Konkur v. Utica Acad. of Sci. Charter Sch.

Decision Date10 February 2022
Docket Number8
Citation38 N.Y.3d 38,185 N.E.3d 483,165 N.Y.S.3d 1
Parties Ersin KONKUR, Appellant, v. UTICA ACADEMY OF SCIENCE CHARTER SCHOOL, Defendant, Turkish Cultural Center and High Way Education, Inc., Respondent.
CourtNew York Court of Appeals Court of Appeals

David G. Goldbas, Utica, for appellant.

Evans Fox LLP, Rochester (Matthew M. Piston of counsel), for respondent.

OPINION OF THE COURT

GARCIA, J.

The issue presented in this appeal is whether Labor Law § 198–b, which prohibits wage kickbacks, contains an implied private right of action. We conclude that no such freestanding private right of action was intended by the legislature and therefore affirm.

Plaintiff Ersin Konkur, who worked as a math teacher at Utica Academy of Science Charter School, commenced the instant action against the school and High Way Education, Inc., doing business as the Turkish Cultural Center, after the school failed to renew his contract. Plaintiff alleged that defendants Utica Academy and High Way were closely affiliated with Fetullah Gu¨len, a Turkish religious leader, and that plaintiff was coerced into making payments from his wages to High Way that were then funneled to Gu¨len's movement. Plaintiff's complaint asserted six causes of action against both defendants, including a claim that High Way and Utica Academy jointly demanded and collected, "on threat of unemployment or demotion in employment, portions of [his] wage, salary, and [ ] overtime," which constituted "illegal kickbacks" in violation of Labor Law § 198–b. Plaintiff sought damages pursuant to Labor Law § 198 arising from that alleged violation.

Supreme Court dismissed all causes of action against High Way save the section 198–b claim, holding that, while section 198–b does not contain an express private right of action, "[t]he current status of the law is not settled" and there is "case law that provides a private right of action does exist on kickbacks." The Appellate Division disagreed and reversed, dismissing the complaint against High Way in its entirety. The Court held that "the legislature did not intend to create a private right of action for violations for Labor Law § 198–b, inasmuch as the legislature specifically considered and expressly provided for enforcement mechanisms in the statute itself" ( 181 A.D.3d 1271, 1272, 121 N.Y.S.3d 759 [4th Dept. 2020] ). We granted plaintiff leave to appeal ( 35 N.Y.3d 915, 132 N.Y.S.3d 406, 157 N.E.3d 129 [2020] ).

Labor Law § 198–b prohibits "kickbacks" by making it unlawful for any person to "request, demand, or receive" part of an employee's wages or salary on the condition that "failure to comply with such request or demand will prevent such employee from procuring or retaining employment." Violation of the statute is a misdemeanor offense (see Labor Law § 198–b [5] ). Labor Law § 218 also provides for administrative enforcement of section 198–b by the Commissioner of the Department of Labor. The statute empowers the Commissioner to grant affected employees restitution and liquidated damages in addition to imposing civil penalties.

Because section 198–b contains no express private right of action, "plaintiffs can seek civil relief in a plenary action based on a violation of the statute ‘only if a legislative intent to create such a right of action is fairly implied in the statutory provisions and their legislative history’ " ( Cruz v. TD Bank, N.A., 22 N.Y.3d 61, 70, 979 N.Y.S.2d 257, 2 N.E.3d 221 [2013], quoting Carrier v. Salvation Army, 88 N.Y.2d 298, 302, 644 N.Y.S.2d 678, 667 N.E.2d 328 [1996] ). As we recently reaffirmed in Ortiz v. Ciox Health LLC , we apply a three-factor test to determine whether the legislative intent favors an implied right: " (1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme’ " ( 37 N.Y.3d 353, 360, 157 N.Y.S.3d 822, 179 N.E.3d 635 [2021], quoting Sheehy v. Big Flats Community Day, 73 N.Y.2d 629, 633, 543 N.Y.S.2d 18, 541 N.E.2d 18 [1989] ). This test requires that " ‘all three factors must be satisfied before an implied private right of action will be recognized’ " ( Ortiz, 37 N.Y.3d at 360, 157 N.Y.S.3d 822, 179 N.E.3d 635, quoting Haar v. Nationwide Mut. Fire Ins. Co., 34 N.Y.3d 224, 229, 115 N.Y.S.3d 197, 138 N.E.3d 1080 [2019] ). Application of this test to the statute here leads us to conclude that section 198–b affords plaintiff no private right of action.

Plaintiff satisfies the first factor as a member of the class of persons the statute was designed to protect. Plaintiff also satisfies the second factor, which requires an analysis of " ‘what the Legislature was seeking to accomplish when it enacted the statute " and a determination of " ‘whether a private right of action would promote that objective’ " ( Ortiz, 37 N.Y.3d at 363–64, 157 N.Y.S.3d 822, 179 N.E.3d 635, quoting Uhr v. East Greenbush Cent. School Dist., 94 N.Y.2d 32, 38, 698 N.Y.S.2d 609, 720 N.E.2d 886 [1999] ). The general intent of article 6 of the Labor Law is to "strengthen ... the rights of employees" (see Truelove v. Northeast Capital & Advisory, 95 N.Y.2d 220, 223, 715 N.Y.S.2d 366, 738 N.E.2d 770 [2000] ), and the law was designed to protect employees coerced into kicking back part of the wages to which they are entitled (see Mem of Exec Secretary and Director of Research, Law Revision Commn, Bill Jacket, L 1939, ch 851 at 11). An individual plenary right would arguably advance this goal by allowing those affected by kickbacks an opportunity to vindicate this right individually, alongside the investigative and enforcement powers of the Labor Department and Attorney General.

The third factor, however, is the "most important and typically turns on the legislature's choice to provide one particular enforcement mechanism to the exclusion of others" because it "demonstrates that the legislature considered and decided what avenues of relief were appropriate" ( Ortiz, 37 N.Y.3d at 360–64, 157 N.Y.S.3d 822, 179 N.E.3d 635 ; see also CPC Intl. v. McKesson Corp., 70 N.Y.2d 268, 519 N.Y.S.2d 804, 514 N.E.2d 116 [1987] ). Here, " [t]he Legislature specifically considered and expressly provided for enforcement mechanisms in the statute itself’ " ( Cruz, 22 N.Y.3d at 71, 979 N.Y.S.2d 257, 2 N.E.3d 221, quoting Mark G. v. Sabol, 93 N.Y.2d 710, 720, 695 N.Y.S.2d 730, 717 N.E.2d 1067 [1999] ; see also Ortiz, 37 N.Y.3d at 362–64, 157 N.Y.S.3d 822, 179 N.E.3d 635 [citing cases]; Carrier, 88 N.Y.2d at 302–303, 644 N.Y.S.2d 678, 667 N.E.2d 328 ; CPC Intl., 70 N.Y.2d at 276–277, 519 N.Y.S.2d 804, 514 N.E.2d 116 ). As we have repeatedly explained,

" ‘the Legislature has both the right and the authority to select the methods to be used in effectuating its goals, as well as to choose the goals themselves. Thus, regardless of its consistency with the basic legislative goal, a private right of action should not be judicially sanctioned if it is incompatible with the enforcement mechanism chosen by the Legislature " ( Cruz, 22 N.Y.3d at 70–71, 979 N.Y.S.2d 257, 2 N.E.3d 221, quoting Sheehy, 73 N.Y.2d at 634–635, 543 N.Y.S.2d 18, 541 N.E.2d 18 [citation omitted]).

It is on this factor, in the face of significant enforcement mechanisms provided for in the statute, that plaintiff's argument fails.

The available avenues for enforcement are clearly pronounced in the text and the statutory history. Section 198–b was first enacted within the Penal Law to address the prevalent issue of kickbacks in public works projects but was soon amended to apply in all employment contexts (see Rep of Comm on Legislation, N.Y. County Lawyers’ Assn, Bill Jacket, L 1934, ch 171 at 4; Mem of Comm on Crim Cts, Law and Pro of Assn of Bar of City of NY, Bill Jacket, L 1939, ch 851 at 7). Later amendment gave the Labor Commissioner administrative enforcement authority (see L 1989, ch 177, § 2). The provision was transferred to the Labor Law in 1965 as part of an overhaul of the Penal Law aimed at placing criminal statutes with their relevant civil subject matter counterparts (see Letter from Richard J. Bartlett, Commission Chair, to Sol N. Corbin, Counsel to Governor, July 1, 1965, Bill Jacket, L 1965, ch 1030 at 4–5). As the Labor Department noted at the time, the change in the law's placement meant differences in how it was criminally enforced (see Mem of Off of Indus Commr, St Dept of Labor, Bill Jacket, L 1965, ch 1031 at 30). District Attorneys typically prosecuted violations of the Penal Law, but as a Labor Law violation, prosecution is undertaken by the Attorney General upon referral from the Department following an investigation (id. ).

A second enforcement mechanism was created in 1989 when the Legislature added section 198–b to a list of violations in section 218 for which the Labor Department could seek civil penalties, in addition to restitution, liquidated damages, interest, reinstatement of the employee's former position, and back pay (see Labor Law § 218[1] ). The Labor Department supported the change because, while the existing criminal enforcement was an important deterrent, "more flexible remedies [were] also necessary to ensure that restitution is, in fact, paid to employees and that they are reinstated to employment" (Letter from Barbara C. Deinhardt, Deputy Commr of Labor for Legal Affairs and Counsel, St Dept of Labor, to Evan Davis, Counsel to Governor, Bill Jacket, L 1989, ch 177 at 10). Specifically, section 218 gives the Commissioner authority to order "payment back to the employee of the amount of wages ... unlawfully received plus liquidated damages in the amount of one hundred percent of unpaid wages" plus interest ( Labor Law § 218[1] ). That section also provides for the imposition of civil penalties based on, among other factors, the size of the employer, the gravity of the violation, and the employer's history of...

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