KEVIN THOMAS DUFFY, District Judge.
Plaintiffs bring this class action lawsuit against SLS Residential, Inc., SLS Health, Inc., SLS Wellness, Inc., and Supervised Lifestyles, Inc., and some of their principals and employees (collectively "SLS"). Before the court is Plaintiffs' motion for partial summary judgment. For the following reasons, the motion is DENIED.
SLS is a private mental health facility providing residential and out-patient treatment to young adults with psychiatric disorders. Plaintiffs were patients of SLS during the certified class period of July 2004 to May 31, 2006. Defendants Joseph Santaro and Alfred Bergman are the owners of SLS. Defendant Shawn Prichard is a licensed psychologist and was SLS's Chief Clinical Officer. The other individual defendants—Matt Sena, Robert Giordano, Robert Deletis, and John Doe—are employees of SLS. Plaintiffs allege that defendants, rather than providing therapeutic treatment, engaged in a pattern of behavior whereby they illegally assaulted, restrained, punished and isolated patients.
Plaintiffs' amended complaint stated causes of action under the Americans with Disabilities Act ("ADA"), the Rehabilitation Act of 1973, and New York Executive Law section 296, as well as claims for deceptive business practices, negligent and intentional infliction of emotional distress, negligent administration, and breach of fiduciary duty. In a memorandum decision and order by Judge Robinson, dated October 10, 2007, the, court subsequently dismissed Plaintiffs' claims under the ADA and the Rehabilitation Act, and Plaintiffs' claim of negligent administration as against defendants Sena, Giordano, Doe, and Caputo.
On November 6-7, 2006, the New York Office of Mental Health ("OMH") conducted a two-day on-site review of SLS' facilities. Subsequently, by letter dated November 17, 2006, OMH directed SLS to cease and desist all admissions into its facilities and imposed a fine in the sum of $10,000 for each of eight separate alleged statutory and regulatory violations. OMH later notified SLS that it had discovered two violations of its cease and desist order,
SLS made a timely request for a hearing on these charges. Michael F. Hogan, the Commissioner of OMH, issued a hearing notice on April 11, 2007, and appointed a hearing officer to preside and prepare a report setting forth findings and recommendations regarding the charges.
The hearing was conducted over twenty hearing days, during which fifteen witnesses testified. Both SLS and OMH were represented by counsel during the hearing. In a report dated April 17, 2008 ("2008 Report"), the hearing officer upheld OMH's allegations that SLS violated certain statutes and regulations and two cease-and-desist orders, and recommended that a total fine in the sum of $110,000 be imposed on SLS. Specifically, the 2008 Report found:
The 2008 Report was adopted in a final determination by Commissioner Hogan.
SLS then commenced a proceeding under New York Civil Practice Laws and Rules article 78 in New York Supreme Court, Putnam County, to review the determination and for a finding of damages. In an order dated December 3, 2008, the Supreme Court granted the petition, annulled the determination, and directed the petitioners to schedule a hearing date before the court on the issue of damages.
On appeal, the Appellate Division, Second Department, upheld the determinations of OMH regarding the charges, except for its determination concerning illegal restraints. See Matter of SLS Residential, Inc. v. New York State Office of Mental Health, 67 A.D.3d 813, 889 N.Y.S.2d 84 (2d Dep't 2009). The court noted that New York law and OMH regulations define a restraint as an "apparatus." Id. at 815, 889 N.Y.S.2d 84. Although it was OMH policy that the type of manual restraints employed without the use of an apparatus, such as the ones used by SLS, constituted an illegal restraint under New York Mental Health Law, OMH had never officially promulgated that policy as a rule or regulation as required by the New York Constitution. Id. at 815-16, 889 N.Y.S.2d 84. Since there was no evidence that SLS used an apparatus to restrain residents, the Appellate Division held that the $10,000 fine for the use of illegal restraints was not supported
By a letter dated August 29, 2008, OMH notified SLS of its determination to revoke all three of the SLS Operating Certificates. Following a hearing examining the period from November 2006 to August 29, 2008, an OMH report ("2010 Report") found a number of violations, including that SLS restricted residents' right to leave the premises or contact people outside the program, and restricted residents' visitation rights. OMH's allegation that SLS continued to use illegal restraints, however, was dismissed due to the Appellate Division's decision. The 2010 Report was adopted in a final determination of Commissioner Hogan and SLS was directed to return their operating certificates.
Plaintiffs move for partial summary judgment on their claim under New York Executive Law section 296, and their negligent and intentional infliction of emotional distress, negligent administration, and breach of fiduciary duty causes of action. In connection with its motion, Plaintiffs assert that, under the doctrine of collateral estoppel, OMH's 2008 Report should have preclusive effect, and SLS is barred from relitigating any factual issues decided by OMH. In response, SLS argues that collateral estoppel is inapplicable to the 2008 Report, and that, since Judge Robinson dismissed Plaintiffs' federal claims, the court should decline to exercise its pendency jurisdiction and remand the case to state court.
Plaintiffs have sufficiently established diversity jurisdiction under the Class Action Fairness Act of 2005 ("CAFA").
CAFA amends the diversity jurisdiction statute and confers original federal jurisdiction over any class action involving (1) 100 or more class members; (2) an aggregate amount in controversy of at least $5,000,000, exclusive of interest and costs; and (3) minimal diversity (where at least one plaintiff and one defendant are citizens of different states). 28 U.S.C. § 1332(d)(2), (5)(b), (6); Blockbuster, Inc. v. Galeno, 472 F.3d 53, 56 (2d Cir.2006). Here, minimal diversity is met because
The local controversy exception provides that a court must deny jurisdiction if
§ 1332(d)(4)(A); Mattera v. Clear Channel Commc'ns, Inc., 239 F.R.D. 70, 77 (S.D.N.Y.2006).
Additionally, a court must decline to exercise jurisdiction under the "home state controversy" exception where two-thirds or more of the proposed class members, and the primary defendants, are citizens of the state in which the action was originally filed. § 1332(d)(4)(B); Mattera, 239 F.R.D. at 77.
SLS submits a list of potential class members to support its motion, but contends, citing to Mattera v. Clear Channel Communications, Inc., 239 F.R.D. 70 (S.D.N.Y.2006), that the court need not have definite evidence of the percentage of New York class members, since the facts indicate that it is "reasonably likely" that a significant number of the class members are from New York. See id. at 80.
In Mattera, although the defendants presented no evidence concerning citizenship, the court concluded that it was "reasonably likely" that more than two-thirds of the class were New York citizens, since the class action was brought by New York employees of New York radio stations. Id. at 80.
The present case is distinguishable from Mattera. The class includes residents of SLS facilities between July 2004 and May 31, 2006. As more than four years have passed, it cannot be as easily assumed that most of the class remains in New York. Also, the class members are not the willing employees of Mattera, they are former psychiatric patients. Arguably, a residential psychiatric facility like SLS could attract out-of-staters seeking treatment and these patients would be less likely to remain in area once their treatment was completed.
Regardless, the presumption SLS proposes is undercut by its own evidence. SLS' list of potential class members contains 269 names, of which, by this Court's calculation, 96 are New York residents. This is barely above one-third and well below the requisite two-thirds needed for both exceptions. Accordingly, SLS has not met its burden of proof and the mandatory "local controversy" and "home state controversy" exceptions are inapplicable.
28 U.S.C. § 1332(d)(3).
While some of these factors may arguably point in SLS' favor, it is not clear that the minimum requirements for remand are met. 28 U.S.C. § 1332(d)(3) requires that "the primary defendants are citizens of the State in which the action was originally filed," but Defendant Prichard is a citizen of Connecticut.
The term "primary defendant" is not defined in CAFA. Courts have defined it variously as "(1) who has the greater liability exposure; (2) is most able to satisfy a potential judgment; (3) is sued directly, as opposed to vicariously, or for indemnification or contribution; (4) is the subject of a significant portion of the claims asserted by plaintiffs; or (5) is the only defendant named in one particular cause of action." Brook v. UnitedHealth Group Inc., No. 06 CV 12954(GBD), 2007 WL 2827808, at *5 (S.D.N.Y. Sep. 27, 2007). Accordingly, where "defendants are each equally culpable and liable for the injuries purportedly suffered by the putative class members, there is no rational basis upon which to differentiate the defendants' status as being primary or secondary." Id. at *6; see Sorrentino v. ASN Roosevelt Ctr., LLC, 588 F.Supp.2d 350, 359 (E.D.N.Y.2008). Here, Prichard is deemed equally liable to the other defendants and is sued directly, rather than vicariously or for indemnification; there is "no rational basis to differentiate" Prichard from other defendants.
Since the minimum requirements for the "interests of justice" exception are not met, the court will not remand the case to state court and will continue to exercise jurisdiction over the case.
The court now turns to Plaintiffs' contention that, under the collateral estoppel doctrine, the OMH findings upheld by the Appellate Division have preclusive effect on this case.
The doctrine of collateral estoppel "precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding
Under the Full Faith and Credit Act, 28 U.S.C. § 1738, when a state administrative proceeding is reviewed by a state court, the court's judgment is entitled to full faith and credit in federal court. See Kremer v. Chem. Constr. Corp., 456 U.S. 461, 466, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982). Thus, "federal courts must give state-court judgments the same preclusive effect as they would receive in courts of the same state." Burkybile v. Bd. of Educ., 411 F.3d 306, 310 (2d Cir.2005).
Accordingly, the Appellate Division's decision is entitled to full faith and credit, requiring this Court to apply New York's collateral estoppel rules. See Wilder v. Thomas, 854 F.2d 605, 616-17 (2d Cir. 1988) ("If the elements of collateral estoppel under New York law are otherwise satisfied, the New York courts' affirmance of the results of the [administrative process] are entitled to preclusive effect."). The Appellate Division, however, did not uphold OMH's charge concerning SLS' use of illegal restraints. Therefore, it is necessary to examine whether the underlying factual findings by OMH regarding restraints have any preclusive effect.
"[W]hen a state agency acting in a judicial capacity resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate,... federal courts must give the agency's factfinding the same preclusive effect to which it would be entitled in the State's courts." Univ. of Tenn. v. Elliott, 478 U.S. 788, 799, 106 S.Ct. 3220, 92 L.Ed.2d 635 (1986) (internal quotation marks and citation omitted); accord Farrell v. Burke, 449 F.3d 470, 482 (2d Cir. 2006).
SLS contends that OMH's ultimate determination that the use of restraints violated residents' rights cannot be given preclusive effect, since courts cannot apply collateral estoppel to "agency determinations of mixed law and fact." See Akgul v. Prime Time Transp. Inc., 293 A.D.2d 631, 633, 741 N.Y.S.2d 553 (2d Dep't 2002) ("[A]n administrative agency's final conclusion, characterized as an ultimate fact or a mixed question of fact and law, is not entitled to preclusive effect."); accord O'Gorman v. Journal News Westchester, 2 A.D.3d 815, 817, 770 N.Y.S.2d 121 (2d Dep't 2003); see Allied Chem. v. Niagara Mohawk Power Corp., 72 N.Y.2d 271, 276, 528 N.E.2d 153, 532 N.Y.S.2d 230 (1988) ("While issue preclusion may arise from the determination of administrative agencies, in that context, the doctrine is applied more flexibly").
SLS argues that Plaintiffs have not shown "identity of issue," since the alleged violations contained in the OMH reports did not occur during the relevant class period of July 2004 to May 31, 2006. The OMH held two separate sets of hearings which led to two reports. While the 2010 Report explicitly sets a "relevant time period" of November 2006 to August 29, 2008, the 2008 Report does not. However, some of the violations detailed in the 2008 Report occurred within the class period.
Manual Restraints: The 2008 Report notes that the OMH, in a letter dated February 22, 2005, advised SLS that the manual "safety holds" utilized by SLS upon its residents were deemed restraints and were not permitted in its community residence program. (Plaintiff's Ex. C ¶ 20). The OMH sent similar letters to SLS in March and August of 2005. Although SLS initially disagreed with the OMH's interpretation of the law, it agreed to comply with its opinion following a meeting with OMH officials in September 2005. (Id. ¶¶ 21-22). OMH subsequently determined that, between January and November 2006, SLS used illegal restraints on its residents twenty-three times. (Id. ¶ 23).
Restrictions on Residents' Right to Leave the Program: In letters dated May and August 2005, and at meetings in September 2005 and October 2006, OMH informed SLS that its residents could not be involuntarily detained. (Id. ¶ 81-82). Nevertheless, the OMH determined that, as of November 6-7, 2006, SLS policies required a resident to give thirty days written notice before a resident could leave the facility, and placed additional restrictions on the residents' right to leave. (Id. ¶ 83). The 2008 Report noted that SLS had not changed these policies "despite being informed by OMH that they were unlawful." (Id. ¶ 86), indicating that these policies were in place prior to OMH's onsite visit.
Other Violations: Additionally, the OMH found that SLS violated OMH regulations
SLS next argues that there is no identity of issue because the OMH reports "did not establish any rights or interests that might be impaired by a finding before this Court that SLS did not violate patients' rights." See Ryan, 62 N.Y.2d at 501, 478 N.Y.S.2d 823, 467 N.E.2d 487 (holding that for an issue to be deemed identical "it must be the point actually to be determined in the second action or proceeding such that a different judgment in the second would destroy or impair rights or interests established by the first.") (internal quotes and citations omitted).
The Appellate Division found that, based on the conduct detailed in the 2008 Report, SLS violated residents' rights under New York law, and OMH was entitled to collect fines. Thus, a contrary decision by this Court would impair OMH's right to collect these fines.
In conclusion, collateral estoppel is appropriate in the present case regarding OMH's determinations and findings on SLS' conduct during the class period. OMH's conclusions concerning the charges upheld by the Appellate Division (SLS' restrictions on residents' right to leave, SLS' lack of an Incident Management Program, and SLS' operation of programs as indistinguishable from one another) will have preclusive effect. OMH's evidentiary findings of fact regarding manual restraints as detailed in the 2008 Report will also have a preclusive effect.
The court will now address whether Plaintiffs are entitled to summary judgment on their claims.
A party is entitled to summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party bears the burden of showing that no issue of material fact exists. Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has made this showing, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts.... The nonmoving party must come forward with specific facts showing that there is a genuine issue for trial." Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir.2002) (internal quotations and citation omitted). "[C]onclusory allegations" and "unsubstantiated speculation," will not defeat a motion for summary judgment. Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir.1998). In analyzing a summary judgment motion, the court must view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in its favor. Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Plaintiffs' second cause of action alleges that SLS violated New York Executive
To state a claim under section 296, a plaintiff must allege that "(1) he has a disability ... (2) that a person who owns, leases (or leases to), or operates a place of public accommodation discriminated against him, (3) on the basis of his disability." Detko v. Blimpies Restaurant, 924 F.Supp. 555, 557 (S.D.N.Y.1996).
SLS does not dispute that Plaintiffs are disabled or that SLS' facilities are a place of public accommodation. Rather, SLS contends that its policies and practices as described in the 2008 Report do not constitute "discrimination" under section 296, since OMH's findings do not show that SLS refused, withheld or denied services to Plaintiffs because of their disability, while at the same time providing those benefits to a group of nondisabled residents.
In turn, Plaintiffs maintain that they were discriminated against because SLS, as a treatment center for patients with psychiatric disorders, specifically targeted persons with disabilities, abused them, violated their legal rights, and thereby profited. Both parties agree, however, that there is not a single case in which this theory of discrimination, either under the ADA or section 296, was accepted or rejected by a court.
However, in a memorandum decision and order dated October 10, 2007, denying SLS' motion to dismiss, Judge Robinson rejected SLS' argument that its conduct could not constitute "discrimination" because Plaintiffs did not allege a similarly situated group of nondisabled persons that SLS had treated differently. The court noted that discrimination occurs where "an entity targets a protected class for mistreatment because of its protected status." Romano v. SLS Residential, Inc., 246 F.R.D. 432, 441 (S.D.N.Y.2007). While Plaintiffs did not allege that SLS had treated them differently than other groups because of their disability, SLS' conduct could still constitute discrimination since "to hold otherwise would allow defendants who wished to discriminate against persons with disabilities to avoid liability under discrimination statutes as long as they only targeted persons with disabilities."
Judge Robinson's order, however, was decided in the context of a motion to dismiss. Whether Plaintiffs have established
Under New York law, for claims for intentional and negligent infliction of emotional distress, a plaintiff must show (1) extreme and outrageous conduct; (2) a causal connection between the conduct and the injury; and (3) severe emotional distress. See Stuto v. Fleishman, 164 F.3d 820, 827 (2d Cir.1999). Additionally, for an intentional infliction of emotional distress claim, a plaintiff must show that the defendant intended to cause, or acted with a "reckless disregard of a substantial probability of causing, severe emotional distress." Id. The conduct alleged must be "`so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized society.'" Howell v. N.Y. Post Co., 81 N.Y.2d 115, 122, 612 N.E.2d 699, 596 N.Y.S.2d 350 (1993) (quoting Murphy v. American Home Prods. Corp., 58 N.Y.2d 293, 303, 448 N.E.2d 86, 461 N.Y.S.2d 232 (1983)).
While the policies and practices detailed in the 2008 Report could constitute outrageous and extreme conduct, Plaintiffs have not submitted evidence showing that they suffered severe emotional harm. See, e.g., Armatas v. Maroulleti, No. 08-CV-310 (SJF)(RER), 2010 WL 4340437, at *19 (E.D.N.Y. Oct. 19, 2010) (holding that an intentional infliction of emotional distress claim failed "[i]n the absence of objective medical evidence of severe emotional distress, or even subjective evidence describing the severe emotional harm"); Artope v. Ctr. for Animal Care and Control, Inc., No. 05 CV 9283(KMW)(RLE), 2009 WL 874037, at *12-13 (S.D.N.Y. Mar. 27, 2009); Bernat v. Williams, 81 A.D.3d 679, 679-80, 916 N.Y.S.2d 614 (2d Dep't 2011) (denying summary judgment where plaintiff failed to show that she was caused to suffer extreme emotional distress).
For a claim for breach of fiduciary duty, a plaintiff must show "(1) a fiduciary duty existing between the parties; (2) the defendant's breach of that duty; and (3) damages suffered by the plaintiff which were proximately caused by the breach." Clarendon Nat'l Ins. Co. v. Health Plan Adm'rs, No. 08 Civ.6279 (GBD), 2009 WL 3053736, at *3, 2009 U.S. Dist. LEXIS
New York Mental Hygiene Law section 31.19(a) imposed a duty on SLS not to "detain" its residents absent lawful authority. The Appellate Division held that SLS violated this provision because its policies restricted the ability of residents to leave the facilities and the program. While arguably duty and breach exist, Plaintiffs have not demonstrated damages caused by the breach. As such, summary judgment is not appropriate on this issue.
Plaintiffs allege that SLS engaged in negligent hiring, retention, and supervision of staff. Under New York law, a claim for negligent hiring, retention, or supervision, "in addition to the standard elements of negligence," requires "a plaintiff [to] show:
Ehrens v. Lutheran Church, 385 F.3d 232, 235 (2d Cir.2004) (quoting Kenneth R. v. Roman Catholic Diocese of Brooklyn, 229 A.D.2d 159, 161, 654 N.Y.S.2d 791 (2d Dep't 1997) (internal citations omitted)). Summary judgment on this claim would be premature, as Plaintiffs have not proven that they suffered an underlying tort, since they have not established their discrimination, emotional distress, or breach of fiduciary duty claims as a matter of law.
In summary, the Court concludes:
For the foregoing reasons, Plaintiffs' motion for summary judgment is DENIED.
SO ORDERED.
