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 Jack B. Weinstein, at the request of the press and over the government's objection, ordered the unsealing of defendant's sentencing memorandum, disclosing details of her cooperation with the government in an official corruption investigation. Judge Sterling Johnson Jr. denied a father's petition, pursuant to the Hague Convention, seeking return of his minor children to Mexico. Judge Arthur D. Spatt dismissed counterclaims for defamation where the allegedly defamatory letter was pertinent to previous and potential litigation. And Judge Denis R. Hurley found that a developer had infringed plaintiffs' copyrighted design work.

Unsealing Sentencing Memo

In United States v. Huntley, 13 CR 54 (May 7, 2013), Judge Weinstein granted a petition by members of the press to unseal defendant's sentencing memorandum, which listed names of state legislators and local officials whose conversations she had taped as part of her cooperation with the government.

Defendant, former New York State Senator Shirley Huntley, pleaded guilty to a mail fraud conspiracy to embezzle state funds designated for a non-profit entity under her control. Attempting to reduce her sentence, at the government's direction she taped her conversations with state legislators and other officials whose names are revealed in a sentencing memorandum filed by her attorney under seal without the court's prior consent.

Members of the press filed a petition to unseal these materials. Objecting, the government asserted that this would interfere with ongoing investigations. The government's sentencing memorandum, which was not sealed, stated that defendant had made recordings of conversations with nine people. While some of the conversations failed to elicit evidence of criminality, the government claimed that "recordings of meetings the defendant held separately with State Senator #1 and two other elected officials did yield evidence useful to law enforcement authorities." There has been substantial press coverage of the fact that defendant cooperated by recording conversations with elected officials.

As Weinstein noted, the presumption against sealing court records is strong under a whole range of First Amendment principles. To tip the balance in the other direction, countervailing factors must demonstrate, on the record, the essential need for closure — and any restriction must be "narrowly tailored" to serve those interests.

In many cases "premature revelations of criminal investigations may stymie law enforcement by allowing criminals to destroy evidence and to take other measures to prevent a full inquiry into possible crimes." Slip op. 5-6. But that concern does not apply here:

Every legislator who has conversed with this defendant will necessarily assume that he or she was recorded under the supervision of the FBI. There will be no surprises to the potentially accused by the revelations of their names. Interference with ongoing investigations will be of almost no significance. (Slip op. 6).

Nor, in the court's view, would unsealing unfairly damage recorded officials not engaged in criminal activity. The presumption of innocence is built into our system, and "privacy interests are at the lowest" for matters of public importance involving political figures, who in any event are well equipped to respond to allegations of wrongdoing. Slip op. 7.

Weinstein also saw no merit to the argument that disclosing names here would discourage good people from participating in government. "Decent politicians can stand the heat." Slip op. 8.

The court stayed its order to unseal defendant's sentencing memorandum for 24 hours to permit the government to seek a longer stay in the U.S. Court of Appeals for the Second Circuit.

Child Abduction Act

In Varillas Broca v. Gil Giron, 11 CV 5818 (EDNY, March 6, 2013), Judge Johnson denied a father's petition seeking return of his minor children to Mexico pursuant to the Hague Convention on the Civil Aspects of International Child Abduction. The court adopted in part and set aside in part a report by Magistrate Judge Joan M. Azrack that recommended returning the children to Mexico.

The mother and father met in Cardenas, Tabasco, Mexico, married in April 1994, and had three children (the oldest at 16 was outside the age parameters of the statute). M.V. and J.V., two minor children, were born in Mexico in 1997 and 2002, respectively. By 1997, the father had become physically and psychologically abusive. The children were citizens of Mexico and lived there from their birth until 2010, when their mother unilaterally fled Tabasco, eventually using a "coyote" to smuggle herself and her children over the U.S. border. The mother and children lived in her sister's home in Texas for about a month and then moved to Brooklyn, where they now live with another sister.

Azrack found that petitioner had set forth a prima facie case for return of the children to Mexico and respondent had failed to establish any of the three affirmative defenses. Slip op. 9. Considering the affirmative defenses de novo, Johnson determined that respondent failed to show a "grave risk" that returning the children would expose them to physical or psychological harm. Although the mother had been abused by the father, there was little threat of harm to the children. In her testimony before Azrack, M.V. did not indicate a fear of her father, even though she had been hit by him three times in the past. J.V. had little memory of his life in Mexico.

Addressing the second exception, Johnson found that both M.V. and J.V. were "well-settled" in their Brooklyn life. M.V. was fluent in English, functioning well in school and active in her church. J.V. was not doing as well with English or in school, but he too had made friends. The children also have an extended family in Brooklyn.

Because the children had moved four times in two years, Johnson determined that their environment was "unstable," and noted that they remain in the United States illegally. On balance, "the totality of factors support a finding that Respondent has established by a preponderance of the evidence that M.V. is well-settled." Slip op. 18. Johnson also considered the disruption that would occur if J.V. were separated from his mother and siblings and sent back to Mexico alone.

Finally, Johnson considered the "mature child exception" in connection with M.V. She preferred to remain in the United States. She had witnessed her parents fighting and did not want to live with her father anymore. At the same time she recognized that her immigration status would be a problem, limiting her opportunities. As Johnson concluded, "M.V. is mature enough to have her objection to repatriation honored." Slip op. 22.

Litigation Privilege

In Officemax v. Cinotti, 12 CV 5075 (EDNY, April 29, 2013), Judge Spatt dismissed defendant's counterclaims for defamation because the statements in question, made in a letter from his former employer to his counsel, were absolutely protected under the "litigation privilege."

The employer's complaint alleged as follows: Defendant worked for Officemax Incorporated (OMI), where he developed new business and found new customers. He began working for W.B. Mason Co. Inc., on June 22, 2012, the same day he left OMI. Following his departure, defendant uploaded files from and connected a flash drive to his OMI-issued laptop. He then allegedly erased his laptop's Internet history and shipped it back to OMI.

OMI had entered into a settlement agreement and release with W.B. Mason in August 2011 relating to former OMI employees hired by W.B. Mason. Pursuant to the settlement, those employees could not contact their former OMI customers. Defendant had agreed as a condition of his employment with OMI not to contact former OMI customers if he left the company.

In his counterclaim, defendant asserted that he did not contact any OMI customers in connection with his position at W.B. Mason. According to defendant, in September 2012 OMI sent a letter to his counsel and then to W.B. Mason's counsel claiming that defendant had violated the terms of the settlement agreement by contacting his former OMI customer. The letter demanded that defendant and W.B. Mason take no further actions in violation of the settlement agreement.

Defendant alleged that the letter sent from OMI to W.B. Mason contained defamatory statements about him. In the complaint, OMI did not assert any claims against defendant based upon the settlement agreement with W.B. Mason, nor has it commenced any lawsuit against W.B. Mason. Accordingly, defendant argued that the letter could not be covered by the "litigation privilege."

Spatt concluded that the "litigation privilege" mandated dismissal of defendant's counterclaims. Under the New York litigation privilege, all statements made by parties, attorneys and witnesses during judicial or quasi-judicial proceedings are absolutely privileged, as long as they are material and possibly pertinent to the resolution of the issues in a proceeding. The litigation privilege applies to statements made at every step of judicial proceedings including those made before the commencement of litigation. The privilege does not apply to statements made to third parties not involved in the subject matter of the litigation. Slip op. 8-9.

The letter at issue here was "pertinent to the previous litigation between OMI and W.B. Mason, as it related to the Settlement Agreement that resulted from that litigation" and defendant's possible violation of the terms of that agreement which could give rise to future litigation. Slip op. 10-11. Thus, the letter was protected by the litigation privilege, requiring dismissal of defendant's counterclaim for defamation.

Copyright of Home Designs

In Axelrod & Cherveny, Architects v. T. & S. Builders, 05 CV 5573 (EDNY, May 2, 2013), Judge Hurley granted partial summary judgment to plaintiffs, holding defendant liable for copyright infringement regarding plaintiffs' home designs.

Plaintiffs held certificates of registration issued by the U.S. Copyright Office for residential home designs known as "Home Design 2434" and "Georgetown II." Plaintiffs created an advertising brochure to market Georgetown II. Although the brochure itself was not copyrighted, it included the artist's drawing and the floor plan of the copyrighted design. Plaintiffs alleged that defendants illegally copied the copyrighted design in connection with the marketing and construction of four homes under the model name "the Franklin" on Long Island without plaintiffs' permission. Defendants allegedly used sales literature that copied the Georgetown II brochure showing the exterior of Georgetown II and referring to the name. Their flyers included floor plans, some of which were identical to plaintiffs' floor plan. Defendants constructed four Franklin homes.

The complaint alleged that defendants designed, constructed, advertised, marketed and sold four homes using plaintiffs' copyrighted designs. The contracts of sale variously included floor plans and a picture of the exterior from the Georgetown II brochure. Some of the homes contained modifications to the Georgetown II design.

In an order issued in August 2008, the court, concluding that plaintiffs had undisputedly obtained valid copyrights, considered whether there had been unauthorized copying of the copyrighted work. Finding "direct evidence of copying," the court held that defendants had actually copied plaintiffs' architectural designs to design and market defendants' homes. Hurley asked for additional briefing on two questions: (1) Did the modifications defendants made to the interior of the houses mean that their copying of the exterior was not an act of infringement? (2) Was the use of the Georgetown II brochure an act of infringement?

In connection with the first question, Hurley concluded that "substantial similarity" between the exterior designs was sufficient to establish infringement of plaintiffs' copyright, and that it did not matter whether there had been changes to the interiors. In reaching this conclusion, the court applied the "ordinary observer test" — i.e., whether an ordinary observer would regard the total concept and feel of the house to be the same. A violation may be based on infringing either the floor plans or exterior or both, making it unnecessary to examine every element in detail. Similarly, defendants' use of the floor plans of Georgetown II in their flyers infringed plaintiffs' copyright.

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 June 14, 2013, issue of the New York Law Journal.  Copyright © 2013 ALM Properties, Inc.  All rights reserved.  Further duplication without permission is prohibited.]