After a two-week trial before Judge Weinstein, on July 10, 2015, an Eastern District jury awarded $2 million to the plaintiffs in G.M.M. v. Kimpson, 13 CV 5059 (EDNY, July 10, 2015), a residential lead poisoning case. Plaintiffs were a mother and her minor child who rented a basement apartment in a pre-1960 building in Brooklyn that was owned at the time by the defendant. The child-plaintiff was born within a few months of moving into the apartment and was almost four years old by the time of trial. The jury found for plaintiffs on three of their four claims, including claims for violation of the New York City Childhood Lead Poisoning Prevention Act, negligence, and violation of New York Real Property Law section 235-b, which creates an implied warranty of habitability in residential leases. The jury found for the landlord on plaintiffs’ fourth claim, for violation of the Federal Residential Lead-Based Hazard Reduction Act, proof of which requires a showing that the landlord knew but failed to disclose that there was lead-based paint on the premises. The jury declined to award punitive damages.
On July 7, 2015, the United States District Court for the Eastern District of New York and the City Bar Justice Center cut the ribbon on their Federal Pro Se Legal Assistance Project (FedPro), to provide information, advice, and limited-scope legal assistance to people proceeding pro se in a variety of federal civil cases. Schlam Stone & Dolan partner Bennette Deacy Kramer is member of the Eastern District Civil Litigation Fund which is providing half of the first-year funding for the FedPro.
On June 25, 2015, the Second Circuit issued a decision in United States v. Yannai, 13-4466, finding that a trial court did not err in continuing a criminal trial without the defendant being present based on its finding that the defendant had deliberately absented himself from trial.
In Yannai, the defendant appealed to the Second Circuit the decision by the EDNY to conduct trial without his being present based on its finding that the “defendant had waived his right to be present by deliberately overdosing on prescription drugs.”
The basic facts relevant to the appeal are that “when federal agents arrived at” the defendant’s home “to arrest him,” the defendant “deliberately swallowed a large number of pills in an attempt to commit suicide” because, he later said, he “felt hopeless about his legal prospects and that he would attempt to commit suicide again rather than go to prison.” The defendant was hospitalized and later kept in detention as a suicide risk. However, as time went on, he convinced the court that he no longer was a risk and was released on bail. The case proceeded to trial. The day after the parties delivered their summations, the court was told that the defendant “had collapsed at a gas station on his way to the courthouse and was in” an emergency room, unconscious. The court dismissed the jury for the day and, after a recess, during which counsel gathered more information, the court spoke by telephone with the defendant’s psychiatrist and his primary attending physician, who told the court that the most likely cause of the defendant’s condition was an intentional overdose of prescription drugs.
The EDNY held that the defendant “had voluntarily absented himself from the” proceedings and for that reason, proceeded with trial without him. The court charged the jury without the defendant being present; he was present for the jury verdict only by telephone. The defendant was found guilty and appealed. The Second Circuit held on appeal that it was not error to continue the trial without the defendant being present, explaining:
A defendant may waive his right to be present, either expressly or by his conduct. Where the offense is not capital and the accused is not in custody, if, after the trial has begun in his presence, he voluntarily absents himself, this does not nullify what has been done or prevent the completion of the trial, but, on the contrary, operates as a waiver of his right to be present, and leaves the court free to proceed with the trial in like manner and with like effect as if he were present. This exception to the defendant’s right to be present is codified in Rule 43(c)–formerly Rule 43(b)–which provides that a defendant who was initially present at trial waives the right to be present when the defendant is voluntarily absent after the trial has begun, and that if the defendant waives the right to be present, the trial may proceed to completion, including the verdict’s return during the defendant’s absence. This rule, which allows an ongoing trial to continue when a defendant disappears, deprives the defendant of the option of gambling on an acquittal knowing that he can terminate the trial if it seems that the verdict will go against him.
A defendant who deliberately fails to appear in court does so voluntarily, and his absence can be considered a knowing waiver. Waiver of a constitutional right, however, is not to be presumed; indeed, there is a presumption against such a waiver. The district court must vigorously safeguard a criminal defendant’s right to be present.
The Second Circuit went on to analyze the trial court’s assessment of whether the defendant’s absence was voluntary, and held that the trial court did not abuse its discretion in continuing the trial in the defendant’s absence.
In Allstate Ins. Co. v. Nazarov, 11-CV-6187 (E.D.N.Y. March 25, 2015), Magistrate Judge Vera M. Scanlon dealt with the evasiveness of a non-party witness who had repeatedly come up with excuses to avoid giving deposition testimony. Plaintiffs moved for discovery from the unrepresented witness, Alena Kuturova-Pidgurskyy, concerning alleged spoliation of evidence in the case.
After Kuturova-Pidgurskyy previously failed twice to appear for depositions, the court had ordered her to produce a doctor’s note to substantiate any claimed medical condition that would prevent her from giving testimony. While she did procure a note, it was light on specifics and Judge Scanlon was unimpressed. Noting that Kuturova-Pidgurskyy had “proffered a myriad of changing excuses as to why she would be unable to appear,” the court held that the “circumstances raise serious doubts as to the legitimacy of Ms. Kuturova-Pidgurskyy’s purported diagnosis.” Id. at 4-5.
As a result, the court permitted the plaintiffs to take “limited discovery as to Ms. Kuturova-Pidgurskyy’s purported medical condition.” Id. at 6. And because of Kuturova-Pidgurskyy’s “pattern of evasiveness and avoidance of appearing for Court-ordered depositions and spoliation hearings,” Judge Scanlon ordered Kuturova-Pidgurskyy to appear in person at the courthouse—under pain of monetary sanctions or her possible arrest for failure to comply—for questioning regarding her condition.
On April 14, 2015, the Second Circuit issued a decision in Mercer v. Bank of N.Y. Mellon, 14-2955-CV, affirming the dismissal of an action for lack of subject matter jurisdiction under the probate exception.
In Mercer, the EDNY dismissed the plaintiffs’ complaint based on the probate exception to federal diversity jurisdiction because the plaintiffs’ claims related to property at issue in “ongoing proceedings in the New York Surrogate’s Court in Suffolk County.” The Second Circuit affirmed, explaining:
The probate exception is an historical aspect of federal jurisdiction that holds probate matters are excepted from the scope of federal diversity jurisdiction. The Supreme Court has clarified that the probate exception reserves to state probate courts the probate or annulment of a will and the administration of a decedent’s estate; it also precludes federal courts from endeavoring to dispose of property that is in the custody of a state probate court. But it does not bar federal courts from adjudicating matters outside those confines and otherwise within federal jurisdiction. We agree with the District Court that Plaintiffs’ claims are barred by the probate exception because they seek to have the District Court control property that is already under the supervisory control of the Surrogate’s Court.
The prohibition against endeavoring to dispose of property that is in the custody of a state probate court is, the Supreme Court has explained, essentially a reiteration of the general principle that, when one court is exercising in rem jurisdiction over a res, a second court will not assume in rem jurisdiction over the same res. This general principle applies equally when, as in this case, the res in question is not property of an estate but property of a trust.
Moreover, it applies also to jurisdiction that is quasi in rem: it is not restricted to cases where property has been actually seized under judicial process before a second suit is instituted, but applies as well where suits are brought to marshal assets, administer trusts, or liquidate estates, and in suits of a similar nature where, to give effect to its jurisdiction, the court must control the property.
(Internal quotations and citations omitted). Applying this law to the facts, the Second Circuit concluded, as had the EDNY, that the exception applied because issues relating to trust property had been and were being litigated before the Suffolk County Surrogate’s Court.
In a March 31, 2015 order in Tomasino v. The Estee Lauder Companies, Inc., et al., 13-CV-4692 (EDNY March 31, 2015), Judge Edward R. Korman declined to dismiss a purported class action alleging that Estee Lauder’s marketing of a line of nighttime facial creams was false and deceptive under New York General Business Law sections 349 and 350.
In a prior order, Judge Korman granted plaintiff leave to replead these claims while dismissing with prejudice plaintiff’s additional claims for breach of express warranty, breach of implied warranty and unjust enrichment. The “crux of the issue” on defendants’ motion to dismiss the amended complaint was whether Tomasino had pled “with sufficient plausibility” her claim that the night creams “‘do not and cannot live up to’ the promise to ‘repair past visible DNA damage’ as a means of making skin look younger.” Slip Op. 7. In DiMuro v. Clinique Laboratories, LLC, 572 Fed. Appx. 27 (2d Cir. 2014), the Second Circuit affirmed dismissal of a similar class action complaint that failed, among other things, to identify the creams’ specific ingredients and failed to allege “that these ingredients lack the ability to improve skin appearance.” Id. at *31.
In an effort to meet the “threshold showing suggested by” DiMuro, the amended complaint included a list of the products’ ingredients. But Judge Korman explained that such a list, even if coupled with “assertions that each ingredient is incapable of repairing DNA or permanently reducing wrinkles,” would be insufficient to make the claims plausible, because it would be “no less conclusory than claiming that the product as a whole does not work.” Slip Op. 8. In the amended complaint, however, Plaintiff also explained the potential effects of the night creams’ ingredients and why those ingredients cannot deliver the promised performance, and that explanation was “punctuated by occasional citations to scientific studies” that “arguably” supported plaintiff’s claim that the creams cannot repair damaged DNA. Id. The court concluded that this provided enough factual support “to ‘nudge [her] claims across the line from conceivable to plausible.'” Id. (quoting Bell Atlantic Corp. v. Twombley, 550 U.S. 544, 570 (2007)).
In Zhang v. Jenzabar, Inc., et al., 12-CV-2988 (E.D.N.Y. March 30, 2015), Judge Roslynn R. Mauskopf denied cross-motions for summary judgment, concluding that issues of fact surrounded the question whether defendants could avoid liability for employment discrimination under the “religious organization” exemption of the New York City Human Rights Law (NYCHRL). Plaintiff alleged she was fired for refusing to abide by the Christian religious practices mandated by her boss, defendant Ling Chai. Plaintiff’s job was to manage programs in China run by defendant All Girls Allowed, Inc. (“AGA”), which was started by Chai and described its mission as seeking “to end infanticide ‘through education, persuasion, prayer and legal defense and by partnership with grassroots organizations in China and around the world.’” Slip op. 4. After Zhang accepted the employment, Chai encouraged Zhang to go to church more and asked her to attend AGA’s daily prayer meetings. Later, Zhang said she no longer wanted to participate in prayer meetings and declined to adopt certain religious statements or participate in other religious practices, including corporate prayer. She was eventually fired.
Defendants contended that AGA was a “religious organization” within the meaning of the NYCHL and thus could not be liable for firing Zhang even if she was fired for religion-related reasons. Judge Mauskopf noted the “dearth of case law” interpreting the religious organizations exemption of the NYCHL, but declined to look for guidance to analogous state and federal employment discrimination standards because “those statutes are all structured differently and their scope and focus have been construed differently.” Slip op. 17. She concluded that whatever legal test could be applied to determine “whether AGA qualifies as a religious organization under the NYCHRL,” slip op. 18, neither side was entitled to summary judgment due to disputes of fact, a paucity of relevant factual details in critical areas, and credibility issues.
On March 11, 2015, the Second Circuit issued a decision in Boies, Schiller & Flexner LLP v. Host Hotels & Resorts, Inc., 14-2949, affirming an EDNY decision sanctioning a law firm for refusing voluntarily to withdraw from representing a litigant despite “a clear conflict of interest” based on its “earlier, substantially related representation of” an opposing party.
In Boies, Schiller & Flexner, the defendant demanded that a law firm withdraw from representing an opposing party because the law firm previously had represented the defendant. The law firm refused. The defendant moved to disqualify and sanction the law firm. The EDNY granted the motion. The Second Circuit affirmed, explaining:
The district court’s findings and review of the record support its conclusion that [the law firm] acted “without a colorable basis” for maintaining it had no conflict of interest until it was faced with the motion to disqualify. The court’s finding that [the law firm] provided to its outside ethics counsel an unreasonably narrow description of its work for [the defendant] is itself sufficiently indicative of bad faith. And the court made other factual findings, including that: [the law firm] accepted the . . . engagement without reviewing its billing records or files pertaining to its prior representation of Host; represented to Host and its outside counsel that it had no conflict before completing its review of its files; filed the . . . complaint before completing its internal document review and production of documents to [the defendant]; and, willfully refused to recognize the obvious conflict.
In sum, contrary to [the law firm]’s argument, the court concluded [the law firm]’s conduct was far, far worse than mere negligence.
(Internal quotations and citations omitted). Because motions to disqualify often are tactical, it is easy to understand why the law firm resisted disqualification. Still, we are all under an independent obligation to assess whether a conflict exists and, where the conflict becomes apparent, to withdraw.
On March 2, 2015, the Second Circuit issued a decision in United States v. Houston, 13-3594-CR, holding that the EDNY erred by not ordering a competency hearing for a criminal defendant.
In Houston, the defendant was sent to a federal medical center for a psychiatric evaluation, which concluded that he was competent to stand trial. However, the defendant’s counsel subsequently raised again the issue of the defendant’s competence, telling the court that he was unable “to aid in his own defense” explaining that the defendant “had engaged in a 30, 35-minute rant,” which counsel described as “almost babbling.” For those reasons, the defendant’s counsel asked that the court order a second competency hearing. The court denied the request because the defendant refused to waive his speedy trial right.
The Second Circuit reversed, explaining:
[A]lthough the district court had already concluded that Houston was competent to stand trial, [its] prior finding [that Houston was competent] did not relieve the district court of its continuing obligation to ensure Houston’s competency. A trial court must always be alert to circumstances suggesting a change that would render the accused unable to meet the standards of competence to stand trial. This is particularly true here where the district court did not make its prior competency determination based on a full competency hearing, but instead relied solely on the written report of the psychiatrists who examined Houston at Federal Medical Center Butner. Because this report was never subjected to critical scrutiny at a competency hearing, it deserves less weight than it might otherwise be entitled to in deciding whether there was new reason to doubt Houston’s competency.
Finally, we place significant weight on the expressed views of [Houston’s counsel] that Houston did not have a full grasp on reality. The opinion of a defendant’s attorney as to his ability to understand the nature of the proceedings and to cooperate in the preparation of his
defense, is indeed significant and probative. [The defendant’s counsel’s] views are particularly probative here because they so closely paralleled the very similar concerns previously expressed by Leonard Lato, Houston’s first appointed attorney.
(Internal quotations and citations omitted).
In Shukla v. Sharma, 07 CV 2972 (E.D.N.Y. Dec. 24, 2014), Chief Judge Carol Bagley Amon addressed some thorny issues related to when, and at what rate, post-judgment interest accrues in a case with an intervening appeal to the Second Circuit.
In Shukla, the underlying action involved allegations that the plaintiff was “trafficked” to the United States under false pretenses to serve as a Hindu priest; this decision related to a fee dispute between defendants and their counsel.
The Court had originally awarded attorneys’ fees to defendants’ trial counsel and against defendants in January 2013. Defendants appealed that order. The Second Circuit largely affirmed, but reversed a portion of the judgment that awarded defense counsel “fees on fees” associated with litigating the fee dispute because the fee-shifting provision in counsel’s engagement letter on this topic was not mutual.
First, the Court determined that post-judgment interest should be begin to run from the date of the original award of attorneys’ fees, in January 2013, because that was when the judgment was “ascertained in a meaningful way” given the Second Circuit’s minor modification.
Next, the Court tackled when post-judgment interest should stop accruing, given that defendants had paid the sum to the court clerk pending appeal. The funds deposited with the court clerk did not accrue interest because, under the Eastern District’s local rules, a court order is required before the clerk may deposit funds in an interest-bearing account. Given that the funds defendants posted as a bond with the clerk did not accrue interest, the Court ruled that defendants would be liable for post-judgment interest until those funds were released to defense counsel by the clerk.
Last, the Court set the post-judgment interest rate. The engagement letter provided for interest accruing at 2% every month until the fees were paid. But because the contract did not specifically provide that this rate would apply to post-judgment interest, such interest was applied at the federal statutory rate.