Adequate Notice under Fair Debt Collection Practices Act

In Carlin v. Davidson Fink, the defendant, a law firm engaged in, among other things, the business of debt collection and foreclosure actions, commenced a foreclosure action against the plaintiff.  The defendant attached to the complaint a "Notice Required by the Fair Debt Collection Practices Act," which stated that the debt set out in the complaint will deemed to be valid unless the plaintiff disputed it within 30 days of receipt of the Notice.

On July 12, 2013, The plaintiff sent a letter to the defendant within the 30-day period disputing the validity of the debt and requesting a verification of the dollar amount of the the purported debt.

On August 9, 2013, the defendant complied, but stated that the amount provided included certain fees that were not yet due, and that if the amount was paid and any of those fees did not actually become due, such fees would be refunded.

The Fair Debt Collection Practices Act requires that within five days of an initial communication with a consumer, a debt collector has to provide a written notice containing, among other things, the amount of the debt.

The action was brought because plaintiff claimed that the defendant had not complied with that requirement.  The defendant moved to dismiss.the action, which motion was denied, but on a motion for reconsideration, the court dismissed the action.  The plaintiff appealed.  The two questions at issue was which document was the initial communication, and whether the notice had been provided.

The Court first held that the complaint was not the initial communication.  The Second Circuit had previously held that a complaint could be an initial communication, but the statute had been amended to eliminate a pleading as an initial communication.

The plaintiff's letter was not an initial communication because an initial communication under the statute was one sent by the debt collector to the consumer.

The Court held that the defendant's August 9, 2013 letter to the plaintiff was the initial communication.

The Court then held that the notice contained in the letter did not comply with the statute because because it "d[id] not specify what the 'estimated fees, costs,  [and] additional payments' are."  The Court stated that "[w]e do not hold that a debt collector may never satisfy its obligation under [the statute] by providing a payoff statement that provides an amount due, including expected fees and costs.  But a statement is incomplete where, as here, it omits information allowing the least sophisticated consumer to determine the minimum amount she owes at the time of the notice, what she will need to pay to resolve the debt at any given moment in the future, and an explanation of any fees and interest that will cause the balance to increase."

The Court acknowledged that the defendant's notice may be common in the debt collection interest, but stated that the Fair Debt Collection Practices Act "does not insulate a debt collector from liability merely because others in the industry engage in the same practice."

The Court vacated the order and judgment of the District Court and remanded the case for further proceedings.

The decision in this appeal can be found here.

No Common Law Right of Public Performance for Creators of Pre-1972 Sound Recordings

A decision in Flo & Eddie, Inc. v. Sirius XM Radio, Inc has come down.

The plaintiff, which claim to own the rights to the recordings of "The Turtles," a well-known band with a string of hits in the 1960s, sued Sirius XM Radio, Inc., a radio and internet-radio broadcaster, claiming that Sirius infringed on the plaintiff's copyright in The Turtle's recordings.  On a motion for summary judgment, Sirius claimed that there was no public performance rights in pre-1972 recordings under New York law and that if such a right existed, it violated the Dormant Commerce Clause.

The District Court held that there was such a right and that it did not violate the Dormant Commerce Clause.  Sirius then moved for reconsideration or to certify its order for interlocutory appeal.  The Court denied the motion for reconsideration, but certified both the summary judgment and reconsideration orders for immediate appeal.

On appeal, the Second Circuit decided that there was an unclear issue of state law that should be decided by the New York State Court of Appeals -- whether there is a right of public performance for creators of pre-1972 sound recordings.

On December 20, 2016, the Court of Appeals held that New York common law does not recognize such a right.

Based on this finding, the Second Circuit reversed the District Court's order denying summary judgment and remanded the case to the District Court with instruction to grant Sirius's motion for summary judgment and to dismiss the case with prejudice.

The New York State Court of Appeal's decision can be found here.  The Second Circuit's decision can be found here.

FMLA -- Obligation on Employer to Ask for Information to Determine whether Employee is Entitled to Relief

In Coutard v. Municipal Credit Union, the District Court dismissed a claim brought by an employee under the Family Medical Leave Act in which the employee claimed that the employer denied him leave to care for his grandfather.  The District Court held that the failure of the employee that he was in a loco parentis relationship with his grandfather doomed his claim.  The Second Circuit reversed, holding that the employer had an obligation to specify any additional information that it needed in order to determine whether plaintiff was entitled to such leave and remanded the case to the District Court for further proceedings.  The plaintiff had asked the Court to grant him partial summary judgment, but the Second Circuit declined to do so.  Even though it held that his claim should be dismissed on failure to give proper notice grounds did not establish as a matter of law that he was entitled to the relief he sought.

A copy of the decision can be found here.

Special Education Case -- "Clear Consensus"

The Second Circuit, in A.M. v. New York City Department of Education, held that where the school district developed an Individualized Education Program ("IEP") for an autistic child, that was against the clear consensus of the substance of the evaluative materials present at the IEP meeting of the Committee on Special Education ("CSE"), such IEP failed to provide the child  with a free, appropriate public education under the Individuals with Disabilities Act.  In so holding, the Court vacated the decision of the District Court and remanded the case for a determination as to whether the placement that the parents had made was appropriate and that equitable considerations favor reimbursement for the sum that the parents had to pay for that placement.

In A.M., the evidence before the CSE showed that A.M. needed intense applied behavior analysis therapy.  The school district had declined to provide for such therapy in the IEP.

A copy of the Court's decision in this case can be found here.

Certified Question on Punitive Damages in Cases under New York City Human Rights Law

What is the standard for assessing punitive damages in a pregnancy discrimination under the New York City Human Rights Law?.  The law itself doesn't set a standard, so the district judge in Chauca v. Abraham, borrowed the standard  from the standard under the federal Title VII and based on that standard declined to give a punitive damages instruction to the jury.  On appeal, the plaintiff contended that this was error because the Human Rights Law should be construed liberally and independently of federal law.  Because there is no controlling New York precedent setting the standard and because that standard is an important issue of state law, the Second Circuit certified a question to the New York State Court of Appeals, asking it to decide as follows:

What is the standard for finding a defendant liable for punitive damages under the New York City Human Rights Law, N.Y.C. Admin. Code § 8‐502?

The decision in Chauca can be found here.

Clear and Unmistakable.

The Second Circuit has reiterated its holding that if a contract agreement provides for arbitration for discrimination claims does not include statutory claims unless the contract's language is clear and unmistakable that such statutory claims are included.  The contract at issue in Winston Lawrence v. Sol G Atlas Realty Co. did not meet this standard.  While the contract stated that discrimination was prohibited and that any violation of the anti-discrimination provision were subject to arbitration.  Because nothing was stated as to claims  under anti-discriminatory statutes, the Court held that the contract did not clearly and unmistakably require such statutory claims be resolved in arbitration.  Accordingly, the District Court's decision sending the case to arbitration and dismissing the action was vacated and the case was remanded for further proceedings.  The Court noted that its decision was in concert with decisions of other circuits that have addressed the issue.

The decision in this case can be found here.

Post - Release Supervision

The New York State Legislature amended the sentencing scheme for violent felons to require that every sentence for a violent felony must be followed by a post-release supervision ("PRS") term.  Some judges.however did not pronounce PRS terms during sentencing proceedings  As a result, certain inmates entered the custody of the Department of Correctional Services ("DOCS") with sentence and commitment orders that did not include PRS terms required by the statute.  Instead of bringing the failure to the attention of the sentencing court, DOCS simply added the PRS term administratively.

This policy was challenged in Earley v. Murray, in which the Second Circuit held that policy was unconstitutional and that the administratively added-on PRS terms were a nullity because that term had not be imposed by a judge.  The Office of Court Administration of New York took the position that the Second Circuit's decision in Earley was not binding on state court and issued a memorandum to judges expressing this view, but urged courts to pronounce PRS terms going forward until the New York State Court of Appeals had the opportunity to rule on this issue.

The New York courts were inconsistent in adhering to to Earley.  The New York State Court of Appeals ruled on the issue in People v. Sparber and Garner v. New York State Department of Correctional Services, holding that New York state law required teh judge to pronounce teh term of PRS orally at sentencing if it was to be included in an inmate's sentence, but did not address whether this rule was also required by the Constitution.

The plaintiffs in Betances v. Fischer were offenders who were subject to mandatory PRS terms and who alleged the DOCS,rather than the sentencing judges, had imposed the PRS terms.  They sought compensatory damages for this violation of their constitutional rights.  The defendants, state officials of DOCS and the Department of Parole, moved to dismiss, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.  The district court denied the motion, and the Second Circuit affirmed, remanding the case to the district court for further proceedings.  In its remand, the Second Circuit directed the district court to develop the record as to objective reasonableness of defendants' efforts to relieve the plaintiffs of the burdens of those unlawfully imposed PRS  terms after the defendants know it had been ruled that the imposition violated federal law.

On remand, the district court granted plaintiffs' motion to certify the case as a class action, and after the parties had cross-moved for summary judgment, denied the defendants' motion for summary judgment on the basis of qualified immunity and granted plaintiffs' cross-motion for summary judgment holding the defendants' personally liable.

After  the defendants had filed a notice of appeal, but before their brief was filed, the district court granted plaintiffs' motion to deem the appeal frivolous, which would have enabled the district court to retain jurisdiction and proceed with a trial on damages notwithstanding the trial.  The defendants' moved for a stay, and the Second Circuit stayed the proceedings in the district court pending the appeal.

The Second Circuit held that the defendants were not entitled to qualified immunity because they were aware of the holding of Earley and had not taking objectively reasonable steps to comply with the case.  Indeed, the Court was not sure that the defendants would ever have complied had it not been for the actions of the New York State Court of Appeals.

The decision of the Second Circuit in Betances v. Fischer can be found here.

A disability is not a disability is not a disability

The question presented in this case is whether being disabled for purposes of the Individuals with Disabilities Education Act ("IDEA") categorically qualifies and individual as having a disability under the Americans with Disabilities Act ("ADA") and Section 504 of the Rehabilitation Act ("Section 504").

The plaintiffs in B.C. v. Mount Vernon School Dist. are high school students with disabilities under IDEA (actually the plaintiffs were the students' parents, but it amounts to the same thing).  Their schools had placed them in AIS remedial classes for which academic credit was not given.  As a result at the end of the school year, they did not have enough credits to graduate to the next grade.  Both students ultimately graduated from high school.

The plaintiffs brought suit in federal court under the ADA and Section 504, claiming that the Mount Vernon School District's policy of scheduling the AIS classes during school hours disparately impacted students with disabilities.  The school district moved for summary judgment, asserting that the plaintiffs should have exhausted their claims through the administrative process under the IDEA before raising these claims in federal court.  The plaintiffs claimed that they were excused from the exhaustion requirement of IDEA because their claims challenged a district-wide policy of discrimination and exhausting administrative remedies with respect to the district's framework and procedures would have been futile.

The District Court accepted the plaintiffs argument that they fall within the "futility" exception to the IDEA exhaustion requirement because they were challenging a district-wide policy.

The District Court granted the district's motion for summary judgment, stating that the plaintiffs' disparate impact evidence only showed the the district's policy only had a disparate impact on students with a disability under IDEA, not under ADA and Section 504, which defines "disability" differently.

The Second Circuit affirmed.  The plaintiffs statistical evidence only showed that district's policy only had a disparate impact on individuals with a disability under IDEA.  It is only if , as a matter of law, a child with a disability under the IDEA necessarily qualifies as an individual with a disability under ADA or Section 504.

ADA and Section 504 define  "disability" as a "physical or mental impairment that substantially limits one or more major life activities."  By contrast, under IDEA, a "child with a disability" has one or more of an enumerated list of impairments requiring "special education or related service."  Hence, a student could have a disability that requires special education or related services without it substantially limiting one or more major life activities.  The Court held that the plaintiffs' position, in effect, read the ADA's substantial limitation requirement out of the statute.  The Court, while acknowledging that many students who qualify for special education or related services under IDEA might also qualify under ADA and Section 504, that is not always the case.  Other circuits have similarly held.

The Second Circuit's decision can be found here.

Plausible Malice

The Court, in Biro v. Conde Nast held that a defamation claim made by a limited purpose public figure, the plaintiff must plead sufficient facts to demonstrate that the required allegation of actual malice is plausible.  In this case, the Second Circuit, in affirming the decision of the District Court, held that the plaintiff had not made any adequate showing of plausibility with respect to actual malice.

The decision in this case can be found here.

Judge Cardamone dies

Former Judge Richard J. Cardamone died at age 90 on October 16, 2015.

Post-garnishment residual wages -- Certified to Connecticut Supreme Court

The Second Circuit has certified the following question to the Connecticut Supreme Court:

Do Conn. Gen. Stat. sections 52-361a and 52-367b, read together, exempt post-garnishment residual wages held in a third-party's bank account from further execution, so that the become freely transferable under the Connecticut Uniform Fraudulent Transfer Act, Conn. Gen. Stat. section 52-552a et seq.?

This question arose under the following facts:

The Appellants owes more than $3,000,000 to the Appellee with respect to two state court judgments.  The Appellant transferred to his wife (also an appellant) more than $300,000 by depositing his wages into her bank account.  During part of this period, the appellee and another judgment creditor garnished appellee's wages.

The Appellee sued the Appellants to recover those transfers.  Both parties moved for summary judgment and the District Court ruled in favor of the Appellee, answering the above-cited question in the negative..  The Appellants appealed.

The Second Circuit stated: "Although [the District Court's" well-reasoned opinion accords with an earlier District of Connecticut decision and one Superior Court opinion, the weight of state authority -- including two Superior Court cases, an opinion of the state Attorney General, and a Judicial Branch form -- has adopted the contrary view."

Because the uncertainty of the state law, the Second Circuit certified the question to the Connecicut Supreme Court.

The decision in The Cadle Co. v. Fletcher can be found here.

Vaccination

The Second Circuit has held that it is within the State's police power to require children to be vaccinated in order to attend public school and that such a requirement does not violate the First Amendment or other constitutional rights.

Citing Supreme Court precedent, the Second Circuit held that the right to practice religion freely does not include liberty to expose the community or the child to communicable disease or the latter to ill
health or death.

The Second Circuit further held that the Supreme Court had held in 1905 that a compulsory vaccination law was not a violation of substantive due process.

The Court also held that the plaintiffs had not made a showing of any violation of the Equal Protection clause of the Constitution.

Finally, the Court held that the Ninth Amendment was not a source of individual rights, and, accordingly, the plaintiffs claim under that amendment could not stand.

The decision is Phillips v. City of New York can be found here.

Repudiating arbitration agreements

The Second Circuit has held that, pursuant to 13 U.S.C. 1787(c), the Nation Credit Union Administrative Board ("NCUA") may repudiate the contract of a credit union that it is liquidating, including any arbitration clauise.

In National Credit Union Administration Board v. Goldman, Sachs & Co., NCUA brought a lawsuit against Goldman, Sachs on behalf of a credit unit that it was liquidating.  Goldman Sachs sought to arbitrate the claims, pursuant to a Cash Account Agreement that contained an arbitration clause.  The NCUA repudiated the agreement and claimed that it was not obligated to arbitrate.

Goldman Sachs claimed that the NCUA's repudiation of a contract is equivalent to that of a trustee in bankruptcy, and that, pursuant to Second Circuit precedent, a trustee in bankruptcy cannot repudiate an arbitration clause.  The Second Circuit, however, held that its prior precedent does not hold that a bankruptcy trustee may not reject an arbitration agreement or clause.

Goldman Sachs further argued that, under common law, a repudiation of an agreement constitutes a breach, and a breaching party is still bound by the contract.  The Second Circuit held that the common law was inapplicable because the statute gave the NCUA the right to repudiate.

Finally, Goldman, Sachs argued that repudiation does not apply to purely procedural provisions of the contract, and, accordingly, the arbitration clause was not enforceable.  The Second Circuit, while not acknowledging that arbitration agreement are "purely procedural," held that Goldman, Sachs had shown neither reason nor authority supporting the proposition that arbitration agreements should be excluded from the NCUA's repudiation power.

The decision can be found here.

Foreign Securities

The Second Circuit as  a matter  of first impression, considered whether the bar on extraterritorial application of the United States securities laws, as set forth in Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010), precludes claims arising out of foreign‐issued securities  purchased  on  foreign  exchanges,  but  cross‐listed  on  a domestic exchange.  It concluded that federal courts had no jurisdiction to consider such claims under the Securities and Exchange Act of 1934.

The decision in City of Pontiac Policeman's and Fireman's Retirement System v. UBS AG can be found here.

Penal Law Rule

In an interpleader action brought by the United States, the District Court granted summary judgment to Brazil, one of the parties who claimed entitlement to certain funds, holding that Brazil was entitled to the funds under a Brazilian forfeiture law, which was grounded in Brazil criminal law.  The other parties seeking the money claimed that summary judgment was not appropriate in that enforcement of the forfeiture law violated the common law penal law rule under which a country will not enforce the penal laws of another country.  On appeal, the Second Circuit held that summary judgment had been improperly granted based on the penal law rule, however, it also held that because Brazil was seeking assistance from the United States Attorney General in enforcing its forfeiture judgment, pursuant to 28 U.S.C. 2467, the District Court should allow Brazil and the Attorney General time to complete this process before taking further action in the case.

The decision in United States v. The Federative Republic of Brazil can be found here.

Charbucks

The Second Circuit upheld the decision of the District Court and held that a company's use of its "Mr. Charbucks" and "Charbucks Blend" trademarks is not likely to dilute by blurring Starbuck's trademarks.

The decision in Starbucks Corp. v. Wolfe's Borough Coffee, Inc. can be found here.

Statutes of Limitations in CERCLA Actions

If the State brings a remedial action -- that is, measures to permanently remediate hazardous wastes --   under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), the statute of limitations begins to run by the commencement of cleanup construction.  If a State brings a removal action -- that is, measures taken to address immediate threats to public health -- the statute of limitations begins to run at the completion of the removal action.

In State of New York v. Next Millenium Realty, LLC, a case involving pollution emanating from the New Cassel Industrial Area in the Town of Hempstead, the District Court had held that the action was a remedial action, and granted summary judgment to the defendants, claiming that the limitations period had run.  The Second Circuit disagreed, holding that it was a removal action and that because the removal action was not complete, the statute had not even begun to run.  The Court found that the actions taken by the state were taken to address an immediate threat to public health and did not permanently remediate the environmental problem at issue.  Hence, the case was not time barred.

The decision in this case can be found here.

Sanctions

An attorney who informed the Court that her client had asserted a gender discrimination case when he had not, and who was sanctioned sua sponte by the District Court got a break from the Second Circuit.    When a Court sanctions Rule 11 sanctions sua sponte, the standard is different.  When a party moves for Rule 11 sanctions, the standard as to whether sanctions should be imposed is the subjective unreasonableness of the attorney's conduct.  However, because a sua sponte decision to sanction an attorney under Rule 11 does not provide the 21-day safe harbor protection, which allows the attorney to correct his or her conduct, the standard is different.  The Second Circuit has held that the standard is subjective bad faith.  The Court found that the record could not support a finding of bad faith and reversed and vacated the District Court's decision imposing sanctions.

The decision in Muhammad v. Walmart Stores East, L.P. can be found here.

Senior Judge Joseph McLaughlin

Second Circuit Senior Judge Joseph McLaughlin died on August 8, 2013 at age 80.  The Judge was appointed to the bench by Ronald Reagan in 1981 as a district judge of the Eastern District of New York and was elevated to the Second Circuit by George H.W. Bush.

More certified questions -- Turnover order

The Second Circuit has certified two questions to the New York Court of Appeals. The questions are:

(1) May a court issue a turnover order pursuant to N.Y. CPLR § 5225(b) to an entity that does  not have actual possession or custody of a debtor’s assets, but whose subsidiary might  have possession or custody of such assets?

(2) If the answer to the above question is in the affirmative, what factual considerations
should a court take into account in determining whether the issuance of such an order is
 permissible?

The decision in Commonwealth of the Northern Marina Islands v. Canadian Imperial Bank of Commerce can be found here.