Campo v. New York City Employees' Retirement System

• Decision Date: 31 March 1988
• Docket Number: D,No. 9,9
• Citation: 843 F.2d 96
• Parties: Helen CAMPO, Plaintiff-Appellant, v. The NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM and The City of New York, Defendants-Appellees. ocket 87-7237.
• Court: U.S. Court of Appeals — Second Circuit

Page 96

843 F.2d 96

Helen CAMPO, Plaintiff-Appellant, v. The NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM and The City of New York, Defendants-Appellees.

No. 9, Docket 87-7237.

United States Court of Appeals Second Circuit.

Argued Oct. 7, 1987.

Decided March 31, 1988.

Edgar Pauk, New York City (Legal Services for the Elderly, New York City, of counsel), for plaintiff-appellant.

Lin B. Saberski, New York City (Frederick A.O. Schwarz, Jr., Corp. Counsel of the City of New York, of counsel), for defendants-appellees.

Before LUMBARD and MINER, Circuit Judges, and FRANK A. KAUFMAN, District Judge, United States District Court for the District of Maryland, sitting by designation.

FRANK A. KAUFMAN, District Judge:

Justin Campo retired in October, 1980, after seventeen years of employment with New York City's Department of Sanitation, because of a disabling illness. In December, 1980, the New York City Employees' Retirement System (NYCERS) approved its Medical Board's recommendation concerning Mr. Campo's retirement and began to pay retirement benefits to him in January, 1981.

NYCERS states that it mailed a letter to Mr. Campo dated March 26, 1981 which set forth the sums of money to which Mr. Campo would be entitled under various alternative retirement options and gave Mr. Campo the opportunity to select the option of his choice. Mrs. Campo, wife of Mr. Campo and plaintiff in this case, claims that, as far as she knows, her husband never received that letter. NYCERS also says it sent to Mr. Campo a letter dated May 5, 1981, advising him that if he did not select an option within sixty days, NYCERS, according to its established procedures, would select for him the option providing for the maximum lifetime benefit with no survivor's benefit. The record does not disclose Mrs. Campo's position as to whether her husband received the May 5, 1981 letter. In any event, Mrs. Campo states that her husband, in her presence, (1) filled out a pension application form sometime between March 16, 1981 and May 11, 1981; (2) selected Option I, which provides for a survivor's benefit; and (3) mailed that form to NYCERS by certified mail, return receipt requested. Mrs. Campo further states that the return receipt was received by her husband, and that she watched him place it in a desk drawer. However, Mrs. Campo says she has been unable to find that receipt. She states that her husband received only one further letter from NYCERS, in August, 1981, informing him about Internal Revenue Service reporting requirements with regard to his retirement arrangements. That letter also noted that Mr. Campo had $115,333.48 in reserve in his retirement account. Mrs. Campo says that, as far as she knows, her husband never received any notice from NYCERS indicating that his application for Option I benefits had not been received.

Mr. Campo apparently received benefit payments from NYCERS for about three years before he died on May 27, 1984. One week later, NYCERS mailed to Mrs. Campo a letter informing her that she would not receive any survivor's benefit. On October 9, 1984, Mrs. Campo went to a NYCERS office, where she was told that her husband had selected an option which did not provide for a survivor's benefit. However, on that occasion, NYCERS personnel were unable to produce a document reflecting that selection by Mr. Campo. They told Mrs. Campo that NYCERS had selected the maximum lifetime payments option for her husband because he had not responded within sixty days of the May 5, 1981 letter.

On June 25, 1985, Mrs. Campo's counsel filed an appeal by letter with NYCERS, setting forth her version of the facts and indicating that Mrs. Campo desired to testify at a hearing concerning her husband's election of benefits. By letter dated July 10, 1985, NYCERS denied Mrs. Campo's appeal without granting her a hearing. Apparently, the New York City Administrative Code ¹ does not require a hearing either before or after a beneficiary like On December 27, 1985, Mrs. Campo filed this section 1983 action in the United States District Court for the Southern District of New York, claiming that NYCERS' failure to grant her the hearing she had requested deprived her of property without due process of law, in violation of the Fourteenth Amendment. Mrs. Campo also advances several state law causes of action against NYCERS, including violations of the New York State Constitution, breach of contract and breach of fiduciary duty.

Mrs. Campo is denied retirement benefits by NYCERS, nor does NYCERS appear to provide a hearing under those circumstances.

The district court granted NYCERS' motion to dismiss, 653 F.Supp. 895 concluding that the informal procedures used by NYCERS to review Mrs. Campo's claim and the availability of state court Article 78 and breach of contract actions provide the required procedural due process. In this appeal, Mrs. Campo challenges that holding. ²

NYCERS urges two grounds for affirmance of the decision below. First, NYCERS takes the position that Mrs. Campo's claim is predicated on alleged negligent acts or omissions by NYCERS in handling her husband's benefits selection and that such negligence cannot give rise to a procedural due process claim in the light of Daniels v. Williams, 474 U.S. 327, 330-32, 106 S.Ct. 662, 664-66, 88 L.Ed.2d 662 (1986), and Davidson v. Cannon, 474 U.S. 344, 347-48, 106 S.Ct. 668, 670-71, 88 L.Ed.2d 677 (1986). The district court apparently concluded that Mrs. Campo's claim was not grounded in negligence, and therefore did not address that issue.

NYCERS' second contention, that its denial to Mrs. Campo of an administrative hearing did not deprive her of due process because the State of New York offers adequate remedies in its courts, goes to the heart of this case. The district court, after expressing doubt as to whether Mrs. Campo has a property interest in her husband's pension, assumed that such an interest exists and then applied the standards enunciated in Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), to determine whether NYCERS should have given her a hearing. In so doing, the district court concluded that NYCERS' informal review of Mrs. Campo's claim and the availability of either an Article 78 proceeding or a breach of contract action in state court to entertain Mrs. Campo's challenge, provided all the procedural process due her under the U.S. Constitution.

DISCUSSION

I.

42 U.S.C. Sec. 1983 provides as follows:

Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory ... subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.

(Emphasis added).

NYCERS is a New York City administrative agency which qualifies as a "person" acting "under color" of state law. See Monell v. Dep't of Social Services, 436 U.S. 658, 669, 98 S.Ct. 2018, 2024, 56 L.Ed.2d 611 (1978). Mrs. Campo has alleged that NYCERS has deprived her of a property interest without due process of law.

In Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972), Justice Stewart wrote that "[t]he Court has also made clear that the property interests protected by procedural due process extend well beyond actual ownership of real estate, chattels, or money." Id. at 571-72, 92 S.Ct. at 2706 (footnote omitted). The New York State Constitution provides that "membership in any pension or retirement system of the state or a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired." N.Y. Const. art. V, Sec. 7. In this case, Mrs. Campo claims that she was designated by her husband as his beneficiary. The district court, in granting NYCERS' motion, assumed that Mrs. Campo has asserted a property interest. We also so assume in the context of this appeal. Therefore, Mrs. Campo has stated a cause of action under 42 U.S.C. Sec. 1983 if she has been denied procedural due process.

II.

The core issue presented by Mrs. Campo is whether NYCERS' refusal to hold the administrative hearing she requested violates her right to procedural due process. In Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 1099, 47 L.Ed.2d 310 (1976), the Supreme Court established standards for determining when a hearing is necessary prior to the deprivation of a claimed property interest. In Mathews, the plaintiff had been denied a trial-type hearing prior to a final determination that he was not eligible for Social Security disability payments. In this case no pre-deprivation hearing was needed or could have taken place. Because a judicial hearing in a state court was available to Mrs. Campo on timely demand, due process requirements for a post-deprivation hearing are met for the reasons discussed infra, regardless of the application, vel non, of Mathews. ³

III.

The fact that Mrs. Campo has a due process right to a hearing does not in and of itself mean that the hearing must take place at the administrative level. Mrs. Campo complains only of NYCERS' failure to grant her a hearing and "refers to no other right, privilege, or immunity secured by the Constitution or federal laws other than the Due Process Clause of the Fourteenth Amendment simpliciter." Parratt v. Taylor, 451 U.S. 527, 536, 101 S.Ct. 1908, 1913, 68 L.Ed.2d 420 (1981), overruled in part on other grounds, Daniels v. Williams, 474 U.S. 327, 106 S.Ct. 662, 88 L.Ed.2d 662 (1986).

In Parratt, an inmate of a Nebraska prison brought a section 1983 action against prison officials who allegedly lost certain hobby materials which the inmate had ordered by mail. Those officials, plaintiff asserted, did not follow normal mail handling procedures required by the prison's own operating...