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 I. Leo Glasser granted a motion to unseal the docket sheet in an old criminal case. Judge Jack Weinstein held that "No Limit Texas Hold'em" poker is not "gambling" for purposes of the Illegal Gambling Business Act. Judge Raymond Dearie denied a motion by the City of New York and certain police officers to dismiss claims that defendants retaliated against plaintiff, a police detective, for complaining to the Internal Affairs Bureau about the conduct of his colleagues. And Judge Arthur Spatt ruled on a prevailing defendant's application for costs in various categories.

Motion To Unseal

In In re Application to Unseal 98 Cr 1101 (ILG), United States v. John Doe, 12 Mc. 150 (EDNY, Aug. 27, 2012), Glasser granted intervenors' motion to unseal the docket sheet in a 1998 criminal case where parts of the record, containing the key confidential facts, had already been revealed on several occasions.

Intervenors, including the Miami Herald Media Company and Linda Strauss, a member of the public acting pro se, moved the court to unseal the complete record in United States v. John Doe, 98 CR 1101. In 1998 the docket sheet and all documents filed in the case were sealed. The issue before the court here was whether, as an initial matter, to unseal the docket sheet.

In December 1998 defendant Doe pleaded guilty, pursuant to a cooperation agreement, to an information charging participation in a racketeering enterprise. The court sealed the case and its docket sheet at the plea proceeding. The inference is clear that the government had asked the court, at the time of the 1998 plea, to seal the proceedings to protect Doe's safety in light of his cooperation. Slip op. 2. No one disputed that the case has been kept under seal since then for the same purpose.

Despite these precautions, in May 2010 a civil action was filed in the Southern District annexing sealed documents from the Doe case — his 2004 presentence report, proffer agreements, and his cooperation agreement. That event provoked litigation in the Eastern District to enjoin the dissemination of the sealed documents. Extensive proceedings followed.

The government had previously revealed Doe's cooperation. In 2001 the government was required to release that information to a defendant against whom Doe had cooperated and who was about to be tried. In 2009 the government inadvertently unsealed the docket of a Doe coconspirator containing a reference to Doe's cooperation. On another occasion Doe's identity and his conviction were also inadvertently disclosed in a government press release later reprinted in the Congressional Record.

Doe's conviction and cooperation were the subject of much speculation by the media. The docket sheet in his case was once mistakenly unsealed for several days, enough time for the media, Lexis and Westlaw to access it.

Docket sheets enjoy a presumption of openness, and the parties opposing the motion — the government and Doe himself — bear the burden of showing that continued sealing is necessary to shield Doe from danger. Normally, the court deciding a motion of this kind would balance the competing interests. But here that "would be academic" as the relevant information "has been publicly revealed; the cat is out of the bag; the genie is out of the bottle." Indeed, "a court lacks power to seal information that, although once sealed, has been publicly revealed." Slip op. 5.

Because continued sealing would be "futile," Glasser both granted the motion to unseal the docket sheet and set a hearing date to determine whether unsealing any case documents is required. "The Government and Doe will bear the burden of establishing that there are compelling interests that override the qualified First Amendment and common law rights of access." Slip op. 7.

Poker, a Game of Skill

In United States v. DiCristina, 11 CR 414 (EDNY, Aug. 21, 2012), Weinstein vacated defendant's conviction on the ground that poker, as a game in which skill predominates over chance, is not "gambling" under the Illegal Gambling Business Act (IGBA), 18 U.S.C. §1955.

On a pretrial motion to dismiss the indictment, Weinstein had held that whether poker constituted gambling under the IGBA was an issue of law for the court. He reserved decision on that question, and charged the jury that poker did constitute gambling under the IGBA. After the jury returned a judgment of conviction, defendant renewed his motion to dismiss.

The court vacated the jury's verdict and dismissed the indictment following extensive analysis of the IGBA and the testimony of competing experts concerning the roles that skill and chance, respectively, play in poker.

Two issues were central.

First, the court considered whether the IGBA covers all activities within the scope of §1955(b)(1), or whether its reach is limited to the financing of activities that also qualify as "gambling" under the definition set forth at §1955(b)(2).

Section 1955(b)(1) defines "illegal gambling business" as any gambling business that both violates state law and meets certain other statutory thresholds. Having been found guilty of financing an operation of "No Limit Texas Hold'em" poker that violated New York law and met the other requirements of §1955(b)(1), defendant argued that, in order to show an IGBA violation, the government must also establish that his conduct involved "gambling" within the meaning of §1955(b)(2). As Weinstein held, because the intended scope of the statute was unclear, the rule of lenity required the government to show that defendant's conduct fell within the scope of both §§1955(b)(1) and (2). Slip op. 100.

This brought the court to the second issue: whether poker constitutes "gambling" within the meaning of §1955(b)(2). That section provides: "'gambling' includes but is not limited to pool-selling, bookmaking, maintaining slot machines, roulette wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein." Weinstein found that poker must "fall under the general definition of gambling and be sufficiently similar to those games listed in the statute to fall within its prohibition . . . . It does not." Slip op. 103.

The games listed in §1955(b)(2) are either exclusively, or predominantly, games of chance from the perspective of the wagering party. The court credited the testimony of defendant's expert over that of the government's expert to find that, while both skill and luck affect the outcome in No Limit Texas Hold'em poker, skill is a factor in every hand and predominates in determining the outcome within a few hundred hands (the typical level of activity for defendant's clients), placing defendant's conduct beyond the scope of the IGBA. Slip op. 112-19.

First Amendment Claims

In Griffin v. The City of New York, 10 CV 2592 (EDNY, July 31, 2012), Dearie declined to dismiss plaintiff's §1983 claims for retaliation violating his right to free speech, and dismissed his claims alleging violations of procedural and substantive due process.

The complaint alleged the following: Plaintiff joined the New York Police Department in 1983. In October 2005 he was promoted to Detective First Grade and joined the C Team of detectives in the 83rd Precinct in Bushwick, Brooklyn. During his career, he had received nothing but praise, including numerous citations and awards.

In late October 2005, one of his colleagues botched a murder investigation. In November, another detective, McCarthy, called to ask plaintiff to accept the blame for the botched investigation. Plaintiff was told that if he refused to do so, other detectives would falsely inform the NYPD Investigation Unit (IU) that the botched investigation was plaintiff's fault. Plaintiff reported to the NYPD Internal Affairs Bureau (IAB) that McCarthy had instructed plaintiff to lie during an official investigation.

After his report, from December 2005 through July 2009, his colleagues called him a "rat," refused to work with him, vandalized his belongings, interfered with his ability to work as a detective and otherwise shunned him. He alleged that his supervisors engaged in retaliatory conduct by treating him disparately from his colleagues. Finally, in July 2009, plaintiff left the NYPD.

Addressing plaintiff's §1983 claim against the City of New York and the individual defendants for violating his right to free speech, Dearie found that plaintiff had established a prima facie retaliation claim. First, plaintiff sufficiently alleged that adverse employment action was taken against him and that there was a causal connection between his protected speech in reporting to the IAB and the action. Thus, the only issue was "whether plaintiff has sufficiently alleged that his complaint to IAB constitutes protected speech under the First Amendment." Slip op. 13. Dearie found that plaintiff had spoken as a citizen and that the subject matter was a matter of public concern fulfilling the requirements of protected speech.

As the court noted, plaintiff had made the statements not pursuant to his official duties, but as a citizen. Several factors supported this conclusion: (1) Even though the NYPD Patrol Guide imposed a duty to report corruption, as a practical matter reporting to the IAB was not tolerated by plaintiff's superiors. (2) McCarthy's alleged misconduct did not relate to plaintiff's ability to perform his duties as a police officer. (3) Any citizen could file a report with the IAB using the same 24-hour phone number provided to NYPD officers. (4) The interest at stake was the public's interest in receiving information about the functioning of government, rather than plaintiff's interest as an employee of the NYPD. Slip op. 16-24.

Speech relating to the functioning of government is particularly important to the public, and speech related to corruption in the police force has the greatest significance:

A police officer allegedly rallying his colleagues to lie in the course of an internal probe into a botched murder investigation and then threatening a fellow officer to accept fault for something he did not do is of paramount public concern, raising at the very least, the specter of more widespread corruption. Slip op. 26.

Dismissal of claims against the individual defendants based on the affirmative defense of qualified immunity was inappropriate at this stage. Defendants failed to show that their actions were objectively reasonable.

Plaintiff's procedural and substantive due process claims under the Fifth and 14th amendments did not fare as well. First, the Fifth Amendment applies only to federal government actions. Second, an Article 78 proceeding was available and provided a meaningful opportunity to challenge the voluntariness of his resignation. Finally, Dearie dismissed plaintiff's §1985 conspiracy claims because, under the statute, the conspiracy must be motivated by some racial or class-based invidious discriminatory animus, and such discriminatory animus was neither pled nor suggested by plaintiff. Slip op. 32.

Award of Costs

In Palm Bay International v. Marchesi di Barolo S.P.A., Taub v. Marchesi di Barolo S.P.A., 09 CV 599 and 09 CV 601 (EDNY, Aug. 13, 2012), Spatt, reviewing prevailing defendant's request for costs in the amount of $147,987 and plaintiffs' objections, awarded costs in the amount of $50,892. Following a long trial, jury verdict and post-trial motions, the court had entered judgment in favor of defendant on its affirmative defense against Palm Bay International.

Plaintiffs asked the court to reject the entire bill of costs because it was unreasonable and defendant was not successful on all its claims. The court examined each category of costs requested and made determinations pursuant to Federal Rule of Civil Procedure 54(d), which provides authority to district courts to award costs to the prevailing party.

Daily Trial Transcripts. Plaintiff sought $20,063 in costs for daily trial transcripts. Even though daily transcripts of trial testimony are not customary, Spatt found that they were necessary for defendant's use in this four-week trial involving the testimony of 16 witnesses, three of whom testified by means of an interpreter. The court approved the entire amount requested for daily transcripts.

Deposition Costs. Defendant sought court reporter costs in the amount of $17,442 incurred in taking the depositions of nine witnesses who testified at trial, plus $262.87 for renting a room for one deposition. None of the deposition transcripts was used at trial itself. Although Local Rule 54.1(c)(2) states that costs are allowable for the original and copy of a transcript, "if the deposition was used or received in evidence at the trial," courts have allowed such costs when they were reasonably necessary to the litigation at the time they were taken. Slip op. 18. The depositions of the witnesses were used in defendant's summary judgment motion, which is also expressly allowed by Local Rule 54.1(c)(2). Accordingly, the court allowed the costs sought for depositions, but disapproved the costs for renting a room.

Witness Fees, Mileage and Subsistence. Defendant sought $8,566 for witness fees and travel and subsistence costs. The court allowed $200 in statutory witness fee costs, but reduced the amounts sought for food and lodging to the allowances established by the General Services Administration for travel. The GSA per diem allowance is $130 per day for accommodations and $34.50 for food. In addition, Spatt disallowed any per diem for defendant's damages expert, who lived in New Jersey. Total allowed fees, mileage and per diem costs were $1,222.50.

Interpreting and Translation Costs. Defendant sought $39,384 for payment of the interpreter and her travel expenses and translation of documents for trial. Spatt allowed interpreting costs under Local Rule 54.1(c)(4), but denied the travel costs, because Italian interpreters are available in Long Island or New York and the costs in the amount of $5,975 were excessive and unreasonable. Given no means to identify what documents were translated or whether they were used at trial, the court found that defendant failed to establish that such translation fees were reasonable. Accordingly, the court allowed only $10,800 in interpretation and translation costs.

Copying Costs. Spatt denied defendant's request for $26,423 in copying costs because defendant failed to provide a statement that the copies were "necessarily obtained for use in the case" as required by Local Rule 54.1(c)(5).

Trial Technologist and Wine Options Summary. Defendant sought costs of $27,558 for the services of a courtroom technologist who prepared electronic exhibits, displayed them to the jury and helped attorneys with the technology in the courtroom and the purchase of a summary of wine market conditions titled "Wine Options." Spatt denied both categories of costs because there was no statutory or rule support for either.

Miscellaneous Fees. The court allowed the amount of $1,364 in costs for serving witness subpoenas by special process servers under the Local Rules and court precedents. Conversely, Spatt found no authority for taxable costs of $7,184 for renting computer equipment, supplies and other miscellaneous rental and cancellation fees.

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 September 14, 2012, issue of the New York Law Journal. Copyright © 2012 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]