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Current Developments in the US District Court for the
Eastern District of New York
Posted: August 11, 2015

Judge Weinstein Chastises New York City for Abusive Revocation of Retirement Benefits

“It is somewhat absurd for a federal district judge to have to slosh its way through the swamps of New York City retirement plans.” So lamented Judge Weinstein as he began his lengthy analysis of the plaintiff’s challenge to a decision by one of New York City’s employee pension systems to revoke the plaintiff’s eligibility for the richest category of benefits. Nonetheless, slosh the judge did in King v. New York City Employees Retirement System (NYCERS), 13 CV 4730 (E.D.N.Y. Aug. 10, 2015), and granted judgment for plaintiff—on a motion to dismiss brought by the Corporation Counsel.

The court suggested that to avoid such an exercise by federal courts, which in this case followed an Article 78 proceeding in state court, there should be “a single state cause of action” for challenging “the accuracy of the administrative decision denying a pension claim,” in which “a possible due process claim, a possible breach of contract claim, and any other challenge to the denial” should be determined “in one litigation, in one state court, by one state judge, on the merits.” Slip op. at 3-4 (emphasis in original). Such a claim, Judge Weinstein continued, “should be adjudicated, where practicable, administratively before a final adverse decision is made by NYCERS.” Id. at 3. In the wake of this decision it would be surprising if NYCERS does not take steps to create a pre-deprivation process for pensioners to challenge adverse decisions on benefits.

Plaintiff David King first worked for New York City for six years in the 1970s, and on that basis became eligible for a Tier 1 pension plan, the most generous of the four tiers of plans offered by NYCERS. By the time he returned to city government employment in the 1980s, the pension laws had been revised and he was now considered a Tier 4 employee, a formula yielding a lower retirement benefit. See id. at 8, 10, 15. He retired in August 2000. Id. at 16. Under state law, he was allowed to, and did, apply for reinstatement as a Tier 1 member, and in an October 2005 letter, NYCERS informed him that was eligible to be reinstated into Tier 1. The letter told King that once he was back in Tier 1, his reinstatement was “irrevocable,” and thereafter King made the necessary payments to become reinstated. Id. at 16, 22.

Despite that seemingly categorical pronouncement, NYCERS subsequently revoked King’s Tier 1 reinstatement. In 2008, the agency informed him by letter that he was erroneously reinstated and in fact belonged in Tier 4, based on what the agency determined was his retirement date of November 16, 2000. See id. at 24-25. The letter did not explain how NYCERS determined that this was his retirement date (other than to say that this was his “payability date”) or that its decision could be challenged in court or with NYCERS. Id. at 25, 26.

After a tortuous path that included an Article 78 proceeding, a district court dismissal, and an appeal to and remand by the Second Circuit, the case returned to the district court on plaintiff’s claims for breach of contract, violation of the due process clause, violation of the pension provision of the New York State Constitution, and violation of section 349 of New York’s General Business Law. Judge Weinstein denied NYCERS’s motion to dismiss and ruled that the agency violated plaintiffs’ due process rights, both procedural and substantive, and committed a breach of contract. The absence of a pre-deprivation hearing at which King could contest the City’s intended revocation of his Tier 1 status violated procedural due process, and the post-deprivation process of an Article 78 proceeding, which King was not informed of, was in any event insufficient because it could not have cured the procedural due process problem of the lack of a pre-deprivation hearing. See id. at 43-44. The City committed a “gross abuse of governmental authority,” and therefore violated substantive due process, by failing to identify the statutory provisions it relied on to determine King was ineligible for Tier 1 benefits or to explain how it determined King’s retirement date and refusing to inform him that he had a right to challenge the decision reducing his benefits. Id. at 44-45. Judge Weinstein granted judgment for the plaintiff and stated that he was deciding the case “on the state contract claim under supplemental jurisdiction . . . rather than on the federal due process claim,” because the latter could leave room for pain and suffering damages “greatly exceeding his contract damages,” and this “would unduly burden the city pension system.” Id. at 53.

Posted: August 10, 2015

Reimbursement of Expert Fees Not Awardable Under FLSA

On July 29, 2015, the Second Circuit issued a decision in Gortat v. Capala Bros., 14‐CV-3304, reversing a decision by the EDNY and holding that expert fees may not be awarded to a prevailing plaintiff under the Fair Labor Standards Act.

In Gortat, the EDNY awarded the plaintiffs, who had prevailed on their FLSA claims against the defendant, not only attorneys’ fees, but also reimbursement of expert fees “beyond the allowances authorized by 28 U.S.C. § 1920.” The Second Circuit reversed the award of expert fees, explaining:

The Supreme Court has made clear on multiple occasions that, absent explicit statutory authorization, a district court may not award reimbursement for expert fees beyond the allowances authorized by 28 U.S.C. § 1920, as limited by 28 U.S.C. § 1821. Unlike other statutory provisions explicitly authorizing such reimbursement, 29 U.S.C. § 216(b) of the FLSA does not expressly address awards reimbursing prevailing plaintiffs for expert fees. In particular, § 216(b)’s reference to “costs” does not constitute explicit statutory authorization to award expert fees.   [T]he Supreme Court [has] stated that the word costs is a term of art that generally does not include expert fees. In the context of a fee provision contained in the Individuals with Disabilities Education Act (“IDEA”), 20 U.S.C. 18 § 1415(i)(3)(B), that likewise referred to costs, the Supreme Court stated that the use of this term of art, rather than a term such as expenses, strongly suggests that § 1415(i)(3)(B) was not meant to be an open‐ended provision that makes participating States liable for all expenses incurred by prevailing parents in connection with an IDEA case.

[That] reasoning is applicable here.  Because 29 U.S.C. § 216(b) of the FLSA does not explicitly authorize courts to award reimbursement for expert fees, it does not permit a court to award such fees beyond the allowances recoverable pursuant to 28 U.S.C. § 1920 as limited by 28 U.S.C. § 1821.3 8   For this reason, the district court erred in awarding $10,425 in costs for expert fees pursuant to this provision.

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

Posted: August 3, 2015

Attempt to Recover Money from Thief not Covered by Fair Debt Collection Practices Act

On July 21, 2015, the Second Circuit issued a decision in Beauvoir v. Israel, 14‐CV-3794, holding that an attempt to recover money owed as a result of a theft is not covered by the Fair Debt Collection Practices Act (“FDCPA”).

In Beauvoir, the defendant was an attorney employed by the company that provided natural gas to the plaintiffs’ home. The defendant contacted the plaintiffs, accusing them of tampering with their gas meter, allowing them to use gas that was unmetered, and thus, in effect, stolen. The plaintiffs sued the defendant in the EDNY for violating the FDCPA, claiming that the defendant’s communications with them had not complied with the requirements of the FDCPA in several ways. The EDNY dismissed the plaintiffs’ claims. The Second Circuit affirmed, explaining:

The FDCPA defines a “debt” as “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.” We have held that, at a minimum, the statute contemplates that the debt has arisen as a result of the rendition of a service or purchase of property or other item of value.

Although we have not previously had occasion to address whether money owed as a result of theft constitutes a “debt” for purposes of the FDCPA, several of our sister circuits have addressed the question and unanimously held that liability deriving from theft or torts does not constitute a “debt’ within the meaning of the FDCPA. Each court reasoned that the transaction from which the obligation to pay money arises must, by definition, be one that is consensual in nature.

We join our sister circuits and hold that money owed as a result of theft is not an “obligation or alleged obligation of a consumer to pay money arising out of a transaction” and, therefore, does not constitute a “debt” for purposes of the FDCPA. Such an obligation plainly is not one that has “arisen as a result of the rendition of a service or purchase of property or other item of value.”

(Internal quotations and citations omitted).

Posted: July 16, 2015

Lead Poisoning Verdict

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.

Posted: July 15, 2015

Schlam Stone & Dolan Partner Bennette Deacy Kramer Participates in Launch of EDNY Pro Se Legal Assistance Project

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.

Posted: July 3, 2015

Criminal Trial Properly Continued Despite Defendant’s Absence

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.

Posted: May 14, 2015

Judge Scanlon Drops The Hammer On “Evasive” Non-Party Witness

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.

Posted: May 4, 2015

Court Lacks Subject Matter Jurisdiction Under Probate Exception

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.

Posted: April 24, 2015

Citation to Scientific Articles Saves Complaint from Dismissal in Class Action Alleging Marketing of Skin Care Cream Was False and Deceptive

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)).

Posted: April 17, 2015

Judge Mauskopf Denies Cross Motions For Summary Judgment Noting Dearth Of Authority Interpreting “Religious Organization” Exemption Of New York City Human Rights Law

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.