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2009-07-02T19:40:00.000-07:00

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United States v. Pearson, 07-0142-cr (July 2, 2009)

2009-07-02T07:09:00.001-07:00

Link to Case

Keywords: Restitution, Guilty Plea, Waiver

Panel: Miner, Katzmann, and Raggi

Opinion by: Per Curiam

Appeal from: NDNY (McAvoy, U.S.D.J.)

Appellant, who pleaded guilty to multiple counts of producing child pornography, appeals the award of $974,902 restitution. The restitution award included the estimated future medical expenses of appellant's victims.

The first question is whether appellant has waived, by his guilty plea, the right to challenge the restitution amount. The Court holds that appellant's agreement to pay restitution "in full" is not a waiver of his right to challenge the amount of restitution. Although appeal waivers are valid and enforceable, they are strictly construed against the government.

The second question is whether the victims' future medical expenses are includable in an award of restitution. The Court joins the 7th, 9th and 10th Circuits in saying they are.

The final question is whether the restitution amount is reasonable. The amount of restitution is judged under an abuse of discretion standard, and will be reversed only if it "rests on an error of law, a clearly erroneous finding of fact, or otherwise cannot be located within the range of permissible decisions." Slip Op. at 9 (quoting United States v. Boccagna, 450 F.3d 107, 113 (2d Cir. 2006)). Because the district court did not explain how it estimated the victims' future expenses, the Court vacates the award and remands "to afford the district court to adjust the award if, in providing its explanation, it determines that the original order does not accurately reflect 'full' restitution, as agreed to by the defendant." Slip Op. at 11.

Pyrrhic victory alert: The district court awarded a substantially lower amount for future medical expenses than had been recommended by the government's expert. The remand and comment about "full" restitution and flexibility may be suggesting to the district court that the restitution amount was too low.

Lafaro v. N.Y. Cardiothoracic Group, PLLC, et al., 08-4621-cv (July 1, 2009)

2009-07-01T08:09:00.000-07:00

Link to Case

Keywords: State Action Immunity, Antitrust, Sherman Act, Midcal Test

Panel: Calabresi, Wesley, and Droney (USDJ, D. Conn.)

Opinion by: Droney, USDJ

Appeal from: SDNY (Robinson, USDJ)

New York created Westchester County Health Care Corporation ("WCHCC"), a public-benefit corporation, in 1997 to operate the Westchester County Medical Center, a hospital in Valhalla, NY. In 2004, WCHCC entered into an exclusivity agreement with a group of cardiothoracic surgeons. The agreement grandfathered another group of cardiothoracic surgeons who had been providing services at the hospital, exempting them from the application of the exclusivity agreement. The grandfathered surgeons sued the WCHCC, the hospital, and the exclusive group, alleging that the exclusivity agreement violated the Sherman Act, 15 U.S.C. § 1. Among other things, they alleged that the exclusive group assigned rooms, staff, and material discriminatorily to frustrate their practices and cause them "maximum disadvantage."

The district court granted judgment on the pleadings to defendants, on the ground that they were entitled to "State Action Immunity." A state acting in its sovereign capacity is not subject to federal antitrust laws. A subdivision of the state is also entitled to such immunity, when it acts pursuant to a "clearly articulated and affirmatively expressed" state policy authorizing its actions, and under California Retail Liquor Dealers Ass'n v. Midcal Aluminum, 455 U.S. 97 (1980), such immunity also extends to a private party acting pursuant to such a policy if the state actively supervises its conduct. Absent such supervision, "there is no realistic assertion that a private party's anticompetitive conduct promotes state policy, rather than merely the party's individual interests." Slip Op. at 6 (quoting Patrick v. Burget, 486 U.S. 94, 101 (1988)).

Because the allegations of the complaint include actions by the private defendants to improve their own financial interests, in possible violation of the grandfather clause and the purpose behind the exclusivity agreement, appellants are not simply attacking the grant of exclusivity, which is subject to state action immunity. Accordingly, the judgment is vacated and the case remanded for consideration of whether the private defendants actions were consistent with the agreement and actively supervised by the state.

Buy Rite, Inc. v. Boyle, 07-4781-cv (July 1, 2009)

2009-07-01T08:07:00.000-07:00

Link to Case

Keywords: Commerce Clause, Alcohol, 21st Amendment

Panel: Walker, Calabresi, and Wesley

Opinion by: Wesley

Appeal from: SDNY (Holwell, USDJ)

The question in this case is whether the dormant Commerce Clause (U.S. Const. art. I, § 8, cl. 3), invalidates a New York State rule that prohibits out-of-state retailers from delivering liquor directly to customers, when such deliveries are permitted by licensed New York retailers.

Although the 21st Amendment (U.S. Const. amend. XXI, § 2), which repealed Prohibition, granted states "virtually complete control over whether to permit importation or sale of liquor and how to structure the liquor distribution system," Granholm v. Heald, 544 U.S. 460, 488 (2005), state regulations are not immune from Commerce Clause analysis and will be overturned if they treat liquor produced out-of-state differently from liquor produced within the state. Id. at 489. In Granholm, for example, the Supreme Court invalidated laws in New York and Michigan that permitted in-state wineries, but not out-of-state wineries, to bypass the licensing system to sell directly to consumers.

Appellants are out-of-state retailers who want to deliver liquor directly to residents without being licensed in New York. They frame their arguments on appeal to come within the Granholm rationale, contending that New York grants privileges to in-state retailers that it does not allow to out-of-state retailers.

The Court rejects appellants' arguments that Granholm requires rejecting New York's limitation of retail delivery to licensed retailers. New York's rule is applied evenhandedly, and all sellers are required to comply with New York's three-tier licensing.

An aside about this three-tier structure: New York's licensing structure (New York Alcoholic Beverage Control Law §§ 100(1), 102(1)(a), and 102(1)(b)), applies to three tiers of distribution - the producer, the distributor/wholesaler, and the retailer. Except for wineries, all liquor produced inside or outside of New York must be channeled through distributors prior to being sold at the retail level to consumers. New York asserts that its three-tier licensing system allow the state to more efficiently and effectively collect taxes and prevent sales to minors.

The essence of appellants' argument is really a direct attack on New York's three-tier licensing scheme -- but that scheme was endorsed in Granholm as "unquestionably legitimate." 544 U.S. at 488-89. As Judge Holwell noted in his "well-reasoned" decision, Slip Op. at 4, even if Granholm's endorsement of the three-tier licensing scheme were dicta, it would be dicta "of the most persuasive kind." Slip Op. at 11 (quoting 515 F. Supp. 2d at 412).

Accordingly, the Court holds that because New York's ABC Law does not discriminate against out-of-state providers, it does not violate the Commerce Clause and is a valid exercise of the state's rights under the Twenty-first Amendment.

Judge Calabresi adds a scholarly concurrence that is part history lesson, part commentary, on the Supreme Court's evolving, increasingly narrow interpretation of the Twenty-first Amendment. The takeaway is that this narrowing, based more on rewriting constitutional meaning than principled judgment, leaves lower courts with little guidance how to rule in a particular case. Although it is clear the meaning of the amendment is changing, "it is difficult to know just how much the Supreme Court wants the amendment to evolve."

ReliaStar Life Ins. Co. of New York v. Home Depot, USA, Inc., 07-0087-cv (June 29, 2009)

2009-06-29T11:44:00.000-07:00

Link to Case

Keywords: "Hell or High Water" Clause; Constructive Eviction, Estoppel, UCC

Panel: Jacobs, Hall (Feinberg recused)

Opinion by: Per Curiam

Appeal from: EDNY (Platt, J.)

The question in this case is whether a commercial tenant (Home Depot) may assert a claim for constructive eviction arising from a late-appearing construction defect against a good-faith assignee (ReliaStar) despite the "hell or high water" clause (usually seen in personal property leases, but here in a long-term real estate lease) and estoppel certificate executed by the tenant at the time the lease was assigned. Somewhat surprisingly (to us at least) the Court holds that the tenant may assert the claim for constructive eviction against the assignee.

The holding may be fact specific. Home Depot entered into a long term lease in 1989. The landlord built a "building pad" upon which Home Depot constructed its store. In 1993, the landlord assigned its rights to ReliaStar. Home Depot represented that landlord was not in default as of the date of the assignment, and further represented that it would pay "all rents due" under the Lease come hell or high water, without any reduction, set off, abatement, or diminution whatsoever. In late 1995, Home Depot discovered the building pad was defective, spent $750,000 attempting to repair it, and ultimately abandoned the premises and stopped paying rent. The district court entered judgment for ReliaStar on the ground that the hell or high water clause was unambiguous.

Under NY UCC § 9-403(c), a contract can be assigned free and clear of all defenses, not including fraud, duress, and the like. The Court reasons that constructive eviction is analogous to the defenses of fraud and duress, because "it goes to the very existence of the agreement, rather than a failure to perform in accordance with the terms of the agreement." Slip Op. at 6. The estoppel certificate does not bar the defense, because it does not more than express Home Depot's knowledge at the time the certificate was executed. Slip Op. at 8. Home Depot asserts it did not discover the defect in the building pad until several years later. The hell or high water clause does not bar the defense, because the clause (drafted by ReliaStar) only obligates Home Depot to pay all rents "due" under the lease. Because a meritorious defense of constructive eviction terminates the lease, the hell or high water clause does not apply if the defense is successful. Slip Op. at 10.

United States v. Mills, 07-0308-cr (June 26, 2009)

2009-06-26T11:18:00.000-07:00

Link to Case

Keywords: Violent Felony, Armed Career Criminal Act

Panel: Kearse, Sack, and Livingston

Opinion by: Per Curiam

Appeal from: D. Conn. (Dorsey, J.)

Defendant-appellant was sentenced as an armed career criminal under the Armed Career Criminal Act, 18 USC s. 924(e) ("ACCA"), which provides enhanced sentences to persons convicted of being a felon in possession of a firearm who have three prior convictions for violent felonies. One of defendant's prior convictions was for first degree escape in violation of Connecticut law, arising from defendants failure to appear for a meeting with his community enforcement officer while on "transitional supervision" under the supervision of the Connecticut Commissioner of Correction. Defendant contends that this failure to return does not constitute a violent felony. Whether a crime is a "violent felony" is subject to de novo review.

In light of the Supreme Court's intervening decision in Chambers v. United States, 555 U.S. ___, 129 S. Ct. 687 (2009), which held that failure to report to a penal institution falls outside the ACCA's definition of "violent felony," the government concedes that the case should be remanded for resentencing without regard to the ACCA.

Mahmood v. Holder, 07-5656-ag (June 25, 2009)

2009-06-25T13:37:00.000-07:00

Link to Case

Key Words: Immigration, Denial of Motion to Reopen
Panel: Winter, Walker, and Calabresi
Opinion by: Calabresi
Appeal from: Board of Immigration Appeals

Petitioner moved to reopen his removal proceedings based upon his marriage to a U.S. Citizen, prior to the date he had been ordered to depart voluntarily. (His first marriage to a U.S. Citizen had been ruled an attempt to evade the immigration laws). The BIA denied the motion on the grounds that the motion was untimely and that peitioner's failure to leave within the voluntary departure period made him statutorily ineligible for any adjustment in status for 10 years.

After the BIA's decision, the Supreme Court decided Dada v. Mukasey, 128 S.Ct. 2307 (2008), which provides that an alien must be permitted to withdraw a voluntary departure request before it expires, to avoid the statutory ineligibility for the adjustment. The holding in Dada seeks to avoid an unfair Catch 22 that would otherwise apply: a motion to reopen can't be prosecuted if the deportee leaves the United States, and failing to leave within the period meant the deportee would be ineligible. It is an open question whether a motion to reopen, by itself, is sufficient to stay the voluntary departure and prevent the 10-year prohibition for failing to leave within the period.

The BIA was correct that petioner's motion was untimely, and the Court of Appeals lacks jurisdiction to review the BIA's refusal to reopen removal proceedings sua sponte. However, the Board may have felt its hand were tied, not having the benefit of the Dada decision, so the Court remands to allow the BIA to consider whether it wishes to exercise its sua sponte authority.

Arias Chupina v. Holder, 08-0867-ag(L) (CON) (June 25, 2009)

2009-06-25T13:25:00.000-07:00

Link to Case

Key Words: Immigration, Order of Deportation

Panel: Miner, Katzmann, and Raggi
Opinion by: Per Curiam

Appeal from: Bureau of Immigration Appeals

The Court of Appeals has jurisdiction to review an order of deportation, also known as an order of removal, defined by statute as either (1) a determination that an alien is deportable, or (2) an order directing that the alien be deported. The orders being appealed from are not final orders of deportation, although they denied petitioner's asylum application as untimely, because they remanded to the immigration judge to consider whether petitioner was eligible for withholding of removal under the UN's Convention Against Torture. Accordingly, the court dismissed the appeal for lack of jurisdiction.

Watson v. Green, 07-2563-pr (June 25, 2009)

2009-06-25T11:04:00.000-07:00

Link to Case

Key Words: Habeas Corpus, Conscientious Objector, DACORB

Panel: McLaughlin, Calabresi, and Katzmann - Opinion by Katzmann

Appeal from: EDNY (Gershon, J)

An enlistee denied discharge as a conscientious objector may obtain review of the denial via habeas corpus. The very limited and narrow standard of review is whether there is a "basis in fact" to support the denial. However, the standard is "not toothless;" the reason for the denial must be stated, grounded in logic and supported by some objective evidence, and "mere conclusory allegations of insincerity" are inadequate.

Army regulations define a conscientious objector as a person who has "[a] firm, fixed and sincere objection to participation in war of any form or the bearing of arms, because of religious training and belief", including a "deeply held moral or ethical belief." The applicant for CO status has the burden of establishing the criteria by clear and convincing evidence.

In this case, petitioner joined the Army to obtain a scholarship for the last three years of medical school, and did not develop his antipathy to war until after the traumatic events of September 11. He offered to serve the time he owed the Army serving as a doctor for non-active duty military or needy civilians. The Army Colonel assigned to investigate petitioner's objections recommended in favor of CO status, but this recommendation was disapproved by the chain of command. The Department of the Army Conscientious Objector Review Board ("DACORB"), the sole decision-making authority for CO applications, denied the application by a 2-1 vote. The only reasons given for the denial were conclusory statements that "applicant failed to demonstrate" his entitlement and that "the application is not convincing." The District Court held that DACORB failed to provide an adequate statement of reasons for its decision and granted the writ. On appeal, the Army conceded the statement of reasons was inadequate, and contended that the case should be remanded to DACORB to allow it to give a fuller explanation of its reasoning.

The Court held that it would normally be appropriate to remand for more explanation, but such a course was "utterly futile" in this case because "the record reveals there is no possible basis in fact to support" the denial.

Moran v. Astrue, 07-1728-cv (June 24, 2009)

2009-06-24T09:38:00.000-07:00

Key Words: Social Security, Substantial Evidence, Duties of ALJ

Panel: Kearse, Sack, and Katzmann - Opinion by Sack

Appeal from: NDNY (Bianchini, MJ)

Link to Case

The Court reverses and remands for a fuller hearing by the Administrative Law Judge ("ALJ"), who was obligated to, but did not, affirmatively assist the disabled pro-se claimant "to develop the record in light of the essentially non-adversarial nature of a benefits proceeding." Slip Op. at 7. The Social Security Act is a "remedial statute intended to include not exclude," Cruz v. Sullivan, 912 F.2d 8, 11 (2d Cir. 1990), and appellate review requires that a claimant be accorded a "full hearing under the .... regulations and in accordance with the beneficent purposes" of the Act. Id.

As an aside, the case includes some historical background concerning the SSA's "systematic and clandestine misapplication of disability regulations" in the 1980's, in which ALJ's were essentially told to disregard the law of the Circuit in making disability determinations.

Wilson v. Mazzuca, 03-2459-pr (June 24, 2009)

2009-06-24T09:01:00.000-07:00

Habeas Corpus, AEDPA, Strickland, Ineffective Assistance

Walker, Cabranes and Raggi - Opinion by Cabranes

The Court vacates and remands with instructions to grant petitioner's writ of habeas corpus if the Queen's County District Attorney does not take concrete steps to retry petitioner for robbery in the second degree. (Although petitioner has already served his 9-1/2 year sentence, the appeal is not moot because he is still subject to collateral consequences arising from the conviction).

The case against petitioner was weak, hinging entirely on a single cross-racial eyewitness identification made two years after the robbery by a reluctant eyewitness. There was no physical evidence of any kind, and no incriminating statements, to link petitioner to the robbery. The prosecution's burden was greatly relieved, however, by five errors by petitioner's lawyer during the trial that the trial court found so incomprehensible that it sua sponte exclaimed: "I have very serious problems with this case right now. The alarm bells are ringing in my head and I'm going right on the record. And the the question concerns the representation of the defendant. I'm sorry, but there is no other way to put it."

Habeas decisions are reviewed de novo, and are governed by the highly deferential standard established by the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA"). In a question of first impression in the Second Circuit, the Court holds that the AEDPA standard applies even if the district court conducted an evidentiary hearing, joining the 5th and 7th Circuits. A writ of habeas corpus may be granted only if the state court's adjudication "was contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court." Where the district court has conducted a hearing, the new information may be considered in applying the AEDPA standard.

To succeed on a claim of ineffective assistance, a petitioner must satisfy the two-pronged test established by Strickland v. Washington, 466 U.S. 668 (1984), and demonstrate that the attorney's performance fell below an objective standard of reasonableness and that, but for the attorney's errors, there is a reasonable probability that the result would have been different. Slip Op. at 16.

Here, pretty much everyone who looked at the case agreed the attorney's performance was head-scratchingly bad, and that the attorney "misinterpreted and misunderstood the law, failed to pay attention, acted recklessly, and did not appreciate the consequences of his decisions [which opened the door to multiple categories of otherwise-inadmissible prejudicial evidence that the trial judge declared he "wouldn't touch with a 50-foot pole"] even though in many cases he was explicitly warned of the risks by the trial court." Slip Op. at 22. Unlike the district court, the Court found the errors were potentially outcome determinative: "In our view, defense counsel's errors -- taken together and viewed in light of all the evidence -- 'undermine [our] confidence in the outcome' of the trial." Slip Op. at 23. Accordingly, the petition should be granted unless the state prosecutor takes steps to provide a new trial.

Transportes Navicros y Terrestres SA v. Fairmount Heavy Transport N.V., 07-3929-cv (June 23, 2009)

2009-06-23T08:08:00.000-07:00

Admiralty, Maritime Attachment, Reduction, Motion to Reconsider, Procedural Defect/Time to Appeal

Kearse, Katzmann, and Bianco, DJ - Opinion by Katzmann

Maritime claims in federal courts are governed by the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure (the "Supplemental Rules"). This appeal involves the district courts discretion to reduce a maritime attachment after it has been granted.

Plaintiff-Appellant Transportes Navieros y Terrestres SA ("TNT"), a Mexican company, obtained a $10 million attachment in the Southern District pursuant to the Supplemental Rules against a Dutch company, Fairmont Heavy Transport NV ("FHT"), that had wrongfully arrested TNT's vessel thinking it belonged to someone else. On motion of FHT, the district court reduced the amount of the attachment to $15,000 because TNT had failed to mitigate its damages by waiting six months, and well after the cancellation of the charter party that was the basis for the bulk of the damages, to seek to cancel the wrongful seizure. On appeal, TNT contends that the district court abused its authority in reducing the amount of the attachment.

There is a preliminary question concerning the timeliness of TNT's appeal. TNT did not appeal the original order, but instead the denial of its subsequent motion for reconsideration. Under Fed. R. App. P. 4(a)(4)(A), a notice of appeal is timely if it is made within 30 days of the denial of a timely motion for reconsideration. However, there existed a question as to whether TNT's motion for reconsideration was timely; the clerk rejected TNT's original filing because TNT filed the motion and supporting documents as one document, and it took TNT two extra days to fix the deficiency. The Court holds that a non-willful error in form will not deprive a party of a right to appeal. See also Contino v. United States, 535 F.3d 124, 126 (2d Cir. 2008) (appeal timely even though original notice of appeal was rejected because it was filed electronically rather than in hard copy, as required by local rule); Fed. R. Civ. P. 5(d)(4) (clerk should not refuse to file a paper solely because it is not in the proper form); Fed. R. Civ. P. 83(a)(2) (non-willful errors of form should not be enforced to deprive a party of substantial rights).

On the primary question, although the power to alter maritime attachments once granted is not unlimited, a court may assess the reasonableness of a plaintiff's damages claim when setting the initial security under Supplemental Rule E(5) -- ensuring that the claim is "not frivolous, although not requiring that plaintiff prove its damages "with exactitude" -- and "may weigh this and other equitable considerations when evaluating whether good cause exists to reduce a security under Rule E(6)." Slip Op. at 26. The district court's reduction of the amount of the attachment was not an abuse of discretion because, as the district court concluded, TNT's six-month delay means that "TNT likely cannot show that the wrongful arrest of the Vesel actually caused its claimed damages."Slip Op. at 27.

Wong v. Doar, 08-4992-cv (June 22, 2009)

2009-06-22T14:21:00.000-07:00

Skidmore Deference, Medicaid, Special Needs Trust

Cabranes, Raggi, and Hall - Opinon by Raggi

The question on appeal is whether informal rule 3259.7 of the State Medicaid Manual ("SMM"), a rule issued by the US Dept. of Health and Human Services' Centers for Medicare and Medicaid Services, which requires that income in a Special Needs Trust be considered in determining a person's eligibility for Medicaid benefits, is inconsistent with section 1396p(d)(4) of the federal Medicaid Act, which states that certain provisions requiring states to consider trust assets in making eligibility determinations "shall not apply" to, among others, a Special Needs Trust.

A Special Needs Trust is a "discretionary trust established for the benefit of a person with severe and chronic or persistent disability and is intended to provide for expenses that assistance programs such as Medicaid do not cover." Sullivan v. County of Suffolk, 174 F.3d 282, 284 (2d Cir. 1999); see also 42 U.S.C. s. 1396(d)(4)(A).

The Medicaid Act is jointly administered by federal and state authorities; in New York, Medicaid is administered by the State Department of Health and locally by the New York City Human Resources Administration.

The Court uses a three step analysis to determine the merits of the challenge to SMM 3259.7.

First, has Congress directly spoken to the precise question at issue? The Court holds that the phrase "[t]his subsection shall not apply" in 42 U.S.C. s. 1396p(d)(4) is not a determination as to what rules should apply, but merely creates a statutory gap where Congress has failed to reach consensus on an issue. In other words, Section 1996p(d)(4) does not expressly exclude Special Needs Trusts from Medicaid post-eligibility determinations.

Second, what level of deference should be accorded the agency determination? Although nonlegislative rules like the SMM are not per se ineligible for Chevron deference, the Court holds that Skidmore deference is more appropriate to Congress's delegation of rulemaking authority in the Medicaid Act.

Third, is the agency interpretation "persuasive?" That is, does it demonstrate a thoroughness of consideration, valid reasoning, and consistency with other interpretations? The Court holds that SMM 3259.7 constitutes a long-standing and reasonable interpretation of the Medicaid Act by the agency charged with enforcing it.

Cablevision Systems Corp. v. FCC, 07-5553-ag (June 22, 2009)

2009-06-22T13:48:00.000-07:00

FCC, "Must Carry", First Amendment, Taking, Cable Television Consumer Protection and Competition Act

Walker, Cabranes, and Raggi - Opinion by Walker

Cablevision, a cable systems operator, contends on appeal that the FCC's decision directing it to carry WRNN, an upstate channel, on its Long Island cable systems constitutes an erroneous interpretation of the "must carry" provisions of the Cable Television Consumer Protection and Competition Act of 1992 (the "Cable Act"), 47 U.S.C. s. 534(a), or, alternatively, an "as applied" violation of the First Amendment or an unconstitutional taking under the Fifth Amendment. The Court rejects all three arguments.

The FCC's interpretation of the must-carry statute is not arbitrary and capricious, but a reasonable interpretation supported by substantial evidence. (The Court had previously granted Chevron deference to the FCC's interpretation of the must-carry statute in WLNY-TV, Inc. v. FCC, 163 F.3d 137, 142 (2d Cir. 1998)).

The FCC's direction that Cablevision carry WRNN in Long Island is not an "as applied" violation of the First Amendment. (Although two decisions of the Supreme Court, Turner Broadcasting System Inc. v. FCC, 512 U.S. 622 (1994) ("Turner I") and 520 U.S. 180 (1997) ("Turner II") approved the Cable Act against First Amendment challenges as content-neutral legislation that furthered important governmental interests and did "not burden substantially more speech than necessary to further those interests," the Court believes that the Turner decisions "do not foreclose the possibility of a successful as-applied First Amendment challenge to the 1992 Cable Act's market modification provisions." The "market modification" provision, not discussed in the Turner decisions, permits the FCC to add or delete communities from a given broadcast station's market "to better effectuate the purposes" of the must-carry statute). The market modification provision is content neutral, and therefore subject only to intermediate scrutiny. Because it advances an important governmental interest unrelated to the suppression of free speech, and does not burden substantially more speech than necessary to further the important interest, the provision does not violate the First Amendment as applied by the FCC here.

The FCC's direction that Cablevision carry WRNN in Long Island is not a "taking" under the Fifth Amendment. In order to establish a regulatory taking, Cablevision must demonstrate that the order "had an economic impact that interfered with 'distinct investment-backed expectations.'" (quoting Penn. Cent. Trans. Co. v. City of New York, 438 U.S. 104 (1978)). Cablevision has failed to meet its "heavy burden" on this issue.

For all of these reasons, the stay of the FCC's order is vacated, and Cablevision must comply with the order within one week from the issuance of the mandate.

Henry v. Champlain Enterprises, 07-0355-cv (June 19, 2009)

2009-06-21T19:51:00.001-07:00

ERISA, Damages

Feinberg, Winter, and Pooler - Opinion by Winter

The Court reverses and remands the district court's dismissal of plaintiff's ERISA claim. (In an earlier appeal, the Court had vacated and remanded the district court's entry of a judgment for plaintiff for $7.75 million plus prejudgment interest and attorney's fees). The district court dismissed based upon the Court's prior admonition that the purpose of ERISA is "to make plaintiffs whole", "not to give them a windfall." 445 F.3d at 624.

The Court remands because the district court made an incorrect assumption that the cancellation of a debt obligation used to make the initial purchase retroactively reduced the cost of the original purchase. "If an investor pays $100 for 20 shares of stock and later sells those shares back to the original seller for $25, the result is not that the investor paid only $75 for the shares. Rather, that result is that the investor lost $75 on that investment."

USA v. Lucky, 08-1939-cr (June 19, 2009)

2009-06-21T19:35:00.000-07:00

Motion to Suppress, Terry Traffic Stop, Speedy Trial Act

Calabresi, Katzmann, and Eaton, CIT - Opinion by Calabresi

The Court holds that defendant's motion to suppress the handgun recovered from his waistband after a traffic was stop properly denied. The police had a reasonable and articulable suspicion justifying the stop of defendant's car, which had the same license plate number and description as the car that fled from a shooting two days earlier. The police had grounds to remove defendant from the car when he refused to roll down the tinted window, show his hands, or step out of the car voluntarily. Finally, the police were justified in cuffing defendant and rolling him over to recover the fully-loaded 9-mm semi-automatic from his waistband when he struggled with them and made a motion toward his waistband.

Defendant's motion to dismiss the indictment for violation of the Speedy Trial Act ("STA"), 18 U.S.C. ss. 3161-3174, was properly denied. One of the 70 days that defendant claims were not excluded properly from the STA calculations involved a status conference, a "legal proceeding" that is automatically excluded from STA calculations. Therefore, defendant has not established the 70 day delay required under STA s. 3161(c)(1).

Baba v. Holder, 08-0212-ag (June 19, 2009)

2009-06-21T19:13:00.000-07:00

Board of Immigration Appeals, Convention Against Torture, Persecution, Substantial Evidence

McLaughlin, Leval, and Pooler - Opinion by Leval

The Court reverses a determination by the Board of Immigration Appeals ("BIA") that petitioner, a citizen of Togo, had not demonstrated a "clear probability of persecution" if he were deported.

The BIA's legal conclusions are reviewed de novo. It's factual findings are reviewed for "substantial evidence."

Petitioner established that he had been subjected to past-persecution as a result of his political activities, in the form of death threats, beatings, and imprisonment under unsanitary conditions with limited, and inedible, food. This showing of past persecution established awe presumption of that the fear of future persecution was well founded, and shifted the burden of production to the government. The Court holds that the evidence relied upon by the BIA was inadequate to rebut the presumption.

Civil Service Employees Assn. v. NLRB, 07-5041-ag (June 19, 2009)

2009-06-21T18:42:00.000-07:00

NLRB, NLRA s. 8(g), Legislative History

Leval, Pooler, and B.D. Parker - Opinion by B.D. Parker

The NLRB upheld a health care provider's discharge of employees who picketed in support of recognizing a union as their collective bargaining agent without given the 10-day notice required of a labor organization by National Labor Relations Act ("NLRA") section 8(g). The Court reverses, holding that section 8(g) does not prohibit peaceful picketing by individuals that is not part of a strike.

Although the NLRB is entitled to a degree of legal leeway and its interpretations are entitled to deference so long as they represent a defensible construction of the statute, the Court must guard against the NLRB assuming authority not committed to it by Congress.

The NLRB's interpretation of section 8(g) to prohibit peaceful picketing is not defensible. A line of Supreme Court cases has recognized that peaceful picketing is protected by the First Amendment, and narrowly construed limitations on such picketing, and Congressional amendments must be construed in light of such existing precedents. Congress's 1974 amendments of the NLRA "shows no intention to punish individuals who do not strike but peacefully picket."

Zino Davidoff SA v. CVS Corp., 07-2872-cv (June 19, 2009)

2009-06-21T18:22:00.001-07:00

Lanham Act, Preliminary Injunction, UPC, Gray Market Goods, Legislative History

Leval, Katzmann, and Livingston - Opinion by Leval

Davidoff, a high-end producer of luxury goods, sued under the Lanham Act to prevent CVS, a retail drug store chain, from selling gray-market units of Davidoff's "Cool Water" cologne with removed UPC labels. Davidoff refused to sell to CVS and other non-luxury outlets, so CVS obtained the cologne elsewhere and removed the UPC labels. The district court granted Davidoff's request for an injunction prohibiting the removal of the UPC labels, which it considered improper whether the product had been authorized for sale in the United States or not. The Court of Appeals affirmed.

Good explanations of Gray Market Goods and UPC codes.

CVS argued that removal of the UPC tags did not violate the Lanham Act, and pointed to past legislative attempts to amend the Act to prohibit the removal of UPC codes. The Court rejected the argument, on the ground that Congressional inaction or failed legislative proposals are not persuasive markers of legislative intent. The Court held that removal of the UPC codes violates the Lanham Act because the removal interferes with Davidoff's quality control and because the altered packages are materially different from intact, authorized packages. The injunction was not an abuse of discretion because Davidoff established "a likelihood that the absence of the codes increased the risk that consumers would unwittingly purchase counterfeit or defective product because of the disabling of Davidoff's device [the UPC code] to guard against these things."

LaForest v. Honeywell, 06-5712-cv (June 18, 2009)

2009-06-18T20:08:00.000-07:00

Jacobs, CJ, Calabresi, and Sack - Opinion by Sack, Dissent in part by Jacobs

An important practice note: Absent a specific an unambiguous reservation of rights, a settlement moots any right of appeal.

A group of employees sued Honeywell, which was bound by a predecessor company's guaranty that the employees' welfare and benefits would never be reduced, under the Labor Management Relations Act, 29 USC s. 141 et seq. ("LMRA"), and the Employee Retirement Income Security Act of 1974, 29 USC s. 1001 et seq. ("ERISA"). The district court granted summary judgment under the LMRA. While that ruling was on appeal, the employees moved for summary judgment on the ERISA claims. The ERISA claims entitled plaintiffs to no additional relief, except the potential for an award of attorney's fees, which were not available under the LMRA. Honeywell opposed the motion on the grounds that ERISA did not apply. The district court granted summary judgment to the employees on the ERISA claims, a decision that could not be immediately appealed. After the Second Circuit affirmed the summary judgment on the LMRA claims, the parties entered into a settlement, so-ordered by the district court, resolving all substantive claims, but preserving Honeywell's right to appeal any award of attorney's fees under ERISA. The district court then awarded attorney's fees to the employees, and Honeywell appealed both the summary judgment on ERISA and the award of attorney's fees under ERISA.

The Court holds that the parties' settlement of the LMRA and ERISA claims precluded any consideration on appeal of the merits of the underlying claims. When claims are settled, all rights of appeal are ordinarily mooted. A right to appeal is not presumed, but must be specifically and unequivocally reserved in the settlement agreement. Because the settlement agreement preserved only the right to appeal an award of fees, the Court would not consider the merits of the district court's grant of summary judgment on ERISA. That the fee award was based on the underlying ERISA claim does not create an implied right to appeal the merits of the ERISA claim based upon the preservation of the right to appeal the fee award. Slip Op. at 9. Nor does the parties' briefing of the merits of the ERISA claim, or their apparent shared assumption that the Court could consider the merits of the ERISA claim; "[W]ant of jurisdiction ... may not be cured by consent of the parties." Slip Op. at 10 (quotation citation omitted).

Accordingly, the only issue on appeal is the propriety of the fee award under ERISA.

Attorney's fee awards under ERISA are reviewed for abuse of discretion under the 5-factor test set forth in Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 971 (2d Cir. 1987). The 5 factors are:

(1) the degree of the offending party's culpability or bad faith;
(2) the ability of the offending party to satisfy an award of attorney's fees;
(3) whether the award of fees would deter other persons from acting similarly under like circumstances;
(4) the relative merits of the parties' positions; and
(5) whether the action conferred a common benefit on a group of pension plan participants.

Because it appears that the district court considered Honeywell's opposition to the LMRA claim to establish the culpability and deterrence factors (it didn't discuss the other 3 factors), which would be error because the LMRA does not authorize the award of fees and because the ERISA claim were more novel and debatable than the LMRA claim, the panel majority remands the fee award to the district court for consideration of all 5 Chambless factors specifically as to the ERISA claim. Chief Judge Jacobs dissents only from this remand, on the ground that their questionable and novel ERISA claim was prosecuted only after the employees had already received all the substantive relief to which they were entitled, and only to permit them to seek attorney's fees for relief that they had already obtained, and because the record is sufficient to demonstrate as a matter of law that plaintiffs would be unable to meet their burden of demonstrating, as to the ERISA claim, that fees were justified under the merits-based Chambless factors.

Jaramillo v. Weyerhauser Co., 07-0507-cv (June 18, 2009)

2009-06-18T19:55:00.000-07:00

Wesley, Livingston, and Cogan, D.J. - Per Curiam

Defendant Weyerhauser purchased an industrial machine second hand and later sold it to plaintiff's employer. Plaintiff was injured while operating the machine, and sued Weyerhauser on the ground that it should be "strictly liable" under New York law. The district court dismissed plaintiff's claim for strict liability against Weyerhuaser, and plaintiff appealed.

New York law imposes "strict liability" on "regular sellers" of industrial machinery, but not on "casual" or "occassional" sellers. The Second Circuit certified the question of whether Weyerhauser was a "regular seller" under New York law to the New York Court of Appeals. The Court of Appeals responded that Weyerhauser was not a "regular seller" under New York law, and that the policies in favor of strict liability did not apply to Weyerhauser's irregularly-scheduled, "as-is, where-is" surplus sales of used equipment. Accordingly, the district court's dismissal was affirmed.

United States v. Fell, 06-2882-cr (June 17, 2009)

2009-06-18T11:44:00.000-07:00

En Banc - Concurring Opinion by Raggi (joined by Jacobs, C.J., Cabranes, B.D Parker, Wesley, and Livingston); Dissenting Opinions by Calabresi (joined by Straub), Pooler, and Sack

This case presents multiple opinions against and in favor of en banc review of the first federal death penalty case to be presented to the Second Circuit in decades.

Judge Calabresi, joined by Judge Straub, and Judges Pooler and Sack in brief separate dissents, submit that "death is different" and that the dearth of Second Circuit death-penalty precedent warrants en banc review, especially where a federal death sentence arises from a state that does not have capital punishment.

Judge Raggi, joined by Chief Judge Jacobs, and Judges Cabranes, B.D. Parker, Wesley, Livingston, and Walker, argues that the panel decision properly disposed of the only substantial issues on appeal -- namely, whether a juror who opposed the death penalty was properly excused, and whether the trial court properly excluded a draft, unsigned plea agreement that provided for life-in-prison from consideration by the jury in the mitigation phase -- pursuant to established Supreme Court precedents.

All the opinions are right.

Judge Calabresi raises a sophisticated and nuanced (and unlikely-to-prevail, as Judge Sack notes, even though he voted for en banc review) argument that there exists a deep constitutional question about the pursuit of the death penalty in states whose popularly enacted laws do not permit it. "We are a nation of profoundly different values, and have been so from the very beginning. Moreover, these value differences are and have always been geographically correlated." (Dissenting Op. at 19). According to Judge Calabresi, "federalism and its recognition of the different viewpoints which make up our nation" (Dissenting Op. at 6) demands that juries be composed of persons reflecting local values, which, in Vermont would be a majority of persons opposing capital punishment. The Sixth Amendment demands that juries be made-up of persons "of the State and district wherein the crime shall have been committed," and federalism dictates that a defendant has "the right to be tried by a set of people who truly represent the point of view of a state and district." Judge Calabresi also contends that the same federal concerns, especially in light of the low barrier to admission of evidence in sentencing hearings, required the judge to let the jury know that local prosecutors were willing to accept a life sentence and that defendant had been willing to admit responsibility. At a minimum, these issues are sufficiently weighty enough to warrant en banc review:

The issue before us, let me emphasize yet again, is not how we come out, but whether this particular case is worth reviewing en banc. I am not a great believer in en bancs. It seems to me, however, that these are issues to which the putting together of all our thought would be helpful. A rehearing en banc would help us al think about the important issues, framed by specific objections, properly before us on direct appeal, that are raised by the potential, nationally ordered, execution of a man in a state whose laws forbid it.

Dissenting Op. at 24.

The concurring opinion by Judge Raggi (joined by Chief Judge Jacobs and Judges Cabranes, Parker, Wesley, Livingston and Walker) submits that the panel decision has correctly resolved the issues on appeal pursuant to established Supreme Court precedents, so that en banc review is unnecessary. The removed juror could not, or would not, confirm to the district court that she would follow the law notwithstanding her objection to the death penalty; therefore, her removal was proper. The trial court's exclusion of the unsigned plea agreement was within the court's discretion. The probative value of the unsigned plea offer to issues on sentencing is minimal. The concurring opinion dismisses Judge Calabresi's federalism concerns as "more imaginary than real." Concurring Op. at 3. Federalism is is concerned with distribution of power. Id. at 7. The Sixth Amendment's specification that federal trials take place in a "local vicinage" arose from the King's practice of shipping Americans to England to avoid nullification at trial. The vicinage requirement does not require "a special solicitude for local values in the selection of a federal petit jury;" even the dissent would agree that such solicitude would be improper for "local values" that were antagonistic to federal civil rights, environmental, or gun trafficking laws. The Constitution is designed for the common and equal benefit of all the people. The exclusion of the juror would have been proper in any State, whether that State had or had abolished the death penalty.

The opinions are noteworthy for the breadth of citation -- including many newspaper articles and Amar's recent Constitution, a Biography.

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Our goal in this blog is primarily to describe and explain, not to comment or critique. In case you were wondering what the heck Judge Calabrese was talking about, however, we thought we'd excerpt a couple of famous federalism quotes from prior Supreme Court decisions that should shed some light on his concerns.

The first quote is from Justice Black's opinion in Younger v. Harris, 401 US 37, 44-45 (1971):

This underlying reason for restraining courts of equity from interfering with criminal prosecutions is reinforced by an even more vital consideration, the notion of "comity," that is, a proper respect for state functions, a recognition of the fact that the entire country is made up of a Union of separate state governments, and a continuance of the belief that the National Government will fare best if the States and their institutions are left free to perform their separate functions in their separate ways. This, perhaps for lack of a better and clearer way to describe it, is referred to by many as "Our Federalism," and one familiar with the profound debates that ushered our Federal Constitution into existence is bound to respect those who remain loyal to the ideals and dreams of "Our Federalism." The concept does not mean blind deference to "States' Rights" any more than it means centralization of control over every important issue in our National Government and its courts. The Framers rejected both these courses. What the concept does represent is a system in which there is sensitivity to the legitimate interests of both State and National Governments, and in which the National Government, anxious though it may be to vindicate and protect federal rights and federal interests, always endeavors to do so in ways that will not unduly interfere with the legitimate activities of the States. It should never be forgotten that this slogan, "Our Federalism," born in the early struggling days of our Union of States, occupies a highly important place in our Nation's history and its future.

The second quote is from Justice Brandeis's dissent from the Lochner-court's decision in New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932):

There must be power in the States and the Nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs. I cannot believe that the framers of the Fourteenth Amendment, or the States which ratified it, intended to deprive us of the power to correct the evils of technological unemployment and excess productive capacity which have attended progress in the useful arts.

To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation. It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country. This Court has the power to prevent an experiment. We may strike down the statute which embodies it on the ground that, in our opinion, the measure is arbitrary, capricious or unreasonable. We have power to do this, because the due process clause has been held by the Court applicable to matters of substantive law as well as to matters of procedure. But in the exercise of this high power, we must be ever on our guard, lest we erect our prejudices into legal principles. If we would guide by the light of reason, we must let our minds be bold.

Like the related issue of "state's rights", the weight accorded to federalism concerns frequently depends upon whose ox is being gored.

Snell Island SNF v. National Labor Relations Board, 08-3822-ag(L) (June 17, 2009)

2009-06-18T10:39:00.000-07:00

Winter, Cabranes, and Sack - Opinion by Cabranes

This is an elegant opinion concerning Chevron deference to a jurisdictional determination of the National Labor Relations Board ("NLRB"), on an issue that has produced a rare, clear circuit split that may well result in review by the Supreme Court. The case is also a fine primer on the legislative history and purpose of the NLRB and the National Labor Relations Act (the "Act"):

The National Labor Relations Act—which is also known as the “Wagner Act” after its sponsor, Senator Robert F. Wagner of New York, see The Encyclopedia of New York City 1231 (Kenneth T. Jackson ed., 1995)—was enacted and took effect in 1935. See generally Lawrence M. Friedman, American Law in the 20th Century 167-69 (2002) (describing the reception of the Act by business and labor interests and its effect on commerce and politics in the New Deal, Second World War, and post-war years). The Act, which was among the first New Deal regulations to be upheld by the Supreme Court, see NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 30 (1937) (“We think it clear that the National Labor Relations Act may be construed so as to operate within the sphere of constitutional authority.”), originally created a three-member Board, with two members necessary for a quorum, see Pub. L. No. 74-198, § 3(a), 49 Stat. 449, 451 (1935) (“There is hereby created a board . . . which shall be composed of three members . . . .”); id. § 3(b) (“A vacancy in the Board shall not impair the right of the remaining members to exercise all the powers of the Board, and two members of the Board shall, at all times, constitute a quorum.”). In 1947, Congress passed the Labor Management Relations Act, which expanded the membership of the Board to five and created the panel system used today. See Pub. L. No. 80-101, §§ 3(a)-(b), 61 Stat. 136, 139 (1947) (“Taft-Hartley Act” or “Taft-Hartley amendments”).

Slip Op. at 3, n. 1. As this blurb indicates, the NLRB consists of 5 members, appointed by the President to 5 year terms, with 3 members constituting a quorum. In December 2007, the Board was down to 4 members, 2 of whose terms were set to expire at the end of December, with no replacement appointments in sight. To permit continued operation of the Board when these terms expired, in an attempt to take advantage of Section 3(b) of the Act, 289 U.S.C. s. 153(b) -- which provides that the Board may delegate any or all of its powers to 3 or more members, who may continue to exercise these powers even if a member becomes unavailable -- the Board delegated all of its decision-making to a panel of 3 members (1 of whose term would expire in 3 days) effective December 28, 2007. As of December 31, 2007, due to the expired terms, this panel was reduced to 2 members. The remaining 2 member panel continued to hear and rule on Board business, including petitioner's refusal to recognize the results of a union election.

The principal question on appeal, and the source of a circuit split, is whether the 2 member panel is permitted under the Act, where the third member was disqualified because his term expired and the NLRB consisted of only 2 members. The DC Circuit recently held that it wasn't, holding that the plain language of the Act required a quorum "at all times;" the expiration of a member's term left that member without authority under agency law, so the Board ceased to have a quorum. The First and Seventh Circuits, on the other hand, have recently held that the 2 member panel was duly constituted and consistent with the Act.

Recognizing that the question "is one ultimately to be resolved by the Supreme Court," Slip Op. at 13, the Court holds that the NLRB panel of 3 was lawfully convened and retained jurisdiction as a panel of 2 when one of the member's term expired. The holding is the result of the two step analysis first established by Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984):

At step one, we consider whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. To ascertain Congress’s intent, we begin with the statutory text because if its language is unambiguous, no further inquiry is necessary. Only if we determine that Congress has not directly addressed the precise question at issue will we turn to canons of construction and, if that is unsuccessful, to legislative history to see if those interpretative clues permit us to identify Congress’s clear intent.

If, despite these efforts, we still cannot conclude that Congress has directly addressed the precise question at issue, we will proceed to Chevron step two, which instructs us to defer to an agency’s interpretation of the statute it administers, so long as it is reasonable.

Slip Op. at 7-8 (quoting N.Y. State Office of Children & Family Servs. v. U.S. Dep’t of Health & Human Servs. Admin. for Children & Families, 556 F.3d 90, 97 (2d Cir. 2009)). The Chevron analysis applies “even where, as here, the question presented involves the agency’s jurisdiction or power to act.” Slip Op. at 6 (citation omitted).

Considering step one, Congress has not directly spoken. The circuit split reflects an ambiguity in the Act. The legislative history reflects a “broad animating purpose ‘to equalize the balance of power between employers and employees’”, Slip Op. at 16, but little else, though it is significant that for much of its life the NLRB did operate with only two members. Slip Op. at 18. In addition, the purpose of the Taft-Hartley amendments of 1947, which increased the size of the Board to the current 5 members, was to increase the NLRB’s efficiency. Slip Op. at 19. Nonetheless, because Congress has never directly addressed the principal issue, the Court proceeds to step two of the Chevron analysis.

Step two requires the court to defer to the agency’s interpretation of the statute, so long as the interpretation is “reasonable.” Slip Op. at 20. The NLRB’s interpretation that the Act permitted the two remaining members to act as a quorum is reasonable. So too is the DC Circuit’s contrary view – but “in applying Chevron deference, an agency’s view governs if it is a reasonable interpretation of the statute – not necessarily the only possible interpretation, or even the interpretation deemed most reasonable by the courts.” Slip Op. at 21 (quoting Entergy Corp. v. Riverkeeper, Inc., 129 S.Ct. 1498, 1505 (2009) (internal quotation omitted)).

United States v. Jass, 06-4899-cr (con) (June 16, 2009)

2009-06-16T08:10:00.000-07:00

Walker, Cabranes, and Raggi - Opinion by Raggi

Sordid facts rarely make for satisfactory opinions.

Here, the facts are certainly sordid, even in abbreviated form. Defendant Jass conspired with her boyfriend Leight to transport minors -- Leight's 12-year-old daughter and her sixth grade classmate -- across state lines to engage in criminal sexual activity and make child pornography. Leight began molesting his daughter when she was four, and Jass joined in the abuse when the girl was eight or nine. Leight used child pornography to convince his daughter that sex with adults was "normal." After a jury trial, the trial court sentenced Leight to 115 years in prison and Jass to 65 years in prison.

There are two principal issues on appeal:

(1) Did the admission of Leight's inculpatory statements, redacted to replace her name with neutral references, violated her Sixth Amendment right to confrontation pursuant to Bruton v. United States, 391 U.S. 123 (1968), Richardson v. Marsh, 481 U.S. 200 (1987), and Gray v. Maryland, 523 U.S. 185 (1998)?

(2) Did the district court erroneously apply a two-level enhancement under Sentencing Guideline s. 2G2.1(b)(3)(B)(ii), which applies when a computer is used "to solicit participation with a minor in sexually explicit conduct"?

(1) Confrontation Clause Claim.

Confrontation clause issues are reviewed de novo, but subject to harmless error analysis. The Court concludes that admission of a statement which has been redacted to replace defendant's name with neutral references does not violate the Confrontation Clause, and, even if it did, any error here would be harmless beyond a reasonable doubt because of overwhelming independent evidence of Jass's guilt.

Bruton held that limiting instructions were inadequate to protect a defendant's confrontation rights as to the inculpatory statements of co-defendants. Richardson allowed that a co-defendant's confession could be admitted with a limiting instruction, but only if the confession "is redacted to eliminate not only the defendant's name, but any reference to his or her existence." 481 U.S. at 208. Gray held that simply redacting the defendant's name from the confession is inadequate to satisfy Bruton's concerns; obviously altered statements "so closely resemble Bruton's unredacted statements that ... the law must require the same result." 523 at 192. Although Richardson expressed no opinion whether a confession could be admitted by replacing the defendant's name with a symbol or neutral pronoun, 481 U.S. 211 n. 5, the Second Circuit has repeatedly affirmed the practice, both before and after Gray.

Leight's statements were redacted to replace Jass's name with the phrase "another person" or "the other person".

Jass makes the plausible argument that because only two adults were implicated in Leight's confession and only two adults were on trial for the crime, and because the other adult implicated in the confession was a female, a jury "would immediately infer that she was the other persons referenced in Leight's confession," Slip Op. at 28, and Bruton concerns required that her trial be severed from Leight's.

Jass's argument, despite its merits, is contrary to well-established Second Circuit authority permitting the use of redacted statements at trial, so long as the redactions didn't signal to the jury that the redacted material implicated defendant and so long as any incriminating effect required reference to other trial evidence. The Court takes great pains to demonstrate that this line of decisions is not contrary to Gray.

The Court's decision cannot be faulted, given the strong line of precedent permitting the use of redacted confessions -- but perhaps an entirely honest system would admit the truth of Jass's assertion that the redactions fooled no one, and the "other person" in Leight's confession was obviously her.

(2) Two-level Enhancement under Sentencing Guideline s. 2G2.1(b)(3)(B)(ii)

In a case of first impression in the Second Circuit, the Court holds that the two level enhancement of USSG 2G2.1(b)(3)(B)(ii), which applies when a computer is used "to solicit participation with a minor in sexually explicit conduct," has no application where a defendant uses a computer to persuade a child to engage in sexual activity. Slip Op. at 37. Using the Oxford English Dictionary as its lexical lodestar, the Court determines that the phrase "solicit participation with a minor" must necessarily be "addressing a situation in which one person solicits another person to engage in sexual activities with a minor" -- that is, soliciting a third-party to have sex with the minor -- and cannot logically apply when a person uses a computer to solicit the minor directly. If the Sentencing Commission had meant to include the latter situation, it would have/should have said "solicit participation by a minor."

The analysis is not entirely convincing -- the OED (assuming it is a better resource to resolve ambiguity in a recent statutory provision than Webster's Third or a grammar) recognizes that participation includes the sense "to share in common, with others or with each other" -- so the section may merely be clunky, and the Court may be mistaking colloquial draftsmanship for a limiting intent.

It doesn't matter, in the end -- Jass is entitled to the benefit of any ambiguity in the guideline under the rule of lenity, and defendant would have gotten the same sentence, well below the statutory maximum, without the 2-level bump.

Fuentes v. Board of Education of the City of New York, 06-4715-pr (June 15, 2009)

2009-06-15T08:34:00.000-07:00

Walker, Calabresi, and Raggi - Per Curiam

Plaintiff, the biological but non-custodial parent of a disabled child, sues pro se under the Individuals With Disabilities Education Act ("IDEA"), 20 USC s. 1415(f)(1), contending that the special education services provided his son by the NYC public schools are inadequate. The district court dismissed the claim on the ground that plaintiff lacked standing because a non-custodial parent lacks authority to make special education decisions for a child.

Following certification by a prior panel, the New York Court of Appeals held "unless the custody order expressly permits joint decision-making authority or designates particular authority with respect to the child's education, a non-custodial parent has no right to 'control' such decisions." Instead, such authority "properly belongs to the custodial parent." Fuentes v. Bd. of Educ. of City of N.Y., 12 NY3d 309 (2009).

Based on the answer to the certified question, the district court's decision that plaintiff lacks standing to assert an IDEA claim is affirmed. A parent lacks standing under IDEA where the parent does not have the authority to make educational decisions concerning the child. Because the New York Court of Appeals has determined that a non-custodial parent lacks authority to control a child's education unless such authority is explicitly contained in the custody order or divorce decree, Fuentes lacks standing to sue as a parent under IDEA.

United States v. Rudaj (Ivezaj), 06-3122-cr (L) (June 11, 2009)

2009-06-11T07:35:00.000-07:00

Feinberg, Miner, and B.D. Parker - Opinion by B.D. Parker

Key Points from this case: (1) An attempt to extort control of an illegal gambling business is a valid RICO predicate act; (2) a presumed owner of the extorted business is a "victim" under RICO, even if he is not the actual owner; (3) whether a RICO count is a "crime of violence" is determined by looking at the underlying predicate offenses; (4) whether a RICO actor is subject to role enhancement under the Sentencing Guidelines is judged by his overall role in the entire enterprise, not just his role in individual predicate acts.

Appellants were members of a violent Albanian racketeering organization in New York City and environs called the "Rudaj Organization", who sought to take over previously established gambling operations controlled by other criminal groups. They were convicted of racketeering in violation of 18 USC ss. 1962(c) and (d).

On appeal, they disputed whether New York's extortion laws (NY Penal Law 155 et seq.) applied to illegal intangible property such as a gambling operation. State law crimes can constitute racketeering acts under RICO. New York law defines "property" expansively and there is no requirement that the extorted property be legal, so illegal tangible assets could be the subject of extortion. This conclusion is buttressed by cases under the federal Hobbs Act, which was modeled on New York's extortion statute and which New York courts frequently look to for guidance.

Defendants also dispute their conviction for using firearms in a crime of violence under 18 USC s. 924(c)(1)(A). Whether an 18 USC s. 1962 RICO offense is a "crime of violence" depends upon the nature of the underling predicate offenses. Where the government proves the commission of at least two acts of racketeering that are crimes of violence, the s. 1962 conviction is a crime of violence for purposes of 924(c). Slip Op. at 13.

Even if the trial court erred in admitting evidence seized from Rudaj's home (the trial court determined that admission was proper because the evidence was discovered as part of a protective sweep or because it was in plain view while officers were searching for clothing for a defendant found in a state of undress), such error was harmless because the case against Rudaj was strong and the seized evidence was cumulative.

Ivezaj's role enhancement under Sentencing Guideline s. 2E1.1 was proper because he was a leader or manager of the overall RICO enterprise. "[I]t makes little sense to allow a defendant who acts in a leadership capacity in a wide-ranging criminal enterprise to have his offense level adjusted on the basis of his participation in discrete racketeering acts." Slip Op. at 20.

Johnson v. Rowley, 07-2213-cr (June 11, 2009)

2009-06-11T07:25:00.000-07:00

Miner, Katzmann, and Raggi - Per Curiam

Does an inmate in federal prison have a constitutionally protected property interest in job assignment with UNICOR, the government corporation providing work and training opportunities for federal inmates? The Court joins the 3rd, 5th and 7th Circuits, as well as district courts in the 2d Circuit, in saying no.

Appellant Johnson lost the job because he used UNCOR equipment to type a letter to his wife, ostensibly as practice for his job duties. He claimed that his firing violated his due process rights as well as his First Amendment rights. The district court dismissed the claims pursuant to Fed. R. Civ. P. 12(c).

Rule 12(c) dismissals, like 12(b)(6) dismissals, are reviewed de novo. Dismissal of the due process claim was proper because a federal prisoner has no legitimate claim to entitlement to a UNICOR job assignment. Dismissal of the First Amendment claim was proper because a federal prisoner is obligated to exhaust administrative remedies under the Prison Litigation Reform Act of 1995 ("PLRA").

JA Apparel Corp. v. Abboud, 08-3181-cv (June 10, 2009)

2009-06-10T18:20:00.000-07:00

Kearse, Sack and Katzmann - Opinion by Kearse, Concurrence by Sack

A terrific summary of New York law concerning contractual interpretation and ambiguity in Judge Kearse's opinion, and a useful analytical framework for contract interpretation in Judge Sack's concurrence.

In 2000, designer Joseph Abboud sold "the names, trademarks [several of which contained the name "Joseph Abboud"], service marks, logs, insignias, ands designations" in an attached schedule to JA Apparel for $65 million and agreed to provide consulting services and not to compete for a combined period of 7 years. At the end of the 7 year period, Abboud announced he was launching a new high-end men's clothing collection "jaz" and to use his name in announcements and publications about the new collection. JA Apparel sued to prevent it, claiming that it owned the exclusive right to use the name "Joseph Abboud." The trial court, after trial, determined that the 2000 contract was unambiguous and that JA Apparel owned the Abboud name, and that Abboud's use of his name in connection with the "jaz" line would also constitute trademark infringement. The Court reversed, determining that the language of the contract was ambiguous as to whether Abboud intended to sell his name other than as a trademark.

Ambiguity is a question of law for the court, determined solely by looking within the four corners of the contract, and giving words their plain and ordinary meaning. Language is not ambiguous solely because the two parties urge different interpretations of it. Language is ambiguous only if it is objectively capable of more than one reasonable meaning, considering the entire agreement and the particular trade or business involved. If a contract is unambiguous, interpretation of the contract is a question of law for the court. If a contract is ambiguous, and only if a contract is ambiguous, the finder of fact may consider extrinsic evidence to resolve the ambiguity.

Examining the entire contract, the Court determines that the contract does not clearly answer the question whether Abboud's name was included as part of the transfer, and that the arguments by Abboud and JA Apparel are both objectively reasonable interpretations of the contractual language. The Court notes it would have been a simple matter to draft unambiguous language that clearly expressed an intent to transfer the Abboud name as well as the trademarks including the name. (Which is true. Why wasn't this ambiguity anticipated and resolved in drafting?) Because the language is ambiguous, the case is remanded for consideration of extrinsic evidence. Because the trial court's determination that Abboud was not entitled to the "fair use" defense to the Lanham Act was based on its determination that the contract unambiguously conveyed Abboud's name to JA Apparel, that determination is also vacated and remanded.

In a concurrence, Judge Sack reaches the same conclusion of ambiguity by a different route. In determining whether a contract is ambiguous, he says, "New York courts ... typically apply three rules of interpretation." First, the examine the entire contract as a whole, the relation of the parties, and the circumstances of execution to determine intention of the parties. Second, thy assign each term in the contract its "fair and reasonable meaning." Third, they avoid an interpretation that would render any word or provision in the contract superfluous or without force and effect. The last rule, the "rule of surplussage," counsels both in favor of and against finding that the 2000 contract included a transfer of the exclusive right to exploit Joseph Abboud's name and not just his name as part of the more general category of trademarks. In other words, the arguments of both parties "do some violence to the rules of interpretation" and the case should be remanded to determine whether the ambiguity can be resolved by extrinsic evidence.

Runner v. New York Stock Exchange, Inc., 08-0653-cv (June 10, 2009)

2009-06-10T10:17:00.000-07:00

Cabranes, Hall and Sweet, DJ - Opinion by Cabranes

Very interesting procedural posture for this appeal.

Plaintiff lost several fingers while using a pulley to move a reel of wire down a small set of stairs in the basement of the New York Stock Exchange. The jury returned a verdict for defendants. Judge Griesa set aside the verdict under Fed. R. Civ. P. 50, held that Labor Law 240(1) -- known as the "Scaffold Law"-- imposed strict liability on defendants for the accident, and ordered a new trial on damages only.

The parties entered into a "high-low" settlement, with plaintiff's ultimate recovery depending upon the disposition of an appeal -- Plaintiff received $900K on signing, which is non-refundable. If the jury's verdict is reinstated by the Second Circuit, plaintiff receives nothing further; if Judge Griesa's order is sustained, plaintiff receives another $1.5 million. If the Second Circuit remands for a new trial, plaintiff recieves another $350K without the need for new trial.

New York's Scaffold Law imposes strict liability on landowners and general contractors for gravity-related injuries. New York's Court of Appeals has recognized only two clear categories for application of the law -- falling objects and falling workers. Although the injury here certainly involves both gravity and a falling object, and would appear subject to the plain terms of the law, it is not entirely clear from prior precedents that the Scaffold Law applies.

Because the Scaffold Law is heavily litigated (the Court's search suggests 1,000 appeals concerning the law in the last five years), and because the New York Court of Appeals "is in a far better position to interpret the intent of New York's legislature" than a federal appeals court sitting in diversity, and finally because a response from the New York Court of Appeals will end the litigation, the Court certifies two questions concerning the Scaffold Law to the New York Court of Appeals pursuant to 22 NYCRR s. 500.27 and Rule 0.27 of the Second Circuit's Rules:

I. Where a worker who is serving as a counterweight on a makeshift pulley is dragged into a pulley mechanism after a heavy object on the other side of a pulley rapidly descends a small set of stairs, causing injury to plaintiff's hand, is the injury (a) an "elevation related injury" and (b) directly caused by the effects of gravity, such that section 240(1) of New York's Labor Law applies?

II. If an injury stems from neither a falling worker nor a falling object that strikes a plaintiff, does liability exist under section 240(1) of New York's Labor Law?

Encarnacion v. Astrue, 07-355-cv (June 4, 2009)

2009-06-09T14:18:00.000-07:00

McLaughlin, Wesley and Hall - Opinion by McLaughlin

Plaintiffs represent a class of disabled children who have allegedly been wrongfully deprived of social security benefits because the Social Security Administration ("SSA") fails to consider the combined effects of a child's impairments across the six evaluative "domains" (acquiring and using information, completing tasks, relating to others, manipulating objects, caring for oneself, and health and physical well being). The SSA only considers limitations within domains, and will only pay benefits if a child has at least two "marked" limitations or at least one "extreme" limitation -- so, for example, it will not consider whether "moderate" limitations in two domains might, in the aggregate, result in a "marked" limitation that, together with another "marked" limitation in a third domain, would justify payment of benefits to the child. Plaintiffs contend such analysis should be required.

This is the second time the claims have been before the Court -- the prior decision, Encarcion ex rel. George v. Barnhart, 331 F.3d 78, 80-86 (2d Cir. 2003) ("Encarcion I") contains a detailed history of the relevant statutes and regulations.

The Court holds that the SSA's interpretion, focusing on combined impairments within rather than accross domains, is "easily understood and applied in a reasonably transparent manner." Because plaintiffs present only "vague arguments that the Commissioner could have designed a better regulatory system," and because the SSA has "substantial expertise" in administering a complex statute, the Commissioner's interpretation of the Act is entitled to deference under Skidmore v. Swift & Co., 323 U.S. 134 (1944). The Court "lack[s] the authority and [is] ill-equipped, in contrast to the Commissioner, to decide the best method to determine childhood disability." Slip Op. at 20.

Pension Committee of the University of Montreal Pension Plan v. CITCO Fund Services, 07-3527-cv (June 9, 2009)

2009-06-09T13:54:00.000-07:00

Leval and B.D. Parker - Opinion by Leval

Another 2 judge opinion under Local Rule 0.14(b). Judge Pooler recused herself after argument.

Plaintiffs invested in hedge funds managed Michael Lauer of Lancer Management Group, LLC ("Lancer"). Plaintiffs sued Lauer and Lancer for securities fraud, and alleged that Bank of America Securities LLC ("BOA") aided and abetted that fraud. The district court granted BOA's motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), stating that the complaint contained only "conclusory assertions" that BOA's actions or omissions proximately caused plaintiffs' losses.

The Court reinstates the claims against BOA. The district court's grant of a motion to dismiss is reviewed de novo. Whether plaintiffs can ultimately prove the allegations is not relevant, the sole question is whether they have stated a claim, accepting all factual allegations (and reasonable inferences from them) as true. Contrary to the district court's holding, the complaint "plausibly and in adequate detail" alleges that BAS knowingly participated in Lancer's retoractive changing of asset values to reflect grossly inflated prices and bogus gains, knowing that investors would rely on the false values, that BAS and Lancer employees worked closed together in cosy familiarity, that BAS received commissions on Lancer's trades and provided Lancer with substantial goods and services, incluidng paying for some of the expenses attending Lancer's Park Avenue office space. Accordingly, the Court concludes that plaintiffs adequately pleaded that BAS aided and abetted securities fraud in a manner that proximately caused damages to plaintiffs.

In re: Local # 46 Metallic Lathers Union, 09-2133-op (June 9, 2009)

2009-06-09T13:37:00.000-07:00

Jacobs, CJ, Straub and Hall - Per Curiam

Defendant Doherty was convicted of money laundering. As part of his plea, the government agreed not to prosecute him for additional crimes, including his defrauding the union of benefit funds. The defrauded union claimed it was a "victim" under the Crime Victims' Rights Act of 2004 ("CVRA"), 18 USC s. 2771, and the Mandatory Victims Restitution Act of 1996 ("MVRA"), 18 USC ss. 3663A-64, entitled to restitution from Doherty notwithstanding the plea. The magistrate judge and district court disagreed, and the union petitioned the Court of Appeals for a writ of mandamus.

Because the district court did not abuse its discretion in finding that Local 46 was not a victim under the CVRA and MVRA, the petition is denied. The reference point for victim status is whether the petitioner was "directly harmed" by the offense of conviction. "Notwithstanding what Doherty planned to do with the laundered funds once he had them in his possession, the 'offense' to which he pleaded guilty was solely and exclusively conspiracy to engage in money laundering". Slip Op. at 12. The government has no obligation to support claims of persons or entities who do not constitute "victims" under the CVRA or MVRA.

Rule 46 - Attorneys Must Renew Second Circuit Admission

2009-06-08T13:55:00.000-07:00

New Local Rule 46.1 requires attorneys to reapply for admission every 5 years.

Attorneys admitted prior to July 1, 2004 must reapply no later than the the anniversary date of their original admission as it occurs between July 2009 to June 2010. So, for example, if you were admitted on January 1, 1980 your renewal application is due no later than January 1, 2010.

Attorneys admitted after July 1, 2004 must renew no later than the fifth anniversary of the original admission.

The notice to the bar about the new rule is here.

The instructions and a pdf-fillable application form are here.

You can search your NY State Bar Registration number (required on the form) here.

Gollomp v. Spitzer, 07-0847-cv (June 8, 2009)

2009-06-08T11:24:00.000-07:00

Leval, Cabranes and Livingston - Opinion by Cabranes

Plaintiff lost a lawsuit against his neighbor for claimed water damage. He then asserted a grab-bag of wrongs against state and local officials concerning that loss. Among other things, he claimed that the judge who decided the lawsuit was incompetent, that the judge's signature had been forged, and that the defendants, including the New York Unified Court System, had failed to conduct adequate investigations and/or conspired to conceal these wrongs and deprive him of his civil rights.

Defendants moved to dismiss, among other reasons, because plaintiff's claims against state officials, and the New York Unified Court System, were barred by Eleventh Amendment sovereign immunity, and also moved for sanctions pursuant to Fed. R. Civ. P. 11. Following plaintiff's amended complaint, defendants moved for sanctions pursuant to 28 USC s. 1927, which requires a finding of "bad faith." The district court dismissed the complaint and awarded defendants $26,796 attorney's fees and $130.20 costs.

The Court agreed that the Eleventh Amendment applied to claims against New York's Unified Court System, which is specifically authorized by the Constitution of the State of New York, N.Y. Const. Art. VI, ss. 1(a) and 29(a) and is "unquestionably an 'arm of the State' entitled to Eleventh Amendment sovereign immunity." Slip Op. at 19 (quotation citation omitted).

The Court also agreed that the trial court had not abused its discretion in awarding sanctions against plaintiff's counsel pursuant to 28 USC s. 1927, which authorizes attorney's fees "when the attorney's actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose" so bad that is is "akin to bad faith." Slip Op. at 19 (quoting 60 E. 8oth St. Equities, Inc. v. Sapir, 218 F.3d 109, 115 (2d Cir. 2000)). The factors supporting the award, the first three of which were relied upon by the district court and the last of which was noted by the Court as additional support, are: (1) plaintiff's counsel had lost several prior similar claims on 11th Amendment grounds; (2) plaintiff's counsel misrepresented its disciplinary record to the magistrate judge three times during a conference concerning Rule 11 sanctions; (3) plaintiff's counsel ignored defendants' warning that the complaint was unfounded and should be withdrawn; and (4) several courts have criticized similar pleadings by plaintiff as incomprehensibly vague and overlong.

The most notable takeaway from the case is how reluctant the Court is to sanction attorneys. Despite a rather lengthy record of similar sanctionable conduct, the Court still spent considerable time considering the chilling effect of sanctions and the threat of sanctions as an improper litigation tool, and then closed with this apologetic note:

A final word is in order. It is an unpleasant task to sanction attorneys. The members of this panel were all practicing lawyers before we joined the bench, and we are keenly aware of the sting—both financial and reputational—that accompanies a court-ordered reprimand. Nevertheless, the rules and statutes that authorize sanctions exist by necessity and for good reason, as the instant case ably illustrates. For over a decade, the judges of the United States District Court for the Northern District of New York—not to mention our judicial colleagues in the New York Court of Claims, the New York Supreme Court, and Appellate Division of the Supreme Court—have patiently hear successive lawsuits in which plaintiff’s counsel have asserted the same stale claims against the State of New York. A private litigant forced to defend against similar claims year after year would certainly deserve some protection from the courts against future harassment. The State of New York deserves no less consideration.

Slip Op. at 28.

Emery Celli Brinckerhoff & Abady LLP v. Plaintiffs' Committee, 06-4565-cv (June 5, 2009)

2009-06-08T10:46:00.000-07:00

Leval, Calabresi, and Wesley - Opinion by Leval

This appeal concerns the allocation of contingent attorney's fees arising from the $2.7 billion settlement paid by Libya to resolve claims concerning the bombing of Pan Am Flight 103 over Lockerbie, Scotland. Appellant law firm Emery Celli brinckerhoff & Abady LLP ("Emery") appeals from the district court order that it pay 3% of its clients' recovery to the Plaintiffs' Committee, which represented 240 of the 246 settling defendants. Emery represented 6 of the remaining plaintiffs, and 13 other counsel represented the rest. All other non-committee counsel agreed to pay the 3% share to the Committee.

The claims against Libya were originally dismissed under the Foreign Sovereign Immunities Act ("FSIA"), and were only able to proceed because of a successful lobbying effort to create a terrorism exception to sovereign immunity. It was undisputed that Emery participated actively in this successful lobbying effort.

Emery contended before the district court that its contribution to the amendment of FSIA was undervalued if it was forced to contribute the same 3% as all other non-committee counsel. On appeal, Emery contends that the district court erred in considering certain evidence and violated due process in employing improperly abbreviated procedures.

Although acknowledging that the district court's ruling on attorney's fees is reviewed for abuse of discretion, because its "intimate[] familiar[ity] with the nuances of the case" puts it in a better position to assess the relevant factors, the Court agreed that the district court committed reversable error in considering certain evidence.

First, the district court gave undue and illogical weight to a letter that Emery's client sent to the Committee, because (a) it was not inconsistent with Emery's claim that its lobbying had been valuable to all plaintiffs, a claim that found further support in the affidavit of Emery's client that the district court ignored, and (b) even if it was inconsistent, the district court provided no reason to give the letter precedence over Emery's conflicting claim. "Where A and B have adverse interests and are in conflict on a question, for a court to simply say A's statement shows that B is wrong, without any reason for preferring A's version over B's, would be arbitrary and would not satisfy the basic requirements of principled fact finding." Slip Op. at 10.

Second, the district court committed a "significant legal error" in using a conditional concession made by Emery for purposes of settlement to support a factual finding against Emery. Fed. R. Evid. 408 forbids a court from "us[ing] a party's provisional concessions uttered in an unsuccessful attempt to reach a settlement agreement to support a finding on the merits of the dispute adverse to that party." Slip Op. at 12. Even though Rule 408 may not strictly apply to attorneys' fee disputes, and even though a district court enjoys "wide discretion" in attorneys' fees awards, considering a provisional settlement concession as proof is an abuse of discretion that would seriously impair the settlement process. Slip Op. at 13.

Third, the district court erred in finding the voluntary payment by the other 13 non-committee counsel as proof of the reasonableness of the 3% payment. Eleven of the 13 counsel did not engage in any FSIA lobbying, so their acceptance is not dispositive of the reasonableness of the payment as to Emery. Moreover, one of the non-committee counsel who agreed to the payment and had lobbied for the FSIA amendment only agreed because he viewed the cost of fighting it was not worth the effort, and suggested that the other similarly situated non-committee counsel agreed for the same reason. Slip Op. at 15.

The Court did not agree, however, that the district court's procedures violated due process. Due process's requirement of "some form of hearing" does not demand an evidentiary hearing. Slip Op. at 16 (citing Henry J. Friendly, Some Kind of Hearing, 123 U. Pa. L. Rev. 1267, 1278-79 (1975)). The district court must give each affected individual "a fundamentally fair chance to present his or her side of the story". Slip Op. at 16 (citation omitted). In determining whether the procedures were sufficient, the appellate court considers two factors: (1) Did each party have a fair opportunity "in view of what is at stake" to present its own positions, and to oppose any adverse positions?, and (2) Did the trial court's findings of fact comport with "fundamental principles of fair fact finding," meaning, are they supported by the record?

Pietrangelo v. United States Army, 07-3124-cv (June 4, 2009)

2009-06-07T07:43:00.000-07:00

Jacobs, Walker and Calabresi - Per Curiam

Plaintiff, a former army lawyer, brought a Freedom of Information Act ("FOIA", 5 USC s. 522) claim as part of his effort to expose alleged corrupt practices in the awarding of Bronze Stars during the first Iraq War. The question on appeal is whether a pro-se attorney plaintiff who substantially prevailed in his FOIA claim was entitled to attorney's fees under FOIA's fee-shifting provision. The answer is no. As a general rule, pro se litigants are not entitled to an award of fees under FOIA or other fee-shifting provisions. The rule is the same where the pro se litigant happens to be a lawyer. In Kay v. Ehrler, 499 US 432, 437 (1991), the Supreme Court denied fees to a pro-se lawyer litigant under an analogous fee-shifting provision, 42 USC s. 1988, explaining that the statutory goal of "furthering the successful prosecution of meritorious claims" is best served by creating a rule that "creates an incentive to retain counsel in every ... case." Allowing pro se lawyers to obtain fees would "create a disincentive to retain counsel." 499 US at 438. Although Kay involved a different fee-shifting statute, other circuit courts have applied its reasoning to FOIA. The Court sees no reason to rule otherwise.

Holmes v. Grubman, 06-5246-cv (June 3, 2009)

2009-06-07T06:59:00.000-07:00

Cabranes and Walker - Opinion by Cabranes

Judge Raggi recused herself prior to oral argument. Second Circuit Local Rule 0.14(b) permits two judges to hear and determine a case "if they reach agreement and neither requests the designation of a third judge."

Plaintiff class representatives claim they failed to sell WorldCom stock (and even purchased additional shares), prior to WorldCom's bankrutpcy, based upon defendants' misrepresentations and omissions. Plaintiffs claim that defendants (Solomon Smith Barney and "swashbuckling deal broker" Jack Grubman) operated under a conflict of interest because they did work for WorldCom, and knew that WorldCom's stock was worthless but continued to promote it. The main issue in the case is whether Georgia law would recognize so-called "holder" claims arising from a plaintiff's failure to sell stock.

Georgia law permits certification of an issue from federal circuit courts when Georgia law is determinative and there are no controlling decisions of the Georgia Supreme Court. The Second Circuit may certify questions where, among other factors, there is an absence of authoritative sate court decisions, the issue is important to the state, and certification may resolve the case. Slip Op. at 16. Finding these factors applicable, the Court certifies the following three questions to the Georgia Supreme Court:

Does Georgia common law recognize fraud claims based on forbearance in the sale of publicly traded securities?
With respect to a tort claim based on misrepresentations or omissions concerning publicly traded securities, is proximate cause adequately pleaded under Georgia law when a plaintiff alleges that his injury was a reasonably foreseeable result of defendant’s false or misleading statements but does not allege that the truth concealed by the defendant entered the market place, thereby precipitating a drop in the price of the security?
Under Georgia law, does a brokerage firm owe a fiduciary duty to the holder of non-discretionary account? The Supreme Court of Georgia may reformulate or expand upon these questions as it sees fit, based on the record of this case.

The Georgia Supreme Court may reformulate or expand the questions as it sees fit; the panel retains responsibility for the case until it receives the court's response.

There are some noteworthy discussions in the decision that are not related to the primary focus on certification.

The case warns practitioners against ignoring the deadline to amend pleadings contained in a district court's scheduling order. Although leave to amend is freely granted, this lenient standard "must be balanced against the requirement under Rule 16(b) that the court's scheduling order 'shall not be modified except upon a showing of good cause.'"Slip Op. at 8 (quotation citation omitted). The determination of "good cause" depends upon "the diligence of the moving party." Id.

The case also warns practitioners that liberal pleading requirements do not allow a plaintiff to assert only generally the statutory basis of their state securities law claim; a complaint that does not specify the specific section of the statute upon which plaintiff relies may be subject to dismissal for failure to state a claim. Id. at 9-10.

If you ever wanted a good, compact description of "blue sky" laws, you now have it. Slip Op. at 3 n. 2: “Blue sky” laws refer to state laws regulating the exchange of securities. Most blue sky laws “were enacted long before the Securities Act of 1933.” Black’s Law Dictionary 183 (8th ed. 2004) (quoting Louis Loss & Edward M. Cowett, Blue Sky Law 3 (1958)). Professor Lawrence M. Friedman has observed that the Kansas blue sky law, which passed in 1911 and was the nation’s first, protected interests other than the “unsuspecting investor.” Lawrence M. Friedman, American Law in the 20th Century 163 (2002) (noting, in addition, that “by the early 1930s, every state except Nevada had its own blue sky law”). “The blue sky laws were popular with bankers, especially small bankers; investment bankers were mostly on the other side. There was a certain element of local protectionism: when Kansas people invested their money in stock schemes, the money almost always left Kansas for distant parts.” Id. There are several explanations for the origin of the term. One is that, in 1911, Wall Street’s burgeoning securities trade raised for the Kansas legislature the specter of eastern industrialists descending upon the state in an attempt to sell everything, including the blue sky, to unsuspecting Kansans. Black’s Law Dictionary 184 (citing 1 Thomas Lee Hazen,Treatise on the Law of Securities Regulation § 8.1, at 490-92 (3d ed. 1995)).

O'Connor v. Pierson, 07-1758-cv (June 3, 2009)

2009-06-07T06:19:00.000-07:00

Winter, Sack and Cogan, DJ - Opinion by Sack

Plaintiff is a public-school teacher who asserted federal due process claims and related state law claims (intentional infliction of emotional distress, invasion of privacy, and tortious interference) because defendants (school administrators and school district) required him to undergo a psychiatric evaluation and release medical records before returning to work from administrative leave. The case has a somewhat tortured procedural history involving parallel federal and state proceedings. The important procedural fact is that plaintiff ultimately lost on the merits of his state law claims in Connecticut state court, and the question is what, if any, preclusive effect will that loss have on federal claims arising from the same operative facts. The district court determined that the claims were barred by res judicata.

Although the defense of res judicata can be waived (and arguably was here, as it was not raised by defendants in an earlier appeal in this case, which resulted in a remand of the federal claims), "a court has authority to invoke the doctrine of res judicata on its own initiative, even when the defense has been waived." Slip Op. at 8, n. 2 (citing O'Connor v. Bd. of Educ., 275 Conn. 912, 882 A.2d 675 (2005); Salahuddin v. Jones, 992 F.2d 447, 449 (2d Cir. 1993)).

The preclusive effect of the Connecticut state court judgment depends on Connecticut law, because a federal court "must give to a state-court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered." Slip Op. at 10 (quotation citations omitted). Under Connecticut law, a judgment on the merits is an absolute bar to any subsequent litigation on the same claim, which includes any cause of action, even if not previously asserted, arising from the same transaction or series of related transactions.

Some interesting side-notes concerning res judicata: (1) Plaintiff's jury verdict on his breach of privacy claim (the only state law claim he won) was reversed by the Connecticut appellate court based on governmental immunity. Is a dismissal on qualified immunity grounds a dismissal on the merits for res judicata purposes? The Court notes conflicting authority, and concludes it doesn't matter because the other state-law claims were indisputably resolved on the merits by an adverse jury verdict. (2) Plaintiff's state lawsuit was against the Board of Education only, while the federal lawsuit was against the Board and individual administrators -- but only in their official capacity. Does a dismissal against the Board have preclusive effect to claims against the administrators? The Court says yes - claims against officers or agents of an entity in their official capacities are just another way of pleading claims against the entity. (3) Did plaintiff have a "full and adequate" opportunity to litigate his federal claims in state court? The Court says yes - the state court had jurisdiction over plaintiff's federal claims, and it does not matter that they would, in all likelihood, have been removed if they had been asserted. Plaintiff "cites no authority, nor are we aware of any, for the proposition that the specter of removal or subsequent remand, which may result in a plaintiff's state and federal law claims being heard in different courts, deprives him or her of an adequate opportunity to litigate his or her claims." Slip Op. at 16.

USA v. Savoy, 08-4900-cr (May 27, 2009)

2009-06-06T13:13:00.000-07:00

Sotomayor, Katzmann, and BD Parker - Per Curiam

Section 3582(c)(2) of the Sentencing Guidelines allow a court to reduce a previously-imposed sentence if the guidelines are changed. Effective November 1, 2007, the sentencing commission enacted the so called "crack amendments," which reduced the base offense level for crack cocaine to eliminate the disparity, which some consider racist, between the punishment for regular cocaine and crack cocaine. The question in this case is whether a district court, on resentencing, my permissibly reduce the defendant's sentence even further than the amount dictated by the change in the guidelines. The policy statement (section 1B1.10(b)(2)(A)) says that the district court "shall not reduce the defendant's term of imprisonment ... to a term that is less than the minimum of the amended guideline range." Not surprisingly, the court holds that the "shall not" language in the policy statement means the district court lacks the authority, on resentencing, to reduce the defendant's sentence below the amended guidelines range -- joining the 1st, 3rd, 4th, 7th, 8th, 10th, and 11th circuits. Only the 9th Circuit takes a contrary view.

Pyke v. Cuomo, 07-0334-cv(L) (May 27, 2009)

2009-06-06T08:29:00.000-07:00

Calabresi, Wesley, and Droney, DJ - Per Curiam

Plaintiffs, representatives of the class of Native Americans on the Mohawk Indian reservation in New York, allege that officials of New York State (former Governor Mario Cuomo among them) violated their rights under the Equal Protection Clause by their inadequate and harmful response to widespread violence in the late 1980s and earlier 1990s.

Specifically, plaintiffs contend that defendants wrongfully withheld police protection within the reservation and took other actions that increased the unrest, such as setting up roadblocks preventing non-residents from entering the reservation and giving advance warning to the Warrior Society, an armed, violent group in the reservation, before police entered the reservation. According to plaintiffs, these actions subjected plaintiffs to an "express classification" under the Equal Protection clause which requires strict judicial scrutiny. Defendants' actions, according to plaintiffs, actually worsened the strife and contributed to millions of dollars of property damage and the death of two young Mohawks.

The court held that the actions of the New York officials, even if misguided or ineffective, did not involve suspect racial classifications. The roadblocks were based on geography, and the notification to the Warrior Society, even if viewed as caving-in to a quasi criminal organization, was not based on race. Accordingly, strict scrutiny is inappropriate, and plaintiffs must proffer evidence of discriminatory intent. Because plaintiffs could not do so, the trial court's grant of summary judgment dismissing the action is affirmed.

Poupore v. Comm'r of Social Security, 08-0659-cv (May 21, 2009) (amended opinion)

2009-06-06T08:24:00.000-07:00

Welsey, Livingston, and Restani (CIT) - Per Curiam

Appeal from decision of Commissioner of Social Security denying claim for disability insurance benefits. The denial is subject to de novo review, but only to determine whether there exists "substantial evidence" to support it, meaning "such reasonable evidence as a reasonable mind might accept as adequate."

The Court rejects claimant's argument that the Commissioner failed to meet his burden under Curry v. Apfel, 209 F.3d 117 (2d Cir. 2000) that claimant retained the capacity to perform light work on the ground that the conclusion is supported by substantial evidence. In addition, the Court holds that Curry has been abrogated by new regulations.

The Court declines to consider claimant's argument that the new regulations don't apply because his disability and application for benefits preceded them, because claimant failed to make this argument either to the district court or to the Court of Appeals in his initial brief. "[A]rguments not made in an appellant's opening brief are waived even if the appellant pursued those arguments in the district court or raised them in a reply brief." (JP Morgan Chase Bank v. Altos Hornos de Mexico, SA de CV, 412 F.3d 418, 428 (2d Cir. 2005).

Sassaman v. Gamache, 07-2721-cv (May 22, 2009)

2009-06-06T08:23:00.000-07:00

Feinberg, Cabranes and Hall - opinion by Cabranes

This is an oddball case. The plaintiff, a male, claims that a superior co-worker, a female, filed a sexual-harassment grievance against him because he refused to acquiesce to her suggestion that he engage in a one-time sexual encounter (a fact pattern that occurs primarily in male fantasy), and that he was pressured to resign by his and her supervisor, a male, whom he claims was having a relationship with that same female co-worker. He also claims that the investigation of the claim was inadequate, even though it was referred to the sheriff's department for evaluation. Testimony established that the plaintiff (1) broke into the female worker's computer to read her emails and (2) initially lied to the sheriff's department about whether he called the female coworker at home or sent her notes. Despite a claim that is somewhat incredible on its face, and his own admitted bad conduct, the Court of Appeals reversed the district court's grant of summary judgment to the defendant County and held that the case should go to the jury.

The principal basis for the court's decision was a remark by the male supervisor to the plaintiff that "you probably did what [the female coworker] said because you're male" (Slip Op. at 7). The court held that a reasonable jury could construe this statement as an invidious sex stereotype, and that this remark, along with the claimed failure to conduct an adequate investigation, might lead a jury to find defendant liable for sex discrimination.

Kelsey v. County of Schoharie, 07-0893-cv (May 22, 2009)

2009-06-06T08:16:00.000-07:00

Jacobs, Miner and Sotomayor - Decision by Miner, Dissent by Sotomayor

This case is notable for the pissing match between the majority and the new appointee to the Supreme Court. As noted by Judge Sotomayor, the majority aggressively ignores precedent concerning appealability and standard of review to reach the merits of a constitutional claim it doesn't like.

Defendant County of Schoharie instituted a "clothing exchange program" in county jails that, the plaintiffs contend, is nothing more than a disguised strip search, in violation of Second Circuit case law and the county's own regulations that strip searches are improper for misdemeanor arrestees in the absence of reasonable suspicion. The district court denied the County's motion for summary judgment, finding questions of fact concerning the nature of the observation of the inmates as they disrobe. The district court went even further, noting that the record "strongly suggests" that the real purpose behind the "clothing exchange" was to strip search inmates for contraband.

Circuit precedent provides that a district court's denial of a defense of qualified immunity based on a question of fact is ordinarily not appealable. In addition, in reviewing the record, the Court of Appeals is required to accept as true the plaintiffs' version of the facts and all its inferences. As Judge Sotomayor points out in dissent, the majority effectively ignored these precedents and "exercised jurisdiction where it has none and assume the wrong party's version of the facts," because, although it claimed to adopt plaintiffs' version of the facts, it actually disregarded or ignored testimony or inferences from testimony that tended to support plaintiff's arguments.

The majority, thus challenged (and correctly so, in our opinion), reacts with surprising indecorousness, accusing Judge Sotomayor of distorting the record (slip op. at 18, n. 2) and ignoring the "entire basis" of the lawsuit (id. at 19, n. 3).