November 12, 2014

New York Law Journal / Written by: Harvey M. Stone, Peter R. Schlam

This column reports on several significant, representative decisions handed down recently in the U.S. District Court for the Eastern District of New York. Topics include the following: peremptory challenges, the Social Options Rehabilitation Service program, compelled psychological testing and pension-plan withdrawal liability.

Peremptory Challenges

In Overton v. Newton, 98 CV 5507 (EDNY, June 11, 2001), Judge Frederic Block, granting a habeas petition (28 U.S.C. 2254), held that, on a statistical analysis, the state prosecutor's use of peremptory challenges against black potential jurors in a 1995 drug case was enough for a prima facie showing of race-based exclusions. Thus, under Batson v. Kentucky, 476 U.S. 79 (1986), petitioner was entitled to vacatur of his conviction.

Petitioner, who is black, was convicted by a jury in Queens County Supreme Court. For jury selection the trial court had employed the jury box system, requiring peremptory challenges to be exercised in rounds. Sixteen prospective jurors were called from the venire for the first round. The prosecutor exercised four peremptory challenges. No contemporaneous record was made of the races of the challenged jurors or the seated jurors. Sixteen prospective jurors were also called for the second round. The prosecutor exercised six peremptory challenges in that round. Defense counsel then raised a Batson issue. Apparently, the prosecutor by that point had used seven of 10 peremptory challenges against blacks. Defense counsel argued that this made out a prima facie showing under Batson, which would require the prosecutor to come forward with a race-neutral explanation for his actions. The prosecutor responded that he had used one of his challenges in the second round to strike a white person and, in any event, three of the eight jurors thus far selected were black. The trial judge summarily rejected the Batson claim, stating that no prima facie case had been established.

Following a third round, the trial judge made findings. Essentially, those findings indicated that, in the second round, six blacks were in the jury box. One was struck for cause. The prosecutor then used five of his six challenges to strike the remaining black potential jurors. Judge Block observed, "the prosecutor used his 10 peremptory challenges to strike 70 percent of the qualified blacks in the first two rounds, including all five qualified blacks in the second round."

The prosecutor's use of 70 percent of his peremptory challenges against blacks before the Batson issue was raised is significant. Indeed, "[t]his was statistically more than twice the 34 percent of blacks comprising the 32 venire persons whose races were known (11 out of 32)." Slip op. 12. In fact, Judge Block noted, there are "multiple sets of statistics" here to support a prima facie showing of discrimination.

Judge Block also concluded that petitioner's showing met the requirements of the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) for habeas relief. Slip op. 13-17. In Judge Block's view the state trial court's summary rejection of any prima facie inference of discrimination was an "unreasonable application of clearly established [U.S.] Supreme Court law to the facts." The trial court should therefore have "required the prosecutor to proffer race-neutral reasons for his strikes against the black venire persons." Slip op. 17.

SORS Program

In United States v. K, 00 CR 951 (EDNY, May 31, 2001), Judge Jack B. Weinstein held that the court could defer sentence of a defendant to permit him to complete the Special Options Rehabilitation Service (SORS) Program, an innovative remediation procedure administered by the Eastern District's Pretrial Service officers. Defendant's continued participation in the program, Judge Weinstein said, would let the young, nonviolent offender, whose physical and mental fragility renders him susceptible to abuse in prison, time to demonstrate rehabilitation and will enable the court to evaluate rehabilitation before imposing sentence. Slip op. 4. Defendant "K" is a 21-year-old male born in mainland China who, at age four, immigrated to the U.S. with his family. A severe learning disability hampered his progress at school, and he began experimenting with drugs at a young age. In April 2000, when K was unemployed and drug-dependent, he was contacted by government informants masquerading as prospective buyers of Ecstasy. K supplied them with 1,000 tablets. In December 2000 K pled guilty to this offense. Under the Sentencing Guidelines his estimated incarceration was 12 to 18 months.

The SORS program provides courts with sentencing alternatives for "young, nonviolent offenders whose backgrounds demonstrate a high probability of rehabilitation under proper guidance." Slip op. 10. K met the requirements of the SORS program. Extensively analyzing the history and purpose of rehabilitation as a sentencing goal and the problems of prison overcrowding (slip op. 12-29), Judge Weinstein discussed the reasons why the SORS program is appropriate under the Guidelines (slip op. 29-36). As the court concluded, "[r] ehabilitation outside of the harmful prison environment is increasingly the only practicable way of dealing sensibly with individuals like K, who are still ethically and behaviorally malleable." Slip op. 45. Judge Weinstein intimated that there could well be possible grounds for ultimately departing downward from the Guideline range here, given the probability of rehabilitation, K's physical and emotional vulnerability and certain extraordinary family circumstances. The court granted a one-year postponement of sentencing. Slip op. 50.

Psychological Testing

In Almantina Caban, an infant, by her mother and natural guardian, Carmen Crespo v. 600 E. 21st Street Co., 99 CV 8218 (EDNY, May 17, 2001), Magistrate Judge Roanne L. Mann denied defendants' application to require Ms. Crespo, a nonparty, to submit to psychological testing.

Plaintiff, born in 1989, was diagnosed with severe lead poisoning. In 1999, Ms. Crespo, as plaintiff's mother and natural guardian, filed the instant complaint, based on diversity jurisdiction, against plaintiff's prior landlords. The complaint alleged that plaintiff became poisoned from exposure to chipping lead paint while she resided in apartments negligently managed by defendants. The lead exposure, plaintiff claimed, caused mild retardation, a low IQ, poor school performance and other problems.

During discovery plaintiff objected to defendants' request that Ms. Crespo, as the infant plaintiff's mother, submit to testing by a psychologist. Defendants argued that the test results might tend (1) to disprove any causal connection between the child's exposure to lead paint and her cognitive defects, and (2) to minimize the award of future damages by showing that, even apart from the exposure to lead, she would not likely have succeeded in academic and professional settings.

The issue of compelled testing, the court noted, was governed in this diversity action by Fed. R. Civ. P. 35(a), which provides in relevant part:

When the mental or physical condition (including the blood group) of a party or of a person in the custody or under the legal control of a party, is in controversy, the court in which the action is pending may order the party to submit to a physical or mental examination by a suitable licensed or certified examiner or to produce for examination the person in the party's custody or legal control. The order may be made only on motion for good cause shown. . . .

Though the parties analyzed the issue only in terms of "relevance," there was a threshold question that had to be resolved whether a guardian of an infant-plaintiff, suing in her representative capacity, is a "party" or "person in the custody or under the legal control of a party" within the meaning of Rule 35(a). Because Ms. Crespo falls into neither category, the court had no authority to order her to undergo the requested testing.

Nominal Party

As Magistrate Judge Mann observed, Ms. Crespo, as a representative of her daughter, is a nominal party only. The few cases that have addressed the issue "have almost uniformly held that a federal court lacks the authority under Rule 35(a) to order a parent, suing on behalf of an infant plaintiff, to submit to an examination." Slip op. 7. These holdings, Magistrate Judge Mann explained, are consistent with the language and history of Rule 35. Slip op. 8-10. Nor, the court concluded, does it have "inherent authority," beyond Rule 35, to order a nonparty to submit to physical or psychological examination.

Defendants also requested an order compelling Ms. Crespo to authorize the release of academic records of the infant-plaintiff's siblings over whom Ms. Crespo retains legal custody. The court said to examine the records in camera to determine probative value and issues relating to privileged medical information. Slip op. 13.

In Rao v. Prest Metals, 00 CV 3785 (EDNY, June 27, 2001), Judge David G. Trager, granting summary judgment to plaintiffs, trustees of a multi-employer pension fund, awarded $294,519 (plus costs and attorney's fees) against defendant for withdrawal liability.

Defendant Prest Metals moved from New York to New Jersey and ceased making contributions to the Production Service & Sales District Council Pension Fund. Believing that Prest Metals had withdrawn from the fund, the fund manager sent a letter to Prest Metals asserting that it had incurred withdrawal liability and liability payments were due each quarter for the next 80 quarters. The letter stated that Prest Metals had the right to request a review of the assessment of withdrawal liability, identify any inaccuracies in the amount of liability or to furnish other relevant information within 90 days. The letter also stated that any dispute arising out of the fund's determination and review must be resolved through arbitration, that must be commenced within 60 days of the earlier of (1) the date of the Fund's notice of findings and determination after a review or (2) 120 days after the date of Prest Metal's request for review of the assessment of withdrawal liability. Beginning in September 1998, the fund and Prest Metals exchanged correspondence in which Prest Metals denied that it had withdrawn from the plan. At the same time Prest Metals defaulted on payment of withdrawal liability. In March 2000, Prest Metals made a formal request for arbitration. The arbitrator found that, by failing to request arbitration within the time prescribed by ERISA, Prest Metals had waived its right to dispute the finding that it had withdrawn. The fund then brought this action to recover the full withdrawal liability.

Judge Trager held that under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), Prest Metals had the obligation to submit to arbitration a factual dispute related to assessment of withdrawal liability, and its failure to do so resulted in a waiver of its right to arbitration. This case did not fall into any exceptions to the arbitration requirement, which apply only if a dispute involves a constitutional question or a matter of statutory interpretation outside the ERISA arbitration provisions. In addition, Prest Metals had not sought relief in the district court before the time limit for arbitration had expired. Slip op. 16. Judge Trager rejected Prest Metals' argument that the MPPAA imposed an obligation on the fund, rather than Prest Metals, to commence arbitration. Under the MPPAA either party can make the request to arbitrate; that right is not given only to the fund. Indeed, the fund expressly informed Prest Metals three months before the expiration of the time to request arbitration that, if it wished to do so, it could commence an arbitration proceeding by filing a demand with the American Arbitration Association. Prest Metals also argued that the time limit to file for arbitration had not yet run, because it had not received a proper response to its request for review. But, as Judge Trager observed, even if the fund had not provided a proper response, "the time within which Prest Metals was required to request arbitration would have been 180 days from the date of its request for review." Slip op. 20. The request by Prest Metals was more than a year too late.

Bankruptcy, Lien

In In re Rodriguez, 00 CV 2183 (EDNY, Mar. 22, 2001), Judge Arthur D. Spatt affirmed a decision of Bankruptcy Judge Dorothy Eisenberg denying summary judgment to the Chapter 7 trustee and granting summary judgment to appellees Douglas and Ann Hassell on the trustee's claim seeking to avoid a mortgage lien on real property owned by the debtor. In August 1997 the debtor purchased property in West Islip from the Hassells, subject to a mortgage to be held by them. The title insurer took the deed and mortgage at the closing for recording, but failed to record both the deed and mortgage until June 15, 1998. Several weeks earlier, on May 28, 1998, the debtor had filed a Chapter 11 petition, which was subsequently converted to a Chapter 7 case. In Bankruptcy Court, the trustee sought to void the Hassells' lien arising from the mortgage. The trustee argued that he had the status of bona fide purchaser on the date of the bankruptcy petition, because the Hassells' failure to record their mortgage resulted in lack of notice to the trustee of the mortgage. Judge Spatt agreed with Judge Eisenberg that the trustee should be charged with inquiry notice of the Hassells' mortgage. Under 544 of the Bankruptcy Code, the trustee has the rights of a bona fide purchaser of real property from the debtor under state law. New York Real Property Law 291 provides that a conveyance not recorded is void against a subsequent bona fide purchaser, except that a purchaser with notice of an unrecorded prior interest in the property or one with "knowledge of facts that would lead a reasonably prudent purchaser to make inquiries concerning such an interest may not avail himself of Section 291." Slip op. 4. As Judge Spatt noted, the trustee may not have been able to find the mortgage recorded, but the deed transferring the property to the debtor was unrecorded as well. A title search would have shown that the Hassells owned the property, not the debtor. Thus, where the debtor's claim of ownership was inconsistent with recorded ownership, a reasonable purchaser would investigate further, rather than assuming title to the property was held by the debtor as possessor. Any investigation would have revealed the mortgage lien on the property. Moreover, because the title company had possession of the title documents, the debtor could never have produced title documents to corroborate his claim of ownership. In short, a reasonable person would have made an inquiry of the owners of record (the Hassells) and discovered the existing mortgage. Slip op. 8-9.

Peter R. Schlam and Harvey M. Stone are partners at Schlam Stone & Dolan. Bennette D. Kramer, a partner of the firm, assisted in the preparation of the article.

[Reproduced with permission from New York Law Journal Volume 226, Friday, July 13, 2001.  Copyright 2001 ALM Properties, Inc.  All rights reserved.]