Court of Appeals Declines to Up the Standards for SEQRA Review

The State Environmental Quality Review Act requires that agencies, municipalities, and local boards that have power to approve or fund projects study the potential adverse environmental impacts of a proposal before they approve it. This makes sense. If a project is going to have adverse environmental consequences for a community, the agency approving it should know that beforehand and factor those consequences and what can be done to mitigate them into its decision. As the Court of Appeals put it, SEQRA “represents an attempt to strike a balance between social and economic goals and concerns about the environment—defined broadly to include ‘land, air, water, minerals, flora, fauna, noise, objects of historic or aesthetic significance, existing patterns of population concentration, distribution, or growth, and existing community or neighborhood character'” (Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400, 414 [1986]).

Because this balance is very fact intensive, and differs with every proposal, substantial discretion is left with the agency that conducts the SEQRA review to determine what potential impacts need to be looked at closely, what alternatives should be considered, and what mitigation measures should be imposed.  Judicial review of these decisions is limited. A rule of reason is applied to the agency’s determinations, and they will be upheld so long as the agency has reasonably identified the potential adverse environmental impacts that the project might have, taken a “hard look” at those impacts, and set forth its determination whether the impacts will be significant in a writing based on the agency’s findings.

In Matter of The Friends of P.S. 163, Inc. v Jewish Home Lifecare, Manhattan (No. 128), which I previewed here, the New York State Department of Health reviewed and approved a 20-story nursing home that will be built on the Upper West Side of Manhattan next to P.S. 163, an elementary school with about 600 students between the ages of 3 and 11. During the SEQRA review, DOH identified that the construction could potentially cause noise and toxic dust exposure issues, but concluded that the mitigation measures that were selected would ensure that the exposure would not exceed federally acceptable levels.

Parents’ groups, however, argued that wasn’t enough.  They claimed that DOH’s SEQRA review didn’t take a hard enough look at the noise and toxic dust impacts and that the mitigation measures weren’t enough to protect the students next door. Supreme Court, New York County agreed and annulled the DOH approval. The Court held that DOH “did not address the particular adverse effects of elevated noise levels on children’s learning abilities or performance in school,” nor “take a sufficiently hard look at additional noise mitigation measures.”  The Court held that DOH did not take a hard enough look at the potential environmental impacts in light of the special concerns of having young elementary school students next door to the construction site.

The Appellate Division, First Department, however, reversed on a 3-1 vote. The Appellate Division held that a higher standard of environmental review doesn’t apply to this project because it is located next to a school.  DOH reasonably evaluated the noise impacts, the Court held, and was obligated only to evaluate and impose mitigation measures to the maximum extent practicable.  The best mitigation measures are not always required. Because DOH relied on the federal standards of exposure to determine whether the mitigation measures imposed would be adequate, the Court held that DOH complied with its obligations under SEQRA.

Although the Court of Appeals recognized the particular sensitivities of construction next to an elementary school, the Court declined to hold DOH to a higher standard of review. Particularly, the Court held, DOH, as the SEQRA lead agency, took the requisite hard look at the noise and dust impacts, and determined that they could be appropriately mitigated.

We disagree with petitioners’ lead claims, and, based on the record here, we conclude that DOH took the requisite hard look at the potential risk posed by soil-based lead contamination and potential lead dust migration. Petitioners’ claims that DOH’s soil-sample evidence was insufficient and resulted in unsupported conclusions about the risk posed by lead at the construction site are without merit. DOH relied on 38 soil samples, taken and analyzed according to a technically sound methodology by expert consultants. DOH weighed and resolved the disagreement voiced by the petitioners’ experts regarding the consultants’ methods and opinions. DOH’s conclusions are based on federal and state standards, including accepted EPA standards, on which the agency was legally allowed to rely. Petitioners may have preferred DOH to adopt a different standard, but we cannot say DOH’s determination “was affected by an error of law or was arbitrary and capricious or an abuse of discretion” (Akpan, 75 NY2d at 570 [1990] [internal quotation marks omitted]).

Petitioners’ challenge to DOH’s assessment of lead dust is similarly unavailing. As the record establishes, DOH relied on detailed investigations by experts, and employed appropriate government standards in assessing the risk of airborne lead. The DEIS, FEIS, and Findings Statement all explicitly acknowledged and evaluated the risk that construction would disturb leaded soil, creating airborne lead dust. In assessing how acute a danger the lead dust posed, DOH directly relied on the federal NAAQS for lead exposure, which was a rational choice, particularly as this standard was specifically formulated to protect sensitive populations, like schoolchildren.

Preventing the migration and inhalation of lead dust was one of the environmental risks the agency specifically set out to measure and mitigate in the RAP and CHASP that it adopted. In recognition of the risk, DOH imposed a battery of construction protocols to monitor and contain airborne dust. DOH reasonably concluded that these mitigation measures were sufficient to ensure that airborne lead levels remained within acceptable NAAQS limits, and explained its assessment fully in the DEIS and FEIS.

(Opn, at 13-14).

Had the Court accepted Petitioners’ arguments that the detailed review that DOH undertook just wasn’t good enough, it basically would have re-written all of its SEQRA precedents over the last 40 or so years.  The fundamental premise of SEQRA review is that it is for the lead agency, not the courts, to consider the evidence of environmental impacts and determine how best to mitigate them to the maximum extent practicable.  As long as the agency’s choices are reasonable, the courts properly defer to the lead agency’s decisions. Thankfully, with this decision, the SEQRA treatise need not be rewritten.

The Court of Appeals’ opinion can be found here.

 

Court of Appeals Holds Trial Judges Must Give Cross-Racial Identification Jury Instruction in Almost Every Case

Let’s set the stage. You’re walking down the street at night on your way back from work. You’re approached by a stranger, about the same age but a different race. He asks you the time, and as you pull out your phone to respond, he snatches it, threatens you with a knife, and runs. The police bring you down to the station and you give them a description of your assailant. You then are asked to pick him out of a lineup. You are sort of unsure, but recognize him when the police tell all of men in the line up to ask you the time.

The defendant is charged with robbery and goes to trial. Because your phone is never found, your identification is the only evidence against him. At the charge conference, the defendant’s counsel argues that the Judge should give a cross-racial identification charge because you’re a different race from the defendant and it’s harder to identify people of a different race, he argues. The trial judge doesn’t buy it, and denies the request. The jury then convicts the defendant, and the Appellate Division, Second Department affirms.  This is the situation that the Court of Appeals faced in People v Boone (No. 55).

On appeal to the Court of Appeals, there was only one issue: in a case where there is an identification by a witness of a different race than the defendant, is the defendant entitled to a cross-racial identification jury instruction? When the majority opinion begins like this, you get a good sense of how it will end:

In light of the near consensus among cognitive and social psychologists that people have significantly greater difficulty in accurately identifying members of a different race than in accurately identifying members of their own race, the risk of wrongful convictions involving cross-racial identifications demands a new approach.

The majority spends pages of the opinion on how social science has decided that cross-racial identifications are not always the most reliable, and how misidentifications are a significant cause of wrongful convictions in this country.

Mistaken eyewitness identifications are “the single greatest cause of wrongful convictions in this country,” “responsible for more . . . wrongful convictions than all other causes combined.” Inaccurate identifications, especially misidentifications by a single eyewitness, play a role in the vast majority of post-conviction DNA-based exonerations in the United States. Indeed, a recent report by the National Academy of Sciences concluded that “at least one mistaken eyewitness identification was present in almost three-quarters” of DNA exonerations. According to amicus The Innocence Project, 71% of DNA exonerations nationally involve eyewitness misidentification. This Court has noted in recent years the prevalence of eyewitness misidentifications in wrongful convictions and the danger they pose to the truth- seeking function and integrity of our justice system.

Social scientists have found that the likelihood of misidentification is higher when an identification is cross-racial. Generally, people have significantly greater difficulty accurately identifying members of other races than members of their own race. According to a meta-analysis of 39 psychological studies of the phenomenon, participants were “1.56 times more likely to falsely identify a novel other-race face when compared with performance on own-race faces.” The phenomenon is known as the cross-race effect or own-race bias

(Opn, at 4-6 [citations omitted]).

The Court then contrasted the allegedly widely accepted social science with what a typical juror knows as he or she hears a criminal case.

There is, however, a significant disparity between what the psychological research shows and what uninstructed jurors believe. One study showed that only 47% of jurors were familiar with the cross-race effect. A survey of over 1,000 jurors in Washington, D.C., cited by amicus the American Psychological Association, found that “[a] large plurality of the survey respondents (48%) thought cross-race and same-race identifications are of equal reliability, and many of the other [survey] respondents either did not know or thought a cross-racial identification would be more reliable (11%). Only 36% of the survey respondents understand that a cross-racial identification may be less reliable.” These findings demonstrate that, while the cross-race effect is a matter of common sense and experience for some jurors, it is by no means a universal belief shared by all. The need for a charge on the cross-race effect is evident.

And so, the Court decided that a cross-racial identification jury instruction should be given in every case where identification of a different race defendant is an issue. Although the majority pays lip service to the idea that the trial court still retains discretion to decide when the charge should be given, the opinion makes it very clear that the answer to that question is in almost always. Indeed, the Court’s rule—the charge must be given in every case it’s requested “when identification is an issue in a criminal case and the identifying witness and defendant appear to be of different races”—so broad that its hard to imagine a case where the trial court can deny a request for the charge.

Now, after the Court’s opinion in Boone, trial judges should get familiar with this jury instruction because it certainly appears that they’ll be giving it a lot from now on:

(1) that the jury should consider whether there is a difference in race between the defendant and the witness who identified the defendant, and (2) that, if so, the jury should consider (a) that some people have greater difficulty in accurately identifying members of a different race than in accurately identifying members of their own race and (b) whether the difference in race affected the accuracy of the witness’s identification.

Judge Garcia, concurring in the result, pointed out the issues with the majority’s opinion making the cross-racial identification jury charge effectively mandatory. Although he agreed that the trial court should not have denied the cross-racial identification jury charge in Boone, he warned that the majority’s opinion took away the trial court’s typical discretion in this area without providing any guidance to the trial bench for when the charge can be denied. Judge Garcia recounts all of the ways that a trial judge can provide the proper context for the jury to consider identification evidence. Judges can admit expert evidence on identifications.  They can allow appropriate cross-examination. They may determine the charges that are warranted based on the evidence they heard during the trial. There are a number of safeguards that trial judges can use to ensure that the jury can appropriately weigh identification evidence based on the particular facts of each case, Judge Garcia explained. And having heard all of the evidence, the trial judges are the best situated to use their discretion to decide when a cross-racial identification jury charge is necessary.  There’s no reason to change that rule, Judge Garcia notes.

Judge Garcia then explains the root of the problem with the majority’s rule:

But the majority hedges. Seemingly aware of the countless implications accompanying a mandatory charge, the majority provides that trial courts may deny the charge where (1) the identifying witness and defendant do not “appear to be of different races,” or (2) the witness’s identification of the defendant is not “at issue” (majority op at 17).

On paper, those purported caveats remain undefined and unexplained. In practice, they are meaningless. As a result,charge on the cross-race effect” (majority op at 17 [emphasis added]), regardless of whether cross-racial identification issues are implicated at trial. Not only is this approach unprecedented — we do not mandate any other charge relating to identification evidence — it inhibits our trial courts in a manner that may frustrate jury deliberations.

In stripping trial courts of their discretion, the majority’s rule presumes that our trial courts are incapable of performing their “quintessential task[s]” (McKnight, 665 F3d 792). It also overcorrects: the rule requires a cross-racial identification charge to be given even where it is likely to confuse, distract, or mislead the jury. Mandating the charge — even in cases where it is misleading, irrelevant, or otherwise unwarranted — creates a substantial risk of juror confusion and serves only to hinder, rather than aid, the jury’s critical factfinding function. In this way, the majority’s overinclusive, mandatory-on-request approach needlessly undermines the reliability of valid identification evidence to the detriment of both victims and jurors.

Although I’m not a criminal lawyer, I tend to agree with Judge Garcia. The decision on when the evidence warrants a particular jury charge should be laid in the hands of the trial judge, the person who presided over the trial. The judge’s decision is still reviewable for abuse of discretion, and if the judge gets it wrong, the conviction can be reversed an a new trial ordered, as in Boone.

But I’m certainly open to persuasion on why I’m wrong.  Let me know if you disagree.

The Court of Appeals’ opinion 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.

Family Court Lacks Jurisdiction to Continue Placement of Child in Foster Care After Dismissal of Underlying Neglect Petition

Under the Family Law, the State has certain authority to seek to protect children in danger by removing them temporarily from their parents’ care. Placing a child in foster care is a heart-wrenching decision that under the law has to be based on what is in the best interests of the child. That decision, however, has to weigh competing rights. As former Chief Judge Kaye put it,

Parental rights are fundamental constitutional rights and cannot be lightly taken away.

In Matter of Jamie J. (No. 118), the Court of Appeals was asked to address when, if ever, Family Court may continue to exert jurisdiction over and continue a foster care placement after a Family Law neglect petition has been dismissed as without foundation.  In Jaime J., a week after Jaime was born, the Wayne County Department of Social Services requested that Family Court remove her from her mother’s care without first filing a neglect petition against the mother. Once a neglect petition was filed, more than a year went by before Family Court held a fact-finding hearing on DSS’s allegations of neglect.

After denying DSS’s last minute motion to amend the neglect petition, Family Court held the fact-finding hearing and found that DSS failed to establish neglect based on the evidence that had been presented. Family Court, therefore, dismissed the neglect petition.

Once the petition was dismissed, Family Court would regularly end Jaime J.’s temporary foster care placement and return her to her mother. But that didn’t happen. Instead, Family Court held a second permanency hearing at DSS’s insistence, which argued that Family Law Article 10-A gave the Court continuing jurisdiction over Jaime to continue her foster care placement even though the neglect petition had been dismissed.

Jaime’s mother strenuously objected to the Court’s refusal to release Jaime from foster care and to the second permanency hearing. To quicken review of her objection, the mother consented to Jaime’s continued foster care placement and appealed, arguing that the Family Court was divested of jurisdiction upon dismissal of the neglect petition. After the Appellate Division, Fourth Department affirmed the Family Court permanency order on a 3-2 vote, Jaime’s mother appealed as of right to the Court of Appeals.

The Court of Appeals, in a fairly straightforward decision, held that once a neglect petition that gave DSS the basis to place a child in foster care is dismissed, Family Court loses jurisdiction over the child and must return her to her parents. Article 10-A of the Family Law, which exists “to provide children placed out of their homes timely and effective judicial review that promotes permanency, safety and well-being in their lives” (Family Law § 1086), doesn’t give Family Court continuing jurisdiction to continue a foster placement and hold permanency hearings without a new neglect petition being filed by DSS, the Court held. The Court, therefore, rejected DSS’s

hyperliteral reading of section 1088, divorced from all context, to argue that Family Court’s pre-petition placement of Jamie J. under section 1022 triggered a continuing grant of jurisdiction that survives the eventual dismissal of the neglect petition. In other words, even if the Family Court removes a child who has not been neglected or abused, it has jurisdiction to continue that child’s placement in foster care until and unless it decides otherwise. Section 1088’s place in the overall statutory scheme, the legislative history of article 10-A, and the dictates of parents’ and children’s constitutional rights to remain together compel the opposite conclusion: Family Court’s jurisdiction terminates upon dismissal of the original neglect or abuse petition.

Indeed, the Court held, “adopting the DSS’s interpretation of section 1088 would permit a temporary order issued in an ex parte proceeding to provide an end-run around the protections of article 10.”

The Court held, in light of the importance of keeping families together, DSS shouldn’t have the right to keep a child away from her parents without first proving that they have neglected her under the terms of the Family Law. That’s what’s in the best interests of the child.

The Court of Appeals’ opinion can be found here.

Court of Appeals Holds One Attempt at Personal Service Enough to Permit Nail and Mail Under NYC Charter

Service of papers saying that you violated a local municipal law implicates important due process concerns. If a property owner doesn’t get notice that something at his or her property violates local zoning regulations, he or she won’t have an opportunity to contest the violation or try to work out a deal to fix it. You might be surprised how frequently that comes up.

In civil litigation, the CPLR requires that a party make reasonable efforts to personally serve the other side—at least three attempts to deliver the papers on different days and at different times—before the party can resort to nail and mail service. After those times trying personal service, the party can then nail a copy of the papers to the door of the house and mail a copy there too. But nail and mail is a last resort in civil litigation when other ways of service haven’t worked.

The same isn’t true under the New York City Charter, however. The Charter allows the Department of Buildings to serve notices of zoning violations by nail and mail, but only if “a reasonable attempt has been made to deliver such notice to a person in such premises upon whom service may be made as provided for by article three of the civil practice law and rules…” So, in Matter of Mestecky v City of New York (No. 120), which I previewed here, the question before the Court of Appeals was whether a “reasonable attempt” at personal service under the Charter is the same as what’s required under the CPLR.

In Mestecky, the DOB tried to serve a property owner with notices of violation for doing construction work without building permits by knocking on the door of the rental property, ringing the doorbell, and then nailing the notices to the door when no one answered. DOB also mailed three of the seven notices of violation to the property owner’s home address. The owner challenged the service as insufficient under the Charter, but an ALJ and the Appellate Division, First Department said the one attempt was enough to satisfy due process.

Interpreting the NYC Charter’s service requirement, the Court of Appeals held that the language was pretty clear. It says “a reasonable attempt” at personal service has to be made before nail and mail service can be used. “A reasonable attempt” is singular, not plural, the Court held, so the NYC Council’s intent wasn’t up for debate.

The Court, therefore, rejected the property owner’s argument that the City Charter’s service provision for zoning violations incorporated the CPLR’s reasonable efforts standard before nail and mail service can be used. Under the Charter, only one personal service attempt is necessary. And so, in this case, the City Department of Buildings did enough, and the zoning violations were sustained.

While Mestecky is an interesting case for us procedural nerds (service issues are always exciting), the Court was careful to limit the reach of its decision to NYC zoning violations. So, there won’t be much, if any, impact on service in litigation in the New York courts.

The Court of Appeals’ opinion can be found here.

Court of Appeals Holds Standard for Punitive Damages Under NYCHRL is Willful or Wanton Negligence, Recklessness, or Conscious Disregard

The New York City Human Rights Law provides strong protections against discrimination in all of its forms.  To strengthen those protections, the NYCHRL makes punitive damages available to a prevailing plaintiff.  Its text, however, doesn’t provide the standard that the courts should apply when determining whether the plaintiff should be awarded punitives.  That’s a problem. Without a standard, the courts are left to interpret the statute and case law to come up with what the plaintiff must prove to that he or she is entitled to the extra award of damages to punish the discriminatory conduct.  And when discrimination cases are brought in federal court under both federal and state anti-discrimination laws, District Court judges tend to apply the federal standard to state law when state law is unclear.  That’s exactly what happened here.

In Chauca v Abraham (No. 113), which I previewed here, Veronica Chauca worked as a physical therapy aid before she went out on an approved maternity leave.  Her employer, however, never let her come back to work after her maternity leave had ended.  She was just told that her services were no longer necessary, and was unceremoniously fired.  If that sounds like blatant pregnancy discrimination, you’re right, it does.  And that’s exactly what a federal jury found, awarding Chauca $65,500 in damages for lost compensation and pain and suffering.

The U.S. District Court for the Eastern District of New York, however, declined to charge the jury on punitive damages.  The Court held instead that although the NYCHRL calls for liberal construction of its provisions, Chauca had not shown that her employer had intentionally discriminated with “malice” or “reckless indifference.”  The Court, thus, in effect applied the Title VII standard for punitive damages to the NYCHRL.

Chauca appealed the damages award to the Second Circuit, arguing that the District Court had improperly applied Title VII’s punitive damages standard to her NYCHRL claims.  The Second Circuit acknowledged that its prior decision in Farias v Instructional Systems, Inc. (259 F3d 91 [2001]) on the issue required the District Court to apply the Title VII standard, but noted that its decision has been called into question in the years after it was handed down. Particularly, the New York City Council has twice amended the NYCHRL to ensure that it it broadly construed, regardless of how similar state and federal statutes are interpreted. That, the Second Circuit reasoned, suggested that the Title VII standard for punitive damages might not be the right one.

Because, however, the New York courts have not yet addressed the question of what is the standard for punitive damage awards under the NYCHRL, the Second Circuit certified the question to the Court of Appeals.  At oral argument, the plaintiff’s counsel argued that because the NYCHRL provides no explicit standard for an award of punitive damages, the New York City Council must have intended that punitives be granted in every case where the plaintiff can establish that he or she was discriminated against.

Predictably rejecting the Plaintiffs’ rule of punitive damages in every case, the Court of Appeals held, to be awarded punitive damages under the NYCHRL, the plaintiff has to satisfy the New York common law rule for punitive damages under Home Ins. Co. v American Home Prods. Corp. (75 NY2d 196, 203-204 [1990]).  That is, the plaintiff must show that the discriminating defendant’s conduct “amount[s] to willful or wanton negligence, or recklessness, or . . . there is ‘a conscious disregard of the rights of others or conduct so reckless as to amount to such disregard'” (Opn, at 2, quoting Home Insurance Co., 75 NY2d at 203-204).

Because the text of the NYCHRL did not provide this standard, the Court relied instead on the generally accepted common law meaning of punitive damages as a legal term of art.  This interpretation was best, the Court held, because the City Council chose the term “punitive damages” knowing that it already had a well defined common law meaning that needed no further explanation.  Simple and straight forward.

The Court declined Plaintiff’s invitation to equate the standard for a compensatory damages award with a punitive damages one. As the Court put it,

Punitive damages differ conceptually from compensatory damages and are intended to address “gross misbehavior” or conduct that “willfully and wantonly causes hurt to another” (Thoreson v Penthouse Int’l, 80 NY2d 490, 497 [1992]). Indeed, this Court has noted that “[n]ot only do [punitive damages] differ in purpose and nature from compensatory damages, but they may only be awarded for exceptional misconduct which transgresses mere negligence” (Sharapata v Town of Islip, 56 NY2d 332, 335 [1982]). Punitive damages represent punishment for wrongful conduct that goes beyond mere negligence and are warranted only where aggravating factors demonstrate an additional level of wrongful conduct (see Home Ins. Co., 75 NY2d at 203-204). Accordingly, there must be some heightened standard for such an award.

The Court also, however, rejected the defendants’ assertions that the District Court properly applied the Title VII standard for punitive damages.  Title VII’s standard for a punitive damages award—requiring “intentional discrimination . . . with malice or with reckless indifference to the . . . protected rights of an aggrieved individual” (Koldstadt v American Dental Assn., 527 US 526, 529-530 [1999])—was too strict in light of the City Council’s recent amendments to the NYCHRL to ensure liberal construction of its anti-discrimination provisions to provide the utmost protection to discrimination victims. In contrast to the Title VII standard for punitive damages, the New York common law approach

requires neither a showing of malice or awareness of the violation of a protected right, representing the lowest threshold, and the least stringent form, for the state of mind required to impose punitive damages. By implementing a lower degree of culpability and eschewing the knowledge requirement, applying this standard adheres to the City Council’s liberal construction mandate while remaining consistent with the language of the statute.

Moreover, NYCHRL violations, by their very nature, inflict serious harm “to both the persons directly involved and the social fabric of the city as a whole” (Rep of Comm on Gen Welfare, Local Law No. 85 [2005], 2005 NY City Legis Ann, at 537). The standard for punitive damages articulated in Home Insurance, while requiring an appropriate showing of heightened culpability for punitive damages consistent with the language of the provision at issue, is nevertheless properly reflective of the serious and destructive nature of the underlying discriminatory conduct and the goal of deterring “future reprehensible conduct” (Ross, 8 NY3d at 489). Furthermore, subjecting NYCHRL defendants to punitive damages under this standard encourages nondiscriminatory behavior and the development and application of appropriate employment criteria. In sum, this approach is the most liberal construction of the statute that is “reasonably possible” and furthers the purpose of the NYCHRL.

Although I won’t spend much time on Judge Rowan Wilson’s dissent, in which he adopts Plaintiff’s rule of an automatic punitive damages award upon a finding of liability because, he argues, it is the most liberal construction of the statute, I have to say that I am continually impressed by his writings.  I finished the majority opinion sure that the correct decision had been reached, but Judge Wilson’s dissent, with its pithy takedowns of the majority’s reasoning, left me with more doubt about the holding than I expected.  And although I’m not ultimately convinced, he certainly makes a compelling case for finding the other way.  It’s worth a read.

The Court of Appeals’ opinion can be found here.

Court of Appeals November Session: Arguments of Interest for November 16, 2017

The Court of Appeals’ November concludes on Thursday, November 16, 2017, with three cases on the argument docket (the Court’s case summaries can be found here).

First on the calendar is a State Environmental Quality Review Act case, which asks whether the New York State Department of Health took a hard look at the potential adverse environmental impacts of a proposed nursing home facility that will be built in Manhattan next to an elementary school. The Court will then hear a Family Law case, which involves the question whether Family Court has jurisdiction under Family Court Act § 846-a to impose a final order of protection for the willful violation of temporary orders of protection, even where it does not find that the violator did not commit a “family offense” under the statute. The last case on the docket asks whether the New York City Water Board acted arbitrarily and capriciously in imposing a City-wide rate increase while at the same time granting a one-time credit to only certain property owners.

No. 128      Matter of The Friends of P.S. 163, Inc. v Jewish Home Lifecare, Manhattan; Matter of Wright v New York State Department of Health

Every time a construction project is proposed, it generally has to go through a environmental review that identifies all potential adverse environmental impacts that could result if the project is built, takes a “hard look” at whether those impacts are significant, and provides a written reasoned elaboration of the agency’s determination of significance.  In Matter of the Friends of P.S. 163, Inc., the project is a nursing home that was reviewed and approved by the New York State Department of Health.  The proposed 20-story nursing home was to be built on the Upper West Side of Manhattan next to P.S. 163, an elementary school with about 600 students between the ages of 3 and 11.

While any project raises some potential environmental impacts, one next to a school has to be reviewed pretty carefully to ensure that the students won’t be impacted. During the SEQRA review, DOH identified that the construction could potentially cause noise and toxic dust exposure issues, but concluded that the mitigation measures that were selected would ensure that the exposure would not exceed federally acceptable levels.  Based upon that conclusion, DOH approved the nursing home.

Two groups of parents and teachers at the school and residents of nearby apartment buildings challenged the approval, arguing that the SEQRA review didn’t take a hard enough look at the noise and toxic dust impacts and that the mitigation measures weren’t enough to protect the students next door. Supreme Court, New York County agreed and annulled the DOH approval. The Court held that DOH “did not address the particular adverse effects of elevated noise levels on children’s learning abilities or performance in school,” nor “take a sufficiently hard look at additional noise mitigation measures.”  The Court held that DOH did not take a hard enough look at the potential environmental impacts in light of the special concerns of having young elementary school students next door to the construction site.

The Appellate Division, First Department, however, reversed on a 3-1 vote. The Appellate Division held that a higher standard of environmental review doesn’t apply to this project because it is located next to a school.  DOH reasonably evaluated the noise impacts, the Court held, and was obligated only to evaluate and impose mitigation measures to the maximum extent practicable.  The best mitigation measures are not always required. Because DOH relied on the federal standards of exposure to determine whether the mitigation measures imposed would be adequate, the Court held that DOH complied with its obligations under SEQRA.

The Court of Appeals will now hear argument on whether DOH took a hard look at the potential adverse environmental impacts of the nursing home project and whether a higher standard of review should apply to projects that are proposed to be built next to schools, churches, or other sensitive uses.

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

Court of Appeals November Session: Arguments of Interest for November 15, 2017

The Court of Appeals’ November Session continues at Court of Appeals Hall on Wednesday, November 15, 2017 with four cases on the argument docket (the Court’s case summaries can be found here).

First up is a certified question from the Second Circuit Court of Appeals involving reinsurance agreements.  Particularly, the Court of Appeals will hear arguments on whether a per occurrence liability cap in a reinsurance contract limits the total reinsurance available under the contract to the amount of the cap regardless of whether the underlying policy is understood to cover expenses such as, for instance, defense costs. Next, the Court will hear arguments in a workers’ compensation case, asking whether the injured worker, who sustained a work-related injury and obtained a schedule loss of use award, was entitled to ongoing payments for litigation expenses incurred in an action against a third-party tortfeasor.

Finally, the Court will hear arguments in two cases that present the same issue: in a medical malpractice action, when does the statute of limitations begin to run when the theory is that the malpractice is “wrongful birth.” In those cases, the plaintiffs allege that a doctor who treated them for infertility negligently failed to test the egg donors for a chromosomal abnormality before birth, and both children were eventually born with the abnormality.  Does the claim for “wrongful birth” accrue when the doctor failed to do the test or when the children were born?

No. 124      Global Reinsurance Corporation of America v Century Indemnity Co.

In Global Reinsurance, Global issued reinsurance certificates to Century to reinsure insurance policies that Century had issued to Caterpillar Tractor Company.  After Caterpillar was sued in numerous cases relating to alleged exposure to asbestos in Caterpillar’s products, Century was obligated to pay for Caterpillar’s defense expenses in addition to paying up to the liability limits of its policies.  According to Global, Century has paid $60 million to Caterpillar and has agreed to pay $30.5 million more.  Of that amount, Global alleges that 10% is the actual liability loss and 90% is defense costs.

In this dispute, the parties each interpret the reinsurance certificate differently.  Global claims that its liability is capped by the total amount in the “Reinsurance Accepted” section of the certificate, which was intended to include both liability and expenses.  Century counters that the reinsurance cap applies only to the “loss” (e.g., settlement amount, judgment award), and that Global is liable to pay all expenses that exceed that amount.

The U.S. District Court for the Southern District of New York adopted Global’s interpretation, holding that the certificates unambiguously limited Global’s liability for both losses and expenses. See Glob. Reins. Corp. of Am. v. Century Indem. Co., No. 13 Civ. 06577, 2014 WL 4054260, at *4‐7 (S.D.N.Y. Aug. 15, 2014).

Noting that the Court of Appeals had not explicitly spoken on this issue, whether a liability cap in a reinsurance policy limits liability for both losses and expenses, the Second Circuit certified the question to the Court of Appeals.  Particularly, the Second Circuit certified this question:

Does the decision of the New York Court of Appeals in Excess Insurance Co.v. Factory Mutual Insurance Co., 3 N.Y.3d 577 (2004), impose either a rule of construction, or a strong presumption, that a per occurrence liability cap in a reinsurance contract limits the total reinsurance available under the contract to the amount of the cap regardless of whether the underlying policy is understood to cover expenses such as, for instance, defense costs?

The Second Circuit’s opinion can be found here.

Court of Appeals November Session: Arguments of Interest for November 14, 2017

The Court of Appeals returns to Albany for a one-week November Session beginning on Tuesday, November 14, 2017. The Court will hear argument in four cases today.

First on the argument calendar are two cases involving questions about how class actions should work in New York.  In the first, the Court is asked whether putative class members were entitled to notice of discontinuance of the action under CPLR 908 despite that the time for the individual plaintiff to move for class certification had expired under CPLR 902. In the second case, the Court will hear arguments on whether the notice provision of CPLR 908 applies to an action pleaded as a class action but dismissed prior to class certification and whether notice must be provided to the putative class of an impending dismissal.

Next up is a criminal case asking whether a criminal defendant’s waiver of the right to appeal was invalid and whether the denial of the defendant’s requests for a lawyer during pretrial proceedings concerning a DNA test violated the defendant’s right to counsel.  Finally, the Court will hear argument in a residential mortgage-backed securities case involving whether a “sole remedy” provision requiring the seller of residential mortgage-backed securities to cure or repurchase mortgage loans that don’t conform to representations and warranties prohibits the buyers from seeking money damages for breach of a contractual provision providing that the contract contains no untrue statements.

No. 39    Nomura Home Equity Loan, Inc. v Nomura Credit & Capital, Inc. 

Back for a second time, the Court of Appeals will hear reargument in Nomura Home Equity Loan, Inc. today.  In this breach of contract action, the trustee of four residential mortgage-backed securities trusts sought to compel Nomura to repurchase failing mortgage loans pursuant to a procedure outlined in a mortgage loan purchase agreement, or for damages in the event that repurchase was not possible. The trustee alleged that Nomura breached the agreement by making specific warranties about the quality of the loans in section 8 of the agreement, and representing in section 7 of the agreement that the agreement did not contain any untrue statements.  Upon the breach of any of the representations or warranties, the agreement provided that Nomura was obligated to either cure the breach or repurchase the affected loan at the purchase price, and that the requirement to cure or repurchase the defective loans “constitute[d] the sole remedies of the Purchaser against the Seller respecting . . . a breach of the representations . . . contained in Section 8.”

Supreme Court denied Nomura’s motion to dismiss the trustee’s claims for repurchase of the loans, but dismissed the claims for damages, holding that the repurchase obligation was the sole remedy under the agreement. The Court held that the alleged breach of the No Untrue Statements representation was governed by the sole repurchase remedy because to hold otherwise would be to render that clause meaningless.

The Appellate Division, First Department, however, reinstated the damages claims, holding that the sole remedy provision specifically limited its application to a breach of the representations contained in section 8, not to the No Untrue Statements representation contained in section 7. If the sophisticated parties to the agreement wanted to apply the sole remedy provision also to the Section 7 representations, the Court held, they knew how, but declined, to do so.  The Court of Appeals will now have to construe the agreement to determine whether damages should be available to the trustee if Nomura cannot repurchase the distressed mortgage loans.

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

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