This column reports on several significant, representative decisions handed down recently in the U.S. District Court for the Eastern District of New York. Magistrate Judge Joan M. Azrack prohibited the government from using a pen register to obtain post-cut-through dialed digits. Judge Arthur D. Spatt set fees for former counsel in a personal injury action involving a car accident, and directed that those fees be paid by the clients. Judge Spatt also apportioned liability and assessed damages in a maritime collision. Judge Denis R. Hurley rejected defendants’ jurisdictional argument under the Rooker-Feldman doctrine, but found plaintiff’s claim to be barred in any event by res judicata.
Magistrate Judge Azrack denied the government’s application to install and use a pen register under the Pen/Trap Statute, 18 U.S.C. §§3121-3127 in In the Matter of Applications of the United States of America for Orders (1) Authorizing the Use of Pen Registers and Trap and Trace Devices and (2) Authorizing Release of Subscriber Information, 06 Misc. 547, 561, 120 (EDNY, Sept. 18, 2007). Deciding a matter of first impression in this Circuit, the court held that the government’s request for access to all post-cut-through dialed digits (PCTDD) is not clearly authorized by the Pen/Trap Statute, and that granting the request would violate the Fourth Amendment.
A pen register records all digits dialed from a particular telephone. In its application the government sought access to all dialed digits, including PCTDD, even if they contain the contents of a telephone communication.
In 1979, the U.S. Supreme Court upheld the installation and use of pen registers on the ground that their use did not reveal the content of any communication and thus did not constitute a search, in Smith v. Mayland, 442 U.S. 735 (1979). Since then, technologies for phone use have expanded to the point where PCTDD – the numbers dialed from a telephone after the 10-digit call is ‘cut through’ – sometimes transmit information such as bank account, Social Security and prescription numbers. To this extent, PCTDD contain the ‘contents’ of communication.
Unlike the ‘probable cause’ standard required in Title III wiretap applications, to obtain a pen register the government needs only to certify that the information to be obtained is ‘relevant’ to a criminal investigation. The Pen/Trap Statute has occasionally been amended, most recently by the Patriot Act. Though modifying the definition of a pen register to accommodate new technologies, the revised statute still explicitly provides that the information obtained ‘shall not include the contents of any communication.’ 18 U.S.C. §3127.
The twist comes with the ‘limitation’ in §3121(c), which states that the agency authorized to install a pen register ‘shall use technology reasonably available to it that restricts the recoding or decoding of electronic impulses to the dialing, routing, addressing, and signaling information utilized in the transmitting of wire or electronic communications so as to not include the contents of any wire or electronic communications.’
The government argued here that the ‘limitation’ provision requires merely the use of ‘reasonably available technology’ to prevent the collection of ‘content’; that no technology exists to separate all PCTDD containing content from that containing no content without giving the government access to content (a premise that the court accepted); and that any content obtained for a pen register is suppressible (the ‘minimization theory’).
While acknowledging some ambiguity in the statute, Judge Azrack rejected the government’s interpretation. First, the legislative history showed a strong recognition that collecting content with a pen register is unconstitutional. Second, the court’s construction was reasonable and avoided any declaration of constitutional infirmity. Third, the government’s argument created serious Fourth Amendment problems. As the court observed, PCTDD can ‘encompass the kind of information that an individual wants and reasonably expects to be kept private.’ Slip op. 18.
Nor could these problems be swept aside by the government’s ‘assumption of risk’ theory. PCTDD are not kept in the ‘ordinary course of business.’ In any event, the critical distinction remains ‘between communications content and non-content.’ Slip op. 2-21.
In short, the evolution of technology over the decades has created a level of intrusion disproportionate to the minimal showing required in the instant pen register application. While ‘sympathetic’ to the government’s plea of necessity, the court noted that this was an issue for Congress to resolve. Until the government can separate PTCDD without content from PTCDD with content, the Fourth Amendment bars the kind of access sought in this case. Slip op. 23-24.
Fee Agreement: Personal Injury
In Greenberg v. Cross Island Industries, Inc., 05 CV 6026 (EDNY, Oct. 16, 2007), Judge Spatt, awarding fees to former counsel in a personal injury case, directed that those fees be paid by the clients rather than from the contingency fee going to successor counsel.
Plaintiff Irene Greenberg was injured when a truck hit a car in which she was riding. She and her husband retained the Alpert firm to represent them in an action for personal injury and loss of services. Later, plaintiffs discharged the Alpert firm and retained the Gair firm. Each firm had an agreement with the clients for a contingency fee of 25 percent.
The case was settled for $1.5 million. Pursuant to the retainer the fee for the Gair firm was $369,614, plus disbursements.
The Gair firm asserted here that the Alpert firm was dismissed for cause and entitled to no fee. Applying New York law, Judge Spatt saw no merit to this argument and found it likely that plaintiff’s husband, a lawyer, simply disagreed with the Alpert firm about how the case should proceed. Moreover, the letters discharging former counsel did not refer to ’cause.’ Slip op. 3-9.
Looking at the amount of work done by each firm, the court awarded an amount equal to five percent of the fee to the Alpert firm. The Gair firm’s retainer agreement and statement filed with the Office of Court Administration showed that, in retaining new counsel, the clients agreed to be ‘solely responsible for any fees awarded to the outgoing Attorneys.’ Judge Spatt therefore directed that the Alpert firm’s fee be paid by the client, rather than out of the Gair firm’s fee.
In In the Matter of the Complaint of Delmarine, Inc., as Owner of a Certain 1973 18′ Signa Bowrider for Exoneration From or Limitation of Liability, 03 CV 6206 (EDNY, Oct. 24, 2007), Judge Spatt determined attribution of liability for a maritime collision and damages due to a passenger.
In June 2003, two motor boats collided in the Great South Bay of Long Island, resulting in serious injuries to Linda Fainer, a passenger in a boat driven by her husband Gregory. Linda and Gregory filed an action in Supreme Court, Nassau County. Delmarine Inc., the owner of the other boat, commenced a maritime claim in federal court to limit its liability under the Shipowners’ Liability Act, 46 App. U.S.C. §181 et seq. (now 46 U.S.C. §30503 et seq.).
Mr. Gregory, an experienced boater, was traveling on a clear day at about 20 to 25 miles an hour eastbound in the Great South Bay toward the Amityville cut. He had the right of way on the port side, but had to cede to boats ahead and on his starboard side. At the time of the accident, he was paying attention to boats ahead and on his right side. Michael Starito, an experienced boater with a Coast Guard license, was testing the boat owned by Delmarine and heading south. The Delmarine boat hit the Fainer boat on its port side in the rear. Neither driver saw the other boat before the accident. Linda suffered a concussion, multiple rib fractures, air and blood in the chest wall, and fracture of the left clavicle.
‘This case,’ Judge Spatt noted, ‘is controlled by admiralty law because the collision occurred in navigable waters and had a substantial connection to traditional maritime activities.’ Slip op. 13. Liability in the case would be apportioned between Mr. Gregory and Mr. Starito, because Linda was a passenger and not the operator of the boat. The applicable navigation rules require that each vessel must maintain a proper look-out; and that when two power boats are crossing, ‘the vessel which has the other on her starboard side shall keep out of the way and shall, if the circumstances of the case admit, avoid crossing ahead of the other vessel.’
In the court’s view (a) Mr. Starito was negligent in that he failed to keep a proper lookout and to keep out of the way of the Fainer boat, permitting his boat to crash into the port side of that vessel; (b) and Mr. Gregory’s failure to look to port at all was a limited departure from his duty to exercise reasonable care. The court apportioned fault at 85 percent for Mr. Starito and 15 percent for Mr. Gregory.
Although Linda had made a fairly good recovery, she was left with a number of serious residual injuries. Slip op. 41. Judge Spatt awarded her $750,000 for past pain and suffering, $500,000 for future pain and suffering to be reduced to present value, and a sum for past medical expenses. Given the speculative evidence, the court made no award for past and future lost wages. Judge Spatt declined to award prejudgment interest for these personal injuries.
Rooker-Feldman And Res Judicata
In Marshall v. Grant, 06 CV 5358 (EDNY, Nov. 6, 2007), Judge Hurley granted defendants’ motion to dismiss on the ground that the action was barred by res judicata. The court rejected defendants’ argument that it lacked subject matter jurisdiction under the Rooker-Feldman doctrine.
Plaintiff asserted that his ex-wife, her mother and sister gave perjured testimony during his matrimonial trial leading to the inclusion of only about 50 percent of a family company as marital assets, damaging him in the amount of $451,782. Plaintiff asserted claims (1) arising from the perjury, (2) for breach of a confidential relationship and fraudulent concealment, (3) for breach of fiduciary duty and (4) for unjust enrichment.
As Judge Hurley observed, Bell Atlantic v. Twombly, 127 S.Ct. 1955 (2007), and its U.S. Court of Appeals for the Second Circuit progeny, Iqbal v. Hasty, 490 F.3d 143 (2d Cir. 2007), require a pleader to provide sufficient factual allegations to render claims plausible rather than speculative.
In finding that this action was not barred by the state-court judgment in the matrimonial action, Judge Hurley applied the Rooker-Feldman doctrine. Plaintiff lost in state court and the state-court judgment was issued before the federal court action was commenced, satisfying the first and fourth requirements for application of the doctrine to bar suit. Concerning the third factor, plaintiff did seek review and rejection of the state-court judgment. In the instant case, however, he did not claim that his injuries arose from the state-court judgment; instead, he claimed that the cause of his injury was defendants’ alleged perjury, fraud and misrepresentations. Slip op. 8. Accordingly, the second factor was not met, and the court did not lack subject matter jurisdiction.
On the other hand, plaintiff was barred by res judicata from relitigating his claims. The first action involved an adjudication on the merits with a trial and judgment. Plaintiff and his ex-wife were both parties in the matrimonial action, and the other defendants are in privity with his ex-wife. Slip op. 9-11. Finally, plaintiff’s allegations that the state-court judgment was obtained by perjury and misrepresentations should have been raised by motion to vacate the state-court judgment and not by collaterally attacking the judgment through a federal court action.
Harvey M. Stone and Richard H. Dolan are partners at Schlam Stone & Dolan. Bennette D. Kramer, a partner of the firm, assisted in the preparation of the article.
[This article is reprinted with permission from the December 14, 2007, issue of the New York Law Journal. Copyright © 2007 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]