Fair Housing Act | Shareholder Rights | Sexual Harassment

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Tenant’s Girlfriend Did Not Qualify As Actually Disabled Under Fair Housing Act

Tenant’s Girlfriend Did Not Qualify As Actually Disabled Under Fair Housing Act

In Mazzocchi v. Windsor Owners Corp. a tenant, proceeding pro se on behalf of himself and his long-term girlfriend, “Jane Doe,” who resided with him in his residential cooperative apartment, filed suit against his landlord, the managing agent, and members of landlord’s board of directors, claiming violation of the Fair Housing Act (“FHA”) by disability discrimination based on his girlfriend’s alleged bipolar disorder, and claiming violation of § 1985 by conspiracy to violate the FHA, when their lease was terminated.

The FHA makes it unlawful to “discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with such dwelling, because of a handicap, etc.” Inasmuch as it prohibits action taken “because of … handicap,” the Court reasoned that the plaintiffs must show a disability within the meaning of the FHA in order to state a claim. “To show the existence of a disability under the FHA, a plaintiff must establish that he or she has ‘(1) a physical or mental impairment which substantially limits one or more of such person’s major life activities, (2) a record of having such an impairment, or (3) is regarded as having such an impairment.’”

Here, the Court concluded that the tenant had not raised a genuine dispute of fact as to whether his girlfriend was actually disabled or had a record of impairment, but had established a triable issue of fact as to whether she was “regarded as having such an impairment.”

“Under the ‘actually disabled’ test, an individual is considered to have a disability if he or she ‘(1) suffers from a physical or mental impairment, that (2) affects a major life activity, and (3) the effect is substantial.’ Major life activities include ‘functions such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning and working.’ A major life activity is ‘substantially limited’ if the impairment ‘prevents or severely restricts’ the major life activity and has a ‘permanent or long term’ impact.”

The tenant had argued that his girlfriend suffers from bipolar disorder and that this mental impairment substantially limits her concentration, thinking, and cognitive function, and her ability to care for herself, interact with others, work, and sleep. However, the tenant did not offer admissible medical evidence diagnosing her with bipolar disorder. Nevertheless, the Court reasoned that even assuming the girlfriend was mentally impaired, “the evidence does not establish a genuine dispute as to whether the alleged impairment ‘substantially limits’ any” of her major life activities.

As for the “regarded as” test, the tenant argued that his girlfriend was regarded by the defendants as having a mental impairment that substantially limited her ability to obtain shelter. The Court reasoned that the “Second Circuit has recognized that the ability to obtain shelter is ‘among the most basic of human needs and thus is a ‘major life activity’ for the purposes of the FHA.’ To show that a person is regarded as having an impairment that substantially limits his or her ability to obtain shelter, a plaintiff must establish that the person ‘is regarded as unable to live in a broad class of housing that would otherwise be accessible to her.’ It is not enough to show that the person is ‘regarded as unable to live in a particular dwelling.”

The Court concluded that the tenant had raised a genuine dispute of fact as to whether the defendants regarded the girlfriend as having a mental impairment that substantially limited her ability to obtain shelter. At a board meeting, participants gave detailed accounts of what they perceived to be the girlfriend’s inappropriate, erratic, and delusional behavior. The participants recounted instances when she cursed at and verbally threatened other building residents without provocation; saw imaginary things and “talked to some kind of a creature in her mind”; and danced in front of the building “in the presence of children while wearing tight, revealing clothing.” The board members expressly attributed her conduct to mental illness and expressed concern that her behavior was a threat to the building’s image and market value.”

Shareholders of a Parent Corp. May Inspect the Books and Records of its Subsidiary

Shareholders of a Parent Corp. May Inspect the Books and Records of its Subsidiary

In Pokoik v. 575 Realties, Inc., several shareholders of a parent corporation brought a petition pursuant to CPLR Article 78 to inspect certain records of a corporate subsidiary. The Supreme Court, New York County, accepting the corporation’s position, denied the shareholders’ motion on the ground that they are not direct shareholders of the subsidiary. The shareholders appealed.

The Appellate Division held that the shareholders made a sufficient showing to establish their common-law right to inspect books and records of a corporation’s wholly owned subsidiary to investigate possible fiduciary mismanagement and wasteful dissipation of corporate assets through payment of excessive salaries and compensation.

Common law rights stem from case law developed by the courts and similar tribunals, that have precedential effect on future cases. The body of past common law binds judges deciding later cases to ensure consistent treatment, and so that consistent principles applied to similar facts yield similar outcomes. This is also known as stare decisis. In contrast, statutory rights stem from the legislature, which enacts law.

Here, the Court noted that under New York law, shareholders have both statutory and common-law rights to inspect a corporation’s books and records, so long as the shareholders seek the inspection in good faith and for a valid purpose. The Court noted that “because the common-law right of inspection is broader than the statutory right, petitioners are entitled to inspect books and records beyond the specific materials delineated in Business Corporation Law §624(b) and (e).” The Court reasoned that the shareholders’ concerns about board mismanagement and excessive expenditures and wasteful dissipation of corporate assets are, on their face, a proper purpose “even if the inspection ultimately establishes that the board had engaged in no wrongdoing.” While the corporations maintained that the shareholders did not tender any evidence to suggest that corporate formalities were not followed between the parent corporation and its subsidiary, they did not refute that the subsidiary is wholly-owned by the parent corporation, in which the petitioning shareholders hold shares, and that the parent and subsidiary share office space and management and are dominated by certain family members who control the affairs of multiple family businesses.

The parent corporation’s counsel advised the petitioners’ counsel that it “has no employees; has no payroll; pays no salaries; pays no workers’ compensation insurance; and, issues no W–2 forms… and has no books or records reflecting salaries paid by the parent to any individual or entity,” which leaves the shareholders with no source other than the subsidiary’s books and records for the information they seek. Because the shareholders’ requests were narrowly related to salaries and compensation and there has been no showing that requiring the subsidiary to produce the records would impose any undue burden, the court held that the shareholders “made a sufficient showing to establish their common-law right to inspect the books and records” of the wholly owned subsidiary, relating to salary and compensation. “Respondents’ argument that the right to inspect extends only to the shareholders of the corporation whose books and records they seek to inspect would allow respondents to shield their alleged misdeeds from scrutiny” as the books and records of the subsidiary “would never be discoverable by anyone other than” the parent corporation’s board of directors. “It also fails to give due consideration to the relationship between a parent and its wholly owned subsidiary. For example, where the parent controls the subsidiary, a shareholder may bring a ‘double’ derivative action ‘not only for wrongs inflicted directly on the corporation in which he holds stock, but for wrongs done to that corporation’s subsidiaries which make indirect, but nonetheless real, impact upon the parent corporation and its stockholders.’”

Sexual Harassment, Yes; Constructive Discharge, No

Sexual Harassment, Yes; Constructive Discharge, No

In La Porta v. Alacra, Inc., a former employee brought an action against her former employer, alleging sexual harassment creating a hostile work environment, constructive discharge, and retaliation under New York City Human Rights Law. The Supreme Court, New York County, granted the employee’s motion for leave to serve an amended complaint and denied the employer’s motion to dismiss. On an appeal by the employer, the Appellate Division held that the allegations stated a claim for sexual harassment creating hostile work environment, but the employee failed to state constructive discharge claim; the amended complaint also properly stated a claim for retaliation.

According to the decision, La Porta alleged that she was the manager of Alacra’s New York City office, and Armen Galoustian was a male employee with a history of sexually harassing female co-workers. In 2015, La Porta and other employ ees witnessed Galoustian engage in unwanted touching and harassing of two female employees. Alacra’s management was aware of Galoustian’s conduct but did nothing to correct it. On March 15, 2015, a Saturday, Galoustian sent plaintiff an unsolicited, offensive message on Facebook stating that her “boobs are someging [sic].” La Porta immediately reported the remark to Alacra’s chief financial officer and her direct supervisor. She also promptly reported the remark to Alacra’s chief executive officer. She followed up by complaining about Galoustian’s offensive conduct when she returned to the office on Monday. She also complained that week to Alacra’s CEO, and Alacra’s president. Instead of correcting Galoustian or reassuring La Porta that he would not follow up on his sexually offensive message with the further sexual harassment he was known to do, Alacra’s managers rebuffed La Porta and completely isolated her for the remainder of her stay at the company. Fearful that Galoustian, unrestrained by management, would harass her, La Porta suffered a relapse of her preexisting Graves’ disease, a stress-variable autoimmune disorder, forcing her to seek medical care. She ultimately found the situation to be unbearable, and resigned on August 26, 2015.

Based on these allegations, the Appellate Court held that La Porta “has stated a viable claim for sexual harassment creating a hostile work environment under the New York City Human Rights Law.” However, the Court concluded that her allegations “do not suffice to state a claim under the stricter standard governing constructive discharge stemming from a hostile work environment.” Constructive discharge, also known as constructive dismissal or constructive termination, is a modified claim of wrongful termination. Wrongful constructive discharge occurs when, instead of firing the employee, the employer wrongfully makes working conditions so intolerable that the employee is forced to resign. However, under current New York and federal anti-harassment laws, where an alleged constructive discharge stems from an alleged hostile work environment, a plaintiff must show working conditions so intolerable that a reasonable person would have felt compelled to resign. This standard is higher than the standard for establishing a hostile work environment itself.

As for the retaliation claim, the Court concluded that her allegations were sufficient to sustain her claim. “We reject defendants’ argument that plaintiff has failed to allege that she engaged in any protected activity because the Facebook message she complained about is not independently actionable. A plaintiff need not establish an underlying HRL violation in order to prevail on a retaliation claim, and, based on her allegations, it can be readily inferred that she had a ‘good faith, reasonable belief that the underlying challenged actions … violated the law.’ In addition, her allegations of being rebuffed and isolated by Alacra’s management sufficiently stated disadvantageous actions by defendants as a result of her complaints to management.”

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