To be Argued by:
STANLEY A. CAMHI, ESQ.
Time Requested 30 Minutes
([ourt of J\pptaIs
STATE OF NEW YORK
In the Matter of the Application of
VILMA LANCASTER, DONALD MILLER and WILLIAM WHITE,
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,
INCORPORA TED VILLAGE OF FREEPORT and
BOARD OF TRUSTEES OF THE INCORPORATED VILLAGE OF FREEPORT,
In the Matter of the Application of
WILLIAM F. GLACKEN, RENA IRE FRIERSON-DAVIS and HARRISON J. EDWARDS,
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 and ; Chapter 130 of the Code of Freeport, and §§ 103, 105,
and 107 of the Public Officers Law for the State of New York,
INCORPORATED VILLAGE OF FREEPORT, ANDREW HARDWICK, MAYOR ROBERT KENNEDY,
TRUSTEE, CARMEN PINEYRO, TRUSTEE, WILLIAM H. WmTE, 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,
BRIEF FOR RESPONDENTS-RESPONDENTS
STANLEY A. CAMHI
JESSICA M. BAQUET
DANIEL E. SHAPIRO
JASPAN SCHLESINGER LLP
Attorneys for Respondents-Respondents
300 Garden City Plaza, 5th Floor
Garden City, New York 11530
Phone No. (516) 746-8000
Fax No. (516) 393-8282
Brief Completed on: April 1, 2013
Echo Appellate Press, Inc.· 30 West Park Avenue· Long Beach, New York 11561 • (516) 432-3601
Printed on Recycled Paper 19815
The Incorporated Village of Freeport is a municipal corporation that does
not have any parents, subsidiaries or affiliates. Customized Claims Services, LLC
is a limited liability company that does not have any parents or subsidiaries. The
assets of Customized Claims Services, LLC were purchased by Customized Claims
Solutions, LLC. Customized Claims Solutions, LLC does not have any parents,
subsidiaries or affiliates.
STATUS OF RELATED LITIGATION
In this appeal, Appellants seek to compel Respondents to reinstate their
defense and indemnification in connection with two federal lawsuits in the United
States District Court for the Eastern District of New York, to wit, Water Works
Realty Corp., et al. v. Edwards, et ai., Case No. 08-cv-0449 and Water Works
Realty Corp., et al. v. Edwards, et ai., Case No. 08-cv-4754. In January 2010,
when the Article 78 proceedings that are the subject of this appeal were
commenced, these lawsuits had been settled as against all of the defendants named
therein except for Appellants and Jorge Martinez. 1 According to the Federal
Court's docket, the aforementioned actions were settled as against each of the
Appellants herein between November 14, 2012 and December 5, 2012 and as
against Mr. Martinez on April 20, 2011. The cases were marked "closed" on the
docket on January 23, 2013.
1 Mr. Martinez was a petitioner in the underlying Article 78 proceedings and was also an
appellant before the Appellate Division. However, he is not a party to the instant appeal.
TABLE OF CONTENTS
DISCLOSURE STATEMENT ................................................................................... i
STATUS OF RELATED LITIGATION ................................................................... ii
TABLE OF AUTHORITIES ................................................................................... vii
QUESTIONS PRESENTED ..................................................................................... 1
PRELIMINARY STATEMENT ............................................................................... 3
COUNTER-STATEMENT OF FACTS ................................................................... 4
PROCEDURAL HISTORY ....................................................................................... 9
SUMMARY OF ARGUMENT ............................................................................... 13
THE VAST MAJORITY OF APPELLANTS'
ARGUMENTS ARE BASED UPON THE
FAULTY PREMISE THAT THE VILLAGE
INSISTED ON THE NON-DISPARAGEMENT
CLAUSE ....................................................................................................... 15
THE COURT LACKS SUBJECT MATTER
JURISDICTION BECAUSE THIS APPEAL
DOES NOT DIRECTLY INVOLVE A
QUESTION ................................................................................................... 18
A. An Appeal as of Right Lies Only if the
Constitutional Question Presented is Substantial .............................. 19
B. The Constitutional Questions Raised Were Not Preserved
For Appeal ....................... ~ .................................................................. 20
C. The Heart of this Matter Concerns Only State
and Local Law .................................................................................... 23
D. Appellants' Constitutional Arguments Are Not
Substantial Because They Are Devoid OfMerit. ............................... 24
THE VILLAGE PROPERLY WITHDREW
APPELLANTS' DEFENSE AND
INDEMNIFICATION AS A RESULT OF
THEIR FAILURE TO COOPERATE AS
REQUIRED BY THE NEW YORK PUBLIC
OFFICERS LAW AND THE FREEPORT _
VILLAGE CODE .......................................................................................... 27
A. An Unreasonable Refusal to Accept a Settlement
that is in The Public Interest is the Quintissential
Failureto Cooperate Under POL §18 and the Village Code .............. 29
1. Under the New York Constitution and State and
Local Law it is Clear that a Public Officer's Duty
to Cooperate in his Defense Encompasses a Duty
to Cooperate in the Settlement of an Action ............................ 29
2. Policy Considerations Dictate that a Public
Officer's Duty to Cooperate in the Defense of
an Action Encompasses a Duty to Cooperate
in the Settlement of an Action .................................................. 35
B. Respondents Did Not Interfere With Appellants' Independent
Counsel ................................................................................................ 37
C. The Elements of the Thrasher Test are Satisfied ............................... 39
THE OPEN MEETINGS LAW DOES
NOT PROVIDE A BASIS UPON WHICH
THE RESOLUTION AND DIRECTIVE
CAN BE INVALIDATED ............................................................................ 47
A. Appellants' Open Meetings Law Arguments Are Not Preserved
For Appeal .......................................................................................... 47
B. Respondents Did Not Violate the Open Meetings Law ..................... 48
C. Respondents Did Not Engage in a Pattern of Deliberate
Violations of the Open Meetings Law ................................................ 52
D. Appellants Are Not Entitled to Attorneys' Fees ................................. 55
RESPONDENTS DID NOT VIOLATE
APPELLANTS' FIRST AMENDMENT
RIGHTS ........................................................................................................ 55
A. Preliminary Matters ............................................................................. 56
B. Appellants' Constitutional Claims Are Barred Under Garcetti .......... 57
1. The Garcetti Doctrine ............................................................... 59
2. All of the Appellants Are Subject to Garcetti
Whether They Held Office at the Time of
the Settlement or Not ................................................................ 61
3. Under Garcetti, the Speech Restricted By the Non-
Disparagement Clause Was Not Protected By the First
Amendment .............................................................................. 62
4. Even if the Non-Disparagement Clause Restricted
Appellants' Right to Speak as Private Citizens,
the Village had an Adequate Justification for Treating
Them Differently Than Members of the General Public ......... 64
C. The Non-Disparagement Clause Is Not A Prior Restraint. ................. 67
D. The Withdrawal of Appellants' Defense and Indemnification
Was Not a Punishment and Instead Was Required By Law ............ 71
E. Appellants Were No Longer Entitled to be Defended or
Indemnified Once They Ceased Cooperating ............................ 76
CONCLUSION ....................................................................................................... 79
TABLE OF AUTHORITIES
Del Castillo v. Bayley Seton Hosp., 172 A.D.2d 796, 569 N.Y.S.2d 168
(2d Dep't 1991) ............................................................................................. 70
Garcia v. Abrams, 98 A.D.2d 871, 471 N.Y.S.2d 161
(3d Dep't 1983) ....................................................................................... 24, 28
Matter of Kachalsky v. Cacace, 14 N.Y.3d 743, 899 N.Y.S.2d 748
(2010) ............................................................................................................ 19
Matter ofSbuttoni, 16 A.D.3d 693, 694, 792 N.Y.S.2d 187 (2d Dep't 2005) ....... 22
Matter of Town of Rye v. New York State Bd. of Real Property Services,
10 N.Y.3d 793,857 N.Y.S.2d 7 (2008) ........................................................ 21
N.Y.S Inspection, Security and Law Enforcement Employees, District Council 82,
AFSCME v. Abrams, 135 A.D.2d 304, 525 N.Y.S. 2d 402
(3d Dep't 1988) ....................................................................................... 24, 28
Nelson Elec. Contr. Corp v. Trans conti ental Ins. Co.,
231 A.D.2d 207,660 N.Y.S.2d 220 (3d Dep't 1997) ... ~ ......................... 37, 39
Nestor v. Britt, 270 A.D.2d 192,707 N.Y.S.2d 11
(1 st Dep't 2000) ............................................................................................ 63
New York State Psychiatric Assn., Inc. v. New York State Dept. of Health,
19 N.Y.3d 17,945 N.Y.S.2d 191 (2012) ...................................................... 31
Roberts v. Town Bd., 207 A.D.2d 404, 615 N.Y.S.2d 725
(2d Dep't 1994) ............................................................................................. 52
Saucedo v. Winger, 22 Kan. App. 2d 259 (1996) ............................................. 29, 30
Schulz v. State of New York, 81 N.Y.2d 336,599 N.Y.S.2d 469
(1993) ................................................................................................ 20, 21, 48
Tabankin v. Codd, 40 N.Y.2d 893, 389 N.Y.S.2d 362
(1976) ............................................................................................................ 20
Thrasherv. United States Liability Ins. Co., 19 N.Y.2d 159, 278 N.Y.S.2d 793
(1967) ...................................................................................................... 28, 39
Trump v. Trump, 80 N.Y.2d 892,587 N.Y.S.2d 907 (1992) ............................ 24, 26
Trump v. Trump, 179 A.D.2d 201, 582 N.Y.S.2d 1008
(1st Dep't 1992) ...................................................................................... 25, 26
Weatherwax v. Stony Point, 97 A.D.2d 840, 468 N.Y.S.2d 914
(2d Dep't 1983) ....................................................................................... 49, 50
Wynkoop Hallenback Crawford Co. v. W. Union Tel. Co., 268 N.Y. 108
(1935) ............................................................................................................ 19
Hogan v. Twp. of Haddon, 2008 U.S. App. LEXIS 5183
(3d·Cir. 2008) ................................................................................................ 61
Alexander v. U.S., 509 U.S. 544, 113 S. Ct. 2766, 125 L. Ed. 2d 441
(1993) ...................................................................................................... 25, 69
Asgeirsson v. Abbott, 2011 U.S. Dist. LEXIS 31662
(W.D. Tx. Mar. 25, 2011) ............................................................................. 60
Cooper v. Town of East Hampton, 83 F.3d 31 (2d Cir. 1996) ................................ 74
Cooper v. Town of East Hampton, 888 F.Supp. 376 (E.D.N.Y. 1995) .................. 73
Cowan v. Ernest Cordelia, P.C., 2001 U.S. Dist. LEXIS 185
(S.D.N.Y. 2001) ...................................................................................... 45, 46
Cty. Commisioners v. Umbehr, 518 U.S. 668 (1996) ............................................. 76
Ezekwo v. New York City Health & Hosps. Corp., 940 F.2d 775
(2d Cir. 1991) ................................................................................................ 63
Garcetti v. Ceballos, 547 U.S. 410, 126 S. Ct. 1951, 164 L. Ed. 2d 689
(2006) ............................................................................................... ...... passim
Hartman v. Register, 2007 U.S. Dist. LEXIS 21175
(S.D. Ohio 2007) ........................................................................................... 61
Hogan v. Twp. of Haddon, 2006 U.S. Dist. LEXIS 87200 (D.N.I. 2006) ............. 61
Kirkpatrick v. Washingtonville, 2011 U.S. Dist. LEXIS 40097
(S.D.N.Y. 2001) ............................................................................................ 63
Matthes v. East Fishkill, 785 F.2d 43 (2d Cir. 1986) .............................................. 52
Pappas v. Giuliani, 290 F.3d 143 (2d Cir. 2012) .................................................... 65
Perry v. Sinderman, 408 U.S. 593 (1972) ............................................................... 76
Rangra v. Brown, 566 F.3d 515 (5th Cir. 2009) ..................................................... 60
Ruotolo v. City of New York, 514 F.3d 184 (2d Cir. 2008) ................................... 63
Shields v. Charter Township of Comstock, 617 F. Supp. 2d 606
(W.D. Mich. 2009) ........................................................................................ 60
The Brooklyn Institute of Arts and Sciences v. The City of New York,
64 F.Supp.2d 184 (E.D.N.Y. 1999) .............................................................. 75
u.S. v. Seale, 577 F.3d 566 (5th Cir. 2009) ............................................................ 60
U.S. v. Quattrone, 402 F.3d 304 (2d Cir. 2005) ...................................................... 69
Wetzel v. Town of Orange town, 308 Fed. Appx. 474
(2d Cir. 2009) ................................................................................................ 63
N.Y. CONST. art. VIII § ..................................................................................... 33, 43
Freeport Village Code §130-6 ......................................................... 23, 28,61,62,77
Freeport Village Code § 130-1 0 ............................................................................... 32
Freeport Village Code § 130-13 ............................................................................... 34
Freeport Village Code § 130-12 ............................................................................... 34
N.Y. Civ. P. & R. §5601(b)(I) ................................................................................ 18
N.Y. Gen. Mun. Law §51 (2013) ............................................................................ 43
N.Y. Public Officers Law § 18 .................................................... ...................... passim
N.Y. Public Officers Law §105 ....................................................... 48, 49, 50, 51, 52
N.Y. Public Officers Law §107 ......................................................................... 52, 55
Fifth Circuit Court of Appeals Local Rule 41.3 ...................................................... 60
James D. Cole, Defense and Indemnification of Local Officials: Constitutional and
Other Concerns, 58 ALB. L. REv. 789 (1995) ............................................... 32
Jessie Beller, Assistant Counsel of New York City Conflicts of Interest Board, Use
of Municipal Resources for Personal Purposes, NYSBAlMLRC MUNICIPAL
LAWYER, Spring 2009, Vol. 23, No. 2 .......................................................... 43
Meredith R. Miller, An Illusory Right to Appeal: Substantial Constitutional
Questions and the New York Court of Appeals, 31 PACE L. REv. 583
(Spring 2011) ................................................................................................ 20
New York Court of Appeals' Clerk's Office, The New York Court of Appeals
Civil Jurisdiction and Practice Outline, February 2011, availab!e at
http://www.courts.state.ny.us/ctapps/forms/civiloutline.pdf ........................ 20
COUNTER-STATEMENT OF QUESTIONS PRESENTED
1. Does the instant matter directly involve a substantial constitutional
question such that Appellants may appeal to this Court as of right pursuant to N.Y.
Civ. P. Law & R. 5601 (b)(I)?
2. Did the Supreme Court and the Appellate Division correctly
determine that Appellants breached their duty to cooperate under Public Officers
Law § 18 ("POL § 18") and Freeport Village Code § 130-6 by refusing to sign a
Stipulation of Discontinuance which would have discontinued certain federal
lawsuits as against them without any admission of wrongdoing or monetary
payment by them?
3. Did Supreme Court and the Appellate Division properly determine
that Respondent Board of Trustees acted within its authority when it withdrew the
defense and indemnification it previously authorized for Appellants after they
refused to sign a Stipulation of Discontinuance which would have discontinued a
federal lawsuit against them without any admission of wrongdoing or monetary
payment by them?
4. Did Supreme Court and the Appellate Division properly determine
that any purported violations of the Open Meetings Law by the Respondent
Board of Trustees were unintentional and thus not a basis for vacating the
Board's January 4, 2010 resolution, which withdrew Appellants' defense and
indemnification in certain federal lawsuits, and the directive that was issued as a
5. Did the Supreme Court and Appellate Division correctly determine
that Respondents did not violate Appellants' First Amendment rights?
Respondents, the Incorporated Village of Freeport ("Village"), the Board of
Trustees of the Incorporated Village of Freeport ("Board")/ Customized Claims
Services, LLC ("CCS"), and Howard Colton, in his capacity as Village Attorney,
(collectively, "Respondents"), submit this brief in opposition to the appeal of
William F. Glacken, Renaire Frierson-Davis, Harrison J. Edwards, Vilma
Lancaster, Donald Miller, and William White (collectively, "Appellants") of the
February 21, 2012 Order of the Appellate Division of the Supreme Court, Second
Dep~artment ("Appellate Order"). The Order affirmed the August 26, 2010 Order
of the Supreme Court, Nassau County (Cozzens, J.) ("Supreme Court Order"),
which properly dismissed an Article 78 proceeding brought by Glacken, Frierson-
Davis and Edwards (collectively, "Glacken Appellants") and a related Article 78
proceeding brought by Lancaster, Miller and White (collectively, "Lancaster
Appellants,,).3 These proceedings, in which Appellants challenged the Village's
withdrawal of their defense and indemnification in connection with two federal
2 The Board of Trustees of the Incorporated Village of Freeport is comprised of Mayor
Andrew Hardwick and four trustees, to wit, Robert Kennedy, Carmen Pineyro, William H. White
and Jorge Martinez. The Board of Trustees of the Incorporated Village of Freeport was named as
a collective unit in the Article 78 proceeding brought by the Lancaster Appellants, while Mayor
Hardwick and each trustee were separately named in their official capacities in the Article 78
proceeding commenced by the Glacken Appellants.
3 As set forth above in the statement regarding the Status of Related Litigation, Jorge
Martinez, one of the current Trustees, was a petitioner in the Lancaster Article 78 proceeding at
the trial level and an appellant before the Second Department. According to Appellants' Notice
of Appeal and Brief, Mr. Martinez is not a party to the instant appeal.
lawsuits, were consolidated and decided together by the Supreme Court. For the
reasons stated herein, the Appellate Division Order should be affirmed.
COUNTER-STATEMENT OF FACTS
The Appellants are past and present officers of the Village, some of whom
were elected to their positions while others were appointed. The elected officers
include: (1) former mayor, William F. Glacken; (2) current Trustee, William
White; (3) former Trustee, Donald Miller; and ( 4) former Trustee, Renaire
Frierson-Davis. The remaining appellants, Vilma Lancaster and Harrison J.
Edwards, are former appointed officers of the Village who served in the positions
of Treasurer and Village Attorney, respectively. (R. 20, 232).
In or about 2008, Water Works Realty Corp. ("WWRC") and its principal,
Gary Melius ("Mr. Melius") (collectively, "Water Works Plaintiffs") commenced
two lawsuits against, among others, the Village and the Appellants named herein
("Water Works Actions"). (R. 91-92; 264-317). They alleged that the named
defendants orchestrated a scheme to unlawfully deprive them of their title to and
interest in certain real property located in the Village ("Property"). (R. 264-317).
Specifically, the Water Works Plaintiffs claimed that the defendants conspired to
have the Village sell certain tax liens against the Property to a friend and client of
Appellant Edwards ("Tax Lien Purchaser"). (R. 283). The conspiracy was
purportedly carried out when "Fraudulent Notices to Redeem" the tax liens, which
did not contain the legally required notice to the owner that the liens could be sold
if they were not redeemed by a certain date, were sent to the Water Works
Plaintiffs. (R. 290). Allegedly, the Tax Lien Purchaser applied for tax deeds as
soon as he was eligible to do so and they were issued to him an exceptionally short
time later. He then apparently locked the Water Works Plaintiffs out of the
The complaints in the Water Works Actions contained ten causes of action,
including Civil RICO (Racketeer Influenced and Corrupt Organization Act)
violations, conspiracy claims, civil rights violations and fraud, and demanded
$8,500,000 in damages, plus treble damages and attorneys' fees. (R. 93). As a
result, the Board adopted a resolution authorizing the Village to provide a defense
for each of the Village officers named as defendants in the Water Works Actions,
including Appellants, and to indemnify them pursuant to POL § 18 and Freeport
Village Code § 130-5. (R. 93). Peter A. Meisels, Esq. of Wilson, Elser,
Moskowitz, Edelman & Dicker LLP ("Mr. Meisels") was initially retained to
represent both the Village and the Appellants. However, the Village eventually
4 As a result of these events, in September 2004, a lawsuit was commenced in the New
York State Supreme Court, Nassau County by the mortgagees of the Water Works property
against the Tax Lien Purchaser to determine claims to the property and to declare that its
mortgages were valid liens. (R. 138). In January 2005, WWRC cross-claimed against the Tax
Lien Purchaser for, inter alia, a declaratory judgment that WWRC was the rightful owner of the
property. (R. 139). By Order dated January 26, 2006, the Supreme Court (Warshawsky, J.) set
aside the tax deeds issued to the Tax Lien Purchaser and declared WWRC the rightful owner of
the property. (R. 140). On February 8, 2006, the tax deeds previously issued to the Tax Lien
Purchaser were cancelled and title was reinstated to WWRC. (R. 140).
retained separate counsel, Dennis E. Warren, Esq. ("Mr. Warren"), to represent it
and Village Attorney Colton. (R. 93-94).
Subsequently, in March 2009, Andrew Hardwick defeated Appellant
Glacken in the Village's mayoral election. (R. 94). Appellant Miller was also
defeated in his bid for re-election as trustee at that time. The Board then consisted
of Mayor Hardwick, Robert T. Kennedy, Carmen Pineyro, Appellant William H.
White, Jr., and Jorge Martinez. (R. 94). The Board is currently comprised of the
After the election, the new Village administration undertook to address the
Water Works Actions and the possible consequences thereof to the Village's
residents. (R. 94). The lawsuit exposed the Village to tens of millions of dollars in
potential damages, as well as the possibility of having to pay plaintiffs' counsel
fees if they prevailed. (R. 94). Even if the Village successfully defended the
lawsuits, the cost of the defense, including legal fees and other related expenses,
would be tremendous and would create an undue burden for the taxpayers since the
Village, to a large extent, is self-insured. (R. 94). ~s a result, the Village started
to focus its attention on trying to settle the litigation with respect to it as well as the
Appellants. (R. 94).
Thereafter, Mr. Warren, the Village's counsel, entered into negotiations with
the Water Works Plaintiffs' counsel. (R.94). Mr. Meisels was kept advised of and
participated in many of the negotiations. (R. 94). The progress of the negotiations
and the terms of a possible settlement were also reported to the Board, which
included Appellant White and Jorge Martinez. (R. 94). An agreement which
resolved the Water Works Actions with respect to the Village, Village Attorney
and all of the Appellants ("Settlement Agreement") was ultimately approved by the
Board on November 5, 2009. (R.94-95). Although Appellants claim they did not
know about the Settlement Agreement when it was executed, they admit that White
was present at the November 5th meeting. Appellants' Br. at 9-10; (R. 428).
The Settlement Agreement provided that the Village would pay the Water
Works Plaintiffs $3,500,000, a fraction of the total potential damages, in
installments over six years. (R. 95). The Water Works Plaintiffs agreed to
discontinue the actions against the individual Village defendants, including
Appellants, without any cost to them or any admission of wrongdoing if they
signed a Stipulation of Discontinuance ("Stipulation") containing non-
disparagement language ("Non-Disparagement Clause"). (R. 95). The benefit that
was to inure to Appellants under the settlement was the same as that which would
have resulted if the litigation concluded with a verdict in their favor.
On November 10, 2009, the same date the Village executed the Settlement
Agreement, Mr. Warren notified Mr. Meisels of Appellants' option to participate
in the settlement by signing the Stipulation no later than November 16, 2009.5 (R.
405). Although, on November 12, 2009, Mr. Meisels wrote to Mr. Warren
regarding concerns the Appellants had with the settlement, Mr. Warren promptly
addressed those concerns on November 13, 2009. (R. 213 -1 7). Mr. Meisels did
not attempt to rebut Mr. Warren's letter or provide Mr. Warren with any additional
support for the positions he took in his November 12th letter. Nonetheless,
Appellants refused to sign the Stipulation, purportedly because it required them not
to interfere with, challenge or criticize the very settlement of which they were
receiving the benefit. (R. 95). The record indicates that the language to which
Appellants objected was insisted upon by the Water Works Plaintiffs. (R. 27, 95,
The Village's principal goal in settling the Water Works Actions was to
"stop the bleeding" by putting an end to the legal fees and expenses that the
Village was incurring in defending the actions and to avoid the tremendous
financial exposure faced by the Village if it or any of the named Village officers
were ultimately found liable. (R. 95). It was, therefore, critically important that all
of the claims against all of the Village defendants be resolved. (R. 96).
By refusing to cooperate in signing the Stipulation and achieving a global
settlement, Appellants left the Village exposed to the continuing financial burden
5 As of that date,. Appellants Lancaster and White continued to serve as officers of the Village
but the other Appellants no longer held office. CR. 20, 232).
of defending the litigation as against them and the possibility of a multi-million
dollar judgment. (R. 369). Appellants did so even though they could not hope to
do better for themselves by proceeding with the lawsuit. They apparently did not
feel the need to cooperate with the Village in settling the litigation, obviously
believing that because the Village was paying for their defense pursuant to Public
Officers Law § 18 and Village Code § 130-5, as well as indemnifying them in the
event of an adverse verdict, they had nothing to lose by doing so. (R. 369).
As a result, on January 4, 2010, the Board convened an executive session in
which it passed a resolution ("Resolution") withdrawing the defense and
indemnification it previously provided Appellants. (R. 369). The basis for the
Board's decision was Appellants' failure to cooperate with the Village, in violation
of POL § 18 and Village Code § 130-6, in obtaining a global settlement which
would have resolved all of the Water Works Plaintiffs' claims against them. (R.
369). On January 5, 2010, the Board issued a directive ("Directive") pursuant to
the Resolution, which revoked and terminated Appellants' defense and
indemnification. (R. 62-64). On January 7, 2010, CCS, the Village's claims
administrator, notified Appellants that the Village had revoked their defense
effective January 4, 2010. (R. 65-68).
On February 10, 2010, the Lancaster Appellants commenced an Article 78
proceeding against the Village and the Board by the filing of a Verified Petition
which sought an Order of the Supreme Court: (1) vacating the January 5, 2010
Directive; (2) directing the Village and the Board to immediately defend and
indemnify them in the Water Works Actions; and (3) declaring the disclaimer of
coverage in the January 5, 2010 Directive invalid. (R. 16-75). On March 12,
2010, the Village and the Board filed an Answer and supporting affidavit of
Village Attorney Colton, which requested that the Petition be denied and the
proceeding dismissed. (R. 76-218). On March 17, 2010, the Lancaster Appellants
filed a reply to the answer of the Village and the Board. (R.219-226).
In the meantime, on March 12,2010, the Glacken Appellants commenced an
Article 78 proceeding against the Village, Mayor Hardwick, Village Attorney
Colton, the Village Trustees, and CCS in which they sought an Order of the
Supreme Court: (1) declaring the January 4, 2010 resolution of the Board illegal,
arbitrary, capricious and without substantial basis in the record; (2) vacating the
January 5, 2010 Directive; (3) directing Village Attorney Colton to restore the
Glacken Appellants' counsel in the Water Works Actions; and (4) declaring that
the Glacken Appellants had shown good cause to void the January 4, 2010
resolution. (R. 227-342). On April 8, 2010, the named respondents, except CCS,
filed an answer in which they sought the dismissal of the proceeding. (R. 343-385).
CCS, by Notice of Motion dated April 8, 2010, moved to dismiss the Petition as
against it. (R.386-390). The Glacken Appellants submitted reply papers on April
19,2010, in which they also opposed CCS' cross-motion. (R.391-441).
By Order of the Supreme Court dated May 20, 2010, the proceedings were
consolidated and assigned to Hon. R. Bruce Cozzens, Jr., J.S.C. On August 26,
2010, the Supreme Court issued a decision which dismissed the consolidated
Article 78 proceedings based on its findings that: (1) any purported irregularities in
the calling of the executive session during which the Resolution was passed were
. not a basis for voiding the Directive under Open Meetings Law § 107; (2) the same
test invoked to determine whether an insurer can properly disclaim coverage based
on an insured's lack of cooperation was applicable; (3) in applying this test, it was
clear that the Village properly withdrew its defense and indemnification of
Appellants because they failed to cooperate as they were required to by POL § 18;
and (4) as a result, the Directive was not made in violation of lawful procedure or
by error of law and was not arbitrary and capricious or an abuse of discretion. (R.
12-15). CCS' motion was denied as academic. (R. 15).
The Lancaster Appellants and the Glacken Appellants filed separate Notices
of Appeal of the Supreme Court Order on September 3,2010 and September 24,
2010, respectively. (R. 8-11). They perfected their appeal by submitting two
separate briefs under the same docket number. On May 19, 2011, at the direction
of the Clerk of the Appellate Division, Second Department, Respondents filed a
single brief addressing the arguments presented in the briefs of both the Glacken
Appellants and Lancaster Appellants. Respondents received the reply briefs of the
Lancaster Appellants and Glacken Appellants on June 6, 2011 and June 15, 2011,
On February 21, 2012, the Appellate Division, Second Department issued an
order affirming the Supreme Court Order. (R. 5-7). In so holding, the Appellate
Division found that: (1) the Board's decision to terminate Appellants' defense and
indemnification was not arbitrary and capricious or an abuse of discretion; (2)
Respondents diligently sought Appellants' cooperation; (3) Appellants' attitude
was one of willful and avowed obstruction; and (4) the Non-Disparagement Clause
did not constitute a prior restraint on free speech. (R. 5-7).
On March 29, 2012, Respondents were served with a single Notice of
Appeal on behalf of all of the Appellants. (R. 3-7). The Notice of Appeal asserted
that they were appealing the Appellate Division Order as of right pursuant N.Y.
Civ. P. Law & R. 5601(b)(1), purportedly because this matter involves "the
construction of the First Amendment to the Constitution of the United States and
article I, section 8 of the Constitution of the State of New York." (R.4). On April
13, 2012, Respondents received a letter from the New York State Court of Appeals
dated April 10,2012, which invited the parties to comment on the Court's subject
matter jurisdiction over the instant appeal. Both sides submitted letters regarding
the jurisdictional issue. On September 6, 2012, the Court set a briefing schedule in
this matter and invited the parties to further argue the issue of subject matter
jurisdiction in their briefs.
As discussed more fully below, this appeal should be dismissed for lack of
subject matter jurisdiction. In the alternative, the Appellate Division Order should
be affirmed on the merits.
SUMMARY OF ARGUMENT
. The instant appeal should be dismissed because the Appellate Division
Order is not appealable as of right. An appeal as of right can only be taken on
constitutional grounds where it directly involves a substantial constitutional
question. The constitutional issue that Appellants raise here is not substantial
because: (1) it was not preserved for appeal; (2) the heart of this case concerns
issues of state and local law; and (3) Appellants have no viable First Amendment
claims. As a result, the Court should dismiss the appeal for lack of subject matter
Furthermore, even if the Court exercises jurisdiction, the Appellate Division
Order should be affirmed on several grounds. First, Appellants' refusal to accept a
settlement that would have discontinued all claims against them, without any
monetary payment or admission of wrongdoing by them, was per se unreasonable.
Their conduct unquestionably constitutes a breach of their duty to cooperate and,
therefore, the Village's withdrawal of their defense and indemnification was not
only appropriate, but required by POL § 18, Freeport Village Code § 130-6 and the
New York State Constitution.
Second, despite their arguments to the contrary, it is clear that the Board
properly convened the executive session during which Appellants' defense and
indemnification was withdrawn. Moreover, even if there were any purported
irregularities in that executive session, they were clearly the result of mere
negligence such that no basis exists upon which the Resolution can be voided.
Finally, Appellants' constitutional arguments should not even be reached
because they were not preserved for appeal. If considered on the merits, their
claims nonetheless fail because the Village cannot be held responsible for the Non-
Disparagement Clause since it was the Water Works Plaintiffs, who are private
parties, that insisted on it. Appellants' claims are also fatally flawed because the
type of speech restricted by the clause is not entitled to protection under the First
Amendment. Additionally, neither the clause nor the Village's withdrawal of
Appellants' defense and indemnification constitutes a prior restraint, a form of
punishment or a retaliatory act.
F or all of the foregoing reasons, the Appellate Division Order should be
THE VAST MAJORITY OF APPELLANTS'
ARGUMENTS ARE BASED UPON THE FAULTY
NOTION THAT THE VILLAGE INSISTED ON
THE NON-DISPARAGEMENT CLAUSE
Appellants' entire appeal is grounded on a faulty premise which appears
throughout their brief and must immediately be dispelled. They repeat ad nauseum
that it was the Respondents who insisted that they agree to the Non-Disparagement
Clause. In doing so, Appellants ignore and, indeed, attempt to conceal the fact that
they conceded in the proceedings before the Supreme Court that it was the Water
Works Plaintiffs who insisted on the provision. Specifically, Harrison J. Edwards,
one of the Appellants and the former Village Attorney, stated in the Reply
Affidavit he submitted below that:
The conditional Stipulation of Discontinuance insisted
upon by the Water Works Plaintiffs required the
* * *
(iv) make no objection to the Village Stipulation of
Settlement nor the Petitioners' Stipulation and agree not
to 'ever interfere, nor challenge or criticize the terms of
either Stipulation in any manner.
(R.396). Significantly, Edwards' Reply Affidavit was submitted in response to the
affidavit of Village Attorney Colton in support of Respondents' answer to the
Article 78 petition. Mr. Colton averred that the Water Works Plaintiffs insisted
upon the Non-Disparagement Clause, likely because Appellant Glacken had
previously made derogatory public remarks about Mr. Melius. (R. 95, 368). The
Glacken Appellants not only failed to refute Mr. Colton's statement in their reply
papers, but submitted a sworn statement in which they essentially agreed with it.
In addition, the Lancaster Appellants stated in their Article 78 Petition that,
at a court conference in the Water Works Actions on January 28, 2010, they
offered to execute an "unconditional Stipulation of Discontinuance" but that offer
"was again rejected". CR. 27). It was obviously the Water Works Plaintiffs who
"again rejected" this offer, as neither Respondents nor their attorneys were present
at that conference because the case had been settled as against them two months
earlier and the Village was no longer defending or indemnifying Appellants.6
Further, the Lancaster Appellants also failed to refute Village Attorney Colton's
statement that he believed Mr. Melius insisted on the clause as a result of
Appellant Glacken's previous remarks. (R.219-226).
It is clear by these admissions that, despite their arguments on this appeal,
Appellants have always been well aware that it was the Water Works Plaintiffs,
and not the Village, that required Appellants to refrain from criticizing the
settlement in exchange for the discontinuance of the claims against them. The
6 The minutes of the court appearance in the Water Works Actions are available as Docket
Entry 59 on the federal docket in the Water Works Actions (1 :08-cv-0449) and they indicate
which parties and attorneys were in attendance. It is respectfully submitted that the Court should
take judicial notice of these minutes.
foregoing notwithstanding, Appellants now point to a single e-mail in the record
from Mr. Warren to Mr. Meisels dated September 21, 2009, in support of their
assertion that it was the Village that insisted upon the Non-Disparagement Clause.
In that e-mail.Mr. Warren notes that the stipulation of settlement might need to
include non-disparagement language. (R. 218). They neglect to point out,
however, that Mr. Warren's e-mail simply forwarded to Mr. Meisels a draft of the
stipulation that had been prepared by the Water Works Plaintiffs' attorney. (R.
218). It is obvious that Mr. Warren was acting as an intermediary between counsel
for the Water Works Plaintiffs and Mr. Meisels. This was consistent with the way
negotiations had proceeded up to that point, and there are several other examples
of this in the record. (R.202-218). As such, when taken in context, the September
21, 2009 e-mail does not support Appellants' assertion that the Non-
Disparagement Clause was a term insisted upon by the Village.
What the Village did insist on was that Appellants cooperate as they were
required to by law. Mr. Meisels' November 12th letter describes a number of
problems that Appellants purportedly had with the settlement. As is obvious from
Mr. Warren's response to that letter, the majority of Appellants' concerns,
including their concern about the Non-Disparagement Clause, were not legitimate.
(R. 213-17). Appellants' refusal to settle on any of the objectively unreasonable
bases mentioned in Mr. Meisels' letter would have been a breach of their statutory
duty to cooperate, in response to which the Village would have been required to
withdraw their defense and indemnification.
On the other hand, Mr. Warren's letter also demonstrates the Village was
willing to address any legitimate concerns Appellants may have had with the
settlement. F or example, in response to their concern that the Water Works
Plaintiffs could seek attorneys' fees as the prevailing party in the lawsuit, Mr.
Warren assured Mr. Meisels that this is not what any of the parties to the
settlement intended and that the Water Works Plaintiffs were willing to confirm as
much in writing. (R. 214). Clearly the Village did not, as Appellants seem to
suggest, blindly demand that Appellants assent to any terms that were put b.efore
them. The Village instead simply followed the law in requiring that Appellants act
reasonably in connection with the proposed settlement because the duty to
cooperate obligated them to do so.
As the record before this Court makes it clear that it was the Water Works
Plaintiffs, and not the Village, that insisted upon the Non-Disparagement Clause,
any assertions to the contrary in Appellants' brief must be disregarded.
THE COURT LACKS SUBJECT MATTER
JURISDICTION BECAUSE THIS APPEAL DOES
NOT DIRECTLY INVOLVE A SUBSTANTIAL
Appellants purport to appeal to this Court pursuant to N.Y. Civ. P. & R.
§5601(b)(I), which authorizes an appeal as of right where the case involves a
constitutional issue. Appellants' Br. at 2. Specifically, they argue that they may
employ Section 5601 (b)( 1) because the main inquiry here is whether Respondents
violated the Constitutions of the United States and New York State by allegedly
imposing a prior restraint on them, retaliating against them for exercising and/or
maintaining their rights to free speech, arid coercing them to remain silent on a
matter of public concern. Id. In reality, however, the heart of this appeal concerns
issues of state and local law and the constitutional questions that Appellants
present are nothing more than a fanciful creation designed by their attorneys to buy
them another round of judicial review. For the reasons that follow, this appeal
should be dismissed for lack of subject matter jurisdiction.
A. An Appeal as of Right Lies Only If the Constitutional Question
Presented is Substantial.
Since at least the 1930s, the Court of Appeals has interpreted N.Y. Civ. P.
Law & R. §5601(b)(I) and its predecessor statutes as authorizing an appeal as of
right on the basis of a constitutional question only where that question is
"substantial". See, e.g., Matter of Kachalsky v. Cacace, 14 N.Y.3d 743, 744, 899
N.Y.S.2d 748, 748 (2010) (dismissing appeal because constitutional question
presented was not substantial); Wynkoop Hallenback Crawford Co. v. W. Union
Tel. Co., 268 N.Y. 108, 113 (1935) (same). "Whether· a particular constitutional
issue is sufficiently substantial to warrant an appeal as of right is, generally
speaking, rather a matter of judgment, to be determined on the facts of the
individual case." Meredith R. Miller, An Illusory Right to Appeal: Substantial
Constitutional Questions and the New York Court of Appeals, 31 PACE L. REv.
583,588 (Spring 2011) (quoting Arthur Karger, Powers of the New York Court of
Appeals §7:1, at 226 (3d ed. 2005)).
In making the relevant determination, the Court considers a number of
factors. First, the Court will determine whether the issue presented has been
properly preserved for review; a constitutional question is not substantial where it
has not been preserved. See Schulz v. State of New York, 81 N.Y.2d 336, 344,
599 N.Y.S.2d 469,470-71 (1993). The Court will also consider "the constitutional
interest at stake, the novelty of the constitutional claim, [and] whether the
argument raised may have merit." New York Court of Appeals' Clerk's Office,
The New York Court of Appeals Civil Jurisdiction and Practice Outline, February
2011 available at http://www.courts.state.ny.us/ctapps/forms/ civiloutline.pdf (last
visited Apr. 17, 2012). Finally, the Court will assess whether the question before
the Court has already been "clearly adjudicated against [Appellants'] position".
See Tabankin v. Codd, 40 N.Y.2d 893,894,389 N.Y.S.2d 362,363 (1976).
In this case, all of the foregoing considerations militate against a finding of
substantiality. Therefore, the instant appeal should be dismissed.
B. The Constitutional Questions Raised Were Not Preserved for Appeal.
Appellants argue for the first time on this appeal that Respondents violated
their rights under the New York State Constitution. Because they did not assert
that their rights under the State Constitution were violated in their Article 78
Petitions or in their briefs to the Appellate Division, these arguments have not been
preserved for review by this Court. See Matter of Town of Rye v. New York State
Bd. of Real Property Services, 10 N.Y.3d 793, 795, 857 N.Y.S.2d 7 (2008)
(holding that, because appellant's constitutional challenge was not raised in his
petition to the trial court, it "is not preserved for  review [by the Court of
Appeals]"). As such, an appeal as of right does not lie with respect to any claims
regarding the New York Constitution.
In addition, there is no basis upon which the Glacken Appellants can appeal
as of right under the United States Constitution because their submissions below
did not allege that the withdrawal of their defense and indemnification violated
their First Amendment rights. (R. 231-262). While they have muddied the
procedural waters by appealing the Appellate Division Order jointly with the
Lancaster Appellants, who raised a First Amendment issue in their Article 78
Petitio~, this does not change the outcome for the Glacken Appellants. Indeed, this
Court previously dismissed an appeal with similar procedural history for lack of
subject matter jurisdiction.
In Schulz, supra, an appeal of two related proceedings was before the Court.
81 N.Y.2d at 342, 599 N.Y.S.2d at 470. At the trial level, the petitioners in one of
the cases had asserted a constitutional right to standing in their initiatory pleading
while, in the other, the petitioners had failed to assert any such right. 81 N.Y.2d at
344, 599 N.Y.S.2d at 470. The Court found that those parties who previously
failed to assert constitutional standing had not properly preserved a substantial
constitutional question for review. 81 N.Y.2d at 344, 599 N.Y.S.2d at 471. The
appeal was thus dismissed as to them. Id. Based on the same reasoning, the Court
should dismiss the instant appeal as to the Glacken Appellants.
While the Lancaster Appellants raised a limited First Amendment issue in
their Petition, they also failed to preserve many of the constitutional arguments
they now make in their brief. Before the Supreme Court, they argued only that the
Non-Disparagement Clause was problematic because "statements made by public
officers on matters of public concern must be afforded First Amendment
protection." (R. 222-23). As a result, their current arguments that the Non-
Disparagement Clause constitutes a prior restraint and that Respondents punished
and/or retaliated against Appellants for exercising and/or maintaining their rights
to free speech are not properly before this Court. See Matter of Sbuttoni, 16
A.D.3d 693, 694, 792 N.Y.S.2d 187, 188 (2d Dep't 2005) (holding that, while
Appellant had argued before the trial Court that Respondents' petition was time
barred under a six year statute of limitations, new arguments that the petition was
time barred under other shorter statutes of limitation had not been preserved for
Because virtually all of Appellants' constitutional arguments are not
preserved, the instant appeal does not present a substantial constitutional question
and should be dismissed for lack of subject matter jurisdiction.
C. The Heart of this Matter Concerns Only State and Local Law.
As' set forth in more detail infra at Point III, the legal issues in this case
primarily concern the Village's obligation, under state and local law, to defend and
indemnify Appellants. POL § 18 and § 130-6 of the Freeport Village Code require
the Village to defend and indemnify public officers with respect to claims arising
from their official acts. Those laws provide, however, that a public officer's
defense and indemnification shall be conditioned upon an officer's full cooperation
in the defense of the claim. See POL §18(5); Freeport Village Code §130-6. The
dispositive issue here is whether the Village properly withdrew Appellants'
defense and indemnification in the Water Works Actions based upon their failure
to cooperate as required.
Both the Supreme Court and the Appellate Division correctly concluded that
the Village's withdrawal of Appellants' defense and indemnification was proper
because they failed to cooperate by willfully and avowedly obstructing the global
settlement of the Water Works Actions. Their holdings were based upon an
application of the "Thrasher" test - a creature of state law that is employed to
determine whether an insurer's disclaimer of coverage was proper. Courts have
also applied the test to determine whether the state properly withdrew an
employee's defense and indemnification under Public Officers Law §17. See, e.g.,
N.Y.S Inspection, Security and Law Enforcement Employees, District Council 82,
AFSCME v. Abrams, 135 A.D.2d 304, 525 N.Y.S. 2d 402 (3d Dep't 1988); Garcia
v. Abrams, 98 A.D.2d 871, 471 N.Y.S.2d 161 (3d Dep't 1983). The outcome of
the instant appeal is contingent upon the exact same state law analysis.
It is thus clear that any constitutional issues presented are, at best, tangential
rather than substantial and that this appeal should be dismissed.
D. Appellants' Constitutional Arguments Are Not Substantial Because
They Are Devoid of Merit.
Notwithstanding that the crux of the matter is clearly founded in state and
local law, Appellants attempt to implicate the Constitution by raising the First
Amendment as a defense to their failure to cooperate. The lack of merit to
Appellants' First Amendment arguments is discussed in great detail in Points I and
V of this brief. Suffice it to say for now, the purported constitutional question
before this Court is not substantial because it is not even colorable on its face. For
example, with respect to Appellants' prior restraint argument, it is beyond
legitimate dispute that "[t]he constitutional prohibition against prior restraint
applies only to orders issued by the government." Trump v. Trump, 179 A.D.2d
201, 205, 582 N.Y.S.2d 1008, 1010 (1st Dep't 1992) rum.:. dismissed 80 N.Y.2d
892, 587 N.Y.S.2d 907 (1992) (appeal dismissed on finding that it did not involve
a substantial constitutional question); see Alexander v. U.S., 509 U.S. 544, 550,
113 S. Ct. 2766, 2771, 125 L. Ed. 2d 441, 450 (1993). Since the Non-
Disparagement Clause was a term insisted on by private parties rather than the
government, and it was embodied in an agreement between those private parties
and Appellants, their claim of prior restraint necessarily fails.
In a case in which a similar argument was made, this Court dismissed an
appeal because a substantial constitutional question was not directly involved. In
Trump v. Trump, husband and wife had entered into a post-nuptial agreement
which contained a confidentiality provision barring· the wife from disclosing the
details of the marriage or her husband's personal or business affairs. 179 A.D.2d at
202-03; 582 N.Y.S.2d at 1009. The Appellate Division, First Department n:todified
the judgment to incorporate the confidentiality provision over the wife's objection,
rejecting her argument that the Court was required to exclude it from the judgment
in order to avoid imposing a prior restraint upon her. 179 A.D.2d at 205; 582
N.Y.S.2d at 1010. The First Department reasoned that "parties to a civil dispute
have the right to chart their own litigation course ... [and] [i]n disposing of such
litigation, [they] may stipulate away statutory, and even constitutional rights"; as
such, the embodiment of those private agreements in a judicial order. does not
result in a prior restraint. 179 A.D.2d at 204-05; 582 N. Y.S.2d at 1010. Although
the wife attempted to appeal to this Court as of right on the basis of her prior
restraint argument, her appeal was dismissecl because it did not present a
substantial constitutional question. Trump, 80 N.Y.2d at 892, 587 N.Y.S.2d at
Here, as in Trump, the mere fact that Appellants have conjured up some
semblance of a constitutional argument is insufficient to confer subject matter
jurisdiction upon this Court. Because the Non-Disparagement Clause was insisted
on by private parties and was not a government order, Appellants' constitutional
argument is so devoid of merit that it cannot possibly be considered "substantial".
That there is no merit to Appellants' constitutional claims is further
evidenced by the fact that, even if the Village is ~onstrued as somehow having
played a role in attempting to restrict their speech, it is well-established that speech
made by public officials pursuant to their official duties is not entitled to First
Amendment protection. See generally Garcetti v. Ceballos, 547 U.S. 410, 126 S.
Ct. 1951, 164 L. Ed. 2d 689 (2006). Because, as discussed in greater detail in
Point V, the type of speech restricted by the clause it is not protected by the First
Amendment, Appellants' do not have a viable constitutional claim over which this
Court can exercise subject matter jurisdiction.
As Appellants have failed to set forth any colorable argument that their First
Amendment rights were violated, the instant appeal should be dismissed for failure
to raise a substantial constitutional question.
THE VILLAGE . PROPERLY WITHDREW
APPELLANTS' DEFENSE AND
INDEMNIFICATION AS A RESULT OF THEIR
FAILURE TO COOPERATE AS REQUIRED BY
THE NEW YORK PUBLIC OFFICERS LAW AND
THE FREEPORT VILLAGE CODE
If the merits are reached, the decisive issue on this appeal is whether
Appellants cooperated as they were required to under the laws of New York and
the Village of Freeport. POL § 18 imposes such an obligation upon all public ,
officers who seek to be defended and indemnified by their municipal employer. It
provides, in relevant part, that a municipality's obligation to defend and indemnify
is conditioned upon "the cooperation of the [ officer] 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." The
Freeport Village Code contains a similar provision at § 130-6, which provides that:
. . . the duty of the Village to defend or save harmless
shall be conditioned upon: ... the full cooperation of the
employee in the defense of such action or proceeding
against the Village based upon the same act or omission.
In concluding that Appellants failed to cooperate under these statutes, the
Supreme Court and the Appellate Division employed the same test that courts
apply to determine whether an insured has failed to cooperate under a contract of
insurance. See Thrasher v. United States Liability Ins. Co., 19 N.Y.2d 159, 168,
278 N.Y.S.2d 793, 800 (1967). As discussed above, courts in at least two other
cases have also applied the so-called "Thrasher" test in determining whether a state
officer failed to cooperate under Public Officers Law § 17, which is the analog to
Section 18 for state employees. See Abrams, 135 A.D.2d at 306,525 N.Y.S.2d at
403; Garcia, 98 A.D.2d at 872, 471 N.Y.S.2d at 163. In order to establish that a
public officer failed to cooperate under this test, the municipality must demonstrate
that: (1) it acted diligently in seeking to bring about the officer's cooperation; (2)
the efforts employed by the municipality were reasonably calculated to obtainthe
officer's cooperation; and (3) the attitude of the officer, after cooperation was
sought, was one of willful and avowed obstruction. Thrasher, 19 N.Y.2d at 168,
278 N.Y.S.2d at 800.
The Supreme Court and the Appellate Division concluded that all three
elements of the Thrasher test were satisfied and that the Village's withdrawal of
Appellants' defense and indemnification was therefore proper. Appellants now
argue that the Courts below erred for several reasons. First, they claim that, under
POL § 18 and Freeport Village Code § 130-6, the refusal of a public officer to settle
a lawsuit can never constitute a failure to cooperate in the defense of an action.
Appellants' Br. at 42-46. In the alternative, Appellants argue that the Village did
not act diligently in· seeking to bring about their cooperation and that they did not
willfully and avowedly obstruct the settlement of the Water Works Actions.
Appellants' Br. at 46 ... 51. As set forth below, Appellants' arguments are without
merit and should be rejected out of hand.
A. An Unreasonable Refusal to Accept A Settlement That is in the Public
Interest is theOuintessential Failure to Cooperate Under POL §18 and
the Village Code.
Appellants claim that a public employee can refuse to settle a lawsuit for any
reason, and that such a refusal can never constitute a failure to cooperate.
Appellants' Br. at 45. This argument is absurd on its face. An analysis of the
relevant law and policy considerations compel only one conclusion -- that the
lower court and Appellate Division correctly determined that the refusal to accept a
reasonable settlement is a violation of the duty to cooperate in the defense of an
action under POL § 18 and the Freeport Village Code.
1. Under the New York State Constitution and state and local law it
is clear that a public officer's duty to cooperate in his defense
encompasses a duty to cooperate in the settlement of an action.
Appellants do not cite a single New York case which stands for the
proposition that a public officer's refusal to accept a settlement can never
constitute a failure to cooperate under the .relevant laws. Instead, they cite to
Saucedo v. Winger, 22 Kan. App. 2d 259 (1996), in which an appellate court in
Kansas held that an insurer can only settle claims for less than the policy limits
without an insured's consent if the terms of the relevant insurance policy provide
that it can do so. Likening POL § 18 to such a policy of insurance, Appellants
conclude that the Village could not have forced them to settle because the statute
does not authorize a municipality to settle a lawsuit over a public officer's
objection.7 From this they make a tremendous leap in arguing that their "refusal to
agree to the settlement, even without regard to their reasons for doing so, is not a
failure to cooperate in [their] defense" under the Public Officers Law. Appellants'
Br. at 45. Simply put, their argument defies all notions of logic and reason and is
neither supported by Saucedo nor any New York law.
The Court's holding in Saucedo was based upon the central tenant of
contract law that an agreement's drafter has a duty to "make the meaning [of the
contract] clear" such that any ambiguities therein must be construed against him.
Id. at 261, 268. Applying this precept, the Court found that, where an insurance
company drafts a contract but fails to explicitly provide that it has the exclusive
right to settle, it has no such right. Id. at 267. It is axiomatic that Saucedo is
completely inapplicable to this case because there is no contract here which can
7 It is critical that the Village did not attempt to settle the Water Works Actions as against
Appellants without their consent. Instead, the Village negotiated a settlement of those lawsuits
on behalf of itself and its officers, in which negotiations Appellants' own lawyer was also a
participant, and then gave Appellants the option to accept it. (R. 213-217). Significantly, the
Village negotiated the best possible settlement that could have been achieved with respect to
Appellants - the lawsuits would have been discontinued as against them with prejudice, without
any monetary payment or admission of wrongdoing by them. Although it was incredibly
beneficial to them, Appellants nonetheless refused to execute the Stipulation and instead chose to
continue litigating. This belies their suggestion that they were "forced" to do anything.
construed against its drafter. The relevant source of the Village's obligation to
defend and indemnify its officers and the Appellants' related duty to cooperate is
instead by statute. Unlike rules of contract interpretation, rules of statutory
construction do not require that ambiguity in the law be construed against any
In construing the meaning and effect of POL § 18 and the Freeport Village
Code, the Court must consider the full text of these laws and the intent and purpose
of the legislature in enacting them in the first instance. See New York State
Psychiatric Assn., Inc. v. New York State Dept. of Health, 19 N.Y.3d 17, 23-24,
945 N.Y.S.2d 191, 193 (2012) ("A statute or legislative act is to be construed as a
whole, and all parts of an act are to be read and construed together to determine the
legislative intent. Furthermore, each section of a legislative act must be considered
and applied in connection with every other section of the act, so that all will have
their due, and conjoint effect. To determine the intent of a statute, inquiry must be
made of the spirit and purpose of the legislation, which requires examination of the
statutory context of the provision."). When these statutes are read in their entirety,
it is clear that the legislature intended to give public bodies a significant modicum
of control over lawsuits they are paying to defend and, further, that it did not intend
to vest public officers with the power to unilaterally decide whether it is
appropriate to continue' litigating on the public's dime in the face of a reasonable
For example, POL § 18(4) provides that, in the event of a settlement, a
municipality's obligation to indemnify a public officer is conditioned upon "the
. approval of the amount of settlement by the governing body of the public entity."
Relatedly, § 130-10 of the Village Code provides that a public officer must submit
any proposed settlement to the Village Attorney for approval. It further provides
that the Village Attorney will approve the settlement "if, in his judgment, the
settlement is in the best interest of the Village." Id. These laws make it clear that
a municipality is not obligated to indemnify a public officer who insists on settling
a lawsuit on terms that it believes are not in the municipality's best interests. It
logically follows that, if a public officer unreasonably refuses to accept a
settlement that is in the public's interest, the legislature did not intend to force the
municipality to continue to bear the costs of his defense. In either case, the public
officer is free to do as he wishes, but at his own expense.
In addition, POL § 18(9) provides that:
all payments made under the terms of this section,
whether for insurance or otherwise, shall be deemed to be
for a public purpose and shall be audited and paid in the
same manner as other public charges.
The significance of this section is paramount; POL § 18 must be enforced in a
manner that does not offend the Gift and Loan Clause of the New York State
Constitution. See James D. Cole, Defense and Indemnification of Local Officials:
Constitutional and Other Concerns, 58 ALB. L. REv. 789, 789-90 (1995) (The
undertaking of defense and indemnification costs by a local government . . . is
subject to the overriding limitation in that it cannot constitute a gift of public funds
in violation of the New York State Constitution."). That clause provides, in
pertinent part, that "[n]o ... village ... shall give or loan any money or property to
or in aid of any individual or private corporation or association, or private
undertaking .... " N.Y. CONST. art. VIII § 1. It is thus beyond dispute that, in
accordance with the Constitution, POL § 18 charges the public body with the
responsibility of ensuring that it expends funds to defend and indemnify its officers
only when doing so serves public, rather than private, interests.
Simple math makes it clear that there was no possible public purpose in
continuing to defend and indemnify Appellants after they refused to settle the
Water Works Actions. Indeed, the settlement would have immediately halted the
expenditure of funds for their defense while simultaneously foreclosing the
possibility that the Village would ever be responsible to pay any damages to the
Water Works Plaintiffs on their behalves. On the other hand, the best possible
result of continued litigation would have been the eventual dismissal of the
lawsuits as against Appellants but only after the expenditure of a significant sum of
additional money to achieve that result. This is not to mention that, in reality,
continuing to litigate carried with it the inherent risk of an award of damages if
. Appellants were ultimately found liable. It is thus irrefutable that the settlement of
the Water Works Actions against Appellants on the negotiated terms was, by far
and away, in the best interests of the public. Because the only possible purpose in
spending additional monies to litigate would have been to further Appellants'
private interests, the Village's expenditure of one more cent on their defense would
have violated the New York Constitution.
Other statutory provisions also make it clear that the legislature did not
intend to give public officers absolute control over whether to settle or continue
defending a lawsuit at a public body's expense .. Specifically, Village Code § 130-
13 provides\that "[t]he Board of Trustees may, by resolution, undertake to
purchase liability insurance for its officers and employees for acts within the
purview of this article." Neither Article 130 nor POL § 18 mandate that such an
. insurance policy require the insurer to obtain the consent of the public employee
before entering into a settlement, nor do they otherwise prescribe limits on a
policy's terms. In fact, POL §18(lO) and Village Code §130-12 provide that
nothing contained therein shall "be construed to impair, alter, limit or modify the
rights and obligations of any insurer under any policy of insurance." Accordingly,
although the Village was self-insured with respect to the Water Works Actions, it
could have obtained insurance that permitted the insurer to settle within the policy
limits without the consent of the public officer. Had it done so, Appellants would
have had no choice but to accept a settlement approved I-by the insurance company.
This fact flies in the face of Appellants' claim that the ·legislature somehow
intended to vest them with the unfettered power to unilaterally decide if, when and
under what conditions a settlement would be appropriate.
When all of the foregoing provisions are considered together, it is clear that
the legislature did not intend to obligate a municipality to continue defending a
public officer who refuses to settle a lawsuit on terms that are in the best interests
of the pUblic. The cooperation requirement contained in POL § 18 and Village
Code § 130-6 was obviously intended to ensure that the municipal treasury cannot
be held hostage by an employee who abuses the privilege of a free defense.
Therefore, Appellants' claim that a municipality can never withdraw a public
officer's defense based upon his refusal to settle, no matter how unreasonable,
must be rejected.
2. Policy considerations dictate that a public officer's duty to
cooperate in the defense of an action encompasses a duty to
cooperate in the settlement of the action.
When the practical effect of Appellants' argument that their "refusal to agree
to the settlement, even without regard to their reasons for doing so, is not a failure
to cooperate in [the] defense" is considered, it becomes clear that it cannot possibly
be the case that a public officer's duty to cooperate in his defense does not
encompass a duty to cooperate in the settlement of a lawsuit. Under Appellants'
theory, a public officer can refuse to settle a lawsuit for any reason regardless of
the amount of damages sought, the cost of the defense, or the strength of the
evidence against him. Such an officer could literally admit to alleged misconduct
and still force the municipality to pay to litigate the case to a conclusion and to
indemnify him for any resulting judgment. His motivation for refusing to settle,
according to Appellants, could be virtually anything - - perhaps he wants to prove
he is innocent of the charges or perhaps he just does not like the plaintiff and the
idea that the person who sued him would receive money as part of a settlement.
Perhaps he just wants to force the plaintiff to continue to spend money litigating,
knowing that it will not cost him anything to do so. In short, if Appellants'
interpretation of the law were correct, a public employee could single-handedly
usurp control of the municipality's treasury by forcing it to expend large sums of
public money even where such expenditure is entirely unjustified, unreasonable
and even unconstitutional. Such a conclusion is ludicrous.
Applying Appellants' theory to the case at bar, it is likewise clear that their
argument'must fail. The Village found itself in a position where its public officers
refused to sign a Stipulation which would have extinguished their exposure to
tremendous liability and put an end to mounting defense costs. The Village was
being sued for $8.5 million dollars in damages and, if the Water Works Plaintiffs
were ultimately successful, they also would have been entitled to treble damages
and to have the Village pay their attorneys' fees. The Village was also facing
hundreds of thousands of dollars, if not more, in additional defense costs. In other
words, the Village's potential exposure was, as Mayor Hardwick . described it,
"astronomical." (R. 193-94). If Appellants had the absolute power to force the
Village to continue paying for their defense and to indemnify them, they could
. have single-handedly bankrupted the municipality simply because they felt like it.
This idea is absolutely preposterous. The only logical conclusion is that the
Village was empowered to determine how and when to limit its exposure in order
to avoid extreme financial hardship.
Accordingly, because both the relevant law and policy considerations
indicate that the unreasonable refusal to accept a settlement constitutes a failure to
cooperate, Appellants' arguments to the contrary must be rejected.
B. Respondents Did Not Interfere With Appellants' Independent Counsel.
Appellants also seem to suggest that their independent counsel had the right
to control the settlement of the Water Works Actions as against them, and that the
Village unlawfully interfered with his ability to do so. Appellants' Br. at 45-46. In
support, they cite only to Nelson Elec. Contr. Corp v. Transcontiental Ins. Co., 231
A.D.2d 207, 660 N.Y.S.2d 220 (3d Dep't 1997). However, the Court's holding in
Nelson actually undercuts their argument.
There, an insured and insurer were in a position of conflict because it was in
each of their best interests to advance a theory of liability which would have
opened the other up to financial exposure. 231 A.D.2d at 208-09; 660 N.Y.S.2d at
221. The insurer permitted the insured to select independent counsel because of
this conflict. 231 A.D.2d at 209; 660 N.Y.S.2d at 221. During the litigation, the
insured's attorney made a strategic decision not to oppose a summary judgment
motion in an attempt to minimize the insured's personal financial exposure. Id.
However, if the motion were granted, the insurer would be financially responsible
for. any damages ultimately assessed against the insured. 231 A.D.2d at 209; 660
N.Y.S.2d at 221-22. The insurer urged independent counsel to oppose the motion,
but he refused and the motion was granted. 231 A.D.2d at 209; 660 N.Y.S.2d at
222. The insurer then claimed the insured had failed to cooperate and ceased
paying for its defense costs. Id. The insured commenced a lawsuit seeking a
declaratory judgment that the insurer was required to reinstate its defense. Id. The
Court ruled in favor of the insured, noting that the independent counsel could not
be "prohibit[ ed] from making tactical decisions ... which are part of a reasonable
litigation strategy intended to decrease the likelihood of liability on th~ part of the
insured." 231 A.D.2d at 210; 660 N.Y.S.2d at 222 (emphasis added).
Here, the Village did not interfere with any attempt by Mr. Meisels to make
tactical decisions designed to limit Appellants' liability in the Water Works
Actions. Instead, the Village negotiated a settlement under which Appellants
would have no personal liability whatsoever, but they refused to agree to it and
demanded that the Village instead pay for them to keep defending the lawsuits.
Their decision to press on with the litigation not only had no conceivable tactical
advantages, but it undeniably increased Appellants' potential exposure to liability
since they otherwise could have settled for nothing.8 Thus, Nelson is
distinguishable and does not provide any support for Appellants' claim that the
Village "failed to follow the rule" regarding independent counsel. Appellants' Br.
c. The Elements of the Thrasher Test Are Satisfied.
Appellants next argue that the withdrawal of their defense and
indemnification was improper because the elements of the Thrasher test were not
satisfied here. They are wrong.
The first two prongs of the Thrasher test, which are closely related, require a
municipality to demonstrate ·that it acted diligently in seeking to bring about an
officer's cooperation and that the efforts it employed were reasonably calculated to
obtain that cooperation. See Thrasher, 19 N.Y.2d at 168; 278 N.Y.S.2d at 800.
Appellants assert that the Village cannot satisfy either of these requirements
because it demanded that they accept the settlement within a limited time period
8 In fact, in affidavits that the Appellants submitted to this Court in opposition to Respondents'
motion to dismiss the appeal, some of them admitted that they ultimately paid to settle the Water
Works Actions. Appellants also claim to have expended over $100,000 to continue defending the
lawsuits after their defense and indemnification was withdrawn. They made such expenditures
even though they could have completely avoided financial exposure by settling in 2009.
and "threatened them" rather than trying "to persuade [them] that they should
accept the Non-Disparagement Clause." Appellants' Br. at 48. However, their
revisionist version of the facts is completely contradicted by the record, which
actually demonstrates that the Village invested significant time and effort in
attempting to procure their participation in a global settlement of the Water Works
With respect to their claims regarding the "limited" time they had to decide
whether to participate in the settlement, Appellants were notified immediately after
a settlement had been reached that they had a week to decide whether to sign the
Stipulation. As reflected in the record, it was the Water Works Plaintiffs, not the
Village, who insisted on that the Stipulation be executed within the prescribed time
frame; Mr. Warren merely delivered the message to Mr. Meisels. CR. 213-14).
Since the Settlement Agreement contained just fourteen pages of substantive text
and the Stipulation was only three pages long, one week was more than a sufficient
amount of time for Appellants to make a decision. Mr. Warren, even pointed this
out when, on November 13,2009, he wrote to Mr. Meisels that it should not take
"more than several hours at most to reasonably evaluate and decide whether or not
[Appellants]" would sign the Stipulation. CR. 214). As a result, there is no
negative inference that can be drawn against Respondents based on the time frame
in which the Water Works Plaintiffs required Appellants to make a decision.
Additionally, Appellants' assertion that the Village did not try to convince
them to cooperate is contradicted by the fact that, when Mr. Meisels expressed
certain reservations he had about the settlement in a letter dated November 12,
2009, Mr. Warren immediately responded with a five page letter addressing every
one of his concerns. Indeed, in his November 13, 2009 response, Mr. Warren
made it clear that: (1) the entire settlement amount would be paid by the Village
and that the Water Works Plaintiffs would acknowledge as much in writing if
Appellants signed the Stipulation; (2) the settlement did not require an admission
of wrongdoing from Appellants; (3) in the event of cross-claims, Appellants'
defense and indemnification would be provided for pursuant to Public Officers
Law § 18; and (4) the Non-Disparagement Clause Plaintiffs did not violate
Appellants' First Amendment rights, but was "both conventional and proper." (R.
213-217). Notably, Mr. Meisels failed to respond to this letter.
It is also importantthat Mr. Warren's November 13, 2009 letter was not the
Village's first attempt to procure Appellants' cooperation. Prior to presenting
Appellants with the option of executing the Stipulation, Mr. Warren kept Mr.
Meisels involved with and fully informed of settlement negotiations. In fact, in an
October 15, 2009 e-mail from Mr. Meisels to the Water Works Plaintiffs' attorney,
Mr. Meisels acknowledged that the settlement negotiations were in a "very
advanced stage" which he "expect[ed] to be successful." (R. 205). He further
stated that he "did not expect [it] to be the case" that the settlement would "not [be]
consummated." CR. 205). Other correspondence in the record also demonstrates
that Mr. Meisels' involvement in settlement discussions endured over the course of
many months, and that Mr. Warren always responded immediately to questions
raised by Mr. Meisels. CR. 202-18). While nothi~g would have prevented Mr.
Meisels from negotiating directly with the Water Works Plaintiffs' attorney if he
felt it would be in his clients' best interests to do so, he chose not to. Tellingly,
there is nothing in the record which suggests that he was dissatisfied with the way
these negotiations happened.
Appellants also complain that "Freeport made it clear to the appellants that if
they did not agree to [the Non-Disparagement Clause], it would cease to defend
and indemnify them going forward ... " Appellants' Br. at 20. While they
characterize this as a "threat", it was nothing of the sort. In his November 12,
2009, Mr. Meisels pointedly asked, "what will be the consequences if our clients
do not execute this agreement by November 16, 2009?" CR. 211). It was in
response to this inquiry that Mr. Warren, in his November 13, 2009 letter, simply
stated the obvious -- Appellants failure to sign the Stipulation required by the
Water Works Plaintiffs, which would have resulted in a global settlement of the
Water Works Actions, would be a breach of their duty to cooperate under POL § 18
and the Village Code. Mr. Warren merely reminded Mr. Meisels of his clients'
obligation under the law and informed him that the Village was reserving its right
to take appropriate action in the event they did not comply with that obligation. It
is manifest that, if Appellants' failed to cooperate, the Board actually would have
no alternative but to discontinue their defense and indemnification since providing
a financial benefit to someone who is not entitled to receive it would constitute an
illegal gift of public funds in violation of the Gift and Loan Clause of the New
York Constitution. See N.Y. CONST. art. VIII §1; N.Y. Gen. Mun. Law §51
(2013); see also Jessie Beller, Assistant Counsel of New York City Conflicts of
Interest Board, Use of Municipal Resources for Personal Purposes,
NYSBAIMLRC MUNICIPAL LAWYER, Spring 2009, Vol. 23, No.2.
Finally, perhaps the best evidence of the Village's diligent attempts to
procure Appellants' cooperation is that the settlement it achieved would ultimately
have provided Appellants with the same outcome that would have resulted if they
successfully defended the lawsuit. Although the Settlement Agreement required a
payment of three million five hundred thousand dollars, the Village assumed total
and sole responsibility for that payment, and no Appellant was required to admit
any wrongdoing. In short, Appellants could not have hoped to do better for
themselves by litigating. One would be hard-pressed to find a better example of a
settlement that was intended to gamer Appellants' cooperation.
The foregoing evidence demonstrates that the Village made significant
attempts to convince Appellants to cooperate, all of which were reasonable under
the circumstances. Therefore, the first and second prongs of the Thrasher test are
Turning to the third prong of the Thrasher test, it is clear from the record that
Appellants acted willfully and avowedly in obstructing the global settlement of the
Water Works Actions. In an attempt to distract from their recalcitrant conduct,
Appellants point out that Mr. Meisels submitted an affidavit below in which he
stated that they were forthright with him and responsive to his requests for
information. Appellants' Br. at 49. That they had an open line of communication
with their attorney, however, is quite beside the point. It is not the Village's
position that Appellants did not return phone calls or failed to contribute to their
defense strategy. Instead, it is the Village's position that the settlement yielded the
best possible result for Appellants and yet they unreasonably refused to agree to it.
The record demonstrates that, from the beginning, Appellants intentionally
assumed an "all-or-nothing" position rather than a cooperative one. As early as
September 21, 2009, Mr. Meisels informed the Village that his clients would not
make the one concession that the Water Works Plaintiffs requested, stating that
Appellants "would not agree to anything that might be construed as an
infringement of [their] First Amendment rights." (R. 218) (emphasis added).
Appellants did not budge from this position in the two months that the Village was
attempting to resolve the Water Works Actions, even though Mr. Warren
repeatedly explained that their First Amendment rights were not implicated by the
Non-Disparagement Clause. (R. 102, 214-15). In response to Mr. Warren's
position on the law, Mr. Meisels never conveyed any legal or factual basis for
insisting that that Appellants' First Amendment rights were implicated in any way.
In sum, Appellants blindly and baselessly demanded that they unconditionally
receive all the benefits offered to them. Their conduct is the epitome of
At least one Court has held that the failure to accept a reasonable settlement
offer constitutes the type of non-cooperation which justifies the withdrawal of
defense coverage. In Cowan v. Ernest Cordelia, P.C., 2001 U.S. Dist. LEXIS 185
(S.D.N.Y. 2001), the United States District Court for the Southern District of New
York found that an insurer had properly terminated its insureds' defense where the
insureds "thwarted the ultimate settlement" of a lawsuit despite the insurer's "good
faith efforts to reach a compromise with the plaintiffs" in that case. Id. at * 15.
Specifically, while the insurer was willing to pay an amount that plaintiffs agreed
to accept in order to end the lawsuit, the settlement foundered because the insureds
insisted that the settlement be subject to absolute confidentiality. Id. at * 16. The
insureds' purported justification for doing so was that, even though the settlement
did not require any admission of wrongdoing by them, they believed that any
dissemination of the fact that they settled the case might give the impression that
they had done something wrong. Id. One of the insureds, an attorney, was
particularly concerned about this because he had previously testified to his
innocence before the disciplinary committee. Id. The Court found that the
insureds' objections were "phantom" and "illusory" insofar as there is no legal
basis upon which a settlement that does not include an admission of wrongdoing
can support a claim that they lied about their innocence in another proceeding. Id.
at * 18. As such, the Court concluded that the insureds' conduct amounted to
willful and avowed obstruction which justified the insurer's. termination of their
defense coverage. Id. at * 19.
Here, as in Cowan, the Village negotiated a settlement that the Water Works
Plaintiffs were willing to accept. The Water Works Plaintiffs' only condition was
that Appellants agree not to criticize the settlement. Although it is well-settled that
speech restrictions imposed by one private party on another do not offend the First
Amendment, Appellants speculatively claimed their rights "could" or "might" be
threatened by the Non-Disparagement Clause. (R. 211, 218). They never provided
any authority to support their claims even after they were repeatedly told that their
position on the law was unsound. It is submitted that no such authority exists. As
such, and as in Cowan, Appellants' "phantom" and "illusory" objections to the
settlement are tantamount to a failure to cooperate under POL § 18 and the Freeport
In light of the foregoing, it is clear that the Supreme Court and Appellate
Division properly found that Appellants failed to cooperate and that the Appellate
Division Order should be affirmed.
THE OPEN MEETINGS LAW DOES
NOT PROVIDE A BASIS UPON
WHICH THE RESOLUTION AND
DIRECTIVE CAN BE INVALIDATED
Appellants' next argument is that the Resolution and Directive should be
invalidated because the Board purportedly violated the Open Meetings Law, Pub.
Off. Law §100 et. seq., in convening the January 4,2010 executive session. This
argument should not be considered because it was not preserved for appeal. It also
fails on the merits because the Board did not, in fact, violate the Open Meetings
Law and, even if it did, any such violation was unintentional and not a basis upon
which the Resolution and Directive can be voided. As a result, the Appellate
Division Order should be affirmed.
A. Appellants' Open Meetings Law Arguments Are Not Preserved for
Initially, it is significant that the Lancaster Appellants failed to argue in their
Article 78 Petition that the Resolution and Directive should be invalidated because
the Board violated the Open Meetings Law. As such, none of the arguments
relating to the Open Meetings Law are preserved as to them. See Schulz, 81
N.Y.2d at 344; 599 N.Y.S.2d at 471. Additionally, while the Glacken Appellants
alleged certain violations of the Open Meetings Law in their Article 78 Petition,
they never before argued that the withdrawal of Appellants' defense and
indemnification should not have been discussed during executive session because
it does not qualify as a discussion about "litigation". Their leading argument
should thus also be disregarded by this Court.
B. Respondents Did Not Violate the Open Meetings Law.
Appellants argue that the Board acted improperly in convening an executive
session during a board meeting on January 4, 2010 to discuss the potential
withdrawal of their defense and indemnification. As an initial matter, one of the
Appellants who advances this argument - Trustee William White - is the party
responsible for having moved to convene the executive session Appellants are
complaining about. (R. 414). The Board, including White and Jorge Martinez, a
Trustee who was previously a party to the Lancaster Article 78 Proceeding and the
subsequent appeal to the Second Department, unanimously voted in favor of this
motion. (R. 414). Their argument is, therefore, simply baffling insofar as it
amounts to an attempt to impugn Respondents for the actions of one of their own.
In any event, the January 4th executive session was convened to discuss,
inter alia, a "litigation matter". (R. 414). Open Meetings Law § 105 provides, in
pertinent part, that:
Upon majority vote of its total membership, taken in an
open meeting pursuant to a motion identifying the
general area or areas of the subject or subjects to be
considered, a public body may conduct an executive
session for the below enumerated purposes only,
provided, however, that no action by formal vote shall be
taken to appropriate public moneys:
* * *
(d) discussions regarding proposed, pending or current
Appellants, citing only to Weatherwax v. Stony Point, 97 A.D.2d 840, 468
N.Y.S.2d 914 (2d Dep't 1983), posit that, as of January 4, 2010, the Board could
not have properly convened an executive session to discuss the Water Works
Actions because the Village was no longer a party to the lawsuits as of that date.
They are wrong.
The Court in Weatherwax did not hold that an executive session can be
convened only to discuss litigation to which the public body is a party. Instead, the
Court held that a public body cannot properly convene an executive . session
pursuant to Section 1 05( d) of the Open Meetings Law where the only basis for
doing so is "fear that litigation may result from actions taken therein." 97 A.D.2d at
841; 468 N.Y.S.2d at 916. In that case, a town's board of trustees convened an
executive session to discuss the termination of the petitioner's post-retirement
insurance benefits. Id. The town board argued that this executive session was
properly convened to discuss litigation because it was likely that the petitioner
would sue the town if the board's decision was not favorable to him. Id. The Court
held that this did not constitute a discussion of proposed or pending litigation under
Open Meetings Law § 105 and, thus, that the executive session had not been
convened for a proper purpose. Id.
Appellants attempt to make the massive leap from the actual holding in
Weatherwax to their assertion that a public body can only convene an executive
session to discuss a litigation to which it is currently a party based on dicta in the
decision where the Court noted that the purpose of Open Meetings Law § 1 05( d) is
to prevent a public body from being forced to bear its litigation strategy to its
adversary. Id. Their argument makes no sense, however, because the Village
obviously has an interest in avoiding the disclosure of litigation strategy in
connection with any pending litigation for which it is financially responsible. This
includes litigation in which it is obligated to defend and indemnify one of its
employees even though the Village itself has not been named as a party. Under
Appellants' theory, the Board can never convene an executive session to discuss
such a lawsuit even though it is the Village treasury that will suffer in the event an
adversary gets an unfair advantage as a result of a public discussion about the
litigation. Clearly, their position is untenable.
It is axiomatic that the foregoing concerns apply here. Indeed, although the
Water Works Actions had been settled as against the Village as of January 4, 2010,
the Village was still responsible to pay for Appellants to continue litigating as of
that date. The purpose of the executive session was to consider whether the Village
-was actually under a continuing obligation to defend Appellants despite their failure
to sign the Stipulation. The topics the Board would have discussed during the
executive session -- the pending litigation and Appellants' conduct in the defense of
the same -- are thus precisely the kind of topics contemplated by Section 1 05( d).
Appellants also fail to acknowledge in their brief that a public discussion
about the possible withdrawal of their defense and indemnification could have been
detrimental to them insofar as it may have touched upon their involvement in the
Water Works Actions. Previously, however, Appellants Glacken and Edwards were
so concerned about publicly discussing the lawsuits that they declined the Village's
request that they- attend a board meeting to address the matters, purportedly in fear
that anyone in attendance might become a potential witness in the case. (R. 335).
Appellants obviously understood then, and cannot now deny, that a public
discussion about their involvement in the litigation could have had a detrimental
impact on their case. It is thus beyond dispute that the policy motivation for
Section 1 05( d) - preventing adversaries from getting the upper hand over their
municipal adversaries - was served by the Board's -decision to convene an
executive session to discuss existing litigation which involved past and present
For the foregoing reasons, it was clearly proper for Appellants to have
convened an executive session to discuss the Water Works Actions on January 4,
2010 pursuant to Open Meetings Law §105(d).
c. Respondents Did Not Engage in a Pattern of Deliberate Violations of the
Open Meetings Law.
Appellants next argue that the Resolution must be voided because it was
passed during an improperly convened executive .session which was the last in a
series of alleged violations of the Open Meetings Law. However, the Supreme
Court properlY determined, and the Appellate Division affirmed, that even if the
Board somehow violated Section 105 of the Open Meetings Law, said violation
was unintentional and not a basis for invalidating the action taken by the Board
during executive session. In so. holding, the Supreme Court cited to Open
Meetings Law § 107, which states that, "[a]n unintentional failure to fully comply
with the notice provisions required by this article shall not alone be grounds for
invalidating any action taken at a meeting of a public body." Courts construing
this language have held that a public body's failure to comply with § 105 which
amounts to "mere negligence . . . is not a sufficient ground upon which to
invalidate the ... action [taken by the public body during executive session]."
Matthes v. East Fishkill, 785 F.2d 43, 45-46 (2d Cir. 1986) (applying New York
law); see Roberts v. Town Bd., 207 A.D.2d 404, 405, 615 N.Y.S.2d 725, 725 (2d
Dep't 1994) (finding that, even if the Court determined that the Town Board had
failed to properly convene an executive session, such failure would be the result of
negligence only and would therefore be insufficient to invalidate the Board's
In an attempt to prove that the Board's purported violations of the Open
Meetings Law were intentional rather than negligent, Appellants point to three
other meetings during which executive sessions were allegedly convened
improperly to discuss the Water Works Actions. Appellants claim that the purpose
of adjourning into executive session was to minimize public awareness of the
settlement of those lawsuits. Appellants' Br. at 55. Their argument is, to say the
least, perplexing when one considers the fact that it was again Appellant White
who moved to convene two of the three executive sessions that Appellants
mention. CR. 419, 424). As in the case of the January 4, 2010 executive session,
Jorge Martinez also voted in favor of each motion made by Appellant White. CR.
It is contradictory for Appellants to assert, on the one hand, that the
executive sessions Appellant White moved to convene were designed to minimize
public awareness about the Water Works Actions while, on the other hand, they
claim that White was so concerned with his perceived obligation to speak out
against the settlement of those cases that he refused to agree to the Non-
Disparagement Clause. The reality is that Appellant White did not have a
deceptive motive in moving to convene any of the aforementioned executive
sessions. Instead, he made the motions believing they were appropriate, and all of
the other Board members clearly agreed as they voted unanimously in favor of
them. CR. 414, 419, 424). Appellants' arguments thus utterly fail to support an
inference that any purported violations of the Open Meetings Law were
intentional. Further, even if Appellants' claims were true, the intentional acts they
complain about would again be attributable to one of their own and not to
Finally, it is significant that the only issue presently before the Court is the
propriety of the Village's decision to terminate Appellants' defense and
indemnification in the Water Works Actions. The decision to do so was made
during a single session on January 4, 2010 which, as set forth above, was properly
convened. While Appellants point out that the Board also voted to settle the Water
Works Actions as against the Village during other executive sessions, the relief
they sought in their respective Article 78 Petitions did not include a request to
invalidate the settlement. Nor did Appellants, or anyone else, commence a separate
proceeding to challenge the legality of the Board's approval of the settlement. It is
obvious that Appellants' only purpose in taking issue with other executive sessions
is to distract the Court from the one issue that is properly before it.
Based on the above, it is clear that the Appellate Division properly
determined that no grounds existed upon which the Resolution and Directive could
be voided and its Order should be affirmed.
D. Appellants Are Not Entitled to Attorneys' Fees.
Appellants assert that the Supreme Court and Appellate Division erred in
declining to award them attorneys' fees and costs in connection with the
prosecution of the underlying Article 78 proceedings and subsequent appeal.
However, Section 107 of the Open Meetings Law provides that, in a proceeding
under that section, "costs and reasonable attorney fees may be awarded by the
court, in its discretion, to the successful party." Because Respondents did not
previously and cannot now succeed under Section 107, they are not entitled to
attorneys' fees or costs and it was a proper exercise of discretion for the lower
courts to deny their requests for such an award.
RESPONDENTS DID NOT VIOLATE
APPELLANTS' FIRST AMENDMENT
Appellants assert that the Village violated their free speech rights by
withdrawing their defense and indemnification on the basis of their refusal to agree
to government-imposed restrictions on their speech. They advance three
arguments in support of their claim: (1) that the Non-Disparagement Clause is a
prior restraint on free speech; (2) that the withdrawal of their defense and
indemnification was a content-based punishment for their refusal to relinquish their
First Amendment rights; and (3) that the Village unconstitutionally deprived them
of a government benefit to which they were entitled because they insisted on
maintaining their constitutional rights. They further contend that the United States
Supreme Court's holding in Garcetti v. Ceballos is not a bar to their First
Amendment claims. At the outset, their main arguments should not even be
reached by the Court because they were not preserved for appeal. If considered on
the merits, all of their arguments fail because they lack any basis in fact or law.
A. Preliminary Matters
As set forth above in Point II, most of Appellants' constitutional arguments
are not preserved for appeal. To reiterate: (1) arguments regarding the New York
State Constitution are not preserved as to any of the Appellants; (2) arguments
regarding the United States Constitution are not preserved as to the Glacken
Appellants; (3) the only First Amendment argument preserved as to the Lancaster
Appellants is that, notwithstanding the United States Supreme Court's ruling in
Garcetti, the Village purportedly infringed the right of public officers to speak on
matters of public concern. See Point II, supra. Accordingly, none of the
constitutional arguments presented in Appellants' brief should be considered by
the Court other than those in Point I, sub-section D, and those arguments should
only be considered as to the Lancaster Appellants.
Additionally, and as set forth in more detail supra in Point I, it is critical that
the Non-Disparagement Clause was not, as Appellants claim, imposed upon them
by the Village. All of the Appellants admitted below that it was the Water Works
Plaintiffs who insisted that this language be included in the Stipulation. (R. 27,
396). Further, to the extent Appellants assert that the Village withdrew their
defense and indemnification because they refused to agree not to disparage the
settlement, they mischaracterize the events. The Village withdrew their defense
and indemnification for one reason -- because they refused to cooperate as they
were required to under the Public Officers Law and Freeport Village Code. Thus,
all of Appellants' constitutional arguments must fail because they are· founded
upon an erroneous characterization of the facts.
B. Appellants' Constitutional Claims Are Barred Under Garcetti.
If considered on the merits, all of Appellants' constitutional arguments fail
because they rely on the erroneous assumption that the type of speech restricted by
the Non-Disparagement Clause is protected by the First Amendment. Although
the Lancaster Appellants devoted a significant amount of effort to arguing this
point before the Supreme Court and the Appellate Division, they now behave as
though the protected status of their speech is a given. Their only attempt to
. directly address the issue is buried in a few short pages in the middle of their brief.
Appellants' Br. at 35-39. As much as they would like to avoid it, however, this is a
threshold issue that must be confronted at the outset.
It is also telling that their fleeting attempt to address this issue amounts to a
complete about face from the position they took below. Before both the Supreme
Court and the Appellate Division, the Lancaster Appellants argued that all of the
Appellants were under a mandate to act as the voice of their constituency because
they were public officers. CR. 32, 222-23). They posited that, accordingly, theirs
were among the most sacrosanct of all First Amendment rights. CR. 223). They
advanced this argument even though there is a well-established body of case law --
the Garcetti Doctrine -- which provides that speech by government officials on
matters of public concern is not protected by the First Amendment.
Now, in an eleventh hour attempt to circumvent a body of case law which is
not favorable to them, Appellants imply that the Garcetti Doctrine can only
possibly apply to Appellants Lancaster and White because the rest of them were no
longer in office when the Water Works Actions were settled. Additionally, as to
Lancaster and White, Appellants argue that Garcetti does not bar their claims
because White was an elected official and, in any event, the Non-Disparagement
Clause restricted their right to speak as private citizens. When the holding and
rationale of Garcetti are accurately explained, however, it is clear that all of the
Appellants are subject to it and that there has been no First Amendment violation
1. The Garcetti Doctrine
Garcetti v. Ceballos, 547 U.S. 410, 126 S. Ct. 1951, 164 L. Ed. 2d 689
(2006) is the controlling Supreme Court case concerning the First Amendment
rights of public officers. There, the Court parsed through decades of Supreme
Court decisions that considered the "balance between the interests of the [public
officer], as a citizen, in commenting upon matters of public concern and the
interest of the State, as an employer, in promoting the efficiency of the public
services it performs through its employees." 547 U.S. at 417; 126 S. Ct. at 1957;
164 L. Ed. 2d at 698 (internal citations omitted). Ultimately, the Court articulated
the following test for determining the extent of a public officer's First Amendment
rights in a given situation:
The first [ element] requires determining whether the
employee spoke as a citizen on a matter of public
concern. If the answer is no, the employee has no First
Amendment cause of action based on his or her
employer's reaction to the speech. If the answer is yes,
then the possibility of a First Amendment claim arises.
The question becomes whether the relevant government
entity had an adequate justification for treating the
employee differently from any other member of the
547 U.S. at 418; 126 S. Ct. at 1958; 164 L. Ed. 2d at 699.
The Garcetti Court's holding is based on the well-settled principle that
"[ w ]hen a citizen enters government service, the citizen by necessity must accept
certain limitations on his or her freedom." 547 U.S. at 418; 126 S. Ct. at 1958; 164
L. Ed. 2d at 699 (citing Waters v. Churchill. 511 U.S. 661, 671, 114 S. Ct. 1878,
128 L. Ed. 2d 686 (1994)). There is significant policy justification for restricting a
public officer's speech, since it can "impair the proper performance of
governmental functions." 547 U.S. at 419; 126 S. Ct. at 1958; 164 L. Ed. 2d at
699. As a result, although the First Amendment does provide "public employees
with certain rights, it does not empower them to constitutionalize the employee
grievance." 547 U.S. at 420; 126 S. Ct. at 1959; 164 L. Ed. 2d at 700.
'The plaintiff in Garcetti was a deputy district attorney -- a public officer who
had been appointed to his position. There is thus no question that the Garcetti
Doctrine extends to all appointed public officers. Whether Garcetti also applies to
elected officials has been considered by several courts. Virtually all have held that
Garcetti applies with equal force to officers who were elected to their posts.9 See,
~ Shields v. Charter Township of Comstock, 617 F. Supp. 2d 606 (W.D. Mich.
2009) (finding that "the concerns underlying Garcetti apply with equal force" to a
9 Rangra v. Brown, 566 F.3d 515 (5th Cir. 2009) is seemingly the only case to hold that
Garcetti does not apply to speech made by elected officials pursuant to their official duties.
However, the Rangra decision was vacated when the Fifth Circuit Court of Appeals granted a
rehearing en bane, and therefore it has no precedential value. See Fifth Circuit Court of Appeals
Local Rule 41.3 ("Un~ess otherwise expressly provided, the granting of a rehearing en banc
vacates the panel opinion and judgment of the court and stays the mandate."); see also U.S. v.
Seale, 577 F.3d 566, 570 (5th Cir. 2009) (per curiam) ("The grant of the petition for rehearing en
banc had the effect of vacating the unanimous panel opinion and rendering it non-precedential. ").
Further, upon rehearing, Rangra was dismissed as moot. For these reasons, District Courts
sitting in the Fifth Circuit have explicitly found that they are "not bound by the Fifth Circuit
Panel's previous conclusion" in Rangra. See Asgeirsson v. Abbott, 2011 U.S. Dist. LEXIS
31662 at *6 (W.D. Tx. Mar. 25, 2011) (declining to apply the portion of the Rangra holding
which found that the constitutionality of the Texas Open Meetings Act should be evaluated under
a strict scrutiny standard of review). This Court should decline to follow Rangra as well.
situation involving an elected official); Hogan v. Twp. of Haddon, 2006 U.S. Dist.
LEXIS 87200 (D.N.J. 2006) affd 2008 U.S. App. LEXIS 5183 (3d Cir. 2008)
(applying Garcetti to a case concerning speech by the commissioner of a township,
an elected official); Hartman v. Register, 2007 U.S. Dist. LEXIS 21175 (S.D. Ohio
2007) (finding that Garcetti applies in the case of an elected official because "[t]he
distinction between the public employee in Garcetti and an elected official, in this
case Plaintiff, is inconsequentiaL"). As a result, it is clear that Garcetti applies to
all of the Appellants irrespective of whether they were elected or appointed.
2. All of the Appellants Are Subject to Garcetti Whether They Held
Public Office at the Time of the Settlement or Not.
Appellants Glacken, Edwards, Frierson-Davis and Miller left office before
the Water Works Actions were settled. Because they were no longer officers of the
Village at that time, they now suggest that they cannot be treated as public officers
for First Amendment purposes. Simultaneously, speaking from the other side of
their mouths, they assert that they are entitled to be defended and indemnified
under state and local law because they were once public officers. Unfortunately
for them, they do not get to selectively divorce themselves from their roles as
Village officials when it suits them to do so.
The sole reason the Village extended a defense and indemnification to
Appellants is because they were public officers who were sued in their official
capacities. Indeed, under POL § 18(3) and the Freeport Village Code, the Village
could only have lawfully defended or indemnified Appellants in a lawsuit arising
from alleged acts or omissions that occurred while they were acting pursuant to
their official duties. Moreover, just as the Village's duty to defend and indemnify
Appellants did not cease when they left office, Appellants' obligation to comply
with POL § 18( 5) and the Freeport Village Code did not end at that time. Because
Appellants are entitled to the benefits of public officers under state law (provided
they comply with their obligations thereunder) it logically follows that they are
also subject to the restrictions that apply to public officers under the First
F or these reasons, Garcetti is equally applicable to those of the Appellants
who left office before November 2009 as it is to those who continued in their
3. Under Garcetti, the Speech Restricted By the Non-Disparagement
Clause Was Not Protected by the First Amendment.
As set forth above, where a public officer speaks pursuant to his official
duties on a matter of public concern, he has no First Amendment cause of action
based upon his employer's reaction to said speech. Garcetti, 547 U.S. at 418; 126
S. Ct. at 1958; 164 L. Ed. 2d at 699. Appellants contended below and continue to
argue on this appeal that the settlement of the Water Works Actions was a matter
of public concern. lO Appellants' Br. at 36-37; (R. 32, 222-23). Thus, the only
Garcetti issue in dispute here is whether Appellants would have criticized the
settlement of the Water Works Actions in their official capacities.
Before the Supreme Court and the Appellate Division, Appellants adamantly
maintained that the Non-Disparagement Clause infringed upon their official duty
to speak out on matters of public concern. (R. 32, 222-24). Even during the
settlement negotiations in the Water Works Actions, Mr. Meisels asserted that it
was one of Appellants' official "responsibilities" to express their opinions on the
settlement. (R. 210-11). Although they now attempt to distance themselves from
these assertions, they are bound by their previous admission that any speech they
would have engaged in about the settlement of the Water Works Actions would
have been made as part of their official duties. See Nestor v. Britt, 270 A.D.2d
192, 192-3, 707 N.Y.S.2d 11, 12 (1st Dep't 2000) (finding that a party was
10 To the extent the clause restricts Appellants' rights to speak on matters of private
concern, it is well-settled that a public official has no First Amendment cause of action for
government restrictions on his right to speak about such matters. See Kirkpatrick v.
Washingtonville, 2011 U.S. Dist. LEXIS 40097 at *16 (S.D.N.Y. 2011) (citing Garcetti v.
Ceballos, 547 U.S. 410, 126 S. Ct. 1951, 164 L. Ed. 2d 689 (2006)); see also Ruotolo v. City of
New York, 514 F.3d 184, 189 (2d Cir. 2008) (citing Lewis v. Cowen, 165 F.3d 154, 163 (2d Cir.
1999)) (noting that it is well-settled that a public official has no First Amendment right to
"redress personal grievances"). Although their brief is silent on this issue, to the extent
Appellants wished to speak out about issues like the impact of the settlement on them, their own
guilt or innocence, or their personal reputations, these are matters of private concern and thus not
protected. See Ezekwo v. New York City Health & Hosps. Corp., 940 F.2d 775, 781 (2d Cir.
1991) (finding that statements made by a public employee where "her primary aim was to protect
her own reputation and individual development" were of private concern); see also Wetzel v.
Town of Orangetown, 308 Fed. Appx. 474, 477 (2d Cir. 2009) (finding that the subject of
disciplinary proceedings against a public employee was a matter of private concern).
estopped from disavowing admissions it made in its pleadings and throughout the
litigation); see also 57 NY Jur Estoppel, Ratification, and Waiver § 62 ("facts
admitted by the pleadings are binding on the parties throughout the entire
Appellants' constitutional argument thus boils down to a claim the Non-
Disparagement Clause infringed upon their obligation to speak in their official
capacities on a matter of public concern. As a result, the type of speech restricted
by the clause is precisely the kind that is not entitled to First Amendment
protection under Garcetti and all of Appellants' First Amendment claims must fail.
4. Even if the Non-Disparagement Clause Restricted. Appellants'
Right to Speak as Private Citizens, the Village Had an . Adequate
Justification for Treating them Differently Than Members of the
Even if, despite their admissions to the contrary, the Non-Disparagement
Clause limited Appellants' right to speak as private citizens on a matter of public
concern, there would be no First Amendment violation under the facts presented
here. A violation certainly would not result from the imposition of the clause
itself, since two private parties, and not the Village, insisted upon it. (R. 27, 396).
Whether the Village's withdrawal of Appellants' defense and indemnification was
a violation of Appellants' rights is thus the only issue here, and it must be resolved
in favor of Respondents.
Under Garcetti, the relevant inquiry is whether the Village had adequate
justification for treating Appellants differently from other members of the public.
See 547 U.S. at 418; 126 S. Ct. at 1958; 164 L. Ed. 2d at 699. In determining
whether such justification exists, the Court must balance "the interests of the
citizen, in commenting on matters of public concern and the interest of the state, as
an employer, in promoting the efficiency of the public services it performs through
its employees." Pappas v. Giuliani, 290 F.3d 143, 145-56 (2d Cir. 2012).
Here, the Village obviously had an adequate justification for treating
Appellants differently than other private citizens because it would not have been
defending and indemnifying in the first place if they had been nothing more than
ordinary private citizens. State law and local law obligated the Village to defend
Appellants, because they were public officers, in a lawsuit where its potential
financial exposure totaled tens of millions of ~ollars. It had an overwhelming
interest in settling the Water Works Actions on the most reasonable terms possible
as against everyone for whom it had assumed financial responsibility. The Village
acted well within reason in determining that the settlement, which would have
ended its expenditure of defense costs for Appellants and would not have required
it to indemnify them for any monetary contribution to the settlement, was fair to
them, in the best interests of the Village and critically important for its taxpayers.
Relatedly, and as set forth more fully supra at Point III, the Village had a
legal obligation under the State Constitution, POL § 18 and the Village Code to
withdraw Appellants' defense and indemnification once they ceased cooperating.
They Village would not have had any such obligation with respect to ordinary
There can also be no question that the continued defense and
indemnification of Appellants would have disrupted the functioning of the Village
on a number of levels. First, the total financial exposure the Village faced in
defense costs and potential damages could have forced it to cut back on essential
services and/or to saddle its citizens with additional tax burdens. Mayor Hardwick
issued a press release which demonstrated that the Village considered these
concerns to be real at the time the settlement was negotiated. (R. 193-95). The
proper functioning of Village government also would have been seriously impaired
had the Village allowed its current and former officers to dictate whether or not it
was appropriate to terminate further spending in connection with the Water Works
Actions. A dangerous precedent would have been set if the Village had allowed
Appellants to effectively hold the Village treasury hostage until they were either
subjectively ready to "cry Uncle" or until the case was litigated to a possibly
On the other hand, Appellants' interest in engaging in the type of speech
restricted by the Non-Disparagement Clause was de minimis at best. The clause
provides, in pertinent part, that "each undersigned defendant specifically represents
and warrants that . . . he/she has no objections to the [Settlement Agreement or
Stipulation] and agrees not to ever interfere, nor challenge or criticize the terms of
either [the Settlement Agreement or Stipulation] in any manner." CR. 59).
Pursuant to its terms, the Non-Disparagement Clause left them with wide latitude
to discuss the Water Works Actions, the facts which gave rise thereto, and the
terms of the Settlement Agreement and Stipulation, or to remain silent if they so
chose. There is simply no reasonable basis upon which they can argue that their
interest in disparaging the settlement outweighed the value of extinguishing the
Village's continued financial exposure as well as their own.
Accordingly, it is clear that, to the extent the Non-Disparagement Clause
restricted Appellants' rights to speak as private citizens on matters of public
concern, there was no First Amendment violation under Garcetti because the
Village had an adequate justification for treating Appellants differently than
members of the general public.
C. The Non-Disparagement Clause Is Not a Prior Restraint.
Assuming arguendo that this matter cannot be disposed of under the Garcetti
Doctrine, it is nevertheless clear that Appellants' characterization of the Non-
Disparagement Clause as a prior restraint is erroneous. "The term 'prior restraint'
is used to describe administrative and judicial orders forbidding certain
communications when issued in advance of the time that such communications are
to occur." Alexander v. U.S., 509 U.S. 544, 550, 113 S. Ct. 2766, 2771, 125 L. Ed.
2d 441, 450 (1993). Here, Appellants were not "ordered" to refrain from
criticizing the settlement. To the contrary, they were given the option to sign the
Stipulation, which contained the Non-Disparagement Clause, in exchange for the
dismissal of the Water Works Actions as against them. That the Non-
Disparagement Clause was not forced upon Appellants is made clear by the fact
that they ultimately exercised their right not to agree to it.
The foregoing notwithstanding, Appellants argue that the Village "coerced"
them by demanding that they agree to the Non-Disparagement Clause or otherwise
face the withdrawal of their defense and indemnification. Appellants' Br. at 24.
In support of their argument, they cite to Mr. Warren's November 13, 2009 letter
to Mr. Meisels in which he stated that the Village reserved its rights under POL
§ 18 and the Freeport Village Code in the event that Appellants failed to cooperate.
(R. 216-17). However, the letter provides absolutely no support for their claim that
they were coerced, as Mr. Warren reminded Mr. Meisels several times throughout
the text that Appellants had the ultimate power to choose whether or not to agree to
settle. (R. 214 ("To reiterate, no one is forcing your clients to sign, and that is
entirely up to them."); R. 215 ("And, to reiterate and state the obvious, your clients
have the right to accept or reject the proposal. It is entirely up to them.")).
In addition, to the extent Mr. Warren informed Mr. Meisels that the Village
reserved its rights in the event of a failure to cooperate, as discussed supra, he did
so in ,response to Mr. Meisels' direct inquiry about the consequences of his clients'
failure to execute the Stipulation. (R. 211). Mr. Warren's response simply pointed
out that Appellants had a legal obligation to cooperate with the Village so as to
achieve a global settlement and that, if they failed to comply, the Village would be
obligated to withdraw the defense and indemnification it previously authorized.
Moreover, Mr. Warren did not assert that Appellants' refusal to agree to the
Non-Disparagement Clause would constitute a failure to cooperate in and of itself.
Instead, he made it ,clear that their refusal to execute the Stipulation on the basis of
any of the patently unreasonable concerns raised in Mr. Meisels' November 12,
2009 letter would constitute a lack of cooperation which would require the Board
to act. See supra at p. 18; 42-43. The idea that the Village's withdrawal of
Appellants' defense and indemnification was motivated by their refusal to be
silenced is, therefore, obviously untrue.
Relying on U.S. v. Quattrone, 402 F.3d 304 (2d Cir. 2005), Appellants also
argue that the Non-Disparagement Clause was a prior restraint because it "provides
for the suppression of speech at the discretion of government officials".
Appellants' Br. at 23. Specifically, they assert that, because the Non-
Disparagement Clause restricted "critical" speech, Village officials retained the
discretion to determine what kind of speech would violate the clause. Appellants'
argument is premised upon their fundamental misunderstanding of the law of
contracts .. The Non-Disparagement Clause was not contained in an agreement
between the Village and Appellants, but was instead a part of an agreement
between them and the Water Works Plaintiffs. The Village would not have had
any standing to enforce the Stipulation and thus its officials retained no discretion
to determine whether to sue for a violation of its terms. See Del Castillo v. Bayley
Seton Hosp., 172 A.D.2d 796, 796, 569 N.Y.S.2d 168, 170 (2d Dep't 1991)
(holding that an individual who is not a party to a contract has no standing to sue a
breach thereof). That discretion would have been left only to private parties -- the
Water Works Plaintiffs. It is, therefore, completely absurd for Appellants to argue
that the Non-Disparagement Clause somehow amounts to government censorship.
Appellants' final prior restraint argument is that the Village's justification
for the Non-Disparagement Clause -- that it was in Freeport's best interest to
insulate the public from critical speech about the settlement -- is legally
insufficient. Appellants' Br. at 26. This characterization of the Village's
"justification" is completely false. It has never been the Village's position that it
was in its own best interest that Appellants' critical opinions be kept from the
public. Instead, as already explained above, it is and has been the Village's
position that the global resolution of the Water Works Actions on the terms that
had been negotiated was in the best interests of the Village and its taxpayers. That
is the Village's justification for believing that Appellants failed to cooperate when
they refused to settle the Water Works Actions without any admission of
wrongdoing or monetary payment by them.
For all of the foregoing reasons, the Appellate Division properly held that
the Non-Disparagement Clause "did not constitute [a] pnor restraint on free
D. The Withdrawal of Appellants' Defense and Indemnification Was Not a
Punishment and Instead Was Required By Law.
In yet another argument that relies upon the false notion that the Village
insisted on the Non-Disparagement Clause, Appellants posit that the clause, and
the ultimate withdrawal of their defense and indemnification, were nothing more
than an attempt by the Village to punish them for a letter Appellant Glacken wrote
to Mayor Hardwick criticizing the settlement. However, their assertion is neither
supported by the record nor by the law they cite.
Specifically, Appellants point out that, on September 3, 2009, Appellant
Glacken wrote to Mayor Hardwick and stated that he thought the lawsuits should
not be settled. (R. 331-32). Three weeks later, Mr. Meisels first learned that non-
disparagement language had been proposed. While Appellants summarily
conclude that this establishes a retaliatory link between the letter and the Non-
Disparagement Clause, they fail to mention that Appellant Glacken had previously
publicly accused Mr. Melius, one of the Water Works Plaintiffs, of attempting to
extort money from the Village by way of these lawsuits. (R. 95, 368). Mr. Melit.;ts
was so upset about the incident that he sued Appellant Glacken for defamation.
(R. 95, 368). Village Attorney Colton stated in the affidavit he submitted below,
and Appellants failed to refute, that Glacken's remarks about Mr. Melius were
likely the reason the Water Works Plaintiffs insisted on the Non-Disparagement
Clause. (R. 95, 368). That Mr. Colton's explanation makes far more sense is
evidenced by the fact that the Non-Disparagement Clause was contained in an
agreement to which only the Water Works Plaintiffs and Appellants were parties
(R. 58-61) and that the Water Works Plaintiffs continued to insist that this
language be included in the Stipulation even after the lawsuits had been
discontinued as against the Village and Appellants' defense and indemnification
had been withdrawn. (R.27).
In attempting to further demonstrate that, as a result of Appellant Glacken's
letter, the Village "would not accept anything less than prohibiting any negative
comments by the appellants concerning the settlement agreement", Appellants
once again rely on a skewed reading of Mr. Warren's November 13, 2009 letter to
Mr. Meisels. Their characterization of Mr. Warren's position is blatantly
misleading and should be completely disregarded by this Court. Much of that
characterization has already been refuted above on pages 18, 42 and 43 and, for
brevity's sake, the Court is again respectfully referred to that portion of this brief
and to the record itself. It is also noteworthy that there is nothing in the exchange
between Mr. Meisels and Mr. Warren which suggests that Board action to
discontinue Appellants' defense and indemnification would have anything to do
with Mr. Glacken's letter. To the contrary, Mr. Warren made it clear that any such
decision by the Board would be based on Appellants' failure to cooperate as
required by law in order to achieve a resolution to the Water Works Actions.
In addition to reciting a distorted version of the facts, Appellants rely on
irrelevant case law in a desperate attempt to make their case. Contrary to their
contentions, Cooper v. Town of East Hampton, 888 F.Supp. 376 (E.D.N.Y. 1995),
does not bear a "striking resemblance" to this case. The issue in Cooper was
whether there was federal jurisdiction over plaintiff s claim. Cooper had alleged
that the town board declined to provide for his defense in a defamation action
brought against him by the Police Chief. Id. at 378. The defamation action arose
out of comments Cooper made to a local newspaper regarding concerns as to
whether the Chief had condoned a pattern of intimidation by the police department
against blacks and poor whites. Id. The Court held that Cooper had sufficiently
pleaded the "requisite nexus" between the exercise of his First Amendment rights
and defendants' subsequent "retaliatory" conduct in voting against providing him
with a legal defense to satisfy the requirements for federal jurisdiction. Id. at 380.
The Court did not address the merits of Cooper's claim and, indeed, specifically
noted that '[t]he Court's ruling on the issue of jurisdiction is by no means,
however, an expression of its opinion on the merits of the case." Id. As a result,
the Cooper decision stands for nothing more than the fact that Cooper's claim
could be brought in federal court.
Appellants also cite to the Second Circuit's decision on the appeal of the
same case. See Cooper v. Town of East Hampton, 83 F.3d 31 (2d Cir. 1996).
However, that decision adds nothing to their argument. There, the Court of
Appeals simply addressed procedural issues as to whether a timely notice of appeal
had been filed, whether the Court should entertain an appeal of an interlocutory
order, and whether it should grant a stay pending appeal of a "Disbursement
Order" issued by the district court.
Accordingly, Cooper is not instructive here. It did not deal with a failure to
cooperate in the defense of a lawsuit, nor did it involve a provision in the Town
Code which required cooperation as a condition for providing a defense.
Moreover, while in Cooper there was a legitimate question as to whether the town
board refused to provide the plaintiff with a defense because of his comments to
the press, in the case sub judice the Board acted because it had a duty to act
pursuant to the Public Officers Law, Village Code and New York State
Constitution once Appellants refused to cooperate with the Village in bringing
about a global settlement of the Water Works .Actions.
F or the same reason, The Brooklyn Institute of Arts and Sciences v. The
City of New York, 64 F.Supp.2d 184 (E.D.N.Y. 1999) is not germane to this
appeal. There, the Mayor of New York sought to withhold funding to a museum
because he was offended by an exhibition it was having which contained what he
considered to be "sick stuff'. Id. at 191. In other words, the government tried to
punish the museum for exercising its First Amendment rights. Here, it was the
Water Works Plaintiffs and not the Village that sought to restrict Appellants'
speech. When Appellants refused to settle the cases, the Board simply did what
the law required by withdrawing their defense and indemnification because they
breached their legal obligation to cooperate. Thus, there is no "direct link between
the Appellants' refusal to forfeit fundamental rights and the suspension of benefits
by Freeport officials" as Appellants claim. Appellants' Br. at p. 31.
Finally, Appellants argue that the Village is required to demonstrate a
compelling interest in order to justify its withdrawal of Appellants' defense and
indemnification. They assert that the Village's purported need to settle the
litigation as to all of the defendants for whom it was financially responsible in
order to "stop the bleeding" does not constitute such a compelling interest because, .
if that is really what the Village wanted, it would have accepted the
"unconditional" Stipulation of Discontinuance that Appellants offered to sign,
which would have ended the litigation as against them. Appellants' Br. at 32.
Critically, the Village is not required to demonstrate a compelling need
because it is not the party responsible for the Non-Disparagement Clause and its
withdrawal of Appellants' defense and indemnification was required by law.
However, even if such a showing were required, Appellants' claim that the
Village's interests are disingenuous is contradicted by their previous admission
that the Water Works Plaintiffs were unwilling to accept any Stipulation other than
the one containing the Non-Disparagement Clause in exchange for the
discontinuance of their claims against Appellants. (R. 27, 396). Thus, there was
obviously no other way to accomplish a global settlement than to have Appellants
sign the conditional Stipulation required by the Water Works Plaintiffs.
As a result, Appellants' have no legitimate basis to argue that the Non-
Disparagement Clause and ultimate withdrawal of their defense and
indemnification were a punishment for Appellant Glacken's letter.
E. Appellants Were No Longer Entitled to Be Defended and Indemnified
Once They Ceased Cooperating.
Relying primarily on Perry v. Sinderman, 408 U.S. 593 (1972) and Cty.
Commisioners v. Umbehr, 518 U.S. 668 (1996), Appellants' final argument is that
it was unconstitutional for the Village to have infringed their entitlement to the
benefit of a defense and indemnification because of their refusal to relinquish their
First Amendment rights. They are wrong, however, because their entitlement to a
defense and indemnification was specifically conditioned upon their cooperation in
the defense of the Water Works Actions. See POL §18; Village Code §130-6.
Once Appellants failed to cooperate, they were no longer entitled to be defended or
indemnified as a matter of law. As such, the Board did not revoke a statutory
benefit to which Appellants were entitled, but instead fulfilled its own legal
obligation to cease defending and indemnifying public officers who failed to
Harkening back to the Thrasher test, Appellants further argue that their
refusal to "forfeit" their First Amendment rights cannot be "viewed as willful and
avowed obstruction" unless the Village can demonstrate a compelling
governmental interest. Appellants' Br at. 34. Notably, they provide no legal
support for their apparent suggestion that a strict scrutiny standard of review is
somehow a part of the third element of the Thrasher test. In any event, Appellants
posit that the Village's only claimed interest "was based upon pure speculation that
the settlement agreement was necessary to avoid  tremendous financial exposure"
and that such speculation as to future harm is not a compelling interest. Id. The
record makes it clear, however, that the prospect of financial ruin was quite real.
Indeed, these lawsuits and the cost to defend them were not simply some
figment of the Village's imagination, as the actions had been commenced and were
being vigorously prosecuted by the plaintiffs. As Mayor Hardwick pointed out in
his press release, the Village had already paid approximately $300,000 in legal fees
defending itself and Appellants as of November 1, 2009, before any discovery had
been conducted in the Water Works Actions. CR. 193-94). The cost to litigate the
matter to a conclusion -- which required the Village to pay two different law firms
to defend the Village and Appellants -- was projected to exceed two million
dollars, excluding the costs for a potential appeal. 11 CR. 194). In addition, a
conservative estimate of the amount of damages that could have been assessed
against the Village and Appellants was at least one million dollars, not including
an award of attorneys' fees to the plaintiffs if they were the prevailing parties. CR.
In reaching the foregoing conclusions, the Board and Mayor Hardwick did
not simply rely on their own lay opinions about the costs of legal fees and a
possible jury verdict. They consulted with the Village's attorneys and its risk
manager, all of whom recommended the se~lement in order to avoid fiscal disaster.
C 193). It is thus beyond legitimate dispute that the Village's desire to "stop the
bleeding" by settling the Water Works Actions was anything but speculative, and
that it had a compelling governmental interesting in maintaining its ability to
11 It is disingenuous for Appellants to act as though the possible financial harm to the Village
was speculative. As they admitted in affidavits they submitted to this Court in opposition to
Respondents' motion to dismiss the appeal, they continued litigating the Water Works Actions
for almost three years after the Village· withdrew their defense and indemnification. They
purportedly expended over $100,000 in defending themselves, and some of them had to pay to
ultimately settle the cases as against them even though none of them would have been required to
make any monetary payment to plaintiffs had they accepted the settlement the Village
function properly by limiting its financial exposure.
F or all of the foregoing reasons, Appellants' constitutional arguments are
without merit and the Appellate Division Order should be affirmed.
Based upon the foregoing, Respondents respectfully request that this Court
issue an Order affirming the Order of the Appellate Division, Second Department,
dated February 21, 2012, and granting such other and further relief as this Court
deems just, proper and equitable.
Dated: April 1, 2013
Garden City, New York
D866487v 1 0 F055962
Stanlex . Ca i, Esq.
Jessica M. quet, Esq.
Daniel E. Shapiro, Esq.
Attorneys for Respondents
The Incorporated Village of Freeport,
The Board of Trustees of the Incorporated
Village of Freeport, Customized Claims
Services, LLC, Andrew Hardwick, in his
capacity as Mayor, and Howard Colton, in
his capacity as Village Attorney
300 Garden City Plaza, 5th Floor
Garden City, New York 11530
(516) 393-8282 (facsimile)