Court Opinion

ID: 9716090
Source: CourtListenerOpinion
Date Created: 2023-08-26 06:26:19.972628+00
Date Added: 2024-06-11T18:23:41.579046
License: Public Domain

Read, J.
(dissenting). I respectfully dissent. The lower courts correctly held that petitioners’ claims were time-barred, the four-month statute of limitations under CPLR article 78 having expired in 2001. Our article 78 precedent on accrual — which no one has suggested altering — simply does not lead to the result that the majority reaches.
Petitioners attack a 2001 contract between the New York State Department of Correctional Services (DOCS) and MCI Worldcom Communications, Inc. (MCI), set to expire on March 31, 2007. This contract granted MCI the exclusive right to provide collect-call only telephone service to inmates at specified rates, and required MCI to pay DOCS a commission of 57.5% of its gross receipts from its customers, the recipients of the inmate-initiated collect calls. Prison systems throughout the country have entered into similar exclusive dealing arrangements, which commonly feature stiff commissions — usually ranging between 20% and 63% with most states charging more than 45% (see Matter of Implementation of the Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996, 17 FCCR 3248, 3253 n 34, 2002 WL 252600, *3 n 34, 2002 FCC LEXIS 889, *12 n 34). And throughout the country, these contracts have been criticized as fundamentally unfair, and have proved to be hghtning rods for litigation. Indeed, the day before this appeal was argued, the Governor announced that the State would change its policy as of April 1, 2007 to make rates reflect only the costs of inmate calls. In addition to injunctive relief, however, petitioners are *199trying to obtain refunds as damages. Since Supreme Court may award damages in an article 78 proceeding if they are incidental to the primary relief sought (see CPLR 7806; Matter of Gross v Perales, 72 NY2d 231, 236 [1988]), we are left with the question of when the four-month statute of limitations began to run in this case, and whether petitioners’ claims are timely.
The majority holds that they are indeed timely because
“[w]hen a contract between a government agency and a telephone company specifies the rate the company will charge, those who wish to challenge the contract, on grounds related to the rate, have not exhausted their administrative remedies until approval by the [Public Service Commission], which has exclusive authority to review and determine intrastate telephone rates. Only then does the agency determination underlying the contract become ‘final and binding’ (CPLR 217 [1])” (majority op at 195).
But the facts of this case do not fit this rule, which, at least as applied here, is at odds with recent precedent, notably our decision in Stop-The-Barge v Cahill (1 NY3d 218 [2003]).
The rates charged in the 2001 contract, based on time-of-day and distance, were exactly the same as the rates charged in a predecessor contract between DOCS and MCI, effective April 1, 1996. The Public Service Commission (PSC) approved these rates on December 17, 1998, a determination that was never challenged. The 2001 contract reduced the commission from 60% to 57.5% but did not tamper with the approved rates. In other words, MCI was charging its customers the same rates under the 2001 contract as it had charged under the 1996 contract, but was paying DOCS a lesser percentage of its gross receipts. Accordingly, the 2001 contract did not prompt MCI to seek approval from the PSC of the rates set forth in the contract: they had already been approved in 1998. Under the majority’s own rule, then, petitioners’ lawsuit was five years too late to challenge DOCS’ determination to require a commission, as embodied in its 1996 contract, because they should have sued within four months after the PSC in 1998 approved the rates incorporating the commission. Under the majority’s own rule, petitioners were also almost three years too late to challenge this determination as embodied in the 2001 contract. That is, since DOCS’ determination in 2001 did not require MCI to seek follow-up rate approval from the PSC, petitioners should have sued within four months after the 2001 contract took effect.
*200Of course, in 2003 DOCS and MCI amended the 2001 contract. The amendment, however, only changed the structure of the rates from time-of-day and distance to a flat rate.* It did not modify or change or in any way affect DOCS’ final and binding determination made in 2001 to require a 57.5% commission, which is what petitioners attack. The majority essentially concludes, however, that petitioners’ otherwise time-barred claims were somehow revived when the PSC approved the modified rate structure on October 30, 2003, even though the commission that petitioners challenge was not affected by the restructuring. Indeed, the PSC took the position in its 2003 determination that it did not even have jurisdiction over the commission. The PSC’s disavowal of jurisdiction may have come as a complete surprise to petitioners, but we do not usually relax the statute of limitations to give a break to sympathetic litigants whose view of the law is arguably well-founded or plausible, but nonetheless mistaken.
Under our traditional rules of accrual, petitioners had only two choices in 2003: to sue DOCS to challenge the rate restructuring (not the commission) within four months after the contract amendment embodying the restructured rates took effect; or, to sue the PSC within four months after its decision to approve the modified rate structure. They did neither. Instead, they sued DOCS within four months after the PSC’s determination, and did not sue the PSC at all. Moreover, in an article 78 proceeding brought against the PSC, petitioners certainly could have argued that whether or not the PSC has jurisdiction over DOCS, the Public Service Law nonetheless required the PSC to determine whether the restructured rates filed by MCI were just and reasonable as a whole. After all, although the PSC only reviewed the so-called jurisdictional portion of MCI’s rate, it ordered MCI to file a tariff with a total rate that included both the jurisdictional component and the commission, and thereby authorized MCI to charge this total rate. Indeed, this was the only rate that MCI could legally charge (see Public Service Law § 92 [2] [d]).
Next, this case cannot be distinguished from Stop-The-Barge. According to the majority, the two cases differ because
*201“[a] refusal by [the New York State Department of Environmental Conservation] to issue an air permit would not have forced [the New York City Department of Environmental Protection] to reconsider its [conditioned negative declaration]. Here, on the other hand, corrective action by DOCS would necessarily have followed disapproval of the MCI rates by the PSC, and therefore petitioners had not exhausted available administrative remedies until the PSC review was complete” (majority op at 196).
The majority is incorrect on both scores. In Stop-The-Barge, a company was seeking the necessary regulatory approvals to install a power generator on a floating barge in Brooklyn, which required State Environmental Quality Review Act (SEQRA) approval from the New York City Department of Environmental Protection (DEP), and an air permit from the New York State Department of Environmental Conservation (DEC). Whether DEC’s “refusal” of the company’s application for an air permit would have forced DEP to reconsider its conditioned negative declaration (CND) under SEQRA would have depended entirely on the terms of the rejection. Theoretically, I suppose, DEC could have outright refused to issue an air permit to the company, or might have attached conditions so onerous that the company decided to scrap the project altogether. Under these circumstances, DEP would never have reconsidered the CND because the project would have been abandoned. More likely, however, DEC would have attached conditions to its approval, which, depending on their terms, might well have required the company to ask DEP to revise the CND’s provisions. Similarly, in this case, what further action DOCS might or might not have been forced to take would have depended entirely on the terms of any PSC “disapproval.” For example, the PSC might have disapproved the rate restructuring for reasons wholly unrelated to the commission. Indeed, since the PSC took the position that it had no jurisdiction over the commission in the first place, this would have to have been the case. In that event, it is probable that the existing rates — the rates that the PSC approved in 1998 and which were never challenged and which, of course, included the commission — would have stayed in effect while the PSC sorted out what changes it might require MCI to make to its proposed new tariff filing (see Public Service Law § 92 [2] [e], [g]). There is no way to predict what, if any, “corrective action” DOCS might have eventually taken as a result of a hypothesized PSC disapproval.
*202What all of this shows, of course, are the ambiguities and difficulties inherent in trying to craft an exception to our usual claims-accrual rule — as the majority does in this case — so as to make a challenge to an administrative agency’s final and binding determination accrue (or, more accurately, revive) on the date when another administrative agency makes a corollary determination with respect to the same contract or project. It is almost always possible for a party to argue — as petitioners do here — that some action the second agency (here, the PSC) might have taken might have caused the first agency (here, DOCS) to revisit the complained-about decision in whole or in part, or that the party had a good-faith belief that this was so. But this does not make the first agency’s determination any less final and binding. Moreover, such an approach is antithetical to the finality and certainty that the four-month statute of limitations under CPLR article 78 is intended to achieve. I do not for a moment think that my colleagues intend to push our law in this direction any further than the facts of this case.
I note also that we have consistently sought over the past several years to encourage parties who seek to challenge an agency determination to do so at the earliest possible date (see Matter of City of New York [Grand Lafayette Props. LLC], 6 NY3d 540 [2006] [city planning commission’s determination to approve condemnation of property final and binding after expiration of 20-day city council call-up period notwithstanding fact that mayor’s office subsequently approved project]; Matter of Best Payphones, Inc. v Department of Info. Tech. & Telecom. of City of N.Y., 5 NY3d 30 [2005] [agency letter denying franchise starts statute of limitations notwithstanding fact that letter is conditional and gives applicant 60 days to cure]; Stop-The-Barge v Cahill, supra [under SEQRA, CND is final agency determination that starts statute of limitations notwithstanding fact that other administrative proceedings will take place]). I do not believe that my colleagues intend to retract our strong message that litigants should risk suing prematurely rather than too late. Again, this case simply has to be chalked up as sui generis. I also note that the majority opinion says nothing about the merits of petitioners’ constitutional claims, or about whether an aggrieved ratepayer may recover a component of a filed tariff in litigation against any party. These issues, and perhaps others, are left for the lower courts to tackle in the first instance.
Finally, the concurrence suggests that the constitutional nature of petitioners’ claims controls the date of accrual, and *203(apparently) that while it may be unreasonable to expect the family members to have learned of the Comptroller’s approval by “perusing the public record” (concurring op at 198), it was not unreasonable to expect them to have known about the PSC’s order from the public record. While we have often adjudicated constitutional claims under CPLR article 78 (see e.g. Matter of Texas E. Transmission Corp. v Tax Appeals Trib., 95 NY2d 323 [2000] [adjudicating Commerce Clause claim in article 78 proceeding]), we have never keyed accrual to the nature of the claim. All petitioners are subject to the same four-month statute of limitations, which accrues when the agency’s determination is final and binding, whether they allege a constitutional violation or some other error of law.
Chief Judge Kaye and Judges Ciparick and Smith concur with Judge Pigott; Judge Smith concurs in a separate opinion; Judge Read dissents in another opinion in which Judge Graffeo concurs; Judge Jones taking no part.
Order modified, etc.

 DOCS estimated that the new rate structure would likely increase the phone bills of the families of the 17% of the inmates incarcerated closest to their relatives’ homes, but would create a savings for the families of the remaining 83% of the inmates’ families. The rate change was expected to be revenue-neutral.