Rhodes v. Herz

84 A.D.3d 1, 920 N.Y.S.2d 11
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMarch 22, 2011
StatusPublished
Cited by25 cases

This text of 84 A.D.3d 1 (Rhodes v. Herz) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rhodes v. Herz, 84 A.D.3d 1, 920 N.Y.S.2d 11 (N.Y. Ct. App. 2011).

Opinion

OPINION OF THE COURT

Roman, J.

The issue before us is whether article 11 of the General Business Law, by its terms, provides an express private right of action and whether, in the absence of such an express right, one is nevertheless implied. We hold, and indeed not for the first time, that article 11 does not provide either an express or an implied private right of action against licensed or unlicensed employment agencies or their agents. Accordingly, plaintiffs first, fifth, sixth and seventh causes of action, premised on violations of article 11, were properly dismissed.

[3]*3According to the complaint,1 plaintiff, a nationally syndicated radio talk show host, entered into a Comprehensive Employment Agent and Managerial Contract with defendant IF Management, Inc. Prior to the contract’s execution, defendant Steven Edward Herz, an employee of IF Management, Inc., represented that he was an employment agent and that IF Management, Inc. could act as plaintiffs employment agent, manager and law firm. Carol Perry was also employed by IF Management, Inc. and, along with the other defendants, acted as plaintiffs employment agent. During the contract’s term, defendants discussed and explored employment opportunities for plaintiff. In particular, defendants attempted to negotiate a publishing contract on plaintiffs behalf with Miramax, negotiated a salary increase with Air America Radio, and sought to obtain plaintiff employment with Westwood One, a radio network, and Sirius, a satellite radio network. Since defendants failed to perform their obligations under the contract, plaintiff timely sought to terminate it. Defendants, however, refused to accept the termination.

Plaintiff asserts several causes of action, but only four are relevant to this appeal. Plaintiffs first cause of action seeks to void the contract between her and the defendants and seeks to recover all monies paid by plaintiff to defendants during the contract’s term. Plaintiff premises this relief on the ground that defendants acted as her employment agents without a license, thereby violating General Business Law § 172, and that by simultaneously acting as her employment agents, managers and attorneys, defendants also violated General Business Law § 187 (8). Plaintiffs fifth cause of action seeks monetary damages on the ground that in failing to disclose that they were not licensed to act as her employment agents and in unlawfully engaging in prohibited employment procurement activities, defendants breached their fiduciary duty. Plaintiff’s sixth and seventh causes of action, both for unjust enrichment, are virtually identical, and therein she seeks damages, equal to all fees plaintiff paid to the defendants, as well as an accounting of defendants’ profits for the contract term. The unjust enrichment claim is premised on violation of General Business Law § 172, insofar as [4]*4defendants were not licensed to act as plaintiffs employment agents, and on a violation of General Business Law § 185, to the extent that the fees charged by the defendants were unlawful.

Subsequent to the commencement of this action, defendants moved to dismiss plaintiffs first, fifth, sixth, and seventh causes of action pursuant to CPLR 3211 (a) (2) (want of subject matter jurisdiction) and (7) (failure to state a cause of action). Defendants argued that insofar as General Business Law article 11 provides for neither an express nor an implied private right of action, plaintiffs causes of action, to the extent premised on violations of article 11, merited dismissal. To the extent that defendants asserted a counterclaim against the plaintiff for breach of contract, they also sought an order enjoining plaintiff from asserting any affirmative defenses premised on defendants’ alleged violation of article 11. The motion court granted defendants’ motion, finding that while article 11 provides for a limited express right of action against a licensed employment agency, it provides no similar express private right of action here, where the defendants were unlicensed during the relevant period (27 Misc 3d 722 [2010]). The motion court further held that, given article ll’s comprehensive enforcement mechanism, no private right of action against an unlicensed employment agency existed. The motion court denied the portion of defendants’ application seeking to enjoin plaintiff from raising a violation of article 11 as an affirmative defense to defendants’ counterclaims. Plaintiff appeals and we affirm.

Article 11 applies to all employment agencies within the state (General Business Law § 170), and defines an employment agency as any person, who, for a fee, procures or attempts to procure employment for persons seeking employment or engagements (General Business Law § 171 [2] [a] [1]). The statute imposes a licensing requirement and as such, no person may “maintain, own, operate or carry on any employment agency” (General Business Law § 172) without a license obtained from the State’s Commissioner of Labor, or if within New York City, the Commissioner of the Department of Consumer Affairs (id.). Additionally, anyone operating an employment agency is required to file a bond in the sum of $5,000 (General Business Law § 177 [1]), payable to the people of the State of New York or the City of New York (General Business Law § 177 [2]), and the bond

“shall be conditioned that the person applying for the [employment agency] license will comply with [5]*5this article, and shall pay all damages occasioned to any person by reason of any misstatement, misrepresentation, fraud or deceit, or any unlawful act or omission of any licensed person . . . committed or omitted in the business conducted under such license, or caused by any other violation of this article” (id.).

Claims or suits upon the bond “may be brought in the name of the person damaged” and “[t]he commissioner may institute a suit against the bond on behalf of any person damaged” (General Business Law § 178). Fees chargeable by an employment agency are limited to those within article 11 (General Business Law § 185), and an employment agency which collects fees in contravention of the article’s provisions is required to return the excess portions thereof within seven days after a demand is made (General Business Law § 186).

Enforcement of article 11 is statutorily delegated to the State Commissioner of Labor, except that in New York City, it is enforced by the Commissioner of Consumer Affairs (General Business Law § 189 [1]). Commensurate with his enforcement powers, the Commissioner, upon reasonable grounds to believe that an employment agency is violating article 11, has the authority to subpoena the records of the employment agency, subpoena witnesses, and conduct an investigation (General Business Law § 189 [2]). As against a licensed person, complaints shall be made orally or in writing to the Commissioner, who may then investigate, hold a hearing, take testimony, subpoena witnesses and direct production of documents (General Business Law § 189 [4]). If after a hearing it is determined that the licensed agency has violated article 11, the Commissioner may suspend or revoke the agency’s or person’s license and/or levy a fine (General Business Law § 189 [5]). Additionally, most violations of article 11, including the operation of an employment agency without a license, are misdemeanors, punishable by a fine of up to $1,000 and by imprisonment not to exceed one year (General Business Law § 190).

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Cite This Page — Counsel Stack

Bluebook (online)
84 A.D.3d 1, 920 N.Y.S.2d 11, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rhodes-v-herz-nyappdiv-2011.