The New York Constitution Can Help Fix the Backlog of Appeals in the Appellate Division, Second Department

Everyone admits that the backlog of pending appeals in the Appellate Division, Second Department is a problem. As Presiding Justice Alan Scheinkman acknowledged in an op-ed in the NY Law Journal last fall, “it can take as long as 18 months for a civil appeal to obtain a place on the court’s day calendar and then more time for a decision to be rendered.” That’s 18 months after an appeal is fully briefed. And to get that far in the first place it could take up to a year from when the notice of appeal is served. So, in reality, the Second Department is often looking at appeals that are pending for almost three years before they are decided.

Recognizing this huge issue, Presiding Justice Alan Scheinkman of the Second Department announced a number of procedural reforms in September 2018 that were designed to decrease the Court’s backlog of appeals. First, the Court increased its oral argument calendars from 20 to 24 cases per day. That’s a good first start. Judge Scheinkman also noted that the Court would use specialized benches for an additional sitting in some long delayed matrimonial, Commercial Division, and land use and zoning appeals.

Third, Judge Scheinkman announced that he was reemphasizing the Court’s requirement of mandatory mediation for pre-perfected appeals through the Court’s Civil Appeals Management (CAMP) program. Judge Scheinkman’s hope is that early mediation will help new appeals, and long delayed ones, settle, which would help reduce the Court’s backlog. Finally, Judge Scheinkman also forecasted that the Second Department would be much less receptive to extensions than it had been in the past. Under the new Appellate Division Uniform Rules, parties can obtain two 30-day extension for their principal briefs by stipulation or letter agreement, but any further extension requires a formal motion “upon a showing of good cause.” The Court will not show much empathy for claims of a heavy workload or a pending reargument motion in the trial court. As Judge Scheinkman put it,

Extension motions should be confined, as the rule says, to limited circumstances where good cause exists, such as where an unexpected health issue or other unforeseeable event has occurred.

In addition to Presiding Justice Scheinkman’s reforms, a proposal was introduced in the Legislature last year to split the Second Department into two separate courts—a North division covering appeals from Dutchess, Orange, Putnam, Rockland, and Westchester counties and a South division covering appeals from Brooklyn, Queens, Nassau, and Suffolk counties.

That’s an interesting proposal, but there are two catches. First, the bill received little support last year and died in the Judiciary Committee of the NY Assembly, the only house in which the bill was introduced. Second, splitting the Second Department requires a constitutional amendment. The NY Constitution expressly provides that there shall be 4 departments of the Appellate Division, and specifies their boundaries.

And the constitutional amendment process is a long and troublesome one. The proposed amendment first has to pass in two successive legislatures, and then be approved by the people of this State at a general election. Normal people, however, aren’t generally thinking about how to fix the backlog of appeals in the Second Department and whether splitting it in two makes sense for the judiciary. So, finding the necessary support for a constitutional amendment may prove difficult.

But the Second Department doesn’t need the rigmarole of a constitutional amendment to fix its backlog of appeals. The New York Constitution already provides two solutions that I noticed. First, section 4(a) of the Judiciary article of the NY Constitution grants the Legislature the right to change the boundaries of the Appellate Division departments every ten years as long as it doesn’t change the total number of departments. Here’s how they’re currently divided:

The Second Department covers the 2nd, 9th, 10th, 11th, and 13th Judicial Districts, while the First Department covers the 1st and 12th, the Third Department covers the 3rd, 4th, and 6th, and the Fourth Department covers the rest.

So, how can the Legislature change the boundaries of the Second Department to reduce its backlog of appeals? Well, it’s all just moving pieces to a puzzle. The 9th Judicial District could become part of the Third Department. Or maybe just move Putnam, Dutchess, and Orange counties into the 3rd Judicial District, which would take them from the Second Department into the Third. Or to get all crazy with it, move Onondaga County into the 6th Judicial District, trade the 5th Judicial District from the Third Department to the Fourth in exchange for the 6th Judicial District, make the 9th Judicial District part of the Third Department, and send the 2nd Judicial District to the First Department. Oh, plus a player to be named later and cash considerations. The possibilities are endless. I’m fairly certain that it’s been more than ten years since the Legislature changed the boundaries of the Appellate Division, so this option is on the table.

If that’s too confusing for you, there’s a second way. Tucked away in the judiciary article is a never-mentioned provision giving the four Appellate Division Presiding Justices the right to call a meeting when one of the Departments is unable to complete its work within a reasonable time and transfer appeals to the other Departments. Who knew? Particularly, Article VI, section 4(g) of the Constitution provides:

So here, because the Second Department has been unable to decide all of its appeals within any reasonable period of time, it could be time for the four Appellate Division Presiding Justices to call a meeting of the families and transfer a bunch of Second Department appeals upstate. The Third and Fourth Departments decide fewer appeals after oral argument each year than the Second (1,579 in the Third Department and 1,444 in the Fourth Department compared to 3,815 in the Second Department in 2017).

Sure, this option would tax the Third and Fourth Department Justices with more work, but overall it should reduce the time that it takes to have appeals decided throughout the State. A little increase in the times from notice of appeal to decision in the Third and Fourth Departments should be more than offset by the significant reduction in the Second Department. And the caseload would be spread out across the four Appellate Division departments more equitably.

There are solutions to fix the huge backlog of undecided appeals in the Second Department. The courts just need to know where to look. Although Presiding Justice Scheinkman’s efforts are certainly laudable, and may well help reduce the problem to an extent, I think the time has come for more drastic action than adding 4 more cases to the daily argument calendar can provide. The time is here to look to our Constitution and use the powers that the Legislature and Judiciary have been granted to change the boundaries of the Appellate Division departments or transfer Second Department appeals to other departments. Indeed, three years for an appeal is just too long for any party to have to wait.

Court of Appeals January Session Arguments of Interest: U.S. Bank National Association v DLJ Mortgage Capital, Inc.

If you thought the fallout from the residential mortgage foreclosure had run its course by now, you’d be wrong. For in the New York courts (and many others, I’m sure), litigation over bad mortgages lives on, and once again finds its way to the New York Court of Appeals. This time, the Court is asked to decide a number of procedural issues in lawsuits over breaches of the representations and warranties about the quality of the mortgages placed in a number of RMBS trusts, and will hear oral arguments tomorrow, January 9, 2019.

Nos. 6 & 7    U.S. Bank National Association v DLJ Mortgage Capital, Inc. (and other actions)

In these breach of contract actions, DLJ placed thousands of mortgages worth nearly $4 billion into residential mortgage backed securities trusts for which U.S. Bank was the trustee. In No. 6, an investor in the trusts, the Federal Housing Finance Agency, sued DLJ for breach of its representations and warranties about the mortgages, but was forced to substitute U.S. Bank because the trust agreement strictly limited suits by investors. Only the trustee could bring suit on behalf of the investors, the agreement said, so FHFA lacked standing. After U.S. Bank was substituted, Supreme Court dismissed the action with prejudice anyway, which barred U.S. Bank from refiling it under CPLR 205(a).

The Appellate Division, First Department affirmed the dismissal with prejudice, reasoning that U.S. Bank was not a “plaintiff” to which the 6-month CPLR 205(a) extension to refile could apply. Nor could U.S. Bank’s claims relate back to the prior action because, the Court held, there was no “valid preexisting action” to which the newly filed action could relate back to.

In No. 7, the issue is slightly different. U.S Bank actually filed this action directly, but failed to comply with a condition precedent to suit, namely, serving notice on both DLJ and Ameriquest as the originator of the loans that it was invoking the trust agreement’s repurchase obligations. Because U.S. Bank failed to comply with the condition precedent before commencing the action, Supreme Court dismissed the action, without prejudice to refiling. The Appellate Division, First Department again affirmed, this time reasoning that U.S. Bank could refile within 6 months under CPLR 205(a) after complying with the stated condition precedent to suit.

I’ve always wanted to know who qualifies as a “plaintiff” under CPLR 205(a), and now we’ll all get to find out! Also notably, one of these cases is being argued by #AppellateTwitter luminary Bob Loeb (@BobLoeb on Twitter). I’ll be heading down to the Court to watch the arguments in person tomorrow, but if you aren’t in Albany, then I strongly recommend watching the Court of Appeals’ livestream of arguments, which can be found here.

Court of Appeals January Session Arguments of Interest: Arrowhead Capital Finance, Ltd. v Cheyne Specialty Finance Fund L.P.

The Court of Appeals begins the new year with one week of oral arguments that features a critical issue effecting multi-state practice of law in New York. On January 9, 2019, the second day of oral arguments, the Court will determine whether the failure of a plaintiff’s nonresident attorney to maintain an in-state office at the time the action was commenced, in violation of Judiciary Law § 470, renders the action a nullity and requires dismissal of the action (the Court’s case summary can be found here).

No. 4  Arrowhead Capital Finance, Ltd. v Cheyne Specialty Finance Fund L.P.

Judiciary Law § 470 provides that “[a] person, regularly admitted to practice as an attorney and counsellor, in the courts of record of this state, whose office for the transaction of law business is within the state, may practice as such attorney or counsellor, although he resides in an adjoining state.” Upon the certified question from the Second Circuit as to “the minimum requirements necessary to satisfy the statutory directive that nonresident attorneys maintain an office within the State ‘for the transaction of law business under Judiciary Law § 470,” the Court of Appeals held “the statute requires nonresident attorneys to maintain a physical office in New York” (Schoenefeld v State, 25 NY3d 22, 25 [2015]).

Arrowhead Capital Finance, Ltd. v Cheyne Specialty Finance Fund L.P. seeks to answer a question left unanswered by the Court of Appeals in Schoenefeld—what is the effect of a nonresident attorney’s failure to comply with the minimum requirements of Judiciary Law § 470.

Barry Goldin is an attorney licensed to practice law in the State of New York who maintains an office in Allentown, Pennsylvania. In June 2014, Goldin, commenced this action on Arrowhead’s behalf against Cheyne, Arrowhead’s general partner, for breach of two trust agreements. The complaint that Goldin filed listed his Allentown office address with its telephone and fax numbers as well as an address at 240 Madison Avenue in Manhattan.

After Cheyne successfully moved to dismiss all of Arrowhead’s claims except for breach of fiduciary duty and breach of contract, Cheyne sought permission to file a second motion to dismiss the action on the ground that Goldin violated Judiciary Law § 470. Specifically, Cheyne argued that the Madison Avenue address listed on the complaint “is not an actual law office occupied by [Goldin], or, for that matter, anyone else.” In response to the motion, the New York law firm of Wollmuth Maher & Deutsche filed a notice of appearance as co-counsel for Arrowhead in the action. Goldin posited that the second motion to dismiss should be denied because any violation of Judiciary Law § 470 was cured by Wollmuth’s appearance as co-counsel.

The Appellate Division, First Department disagreed, holding that “[p]laintiff’s subsequent retention of cocounsel with an in-state office did not cure the violation, since the commencement of the action in violation of Judiciary Law § 470 was a nullity.” The First Department’s “nullity” rule directly conflicts with precedent from the Second and Third Department which permit a nonresident attorney to cure a Judiciary Law § 470 violation by obtaining a new counsel with a New York office or by filing a pro hac vice application (see, e.g., Elm Mgt. Corp. v Sprung, 33 AD3d 753 [2d Dept 2006]; Stegemann v Rensselaer County Sheriff’s Off., 153 AD3d 1053 [3d Dept 2017]).

The Court of Appeals resolution of this issue with have a great impact on the future of multi-state practice in New York. Certainly, unwitting plaintiffs should not be punished for their attorneys’ violation of Judiciary Law § 470. Conversely, clients should not be able to refute actions taken by their nonresident attorneys on their clients’ behalf merely because the attorney has violated Judiciary Law § 470. However, is judicial economy served by dismissing actions without prejudice for an attorney’s failure to maintain bricks and mortar in New York? After all, the nonresident attorney Goldin in Arrowhead is licensed to practice law in the New York. And isn’t that why New York adopted the Uniform Bar Exam, to make it easier to maintain a multi-state practice?

Interestingly, Goldin is scheduled to present Arrowhead’s oral argument of the appeal before the Court of Appeals, even though doing so is technically a violation of section 470. By allowing that to occur, could the Court be signaling that Goldin’s affiliation with Wollmuth, a New York City firm, was sufficient to cure his violation? We shall see.

Appellate Division E-Filing Update: Fourth Department Rings in New Year With Voluntary E-Filing

E-filing appeals in the Appellate Division has expanded again. This time to ring in the new year, the Fourth Department announced that it would expand its e-filing program to all civil appeals on a voluntary basis. Before, the Fourth Department had limited e-filed appeals to Commercial Division matters, Surrogate’s Court matters, and all matters that were e-filed in Supreme Court below. Now, all an appellant needs to do is e-file the appeal in the first instance and serve on the respondents a notice of e-filing, and the required Entry of Initial Information for Electronic Filing (22 NYCRR § 1245.3). That’s it.

Here’s the only catch. Because the Fourth Department hasn’t yet made e-filing mandatory, the other parties still can decide not to e-file the appeal. But why would you do that? Outside of unfamiliarity with the e-filing system, I can’t see any reason not to consent. Plus, the Court encourages e-filing in all matters in which it is allowed, and advises that the e-filing program will continue to expand as 2019 progresses. You wouldn’t want to shrug off the Court’s preference for e-filing, would you? I sure wouldn’t.

Finally, the Fourth Department advises that the e-filing program will continue to expand as 2019 proceeds, which can only mean a move to mandatory e-filing in all civil appeals. That’s where the Third Department is, and the First and Second are getting closer too. This is yet another positive step for e-filing in New York, and a great way to start 2019. Happy New Year!

The Appellate Division April, May, and June 2018 Leave Grants

The Appellate Division rounded out the 2017-18 term with only two more leave grants. That makes only 13 Appellate Division leave grants for the entire 2017-18 term, which is well off the mark of 38 grants during the 2016-17 term.  So what explains the change?  Could it be that Chief Judge DiFiore quietly told the Appellate Division Justices to stop granting leave to appeal to the Court of Appeals because the Court wants to control its own docket? I certainly hope not (and I have thoughts on that that are best left for a different time). But such a huge drop off in Appellate Division leave grants must have some explanation.

In total for the 2017-18 term, the Appellate Division granted leave in 6 cases from the Second Department, 5 from the First Department, 2 from the Fourth Department, and none from the Third Department. That mostly follows the pattern from last year that most Appellate Division leave grants come from the downstate departments, while the upstate departments are more stingy in sending cases directly to the Court of Appeals.

Here’s a quick look at the two new Appellate Division leave grants from April, May, and June 2018.

April Appellate Division Leave Grants

Kuzmich v 50 Murray Street Acquisition LLC, 157 AD3d 556 (1st Dept 2018)

Question presented: Whether the tenants’ apartments in a building receiving Real Property Tax Law § 421-g tax benefits are subject to rent stabilization or should have been deregulated under the luxury vacancy control provisions of Rent Stabilization Law of 1969 [Administrative Code of City of NY] § 26-504.2(a).

Supreme Court, New York County, among other things, denied the landlord’s motion for summary judgment, granted the tenants’ cross motion for partial summary judgment, declared that the tenants’ apartments are subject to rent stabilization, and ordered that a special referee be designated to hear and determine the amount of the rent overcharges and the amount of attorneys’ fees and costs incurred by the tenants in litigating this action. The Appellate Division, First Department reversed, granted the landlord’s motion for summary judgment to the extent of declaring that the tenants’ apartments were properly deregulated and are not subject to rent stabilization, denied the tenants’ cross motion, vacated the orders regarding the special referee, and remanded the matter for further proceedings.

159 MP Corp., et al. v Redbridge Bedford, LLC, 160 AD3d 176 (2d Dept 2018)

Question presented: In an action for a judgment declaring that two commercial leases are in full force and effect and that the plaintiffs are not in violation of their obligations under the leases, and seeking a Yellowstone injunction to prevent landlord from terminating leases or commencing summary proceeding for eviction, whether written leases negotiated at arm’s length by commercial tenants may include a waiver of the right to declarative relief that is enforceable at law, or whether such a waiver is void and unenforceable as a matter of public policy.

Supreme Court, Kings County, denied plaintiffs’ motion for a Yellowstone injunction and granted defendant’s cross motion for summary judgment dismissing the complaint. The Appellate Division, Second Department affirmed.


NY DFS Suit Update: State Appeals Order Declaring Daily Fantasy Sports Unconstitutional, Plaintiffs Seek Reargument

After Judge Gerald Connolly of Supreme Court, Albany County (the trial level in New York) recently declared that New York’s Interactive Fantasy Sports Law violated the New York Constitution’s outright ban on gambling, the case was bound to head on appeal. To me, the only question was to which court. Would the State appeal to the Appellate Division, Third Department (the intermediate appellate court) or directly to the New York Court of Appeals under a little used provision of the Court’s direction that allows cases that directly involve only the constitutionality of a state statute to be directly appealed to the state’s top appellate court? Well, now we have our answer.

The State filed a notice of appeal to take the case to the Third Department. Because the Appellate Division’s new e-filing rules have now kicked in, the case documents should be available on the Third Department’s electronic docket as soon as they are filed with the Court. From here, the State has 6 months to perfect its appeal by filing the brief and the record with the Third Department, and gets an automatic stay of Judge Connolly’s decision. That’s good news to the DFS industry, which will continue to enjoy the status quo of DFS gameplay in New York (and plenty of profits) as the appeals are ongoing.

For the plaintiffs, because they lost in part below, they have two options: (1) file a notice of cross appeal to take that part of Judge Connolly’s decision that held that the Legislature could exempt DFS from the criminal definition of gambling to the Third Department, or (2) file a reargument motion with Judge Connolly to get him to change his mind on that issue.  And it appears that they will pursue both avenues of relief.

Just a few days ago, the plaintiffs moved for reargument of Judge Connolly’s decision, arguing that by holding that the Legislature could decriminalize DFS even though the constitution prohibits it, the decision allows FanDuel and DraftKings to continue to operate in violation of the constitutional ban. That, the plaintiffs argue, allowed the Legislature to skirt the express terms of the New York Constitution merely because no other civil statutory scheme has been enacted to execute the constitutional ban. As the plaintiffs put it,

DFS OA screencap.bmpDFS OA screencap 2

Thus, the plaintiffs argue, because the purpose of removing DFS from the definition of “gambling” in the criminal statutes was to authorize the practice, which the Court correctly held violates New York’s constitutional ban on “gambling,” the Legislature lacked authority to authorizes what the Constitution had already prohibited. Splitting the decision as Judge Connolly did would “‘invalidate the dog while preserving the tail'” (that’s such a great quote!), the plaintiffs contend, and the Court should have invalidated the entire IFS Law, not just its regulatory scheme.

Based on that argument, the plaintiffs ask Judge Connolly to impose a permanent injunction that would compel the State to stop the current DFS operators from continuing to offer games in New York. Even if the Court did so, however, DFS games likely would still continue during the appeals as a result of the State’s entitlement to an automatic stay of any decision that Judge Connolly makes.

Although I certainly understand the plaintiffs’ point that Judge Connolly’s decision effectively found a constitutional violation without any real remedy, I think they’ll be hard pressed to convince the Judge to change his mind. Usually, any mind changing is made by the Appellate Division upon appellate review, not by the Judge that just issued the decision the party is seeking to reargue.  But, here, the plaintiffs had nothing to lose by making the motion, and we’ll see how it comes out.

Next up, the State will get a chance to oppose the plaintiffs’ reargument motion on December 19th, and the plaintiffs will reply by December 28th. I would expect a decision, likely a short and sweet denial of reargument, in late January or early February. And then the real appellate fireworks will begin.


Appellate Division E-Filing Update: Second Department Expands Mandatorily E-Filed Appeals as of December 3, 2018

The New York Appellate Division e-filing program has gone so well that the Second Department is expanding it again. After a limited start in March that only included appeals originating from Westchester County, and then Suffolk in July, the Court has decided to include all appeals from orders in the Ninth Judicial District beginning on December 3, 2018.

The e-filing system has not only worked well for the courts and attorneys who practice frequently in the Appellate Division, but it has also opened up previously hard to get case documents for public view. If there’s an Appellate Division case you’re interested in, you can now just go to the NYSCEF e-filing system and search for the case as a guest. No login or payment necessary, unlike the federal courts’ PACER system. Better access to the courts and case documents is always a good thing.

As the Appellate Division e-filing system evolves, there are a few changes I’d love to see, like being able to search for cases with specific issues or motions. But for now, the transition to appellate e-filing has gone about as well as could have been expected. And the Clerk’s Offices in each of the courts deserves plenty of credit for that.

The Appellate Division January, February, and March 2018 Leave Grants

The Appellate Division only granted two more cases from the first three months of 2018, both of which came from the Second Department. With the two new leave grants from the Second Department, it jumped into the departmental lead with 5 leave grants to 4 from the First Department and 2 from the Fourth Department. The 11 total Appellate Division leave grants through March 2018 is way behind the 26 the Appellate Division had granted through March 2017. An interesting downturn to watch to see if this is more aberration or trend.

If you missed the first two parts of my Appellate Division leave grants series, August, September, and October 2017’s grants can be found here, and November and December 2017’s grants here.

Here’s a quick look at the two new Appellate Division leave grants, both of which came in March 2018.

March Appellate Division Leave Grants

Andryeyeva v New York Health Care, Inc., 153 AD3d 1216 (2d Dept 2017)

Questions presented: Whether the plaintiffs’ renewed motion for class certification was properly granted, and whether the Appellate Division erred in finding that the premise upon which the employer based its payment practices with respect to nonresidential home health care attendants–that is, the Department of Labor’s interpretation of the Wage Order (12 NYCRR 142.2.1)–is neither rational nor reasonable.

Supreme Court, Kings County, granted plaintiffs’ renewed motion for class certification pursuant to CPLR article 9. The Appellate Division, Second Department affirmed.

Moreno v Future Care Health Services, Inc., 153 AD3d 1254 (2d Dept 2017)

Questions presented: Whether the defendant employer violated Labor Law article 19 by paying the plaintiff home health care attendants a flat rate for 24-hour shifts, resulting in a wage below minimum wage, and whether Supreme Court properly denied plaintiffs’ motion for class certification.

Supreme Court, Kings County, denied the plaintiffs’ motion for class certification pursuant to CPLR article 9. The Appellate Division, Second Department vacated the order, and granted plaintiffs’ motion for class certification pursuant to CPLR article 9.

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:


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.


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.

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