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Posted: December 14, 2015

Court Awards $5 Million In Attorneys’ Fees And Costs In Civil Rights Saga

“The Court assumes familiarity with the facts and procedural history of the case” Judge Joanna Seybert writes in the opening sentence of Restivo v. Nassau County, 06-CV-6720 (E.D.N.Y. Nov. 30, 2015), but it is difficult to appreciate fully the outcome – the award of $5 million in attorneys’ fees and costs to the well-known plaintiffs’ civil rights firm, Neufeld Scheck & Brustin LLP (“NSB”) – on the basis of the short summary that the Court provides to resolve the fee motion. This much shorter blog entry will necessarily do the matter even less justice, but here goes: plaintiffs John Restivo and Dennis Halsted were wrongly convicted in 1985 for the rape and murder of a Long Island teenager named Theresa Fusco. They spent 18 years in prison, until 2003, when they were finally released based on exculpatory DNA evidence and the help of attorneys from the “Innocence Project” (which was founded by named NSB partners, Barry Scheck and Peter Neufeld).

In 2006, NSB filed a § 1983 civil rights action on behalf of Restivo, Halsted and a third-man, John Kogut, who had initially confessed to the crime but was acquitted in a 2005 re-trial based on evidence that the lead Nassau County detective on the case, Joseph Volpe, had manufactured evidence and had obtained the confession improperly. The issue in § 1983 action was whether Volpe and Nassau County had unconstitutionally deprived the plaintiffs of their right to a fair trial. The plaintiffs also sued for malicious prosecution. A first trial ended in 2012 in a verdict for defendants. NSB moved for a new trial for Restivo and Halsted on the ground that they were prejudiced by the jury’s receipt of evidence of Kogut’s confession, which tainted its consideration of the degree to which the defendants had probable cause to suspect Restivo and Halsted. Judge Seybert granted a new trial in her joint decision in Kogut v. County of Nassau, 06 CV 6695, and Restivo v. Nassau County, 06-CV-6720 (EDNY, July 22, 2013). In the second trial, which ended in 2014, the jury awarded Restivo and Halsted $18 million each — $1 million for each year of their wrongful incarceration.

Judge Seybert’s fee decision recites impressive numbers of deposition and trial days, expert reports and Daubert challenges over the course of eight years of civil litigation, including two trials. It is clear that the facts and the results, not nuance in the law on attorneys’ fees, drives the award. Nevertheless, there are a few legal tidbits for practitioners who are fond of the law of lawyering. First, the Court found that counsel could overcome the presumption in favor of “in-district” hourly fee rates and granted the application for higher SDNY partner rates of $700/hour on the ground that “no lawyers with primary offices in the [EDNY] have obtained a successful jury verdict in a § 1983 wrongful conviction suit, as NSB did here” Slip Op. 7. Second, the Court refused to dock the application for time spent on “dismissed, withdrawn and abandoned claims” quoting the Second Circuit for the proposition that “[e]specially in a complex case, competent counsel is entitled to raise ‘alternative legal grounds for a desired outcome, and the court’s rejection of or failure to reach certain grounds is not a sufficient reason for reducing a fee.'” Slip Op. 11 (quoting Green v. Torres, 361 F.3d 96, 100 (2d Cir. 2004)). Third, the Court declined to fault NSB for “block billing” entries on their time sheets (i.e., failure to itemize how much time was spent on each task covered in a multi-task description), noting that the practice “is pervasive in the legal industry” and was not prohibited in this Circuit. Slip Op. 13. Indeed, the only “haircut” to the application was the “legitimate concern” raised by Defendants to “instances in which NSB lawyers billed travel time as attorney time.” Slip Op. 13. NSB wisely took that issue off-the-table by agreeing to omit those entries. Id. In the end, the Court awarded $4.58 million in attorneys’ fees for the 1983 actions, $320,000 in costs and $97,132.50 for the time and costs of preparing the fee application itself. The total is $4,997,914.55.

    Editors’ Note: For more casual, but detailed reading about the underlying criminal case against Restivo, Halstead and Kogut, their acquittals, the subsequent civil rights trials and the jury’s $18 million award to each of Restivo and Halstead, see “The Price of a Life” in the April 13, 2015 issue of The New Yorker.

Posted: December 10, 2015

Lender Has Standing to Foreclose When it Possesses Note

On November 24, 2015, the Second Circuit issued a decision in Eastern Savings Bank, FSB v. Thompson, 14-4520-CV, reversing the EDNY’s grant of summary judgment to a defendant in a foreclosure action on the ground that the plaintiff lacked standing to bring a foreclosure action because of defects in the chain of assignments of title.

In Eastern Savings Bank, the plaintiff brought a foreclosure action against the defendant. The EDNY granted summary judgment to the defendant on the ground that the plaintiff lacked standing to bring the action because of a defect (cured after the lawsuit was initiated) in the chain of assignment of the note. The Second Circuit reversed, explaining:

Under New York law, a plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that, when the action was commenced, it was either the holder or assignee of the underlying note. Notably, either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident. Thus, although assignment of a mortgage without the accompanying note does not provide the assignee with a right to the debt, the delivery or assignment of a note without the accompanying mortgage transfers the debt and can confer standing on the recipient.

. . . The record admits no genuine dispute that [the plaintiff] possessed the original note, indorsed in blank, prior to commencing this action in March 2012. . . . Further, defendants failed to raise any question of fact as to whether [the plaintiff] retained possession of the note.

When a plaintiff demonstrates that upon commencement of the action it possessed a note, indorsed in blank, by way of physical delivery, New York has consistently found the plaintiff to have sufficient interest in the enforcement of the debt to support standing in a foreclosure action.

(Internal quotations and citations omitted) (emphasis added).

Posted: December 1, 2015

Suit Against State Court Judges Barred By Younger Abstention Doctrine

On November 12, 2015, the Second Circuit issued a decision in Falco v. Justices of the Matrimonial Parts of the Supreme Court of Suffolk County, 15-863-CV, affirming the dismissal of an action against New York State Supreme Court justices on Younger Abstention Doctrine grounds.

In Falco, the plaintiff was ordered by a Suffolk County matrimonial judge to pay half the cost of court-appointed counsel for his children in a divorce proceeding. The plaintiff refused and brought a Section 1983 action in the EDNY “challenging the constitutionality of the New York laws that authorize State judges to order parents to pay for attorneys appointed for their children.” The defendants moved to dismiss on Younger abstention grounds. The EDNY granted the motion. The Second Circuit affirmed.

The court began by discussing the standard for granting a motion to dismiss on Younger abstention grounds. It explained that the EDNY had erred in deciding the motion under the Second Circuit decision in Spargo v. New York State Commission on Judicial Conduct rather than the standard set forth in Sprint Communications, Inc. v. Jacobs, which the Supreme Court decided after Spargo. In Sprint, the Supreme Court “clarified that district courts should abstain from exercising jurisdiction only in three exceptional circumstances involving (1) ongoing state criminal prosecutions, (2) certain civil enforcement proceedings, and (3) civil proceedings involving certain orders uniquely in furtherance of the state courts’ ability to perform their judicial functions” and that “these three exceptional categories define Younger’s scope.”

The Second Circuit went to hold that:

[o]n de novo review, however, we independently conclude that [the plaintiff’s] case presents circumstances that qualify as “exceptional” under Sprint and that Younger abstention was therefore warranted. [The plaintiff’s] federal lawsuit implicates the way that New York courts manage their own divorce and custody proceedings—a subject in which the states have an especially strong interest. In particular, [the plaintiff] challenges the State court’s order that he pay half the fees of the attorney appointed to represent his children in the divorce proceeding. Although there is some disagreement among New York courts about whether the fees for such court-appointed counsel should be borne by the public or by the parents, . . . there is no discernible disagreement that orders relating to the selection and compensation of court-appointed counsel for children are integral to the State court’s ability to perform its judicial function in divorce and custody proceedings. The circumstances of this case therefore clearly fall within Sprint’s third category: pending State civil proceedings involving orders uniquely in furtherance of the state courts’ ability to perform their judicial functions.

(Internal quotations and citations omitted).

Posted: November 30, 2015

Court Elects Lodestar Over Percentage Method In Awarding Attorneys’ Fees In FLSA Case, While Reducing Lodestar Fee To Account For Overstated Hours And Other Timekeeping Excesses

In Marshall v. Deutsche Post DHL, No. 13-CV-1471 (E.D.N.Y. Sept. 21, 2015), Judge Dearie reduced a claim for $500,000 in attorneys’ fees under the Fair Labor Standards Act, 29 U.S.C. § 216(b), to $370,236.50. The parties settled the case for $1.5 million while plaintiffs’ motion for certification as a collective action was pending. Plaintiffs’ claim for compensatory damages was $1,650,000.

Judge Dearie applied the lodestar method, under which a presumptively reasonable fee is determined by multiplying “a reasonable hourly rate by the reasonable number of hours required by the case.” Slip op. 10. He criticized the percentage-of-settlement method for determining fees sought by plaintiffs’ counsel as dependent on one of the prevailing “amorphous multi-factor tests” that “are often outcome driven”—”‘a list of factors without a rule of decision [that] is just a chopped salad.'” Slip op. 12 (quoting In re Synthroid Mktg. Litig., 264 F.3d 712, 719 (7th Cir. 2001)). The judge explained that “[i]t is almost impossible to know what amount of time, litigation magnitude, complexity, and risk justifies a 20 percent versus 30 percent fee award,” and noted that most of the cases awarding a 33 percent fee in employment class actions are “without persuasive force” because they “cite to ‘proposed orders drafted by the class action plaintiffs’ bar'” that reflect minimal, if any, review by judges. Slip op. 12 (quoting Fujiwara v. Sushi Yasuda Ltd., 58 F. Supp. 3d 424, 436 (S.D.N.Y. 2014)).

In applying the “modified” lodestar method, in which the court considers case-specific factors at the outset to determine the reasonable hourly rate (rather than once the lodestar fee is calculated), see Slip op. 14, the Court rejected plaintiffs’ counsel’s requested hourly rates of $400 to $750 for senior partners, $350 and $400, respectively, for a junior partner and senior associate, $190 and $375 for associates, and $85-$150 for paralegals. Judge Dearie observed that prevailing rates in FLSA cases in the Eastern District are “now well established” at $300 to $400 for partners, $200 to $300 for senior associates, and $100 to $150 for junior associates, though he questioned the wisdom of “treating Brooklyn and Manhattan as separate legal markets,” as the Second Circuit does. Slip op. 15 & n.3.

Regarding the number of hours spent, the Court concluded they were “overstated,” finding that many time entries were “vague and evidence redundant work.” Slip op. 20. The Court criticized the “top heavy” approach reflected in the senior partners having spent most of their time reviewing others’ work and “conferring with each other.” Id. Judge Dearie also criticized the firm’s block billing; billing in quarter hour increments, which “tends substantially to overstate” the time spent since “many tasks require only a short time span to complete,” slip op. 21 (internal quotation marks omitted); and billing travel time at full hourly rates, even though the general rule in the District “is that travel time is compensated at one-half the amount of time billed.” Slip op. 22. To “trim the excess” from the billing entries, Judge Dearie imposed an across the board percentage cut of 10%. Slip op. 22. The resulting fee award was $370,236.50. The Court also awarded the total amount of costs requested, some $33,300. See slip op. 23.

Posted: November 25, 2015

Appeal Dismissed As Untimely Based on Unsuccessful Attempt to E-File

On October 30, 2015, the Second Circuit issued a decision in Franklin v. McHugh, No. 14‐4096‐CV, dismissing an appeal as untimely because the electronic filing of the notice of appeal, although timely attempted (and believed by counsel to have been timely made) was not successfully processed by the court’s electronic filing system.

In Franklin, the appellant’s counsel “attempted to file” a notice of appeal from an adverse decision of the EDNY “electronically through the Case Management/Electronic Case Files (“CM/ECF”) system . . . .” He “uploaded the notice of appeal and other requisite documents to the CM/ECF system on that day and paid the required $505 filing fee by accessing www.pay.gov, the federal government website for making payments to government agencies” and “received an email from www.pay.gov transmitting a receipt for his payment.” However, the CM/ECF system did not register the notice of appeal on the court docket on October 23 or, indeed, on any day from then through October 27.  Rather, on October 28, after” appellant’s counsel “learned that the District Court docket sheet (operated through CM/ECF) did not reflect the notice of appeal, his office contacted the Eastern District’s Clerk’s Office,” which told him to refile the documents, and pay the fee again,” which he did. Appellant’s counsel “was assured that the initial receipt of October 23, 2014 would stand as proof that” he “did timely file, but due to issues with the ECF system the notice of appeal did not get properly docketed.”

The respondent moved to dismiss the appeal as untimely. The Second Circuit granted the motion. It began by reciting the established rule that “[t]he timely filing of a notice of appeal in a civil case is a prerequisite to the appellate court’s jurisdiction” and “is not subject to judicially created equitable exceptions.” It went on to address whether appellant had timely filed the notice of appeal.

The court examined the local rules relating to electronic filing, explaining:

[T]the Joint Local Civil Rules of the United States District Courts for the Southern and Eastern Districts of New York direct parties serving and filing papers to follow the instructions regarding Electronic Case Filing (ECF) published on the website of each respective Court. They confirm that a document filed by electronic means in accordance with such instructions will be deemed properly filed. The Eastern District publishes its instructions for electronic filing in that court’s CM/ECF User’s Guide, available on its website.  As relevant here, it instructs:

Upon completion of an electronic filing the last screen you see is a Notice [o]f Electronic Filing screen. This screen will tell you, among other things, the document number assigned to your document; will contain your electronic file stamp; and, at the bottom of the page, will notify you that a notice will be, or will not be, electronically mailed to counsel.

Although the Eastern District’s instruction could have been more explicit, it plainly implies that an electronic filing is not complete until the last screen, called “Notice of Electronic Filing,” appears on the user’s computer.   

(Internal quotations and citations omitted). The court went on to find that:

although [the appellant’s] counsel undoubtedly intended to file a notice of appeal electronically on October 23, 2014, his efforts fell short of the mark.  His account of his attempt to file electronically a notice of appeal on October 23 suggests strongly that counsel simply overlooked the last step of the process: he appears to have followed the electronic filing process through the fee‐paying stage only, stopping upon receiving the receipt for payment.  He does not represent that he proceeded past that point or that he received the critical Notice of Electronic Filing screen; and he appears to have failed at the time to notice the shortcoming.
  
As described in the User’s Guide, only the appearance of the Notice of Electronic Filing screen would have confirmed that the notice of appeal was actually filed and docketed.  The notice of appeal therefore was not “filed” with the Eastern District’s Clerk’s Office on October 23, and our Court is not at liberty to treat it as having been filed then.  Rather, the record is plain that the notice was filed—untimely—on October 28, 2014.

(Internal quotations and citations omitted). The court suggested that the error might have been curable, but that appellant’s counsel failed to do so, explaining:

This is not to say that there might not be occasions in which a true malfunction in the CM/ECF system or in Internet operation prevents or somehow distorts a timely electronic filing.  In such an instance, the federal rules provide for the vigilant counsel a path to relief in the district courts from the otherwise unforgiving deadline that we apply here: Federal Rule of Appellate Procedure 4(a)(5)(A) empowers a district court to extend the time to file a notice of appeal if a party so moves no later than 30 days after the time prescribed by this Rule 4(a) expires and shows excusable neglect or good cause.  Thus, after [the appellant’s] counsel learned on October 28 that his October 23 notice of appeal was not in fact filed, he might have moved the District Court, within 30 days after the appeal deadline to extend the time for filing his notice of appeal.  Absent an extension, however, . . . our Court cannot accept [the appellant’s] notice of appeal as timely.  And the District Court no longer has authority to alter [the appellant’s] time to appeal.

(Internal quotations and citations omitted).

Posted: November 10, 2015

No Forfeiture of Substitute Property Without Showing That Offense Property Unrecoverable

In United States v. Espada, 10 CR 00985-1 (EDNY, Sept. 2, 2015), Judge Frederic Block explored competing claims to the pension benefits of convicted former state senator Pedro Espada, in the context of the Government’s effort to forfeit the pension. The Government sought forfeiture of the pension as “substitute assets,” that is, assets not connected to the offense for which Espada was convicted. In order to forfeit substitute assets the Government must show that, in essence, offense assets are not available for forfeiture, and once that showing is made, the court “is required to enter a preliminary order forfeiting the substitute property without regard to any third-party interests in the property.” Slip op. 7, 9. Following Judge Block’s entry of a preliminary order of forfeiture, Espada’s wife filed a petition claiming an interest in the pension as his beneficiary. Under the forfeiture statutes, title to offense assets vests in the United States upon commission of the crime, a principle known as the “relation back” provision. Slip op. 8. The relation back provision, however, “does not specify when the government acquires an interest in substitute property.” Id. (emphasis in original). Thus, the Court had to decide whose interest in the pension vested first, the Government’s or Mrs. Espada’s.

The Court concluded that under state law, Mrs. Espada’s interest vested when her beneficiary’s interest became irrevocable in January 2011. Slip op. 11. Determining when the Government’s interest vested, however, was “a question of some complexity,” since the relation back provision does not say “when the government’s interest in substitute property vests and the Second Circuit has yet to address this precise question.” Slip op. 13. The Court drew on case law surrounding pre-trial restraints of substitute assets under the forfeiture statutes, the majority of which holds that the pre-trial restraints available for use against offense property cannot be applied to substitute assets. Slip op. 14-18. The Second Circuit so held in construing the forfeiture provisions of the RICO statute—which “are identical in all material respects to those of the criminal forfeiture statute,” Slip op. 16—in United States v. Gotti, 155 F.3d 144 (2d Cir. 1998). Slip op. 17.

Based on the text of the forfeiture statute and the case law, Judge Block concluded that the Government cannot acquire an interest in substitute property until it has demonstrated that it cannot obtain offense property for forfeiture. Accordingly, the Government’s interest in Espada’s pension vested only on January 23, 2014, “when the Court entered a preliminary order forfeiting his pension as substitute property.” Slip op. 22. Since Mrs. Espada’s interest vested first, the Court granted summary judgment in Mrs. Espada’s favor, stating that it would issue an amended forfeiture order reflecting her interest in the pension. Slip op. 23.

Posted: October 27, 2015

Judge Cogan Strips Belarus Entities Of Sovereign Immunity Defense As Sanction For Discovery Abuse

In a civil case of international intrigue, Funk v. Belneftekhim a/k/a Concern Belneftekhim, 14 CV 0376 (E.D.N.Y. Oct. 20, 2015), the facts alone make for a worthy read. Plaintiffs, a New York attorney and his legal assistant, represented investors in defendants, a Belarusian oil company and its U.S. subsidiary that were connected with Belarussian government officials and several “John Does.” U.S. governmental sanctions in 2006 and 2007 against Belarus gave rise to a “commercial dispute” between plaintiffs’ clients and defendants over the status of the investments. Slip op. at 3. According to the complaint, instead of negotiating in good faith, after several meetings in New York, the defendants in 2008 “lured” plaintiffs to travel to London whereupon they drugged plaintiffs, flew them against their will to Belarus and imprisoned and tortured them for over a year. District Judge Brian M. Cogan’s opinion recounts diplomatic efforts at high levels of the U.S. government and human rights organizations to obtain plaintiffs’ release. Slip op. at 5.

In 2012, plaintiffs commenced suit in New York Supreme Court against defendants for assault and battery, false imprisonment, infliction of emotional distress and other intentional torts. Defendants did not answer and took no action with respect to the case until 2014, when they removed it to federal court on the twin bases of diversity jurisdiction and original jurisdiction for actions involving foreign states. Defendants then moved to dismiss based upon sovereign immunity defense and lack of personal jurisdiction. The Court determined that the parties would have to engage in discovery for it to resolve the issues, but defendants would not cooperate. The Court at first issued monetary sanctions against defendants and, when they failed to pay, plaintiffs moved for default judgment as a discovery sanction.

The legal issues resolved might at first blush appear to be of interest only to the litigants, but Judge Cogan grappled with several jurisdictional, pleading and discovery issues that should attract wider attention. First, Judge Cogan resolved that “a discovery sanction other than monetary fines, which defendants continue to refuse to pay, is appropriate.” Slip op. at 10. He added that “although it may eventually come that point,” id., default was too much of a sanction too soon and that, first, the Court should impose a lesser but still severe sanction of striking the sovereign immunity defense. In that way, the sanction fit the offending conduct of failure to engage in discovery on the defense. The Court vacated “per diem” monetary sanctions previously imposed on defendants on a going forward basis, but kept those in place that had already accumulated.

The striking of the sovereign immunity defense gave rise to another issue: whether the removal was untimely. 28 U.S.C. 1441(d) allows for enlargement of the usual 30-day period for removal (see section 1446) in cases of sovereign immunity “at any time for cause shown.” Plaintiff argued for remand based on the dismissal of the defense. The Court rejected remand on the grounds that, at the time of the removal, “it [was] not the case that the defense was so frivolous that [defendant] could not invoke [Section 1441(d)] and trigger the Court’s discretion to enlarge the removal period.” Slip op. at 11. The Court further noted that it continued to have diversity subject matter jurisdiction. Id.

Finally, the Court required plaintiffs to re-plead with more particularity under Fed. R. Civ. P. 9(b) their fraud claim that defendants had “lured” them from New York to London with the intent to imprison them in Belarus. It noted that “defendants’ personal jurisdiction arguments may well be dependent on the survivability of the plaintiffs’ fraud claims.” Slip op. at 13. The Court noted that “[m]erely attributing statements to [corporate] ‘defendants’ is not enough as it neither alleges the names of the speakers nor the specific positions they held for defendants.” Slip op. 15. Sympathizing that the plaintiffs could not without discovery identify several of the John Doe defendants, the Court added “if any of the John Doe defendants are responsible for the fraudulent statements, plaintiffs must at least identify what the Doe defendant said, when it was said and where it was said.” Id.

Posted: October 26, 2015

Arguments Not Raised in District Court Could Not be Raised on Appeal

On October 19, 2015, the Second Circuit issued a decision in In re: Fiorano Tile Imports, Inc., 14-3915, holding that arguments not raised in the EDNY could not be raised on appeal even though controlling circuit precedent would have precluded the court from accepting them, explaining:

It is a well-established general rule that an appellate court will not consider an issue raised for the first time on appeal. This court has discretion to consider arguments waived below, and will exercise that discretion where necessary to avoid a manifest injustice. However, the circumstances normally do not militate in favor of an exercise of discretion to address new arguments on appeal where those arguments were available to the parties below and they proffer no reason for their failure to raise the arguments below.

In the district court, [the appellant] argued only that the case was not equitably moot because the Plan had not been substantially consummated. In this Court, [the appellant] . . . primarily argues that equitable mootness should not apply because of the debtor’s lack of good faith or unclean hands. Because those arguments were not raised below, they have been forfeited.

Nor do we find it necessary to consider those arguments to prevent manifest injustice. [The appellant] argues that it could not have raised the arguments below because In re Chateaugay Corp., 10 F.3d 944 (2d Cir. 1993) made these arguments unavailable, as a matter of law, in the district court. [The appellant], however, could have argued to the district court that Chateaugay should be distinguished, or that equitable mootness should not apply for the reasons it presses on its appeal. To the extent that [the appellant] contends that the arguments would have failed in the district court because Chateaugay controls this case, the same precedent is equally binding on a panel of this Court. . . . To the extent [the appellant] seeks to preserve any argument that Chateaugay should be overruled, it could and should have presented that argument below, as it does here, in order to preserve it for review before this Court sitting en banc or before the Supreme Court.

(Internal quotations and citations omitted).

Posted: October 13, 2015

Action Dismissed on Rooker Feldman Grounds

On October 1, 2015, the Second Circuit issued a decision in Riley v. Commissioner of Finance, 14-4541-CV, affirming the EDNY’s dismissal of an action pursuant to the Rooker-Feldman doctrine.

In Riley, the plaintiff brought a “quiet-title action which sought a declaration of ownership of property despite a tax-foreclosure judgment already entered . . . in New York state court.” The EDNY dismissed the action pursuant to the Rooker-Feldman doctrine. The Second Circuit affirmed, explaining:

Federal appellate jurisdiction to reverse or modify a state-court judgment is lodged exclusively in the Supreme Court. On that principle, the Rooker-Feldman doctrine bars a party who has already had a judgment entered against her in state court from initiating a federal action complaining of injuries caused by the state-court judgment and inviting federal review and rejection of that judgment.

The district court here correctly dismissed Riley’s action pursuant to Rooker-Feldman. The complaint sought to remove six alleged clouds on Riley’s claimed title to a Brooklyn property, as well as a declaratory judgment of free-and-clear ownership. Riley’s claimed ownership of the property, however, was already fully adjudicated and rejected in the prior state-court proceedings.

(Internal quotations and citations omitted).

Posted: October 7, 2015

Appeal Dismissed As Untimely Despite Appellant’s Observance of District Court Rules

On September 16, 2015, the Second Circuit issued a decision in Weitzner v. Cynosure, Inc., 14-723-CV, dismissing an appeal that was untimely only because the appellant followed the district judge’s rules regarding when to file a motion for reconsideration.

In Weitzner, the appellants “moved for reconsideration” of the EDNY’s decision dismissing their complaint, “but, in deference to the judge’s individual calendar rule prohibiting the filing of motions until the completion of briefing, did not file the motion until after passage of the 28-day time limit prescribed by Fed. R. App. P. 4(a)(4)(A)(vi) for the motion to toll the time for filing a notice of appeal.” Rather, the appellants filed their notice of appeal when the motion for reconsideration was denied.

The respondent argued that the appeal should be dismissed because of the failure timely to file the notice of appeal. The Second Circuit agreed and dismissed the appeal, explaining that the question it had to resolve was whether the appellants’:

failure to file within 28 days be equitably excused because the motion would have been filed within 28 days had they not delayed filing so as to comply with the district judge’s Individual Rule 3(d), requiring that filing be deferred until the motion is fully briefed. We are not at liberty, however, to grant plaintiffs equitable relief from the 28-day filing requirement unless that requirement should be deemed a “claim-processing” rule rather than a “jurisdictional” rule under the terminology adopted by the Supreme Court in Bowles v. Russell, 551 U.S. 205, 213 (2007). The Supreme Court ruled in Bowles that the 30-day time limit for the filing of a notice of appeal under FRAP Rule 4(a)(1)(A) is “jurisdictional” and therefore may not be waived for equitable reasons. Bowles explained that the litmus test for a “jurisdictional” rule is its institutional provenance: time limits that are mandated by statute (as opposed to those resulting from judicial recommendation with congressional acquiescence under 28 U.S.C. § 2074) are “jurisdictional,” meaning that they are not subject to waiver or equitable exception. . . . .

The very reasoning that led the Supreme Court in Bowles to the conclusion that the 30 days allowed under FRAP Rule 4(a)(1)(A) for a notice of appeal is “jurisdictional,” and thus not subject to waiver or equitable exception, suggests that the 28 days allowed for tolling under FRAP Rule 4(a)(4)(A)(vi) should be deemed not “jurisdictional.” It follows from the reasoning of Bowles that the 28-day time limit of FRAP Rule 4(a)(4)(A)(vi), which was adopted in a federal rule but not dictated by act of Congress, should be considered a “claim-processing rule,” which is subject to equitable exception or waiver.

Having ruled that the 28-day time limit could be equitably excused, one would think that the appellants’ appeal would then be found to have been timely. But no. The Second Circuit went on to dismiss the appeal, holding:

Nevertheless, considering a number of the factual circumstances, we conclude that Plaintiffs do not qualify for such an exception. It is true that, were it not for the district judge’s Individual Rule, Plaintiffs would in all likelihood have filed their Rule 60(b) motion within 28 days following judgment, and would therefore have qualified for tolling of their time to file notice of appeal. First, however, Plaintiffs had abundant opportunity to ask leave of the court to file the motion, and did not do so. Upon serving the motion, counsel filed a letter advising the court of the motion. The letter included no request to be allowed to file the motion promptly. Following the letter, and well within the allowable 28 days, counsel met with the judge to schedule the briefing and filing of the motion for reconsideration. Plaintiffs again had ample opportunity at that conference to ask the district judge to be excused from delaying the filing until the briefing of the motion was complete, so that the judge’s individual rule would not cause Plaintiffs to forfeit their right of appeal. Instead of making such a request, Plaintiffs consented to a scheduling order under which the motion for reconsideration would not be filed until after the passage of 28 days. Furthermore, Plaintiffs delayed their briefing and filing by several months after the date recited in the scheduling order without asking for leave to do so. Because Plaintiffs did not take any reasonable measures to preserve their rights, no unique circumstance exists to justify application of an exception to the filing requirements of Appellate Rule 4(a).

The court went on to try to explain why compliance with the trial court’s rule did not warrant a different result:

The possibility that a party might forfeit a meritorious appeal because the district judge announced a personal rule prohibiting the filing of motions is deeply troubling. As discussed above, it is not so troubling in the present case, first, because counsel had every opportunity to request relief from the district judge’s prohibition and failed to do so, and, second, because this appeal appears in any event to be without merit. Nonetheless, the capacity of such a rule to result in the forfeiture of a meritorious appeal is obvious.

An individual judge’s rule prohibiting the filing of a motion until the completion of briefing seems of doubtful consistency with the requirement of Fed. R. Civ. P. 5(d)(1) that any paper after the complaint that is required to be served must be filed within a reasonable time after service. Furthermore, because important litigating rights can be forfeited by the failure to file a motion within a specified number of days, it seems clear that a judge’s adoption of a rule that prohibits reasonably prompt filing runs the risk of causing litigants to lose important litigating rights, including the right to seek on appeal to overturn an erroneous judgment.

Fifteen years ago in Camacho v. City of Yonkers, we noted that a judge’s individual rule requiring litigants to delay the filing of a motion (in that case the rule required delaying the filing until after a conference with the court) was likely to serve as a snare for the unwary litigant. We urged district courts to modify such rules so they do not lead the unwitting to believe they have preserved a right to appeal when in fact they have not. In spite of that exhortation, we have found in studying this forfeited appeal that numerous district judges in this circuit continued to publish individual rules that prohibit the filing of a motion, either until after a conference with the court, or until completion of briefing on the motion. It is a virtual certainty that such rules will continue, on occasion, to cause litigants to forfeit important rights in the good-faith, but erroneous, belief that they cannot be held to have defaulted for failure to file a motion when they are commanded by the judge not to file the motion.

While it is true that in many cases counsel will have the opportunity, as in this case, to ask the judge’s leave to file without delay, a judge is not always available to deal promptly with an emergency application. Nor is there a guarantee that all judges will reasonably grant an exception from compliance with their rules. Litigants should not be put in the position of risking to be held in contempt for violation of the court’s rules – simply for filing with the court a paper whose filing is not only permitted, but also required, by the federal rules.

We have no doubt that the purpose of such individual calendar rules is to assist district courts in dealing with significant administrative burdens. Nonetheless, we are confident that the useful objectives of such rules could be achieved in a manner that would avoid these unacceptable pitfalls.

We very strongly recommend that district courts promptly review their individual rules and practices so as to eliminate the unacceptable risk that litigants will forfeit rights because of observance of rules promulgated by individual judges, especially with regard to rules that are of questionable consistency with the governing provisions of the federal rules and statutes.

(Internal quotations and citations omitted).