Key Points

  • The Third Department held that government inaction, as well as an affirmative step, may support a retaliation claim under Civil Service Law § 75-b.
  • Susan Rosenthal, the former president and CEO of the Roosevelt Island Operating Corporation, sufficiently alleged she was fired for repeatedly reporting the State's failure to address the condition of abandoned steam tunnels.
  • The State conceded a question of fact as to whether it was Rosenthal's de facto employer, so the Court of Claims should not have dismissed the retaliation claim for lack of jurisdiction on a motion to dismiss.
  • The defamation claim was untimely because her earlier CPLR article 78 petition did not qualify as a notice of intention to file a claim under Court of Claims Act § 11.
  • The state constitutional stigma-plus due process claim was barred because adequate alternative remedies existed, including an article 78 name-clearing hearing, a common-law tort claim and a Section 1983 suit.

A New York appeals court ruled Thursday that the state's public-employee whistleblower law can protect a worker who reports the government's failure to act on a safety hazard. The decision revives a retaliation claim by the former head of the Roosevelt Island Operating Corporation, who says she was fired for warning that abandoned steam tunnels were in disrepair.

A four-justice panel of the Appellate Division, Third Department, unanimously reinstated Susan Rosenthal's claim against the State of New York under Civil Service Law § 75-b. That statute bars public employers from firing employees for disclosing to a government body information about a violation of law that creates a substantial and specific danger to public health or safety, or information the employee reasonably believes is true and reasonably believes constitutes improper governmental action. Justice Mackey wrote the opinion, joined by Justice Reynolds Fitzgerald, who presided, and Justices McShan and Corcoran.

The ruling sets a rule for the Third Department: the misconduct a whistleblower reports need not be an affirmative step. "Accordingly, we now hold that government action, whether passive inaction or an affirmative step taken, may support a Civil Service Law § 75-b claim," Justice Mackey wrote. The panel upheld dismissal of Rosenthal's defamation and state constitutional claims, leaving retaliation as the only claim that goes forward in the Court of Claims.

Rosenthal served as president and chief executive of the corporation, known as RIOC. She was fired in June 2020. Shortly afterward, according to the opinion, a senior adviser to then-Governor Andrew M. Cuomo told the New York Post that her firing followed a complaint and an investigation finding she had used "racially and sexually offensive" language.

In her claim, Rosenthal alleged that engineering studies from 2012 and 2017 found the tunnels in disrepair and warned of "catastrophic results" in a significant weather event. From 2017 until her firing, she alleged, she repeatedly tried to alert the State and to devise a plan to reduce the risk. She said she wrote a memorandum and raised the issue with the then-deputy secretary for economic development "every other week" over "many months," but no action was taken. She argued that the State's inaction amounted to criminal nuisance in the second degree.

Zainab Chaudhry of the Court of Claims dismissed the retaliation claim in an order entered March 27, 2025, finding that the court lacked jurisdiction because RIOC, not the State, was Rosenthal's employer. On appeal, the State conceded a point the panel accepted: in the court's words, "there exists a question of fact as to whether defendant was claimant's de facto employer such that this issue should not have been resolved on a motion to dismiss." It argued instead that her allegations failed to state a whistleblower claim.

The panel rejected that argument. "It is axiomatic that government inaction may have as profound adverse effects to public safety and health as that of an active response," Justice Mackey wrote, adding that "whether to respond actively or passively to a safety concern is an affirmative choice taken." The court said it could "scarcely conceive of a scenario in which whistleblower protections would be denied, as a matter of law, to an employee who discloses a governmental failure to investigate a credible threat to the life or safety of a public figure."

The panel drew on a 2012 First Department decision under Labor Law § 740, the parallel statute for private employers. That court found that a defendant's discouragement of reports of suspected child abuse stated a claim because the "alleged inaction might result in further abuse or maltreatment" of children. A contrary rule, Justice Mackey wrote, "would undermine the salutary purpose of this state's whistleblower protections." Rosenthal had pleaded her claim under the private-employer statute, but the court said in a footnote that Section 75-b covers public employees and the form of her pleading made no difference.

The defamation claim failed on timing. Under the Court of Claims Act, a claim against the State for an intentional tort by a state officer or employee must be filed within 90 days, unless the claimant serves a notice of intention within that window, which extends the deadline to one year. Both sides agreed the question turned on whether Rosenthal's October 2020 petition under CPLR article 78, could serve as that notice.

The panel held that it could not. Rosenthal conceded the petition did not expressly assert defamation, and the court noted that "nothing in claimant's petition asserted that she had suffered reputational damages as a result of defendant's reported allegations to the press," that she sought different relief, and that she never told the State she would seek money damages.

The court also affirmed dismissal of Rosenthal's "stigma plus" claim, a due process theory that the State's public statements about her firing, combined with the denial of a hearing to clear her name, injured her. Damages for state constitutional violations are a narrow remedy, the court said, unavailable where an adequate alternative exists. It identified several, including a name-clearing hearing through an article 78 proceeding, a common-law tort claim and a federal civil rights suit under 42 U.S.C. § 1983. The panel rejected her argument that the due process claim was distinct from defamation, "inasmuch as both are based upon the same underlying facts and seek identical damages."

The litigation has spanned several courts. A Manhattan Supreme Court justice dismissed Rosenthal's article 78 petition in July 2021, concluding that the decision to fire her "clearly was not irrational," and the First Department affirmed. A separate suit filed in April 2021 ended with her whistleblower, Section 1983 and defamation claims dismissed "without prejudice as they were improperly brought in Supreme Court, instead of before the Court of Claims." A federal stigma-plus suit was dismissed in May 2025, but the Second Circuit vacated that judgment while this appeal was pending, finding her Section 1983 claim had never been decided on the merits, and sent the case back for further proceedings.

Rosenthal was represented by Edward Dolido of Storch Byrne LLP. The State was represented by the office of Attorney General Letitia James.

The panel modified the Court of Claims order, without costs, to deny the State's motion to dismiss the retaliation claim, and otherwise affirmed it. The whistleblower claim now returns to the Court of Claims, where whether the State was Rosenthal's de facto employer remains an open question of fact.