New York Law Review

Tag: Federal Agency Determination

  • Yerry v. Good Samaritan Hospital, 25 N.Y.2d 912 (1969): State Court Jurisdiction and Federal Agency Determinations

    Yerry v. Good Samaritan Hospital, 25 N.Y.2d 912 (1969)

    State courts lack subject matter jurisdiction to review official acts performed by federal officials acting under the authority of acts of Congress and its regulations.

    Summary

    Non-union laborers sued Mayfair Construction Corp. to recover the difference between wages paid and the prevailing wage determined by the Secretary of Labor, as required by the National Housing Act for federally insured construction projects. The FHA had investigated and ordered restitution, which Mayfair paid. The plaintiffs cashed the checks, some of which contained a release of all claims. The New York Court of Appeals held that state courts lack subject matter jurisdiction to review the FHA’s wage determination, as it would essentially be reviewing the actions of a federal agency acting under federal law. The dissent argued that the state court lacked jurisdiction because the plaintiffs were essentially appealing a federal agency determination.

    Facts

    Plaintiffs, non-union laborers and mechanics, were employed by Mayfair Construction Corp. on construction projects in Manhattan between August 29, 1962, and May 6, 1964. The projects were financed under the National Housing Act with building loans insured by the Federal Housing Administration (FHA). Plaintiffs alleged they were paid less than the prevailing wage determined by the Secretary of Labor, as required by federal law. The FHA investigated the matter and ordered Mayfair to make restitution to the employees. Mayfair issued checks to the employees, which were sent via the FHA along with letters stating that the payment represented a reimbursement of wages to bring them up to the proper prevailing wage. Nine of the plaintiffs later received additional checks which included an endorsement stating that acceptance of the check constituted payment in full and a complete release of all claims against Mayfair.

    Procedural History

    Plaintiffs commenced an action against Mayfair. Supreme Court granted Mayfair’s motion to dismiss the first cause of action (the wage claim), holding that the National Housing Act did not give a private right of action. The Appellate Division reversed, holding that a private right of action was implied. The Court of Appeals granted Mayfair’s motion for leave to appeal, certifying the question of whether the first cause of action should be dismissed.

    Issue(s)

    Whether the state courts have subject matter jurisdiction to hear a claim for wages when the FHA has already investigated the claim and ordered restitution under the National Housing Act.

    Holding

    No, because state courts lack the power to review official acts performed by federal officials acting under the authority of acts of Congress and regulations promulgated under such laws.

    Court’s Reasoning

    The Court of Appeals, in a dissenting opinion, reasoned that the state courts did not have subject matter jurisdiction. The dissent relied on previous cases such as Matter of Armand Schmoll, Inc. v. Federal Reserve Bank of N.Y., 286 N.Y. 503, Wasservogel v. Meyerowitz, 300 N.Y. 125, and Fieger v. Glen Oaks Vil., 309 N.Y. 527. The dissent in Schmoll noted that, while state courts can enforce rights created by federal statute, they cannot control how a federal agency performs its duties under federal law where the federal government has exclusive jurisdiction. In Wasservogel, the court held that state courts have no jurisdiction to review federal administrative orders. In Fieger, the court held that the state courts have no power to review a determination by the FHA authorities because it represented “Federal governmental action by authorized Federal officers”. The dissent distinguished Northridge Coop. Section No. 1 v 32nd Ave. Constr. Corp., 2 NY2d 514, because in that case, the action was not being maintained in derogation of any official act performed by the Federal Housing Administrator. Because the lawsuit would question the correctness of the FHA Commissioner’s determination made under the authority of federal statute and regulation, the state courts are not empowered to review it.