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THE COMPLAINT STATED A CAUSE OF ACTION FOR NEGLIGENT SUPERVISION OF DEFENDANT INVESTMENT BANK’S EMPLOYEE WHO ALLEGEDLY DEFRAUDED PLAINTIFFS OF $25 MILLION TO COVER THE EMPLOYEE’S LOSSES; THE ARGUMENT THAT PLAINTIFFS COULD NOT SUE THE BANK BECAUSE THEY WERE NOT BANK CUSTOMERS WAS REJECTED (CT APP).

​The Court of Appeals, in a full-fledged opinion by Judge Cannataro, over a two-judge dissent, reversing the appellate division, determined plaintiffs (charitable foundation) stated a cause of action against defendants (investment bank) for negligent supervision of an employee who allegedly defrauded the foundation of $25 million. Plaintiffs were not customers of defendants (investment bank). Rather, plaintiffs were approached by defendants’ employee to invest $25 million, allegedly as part of a fraudulent scheme to cover the employee’s losses. The argument that plaintiffs could not sue because they were not defendants’ customers was rejected by the majority:

… [T]he complaint adequately alleged that defendants were on notice of the employee’s propensity to commit fraud prior to his interactions with plaintiffs and their resulting losses. * * *

When an employer has notice of its employee’s propensity to engage in tortious conduct, yet retains and fails to reasonably supervise such employee, the employer may become liable for injuries thereafter proximately caused by its negligent supervision and retention … . As every Department of the Appellate Division has recognized, a defendant is on notice of an employee’s propensity to engage in tortious conduct when it knows or should know of the employee’s tendency to engage in such conduct … . * * *

… [P]laintiffs were not customers of defendants, as that term is typically understood, but plaintiffs alleged that they were prospective customers who were solicited by [defendants’ employee] to participate in a financing arrangement related to one of defendants’ legitimate business deals, supported by defendants’ genuine documentation and information, which he was given access to by defendants as part of his employment. We hold that these allegations support the existence of a duty on the part of defendants to non-negligently supervise [the employee] for plaintiff’s benefit … . Moore Charitable Found. v PJT Partners, Inc., 2023 NY Slip Op 03185, CtApp 6-13-23

Practice Point: Here the complaint stated a cause of action for negligent supervision against an investment bank based on fraud allegedly committed by a bank employee, even though the plaintiffs were not customers of the bank. The Court of Appeals found a duty to supervise the employee for the plaintiffs’ benefit.

 

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ELECTRONIC LOGGING DEVICES (ELD’S) WHICH KEEP TRACK OF COMMERCIAL TRUCKERS’ LOCATION, HOURS OF OPERATION AND MILES DO NOT FACILITATE UNREASONABLE SEARCHES; THE TRUCKING INDUSTRY IS HEAVILY REGULATED AND THE ELD’S AIM TO PREVENT DRIVER FATIGUE (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Troutman, determined the electronic logging devices (ELD’s) which record the location, engine hours and mileage of commercial motor vehicles (CMV’s) do not facilitate unreasonable searches, The commercial trucking industry has been regulated for decades to prevent accidents due to drivers’ fatigue and the ELD’s contribute to that end:

Before us is a facial challenge to the constitutionality of New York regulations adopting a rule promulgated by the Federal Motor Carrier Safety Administration requiring the installation of electronic logging devices in commercial motor vehicles. We hold that the warrantless inspections authorized by the regulations fall within the administrative search exception to the warrant requirement and do not constitute unreasonable searches and seizures under article I, § 12 of the State Constitution. * * *

… [P]etitioners correctly concede that there is a long tradition of commercial trucking being subject to comprehensive regulations. Regulation of commercial trucking, including regulation of “the maximum hours of service for commercial drivers,” extends back more than eighty years both in New York and on the federal level … . Those regulations are in keeping with this State’s “vital and compelling interest in safety on the public highways” … .

CMV operators therefore have “a diminished expectation of privacy in the conduct of that business because of the degree of governmental regulation” … , and “may reasonably be deemed to have relinquished a privacy-based objection” to an “intrusion that will foreseeably occur incident” to applicable regulations … . More particularly, … commercial truck drivers have a diminished expectation of privacy in the location of their vehicles because of their participation in a pervasively regulated industry. Matter of Owner Operator Ind. Drivers Assn., Inc. v New York State Dept. of Transp., 2023 NY Slip Op 03184, CtApp 6-13-23

Practice Point: Electronic Logging Devices (ELD”s) which keep track of the location, hours of operation and mileage of commercial trucks aim to prevent driver fatigue and do not facilitate unreasonable searches.

 

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IN THIS DEFAMATION ACTION (1) PLAINTIFF WAS DEEMED A LIMITED PUBLIC FIGURE REQUIRING PROOF OF MALICE; (2) SOME STATEMENTS PROTECTED BY LITIGATION PRIVILEGE, QUESTIONS OF FACT WHETHER OTHER STATEMENTS PROTECTED BY PRE-LITIGATION AND FAIR REPORT PRIVILEGES; (3) AMENDMENTS TO THE ANTI-SLAPP STATUTE APPLY ONLY TO CONDUCT AFTER THE AMENDMENTS WENT INTO EFFECT (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Garcia, over a dissent, reversing the appellate division in this defamation action, determined: (1) plaintiff music producer (Gottwald) is a limited public figure who must prove defendant singer-songwriter (Sebert) was motivated by malice when claiming Gottwald raped her; (2) whether 20 alleged statements are subject to the pre-litigation privilege must be determined by the jury; and (3) the amendments to the anti-SLAPP statute which went into effect during the course of the lawsuit apply only to conduct after the amendments went into effect (the amendments allow certain damages and attorney’s fees). The opinion is far to comprehensive to fairly summarize here:

[Re: plaintiff’s public-figure status:] By 2014, when Gottwald initiated this defamation action, he was, by his own account, a celebrity—an acclaimed music producer who had achieved enormous success in a high-profile career. As self-described in the complaint, he “has written the most Number One songs of any songwriter ever” and “was named by Billboard as one of the top ten producers of the decade in 2009.” … . * * *

[Re: privilege:] Sebert identifies 25 allegedly defamatory statements that she contends cannot serve as the basis for liability because they are protected by one or more of three privileges: the litigation privilege, the pre-litigation privilege, and the statutory fair report privilege under Civil Rights Law § 74.  * * * We agree that questions of fact exist as to the application of the pre-litigation and fair report privileges—those issues must go to a jury—but disagree as to application of the absolute litigation privilege. * * * Because … five statements fall squarely within the purview of the absolute litigation privilege, they ” ‘cannot serve as the basis for the imposition of liability in a defamation action’ ” … . * * *

[Re: anti-SLAPP statute:] Because Gottwald’s liability attached, if at all, when he chose to continue the defamation suit after the effective date of the statute, any potential calculation of attorney’s fees or other damages begins at the statute’s effective date …”. Gottwald v Sebert, 2023 NY Slip Op 03183, CtApp 6-13-23

​Practice Point: In this defamation opinion, the concepts of “limited public figure,” “litigation, pre-litigation and fair report privilege.” and the application of the amendments to the anti-SLAPP statute are discussed in great detail.

 

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THE TRAFFIC STOP WAS VALID, BUT THE POLICE OFFICERS SAW NOTHING TO INDICATE A WEAPON WAS IN THE CAR; THE SEARCH OF THE CAR AND SEIZURE OF A WEAPON FROM AN OPEN PURSE IN THE BACK SEAT WAS ILLEGAL (FIRST DEPT).

The First Department, reversing defendant’s conviction and dismissing the indictment, determined the police properly stopped the car in which defendant was a passenger but did not have sufficient information to justify a search of the vehicle for a weapon. A weapon was seized from an open purse in the back seat:

The police have authority to order occupants out of a vehicle in the event of a traffic violation … . Absent probable cause, the police are allowed to conduct a limited intrusion into the vehicle only if the totality of the information available supports a reasonable conclusion that there is a substantial likelihood of a weapon within the vehicle that poses an actual and specific threat to the officers’ safety … . … [T]he Court of Appeals has described this exception to the probable cause requirement as “narrow” … .

Furtive movements “suggesting that the defendant was reaching for something that might be a weapon” combined with some other suggestive factor have been determined to meet this standard … . * * *

No such actual and specific danger was shown to exist in this case. …  Defendant hesitated only briefly before rolling the window down and complying with the officer’s demands to show his hands and to step out of the vehicle. Taking a few “moments” to comply with an officer’s orders does not rise to the level of furtive or suspicious activity so as to support a finding of an actual and specific danger to officer safety  … He was frisked outside of the vehicle and found not to possess any weapons. Defendant remained in full view of the officers, his demeanor described as “relaxed”; he made eye contact and did not otherwise appear suspicious. People v Scott, 2023 NY Slip Op 02769, First Dept 5-23-23

Practice Point: There is a narrow exception to the probable cause requirement where police officers suspect a weapon may be in the car during a traffic stop. Here the evidence did not suggest the presence of the weapon. The weapon seized from an open purse in the back seat should have been suppressed.

 

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THE CITY OF OGDENSBURG PROPERLY PASSED A LOCAL LAW REPEALING A PRIOR LOCAL LAW WHICH OPTED OUT OF THE RPTL ARTICLE 11 PROVISIONS FOR DELINQUENT REAL ESTATE TAX COLLECTION; THE COUNTY’S ARGUMENT THAT THE LOCAL LAW UNLAWFULLY SHIFTED THE BURDEN OF TAX COLLECTION TO THE COUNTY AND SCHOOL DISTRICT WAS REJECTED (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Cannataro, determined the Local Law which repealed a prior Local Law in which the City of Ogdensburg opted out of the application of RPTL Article 11 (regarding the collection of delinquent real estate taxes) was not unconstitutional. The county argued repeal of the local law unlawfully shifted the burden of delinquent tax collection to the county and the school district. That argument was rejected:

Inasmuch as the County has no powers with respect to taxation that are not “unambiguously delegated” to it by the legislature or the Constitution … and the legislature has chosen to limit a county’s ability to enter into RPTL 1150 (1) agreements by making such agreement permissive rather than mandatory, it cannot be said that the City impaired the County’s power by doing as the legislature permits it to do under RPTL article 11. Therefore, we conclude that Local Law No. 2 does not violate the statutory and constitutional protections at issue, but effectuates a power the legislature granted to cities wishing to revoke their initial opt-out from article 11. Matter of St. Lawrence County v City of Ogdensburg, 2023 NY Slip Op 02757, CtApp 5-23-23

Practice Point: A city can opt out of the RPTL Article 11 provisions re: delinquent real estate tax collection, and it can later opt back in. Here the county’s argument that the city’s opting back in unlawfully shifted the tax collection burden to the county and school district was rejected.

 

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THE JUDGE’S POLICY OF NOT LETTING MEMBERS OF THE PUBLIC INTO THE COURTROOM DURING TESTIMONY HAD THE UNINTENDED EFFECT OF EXCLUDING MEMBERS OF THE PUBLIC FROM PORTIONS OF THE TRIAL; NEW TRIAL ORDERED (CT APP) ​

The Court of Appeals, reversing the appellate division, determined the procedure imposed by the judge effectively prevented members of the murder victim’s family from attending parts of the trial. Although the judge did not mean to exclude members of the public from the trial, the judge’s policy of not letting members of the public into the courtroom during testimony was improperly implemented and had the unintended result of excluding members of the public. The Court of Appeals, over a two-judge concurrence, ordered a new trial:

The trial judge is in charge of the courtroom and is ultimately responsible for ensuring that any limitation on a defendant’s right to a public trial conforms with constitutional dictates. At defendant’s trial, the judge delegated to court officers the implementation of the judge’s general policy of prohibiting the public from entering or exiting the courtroom while a witness testifies. We agree with the Appellate Division that members of the public were excluded from the courtroom at a time when they should have had access under the terms of the extant policy. But, contrary to the Appellate Division’s conclusion, that error directly resulted from the acts of court officials enforcing the trial judge’s order. Therefore, the court violated defendant’s right to a public trial. People v Muhammad, 2023 NY Slip Op 02756, CtApp 5-23-23

Practice Point: Even if the judge did not intend to exclude members of the public from the trial, the judge’s policy of not allowing anyone to enter the courtroom during testimony had that effect. New trial ordered.

 

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THE JUDGE CLOSED THIS MURDER TRIAL TO THE PUBLIC CITING “INTIMIDATION” BY SPECTATORS AND THE POSTING OF A PHOTO OF THE TRIAL ON INSTAGRAM; THE SPARSE RECORD DID NOT SUPPORT CLOSING THE COURTROOM, NEW TRIAL ORDERED (CT APP).

The Court of Appeals, reversing defendant’s conviction and ordering a new trial, determined the record did not support holding the murder trial in a courtroom closed to the public. The judge reacted to spectators deemed “intimidating” and the posting on Instagram of a photo taken in the courtroom with a caption supporting the defendant:

… [T]he People moved to close the courtroom, citing the fact that photographs had been taken in the courtroom and posted on Instagram with the caption “Free Dick Wolf”—which the prosecutor asserted was a reference to one of defendant’s street names. After an off-the-record discussion with counsel, the court noted its concern with the photographs, and added that

“[p]eople in the courtroom have been very intimidating. . . . They intimidated a court reporter already. They stare people down. They’re staring up here. I am closing this courtroom based on the fact that now there are pictures that were taken in this courtroom. And I know that pictures can be taken very [surreptitiously] with a cellphone. You can look like you’re looking at your cellphone when you’re really taking pictures. But clearly pictures were taken in this courtroom by someone who had to have been sitting in this courtroom and pictures were taken outside the court. I’m closing the courtroom.”  * * *

Although the prevention of intimidation by spectators during trial may very well be an “overriding interest” that can support courtroom closure … , it is incumbent on the trial court to ensure that the record adequately justifies its concerns and demonstrates that the identified interest would be jeopardized absent a closure. Where closure is warranted, it must be tailored to address the overriding interest. Here, the court ordered the broadest possible closure, completely excluding all members of the public for the remainder of trial. On this sparse record the closure was disproportionate in relation to the circumstances described. People v Reid, 2023 NY Slip Op 02755, CtApp 5-23-23

Practice Point: Closing the courtroom during a trial is a drastic measure which must be justified on the record. Here the sparse record was deemed insufficient and a new trial was ordered.

 

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“EXEMPT EMPLOYEES” UNDER THE CIVIL SERVICE LAW ARE TERMINABLE AT WILL; A COLLECTIVE BARGAINING AGREEMENT WHICH PURPORTS TO MAKE AN EXEMPT EMPLOYEE TERMINABLE FOR CAUSE IS UNENFORCEABLE (CT APP).

The Court of Appeals, reversing the appellate division, in a full-fledged opinion by Judge Garcia, determined a so-called “exempt employee (here the secretary to the town planning board) whose qualifications cannot be tested by a Civil Service examination is terminable at will. The collective bargaining agreement (CBA) defined the bargaining unit to include the secretary and permitted the town to terminate only for “just cause.” When the secretary was fired the union filed a grievance and sought arbitration. The Court of Appeals held the secretary. as an “exempt employee”  was terminable at will and arbitration was therefore not available:

Certain civil service positions are classified as “exempt” when the position is of a confidential nature and requires personal qualities that cannot practicably be tested by an examination. Exempt class employees are therefore terminable at will. In this case, the parties entered into a collective bargaining agreement that purports to provide for-cause termination protection to certain exempt class employees. We hold the agreement unenforceable to the extent it grants such protections, and therefore this dispute over an exempt class employee’s termination is not arbitrable. Matter of Teamsters Local 445 v Town of Monroe, 2023 NY Slip Op 02754, CtApp 5-23-23

Practice Point: A so-called “exempt employee” under the Civil Service Law is one whose skills cannot be tested by a Civil Service exam. Exempt employees are terminable at will. A collective bargaining agreement which purports to make exempt employees terminable for cause is unenforceable.

 

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TIER 3 NYC POLICE OFFICERS CANNOT COUNT YEARS OF NON-POLICE SERVICE TOWARD THE 22 YEARS OF POLICE SERVICE REQUIRED FOR RETIREMENT ELIGIBILITY (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Singas, reversing the appellate division, determined tier 3 police officers may not count prior “non-police” service in computing the 22 years of service required for eligibility for retirement benefits:

… [T]ier 3 officers are eligible for retirement after 22 years of service without regard to their age … . The issue before us is whether a tier 3 police officer’s prior non-police service “qualifies to be counted as credited service pursuant to [Retirement and Social Security Law § 513]” … .

… [W]e conclude that the legislature intended tier 3 officers to receive the same service credit as their tier 2 counterparts, but restricted to the credit available prior to July 1, 1976.

Before July 1, 1976, the Administrative Code provided that a tier 2 officer would not be eligible for retirement until he or she “served in the police force for” the then-minimum period of 20 or 25 years … . This language plainly demonstrates that, prior to July 1, 1976, tier 2 officers could count only prior police service toward their retirement eligibility. Accordingly, tier 3 officers may receive retirement credit only for prior police service. Matter of Lynch v City of New York, 2023 NY Slip Op 02753, CtApp 5-23-23

Practice Point: Tier 3 NYC police officers cannot count years of non-police service toward retirement eligibility.

 

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IN THESE TWO CASES, INTRUDERS ENTERED AN APARTMENT BUILDING THROUGH EXTERIOR DOORS WHICH, ALLEGEDLY, WERE UNLOCKED AND MURDERED VICTIMS WHO WERE SPECIFICALLY TARGETED; THE FACT THAT THE VICTIMS WERE TARGETED WAS NOT AN “INTERVENING ACT” WHICH RELIEVED THE LANDLORD OF LIABILITY AS A MATTER OF LAW (CT APP).

The Court of Appeals, affirming the Second Department and reversing the First Department, in a full-fledged opinion by Judge Wilson, determined the fact that the murder victims were targeted did not relieve the landlord, here the NYC Housing Authority (NYCHA), of liability for the alleged failure to provide exterior doors with functioning locks:

… [W]hen the issue of proximate cause involves an intervening act, “liability turns on whether the intervening act is a normal or foreseeable consequence of the situation created by the defendant’s negligence” … . It is “[o]nly where ‘the intervening act is extraordinary under the circumstances, not foreseeable in the normal course of events, or independent of or far removed from the defendant’s conduct,’ [that it] may possibly ‘break[ ] the causal nexus’ ” … . But “[a]n intervening act may not serve as a superseding cause, and relieve an actor of responsibility, where the risk of the intervening act occurring is the very same risk which renders the actor negligent” … .

Here, the risk created by the nonfunctioning door locks—that intruders would gain access to the building and harm residents—is exactly the “risk that came to fruition” … . It was not the trial court’s role, on summary judgment, to assess the fact-bound question of whether the intruders … would have persevered in their attacks had the doors been securely locked. This is not to say that the sophistication and planning of an attack is irrelevant to the factfinder’s determination of proximate cause, or even that it could never rise to such a degree that it would sever the proximate causal link as a matter of law … . But neither [scenario here] approaches that level. Scurry v New York City Hous. Auth., 2023 NY Slip Op 02752, CtApp 5-23-23

Practice Point: The fact that the victims were specifically targeted by intruders who entered the apartment buildings through doors alleged to have been unlocked did not relieve the landlord of liability under an “intervening act” theory. The requirement that exterior doors be locked addresses the risk at issue in these cases.

 

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