Court of Appeals April-May Session: Arguments of Interest for April 26, 2018

The Court of Appeals wraps up the first week of the April-May Session with only two criminal cases on the argument docket. Each involves claims of actual innocence and when criminal defendants can bring those claims as a basis to vacate their convictions.  Particularly, the Court will hear arguments on the following issues: (1) whether a freestanding claim of actual innocence is cognizable basis to vacate a conviction under CPL 440.10(1)(h), and whether the waives that claim by pleading guilty to the charges, and (2) whether a criminal defendant’s claim that the People committed a Brady violation and that newly discovered evidence warranted vacatur of his conviction, and whether the Court’s rejection of those claims impliedly also rejected his claim of actual innocence.

No. 62    People v Natascha Tiger

When a severely disabled child was admitted to the hospital with what appeared to be scald burns, the defendant, a licensed practical nurse who had given the child a bath earlier that day, was charged with endangering the welfare of a physically disabled person, and pled guilty. Two years later, however, she moved to vacate her conviction based on a claim that she was actually innocent. Medical evidence, she said, showed that the child had an adverse reaction to medication, and wasn’t actually burned.

After County Court denied her application without a hearing, the Appellate Division, Second Department reversed. The Court held that, consistent with its prior precedent, the defendant could raise a claim of actual innocence as a basis to vacate her conviction.  the Court noted, however, that the Court of Appeals has not yet passed on that question. The Appellate Division also rejected the People’s argument that the defendant had waived her claim of actual innocence by pleading guilty to the charges, holding instead that it would offend due process for an actually innocent person to be convicted and barred from raising that claim on a post-conviction motion.

The Court of Appeals will now hear arguments and decide these open, and important, questions.

The Appellate Division, Second Department’s order can be found here.

Court of Appeals April-May Session: Arguments of Interest for April 25, 2018

The Court of Appeals will hear arguments in three cases on this rainy Wednesday, April 25, 2018, the second day of the April-May Session. On the docket today are two criminal appeals about the right to counsel and a civil case about taxing cigarettes sold on an Indian reservation, involving the following issues: (1) whether Tax Law § 471, which imposes a tax “on all cigarettes sold on an Indian reservation to non-members of the Indian nation or tribe and to non-Indians,” violates Indian Law § 6, which prohibits state taxation on an Indian reservation, and the federal Due Process Clause; (2) whether a criminal defendant’s right to counsel was violated when he was questioned by police officers on a homicide that was “factually interwoven” with a robbery charge for which he had an attorney; and (3) whether a criminal defendant’s right to counsel was violated when a police detective, while questioning the defendant on a homicide investigation, mentioned a pending drug charge for which the defendant had counsel.

No. 59     White v Schneiderman 

Eric White, a member of the Seneca Nation, owns a convenience store on the reservation and sells cigarettes. He brought this action against the New York Attorney General and the Department of Taxation and Finance to challenge the validity of Tax Law § 471, which requires him to charge state sales tax on cigarettes sold to non-members of the Tribe. That, he says, violates Indian Law § 6, which states, “No taxes shall be assessed, for any purpose whatever, upon any Indian reservation in this state, so long as the land of such reservation shall remain the property of the nation, tribe or band occupying the same.”  He also contends that the Tribe entered a treaty with the United States that exempts activities on the reservation from state taxation, and that imposing the tax violates the federal Commerce Clause and Due Process Clause.

Supreme Court, however, dismissed his declaratory judgment action, holding that Indian Law § 6 and the treaty only prohibit the taxation of real property, not goods like cigarettes.  The Appellate Division modified slightly, but agreed that only taxation of real property is prohibited.  White, the Court held, can be required to charge sales tax to non-Indians, and this minimal burden doesn’t violate the Constitution.

The Court of Appeals is now asked to decide.  Does the State have any right to require the collection of taxes on cigarettes on an Indian Reservation?  What about for other goods sold to non-Indians? We shall see.

The Appellate Division, Fourth Department order can be found here.

Court of Appeals April-May Session: Arguments of Interest for April 24, 2018

The Court of Appeals returns for the April-May Session (and so do I after a month off) on Tuesday, April 24, 2018. The Court has three cases on its argument docket (the Court’s case summaries can be found here), which involve the following issues: (1) whether accidental disability retirement benefits are a collateral source that must be offset from an award of future damages under CPLR 4545; (2) whether a New York choice of law provision in a nondisclosure agreement required application of both New York procedural and substantive law, such that the New York borrowing statute (CPLR 202) would require the plaintiff to satisfy two different statutes of limitations, New York’s and that of the forum state; and (3) whether the denial of a motion to quash in a criminal trial is appealable, and whether the Appellate Division properly granted the motion to quash based on the qualified protection for a journalist’s nonconfidential material.

No. 58      Matter of People v Conrado Juarez; Frances Robles

In a brutal case of the sexual abuse and murder of a 4 year old, the Court of Appeals will hear arguments on whether the denial of a motion to quash a subpoena in a criminal case is appealable. Should the Court decide that it is, a really interesting question of journalistic privilege lies beneath.

For 22 years, the police were unable to identify the 4-year-old murder victim who was found in a picnic cooler in Manhattan in 1991. When she was eventually identified in 2013, the police questioned her cousin, Conrado Juarez, as the suspect. He confessed after hours of interrogation, and was charged with murder. Two days later, Frances Robles, a reporter with the New York Times, interviewed him at Rikers Island, but Juarez changed his story. Instead of participating in the murder, this time he said he only helped his sister dispose of the victim’s body after she fell down the stairs.

Juarez moved to suppress his confession as involuntary, and in response the police subpoenaed Robles to testify at the suppression hearing and for her notes. Robles moved to quash the subpoena based on New York’s Shield Law, Civil Rights Law § 79-h(c), which generally protects from disclosure the information reporters gather while investigating stories.

Supreme Court denied the motions to quash the subpoenas, balancing the interests in favor of the People’s access to all evidence that could go to show that Juarez’s statements were voluntary.  The Appellate Division, First Department reversed, and granted Robles’s motions to quash, holding

the People have a videotaped confession by the defendant that has been found admissible at trial and that includes statements consistent with other evidence in the case. Under the circumstances, and in keeping with ‘the consistent tradition in this State of providing the broadest possible protection to “the sensitive role of gathering and disseminating news of public events”‘…, we find that the People have not made a ‘clear and specific showing’ that the disclosure sought from Robles (her testimony and interview notes) is ‘critical or necessary’ to the People’s proof of a material issue so as to overcome the qualified protection for the journalist’s nonconfidential material (Civil Rights Law § 79-h[c]).

On appeal, however, the People now argued that the Court lacks jurisdiction to hear the case because a trial court order denying a nonparty’s motion to quash a subpoena in a criminal case isn’t appealable. The People’s argument is based on the Court of Appeals’ decision about one year ago in the Facebook search warrants case, where the Court held that denial of a motion to quash in a criminal case isn’t appealable, and the Court lacks jurisdiction to consider the underlying merits question.

Unless the Court decides to reconsider its prior precedent from only a year ago, which is highly doubtful, or decides that search warrants are somehow different from subpoenas in criminal cases, this case is going to end up just like the Facebook case, dismissed for lack of jurisdiction and remanded for the Appellate Division to do the same. That’s really unfortunate, but it seems to me unavoidable.

The Appellate Division, First Department’s order can be found here.

Court of Appeals February Session: Arguments of Interest for February 14, 2018

Happy Valentine’s Day! The Court of Appeals wraps up its February Session with three cases on the calendar (the Court’s case summaries can be found here). The specific issues the Court will face include: (1) whether a plaintiff seeking summary judgment on the issue of liability must establish, as a matter of law, that he or she is free from comparative fault or whether that issue should be left to the damages portion of trial; (2) whether a worker was injured as a result of a force of gravity accident under Labor Law § 240(1) where he was operating a forklift when it tipped forward ejecting him from it; and (3) what is the maximum term of probation that may be imposed on a criminal defendant that is adjudicated a youthful offender on a charge of sexual abuse in the first degree.

No. 32     Rodriguez v City of New York

The New York City Department of Sanitation takes care of the snow plowing in New York City.  So, before the City gets a big storm, its trucks have to be equipped with plows and tire chains. That’s what the plaintiff was doing when he was hurt. As he and two co-workers were putting the tire chains on the City’s trucks, his co-workers backed a truck into a garage bay. The plaintiff walked behind the truck, the truck skid on ice while trying to stop, and the plaintiff was pinned between the truck and a stack of tires.

After the plaintiff sued the City for his co-workers’ negligence, Supreme Court denied his motion for partial summary judgment on liability, holding that the issue of the plaintiff’s comparative negligence had to be left to the jury to decide.

The Appellate Division, First Department, noting that when issues of comparative negligence should be decided in the course of litigation have vexed the courts for a long time, affirmed the denial of partial summary judgment. The Court held that the reasonable approach was to submit all of these issues to the jury if the plaintiff is unable to show that he is free from comparative fault on summary judgment.  That way, the Court reasoned, both sides can present their proof on comparative fault and the jury can sort it out.

Two justices dissented, arguing that the plaintiff’s burden on partial summary judgment as to liability should only be to establish the defendant’s fault. As the dissenters put it, “[t]he affirmative defense of comparative negligence is a partial defense that does not bar a plaintiff’s recovery, but merely reduces the amount of damages in proportion to the plaintiff’s culpable conduct.” That approach, the dissenters would have held, more closely aligns with the prevailing case law in New York, the CPLR, and the pattern jury instructions.

I think the dissent is right on this one. A prima facie case on the defendant’s liability for summary judgment purposes need only include enough evidence to show that the defendant was negligent. The plaintiff’s comparative fault is not a complete defense to the defendant’s liability. If the plaintiff can show that the defendant is somewhat at fault, then how much his damages should be reduced as a result of his own fault in the accident should only be addressed at the damages phase, not when the plaintiff has sought partial summary judgment only on liability. We’ll see if the Court of Appeals comes out the same way.

The Appellate Division, First Department’s decision can be found here.

Court of Appeals February Session: Arguments of Interest for February 13, 2018

The Court of Appeals is back for a 2-day week of arguments to wrap up the February Session at Court of Appeals Hall. The Court has 3 cases on the argument docket today (the Court’s case summaries can be found here), the highlight of which finds former Court of Appeals Judge Victoria Graffeo in her debut as an advocate before the Court squaring off with former New York Solicitor General Caitlin Halligan, now with Gibson Dunn. The issues before the Court today include: (1) whether a stop and frisk was justified where the criminal defendant furtively tried avoid the police, then when he was stopped, refused to answer questions, and the police officer saw a bulge up his sleeve; (2) whether, in determining the value of a partnership interest for purposes of Partnership Law § 69(2)(c)(ii)—to buy out the interest of a partner who has wrongfully caused the dissolution of the partnership to allow the partnership to continue—a minority discount may be applied to reflect the lack of control a minority partner has in the operations of the partnership; and (3) whether a motion to dismiss based upon documentary evidence was properly denied where email communications were unclear whether the parties agreed to the material terms of an employment contract.

No. 30      Congel v Malfitano

This case is interesting not only for the issues it presents and the impact it can have on corporate law in New York, but also for who is arguing it.  Former Court of Appeals Judge Victoria Graffeo, who Governor Cuomo unceremoniously declined to reappoint her to the Court at the end of her 14 year term (even though she had not reached the age of mandatory retirement, and most of her predecessors had been reappointed), is back!  Judge Graffeo makes her first appearance before the Court in an advocate’s role since returning to private practice after her time on the Court concluded. And she’s facing off with one of New York’s most formidable foes, former New York Solicitor General (and DC Circuit appointee who never received consideration from Congress) Caitlin Halligan. Should be a fun one to watch!

At issue in the case is whether a partnership was wrongfully dissolved by a single partner, instead of the majority, and whether in valuing the dissolving partner’s share a minority discount should be applied. Two really interesting issues of partnership law, a subject that doesn’t reach the Court of Appeals all that often.

Supreme Court held that Malfitano had, in fact, wrongfully dissolved the partnership, because the partners’ agreement didn’t allow for unilateral dissolution. The Appellate Division, Second Department affirmed that holding, further noting that the mere fact that the agreement didn’t specify a specific time period for the partnership to continue didn’t make it terminable at will, because it provided that the partnership would continue until a majority of the partners elected to end it. That’s a definite term, the Court held.

After a trial on damages, the Appellate Division, Second Department held that a minority discount should be applied to account for the fact that Malfitano, as a minority partner, couldn’t force the partnership to liquidate its assets (a shopping mall). The Court, though, relied primarily on a case from the Supreme Judicial Court of Massachusetts in doing so. The question now is whether New York law permits the same result.

The Appellate Division, Second Department’s order can be found here.

Court of Appeals February Session: Arguments of Interest for February 8, 2018

The Court of Appeals’ February session continues on Thursday, February 8, 2018 with three cases on the argument docket (the Court’s case summaries can be found here).

The Court will hear arguments on the following issues: (1) whether in misappropriation of trade secrets cases, damages can be measured by the misappropriator’s costs avoided, and whether prejudgment interest may be awarded on those damages; (2) when during trial must a criminal defendant invoke the right to proceed pro se; and (3) whether a criminal defendant was improperly denied the right to proceed to trial pro se, but with stand by counsel, and whether the trial court improperly denied the defendant’s attempt to introduce psychiatric evidence to challenge the voluntariness of his Miranda waiver.

No. 26     E.J. Brooks Company, d/b/a TydenBrooks v Cambridge Security Seals

Manufacturing plastic security seals is apparently big business.  You know, those seals that are nearly impossible to get off a bottle without a knife but give you a measure of comfort that nobody tampered with your goods before you opened them.  Well, when your company makes those plastic security seals, and three employees steal your trade secrets to take to a competitor, you sue them for misappropriating your hard work and ingenuity.

That is exactly what happened in E.J. Brooks Co. v Cambridge Sec. Seals, and the plaintiff won at trial.  So, the federal district court ordered the defendants to pay back in damages the costs that they avoided by stealing the trade secrets instead of developing the plastic security seals on their own.  The Court, however, denied the plaintiff’s request for prejudgment interest under CPLR 5001, holding in essence that inclusion of prejudgment interest would be duplicative here because the jury awarded damages from the date of the misappropriation to the date of the verdict.

On appeal, the Second Circuit held that finding liability was easy, but the question of the proper amount of damages for the misappropriation was less so.  The Court explained that New York decisions appear to have authorized a number of different measures of damages in misappropriation of trade secrets cases, but never explicitly the costs avoided measure used by the disctrict court below. So, the Second Circuit decided to certify the question to the Court of Appeals to decide.


The Second Circuit also certified whether the typically mandatory award of prejudgment interest under CPLR 5001 still applies where the plaintiff has already been awarded damages for the entire prejudgment period and an additional award of prejudgment interest would be a windfall.

The Court of Appeals will now have to decide these two certified questions:


The Second Circuit’s opinion can be found here.

Court of Appeals February Session: Arguments of Interest for February 7, 2018

The Court of Appeals’ February Session continues on Wednesday, February 7, 2018, with four cases (three arguments) on the docket (the Court’s case summaries can be found here). The Court will hear arguments on the following issues: (1) whether a contract of insurance that provides it will cover as an additional insured any party that the insured has “agreed to add as an additional insured by written contract” requires a direct agreement between the insured and the intended additional insured, or whether a recital in a collateral agreement is sufficient; (2) whether the Civil Rights Law § 51 right to privacy protects against use of a person’s likeness in a video game; and (3) whether the People were entitled to a Frye hearing to challenge the scientific basis for a criminal defendant’s expert’s theory of the victim’s death where the theory was not novel (that the victim died of drowning after ingestion of five prescription drugs, instead of by strangulation).

No. 23     Gravano v Take-Two Interactive Software, Inc.
No. 24     Lohan v Take-Two Interactive Software, Inc.

Grand Theft Auto V is the latest in a popular series of the video games where the player controls one of several main characters in a mob family/drug cartel story that takes place in the fictional city of Los Santos, San Andreas.  After the game was released, Plaintiffs Lindsay Lohan and Karen Gravano (of the reality show Mob Wives) were upset at what they believed to be characters that depicted them in particular ways.  In 2014, they commenced suit against Take-Two Interactive Software, Inc., the video game’s creator, alleging that it misappropriated their likenesses and violated their rights to privacy under New York Civil Rights Law § 51.

Specifically, Lohan alleged that the Take-Two “used a look-alike model to evoke Lohan’s persona and image.  Further, Lohan argue[d] that defendants purposefully used Lohan’s bikini, shoulder-length blonde hair, jewelry, cell phone, and signature peace sign pose in one image, and used Lohan’s likeness in another image by appropriating facial features, body type, physical appearance, hair, hat, sunglasses, jean shorts, and loose white top.  Finally, Lohan argue[d] that defendants used her portraits and voice impersonation in a character that is introduced to the player in a side mission.”  Gravano v Take-Two interactive Software, Inc., 142 AD3d 776, 777 (1st Dept 2016) (internal quotation marks omitted).

Gravano similarly claimed that the GTA character “Andrea Bottino” mirrored “her image, portrait, voice, and likeness” and “use[d] the same phrases she uses; that the character’s father mirror[ed] Gravano’s own father; that the character’s story about moving out west to safe houses mirrored Gravano’s fear of being ripped out of her former life and being sent to Nebraska; that the character’s story about dealing with the character’s father cooperating with the state government [was] the same as Gravano dealing with the repercussions of her father’s cooperation; and that the character’s father not letting the character do a reality show is the same as Gravano’s father publicly decrying her doing a reality show.”  Id. at 776-777.

After Supreme Court denied Take-Two’s motions to dismiss, the Appellate Division, First Department reversed and dismissed the complaints in their entirety.  The Court held that New York’s right to privacy statute, Civil Rights Law § 51, protects individuals’ name, portrait, and picture, none of which the Court held was used in GTA’s fictional characters.  See id. at 777.  The look-alike depictions, the Court held, were not close enough to violate Lohan’s and Gravano’s rights to privacy.  See id.

The Court further held that even if the GTA depictions were enough to be considered representations of Lohan and Gravano, their claims failed nonetheless because the video game did not fall under Civil Rights Law § 51’s narrow definitions of “advertising” or “trade.”  See id.  Instead, the Court held, the “video game’s unique story, characters, dialogue, and environment, combined with the player’s ability to choose how to proceed in the game, render it a work of fiction and satire,” which is protected under the statute and the First Amendment.  Id.

Ready to speak on the scope and extent of Civil Rights Law § 51’s right to privacy, the Court of Appeals will hear arguments on the issue today.  Now, we can only hope that the stars will join their depictions in front of the Court for oral argument.

The Appellate Division, First Department’s order can be found here.

Court of Appeals February Session: Arguments of Interest for February 6, 2018

The Court of Appeals returns for the February Session on Tuesday, February 6, 2018. First on the agenda for the Court is Chief Judge Janet DiFiore’s State of Our Judiciary speech earlier in the morning at 11:30 a.m. The Chief Judge is expected to report on the progress of her Excellence Initiative, which was designed to be a detailed and comprehensive evaluation of court processes and procedures to identify needed areas for reform, and to propose a range of reforms to the court system to improve the “quality of justice” for New Yorkers. A livestream of Chief Judge DiFiore’s speech can be seen here.

Then at 2 p.m., the Court gets back to its argument calendar, with four cases on the docket for the day (the Court’s case summaries can be found here). The Court will confront a wide range of issues, including (1) whether an agency subject to the Freedom of Information Law may deny a request for records without confirming whether or not the requested records even exist, (2) whether a criminal defendant’s confession that was obtained 25-28 hours after his arrest and after multiple interrogations may be considered voluntarily made and used against him without the People first establishing that the defendant was provided with access to food, water, a bathroom, and sleep during that time, and (3) whether, in an insurance dispute over long-term environmental contamination, liability for the damages caused can be allocated to insurers for time periods beyond the periods provided in the applicable policies.

No. 19     Matter of Abdur-Rashid v New York City Police Department
                 Matter of Hashmi v New York City Police Department

After September 11th, the law enforcement world changed dramatically. The PATRIOT Act gave the intelligence community far greater surveillance powers, and some of the tactics employed filtered down to the level of the local police. In the wake of the attacks, the New York City Police Department began to conduct covert surveillance of Muslim communities in New York and New Jersey.  According to a series of Pulitzer Prize-winning Associated Press articles, which ran in 2011 and can be found here, “the NYPD dispatched undercover officers into minority neighborhoods as part of a human mapping program.  Police also used informants, known as ‘mosque crawlers,’ to monitor sermons, even when there was no evidence of wrongdoing” (Highlights of AP’s Pulitzer Prize-winning Probe into NYPD Intelligence Operations).

When the surveillance program was revealed, Talib Abdur-Rashid and Samir Hashmi filed separate FOIL requests with the NYPD, and asked for copies of any records relating to the NYPD’s surveillance or investigation of them personally or of organizations with which they were affiliated. In particular, Abdur-Rashid was Imam at Mosque of Islamic Brotherhood in Manhattan, and Hashmi, a Rutgers student, was an officer of the University’s Muslim Student Association.

The NYPD, predictably, denied the requests under FOIL’s law enforcement and public safety exemptions, but would not confirm or deny whether any records actually existed. Basically, the NYPD didn’t want to say whether the men or their organizations had been surveilled or investigated, so it just refused to say whether it was withholding any records that would have been responsive to their requests. That way, the NYPD could in denying the requests keep secret whether any investigation was done.

When Abdur-Rashid and Hashmi challenged the denials of their FOIL requests in court (in separate Article 78 proceedings), the trial courts split. In Abdur-Rashid, Supreme Court adopted the NYPD’s argument that it should be allowed, under FOIL, to deny the request without confirming or denying whether any responsive records exist. This rule, which first arose in Phillippi v CIA (546 F2d 1009 [D.C. Circuit 1976]) and is known as the Glomar doctrine, is widely applied under the federal Freedom of Information Act, but has not been adopted expressly under FOIL. The rationale, the federal courts have explained, is that where the mere fact that responsive documents either do or do not exist would fall within a FOIA exemption—like disclosing that fact would harm national security interests—the responding agency should be permitted to deny the request without confirming or denying the existence of the record.

In Hashmi, however, Supreme Court went the other way. The Court rejected the NYPD’s argument, holding that “adoption of the Glomar doctrine ‘would effect a profound change to a statutory scheme that has been finely calibrated by the legislature’ and ‘would build an impregnable wall against disclosure of any information concerning the NYPD’s anti-terrorism activities.'” That change, the Court reasoned, should come from the Legislature, not the courts.

Resolving this conflict at the trial level, the Appellate Division, First Department sided with the NYPD, and formally adopted the Glomar doctrine for the first time in New York. The Court held that the doctrine falls within the scope of FOIL’s purposes because it is not expanding any FOIL exemption to disclosure, but only allowing the responding agency to withhold information subject to those exemptions. In these cases, the Court held, that means withholding the information concerning whether the NYPD even has any files responsive to the FOIL requests. The Court held that the NYPD was justified in invoking the law enforcement and public safety exemptions to withhold that information because the evidence showed that “confirming or denying the existence of the records would reveal whether petitioners or certain locations or organizations were the targets of surveillance, and would jeopardize NYPD investigations and counterterrorism efforts.”

The Court of Appeals will now decide whether there is, or should be, a state analog to the federal Glomar doctrine.  Or whether that question should be left up to the Legislature entirely.

The Appellate Division, First Department’s order can be found here.

Court of Appeals January Session: Arguments of Interest for January 10, 2018

The Court of Appeals wraps up its January Session arguments on January 10, 2018 with cases that make the procedural geek in me smile. There are three cases on the argument calendar today (the Court’s case summaries can be found here), two of which involve really interesting (to me at least) procedural issues about counterclaims and the courts’ interests of justice jurisdiction. Here are the issues the Court will address: (1) does the Federal Rules of Civil Procedure’s mandatory counterclaims rule apply in New York state litigation to give res judicata effect to a counterclaim that was not pled in a prior federal suit; (2) does an appellate court have interests of justice jurisdiction to review an issue that a criminal defendant waived before the trial court; and (3) is a criminal defendant denied effective assistance of counsel by withdrawing a Hundley motion to suppress a videotaped confession after the trial court has granted a hearing on the motion.

No. 16    Paramount Pictures Corporation v Allianz Risk Transfer AG

In a suit about a lost investment in movies, the issue before the Court of Appeals has absolutely nothing to do with the movie or the lost investment. Instead, it’s the kind of issue that sparks interest in the community of appellate lawyers who look at how the courts work. In this case, Allianz invested in a Paramount film, but agreed to waive any claims against Paramount and not to sue if the investment went south.

The investment tanked, and Allianz sued Paramount in federal court anyway, notwithstanding the waiver of claims and bar to lawsuits. Paramount defended the litigation based on the waiver provision, but never raised the covenant not to sue as an affirmative defense or pled Allianz’s breach of it as a counterclaim in the federal suit. What’s noteworthy about that is that Rule 13(a) of the Federal Rules of Civil Procedure require any party to a suit to assert any mandatory counterclaims that it has in that litigation or else they will later be barred from doing so.

After the federal court predictably dismissed the case because of the waiver provision, Paramount brought this breach of contract suit in state court based Allianz’s breach of the covenant not to sue. Allianz moved to dismiss, arguing that res judicata barred Paramount’s breach of contract claim because it was a mandatory counterclaim that was never asserted in the federal suit and was barred by FRCP Rule 13(a).

Supreme Court denied the motion to dismiss, citing New York’s permissive counterclaims rule under CPLR 3011. New York doesn’t subscribe to the federal mandatory counterclaim rule, the Court held, and to adopt it would conflict with New York’s rule.

The Appellate Division, First Department, however, reversed and dismissed the suit. The Court held that Rule 13(a) should be applied in state court litigation, and Paramount’s breach of contract claim was thus barred by res judicata for failure to assert it as a mandatory counterclaim in the federal suit.

The Court of Appeals will now hear arguments on this issue of first impression in New York. In a practical sense, it would make sense to me that res judicata should bar any mandatory counterclaim that a party was required to assert in a prior federal suit, but failed to do so. Holding the other way would be a disservice to judicial economy and would allow parties to litigate multiple suits in different forums (with different judges and rules) claims that could all be resolved in a single case all at once. But that will be up to the Court to decide.

The Appellate Division, First Department’s order can be found here.

Court of Appeals January Session: Arguments of Interest for January 9, 2018

The Court of Appeals is back for the final week of the January Session. There are only two days of argument this week, and three cases are on the docket today (the Court’s case summaries can be found here). The Court will hear arguments on the following issues: (1) whether the Long Island Power Authority is entitled to governmental immunity from tort liability for its failure to shut down the power grid in Queens before or during Hurricane Sandy; (2) does an indenture trustee have standing to enforce all rights of bondholders, or just limited authority to bring actions for payment on or to enforce the terms of the notes; and (3) whether a criminal defendant is denied a constitutional speedy trial where the prosecution delays his trial for six years while trying to obtain the cooperation of a co-defendant.

No. 11     Connolly v Long Island Power Authority
No. 12     Baumann v Long Island Power Authority
No. 13     Heeran v Long Island Power Authority

In these three consolidated cases, about 180 property owners allege that their homes were destroyed or their properties damages by fires caused when the Hurricane Sandy storm surge came into contact with LIPA’s still live power lines. The property owners allege that this damage was foreseeable and, thus, LIPA was negligent in not shutting down the power grid before the storm.

Supreme Court denied LIPA’s motion to dismiss the cases, holding that it was not entitled governmental immunity because running the power grid is an act within LIPA’s proprietary capacity. Power has traditionally been provided by the private section, the Court reasoned, and so LIPA’s actions could not be immune from the negligence suits.

The Appellate Division, Second Department affirmed, with one Justice dissenting. The majority reasoned that LIPA was created by the Legislature as a substitute for what was formerly a private enterprise, and thus its actions in operating the power grid were proprietary, not governmental. As such, the majority held that LIPA was not immune from suit. The dissenter argued, on the other hand, that LIPA is a governmental entity and its preparations for and responses to the hurricane were governmental functions. The mere fact that the power grid used to be operated privately does not eliminate the governmental nature from LIPA’s actions, the dissenter reasoned.

So, what actions can be held to be in a public authority’s proprietary capacity that would subject it to normal tort liability? Are there any at all?  The Court of Appeals will hear arguments on those questions today.

The Appellate Division, Second Department’s order can be found here.


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