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.

Section 3622(a)(3) – Release for Medical Treatment

In United States v. Gigante, 02 CR 140 (EDNY, March 12, 2002), Judge I. Leo Glasser, denying defendant's request to be temporarily released from incarceration for medical testing and treatment, held that the court had no jurisdiction to grant the relief sought.

Following a 1997 jury trial in a prior Eastern District case, defendant Vincent Gigante was convicted of racketeering and related offenses. In pretrial proceedings there, defendant had claimed that he was mentally incompetent and physically too vulnerable to stand trial. The court found that defendant was able to go to trial and that his mental incompetence was feigned. After the jury verdict, defendant made, and the court rejected similar claims regarding his competence to be sentenced. Defendant received a 12-year prison sentence.

Defendant was later indicted in the instant case for alleged racketeering and obstruction of justice related to his conduct in prison. While he was incarcerated at the Federal Medical Center in Fort Worth, Texas, the U.S. Attorney arranged for him to be transferred to the Metropolitan Detention Center in Brooklyn pending disposition of the new charges.

In February 2002, defendant moved, by order to show cause, for his "temporary release" from the "custody of the United States Marshals" (a) to Lutheran Medical Center in Brooklyn for cardiac testing; (b) then, if necessary, to Mount Sinai Hospital in Manhattan for surgery; and (c)thereafter, back to Lutheran Medical Center for the rest of his incarceration. At hearings on the motion, Judge Glasser sua sponte raised questions about the court's jurisdiction.

As explained in the court's decision, defendant erroneously assumed that he was brought here from Texas pursuant to a writ of habeas corpus ad prosequendum. Defendant, however, was not in the custody of a separate sovereign while in Texas. Rather, he was merely transferred from one federal facility to another, by the prosecutor's request to the warden of the Fort Worth facility.

Nor, contrary to defendant's assumption, is he in the custody of the U.S. Marshal. As the court explained, defendant is a "pretrial inmate" as to the pending indictment and would thus be in the "safekeeping" of the U.S. marshals pursuant to 18 U.S.C. 4086. But he is also a convicted inmate serving a federal sentence. Therefore, under 28 C.F.R. 551.101(a)(3) and (b), he is not a "pretrial inmate." Accordingly, defendant "is in the custody of the Bureau of Prisons which is charged by [18 U.S.C.] 4042(a)(2) with providing for his safekeeping and care as a person convicted of an offense or otherwise held." Slip op. 8.

Application for Relief

Defendant based his application for relief on 18 U.S.C. 3622(a)(3), which provides that the Bureau of Prisons may release a prisoner to visit a designated place for no more than 30 days to obtain medical treatment not otherwise available. One of the several conditions for release is "reasonable cause to believe that a prisoner will honor the trust imposed in him."

That statute, Judge Glasser concluded, does not apply here. Defendant's request to be confined at Lutheran Medical Center "for the remainder of his incarceration" would exceed the 30-day limit. Nor was there "reasonable cause" to believe that he would "honor the trust imposed in him."

Because a furlough was also unavailable (see 28 C.F.R. 570.30 et seq.), the applicable regulation is 28 C.F.R. 570.41, Medical Escorted Trips. This again leaves defendant in the custody and control of the Bureau of Prisons, which must determine whether a medical escorted trip is appropriate. Slip op. 10-11.

As the court also noted, defendant failed to exhaust administrative remedies as required by The Prisoner Litigation Reform Act, 42 U.S.C. 1997e. Slip op. 11-15.

Declaratory Judgment

Corporate Dispute. In RJE Corp. v. Northville Industries Corp., 02 CV 1440 (EDNY, April 25, 2002), Judge Frederic Block construed a series of agreements between feuding family members concerning the ownership and valuation of a multimillion-dollar petroleum pipeline system on Long Island.

By the mid-1980s, the progeny of Samuel Bernstein - who had founded a coal company that grew to own the valuable pipeline at issue - were in two hostile camps, each headed by one of his sons: Harold and Raymond. In 1988, they entered a series of agreements designed to apportion their respective rights and responsibilities with respect to the pipeline, including responsibility for current and future environmental costs that had become a special concern after a 1986 leak.

The agreements left Harold Bernstein in control of Northville, the family company and, thus, in control of the pipeline, together with its revenues and obligations. In exchange for conveying his 44.3 percent interest in the company to Harold, Raymond Bernstein received rights and assumed obligations, as set forth in the agreements, through his entity, plaintiff RJE. Among the terms of the agreements, RJE was to receive an annual consulting fee of $840,000 and agreed to share proportionally in environmental liabilities (subject to the limitation that its environmental obligations would not exceed the amounts received in exchange for the Northville stock). In addition, RJE retained a right of first refusal in the event Northville sought to sell to a third party and was entitled to participate in proportion to its former interest in the event of such a sale.

The 1988 agreements included various mechanisms by which the parties could terminate their joint dealings with respect to the pipeline system. One of these was an "Option Agreement," pursuant to which the parties could submit to a defined bidding process to determine which would control the pipeline in its entirety. Faced with mounting environmental liabilities, Northville decided to shut down the pipeline operation. An "Abandonment Provision" in the Option Agreement provided that, in such a case, the Pipeline System would be appraised and the parties would submit bids upon it. If Northville bid the higher amount, it would be free to terminate the operation as planned. If RJE won the bidding, it would acquire the pipeline operation.

Northville took the position that, for purposes of bidding under the Abandonment Provision, the value of the "Pipeline Operation" should include its environmental obligations. RJE argued that such obligations were excluded by the express agreement of the parties. It brought an action for a declaratory judgment to clarify the issue prior to the bidding process and for specific performance to force Northville to comply with the Option Agreement under RJE's interpretation.

Judge Block found that, read together, the relevant agreements were unambiguous in excluding remediation costs from the calculation of the pipeline system's fair market value. Among other considerations, he noted that Pipeline System "is defined in the preamble of the Option Agreement to include any assets, without any reference to liabilities" (slip op. 13-14) and that "where the parties intended to have RJE assume environmental liabilities, they explicitly provided for such assumptions" elsewhere in the agreements. Id. at 21.

RJE's victory was not complete, however. As the court concluded: "The only harm that RJE has suffered as a result of Northville's mistake [in construing the agreements] has been the incidental costs incurred in obtaining the appraisals and preparing its bid, and attorney's fees and costs associated with this litigation.... Assuming Northville is willing to compensate RJE for the [se] incidental costs, specific performance will not be ordered." Slip op. 33.

Cable Act

In Goldberg v. Cablevision Systems Corp., 01 CV 4223 (EDNY, March 23, 2002), Judge Arthur D. Spatt dismissed plaintiff's cause of action under the Cable Communications Policy Act of 1984 (the Cable Act) based on Cablevision's refusal to air his programs on their public access channel until he signed an Access User Contract.

Under the Cable Act federal, state or local governmental entities may grant a franchise to a cable operator to construct or operate a cable system. The Cable Act permits the franchising authority to require cable operators to provide public, educational and governmental (PEG) channel capacity on their cable systems and to establish rules and procedures for the use of the PEG channel.

The New York State Public Service Commission sets minimum standards that are incorporated into every franchise agreement. State regulations require that New York cable operators with a capacity of 21 or more channels designate at least one full-time channel for public access and at least one full-time channel for educational and governmental use. Both federal and state regulations prohibit franchisees and municipalities from "exercising 'any editorial control over any public, educational or governmental use of channel capacity designated for PEG purposes."' Slip op. 5. The only restriction a cable operator may impose is to refuse to transmit any public access program or portion thereof which contains obscenity, indecency or nudity.

Cablevision's franchise agreement with the Town of Oyster Bay requires Cablevision to make available and activate two PEG access channels. The agreement further requires Cablevision to develop and implement rules for PEG Access Channel use which insure that the PEG channel and equipment are available on a first-come, nondiscriminatory basis and which comply with federal and state laws.

Plaintiff, a resident of Oyster Bay, produces television programming to be shown on the public access channel designated by the agreement between Cablevision and Oyster Bay. Prior to April 1, 2001, plaintiff and Cablevision had entered into an Access User Contract, by which plaintiff agreed to abide by Cablevision's Access Rules, to reimburse Cablevision for damage to equipment and facilities, to reimburse or indemnify Cablevision for any liability for violation of intellectual property rights of third parties and to provide programs that do not include obscene or indecent material or advertisements for a lottery.

Effective April 1, 2001, Cablevision required plaintiff to enter into a new Access User Contract based on a revised set of access user rules and guidelines. The new contract was more specific but generally covered the same areas and required the same agreements. Plaintiff signed the new agreement, but added a provision stating: "Nothing is or has been agreed to that is not in accord with United States and New York State law or that would waive my rights that would otherwise apply." The complaint alleged that Cablevision revoked the existing Access User Contract because of plaintiff's amendment, sent him a clean copy of the contract and invited him to submit it. Plaintiff alleged that Cablevision refused to cablecast any of his programs until he signed the agreement without his proposed language.

Cablevision based its motion to dismiss on the ground that it had not violated the Cable Act, because the requirement that programmers sign an Access User Contract did not constitute "editorial control" prohibited by 531(e). As Judge Spatt noted, while 531(e) prohibits a cable operator from exercising "editorial control" over PEG programming, cable operators may enforce contractual and state-law provisions regarding PEG access. Thus, the court concluded, Cablevision's "decision not to cablecast the plaintiff's programs was not based on the nature or content of its programs." Slip op. 13. Instead, Cablevision's contract requirement was merely an attempt to enforce its technical and procedural rules regarding PEG access channel use, as required by Oyster Bay and permitted under the Cable Act. The court dismissed plaintiff's claim under 531(e), stating:

To hold otherwise would render cable operators completely powerless to regulate how and when their facilities are used; to organize the submission and cablecasting of programs; to protect their property; and to limit their liability in intellectual property actions brought by third parties.

Slip op. 17.

Peter R. Schlam and Harvey M. Stone are partners at Schlam Stone & Dolan.

[This article is reprinted with permission from the May 3, 2002, issue of the New York Law Journal. Copyright © 2007 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]