June 6, 2018

New York Law Journal / Written by: Harvey M. Stone, Richard H. Dolan, Bennette Deacy Kramer

This column reports on several significant, representative decisions handed down recently in the United States District Court for the Eastern District of New York. Judge I. Leo Glasser declined to remand a case to state court where plaintiffs could not state a cause of action against the non-diverse defendants. Judge Jack B. Weinstein found that officers sued in a §1983 action for “false arrest” had acted reasonably and therefore had qualified immunity. And Judge Joseph F. Bianco declined to grant injunctive relief to plaintiff in connection with his suspension from the Merchant Marine Academy for alleged sexual misconduct.

Motion to Remand Denied

In Mraz v. J.P. Morgan Bank, 17 CV 6380 (EDNY, May 3, 2018), Judge Glasser denied a motion to remand a complaint to state court, despite a facial absence of diversity, based on his finding that plaintiffs “could not possibly recover” on their claims against the non-diverse parties. Slip op. 9.

Plaintiffs Camilla and Jiri Mraz had a joint account at JP Morgan Chase Bank (“Chase”). Camilla Mraz had used a power of attorney she held for one Milan Mader, a non-party Chase customer, to transfer $60,000 from Mader’s Chase account to plaintiffs’ joint Chase account. Chase then invoked its right, under its Depository Account Agreement with plaintiffs, to freeze plaintiffs’ joint account based on suspicion of fraudulent or illegal activity, or because it believed such a freeze was necessary to avoid or reduce Chase’s risk of a loss.

Claiming the transfer was a reimbursement, plaintiffs sued Chase in Supreme Court, Queens County, alleging breach of contract, negligence, breach of fiduciary duty and breach of the duty of good faith and fair dealing. Three Chase employees were named in the negligence count only, based on duties arising from Chase’s contractual relationship with plaintiffs. At least two of the Chase employees were citizens of New York, like plaintiffs.

After Chase removed the matter to federal court under 28 U.S.C. §1441(a), plaintiffs moved to remand based on a lack of diversity jurisdiction and, simultaneously, filed an amended complaint that (1) changed the theory of their negligence claim to rest upon breach of an asserted duty owed to Camilla Mraz as agent to Mader, and (2) sought to add claims for negligence, breach of fiduciary duty and tortious interference with contract against a new (non-diverse) entity, JPMorgan Securities (JPMS).

Glasser declined to remand, noting that, under the doctrine of fraudulent joinder, a court assessing its diversity jurisdiction may disregard a non-diverse defendant if it determines that plaintiff cannot state a cause of action against it.  Slip op. 6.

The propriety of removal is based on the pleadings as they existed at the time of removal. Slip op. 7. The negligence claim against the Chase employees was “a contract claim repackaged as a tort claim, and as such it will not lie under New York law.” Slip op. 10.

Remand would be improper even if the court were to exercise its discretion to consider the amended complaint.

The negligence and fiduciary breach claims arose from a duty assertedly owed by Chase and its employees to Camilla Mraz as agent to Mader. Thus, claims asserted in plaintiffs’ individual capacities could not stand. And, as Camilla Mraz’s power of attorney from Mader was terminable at will, it could not support a tortious interference claim. Slip op. 11-12.

Nor did the amended complaint’s joinder of the non-diverse JPMS require remand. The claims against JPMS could not survive dismissal of the claims against the Chase employees, as a claim of vicarious liability cannot stand when there is no primary liability for it to rest upon. Slip op. 13-14.

Qualified Immunity

In Dyal v. Adames, 16 CV 2133 (EDNY, May 7, 2018), Judge Weinstein granted a motion by two defendant police officers for summary judgment in connection with plaintiff’s §1983 claim alleging false arrest.

Plaintiff Dyal and his ex-girlfriend, Ms. Brown, had a falling out. On Sept. 30, 2014, Ms. Brown showed up at his residence to retrieve her belongings. Plaintiff said he was busy and could not return her things. She banged on his window and broke it. He called 911. She also called 911 to report that he would not return her clothing.

Sergeant Kristen Adames and Officer Edwana Johnson (“defendants”) responded to the 911 calls. They saw a rag covering Ms. Brown’s hand, and claim that Ms. Brown said that plaintiff had slammed the door on her hand. Ms. Brown denies ever saying that, and asserts that she cut her hand from breaking the window.

Defendants swear that Ms. Brown told them that plaintiff did not let her pick up her clothes on Sept. 30, though this was not mentioned in the arrest report. Without dispute, Ms. Brown did tell the 911 operator that plaintiff would not permit her to pick up her belongings.

Ms. Brown was arrested for breaking the window, and plaintiff was arrested for assault. The charges against both plaintiff and Ms. Brown were dismissed at arraignment.

The issue is whether probable cause existed to arrest plaintiff. As Weinstein explained: “[I]t is not relevant whether probable cause existed with respect to each individual charge, or, indeed, any charge actually invoked by the arresting officer at the time of arrest. Jaegly [v. Couch], 439 F.3d [149] at 154 (emphasis added).” Slip op. 5-6. This approach recognizes that police act “under pressure of a quick decision in the field.” Slip op. 6.

Here, the officers were entitled to “qualified immunity” because plaintiff’s arrest was arguably based on probable cause: “The officers reasonably relied on Ms. Brown’s claim and arrested [plaintiff]. She claimed that he would not return her belongings. This is sufficient to support probable cause for larceny.” Slip op. 9. Though plaintiff’s version was that he was merely telling Ms. Brown “[n]ow is not a good time,” the officers could reasonably accept Ms. Brown’s version of events and find a “refusal” to return property.

The court noted that plaintiff had acted as a reasonable citizen during the incident. Even so, the officers acted reasonably as well.

Discipline—Merchant Marine Academy

In Doe v. United States Merchant Marine Academy, 18 CV 1870 (EDNY, Apr. 20, 2018), Judge Bianco denied plaintiff’s motion for a preliminary injunction, finding that he had failed to show a likelihood of success on the merits of his Administrative Procedure Act (APA) and Fifth Amendment due process claims challenging his suspension from the Academy.

Plaintiff sued the Academy to compel it to reinstate him so that he could complete his courses, sit for licensing exams and graduate, after a disciplinary proceeding arising from a sexual encounter with an inebriated woman had resulted in his suspension for the remainder of the academic year. Plaintiff alleged that the hearing and resulting suspension violated (a) the Academy’s rules under the APA, and (b) procedural and substantive due process.

The APA entitled the Academy to deference in interpreting its sexual harassment, dating violence and sexual assault policies. Under those policies, the superintendent’s hearing here was authorized for disciplinary proceedings involving sexual assault charges; plaintiff’s opportunity to cross-examine the complainant through written questions was sufficient; and the standard for determining that complainant was too intoxicated to give lawful consent was met.

In Judge Bianco’s view:

[T]he Superintendent followed the Academy’s procedures and considered all of the evidence during both phases of the proceedings in arriving at his decisions, and there is simply no basis to conclude that his actions or decisions were arbitrary or capricious. Plaintiff has, therefore, failed to demonstrate a likelihood of success on the merits of the APA claim.

Slip op. 24.

Plaintiff also did not show that he was deprived of due process. As to dismissal of a cadet, procedural due process requires “that he be given a fair hearing at which he is apprised of the charges against him and permitted a defense.” Slip op. 25. Plaintiff had a fair hearing. Given the strong presumption that the superintendent was impartial, plaintiff “failed to demonstrate a likelihood of success in showing that the Superintendent had a bias toward plaintiff that rendered him unable to perform his function as a fair and impartial decision-maker.” Slip op. 28. The charges gave adequate notice for due process.

Plaintiff also challenged the way the hearing was conducted. Judge Bianco found that: (1) students are not entitled to representation at non-criminal proceedings and plaintiff was allowed to have an attorney present; (2) plaintiff was not prejudiced by the “tiring” length of the hearing; (3) the superintendent did not undermine plaintiff’s case by limiting the time for his opening or questioning witnesses; (4) the superintendent’s credibility determinations were supported by the record; and (5) plaintiff did not have the right to inquire into complainant’s sexual activities.

Finally, plaintiff failed to demonstrate a violation of substantive due process, because he could not show that the government action was so egregious as to shock the conscience. Slip op. 31-32.

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.