The American Muslim community's fears about stereotyping lie at the center of a recent landmark court case, Tabbaa v. Chertoff, involving 40 Muslims who were detained at the Canada – U.S. border when they tried to return from a conference. Exploring this case as part of its coverage of the atmosphere surrounding current Congressional hearings on the radicalization of Muslims, NPR's Dina Temple-Raston interviewed Schlam Stone & Dolan partner Mike Battle. Mr. Battle, who was United States Attorney for the Western District of New York, served successfully as prosecutor when the U.S. brought its landmark case against the Lackawanna Six in 2002. He has followed with interest the evolution of law and government policies affecting persons swept up in the politics of anti-terrorism. The Tabbaa case was brought by an American citizen and Muslim who crossed the border in December 2004 to attend a conference in Toronto. When he attempted to get home, Mr. Tabbaa and 39 others were detained at the border by U.S. border authorities and, they assert, illegally mistreated. Mr. Tabbaa lost the case and an appeal, but further related legal action, backed by the ACLU, is pending.
After an eight-day hearing, Schlam Stone & Dolan Partner Michael Battle, who had been appointed by the Mayor of Buffalo to preside over a removal hearing for Buffalo's Commissioner of Human Resources, issued his report and recommendation to the Mayor. Mr. Battle's report found that payment of insurance premiums on behalf of 170 dead retirees, at a cost of $839,688.18, constituted sufficient cause for firing the Commissioner. The Mayor adopted Mr. Battle's recommendation completely, and removed the Commissioner from her position. Schlam Stone & Dolan Counsel Vitali S. Rosenfeld and Schlam Stone & Dolan Associate David G. Abrams assisted Mr. Battle in this matter.
Three Schlam Stone & Dolan victories were in the top ten New York business divorce cases of 2010, according to www.nybusinessdivorce.com, a respected web blog on New York law regarding disputes between business owners. These were: (1) a New York County Commercial Division case where the judge dismissed a lawsuit brought by a former managing member of a New York LLC, finding as a matter of law that the plaintiff had been properly expelled for cause; (2) an Appellate Division Second Department case holding that courts may not expel a New York LLC member unless language in the LLC's operating agreement permits; and (3) an Appellate Division First Department order granting leave to appeal to the Court of Appeals on issues relating to the fiduciary duties of LLC organizers, and to New York's Martin Act.
When AXA Mediterranean Holding, a French unit of Spain's AXA SA, bought a Mexican insurance conglomerate, Seguros ING SA de CV (which it renamed AXA Seguros), from Dutch ING Groep's ING Insurance International for $1.5 billion in 2008 it didn't expect anything to go wrong. Nevertheless, the stock purchase agreement covering the deal prudently included clauses to protect the buyer . . . just in case. As things turned out, the just in case became a legal case when AXA sold one of Seguros' constituent businesses, the bond company AXA Fianzas (formerly ING Fianzas) to Afianzadora Sofimex. As the sale went forward, due diligence conducted by Sofimex exposed substantial misrepresentations by ING regarding Fianzas. In 2007, ING stated that Fianzas had been valued at $118 and $16
In November 2010, Schlam Stone & Dolan filed a lawsuit on behalf of AXA Mediterranean Holding, a Spanish unit of France's AXA SA, against ING Insurance International B.V. The lawsuit arises from a transaction that closed in July 2008 pursuant to which ING sold AXA several Mexican companies, including a Mexican insurance company and a Mexican bond company and alleges breaches by ING of representations and warranties ING provided to AXA with respect to the financial condition of those companies. The complaint is available here.
Schlam Stone & Dolan Partner Michael Battle (former United States Attorney and Buffalo-area trial judge) has been appointed by the City of Buffalo and Buffalo Mayor Byron Brown to preside over a hearing in which the City is seeking to remove a high-level Commissioner. The Mayor wants to remove his Commissioner of Human Resources for allegedly costing the City close to a million dollars in insurance premiums for dead people that were inadvertently listed on the City's rolls. Mr. Battle – assisted by Schlam Stone & Dolan Associate David G. Abrams – was asked by the Mayor to act as the Hearing Officer, and to present the City with a complete factual report and recommendation of penalty. This unusual, highly-publicized hearing lasted eight separate days, and was a regular fixture on the Buffalo evening news. The following articles (which will open in a new window) highlight a portion of this coverage.
Schlam Stone & Dolan is counsel for appellants in the first two commercial cases in which the Appellate Division First Department granted leave to appeal to the New York Court of Appeals during the 2010-11 Term. Both cases involve important issues of LLC fiduciary duties. In the first case, Roni v. Arfa, the Court of Appeals will be asked to decide: (a) whether the organizer of a New York LLC owes a fiduciary duty as a matter of law to the prosective investors he solicits notwithstanding the absence of any trust or confidence being reposed in the organizer by the prosective investors or any superior skill or expertise on the part of the organizer compared to the prosective investors, and (b) whether the anti-fraud provision of New York's Martin Act applies only to public securities offerings and not to private securities offerings. In the second case, Arfa v. Zamir, the Court of Appeals will be asked to decide whether a release given by a fiduciary of a New York LLC is void where the fiduciary failed to disclose material facts to the releasor concerning the released conduct. In each of these two cases, Schlam Stone & Dolan partner David Katz and of-counsel attorney Michael Marcus succeeded in convincing the Appellate Divsion to certify these questions to the Court of Appeals for review. Their success in each case is discussed on the influential web blog nybusinessdivorce.com.
Sometimes the law of New York treats an LLC like a corporation, sometimes like a partnership, and sometimes like a unique entity. In related cases Roni LLC v. Arfa and Arfa v. Zamir the lower court rulings, subsequently appealed in the Appelate Division First Department explored various aspects of a real estate venture gone arwy, one in which the structure of the central entity, a New York LLC, has fostered ambiguities that present the courts with daunting challenges. Rachel L. Arfa, a central party in the two cases, has selected Schlam Stone & Dolan partner David Katz and of-counsel attorney Michael Marcus as appellate counsel. They have been able to appeal a lower court defeat, achieve some initial appelate gains, and subsequently get the New York Court of Appeals to hear the matters.
In the action, plaintiffs claimed a common-law right to expel defendant Winston Chiu, represented by Schlam Stone & Dolan partner Jeffrey Eilender and associate Samuel Butt, from his position as a member of an LLC. In March, 2010, the Second Department upheld a trial court ruling denying that plaintiffs had such a right at common law. Commentators are describing the Second Department’s ruling as representing the end of "the era of freewheeling judicial remedies" in LLC breakup cases.
On January 12, 2010, Schlam Stone & Dolan partner Richard H. Dolan, representing the Governor, the Legislature and the State of New York, argued before the New York Court of Appeals on behalf of the defendants in three judicial pay cases. The three cases, which are being followed around the country, each involve plaintiffs who filed suit seeking to force New York State to give pay raises to the state judiciary, and were consolidated by the Court of Appeals for a joint argument, which lasted two hours.