Motion for Child Support in Audra Schmitt v. The New York State Teachers' Retirement System| Trellis.Law

On March 31, 2023 a Motion-Secondary was filed involving a dispute between Audra Schmitt, and The New York State Teachers' Retirement System, for Special Proceedings - CPLR Article 78 in the District Court of Albany County.

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FILED: ALBANY COUNTY CLERK 03/31/2023 10:47 AM INDEX NO. 902786-23
NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 03/31/2023

STATE OF NEW YORK SUPREME COURT
COUNTY OF ALBANY
________________________________________________

In the Matter of the Application of

AUDRA SCHMITT,

-against-

THE NEW YORK STATE TEACHERS’ Index No.: ___________
RETIREMENT SYSTEM, RJI No.: _____________

Respondent.
________________________________________________

PETITIONER’S MEMORANDUM OF LAW
IN SUPPORT OF THE VERIFIED PETITION

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Table of Contents

PRELIMINARY STATEMENT ............................................................................................................... 3
STATEMENT OF FACTUAL AND PROCEDURAL BACKGROUND.............................................. 4
ARGUMENT AND STANDARD OF REVIEW ...................................................................................... 4
POINT I: THE CHALLENGED DETERMINATION WAS ARBITRARY, CAPRICIOUS,
IRRATIONAL, AND MADE IN ERROR OF LAW AND MUST BE RESCINDED
...................................................................................................................................................................... 5
CONCLUSION..........................................................................................................12

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PRELIMINARY STATEMENT

In this Article 78 proceeding, the Petitioner seeks to annul a final determination of the New

York State Teachers’ Retirement System (“Respondent” or “NYSTRS”) denying her pension credit

for salary payments made to her by the Livonia Central School District (the “District”) for the

period May 19, 2020 through her retirement date of April 21, 2022, while she was sick and out of

work on an approved medical leave. Petitioner challenges that NYSTRS’ determination was

“arbitrary, capricious, unreasonable, unlawful and contrary to the [law].” CPLR §7803(3). In

addition, Petitioner seeks an order compelling Respondent to reinstate Petitioner’s pension credit

in a manner consistent with the New York Retirement and Social Security Law (“RSSL”). CPLR

§7803(1). Petitioner contends that Respondent’s review of her case was haphazard and NYSTRS

overlooked the fact that from the period December 12, 2019 and continuing until her retirement

date of April 20, 2022 she was on an approved medical leave of absence, utilizing sick leave

accruals that were available to her, and that she had a legal right to this leave under federal and

state anti-discrimination laws because she was an individual with a disability.

NYSTRS’ Final Determination erroneously concluded that Petitioner was “not working”

due to “an agreement not to work.” The basis for the Final Determination is fatally flawed because

Petitioner was out of work on a documented and approved sick leave beginning December 12,

2019. Somewhat separately, and only because the Superintendent had sought to illegally terminate

Petitioner while she was on a medical leave of absence, Petitioner entered into a separation

agreement with the District to resolve claims that she had against the Superintendent. Petitioner

was not the problem employee—the record makes it quite clear that the Superintendent was the

problem employee.

That separation agreement did not change Petitioner’s protected medical leave status, which

is an erroneous assumption built into NYSTER’ Determination, but not substantiated by any facts

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in the record or by any law. In fact, the erroneous assumption is contrary to NYSTER’ own

regulations. The entire basis for the Final Determination is fatally flawed because Petitioner was

out of work on sick leave beginning December 12, 2019 and continued to be sick (disabled) until

her retirement.

Perseverating on its standard procedures utilized when it reviews settlement agreements

that involve resignations, NYSTRS jumped to conclusions in Petitioner’s pension review and

disregarded the facts of Petitioner’s case. In doing so, NYSTRS has failed to adhere to the law

regarding the pensionability of paid sick leave.

NYSTRS also failed to take into account that it would have been unlawful for the District

to require Petitioner to work when she was not medically fit to perform her job duties as

documented by her medical provider (which documentation was approved and adopted by the

District). There is no dispute in the record that Petitioner was disabled and on a medical leave—

yet inexplicably, NYSTRS denies Petitioner of that status simply because Petitioner also agreed to

a certain retirement date as part of a separation agreement. The separation agreement was never

intended to be about her retirement, it was about avoiding litigation and keeping confidential the

unlawful acts of the Superintendent because his acts, if exposed, would have been disastrous for

the District and the Board of Education members.

In her Verified Petition and Affidavit, Petitioner has offered a valid argument as to why

NYSTRS’ determination should be annulled pursuant to CPLR §7803(3) and her full pension

restored. NYSTRS’ disregard of the facts led to an error of law. Accordingly, the Respondent

respectfully requests that the Court grant her the relief requested in the Petition.

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STATEMENT OF FACTUAL AND PROCEDURAL BACKGROUND

The Petitioner respectfully refers the Court to the accompanying Affidavit of Audra Schmitt

(“Schmitt Aff.”), for a complete account of the relevant facts and record in this proceeding. That

Affidavit and its accompanying Exhibits will be referenced herein as relevant.

ARGUMENT

STANDARD OF REVIEW IN A PROCEEDING PURSUANT
TO CPLR 7803(3).

An Article 78 proceeding is available to review whether an agency “determination was made

in violation of lawful procedure … or was arbitrary and capricious or an abuse of discretion.” CPLR

§7803(3). The standard of review for an agency determination pursuant to CPLR 7803(3) is limited

to whether there is a rational basis for the action, or whether the action is arbitrary and capricious or

an abuse of discretion. See generally, Pell v. Board of Educ., 34 N.Y.2d 222, 230-31 (1974); Matter

of Peckham v. Calogero, 12 N.Y.3d 424, 431 (2009). A determination is arbitrary and capricious if

it is without sound basis in reason and is made in disregard of the facts. Id.; see also, Matter of Colton

v. Berman, 21 N.Y.2d 322 (1967); Matter of Thompson v. Jefferson County Sheriff John P. Burns,

118 A.D.3d 1276 (4th Dept. 2014).

When an administrative entity’s determination is rendered without a hearing, the review “is

limited to whether [the determination] is arbitrary, capricious, or without a rational basis’.” Matter of

Porco v. New York State Teachers’ Retirement System, 140 A.D.3d 1457, 1458 (3d Dep’t 2016)

(quoting Matter of Maillard v. NYS Teachers’ Retirement System, 57 A.D.3d 1299, 1300 (3d Dep’t

2008)). “An action is arbitrary and capricious when it is taken without sound basis in reason or

regard to the facts.” Matter of Peckham, 12 N.Y.3d at 431 (citing Pell, 34 N.Y.2d at 231). In the

instant case, Petitioner has demonstrated that NYSTRS’s Determination was arbitrary, capricious,

without a rational basis, and in error of its own regulations.
5

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POINT I

THE CHALLENGED DETERMINATION WAS
ARBITRARY, CAPRICIOUS, IRRATIONAL, AND MADE IN
ERROR OF LAW AND MUST BE RESCINDED.

Although the scope of the judicial role is narrow when reviewing the determination of an

administrative agency or entity pursuant to CPLR §7803, it is not completely non-existent as

NYSTRS’ slipshod attention to the facts of this case and disregard of the law would suggest it

believes. The record demonstrates that NYSTRS’ determination was not supported by record

evidence, did not have a sound and rational basis, was arbitrary and capricious, and affected by an

error of law.

A. NYSTRS’ Determination Was In Error Of Law.

The benefits provided to teachers with a NYSTRS membership date after July 27, 1976—

Tier 4 members—which is the case of Petitioner, are governed by Article 15 of the New York State

Retirement and Social Security Law (“RSSL”). Service Credit is governed by RSSL §609; Service

Retirement is governed by RSSL §604; and Early Retirement Reductions are governed by RSSL

§603(i). The New York State Retirement System (the “System”) has promulgated rules and

regulations implementing various provisions of law applicable to the System. See generally, 21

New York Codes, Rules and Regulations (“NYCRR”) Parts 5000 et. seq. By its own rules and

regulations, NYSTRS is required to credit members with service credit for certain leaves of

absence. Section 5001.1(h)(1) states: “[T]he number of days of service credit earned in a given

school year … shall be determined using the actual number of paid days (or parts thereof) of service

a teacher worked as a member and days of leave as determined pursuant to Section 5001.3

hereof….” Section 5001.3 specifically protects a member’s leave of absence. Section 5001.3(a),

which applies to Petitioner’s situation, states: “A member who is on a leave of absence and earning

at least half pay for the period of his or her leave may be granted full-service credit, or, service

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credit at half the full rate, whichever is more beneficial.” This regulation is in keeping with the

federal and state anti-discrimination laws, which prevent employers from negatively impacting the

terms and conditions of employment of employees with disabilities. See generally, Americans With

Disabilities Act of 1990, 42 U.S.C. § 12101, et seq., and the New York State Human Rights Law

§296.

NYSTRS failed to follow its own regulation when it refused to credit Petitioner for all of

the time that she was paid by the District through payroll while on an approved medical leave of

absence due to a disabling condition. Petitioner was utilizing paid time off with the District’s

approval. (Schmitt Aff. at ¶¶ 45, 51-52). Of significance, the District accepted Petitioner’s medical

substantiation for her need for a medical leave of absence. (Schmitt Aff. at ¶ 11). The record

contains absolutely no dispute that Petitioner was an individual with a disability beginning on

December 12, 2019 and continuing until her date of retirement. (Schmitt Aff. at a¶ 26; Ex. D). A

leave of absence was the reasonable accommodation the District offered to Petitioner because the

District would not or could not otherwise accommodate her disability. (Schmitt Aff. at ¶ 11).

Notably, Petitioner was on a medical leave of absence for five months before a settlement

agreement was even contemplated. NYSTRS unilaterally, and without any basis to do so, decided

that a settlement agreement that Petitioner signed ended her medical leave of absence. There is no

rational basis for that assumption. Petitioner continued to be an employee with a disabling medical

condition entitled to a leave of absence until the day of her retirement on April 20, 2022. (Schmitt

Aff. at ¶ 20).

Given Petitioner’s medical condition and undisputed right to remain on a leave of absence

and utilize her sick accruals, as provided for in the settlement agreement and pursuant to the

Americans With Disabilities Act of 1990, 42 U.S.C. § 12101, et seq., and the New York State

Human Rights Law §296, NYSTRS erred in failing to apply 21 NYCRR §5001.3 to Petitioner’s

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retirement assessment. Of note, according to the Equal Employment Opportunity Commission,

leave is a reasonable accommodation for employees with disabilities. See, EEOC Publication,

Employer-Provided Leave and the Americans with Disabilities Act (May 9, 2016). In the instant

matter, since the District was unwilling to remove the Superintendent from the work environment,

and since Petitioner could not work in the same environment as the Superintendent without

suffering dangerous health consequences, the District had no option other than to offer a leave of

absence to Petitioner as the mechanism to accommodate her disability. NYSTRS cannot disregard

these important statutes that protect individuals with disabilities from negative employment

consequences.

Ultimately, Respondent needed apply Section 5001.3 because Petitioner was on an

approved FMLA/ADA/NYSHRL protected leave of absence before she entered into a settlement

agreement with the District and she had been on the approved leave of absence since December

19, 2019. NYSTRS did not apply Section 5001.3 solely because of the existence of the settlement

agreement. NYSTRS became hyper-focused on the settlement agreement and its interpretation of

the agreement, which was divorced from all other facts and circumstances. Petitioner’s leave of

absence pre-dated the agreement and therefore this was not the typical type of circumstance where

a member receives a payment or receives paid sick leave in exchange for entering into a resignation

agreement. Petitioner’s continuation of employment was being guaranteed to her in the agreement.

The purpose of the District’s action to promise to continue Petitioner’s employment, was to protect

her from the actions of the Superintendent, who was trying to terminate her employment in

retaliation for Petitioner’s protected activity.

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B. Respondent’s “Investigation” Was Slipshod.

NYSTRS’s Final Determination states: “Audra Schmitt did not earn the at-issue salary

payments as a teacher or for teaching services but rather received them in exchange for her to cease

such services, irrevocably resign, and for a mutual waiver of potential claims and causes of action

between her and the District.” This statement completely disregards all the facts of the case.

Petitioner’s case included very unique facts and circumstances that required NYSTRS’ attention.

If NYSTRS is in the business of interpreting settlement agreements, it needs to do so thoroughly

and properly.

As detailed in the Schmitt Aff., NYSTRS’ hasty email communication with the District was

not enough due diligence to revise Petitioner’s retirement payments. (See Schmitt Aff. at ¶¶ 51-

52; Ex. O). Although Petitioner’s sick leave was paid for by use of her existing sick leave accruals,

spread over a period of years, and had originally been reported as such by the District to NYSTRS,

NYSTRS accepted an email from the District stating that Petitioner was actually not utilizing

accruals. This was incorrect. NYSTRS relied on this erroneous statement almost exclusively in

denying Petitioner two years of service credit, causing a massive retirement reduction. In making

such a serious decision, reliance on an informal answer in a brief email exchange seems

irresponsible. NYSTRS seemingly makes its decision while emailing back and forth with the

District. (See, Schmitt Aff. Ex. K). Thereafter, NYSTRS did absolutely no fact checking or follow-

up with Petitioner. NYSTRS’ process to review Petitioner’s service credit and final average salary

consisted of a few short emails exchanged with the District without any separate verification

process or thorough review of the facts. The “investigation” was performed so carelessly that it

could be considered to have been performed in bad faith. NYSTRS’ inadequate “investigation”

caused the agency to disregard or overlook critical facts that would have led NYSTRS to the correct

conclusion regarding Petitioner’s pension calculation.

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C. Respondent’s Reliance on Matter of Hall and Matter of Hadley-Luzerne Is Misplaced.

The Final Determination states:

Audra Schmitt did not earn the at-issue salary payments as a teacher
or for teaching services but rather received them in exchange for her
to cease such services, irrevocably resign, and for a mutual waiver
of potential claims and causes of action between her and the District.
This type of payment falls squarely within the rule of law established
in Matter of Hadlev-Luzerne Central School District v. NYSTRS and
Matter of Hall v. NYSTRS. In each of the foregoing cases, the
employer procured the participant's resignation by agreeing to pay
a certain sum of money. In each case, the court sustained the
System's determination that such payments, not being ascertainable
by reference to the collective bargaining agreement, constituted buy-
outs of the members' tenure rights — not compensation in exchange
for teaching services as required by Education Law § 501.11(a).
Such payments in lieu of litigation and/or in exchange for
resignation do not constitute compensation earned as a teacher, or
for teaching services, and are therefore not NYSTRS pension
eligible.

These cases cited by NYSTRS in its Final Determination are quite distinguishable from Petitioner’s

circumstances. If NYSTRS had not decided to disregard the circumstances leading up to

Petitioner’s settlement with the District, it would have known that these cases are inapposite. Note,

in its Final Determination, NYSTRS stated: “[I]t is not NYSTRS’ role to judge the circumstances

leading up to the execution of a separation or settlement agreement, nor the parties’ intentions in

entering into an agreement.” However, NYSTRS needed to assess the facts of Petitioner’s case to

make a valid determination. NYSTRS’s assertion that it divorced the facts from the law, is arbitrary

and capricious. Moreover, once NYSTRS was informed there was a settlement agreement, it

became solely focused on the agreement, admittedly, separating the agreement completely from its

context.

Matter of Hall and Matter of Hadley-Luzerne are cases regarding Final Average Salary

calculations, not calculation of years of service credit. Second, those cases are about extra

payments made to district employees in exchange for the withdrawal of the employees’ tenure

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rights. That is not similar to Petitioner’s circumstance because she was an untenured administrator

at the time of the agreement and was not paid extra payments as part of the agreement—in fact, her

annual salary was reduced. In Matter of Hall, 697 N.Y.S.2d 763 (3d Dept. 1999), the Court

determined that a payment of $40,000 to the Petitioner was above and beyond anything that he was

owed by the District, and therefore, the amount could not be included in his Final Average Salary.

The record in Hall also showed that while the parties tried to argue that the $40,000 payment was

paid in exchange for previously earned accruals, the record showed that no such accruals were ever

due to Mr. Hall. Since there was no valid purpose for the payments, the Court determined that

NYSTRS’ assessment that the payment was only in exchange for Mr. Hall’s resignation was

rationale.

In Petitioner’s case, her agreement was not about ending her employment—it was about

continuing her employment. Recall, the Superintendent was poised to unlawfully terminate

Petitioner, she send letters to the Board of Education members seeking help and alerting the Board

to the Superintendent’s actions, and the Board immediately halted her termination. The Board

recognized Petitioner’s right to continue in her position. The issue that NYSTRS ignored is that

Petitioner needed to stay out on leave because she was not medically able to work under the

Superintendent, and since the Board, at that time, was not prepared to terminate the Superintendent,

Petitioner had no choice but to remain out on leave.

Contrary to the circumstances of the petitioners in Hall and Hadley-Luzerne, Petitioner did

not earn more money as a result of entering into the settlement—her pay was substantially reduced.

Essentially, Petitioner had to spread her remaining sick accruals over a two year period, and so her

salary was reduced to account for the value of the accruals she had available to her at the time of

the settlement agreement. The entire spirit of the agreement was to allow petitioner to continue to

utilize her sick days until she was eligible to retire without a reduction in pension benefits.

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NYSTRS’ Final Determination is in complete contravention to the intent of the settlement

agreement.

CONCLUSION

In view of all of the foregoing, the Verified Petition should be granted in its entirety;

together with such other and further relief as the Court may deem it appropriate to award the

Petitioner.

Dated: March 30, 2023 By: Karlee S. Bolaños
Pittsford, New York Bolaños Lowe PLLC
16 S. Main Street
Pittsford, New York 14534
(585) 643-8444
kbolanos@bolanoslowe.com

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WORD COUNT CERTIFICATION

In accordance with 22 NYCRR §202.8-b(c), the undersigned hereby certifies that the total
number of words in the foregoing Memorandum of Law is 3,123 in compliance with the word
count limit set forth by 22 NYCRR §202.8-b(a).
/s/ Karlee S. Bolaños
Karlee S. Bolaños

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Motion-Secondary: Audra Schmitt v. The New York State Teachers' Retirement System

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