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applying a Rule 56 analysis to a Rule 15 motion to amend because "both parties have submitted various exhibits and affidavits on the instant motion [to amend], and these materials cover matters outside the pleadings"
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No. 03 Civ. 7557 (BSJ) (THK).
September 15, 2004
MEMORANDUM OPINION AND ORDER
This employment discrimination case was referred to this Court for general pretrial supervision and reports and recommendations on dispositive motions. Presently before the Court is Plaintiff's motion to amend the Complaint to assert claims under 42 U.S.C. §§ 1981 and 1983, against the New York Botanical Garden ("the Garden") and its president, Gregory Long ("Long"). For the reasons that follow, Plaintiff's motion is granted as to his § 1981 claim and denied as to his § 1983 claim.
Background
Plaintiff commenced employment at the Garden in 1984 and was fired in 2001. In January 2002, Plaintiff submitted a complaint of discrimination to the New York City Commission on Human Rights ("CHR"). (See Affidavit of Keith Lloyd, dated Aug. 13, 2004 ("Pl.'s Aff.") ¶ 24.) The CHR commenced an investigation that culminated on March 7, 2002, with a no-probable-cause determination and dismissal of Plaintiff's claims. The CHR's findings were later affirmed upon review. Plaintiff was not represented by counsel during the CHR investigation (see id. ¶ 27), and did not receive a hearing or an opportunity to cross-examine witnesses. (See id. ¶ 61). Plaintiff further alleges that the CHR relied on unsworn testimony from an anonymous witness (see id. ¶ 75), and that its determination was based on an incomplete factual record. (See id. ¶ 69).
Rather than appeal the CHR determination in the New York courts, Plaintiff brought the instant action in this Court on September 24, 2003. Plaintiff sued Long individually under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1140, and the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), 29 U.S.C. § 1161, et seq. Plaintiff also asserted claims against the Garden under federal, New York City, and State law for discrimination on the basis of race, age, and disability, as well as unlawful retaliation. Plaintiff voluntarily withdrew his ERISA, New York City, and State law claims, and his retaliation claim under the New York Worker's Compensation Statute (see Affirmation of Ian Wallace in Reply to Defs.' Opp'n to Pl.'s Mot. to Amend the Compl., dated Aug. 13, 2004 ("Wallace Reply Aff.") ¶¶ 16-17), and on August 10, 2004, the District Court (Jones, J.) granted Defendants' motion to dismiss the COBRA claim. See Lloyd v. N.Y. Botanical Garden, 03 Civ. 7557 (BSJ) (S.D.N.Y. Aug. 10, 2004) (order granting partial motion to dismiss).
Plaintiff now seeks leave to amend the Complaint to assert claims against the Garden and Long for racial discrimination, in violation of 42 U.S.C. § 1981, and to assert a claim against the Garden and Long pursuant to 42 U.S.C. § 1983. Defendants contend that the CHR determination against Plaintiff precludes him from raising either claim in this Court. Furthermore, Defendants maintain that the Garden and Long are not state actors and thus cannot be sued under § 1983, regardless of the preclusive effect of the CHR proceeding.
Discussion
I. Leave to Amend
Rule 15 of the Federal Rules of Civil Procedure provides that leave to amend pleadings "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). Leave to amend should be granted unless there is "an apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of the allowance of the amendment, [or] futility of the amendment." Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230 (1962); see also Commander Oil Corp. v. Barlo Equip. Corp., 215 F.3d 321, 333 (2d Cir. 2000) (noting that leave to amend is "discretionary" and should be "freely given"); Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993) ("The rule in this Circuit has been to allow a party to amend its pleadings in the absence of a showing by the nonmovant of prejudice or bad faith.").
Defendants oppose the proposed amendments, arguing that they would be futile. To establish futility, the nonmovant must normally show that the amended claims would be subject to dismissal, under Rule 12(b)(6) of the Federal Rules of Civil Procedure, for failing to state a claim upon which relief may be granted. See Lucente v. IBM Corp., 310 F.3d 243, 258 (2d Cir. 2002). However, because both parties have submitted various exhibits and affidavits on the instant motion, and these materials cover matters outside the pleadings, this Court will judge the motion to amend under the standard for a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. See Dipace v. Goord, 308 F. Supp. 2d 274, 278-79 (S.D.N.Y.) (Report and Recommendation), aff'd sub nom. Tortorici v. Goord, 308 F. Supp. 2d 274 (S.D.N.Y. 2004);Republic Nat'l Bank v. Hales, 75 F. Supp. 2d 300, 309 (S.D.N.Y. 1999), aff'd sub nom. HSBC Bank USA v. Hales, No. 00-7622, 2001 WL 99830 (2d Cir. Feb. 6, 2001). Following this standard, this Court will draw all reasonable inferences in favor of Plaintiff, the nonmovant, and will find for Defendants only if there are no genuine issues of material fact and Defendants are entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Dawson v. County of Westchester, 373 F.3d 265, 272 (2d Cir. 2004).
II. The CHR Proceeding and Collateral Estoppel
A state administrative proceeding has the same preclusive effect in a federal court that it would have in a state court under state law. See Univ. of Tenn. v. Elliott, 478 U.S. 788, 799, 106 S. Ct. 3220, 3226 (1986). A New York State agency determination will collaterally estop a plaintiff from subsequently bringing suit in the New York courts if there is an "`identity of issue which has necessarily been decided in the prior action and is dispositive of the present action,' and the party to be estopped . . . had a `full and fair opportunity to contest the decision now said to be controlling.'" Kosakow v. New Rochelle Radiology Assocs., 274 F.3d 706, 730 (2d Cir. 2001) (quoting Schwartz v. Pub. Adm'r, 24 N.Y.2d 65, 71, 298 N.Y.S.2d 955, 960 (1969)). The proponent of preclusion bears the burden of proving identity of issue, while the adverse party bears the burden of proving that he lacked a full and fair opportunity to litigate the issue. Id.
Plaintiff contends that there is no identity of issue here because Plaintiff never raised the issue of state action before the CHR, and therefore the CHR's no-probable-cause determination did not consider Defendants' public or private status. (See Pl.'s Mem. of Law in Reply to Defs.' Opp'n to the Mot. to Amend the Compl., dated Aug. 13, 2004 ("Pl.'s Reply Mem.") at 3.) The relevant question, however, is not whether state action was alleged in the administrative proceeding, but whether the same substantive violations as alleged here were alleged before and decided by the CHR. A plaintiff cannot bring a § 1983 claim without alleging the violation of a distinct federal right. See Patterson v. County of Oneida, 375 F.3d 206, 225 (2d Cir. 2004). By his proposed amendment, Plaintiff Lloyd seeks to assert no violation of a federal right other than his discrimination-based claims. (See Proposed Am. Compl. ¶¶ 1-2.) Plaintiff does not dispute, however, that the CHR's no-probable-cause determination, which found that Defendants did not unlawfully discriminate against Plaintiff, necessarily decided an issue identical to and dispositive of his claim of employment discrimination in this action, under sections 1981 and 1983. See Whidbee v. Garzarelli Food Specialties, Inc., 223 F.3d 62, 68 (2d Cir. 2000) (§ 1981 "outlaws discrimination with regard to the enjoyment of all benefits, privileges, terms, and conditions of a contractual relationship," including employment). Since Plaintiff's § 1981 and § 1983 claims are dependent on his assertion of discrimination, the CHR determination dismissing the substance of his discrimination claim is a potential obstacle to his proceeding on these claims in this action.
The remaining question is whether Plaintiff's CHR proceeding granted him a full and fair opportunity to litigate his claims. In making such a determination, a court should consider "the various elements which make up the realities of litigation," including "the size of the claim, the forum of the prior litigation, the use of initiative, the extent of the litigation, the competence and experience of counsel, the availability of new evidence, indications of a compromise verdict, differences in the applicable law and foreseeability of future litigation."Kosakow, 274 F.3d at 734 (quoting Schwartz, 24 N.Y.2d at 72, 298 N.Y.S.2d at 961). A full and fair opportunity existed only if the complainant's issues were "adequately tested" or "fully aired" at the proceeding. Id. at 736 (quoting Allied Chem. v. Niagara Mohawk Power Corp., 72 N.Y.2d 271, 277, 532 N.Y.S.2d 230, 232 (1988)).
Plaintiff makes the following uncontroverted assertions to support his contention that the CHR investigation did not afford him a full and fair opportunity to litigate his discrimination claims. At the CHR, Plaintiff did not receive a hearing, could not confront or cross-examine opposing witnesses, was not entitled to discovery, and proceeded pro se. (See Pl.'s Aff. ¶¶ 61-65.) Plaintiff also contends that, after the CHR rendered its determination, he reviewed the CHR file and found that it was missing evidence submitted by both sides. (See id. ¶¶ 68-70.) The file also contained evidence of which Plaintiff had been completely unaware. This evidence had been obtained through the CHR's investigator, who used an anonymous "friend" at the Garden as her source. It therefore appears that the CHR relied upon unsworn hearsay testimony, and Plaintiff was never informed of the existence of either the witness or the testimony. (See id. ¶¶ 75-79.) Finally, Plaintiff contends that full discovery in this action will allow him to acquire new evidence from Defendants that was unavailable at the time of the CHR proceeding, most particularly funding and staffing data which are relevant to the issue of whether the Garden could reasonably have accommodated Plaintiff's need for an assistant. (See id. ¶ 99.) All of these factors suggest that the CHR proceeding was relatively informal, if not flawed, and did not afford Plaintiff a meaningful opportunity to litigate his claims. See Kosakow, 274 F.3d at 735-36; cf. Curry v. City of Syracuse, 316 F.3d 324, 332 (2d Cir. 2003) (finding that an administrative proceeding had preclusive effect because plaintiff had a hearing, "was represented by competent counsel," and "had the opportunity to call witnesses, to testify himself, to present evidence, and to cross-examine" opposing witnesses).
Defendants rely on a variety of cases in which a New York administrative agency's no-probable-cause determination precluded a plaintiff from litigating in federal court. See, e.g., Kirkland v. City of Peekskill, 828 F.2d 104 (2d Cir. 1987);DeCintio v. Westchester County Med. Ctr., 821 F.2d 111 (2d Cir. 1987). The Second Circuit's Kosakow decision, however, distinguished Kirkland and DeCintio. See Kosakow, 274 F.3d at 729-30. In Kirkland, the complainant appealed the administrative determination in state court before bringing a claim in federal court, see Kirkland, 828 F.2d at 109, and inDeCintio the complainant received two formal hearings and admitted that he had "fleshed out" the relevant issues. DeCintio, 821 F.2d at 116-18. The other cases Defendants cite are similarly distinguishable because they considered administrative proceedings that were more comprehensive and formal than Plaintiff's CHR investigation.See Alvarado v. Manhattan Worker Career Ctr., No. 01 Civ. 9288 (CBM), 2002 WL 31760208, at *12 (S.D.N.Y. Dec. 10, 2002) (complainant was represented by counsel and offered no evidence of any deficiencies in his New York State Division of Human Rights ("DHR") proceeding); Evans v. N.Y. Botanical Garden, No. 02 Civ. 3591 (RWS), 2002 WL 31002814, at **23 (S.D.N.Y. Sept. 4, 2002) (complainant was represented by counsel and was afforded the opportunity to confront opposing witnesses at a conference during his DHR proceeding); Adame v. Tootsie Roll, No. 98 C 1942, 1999 WL 14493, at *3 (N.D. Ill. Jan. 7, 1999) (complainant was represented by counsel and was given a formal hearing by the Illinois Department of Human Rights); Mendoza v. SSC B Lintas, 799 F. Supp. 1502, 1510 (S.D.N.Y. 1992) (DHR gave complainant a formal hearing and considered his claims for over three years). By contrast, in Kosakow the Second Circuit found no preclusive effect in a no-probable-cause administrative determination made, like Plaintiff's determination, "absent a formal hearing and absent any subsequent review in state court."Kosakow, 274 F.3d at 730.
Because the issue of whether Plaintiff was subjected to unlawful discrimination was not "adequately tested" or "fully aired" during the CHR proceeding, Plaintiff has met his burden of establishing that he lacked a full and fair opportunity to litigate his claims. Id. at 736. Consequently, Plaintiff is not collaterally estopped from bringing his proposed claims before this Court.
III. Plaintiff's § 1983 Claims
To state a claim under 42 U.S.C. § 1983, "a plaintiff must allege that he was injured by a state actor or a private party acting under color of state law." Ciambriello v. County of Nassau, 292 F.3d 307, 323 (2d Cir. 2002). A § 1983 action may only be brought against a private entity if "there is such a `close nexus between the State and the challenged action' that seemingly private behavior `may fairly be treated as that of the State itself.'" Brentwood Acad. v. Tenn. Secondary Sch. Athletic Ass'n, 531 U.S. 288, 295, 121 S.Ct. 924, 930 (2001) (quotingJackson v. Metro. Edison Co., 419 U.S. 345, 351, 95 S. Ct. 449, 453 (1974)). A "close nexus" exists if the State holds controlling, coercive, or influential power over the entity, willfully engages in joint conduct with the entity, is entwined in the entity's management, or delegates a public function to the entity. See Tancredi v. Metro. Life Ins. Co., 316 F.3d 308, 313 (2d Cir. 2003), cert. denied, 539 U.S. 942, 123 S. Ct. 2610. The existence of state action must be pleaded with specificity in the complaint, rather than with conclusory statements. See id.
Where the defendant in a § 1983 action is a corporation, a sufficiently close nexus with the state may be found if (1) the government created the corporation by special law, (2) to further governmental objectives, and (3) retains permanent authority to appoint a majority of its directors. See Horvath v. Westport Library Ass'n, 362 F.3d 147, 153 (2d Cir. 2004); see also Lebron v. Nat'l R.R. Passenger Corp., 513 U.S. 374, 400, 115 S. Ct. 961, 974-75 (1995) (setting forth the above three-pronged test for state action by a corporation). Although the Garden is a corporation (see Letter from Volpe to Siegel, dated Mar. 1, 2002), neither party addresses the Lebron test for state action in its memorandum of law, and Plaintiff pleads no facts in the Proposed Amended Complaint that could satisfy the Lebron requirements. Furthermore, the record contains no indication that the Garden was created by special law or that the City of New York retains permanent authority to appoint a majority of its directors. In fact, the Garden's by-laws grant the authority to elect a majority of the Garden's board to the Garden's members. (See Const. By-Laws of the N.Y. Botanical Garden ("Garden By-Laws") art. III.)
The Proposed Amended Complaint does not aver that the City or State of New York owns and operates the Garden. Instead, it contends that the Garden is a state actor because it obtains "a significant portion of its funding from various government sources . . . [and] performed a public function, including but not limited to, the provision of educational and cultural services to members of the general public." (Proposed Am. Compl. ¶ 12.) Defendants confirm that the Garden receives public as well as private funding and "is dedicated to environmental education" as a member of the Cultural Institutions Group of the City of New York (see Letter from Volpe to Siegel, dated Mar. 1, 2002), but nevertheless argue that the Garden is a private entity and not a state actor.
Plaintiff's counsel maintains "[u]pon information and belief, [that] the grounds and buildings of the Garden are owned by the City of New York." (Wallace Reply Aff. ¶ 50.) The Court, however, cannot consider this assertion, since it is neither included in the Complaint nor supported by competent evidence.See Fed.R.Civ.P. 56(e); Patterson, 375 F.3d at 219. Furthermore, Plaintiff has made no formal discovery request for documents that would establish ownership of the Garden's grounds and buildings. Finally, even if Plaintiff's assertion were true, the mere fact of City ownership of Garden property would be insufficient to establish the Garden as a state actor, if the City did not control or profit from the Garden's activities,see Murphy v. N.Y. Racing Ass'n, Inc., 76 F. Supp. 2d 489, 495 (S.D.N.Y. 1999) (citing Rendell-Baker v. Kohn, 457 U.S. 830, 843, 102 S. Ct. 2764, 2772 (1982)), or the Garden did not engage in the alleged conduct pursuant to a municipal policy or custom. See Patterson, 375 F.3d at 226 (citing Monell v. Dep't of Soc. Servs., 436 U.S. 658, 692-94, 98 S. Ct. 2018, 2037-38 (1978)).
It is clearly established that a private entity may receive large amounts of public funding without being deemed a state actor for § 1983 purposes, even if such funding accounts for nearly all of the entity's income. See Rendell-Baker v. Kohn, 457 U.S. 830, 840-41, 102 S. Ct. 2764, 2772 (1982); Horvath, 362 F.3d at 152. Public funding alone does not indicate that a government entity exercises the degree of influence or coercion over a private entity necessary to establish state action. See Horvath, 362 F.3d at 152. Therefore, even under the assumption that the Garden receives "a significant portion of its funding from various government sources" (Proposed Am. Compl. ¶ 12), the Garden cannot be considered a state actor.
Plaintiff's assertion that the Garden is a state actor because it performs a public function also lacks merit. A private entity does not become a state actor merely by providing educational services to the public. See Rendell-Baker, 457 U.S. at 942, 102 S. Ct. at 2772. Nor does a private entity become a state actor because the government officially recognizes or regulates the entity's provision of services to the public. See Jackson, 419 U.S. at 358, 95 S. Ct. at 457. Instead, for a private entity to act under color of state law because it serves a public function, the entity's function must have been "traditionally the exclusive prerogative of the State."Rendell-Baker, 457 U.S. at 842, 102 S. Ct. at 2772 (quotingJackson, 419 U.S. at 353, 95 S. Ct. at 455); see also Ruhlmann v. Ulster County Dep't of Soc. Servs., 234 F. Supp. 2d 140, 166 (N.D.N.Y. 2002) (noting that "an extraordinarily low number of `functions' have been held to be `public'");Okunieff v. Rosenberg, 996 F. Supp. 343, 353 (S.D.N.Y. 1998) ("The fact that the private party has powers coextensive with the state is irrelevant to determine that state actions exists. Exclusivity is required.") (citation omitted), aff'd, 166 F.3d 507 (2d Cir. 1999). The operation of a botanical garden is not a function traditionally and exclusively exercised by government. See Horvath, 362 F.3d at 152 (a service that a private person or enterprise can typically provide is not a public function). Therefore, the Garden's provision of educational services does not serve to satisfy the public function test.
Accordingly, even accepting the factual claims in the Proposed Amended Complaint and Plaintiff's supplemental documents as true, the Garden does not qualify as a state actor and cannot be sued under § 1983. Because there is no genuine issue of material fact in regard to whether the Garden is a state actor, leave to amend the Complaint to add a cause of action against the Garden under § 1983 is denied.
Plaintiff contends that "there is additional discovery that must be conducted before the exact nature of the Garden is confirmed." (Pl.'s Reply Mem. at 20.) Specifically, Plaintiff maintains that Defendants have failed to satisfy his discovery requests for the Garden's charter and financial documents detailing the extent of the Garden's government funding. (See id.) The Court notes, however, that Plaintiff did not include the charter in his formal document request, and in any case, Defendants were required to produce the Garden's by-laws, which lend no support to Plaintiff's claim of state action. Furthermore, as discussed, production of documents revealing the extent of Defendants' government funding will not assist Plaintiff in bringing his § 1983 claim, as public funding alone does not establish state action. Consequently, there is no reason to believe that additional discovery would provide support for Plaintiff's claim.
It follows that Plaintiff's Proposed Amendment to allege claims under § 1983 against Defendant Long would also be futile. To allege a claim under § 1983 against an individual defendant, a plaintiff must show that the defendant is a person acting under color of state law who was personally involved in the deprivation of a federal right. See Back v. Hastings on Hudson Union Free Sch. Dist., 365 F.3d 107, 122 (2d Cir. 2004). A person acts under color of state law when he "abuses a position given to him by the State." Kern v. City of Rochester, 93 F.3d 38, 43 (2d Cir. 1996) (quoting West v. Atkins, 487 U.S. 42, 49-50, 108 S. Ct. 2250, 2255 (1988)).
Plaintiff contends that Long is a state actor and may be sued under § 1983 solely "by virtue of his employment as President of Defendant Garden." (Proposed Am. Compl. ¶ 14.) Since Plaintiff cannot demonstrate that the Garden is a state actor, and Long was not appointed President by the City or State (see Garden By-Laws art. VI, §§ 1-2), Long cannot be considered to have acted under color of state law. See Kern, 93 F.3d at 43. Plaintiff is therefore denied leave to amend the Complaint to add a cause of action under § 1983 against Defendant Long.
Conclusion
For the foregoing reasons, Plaintiff's motion for leave to amend the Complaint is granted with regard to his claim under 42 U.S.C. § 1981, and denied with regard to his claim under 42 U.S.C. § 1983.
SO ORDERED.