NY DFS Suit: NY Judge Holds Daily Fantasy Sports Law Violates NY’s Constitutional Ban on Gambling, and the State Could Appeal Directly to the Court of Appeals Right Now

Article I, § 9 of the New York Constitution bans gambling, plain and simple. That includes, lotteries, pool selling, book making, and now, according to a New York trial judge, daily fantasy sports as well. As you may recall, in 2015, the New York Attorney General made it a point to enforce the constitutional ban on gambling against major DFS players FanDuel and DraftKings. After the Legislature passed the Interactive Fantasy Sports Law in 2016, based on substantial lobbying efforts from the DFS industry, the AG settled the case against FanDuel and DraftKings and found itself in the unenviable position of having to switch sides to defend the new enactment.

The IFS law (Chapter 237 of the Laws of 2016) attempted to exempt “interactive fantasy sports” from the New York Constitution’s ban on gambling. Specifically, it provides:

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Using the AG’s own arguments against it, a group of private plaintiffs challenged the IFS Law as a violation of New York’s constitutional ban on gambling. They argued: “In enacting [the DFS law], the Legislature has done exactly the opposite of what Article I, § 9 of the Constitution commands. Instead of passing laws to prevent gambling, it has enabled it. It has also provided a tortured interpretation of the term ‘gambling’ that defies its ordinary meaning while violating the principle that exceptions to constitutional prohibitions should be strictly construed” (Plaintiffs’ Memorandum of Law, at 25).

NY Interactive Fantasy Sports Law is Unconstitutional, But Holds that the Legislature Can Exempt DFS from the Penal Law

Judge Gerald Connolly, in a seemingly split decision, which can be read in full here, agreed with the plaintiffs. In a comprehensive decision of the type I like to see in an important case like this one, Judge Connolly held that the scope of the term “gambling” in the New York Constitution must be construed broadly according to its plain meaning. The terms are broad and all-inclusive, he noted. Indeed, the “any other form of gambling” language in the constitutional ban requires an “expansive, not a limited” interpretation (Decision, at 20). Indeed, the Judge noted, it has been interpreted previously by the AG to forbid sports gambling, which includes DFS. Judge Connolly thus held that daily fantasy sports, which involves the selection of players over whom the DFS participants have no control after the lineups are set, is gambling and falls within NY’s constitutional ban.

It is not for the Legislature to define the scope of the constitutional ban, the Judge held. Accepting the State’s interpretation would allow the Legislature’s definition of gambling in a statute to render the constitutional provision meaningless, a construction that must be avoided under normal principles of constitutional interpretation. A statute cannot change the effect of a constitutional provision. To change the constitution, the amendment process must be followed. And the Legislature did not do that here for DFS.

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The Court also rejected the State’s argument that because DFS involves a measure of skill, a fact which the Judge presumed to be true, it can’t be a game of chance prohibited by the Constitution. The drafters of the constitutional ban on gambling intended to prohibit “contests based on future contingent events,” which DFS clearly is, the Judge reasoned, regardless of the skill involved (Decision, at 19).

Although the Court largely sided with the plaintiffs’ argument that DFS is prohibited by the NY constitutional ban on gambling, the Judge did reject one portion of their argument. In a confusing distinction, the Court held that the Legislature’s exemption of DFS from the definition of “gambling” under the Penal Law, the criminal statutes in New York, was not unconstitutional. The Court held that it was not within the scope of judicial review to declare that the Legislature’s discretionary act to define DFS as outside of the statutory definition of gambling in the criminal statutes. That decision lies entirely with the Legislature.

So, if I have this right, DFS is prohibited by the NY Constitution, but DFS companies like FanDuel and DraftKings can’t be criminally prosecuted for operating unconstitutional DFS games in New York. Relief for the constitutional violation must lie elsewhere apparently.

The Appellate Process

The State will undoubtedly appeal Judge Connolly’s order declaring the IFS law unconstitutional. By virtue of that appeal, enforcement of the order will be automatically stayed under CPLR 5519(a). So, for now and while the appellate process continues, DFS will remain up and running in New York. And that’s not a short process. From the time the notice of appeal is filed, the State will have 6 months to perfect the appeal by filing a brief and the record. Plus, the time to perfect the appeal can be extended up to another 3 months, by stipulation of the parties, or a motion to the Court. With the benefit of the automatic stay, the State will be in no rush to file its brief, I’d imagine. They’ll want to get it right.

If both sides appeal (because they both lost something, the State more than the plaintiffs though), the time is measured from the latest notice of appeal and both appeals will have to be perfected simultaneously. If not, once the State files its brief, the plaintiffs will technically have 30 days to file their opposing brief, but that time is routinely extended, and under the new uniform rules of the Appellate Division, can last up to a total of 3 months.

Although Judge Connolly did not have the benefit of amici submissions on the legal issues (a surprising decision, I think, given the stakes involved), I would be surprised if numerous amici motions are not made at the Appellate Division. Interested parties will undoubtedly want to give the Court their views on the issues, and the Court will certainly welcome all the help it can get in deciding this case).

Once the case is fully perfected before the Appellate Division, it’s usually three or four months before the Court will schedule oral argument. It’s then 4 to 6 weeks until a decision in most cases, and I’d expect this one to be the same. So, totaling all that time up, you’re looking at about 15 to 18 months before the Appellate Division will decide the issues, and then the case can go to the New York Court of Appeals.

Because this case unquestionably involves a substantial constitutional question, whichever party loses at the Appellate Division should have an appeal as of right directly to the Court of Appeals, which would then issue a final opinion on the constitutionality of the IFS law, likely in 2021 at the earliest.

The State Can Appeal Directly to the Court of Appeals Right Now

Here’s an interesting wrinkle. What if the State decides it doesn’t want to wait that long? It could try to appeal directly to the Court of Appeals right now, and I think it should.

A little used provision of the Court’s jurisdiction allows the Court of Appeals to hear and decide cases on direct appeal from a trial court order, like this one, that finally determines a case “where the only question involved on the appeal is the validity of a statutory provision of the state or of the United States under the constitution of the state or of the United States” (CPLR 5601 [b] [2]). That seems to me to apply here.

First, Judge Connolly’s order finally disposes of the entire action. It granted relief to both sides, decided all of the causes of action, and there are no issues left to consider, so it’s a final determination. Second, the only issue in the case are whether the IFS law violates the New York Constitution’s ban on gambling. Judge Connolly said it did. CPLR 5602 thus appears to give the State, or the plaintiffs for that matter, the right to appeal directly to the Court of Appeals for a final decision on the constitutional question right now.

But why appeal directly to the Court of Appeals now, instead of letting the Appellate Division decide the issues first? Timing is everything for this case. The DFS industry wanted a quick fix to the issue before DFS was legal in New York, and it presumably wants a quick end to this litigation to provide certainty to the industry. Outside of a constitutional amendment to authorize DFS, which is a two year-plus process, the quickest way to a final resolution is a direct appeal to the state’s highest court. If the Court of Appeals is going to decide the issues anyway, why not get them to do it now?

What’s more, the Court of Appeals is often reticent to strike down a statute as unconstitutional, and the burden for the plaintiffs to carry is a heavy one. The Court of Appeals will review the constitutional issue on a clean slate, so it’s free to disagree with Judge Connolly’s determination. And every single Judge on the Court has been appointed by Governor Andrew Cuomo. Now, that doesn’t mean they’ll all agree with the State, but the State would only need 4 votes for constitutionality. While Judges Rivera and Wilson may not be in play (the State’s arguments are a little weak for getting their votes, I think), Chief Judge DiFiore and Judges Stein, Garcia, Fahey, and Feinman are.

Win or lose, the Legislature will have a chance to fix the issue and grant an exception from the NY constitutional ban on gambling for DFS (and sports gambling for that matter) for all time, a process it probably should have followed back in 2016.

Zarda is Out: En Banc Second Circuit Holds Sexual Orientation Discrimination is Protected by Title VII

This is the decision that so many have been waiting for. In a historic ruling in Zarda v Altitude Express, the Second Circuit today overruled its’ prior precedent in Simonton v. Runyon, and held that sexual orientation discrimination is discrimination because of sex that finds protection under Title VII.

The comprehensive opinion the majority of the Second Circuit held that “sexual orientation discrimination is motivated, at least in part, by sex and is thus a subset of sex discrimination” (Opn, at 20-21). Looking to the text of Title VII, the majority concluded that Title VII’s protection against discrimination “because of . . . sex” extends to sexual orientation because “sex is necessarily a factor in sexual orientation” (Opn, at 21). Leading with the Black’s Law Dictionary definition of sexual orientation—”[a] person’s predisposition or inclination toward sexual activity or behavior with other males or females”—the Court noted that a person’s sexual orientation can’t be identified unless that person’s sex is known as well as the sex of those to whom the person is attracted. As the majority put it,

Because one cannot fully define a person’s sexual orientation without identifying his or her sex, sexual orientation is a function of sex. Indeed sexual orientation is doubly delineated by sex because it is a function of both a person’s sex and the sex of those to whom he or she is attracted. Logically, because sexual orientation is a function of sex and sex is a protected characteristic under Title VII, it follows that sexual orientation is also protected.

Taking apart the argument that firing an employee for his or her sexual orientation is not firing them because of their gender, the majority held that “this semantic sleight of hand is not a defense; it is a distraction” (Opn, at 23-24). The failure to reference the employee’s gender doesn’t change the fact that “firing a man because he is attracted to men is a decision motivated, at least in part, by sex” (Opn, at 24). Merely using different terminology to achieve the same discriminatory result, the majority held, doesn’t fly under Title VII.

The Court also held that Congress’ failure to protect expressly sexual orientation under Title VII doesn’t undermine the conclusion that the broad language that Congress did use was intended to protect not only the “principal evil,” but also “comparable evils” (Opn, at 27).  Thus, the majority reasoned, the protections afforded to employees against discrimination because of their “sex” was not meant to be exclusive, and necessarily includes protection for sexual orientation too.

This conclusion, the Court held, is also supported by the Supreme Court’s “comparative test” for when an employment practice constitutes sex discrimination. Using the en banc Seventh Circuit’s decision in Hively v Ivy Tech Community College as a salient example, the majority explained if a female employee who is attracted to females is denied a promotion when a male employee also attracted to females is given the promotion, the denial of the promotion (all other things being equal, of course) is because of the female employee’s sex. Thus, it is clear, the majority held, that sexual orientation discrimination is just a subset of sex discrimination and is protected under Title VII.

Having addressed the proper application of the comparative test, we conclude that the law is clear: To determine whether a trait operates as a proxy for sex, we ask whether the employee would have been treated differently “but for” his or her sex. In the context of sexual orientation, a woman who is subject to an adverse employment action because she is attracted to women would have been treated differently if she had been a man who was attracted to women. We can therefore conclude that sexual orientation is a function of sex and, by extension, sexual orientation discrimination is a subset of sex discrimination.

The gender stereotyping theory provided yet another basis to conclude that sexual orientation discrimination is discrimination because of sex, the majority held. When an employer discriminates because it believes that a man cannot, or should not, be attracted to men, but doesn’t discriminate when women are similarly attracted to men, the employer acts on the basis of the employee’s gender. That is clearly protected by Title VII. Thus, the Court explained, the prior framework under Simonton trying to distinguish when a discrimination claim is impermissibly based on sex stereotyping or when it is (formerly) permissible sexual orientation discrimination no longer worked.  The lower courts struggled with the distinction, the majority held, and no basis remained to keep it.

It is also unlawful associational discrimination for an employer to discriminate based on an employee’s romantic association with a partner of the same sex, the majority held.  Harkening back to the Supreme Court’s decision in Loving v Virginia, the majority explained that “policies that distinguish according to protected characteristics cannot be saved by equal application” (Opn, at 54) and so whether an employer adversely treats both men and women for same sex association is no defense to a claim of discrimination under Title VII. Indeed, discrimination based on sexual orientation, the majority held, “is no less repugnant to Title VII than anti-miscegenation policies” (Opn, at 59).

The Second Circuit has now joined the Seventh Circuit in Hively, holding that sexual orientation discrimination is protected under Title VII. This is a huge decision, and one that has been long awaited by LGBT rights advocates. But, it is certainly not the end.  The Eleventh Circuit has declined to agree. And Zarda may well be poised to head up to the Supreme Court, where it faces an uncertain reception. This decision of the en banc Second Circuit, though, to overrule its prior precedent and recognize that no one should be discriminated against on the basis of their sexual orientation or any other protected characteristic is a monumental one.

The Second Circuit’s en banc opinion can be found here.

Second Department Joins the Third Department in Applying the Child of the Marriage Presumption to Same Sex Spouses

It was only a few weeks ago that the Third Department held, for the first time in New York, that a married same sex couple is entitled to the presumption that a child born during their marriage is a child of the marriage. Now, the Second Department has agreed.

In Matter of Joseph O. v Danielle B., the Second Department faced the same situation that the Third Department addressed in Matter of Christopher YY. v Jessica ZZ. Joseph O. sought to establish his paternity to a child born to Danielle and her wife, Joynell, by artificial insemination using Joseph’s sperm. Like in Christopher YY., Joseph expressly waived any right to seek to establish parental rights or visitation, yet went back on the deal and petitioned Family Court to be declared the child’s father and for visitation.

Danielle and Joynell moved to dismiss the paternity and visitation petitions, arguing that they, as married spouses, were entitled to the presumption of legitimacy, that their child born via artificial insemination was a child of their marriage.  But Family Court held that Joseph had shown enough proof that he was the child’s father that the burden shifted to Danielle and Joynell to show it was not in the best interests of the child to do paternity testing or to declare Joseph the child’s father. Family Court also held that questions of fact existed whether equitable estoppel should bar Joseph from asserting paternity because Danielle and Joynell had permitted him to visit the child three or four times per year.

On appeal, the Second Department began its opinion discussing the irrebuttable statutory presumption of legitimacy that Domestic Relations Law § 73 attaches when a couple has a doctor perform the artificial insemination. Because that wasn’t the case here, the Court held that Danielle and Joynell weren’t entitled to the statute’s irreuttable presumption and couldn’t establish their parentage under section 73. That, however, wasn’t the end of the inquiry. The Court held instead, “Domestic Relations Law § 73 was not intended to be the exclusive means to establish the parentage of a child born through artificial insemination of a donor.”

Turning then to the common law presumption of legitimacy, and relying heavily on the Third Department’s decision in Christopher YY., the Second Department too held that Danielle and Joynell were entitled to the rebuttable presumption that the child born during their marriage was legitimate. Although the Court declined to prescribe what proof would be necessary to rebut the presumption, much like the Third Department did, the Court held that the paternity petition should be dismissed based on equitable estoppel. Joseph agreed to give up his rights, didn’t establish a parenting relationship with the child, and his few visits over 3 years didn’t undermine Danielle’s and Joynell’s parental roles. So, the Court held, Joseph can’t now assert that he is the child’s parent.

Like Christopher YY., this is a significant win for LGBT rights, especially in the important Family Law arena. What’s more, because the Second and Third Departments now agree that the child of the marriage presumption applies to married same sex couples, it’s even less likely that the Court of Appeals will need to address this issue. Because of an old New York rule that makes an Appellate Division decision binding statewide—not just in the Department in which the trial courts sit—until a conflict among the Departments emerges, the now settled Appellate Division precedent already applies throughout the State and is binding in all Family Court proceedings. Unless the Court of Appeals is keen to take on the issue simply to affirm the settled Appellate Division rule, which I think it would given Judge Abdus-Salaam’s monumental decision in Matter of Brooke S.B. v Elizabeth A.C.C., it would take either the First or Fourth Departments disagreeing and creating a conflict for the Court of Appeals to weigh in.

The law in New York now stands firm: same sex couples have the same right to a presumption that their children are legitimate that opposite sex couples always had. And that’s the way it should be.

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

New York DFS Lawsuit Update: Plaintiffs Seek Summary Judgment that DFS Law Violates New York’s Constitutional Ban on Gambling

Gambling is gambling is gambling, the plaintiffs argue. Whether it’s wagering on horse racing at Saratoga, playing poker or roulette in one of New York’s 4 new casinos, or playing daily fantasy sports at DraftKings or FanDuel, it’s all prohibited by the New York Constitution’s ban on gambling. The only difference is that the Legislature has carved out exceptions to the constitutional ban for horse racing and casinos and tried to avoid doing the same in New York’s DFS law. The two-year process to amend the constitution was too long to wait for DFS, apparently. And now, the plaintiffs in White v Cuomo have asked the trial court to declare New York’s law authorizing interactive fantasy sports unconstitutional.

As I wrote about when the trial court denied the State’s motion to dismiss the case, this case asks the Court to construe the scope of the New York Constitution’s ban on “gambling” to decide whether DFS can be allowed by mere legislative amendment, or if an amendment to the New York Constitution is necessary. In particular, Article I, § 9 of the New York Constitution provides, in relevant part: “no lottery or the sale of lottery tickets, pool-selling, book-making, or any other kind of gambling, except [the State lottery, betting on horse races, and casino gambling] shall hereafter be authorized or allowed within this state.” The Constitution, however, doesn’t define the term “gambling.” So, the question that remains, and the one the Court needs to resolve, is whether DFS is prohibited “gambling” under the New York Constitution.

The plaintiffs have now moved for summary judgment to bring that issue before the Court for a decision on the merits. A copy of the plaintiff’s memorandum of law in support of the motion can be found here.

First, a primer on the DFS law and the Legislature’s justification for why DFS is not gambling. As the plaintiffs point out in their papers, throughout history, the New York Attorney General has opined that the Constitution’s ban on gambling includes sports betting. To try to get around that interpretation, the DFS law “declared that interactive fantasy sports are not games of chance, but rather, ‘fantasy or simulation sports games’ based upon ‘the skills of contestants’ and are not based on the current membership of an actual team” (Plaintiffs’ MOL, at 15, quoting Racing, Pari-Mutuel Wagering and Breeding Law § 1400[1][a]). The Legislature also found that the fantasy players get to choose their own teams, so the outcome of the DFS contest depends on who they choose, not on events outside of their own control.  The workaround the Constitution’s plain language, the plaintiffs’ argue, misses the mark.

In support of their argument, the plaintiffs assert that the Constitution does not give the Legislature the power to create exceptions to the ban on gambling without following the constitutional amendment process. Indeed, they note, the Legislature has authorized 4 exceptions to the constitutional ban by amendment: betting on horse racing, games of chance like bingo and lottery run by non-profits, state-run lotteries, and the casinos. The Legislature has not amended the Constitution to permit DFS, and can’t do so merely by legislation.

In enacting [the DFS law], the Legislature has done exactly the opposite of what Article I, § 9 of the Constitution commands. Instead of passing laws to prevent gambling, it has enabled it. It has also provided a tortured interpretation of the term “gambling” that defies its ordinary meaning while violating the principle that exceptions to constitutional prohibitions should be strictly construed (Plaintiffs’ MOL, at 25).

Next, the plaintiffs argue, the best evidence of what the Constitution’s ban on “gambling” prohibits is the statute it adopted immediately after the 1894 amendment that added the ban. In that statute, the plaintiffs’ argue, the Legislature prohibited “any contest involving gambling on ‘the skill, speed, or power of endurance of man or beast’ involved ‘any unknown or contingent event whatsoever'” (Plaintiffs’ MOL, at 26-27, quoting Penal Law § 351). That’s exactly what DFS is, the plaintiffs argue. It’s betting on the performance of an athlete over which the bettor has no control. That’s prohibited gambling, as the Legislature defined it in 1894. And the Legislature can’t change its interpretation of the term “gambling” now after 122 years, the plaintiffs argue.

The plaintiffs then try to take apart the Legislature’s finding that DFS is a game of skill, not game of chance. The plaintiffs acknowledge that DFS players put together a team of individual athletes and that takes some skill, but that alone doesn’t take DFS outside of the realm of prohibited gambling under the Constitution.

Here’s why: although the New York Constitution doesn’t define “gambling,” New York’s criminal code does. That definition could be what the Court will look at to decide whether DFS falls within the scope of prohibited gambling. The Penal Law defines the term “gambling” as risking something of value (e.g., money) “upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome” (Penal Law § 225.00[2]). Getting a little into the weeds, a “contest of chance” is then in turn defined as “any contest, game, gaming scheme or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein” (Penal Law § 225.00[1]).

So, breaking it down, gambling in New York has been defined as a game where a player risks money (or something else of value) on the outcome of an event that he or she doesn’t control and that involves a “material” degree of chance, even if some skill is required to win. That’s why the plaintiffs argue that the amount of skill that it takes to put together a DFS team doesn’t make it any less gambling. In the end, the DFS player doesn’t have any control over how his or her players performs, and winning therefore depends on a material degree of chance. It’s a pretty strong argument, I think.

The plaintiffs also acknowledge that the Legislature could decline to criminalize what the State has previously called “incidental” gambling, like small office pools or family and friends card games. But, DFS is not that, they argue. The DFS industry is a multi-million dollar business, where the operators make their money by taking a “rake” from the pot of entry fees. Thus, the only route to legalize DFS in New York, the plaintiffs contend, is through an amendment to the New York Constitution.

If the plaintiffs are right, their win will not only devastate DFS in New York, but also online poker, sports betting, and maybe even full season fantasy sports.  Because, as they argue, there’s no difference between putting together a fantasy team for one week or the whole season (Plaintiffs’ MOL, at 3 “[interactive fantasy sports] itself can take many forms, with some contests lasting all season long (e.g., baseball fantasy sports lasting the entire baseball season), or weekly, but also ‘daily fantasy sports’ (‘DFS’), a relatively more recent iteration which is extremely popular in which contests are conducted on a weekly or daily basis”]). If one falls, so falls the others.

As the New York Legislature considers authorizing online poker and sports betting, this case hangs as a cloud over those deliberations. There too the Legislature seems to be urging that it can get around the express constitutional ban on gambling with mere wordsmithing. Until Judge Connolly decides this case, though, the risk of authorizing more forms of online gaming seems to me too steep to take. But that’s why I’m an attorney, not a representative in state government.

The State now has until the end of February to respond in defense of the DFS law, to argue that the interactive fantasy sports authorized by the New York Legislature do not run afoul of New York’s constitutional ban on gambling. It will be a tough task, no question, made more difficult by the Attorney General’s prior case against DraftKings and FanDuel. But, the State does have one thing on its side: a heavy presumption that an act of the Legislature is constitutional.

After the State’s submission and the plaintiffs get a chance to reply, the case will go to the Judge on one legal question: does the New York DFS law violate the New York Constitution’s ban on gambling? The answer to that question will undoubtedly have a huge impact on the landscape for fantasy sports in New York well into the future.

Third Department Extends Child of the Marriage Presumption to Same Sex Spouses for the First Time

A child is born to a married woman. Under New York law, the child is presumed to be a product of the woman’s marriage. The presumption can be rebutted, of course, but in the beginning, the law assumes that the children of married spouses are legitimate. That makes sense. New York’s policy is to keep families together, unless a different arrangement is clearly in the best interests of the children. Although New York cases have never before applied the child of the marriage presumption to same sex spouses, the rationale for its existence applies equally regardless of the married spouses’ gender. And that’s what the Appellate Division, Third Department held today for the first time.

In Matter of Christopher YY. v Jessica ZZ., Jessica, who was legally married to Nichole at the time, was inseminated in an informal procedure at home using Christopher’s sperm, which he had volunteered to donate. They drew up a contract (without legal advice) that said Christopher agreed to donate his sperm and to waive any claim to paternity of a child conceived or to visitation. In return, Jessica and Nicole agreed to waive any right to child support.

On the second try at insemination, Jessica became pregnant and had a baby girl. After her birth, the baby lived with Jessica and Nicole, and Jessica’s two other children, as a family. But after she was born, Christopher apparently had second thoughts. When the baby was about seven months old, Christopher filed a paternity petition, seeking a paternity test, and a separate petition for custody.

Under New York’s family law regime, the paternity petition almost automatically triggers a court-ordered paternity test and a hearing on what is in the best interest of the child. There is an exception, however. Family Court can decline to order the paternity test if it finds, in a written order, that the test “is not in the best interests of the child on the basis of res judicata, equitable estoppel, or the presumption of legitimacy of a child born to a married woman” (Family Ct Act § 532[a]). That’s what Jessica and Nicole argued here. They claimed that the test should not be held because they, as married spouses, were entitled to the child of the marriage presumption, and that Christopher should be equitably estopped from going back on his agreement.

For the first time in New York, the Third Department held that same sex spouses are also entitled to the presumption that children born to married spouses are legitimate. As the Third Department put it,

As the child was born to respondents, a married couple, they have established that the presumption of legitimacy applies, a conclusion unaffected by the gender composition of the marital couple or the use of informal artificial insemination by donor (Opn, at 5-6).

Although the presumption applied, the Court held that that wasn’t the end of the inquiry. Because the presumption is a rebuttable one, the Court had to still decide whether Christopher had shown “clear and convincing evidence excluding the [spouse] as the child’s [parent] or otherwise tending to prove that the child was not the product of the marriage” (Opn, at 6). The law’s formulation for rebutting the presumption, the Court noted, is problematic for same sex spouses.

If the presumption of legitimacy turns primarily upon biology, as some earlier cases indicate, rather than legal status, it may be automatically rebutted in cases involving same-gender married parents. This result would seem to conflict with this state’s strong policy in favor of legitimacy, which has been described as one of the strongest and most persuasive known to the law. Summarily extinguishing the presumption of legitimacy for children born to same-gender married parents would seem to violate the dictates of the Marriage Equality Act (see L 2011, ch 95), which guarantees to such couples the same legal status, effect, right, benefit, privilege, protection or responsibility relating to marriage as exist for different-gender couples (Opn, at 8 [cleaned up]).

So, the Court held, it is time to rework the standard to apply equally to everyone. But, the problem is, the Court didn’t know how that should work.

While a workable rubric has not yet been developed to afford children the same protection regardless of the gender composition of their parents’ marriage, and the Legislature has not addressed this dilemma, we believe that it must be true that a child born to a same-gender married couple is presumed to be their child and, further, that the presumption of parentage is not defeated solely with proof of the biological fact that, at present, a child cannot be the product of same-gender parents. If we were to conclude otherwise, children born to same-gender couples would be denied the benefit of this presumption without a compelling justification. The difficulty is in fashioning the presumption so as to afford the same, and no greater, protections (Opn, at 9).

Instead of articulating a general rule that could be applied in every case, the Court focused on the facts of this one, holding that Christopher had failed his burden to show that the baby girl was not entitled to the legal status of the product of Jessica’s and Nicole’s marriage. Thus, the Court held, the child of marriage presumption had not been rebutted and no paternity test should be given.

The Court alternatively based its decision on equitable estoppel, that the testimony at the best interests of the child hearing established that Christopher had waived his rights and responsibilities of parenting, and should not now be allowed to go back on that agreement. Indeed, Jessica and Nicole relied on his agreement and cared for the baby from her birth as a family. As the Court put it,

Having led respondents to reasonably believe that he would not assert – and had no interest in acquiring – any parental rights and was knowingly and voluntarily donating sperm to enable them to parent the child together and exclusively, representations on which respondents justifiably relied in impregnating the mother, it would represent an injustice to the child and her family to permit him to much later change his mind and assert parental rights (Opn, at 15).

This is a significant decision for LGBT rights in New York, though not necessarily a surprising one after the courts in New York have routinely offered the same protections and rights under the law to same sex couples as they previously did for opposite sex ones. We’ll see if this case heads to the Court of Appeals on the issue of first impression, but given the underlying facts that weigh heavily in Jessica’s and Nicole’s favors, and the alternative ground on which the Third Department based its decision, the Court may not yet need to address it.

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

 

 

Third Department Justices Disagree on Whether Student Accused of Sexual Assault Should Have Right to Cross-Examine Accuser

The Appellate Division, Third Department has decided a number of significant issues recently involving the State University of New York’s disciplinary system in sexual assault cases. First, it was Matter of Haug v State Univ. of N.Y. at Potsdam, in which the Court annulled the expulsion of a student accused of sexual assault, finding that the hearsay statement of the accuser wasn’t enough to support the discipline. That case is at the Court of Appeals on an appeal as of right, and has been fully briefed, just waiting for an argument date.

Next, it was Matter of Weber v State Univ. of N.Y., Coll. At Cortland, where the Third Department reached a seemingly contradictory result to Haug. In Weber, the facts were a little more clear, but in neither case did the accused student have the “affirmative consent” to sex that the SUNY Code of Conduct requires. While in Haug, the Third Department vacated the expulsion, in Weber, the Court upheld it.

The Third Department’s latest foray into the SUNY disciplinary process in sexual assault cases came just this week. In Matter of Jacobson v Blaise, the Third Department heard a case arising from an alleged sexual assault on Halloween 2015 at SUNY Plattsburgh. Neither the accused student nor the accuser remembered who initiated the sex, and both were drunk at the time. Five days afterward, the accuser reported it as sexual assault, and the accused was issued a “No Contact” order.

At the eventual disciplinary hearing, the accuser listened to the proceedings via Skype, but did not participate. Instead, the lead investigator that had filed the disciplinary charges against Jacobson read the accuser’s statement into the record at the hearing. Jacobson was allowed to cross-examine the investigator at the hearing, but not the accuser herself. This was a major point of contention between the majority and dissent at the Third Department.

As the majority explained, under the “‘Students’ bill of rights’ section in the Education Law, the reporting person has the right to ‘[m]ake a decision about whether or not to . . . participate in the judical or conduct process . . . free from pressure by the institution’ (Education Law § 6443).” This protection has two components: first, the accuser can decide whether or not to participate in the hearing, and the school can’t tell him or her that failure to participate could hinder the case; second, the accuser has the right to remain anonymous. In light of these protections, the Court held, Jacobson had no due process right to cross-examine his accuser at the hearing, whether in person, electronically through Skype, through the hearing officer, or by written questions. His right to question the investigator about the accuser’s statement was enough in this case, the majority decided.

The majority recognized, however, that there may be a case where a limited right to cross-examination of the accuser should be permitted. In Weber, for example, “the accused student submitted questions through the hearing officer who reworked the question ‘into a more neutral form'” (Weber, 150 AD3d at 1432). Thus, the majority set out a new rule for when the limited right to cross-examine the accuser arises:

where a material factual conflict exists between the statements of a reporting person and an accused student, a mechanism should be made available for the accused student to present questions for the reporting person to address, akin to that utilized in Doe or Weber.

The two Justice dissent, on the other hand, would have held that Jacobson’s due process rights had been violated. The dissent countered:

The dissent recognized that cross-examination is not necessary or warranted in many student disciplinary cases, most of which result in nothing more than a slap on the wrist or a suspension from which the student can return to school. But sexual assault cases are different, the dissent reasoned. They lie at the extreme end of disciplinary consequences and, thus, an accused student should have a full panoply of due process rights to cross-examine the accuser in whatever form the hearing officer finds appropriate.

In this case, the dissent noted, the accuser was already watching the hearing via Skype and could have been questioned that same way, or Jacobson could have been allowed to submit questions for the hearing officer to ask. Either way, the dissent argued, the failure to give Jacobson this right deprived him of due process at the hearing and rendered his expulsion void.

Here’s the thing though. The majority too found a reason to vacate Jacobson’s expulsion. It just wasn’t on due process grounds. Instead, the majority held that the investigator had at the hearing improperly defined what it meant to obtain affirmative consent to sex and suggested that Jacobson had to have been the one to ask for consent because he initiated the sex by penetrating the accuser. That’s not the right definition of either affirmative consent or initiation, the majority held, and it seriously undermined the Board’s decision to sustain the sexual assault charges. So, it sent the case back to the SUNY Disciplinary Board for a new hearing.

The dissent agreed with that flaw too, but because it also found a due process violation, it wouldn’t have sent the case back. Instead, it would have annulled the determination and ended the matter altogether.

Now, Jacobson will have a chance to go back before the Board for a new hearing in the charges, which may be of little comfort to him if he is again denied a chance to have the accuser questioned.

The right of cross examination issue in sexual assault disciplinary hearings is a hard and interesting one. There are certainly important interests on both sides, and I haven’t done enough research to know how those interests should be balanced.

It’s the kind of issue that should be heard by the Court of Appeals so there is a single rule to be applied statewide, but that won’t happen quite yet, unless the Third Department dissenters grant Jacobson leave to appeal. Without an Appellate Division leave grant, the Court of Appeals can’t hear the issue in this case because the remand for a new administrative hearing renders the Appellate Division order nonfinal. It seems to me, though, that this would be a good companion case to Haug, which is now fully submitted before the Court of Appeals. I can’t imagine it will be long before the Court is asked to address the question.

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

Expressions Hair Design Update: The Second Circuit Certifies Interpretation Question to the Court of Appeals

You’ve bought things with a credit card before, right? Me too. Have you ever thought that you might be charged a different price for what you’re buying because you’re not paying in cash? Me neither, and that seems to be what New York General Business Law § 518 tries to prevent.  It provides:

No seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means.

But what does section 518 actually prohibit a merchant from doing?  How far is its reach?  The Second Circuit previously suggested that section 518 appears to bar a retailer from posting a cash price and noting along side it that those paying with a credit card will be charged a certain amount more, the so-called “single-sticker-price scheme.”  Retailers seem to be able to offer discounts to people paying in cash, however.  No New York courts have addressed the reach of the provision, and so what exactly is prohibited remains an unsettled question.

The Second Circuit has now asked the Court of Appeals to resolve that question.  For those who haven’t been following the case closely, including its quick trip to the Supreme Court, here’s a brief recap.  In Expressions Hair Design v Schneiderman, five New York retailers challenged section 518 as a violation of their First Amendment rights by impermissibly regulating how they communicate their prices to customers.  The District Court found in the retailers’ favor, but the Second Circuit vacated the District Court judgment. The Second Circuit held that section 518 regulated conduct, not commercial speech, and thus did not violate the First Amendment.

The Supreme Court granted certiorari, however, and reversed. The Supreme Court held that section 518 does regulate commercial speech, and clearly bars the single-sticker-price scheme to which the retailers had limited their challenge. The The Court, therefore, remanded the case to the Second Circuit to address the question that it did not previously, whether Section 518’s regulation of commercial speech survived First Amendment scrutiny.  Although the Court’s consideration of the question was limited to the single-sticker pricing scheme set forth by the retailers, the Court noted that the Second Circuit was free to consider the constitutionality of other pricing schemes should it decide to do so.

On remand from the Supreme Court, the Second Circuit asked the parties for further briefing on the First Amendment issues and whether the unsettled statutory interpretation question should be certified to the Court of Appeals for a determination under New York law.  In response, the State argued that the Second Circuit should certify two questions concerning the interpretation of section 518 to the Court of Appeals because the statute’s constitutionality turns on the Court’s answer to those questions.  Particularly, the State asked the Second Circuit to certify these questions:

The retailers, on the other hand, argued that the Supreme Court’s opinion foreclosed the certification route by adopting the Second Circuit’s prior interpretation of section 518.  Regardless, the retailers argued, certification was inappropriate because the Court of Appeals could not construe section 518 as prohibiting any dual pricing scheme because such an interpretation “would directly conflict with a federal statute expressly protecting the right of merchants to provide discounts to cash-paying customers, see 15 U.S.C. § 1666f—and so would likely be preempted under the Constitution’s Supremacy Clause. The constitutional-avoidance doctrine thus has no application in a case like this one, where avoiding one set of constitutional problems necessarily presents the court with an entirely new set of constitutional problems.”  (Plaintiffs’ Brief, at 18).

After evaluating the parties’ arguments, the Second Circuit decided on the certification route, and certified this question:

Does a merchant comply with New York’s General Business Law § 518 so long as the merchant posts the total‐dollars‐and‐cents price charged to credit card users?

Because the Supreme Court remanded on “whether Section 518, as applied to the single‐price scheme, is either a valid regulation of commercial speech under Central Hudson or a permissible disclosure rule under Zauderer,” the Second Circuit decided that the Court of Appeals’ interpretation of the scope of the statute would help the Court choose which test applies.

More fundamentally, because the question whether to apply Central Hudson’s test or Zauderer’s turns in part on a functional analysis of Section 518, the First Amendment inquiry in this case properly begins by accounting for the way the statute operates in practice. Despite the general rationale it offered in Zauderer for the lesser standard of review it articulated in that case, the Supreme Court has never clearly specified a governing framework that determines when Zauderer’s less‐exacting standard should apply instead of Central Hudson’s intermediate scrutiny. However, the Supreme Court has suggested that, at a minimum, Zauderer supplies the governing standard when evaluating the constitutionality of a law (1) designed to address misleading commercial speech (or, presumably, its equivalent, the non‐disclosure of information material to the consumer), (2) which mandates only that the merchant make certain truthful statements, and (3) which does not prevent the merchant from conveying additional truthful information.

We see no obvious way to conduct the functional analysis this view of the Central Hudson/Zauderer distinction requires without first gaining greater clarity about the correct application of Section 518 under New York law. Here, of course, the State argues that Section 518 is designed to address the possibility that consumers will be misled if a merchant does not clearly disclose, at the outset, the price it charges to credit card users. As a result, the scope of Section 518’s prohibition is crucial to our analysis in this case. If Section 518 forces a merchant to disclose an item’s credit‐card price, without otherwise either barring the merchant from (a) implementing (and describing to customers) a pricing scheme that differentiates between payments by credit card and cash or (b) conveying to its customers other information the merchant finds relevant, then Zauderer might apply. However, if the statutory prohibition sweeps much more broadly, then Central Hudson might apply. At the very least, without some clarification of Section 518’s scope from the Court of Appeals, and in the absence of some other way to identify the actual scope of Section 518’s rule, it is not clear that we can even decide the basic question of which standard of review — Central Hudson or Zauderer — properly applies.

Here’s the thing, though. In certifying the interpretation question to the Court of Appeals, the Second Circuit makes a number of statements that seem to suggest, clearly to me at least, where the Court stands on the retailer’s First Amendment challenge.  For instance, when explaining how the Court of Appeals’ interpretation could affect the Zauderer test, the Second Circuit explains how section 518 could survive scrutiny under that test, and then, with a conspicuous caveat that it isn’t deciding the merits, basically rejects the retailers’ arguments on the merits. I wouldn’t be too encouraged if I was one of the retailers.

Another interesting point from the Second Circuit’s certification decision is that it explains that it is choosing between the Central Hudson and Zauderer tests without much, if any, guidance from the Supreme Court on when each applies. It is conceivable that this case could go to the Court of Appeals for resolution of the scope of section 518, come back to the Second Circuit for which test applies and whether section 518 withstands the retailers’ First Amendment challenges, and then head back to the Supreme Court for the second time. An appellate geek like me can only dream!

The Second Circuit’s certification opinion can be found here.

Fourth Department Affirms Class Certification for Buffalo Jills in Case Against NFL, Bills

In Ferrari v The National Football League, four former members of the Buffalo Jills, the Bills’ cheerleading squad, brought a proposed class action against the NFL, the Bills, and their employer alleging that they weren’t paid for hundreds of hours of work because they were “deliberately misclassified as independent contractors rather than employees.” The Jills’ complaint can be found here.  This suit came on the heels of similar cases brought against the Raiders, Bengals, and 49ers by the teams’ cheerleading squads.  While those cases were either settled (Raiders and Bengals) or dismissed (49ers), the Buffalo Jills case has gone forward.

The latest fight in the case was over class certification, basically, whether the four named plaintiffs in the Jills case can represent the interests and press the wage claims on behalf of all of the current and former members of the Jills as a whole.  Class certification is a key point in a case like this.  If a class is certified, the plaintiffs will have a much stronger position to negotiate a settlement of the case and likely for more money.  If the court doesn’t think the interests are sufficiently similar, however, and all of the plaintiffs are made to bring and prove their own harms and damages, the NFL and Bills would be in a much stronger position.  It’s far less likely that individual Jills will hire their own attorneys and pay to litigate a case for what could end up being a small amount of damages. So, without class certification, many proposed class actions end up being dismissed.  The juice just wouldn’t be worth the squeeze at that point.

In the Jills case, Supreme Court, Erie County held that the Jills’ claims had common questions—whether they were improperly classified as independent contractors instead of employees, and thus were denied wages they should have been paid for appearances in the community—and there were enough affected individuals that the case would be better tried as a class action. Recognizing that this was a pivotal issue in the case, the NFL and Bills appealed.

The Appellate Division, Fourth Department, however, affirmed the class certification order, holding that all five requirements for class certification under CPLR 901(a) had been met.  These are the five requirements that the Court looked at:

a. One or more members of a class may sue or be sued as representative parties on behalf of all if:
1. the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable;
2. there are questions of law or fact common to the class which predominate over any questions affecting only individual members;
3. the claims or defenses of the representative parties are typical of the claims or defenses of the class;
4. the representative parties will fairly and adequately protect the interests of the class; and
5. a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

Particularly, the Court held that “the common questions include whether the putative class members were employees or independent contractors and whether defendants failed to pay them in accordance with the law, and we conclude that those questions  predominate over individual questions of damages” (Opn, at 3). The Court also noted that the claims of the four named plaintiffs were the same as the potential class members, and that the named plaintiffs can adequately protect the interests of the rest of the class.  Finally, the Court held that the class action was the preferable means of litigating these claims against the NFL and Bills because “this is a case where the cost of prosecuting individual actions would deprive many of the putative class members of their day in court” (Opn, at 4).

This was a big win for the Jills, and the case will now go back to the Erie County trial court, where the parties will go through discovery, depositions, motion practice, and possibly try to reach a settlement.

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

 

En Banc Second Circuit Hears Arguments Whether Sexual Orientation Discrimination is Discrimination Because of Sex Under Title VII

The full Second Circuit yesterday heard arguments in Zarda v Altitude Express, which involves the hot button legal question whether Title VII offers protection for sexual orientation discrimination under the clause prohibiting discrimination “because . . . of sex.” In a nearly two-hour argument, with three attorneys arguing on each side, the Court was fairly active in questioning the parties, trying to drive each of them to address the weakest parts of their arguments and help the Court draw a line for what Title VII protects and what it doesn’t.

After a lackluster start by counsel for Plaintiffs, where it took him a great while of stumbling to get into the statutory interpretation question, counsel for the EEOC picked up the mantle for why the agency believes that Title VII does protect against sexual orientation discrimination and ran with it.  As the EEOC amicus brief laid out, there are three theories of interpretation to get there: first, that sexual orientation discrimination requires the employer to take the employee’s sex into account in conjunction with the sex of that employee’s actual or desired partner; second, that sexual orientation discrimination is a form of sex stereotyping prohibited under Title VII by the Supreme Court’s decision in Price Waterhouse v Hopkins; and, third, that it is gender-based associational discrimination treating LGBTQ individuals disparately because of with whom they romantically or sexually associate.

The EEOC counsel was by far, I thought, the most polished of the three on Plaintiffs’ side, and adeptly maneuvered the Judges’ hypotheticals like “how can the discrimination be based on sex if a woman could presumably also be fired for her sexual orientation?”  To that the EEOC’s counsel responded, under that scenario, “both a man and a woman would be fired for not comporting with proper gender roles,” which is prohibited under the Price Waterhouse sex stereotyping theory.

What was most interesting to me was the Judges pushed the EEOC to explain its change in position over the years to now argue that Title VII offers protection against sexual orientation discrimination.  The EEOC’s counsel explained that following the Supreme Court’s decisions over the last 15 or so years concerning LGBTQ rights, the agency undertook a “fresh look” and sought input from both employers and employees on what protections they believed Title VII offered.  This “fresh look,” the EEOC counsel advised the Judges, resulted in the new view on the statutory interpretation question, like the en banc Seventh Circuit undertook in Hively and Chief Judge Katzmann did in his concurrence in Christiansen v Omnicom Group.

The strangeness of the USDOJ’s contrary position certainly was not lost on the Judges during the argument either. As Judge Rosemary Pooler put it, “You know we love to hear from the federal government, but it’s a bit awkward to hear from them on both sides.”  To that, the EEOC counsel could only respond, “Indeed, your Honor.”

That was not the end of the issue. As soon as the USDOJ attorney got up to the lectern, the Judges started in on him.  In fact, the first question before the USDOJ even got out his first sentence was: “Can I interrupt and ask a question about why you’re here?  Doesn’t DOJ ordinarily defer to the EEOC on Title VII questions?” Ouch. The best he could come up with is that the USDOJ is the nation’s largest employer and the interpretation of Title VII would have an impact on it.

And the questions about USDOJ’s participation kept coming in rapid succession. Next, “Who is the representative from the Civil Rights Division on this brief?”  Then, “So in Hively, the EEOC filed an amicus brief, but DOJ did not. Is there some reason why a brief wasn’t filed then, but one is filed now?” And, “With respect to the EEOC and Department of Justice, what is the process that is entered into in terms of filing a brief?  Can the EEOC file its own brief without consultation with the Department of Justice?”  The USDOJ lawyer eventually got so uncomfortable with the questions that he repeated, multiple times, that he didn’t believe it was appropriate to disclose the internal processes of the DOJ as to when and how a brief contradicting the EEOC is filed.

The argument went downhill from there.  The USDOJ reiterated its arguments that men and women are treated the same for the context of their sexual relationships and, thus, sexual orientation discrimination is not discrimination because of sex.  The Judges, however, just didn’t seem to be buying it.

This is a fascinating argument to hear, made even more so because of the Court’s interest in issues other than the pure statutory interpretation of Title VII.  If you have a free two hours, I strongly recommend listening.  The audio is available on the Second Circuit’s website here.

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