Go New York Tours Inc. d/b/a TopView Sightseeing and Asen Kostadinov, Plaintiffs-Petitioners, v. New York State Department of Labor and Roberta Reardon, in her official capacity as Commissioner of Labor of the State of New York, Defendants-Respondents. (2026)

I. Statement Pursuant to CPLR 2219 [a]

The following e-filed papers were read on the motion of plaintiffs, brought by order to show cause, for a preliminary injunction staying proceedings before the Industrial Board of Appeals (motion sequence No. 001), and on the cross-motion of defendants to dismiss the verified hybrid complaint and petition: the verified hybrid complaint and petition (NYSCEF Doc No. 1); the affirmation of Barak F. Bacharach, Esq., dated April 7, 2026, together with exhibits 1 through 6 annexed thereto, including Order to Comply No. 25-00253 (NYSCEF Doc Nos. 4, 5); plaintiffs' memorandum of law in support (NYSCEF Doc No. 11); the order to show cause signed April 8, 2026 (NYSCEF Doc No. 12); the affirmation of service of Pablo Portes Isidor (NYSCEF Doc No. 13); defendants' notice of cross-motion to dismiss, dated June 26, 2026 (NYSCEF Doc No. 18); defendants' memorandum of law in response to the order to show cause and in support of the cross-motion (NYSCEF Doc No. 19); the letter of the Office of the Attorney General dated June 26, 2026 (NYSCEF Doc No. 20); plaintiffs' memorandum of law in further support of the motion and in opposition to the cross-motion, dated August 31, 2026 (NYSCEF Doc No. 26); the affirmation of Barak F. Bacharach, Esq., dated August 31, 2026, together with exhibit 1 annexed thereto (NYSCEF Doc No. 27); and defendants' reply memorandum of law, dated September 22, 2026 (NYSCEF Doc No. 29).

The undersigned was recently assigned to the Supreme Court, New York County, Civil Term, by Administrative Order of the Chief Administrative Judge of the Courts (AO/150/2026), and the motion and cross-motion now come before the undersigned for determination. Upon the foregoing papers, and for the reasons that follow, the motion is denied and the cross-motion is granted in part and denied in part.

II. Factual and Procedural Background

The background recited below is drawn from the pleading, affirmations, and exhibits submitted on the motion and cross-motion. It does not resolve disputed matters, and where the parties' accounts diverge, the court so notes. For purposes of the cross-motion, the factual allegations of the verified hybrid complaint and petition are accepted as true, although bare legal conclusions do not receive the same deference (see Myers v Schneiderman, 30 NY3d 1, 11 [2017]).

A. The Parties and Plaintiffs' Business

Plaintiff Go New York Tours Inc., which does business as TopView Sightseeing (Go New York), operates hop-on, hop-off tour buses in New York City. Under its business model, tourists board a bus at one stop, leave it at an attraction of their choosing, and later board the same or another Go New York bus to continue the tour. Customers may buy tickets online, at Go New York's office, or from more than one hundred street-level ticket sellers (NYSCEF Doc No. 1, ¶ 13). Plaintiff Asen Kostadinov is identified in defendants' papers as the alleged president of Go New York, and he was named, together with Go New York, in the administrative order that underlies this action. The court refers to Go New York and Kostadinov collectively as plaintiffs.

Defendant New York State Department of Labor (DOL) is the agency charged with enforcing the wage provisions of the Labor Law, and defendant Roberta Reardon is sued in her official capacity as Commissioner of Labor (the Commissioner). Defendants describe the DOL's mission as ensuring that workers receive a fair wage and protecting law-abiding employers from unfair competition by those who undercut legal minimums.

The caption of the order to show cause names only Go New York as a plaintiff, while the body of that order, and every paper filed thereafter, treats both Go New York and Kostadinov as the moving parties. Defendants, in turn, ask that the relief sought by both be denied and that the pleading be dismissed in its entirety. The court treats the captioning variance as a scrivener's error and addresses the claims of both plaintiffs.

B. The Investigation and the Order to Comply

By plaintiffs' own account, the DOL "has conducted a multi-year investigation into [Go New York's] employee and independent contractor compensation practices" (NYSCEF Doc No. 1, ¶ 15). On July 9, 2025, the DOL's Division of Labor Standards issued Order to Comply No. 25-00253 (the Order to Comply) to Kostadinov and Go New York (NYSCEF Doc No. 5). As described in the parties' papers, the Order to Comply found that plaintiffs had, inter alia, failed to pay wages earned or payable to approximately 315 employees identified on an annexed schedule, and it directed payment of $26,536,020.63. Plaintiffs itemize that sum as $4,699,247.78 in wages, wage supplements, and wage underpayments; $7,731,029.51 in interest; $4,699,247.78 in liquidated damages; and $9,406,495.56 in civil penalties. Those four figures, as plaintiffs state them in reply, sum to the stated total. Plaintiffs' opening memorandum gives the civil penalty as "$9,406,49.56," which appears to be a typographical error.

Plaintiffs further attribute $4,695,321.47 of the wage claim, $7,724,684.66 of the interest, $4,695,321.47 of the liquidated damages, and $9,390,462 of the civil penalty to alleged violations of the minimum wage laws, and they represent that the remaining categories, described as supplemental wage claims, unlawful deductions, an unspecified wage claim, and other civil penalties, total $27,941.09. The four minimum wage figures so attributed total $26,505,789.60, leaving $30,231.03 of the stated total, while plaintiffs place the remaining categories at $27,941.09, an unexplained difference of $2,289.94. Certain penalty figures also do not correspond precisely to a doubling of the associated wage amounts. The Order to Comply is before the IBA, and its component calculations are not at issue on this motion. The court therefore recites these figures as plaintiffs present them and makes no finding as to their accuracy. Plaintiffs also represent that the Order to Comply concerns wages allegedly underpaid and deductions allegedly made during the period from March 2012 to March 2015. The Order to Comply states that "[i]n addition to the amount due to said employee(s), said Employer owes the Commissioner of Labor civil penalty(ies) for violation of Labor Law."

The civil penalty was assessed under Labor Law § 218. That statute conditions an enhanced civil penalty on specified predicates, including a prior violation or a violation that is "willful or egregious," limits the penalty to an amount "not to exceed double the total amount" found due, and separately directs that the amount be fixed with consideration of "the size of the employer's business, the good faith basis of the employer to believe that its conduct was in compliance with the law, the gravity of the violation, and the history of previous violations." Plaintiffs contend that the Order to Comply recited these factors without identifying the facts to which the Commissioner applied them, and that it imposed the maximum penalty without factual support. In her answer before the Industrial Board of Appeals, the Commissioner explained that "[t]he 200% civil penalty was based on the large size of the business, the good faith basis (or lack thereof) of Petitioners to believe, during the claim period, their conduct was in compliance with the law" (NYSCEF Doc No. 27, exhibit 1 at 20-21).

C. The Administrative Appeal Before the Industrial Board of Appeals

On September 5, 2025, plaintiffs petitioned the Industrial Board of Appeals (IBA) pursuant to Labor Law § 101, asking that the Commissioner's findings be overruled in their entirety. The IBA assigned the appeal Docket No. PR 25-099. The petition advanced several grounds, among them that the Commissioner failed to hold a hearing, failed to conduct a valid investigation, and failed to set forth the facts on which her calculations were based. Of particular significance here, the petition expressly asserted that "[t]he Order and findings of the Commissioner violate Petitioners' constitutional rights to a jury trial," and that "[b]oth the US Constitution and the New York State Constitution guarantee the right to a jury trial" (NYSCEF Doc No. 4, exhibit 2 at 2-3). The very constitutional objection that animates this action was thus placed before the administrative tribunal at the outset of the appeal.

The Commissioner obtained a 45-day extension and then answered the petition. Plaintiffs' April 2026 affirmation dates the answer November 11, 2025, while their August 2026 affirmation annexes the pleading and dates it November 24, 2025. The discrepancy is immaterial to the issues presented. According to plaintiffs, the answer denied their claims, including the claim of a federal jury trial right, but did not address the claim under the New York State Constitution.

On January 12, 2026, the IBA scheduled a pre-hearing video conference for February 23, 2026, and directed the Commissioner "to provide a complete copy of its investigative file to petitioner(s) within ten (10) days of the date on this notice." The file was not produced within that time. When plaintiffs' counsel inquired on January 27, 2026, the Commissioner's counsel, Osa Iyinbo, Esq., attributed the delay to the size of the file and the need to redact sensitive information. On February 3, 2026, Mr. Iyinbo reported that the redactions were complete and that, because of its size, the file would be mailed on a flash drive, which plaintiffs' counsel received on February 9, 2026. That same day, plaintiffs asked for a 30-day adjournment of the pre-hearing conference to review the file. Mr. Iyinbo consented but advised that he was unavailable for the whole of March and available on April 8, 9, 20, 23, 27, and 28. The IBA rescheduled the conference to early April 2026. The Bacharach affirmation places the adjourned date on April 8, 2026, and plaintiffs' memorandum places it on April 9, 2026.

Defendants represent, and plaintiffs do not dispute, that the IBA proceeding remains incomplete, that no hearing has been scheduled, and that the IBA has issued no decision.

D. The Related Action Concerning Unemployment Insurance Contributions

Plaintiffs have also brought to the court's attention a separate action, Go New York Inc. d/b/a TopView Sightseeing v New York State Department of Labor, Index No. 151666/2026, assigned to Justice Lyle E. Frank. As plaintiffs describe it, that matter arose when one of Go New York's ticket sellers applied for unemployment benefits, which prompted a DOL audit and a determination that the ticket sellers were employees rather than independent contractors. An Administrative Law Judge initially found for Go New York, the Unemployment Insurance Appeals Board reversed, and the Appellate Division, Third Department, affirmed the Board. The DOL then sought to impose unemployment insurance contributions, interest, and civil penalties, including penalties under Labor Law § 570 [3] and [4], for the period from 2017 to the present, as reflected in a letter from Denise Engeberg, Senior Unemployment Insurance Reviewing Examiner, that Go New York received on November 10, 2025 (NYSCEF Doc No. 4, exhibit 5).

Go New York commenced that action seeking a declaration of its right to a jury trial. On February 20, 2026, the court in that action issued a temporary restraining order enjoining the DOL from enforcing its determination that Go New York owed unemployment insurance contributions for 2017 to the present, and from continuing its investigation, pending determination of a motion for a preliminary injunction that was set down for May 21, 2026 (NYSCEF Doc No. 4, exhibit 6). Plaintiffs stress that the two matters involve different remedies and different time periods, and the record bears out that the assessments do not overlap. Defendants report in their reply that on July 30, 2026, Justice Frank dismissed that action because Go New York had failed to exhaust its administrative remedies. Defendants first raised that decision in reply, and the court has been furnished only the brief excerpt quoted there.

E. Commencement of This Action and the Order to Show Cause

Plaintiffs commenced this hybrid action and proceeding by a complaint and petition verified on April 6, 2026 (NYSCEF Doc No. 1). The pleading, brought principally under CPLR 3001, "challenges the constitutionality, as applied, of the New York State Department of Labor's wage enforcement scheme insofar as it authorizes an executive agency, together with the Industrial Board of Appeals ('IBA'), to adjudicate liability, compel discovery, and impose punitive civil penalties without a jury trial" (id. ¶ 1). In the alternative, and in plaintiffs' words "out of an abundance of caution," the pleading seeks limited relief under CPLR article 78 (id. ¶ 5), which defendants describe as a request for an order under CPLR 7803 [2] finding that defendants have acted in excess of their jurisdiction. The prayer for relief seeks, among other things, to prevent the DOL and the IBA from proceeding.

On April 6, 2026, plaintiffs' counsel told Mr. Iyinbo that the pleading and an order to show cause would be filed, and Mr. Iyinbo agreed to accept service on the Commissioner's behalf by email. Plaintiffs represent that this is Go New York's first request for a stay of the IBA proceeding.

On April 8, 2026, Justice Jeffrey H. Pearlman signed the order to show cause (NYSCEF Doc No. 12). It directed defendants to show cause at IAS Part 44 on May 14, 2026, why an order should not be entered staying the Commissioner's proceedings before the IBA in Docket No. PR 25-099, "seeking, inter alia, allegedly underpaid wages and civil penalties, until such time as (1) the Courts rule on Petitioners' entitlement to a jury trial pursuant to the Seventh Amendment to the United States Constitution and Art. I § 2 of the New York State Constitution and claims and (2) such jury trial has been completed." The proposed decretal paragraph that would have stayed the IBA proceeding pending resolution of the motion was struck and initialed by the signing Justice, so no interim restraint issued. The order directed service by email and upon the offices of the DOL and the Attorney General on or before April 14, 2026, and it directed oral argument. Plaintiffs' process server affirms that on April 8, 2026, the order and supporting papers were served by email and by overnight delivery upon the Commissioner, Mr. Iyinbo, the DOL's Office of General Counsel, the Attorney General, and Assistant Attorney General Marjorie Leff (NYSCEF Doc No. 13).

F. The Cross-Motion and the Further Submissions

By notice dated June 26, 2026, and returnable July 27, 2026, defendants cross-moved for an order dismissing the pleading with prejudice pursuant to CPLR 3211 [a] [2] and [7], on the grounds that the court lacks subject matter jurisdiction and that the pleading fails to state a cause of action (NYSCEF Doc No. 18). In the same submission, defendants opposed the application for injunctive relief (NYSCEF Doc No. 19). Plaintiffs filed a memorandum in further support of the motion and in opposition to the cross-motion on August 31, 2026, together with a supplemental affirmation annexing the Commissioner's answer before the IBA (NYSCEF Doc Nos. 26, 27). Defendants replied on September 22, 2026 (NYSCEF Doc No. 29).

Defendants' reply, in answering plaintiffs' argument concerning the Legislature's power to assign new functions to administrative agencies, discusses the history of unemployment insurance, a subject that belongs to the related action rather than to this minimum wage proceeding. The court reads that passage as an inadvertent carryover and treats it as such. The court likewise disregards the numbering irregularities in the enumerated arguments of defendants' opening memorandum, which have no bearing on its substance.

III. Conclusions of Law

A. The Governing Standards

On a motion pursuant to CPLR 3211, dismissal is warranted where "the court has no jurisdiction of the subject matter of the cause of action" or "the pleading fails to state a cause of action" (CPLR 3211 [a] [2], [7]). Well-pleaded factual allegations are accepted as true, but allegations that consist of bare legal conclusions, or that are inherently incredible or clearly contradicted by documentary evidence, are not (see Myers v Schneiderman, 30 NY3d 1, 11 [2017]). Plaintiffs correctly observe that dismissal at the threshold of litigation is not lightly granted (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]).

The party seeking a preliminary injunction "must demonstrate a probability of success on the merits, danger of irreparable injury in the absence of an injunction and a balance of equities in its favor" (Nobu Next Door, LLC v Fine Arts Hous., Inc., 4 NY3d 839, 840 [2005]; see Harris v Patients Med., 169 AD3d 433, 434 [1st Dept 2019]). The ordinary purpose of such relief "is to maintain the status quo and to prevent any conduct which might impair the ability of the court to render final judgment" (Putter v City of New York, 27 AD3d 250, 253 [1st Dept 2006]). A preliminary injunction is "a drastic remedy that will not be granted unless a clear right thereto is established under the law and the undisputed facts upon the moving papers," and the burden of showing that right rests with the movant (Corporate Coffee Sys., LLC v R.U.G. Consulting, LLC, 235 AD3d 829, 830 [2d Dept 2025]). Where, as here, the movant challenges the constitutionality of a legislative scheme, "the burden becomes more difficult as there exists an exceedingly strong presumption of constitutionality" (Schulz v State Executive, 108 AD3d 856, 857 [3d Dept 2013]). The standard for provisional relief is thus considerably more demanding than the standard that governs a motion to dismiss, and a claim may survive the latter without satisfying the former.

B. The Exhaustion Doctrine and the Constitutional Exception

The Legislature has prescribed a specific path for review of the Commissioner's wage determinations. Article 3 of the Labor Law (Labor Law §§ 100-103), read together with Labor Law §§ 218 and 219, directs challenges to an order for the payment of wages, benefits, or wage supplements first to the IBA (see Labor Law §§ 101, 103). A party aggrieved by the IBA's decision may then seek review "in a proceeding under article seventy-eight of the civil practice law and rules for judicial review, if such proceeding is commenced within sixty days after the decision is issued" (Labor Law § 102). Plaintiffs invoked this process when they petitioned the IBA in September 2025, and that proceeding remains pending without a hearing or decision.

The courts have enforced this sequence. In Matter of Associated Gen. Contrs. of NY State, LLC v New York State Dept. of Labor (226 AD3d 1207, 1208 [3d Dept 2024]), the Third Department required initial IBA review of a challenge to a regulation, notwithstanding the constitutional grounds asserted. Lyell Party House, Inc. v New York State Dept. of Labor, Commr. (190 AD3d 1046 [3d Dept 2021]) similarly required initial administrative review of a wage regulation, while distinguishing a separate challenge to the constitutionality of a statute. Where the Legislature has made an administrative route the exclusive method for challenging a Labor Law determination, the courts have also declined to entertain a parallel declaratory judgment action and article 78 proceeding directed at the determination itself (see Numrich Gun Parts Corp. v Rivera, 115 AD3d 1050, 1051 [3d Dept 2014], appeal dismissed 23 NY3d 979 [2014]; Vartanian v Research Found. of State Univ. of NY, 227 AD2d 744, 745 [3d Dept 1996]). The rationale is practical as well as jurisdictional, because questions arising under the Labor Law often "cannot be answered without the development of a factual record and an examination of all the circumstances," which are tasks "the Legislature has assigned, in the first instance," to the agency (Christa Constr., LLC v Smith, 63 AD3d 1331, 1331 [3d Dept 2009]; see Hopewell Volunteer Fire Dept., Inc. v Gardner, 101 AD3d 1652, 1653 [4th Dept 2012]).

The exhaustion requirement is not, however, without exceptions. The Court of Appeals has recognized that exhaustion need not be followed where agency action is challenged as unconstitutional or wholly beyond the agency's grant of power, and that even an exclusive statutory route of review may leave room for another form of judicial scrutiny where the statute is challenged as unconstitutional by its terms or in its application, while cautioning that a constitutional claim that depends on factual issues reviewable at the administrative level should first be presented to the agency (see Watergate II Apts. v Buffalo Sewer Auth., 46 NY2d 52, 57 [1978]). The First Department, in turn, has distinguished ordinary objections to the conduct of an administrative proceeding from allegations that the statute or administrative scheme itself is unconstitutional in a manner that undermines the legality of the entire proceeding (see Martinez 2001 v New York City Campaign Fin. Bd., 36 AD3d 544 [1st Dept 2007]). Lyell Party House draws the same line between a challenge to a wage order's or regulation's validity and a challenge to the constitutionality of a statute.

The exhaustion inquiry therefore turns on the substance of the constitutional objection. A challenge to the Commissioner's findings, calculations, or application of a valid statute ordinarily requires completion of the administrative process. A challenge to the constitutional validity of the statutory adjudicatory scheme requires separate consideration under the recognized exceptions. Neither the label a litigant attaches to its claim nor the existence of a pending assessment answers that question, and plaintiffs' description of their challenge as one "as applied" does not resolve it either way. Nor does plaintiffs' earlier invocation of IBA review, standing alone, convert a challenge to the forum into a challenge to the assessment.

The pleading before the court occupies both categories. To the extent it attacks the Order to Comply itself, including the adequacy of the Commissioner's investigation, the absence of a hearing, the factual support for the Commissioner's calculations, and the basis for imposing the maximum penalty, it presents precisely the objections that plaintiffs raised in their IBA petition. Those objections depend on the development of a factual record and fall within the core of what the Legislature assigned to the IBA in the first instance (see Christa Constr., 63 AD3d at 1331). The alternative request for relief under CPLR article 78 stands on the same footing, since there is no final determination of the IBA to review. These portions of the pleading must await completion of the administrative process and any ensuing proceeding under Labor Law § 102.

The central claim of the pleading is different in kind. Plaintiffs allege that the wage enforcement scheme is unconstitutional "insofar as it authorizes an executive agency, together with the [IBA], to adjudicate liability, compel discovery, and impose punitive civil penalties without a jury trial" (NYSCEF Doc No. 1, ¶ 1). That claim does not dispute the Commissioner's arithmetic, the credibility of any witness, or the weight of any evidence. It asks whether the Legislature may constitutionally assign the adjudication of civil penalties under Labor Law § 218 to an administrative tribunal without a jury. The historical and constitutional question does not depend on whether the Commissioner correctly calculated this assessment or proved the underlying wage violations. The statutory basis and character of the challenged civil penalty can be determined from the governing law and the Order to Comply. The "application" plaintiffs challenge is the scheme's application to penalties of this kind, not its application to disputed facts. So understood, the claim is a challenge to the authority of the forum, and it falls within the exception that Watergate II and Martinez 2001 recognize. The zoning decisions on which plaintiffs rely are consistent with that conclusion, in that each permitted a declaratory challenge to the constitutionality of the governing enactment, as distinct from a request for relief from its application (see Levitt v Incorporated Vil. of Sands Point, 6 NY2d 269, 273 [1959]; Polak v Kavanah, 48 AD2d 840, 840-841 [2d Dept 1975]).

Defendants' authorities do not require a different result as to that claim. Associated Gen. Contrs. and Lyell Party House concerned challenges to regulations, and Lyell Party House itself distinguished a challenge to the constitutionality of a statute. Numrich and Vartanian, as described in the papers, involved challenges to particular agency determinations. The decision in the related action, as reported in defendants' reply, dismissed Go New York's challenge because "petitioner has failed to exhaust its administrative remedies" and "[t]he administrative proceedings that petitioner is challenging have not yet been completed" (Go New York Inc. v New York State Dept. of Labor, 2026 WL 2298569, *1 [Sup Ct, NY County 2026]). That decision, rendered by a court of coordinate jurisdiction under a different statutory scheme, does not bind this court, and the excerpt furnished does not indicate whether the constitutional exception was considered. Finally, defendants' concern that recognizing the exception would allow any regulated party to evade the administrative process by invoking the Constitution is answered by the substance test itself. Only a genuine challenge to the constitutional authority of the forum qualifies, and the court has confined its ruling accordingly.

Accordingly, the branch of the cross-motion seeking dismissal pursuant to CPLR 3211 [a] [2] is granted to the extent that the alternative article 78 claim and the portions of the pleading that challenge the findings, calculations, investigation, or other application of the Labor Law reflected in the Order to Comply are dismissed for failure to exhaust. Because that dismissal rests on the incomplete state of the administrative process rather than on the merits, it is without prejudice to plaintiffs' pursuit of those objections before the IBA and in any timely proceeding under Labor Law § 102, and defendants' request that it be with prejudice is denied. The branch seeking dismissal under CPLR 3211 [a] [2] is otherwise denied, and the court turns to whether the challenge to the adjudicatory scheme states a claim and warrants provisional relief.

C. The Seventh Amendment Claim Is Foreclosed by Binding Precedent

The Seventh Amendment provides that "[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved" (US Const 7th Amend). The threshold question is whether that guarantee binds the States at all, and the controlling authority answers it uniformly. The United States Supreme Court has held that the Seventh Amendment "applies only to proceedings in courts of the United States, and does not in any manner whatever govern or regulate trials by jury in state courts" (Minneapolis & St. Louis R.R. Co. v Bombolis, 241 US 211, 217 [1916]; see Walker v Sauvinet, 92 US 90, 92-93 [1875]). It has since described the Amendment as "inapplicable to proceedings in state court" (Osborn v Haley, 549 US 225, 252 n 17 [2007]) and as governing "proceedings in federal court, but not in state court" (Gasperini v Center for Humanities, Inc., 518 US 415, 418 [1996]).

The Court of Appeals has long held the same (Middleton v Whitridge, 213 NY 499, 506 [1915] ["The seventh amendment to the federal Constitution does not limit state action"]), and the Appellate Division, First Department, whose decisions bind this court, has repeatedly and recently so held (James Thomas Realty, LLC v Cheliotes, 249 AD3d 633, 634 [1st Dept 2026]; Matter of Serby v City of New York, 215 AD3d 438, 439 [1st Dept 2023], lv denied 40 NY3d 907 [2023]; Shah v 20 E. 64th St., LLC, 198 AD3d 23, 40 [1st Dept 2021]; Marko v Korf, 166 AD3d 545, 546 [1st Dept 2018]). Serby is especially instructive, for it rejected the contention that a petitioner in an administrative proceeding was "entitled to a jury trial under the Seventh Amendment which is not applicable to cases tried in state courts" (215 AD3d at 439). The Second Department is in accord (see Matter of Department of Hous. Preserv. & Dev. of City of NY v Deka Realty Corp., 208 AD2d 37, 51 n 6 [2d Dept 1995]).

Plaintiffs' principal authority, Ball v New York State Dept. of Health (87 Misc 3d 504 [Sup Ct, Schoharie County 2025]), no longer supports their position. The Appellate Division, Third Department, reversed that decision, agreeing that the trial court had "improperly disregarded binding precedent from the Supreme Court of the United States that the Seventh Amendment does not apply to the states," and cautioning that lower courts should not, "on [their] own authority[,] ... take[ ] the step of renouncing" that precedent (Ball v New York State Dept. of Health, 2026 NY Slip Op 02494, *2 [3d Dept 2026]). This court is bound by the same principle. The Supreme Court has instructed that "if a precedent of this Court has direct application in a case yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to this Court the prerogative of overruling its own decisions" (Rodriguez de Quijas v Shearson/American Express, Inc., 490 US 477, 484 [1989]). That directive applies with at least equal force to a trial court, which is further bound by the decisions of the First Department.

Plaintiffs' remaining arguments do not change this conclusion. They read footnote 13 of McDonald v City of Chicago (561 US 742, 765 n 13 [2010]) as signaling that pre-incorporation decisions such as Bombolis have lost their force, but the footnote observes only that the governing decisions on "the Seventh Amendment's civil jury requirement long predate the era of selective incorporation." It does not overrule them, and the First Department, well after McDonald, has continued to apply the rule they announce. Plaintiffs also invoke Justice Gorsuch's statement respecting the denial of certiorari in Thomas v Humboldt County (146 S Ct 27 [2025]). That statement, while suggesting that Bombolis "warrants a second look," acknowledged its holding that the Seventh Amendment's civil jury right is not enforceable against the States and recognized that review in that case was not appropriate (id. [statement of Gorsuch, J., respecting denial of certiorari]). A statement respecting the denial of certiorari is not a holding, and it cannot license a trial court to depart from settled precedent. Plaintiffs also rely upon Perez-Traverso v Hospital Comunitario Buen Samaritano, Inc. (2014 WL 1320263, *2 [D PR 2014]), a federal district court decision that questioned whether Bombolis remains good law. The United States Court of Appeals for the First Circuit later rejected that reasoning, holding that "the Supreme Court has consistently held that states are not constitutionally required to provide a jury trial in civil cases" (Gonzalez-Oyarzun v Caribbean City Bldrs., Inc., 798 F3d 26, 29-30 [1st Cir 2015]).

Because the Seventh Amendment does not govern proceedings before the DOL and the IBA, the court need not reach the parties' competing positions on whether the Commissioner's claims are legal or equitable in nature, or whether the public rights exception would apply (see Securities & Exch. Commn. v Jarkesy, 603 US 109 [2024]; Atlas Roofing Co. v Occupational Safety & Health Review Commn., 430 US 442 [1977]). Nor does Sun Valley Orchards, LLC v United States Dept. of Labor (148 F4th 121 [3d Cir 2025]) alter the analysis. The Supreme Court granted certiorari in Sun Valley on questions concerning Article III and the federal Department of Labor's statutory adjudicatory authority (cert granted No. 25-966, 2026 WL 1127242 [US 2026]). Those questions do not resolve whether the Seventh Amendment applies to the States or whether article I, § 2 of the New York Constitution requires a jury in this proceeding.

D. The Due Process and Privileges or Immunities Theories

Recognizing the weight of this authority, plaintiffs contend that the right to a civil jury is secured against the States independently by the Due Process Clause of the Fourteenth Amendment. They rely on Jarkesy and on Justice Gorsuch's observation there that "[t]he Seventh Amendment's jury-trial right does not work alone" but "operates together with Article III and the Due Process Clause of the Fifth Amendment to limit how the government may go about depriving an individual of life, liberty, or property" (Jarkesy, 603 US at 141 [Gorsuch, J., concurring]). That argument is the incorporation argument under another name. Jarkesy arose from a federal enforcement proceeding under the federal securities laws and was decided under the Seventh Amendment, which applies of its own force to the federal government. Nothing in the majority opinion or the concurrence purports to extend the civil jury guarantee to the States. The Third Department in Ball rejected this route, holding that the distinction between the Privileges or Immunities and Due Process Clauses "does not constitute an invitation for lower courts to engage in the incorporation analysis" (Ball, 2026 NY Slip Op 02494, *2). The Supreme Court, for its part, has stated that it "has not held that the right to a jury trial in civil cases is an element of due process applicable to states through the Fourteenth Amendment" (Curtis v Loether, 415 US 189, 192 n 6 [1974]).

Plaintiffs correctly note that the approach of Palko v Connecticut (302 US 319 [1937]) was later repudiated (see Benton v Maryland, 395 US 784, 794 [1969]). The continued force of the specific holdings concerning the civil jury, however, does not depend on Palko, and it is not for this court to declare that those holdings have been silently overruled. The privileges or immunities argument fares no better. The Supreme Court held in Walker that trial by jury in suits at common law pending in state courts "is not, therefore, a privilege or immunity of national citizenship, which the States are forbidden by the Fourteenth Amendment to abridge" (Walker, 92 US at 92-93; see Slaughter-House Cases, 83 US 36 [1873]). Plaintiffs point to later criticism of the Slaughter-House Cases (see Saenz v Roe, 526 US 489, 523 n 1 [1999] [Thomas, J., dissenting]), but criticism in a dissenting opinion is not reversal.

The federal constitutional issue presents a purely legal question, and the allegations of the pleading, accepted as true, do not affect its resolution. The court therefore reaches that issue on the cross-motion and declares the parties' rights in defendants' favor (see Lanza v Wagner, 11 NY2d 317, 334 [1962]; Matter of Tilcon NY, Inc. v Town of Poughkeepsie, 87 AD3d 1148, 1150 [2d Dept 2011]). The declaration appears in the decretal paragraphs below.

E. The Claim Under Article I, Section 2 of the New York Constitution

Plaintiffs' more substantial argument rests on the State Constitution, which provides that "[t]rial by jury in all cases in which it has heretofore been guaranteed by constitutional provision shall remain inviolate forever" (NY Const, art I, § 2). The Court of Appeals has read this provision to guarantee a jury trial "(1) in all those cases to which it would have traditionally been afforded under the common law before 1777, and (2) in all cases to which the Legislature by statute extended a right to a jury trial between 1777 and 1894," and further to reach "new cases that are analogous to those traditionally tried by a jury" (Matter of DES Mkt. Share Litig., 79 NY2d 299, 304 [1992]; see People v Page, 88 NY2d 1, 5 [1996]). The State guarantee is not coextensive with the federal one, for "the contours of the federal guarantee differ from the protections afforded the right to a jury trial in civil cases in this State" (Marko, 166 AD3d at 546). The inquiry therefore turns on New York's own historical categories.

Plaintiffs advance two arguments under this provision. The first, that a finding of willful or egregious conduct under Labor Law § 218 is in substance a finding of common-law fraud (see China Dev. Indus. Bank v Morgan Stanley & Co. Inc., 86 AD3d 435, 436-437 [1st Dept 2011]; R.C.P.S. Assoc. v Karam Devs., 213 AD2d 612, 614 [2d Dept 1995]), is not persuasive. Common-law fraud requires a material misrepresentation or omission of fact, known to be false and made with intent to defraud, upon which the plaintiff reasonably relied to its injury (see Financial Guar. Ins. Co. v Putnam Advisory Co., LLC, 783 F3d 395, 402 [2d Cir 2015]). A willful or egregious wage violation, which is one of the predicates for an enhanced penalty under Labor Law § 218, does not necessarily require any misrepresentation, reliance, or deception. The factors that govern the amount of the penalty, namely the size of the business, the employer's good faith basis for believing its conduct lawful, the gravity of the violation, and the history of previous violations, do not require them either. The Commissioner's stated basis for the penalty rested on the size of the business and the absence of a good faith basis for believing the conduct lawful, and the Order to Comply, as described in this record, charges a failure to pay wages owed.

Defeating the fraud analogy, however, does not defeat plaintiffs' separate argument concerning historical actions for penalties. Plaintiffs cite authority that "suits to enforce forfeitures or penalties have been generally tried by a jury" (Colon v Lisk, 153 NY 188, 194 [1897]), and an older decision observing that a penalty newly created is subject to the constitutional regulations that govern the class of penalties generally (see Wood v City of Brooklyn, 14 Barb 425, 432-433 [Sup Ct 1852]; see also People ex rel. Lemon v Elmore, 256 NY 489, 493 [1931]; Matter of Vergari v Marcus, 26 NY2d 764 [1970]). On plaintiffs' theory, the closest historical analogue to the civil penalty sought here is an action to recover a statutory penalty, which the cited authorities describe as traditionally tried to a jury. That theory is directed at the civil penalty. It does not, on its own terms, reach the wages, interest, and liquidated damages that make up the balance of the assessment, which defendants describe as amounts payable to the affected employees, and plaintiffs have not offered a separate historical analogue for those components.

Defendants' principal responses do not dispose of the penalty argument as a matter of law. That minimum wage legislation is modern (see Mary Lincoln Candies v New York State Dept. of Labor, 289 NY 262, 266-268 [1942]) does not by itself establish that a monetary penalty attached to that legislation falls outside article I, § 2, since the Court of Appeals has extended the guarantee to "new cases that are analogous to those traditionally tried by a jury" (DES Mkt. Share Litig., 79 NY2d at 304). Sohn v Calderon (78 NY2d 755, 766-767 [1991]) and Loretto v Teleprompter Manhattan CATV Corp. (58 NY2d 143, 152-153 [1983]) establish that the Legislature may confer first-instance adjudicatory jurisdiction on an agency, subject to judicial review (see also Motor Vehicle Mfrs. Assn. of U.S., Inc. v State of New York, 75 NY2d 175, 184 [1990]; Delgado v State of New York, 39 NY3d 242, 251-253 [2022]). Those decisions address the allocation of judicial and administrative jurisdiction under article VI, however, and the propositions defendants quote do not explain how that allocation interacts with the distinct guarantee of article I, § 2 when the matter assigned is one to which the jury right would otherwise attach. Nor does Ball resolve the question. Ball involved professional licensing discipline, including possible fines and license revocation, and its State constitutional holding rested on the historical treatment of professional disciplinary proceedings. Although instructive, that holding does not itself resolve whether the monetary penalties sought under Labor Law § 218 are analogous to penalty actions historically tried to a jury (see Ball, 2026 NY Slip Op 02494, *3).

Construing the pleading liberally, as the court must on a motion to dismiss (see Leon, 84 NY2d at 87-88), the court cannot say that the State constitutional challenge to the adjudication of civil penalties under Labor Law § 218 fails to state a claim. The branch of the cross-motion seeking its dismissal under CPLR 3211 [a] [7] is therefore denied.

Surviving a motion to dismiss is not the same as establishing a clear right to provisional relief. The State constitutional question is unsettled and substantial, and on this record it is not resolved in plaintiffs' favor with the clarity that a preliminary injunction demands. Colon and Vergari establish a substantial historical argument concerning nonjury procedures for forfeitures and penalties. They involved forfeiture of property under statutory procedures, however, and do not determine whether adjudication of the civil penalty associated with this wage enforcement scheme carries the same jury guarantee. That unresolved question does not, on the present motion record, establish plaintiffs' entitlement to the broad preliminary stay they seek. The Legislature's recognized power to assign first-instance adjudication to agencies, while not dispositive of the jury question, is a serious countervailing consideration, and the strong presumption of constitutionality that attends the legislative scheme weighs against provisional relief (see Schulz, 108 AD3d at 857). Moreover, the stay plaintiffs seek is broader than the argument that supports it. Plaintiffs ask the court to halt the entire IBA proceeding, including its adjudication of wages, interest, and liquidated damages, although their historical argument, by its terms, reaches only the civil penalty. Nor have plaintiffs established the other prerequisites for a narrower injunction limited to adjudication of the civil penalty, for the reasons discussed below with respect to irreparable harm and the balance of the equities. Plaintiffs have not demonstrated a likelihood of success sufficient to warrant that relief. This preliminary assessment is not a final adjudication of the State constitutional claim, which remains pending.

F. Plaintiffs Have Not Established Irreparable Harm

Plaintiffs contend that the deprivation of a constitutional right is irreparable harm as a matter of course (see Connecticut Dept. of Envtl. Protection v Occupational Safety & Health Admin., 356 F3d 226, 231 [2d Cir 2004]; Demetriou v New York State Dept. of Health, 74 Misc 3d 792, 798 [Sup Ct 2022]). That principle presupposes that a constitutional violation has been convincingly shown, since "merely asserting a constitutional injury is insufficient to automatically trigger a finding of irreparable harm" (KM Enters., Inc. v McDonald, 2012 WL 540955, *3 [ED NY 2012]). Plaintiffs' federal claim is foreclosed by binding authority, and their State claim, though it survives dismissal, has not been shown to be likely to succeed.

The court recognizes that plaintiffs assert an injury distinct from the ordinary burdens of litigation, namely the injury of being made to submit to an adjudication in a forum they contend is constitutionally unauthorized. That type of injury has been recognized as different in kind from the expense of administrative litigation, and as one that later judicial review of the agency's decision may not fully repair, although the ordinary cost of participating in an administrative proceeding does not, by itself, justify immediate judicial intervention (see Axon Enterprise, Inc. v Federal Trade Commn., 598 US 175 [2023]). Axon addressed federal statutory review schemes and does not govern New York's exhaustion doctrine, but its reasoning is a fair answer to any suggestion that later review necessarily cures a forum objection. The difficulty for plaintiffs is that a forum injury of this kind is only as strong as the constitutional objection on which it rests. Because plaintiffs have not shown that they are likely to establish that the IBA may not adjudicate the civil penalty without a jury, and because their objection does not extend to the balance of the proceeding at all, they have not established with the requisite clarity that proceeding before the IBA will inflict an irreparable constitutional injury.

Nor does the record establish an imminent threat of collection. Irreparable harm must be "imminent, not remote or speculative" (Golden v Steam Heat, 216 AD2d 440, 442 [2d Dept 1995]). While the statutory review proceeding remains pending, the Commissioner may not invoke the judgment-filing and warrant enforcement mechanisms specified in Labor Law §§ 218 [3] and 219 [3]. The record therefore does not establish an imminent collection threat through those mechanisms, and there is no showing of a risk that property will be dissipated or that an eventual judgment will be rendered ineffectual (see Speyside Holdings v Nebari Natural Resources Credit Fund, 243 AD3d 714, 715 [2d Dept 2025]).

The timing of the application further undercuts the claim of urgency. The Order to Comply issued on July 9, 2025, and plaintiffs raised their jury trial objection before the IBA on September 5, 2025. They did not seek judicial intervention until April 2026, roughly seven months after articulating that objection and on the eve of the adjourned pre-hearing conference. Although the record reflects that the Commissioner's production of the investigative file was delayed, that circumstance bears on the pace of the administrative proceeding, not on when the constitutional objection became known to plaintiffs. Delay "tends to indicate at least a reduced need for such drastic, speedy action" (Citibank, N.A. v Citytrust, 756 F2d 273, 276 [2d Cir 1985]), and the First Department has affirmed the denial of preliminary injunctive relief in light of a movant's delay (see Kazantzis v Cascade Funding RM1 Acquisitions Grantor Trust, 217 AD3d 410, 412 [1st Dept 2023]; Mercury Serv. Sys. v Schmidt, 50 AD2d 533 [1st Dept 1975]).

G. The Balance of the Equities Does Not Favor Plaintiffs

Finally, plaintiffs have not shown that the balance of the equities weighs in their favor (see Doe v Axelrod, 73 NY2d 748, 750 [1988]). In striking that balance, "the court must weigh the interests of the general public as well as the interests of the parties to the litigation" (City of New York v Miller, 20 Misc 3d 1117[A] [Sup Ct, Kings County 2008], affd 72 AD3d 726 [2d Dept 2010]). Plaintiffs argue that the Commissioner suffers no prejudice from a stay because interest will continue to accrue, and that without a stay they will be compelled to take part in proceedings that may prove a nullity. The first point has some force as to the Commissioner's financial interest, but it overlooks the public interest in the orderly and timely completion of the administrative review of wage claims on behalf of the approximately 315 workers identified in the Order to Comply, claims that concern a period that closed more than a decade ago. The second point assumes the success of a constitutional theory that plaintiffs have not shown to be likely.

The duration and breadth of the requested stay weigh decisively against it. By the terms of plaintiffs' own proposed order, the IBA proceeding would be suspended until the courts rule on plaintiffs' entitlement to a jury trial and until any such jury trial has been completed, an indefinite period. The stay would halt the administrative review of every component of the Order to Comply, including the wages, interest, and liquidated damages to which plaintiffs' State constitutional argument does not extend. Plaintiffs' constitutional claim, meanwhile, remains pending before this court and is preserved before the IBA. In reaching this conclusion, the court draws no inference from defendants' characterization of plaintiffs as seeking to avoid their legal obligations, and nothing in this decision reflects any view on the merits of the Order to Comply, which remain for the IBA to determine in the first instance.

IV. Conclusion and Decretal Paragraphs

Plaintiffs have raised a serious question about the reach of the State constitutional jury guarantee, and that question survives for further proceedings. Their federal claims are resolved against them by binding precedent, their objections to the Order to Comply itself must first be presented through the administrative process that the Legislature prescribed, and they have not shown a clear right to halt that process while their State claim is litigated. Accordingly, it is hereby

ORDERED that the motion of plaintiffs Go New York Tours Inc. d/b/a TopView Sightseeing and Asen Kostadinov, brought by order to show cause (motion sequence No. 001), for a preliminary injunction staying the proceedings of defendants before the Industrial Board of Appeals in Docket No. PR 25-099 until the courts rule upon plaintiffs' entitlement to a jury trial and any such jury trial has been completed, is DENIED in its entirety; and it is further

ORDERED that the cross-motion of defendants New York State Department of Labor and Roberta Reardon, in her official capacity as Commissioner of Labor, is GRANTED pursuant to CPLR 3211 [a] [2] to the extent that the claim for relief under CPLR article 78, and the verified hybrid complaint and petition insofar as it challenges the findings, calculations, investigation, or other application of the Labor Law reflected in Order to Comply No. 25-00253, are dismissed for failure to exhaust administrative remedies, without prejudice to plaintiffs' pursuit of those objections before the Industrial Board of Appeals and in any timely proceeding pursuant to Labor Law § 102; and it is further

ORDERED and ADJUDGED that, upon the branch of defendants' cross-motion directed to the federal constitutional claim, it is DECLARED that neither the Seventh Amendment to the United States Constitution, of its own force or as incorporated through the Fourteenth Amendment, nor the Fourteenth Amendment theories pleaded here entitles plaintiffs to a jury trial in the proceedings concerning Order to Comply No. 25-00253; and it is further

ORDERED that the cross-motion is otherwise DENIED, including the branch seeking dismissal of plaintiffs' claim under article I, § 2 of the New York Constitution and the branch seeking dismissal with prejudice; and it is further

ORDERED that defendants shall serve an answer to the remaining claim of the verified hybrid complaint and petition within twenty days after service of a copy of this decision and order with notice of entry; and it is further

ORDERED that plaintiffs shall serve a copy of this decision and order, with notice of entry, upon counsel for defendants within twenty days of its entry.

This constitutes the decision and order of the court.

Dated: October 1, 2026

New York, New York

ENTER:

HON. RONALD CASTORINA, JR.

JUSTICE OF THE SUPREME COURT

Ronald Castorina, Jr., J.