November 13, 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 Brian M. Cogan disqualified a lawyer in a criminal case. Judge Jack B. Weinstein denied, in part, defendant Board of Education's motion for summary judgment in a suit involving allegations of bullying at a public school. And Judge Cogan found that the presence of non-diverse defendants deprived the court of subject matter jurisdiction.

Disqualification of Counsel

In United States v. Curanovic, 08 CR 240 (EDNY, March 31, 2011), Judge Cogan disqualified an attorney from representing defendant Dino Saracino because of "unwaivable" conflicts of interest.

Mr. Saracino, an alleged member of the Colombo crime family, is charged with conspiring to make extortionate extensions of credit (among other offenses). Mr. Saracino allegedly arranged for another Colombo member to run his loan sharking business if, as anticipated, Mr. Saracino was arrested. That member, CW-1, is now cooperating with the government.

Despite Mr. Saracino's plans for CW-1, a Colombo associate later told CW-1 that alleged Colombo member Anthony Russo was taking over Mr. Saracino's loan sharking business and keeping a portion of the profits. This intervention was contrary to Mr. Saracino's intentions in several respects.

CW-1 met with Mr. Saracino's attorney after Mr. Saracino was incarcerated and informed him of Mr. Russo's actions. The attorney recommended that CW-1 meet with Theodore Persico Jr., a Colombo family member, to work things out. The attorney agreed to set up the meeting.

The next day CW-1 met with Mr. Persico, at the attorney's residence. The attorney waited for both men to be present and then left the room. Mr. Persico told CW-1 that CW-1 could keep loan sharking proceeds if he collected the payments, but that certain other criminal proceeds generated by Mr. Saracino's crew members would go to Mr. Persico, and Mr. Russo.

As a result of CW-1's information, the U.S. Attorney's Office is now investigating Mr. Saracino's attorney. The government took the position that the potential conflicts here were waivable, albeit barely. To analyze the potential conflict, Judge Cogan had to assume the truth of CW-1's testimony. In finding that a waiver would not cure the problem, Judge Cogan pointed to the following:

  • Though the meeting between CW-1 and the attorney occurred about a year after Mr. Saracino's arrest and substantially beyond the end date of the charged conspiracy, the attorney has been implicated in the ongoing loansharking operation.
  • "The extortion business that was the subject of the discussion between [the attorney] and CW-1, and then, as a result of [the attorney's] good offices, between CW-1 and Persico, Jr., is the very same business charged in the indictment." Slip op. 6.
  • CW-1 will testify at trial about his interactions with the attorney and Mr. Persico, as proof of the loansharking conspiracy.
  • The attorney, himself under investigation, is in a position to help the government, and his "strong interest in self-protection" could lead to a decision that threatens his client's interests.

Even if the conflict is "waivable," the court stated, no "rational defendant" would knowingly want to be represented by a lawyer with these conflicts. If Mr. Saracino stayed on the case, he would not be allowed to contradict, through his own testimony, CW-1's version of events.

The court also has an independent interest in the integrity of the proceedings. While the parties could agree not to refer at trial to the attorney's real name, the jurors might see through the veiled references to him and sense the taint in the proceedings. In any event, the necessary disclosure to the public would expose the appearance of impropriety.

Finally, Mr. Saracino recently filed a financial affidavit seeking representation under the Criminal Justice Act. A defendant has no right to choose a particular CJA counsel. The court had previously indicated that, for purposes of efficiency, the original attorney could be appointed CJA counsel. But now that the conflict has emerged, the reason to continue with the same counsel no longer exists.

School Bullying-IDEA

In T.K. and S.K., Individually and on Behalf of L.K. v. New York City Dept. of Education, 10 CV 0752 (EDNY, April 25, 2011), Judge Weinstein conducted a wide-ranging review of the legal landscape concerning the educational establishment's liability for inadequate responses to bullying, in the course of denying defendant's motion for summary judgment with respect to a student's claim under the Individuals with Disability Education Act, 20 U.S.C. §§1400 et seq. (IDEA).

Plaintiffs, on behalf of their disabled minor child, sought reimbursement under IDEA for private school tuition incurred after the child assertedly "was deprived of an appropriate education because her assigned public school did nothing to prevent her from being so bullied by other students as to seriously reduce the opportunity for an appropriate education."

Public school personnel had established the child's Individualized Education Plan (IEP) after meaningful, individualized consideration in consultation with the parents and appropriate experts. However, defendant declined to address the parents' concerns about the effect of bullying on their child. Although defendant's reason was that bullying was "not appropriate" to a meeting about the IEP and "could be discussed later," the parents' concerns were never addressed. Slip op. 7.

Judge Weinstein stated, "This case presents the largely unresolved issue of the extent to which bullying by other students inhibits a disabled child from being educated appropriately, and what her school must do about it. A strict legal test is developed and applied." Slip op. 3. The court surveyed the case law and academic literature concerning bullying in schools and its effect on the education and mental well being of victims, bullies, and bystanders, both as to students in general, and disabled students in particular. Slip op. 11-18.

As Judge Weinstein noted, the "question of whether bullying can be grounds for finding that a school district deprived a student of a free and appropriate education [FAPE] is an open question in the Second Circuit." While "[t]hree other circuit courts of appeals have expressly noted that bullying can be a basis for denial of a FAPE, . . . a common framework under which to analyze the issue has not emerged." Slip op. 37. Judge Weinstein reviewed the Court of Appeals precedents and various district court decisions that had adapted a four-part test from the standard for students' claims of sexual harassment under Title IX (20 U.S.C. §§1681 et seq.), and considered "expert guidance provided to school districts by the Federal Department of Education." Id. at 37-47.

Judge Weinstein simplified and restated the earlier four-part test to conclude that: "under IDEA, the question to be asked is whether school personnel [were] deliberately indifferent to, or failed to take reasonable steps to prevent bullying that substantially restricted a child with learning disabilities in her educational opportunities." Slip op. 45.

Under that standard, defendant's motion for summary judgment was denied: (1) Plaintiffs had presented evidence that the disabled student, L.K., "was isolated and the victim of harassment from her peers," and the administrative review had erred in concluding that this concerned only placement and not the adequacy of the educational program. (2) There was evidence that defendant had notice of the problem, which the administrative review had erroneously failed to consider. (3) Defendant failed to provide evidence "that it either investigated claims of bullying or took steps to remedy the conduct." (4) Evidence of some academic progress by L.K. did not justify dismissal. Rather, "[t]he law recognizes that a student can grow academically, but still be denied the educational benefit that is guaranteed by IDEA." Slip op. 48-49.

The court dismissed plaintiffs' claim that the IEP had been impermissibly "predetermined." Despite defendant's failure to address the parents' concerns about bullying, the IEP had been prepared with sufficient input from the parents and experts concerning L.K.'s educational needs. Slip op. 50.

Subject Matter Jurisdiction

In Eastern Savings Bank v. Walker, 11 CV 798 (EDNY, April 1, 2011), Judge Cogan raised, sua sponte, the issue of subject matter jurisdiction based on diversity of citizenship. As the court held, several defendants-the State of New York, the New York State Department of Taxation and the Internal Revenue Service-were non-diverse, and unless they were voluntarily dismissed as defendants, the case would be dismissed for lack of subject matter jurisdiction. All three defendants were added in this mortgage foreclosure proceeding to enable a sale of the property free and clear of their tax liens.

The State of New York could not be sued on diversity grounds because it is not a citizen of any state. New York Real Property Actions and Procedures Law §201 provides that the state may be made a party defendant in foreclosure actions in the same manner as a private person. But as Judge Cogan concluded, the "State of New York cannot make itself a citizen of New York for the purposes of diversity jurisdiction, and plaintiff naming the State as a defendant in this action destroys diversity."

Although the status of whether the New York State Department of Taxation and Finance was more complicated, Judge Cogan found that it was simply an agency of the state, not a citizen of the state. First, the Department of Taxation was not organized as a corporation under New York law. Second, the state here was clearly the real party in interest as the lienholder in an action affecting real property. Third, the Department of Taxation was a pure governmental division, not an independently operating government corporation, like a state highway commission. The function of the Department of Taxation was to collect taxes and remit them to the state.

Similarly, Judge Cogan found no basis for jurisdiction over the Internal Revenue Service. The IRS is clearly not a citizen of any state. In addition, the waiver of sovereign immunity in mortgage foreclosure actions found in 28 U.S.C. §2410(a)(2) does not provide a basis for federal question jurisdiction over a claim against the IRS. Slip op. 11-12.

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 May 13, 2011, issue of the New York Law Journal. Copyright © 2011 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]