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Subpoena Which Could Result In Compelling a New York Reporter to Reveal Her Sources in an Out-of-State Proceeding Should Not Have Been Issued by a New York Court

In a full-fledged opinion by Judge Graffeo, with three dissenting judges, the Court of Appeals reversed the Appellate Division and held that a New York reporter (Winter) could not be subpoenaed to testify in Colorado.  Under Colorado law, it was likely the reporter would have been compelled to reveal her sources for a story about a notebook provided by James Holmes to his psychiatrist.  Holmes was the shooter in a mass shooting in a movie theater in Aurora, Colorado, during a midnight showing of a “Batman” movie.  The court determined that the public policy underlying New York’s Shield Law would be violated if the subpoena were issued and, therefore, issuance of the subpoena was prohibited:

…New York public policy as embodied in the Constitution and our current statutory scheme provides a mantle of protection for those who gather and report the news — and their confidential sources — that has been recognized as the strongest in the nation.  And safeguarding the anonymity of those who provide information in confidence is perhaps the core principle of New York’s journalistic privilege, as is evident from our colonial tradition, the constitutional text and the legislative history of the Shield Law.  * * *

It is therefore evident based on the New York Constitution, the Shield Law and our precedent that a New York court could not compel Winter to reveal the identity of the sources that supplied information to her in relation to her online news article about Holmes’ notebook.  Holmes does not argue otherwise but relies on our decision in Matter of Codey (Capital Cities, Am. Broadcasting Corp.) (supra, 82 NY2d 521) for the proposition that, when New York functions as the “sending state” in relation to a CPL 640.10(2) application, issues concerning testimonial privilege — including the applicability of the absolute privilege afforded by the Shield Law — simply cannot be considered by a New York court.  …

CPL 640.10(2) is New York’s codification of the Uniform Act to Secure the Attendance of Witnesses From Without a State in Criminal Proceedings, which has been adopted by all 50 states. * * *

We … conclude that an order from a New York court directing a reporter to appear in another state where, as here, there is a substantial likelihood that she will be compelled to identify sources who have been promised confidentiality would offend our strong public policy — a common law, statutory and constitutional tradition that has played a significant role in this State becoming the media capital of the country if not the world.  Matter of Holmes v Winter, 245, CtApp 12-10-13

 

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Failure to Provide Pre-Restraint Notice to a Judgment Debtor as Required by the Exempt Income Protection Act Violates Due Process

In a full-fledged opinion by Justice Hall, the Second Department determined that the failure of the judgment debtor’s bank to provide the notice required by the Exempt Income Protection Act (CPLR 5222-a) before restraining the debtor’s account violated due process:

…[T]he statutory mechanism requires the attorney for the judgment creditor to serve a judgment debtor’s banking institution with a copy of the restraining notice, an exemption notice, and two exemption claim forms (see CPLR 5222-a[b][1]). The statute then requires the banking institution, within two business days after receipt of such documents, to serve upon the judgment debtor a copy of the restraining notice, the exemption notice, and the two exemption claim forms (see CPLR 5222-a[b][3]). In this action, the attorney for the judgment creditor properly sent the required documents to the judgment debtor’s bank, but the bank did not timely send the documents to the judgment debtor. As a result, the judgment debtor’s bank account was restrained without any notice to her or any opportunity to claim that certain funds in the account were exempt from debt collection. We conclude that this constituted a violation of the judgment debtor’s due process rights, and, as a remedy, afford the judgment debtor the opportunity to claim exemptions before any funds in her account are turned over. Distressed Holdings LLC v Ehrler, 2013 NY Slip Op 08044, 2nd Dept 12-4-13

 

 

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Reimbursement Cuts for Profit-Making Nursing Homes Did Not Violate Takings or Equal Protection Clauses

The Third Department determined the plaintiffs—profit-making businesses operating nursing homes—did not raise questions of fact about whether reductions in Medicaid reimbursement rates instituted in 2011 violated the Takings Clause and the Equal Protection Clause:

…”‘[W]here a service provider voluntarily participates in a price-regulated program or activity, there is no legal compulsion to provide service and thus there can be no taking'”… . * * *

Given [the] fundamental difference in the underlying economic purposes and incentives of proprietary and voluntary facilities, they are not similarly situated as they must be to sustain plaintiffs’ equal protection claim … . Bay Park Center for Nursing and Rehabilitation LLC v Shah, 516654, 3rd Dept 11-27-13

 

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Resentencing to a Term of Imprisonment with a Maximum Greater than the Initial Sentence Violates Double Jeopardy Principles

The Third Department determined resentencing defendant to a term of imprisonment with a maximum greater than the initial sentence violated double jeopardy principles:

County Court violated double jeopardy principles when it imposed on defendant an aggregate sentence with a maximum of more than 10 years in prison.  “[T]he key to double jeopardy analysis of a sentence increase is whether the defendant had a legitimate expectation in the finality of his [or her] original sentence” … .  A court violates double jeopardy principles if it subjects a defendant to a greater maximum sentence upon resentencing after the original agreed-upon sentence has been determined to be illegal … .  At the time of resentencing, defendant had served two years of his 10-year prison sentence … .   As defendant had a reasonable expectation of finality in the maximum term of his prison sentence, namely that he would serve no more than 10 years in prison, imposing a maximum prison term greater than 10 years would run afoul of the double jeopardy clause … . Thus, we modify the resentence to an aggregate maximum of 10 years in prison.  People v DePerno, 105100, 3rd Dept 11-21-13

 

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Effect of Witness’ Invocation of Fifth Amendment Privilege on Fairness Explained

The Second Department explained when a witness’ asserting the privilege against self-incrimination constitutes reversible error and noted that the introduction of a photograph of the murder victim when he was alive was (harmless) error:

“[A] witness’s invocation of the Fifth Amendment privilege may amount to reversible error in two instances: one, when the prosecution attempts to build its case on inferences drawn from the witness’s assertion of the privilege, and two, when the inferences unfairly prejudice defendant by adding critical weight’ to the prosecution’s case in a form not subject to cross-examination” … . “Absent a conscious and flagrant attempt by the prosecutor to build a case out of the inferences arising from the use of the testimonial privilege or without some indication that the witness’s refusal to testify adds critical weight to the People’s case in a form not subject to cross-examination, reversal is not warranted” … . Under the circumstances presented here, invocation of the Fifth Amendment privilege against self-incrimination by a prosecution witness did not add critical weight to the prosecution’s case, and the defendant was not deprived of his right to a fair trial by that testimony… .  People v Berry, 2013 NY Slip Op 06872, 2nd Dept 10-23-13

 

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Criteria for Unconstitutional Impairment of Contract Rights Explained in Context of Requirement that Health Insurers Reimburse Customers Pursuant to Public Health Law Section 4308

Supreme Court granted summary judgment to plaintiff health insurer on the ground that certain portions of Insurance Law section 4308 constituted an unconstitutional impairment of contract rights.  The Third Department determined summary judgment should not have been granted (on grounds unrelated to a determination of constitutionality).  In the course of the decision, the court explained the constitutional analytical criteria:

Plaintiff is a not-for-profit health insurer that offers various types of health insurance to its subscribers, including – insofar as is relevant here – community-rated, large-group insurance and health maintenance organization policies. Historically, insurers such as plaintiff were required to obtain prior approval from the Superintendent of Insurance1 before increasing or decreasing premium rates (see Insurance Law former § 4308 [c] [1]…).  In 1995, however, the Legislature replaced this system with a “file and use” methodology, whereby insurers could increase or decrease premiums at their discretion, so long as the “anticipated incurred loss ratio” for the affected insurance pool fell within statutory minimum and maximum percentages… .  If the actual loss ratio fell below the statutory minimum, the insurer was required to “issue a refund to its subscribers or credit a dividend against future premiums”; if the actual loss ratio exceeded the statutory maximum, the insurer “increase[d] its premium rates accordingly”… .

In response to growing concerns that steady increases in premium rates were making health insurance less affordable, the Legislature amended Insurance Law § 4308 again in 2010 (see L 2010, ch 107, § 2) – reinstating the prior approval requirement and setting the minimum loss ratio for all coverage pools at 82% loss ratio for its large-group coverage pools fell below the 82% requirement.  As a result, defendant Superintendent of Financial Services directed that plaintiff issue refunds or credits totaling $3,349,976 to policyholders enrolled in community-rated large-group contracts. * * *

US Constitution, article I, § 10 provides that “[n]o [s]tate shall . . . pass any . . . [l]aw impairing the [o]bligation of [c]ontracts.”  The prohibition contained in the Contract Clause, however, is not absolute, as states “retain the power to safeguard the vital interests of [their] people” … .  “Thus, the [s]tate may impair [private] contracts by subsequent legislation or regulation so long as it is reasonably necessary to further an important public purpose and the measures taken that impair the contract are reasonable and appropriate to effectuate that purpose” … .  Analysis of a claimed Contract Clause violation “require[s] consideration of three factors: (1) whether the contractual impairment is in fact substantial; if so, (2) whether the law serves a significant public purpose, such as remedying a general social or economic problem; and, if such a public purpose is demonstrated, (3) whether the means chosen to accomplish this purpose are reasonable and appropriate”… . Healthnow New York Inc … v NYS Insurance Dept, 516179, 3rd Dept 10-17-13

 

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Law Requiring Approval Before Health Care Facility Withdraws or Transfers Assets Held Valid

In a full-fledged opinion by Judge Lippman, the Court of Appeals reversed the lower courts and found that Public Health Law 2808(5)(c), which requires the Commissioner of Health’s approval before a residential health care facility withdraws or transfers more than three percent of its assets, did not violate substantive due process and did not delegate legislative authority to the Commissioner:

The lower courts, we believe, erred in concluding that the subject statute was offensive to substantive due process. Economic regulation will violate an individual’s substantive due process property interest only in those situations, vanishingly rare in modern jurisprudence, where there is absolutely no reasonable relationship to be perceived between the regulation and the achievement of a legitimate governmental purpose …; the regulation, to be actionable, must be arbitrary in the constitutional sense — which is to say “so outrageously arbitrary as to constitute a gross abuse of governmental authority”  … . * * *

Plaintiffs’ alternative theory for deeming § 2808 (5) (c) unconstitutional — that the provision’s catch-all phrase effects an improper delegation of legislative policy-making power — is not, in our view, more viable than their substantive due process claim.    * * * The enumerated criteria clearly tie the Commissioner’s disposition of an equity withdrawal application to the financial condition of the facility and its quality of care record.  These are highly pertinent and not excessively general criteria and it is reasonably clear, and in any case conceded by defendants, that the catch-all’s immediately subsequent reference to “such other factors” does not authorize application dispositions based on criteria that are generically different.  Brightonian Nursing Home… v Daines…, 161, CtApp 10-15-13

 

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Resentencing After Original Sentence Expired Violates Double Jeopardy Clause

The Fourth Department explained that a resentencing which takes place after the original sentence has been completed violates the double jeopardy clause.  People v Alvarado, 961, 4th Dept 9-27-13

 

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City Code and Charter Not Unconstitutionally Applied Re: Searches Related to Certificates of Occupancy

The Fourth Department reversed Supreme Court’s grant of an Article 78 petition. In granting the petition, Supreme Court found that the relevant provisions of the city code and charter were unconstitutional as applied with respect to searches of petitioner’s property in connection with the issuance of certificates of occupancy.  In reversing that determination, the Fourth Department wrote:

We have previously upheld as constitutional the City’s CO requirement as well as its procedure for issuing judicial warrants for inspections of premises in cases where the City has failed to obtain the consent of the homeowners or tenants … .  Petitioner concedes that the laws at issue are valid on – their face, but contends that the determination that he violated City Code § 90-16 (A) (2) (d) is unconstitutional because, as a result of the determination, he will be required to consent to a warrantless inspection of his property or risk prosecution and fines.  That contention, however, was specifically considered and rejected by this Court in Matter of Burns v Carballada (101 AD3d 1610, 1611-1612), which involved facts nearly identical to those herein.  The petitioners in Burns commenced a CPLR article 78 proceeding seeking to annul two determinations of the Municipal Code Violations Bureau finding that they violated City Code § 90-16 (A) (2) (d), the same provision at issue here, by owning rental property that was occupied without a valid CO (id. at 1610).  In the Burns petition, like the petition in this case, petitioners asserted, inter alia, that the determinations that they failed to comply with the City Code CO provision violated the Fourth Amendment and article I, § 12 of the New York State Constitution (id.).  Specifically, petitioners contended that the City’s CO inspection and warrant system was unconstitutional as applied to them because it prevented them from obtaining a CO without first consenting to a warrantless search of their properties (id. at 1611-1612).  We rejected that contention and stated that, “[u]nder the City’s ordinance, . . . an inspection can take place either upon consent or upon the issuance of a warrant (see City Charter § 1-11).  On the record before us, petitioners have not shown that they were actually penalized for refusing to allow an inspection inasmuch as there is no evidence that they ever applied for a CO and thereafter refused to consent to the required inspection of their properties” (id. at 1612).  Matter of Capon v Carballada…, 858, 4th Dept 9-27-13

 

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Death Threats Not Protected Under First Amendment; Hearsay May Be Basis of Administrative Determination

In affirming the arbitrator’s recommendation a teacher should be terminated for making death threats against an arbitrator in a prior disciplinary proceeding, the First Department noted that hearsay can be the basis for an administrative determination and explained the threats were not protected by the First Amendment:

We reject petitioner’s allegations that the instant disciplinary proceeding and the ultimate discipline imposed against him violated the right to free speech under the First Amendment to the United States Constitution. Supreme Court properly deferred to the arbitrator’s finding that petitioner’s statements are exempt from First Amendment protection because they constitute “true threats.” We note that petitioner’s former attorney only disclosed the threats because he believed that petitioner’s increasingly erratic behavior rendered him genuinely dangerous. Under the circumstances, it cannot be argued that petitioner’s speech implicates matters of public concern … . Nor can it be disputed that petitioner’s death threats disrupted the initial arbitration proceeding… . Matter of Smith v New York City Dept. of Educ., 2013 NY Slip Op 05765, 1st Dept 9-3-13

 

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