Cheeks review under FLSA is required for unilateral dismissals

In 2015, the Second Circuit held for the first time that federal judges must approve the settlements of any claims brought under the Fair Labor Standards Act (FLSA). That was the Cheeks decision. Since then, we've seen a few cases that explore the boundaries of Cheeks, such as whether Rule 68 Offers of Settlement are subject to Cheeks review. (They are not). In this case, the Court considers whether the district judge must retain jurisdiction over a case when the plaintiff files a notice of voluntary dismissal of the FLSA claim. 

The case is Samake v. Thunder Lube, Inc., issued on January 27. The procedural history is complex. After plaintiff filed his FLSA claim, the employer moved to compel arbitration, no doubt triggered by plaintiff's having signed an arbitration agreement on the first day of employment without realizing he was signing his rights away but that's what you do when you start a new job and you have no bargaining power anyway and will sign whatever they put in front of you so you can get to work and start paying your bills. Anyway, the plaintiff next filed a notice of voluntary dismissal without prejudice under Rule 41. Normally, the district court signs off on such a notice without asking any questions. Not this case; the trial court held onto the case to determine that the parties had not reached any settlement that would necessitate judicial review under Cheeks.

Can the trial court do this? Yes, says the Court of Appeals (Jacobs and Liman [D.J.], with Menashi concurring). A couple of district court cases say the trial court should do this under Cheeks, but there was no binding authority on this issue, until now. The concern is the parties will try to avoid the (sometimes intrusive and time-consuming) Cheeks oversight by filing a stipulation of voluntary discontinuance and settling the case on their own. In this case, it looks like there was no FLSA settlement, and since the trial court granted the motion to compel arbitration, off to JAMS (or AAA) the case went.

The Second Circuit holds the trial court had authority to retain limited jurisdiction over the case to conduct a Cheeks review. The policies behind reviewing the settlement under Cheeks (that case  involved a joint dismissal by the parties) equally apply when we've got a unilateral dismissal under Rule 41: we have to make sure the plaintiff is getting a fair shake under the settlement. Also, the Court is worried that a contrary ruling will try to evade Cheeks review "simply by negotiating a settlement and release, then filing a unilateral dismissal without prejudice rather than a stipulated dismissal." This is not a theoretical concern, the Court notes. "History demonstrates that such concerns beset FLSA settlements arrived at by voluntary dismissal just as they do dismissals that are stipulated." A footnote to this statement cites four cases where this has happened, further supporting the Second Circuit's intent to eliminate such gamesmanship. 

Some legal advice from the Court of Appeals on false arrest claims

The plaintiff went to trial on his federal and state false arrest claims. The jury ruled in his favor on both claims, awarding him $150,000 for pain and suffering and another $35,000 in punitive damages. After the trial court vacated both verdicts on qualified immunity grounds, reasoning that the officer had "arguable probable cause," the plaintiff appealed. As I wrote in this blog post, the Court of Appeals finds that while the officer did not have probable cause to arrest the plaintiff, the officer did in fact have arguable probable cause, so the federal claim is gone. It's a different story with the state false arrest claim.

The case is Triolo v. Lee, issued on January 21. The case arises from an ugly family dispute that resulted in altercations. The police arrested plaintiff for assault without fully investigating evidence that would have shown the plaintiff did not actually attack his family. On the federal claim, the Court of Appeals said the officer's willful failure to explore this evidence demonstrated a lack of probable cause. But the Court also said a reasonable officer, in light of the entire record, would have arrested plaintiff. That's the "arguable probable cause" that gets you qualified immunity.

What about the state false arrest claim? Until now, the law was not clear about state false arrest claims and qualified immunity. The question is whether the municipality can be held liable for false arrest even if the officer gets qualified immunity under state law. In this case, the Eastern District of New York said "the County was not liable because [Defendant] Lee was immune from liability and it was sued for Lee's conduct only under a theory of respondeat superior." 

Courts have long held that municipalities can be held liable on a respondeat superior theory if one of its officers makes a false arrest. In this case, the Second Circuit (Chin, Pooler and Lohier) says New York law does not "categorically bar a principal's vicarious liability when an agent is immune from liability." But the cases the Court cites for this point are not false arrest cases but traditional torts cases. However, the Court notes the Restatements provide similar guidance. Bottom line: even if the officer has qualified immunity (and he does in this case on the state law claim), the county (or the town, city, or whatever) can still be liable for false arrest on a respondeat superior theory. There was some language in Kass v. City of New York, 864 F.3d 100 (2d Cir. 2017), that suggested otherwise, but the Court in Triolo clears this up, untangling a complex state law issue without sending it to the New York Court of Appeals, which it often does for unsettled areas of state law (Judge Lohier would send it to the New York Court of Appeals, but the majority in Triolo says in a footnote that the issue is not that complex and the case is almost six years old and we have to finish off this case once and for all). Since municipalities cannot enjoy qualified immunity, the county is on the hook for Lee's false arrest, even if Lee is immune from suit.

The Court will never give legal advice, but the advice here for false arrest lawyers is you ought to file those notices of claim for state law false arrest claims, and not just rely on Section 1983 for the federal claims, which often are dismissed on qualified immunity grounds. With short deadlines, notices of claim have to be filed quickly, and some municipalities actually have their own notice of claim rules and procedures that no one knows about that serve as trap doors even for experienced counsel. I learned that the hard way last year, but some brilliant lawyering on my part got around it. Bringing a notice of claim also entitles the municipality to a quick Rule 50-h hearing that allows its lawyers to ask your client questions prior to any lawsuit. That can be a hassle, but in this case it paid off. Triolo's jury verdict is restored.

Federal false arrest verdict from family dispute is thrown out on appeal, but state claim is reinstated

This false arrest case went to trial and plaintiff on his federal and state law claims. Yay! But a funny thing happened on the way to the judgment. The trial court threw out the verdict on defendant's post-trial motion, holding the police officer was entitled to qualified immunity. Plaintiff takes up an appeal. He gets the state verdict back, but the federal claim is gone.

The case is Triolo v. Lee, issued on January 21. This case began with a horrible family argument that included violence, vulgarities, and an altercation at the father's wake. The dispute had plaintiff on one side, and his brother and mother on the other side. The police report said plaintiff punched, strangled and choked his brother, but for some reason the report also said that "no offense was committed." Plaintiff got arrested criminal obstruction of breathing or blood circulation (for choking his brother) and assault (for grabbing his mother). At trial, the jury found there was no probable cause to arrest plaintiff, who was awarded $150,000 for pain and suffering and $35,000 in punitive damages. The trial court knocked out the verdict, holding the officer had qualified immunity, which lets police officers off the hook if they have arguable probable cause.

The Court of Appeals threads the needle on the federal claim, finding the jury did in fact have a basis to find the officer lacked probable cause to arrest plaintiff. The rationale is that the officer arrested plaintiff despite having access to information at the time that demonstrated plaintiff had not violated the law. While the brother and mother signed statements claiming plaintiff had assaulted them, "the jury disregarded evidence that undermined their veracity," as they had no visible injuries, the domestic incident report said "no offense was committed," and the officer showed no interest in evidence presented by plaintiff's wife that plaintiff was in fact the victim, not the aggressor. 

Courts usually find probable cause existed when the police rely on the victim's statement that someone did them wrong. Probable cause exists even if the victim was mistaken. The officer does not have to conduct a full-blown investigation into the charges against the criminal defendant before making an arrest. That's why so many false arrest claims are dismissed. But there is a narrow line of cases that say the officer cannot ignore evidence that would completely exonerate the criminal defendant. You don't see those cases too often. This is one of those cases. 

But to win the case, plaintiff still has to get around qualified immunity, a judge-made rule that says the officer cannot lose the case if he acted reasonably under the circumstances. That immunity applies here, the Court of Appeals (Lohier, Pooler and Chin) says, because he had "arguable probable cause" to make the arrest. As it is not clear that no reasonable officer could have concluded that probable cause existed, the officer gets qualified immunity, and the federal claim is gone. Here is the reasoning on this issue:

The alleged victims signed a domestic incident report, alleging that Triolo choked, punched, grabbed, and injured them.  Their accounts were consistent with each other's.  And even though the lack of visible injuries arguably undermined their veracity, it is nonetheless possible that no visible injuries resulted from the alleged assault.  Finally, although the report stated that no arrest was made on May 17, 2015, because "no offense [was] committed," a reasonable officer receiving this report could have concluded this was a mistake because the form also plainly indicated that Triolo had engaged in punching, pushing, strangulation, and choking.

The state law claim, however, is reinstated. But that's a blog post for another day.

State Court strikes down NY's mask mandate

A state judge in Nassau County has ruled that the Governor exceeded her authority in issuing a COVID-19 mask mandate in December 2021. This is the latest in a series of court rulings over the last few years in which courts around the country have applied traditional legal principles in examining governmental orders relating to the pandemic. 

The case is Demetriou v. New York State Department of Health, issued on January 24. The most recent high-profile COVID-19 ruling saw the Supreme Court strike down an order from the federal Occupational Safety and Health Administration (OSHA) mandating that large employers around the country follow a vaccination mandate. That ruling concerned the power of a federal agency and whether it comported with the federal statute that created the agency. The Nassau County ruling involves a similar legal principle: separation of powers. 

These cases have acquainted the public with otherwise obscure legal principles. They are obscure to the general public, but not to lawyers and judges, many of whom probably last focused on these principles in law school. But obscure legal principles have a funny way of becoming relevant when you last expect it. Two years ago, courts were not routinely considering whether the Executive Branch had authority to make certain decisions. Not so today.

The plaintiffs in this case sue on behalf of their children who have to wear masks in school. The Court notes that the Governor declared a disaster emergency on November 26 once the Omicron variant began spreading around the country. But the State admits in its Answer to the lawsuit that currently there is no state disaster emergency. The Executive Branch then promulgated the mask mandate regulation. Everyone over the age of two has to wear one. The problem, as the Court sees it, is that the regulation covers a subject matter that only the State Legislature can address, not the Governor's office. The Court cites a 1987 ruling from the State Court of Appeals stating that the legislative branch cannot cede its authority to an administrative agency, which is not part of the legislative branch but the executive branch, with the Governor at the helm of that branch.

Administrative agencies do have power to issue certain rules. But those rules must be authorized by statutes. The Court says that no law enacted by the State Legislature gave the Department of Health the authority to adopt the mask mandate. Nor may regulations issue without compliance with the Administrative Procedure Act, which articulates a process for new regulations. This is administrative law 101: all regulations must in some way be authorized by statute. Since administrative agencies are comprised of experts who can issue specific regulations that give life to a statute, courts will defer to that expertise. But that deference has its limits. By way of example, the judge writes, "This Court does not need to contort the bounds of reality to imagine chaos in this State wherein laws were rules made from Executive Branch appointees such as the Commissioner of the Department of Motor Vehicles issuing annually new and differing speed limits or other rules of the road."

While the judge is sympathetic to what the State is trying to do in enacting the mask mandate, it strikes down the mandate, concluding this is a matter for the Legislature, not the Governor. The implication is that if the Legislature enacts such a mandate, it would probably be legal. In the meantime, the State is appealing this ruling, and my guess is the Appellate Division will resolve this issue very quickly. In the meantime, since the State is taking up an appeal, the mandate is still enforced during the appellate process.

Challenge to IBM severance agreement fails

When these plaintiffs were laid off from IBM, they signed severance agreements in which they agreed not to join any class or collective actions against IBM. In exchange for signing the agreements, plaintiffs got lump-sum payments for lost salary as well as a year's worth of health and life insurance coverage. Plaintiffs then sued IBM, claiming the agreements were invalid because they did not include information set forth in the Older Workers Benefit Protection Act of 1990. The Court of Appeals rejects that arguments, and plaintiffs are prohibited from joining any class actions.

The case is Estle v. International Business Machines Corp., issued on January 20. Under the age discrimination law, any waiver of your rights must be "knowing and voluntary." If the severance agreement leaves out pertinent information, then you did not knowingly waive your rights, correct? Maybe not. In this case, the severance agreements left out information relating to the job titles and ages of other employees who were not part of the layoff, what we call "comparator information." As the district court pointed out:

Between 2001 and 2013, IBM “conducted at least a dozen group layoffs,” using “a standard Separation Agreement, which required employees to sign a general waiver of employment-related rights and claims, including all rights and claims under the ADEA, in order to receive a severance payment and benefits. During that time, IBM consistently provided employees selected for layoff with the OWBPA comparator information.” (Id. ¶¶ 35-36)

In 2014 – pursuant to a “company-wide change” – IBM stopped providing this comparator information to those employees selected for layoff. Plaintiffs contend that the comparator information must be provided under the OWBPA in order for IBM to obtain a waiver of ADEA rights. (Id. ¶¶ 33, 36) According to Plaintiffs, however, they “received no information in writing regarding which ‘class, unit, or group’ their Resource Action would affect, ‘any eligibility factors’ for the Resource Action, ‘the job titles and ages of all individuals’ asked to sign the waiver, or ‘the ages of all individuals in the same job classification or organizational unit’ within the group who were spared.” (Id. ¶ 79)

Estle v. Int'l Bus. Machines Corp., No. 19 CIV. 2729 (PGG), 2020 WL 5633154, at *1 (S.D.N.Y. Sept. 21, 2020), aff'd, No. 20-3372, 2022 WL 175487 (2d Cir. Jan. 20, 2022)

Between 2001 and 2013, IBM “conducted at least a dozen group layoffs,” using “a standard Separation Agreement, which required employees to sign a general waiver of employment-related rights and claims, including all rights and claims under the ADEA, in order to receive a severance payment and benefits. During that time, IBM consistently provided employees selected for layoff with the OWBPA comparator information.” (Id. ¶¶ 35-36)

In 2014 – pursuant to a “company-wide change” – IBM stopped providing this comparator information to those employees selected for layoff. Plaintiffs contend that the comparator information must be provided under the OWBPA in order for IBM to obtain a waiver of ADEA rights. (Id. ¶¶ 33, 36) According to Plaintiffs, however, they “received no information in writing regarding which ‘class, unit, or group’ their Resource Action would affect, ‘any eligibility factors’ for the Resource Action, ‘the job titles and ages of all individuals’ asked to sign the waiver, or ‘the ages of all individuals in the same job classification or organizational unit’ within the group who were spared.” (Id. ¶ 79)

Estle v. Int'l Bus. Machines Corp., No. 19 CIV. 2729 (PGG), 2020 WL 5633154, at *1 (S.D.N.Y. Sept. 21, 2020), aff'd, No. 20-3372, 2022 WL 175487 (2d Cir. Jan. 20, 2022)

Between 2001 and 2013, IBM “conducted at least a dozen group layoffs,” using “a standard Separation Agreement, which required employees to sign a general waiver of employment-related rights and claims, including all rights and claims under the ADEA, in order to receive a severance payment and benefits. During that time, IBM consistently provided employees selected for layoff with the OWBPA comparator information.” (Id. ¶¶ 35-36)

In 2014 – pursuant to a “company-wide change” – IBM stopped providing this comparator information to those employees selected for layoff. Plaintiffs contend that the comparator information must be provided under the OWBPA in order for IBM to obtain a waiver of ADEA rights. (Id. ¶¶ 33, 36) According to Plaintiffs, however, they “received no information in writing regarding which ‘class, unit, or group’ their Resource Action would affect, ‘any eligibility factors’ for the Resource Action, ‘the job titles and ages of all individuals’ asked to sign the waiver, or ‘the ages of all individuals in the same job classification or organizational unit’ within the group who were spared.” (Id. ¶ 79)

Estle v. Int'l Bus. Machines Corp., No. 19 CIV. 2729 (PGG), 2020 WL 5633154, at *1 (S.D.N.Y. Sept. 21, 2020), aff'd, No. 20-3372, 2022 WL 175487 (2d Cir. Jan. 20, 2022)

Between 2001 and 2013, IBM “conducted at least a dozen group layoffs,” using “a standard Separation Agreement, which required employees to sign a general waiver of employment-related rights and claims, including all rights and claims under the ADEA, in order to receive a severance payment and benefits. During that time, IBM consistently provided employees selected for layoff with the OWBPA comparator information.”

In 2014 – pursuant to a “company-wide change” – IBM stopped providing this comparator information to those employees selected for layoff. Plaintiffs contend that the comparator information must be provided under the OWBPA in order for IBM to obtain a waiver of ADEA rights. 

 

According to Plaintiffs, however, they “received no information in writing regarding which ‘class, unit, or group’ their Resource Action would affect, ‘any eligibility factors’ for the Resource Action, ‘the job titles and ages of all individuals’ asked to sign the waiver, or ‘the ages of all individuals in the same job classification or organizational unit’ within the group who were spared.”

In signing the severance agreements, did plaintiffs waive any rights under the Older Workers Benefit Protection Act? No, says the Court of Appeals (Park, Leval and Sack). In 14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009), the Supreme Court said the "right or claim" under the age discrimination law that employees cannot knowingly waive "is limited to substantive rights and does not include procedural ones." Collective actions, like arbitration, are procedural issues, not substantive rights under 14 Penn Plaza. 

What it means for plaintiffs is they did not waive any substantive rights and "a collective-action waiver is thus not a waiver of any 'right or claim' under the ADEA that triggers the requirements" under the statute's knowing waiver provision. No class or collective action for plaintiffs, who can still bring individual ADEA claims. As the Circuit notes, this holding is consistent with those reached by five other Circuits since 1999.

Between 2001 and 2013, IBM “conducted at least a dozen group layoffs,” using “a standard Separation Agreement, which required employees to sign a general waiver of employment-related rights and claims, including all rights and claims under the ADEA, in order to receive a severance payment and benefits. During that time, IBM consistently provided employees selected for layoff with the OWBPA comparator information.” (Id. ¶¶ 35-36)

In 2014 – pursuant to a “company-wide change” – IBM stopped providing this comparator information to those employees selected for layoff. Plaintiffs contend that the comparator information must be provided under the OWBPA in order for IBM to obtain a waiver of ADEA rights. (Id. ¶¶ 33, 36) According to Plaintiffs, however, they “received no information in writing regarding which ‘class, unit, or group’ their Resource Action would affect, ‘any eligibility factors’ for the Resource Action, ‘the job titles and ages of all individuals’ asked to sign the waiver, or ‘the ages of all individuals in the same job classification or organizational unit’ within the group who were spared.” (Id. ¶ 79)

Estle v. Int'l Bus. Machines Corp., No. 19 CIV. 2729 (PGG), 2020 WL 5633154, at *1 (S.D.N.Y. Sept. 21, 2020), aff'd, No. 20-3372, 2022 WL 175487 (2d Cir. Jan. 20, 2022)

Sex discrimination verdict upheld in the Northern District of New York

This case went to trial in the Northern District of New York in 2021. The jury found an upstate school district discriminated against a principal because of her gender, awarding her more than $480,000 in damages. As always, the defendants post-trial asked the judge to throw out the verdict and/or reduce the damages award. The trial court rejects that effort, and the verdict stands.

The case is Krause v. Kelahan, 2022 WL 5876678 (N.D.N.Y. Dec. 13, 2021). The plaintiff put on evidence that the Schools Superintendent, Kelahan, said plaintiff's office was too feminine and that women in general are too emotional. He also questioned plaintiff's fitness as a mother in taking the job in the first place. Based on Kelahan's recommendation, plaintiff was fired as principal. While defendants put on evidence that plaintiff had job deficiencies, Judge Hurd recognizes that you need compelling evidence to overturn a verdict and the jury can believe whatever witnesses it wants in rendering a verdict. Kelahan argued that plaintiff had mishandled a Section 504 disability accommodation for a student, but the jury was able to reject that defense the student's family had no objections to the altered 504 plan, and that situation was unique, caused by the family's difficulties in obtaining a proper accommodation for their daughter. This kind of nuanced reasoning by the trial court demonstrates how difficult it is to overturn a jury verdict. There is always an argument that the plaintiff offered at trial that the jury could have accepted in ruling for the plaintiff.

Plaintiff also prevailed on her hostile work environment claim. The district court said this was a closer call than the termination claim, but since plaintiff testified that Kelahan made "repeated criticism[s] and cutting remarks . . . for the entire duration of her employment," comments that included the motherhood insult, that's enough for a gender harassment claim.

Defendants raise one argument that gives Judge Hurd serious pause: the cat's paw argument. Under the cat's paw, an employer can be liable for discrimination if the recommender was motivated by gender bias. There is no cat's paw if the final decisionmaker acted in good faith. The court gets around this complicated area of the law by finding that the school board had delegated the decision making authority to the superintendent. The law for that proposition is Vance v. Ball State Univ., 570 U.S. 421 (2013). Without this rule, Judge Hurd states, employers could delegate decision making to biased supervisors and then claim ignorance and avoid liability unless there were "obvious red flags to warrant closer scrutiny into a subordinate's recommendation. Through a simple act of corporate restructuring, anti-discrimination statutes would find themselves suddenly toothless."

What about damages? The jury awarded plaintiff $150,000 for pain and suffering (I assume the remaining damages covered lost wages). But that amount of money for 1.5 years of discrimination is within the reasonable range of damages awards. Besides, the court notes, defendants' post-trial brief did not cite any cases to support their argument that this amounted to too much money. The court writes that it will not do defendants' research for them.

A word or two about proper briefing. The judge starts out the opinion by noting that defendants' lawyer submitted an attorneys' affirmation rather than a brief. That violates the NDNY's rules, and probably those in other judicial districts. We want briefs, not attorney affirmations. Making matters worse, "apparently sensing the metaphorical ice cracking under their feet, defendants nevertheless tried to scamper these arguments back to more solid footing by resubmitting them verbatim in their reply brief." That tactic won't work, either. Also, defendants' post-trial submissions barely cited to any legal authority. Nor did they cite to the trial transcript to support their evidentiary arguments. Folks, if you want to win your motion, you'll have to do better than that. 

Supreme Court strikes down federal vaccine mandate for large employers

This is one of the rare administrative law cases that makes the front page and affects everybody. The Supreme Court has ruled that OSHA exceeded its authority in requiring about 84 million workers to get the COVID vaccine (or take a weekly medical test and wear a mask).

The case is National Federation of Independent Business v. Department of Labor, issued on January 13, only one week after oral argument. The Occupational Safety and Health Administration issued this mandate in November 2021. OSHA has authority to issue rules governing workplace safety, but the OSHA statute cabins that authority as follows: the agency is mandated to "deal[] with occupational  safety and health problems,” and it is empowered to issue “mandatory occupational safety and health standards applicable to businesses.” OSHA can also issue “an emergency temporary standard to take immediate effect . . . if [the agency] determines (A) that employees are exposed to grave danger from exposure to substances or agents determined to be toxic or physically harmful or from new hazards, and (B) that such emergency standard is necessary to protect employees from such danger.”

The 6-3 majority (all appointed by Republican presidents) rules that the vaccine mandate for businesses employing more than 100 persons exceeds OSHA's authority because "this is no 'everyday exercise of federal power.'" Rather it is "a significant encroachment into the lives -- and health -- of a vast number of employees." So the Court starts off with a "big picture" approach: a huge mandate like this needs clear statutory authority which the agency does not have. While the OSHA law empowers the agency to set workplace safety standards that affect people at work, such as internal safety rules, this is a broad public health measure. While COVID is a risk that occurs in many workplaces, the Court holds, it spreads elsewhere: at home, during sporting events and wherever else people gather. "That kind of universal risk is no different from the day-to-day dangers that all face from crime, air pollution, or any number of communicable diseases." The Court adds, "permitting OSHA to regulate the hazards of daily life—simply because most Americans have jobs and face those same risks while on the clock—would significantly expand OSHA’s regulatory authority without clear congressional authorization."

There are many ways to interpret a federal statute, which is why most cases reach the Supreme Court in the first place: lower court judges see things differently. The same holds true for Supreme Court justices. The three dissenters (all appointed by Democratic presidents) parse the OSHA statute, concluding that COVID is in fact a "new hazard" and a "physically harmful" agent that poses a "grave danger" to millions of employees who can catch the virus at work. Justice Kagan provides the latest death statistics on this point. So, while the mandate affects people outside the workplace, as the vaccine also affects you after you punch out for the day, it remains a workplace safety rule, Kagan writes, the product of OSHA research showing that close contact among workers can spread the virus. She sums up: "the [majority] argues that OSHA cannot keep workplaces safe from COVID–19 because  the  agency  (as it readily acknowledges) has no power to address the disease outside the work setting.
But nothing in the Act’s text supports the majority’s limitation on OSHA’s regulatory authority."

In a related case, a 5-4 Court majority did uphold the vaccine mandate for employees working in federally-funded health facilities. That case also came down on January 13. It involves a different set of statutes, having nothing to do with OSHA. In this case, Biden v. Missouri, the Court analyzed the Medicare/Medicaid statute, which provides federal money to health facilities provided they comply with certain requirements. In this instant, staff must be vaccinated (unless they have a medical or religious exemption). The Secretary of Health and Human Services can impose a mandate like this if it finds the mandate is "necessary in the interest of the health and safety of the individuals who are furnished services." The three Democratic appointees voted with the majority, which includes Chief Justice Roberts and Justice Kavanaugh. Justices Thomas, Gorsuch, Alito and Barrett dissent.

$14.7 million verdict is thrown out because of jury problem

This personal injury case went to trial in New York County. After the jury found the New York Transit Authority was liable for the plaintiff's injuries, a separate trial was held on damages. The jury awarded $14.7 million dollars. There will have to be a new trial on damages because something went wrong in the process involving an alternate juror.

The case is Caldwell v. New York City Transit Auth., a Second Department decision issued on December 29. A terrible new year for the plaintiff and her trial attorneys. What happened was that, after the jury began deliberating, one juror had to leave, so the trial court had an alternate juror take his place. When the jurors reached a verdict on damages, they were polled (where each juror stands up and publicly announces agreement with the verdict). "After reading the verdict, the Supreme Court thanked the jury and was about to discharge the jurors when defense counsel interjected with a request that the jurors be polled. Polling revealed that the announced verdict included the votes of the discharged juror as to questions one through four, and that the substituted juror only voted on questions five and six. As to questions one through four, the substituted juror was 'not there.'" 

In other words, the jury did not start its deliberations all over again when the alternate juror because a real juror. Instead, the jury kept the votes of the original (but dismissed juror) and wrapped up deliberations with the new juror. So the verdict was actually the product of two different juries.

The CPLR says that "where the parties to a civil case have not agreed to a trial by fewer than six jurors, a valid verdict requires that all six jurors participate in the underlying deliberations The parties are entitled to a process in which each juror deliberates on all issues and attempts to influence with his or her individual judgment and persuasion the reasoning of the other five." In this case, the alternate juror did not deliberate on all the issues relating to damages. That violates the fundamental rule detailed above. It also violates the rule that a losing party has the right to have the jury polled on the verdict. Without the original juror present (who deliberated and ruled on some of the damages issues), there was no such poll. A verdict sheet is no substitute for the poll. Here is the rule the Second Department articulates, having analyzed the statutes governing issues like this:

we hold that to reconcile CPLR 4106 with the constitutional right to a civil jury trial, a trial court permitting, upon adequate inquiry, a substitution of a regular juror with an alternate juror once deliberations have begun, must instruct the jury: (1) that one of its members has been discharged and replaced with an alternate juror as provided by law; (2) that the parties are entitled to a verdict reached only after full participation of the six jurors who will ultimately return the verdict; and (3) in order to assure the parties of that right, the jury must start their deliberations on each issue from the beginning, and must set aside and disregard all past deliberations. Further, where the trial court has provided the jury with a verdict sheet, the court should substitute it with a clean verdict sheet in order to ensure that past deliberations do not infect the new deliberation process.

A new trial on damages is warranted because "[t]he Supreme Court's failure to give the jury an instruction, inter alia, to begin deliberations anew resulted in an invalid verdict that included the votes of the discharged juror, and did not include votes of the juror who replaced him."

Split ruling awards Social Security benefits to disabled worker

You can receive disability insurance benefits under the Social Security Act if you suffer a physical or workplace injury and cannot perform any long-lasting substantial gainful activity. The plaintiff in this case suffered a serious workplace injury in her capacity as a school teacher, breaking up a fight among two students, sending her to the ER with a serious head injury, pain in her upper back, nausea, and tingling in her fingers. While this pain was persistent over a number of years, an administrative law judge denied her benefit application. The Court of Appeals reverses and the plaintiff wins.

The case is Colgan v. Kijakazi, issued on January 3. The ALJ ruled against plaintiff because he identified many sedentary jobs in the national economy that plaintiff was able to perform in light of her age, education, and work experience. This is called a RFC assessment, short for residual functional capacity. While plaintiff's expert said she cannot work sedentary jobs because she has suffered debilitating headaches that would last for several hours each day and that her injuries were permanent and her chronic fatigue would interfere with her ability to perform job-related duties, the ALJ rejected that opinion, triggering this appeal.

The Court of Appeals (Calabresi and Walker) says that, while the "substantial evidence" threshold gives ALJ's great deference in resolving these disputes, the medical opinion of the claimant's doctor must be given "controlling weight" if it is "well-supported by medically acceptable clinical and laboratory diagnostic techniques and is not inconsistent with the other substantial evidence" in the record. The Court finds that plaintiff's doctor's opinion was well-supported and reasonable, and the ALJ improperly rejected that medical opinion. It is not enough to say the doctor's opinion may be rejected because she simply checked off a box on relevant form. Moreover, the doctor's check-box was well supported by voluminous medical records in the course of the doctor's medical treatment of claimant. 

Judge Menashi dissents, finding that the ALJ had a basis to find the doctor's opinion lacked a supportive rationale and was not well-explained. While the doctor did not provide a sufficient rationale for her opinion, the Court "attempts to supply one on appeal," Judge Menashi says, stating further that while the Commissioner of Social Security has final responsibility for determining eligibility for these benefits, "these regulations would mean little if a conclusory check mark, devoid of reasoning, must receive 'controlling deference' that supplants the agency's well-explained judgment" against the receipt of benefits. 

Annoying fax survey does not violate law against annoying fax adverstisements

I've noticed a fair number of cases in the Second Circuit dealing with unwanted fax messages and the Telephone Consumer Protection Act of 1991. You can sue over these unwanted faxes, but the real money is in class actions. This is one of those cases, but there is no case, and thus no class action. Just a recycling bin filled with annoying faxes that no one asked for.

The case is Katz v. Focus Forward, LLP, issued on January 6. The TCPA says you cannot send unsolicited fax advertisements, defined as "any material advertising the commercial availability or quality of any property, goods, or services." You also can't fax surveys that serve as a pretext to an advertisement. The survey part of the statute was enacted in 2006, no doubt to fill a loophole that the fax offenders had been exploiting for fun and profit. 

The fax in this case was a survey stating the Focus Forward outfit was conducting a market research survey, offering $150.00 for the recipient's participation in a 45-minute telephone interview. The faxes are attached as appendices to the Second Circuit opinion; they do not appear to be advertising any service or product so far as I can tell. Indeed, Focus Forward is a market research company. It is not clear if they are selling anything else. Two of these faxes were sent to Katz, a dentist. 

Do these faxes violate the TCPA? The Court of Appeals (Cabranes, Lohier and Lee) says they do not. This is a case of first impression in the Second Circuit, but the Third Circuit has already resolved this issue in a similar case, finding that these faxes do in fact violate the statute. The Second Circuit disagrees with the Third Circuit's analysis, creating a clear Circuit conflict which the U.S. Supreme Court will love to resolve. 

The Third Circuit says the faxes violate the statute because offering money in exchange for participation in a market survey is a commercial transaction, and that therefore "a fax highlighting the availability of that transaction is an advertisement under the TCPA." The Second Circuit sees it differently, finding that the faxes are not really advertising property, goods, or services. "Faxes that seek a recipient's participation in a survey plainly do not advertise the availability of any one of those three things" and thus are not "advertisements" under the TCPA. 

Murder conviction upheld even though trial lawyer admitted he provided ineffective representation

I love this case because I would imagine the appellate judges could not believe what they were reading in the record as they decided whether to overturn a murder conviction because the defense lawyer admitted that his representation was incompetent. But while the lawyer dropped the ball six ways to Sunday, the conviction is affirmed. 

The case is People v. Graham, decided by the Appellate Division on December 16. Here is the tablesetter for the ruling:

In this appeal from a murder conviction, we are confronted with the unusual situation where defense counsel admitted his own ineffectiveness in failing to properly investigate and prepare this murder case for trial. Notably, counsel stated to the motion court that he filed a late alibi notice due to his incompetence and his putative belief that the statutory deadlines would not be enforced; his personal problems (which, while serious, did not account for his years of inactivity on this case); and his trial schedule. Yet, after setting forth his own ineffectiveness, counsel declined to withdraw from representation, essentially arguing that his expertise as a trial lawyer trumped his missteps. 

While the lawyer was assigned the case in February 2012, he did not meet with his client until March 2014, and he not only did not investigate the case, he did not articulate any reasonable trial strategy for this omission. Instead, a few weeks prior to trials like this, he asks his clients to tell him what happened. Nor did he investigate any possible alibi to show that someone else had committed the crime. When the trial court found out about this negligence, it conducted a hearing to get to the bottom of this. Here is how the First Department summarizes what happened at the hearing. I know that no one likes to read block quotes, but please read this closely:

He explained that if the late alibi was permitted his client should continue with his representation because he had a “reputation that’s impeccable as a trial attorney” in practice for 25 to 30 years, was in “Forbes Magazine” and “represented many, many famous people, and the New York Mets.” After asserting that he was “humble,” he stressed that his “expertise is trial work.” According to counsel, “being off my game is twenty times better than any other 18B lawyer.” He also characterized the motion court’s concern regarding his effectiveness as “aggravation,” something which he had “never been put through” given his stellar reputation.

Can you believe this guy? I looked through the docket to find out his name, but it is nowhere to be found. Anyway, this bluster is not enough to grant the defendant a new trial because, the Court finds, there was enough evidence to convict him in any event, and ineffective assistance of counsel claims on appeal cannot win unless you can show the lawyer's negligence deprived you of a fair trial. It looks like Mr. Wonderful did a good job at trial once he put his mind to the case, vigorously cross-examining the prosecution's witnesses, moving to suppress his client's post-arrest statements, and twice seeking a mistrial based on the testimony of one witness. So while trial counsel could have done a much better job in preparing for trial instead of reading his press clippings, the conviction stands. And that, ladies and gentleman, tells us how difficult it is to win an ineffective assistance of counsel appeal. 

 

CPLR 205(a): how far will it take us?

New York litigators are familiar with CPLR 205(a), which says that, under certain conditions, you can refile a lawsuit within 6 months after the case was dismissed.  The statute contains some clear language about when you can keep filing the same case. This issue has never arisen until now. This case is dismissed.

The case is Ray v. Ray, issued on December 27. The dispute involves a hedge fund and a divorce. The timeline here is crucial. The first lawsuit was filed in 2010 and 2014, both of which alleged the defendant had fraudulently conveyed money to avoid certain obligations. Those cases were dismissed by State Supreme Court, and the Appellate Division affirmed. In 2018, a third fraudulent convenience lawsuit was filed, this time in federal court, alleging the same facts as the prior cases. The trial court said the case was timely even though the events took place more than six years earlier, because Section 205 allowed plaintiff to file a new case in six months after the Appellate Division had ruled on the last case. The 2018 case was dismissed for failure to state a claim, however. Plaintiff then sued his ex-wife again in 2020 in state court, but the case was removed to federal court. This was also a fraudulent conveyance suit. This case got dismissed on statute of limitations grounds, over plaintiff's objection that Section 205 gave him another six months to file after the 2018 case was dismissed. The issue is whether the 2020 case can proceed under Section 205.

How far will Section 205 allow a plaintiff like this to continue invoking the six month statute of limitations triggered by the last case dismissal? As the Court of Appeals framed the issue at the start of the opinion, "Does section 205(a) . . . permit a litigant to file an otherwise untimely "new action" within six months of a prior action, where that "prior action" was, itself, only made timely by a previous application of section 205(a)?" 

Situations like this may seem uncommon, but all litigators are worried about losing a case on statutes of limitations grounds, so this ruling may be cited in the future more often than you think. While new issues involving the CPLR may be sent to the New York State Court of Appeals to issue a definitive ruling to guide the Second Circuit, which usually does not want to resolve matters of first impression under state law, the Second Circuit decides this issue in the first instance, determining that the plain language of Section 205 answers the questions definitively. 

The Second Circuit finds that "by its own terms, section 205(a) can only be applied "provided that the new action would have been timely commenced at the time of commence of the prior action." This means that the 2020 action is the "new action" under the statute. The "prior action" was the 2018 case. For that angle, the 2020 action would not have been timely commenced when the 2018 case was commenced. Had the 2020 case been commenced in 2018, that would have been nearly nine years since the alleged fraudulent transfers. That would be untimely.

Slip and fall case (with Nixonian footnote) will go to the jury

One of the great legal minds in the United States on tort liability is Guido Calabresi, former Dean of Yale Law School who has been sitting on the Second Circuit Court of Appeals since 1995. So when a traditional torts claim comes before him, I imagine that Judge Calabresi dives right in. In this case, the Second Circuit reverses summary judgment in favor of the U.S. government on a torts claims and remands the case for trial.

The case is Borley v. United States, issued on December 28. The plaintiff fell and hurt herself at at U.S. military commissary on Long Island. She got hurt because the emergency doors at the facility had a low metal bar along the ground that she tripped over. These were not the doors that people were supposed to use when entering and exiting the commissary. But they would open and close on their own if, by way of example, customers pushed their shopping carts against them. The warnings about the metal bar were not readily visible. While plaintiff's lawyer argued that it was foreseeable that this notice defect might cause someone to get hurt, the trial court granted the government's motion for summary judgment. The Court of Appeals (Calabresi, Lohier and Walker) reverses. 

Law students are told on the first day of torts class that torts liability turns on the following issues: duty, breach, causation, and harm. If you breach a duty of care to a foreseeable plaintiff, and that breach of duty causes her some harm, then you are on the hook for torts liability. This case asks whether the jury may find in plaintiff's favor on the "duty" issue. Did the commissary fail to show due care to customers by maintaining its premises in a reasonably safe condition? 

Judge Calabresi drops a long and scholarly footnote on the issue of whether it is appropriate for a court to decide the "breach of duty" question as a matter of law and whether it should be left for the jury. You can expect footnotes like this when the opinion-writer is a torts expert and thinks about these issues all the time, whether he is on the bench or taking out the garbage or shooting the bull with other torts scholars. Since you will probably not read the footnote, I can tell you that Judge Calabresi notes that many scholars (including a young Richard Milhous Nixon, decades before he stopped caring about complying with accepted legal principles and standards) think judges should resolve the "breach of duty" question on their own. But this footnote further notes that the torts-world has largely rejected that view. The opinion as a whole provides further discussion on other torts-related principles.

We're going to impanel a jury for this case, folks, as New York law largely leaves these issues to the conscience of the community, not a judge. The Court of Appeals finds a jury could find that the commissary could have taken better care to protect customers like the plaintiff in this case.