November 12, 2014

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

In an extensive decision dealing with issues of preclusion and public nuisance, U.S. District Court for the Eastern District of New York Judge Jack B. Weinstein declined to dismiss a suit by New York City against companies in the gun industry. Judge Nicholas G. Garaufis, rejecting an argument of governmental "waiver", applied the "plain view" doctrine in declining to suppress evidence seized during a "sweep" of a warehouse. Judge David G. Trager denied appointment of counsel to a minor seeking, with no substantial basis, to enjoin the deportation of her father. And Judge Raymond J. Dearie held, in a discrimination case, that the obligation of an insured to give notice to its carrier was not triggered by the insured's receipt of an EEOC Notice of Charge.

Public Nuisance and Guns

In City of New York v. Beretta U.S.A Corp., 00 CV 3641 (EDNY, April 12, 2004), Judge Weinstein denied defendants' motion to dismiss the city's suit for an injunction against gun manufacturers, importers and distributors for common law and statutory public nuisance. Defendants had argued that (a) the suit was precluded by the New York Supreme Court's decision in People v. Sturm, Ruger & Co., Inc., No. 402586/00 (SupCt, N. Co., Aug. 10, 2001), aff'd, 761 NYS2d 192 (1st Dep't, 2003), leave to appeal denied, 100 NY2d 514 (2003), a public nuisance action by the state as parens patriae; (b) the complaint fails to state a claim; and (c) an injunction would place an impermissible burden on interstate commerce.

Having dropped its claim for monetary damages, the city sought an injunction to abate a public nuisance. The city asserted that defendants could, but do not, take steps to prevent diversion to the illegal market and thereby reduce the harm caused by the illegal use of guns.

Citing data based, in part, on traces by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the city alleged that defendants failed to (1) monitor corrupt retailers; (2) require retail sales only through storefront establishments; (3) prohibit straw sales; and (4) limit sales at gun shows, sales of multiple guns to the same person, and sales to dealers in states with gun laws. According to the complaint, defendants could have used information gleaned from ATF trace requests to apply more careful practices, such as closing off the flow of guns to retailers or first purchasers connected to a disproportionate number of traces.

The city's claim, Judge Weinstein held, is not barred as a matter of res judicata by the Sturm, Ruger decision. That case was brought by the State Attorney General on behalf of the people of New York, and was dismissed for failure to state a claim for public nuisance. The dismissal occurred before answers were filed or discovery taken, and the trial court noted facts which, if alleged, might be sufficient to state a cause of action. That decision was thus not '" a final judgment on the merits of a similar claim." The city's complaint here, moreover, corrected defects identified by the court in Sturm, Ruger.

Judge Weinstein found another reason for denying preclusion: "The substantial degree of autonomy historically enjoyed by New York City to act on matters of local concern, as well as the proper delineation of authority between the Corporation Counsel of the City of New York and the Attorney General of the State of New York, require that the city not be characterized as a privy of the state for res judicata purposes." Slip op. 10.

As Judge Weinstein observed, under applicable New York law, a judgment on the merits is binding not only on the parties, but on those "in privity" with them. The New York state courts have apparently never decided the privity issue presented here ----whether a prior case brought by the state in its parens patriae capacity will bar the city from bringing suit on the same cause of action. The city is not precluded, Judge Weinstein noted, simply because its residents, if suing as private plaintiffs, might be barred from bringing suit. The city's municipal interest to promote public safety is distinct from that of individual New Yorkers.


Surveying developments in the legal status of cities, the law of municipal corporations, and home rule in New York City, Judge Weinstein held:

Precluding the City from bringing suit aimed at redressing the problem of gun-related violence would interfere with the authority accorded it under New York's home rule provisions. Consistent with Article IX of the state constitution, the City has the authority to take action in issues of local concern including those affecting the safety, health and well-being of its inhabitants. (Slip op. 27-28)

Preclusion would be contrary to the current State-City legal relationship, especially when the City's "experience with and attitude toward firearms is so distinct from that of the rest of the State[.]" Preclusion would also not respect the "proper division of authority between the Corporation Counsel and the Attorney General ..." Slip op. 29.

As to the alleged failure to state a claim, Judge Weinstein noted that, under New York law, a claim for public nuisance may lie against members of the gun industry whose practices lead to substantial diversion into the illegal secondary market. Relying on statements from former insiders in the gun business, the city alleged knowledge by defendants that the criminal market is fueled by their allegedly imprudent practices. And, even if the city is required to plead a duty of care of the type developed in certain negligence cases, the allegations here are sufficient to create an inference of duty under a theory of negligent entrustment. See Hamilton v. Beretta U.S.A. Corp., 96 NY2d 222 (2001). Slip op. 39-40.

Nor, the court stated, does the fact that conduct is otherwise lawful bar liability for public nuisance. Many of the practices at issue here, moreover, remain unregulated. Slip op. 41.

As Judge Weinstein also explained, the New York courts have left open the possibility that a casual connection might be shown between harm to the public and practices in the gun industry. And recently, more evidence has been available on this link.

Finally, Judge Weinstein observed that, as a general matter, any burden placed on interstate commerce is outweighed by the public interest in regulating sales of firearms. Objections that particular provisions of the requested relief impermissibly burden commerce can be considered later, if necessary, on a case-by-case basis. The court also saw no merit to the claim that an injunction would violate due process by attempting to regulate conduct outside the city's borders. "The city seeks relief for the harm imposed on itself and on those within its borders." Slip op. 51.

Plain View

In United States v. Big Apple Bag Company, Inc., 03 CR 781 (EDNY, May 7, 2004), Judge Nicholas G. Garaufis, having previously suppressed all evidence seized from a warehouse pursuant to an invalid search warrant, held that certain of that evidence in the "plain view" of arresting officers during a protective sweep of the warehouse was admissible. The court also held that the government did not waive the "plain view" argument by failing to assert it, during litigation on the search warrant, as an alternative basis for admissibility.

In May 2003 a group of law enforcement officers went to a Queens warehouse to execute an arrest warrant for Danny Teng, a fugitive. While outside the warehouse, FBI agents approached a man they believed to be Teng. The man denied he was Teng, produced photo identification with another name and said Teng was inside the warehouse. Together with this man, a number of agents entered the warehouse and walked along the center corridor. On either side of the corridor were rows of stacked boxes, perpendicular to the corridor.

As they walked to the rear of the warehouse, the agents, to guard their safety, did a visual "sweep" for other people and weapons. In the process they saw obvious narcotics paraphernalia in various places.

Within minutes, the agents ascertained that the man they had met outside the warehouse actually was Teng. They arrested him and, after obtaining a search warrant, seized virtually all the contents of the warehouse.

In February 2004, after a Franks hearing, Judge Garaufis suppressed the evidence seized pursuant to the search warrant on the ground that one of the FBI Agents had made deliberately or recklessly false material statements in support of the warrant. The government moved for reconsideration but later, in its reply brief, withdrew the motion and argued instead that some of the evidence was admissible in any event under the "plain view" doctrine. This was the first time that this argument was clearly stated and developed, though it had been cursorily made in the initial brief.

Judge Garaufis rejected defendants' contention here that the government had waived its "plain view" argument.Before the court issued its order of suppression, the government was not "on notice" that it could not use the evidence seized pursuant to the search warrant. The government, moreover, "does not generally have the burden before trial of proving that its evidence may be admitted[.]" As the court also noted, there is "very little precedent for the proposition that the government can waive an evidentiary argument before trial."

Judge Garaufis then found that the agent who made the relevant "plain view" observations was lawfully in the warehouse at the time, and that the protective sweep was permissible to prevent an attack. The admissible evidence, however, was limited to the specific objects seen during the sweep. The government was thus left with the task of showing somehow, by a preponderance of the evidence, which items of drug paraphernalia among the many seized had been in "plain view.'

Representation of Minors

In Fayemi v. Bureau of Immigration and Custom Enforcement, 04 CV 1935 (EDNY, May 24, 2004), an action to enjoin the Bureau (the successor to the INS) from deporting the thirteen-year-old plaintiff's father to Nigeria, Judge Trager denied plaintiff's application for appointment of counsel and directed her grandmother and father to obtain counsel within 60 days.

Plaintiff alleged that the deportation of her father because of an aggravated felony conviction would cause her extreme psychological hardship and emotional distress, violating her Eighth Amendment rights and Equal Protection under the Fifth Amendment. Because plaintiff as a minor cannot proceed pro se, the complaint requested the court to appoint an attorney to represent her.

A minor may not appear pro se or be represented by a lay person ----even a parent. The district court may appoint counsel for a minor only if a "substantial claim" exists on behalf of the minor, but there is no right to counsel in a civil case.

Here, Judge Trager decided, the complaint did not raise any substantial claims. First, the cruel and unusual punishment clause of the Eighth Amendment is inapplicable to deportation proceedings, which are civil proceedings, not punishment. Second, plaintiff alleged no facts to suggest an equal protection violation, because she did not show that the treatment of her father as an alien arose from some impermissible consideration. Indeed, the complaint did not even suggest that her father was wrongly convicted.

As Judge Trager noted, while the decision not to appoint counsel may preclude plaintiff from pursuing her claims in the district court, she may have a remedy through a petition to the Attorney General for a waiver of her father's criminal grounds for deportability under section 212(h) of the Immigration and Naturalization Act, 8 USC § 1182(h).

Insurance Coverage

In Equal Employment Opportunity Commission v. Trataros Construction, Inc., 01 CV 5127 (EDNY, March 31, 2004), Judge Raymond J. Dearie granted summary judgment to Trataros Construction, Inc., against third-party defendant, Admiral Insurance Company, its insurer, ruling that Admiral had a duty to defend and indemnify Trataros in the underlying Equal Employment Opportunity Commission (EEOC) discrimination action. At the same time, Judge Dearie dismissed the action brought by the intervening individual plaintiffs against Admiral, finding that they lacked standing to sue.

On May 19, 2000, several women (the intervening plaintiffs) filed sex discrimination and retaliation charges against Trataros with the EEOC. On June 2, 2000, the commission sent a notice of charges to Trataros, and requested information about the charges. After an investigation of the complaints, on May 22, 2001, the commission issued a Determination Letter finding reasonable cause to support the charges. It commenced this action against Trataros on Aug. 2, 2001.

The Admiral Employment Practices Liability Insurance policy was a "claims made" policy, requiring Trataros to give notice "as soon as practicable, but in no event later than 90 days after such Claim is first made. 'Trataros notified Admiral of the claim on June 11, 2001, after receiving the EEOC Determination Letter. Denying coverage, Admiral contended that the EEOC Notice of Charge on June 2, 2000, was a claim under the policy. Trataros countered that the claim was not made until the commission issued its Determination Letter.

Judge Dearie focused on the definition of a claim in the policy as:

1) [a] written demand or assertion for monetary or non-monetary relief, or 2) a civil, criminal, administrative or arbitration proceeding for monetary or non-monetary relief which is commenced by: a) service of complaint or similar pleading, or b) return of an indictment ... or c) receipt or filing of a notice of charges. Slip op. 6-7.

As Judge Dearie concluded, the EEOC lacked power to order any monetary or non-monetary relief. In fact, its only power was to request informal, voluntary dispute resolution methods, such as conciliation. The commission could initiate an enforcement action, as here, to eliminate unlawful practices, but only the court could grant relief. The commission's reasonable cause determination merely provided a claimant with a jurisdictional prerequisite to seek relief in district court. Accordingly, the court found Trataros' June 21 notice to Admiral timely.

Judge Dearie also found that the individual plaintiffs lacked standing to sue Admiral because they were strangers to the insurance contract. New York Insurance Law § 3420 permits judgment creditors to sue insurers directly on unpaid judgments, but not to bring actions for damages before a judgment has been rendered. Examining relevant New York and U.S. Court of Appeals for the Second Circuit case law, Judge Dearie concluded that section 3420 applies equally to actions for a declaratory judgment. Thus, the court held:

Because the Intervening-Plaintiffs' action against Admiral is contingent on a future event, namely a judgment against Trataros in the underlying action and Trataros' refusal or inability to satisfy that judgment, the action is premature.Slip op. 16.

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

[This article is reprinted with permission from the June 11, 2004, issue of the New York Law Journal. Copyright © 2007 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]