November 12, 2014

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

This column reports on several significant, representative decisions handed down recently in the U.S. District Court for the Eastern District of New York. Judge Jack B. Weinstein allowed the government to amend its death penalty notice by adding a statutory aggravating factor relating to serious physical abuse of the victim. Judge Raymond J. Dearie denied the New York City Transit Authority's motion for summary judgment with respect to hostile work environment claims by an Indian national. Judge Brian M. Cogan gave plaintiff one last chance to effect service of the complaint on defendant in Chile. And Judge Weinstein denied summary judgment to both sides in Zyprexa litigation involving alleged overpayment by plaintiffs.

Death Penalty — Notice of Intent

In United States v. Taveras, 04 CR 156 (EDNY, June 6, 2007), Judge Weinstein granted the government's motion to amend its notice of intent to seek a death sentence by including in the notice an additional statutory aggravating factor for each murder count — to wit, that 'defendant committed the offense in an especially heinous, cruel or depraved manner in that it involved torture or serious physical abuse to the victim.' 18 USC §3592(c)(6). The court ruled that, at the penalty phase, evidence could be introduced as to defendant's alleged use of a knife to cut a man's throat after shooting him, but not as to post-mortem dismemberment.

Defendant was charged with committing two murders while engaged in a conspiracy to distribute cocaine and heroin. See 21 USC §848. After the fourth superseding indictment, the government requested leave to amend its notice of intent to seek the death penalty.

Regarding the timing of the motion to amend, Judge Weinstein saw no bad faith by the government or prejudice to defendant.

Turning to the admissibility of evidence, the court stated:

Evidence with respect to count one, that the defendant cut the victim's throat after having shot him, but while he was still alive, leaving him to bleed to death in a bathtub while he was arguably conscious, will be admitted. The evidence is highly probative of an offense committed in a heinous, cruel or depraved manner. The act of cutting the victim's throat could fit within the definitions of both torture and serious physical abuse. This action constituted part of the direct commission of the offense, and is the type of act contemplated by the statute. Defendant's alleged decision to use a knife to cut the victim's throat after having shot him was a measure above and beyond what was necessary to kill Rosario. Leaving him alone in a bathtub to bleed to death was a form of torture; he was restrained by the tub, could not seek help, but was arguably conscious of his life ebbing as his blood drained away.

Excluding evidence of post-mortem dismemberment on both murder counts, Judge Weinstein stated that this conduct had 'the rational purpose of concealing and disposing of the corpses in order to evade prosecution.' Dismemberment was therefore not relevant to the 'heinous, cruel or depraved manner issues.'

In any event, the danger of unfair prejudice from such evidence would outweigh its probative value. Slip op. 12.

Hostile Work Environment

In George v. New York City Transit Authority, 04 CV 3263 (July 17, 2007), Judge Dearie denied defendants' summary judgment motion as to plaintiff's hostile work environment claim, but granted their motion as to plaintiff's retaliation claim.

Plaintiff, an Indian national and bus driver for the Transit Authority, alleged that his employer and his union representative subjected him to a hostile work environment because of his race and national origin, and retaliated against him for his complaints, in violation of Title VII and the State Human Rights Law.

As Judge Dearie noted, plaintiff produced evidence that he endured (1) a persistent barrage of ethnically offensive comments that spiked following the 9/11 attacks on the World Trade Center, and (2) one physical assault. For example, plaintiff testified at his deposition that he was routinely addressed as 'Bin Laden,' 'camel jockey,' 'Saddam Hussein' and 'caveman.' No such slurs were uttered during the lone assault on him by a coworker. That facially neutral incident, however, could be viewed as evidence of a hostile work environment in light of the coworker's active participation in name-calling on other occasions.

Judge Dearie also found that plaintiff raised triable issues of fact as to whether the Transit Authority took adequate remedial action on his complaints. His supervisor's suggestion that he report his complaints to the union was a mixed signal, given the alleged offensive conduct by plaintiff's union representative, the sole remaining individual defendant.

Regarding the retaliation claim, plaintiff failed to show a causal connection between his protected activities and the asserted adverse action -- increased observation leading to two suspensions. Aside from plaintiff's inability to show 'temporal proximity,' the court gave significant weight to the decisions of neutral arbitrators upholding each of the two suspensions for incidents on the job (a collision with a light pole, and closing a bus door on a passenger's neck).

Int'l Service of Summons, Complaint

In Telxon Corp. v. Rimpex Chile, SA, No 03 CV 6011 (EDNY, July 3, 2007), Judge Cogan granted plaintiff a further extension to file proof of service of the summons and complaint, while putting plaintiff on notice that it would have to effect service or face dismissal.

Plaintiff filed the summons and complaint in November 2003, and beginning in March 2004 made numerous requests for an extension of time to effect service. Over time plaintiff took steps to effect service by: (1) submitting letters rogatory for Judge Thomas C. Platt to sign in March 2004, (2) retaining the leading process serving firm for international service of process; and (3) through that firm, (a) forwarding papers via diplomatic channels for service in Chile in May 2004, and (b) requesting reports from judicial authorities in Chile three times through June 2005, with no response. The process server purportedly informed plaintiff that it had completed service in June 2006, but was unable to obtain proof of service.

Judge Cogan found that plaintiff was diligent at the beginning by placing service in the hands of a well-respected international service agency, but that plaintiff failed to adjust when its initial service efforts proved ineffective. Thus, the time had come to consider alternatives.

As plaintiff reported, Chilean counsel had advised that service should be effected in accordance with the Inter-American Convention to protect plaintiff's ability to enforce a judgment in Chile. However, the Inter-American Convention provides a nonexclusive means of service, and plaintiff had additional means of service available in Rule 4(f), which allows 'other means not prohibited by international agreement as may be directed by the court.' But plaintiff believed that, by using a method other than the Inter-American Convention, it: (i) would jeopardize its ability to enforce any eventual U.S. judgment in Chile, or (ii) might face arguments that, under rules of international comity, it had failed to establish jurisdiction over defendants.

In the court's view, neither of these concerns justified further open-ended delay. First, 'we need not concern ourselves with enforceability in Chile because there is no judgment, and there never can be one without service of process.' Slip op. 4.

Second, Judge Cogan observed that comity has its limits where, as here, plaintiff had repeatedly attempted service under the Inter-American Convention and failed. The United States has a strong interest in swift resolution of suits brought by its citizens, and here the Chilean judicial authorities had not cooperated to advance this interest. Slip op. 6. Besides, plaintiff could enforce a judgment in the United States instead of domesticating it in Chile by, for example, seizing defendant's U.S. assets such as accounts receivable or bank transfers clearing through the United States.

The court thus required plaintiff to undertake an investigation as to whether a U.S. judgment would be uncollectible without Chilean domestication, so as to 'crystallize the question why plaintiff has waited helplessly in this Court for the last four years instead of suing in Chile when, even if it were able to obtain a judgment in this Court, plaintiff would have to take it to Chile in any event.'

As to plaintiff's claim that defendant had not been prejudiced, Judge Cogan stated that there was not sufficient information about whether defendant was on notice of the action, had taken steps to preserve witnesses and documents, or was even aware of the need to preserve such evidence.

As to any alleged unfairness in not allowing unlimited time to serve under the Inter-American Convention, Judge Cogan stated that plaintiff had placed this burden upon itself. Plaintiff had chosen 'to do business with a foreign company without an arbitration clause, a forum-selection clause, or a consent to service of process clause.' Slip op. 7. In short, plaintiff assumed an increased risk in entering into a relationship with defendant.

The court ordered plaintiff to file proof of service by Aug. 15 or, alternatively, move for leave to make alternative service under Rule 4(f)(3). If plaintiff failed to do so, the court intended to dismiss the action without prejudice.

Denial of Summary Judgment

In In re Zyprexa Products Liability Litigation, No 04 MD 1596 (EDNY, June 28, 2007), Judge Weinstein denied plaintiffs' and defendant's motions for summary judgment in part of a series of cases based on injuries resulting from the sale of the drug Zyprexa, an antipsychotic medication manufactured by defendant Eli Lilly & Co.

Numerous plaintiffs filed class actions suits against Lilly seeking economic damages for overpayment for Zyprexa. Plaintiffs claimed that Lilly withheld information and disseminated misinformation about the safety and efficacy of Zyprexa and promoted it for uses for which it was not intended and for patients who would have been better served by less expensive drugs. Thus, the price of Zyprexa was higher than it should have been had the truth been known, and plaintiffs claimed their excess payments as damages.

As the court noted, Zyprexa is useful for on-label and off-label purposes, and has increased the quality of life for many people with serious debilitating diseases.

Plaintiffs asserted claims under RICO and various state consumer protection statutes, as well as for common law fraud and unjust enrichment.

In denying plaintiffs' motion for summary judgment, the court pointed to various factors: (1) the relationship between third-party payers and pharmaceutical benefit managers was unclear; (2) a trial was required to determine how Lilly's actions influenced what physicians prescribed; (3) pre-emption did not apply; (4) a jury could find that knowledgeable prescribing physicians find Zyprexa preferable to other medications; (5) plaintiffs may not be able to prove damages.

Judge Weinstein also denied defendant's motion for summary judgment because plaintiffs had raised genuine issues of material fact. The court found the alleged injury to be 'direct': 'plaintiffs overpaid from their own funds for Zyprexa because of Lilly's fraud.' Slip op. 7.

Concerning reliance, the court noted that statistical, rather than individualized, proof was sufficient and appropriate where a sophisticated scheme existed, because the scheme was likely to distort public, rather than individual, knowledge. Thus, plaintiffs met the standard for reliance with their allegations 'that Lilly intentionally engaged in a broad-based plan to misrepresent to the medical and scientific communities the nature of Zyprexa's benefits and risks, and that scheme was successful in distorting the general body of knowledge about Zyprexa.' Slip op. 11.

Citing policy reasons for allowing the case to go forward, Judge Weinstein stated that such actions 'furnish backstop protection against under-regulated potentially dangerous activity by a market where caveat emptor largely rules.' While there are also policy arguments in favor of limiting 'individual litigation-enforced remedies for fraud on consumers of pharmaceuticals,' implementation of any such limits was for the legislature, not the courts. Slip op. 12-13.

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 August 10, 2007, issue of the New York Law Journal. Copyright © 2007 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]