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 Nicholas G. Garaufis held that, under evolving circumstances, a 'substantial saving of judicial resources' was not likely to result from his keeping a case, even though he had properly accepted it as a 'related' matter. Judge Jack B. Weinstein terminated a 1974 remedial desegregation order where no vestiges remained of the original constitutional violation. Judge John Gleeson conditionally certified a class under the Fair Labor Standards Act and certified a class under Rule 23(a) to pursue state law claims. Judge Arthur D. Spatt applied a 2 percent discount rate in reducing damages for future pain and suffering to present value.

'Related' Case

In United States v. Agate, 08 CR 76 (March 13, 2008), Judge Garaufis, on reconsideration, declined as a matter of discretion to keep a 'related' case and ordered that the case be randomly assigned to an Eastern District judge.

Defendant Corozzo submitted a motion for this case to be randomly reassigned. Judge Garaufis invited the codefendants to join in the motion or make a separate application. Thirty-six codefendants then joined Mr. Corozzo's motion, 23 took no position and the government opposed the motion.

Judge Garaufis concluded that, under Local Rule 50.3(a) and (c), this case was indeed 'related' to other cases over which he has presided 'because of the similarity of facts and legal issues or because the case arises from the same transactions or events[.]' Local Rule 50.3(a). In this respect, the court was adhering to its earlier determination.

Nevertheless, the court chose to exercise its discretion to have the case randomly reassigned. The Local Rule calls for assigning a related case to the same judge when a 'substantial saving of judicial resources is likely to result ' or the assignment 'is otherwise in the interest of justice.'

Here, this goal would not be met. The court pointed to its docket and calendar and the 'growing complexity of the instant litigation since the Indictment was filed – including manifold issues emanating from the government's separation orders, imminent filings from the government regarding the disqualification of some attorneys on the case, and coordination with the U.S. Marshall Service regarding the sealing of courtrooms, transportation of defendants, and visitations[.]'

Judge Garaufis also observed:

[T]he court has 356 pending civil cases and 142 pending criminal cases involving at least 269 criminal defendants. This alone would not ordinarily affect the court's determination. . . . Many judges in this district carry a similarly heavy case load. However, in addition, the court is currently scheduled to preside over a number of lengthy criminal trials during the next two years, including a four-defendant organized crime racketeering trial which may last most of the summer...and two death-penalty trials scheduled to commence thereafter. . . .

For these reasons, Judge Garaufis added, 'a substantial savings of judicial resources is not likely to result from this court's acceptance of the case as related.' Judge Garaufis would, of course, be obligated to accept the case upon random assignment. Slip op. 7, n.2.

Termination of Remedial Desegregation Order

In Hart v. The Community School Board of Brooklyn, New York School District #21, 72 CV 1041 (EDNY, Feb. 27, 2008), Judge Weinstein terminated the remedial order imposed in 1974 requiring defendants to desegregate Mark Twain Intermediate Gifted and Talented School in Brooklyn. Since defendants had complied with the terms of the 1974 order and fully achieved the desegregation of Mark Twain, the court had no further jurisdiction.

Following a bench trial in 1973, the court found that the school board and chancellor were liable for conducting a segregated school in violation of the Constitution. The court required a plan to 'provide that the school population of Mark Twain not deviate more than 10 percent from the average ratio of the minority to the white population in District 21.' In July 1974, the court approved a plan to: (1) redraw the feeding patterns of the middle schools in the district so that each grade had 70 percent Caucasian and 30 percent minority populations; (2) graduate the 8th and 9th grades of Mark Twain; (3) transfer Mark Twain's present 7th grade to other middle schools; and (4) establish a 'magnet' school for gifted and talented children.

Mark Twain thereafter turned into a highly successful school with many more applicants than students admitted. Indeed, because so many students were unable to attend Mark Twain, the school board established accelerated programs at other schools while maintaining the court-ordered percentages at Mark Twain.

Judge Weinstein concluded that no vestiges remained of the original constitutional violation, racial segregation, and that:

Defendants' implementation of the remedial order at Mark Twain and the achievement of a racial mix at Mark Twain and other District 21 middle schools over the last 30 years demonstrate substantial good-faith compliance over a long period of time. Slip op. 10.

Judge Weinstein considered the effect of the recent U.S. Supreme Court decision in Parents Involved in Comty Schs. v. Seattle Sch. Dist., 127 S.Ct. 2738 (2007), and concluded that race as one factor among many in the composition of college and graduate schools should be applied as well to grade schools.

Class Action Under FLSA

In Guzman v. VLM Inc. d/b/a Reliable Bakery, 07 CV 1126 (EDNY, March 2, 2008), Judge Gleeson confirmed the conditional certification of a class under the federal Fair Labor Standards Act (FLSA) and granted plaintiffs' motion to certify a class under Federal Rule of Civil Procedure 23 to pursue state law claims under the New York Labor Law (NYLL). Plaintiffs' claims arose from the failure of the Reliable Bakery to pay time-and-a-half overtime pay or 'spread of hours' compensation for working more than 10 hours in a day.

Under the FLSA, once the court has authorized a collective action, plaintiffs notify potential class members of the pendency of the action, allowing them to opt in. Judge Gleeson clarified that his authorization to notify potential class members constituted a conditional certification of the class for the purpose of authorizing notice and discovery.

In granting plaintiffs' motion to certify the state law class, Judge Gleeson considered the requirements under Rule 23(a). First, because the class consisted of at least 133 individuals, plaintiffs had met the numerosity requirement. The court thus rejected defendants' claim that the class was restricted to only those individuals who had opted into the FLSA action.

Next, as the court noted, commonality is established by a single common question of law or fact, which was the case here.

The class representatives here met the 'typicality' requirement, because each class member's claim arises from the same course of events and rests on the same legal arguments. The affidavits submitted by plaintiffs and defendants demonstrated that all bakery employees were paid on a daily, not hourly, basis. Defendant Vitacco, moreover, was an 'employer' within the meaning of the FLSA because he had the ability to set pay rates for all bakery workers, acknowledged that he was president of VLM and showed wide knowledge of its personnel practices. Slip op. 13.

Challenging plaintiffs' adequacy as class representatives, defendants emphasized that plaintiffs were no longer employed by defendants and that plaintiff Guzman allegedly destroyed a bakery alarm and clock. In the court's view, plaintiffs' current status as nonemployees did not render them unfit as class representatives, and evidence that Mr. Guzman had destroyed bakery property would not materially impair his credibility concerning wages.

Because the central issue was whether 'defendants had a uniform policy or practice of denying overtime and spread-of-hours compensation to its employees,' predominance was satisfied.

Finally, Judge Gleeson found that class action was superior to other methods for adjudicating this controversy. First, the opt-out nature of a class action, as opposed to the opt-in requirement of the FSLA, would include those potential class members who were fearful of retaliation if they opted in. Next, there was no danger of confusion with two notices as long as each was carefully worded. The court found the 'values of judicial economy, convenience, and fairness all favor exercising supplemental jurisdiction' over the NYLL class-action claims, since the factual overlap between the federal and state claims was 'virtually total' and judicial economy would not be served by litigating in two separate fora. Slip op. 19.

Discounting Future Damages

In an action involving a collision between two recreational motor boats on Long Island in Great South Bay, causing claimant to suffer serious and permanent injuries, Judge Spatt held, among other things, that claimant's award for future pain and suffering should be discounted by 2 percent, as a reduction to present value. In the Matter of the Complaint of Delmarine Inc., as Owner of a Certain 1973 18' Signa Bowrider for Exoneration From or Limitation of Liability, 03 CV 6206 (EDNY, Feb. 1, 2008).

In October 2007, the court had awarded claimant $750,000 for her injuries and pain and suffering 'to date,' $500,000 for future pain and suffering, plus past medical expenses.

Claimant argued here that, in reducing the award for future pain and suffering, the court should apply a discount of 2 percent per year. The operator of the other boat and its owner argued that, based on current market information, a discount of 4.15 percent per year would reasonably reflect a long-term investment.

As Judge Spatt observed, the rule of discounting future loss of earnings to present value has been extended to future nonpecuniary losses. Under New York law the period of time used to calculate the present value for damages attributable to pain and suffering is a maximum of 10 years.

Judge Spatt stated that the parties contesting the 2 percent rate have not adduced any convincing evidence of an appropriate alternative discount rate and have merely suggested a rate based upon currently available conservative investments such as 20-year United States Government Treasury Notes.

Finding claimant's requested 2 percent discount rate to be 'reasonable,' the court reduced the $500,000 award for future pain and suffering to a present value of $347,898. See Dora v. Marina Mercante Nicaraguens SA, 634 F.2d 30 (2d Cir. 1980).

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 April 11, 2008, issue of the New York Law Journal. Copyright © 2008 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]