Whistleblower suit against OTB going forward

• Share on
• 
• 
• 
• 

Batavia Downs. Photo by Garrett Looker.

A lawsuit filed by a former Western Regional Off-Track Betting Corp. executive – who claims he was fired for cooperating with state and federal investigators examining the operation – is moving forward.

In a ruling issued last week, U.S. District Court Judge William Skretny dismissed several claims, narrowing the scope of a lawsuit filed in August 2021 by OTB’s former chief operating officer, Michael Nolan. But Skretny denied a request from OTB to toss what Nolan’s attorney described as the “most important” causes of action in the lawsuit.

Barring an appeal, Skretny’s ruling clears the way for Nolan’s claim that he was illegally retaliated against, and ultimately fired, for sharing his concerns with investigators examining the inner workings of the gambling agency.

“The essence of this lawsuit was not dismissed by the judge,” said Nolan’s attorney Steve Cohen. 

“We are glad that the judge made a decision and that we can now proceed forward with this lawsuit,” he added. 

Despite the case moving forward, OTB attorney Aaron Saykin said he was “very pleased” by Skretny’s decision, and focused on the aspects of the case Skretny dismissed. For example, Nolan cannot file against individual OTB officials, cannot sue under the state Labor Law and cannot seek legal fees.

In a statement issued in response to questions, Saykin alluded to potential future legal action against Nolan by OTB.

“We are confident that his remaining two claims are equally without merit and will be similarly defeated once the court learns what really happened,” Saykin said. “We look forward to vigorously presenting our case, which is likely to include counterclaims against Mr. Nolan for the actions that he engaged in.”

Saykin did not say what those counterclaims might be. He also declined to say if he would appeal Skretny’s ruling.

Nolan worked for OTB for nearly three decades before being dismissed by the organization in December 2020. While Nolan still served as chief operating officer, OTB became the subject of investigations undertaken by the FBI, the U.S. Attorney’s Office for the Western District of New York, the state comptroller’s office, the New York State Gaming Commission and what his complaint describes as “various district attorneys’ offices.”

According to Nolan’s complaint, he agreed to talk with investigators about his concerns that OTB was:

• Issuing “rich” health insurance benefits to board directors.
• Appointing a “politically-connected” board member to allow that individual to receive insurance benefits through the corporation.
• Awarding “lucrative contracts to politically-connected entities.”
• Improperly using video lottery terminal funds.
• Distributing luxury box and event tickets purchased by the public benefit corporation to friends, family and political associates for personal use.

In his lawsuit, Nolan maintains he became a target of management after he expressed concerns about what he viewed as questionable conduct within the operation to OTB board members, former board Chairman Richard Bianchi and CEO and President Henry Wojtaszek.

Nolan’s lawsuit singled out Wojtaszek and Bianchi, contending they “swiftly, aggressively, and austerely” retaliated against him for cooperating in probes of the public benefit corporation.

As a result, Nolan said he was wrongfully denied a raise, forced to work weekends and stripped of various responsibilities, including his role as OTB’s Freedom of Information officer. In his lawsuit, Nolan claims the experience caused him significant “emotional distress” and personal financial cost, including $80,000 in personal attorney fees.

Wojtaszek and other OTB officials previously characterized the claims in Nolan’s lawsuit as “baseless” and as a “frivolous attack” by a former employee with an “ax to grind.”

In an Oct. 12, 2022 ruling, Skretny dismissed Nolan’s initial complaint, agreeing with OTB that the former chief operating officer’s claims of First Amendment retaliation were “time barred” as they were filed in August 2021 despite the alleged retaliation occurring before April 30, 2019. According to the judge’s ruling, the lawsuit fell outside a statute of limitations requiring such claims to be filed within one year and 30 days from the date of the first alleged incident.

Last September, the U.S. Second Circuit Court of Appeals determined Skretny erred in his decision and ordered Nolan’s lawsuit reinstated. 

In vacating and reversing Skretny’s dismissal, the appeals court found the district court applied the incorrect statute of limitations, determining Nolan’s August 2021 complaint was timely because he alleged retaliatory conduct beginning in 2019.

In his Oct. 23 ruling, Skretny determined claims made by Nolan on or after Dec. 21, 2019 can be considered by the courts based on the timing of the filing of his initial notice of claim and an additional 287-day period that was added due, in part, to the pandemic’s impact on court proceedings. 

While OTB argued Nolan’s claims of retaliation under Civil Service Law should be dismissed because they did not happen on or after Dec. 21, 2019, Skretny determined that “at least some retaliatory conduct” occurred after that date. The judge’s ruling notes that Nolan alleges he discussed allegations of wrongdoing with OTB board directors in February and March 2019 and with law enforcement investigators between March and October 2019. 

“In particular, he alleges that the retaliatory conduct alleged in the complaint continued and persisted through Dec. 18, 2020, the date his employment was terminated,” Skretny wrote in his decision. “Discovery is necessary to flesh out the exact dates.”

According to Skretny’s Oct. 23 ruling, Nolan agreed to drop two of the five causes of action in his lawsuit, with Nolan conceding that his claims of First Amendment retaliation against Bianchi and Wojtaszek were “duplicative” of his claims against OTB and agreeing he could not argue retaliation in violation of New York Labor Law because, as a public employee governed under the state’s Civil Service Law, the statute does not apply to him.

Skretny dismissed Nolan’s claim that he is owed compensation for attorney fees, determining it was not filed in a timely fashion under the law.

The judge also dismissed Nolan’s claim of “intentional infliction of emotional distress” against Wojtaszek and Bianchi, agreeing with OTB’s attorney that it did not rise to the state legal standard for bringing such a claim because it did not involve “extreme and outrageous” conduct, intent to cause severe emotional distress and did not demonstrate a connection between conduct and injury.

“Even assuming the truth of Nolan’s allegations, the acts of which he complains – shunning, subordination, false performance ratings, pressure to resign, termination – were all taken in the employment context and do not rise to the level of atrociousness necessary to support an intentional-infliction-of-emotional-distress claim,” Skretny wrote in his decision.

Skretny’s decision follows the recent move by OTB’s board to extend a three-year contract to former Buffalo Mayor Byron Brown that will pay him $295,000 in year one to serve as CEO and president, replacing Wojtaszek who is expected to leave the organization in December. 

“We are curious to see how that’s going to affect this,” Cohen said. “Our hope is that Byron Brown will bring a sense of honesty and transparency to the OTB in stark contrast to Wojtaszek and Bianchi.” 

“The people who are punishing employees for cooperating with authorities need to be taken to task and Mike Nolan is doing exactly that,” he added.

Mark Scheer