January 15, 2016

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 William F. Kuntz II concluded, after an evidentiary hearing, that defendant was competent to stand trial and that, despite some dementia, he had exaggerated his symptoms for purposes of malingering. Judge Raymond J. Dearie dealt with issues of sovereign immunity under the Federal Tort Claims Act, as applied to various claims by two female inmates who had been sexually abused by a correctional counselor.

Judge John Gleeson declined to consider, for sentencing purposes, incriminating proffer statements made by defendant during his failed cooperation attempt. And Judge Joseph F. Bianco held that, because the agreed forum for arbitration had become unavailable, plaintiff was not required to submit to arbitration before a substitute forum.

Competence to Stand Trial

In United States v. Bumagin, 11 CR 800 (EDNY, July 15, 2015), Judge Kuntz found defendant competent to stand trial, based in part on the court's own observations of defendant's interactions with his attorney.

Defendant Luis Rivera, now 68 years old, was charged with several offenses committed in 2011, including a Hobbs Act robbery conspiracy, 18 U.S.C. §§1951(a) and 3551 et seq., and illegal use of a firearm.

In June 2012 defense counsel asked the court to commence proceedings to determine defendant's competency to stand trial and assist in his defense. Defendant underwent three competency evaluations, leading to a hearing in July 2014.

Finding the evidence on competency to be inadequate to render a decision, in December 2014 Kuntz ordered an additional evaluation by psychologist Sanford Drob.

As the court noted, Dr. Drob's report was "thorough and detailed." According to Dr. Drob, the testing, "if taken at face value," showed a "significant decline" in cognitive functioning since the reports done by other experts in 2012 and 2013. Drob's report expressed a view that defendant made a "reasonable effort" in the testing process and seemed to be "thinking about and even struggling with the answers" in an honest rather than manipulative way. While Dr. Drob also had a "significant remaining question" as to whether defendant could have been "exaggerating cognitive deficits" in certain answers and even malingering, "on balance" Drob found defendant incompetent to stand trial and unlikely to be restored to competency.

In June 2015 the court held a second competency hearing where Dr. Drob and defendant's son, Sergeant Martin Bumagin, testified. Sergeant Bumagin described examples of his father's inability to remember salient facts and details about the family, such as the sergeant's injury while serving in Iraq.

Dr. Drob's testimony explained his finding of incompetence, but also referred to defendant's desire to discuss the case and his citing of facts and arguments that support his defense. Dr. Drob reiterated both his conclusion regarding defendant's "progressive dementing process" and his concerns about possible skillful malingering.

As Kuntz observed, a competent defendant must be reasonably able to understand the proceedings against him and to assist in his defense. Here, the question of competency was a "close one." Pointing to certain comments by Dr. Drob and to numerous occasions when the court observed defendant's interactions with his lawyer, Kuntz found defendant to be competent. The court acknowledged some likely dementia, but found "malingering" to be "'the chief reason for the symptoms he displays.' United States v. Gigante, 996 F.Supp. 194, 201 (E.D.N.Y. 1998, Weinstein, J.)." Defendant, the court added, is "attempting to avoid trial" and a possible guilty verdict and punishment.

Sovereign Immunity

In Riascos-Hurtado v. United States, 09 CV 003 (EDNY, June 5, 2015), Judge Dearie granted in part and denied in part the government's motion to dismiss tort claims by two female inmates who had been sexually abused.

While confined at the federal Metropolitan Detention Center in Brooklyn, plaintiffs Catherine Riascos-Hurtado and Gladys Sanchez-Loqui each reported defendant Theodore Raines, a correctional counselor, for sexual abuse. No disciplinary action was taken, and the acts continued. Eventually, Raines was indicted and pleaded guilty to one count of sexual abuse of a ward, in violation of 18 U.S.C. §§2244(a), 2246(3).

Plaintiffs sued both Raines and the government. Raines defaulted, and the government moved to dismiss on the ground that, under the Federal Tort Claims Act (FTCA), 28 U.S.C. §§1346(b), 2671-2680, sovereign immunity had not been waived. Dearie granted the government's motion as to plaintiffs' claims for battery and negligent screening, hiring and training, but denied it as to their claims for negligent supervision.

As to battery, the FTCA waives sovereign immunity only for intentional acts committed by an employee "within the scope of his office or employment," 28 U.S.C. §1346(b)(1), a determination governed by New York law. "'New York courts consistently have held that sexual misconduct and related tortious behavior arise from personal motives and do not further an employer's business,'" thus defeating any waiver of sovereign immunity, "'even when committed within the employment context.'" Slip op. 8, quoting Swarna v. Al-Awadi, 622 F.3d 123, 144-45 (2d Cir. 2010).

For negligence claims, the FTCA's waiver of sovereign immunity does not extend to claims arising from a "discretionary function or duty." 28 U.S.C. §2680(a). "'[F]or a claim of negligent hiring or supervision to be barred by the discretionary function exception, the decision to hire or supervise the negligent employees must be 'grounded in considerations of public policy or susceptible to policy analysis.'" Slip op. 11, quoting Gibbons v. Fronton, 533 F.Supp.2d 449, 455 (S.D.N.Y. 2008) (internal citation omitted.)

Plaintiffs' claims of negligent screening, hiring and training failed because the "multi-factored choices" involved in these functions "require a balancing of competing objectives, and are of the nature and quality that Congress intended to shield from tort liability."

Although supervision also involves "considerable judgment," the negligent supervision claims survived because the government had not offered any explanation as to how its failure—contrary to its own regulations—to adequately supervise Raines after plaintiffs had reported his earlier abuse could be an exercise of discretion that "involved policy considerations." Slip op. 12.

Proffer Statements

In United States v. Rivera, 12 CR 700 (EDNY, July 22, 2015), Judge Gleeson decided not to consider proffer statements made by defendant in imposing sentence.

Defendant Luis Rivera pleaded guilty to selling 978.7 grams of heroin to a confidential informant, with an advisory Sentencing Guidelines range of 108-135 months. Prior to the plea Rivera was interviewed by the prosecution three times, with his counsel present, to proffer what he would say if the government accepted his cooperation. Defendant proffered that he had trafficked a far greater quantity of drugs, had occupied a leadership role in the business, and had engaged in violent criminal activity, including murder, kidnapping, torture, beatings and robberies.

Without a proffer agreement, defendant's statements would have been protected under Federal Rule of Evidence 410, which prohibits disclosure of statements made during plea discussions unless defendant misleadingly relies on one or more proffer statements. But before his attempted cooperation, defendant signed a proffer agreement waiving Rule 410's protections. Under the agreement, the government (1) could not offer defendant's proffer statements in its case in chief or at sentencing; (2) could use those statements to obtain leads, cross-examine defendant or rebut defendant's evidence; and (3) could use his statements if he sought a reduction in sentence, a downward departure or downward adjustment.

In a murky provision citing "district policy," the agreement allowed the government "to notify the Probation Department and the Court [of the proffer statements] in connection with sentencing to the extent it is required by law" to do so, and to notify the Probation Department and court of the government's agreement not to offer defendant's statements in evidence at sentencing. Slip op. 10.

The Probation Department submitted a Presentence Report to the court describing defendant's offense as "participation in a total of just under six kilograms of heroin on four occasions in 2012," but did not mention defendant's proffer or any incriminating statements. Slip op. 14. On the same day, pursuant to district policy, the Probation Department submitted a sealed memorandum to the court and counsel detailing defendant's incriminating statements in his proffer sessions and providing an alternative guidelines range calculation.

As the court observed, "When a would-be cooperating defendant proffers in the absence of any proffer agreement and no cooperation agreement results, the relevant rules and Guidelines provisions require that the proffer statements be withheld from the sentencing judge. The rule is firmly grounded in the policy encouraging plea discussions generally, and cooperation bargaining specifically." Slip op. 27. Rejecting the government's contention that 18 U.S.C. §3661 required it to provide all relevant information to the sentencing judge, Gleeson noted that the government constructs factual predicates in plea agreements that it then presents to the court. The court also stated: "to the extent the district policy regarding proffer-protected statements is followed where there is neither a proffer agreement nor a cooperation agreement, I conclude that it violates the defendant's rights in every case." Slip op. 30.

Here, there was a signed proffer agreement, and the district policy requiring the disclosure of proffer statements was not disclosed to defendant before his proffers. Nor was the policy supported by case law or statute. For these reasons, "disclosure of his proffer statements pursuant to that policy violated the limited protection from disclosure afforded by the proffer agreement." Slip op. 34.

As the court noted, "by providing damaging information about the defendant to the sentencing judge for her to consider or not as she sees fit, the [current district] policy forces the lawyers for at least some proffering defendants to advocate in the dark." Slip op. 37. Gleeson suggested "that whatever course the government chooses, it makes the choice clearly and discloses it fully to proffering defendants and their counsel. Most importantly, there needs to be a single, transparent track of information to the sentencing judge. Proffer statements should either be in the sentencing mix…or out of it entirely." Slip op. 37. Finally, the court suggested that the district policy be revised following discussions among the Probation Department, the U.S. Attorney and members of the defender community.

Arbitration Provision

In Moss v. BMO Harris Bank, 13 CV 5438 (EDNY, July 16, 2015), Judge Bianco granted plaintiff Deborah Moss' motion for relief from an order compelling arbitration and staying the case, because the arbitration forum designated in the arbitration clause declined to arbitrate the case.

The arbitration clause in the loan agreement between Moss and defendants Bay Cities Bank and First Premier Bank required binding arbitration by the National Arbitration Forum (NAF). By Memorandum and Order dated June 9, 2014, the court granted defendants' motions to compel arbitration and stayed the case.

After she submitted her claims to NAF, NAF informed Moss that it was no longer able to accept arbitration claims involving consumers, making the designated arbitration forum unavailable. In opposition to Moss' motion, defendants argued that plaintiff was aware at the time of the motion to compel arbitration that NAF could not arbitrate consumer claims and that the court could name a substitute under 9 U.S.C. §5.

Noting that defendant was also aware that NAF was an unavailable forum, the court viewed "the NAF's decision as a changed circumstance that warrant[ed] renewed consideration of the parties' duty to arbitrate this case." As Bianco found, it was the intent of the parties to arbitrate before NAF. In In re Solomon Shareholders' Derivative Litig., 68 F.3d 554, 560-61 (2d Cir. 1995), the U.S. Court of Appeals for the Second Circuit held that, although 9 U.S.C. §5 permits courts to appoint a substitute arbitrator when the named arbitrator is not available, section 5 does not authorize a substitution when private parties agree to arbitrate exclusively before a specific forum that subsequently becomes unavailable.

Relying on Sullivan, Bianco held: "When the text of an arbitration agreement evinces an intent to arbitrate solely before a specific forum, In re Salomon tells us that a court may not override the parties' agreement and appoint a substitute arbitrator." Thus, "the unavailability of the designated arbitration forum renders the entire arbitration agreement void." Slip op. 7.

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.