MARGERUM, EUGENE v. CITY OF BUFFALO ( 2017 )

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
278
CA 16-01325
PRESENT: PERADOTTO, J.P., LINDLEY, DEJOSEPH, NEMOYER, AND TROUTMAN,
EUGENE MARGERUM, JOSEPH FAHEY, TIMOTHY HAZELET,
PETER KERTZIE, PETER LOTOCKI, SCOTT SKINNER,
THOMAS REDDINGTON, TIMOTHY CASSEL, MATTHEW S.
OSINSKI, MARK ABAD, BRAD ARNONE, DAVID DENZ,
PLAINTIFFS-RESPONDENTS,
ET AL., PLAINTIFF,
V MEMORANDUM AND ORDER
CITY OF BUFFALO, CITY OF BUFFALO DEPARTMENT OF
FIRE, DEFENDANTS-APPELLANTS,
AND LEONARD MATARESE, INDIVIDUALLY AND AS
COMMISSIONER OF HUMAN RESOURCES FOR CITY OF
BUFFALO, DEFENDANT.
HODGSON RUSS LLP, BUFFALO (JOSHUA FEINSTEIN OF COUNSEL), FOR
DEFENDANTS-APPELLANTS.
CHIACCHIA & FLEMING, LLP, HAMBURG (ANDREW P. FLEMING OF COUNSEL), FOR
PLAINTIFFS-RESPONDENTS.
Appeal from an order of the Supreme Court, Erie County (John A.
Michalek, J.), entered October 23, 2015. The order denied the motion
of defendants for a protective order.
It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by granting that part of defendants’
motion seeking a protective order limiting the disclosure of any
privileged or confidential material generated after February 3, 2006
and as modified the order is affirmed without costs.
Memorandum: Plaintiffs, firefighters employed by defendant City
of Buffalo Department of Fire (Fire Department), commenced this action
alleging that defendants discriminated against them by allowing
promotional eligibility lists created pursuant to the Civil Service
Law to expire solely on the ground that plaintiffs, who were next in
line for promotion, were Caucasian. The eligibility lists were
generated following civil service examinations in 1998 and 2002.
Because minorities fared poorly on those examinations, there were few,
if any, minority applicants on the eligibility lists. Men of Color
Helping All Society, Inc. (MOCHA), an organization of African-American
firefighters employed by the Fire Department, commenced two actions in
federal court alleging that the 1998 and 2002 examinations for the
position of lieutenant were discriminatory.
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CA 16-01325
In 2005 and 2006, while the federal actions were pending,
defendant Leonard Matarese, then Commissioner of Human Resources for
defendant City of Buffalo (City), decided to allow the eligibility
lists for all supervisory positions that were generated from the 2002
examinations to expire without granting a typical one-year extension.
In addition to prompting plaintiffs to commence this action, that
decision spawned related CPLR article 78 proceedings (see Matter of
Hynes v City of Buffalo, 52 AD3d 1216; Matter of Hynes v City of
Buffalo, 52 AD3d 1217) and arbitration proceedings (see Matter of
Buffalo Professional Firefighters Assn., Inc., IAFF Local 282 [City of
Buffalo], 79 AD3d 1737, lv dismissed 17 NY3d 854, rearg denied 18 NY3d
836).
In the context of this action, we initially affirmed that part of
an order denying defendants’ CPLR 3211 motion to dismiss the complaint
but concluded that Supreme Court erred in granting plaintiffs’ cross
motion for partial summary judgment on liability (Margerum v City of
Buffalo, 63 AD3d 1574 [Margerum I]). Fourteen days after our decision
in Margerum I, the United States Supreme Court issued its decision in
Ricci v DeStefano (557 U.S. 557), establishing a new test for liability
in discrimination cases such as this one. The Court held that,
“before an employer can engage in intentional discrimination for the
asserted purpose of avoiding or remedying an unintentional disparate
impact, the employer must have a strong basis in evidence to believe
it will be subject to disparate-impact liability if it fails to take
the race-conscious, discriminatory action” (id. at 585).
Relying on Ricci’s “strong basis in evidence” test, plaintiffs
again moved for partial summary judgment on liability. We affirmed
the order granting that motion (Margerum v City of Buffalo, 83 AD3d
1575 [Margerum II]), and the matter proceeded to trial on damages. On
the appeal from the subsequent judgment, we modified the damages award
(Margerum v City of Buffalo, 108 AD3d 1021, mod 24 NY3d 721 [Margerum
III]). Both parties appealed to the Court of Appeals, which concluded
that “whether the City had ‘a strong basis in evidence to believe it
[would] be subject to disparate-impact liability’ at the time that it
terminated the promotion eligibility lists while the MOCHA litigation
was still pending raises issues of fact that cannot be determined on
motions for summary judgment” (Margerum III, 24 NY3d at 732). The
Court found that “[t]here must be a credibility assessment of the
City’s position as to the validity of the examinations, the prospects
in the federal litigation, and the reasons for its decision to expire
the promotion eligibility lists. We know that Matarese decided to let
the promotion eligibility lists expire in 2005 and 2006. What we do
not know is why” (id.). The Court remitted the matter to Supreme
Court for further proceedings.
Following the Court of Appeals’ remittitur, plaintiffs submitted
a request for the production of documents in which they sought
disclosure of “[a]ny and all documents Leonard Matarese reviewed
and/or relied upon prior to making the decisions to terminate the
[applicable] Civil Service promotion lists . . . in 2005 and 2006”
(emphasis added). Defendants thereafter moved for a protective order
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CA 16-01325
in which they sought eight forms of relief. In the first two
requests, defendants requested that the court “declin[e] to follow the
direction of the Court of Appeals” in Margerum III (24 NY3d 721) and
to stay further proceedings until various issues, including the
privilege issues, could be resolved. The court denied those two
requests in their entirety.
In the third request, defendants sought to maintain privileges
over materials during the discovery process, while allowing them to
use the materials at trial under appropriate confidentiality
restrictions. In the fourth request, defendants sought to limit the
disclosure of privileged or confidential material to three specific
subject areas and “to the period prior to February 3, 2006.” The
court denied those two requests without prejudice to renew.
The court likewise denied the fifth through eighth requests
without prejudice to renew, but the parties subsequently entered into
an agreement concerning those requests. We thus do not address them
on this appeal.
Defendants initially contend that we should conduct a de novo
review of the order denying their motion on the ground that their
contentions involve questions of law for which we need not defer to
the trial court. The cases cited by defendants in support of their
contention, however, do not involve discovery disputes (see Andrea v
Arnone, Hedin, Casker, Kennedy & Drake, Architects & Landscape
Architects, P.C. [Habiterra Assoc.], 5 NY3d 514, 521; Bush v Delaware,
Lackawanna & W. R.R. Co., 166 NY 210, 227). We reject defendants’
contention and see no need to depart from our traditional standard of
reviewing the order for either an abuse of discretion (see Imanverdi v
Popovici, 109 AD3d 1179, 1179), or an improvident exercise of
discretion (see Kimmel v State of New York, 302 AD2d 908, 908).
Contrary to defendants’ contention, the court did not abuse its
discretion in denying the first and second requests, which essentially
asked the court to ignore or disregard the Court of Appeals’ decision
in Margerum III based on defendants’ belief that the Court of Appeals
improperly expanded the holding of Ricci. We decline to do so as
well. It is axiomatic that the Appellate Division and the trial
courts are “court[s] of precedent and [are] bound to follow the
holding of the Court of Appeals” (Jiannaras v Alfant, 124 AD3d 582,
586, affd 27 NY3d 349). We thus reject defendants’ challenges to the
decision of the Court of Appeals. Contrary to defendants’ further
contention, the court did not improvidently exercise its discretion in
denying their request for a stay of further proceedings until the
privilege issues could be resolved (see CPLR 2201).
With respect to defendants’ third and fourth requests, in which
defendants raised issues of privilege, we agree with defendants that
the court erred in denying that part of their motion that sought to
limit disclosure to documents that were reviewed and/or relied upon by
Matarese before he made the decision to allow the applicable Civil
Service promotion lists to expire. First, those were the only
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CA 16-01325
documents sought in plaintiffs’ demand for documents and, second, only
those documents generated before February 3, 2006, the date on which
Matarese let the last list expire, are relevant to the determination
whether defendants had “ ‘a strong basis in evidence to believe it
[the City] [would] be subject to disparate-impact liability’ at the
time that it terminated the promotion eligibility lists” (Margerum
III, 24 NY3d at 732 [emphasis added]). We therefore modify the order
accordingly.
Contrary to defendants’ further contentions, the court properly
denied, without prejudice, that part of their fourth request for a
protective order for documents generated before February 3, 2006.
Although defendants correctly contend that the holding of the Court of
Appeals in Margerum III seemingly requires them to disclose privileged
material, there are times when even privileged material must be
disclosed. For example, a client may be deemed to have waived the
attorney-client and work product privileges by making selective
disclosures of the advice, or in instances “where invasion of the
privilege is required to determine the validity of the client’s claim
or defense and application of the privilege would deprive the
adversary of vital information” (Jakobleff v Cerrato, Sweeney & Cohn,
97 AD2d 834, 835; see Deutsche Bank Trust Co. of Ams. v Tri-Links Inv.
Trust, 43 AD3d 56, 63-64; cf. Heckl v Walsh, 130 AD3d 1447, 1448).
Moreover, materials covered by a “conditional privilege,” such as the
privilege for materials prepared in anticipation of litigation (Matter
of Grand Jury Proceedings [Doe], 56 NY2d 348, 354), may be disclosed
but “only upon a showing that the party seeking discovery has
substantial need of the materials in the preparation of the case and
is unable without undue hardship to obtain the substantial equivalent
of the materials by other means” (CPLR 3101 [d] [2]). It cannot be
gainsaid that privileges are “meant to operate as a shield or a sword,
but not both at once” (Levy v Arbor Commercial Funding, LLC, 138 AD3d
561, 562).
Ultimately, “resolution of the issue ‘whether a particular
document is . . . protected is necessarily a fact-specific
determination . . . , most often requiring in camera review’ ” (Optic
Plus Enters., Ltd. v Bausch & Lomb Inc., 37 AD3d 1185, 1186, quoting
Spectrum Sys. Intl. Corp. v Chemical Bank, 78 NY2d 371, 378). We thus
conclude that, inasmuch as there may be a valid basis for disclosure
of privileged materials, the court properly denied that part of
defendants’ fourth request seeking a blanket protective order
encompassing the period before February 3, 2006.
We have reviewed defendants’ remaining contentions and conclude
that they lack merit.
Entered: March 31, 2017 Frances E. Cafarell
Clerk of the Court