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The standard for satisfying the “material misrepresentation” element of an estoppel claim under federal law has been clarified by the 2nd U.S. Circuit Court of Appeals. In a case brought under the Family and Medical Leave Act by a technician dismissed from her job at a New Rochelle, N.Y., radiology group, the court directly addressed for the first time “whether a material and definite misrepresentation, by silence or otherwise, without evidence of an intent to deceive, can satisfy the ‘material misrepresentation’ element.” In Kosakow v. New Rochelle Radiology Associates, 00-7392, Nancy Kosakow charged that she was terminated after she had taken protected leave under the Act (FMLA) for the surgical removal of a possibly cancerous cyst. Kosakow’s pro se discrimination charge with the New York State Division of Human Rights ended with the agency finding that there was no probable cause to believe that New Rochelle Radiology had engaged in unlawful discrimination. Kosakow had alleged that her employer failed to notify her about the number of hours she needed to work in order to be eligible for protection under the FMLA. Kosakow did not seek review in state court. Instead, she filed suit in the Southern District of New York, where Judge Colleen McMahon granted summary judgment for New Rochelle on the grounds that Kosakow did not work the minimum hours needed for eligibility and that the DHR finding barred her from pursuing her claim under the doctrine of collateral estoppel. Her appeal presented several issues to the 2nd Circuit, including two that the court has yet to address. Eastern District of New York Judge David G. Trager, sitting by designation, said that the U.S. Supreme Court, in defining material misrepresentation for estoppel purposes, adopted the definition set forth in the Restatement (Second) of Torts. “In the comment section, the Restatement makes clear that estoppel is appropriate even where “the one making the representation believes that his statement is ‘true,’ and, moreover, ‘it is immaterial whether the person making the representation exercised due care in making the statement,’ ” Judge Trager said. Accordingly, he said, we hold “that a party may be estopped where that party makes a definite misrepresentation (or, in the present case, a misrepresentation by silence) and had reason to believe the other party would rely upon it, regardless of whether the person making the representation intended to deceive.” In Kosakow’s case, Judge Trager said, she alleged New Rochelle Radiology knew she was taking medical leave, but did not inform her she was only about 50 hours short of the 1,250 hours worked to be eligible under the medical leave act. “New Rochelle was under a legal duty to inform its employees of the protections of the FMLA and what was required of its employees in order that they qualify for those protections,” Judge Trager said. ” If New Rochelle failed to post the required notices or include the required information in its employee manual, then New Rochelle failed to fulfill this legal duty and would have deprived Kosakow of the opportunity to take her leave under the shelter of the FMLA.” Kosakow’s operation was not an emergency, he said, and there was no reason it could not have been rescheduled, allowing her to obtain the hours needed for eligibility under the FMLA. “In such circumstances, it could not be argued that Kosakow had not met the requirements of the statute if this shortcoming were a result of New Rochelle’s failure to relay those requirements to her,” he said, and the lower court could have concluded that New Rochelle “is estopped from maintaining that Kosakow was ineligible for FMLA protection.” STATE CASE LAW IS KEY Judge Trager then turned to the next issue — whether the district court was correct in concluding that Kosakow’s claim in federal court under the family medical leave act was precluded because it involved “the same facts and circumstances” of the DHR proceeding. “This case presents an issue that has not been directly decided in this Circuit,” he said. “Specifically, does a determination of no probable cause by the DHR, reached without a hearing and unreviewed in state court, preclude litigation of a subsequent claim in federal court based on the same events.” The problem, he said, was that the act does not expressly address the issue and there is no evidence of congressional intent. So Trager said the court’s task was to turn to whether New York state case law on collateral estoppel would preclude subsequent litigation following a DHR hearing. Under the principles set forth by the New York Court of Appeals, Trager said that “several factors appeared to support the application of collateral estoppel.” However, he said, there was a real question of whether Kosakow had a full and fair opportunity to litigate the issue before the DHR, which issued a finding based “primarily, if not exclusively, upon a review of the papers submitted.” “At the DHR hearing, having had no discovery, Kosakow did not have any access to evidence that may have served to refute New Rochelle’s claim that it was suffering from financial difficulties,” he said. “In fact, Kosakow did not even attempt to disprove New Rochelle’s contention that it had legitimate financial reasons for terminating some employees.” Judge Trager, noting that Kosakow was acting pro se before the DHR, said “there is no reason to believe that Kosakow would have understood that the determinations made by the DHR would prevent her from litigating the same issues in federal court.” Moreover, he said, the DHR proceeding is “far less formal” than that of the federal case, and Kosakow did not “receive any type of hearing wherein she could confront the witnesses against her.” “It cannot be ignored that the DHR makes factual conclusions based on a record that is far less developed than that before a federal court,” he said, adding that, “the issue of whether Kosakow was terminated for legitimate business reasons was not ‘adequately tested’ or ‘fully aired’ at the DHR proceeding.” Second Circuit Judges Jose A. Cabranes and Amalya Kearse joined in the opinion. William D. Frumkin of Sapir & Frumkin in White Plains, N.Y., represented Kosakow. Jordy Rabinowitz of Garfunkel, Wild & Travis in Great Neck, N.Y., represented New Rochelle Radiology Associates. Amicus curiae briefs were filed by the U.S. Department of Labor, the New York Chapter of the National Employment Lawyers’ Association and the Employment Advisory Council.

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