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. Magistrate Judge Vicktor V. Pohorelsky granted motions by defendant Saudi Arabian Airlines in a race discrimination case to strike both immaterial matter in the complaint and plaintiffs' jury demand. Judge Jack B. Weinstein held that an insurance policy's definition of 'robbery' included theft by tricks. Judge Eric N. Vitaliano denied plaintiffs' due process and equal protection claims against the Board of Elections for rejecting her petition to be placed on a primary ballot for City Council. And Judge Weinstein commented on the dangers defendant possibly faced following the U.S. Court of Appeals for the Second Circuit's reversal of his conviction on one of three counts.

Motion to Strike Jury Demand

In Aboeid v. Saudi Arabian Airlines Inc., 10 CV 2518 (EDNY, June 1, 2011), a case pending before Judge Sterling Johnson Jr., Magistrate Judge Pohorelsky granted defendant's motion to strike from the complaint certain immaterial allegations and plaintiff's jury demand.

Defendant Saudi Arabian Airlines, owned by the Kingdom of Saudi Arabia, is a 'foreign state' within the meaning of the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §1603(a)(b).

Plaintiffs – a husband, wife and their seven children – alleged that, because of their race and color, they were mistreated by defendant's employees on a trip from New York to Sudan and back. Plaintiffs asserted, for example, that on their return trip they were denied boarding in Jeddah, Saudi Arabia; and that they were stranded there for 13 days before obtaining alternative transportation to the United States, all at their own expense.

Defendant moved pursuant to Rule 12(f) F.R. Civ. P., to strike general allegations that Saudi Arabia has a 'history of ubiquitous racism against Blacks'; that, as shown by internet postings, this is 'consistent with internal racial issues in Saudi Arabia, which only outlawed slavery of Blacks in 1962'; and that various cited news reports document race and gender discrimination in Saudi Arabia.

In striking these allegations as immaterial, Judge Pohorelsky stated:

a plaintiff should not be able to show a defendant's intent and motive by producing evidence of a history of discrimination in a place where a defendant is located. Such evidence is essentially character evidence, and would thus run afoul of the prohibition against the use of such evidence. See Fed. R. Evid. 404 (a) . . . The prohibition would be doubly applicable here because the character evidence . . . is not the character of the defendant, but of the country where defendant is located.

Defendant also moved pursuant to Rule 39(a)(2), F.R.Civ.P., to strike the demand for a jury trial, on the ground that, under the FSIA, defendant is subject only to nonjury trials in the federal courts.

According to plaintiffs, defendant waived FSIA protection by operating as a foreign air carrier in the United States pursuant to a Department of Transportation permit conditioned on the waiver of sovereign immunity regarding claims arising from plaintiffs' international air transportation. But such waivers must be made 'explicitly or by implication.' 28 U.S.C. §§1605 (a)(l), 1610 (a)(l). While defendant waived immunity from suit in the United States, the waiver said nothing about nonjury trials.

Judge Pohorelsky also saw 'an even more fundamental problem.' The FSIA, the sole source of subject matter jurisdiction here, provides, that 'district courts shall have original jurisdiction. . . of any nonjury civil action against a foreign state.' 28 U.S.C. §1330(a) (emphasis added.) Thus, granting the complaint's jury demand would deprive the court of jurisdiction.

Such a result would also be inconsistent with language in the DOT permit referring to the waiver of sovereign immunity under the FSIA. By this language the DOT 'must have intended' to bring defendant within the various FSIA provisions, particularly the extension of subject matter jurisdiction to 'nonjury trials.'

Insurance – 'Robbery'

In VAM Checking Corp v. Federal Insurance Company, 10 CV 1529 (EDNY, May 27, 2011), Judge Weinstein granted summary judgment compelling defendant insurance company to cover the claim of its insured, a check cashing company. Posing as the wife of plaintiff company's owner, one of a team of scam artists called the company and instructed a cashier to give $120,000 in cash to her (purported) husband's representative, who was to appear with a code word that would identify him as authorized to take the funds. The cashier did as instructed, not realizing that she had been duped until she spoke with the owner hours after the money had been handed over.

The case turned on whether the incident fell within the policy's definition of 'robbery.' Defendant argued that, because the cashier was induced to turn the money over by trickery, plaintiff could not establish the use of force or threat required for a robbery under §160 of the New York Penal Law. Judge Weinstein found that the insurance policy's definition of 'robbery,' which did not require 'force, violence or apprehension,' rendered the Penal Law's definition 'irrelevant.' Slip op. 7.

Under the policy's definition of 'robbery,' the critical question was whether there was an 'overt felonious act committed in the presence and cognizance of [the cashier].' This condition was met when the cashier saw one of the conspirators come and take the money. In the court's view, the word 'cognizance' did not require the cashier to be aware that the conduct she witnessed was felonious. Ambiguities in the policy would be construed against the defendant as draftsman, and defendant both 'chose to use the esoteric term 'cognizance',' and failed to include clear and specific exclusions for 'deceptive fraud or larceny by trick.' Slip op. 13-14. As Judge Weinstein observed, the case 'illustrates why insurance companies should use plain English.'

Election Issues

In Leroy v. New York City Board of Elections, 09 CV 3952 (EDNY, June 19, 2001), Judge Vitaliano dismissed claims for damages based on alleged due process and equal protection violations arising from the Board of Elections' decision to keep plaintiff's name off a primary ballot for City Council, District 28, in Queens.

Plaintiff, appearing pro se, filed a petition to be placed on the September 2009 Democratic Party primary ballot for City Council. The petition had a defective cover sheet and the Elections Board gave plaintiff the opportunity to correct it. She filed an amended cover sheet, which was also defective, this time for omitting the name of the political party. The board notified plaintiff that she would not appear on the September primary ballot.

Plaintiff commenced a special proceeding in Supreme Court, Queens County, seeking an order validating her petition. The court dismissed the petition as untimely, and the Appellate Division affirmed.

Plaintiff filed the present action on primary day, seeking an injunction requiring the Elections Board to add her name to the November general election ballot. In a separate prior decision, Judge Vitaliano denied injunctive relief. Here, the court addressed plaintiff's damages claims against the board for (1) deprivation of due process; (2) gender discrimination; and (3) a conflict of interest between the Board of Elections and plaintiff's campaign.

As to plaintiff's due process claim, Judge Vitaliano found that plaintiff had no property or liberty interest in an elected position. Even if such an interest existed in a ballot position, the court noted, there was no due process violation. Plaintiff alleged numerous missteps by the Elections Board that she claimed violated her due process rights, but the real issue was whether the process was constitutionally adequate under Matthews v. Eldridge.

In Rivera-Powell v. New York City Board of Elections, 470 F.3d 458 (2d Cir. 2006), the Second Circuit found that the process set forth in the New York Election Law satisfied due process, because an aggrieved candidate had a hearing before being removed from the ballot and an opportunity to obtain full judicial review under Election Law §16-102. This process, followed here, provided sufficient notice and a pre-deprivation opportunity to be heard, which, along with the availability of expedited court proceedings, met due processstandards.

Judge Vitaliano also dismissed plaintiff's equal protection claim based on gender. Plaintiff's unsupported and conclusory allegations of discrimination established no intentional or purposeful discrimination by the board. Indeed, there was nothing to suggest that her gender played any role in the board's decision to keep her off the primary ballot. Plaintiff's examples of men who were treated differently did not include any who submitted defective cover sheets, so there was no class of individuals to which plaintiff could belong or be compared. Slip op. 14-15.

Finally, the presence of the estranged son of her campaign manager as an Elections Board reviewer and decision maker did not violate any constitutional or federal or state statutory provision. Slip op. 15-16.

Criminal Venue

In United States v. Butler, 08 CR 370 (EDNY, June 17, 2011), Judge Weinstein warned defendant, whose securities fraud conviction had been reversed by the Second Circuit for lack of venue, that a new trial or indictment in the Southern District could result in a longer term of imprisonment than he already faced.

Defendant was found guilty after a jury trial on three counts: Count One, conspiracy to commit securities fraud; Count Two, securities fraud; and Count Three, conspiracy to commit wire fraud. Judge Weinstein sentenced him to five-year terms of imprisonment on each count, to run concurrently. The Second Circuit affirmed the conviction on the two conspiracy counts, but vacated the securities fraud conviction on the ground that use of Kennedy Airport for international travel did not provide a basis for venue on that count (where the criminal activity was centered in the Southern District of New York and Switzerland). Judge Weinstein found it a 'curious result, that a court with power to try the conspiracy to commit a crime may not try the substantive crime that resulted from the success of the conspiracy. . . .'

The Second Circuit also remanded for resentencing on the conspiracy counts. Judge Weinstein saw two possible unfavorable outcomes regarding vacatur of Count Two. First, the government could retry him in the Eastern District and establish venue with the cooperation of his co-defendant. Second, the Southern District could indict him, and if he were convicted, sentence him under the guidelines to an additional and/or longer term of imprisonment. Both results would leave defendant worse off. Thus, the court suggested that defendant consider consenting retroactively to venue in the Eastern District and seeking to modify the Second Circuit mandate. The court indicated that it would most likely impose the same sentence on defendant for Counts One and Three.

Setting an argument date, Judge Weinstein stated:

Defendant shall be present, prepared for resentencing on Counts One and Three, for a discussion of Count Two, and for immediate incarceration. Slip op. 3.

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 July 8, 2011, issue of the New York Law Journal. Copyright © 2011 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]