November 20, 2018

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 held that an alleged inconsistency between a guilty verdict on count one and the jury's answers to special interrogatories on the verdict sheet did not require a new trial. Judge Jack B. Weinstein found that two legally distinct entities were "joint employees" under the Fair Labor Standards Act, thus requiring employee work hours to be assessed cumulatively in determining overtime pay. And Judge Sandra J. Feuerstein found that the labeling on packages for Kellogg's "Cheez-It Whole Grain" crackers was not misleading.

'Inconsistent' Verdicts

In  United States v. Person, 15 CR 466 (EDNY, June 6, 2017), Judge Glasser denied defendant's motion for a new trial where the general verdict of guilty on count one was allegedly inconsistent with the jury's answer to special interrogatories on the verdict sheet.

Defendant was found guilty of conspiring to distribute and possess with intent to distribute cocaine base and heroin, 21 U.S.C. §§846 and 841(b)(1)(C) (count one); and using and carrying a firearm in connection with a drug offense, 18 U.S.C. §942 (C)(1)(A)(i) (count three). She was acquitted on another count, charging her with maintaining a stash house.

Defendant filed a motion for a new trial in the interest of justice pursuant to Rule 33, Fed. R. Crim. P., based primarily on the verdict sheet relating to the conspiracy charged in count one. On that sheet, the jury recorded its vote on the general verdict as "guilty." The verdict sheet also contained two special interrogatories, asking: (1) "Did the government prove that the defendant was responsible for a substance containing cocaine base?;" and (2) "Did the government prove that the defendant was responsible for a substance containing heroin?" As to each question, the jury checked off "No."

The government's requests to charge the jury had included the special interrogatories on count one. In its words, the government wanted to "insure unanimity in terms of which substance they determined." Defense counsel seconded that request.

Upon announcement of the guilty verdict, neither party asked the court to address any inconsistency or to direct the jury to resume deliberations to clarify the verdict.

In denying the new trial motion, Glasser reviewed the law on inconsistent verdicts (slip op. 8-20), which are often caused by special interrogatories. Fed. R. Civ. P. §49(b), authorizing special interrogatories in civil cases, has no counterpart in the Federal Rules of Criminal Procedure-an absence that "counsels caution." Slip op. 7. This case is a "paradigmatic" example of why they are "generally disfavored" in criminal cases. Slip op. 8.

While the "inconsistency" here was confined to one count, it is significant that consistency in a verdict between two counts is not necessary. Such a verdict could be the result of lenity, and in any event the trial and appellate courts protect against error and irrationality by assessing the sufficiency of the evidence. Slip op. 9. The evidence against defendant was sufficient.

As Glasser presumed, by "finding that the defendant was not 'responsible for a substance containing cocaine or heroin' [the jurors] were deciding that she was, in effect, 'not responsible' for the substantive offense of possessing with intent to distribute the controlled substance." And "the commission of the substantive offense and the conspiracy to commit it are two separate and distinct crimes." Slip op. 10.

The court also declined to read the verdict on count one as meaning, "we find the defendant guilty of conspiracy although she is not guilty." See  Statler v. United States, 157 U.S. 277 (1895). Additionally, the guilty verdict on count three, for carrying a firearm in connection with a drug offense, required the jury to find, as a predicate, that she was guilty on count one.

In short, the special interrogatories are superfluous and do not affect the general verdict. In Glasser's view, the "aversion" to using special interrogatories in criminal cases comes from wise policy considerations, including the avoidance of delving into the jurors' minds. Slip op. 13, 20.

Joint Employer Status

In  Murphy v. HeartShare Human Services of New York, 17 CV 1033 (EDNY, June 1, 2017), Judge Weinstein denied a motion to dismiss by two defendants alleged to be joint employers under the Fair Labor Standards Act, 29 U.S.C. §201 et seq., and New York State Labor Law, N.Y. Lab. Law §652.

Both plaintiffs were hired by, and worked contemporaneously for, each of two legally-distinct employers. One, HeartShare Education Center, operates a school (the "school") for students with developmental and learning disabilities. The other, HeartShare Human Services of New York, operates a contiguous residence (the "residence") for children who attend, or have recently attended, the school. Plaintiffs were paid separately by each employer, and were paid overtime only when their hours per week for either employer exceeded 40. The lawsuit concerned whether each plaintiff should have received overtime whenever her cumulative weekly work hours, between the two employers, exceeded 40. This turned on whether defendants were regarded as a "joint employer."

Weinstein assessed the defendants' joint employer status under the "horizontal employment" test of 19 C.F.R. §791.2. Under that test:

[I]f the facts establish that the employee is employed jointly by two or more employers, i.e., that employment by one employer is not completely disassociated from employment by the other employer(s),  all of the employee's work for all of the joint employers during the workweek is considered as one employment for purposes of the [Fair Labor Standards] Act.

Slip op. 10-11, quoting 19 C.F.R. §791.2(a) (emphasis in decision).

Plaintiffs alleged that the two defendants worked out of common headquarters, shared overlapping clients (i.e., students at the school who lived at the residence), and that some aspects of their work for the two defendants-which included transiting students between the school and the residence-were overseen by common supervisors. They introduced evidence on these and related points at an evidentiary hearing.

After consulting opinion letters issued by the U.S. Department of Labor in 2015 and 2016 to provide guidance as to "joint employer" determinations, Slip op. 10-11, Weinstein concluded:

It is difficult to see how two employers which were in part created to serve the same clients, are headquartered at the same address, physically operate out of the same address, share employees, share an accounting and human resource department, require employees to perform tasks that simultaneously benefit both employers, and share a name-HeartShare-are "completely disassociated" with respect to plaintiffs' employment.

Slip op. 20-21.

Denying defendants' motion to dismiss as to "joint employer" liability, the court found that a defense motion for summary judgment on that question would not be viable. Weinstein also denied defendants' motion to dismiss the breach of contract claims, because a "contract to ignore workers' statutory overtime rights is void as against public policy." Slip op. 2, 21-22.


In  Mantikas v. Kellogg, 16 CV 2552 (EDNY, May 31, 2017), Judge Feuerstein dismissed a complaint alleging false and misleading labeling under the New York General Business Law and California law, and unjust enrichment under Michigan law, by defendant Kellogg Company in connection with "Cheez-It Whole Grain" crackers. Plaintiff Kristen Mantikas, a resident of New York, and plaintiffs Kristin Burns and Linda Castle, residents of California, claimed that the "whole grain" representation on the front of the cracker box was misleading because the crackers were not predominately whole grain and, thus, were worth less than the crackers they paid for.

To state a claim under the consumer protection laws of either New York or California, plaintiff must allege that a "reasonable consumer," looking at any product label or advertisement as a whole, could have been misled by defendant's conduct. Although the "reasonable consumer" determination is generally a question of fact, here plaintiffs' allegations were "simply not plausible" as a matter of law. Slip op. 7.

"Whole grain" and "made with whole grain" on the crackers' packaging would not mislead or deceive a "reasonable customer." "[A]s the crackers' packaging conspicuously states that the crackers are made with either five (5) or eight (8) grams of whole grain per serving, Defendant neither misrepresents that its crackers are one hundred percent (100 percent) whole grain nor suggests that they are predominately whole grain." Slip op. 8.

Feuerstein rejected plaintiffs' contention that they could assert an unjust enrichment claim under Michigan law. In pressing that claim, plaintiffs had noted that (1) defendant's headquarters was in Michigan; (2) defendant's misrepresentations concerning the crackers came from Michigan; and (3) defendant's misrepresentations led directly to plaintiffs' injuries. But plaintiffs were residents of, and purchased the crackers in, New York and California. Plaintiffs could not establish a connection between their injury and the state of Michigan because they neither resided nor purchased the crackers in Michigan. A plaintiff must reside in, do business in or have some other connection to Michigan for standing to assert an unjust enrichment claim under its law. Slip op. 11-17.

Harvey M. Stone and Richard H. Dolan are partners at Schlam Stone & Dolan.