A former New York City administrative law judge's claims against the city's consumer affairs department, that she was subjected to sexual harassment and retaliated against for complaining about it, will go forward, a state appeals court has ruled.

She will also be allowed to add an alternative First Amendment retaliation claim rooted in allegations that she suffered unfair treatment for publicly raising concerns about agency directors pressuring her and other judges to resolve cases in the agency's favor, the court decided.

In a nearly full reversal of a 2015 lower court ruling, an Appellate Division, Second Department, panel has ruled that Susan Kassapian, a principal administrative law judge from 2009-13 and currently a deputy commissioner for the city's Office of Administrative Trials and Hearings, stated several claims that should survive the city's motion to dismiss.

“The allegation that a co-worker repeatedly demonstrated a sex toy to the plaintiff was sufficient to state a cause of action to recover damages for sexual harassment in violation of the NYCHRL [New York City Human Rights Law],” the panel wrote, later adding, “The court erred in determining that the cause of action must be dismissed because the behavior constituted no more than petty slights or trivial inconveniences.”

The unanimous panel also wrote that “the allegations of disparate treatment of older employees, including the plaintiff, and that the plaintiff's demotion was based, in part, on age discrimination, sufficiently stated a cause of action to recover damages for age discrimination in violation of the NYCHRL.”

According to Kassapian's amended complaint and her attorney, Stewart Lee Karlin, her problems began in 2009, when, after decades at consumer affairs in various positions, she became an administrative law judge. She and other administrative law judges believed they were being improperly pressured by the agency's director and deputy director to issue decisions both favoring the agency and imposing maximum fines on businesses so that the agency could reap more money.

In 2009, Kassapian and other agency ALJs wrote a letter to the Civil Service Bar Association president pointing to the problem, and focusing attention on the “unethical practice” of the agency's director writing and overseeing appeals of cases while also influencing the ALJ's decision-making via her supervisory role, according the complaint.

And subsequently, the ALJs allegedly made further efforts to address the problem, from initiating labor-management meetings with the agency's top directors, to going to the city's Department of Investigation, to contacting the city's public advocate office, then headed by Bill de Blasio.

The ALJs also requested whistleblower protection, but it was denied, the complaint states.

The suit alleges that, in 2010, consumer affairs' then-deputy director Bruce Dennis flaunted a sex toy at Kassapian when she entered his office. He also referred to himself as “Testicles” or “Mr. Testicles” as he showed the sex toy to colleagues, and Kassapian allegedly told him it was disgusting and asked him to put away the sex toy.

But on two following days, Dennis again flashed the sex toy at Kassapian, she alleges.

After Kassapian complained about the sex toy incident, her workload was increased, she said. Then in 2011, after Dennis was made agency director, she was allegedly demoted.

Kassapian eventually left her ALJ position in 2013, when she was approved to be transferred to the agency's general counsel office and work there as a senior counsel.

Still, she was retaliated against in the new position as well, she alleges, including by being given a nearly unmanageable workload.

Kassapian, now in her early 60s, has since left the consumer affairs department for the Office of Administrative Trials and Hearings, Karlin said.

The Second Department panel, in reversing most of the 2015 decision issued by Kings County Supreme Court Justice Dawn Jimenez-Salta, in which Jimenez-Salta dismissed Kassapian's complaint, wrote that in addition to Kassapian outlining sex discrimination allegations, she also submitted an affirmation from a separate co-worker that detailed further allegations of sexual harassment suffered by Kassapian.

The panel then wrote that Jimenez-Salta erred in dismissing the sex discrimination cause of action based on the behavior constituting only a trivial inconvenience.

“A contention that the behavior was a petty slight or trivial inconvenience constitutes an affirmative defense, which should be raised in the defendants' answer and does not lend itself to a pre-answer motion to dismiss,” the panel wrote in Kassapian v. City of New York, 506287/13.

In addressing Kassapian's age discrimination claim, and ruling that it should survive dismissal, the panel noted that “the fact that the individual defendants were approximately the same age as the plaintiff does not render the cause of action insufficient.”

The panel, consisting of Justices William Mastro, L. Priscilla Hall, Leonard Austin and Sandra Sgroi, ruled that Jimenez-Salta also erred by dismissing Kassapian's NYCHRL claim stating that she was retaliated against because she complained of sexual harassment.

“The allegations that, following the plaintiff's complaint to a supervisor concerning alleged sexual harassment, the plaintiff was assigned double the normal workload, subjected to increased scrutiny of her work and reprimands for minor errors, and ultimately demoted a few months later, sufficiently stated a cause of action to recover damages for unlawful retaliation for the plaintiff's complaints of sexual harassment in violation of the NYCHRL,” the panel wrote.

Finally, the panel also overruled Jimenez-Salta's denial of Kassapian's motion to amend the complaint to assert an alternative First Amendment retaliation cause of action pursuant to 42 USC Section 1983 in the event her state constitutional causes of action were dismissed.

“Given the state constitutional causes of action included in the original complaint, the defendants would not be prejudiced or surprised by the assertion of a First Amendment cause of action,” the panel wrote in the Nov. 15 opinion.

“Further, the proposed amended complaint sufficiently alleged that the plaintiff and other ALJs spoke out, both internally in the agency and externally, as citizens on a matter of public concern,” the panel wrote. It added, “The allegations that the plaintiff was demoted following the internal complaints, and that she suffered a campaign of harassment following the external complaints, sufficiently pleaded that the subject speech was a substantial or motivating factor for an adverse employment action.”

Karlin, who runs the boutique Stewart Lee Karlin Law Group, said on Wednesday that he believed the panel correctly decided each issue.

“The amended complaint set forth facts in detail that would give rise to not just retaliation but also to the sexual harassment,” he said. He also noted that the sexual harassment “happened three or four times,” not simply once.

He also pointed out that Kassapian, who began at consumer affairs in 1987, is still working for the city, although doing so has been difficult.

“She has benefits and pension and all of that tied in,” he said. “She has a lot vested at this point. It's not easy to walk away when you have your lifetime career with the city.”

A spokeswoman for the city's Law Department, Kimberly Joyce, said in a statement: “There is zero tolerance for discrimination in any city agency. While we respect the courts' decision we disagree with certain aspects of the ruling. We are weighing our legal options.”