To be Argued by:
ROBERT A. SPOLZINO
(Time Requested: 30 Minutes)
Court of Appeals
of the
State of New York
O
In the Matter of the Application of
VILMA LANCASTER, DONALD MILLER
and WILLIAM WHITE,
Petitioners-Appellants,
for a Judgment pursuant to Article 78 of the CPLR vacating
a Directive dated January 5, 2010 and compelling the
Incorporated Village of Freeport to Immediately comply
with New York Public Officers Law Section 18 and
Chapter 130, et seq. of the Village Code of the Incorporated
Village of Freeport
– against –
INCORPORATED VILLAGE OF FREEPORT and
BOARD OF TRUSTEES OF THE INCORPORATED
VILLAGE OF FREEPORT,
Respondents-Respondents.
(See inside Cover for Completion of Caption)
BRIEF FOR PETITIONERS-APPELLANTS
WILSON ELSER MOSKOWITZ EDELMAN & DICKER LLP
Attorneys for Petitioners-Appellants
3 Gannett Drive
White Plains, New York 10604
Tel: (914) 323-7000
Fax: (914) 323-7001
robert.spolzino@wilsonelser.com
Of Counsel:
PETER A. MEISELS
KATHLEEN A. DALY
Appellate Division, Docket No.: 2010-09082
Nassau County Clerk’s Index Nos.: 2876/10 & 5018/10
APPELLATE INNOVATIONS
(914) 948-2240 7316
_________________________
In the Matter of the Application of
WILLIAM F. GLACKEN, RENAIRE FRIERSON-DAVIS
and HARRISON J. EDWARDS,
Petitioners-Appellants,
for a Judgment pursuant to Article 78 of the CPLR
compelling the Incorporated Village of Freeport to
immediately comply with the New York Public Officers
Law § 18[3] and [4]; Chapter 130 of the Code of Freeport,
and §§ 103, 105, and 107 of the Public Officers Law for the
State of New York
– against –
INCORPORATED VILLAGE OF FREEPORT, ANDREW HARDWICK,
MAYOR, ROBERT KENNEDY, TRUSTEE, CARMEN PINEYRO,
TRUSTEE, WILLIAM H. WHITE, TRUSTEE, JORGE MARTINEZ,
TRUSTEE, each in their official capacity as “Trustee” for the Incorporated
Village of Freeport and collectively, together with Mayor Hardwick,
comprising the Board of Trustees for the incorporated Village of Freeport;
CUSTOMIZED CLAIMS SERVICES, LLC, in its capacity as claims
administrator for the incorporated Village of Freeport, and HOWARD
COLTON, in his official capacity as Village Attorney for the
Incorporated Village of Freeport,
Respondents-Respondents.
_________________________
STATEMENT PURSUANT TO CPLR 5531
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-------+~-------
In the Matter of the Application of
VILMA LANCASTER, DONALD MILLER, WILLIAM WHITE
and JORGE MARTINEZ,
Petitioners-Appellants,
for a judgment pursuant to Article 78 of the CPLR vacating a Directive dated January
5, 2010 and compelling the Incorporated Village of Freeport to immediately comply
with New York Public Officers Law Section 18 and Chapter 130, et seq. of the
Village Code of the Incorporated Village of Freeport
-against-
INCORPORATED VILLAGE OF FREEPORT and BOARD OF TRUSTEES OF
THE INCORPORATED VILLAGE OF FREEPORT,
Respondents-Respondents.
(See inside cover for continuation of caption)
1. The index numbers of the case are Nassau County Clerk's Index Nos. 2876/2010
and 5018/2010. The docket number of the matter in the Appellate Division,
Second Department is 2010-09082.
2. The full names of the original parties are set forth above.
3. The proceeding was commenced in the New York State Supreme Court,
Nassau County. ·
4. The proceeding was commenced by the filing of notice of petitions and petitions on
or about February 8, 2010 and March 12, 2010. Issue was joined by service of
respondents' answers on or about March 12,2010 and AprilS, 2010.
5. Nature of the action: Statutory; Public Officers Law. Petitions arise out of a
Directive of the Board of Trustees where the defense and indemnification of the
petitioners in the Federal actions was revoked and terminated in violation, of the
First Amendment the United States Constitution, Article 1 Section 8 of the New
York State Constitution, Public Officers Law § 18 and 100 et seq., and Freeport
Village Code §130 et seq.
6. The appeal is to the Court of Appeals of the State ofNew York, pursuant to CPLR
560l(b)(l) from an order of the Appellate Division, Second Judicial Department,
dated and entered on February 21, 2012, which unanimously affrrmed the judgment
of the Supreme Court, Nassau County (Cozzens, Jr., J.) dated August 26,2010 and
entered in the office of the Clerk of the County of Nassau on August 27, 2012,
which order finally determines this action and where there is directly involved the
construction of the First Amendment to the Constitution of the United States and
article I, section 8 of the Constitution of the State ofNew York.
7. The appeal is on the full reproduced record.
In the Matter ofthe Application of
WILLIAM F. GLACKEN, RENAIRE FRIERSON-DAVIS
and HARRISON J. EDWARDS,
Petitioners-Appellants,
for a judgment pursuant to Article 78 of the CPLR compelling the Incorporated
Village of Freeport to immediately comply with the New York Public Officers Law
§18 [3] and [4]; Chapter 130 of the Code of Freeport, and§§ 103, 105 and 107 of the
Public Officers Law for the State of New York
-against-
INCORPORATED VILLAGE OF FREEPORT, ANDREW HARDWICK, MAYOR,
ROBERT KENNEDY, TRUSTEE, CARMEN PINEYRO, TRUSTEE, WILLIAM H.
WHITE, TRUSTEE, JORGE MARTINEZ, TRUSTEE, each in their official capacity as
"Trustee" for the Incorporated Village of Freeport and collectively, together with Mayor
Hardwick, comprising the Board of Trustees for the Incorporated Village of Freeport;
CUSTOMIZED CLAIMS SERVICES, LLC, in its capacity as claims administrator for
the Incorporated Village ofFreeport and HOWARD COLTON, in his official capacity as
Village Attorney for the Incorporated Village of Freeport,
Respondents-Respondents.
Table of Contents
Preliminary Statement ............................................................................................... 1
Questions Presented .................................................................................................. 1
Jurisdiction of the Court ............................................................................................ 2
Summary of Argument. ............................................................................................. 3
Statement of Facts ..................................................................................................... 5
Argument. ................................................................................................................ 19
I Freeport Violated the Appellants' Rights to Freedom of Speech
by Revoking their Defense and Indemnification because they
Refused Freeport's Demand that they Refrain from Criticizing
the Settlement ................................................................................................. 19
A. Freeport's requirement of a "non-disparagement"
clause was an impermissible prior restraint on free speech ....... 23
B. Penalizing the appellants for refusing to refrain
from critical speech is unconstitutional content-based
discrimination ............................................................................. 26
C. Freeport could not constitutionally deprive the
appellants of the defense and indemnification to
which they were entitled because the appellants
insisted on maintaining their free speech rights ......................... 32
D. Lancaster and White did not lose their First
Amendment rights to speak about the settlement
because they were public officials .............................................. 35
(1) The settlement agreement was a matter
of public concern .............................................................. 36
(2) Freeport did not meet its burden of showing that
its interests outweighed those of Lancaster. ..................... 38
(3) As a legislator, White had a duty to speak
on issues of public concern ............................................... 38
II The Appellants' Rejection of a Stipulation Prohibiting
them from Criticizing the Settlement is not a Failure to
Cooperate that Entitles Freeport to Revoke their Defense
and Indemnification under Public Officers Law § 18 ..................................... 40
A. The refusal to accept a conditional settlement
is not a failure to cooperate in the defense of the action ............ 42
B. Since Freeport never "acted diligently to bring about" the
appellants' cooperation it wrongfully revoked their defense
and indemnification .................................................................... 46
C. The appellants' attitude was not one of willful and avowed
obstruction ................................................................................... 49
III Freeport violated the Open Meetings Law by
Revoking the Appellants' Defense and
Indemnification in an Illegal Executive Session ............................................. 51
A. Revoking the defense and indemnification of an employee
or public official is not "proposed, pending or current
litigation," with respect to which an executive session is
permissible .................................................................................. 52
B. Freeport engaged in a pattern of violating the Open Meetings
Law .............................................................................................. 55
C. The resolution adopted in executive session should be declared
null and void and the appellants should be awarded their
attorneys' fees and litigation expenses ....................................... 58
Conclusion ............................................................................................................... 60
11
Table of Authorities
Cases
Aebisher v. Ryan,
622 F.2d 651 (2d Cir. 1980) ................................................................................ 24
Ashcroft v. American Civil Liberties Union,
542 U.S. 656 (2004) ............................................................................................ 32
Bond v. Floyd,
385 U.S. 116 (1966) ............................................................................................. 39
Boos v. Barry,
485 U.S. 312 (1988) ............................................................................................. 32
Burns v. Citarella,
443 F. Supp. 2d 464 (S.D.N.Y. 2006) ........................................................... 35, 39
Caraccilo v. Vill. of Seneca Falls,
582 F. Supp. 2d 390 (W.D.N.Y. 2008) ................................................................ 38
Citizens United v. Federal Election Commission,
558 U.S. 310, 130 S. Ct. 876 (2010) ...................................................... 21, 27, 31
Connickv. Myers,
461 U.S. 138 (1983) ............................................................................................. 37
Cooper v. Town of E. Hampton,
83 F.3d 31 (2d Cir. 1996) ................................................................................... 30
Cooper v. Town of East Hampton,
888 F. Supp. 376 (E.D.N.Y. 1995) ......................................................... 29, 30, 31
Csorny v. Shoreham-Wading River Cent. Sch. Dist.,
305 A.D.2d 83 (2d Dep't 2003) ........................................................................... 53
David Zehner v. Board of Education of Jordan-Elbridge Central School District,
91 A.D.3d 1349 (41h Dep't 2012) ................................................................... 54, 58
111
Dreyer v. City of Saratoga Springs,
43 A.D.3d 586 (3d Dep't 2007) ........................................................................... 43
Feliberty v. Damon,
72 N.Y.2d 112 (1988) .......................................................................................... 44
Frank v. State of New York,·
1996 U.S. Dist. Lexis, 7849 (N.D.N.Y. May 24, 1996) ...................................... 43
Garcetti v. Cebellos,
547 U.S. 410 (2006) ....................................................................................... 36, 38
Garcia v. Abrams,
98 A.D.2d 871 (3d Dep't 1983) ........................................................................... 47
Giordano v. O'Neill,
131 A.D.2d 722 (2dDep't 1987) ......................................................................... 43
Goetschius v. Bd. of Educ. of the Greenburgh Eleven Union Free School Dist.,
244 A.D.2d 552 (2d Dep't 1997) 56
Gordon v. Village of Monticello,
87 N.Y.2d 124 (1995) ................................................................................... 53, 60
Higgins v. Town of Southampton,
613 F. Supp. 2d 327 (E.D.N.Y. 2009) ................................................................. 43
Immuno AG v. Moor-Jankowski,
77 N.Y.2d 235, cert. denied, 500 U.S. 954 (1991) .............................................. 21
Jackler v. Byrne,
658 F.3d 225 (2d Cir. 2011), cert. denied, 132 S. Ct. 1634 (2012) ..................... 37
Kohnberg v. Murdock,
5 N.Y.2d 859 (1958) .............................................................................................. 3
LoRusso v. New York State Office of Court Administration,
229 A.D.2d 995 (41h Dep't 1996) ......................................................................... 43
Lusk v. Village of Cold Spring,
475 F.3d 480 (2d Cir. 2007) ................................................................................ 23
lV
Madole v. Barnes,
20 N.Y.2d 169 (1967) .......................................................................................... 26
Mathis v. State of New York,
140 Misc.2d 333 (Sup. Ct. Albany Cty. 1988) .................................................... 44
Matter of Kaur v. New York State Urban Dev. Corp.,
15 N.Y.3d 235 (2010) ............................................................................................ 3
Matter of Nicholson v. State Commission on Judicial Conduct,
50 N.Y.2d 597 (1980) ............................................................................................ 3
Matter of O'Brien v. Spitzer,
7 N.Y.3d 239 (2006) ............................................................................................ 43
Nagle v. Marron,
663 F.3d 100 (2d Cir. 2011) ................................................................................ 35
Nebraska Press Ass'n v. Stuart,
427 U.S. 539 (1976) ............................................................................................. 23
Nelson Elec. Contr. Corp. v. Transcontinental Ins. Co.,
231 A.D.2d 207 (3d Dep't 1997) ......................................................................... 46
New York City Housing Auth. v. Housing Auth. Risk Retention Group, Inc.,
203 F.3d 145 (2d Cir. 2000) .......................................................................... 44,47
New York Times v. Sullivan,
376 u.s. 254 (1964) ............................................................................................. 20
O'Neill v. Oakgrove Constr., Inc.,
71 N.Y.2d 521 (1988) .................................................................................... 21,43
Polak v. Schenectady,
181 A.D.2d233 (3dDep't 1992) ........................................................................ 43
Police Dept. of Chicago v. Mosley,
408 U.S. 92 (1972) ............................................................................................... 27
Republican Party v. White,
536 U.S. 765 (2002) ............................................................................................. 39
v
Reuland v. Hynes,
460 F.3d 409 (2d Cir. 2006), cert. denied, 552 U.S. 819 (2007) ......................... 36
Rosenberger v. Rector and Visitors of University of Virginia,
515 u.s. 819 (1995) ............................................................................................. 20
Saucedo v. Winger,
22 Kan.App.2d 259,268,915 P.2d 129, 136 (Kan. App. 1996) ......................... 44
Schoolcraft v. City of New York,
2012 U.S. Dist. LEXIS 128557 (S.D.N.Y. Sept. 7, 2012) ................................. 24
Smith v. City Univ. ofNew York,
92 N.Y.2d 707 (1999) .......................................................................................... 53
Snyder v. Phelps,
_U.S._, 131 S. Ct. 1207 (2011) ................................................................. 36
Sousa v. Roque,
578 F.3d 164 (2d Cir. 2009) ................................................................................ 38
Southeastern Promotions, Ltd. v. Conrad,
420 U.S. 546 (1975) ............................................................................................. 25
Stassi v. Vill. of N Syracuse,
2009 U.S. Dist. Lexis 89068 (N.D.N.Y. Sept. 25, 2009) .................................... 43
Thrasher v. United States Liability Insurance Co.,
19 N.Y.2d 159 (1967) .................................................................................... 46,48
Turner Broadcasting System, Inc. v. Federal Communications Commission,
512 u.s. 622 (1994) ............................................................................................. 31
United States v. Quattrone,
402 F.3d 304 (2d Cir. 2005) ................................................................................ 23
Walton v. New York State Dep't of Correctional Services,
8 N.Y.3d 186 (2007) .............................................................................................. 3
Weatherwax v. Stony Point,
97 A.D.2d 840 (2d Dep't 1983) ........................................................................... 54
Vl
Zieper v. Metzinger,
474 F.3d 60 (2d Cir. 2007) ............................................................................ 23, 24
Zimmer! ink v. Zapotosky,
2011 U.S. Dist. LEXIS 53186 (W.D. Pa. Aprill1, 2011) .................................. 39
Statutes
CPLR Art. 78 ............................................................................................................. 1
Public Officers Law§ 18 ................................................................................. passim
Public Officers Law§ 100 ................................................................................. 51-52
Public Officers Law§ 103 ...................................................................................... 52
Public Officers Law§ 105 ................................................................................ 52, 57
Public Officers Law§ 107 ................................................................................ 52, 59
Constitutional Provisions
U.S. Const. art. I ............................................................................................... passim
N.Y. Const. art. I, § 8 .............................................................................................. 22
Other Authorities
Committee on Open Government, AO 2754 .......................................................... 58
Committee on Open Government, AO 5280 .......................................................... 59
Treatises
14 Couch on Ins.§ 203:8 ........................................................................................ 44
Cohen & Karger, The Powers of the New York Court of Appeals,§ 37 (3d ed.
1997) ...................................................................................................................... 3
Vll
Preliminary Statement
In two related hybrid proceedings commenced pursuant to CPLR Article 78,
the appellants appeal from an order of the Appellate Division, Second Department,
dated February 21, 2012 which affirmed the dismissal of those proceedings.
Questions Presented
1. Did Freeport violate the appellants' rights to freedom of speech by
threatening to revoke their defense and indenmification in a federal civil rights
lawsuit when they refused to agree that they would never criticize Freeport's
settlement of that lawsuit? The appellants submit that it did.
2. Did Freeport satisfy its heavy burden of establishing that by refusing
to give up their free speech rights the appellants had failed to cooperate in the
defense of the lawsuit, permitting Freeport to revoke the defense and
indenmification it was providing to the appellants pursuant to Public Officers Law
§ 18 and the companion provisions of the Freeport Code? The appellants submit
that it did not.
3. Did Freeport violate the Open Meetings Law, entitling the appellants
to recover their attorneys' fees and litigation expenses in this proceeding, by
revoking the appellants' defense and indenmification in executive session, after a
persistent and repeated pattern of Open Meetings Law violations in connection
with its settlement of the federal lawsuit? The appellants submit that it did.
Jurisdiction of the Court
The appellants are four former and two current officials and employees of
the Village of Freeport. The constitutional issue, as more fully discussed below, is
whether Freeport violated the appellants' federal and state constitutional rights to
freedom of speech by revoking Freeport's defense and indemnification of the
appellants in two federal lawsuits because they would not agree to forfeit their
right to comment critically about a $3.5 million settlement negotiated between
Freeport and the plaintiffs in the underlying lawsuits, in which Freeport was also a
defendant.
This appeal requires the Court to determine whether Freeport's action in
revoking the appellants' defense and indemnification constitutes the
unconstitutional imposition of a prior restraint on speech critical of Freeport, or
unconstitutional retaliation against the appellants for exercising their free speech
rights and seeking to preserve them, or an unconstitutional attempt to coerce the
appellants to remain silent on a matter of public interest, or unconstitutional
punishment for the appellants' insistence on maintaining their free speech rights, or
all four. These constitutional issues were properly raised in this proceeding
pursuant to CPLR Article 78. R. 7, 14. See, e.g., Matter of Kaur v. New York State
2
Urban Dev. Corp., 15 N.Y.3d 235 (2010); Walton v. New York State Dep't of
Correctional Services, 8 N.Y.3d 186, 203 (2007)(Read, J., concurring)("[W]e have
often adjudicated constitutional claims under CPLR article 78"); Matter of
Nicholson v. State Commission on Judicial Conduct, 50 N.Y.2d 597 (1980). The
issues have been duly preserved. R. 24-25, ~ 21; R. 32, ~ 43; R. 221, ~~ 6-10; R.
406, ~~ 17-18.
This appeal also properly raises two non-constitutional issues. See generally
Cohen & Karger, The Powers of the New York Court of Appeals, § 37 (3d ed.
1997) ("so long as such a constitution.al question is directly involved, an appeal as
of right will lie even though other questions may also be involved and all questions
in the case which the Court of Appeals is empowered to review will be open for
consideration, whether or not they are of a constitutional nature"); Kohnberg v.
Murdock, 5 N.Y.2d 859 (1958). First, does the refusal by a public employee or
official to agree to relinquish his or her free speech rights constitute a "failure to
cooperate" within the meaning of Public Officers' Law§ 18? Second, did Freeport
violate the Open Meetings Law when it revoked and terminated the appellants'
defense and indemnification in executive session?
Summary of Argument
Freeport revoked the defense and indemnification of the appellants in a
federal lawsuit because one of them criticized the proposed settlement of that
3
lawsuit by Freeport and all of them refused to agree not to criticize the settlement
in the future. If the First Amendment and the corresponding provision of the New
York State Constitution mean anything, however, they mean that the government
can neither retaliate against an individual for his or her speech nor condition the
continued receipt of some government benefit or service on the individual's
agreement not to speak. Because that is what Freeport did here, the resolution of
the Board of Trustees revoking the defense and indemnification of the appellants
violates both the United States Constitution and the New York State Constitution
and must be set aside.
The resolution should have been set aside by the Supreme Court and the
Appellate Division, however, even without reaching the constitutional issue. The
refusal of a public official or public employee to accept a settlement conditioned
on his or her silence is not a failure to cooperate within the meaning of Public
Officers Law § 18(5)(ii). Even if it were, the resolution by which the Board of
Trustees revoked the appellants' defense and indemnification was invalid because
it was adopted in an executive session that was called in violation of the
requirements of the Open Meetings Law. Because that illegal meeting was part a
pattern of illegal meetings by which Freeport effected the settlement of the federal
lawsuit, the resolution adopted at that meeting should be set aside and Freeport
4
should be required to pay the litigation costs incurred by the appellants in this
proceeding.
Statement of Facts
On March 18, 2009, appellant William Glacken, who had been elected as
Mayor of the Village of Freeport in 1997, lost his bid for election to a fourth term.
R. 232, ~2, 238, ~ 37. Appellant Renaire Frierson-Davis ("Frierson-Davis") lost her
positions as Village Trustee and Deputy Mayor in the same election. R. 232, ~ 4.
Appellant Donald Miller ("Miller") lost his seat as a Trustee in the 2009 election as
well. R. 20, ~ 2. Appellant Harrison J. Edwards ("Edwards") was the Village
Attorney in the Glacken Administration from April 1997 to April 2009. R. 232, ~
6. Appellant Vilma Lancaster ("Lancaster") was Freeport's Treasurer during both
the Glacken Administration and remained in that position during the administration
of Mayor Andrew Hardwick that followed. R. 20, ~ 1. Appellant William White
("White") was, and continues to serve as, a member of Freeport's Board of
Trustees. 1
While all of the appellants held public office, they, along with Freeport and
Howard Colton, who had been the Deputy Village Attorney in the Glacken
1 Glacken, Frierson-Davis, Miller, Edwards, Lancaster and White will be collectively
referred to as "appellants." Jorge Martinez ("Martinez") was a petitioner in these proceedings,
but the Water Works Actions were subsequently discontinued against him by the Water Works
plaintiffs in April2011 and he has not pursued his appeal here.
5
Administration, were sued by Water Works Realty Corp. and Gary Melius in two
actions in the New Yorlc State Supreme Court. Both actions were removed to the
United States District Court for the Eastern District of New York (the "Water
Works actions"). The complaints asserted claims under 42 U.S.C. § 1983, 18
U.S.C. § 1861 and state law.
By Local Law 4-1979, which had been enacted on May 14, 1979, Freeport
had adopted the provisions of Public Officers Law§ 18 with respect to the defense
and indemnification of public officers and employees. See Freeport Code§§ 130-6
and 130-7. Pursuant to this authority, Freeport had provided the appellants with
defense and indemnification in the Water Works actions and had retained the
Wilson Elser Law Firm to defend Freeport and all of its officials. R. 39-41. Upon
Mayor Hardwick's election, along with Trustees Robert Kennedy and Carmen
Pineyro, R. 238, ~ 37, Colton replaced Edwards as Village Attorney and, based
upon concerns of a potential conflict of interest, Freeport retained the firm of
Warren and Warren (the "Warren Firm") to represent it in the Water Works
actions. Several months later, the Warren Firm took over the representation of
Colton, as well. Freeport authorized Wilson Elser to continue to represent the
appellants. R. 404, ~ 3.
Led by the new administration and with the assistance of its new counsel,
Freeport entered into settlement discussions with the Water Works plaintiffs. R.94,
6
~ 11; R. 208-209. A monetary settlement, in the amount of $3.5 million, was
proposed in or about August 2009. R. 331. The settlement proposal was forwarded
to Peter Meisels of Wilson Elser as counsel for the appellants. R. 208-09.
On September 3, 2009, Glacken wrote to Mayor Hardwick recommending
against the proposed $3.5 million pay-out. In his letter, Glacken stated that while
he understood that he "would stand to benefit personally from such a settlement
and will, of course, perform all of my obligations as required by the Public
Officers Law, I do not believe that it is in the best interests of the people of
[Freeport] to enter into such a settlement, particularly under the terms proposed."
R. 331-32. Glacken explained:
I should remind you that all of the cases arose out of an
attempt by [Freeport] and the County of Nassau to collect
back taxes owed by Water Works Realty Corp. over a
period of several years. [Freeport] actively collected
over $600,000 in tax arrears from Water Works before
any litigation was commenced, and was actually dropped
as a defendant in the first lawsuit because it had done
nothing illegal and merely exercised its right (and
obligation) to collect the taxes it was owed.
From the standpoint of [Freeport] ... and [Freeport]
defendants, in my opinion, the cases are completely
defensible, and they can and should be vigorously
defended. The public interest requires it, particularly in
view of the fact that Water Works is once again in arrears
to [Freeport] for more than $900,000 in taxes. If
[Freeport] is to preserve its ability to collect back taxes
from every property owner in the future, it must
7
successfully defend these cases against Water Works and
[Gary] Melius.
R. 332. Glacken sent copies of this letter to each of the sitting members of Board,
as well as to the Village Clerk. R. 332.
The Board of Trustees held a special meeting on September 18, 2009 at 7:45
a.m. R. 419. In addition to the Mayor and the Trustees, Colton, Lancaster and the
Clerk were in attendance. Id. The meeting was almost immediately adjourned to
executive session to discuss two "litigation matters." Id. A resolution was offered
proposing that Freeport settle the Water Works actions by paying the plaintiffs
$3.5 million. The settlement would provide for the continued indenmification of
the appellants and would also have settled a separate defamation action that had
been commenced by Melius against Glacken in the Supreme Court, Nassau
County.2 R. 422. The resolution was adopted by the vote of Mayor Hardwick and
Trustees Kennedy and Pineyro, with Trustees Martinez and White abstaining. R.
423. Following this vote, the meeting was adjourned without returning to public
session. Id.
2 The defamation action arose out of remarks Glacken had made at a political debate held
on February 26, 2009 concerning his opinion about the Water Works actions. R. 198-200. The
Appellate Division, Second Department, recently granted summary judgment dismissing the
complaint in that action. Melius v. Glacken, 94 A.D.3d 959 (2d Dep't 2012).
8
Mr. Warren sent Mr. Meisels a draft of a proposed settlement agreement on
September 21, 2009. R. 218. For the first time, Mr. Warren raised an issue about
the need for what he described as "non-disparaging" language. He wrote:
Peter:
Here is the recently proposed Stipulation on
Water Works. Kindly review and let me lmow
your sentiments. I think we will need language in
the Stip to indicate that . . . the defendants will
support and not disparage the settlement.
Dennis
R. 218. Mr. Meisels immediately replied that he would circulate the draft to his
clients and would consider any language proffered, but advised Mr. Warren that
the appellants could not "agree to anything that might be construed [as] an
infringement of [their] First Amendment rights." R. 218.
Mr. Meisels received another draft of the proposed settlement agreement on
October 14, 2009. R. 208. He responded immediately with changes. R. 209. That
proposed agreement did not contain any "non-disparagement" language. R. 406, ,-r
14. After Mr. Meisels had provided his comments and proposed changes, Mr.
Warren advised him to disregard the draft. R. 406, ,-r 15. Mr. Meisels never
received another. R. 406, ,-r,-r 15, 17.
On November 5, 2009, the Board of Trustees held another special meeting at
which it immediately moved into executive session to discuss "one litigation
9
matter" and "one personnel matter." R. 424. During the course of this executive
session, the Board, again by the votes of Mayor Hardwick and Trustees Kennedy
and Pineyro, with Trustee White abstaining and Trustee Martinez absent, adopted a
resolution approving a new and different settlement of the Water Works actions on
behalf of Freeport and Colton which "supersede[ d] and completely replace[ d] the
September 18, 2009 resolution of the [Board]." R. 428. The Board adopted this
resolution even though no agreement had been reached with the appellants. R. 427.
Attached to the November 5, 2009 resolution was a statement by Mayor
Hardwick addressed to "all Village Residents," purporting to explain that he was
voting in favor of the resolution notwithstanding that "Melius is an individual who
is personally known to [him]" and that without his vote the resolution approving
the settlement could not be passed. R. 429. Mayor Hardwick concluded his
statement by stating that he "intend[s] to hold a public meeting to lay out the
matter in full." R. 430. No such public meeting has ever been held. The Board
adjourned the special meeting without returning to a public session. R. 430.
On November 10, 2009, Freeport, on behalf of itself and Colton settled the
Water Works actions for $3.5 million by entering into a stipulation with the
plaintiffs. R. 43-57. The appellants were not aware of the stipulation and did not
participate in its negotiation. R. 210. The stipulation required Freeport to pay the
plaintiffs $500,000 in two payments by January 31, 2010, and to pay the balance of
10
$3 million in equal installments over a period six years at 6.5 percent interest, with
a balloon payment to be made on February 1, 2016. R.52. It further provided that
if Freeport defaulted in any payment, and failed to cure that default, judgment
could be entered against it for $3.5 million and the Water Works plaintiffs would
be entitled to immediate execution on the judgment, with interest at the judgment
rate of nine percent. R.48, ~ 3.
This stipulation did not contain a non-disparagement clause, nor were the
parties bound by any confidentiality provisions. The stipulation also did not effect
a settlement as to the appellants. It did provide, however, that, "TIME BEING OF
THE ESSENCE", the appellants would be covered by the settlement agreement
only if, by November 16, 2009, each "execute[d] and deliver[ed]" to the plaintiffs
in the Water Works actions a stipulation of discontinuance in the form that was
annexed to the settlement agreement. R. 49, ~ 5, R. 53,~ 10 (emphasis in original).
That form incorporated the terms of the stipulation, but included an additional
provision by which each appellant "specifically represents and warrants that ...
he/she has signed this Stipulation voluntarily and of his/her own free will; and
he/she has no objections to the [Stipulation of Settlement] nor this Stipulation and
agrees not to ever interfere, nor challenge or criticize the terms of either Stipulation
in any manner." R. 59, ~ 4.
11
Mr. Meisels received the proposed stipulation on November 11, 2009, and
contacted Mr. Warren the following day. In addition to the tight time constraints
that were being imposed on the appellants, Mr. Meisels raised several concerns
with the stipulation. R. 210. Specifically, he stated:
It seems that the concerted effort by [Freeport] and the
plaintiffs to silence any comment by our clients in this
matter of public concern, particularly as to those who
hold public office, is misguided at best and could be
construed as a threat to our clients' First Amendment
rights. I suggest revisions to paragraph 4 to avoid even
the impression of an effort to impinge on anyone's right
to express themselves or to coerce any public official
from fulfilling his/her responsibilities.
The agreement between the plaintiffs and our clients
should include the standard language that this is not an
admission of wrongdoing by any party.
R. 211. Mr. Meisels also questioned the requirement that the appellants tender a
release to plaintiffs but that no reciprocal release would be provided to the
appellants. R. 211.
Mr. Warren, dismissed Mr. Meisels' concerns about an infringement of the
appellants' First Amendment rights, asserting that the paragraph imposing that
requirement was nothing more than a "non-disparagement clause" that was "both
conventional and proper." R. 214-15. Mr. Warren also warned Mr. Meisels that if
the appellants did not execute the stipulation of discontinuance-as is-there
would be consequences:
12
R. 216-17.
Self-evidently, if they fail to cooperate in this settlement
and timely sign and deliver their discontinuance
stipulations which would discontinue all claims against
them with prejudice without any cost to them, such will
be patently unreasonable and a breach of their duty of
cooperation to [Freeport], under the NY Public Officers
Law and Freeport Village Law and accordingly,
[Freeport] reserves all of its rights and remedies,
including but not limited to its rights to cease all
payments for defense or indemnity which accrue after
Monday November 16,2009.
Significantly, during this period, Mr. Meisels advised Mr. Warren, as well as
counsel for the Water Works plaintiffs, on a number of occasions that the
appellants stood ready and willing to execute an unconditional stipulation of
discontinuance with prejudice that would have ended the litigation. R. 407, "If 22.
See also R. 70. This offer was "consistently rejected." R. 407, "1[22. The appellants
declined to execute the stipulation of discontinuance because of the restriction that
it would have imposed on their freedom of speech. They continued to state that
they would "sign an unconditional Stipulation of Discontinuance." R. 241, "If 48.
Freeport's Board of Trustees met next on November 16, 2009. R. 431.
According to the unofficial minutes, the meeting was adjourned into executive
session for the purpose of discussing two "litigation matters" and one personnel
matter. R. 435. During this executive session, the Board "re-ratifTied]" the
resolution with respect to the Water Works actions that had been adopted during
13
the executive session on November 5, 2009. R. 435. Mayor Hardwick and Trustees
Kennedy and Pineyro again voted in favor of the resolution. Trustees White and
Martinez abstained. R. 439. The meeting was adjourned without returning to public
session. R. 441.
On November 17, 2009, Mayor Hardwick issued a press release in which he
"report[ed] to the taxpayers of Freeport" that the "Water Works 'Racketeering'
Lawsuits Settled." R. 193-95. Mayor Hardwick implicitly acknowledged that no
public discussion had been held on the settlement and that as "soon as all of the
post-settlement matters are completed, I intend to hold a public meeting to discuss .
. . the Hardwick administration's successful avoidance of having to issue bonds
and/or raise taxes to pay for the Water Works settlement." R. 194-95.
The Board met again on January 4, 2010. R. 412. According to the
unofficial minutes, the meeting was adjourned into executive session to discuss
three personnel matters and one "litigation matter." R. 414. The "litigation matter"
was the revocation and termination of the appellants' defense and indenmification.
R.416-17. According to the unofficial minutes, the Board made the following
"findings":
• Glacken and Edwards "had an opportunity to address the Board ...
but elected not to do so"
• The appellants "after being given the opportunity to s1gn the
[stipulation of discontinuance] elected" not to do so;
14
• The "failure to sign the [stipulation of discontinuance] has resulted
in the additional expenditure of [Freeport] funds to defend the
action"·
'
• Freeport "is not authorized to indemnify the [appellants]".
R.417.
Based upon these findings, Mayor Hardwick and Trustees Kennedy and
Pineyro, over the opposition of Trustees White and Martinez, adopted a resolution
revoking and terminating the defense and indemnification of the appellants. R.417.
Freeport's claims administrator notified each of the appellants of the resolution by
letter dated January 7, 2010. R. 65-67; R. 241, ~ 49. The letter stated that the Board
had "passed a Directive, whereby the indemnification and defense of those
defendants electing not to participate in the settlement of [the Water Works
Actions] is revoked and terminated." R. 65-68, 334. Because the "Directive" was
deemed "effective immediately," the letter stated that "after January 4, 2010, all
costs associated with your defense in this matter and any possible judgment or
settlement will not be the responsibility ofthe Village of Freeport." Id. Attached to
each of these letters was an excerpt from the minutes of the January 4, 2010 Board
meeting. R. 62-64.
The following day, January 8, 2010, Freeport notified appellants' counsel,
Wilson Elser, of the Board's January 4, 2010 resolution. R. 70. Wilson Elser
notified the appellants that, because of the January 4, 2010 resolution, it was
15
"necessary for [each] to make other arrangements to be represented by counsel as
quickly as possible." R. 336. By letter application dated January 20, 2010, Wilson
Elser moved to withdraw as counsel in the Water Works Actions based on the
January 4, 2010 resolution and its conclusion that Freeport would "refuse" to pay
any further legal fees in connection with the defense of these Actions. R. 69-72.
Wilson Elser's application to withdraw as counsel was granted on January 28,
2010. R. 73.
By verified petition dated February 8, 2010, Lancaster, Miller, White and
Martinez, commenced a proceeding pursuant to CPLR Article 78 in the Supreme
Court, Nassau County, requesting that the court vacate the January 4, 2010
resolution and direct that Freeport immediately provide a defense for the appellants
(the "Lancaster Proceeding"). The petition alleged that the resolution was illegal,
arbitrary and capricious, and constituted an abuse of discretion because the manner
of its adoption violated Public Officers Law § § 103 and 105 and its substance was
unconstitutional and violated Public Officers Law § 18 as well as the
corresponding provision of Freeport Code,§ 130 et seq. R. 19-36.
Freeport responded to the petition by asserting that appellants' "failure to
cooperate with [Freeport] in the settlement of the case was a violation of the
condition imposed by [the Public Officers Law§ 18] and [Freeport] Code." R. 80,
~ 26. It identified the appellants' "failure to cooperate" as their "refus[al] to sign
16
the stipulation of discontinuance." R. 82,, 42. It rested Freeport's defense of its
action on the argument that:
[Freeport] is not required to pay for [appellants'] defense
and indemnify them so that they can engage in conduct
which is contrary and detrimental to [Freeport's] interest
and whose sole purpose is to undermine [Freeport's]
settlement which the respondents determined was in
[Freeport's] best interest.
It is not arbitrary, capricious or an abuse of discretion for
respondents to determine that [appellants'] conduct
constitutes a failure to cooperate with [Freeport] in the
defense ofthe Water Works Action.
R.88, ,, 71-72.
Colton, bluntly stated that the "failure to cooperate" was the "refusal to
execute the stipulation". R.98 (emphasis in original). He explained Freeport's
position as follows:
R.102,,36.
It is not uncommon or unusual for parties to agree on
what will or will not be said in public as part of a
settlement agreement. Even though such agreements
might restrict what a person could say, they are perfectly
permissible. [Appellants'] counsel's statement that his
client would not agree to anything that might be
construed as infringing of his clients' First Amendment
rights - - a position that he continues to assert today,
demonstrates [appellants'] willful and avowed
obstruction to the settlement.
Colton concluded by stating that "[appellants'] decision not to cooperate was
willful and obstructionist and desigued to promote their own political agenda
17
which is contrary to [Freeport's] interests." R.105 ~ 43. Notably, neither Mayor
Hardwick, who had verified Freeport's answer, nor Mr. Colton could point to any
other lack of cooperation on the part of the appellants other than their refusal to
execute a stipulation with its prohibition on critical speech.
By notice of petition dated March 12, 2010, Glacken, Frierson-Davis and
Edwards commenced a separate proceeding pursuant to CPLR Article 78. R. 227-
62 (the "Glacken Proceeding"). While similar in many respects to the Lancaster
Proceeding, the Glacken Proceeding also sought the immediate restoration of
Wilson Elser as the appellants' counsel in the Water Works actions, rescission of
the January 4, 2010 resolution, as well as any and all directives, orders or
instructions promulgated under it, plus attorneys' fees, court costs . and
disbursements. R.228-29.
The respondents' answer in the Glacken Proceeding was similar to the
answer in the Lancaster Proceeding. Essentially, the respondents argued that
"[Freeport] provided a defense until the Board determined that [appellants] were
not entitled to coverage because of their failure to cooperate with [Freeport] in the
defense of the Water Works Actions by failing to sign the Stipulation of
Discontinuance." R. 357, ~ 105. As before, Mr. Colton defined the lack of
cooperation in terms of the refusal to execute the stipulation with its problematical
18
language. No other "obstructionist" or "non-cooperative" behavior was noted by
respondents. Specifically, Mr. Colton stated:
R.375, ~ 40.
The only thing they had to do in return was not object to
the settlement or criticize it. The Board determined that
the settlement was in [Freeport's] best interest.
[Appellants] rejected the settlement apparently because
they want to object to it and disparage it - - positions
which are clearly contrary to [Freeport's] interests.
By decision and order dated August 26, 2010, the Supreme Court dismissed
both proceedings. R. 12-15. The appellants timely appealed. R. 8-11. By order
dated February 21, 2012, the Appellate Division, Second Department, affirmed the
Supreme Court's order. R. 5-7. These appeals followed.
ARGUMENT
I
Freeport Violated the Appellants' Rights to Freedom of Speech by
Revoking their Defense and Indemnification because they Refused
Freeport's Demand that they Refrain from Criticizing the Settlement
On September 3, 2009, appellant William Glacken criticized the terms of the
proposed $3.5 million settlement between Freeport and the Water Works plaintiffs
as not being in the "best interests of the people of Freeport." R.332. When
Freeport subsequently settled the claims against it on essentially the same terms, it
required, as a condition of including the appellants in the settlement, that the
19
appellants accept a provlSlon by which the appellants would "specifically
represent[] and warrant[]" that they would never "interfere, nor challenge or
criticize the terms of either the [stipulation of discontinuance] or the [settlement
agreement] in any manner." R. 59,~ 4. Freeport made it clear to the appellants that
if they did not agree to this term, it would cease to defend and indenmify them
going forward, despite the fact that the appellants remained exposed to claims from
the Water Works plaintiffs and third-party claims from the other Water Works
defendants. R. 216-17,239, ~ 42.
While the appellants agreed to execute a standard stipulation of
discontinuance, which would have afforded Freeport the end to the litigation that it
claimed was so "critically important," Freeport refused to accept it. R. 368, ~ 16;
R. 407, ~ 22. When the appellants would not forfeit their rights to speak about the
settlement, Freeport delivered on its threat and revoked the appellants' defense and
indenmification on the ground that the refusal to sign the conditional stipulation
constituted "willful and avowed obstruction to the settlement." R. 102, ~ 36.
The right to criticize government officials and policies is the "central
meaning of the First Amendment." New York Times v. Sullivan, 376 U.S. 254, 273
(1964). This point has repeatedly been affirmed by both the Supreme Court and
this Court. See Rosenberger v. Rector and Visitors of University of Virginia, 515
U.S. 819, 828 (1995)("it is axiomatic that the government may not regulate speech
20
based on its substantive content or the message it conveys"); Citizens United v.
Federal Election Commission, 558 U.S. 310, 130 S. Ct. 876, 898 (2010)
("[p]remised on mistrust of governmental power, the First Amendment stands
against attempts to disfavor certain subjects or viewpoints ... [it] protects speech
and speaker and the ideas that flow from each"); O'Neill v. Oakgrove Constr., Inc.,
71 N.Y.2d 521, 529 (1988) ("Article 1, § 8 of the Constitution assures, in
affirmative terms, the right of our citizens to 'freely speak, write and publish' and
prohibits the use of official authority which acts to 'restrain or abridge the liberty
of speech of the press."'). On this point the New York State Constitution affords
even greater protection than the United States Constitution. See Immuno AG v.
Moor-Jankowski, 77 N.Y.2d 235, 250, cert. denied, 500 U.S. 954 (1991) ("whether
by the application of 'interpretive' (e.g., text, history) or 'noninterpretive' (e.g.,
tradition, policy) ... factors, the protection afforded by the guarantees of free press
and speech in the New York Constitution is often broader than the minimum
required by the Federal Constitution")(intemal quotation marks and citations
omitted).
Here, even though the appellants had their own counsel because of a
potential conflict of interest, Freeport "negotiated" a settlement for them and then
forwarded the stipulation to their counsel with the directive that it be executed "as
is" and returned within a week. R. 240 ~ 45; R. 405-06, ~~ 13, 16. Freeport's
21
counsel dismissed the appellants' concerns that the purported "non-disparagement"
clause violated their First Amendment rights. And while he stated that it was their
choice as to whether they wanted to sign the stipulation, he threatened that a failure
to sign would have consequences. Specifically he stated that if they did not
"execute this [stipulation] by the November 16th deadline," Freeport would reserve
its "rights and remedies including but not limited to its right to cease all payment
for defense or indemnity which accrue after Monday, November 16, 2009." R.
216-17. When the appellants refused to forfeit their First Amendment rights,
Freeport punished them. By a resolution adopted on January 4, 2010 in a closed
executive session, Freeport revoked the defense and indemnification that it had
been providing to appellants under the Pubic Officers Law and Freeport Code. R.
416-17.
Whether Freeport acted because of Glacken's earlier criticism, or to punish
the appellants for insisting on maintaining their free speech rights, or simply as a
means of silencing future criticism, or all three, its mandate that the appellants give
up their right to criticize the government with respect to a matter of public concern
in order to maintain their defense and indemnification and its revocation of that
defense and indemnification when they refused to comply violated the appellants'
right to freedom of speech, under both the First Amendment to the United States
Constitution and article I, section 8 of the New York State Constitution. The
22
remedy for Freeport's unconstitutional treatment of the appellants is to declare the
January 4th resolution null and void, and reimburse them for any expenditures they
have made in their defense of the Water Works actions.
A. Freeport's requirement of a "non-disparagement"
clause was an impermissible prior restraint on free speech.
A governmental threat to penalize future speech is a prior restraint. Fairley
v. Andrews, 578 F. 3d 518 (2009), cert. denied, 130 S. Ct. 3320 (2010)(citing
Nebraska Press Ass'n v. Stuart, 427 U.S. 539, 559 (1976); see also United States
v. Quattrone, 402 F.3d 304, 309 (2d Cir. 2005)("a 'prior restraint' on speech is any
law, regulation or judicial order that suppresses speech - or provides for its
suppression at the discretion of government officials - on the basis of the speech's
content and in advance of its actual expression")( emphasis added). As the Supreme
Court has made clear, such restraints are the "most serious and the least tolerable
infringement on First Amendment rights" Nebraska Press Ass'n, 427 U.S. at 559.
For this reason, prior restraints are "subjected to judicial scrutiny 'with a 'heavy
presumption' against [their] constitutional validity." Lusk v. Village of Cold
Spring, 475 F.3d 480, 485 (2d Cir. 2007)(citations omitted). Freeport has not
overcome this heavy presumption.
The use of coercive tactics in an attempt to prevent future speech is strictly
forbidden. See Zieper v. Metzinger, 474 F.3d 60, 65-66 (2d Cir. 2007) ("First
Amendment prohibits government officials from encouraging suppression of
23
speech in a manner which 'can reasonably be interpreted as intimating that some
form of punishment or adverse regulatory action will follow the failure to accede to
the official's request")(internal citation omitted); Fairley, 578 F.3d at 525 ("[t]he
first amendment protects speakers from threats of punishment that are designed to
discourage future speech"); Aebisher v. Ryan, 622 F.2d 651, 655 (2d Cir. 1980)
("[w]here the use of coercive power is threatened, First Amendment rights may be
violated by the chilling effect of governmental action that falls short of a direct
prohibition against speech"); Schoolcraft v. City of New York, 2012 U.S. Dist.
LEXIS 128557 * 13 (S.D.N.Y. Sept. 7, 2012)("[i]n determining whether a
particular request to suppress speech is constitutional, what matters is that
distinction between attempts to convince and attempts to coerce") (internal
quotation marks and citation omitted).
Freeport's demand that the appellants s1gn the stipulation was clearly
coerciVe. The "voluntary" nature of the stipulation was an illusion. Freeport's
counsel had told them that if they refused to sign this stipulation "as is" (R. 240, ~
45), Freeport would treat the refusal as a "breach of their duty of cooperation to
[Freeport] under the NY Public Officers Law and Freeport Village Law" and
would seek to "cease all payments for defense or indemnity which accrue after
Monday November 16, 2009." R. 216-17. By any measure, this was coercion. See
Zieper, 4 73 F .3d at 67 (a "request" that the plaintiff remove his video from public
24
access, followed by visits from three police officers and an FBI agent, was
coercive because "a rational juror could conclude that the officers' actions and
comments could reasonably be interpreted as an attempt to coerce Zieper into
removing his film from the internet").
It was also censorship. The stipulation obligated the appellants to refrain
from any speech that either Freeport or the Water Works plaintiffs considered to be
"interfer[ing]", "challeng[ing]" or "crit[ical]" of the settlement agreement, thus
leaving it to Freeport's discretion to decide what would constitute conduct or
speech deemed to be critical of the settlement agreement. Any appellant who
signed the stipulation would run a very great risk of future sanctions (i.e., a
lawsuit) if he or she said anything about that agreement, or the officials who
negotiated it, short of effusive praise. The stipulation thus allowed Freeport to
censor forever the appellants' speech with regard to the settlement. Government
censorship is not permitted. As the Supreme Court has stated, "[ o ]ur distaste for
censorship - reflecting the natural distaste of a free people - is deep-written in our
law." Southeastern Promotions, Ltd. v. Conrad, 420 U.S. 546, 559 (1975)(citations
omitted).
Freeport offered no justification for the imposition of such a prior restraint
on the appellants' freedom of speech. It relied solely upon generalities, asserting
that the stipulation of discontinuance and the settlement agreement are "in
25
Freeport's best interest" and that the appellants' refusal to execute the stipulation is
proof that they want to "object" and "disparage" the settlement, which is, in
Freeport's view, "clearly contrary to Freeport's interests." See, e.g., R. 375, 1 40.
The First Amendment, however, does not permit Freeport to determine what is or
is not good speech. Justifying a prior restraint in order to protect the public from
unpopular views has very rarely, if ever, survived scrutiny. See Madole v. Barnes,
20 N.Y.2d 169, 282 N.Y.S.2d 225 (1967)("[i]t is an 'unlawful restriction of the
constitutional right of free speech. . . to exercise prior restraint of the expression of
such views unless it is demonstrable on a record that such expression will
immediately and irreparably create injury to the public weal -- not that such
expression, without itself being unlawful, will incite criminal acts in others'")
(internal citations omitted).
The Appellate Division erred when it treated this stipulation, supposedly
"negotiated on [appellants'] behalf' by Freeport, as a mere non-disparagement
clause. R. 7. It was a prior restraint aimed at suppressing speech on a matter of
public concern. The constitutional violation could not be clearer. The order must
be reversed.
B. Penalizing the appellants for refusing to refrain from
critical speech is unconstitutional content-based discrimination.
It is a long-standing and oft-recited First Amendment principle that the
government may not regulate the speech or expressive conduct of a private citizen
26
based on its substantive content or the message it conveys. Police Dept. of Chicago
v. Mosley, 408 U.S. 92, 95 (1972)("[a]bove all else, the First Amendment means
that government has no power to restrict expression because of its message, its
ideas, its subject matter, or its content"). In a corollary principle, courts have
consistently held that where the government cannot regulate such speech or
conduct, it clearly cannot penalize it: "Political speech must prevail against laws
that would suppress it, whether by design or inadvertence." Citizens United, 558
U.S. 310, 130 S. Ct. at 896 (tracing history of cases that dealt directly and
indirectly with government actions intended to sanction a person for conduct
protected by the First Amendment); The Brooklyn Institute of Arts and Sciences v.
The City of New York, 64 F. Supp.2d 184, 199 (E.D.N.Y. 1999)("[g]ovemment
efforts to suppress expression can take many forms, and the courts have not
hesitated to invalidate those efforts, no matter how indirect the form")( citing
Speiser v. Randall, 357 U.S. 513 [1958]).
Here, the record establishes that a "non-disparagement clause" was never
part of the earlier negotiations between Freeport and the appellants. It was simply
presented to appellants, together with the fully executed settlement agreement,
with instructions to sign. R. 406, '1['1[16-18. When the appellants refused to sign,
Freeport revoked the defense and indenmification it had been providing to them
27
under the Public Officers Law and the Freeport Code. On these points, the timeline
is indisputable and the retaliatory link is undeniable.
In September 2009, when he first learned that Freeport was considering a
payment of $3.5 million to the Water Works plaintiffs, Glacken implored Mayor
Hardwick and the Board of Trustees to consider carefully the ramifications of such
a payment. R. 331-32. He specifically expressed his belief that the payment of
$3.5 million to the Water Works plaintiffs based on "outlandish allegations" would
not be in "the best interests of the people of Freeport." Id.
Approximately three weeks after Glacken sent his letter, Freeport's counsel
informed the appellants' counsel that Freeport believed it would be necessary to
include "language in the Stip to indicate that the defendants will support and not
disparage the settlement." R. 218. The appellants' counsel, Mr. Meisels,
immediately replied that his clients would "consider any suggestions but [could
not] agree to anything that might be construed as an infringement of ... First
Amendment rights." Id. Freeport's counsel did not communicate further with Mr.
Meisels regarding any "non-disparagement" clause until he presented the "take it
or leave it" stipulation of discontinuance on November 10, 2009. R. 402, ~ 17.
Freeport made it abundantly clear that it would not accept anything less than
language prohibiting any negative comments by the appellants concerning the
settlement agreement. By letter dated November 13, 2009, Freeport's counsel
28
warned the appellants that if they did not "agree" to accept this "conventional"
language, they "would forfeit their right to participate in the settlement and to have
all of the claims asserted against them discontinued with prejudice." R. 377-78, 'lf'lf
45, 17; R. 215, 'If 5. Freeport's counsel also warned that if the stipulation was not
signed by the November 161h deadline, Freeport would treat the refusal to sign as a
"breach of their duty of cooperation to Freeport under the NY Public Officers Law
and Freeport Village Law" and would "cease all payments for defense or
indemnity which accrue" after that date. R. 216, 'If 8. When the appellants refused
to forfeit their rights Freeport carried out its threat and revoked their defense and
indemnification. R. 62-64, 417.
The facts here bear a striking resemblance to the situation presented in
Cooper v. Town of East Hampton, 888 F. Supp. 376 (E.D.N.Y. 1995). In Cooper,
the plaintiff, an elected member of the Town Board, commenced a civil rights
action against the Town because of the Town's refusal to provide him with defense
and indemnification in connection with a defamation lawsuit brought against him
by the Town's police chief. The plaintiff claimed that the refusal to provide the
defense and indemnification was in retaliation for his negative public comments
about the Town's police department. One member of the Town Board had, in fact,
commented that "[i]f [Cooper] has to spend money for a lawyer, that will teach
him a lesson to keep his mouth shut." Id., 888 F. Supp. at 380 (emphasis in
29
original). On these facts, the court found that the plaintiffs speech was protected
by the First Amendment. The court stated:
A public official's right to speak to the press and the public about
his/her concerns or views is certainly protected by the First
Amendment. It is indeed, "beyond cavil that the First Amendment
encompasses a freedom of expression that extends to political speech
and the right to petition the government for a redress of grievances."
Id. at 380 (internal citations omitted).
As noted in a later appeal before the United States Court of Appeals for the
Second Circuit, the plaintiff was granted partial summary judgment on his claim
for representation under local law and the Town was directed to pay the cost of that
representation. See Cooper v. Town of E. Hampton, 83 F.3d 31, 33 (2d Cir. 1996).
The Court of Appeals denied the Town's motion to stay its obligation to pay the
plaintiffs counsel fees, reasoning that "there is an important public interest to be
served in ensuring the effective representation of civil litigants in Cooper's
circumstances. This interest is especially significant in cases involving a defendant
who has claimed the protection of the First Amendment to speak on a matter of
public concern." 83 F.3d at 36.
Similarly, in Brooklyn Institute of Arts and Sciences, the court found that the
City had violated the museum's fundamental rights by withholding funding and
seeking to evict it because it had exhibited a work that was considered by some
(including the Mayor) to be "disgusting" and "sacrilegious." The court stated:
30
The decision to withhold an already appropriated general
operating subsidy from an institution which has been supported by
the City for over one hundred years, and to eject it from its City-
owned building, because of the Mayor's objection to certain works in
a current exhibit, is, in its own way, to discriminate invidiously in its
subsidies in such a way as to aim [] at the suppression of dangerous
ideas ... The Government's purpose is the controlling consideration in
determining whether a restriction on speech is viewpoint
discriminatory.
64 F.Supp.2d at 200 (internal quotation marks and citations omitted).
As in Cooper and Brooklyn Institute of Arts and Sciences, there was a direct
link here between the refusal of the appellants to forfeit fundamental rights and the
suspension of benefits by Freeport officials. Mr. Colton, admitted as much when he
stated in opposition to the petition that the "failure to cooperate" was the "refusal
to execute the stipulation". R. 98 (emphasis in original). He also described the
appellants' refusal to forfeit their rights to engage in critical speech as a
demonstration of their "willful and avowed obstruction to the settlement." R. 102,
~ 36.
This type of viewpoint discrimination is presumptively unconstitutional. See
Turner Broadcasting System, Inc. v. Federal Communications Commission, 512
U.S. 622, 641-43 (1994). To overcome the presumption ofunconstitutionality, the
government is held to a standard of "strict scrutiny which requires [that it] prove
that the restriction 'furthers a compelling interest and is narrowly tailored to
achieve that interest."' Citizens United, 558 U.S. 310, 130 S.Ct at 882; Ashcroft v.
31
American Civil Liberties Union, 542 U.S. 656 (2004). See also Boos v. Barry, 485
U.S. 312, 321 (1988) (content-based restrictions on political speech "must be
subjected to the most exacting scrutiny"). Freeport did not meet this burden. It did
not even come close.
Freeport's position that it was necessary to suppress the appellants' speech
in order to "stop the bleeding," i.e., the "financial burden" of the Water Works
actions, is plainly contradicted by the record. The appellants' counsel repeatedly
made it clear to Freeport's counsel that the appellants were ready and willing to
execute an unconditional stipulation of discontinuance. R. 407, ~ 22. Such a
stipulation would have ended the litigation and would have "stop[ped] the
bleeding" just as effectively. Freeport "consistently rejected" this offer. Id. See
also R. 27, ~ 27; R. 241, ~ 48. The sole justification that Freeport has put forward
for its action is thus no justification at all.
C. Freeport could not constitutionally deprive the appellants
of the defense and indemnification to which they were entitled
because the appellants insisted on maintaining their free speech rights.
Freeport provided defense and indemnification to the appellants because it
was required to do so under section 130.1 et seq. of Freeport Code and Public
Officers Law§ 18. R. 97, ~ 22. Having done so, Freeport could not terminate that
benefit because the appellants refused to waive their First Amendment rights. R.
332. As the Supreme Court held more than forty years ago:
32
[E]ven though a person has no 'right' to a valuable government benefit
and even though the government may deny him the benefit for any
number of reasons, there are some reasons upon which the government
may not rely. It may not deny a benefit to a person on a basis that
infringes his constitutionally protected interests - especially his interest
in freedom of speech.
Perry v. Sindermann, 408 U.S. 593, 597 (1972). See also Bd. of County Comm'rs
v. Umbehr, 518 U.S. 668, (1996)("[t]he First Amendment permits neither the firing
of janitors nor the discriminatory pricing of state lottery tickets based on the
government's disagreement with certain political expression"); Planned
Parenthood Greater Memphis Region v. Dreyzehner, 853 F. Supp. 2d 724 (M.D.
Tenn. 2012) ('"the denial of a government benefit on account of a person's
political beliefs is in effect a penalty for holding those beliefs"')( quoting Lane v.
City of Lafollette, 490 F. 3d 410, 419 (61h Cir. 2007).
Perry is directly on point. In Perry the Supreme Court held that the state
college system, which otherwise had the right to refuse to renew a professor's
contract, could not do so because he had criticized the college administration. "[A]
teacher's public criticism of his superiors on matters of public concern may be
constitutionally protected and may, therefore, be an impermissible basis for
termination of his employment." 408 U.S. at 598. Similarly, in Umbehr, the
plaintiff-petitioner who as a trash hauler with a contract to provide services in
Waubunsee County, Kansas, publicly criticized the County Commission through
letters to the editors of local newspapers and various speeches on matters of public
33
concern. In Umbehr, the Court recognized that the "unconstitutional conditions
precedents" and the protection afforded to free speech claims covered public
employees to private citizen recipients of government benefits. 518 U.S. at 680;
see also Alliance for Open Soc'y Int'l, Inc. v. United States Agency for
International Development, 651 F .3d 218, 234 (2d Cir. 20 10) ("compelling speech
as a condition of receiving a government benefit cannot be squared with the First
Amendment.")
Simply put, revoking a statutory benefit to which the appellants were
otherwise entitled, specifically because the appellants would not forfeit their free
speech rights, is repugnant to the First Amendment. It certainly cannot be viewed
as "willful and avowed obstruction," absent a showing by Freeport of a compelling
governmental interest. Freeport made no such showing. Its only claimed interest
was based upon pure speculation that the settlement agreement was necessary to
"avoid the tremendous financial exposure faced by [Freeport] if it or any of the
named [appellants] were ultimately found to be liable for plaintiffs' damages." R.
368, -u 16. Speculation as to future harm, however, does not satisfy the requirement
of demonstrating a compelling interest sufficient to suppress speech. In fact, when
the government defends speech restrictions, it "must . . . . demonstrate that the
recited harms are real, not merely conjectural, and that the [restriction] will in fact
alleviate these harms in a direct and material way." United States v. Nat'! Treasury
34
Emps. Union, 513 U.S. 454, 475 (1995) (internal quotation mark omitted). Freeport
did not do that here.
D. Lancaster and White did not lose their First Amendment rights
to speak about the settlement because they were public officials.
When Freeport threatened to revoke and then did revoke the appellants'
defense and indemnification, in November 2009 and January 2010 respectively,
only Lancaster and White were public officials. Lancaster was Freeport's Treasurer
and White was an elected member of the Board. R. 20, ~~ 1, 3. In its opposition to
the Lancaster Proceeding, Freeport urged dismissal because Lancaster and White
were public officials with restricted First Amendment rights. R. 104, ~ 41. Apart
from citing to case law concerning the ability of a public employer to set limits on
employee speech in carrying out official duties, Freeport failed to articulate the
particular interests at stake here.
"Public employees do not relinquish the First Amendment rights they would
otherwise enjoy as citizens simply because of their public employment." Nagle v.
Marron, 663 F.3d 100, 106 (2d Cir. 20ll)(internal quotation marks omitted and
citations omitted). Similarly, "'[o]ne does not lose one's rights to speak upon
becoming a legislator."' Burns v. Citarella, 443 F. Supp. 2d 464, 470 (S.D.N.Y.
2006)(quoting X-Men Sec., Inc. v. Pataki, 196 F.3d 56 [2d Cir. 1999]). Thus,
Lancaster and White did not forfeit their rights to speak as private citizens on
issues of public concern simply because they were still active public officials. And
35
even assuming that there was a governmental interest to consider, Freeport failed
to establish that such interests outweighed those of Lancaster and White in
exercising their First Amendment rights.
(1) The settlement agreement was a matter of public concern.
The leading case with respect to permissible limitations on the First
Amendment rights of public employees is Garcetti v. Cebellos, 547 U.S. 410
(2006). Garcetti made it clear, however, that "[s]o long as employees are speaking
as citizens about matters of public concern, they must face only those speech
restrictions that are necessary for their employers to operate efficiently and
effectively." Id., at 419. Thus, "even in its capacity as an employer, the First
Amendment ... prohibits [the government] from punishing its employees in
retaliation for the content of their protected speech." Reuland v. Hynes, 460 F .3d
409, 415 (2d Cir. 2006), cert. denied, 552 U.S. 819 (2007) (internal quotation
marks and citations omitted).
Speech construed as touching on matters of public concern has been
interpreted broadly by the Supreme Court. See Snyder v. Phelps,_ U.S. _,
131 S. Ct. 1207, 1216 (2011) (" [s]peech deals with matters of public concern
when it can 'be fairly considered as relating to any matter of political, social, or
other concern to the community, [and] the 'inappropriate or controversial character
of a statement is irrelevant to the question whether it deals with a matter of public
36
concern"') (internal citations omitted); see also Connick v. Myers, 46.1 U.S. 138,
146 (1983) (speech will be deemed an issue of public concern if it "relat[ es] to any
matter of political, social, or other concern to the community.") Moreover, a topic
is a matter of public concern for First Amendment purposes if it is "of general
interest," or "of legitimate news interest," or "of value and concern to the public at
the time" of the speech." Jackler v. Byrne, 658 F.3d 225, 236, cert. denied, 132 S.
Ct. 1634 (2012) (2d Cir. 2011) (internal citations omitted).
Here, even if the expenditure of $3.5 million in public funds were not, in
itself, a matter of public interest, Mayor Hardwick made the settlement agreement
such when he issued a press release under the banner:
WATER WORKS 'RACKETEERING' LAWSUITS SETTLED
Mayor Andrew Hardwick Explains Lawsuit Settlement
R. 193 (emphasis in original). This press release, addressed to "the taxpayers of
Freeport," sought to persuade the community at large that Village officials had no
choice but to settle in order to "avoid financial disaster - - and a tax hike." Id. The
Mayor painted a picture of "astronomical" exposure and the possibility that a loss
at trial could result in "a special tax assessed to each Freeport homeowner and
commercial building owner." R. 193-94. The press release thus establishes beyond
dispute that the settlement agreement was a matter of public interest.
37
(2) Freeport did not meet its burden of showing that
its interests outweighed those of Lancaster.
If an employee's speech touches upon or qualifies as a matter of public
interest, the public employer can limit that speech only upon demonstrating that the
employee's right to comment on a matter of public concern is outweighed by the
employer's interest in the "efficiency of its services." Sousa v. Roque, 578 F.3d
164, 175 (2d Cir. 2009). Notwithstanding its reliance on Garcetti, Freeport made
no effort to define Lancaster's official duties or to demonstrate that any comments
or expressive conduct by her regarding the settlement agreement somehow
impaired the operation of the Treasurer's Office. 3 R. 104, ~ 41. See Caraccilo v.
Vill. of Seneca Falls, 582 F. Supp. 2d 390, 406 (W.D.N.Y. 2008) ("[i]t is the
employer's 'burden to show that the employee's activity is disruptive to the internal
operations of the governmental unit in question"')( quoting Melzer v. Bd. of Educ.,
336 F.3d 185, 197 [2d Cir. 2003]). Without such proof, Freeport cannot rely on
Garcetti to support its revocation of Lancaster's defense and indemnification.
(3) As a legislator, White had a duty
to speak on issues of public concern
In Garcetti, the Court found certain restrictions necessary because
"[g]overnment employers, like private employers, need a significant degree of
3 Lancaster did not, in fact, make any comments-she simply refused to execute the
stipulation of discontinuance with its prohibition against critical speech. On this basis alone,
Freeport has failed to establish that Lancaster's actions or allegedly prohibited conduct was
"detrimental to Freeport's interests." R. 83, 'If 71.
38
control over their employees' words and actions; without it, there would be little
chance for the efficient provision of public services." 547 U.S. at 418-19. Unlike a
public employee, a legislator, as an elected official, is beholden to no one but the
public-his constituents. See Zimmerlink v. Zapotosky, 2011 U.S. Dist. LEXIS
53186 (W.D. Pa. April 11, 2011)("[w]hile the government has interests as an
employer justifying some regulation of employees' speech, the government has no
interest justifying regulation of elected legislators' speech"), modified on other
grounds, 2011 U.S. Dist. LEXIS 53189 (W.D. P.A. May 18, 2011).
Because he is a legislator, any criticism by White of the settlement
agreement would have been protected speech. "The manifest function of the First
Amendment in a representative government requires that legislators be given the
widest latitude to express their views on issues of policy." Bond v. Floyd, 385 U.S.
116, 135-36 (1966); Burns, 443 F. Supp. 2d at 470; see also Republican Party v.
White, 536 U.S. 765, 781-82 (2002)("[t]he role that elected officials play in our
society makes it all the more imperative that they be allowed freely to express
themselves on matters of current public importance")(internal quotations and
citation omitted).
The Supreme Court and the Appellate Division erred in implicitly rejecting
this argument. While there is little, if any, decisional law on this subject, appellant
White submits, that if a majority of the Board could constitutionally deprive him of
39
defense and indemnification unless he agreed not to voice any opinion on the
settlement, it could also diminish his salary or otherwise harm him financially in
order to compel him to speak (or not to speak) on a particular issue. That would
clearly be inconsistent with his rights and obligations as a public official.
Depriving him of defense and indemnification had the same effect.
II
The Appellants' Rejection of a Stipulation Prohibiting
them from Criticizing the Settlement is not a Failure to
Cooperate that Entitles Freeport to Revoke their Defense
and Indemnification under Public Officers Law§ 18
Freeport revoked the appellants' defense and indemnification because they
refused to agree to sign a stipulation which would have required them to forfeit
their fundamental right to speak openly about a matter of public concern-the
expenditure of $3.5 million to settle the Water Works actions. Freeport admitted
that it revoked and terminated appellants' defense and indemnification for this
reason, referring to this refusal as "willful and avowed obstruction." R. 102, ,; 36.
There is, however, no authority under Public Officers Law § 18 to find that a
public official or employee fails to cooperate in the defense of an action by
refusing to forfeit his or her First Amendment rights as a condition of settling the
action. To the contrary, long-standing principles of constitutional law provide that
the continuation of the appellants' statutory benefits cannot be conditioned upon a
forfeiture of fundamental rights.
40
Public Officers Law § 18 does not authorize a public employer to dictate the
terms upon which an indemnified public employee or official must settle a case.
There is also no authority under Public Officers Law § 18 for the proposition that
the refusal to enter into a settlement constitutes a failure to cooperate. Even if such
authority could be found, Freeport has not met its "heavy" burden of showing that
(1) it acted diligently in seeking to bring about appellants' cooperation, (2) the
efforts it used were reasonably calculated to bring about such cooperation, and (3)
the attitude of the appellants was one of"willful and avowed obstruction."
Indeed, the record establishes clearly that Freeport-in its dual role as
insurer and co-defendant-excluded appellants from the negotiations which
resulted in the settlement agreement, and threatened them with sanctions if they did
not agree to sign the stipulation of discontinuance "as is" with its prohibition
against critical speech. Appellants did not engage in willful and avowed
obstruction when they refused to sign; they simply insisted on their constitutional
rights. Thus, even if the restraint on speech that the stipulation imposed did not
violate the appellants' First Amendment rights, Freeport's revocation of their
defense and indemnification must be set aside because it is wholly unsupported as
a matter oflaw.
41
A. The refusal to accept a conditional settlement is not
a failure to cooperate in the defense of the action
Public Officers Law section 18(3)(a) establishes the "defense" obligation of
a public employer that has adopted its provisions as follows:
Upon compliance by the employee with the provisions of
subdivision five of this section, the public entity shall
provide for the defense of the employee in any civil
action or proceeding, state or federal, arising out of any
alleged act or omission which occurred or allegedly
occurred while the employee was acting within the scope
of his public employment or duties.
The decision to grant or deny defense under the Public Officers Law is not
discretionary. Once an employee or former employee has made the necessary
demand and is deemed eligible, the defense is conditioned only upon "the full
cooperation of the employee in the defense of such action or proceeding and in
defense of any action or proceeding against the public entity based upon the same
act or omission, and in the prosecution of any appeal." Public Officer's Law§ 18
(S)(ii). Freeport has adopted the provisions of Public Officers Law§ 18. It had also
received the requisite demand from the appellants, determined them to be eligible
and provided for their defense and indemnification in the Water Works actions.
Freeport Code § 130-1 et seq. Nothing in either Public Officers' Law § 18 or
Freeport Code permitted Freeport to compel an employee who has been defended
and indemnified to settle on terms Freeport defined.
42
Despite this, Freeport argued, and the Supreme Court and the Appellate
Division held, that the appellants' refusal to agree to a settlement negotiated by
Freeport constituted a failure to cooperate and, therefore, a breach of the conditions
established by Public Officers Law § 18 for the employee's defense and
indemnification. There is no authority for that position and the appellants submit
that it is based on an erroneous understanding of the relationship between a
municipal employer and employee.
Although this Court has characterized the purpose of Public Officers Law
§ 17, the corresponding provision with respect to state employees, as "in essence,
to provide insurance against litigation," Matter of O'Brien v. Spitzer, 7 N.Y.3d
239, 242 (2006), it has never, strictly speaking, defined the nature of the
relationship between a public employer and an employee whom it is indemnifying
under Public Officers Law. The Appellate Division, however, has consistently
described that the relationship as analogous to the relationship between an insurer
and an insured. See Dreyer v. City of Saratoga Springs, 43 A.D.3d 586 (3d Dep't
2007); LoRusso v. New York State Office of Court Administration, 229 A.D.2d 995
(4th Dep't 1996); Polak v. Schenectady, 181 A.D.2d 233 (3d Dep't
1992); Giordano v. O'Neill, 131 A.D.2d 722 (2d Dep't 1987). Other courts have
adopted that analogy. See Higgins v. Town of Southampton, 613 F. Supp. 2d
327 (E.D.N.Y. 2009); Stassi v. Vill. of N Syracuse, 2009 U.S. Dist. Lexis 89068
43
(N.D.N.Y. Sept. 25, 2009); Frank v. State of New York, 1996 U.S. Dist. Lexis,
7849 (N.D.N.Y. May 24, 1996); Mathis v. State of New York, 140 Misc.2d 333
(Sup. Ct. Albany Cty. 1988). If that analogy is correct, the order of the Appellate
Division must be reversed.
An insurer has no inherent right to compel a settlement by its insured. While
insurers frequently settle claims without the insured's consent, they do so on the
strength of policy provisions which give them such authority. See Feliberty v.
Damon, 72 N.Y.2d 112, 116 (1988). Where the policy does not provide such
authority, however, the insurer cannot settle without the insured's consent. See
Saucedo v. Winger, 22 Kan.App.2d 259, 268, 915 P.2d 129, 136 (Kan. App. 1996)
("The policy at issue simply does not say if [the insurer] has the exclusive right to
settle and consequently must be interpreted to mean that [the insurer] cannot settle
for less than the policy limits without the consent of [the insured]."); 14 Couch on
Ins. § 203:8 ("[U]nder a policy which did not expressly state that the insurer had
the exclusive right to control settlement, the insurer could not settle a claim within
policy limits without the consent of the insured.")
The United States Court of Appeals faced this issue in New York City
Housing Auth. v. Housing Auth. Risk Retention Group, Inc., 203 F.3d 145 (2d Cir.
2000), where it was called upon to decide whether the insurer for the New York
City Housing Authority could refuse to further defend and indemnify the Housing
44
Authority after the Housing Authority refused to relinquish its $500,000 self-
insured retention as part of a $1 million settlement offer. The Court of Appeals
held that the terms of the insurance policy were dispositive. Since the policy
provided that the insurer could compel a settlement only where there was a
likelihood that the claim would exceed the self-insured retention, and the Court of
Appeals found that there was such a likelihood, it held that the insurer was entitled
to disclaim coverage.
The "policy" here IS Public Officers Law § 18. Unlike the situation
presented in the Housing Authority case, there is nothing in Public Officers Law
§ 18 that confers authority to settle on the municipal employer in any
circumstances. Since there is no such authority, Freeport had no right to define the
terms of the settlement for the appellants. If Freeport could not define the terms of
the settlement, it could not compel the appellants to agree to it under pain oflosing
their defense and indenmification. Freeport was obligated to defend the appellants.
The appellants' refusal to agree to the settlement, even without regard to their
reasons for doing so, is not a failure to cooperate in that defense.
The egregious nature of Freeport's action here is highlighted by the conflict
of interest between Freeport and the appellants, as Freeport recognized by retaining
its own counsel. R. 94, 1 12; R. 367, 1 12. Freeport had no right to advance its own
interests at the expense of the appellants. Yet this is precisely what it did. By
45
demanding that appellants forfeit their constitutional rights, Freeport violated its
obligations under the Public Officers Law. See Nelson Elec. Contr. Corp. v.
Transcontinental Ins. Co., 231 A.D.2d 207 (3d Dep't 1997) ("[w]here, as here, the
interests of the insured are at odds with those of its insurer, the former is entitled to
select independent counsel to conduct the defense so that, inter alia. tactical
decisions will be in the hands of an attorney whose loyalty to [the insured] is
unquestioned. Inherent in this rule is the axiom that when such a conflict exists,
the interests of the insured are paramount")(intemal quotation marks and citation
omitted). Freeport failed to follow the rule here.
B. Since Freeport never "acted diligently to bring about" the appellants'
cooperation it wrongfully revoked their defense and indemnification
Even if there were something in the Public Officers Law that gave Freeport
the right to compel a settlement by defining the refusal to sign as a failure to
cooperate, Freeport has not satisfied its burden of establishing that the appellants
did not cooperate in the defense of the Water Works actions. As stated in the
seminal case, Thrasher v. United States Liability Insurance Co., 19 N.Y.2d 159
(1967), the burden of establishing non-cooperation rests squarely upon the insurer.
The burden is "a heavy one," requiring the insurer to prove that it "acted diligently
in seeking to bring about the insured's cooperation; that the efforts employed by the
insurer were reasonably calculated to obtain the insurer's cooperation; and that the
46
attitude of the insured, after his cooperation was sought, was one of 'willful and
avowed obstruction."' 19 N.Y.2d at 168 (citations omitted).
Under the Public Officers Law, the "heavy" burden of proving non-
cooperation is on the public employer. See Garcia v. Abrams, 98 A.D.2d 871 (3d
Dep't 1983). The claimed breach of the duty to cooperate must be "both substantial
and material." 98 A.D.2d at 872. A breach is immaterial if "no irreparable harm
has been done so as to impede ... the [public employer's] ability to defend the
action." 98 A.D.2d at 873.
Freeport did not satisfy this heavy burden. Merely demanding that the
insured agree to the settlement does not do so. In Housing Auth., supra, the insurer
demanded that the insured agree to the settlement and the insured refused. Because
the insurer's demand was not intended to achieve cooperation and it did nothing to
bring about the insured's cooperation other than make the demand, the United
States Court of Appeals for the Second Circuit held that the insurer had failed to
prove that the insured had failed to cooperate. Specifically, the court based its
decision on the facts that the insurer "made no attempt to persuade [the insured]
that there was a reasonable chance of success" and did not "so much as give [the
insured] the opportunity to reconsider its position. 203 F.3d at 151-152. The court
characterized the "tone" of the insurer's communication to the insured as "final"
and concluded that "[s]ince [the insurer] never attempted to persuade [the insured]
47
to cooperate, [the insured's] failure to cooperate falls short of willful and avowed
obstruction." I d. The situation here is the same.
Freeport did nothing more than make a demand that the appellants' sign the
stipulation "as is" within a limited period of time. R. 240,, 45; R.405,, 13. When
Freeport made that demand, it did so }mowing that the appellants would reject the
stipulation, because the appellants' counsel had already advised Freeport's counsel
that the appellants would not agree to a restriction of First Amendment rights. R.
218. When the appellants' counsel reminded Freeport's counsel of that fact, R.
211, Freeport's counsel did not try to persuade the appellants that they should
accept the restriction. Instead, he threatened the appellants with the loss of their
defense and indemnification if they did not sign the stipulation. R. 216-17.
Thrasher requires that before revoking an employee's defense and
indemnification for failure to cooperate, the public employer must prove that "it
acted diligently in seeking to bring about the insured's cooperation; that the efforts
employed by the insurer were reasonably calculated to obtain the insurer's
cooperation; and that the attitude of the insured, after his cooperation was sought,
was one of 'willful and avowed obstruction."' 19 N. Y.2d at 168 (citations
omitted). Threats are not calculated to persuade. As a result, even if the appellants'
First Amendment rights were not violated and even if the refusal to agree to a
conditional settlement can be deemed a failure to cooperate, the appellants did not
48
fail to cooperate here in a way that would entitle Freeport to disclaim its liability
for defense and indemnification. The resolution purporting to do that must,
therefore, be set aside.
C. The appellants' attitude was not one
of willful and avowed obstruction.
The record simply does not support a finding that the appellants failed to
cooperate or that their attitude was one of "willful and avowed obstruction." In
fact, the record is to the contrary. The appellants' counsel, Mr. Meisels, confirmed
that the appellants "responded to all inquiries and provided all information
requested by Wilson Elser." R. 404, ~ 5. Mr. Meisels also found each of the
appellants to be "forthright relative to all discussions, inquiries and requests from
Wilson Elser concerning each party's involvement in the underlying circumstances
and transactions involved in the Water Works [A]ctions." R. 404, ~~5-6.
Notably, the resolution revoking the defense and indemnification does not
reference any obstructionist actions on the part of the appellants in the defense of
the action. In fact, prior to the demand by Freeport's counsel that appellants
execute the conditional stipulation of discontinuance, Freeport never advised Mr.
Meisels that appellants were being uncooperative. As Mr. Meisels pointed out:
At no time during Wilson Elser's representation of the
[appellants] herein in the Water Works [A]ctions did I
receive any notice from [Freeport] or its Claims
Administrator that [appellants] were failing to cooperate
in the defense of the Water Works Actions, other than the
49
November 13, 2009 letter from Dennis Warren
concerning the requested execution of [the] stipulation of
discontinuance.
R. 405, ~ 8.
There were only two reasons cited by Freeport to support the resolution and
subsequent directive revoking and terminating appellants' statutory right to defense
and indemnification: (1) that Glacken and Edwards "had an opportunity to address
the Board of Trustees but elected not to do so" and (2) that the appellants "fail[ ed] .
. . to sign the [stipulation of discontinuance] . . . result[ing] in the additional
expenditure of [Freeport] funds to defend an action that has been settled." R. 417.
Neither supports a finding of"willful and avowed obstruction."
First, Glacken and Edwards offered to address the Board through counsel
but could not do so directly based on the claims asserted against them by the Water
Works plaintiffs. As the appellants' counsel explained to the Board, any such
discussions "would not be privileged and that all persons present would become
potential witnesses regarding its content." R. 335.
Second, and equally important, as Freeport itself has admitted, there is
simply no case law to support its claim that a refusal to waive the fundamental
right of free speech constitutes a failure to cooperate. R. 376, ~ 41. Freeport is
correct on this point.
50
Freeport's "concern" about financial ruin and the "additional expenditure" of
funds is a feeble excuse at best given the fact that they rejected an offer of an
unconditional stipulation of discontinuance which would have given Freeport the
financial security it claims it needed.
III
Freeport violated the Open Meetings Law by
Revoking the Appellants' Defense and
Indemnification in an Illegal Executive Session
The Open Meetings Law, Public Officers Law § 100 et seq., prohibits a
public body from taking action outside the view of the public, except in very
limited circumstances. Revoking the defense and indenmification of an employee
is not one of those circumstances. Freeport's misconduct in stripping the appellants
of defense and indenmification out of the public eye, during an improperly-
convened executive session at the January 4, 2010 meeting, was simply the
culmination of secret Board machinations designed to push through a questionable
settlement paid with taxpayer monies and to silence criticism of Freeport's actions.
The Supreme Court's finding that "any purported irregularities in the calling
of an executive session on January 4, 2010 to be unintentional and not grounds for
invalidating the Directive of January 5, 2010" ignored the repeated violations and
the clear pattern of misconduct as evidenced by prior actions taken by Freeport in
connection with the settlement of the Water Works actions. The record further
51
establishes that the appellants were prejudiced by Freeport's blatant violations of
the Public Officers Law and have established good cause in seeking to invalidate
the January 5, 2010 directive revoking and terminating their defense and
indemnification. As a result, the Supreme Court and the Appellate Division erred
in ignoring the appellants' claim for attorneys' fees and costs under Public Officers
Law§ 107.
A. Revoking the defense and indemnification of an employee
or public official is not "proposed, pending or current litigation,"
with respect to which an executive session is permissible.
The Open Meetings Law grew out of the "crisis of confidence in American
politics occasioned by Watergate" and was specifically enacted to "open the
decision-making process of elected officials to the public while at the same time
protecting the ability of the government to carry out its responsibilities." Gordon v.
Village of Monticello, 87 N.Y.2d 124, 127 (1995). Indeed, the preamble of this law
expressly declares the need for such openness: "It is essential to the maintenance of
a democratic society that the public business be performed in an open and public
manner and that the citizens of this state be fully aware of and able to observe the
performance of public officials." Id. (quoting Public Officers Law § 1 00). Because
of this express declaration, the language of section 103, which requires that
"[ e ]very meeting of a public body shall be open to the general public," has been
"liberally construed to effectuate the legislative purpose." Csorny v. Shoreham-
52
Wading River Cent. Sch. Dist., 305 A.D.2d 83, 88 (2d Dep't 2003) (citing
Gordon); see also Smith v. City Univ. of New York, 92 N.Y.2d 707 (1999).
While the Open Meetings Law authorizes a public body to discuss certain
defined topics, as specifically delineated in Section 105, during closed executive
sessions, this is the exception to the general rule requiring openness, and "must be
narrowly scrutinized, lest the article's clear mandate be thwarted by thinly veiled
references to the areas delineated thereunder." Weatherwax v. Stony Point, 97
A.D.2d 840, 841 (2d Dep't 1983) (internal quotation and citation omitted); see also
Zehner v. Board of Education of Jordan-Elbridge Central School District, 91
A.D.3d 1349 (41h Dep't 2012) ("[g]iven the overriding purpose of the Open
Meetings Law, section 105 is to be strictly construed, and the real purpose of an
executive session will be carefully scrutinized 'lest the ... mandate [of the Open
Meetings Law] be thwarted by thinly veiled references to the areas delineated
thereunder"') (quoting Daily Gazette Co., 111 Misc. 2d at 304 ).
There are only eight purposes under the Open Meetings Law for which an
executive session may be convened. The only one that is relevant here, and the one
that Freeport invoked in order to avoid discussing the proposed revocation of the
appellants' defense and indemnification in public, is "discussions regarding
proposed, pending or current litigation." Public Officers Law § 105(l)(d). This
provision may be invoked, however, only where the public body is a party to the
53
litigation. This exception to the general rule is permitted because public bodies
need to be able to discuss their litigation strategy without fear that it will be
disclosed to an adversary. See Weatherwax, 97 A.D.2d at 841. But there was no
adversary here; Freeport had already settled with the Water Works plaintiffs. The
litigation exception is not a license to discuss privately any matter tangentially
related to litigation with respect to which the public body might wish to hide its
discussions. Yet that is the very purpose for which Freeport employed the
executive session here.
During the course of the January 4, 2010 public meeting, the Board went
into executive session to discuss "three (3) personnel matters and one (1) litigation
matter." R. 414. In fact, there was no discussion of a "litigation matter." The
"litigation matter" referenced in the unofficial minutes is the Water Works
litigation, which Freeport had already settled several month earlier. R. 416. What
the Board really discussed, and approved, was the resolution revoking the
appellants' defense and indemnification. R. 410,,; 5. There was no litigation in that
regard pending at that time between Freeport and the appellants. That litigation
began after Freeport's Board adopted the revocation resolution in executive
session. There was also nothing to fear from Freeport's adversary (the Water
Works plaintiffs) in the litigation that was the purported basis for the executive
session. There was, therefore, no legitimate discussion of "proposed, pending or
54
current litigation." As a result, there was no basis whatsoever for convening an
executive session and the resolution adopted in that executive session, revoking the
appellants' defense and indemnification, is illegal.
B. Freeport engaged in a pattern of violating the Open Meetings Law.
A "persistent pattern of deliberate violations of the Open Meetings Law
through insufficient notice, unreasonable starting times, improper convening of
executive sessions, and improper exclusion of members of the public" requires that
the action taken in executive session be set aside. See Goetschius v. Bd. of Educ. of
the Greenburgh Eleven Union Free School Dist., 244 A.D.2d 552 (2d Dep't 1997).
Here, stripping the appellants of their defense and indemnification during the
January 4, 2010 executive session was simply the last of a series of Open Meetings
Law violations employed by Freeport for the purpose of secretly disposing of the
Water Works actions and punishing the appellants.
For example, the special meeting of the Board of Trustees held on
September 18, 2009 at 7:45 a.m.4 was immediately adjourned to executive session
to discuss "two litigation matters." R. 419. It was during the executive session at
this very early morning special meeting that Mayor Hardwick and Trustees
Kennedy and Pineyro approved a resolution to settle the Water Works actions by
paying $3.5 million. R. 423.
4 The Board's regular meetings are held on Mondays at 7:30p.m. See, e.g., R. 407.
55
A second special meeting of the Board of Trustees was held on November 5,
2009 at 5:30p.m. As with the September 18th special meeting, the Board moved
almost immediately into executive session to discuss "one litigation matter" and
"one personnel matter." R. 424. During the course of that executive session, Mayor
Hardwick and Trustees Kennedy and Pineyro again approved a resolution settling
the Water Works actions and authorizing a confession of judgment in the amount
of $3.5 million. R. 424, 428. This settlement resolution "supersede[d] and
completely replace[d] the September 18, 2009 resolution of the [Board]." R. 428.
The special meeting was adjourned without ever returning to public session. R.
430.
Approximately two weeks later, the Board met at its regularly scheduled
time, 7:30p.m. According to the unofficial minutes of that meeting, a motion was
made to adjourn the meeting to executive session to discuss a dispute about the
official minutes of the previous Board meeting. R. 431. After returning to
legislative session, a further motion was made to adjourn once again into executive
session for the purpose of discussing "two litigation matters and one personnel
matter." R. 435. During this executive session, the Board "re-ratif[ied]" the
resolution with respect to the Water Works actions that had been adopted in
executive session two weeks earlier. R. 435. Again, the votes of Mayor Hardwick
and Trustees Kennedy and Pineyro carried the resolution. Trustees White and
56
Martinez abstained. R. 439. As with the prior two special meetings, this Board
meeting was adjourned without returning to legislative session. R. 441.
Thus, Freeport approved the payment of $3.5 million in public funds to
settle the Water Works actions, and authorized the execution of a confession of
judgment, without ever discussing the matter in public. Appropriating monies for a
settlement, or for any purpose, is not an appropriate topic for executive session
discussion. Public Officers Law § 105. In fact, sunlight is necessary "to prevent
public bodies from debating and deciding in private matters that they are required
to debate and decide in public, i.e., deliberations and decisions that go into the
making of public policy." Zehner, 91 A.D.3d at 1350. "Matters of policy" in this
context is generally understood to include the "manner in which public money will
be expended or allocated" and are specifically matters to be discussed and debated
during a public meeting. See Committee on Open Government, AO 2754.
There were other violations. For example, the initial resolution approving
this settlement was adopted at a time when much of the public was unlikely to be
at the meeting. This is itself a red flag. In an advisory opinion, the Committee on
Open Government has noted that at least one trial court decision found that an
early morning meeting, at 7:30 a.m., was decidedly inappropriate and not in
keeping with the legislative mandate of openness, given that members of the public
57
were unlikely to be available to attend during such early morning hours even if
they wanted to:
[T]he scheduling of a board meeting at 7:30 a.m. -- even assuming
arguendo that such meetings were properly noticed and promptly
conducted -- does not facilitate attendance by members of the public,
whether employed within or without the home, particularly those with
school age or younger children, and all but insures that teachers and
teacher associates at the school are unable to both attend and still
comply with the requirement that they be in their classrooms by 8:40
a.m.
OML-A0-05280 (quoting Matter of Goetchius v. Board of Education, [Sup. Ct.,
Westchester Cty., August 8, 1996]).
Taken together, these persistent and repeated violations are indicative of
deliberate conduct aimed at avoiding the requirement of openness. Revoking and
terminating appellants' defense and indemnification in executive sesswn on
January 4, 2010 was simply part of this pattern of misconduct.
C. The resolution adopted in executive session should be declared
null and void and the appellants should be awarded their
attorneys' fees and litigation expenses.
The record establishes that Freeport purposely evaded the requirements of
the Open Meetings Law in connection with the Water Works settlement generally
and in connection with the revocation of the appellants' defense and
indemnification in particular. Because of Freeport's egregious actions, the
appellants have been compelled to pay for their defense in the Water Works
actions and to prosecute these proceedings. Having thus established good cause,
58
the appellants are entitled to recover their attorneys' fees and costs in connection
with these proceedings pursuant to Public Officers law§ 107.
Even without the compelling evidence of Freeport's repeated violations of
the Open Meetings Law, the appellants would still be entitled to recover their
attorneys' fees and costs, based upon the deliberate misconduct that occurred
during the January 4, 2010 meeting. As stated by this Court in Gordon:
Though, as the Appellate Division observed, the fact that
a defendant has repeatedly violated the Open Meetings
Law is certainly the kind of evidence that may justify an
award of attorneys' fees ... that no such behavior was
shown on the part of these defendants is of no moment
since it is inconceivable that the Legislature had only
such recidivist offenders in mind when it vested Trial
Judges with the authority to award costs and fees in the
first place. In fact, it is very often the possibility of
recovering costs and attorneys' fees that gives private
citizens like plaintiffs the impetus they need to bring
meritorious lawsuits to enforce the Open Meetings Law
thus advancing the statutory policy of keeping New
Yorkers better apprised of the actions of their elected
officials.
87 N.Y.2d at 128 (emphasis added).
The Supreme Court and the Appellate Division thus erred in refusing to
award the appellants their disbursements, costs and reasonable attorneys' fees in
connection with the prosecution of these proceedings and appeals.
59
Conclusion
For all of the foregoing reasons, the appellants submit that the order of the
Appellate Division should be reversed and the petitions should be granted.
Freeport violated the appellants First Amendment rights by revoking their defense
and indemnification. It did so, moreover, in a manner for which there was no basis
in the law upon which Freeport relied, the Public Officers Law, and which violated
the Open Meetings Law. The resolution Freeport adopted should, therefore,
declared null and void and Freeport should be required to reimburse the appellants
for any expenditures they have made in the defense of the Water Works actions.
The appellants should also recover the attorneys' fees and litigation expenses they
have incurred in this proceeding.
Respectfully submitted,
WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP
Attorneys for Appellants
By: ~b~r:A~&::a
Peter A. Meisels
Kathleen A. Daly
3 Gannett Drive
White Plains, New York 10604
(914) 323-7000
Dated: White Plains, New York
December 12, 2012
60
IDENTICAL COMPLIANCE OF BRIEFS CERTIFICATION
It is hereby certified that the Brief for Petitioners-Appellants
which was filed electronically (by CD-Rom), December 12, 2012
is identical to the Brief being filed physically with
the New York State Court of Appeals.
Dated: December 11,2012
~a:IJJ
KATHLEEN A.~.
WILSON ELSER MOSKOWITZ
EDELMAN & DICKER LLP
Attorneys for Petitioners-Appellants
3 Gannett Drive
White Plains, New York 10604
Tel: (914) 323-7000
Fax: (914) 323-7001
robert.spolzino@wilsonelser.com