April 19, 2017
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 Raymond J. Dearie found that two of defense counsel's peremptory challenges to potential jurors were improperly based on gender. Judge Denis R. Hurley decided what categories of damages could be presented to the jury in a legal malpractice case. And Judge Margo K. Brodie denied a defendant's motion to reconsider the denial of summary judgment regarding Truth in Lending Act claims, in part because of defendant's failure to raise its "lack of assignment" argument in its earlier motion papers.
In United States v. Gigliotti , 15 CR 204 (EDNY, Nov. 14, 2016), Judge Dearie disallowed two of the peremptory challenges by the defense in a criminal case to potential jurors, finding that they were improperly based on gender, in violation of Batson v. Kentucky , 476 U.S. 79 (1986).
The government during jury selection, having noticed that only one of the 12 jurors was a man, raised a challenge under Batson, which prohibits peremptory challenges based on gender and other constitutionally impermissible factors.
A review of defendants' 10 peremptory challenges showed that all 10 were directed at men. This pattern constituted a prima facie showing that the challenges were gender-based: "[D]efendants used all ten of their peremptory challenges against men, after starting with a pool of qualified jurors that included more women than men." Slip op. 6. The court qualified 28 potential jurors—15 women and 13 men.
This shifted the burden to defendants to offer nondiscriminatory explanations for their peremptory strikes. As to 9 of the 10 jurors, counsel were able to do so, citing factors such as ties to law enforcement, prior jury experience, hostile demeanors, and language or scheduling difficulties.
No meaningful explanation, however, was given in the case of the 10th juror, referred to as Juror 16. Rather, counsel said only that they struck him based on a "gut" instinct and discussion with their clients. "Gut," Dearie observed, can sometimes be enough, "but only where such gut instincts flow from some articulable basis." Slip op. 7 (emphasis in original). Counsel's statement that Juror 16 was a high school physics teacher, with no explanation as to why that was relevant, did not help to meet the defense burden.
Though counsel did give a gender-neutral explanation for another juror, Juror 3, the court found, in applying the third step of the Batson analysis, that counsel's reasons were not credible under all the circumstances. Counsel claimed to have stricken Juror 3 because he had a pronounced Spanish accent and a background in law enforcement. Counsel also pointed to Juror 3's prior jury service: "once that happens, they are more inclined to convict, particularly if it is a criminal case they've served in."
Contrary to counsel's assertions, the record reflected no law enforcement background for Juror 3. And he had served only on a civil jury, not a criminal jury. Significantly, counsel chose not to strike eight other jurors who had served on trial juries or grand juries. Of these, six were women and two were men. A male juror not struck had served on juries in two murder cases, one of which reached a verdict. Slip op. 10-11.
In Thieriot v. Jaspan Schlesinger Hoffman, 07-CV-5315 (EDNY, Oct. 18, 2016), Judge Hurley found aspects of plaintiffs' damage claims in a legal malpractice case too speculative, while allowing others to be presented to the jury.
Plaintiffs brought a diversity action alleging that erroneous legal advice given them by attorneys from defendant Jaspan Schlesinger Hoffman, LLP both delayed the sale of, and diminished the sale price for, a property in Nassau County. Plaintiffs alleged that defendants' representation fell below the requisite standard in that defendants: (1) listed plaintiff Elizabeth Thieriot as owner of the property, rather than the plaintiff trust that was the true owner; (2) failed to take appropriate action to cure that error prior to the 2003 closing date, exposing plaintiffs to legal claims from the prospective buyer; (3) failed to advise plaintiffs of the exposure they faced in an action by the prospective buyer; (4) failed to condition the return of the prospective buyer's deposit upon delivery of a release from further claims under the contract of sale; (5) failed to raise, as a defense to the prospective buyer's later action for specific performance, that the contract of sale listed the wrong owner; and (6) failed to advise plaintiffs properly concerning settlement of the specific performance action, which plaintiffs ultimately lost.
Both sides brought motions in limine regarding what evidence would be presented to the jury as to damages. Hurley identified three categories of damages: (1) lost profits, (2) out-of-pocket expenses/lost opportunity costs, and (3) legal fees. Defendants argued that all three should be excluded.
Plaintiffs sought to prove lost profits by submitting evidence that another, specifically identified buyer would have paid a higher purchase price if defendants had advised them to proceed with that sale before the original prospective buyer filed its action for specific performance and a lis pendens restraining the property. Hurley rejected this as too speculative under Kenford Co. v. County of Erie , 67 N.Y.2d 257, 261 (1986), New York's leading case regarding "lost profit" damages.
The out-of-pocket and opportunity cost damages plaintiffs sought included interest they would have accrued had the sale gone forward on the original 2003 closing date as well as carrying costs for the property such as taxes, insurance, maintenance expenses and related travel expenses from the original closing date to the eventual sale in 2007. These were allowed to go before the jury: "Although the Court has significant reservations as to the recoverability of some of these items, the defendants have not presented sufficient legal authority to warrant a ruling that plaintiffs are not entitled to pursue such items as a matter of law." Slip op. 5-6.
Legal fees incurred in connection with (1) the sale of the property, (2) the specific performance action brought by the original prospective buyer, and (3) other litigation with the original prospective buyer were also sufficient to go to the jury, which would determine whether those damages "were proximately caused by defendants' alleged malpractice." Slip op. 7, 12.
Truth in Lending Act
In Pierre v. Planet Automotive, 13 CV 675 (EDNY, Oct. 31, 2016), Judge Brodie denied the motion of defendant American Suzuki Financial Services to reconsider the court's denial of its motion for summary judgment in connection with the question of assignee liability in a vehicle purchase, where Suzuki's main argument had not been made in its original motion.
Plaintiff, who purchased a vehicle from Planet, claimed that, as part of the transaction by which she purchased and financed the vehicle, additional products that were included as a condition to financing were bundled into the cash price listed on the RIC rather than disclosed separately as finance charges, in violation of the Truth in Lending Act, 15 U.S.C. §1001, et seq. (TILA). The loan was assigned to Suzuki following the sales transaction. Plaintiff pointed to six documents assigned to Suzuki that reflected the illegal price increase, including a Theft Deterrent Certificate and Warranty Application. The prices for the vehicle in the various documents ranged from $25,629 to $34,129.39.
Plaintiff alleged (1) federal law violations of the TILA and the Magnuson-Moss Consumer Warranty Act, 15 U.S.C. §2310 (MMWA), and (2) New York common law fraud and false advertising claims. The claims were made against both Planet Automotive, Inc., the seller of the vehicle, and Suzuki, the assignee of the RIC.
In a decision dated June 21, 2016, Judge Brodie granted Suzuki's motion for summary judgment as to plaintiff's MMWA claim, because the plain text of the MMWA prohibits assignee liability, but denied summary judgment as to the TILA and New York law claims. Judge Brodie found plaintiff had raised a genuine issue of fact "as to whether it is apparent from comparing the RIC with these documents that the Theft Deterrent Certificate and the Warranty Application should have been listed on the RIC as third-party charges." June Decision, slip op. 14. Assignees are "liable for TILA violations when the disclosure statement is inconsistent with other assigned documents." Slip op. 5.
In the motion before the court, Suzuki sought reconsideration of the June decision, arguing that defendant Planet never assigned the Theft Deterrent Certificate and Warranty Application to Suzuki.
The court denied Suzuki's motion for reconsideration because Suzuki "failed to raise its lack of assignment argument in its earlier motions and also fails to show that the Court overlooked pertinent facts or controlling law" in its prior decision. 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.