Caswell v. New York State United Teachers

Caswell v New York State United Teachers 2026 NY Slip Op 05889 October 9, 2026 Appellate Division, Fourth Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This decision is uncorrected and subject to revision before publication in the Official Reports. THOMAS CASWELL, PLAINTIFF-APPELLANT, v NEW YORK STATE UNITED TEACHERS, MELINDA PERSON, IN HER OFFICIAL CAPACITY AS PRESIDENT OF NEW YORK STATE UNITED TEACHERS, OSWEGO CLASSROOM TEACHERS ASSOCIATION, AND CARRIE PATANE, IN HER OFFICIAL CAPACITY AS PRESIDENT OF OSWEGO CLASSROOM TEACHERS ASSOCIATION, DEFENDANTS-RESPONDENTS. Supreme Court of the State of New York, Appellate Division, Fourth Judicial Department Decided on October 9, 2026 677 CA 25-01180 Present: Montour, J.P., Ogden, Greenwood, Nowak, And Skinner, JJ. THE FAIRNESS CENTER, HARRISBURG, PENNSYLVANIA (ANTHONY R. HOLTZMAN OF COUNSEL), FOR PLAINTIFF-APPELLANT. ROBERT T. REILLY, GENERAL COUNSEL, NEW YORK STATE UNITED TEACHERS, LATHAM (ANDREA A. WANNER OF COUNSEL), FOR DEFENDANTS-RESPONDENTS. Appeal from an order of the Supreme Court, Oswego County (Gregory R. Gilbert, J.), entered June 17, 2025, in a declaratory judgment action. The order granted defendants' motion to dismiss plaintiff's complaint. [*1] It is hereby ORDERED that the order so appealed from is unanimously modified on the law by reinstating the complaint to the extent that it seeks a declaration and granting judgment in favor of defendants as follows: It is ADJUDGED and DECLARED that the dues provision in the membership agreement is not an unlawful penalty provision, and as modified the order is affirmed without costs. Memorandum: Plaintiff commenced this action seeking a declaration that union dues collected from him constituted an invalid penalty provision in the relevant contract. Plaintiff was a teacher in the Oswego City School District (District) and a member of defendants New York State United Teachers (NYSUT) and Oswego Classroom Teachers Association (OCTA) (collectively, Unions) until March 2024. In 2018, plaintiff signed a union membership and dues deduction authorization form (membership agreement). By signing the membership agreement, plaintiff agreed to authorize the District to deduct regular monthly dues and remit that amount to OCTA. The membership agreement provided, in relevant part, that it "shall remain in effect, regardless of whether I am or remain a member of the Union, for a period of one year from the date of this authorization and shall automatically renew from year to year unless I revoke this authorization by sending a written, signed notice of revocation via U.S. mail to the Union between the window period of August 1 and August 31." On or around March 25, 2024, plaintiff gave written notice to NYSUT ending his union membership. Defendant Carrie Patane, President of OCTA, responded to plaintiff and reminded him of the window period for cancellation. She explained that, although plaintiff could withdraw from the union before the window period and forfeit his rights of membership, he was still required to pay union dues until June 30, 2024, which was the last payroll period prior to the window revocation period. At the Unions' direction, the District continued to deduct membership dues from plaintiff's paycheck until the end of June 2024, totaling $290.16, and provided those dues to OCTA. Plaintiff commenced this action in March 2025 against the Unions and their respective presidents. Plaintiff alleged that, in collecting membership dues from him after he gave notice of his termination of membership, the Unions were relying on a provision in the membership agreement that purported to be a liquidated damages provision but was actually an unlawful penalty provision and was therefore invalid. In his first cause of action, plaintiff sought a declaration that the dues provision was an invalid penalty provision and that, as a result, the dues collected from plaintiff after he ended his union membership were unlawful. The second and third causes of action were dependent on the first cause of action and sought reimbursement of the dues that were collected from him after he ended his membership on theories of money had and received and conversion, respectively. Defendants moved pursuant to CPLR 3211 (a) (7) to dismiss the complaint and submitted a supporting affirmation from a NYSUT official who explained that union members received the rights and benefits of membership, including the right to run for union office, to vote for union officers, and to participate in the internal affairs of the union. Defendants also submitted an affirmation from Patane, who averred that OCTA paid assessments to NYSUT on a monthly basis in exchange for services and benefits related to, among other things, advice, guidance, and support. Supreme Court granted the motion and dismissed the complaint. Upon a motion to dismiss pursuant to CPLR 3211 (a) (7) in a declaratory judgment action, we must undertake a three-step analysis. Under step one, the question is "whether a proper case is presented for invoking the jurisdiction of the court to make a declaratory judgment" (Matter of Kerri W.S. v Zucker, 202 AD3d 143, 154 [4th Dept 2021], lv dismissed 38 NY3d 1028 [2022], lv denied 42 NY3d 905 [2024] [internal quotation marks omitted]; see Boryszewski v Brydges, 37 NY2d 361, 365 [1975]; Parker v Hilton, 233 AD3d 1472, 1474 [4th Dept 2024]). To survive a motion to dismiss, "[t]he plaintiff's allegations must demonstrate the existence of a bona fide justiciable controversy, defined as a real dispute between adverse parties, involving substantial legal interests for which a declaration of rights will have some practical effect" (Parker, 233 AD3d at 1474 [internal quotation marks omitted]). If there is a justiciable controversy, the inquiry moves to step two where the question is "whether factual issues preclude a summary determination of the parties' rights" (Kerri W.S., 202 AD3d at 154). If there are no questions of fact and the only issues presented are questions of law or statutory interpretation, then at step three "the court effectively 'treat[s]' the motion to dismiss for failure to state a cause of action 'as a motion for a declaration' and proceeds accordingly" (id. at 155). In other words, the court at step three denies the CPLR 3211 (a) (7) motion in order to "retain[ ] jurisdiction of the controversy," and it then immediately "declare[s] the rights of the parties, whatever they may be" (St. Lawrence Univ. v Trustees of Theol. School of St. Lawrence Univ., 20 NY2d 317, 325 [1967]; see Kerri W.S., 202 AD3d at 155). The parties do not dispute that this is a proper case for a declaratory judgment, and they further agree that no questions of fact are presented. The issue of law presented to us is whether the membership agreement contains an invalid penalty provision. New York's Taylor Law (Civil Service Law art 14) guarantees public employees the right to choose whether to join the union as members (see Civil Service Law § 202). By signing the membership agreement, plaintiff authorized the District to deduct union dues from his wages and remit them to OCTA (see § 208 [1] [b]). The Taylor Law provides that "[t]he right to such membership dues deduction shall remain in full force and effect until . . . an individual employee revokes membership in the employee organization in writing in accordance with the terms of the signed authorization" (§ 208 [1] [b] [i] [emphasis added]). The membership agreement here provided that membership and monthly dues shall remain in effect for a period of one year, and shall automatically renew, unless revoked during the window period. Thus, pursuant to the unambiguous terms of the membership agreement, plaintiff remained obligated to pay monthly dues until the window period of August 1 through August 31 began. We reject plaintiff's contention that the dues provision was an invalid penalty provision. "[A] provision which requires, in the event of contractual breach, the payment of a sum of money grossly disproportionate to the amount of actual damages [is a] penalty and is unenforceable" (Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d 420, 424 [1977]; see Trustees of Columbia Univ. in the City of N.Y. v D'Agostino Supermarkets, Inc., 36 NY3d 69, 75 [2020]). "A clause [*2]which provides for an amount plainly disproportionate to real damage is not intended to provide fair compensation but to secure performance by the compulsion of the very disproportion. A promisor would be compelled, out of fear of economic devastation, to continue performance and [the] promisee, in the event of default, would reap a windfall well above actual harm sustained" (Truck Rent-A-Ctr., 41 NY2d at 424). Thus, the rule is that "[a] contractual provision fixing damages in the event of breach will be sustained if the amount liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation . . . If, however, the amount fixed is plainly or grossly disproportionate to the probable loss, the provision calls for a penalty and will not be enforced" (id. at 425). Whether the contract contains an unenforceable penalty is a question of law for the court to determine, "giving due consideration to the nature of the contract and the circumstances" (JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 379 [2005]; see Bates Adv. USA, Inc. v 498 Seventh, LLC, 7 NY3d 115, 120 [2006], rearg denied 7 NY3d 784 [2006]; Chumsky v Chumsky, 64 AD3d 1156, 1157 [4th Dept 2009]). The burden is on the party seeking to avoid the payment required under the clause at issue—here, plaintiff—to show that the clause, in fact, provides for a penalty (see JMD Holding Corp., 4 NY3d at 380; see also Bates Adv. USA, Inc., 7 NY3d at 120). We conclude that, considering the nature of the agreement and the circumstances (see JMD Holding Corp., 4 NY3d at 379-380), it is not an unenforceable penalty to require the payment of dues for the remainder of the year until the start of the window period. It cannot be said that the payment of dues for one year is grossly disproportionate to the amount of actual damages sustained by the Unions as a result of plaintiff's early termination of union membership (see generally Truck Rent-A-Ctr., 41 NY2d at 425). We therefore agree with the court that plaintiff is not entitled to any relief. The court erred, however, in dismissing the complaint to the extent that it seeks a declaration and in failing to declare the rights of the parties (see LaFramboise Group Ltd. v Commercial Underwriters Ins. Co., 139 AD3d 1367, 1367 [4th Dept 2016]; Leo v New York Cent. Mut. Ins. Co., 136 AD3d 1333, 1333 [4th Dept 2016], lv denied 28 NY3d 902 [2016]). We therefore modify the order accordingly, and we grant judgment in favor of defendants declaring that the dues provision in the membership agreement is not an unlawful penalty provision. Entered: October 9, 2026 Ann Dillon Flynn Clerk of the Court