November 12, 2014

New York Law Journal / Written by: Harvey M. Stone, Richard H. Dolan

In the U.S. District Court for the Eastern District of New York, Judge Frederic Block saw no basis for the removal to federal court of a state murder indictment against an FBI agent. Judge Raymond J. Dearie denied defendant law firm's motion for summary judgment under the Fair Debt Collection Practices Act. Judge Dearie also decided issues involving federal instrumentality immunity in an employment discrimination case against the Federal Reserve Bank of New York. And Judge Arthur D. Spatt denied the application of a nonparty intervenor to proceed on appeal in forma pauperis.

Removal: 28 USC § 1442(a)(1)

In People v. DeVecchio, 06 CR 235 (EDNY, Jan. 9, 2007), Judge Block, remanding a murder case against an FBI agent to Supreme Court, Kings County, held that defendant had failed to justify removal to federal court under 28 USC § 1446(a)(1). That statute authorizes the removal of a state case in which a federal officer is criminally prosecuted 'for any act under color of such office....'

Defendant DeVecchio worked for the FBI between 1965 and 1996. During much of that period he worked as a supervisory special agent in charge of organized-crime investigations. Mr. DeVecchio 'handled' several confidential informants, including Gregory Scarpa Jr., a 'made' member of the Colombo family. Mr. Scarpa was assigned to Mr. DeVecchio from 1980 to 1992.

The state indictment against Mr. DeVecchio alleges that he committed second-degree intentional murder by aiding and abetting Mr. Scarpa in killing four people, essentially by discussing the murders with Mr. Scarpa and passing on information to him.

In his notice of removal, Mr. DeVecchio stated that, at all relevant times, he was acting under express authority given to him as a supervisory FBI agent and that his relationship with Mr. Scarpa was part of his official duty. Mr. DeVecchio also asserted his intention to raise two federal defenses: (1) a defense of immunity under the Constitution's Supremacy Clause; and (2) a Kastigar defense based on his claim that the evidence against him derived from his compelled testimony in two prior federal proceedings. In one of those proceedings, an internal FBI investigation, Mr. DeVecchio was compelled to submit a statement in return for a promise that it would not be used in a criminal prosecution against him. He also gave compelled testimony in federal trials against Mr. Scarpa and an acting boss of the Colombo family. Mr. DeVecchio was never charged in a federal indictment. According to his Kastigar argument, the state prosecution uses his compelled statements and testimony, and leads derived therefrom, in violation of his right against self-incrimination.

Papers submitted by Mr. DeVecchio described in detail the special relationship between an FBI agent and his confidential sources. Mr. DeVecchio also insisted that every conversation he had with Mr. Scarpa properly fulfilled his duties as an FBI agent, and that he never knowingly gave him information which could have abetted any murder.

After extensively analyzing Mesa v. California, 489 US 121 (1989), and related cases dealing with federal-officer removal (slip op. 8-23), Judge Block turned to the unique circumstances of this case.

In Judge Block's view neither of Mr. DeVecchio's two proffered defenses rises to the level of a federal defense. His immunity defense -- that he acted in furtherance of his duties and never aided Mr. Scarpa in murder -- may satisfy the liberal standards for removal in civil cases, but not the more stringent standards in criminal cases. Mr. DeVecchio is 'simply being charged with outright murders having nothing to do with his federal duties.' Slip op. 24. Although his denials may be justified, this is not a defense based on federal immunity (or self-defense in performing official duties), triggering Article III 'arising under' jurisdiction.

Nor does his 'scope of employment' claim -- to wit, that his only contact with Mr. Scarpa was as his FBI handler -- satisfy the pleading requirements for criminal immunity.

The Kastigar defense under 18 USC § 6002, moreover, does not support Article III removal jurisdiction. '[R]ather, it is simply a vehicle for the suppression of immunized evidence or the dismissal of an indictment based on such evidence....' Slip op. 26. These issues, Judge Block noted, can appropriately be resolved in state court.

The ultimate question is whether there are special circumstances, 'as Mesa conjures, that could substitute for the assertion of a federal defense[.]' Slip op. 27. As Judge Block observed, Mesa 'did not slam the door shut on protective jurisdiction' to counter state-court hostility (which, classically, could arise against federal officers safeguarding civil rights). But the record here does not call for protective jurisdiction. As to the 'special relationship' between agents and informants, the court saw no federal interest establishing constitutional jurisdiction.

From a 'statutory perspective,' the absence of a 'federal defense' or 'federal interest' also precluded removal. Slip op. 29-31.

Fair Debt Collection Practices Act

In Miller v. Wolpoff & Abramson LLP, 01 CV 1126 (Jan. 25, 2007), Judge Dearie denied summary judgment to a law firm which argued that, under § 1692e(3) of the Fair Debt Collection Practices Act (FDCPA), its responsible attorney was entitled to rely upon the review of other counsel in sending a collection letter.

Defendant Upton Cohen & Slamowitz (UC&S), through its partner Mitchell Slamowitz, sent a collection letter to plaintiff on behalf of Lord & Taylor. UC&S sent such letters to New York clients of Lord & Taylor, including plaintiff, because Lord & Taylor's other collection counsel, codefendant Wolpoff & Abramson LLP (W&Amp;A), was not admitted in New York. Plaintiff alleged that UC&S violated the FDCPA by failing to conduct a sufficient investigation into the validity of the claimed debt to satisfy the FDCPA's requirement of 'meaningful attorney involvement.'

UC&S sought summary judgment on the ground that attorney Slamowitz had relied upon the investigations of W&A and/or Lord & Taylor. UC&S relied, in part, on a stipulation in which plaintiff agreed that the review conducted by W&A was sufficient under the FDCPA. (Plaintiff had entered into a consent judgment recognizing no violation by W&A with respect to plaintiff.) Since the W&A review was sufficient, UC&S argued, its reliance upon that review was a complete defense; alternatively, UC&S argued that it had conducted sufficient independent review.

Judge Dearie found that, although § 1692e(3) permitted UC&S 'to rely to some degree on W&A's review,' UC&S failed to show that it was sufficiently familiar with the nature of that review to support summary judgment. As to UC&S's own review, the volume of letters sent by UC&S, the lack of detail in attorney Slamowitz's deposition testimony regarding UC&S's own review, and the lack of detail regarding UC&S's investigation into the confirmation practices at Lord & Taylor, all left questions as to whether or not UC&S had supplied the 'meaningful attorney involvement' that § 1692e(3) requires. Slip op. 17-22.

Federal Instrumentality

In James v. Federal Reserve Bank of New York, 01 CV 1106 (EDNY, Jan. 25, 2007), Judge Dearie granted defendant's motion for reconsideration and affirmed the court's prior decision granting in part and denying in part defendant's motion to dismiss plaintiff's claims under Title VII, the Americans with Disabilities Act (the ADA), the New York State Human Rights Law (NYSHRL) and the New York City Human Rights Law.

Plaintiff worked for the Federal Reserve Bank of New York from 1970 until Feb. 23, 2001. Plaintiff asserted various claims of employment discrimination in charges filed with the EEOC, which issued right to sue letters to her. In a prior decision, Judge Dearie had dismissed all of plaintiff's claims except for retaliation under Title VII and the ADA.

On reconsideration, defendant argued that the New York State Division of Human Rights (NYSDHR) lacked authority to grant relief, because defendant was a federal instrumentality immune from state regulation unless such regulation was expressly authorized by Congress. Defendant claimed that state and local laws regulating employment practices were preempted by the Federal Reserve Act (FRA). Under Title VII, if a plaintiff originally commenced proceedings in a state or local agency with authority to grant relief, a 300-day statute of limitations applies. If the state or local agency lacks authority, a 180-day period applies. Plaintiff filed her action within the 300-day period, but not the 180-day period.

Defendant also argued on reconsideration that the court overlooked conflicts between Title VII and the ADA, on one hand, and the NYSHRL on the other. Any preemption here would have to be implied, because the FRA does not expressly preempt the NYSHRL. Defendant argued that because the FRA gives Federal Reserve Banks the power to dismiss 'at pleasure' its officers and employees, the FRA preempts application of the NYSHRL.

Judge Dearie found that the FRA did not preempt application of the NYSHRL and did not divest the NYSDHR of authority over the New York Fed. The court adopted the 'retail' preemption approach previously applied in the U.S. District Court for the Southern District of New York, rather than a 'wholesale' approach adopted by the U.S. Court of Appeals for the Third Circuit. As Judge Dearie noted, 'wholesale' preemption would frustrate the intent of Congress to establish a joint federal/state system for enforcing anti-discrimination laws, and the 'retail' approach would permit greater enforcement of state employment law. The court concluded: if 'the NYSHRL applies to the New York Fed in any case, the NYSDHR has jurisdiction, and the 300-day time limit applies.' Slip op. 15. Thus, in order to establish immunity, the New York Fed had to demonstrate that it was immune from every provision of the NYSHRL.

Concerning immunity, the court first determined that the New York Fed qualified as a federal instrumentality for the purposes of state employment law. The New York Fed operates virtually as an arm of the government by issuing currency, carrying on general fiscal duties of the United States and regulating the financial structure of federal and state banks.

As Judge Dearie also found, the New York Fed's status as a federal instrumentality did not immunize it against NYSHRL because the state scheme did not interfere with the New York Fed's federal function. The New York Fed was subject to federal employment laws, including Title VII and the ADA, which limited the New York Fed's discretion in employment decision-making through an antidiscrimination scheme. Thus, Judge Dearie

failed to see how the enforcement of state employment laws that are consistent with federal law to which the New York Fed is subject already will interfere with the New York Fed's performance of its federal function. Slip op. 25.

Accordingly, the court rejected the New York Fed's claim to immunity from regulation by the NYSDHR. As a result, the 300-day time limit of the NYSHRL applied and plaintiff's claims were not time-barred.

Standard for Leave to Proceed in Forma Pauperis

In United Parcel Service of America, Inc. v. The Net, Inc., 99 CV 7059 (EDNY, Jan. 8, 2007), Judge Spatt denied the motion of intervening-defendant Keith Maydak (whose motion to intervene had previously been denied) for leave to proceed in forma pauperis on appeal.

Defendant The Net Inc. registered the domain name '' without license or authorization from UPS. The court entered a default judgment against the named defendants in February 2001. In March 2001, nonparty Maydek informed the court that: (1) he was the proprietor of defendant The Net; (2) he would accept service on behalf of The Net; (3) he wished to appear on behalf of The Net; (4) he had learned of the lawsuit from a third party; (5) he had not received any of the papers; and (6) he wanted to file a motion to dismiss the complaint because the plaintiff had not properly served the summons and complaint. Mr. Maydek also moved to vacate the default judgment.

In a prior order, the court granted Mr. Maydak's motion to vacate the default judgment, but denied his motion to intervene for lack of standing. Mr. Maydek failed to offer any credible evidence of his connection to The Net, and his conclusory allegation that he operated The Net from prisons that do not have internet access was absurd. Accordingly, the court again entered a default judgment against The Net. The court then denied Mr. Maydek's multiple motions for reconsideration.

In the application before the court, Judge Spatt denied Mr. Maydek's motion for leave to proceed in forma pauperis on appeal because he did not demonstrate 'the degree of financial stringency necessary to justify relief. ' Slip op. 8. Mr. Maydek failed to include any information regarding his current or recent earnings and he affirmed that he owned two houses. An appeal of the court's order, moreover, would be frivolous and lacking in good faith. In addition, Mr. Maydak, a nonparty, lacked any right to appeal. Slip op. 9.

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 February 9, 2007, issue of the New York Law Journal. Copyright © 2007 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]