Motion-Secondary: Automatic Meter Reading Corp., Jerry Fund v. New York City, Nyc Commission On Human Rights, Carmelyn P. Malalis, Monica Cardenas

On November 25, 2015 a Motion-Secondary was filed involving a dispute between Automatic Meter Reading Corp., Jerry Fund, and Carmelyn P. Malalis, Monica Cardenas, New York City, Nyc Commission On Human Rights, for Special Proceedings - Other (Article 78) in the District Court of New York County.

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FILED: NEW YORK COUNTY CLERK 06/29/2016 10:54 PM INDEX NO. 162211/2015
NYSCEF DOC. NO. 95 RECEIVED NYSCEF: 06/29/2016

SUPREME COURT OF THE STATE OF NEW YORK
NEW YORK COUNTY
______________________________________________

Automatic Meter Reading Corp. and Jerry Fund, :

Petitioners, : Index No. 162211/2015

-against- :

New York City, NYC Commission on Human Rights :
and Carmelyn P. Malalis, individually and
as NYC Commission on Human Rights :
Commissioner/Chair, and Monica Cardenas,
:

Respondents. :
______________________________________________

SUPPLEMENTAL MEMORANDUM OF LAW IN FURTHER SUPPORT OF
RESPONDENT MONICA CARDENAS’ VERIFIED ANSWER

THE LEGAL AID SOCIETY

Seymour James, Attorney-in-Chief
Adriene Holder, Attorney-in-Charge, Civil Practice
Karen Cacace, Director, Employment Law Unit
Amy M. Hong, Of Counsel
199 Water Street, 3rd Floor
New York, NY 10038
(212) 577-3626

Attorneys for Respondent Monica Cardenas

June 29, 2016

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TABLE OF CONTENTS

PRELIMINARY STATEMENT………………………………………………………………….1

ARGUMENT…………………………………………………………………………….………..2

I. This Court Has Exclusive Jurisdiction Over The Matter Pursuant To The NYC Admin.
Code § 8-123………………………………………………………………….……….2

II. The Commission Was Within Its Discretion Not to Off-Set Respondent Monica
Cardenas’ Compensatory Damages Award By the Amount of her Unemployment
Insurance Benefits…………………………………………………………………….4

A. The NYCHRL Requires An Independent and Separate Analysis From Similar
Provisions Under State and Federal Law……………………………………………..5

B. Unemployment Insurance Is a Collateral Source under New York State Law And Not
Deductible From Back Pay Awards…………………………………………………..6

C. The Commission Was Within Its Discretion to Rely on Federal Law……………......8

III. The Civil Penalty in the Amount of $250,000 Imposed by the Commission Is Reasonable
and Enforceable……………………………………………………………………...10

IV. Analogous Punitive Damages Awards Support the Imposition of a Civil Penalty in the
Amount of $250,000…………………………………………………………………14

CONCLUSION…………………………………………………………………………………..16

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TABLE OF AUTHORITIES

Page(s)

Federal Cases

BMW of North America, Inc. v. Gore,
517 U.S. 559 (1996)..................................................................................15

Caravantes v. 53rd St. Partners, LLC,
2012 WL 3631276 (S.D.N.Y. Aug. 23, 2012) .........................................................................15

E.E.O.C. v. Yellow Freight Sys., Inc.,
2001 WL 1568322 (S.D.N.Y. Dec. 6, 2001) .............................................................................6

Gaworski v. ITT Commercial Fin. Corp.,
17 F.3d 1104 (8th Cir. 1994) ...................................................................................................10

MacMillan v. Millennium Broadway Hotel,
873 F. Supp. 2d 546 (S.D.N.Y. 2012)......................................................................................15

Marshall Field & Co. v. N.L.R.B.,
318 U.S. 253 (1943) ...................................................................................................................8

N.L.R.B. v. Gullett Gin Co.,
340 U.S. 361 (1951) ...............................................................................................................8, 9

Promisel v. First Am. Artificial Flowers,
943 F.2d 251 (2d Cir. 1991).......................................................................................................9

Roberts v. United Parcel Service, Inc.,
115 F. Supp. 3d 344 (E.D.N.Y. 2015) ...............................................................................14, 15

Shannon v. Fireman’s Fund Ins. Co.,
136 F. Supp. 2d 225 (S.D.N.Y. 2001)......................................................................................10

Siracuse v. Program for the Dev. of Human Potential,
2012 WL 1624291 (E.D.N.Y. Apr. 30, 2012) ...........................................................................8

State Cases

119-121 East 97th Street Corp v. NYC Comm’n on Human Rights,
220 A.D.2d 79 (1st Dep’t 1996) ..........................................................................................3, 11

Ahroner v. Israel Discount Bank of New York,
79 A.D.3d 481 (1st Dep’t 2010) ..............................................................................................14

Albunio v. City of New York,
16 N.Y.3d 472 (2011) ................................................................................................................5

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City of NYC CHR v. Salinas Realty Corp.,
183 Misc.2d 897 (Sup. Court NY County March 15, 2000)......................................................4

Horizon Inc. v. Wolkowicki,
55 A.D.3d 337 (1st Dep’t 2008) ..............................................................................................14

Inchaustegui v. 666 5th Ave. Ltd. P'ship,
268 A.D.2d 121 (1st Dep’t 2000), aff'd, 749 N.E.2d 196 (N.Y. 2001) .....................................7

Maloff v. City Comm'n on Human Rights,
46 N.Y.2d 902 (1979) ................................................................................................................4

Maloff v. City Commission on Human Rights,
45 A.D.2d 834 (1st Dep't 1974) .................................................................................................3

Matter of NYS Depart. of Correct. Services v. NYS Division of Human Rights
53 A.D.3d 823 (3rd Dept 2008)…………………………………………………….3

Matter of Shahbain v. New York City Comm’n on Human Rights, ex. Rel. Dileo,
50 Misc.3d 1213(A), (Sup. Court NY County Jan 22, 2016) ....................................................4

Melman v. Montefiore Med. Ctr.,
946 N.Y.S.2d 27 (1st Dep’t 2012) .............................................................................................5

Pioneer Group v. State Div. of Human Rights on Complaint of Foote,
174 A.D.2d 1041 (4th Dep’t 1991) ........................................................................................6, 7

Rodriguez v. NYC Commission on Human Rights,
2003 WL 25668661 (Sup. Court NY County September 16, 2003) ..........................................4

Rutzen v. Monroe Cty. Long Term Care Program, Inc.,
104 Misc. 2d 1000 (Sup. Ct. 1980) ....................................................................................7, 8, 9

Salemi v. Gloria’s Tribeca Inc.,
2012 WL 10785641 (N.Y. Sup. Ct. Sept. 27, 2012) ..........................................................15, 16

Silver Dragon Restaurant v. City of NY Commission on Human Rights,
2004 WL 6032607 (Sup. Court NY County March 19, 2004) ..................................................4

Williams v. New York City Housing Auth.,
61 A.D.3d 62 (1st Dep’t 2009) ........................................................................................5, 7, 10

Wooten v. State,
753 N.Y.S.2d 266.......................................................................................................................6

Zakre v. Norddeutsche Landesbank Girozentrale,
2009 WL 1585830 (2nd Cir. 2009)………………………………………………15

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State Statutes

N.Y. CPLR § 4545 ...........................................................................................................................6

N.Y. CPLR § 7801 ...........................................................................................................................2

N.Y. CPLR § 7804 ...........................................................................................................................3

City Statutes

N.Y.C. Admin. Code § 8-123 ..........................................................................................................3

N.Y.C. Admin. Code § 8-126 ....................................................................................................2, 10

N.Y.C. Admin Code § 8-130 ...................................................................................................1, 5, 8

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Pursuant to the Court’s direction during the parties’ appearance in this matter on May 23,

2016, Respondent Monica Cardenas submits this supplemental memorandum of law in further

support of her Verified Answer. In accordance with the Court’s request, this memorandum will

specifically address: the Court’s authority to adjudicate this matter, whether the Commission

should have off-set Respondent Monica Cardenas’ compensatory damages award by the amount

of unemployment insurance she received, and the reasonableness and enforceability of the civil

penalty imposed by the New York City Commission on Human Rights in its Decision and Order

dated October 28, 2015.

Based on the memorandum of law in support of her Verified Answer dated February 3,

2016 and this supplemental memorandum of law in further support of her Verified Answer dated

June 29, 2016, Respondent Monica Cardenas requests that the Court affirm the Commission’s

Decision dated October 28, 2015, dismiss the petition, enter judgment for Respondents, and

grant Respondents costs and fees, together with such other and further relief as the Court deems

just and proper.

PRELIMINARY STATEMENT

The purpose of the New York City Commission on Human Rights (“Commission”) is to

enforce and effectuate the New York City Human Rights Law, Title 8 of the Administrative

Code of the City of New York (“NYCHRL”). The NYCHRL is one of the most comprehensive

civil rights laws in the nation and is to be construed liberally for the accomplishment of the

uniquely broad and remedial purposes thereof, regardless of whether federal or New York State

civil and human rights laws, including those laws with provisions comparably-worded to

provisions of this title, have been so construed. N.Y.C. Admin. Code § 8-130. The NYCHRL

authorizes the Commission to order bad actors to cease and desist from engaging in unlawful

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discriminatory practices, order other affirmative actions, such as awarding back pay, front pay,

and compensatory damages for emotional distress to the complainant and impose civil penalties

to vindicate the public interest with a maximum penalty of $250,000 if the conduct complained

of is found to be willful, wanton or malicious. The Commission’s Decision and Order dated

October 28, 2015 (“Decision”) was well within its mandate and should not be disturbed by this

Court.

ARGUMENT

I. This Court Has Exclusive Jurisdiction Over The Matter Pursuant To The NYC
Admin. Code § 8-123

Petitioners bring this proceeding as a hybrid action under article 78 of the New York

Civil Practice Law and Rules (“CPLR”) and section 8-123 of the New York City Administrative

Code (“NYC Admin. Code”) seeking an order to annul or modify the Commission’s Decision

which found that Automatic Meter Reading Corp. and Jerry Fund (“Petitioners” or “AMRC” or

“Mr. Fund”) engaged in unlawful discriminatory practices. Petitioners have properly filed the

petition pursuant to section 8-123 of the NYC Admin. Code as it sets forth a special mechanism

for judicial review of the Commission’s final decisions and orders. Petitioners, however,

mistakenly filed the petition under article 78 because article 78 proceedings should not be used

to challenge determinations where judicial review is expressly authorized by statute. See N.Y.

CPLR § 7801(1).

Section 8-123 of Title 8 of the Administrative Code specifically provides:

a. Any complainant, respondent or other person aggrieved by a final order of the
commission issued pursuant to section 8-120 or section 8-126 of this chapter or an
order of the chairperson issued pursuant to subdivision f of section 8-113 of this
chapter affirming the dismissal of a complaint may obtain judicial review thereof in a
proceeding as provided in this section.

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b. Such proceeding shall be brought in the supreme court of the state within any county
within the city of New York wherein the unlawful discriminatory practice….occurs or
wherein any person required in the order to cease and desist from an unlawful
discriminatory practice…resides or transacts business…

c. Such proceeding shall be initiated by the filing of a petition in such court, together
with a written transcript of the record upon the hearing, before the commission….
Thereupon the court shall have jurisdiction of the proceeding and of the questions
determined therein, and shall have power to grant such relief as it deems just and
proper, and to make and enter upon the pleadings, testimony, and proceedings set
forth in such transcript an order annulling, confirming or modifying the order of the
commission in whole or in part.

e. The findings of the commission as to the facts shall be conclusive if supported by
substantial evidence on the record considered as a whole.

Section 8-123(f) makes clear that “….The jurisdiction of the supreme court shall be

exclusive and its judgment and order shall be final, subject to the review by the appellate

division of the supreme court and the court of appeals in the same manner and form and with the

same effect as provided for appeals from a judgment in a special proceeding”. N.Y.C. Admin.

Code § 8-123(f).

The substantial evidence review called for in NYC Admin. Code § 8-123 does not require

a transfer to the Appellate Division as in the case of an article 78 proceeding. See CPLR §

7804(g). The First Department and this Court have reached the same conclusion.1 See 119-121

East 97th Street Corp v. NYC Comm’n on Human Rights, 220 A.D.2d 79 (1st Dep’t 1996)(The

landlord appealed the trial court’s decision to the First Department, however, the Supreme Court

did not transfer the petition in the first instance and retained jurisdiction); Maloff v. City

Commission on Human Rights, 45 A.D.2d 834, 834 (1st Dep’t 1974)(remanding NYCHRL

judicial review case to supreme court and stating that “where, as here, an exclusive review

1
In the Matter of NYS Depart. of Correct. Services v. NYS Division of Human Rights, the Supreme Court in Albany
County transferred the matter to the Third Department to review a determination of the New York State Division of
Human Rights, however, it is inapplicable here as the case involves the New York State Human Rights Law and not
one filed under NYC Admin. Code 8-123. 53 A.D.3d 823 (3rd Dep’t 2008)

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procedure by a specified court is expressly provided for by statute, a proceeding under article 78

is not maintainable”); Matter of Shahbain v. New York City Comm’n on Human Rights, ex. Rel.

Dileo, 50 Misc.3d 1213(A), at *2, (Sup. Court NY County Jan 22, 2016)(“This court has

exclusive jurisdiction over the issues in this proceeding and transfer to the Appellate Division is

inappropriate”); City of NYC CHR v. Salinas Realty Corp., 183 Misc.2d 897, 898 (Sup. Court

NY County March 15, 2000)(“Under Administrative Code 8-123, in the first instance this court

has exclusive jurisdiction of the issues in this proceeding and the matter could not be so

transferred for lack of subject matter jurisdiction in the Appellate Division at that state of the

proceeding.”); Silver Dragon Restaurant v. City of NY Commission on Human Rights, 2004 WL

6032607 (Sup. Court NY County March 19, 2004)(reviewing a NYCHLR order after converting

article 78 proceeding to NYCHRL section 8-123 proceeding and stating that “respondents

correctly indicate, as a procedural matter, the inapplicability of CPLR article 78 to this case” and

that appellant “incorrectly proceeded under CPLR article 78”); Rodriguez v. NYC Commission

on Human Rights, 2003 WL 25668661 (Sup. Court NY County September 16, 2003)(“Title 8 of

the New York City Administrative Code provides the sole mechanism for judicial review of

decisions made by the Commission.”).

Accordingly, this Court has exclusive jurisdiction over this matter pursuant to section 8-

123 of the NYC Admin. Code and transfer to the Appellate Division would be in error.

II. The Commission Was Within Its Discretion Not to Off-Set Respondent Monica
Cardenas’ Compensatory Damages Award By the Amount of her
Unemployment Insurance Benefits

As stated earlier, the purpose of the Commission is to enforce and effectuate the

NYCHRL. Indeed, “[t]he [New York City C]omission [on Human Rights] has wide discretion in

formulating remedial relief to prevent discrimination.” Maloff v. City Comm'n on Human Rights,

46 N.Y.2d 902, 904 (1979). While there are no cases directly on point under the NYCHRL, the
4

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Commission’s decision to award Ms. Cardenas back pay without deducting her unemployment

insurance compensation is well-within the Commission’s discretion.

A. The NYCHRL Requires An Independent and Separate Analysis From
Similar Provisions Under State and Federal Law

The NYCHRL requires courts to “construe[] liberally [the NYCHRL] for the

accomplishment of the uniquely broad and remedial purposes thereof, regardless of whether

federal or New York state civil and human rights laws . . . have been so construed.” N.Y.C.

Admin. Code § 8-130. Indeed, the First Department has “mandate[d] that[,] courts be sensitive to

the distinctive language, purposes, and method of analysis required by the City HRL, requiring

an analysis more stringent than that called for under either Title VII or the State HRL.” Williams

v. New York City Housing Auth., 61 A.D.3d 62, 65 (1st Dep’t 2009). To this end, the First

Department has stated:

[i]t is clear that interpretations of State or federal provisions worded similarly to City
HRL provisions may be used as aids in interpretation only to the extent that the
counterpart provisions are viewed ‘as a floor below which the City’s Human Rights law
cannot fall, rather than a ceiling above which the local law cannot rise’ (§ 1), and only to
the extent that those State- or federal-law decisions may provide guidance as to the
“uniquely broad and remedial” provisions of the local law.

Id. at 66-67. (internal quotations marks and citations omitted).

Using the expansive lens in which the NYCHRL must be analyzed, this Court is

compelled to uphold the Commission’s order based on the remedial purposes of the NYCHRL

that favor discrimination plaintiffs rather than applying any analogous standard within state law.

N.Y.C. Admin. Code § 8-130; Albunio v. City of New York, 16 N.Y.3d 472, 477-78 (2011)

(stating that “we must construe . . . provisions of the City's Human Rights Law, broadly in favor

of discrimination plaintiffs, to the extent that such a construction is reasonably possible”);

Melman v. Montefiore Med. Ctr., 946 N.Y.S.2d 27, 30 (1st Dep’t 2012) (same).

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The Commission interpreted the NYCHRL so as not to deduct unemployment insurance

benefits from Ms. Cardenas’s back pay award. Because the Commission’s determination in this

case supports the remedial purposes of the law, this Court is compelled to uphold the

Commission’s decision on this issue.

B. Unemployment Insurance Is a Collateral Source under New York State Law
And Not Deductible From Back Pay Awards

Petitioners argue that CPLR § 4545 requires a set off with respect to all collateral

payments, which includes unemployment compensation. However, CPLR § 4545 applies only to

personal injury actions and not to discrimination cases. CPLR § 4545(a) (entitled “Actions for

personal injury, injury to property or wrongful death”); E.E.O.C. v. Yellow Freight Sys., Inc.,

2001 WL 1568322, at *2 (S.D.N.Y. Dec. 6, 2001) (“[I]t appears quite plain that C.P.L.R. §

4545[a] applies only to personal injury actions. Plaintiffs do not cite, nor has this Court found, a

New York case applying N.Y. CPLR § 4545[a] to a discrimination claim.”). Accordingly, to

apply CPLR § 4545 is simply incorrect as a matter of law.

Petitioners further argue that this Court should follow Pioneer Group v. State Div. of

Human Rights on Complaint of Foote, 174 A.D.2d 1041, 1041 (4th Dep’t 1991). 2 Pioneer

concerns a case against the State Division of Human Rights (“SDHR”) where the Fourth

Department found that there was substantial evidence supporting the SDHR’s determination that

the employer unlawfully discriminated against complainant because he had been convicted of a

crime. Upon review, the Fourth Department modified the SDHR’s order to state that “the award

of back pay should be offset by any unemployment insurance benefits and employment-related

2
Petitioners attempt to show support for their opinion by citing in a footnote to Wooten v. State, 753 N.Y.S.2d 266
(4th Dep’t). However, Wooten concerns the offset of social security benefits following an award for the wrongful
death of an inmate in a medical malpractice case and thus provides no guidance to the Court in the case presently
before this Court, an employment discrimination case in which the NYCCHR has chosen not to offset
unemployment insurance benefits from a back pay award. Petitioners may be correct that CPLR was properly
applied in Wooten, a wrongful death case, but that analysis answers a question that is irrelevant here.

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income received by complainant during the period between his unlawful termination and the date

on which he accepts or rejects petitioner Pioneer Group’s offer of employment”. 174 A.D.2d at

1041. This case, however, is distinguishable as Pioneer applied the New York State Human

Rights Law and not the uniquely broad and remedial NYCHRL. Because Pioneer did not

consider whether unemployment insurance benefits should be deducted from a damages award

under the NYCHRL, this Court is not bound by Pioneer. As stated earlier, the First Department

in Williams made clear that interpretations of the state law are a “floor below which the City’s

Human Rights law cannot fall, rather than a ceiling above which the local law cannot rise”.

Williams v. New York City Housing Auth., 61 A.D.3d at 66-67.

Moreover, Pioneer’s holding, which did not rely on any analysis, runs afoul of the actual

New York State law collateral source doctrine. The First Department has stated that “[t]he

purpose of [the collateral source] rule . . . is to ensure that the wrongdoer is required to pay for

all damages his conduct caused to the injured party, without setoff from payments the injured

party receives from other, collateral sources.” Inchaustegui v. 666 5th Ave. Ltd. P'ship, 268

A.D.2d 121, 125 (1st Dep’t 2000), aff'd, 749 N.E.2d 196 (N.Y. 2001). Under the collateral

source doctrine, New York State law “holds that as a general rule damages cannot be mitigated

or reduced because of payments received by an injured party from a source wholly independent

of and collateral to the wrongdoer.” Rutzen v. Monroe Cty. Long Term Care Program, Inc., 104

Misc. 2d 1000, 1001 (Sup. Ct. 1980). In Rutzen, which involved a breach of employment

contract, the court distinguished “gratuitous benefits paid by an employer, which are deductible

from plaintiff's damages, and disability, pension, vacation and other ‘fringe’ benefits which are

not.” Rutzen, 104 Misc. 2d at 1002. The court determined that “unemployment insurance

benefits are in the nature of collateral ‘fringe’ benefits extended to an employee in consideration

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for his previous services” and therefore do not require an offset. Rutzen, 104 Misc. 2d at 1003;

see also Siracuse v. Program for the Dev. of Human Potential, 2012 WL 1624291, at *12-15

(E.D.N.Y. Apr. 30, 2012) (citing to Rutzen repeatedly during thorough review of New York State

collateral source doctrine and declining to offset disability benefits from judgment against

employer in disability discrimination NYCHRL case).

Because Ms. Cardenas’s payments from the state fund for unemployment insurance fall

within New York state’s collateral source doctrine, they should not be deducted from the

damages award against Petitioners.

C. The Commission Was Within Its Discretion to Rely on Federal Law

In making its Decision not to off-set Ms. Cardenas’ back pay award with the

unemployment insurance benefits she received, the Commission properly reviewed federal

standards that serve the NYCHRL’s remedial purposes. See N.Y.C. Admin. Code § 8-130.

In a case involving the National Labor Relations Act, the United States Supreme Court

found that unemployment insurance benefits are collateral and need not be deducted from a

damages award:

Payments of unemployment compensation were not made to the employees by
respondent but by the state out of state funds derived from taxation. True, these taxes
were paid by employers, and thus to some extent respondent helped to create the fund.
However, the payments to the employees were not made to discharge any liability or
obligation of respondent, but to carry out a policy of social betterment for the benefit of
the entire state. We think these facts plainly show the benefits to be collateral.

N.L.R.B. v. Gullett Gin Co., 340 U.S. 361, 364-66 (1951) (citations omitted) (emphasis added)

(holding that NLRB did not abuse its discretion by awarding back pay without deducting

unemployment insurance for a number of reasons, including because tax payments “were not

made to discharge any liability or obligation of respondent, but to carry out a policy of social

betterment for the benefit of the entire state”); see Marshall Field & Co. v. N.L.R.B., 318 U.S.

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253, 255 (1943) (“[T]he benefits received under the state compensation act were plainly not

‘earnings' which, under the terms of the [National Labor Relation] Board’s order, could be

deducted from the back pay awarded.”); see Rutzen, 104 Misc. 2d at 1003 (applying Gullett

Gin’s reasoning to New York state law and stating that “[t]he Court in Gullett Gin considered

and rejected the argument, which supports defendants here, that State unemployment benefits are

not collateral benefits but are instead direct benefits from the employer, as they are derived from

the employer's tax contributions”). The Commission’s decision not to deduct unemployment

benefits from Ms. Cardenas’ back pack appropriately followed the United States Supreme Court

precedent in Gullett Gin and its sound reasoning.

Petitioners paid taxes to the New York State Unemployment Insurance Fund and not to

Ms. Cardenas directly. Thus, the benefits are collateral benefits and should not be deducted from

the back pay award. Should this Court decide to deduct unemployment insurance benefits from

Ms. Cardenas’s back pay award, this Court would reward Petitioners by reducing their penalty

for breaking the law with regard to Ms. Cardenas’s employment. A private company should not

receive a discount on its debt to a victim of discrimination because state policy makers chose to

support that company’s employees during their joblessness.

The Second Circuit has also found that it is appropriate not to deduct unemployment

insurance benefits from back pay awards in employment cases. Even though declining to deduct

public benefits from a back pay award may result in an additional benefit to the employee, “‘as

between the employer, whose action caused the discharge, and the employee . . . it is fitting that

the burden be placed on the employer.’” Promisel v. First Am. Artificial Flowers, 943 F.2d 251,

258 (2d Cir. 1991) (quoting Maxfield v. Sinclair Int’l, 766 F.2d 788, 795 (3rd Cir. 1985)). “A

majority of [Second Circuit courts] have relied on [Promisel’s] reasoning in not deducting

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unemployment benefits from backpay awards.” Shannon v. Fireman’s Fund Ins. Co., 136 F.

Supp. 2d 225, 232 (S.D.N.Y. 2001) (citing to such cases). Although the Second Circuit’s

decisions are not binding on this Court, interpretations of federal law with similar provisions to

the NYCHRL are a “floor below which the City’s Human Rights law cannot fall, rather than a

ceiling above which the local law cannot rise”. See Williams v. New York City Housing Auth., 61

A.D.3d at 66-67.

Moreover, the majority of federal circuits “have held that, as a matter of law,

unemployment benefits should not be deducted from backpay awards.” Gaworski v. ITT

Commercial Fin. Corp., 17 F.3d 1104, 1113-14 (8th Cir. 1994) (stating that “[b]ased on these

considerations, no circuit that has considered the matter has determined that unemployment

benefits should, as a general rule, be deducted from backpay awards in discrimination cases” and

adopting the majority view because it is “the more sound position” and pointing out that, should

the award be reduced “it should be the state that seeks to recoup the benefits”).

Because it was well within the Commission’s discretion not to off-set Ms. Cardenas’

back pay award with the unemployment insurance benefits she received, this Court is compelled

to uphold the Commission’s decision declining to deduct Ms. Cardenas’s unemployment

insurance benefits from her back pay award.

III. The Civil Penalty in the Amount of $250,000 Imposed by the Commission Is
Reasonable and Enforceable.

Section 8-126 of the NYC Admin. Code provides that the Commissioner may impose a

civil penalty upon finding that a respondent has engaged in an unlawful discriminatory practice,

in addition to the other remedies and penalties allowed under the statute. N.Y.C. Admin. Code §

8-126. The Local Civil Rights Restoration Act of 2005 (the “Restoration Act”) sought to

“enhance the human rights law’s power to deter unlawful discriminatory acts by increasing the

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amount of civil penalties that may be awarded for violations.” Committee on General Welfare,

To Amend the Administrative Code of the City of New York, in Relation to the Human Rights

Law 6 (2005), http://www.antibiaslaw.com/sites/default/files/all/CommitteeReport081705.pdf.

The Restoration Act of 2005 increased the maximum civil penalty that may be imposed in all

cases from $50,000 to $125,000, and from $100,000 to $250,000 in cases involving willful,

wanton or malicious acts or where an act of discriminatory violence or harassment has occurred.

N.Y.C. Local Law No. 85 of 2005 § 6. The increase was intended to reflect the serious injury

that discriminatory acts cause, both to the individuals directly involved and to “the social fabric

of the City as a whole.” Committee on General Welfare, supra at 6.

The imposition of civil penalties is meant to “punish the violator” and “strengthen and

expand the enforcement mechanisms of the law so the Commission [can] prevent discrimination

from playing any role in actions related to employment, public accommodations, housing and

other real estate.” 119-121 East 97th St. Holding Corp. v. N.Y.C. Comm’n on Human Rights, 220

A.D.2d 79, 88 (1st Dep’t 1996). The record here supports the imposition of a $250,000 civil

penalty as Mr. Fund subjected Ms. Cardenas to a hostile work environment with his

discriminatory actions over a significant period of time, approximately three years, and ignored

Ms. Cardenas’ repeated pleas to stop his unwelcome and degrading behavior.

As set forth in Ms. Cardenas’ Verified Answer and Memorandum of Law in Support of

her Verified Answer dated February 3, 2016, while employed at AMRC and especially during

the period of time when Ms. Cardenas was the office manager for AMRC, Ms. Cardenas endured

numerous comments of a sexual nature and harassing physical behavior by Mr. Fund that created

a hostile work environment. It is undisputed that Mr. Fund hit Ms. Cardenas’ buttocks with an

umbrella and after being told not to do that, hit Ms. Cardenas’ buttocks again. Tr. At 80, 81, 801-

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803, 808-810, 825-827; Hong Aff. Exhibit C. It is also undisputed that Mr. Fund posted a

cartoon from the Daily News depicting a woman wearing a tight skirt, a low-cut shirt and high

heeled shoes by the office copier and wrote on top of it “OUR OWN MONICA.” Tr. at 34-37,

39-40, 648, 649, 650-52; Hong Aff. Exhibit D. It is also undisputed that Mr. Fund compared Ms.

Cardenas to a swimsuit model in a swimsuit edition of Sports Illustrated. Tr. at 59, 60, 444,

656; Hong Aff. Exhibit E.

At the hearings before the administrative law judge (“ALJ”) below, Ms. Cardenas

testified at length about the lewd behavior and comments she endured while working for Mr.

Fund. Ms. Cardenas testified about how Mr. Fund licked her neck and inserted a rolled-up

newspaper in her pants. Tr. at 26, 28, 29, 765,-66, 764. Ms. Cardenas also testified about how

Mr. Fund made sexually explicit remarks about her to a client, would make on-going comments

of an inappropriate nature such as “Why did I put a woman in charge?”, would offer to rub her

chest when she had cough, would say “sex helps” with headaches and offer to help her with that,

and would suggest that they run away together and saying that he would remember to bring the

“Viagra and Cialis.” Tr. at 31, 44, 46-47, 49-50, 72, 73, 185, 308, 780, 796, 787-88. Mr. Fund

also gave Ms. Cardenas a book on how to put on make-up and gave her money to fix her hair

because he said she looked like a lion. Tr. at 74, 798, 811. Time and time again, Ms. Cardenas

would respond to Mr. Fund’s harassment by saying, “No thank you. Please don’t say those things

to me. That’s disrespectful.” Tr. 49-50; 73. Taken all together, Mr. Fund’s discriminatory

actions were willful, wanton and malicious and thus justify the imposition of a $250,000 civil

penalty.

Although the Commission has not ever before issued the maximum penalty as it did here,

the Commission, under the new leadership of Commissioner Carmelyn P. Malalis, has made

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clear that it intends to use the civil penalty to punish bad actors and deter continued unlawful

behavior. In November 2015, the Commission issued a press release explaining that the

imposition of a civil penalty in the amount of $250,000 is warranted when unlawful conduct is

willful, wanton, or malicious. Hong Aff. Exhibit K.

The press release also explained that large civil penalties are intended to punish and deter

egregious violations of the law especially “when respondents flout orders and fail to provide

information ordered by the administrative law judge at the Office of Administrative Trials and

Hearings (OATH).” Hong Aff. Exhibit K. As set forth in the Memorandum of Law in Support

of Ms. Cardenas’ Verified Answer, Petitioners repeatedly failed to abide by ALJ orders to

produce certain documentation related to their finances. Prior to the commencement of the

hearing, Ms. Cardenas served Requests for the Production of Documents on Petitioners, which

included requests for financial documents that would demonstrate Petitioners’ net worth. Hong

Aff. Exhibit H. Ms. Cardenas also took the deposition of Mr. Fund, during which he testified

about the various bank accounts maintained by AMRC. During his deposition, Ms. Cardenas’

counsel again asked for the production of documents related to Petitioners’ net worth. Hong Aff.

Exhibit I; Hong. Aff. Exhibit J. The issue was raised before ALJ Zorgniotti who set production

deadlines. Nevertheless, prior to and during the hearing, Petitioners repeatedly failed to timely

produce the requested documents pertaining to financial information related to AMRC and Mr.

Fund.

Although Petitioners claim that the consideration of ALJ Exhibit 7 by the Commission

was improper, Petitioners’ argument fails. ALJ Exhibit 7 merely reflects correspondence

between the parties regarding the ALJ’s three orders requiring Petitioners to produce their

financial information. Although Petitioners produced some financial information related to

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AMRC mid-way through the hearing process, Petitioners never produced a complete set of

financial information related to AMRC or any financial information related to Mr. Fund despite

repeated requests to do.

It was rational for the Commission to draw an adverse inference concerning Petitioners’

ability to pay a civil penalty from Petitioners’ failure to provide financial documentation. See

Horizon Inc. v. Wolkowicki, 55 A.D.3d 337, 337-8 (1st Dep’t 2008) (holding that discovery

sanction of adverse inference charge against defendants was warranted where defendants refused

to produce checks and other financial documents essential to the claim); Ahroner v. Israel

Discount Bank of New York, 79 A.D.3d 481, 481-82 (1st Dep’t 2010) (finding that court properly

assigned adverse inference to defendants where defendant destroyed emails in employment

discrimination action). Petitioners were aware of the existence of such documents, the requests

for production that were made and the orders to produce such documents. It was well within the

Commission’s discretion to draw an adverse inference against

Case Info

Judge

Shlomo Hagler Track Judge’s New Case

Case No.

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Document Filed Date

June 29, 2016

Case Filing Date

November 25, 2015

County

Parties

Automatic Meter Reading Corp. Plaintiff
BERNHARDT, DORIS F. Attorney for the Defendants
Carmelyn P. Malalis Defendant
GARROD, SCOTT BRIAN Attorney for the Plaintiff
HONG, AMY M. Attorney for the Defendants
HONIG, JONATHAN Attorney for the Plaintiff
Jerry Fund Plaintiff
Monica Cardenas Defendant
New York City Defendant
NYC Commission on Human Rights Defendant
OKEREKE, AMY NKEMKA Attorney for the Defendants
MESHULOM BULS Attorney

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Motion-Secondary: Automatic Meter Reading Corp., Jerry Fund v. New York City, Nyc Commission On Human Rights, Carmelyn P. Malalis, Monica Cardenas

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