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Kevin Schlosser Authors, “No Need To Wait To Tap Private Judges Under CPLR”

There is no reason for practitioners and their clients to wait for the legislature to act. The mechanism of hiring a private judge is already fully available.

I read with interest the article “A Proposal for Private Judging in New York,” by David B. Saxe and James M. Catterson, March 12, 2021.

Although it was not cited in the article, a piece that I published in the New York Law Journal over four months ago alerted practitioners in New York that the CPLR already allows for the engagement of what I referred to as “private judges.”  See K. Schlosser, “The Use of Private Judges: New World, New Wave?” NYLJ, Nov. 6, 2020. As I indicated, there are several advantages and benefits that currently exist under the applicable provisions of the CPLR, including allowing for flexibility and certainty afforded by private judges, the availability of expertise catered to the case at issue, avoiding the cost and bureaucracy of ADR forums, obtaining an enforceable judgment and preserving full appeal rights that arbitration does not afford.

While these CPLR provisions could be enhanced, there is no reason for practitioners and their clients to wait for the legislature to act. The mechanism of hiring a private judge is already fully available.

Kevin Schlosser is a partner at Meyer, Suozzi, English & Klein, P.C. and chair of the firm’s litigation and alternative dispute resolution department, which has a full roster of private judges from many disciplines of law. He also served as chair of the Commercial Litigation Committee of the Bar Association of Nassau County.

Click here to view New York Law Journal article on Law.com.

Edward LoBello & Jordan Weiss Author Thomson Reuters “Practical Law Eastern District of New York Bankruptcy Court Toolkit”

On February 25, 2021, Edward J. LoBello and Jordan D. Weiss authored Practical Law Eastern District of New York Bankruptcy Court Toolkit published by Thomson Reuters.  The online publication compiles key resources for attorneys in the practice of bankruptcy law in the Eastern District of New York, including applicable statutes, rules, court procedures, and practice notes.

Click here and sign in to view toolkit.

Kevin Schlosser Authors, “The Use of Private Judges: New World, New Wave?” for NYLJ

Our system of justice has certainly faced various challenges over the years, but no one can deny that the COVID-19 crisis has forced us to confront unprecedented obstacles―2020 has been a year no one will forget. In March, the entire state court system virtually shut down, except for cases deemed “essential.” While our administrative judges and the office of court administration have worked tirelessly to restore some semblance of normalcy, the challenges are formidable.

On top of trying to balance life and death issues with providing timely and effective justice, our court administrators and the judiciary are facing debilitating budget cuts. As our chief administrative judge has recently acknowledged, “the economic fallout of the coronavirus pandemic has led to enormous pressures on the State budget, including the Judiciary budget,” noting a $300 million hit to the court system. NYLJ Sept. 30, 2020, “As NY State Courts Report Budget Cut, Lawyers Fear Delays, Employee Unions Worry Over Jobs.”

The New York State Bar Association president has ominously predicted: “This budget cut is a matter of grave concern to the New York State Bar Association because it will inevitably create hardship for litigants and delay the administration of justice.” https://nysba.org/new-york-state-bar-association-president-scott-karson-calls-cuts-to-judiciary-budget-a-grave-concern/

Yet unanticipated silver linings have awakened in the crisis. The convenience and cost-savings of remote, virtual appearances, depositions and proceedings are beginning to overcome the initial resistance and reluctance. Both the Bar and the courts are adapting to a new, more flexible approach to dispensing and achieving justice.

Particular problems with jury trials have led many to consider and in fact advocate more use of bench trials. Additionally, more than ever before, “alternative dispute resolution” is seeing a supercharged interest.

Amidst all this, there should be renewed interest in the often overlooked yet extremely useful provisions of the CPLR authorizing parties to hire a “referee,” or as I call it, a “private judge,” to help resolve their differences, including significantly, to determine commercial and business disputes. The utility of a private judge to determine legal disputes has actually been available under the New York justice system for over a century. See Woodruff v. Dickie, 31 How. Pr. Rep. 164 (Sup. Ct. N.Y. Co., 1866). It has largely been hibernating.

Authority and Powers of Private Judges

The authority for such an appointment of a private judge is contained in CPLR 4001: “A court may appoint a referee to determine an issue, perform an act, or inquire and report in any case where this power was heretofore exercised and as may be hereafter authorized by law.” CPLR Article 43 provides the power and authority of a private judge to “determine an issue.”

As soon as a new case is filed in court, the parties can immediately stipulate to the appointment of a private judge. CPLR 4317(a) provides: “The parties may stipulate that any issue shall be determined by a referee.” Only in three limited circumstances must leave of court be sought first: “[1] for references in matrimonial actions;  [2] actions against a corporation to obtain a dissolution, to appoint a receiver of its property, or to distribute its property, unless such action is brought by the attorney-general;  or [3] actions where a defendant is an infant.” Id. All the parties need to do is stipulate and name their private judge, and the clerk must then issue an order effectuating the stipulation: “Upon the filing of the stipulation with the clerk, the clerk shall forthwith enter an order referring the issue for trial to the referee named therein.” Id.

CPLR 4301 affords the private judge broad powers, equivalent to a Supreme Court Justice, with limited restrictions: “A referee to determine an issue or to perform an act shall have all the powers of a court in performing a like function;  but he shall have no power to relieve himself of his duties, to appoint a successor or to adjudge any person except a witness before him guilty of contempt.”

The private judge has the power not only to issue a decision, but also a fully effective and enforceable judgment. See CPLR 5016(c) (“Judgment upon the decision of a court or a referee to determine shall be entered by the clerk as directed therein. When relief other than for money or costs only is granted, the court or referee shall, on motion, determine the form of the judgment.”)

Benefits and Advantages of a Private Judge

There are plenty of benefits to hiring a private judge who is dedicated exclusively to the case at hand:

1. Flexibility and Certainty. While the authority to appoint a private judge to determine issues in dispute derives from the CPLR, the private judge is free to conduct the affairs and proceedings at times, places and in a manner at his or her discretion, and entirely consistent with the preferences of the parties and their counsel. The parties deal with just one person, rather than the entire administration of the court system. (There is no “clerk’s law.”) The parties are able to secure real, reliable dates certain for written submissions, hearings and/or trials, which afford for advance planning. In short, the parties have a captive audience of one―their own private judge. Particularly now, given concerns about appearing in a large, public courthouse for hearings or other appearances, meetings with private judges could be in a more controlled, private law office or other location, or of course conducted virtually.

2. Expertise. The parties can select who they jointly believe is the best person for the job. They can identify and choose someone with precisely the experience, knowledge and temperament that fits the case and the subject matter of the dispute. It is obviously enormously helpful to have someone particularly experienced in the issues presented by the case. Of course, counsel for both parties must feel comfortable with the integrity and objectivity of whom they choose.

3. Avoiding Cost and Bureaucracy of ADR Forums. While ADR companies are certainly adept at resolving disputes, they often saddle parties with unwieldy bureaucracy. To be sure, the parties will need to pay for the services of the private judge, but hiring a private judge can afford advantages over resolving a dispute in arbitration or administered through the large well-known dispute resolution organizations. The private judge can avoid the administrative bureaucracy and cost associated with the large ADR forums and venues. The private judge has the luxury of dealing directly with the parties as and when they need attention. The direct attention afforded by the private judge is ultimately likely to reduce the overall cost of resolving disputes, even with the cost of the private judge’s services. Additionally, the parties could enlist the private judge to help settle their case or formally decide particular issues, without a full blown adjudication of the entire merits.

4. An Enforceable Judgment. Unlike arbitration awards, as noted above, the private judge can reduce his or her decision to an enforceable judgment. CPLR 5016(c). There is no extra step to institute an entirely new proceeding under CPLR 7511 to confirm the private judge’s decision as there is after an arbitration award is issued. Thus, the additional time, expense and litigation attendant to confirming an award is eliminated.

5. Full Appeal Rights Preserved. Litigants are often reluctant to submit to arbitration because of the very limited opportunity to obtain a full and fair review of the arbitrator’s determination. It is well-recognized that courts will not vacate or nullify the decision of an arbitrator, except in exceptional and clear circumstances. It can be daunting to place all of that unchecked discretion in one person (or in a small panel). Unlike in arbitration, the decisions and judgment of the private judge are fully reviewable on appeal through the New York Court system based upon all the grounds available to challenge any decision of a court. See Bedford v. Hol-Tan Co., 140 App.Div. 282, 285–286, 125 N.Y.S. 173, 175–176 (1st Dept. 1910) (“A referee appointed to hear and determine has the same power and authority as a justice of the court, and his decision stands as the decision of the court. [CPLR 4319.] His [or her] decision can be reviewed and set aside only for the same reason and in the same manner as can a decision of the court.”); Hampton Bays Supply Co. v. Adler, 3 Misc.2d 224, 226, 147 N.Y.S.2d 775, 778 (N.Y. Sup. 1955). Therefore, the reluctance that attorneys and their clients may have to the relatively unchecked power of an arbitrator to determine their dispute is ameliorated by the appellate review process. While the appellate courts are also facing overwhelming burdens, having a last resort in accordance with traditional appellate protections is a useful safety latch.

***

Our system of justice is facing unparalleled pressures. As we all try to find ways to resolve disputes in the most humane, fair, cost-efficient and expeditious manner, the use of private judges offers an additional, potentially-appropriate option.

 

Kevin Schlosser has served as Chair of the Commercial Litigation Committee of the Bar Association of Nassau County, President of the Theodore Roosevelt Inn of Court, and is a partner at Meyer, Suozzi, English & Klein, P.C., where he is Chair of the Litigation and Alternative Dispute Resolution Department, which has a full roster of private judges from many disciplines of law.

Andrew Turro Authors, “New York’s New Sick Leave Law”

Under new legislation all New York private employers are required to provide sick leave to employees. Under New York’s Sick Leave Law (the “Law”), the amount of an employee’s sick leave and whether it is paid or
unpaid  depends on the size and/or the net income of the employer. The Law takes effect, and covered
employees will be entitled to begin accruing leave time, on September 30, 2020. However, employees may be restricted from utilizing the accrued leave until January 1, 2021.

Amount of Sick Leave

Under the Law:

  • Employers with four or less employees and a net income of less than $1 million in the prior tax year must provide employees with up to 40 hours of unpaid sick leave per calendar year.
  • Employers with between 5 and 99 employees as well as employers with 4 or less employees and a net income of over $1 million in the prior tax year are required to provide each employee with up to 40 hours of paid leave per calendar year.
  • Employers with 100 or more employees must provide employees up to 56 hours of paid leave per
    calendar year.

For purposes of computing the number of employees, a “calendar year” under the Law means the twelve-month period from January first through December thirty-first. The Law further provides that for all other
purposes, a calendar year “shall either mean the twelve-month period from January first through December thirty-first, or a regular and consecutive twelve-month period, as determined by the employer.”

If an employer already provides sick leave or time off at least equal to the amount required under the Law, the employer is not required to provide additional time off, so long as the leave may be utilized for the same reasons required by the Law (which are described below).

Employees must accrue sick leave at a rate of at least one hour of sick leave for every 30 hours worked, which is the same accrual rate provided in the New York City Earned Safe and Sick Time Act. Under the Law, employers alternatively may fulfill their legal obligation by “front loading” the sick leave at the beginning of the calendar year as long as they do not reduce or revoke any leave based on the hours that an employee actually worked. Additionally, under the Law, employers are not required to pay employees for unused sick leave upon an employee’s voluntary or involuntary separation from employment.

Use of Sick Leave

Sick leave under the Law may be used for the following reasons:

  1. For a mental or physical illness, injury or health condition of an employee or such employee’s family member, regardless of whether such illness, injury or health condition has been diagnosed or requires medical care at the time such leave is requested. Under the Law, a “family member” includes an employee’s child, spouse, domestic partner, parent, sibling, grandchild or grandparent; and the child or parent of an employee’s spouse or domestic partner. The Law further provides that a “parent” includes a biological, foster, step– or adopted parent, or a legal guardian of an employee. The Law’s definition of “child” includes a biological, adopted or foster child and a legal ward.
  2. For the diagnosis, care or treatment of any mental or physical illness, injury or health condition, or need for medical diagnosis of, or preventative care for, such employee or such employee’s family member.
  3. For a variety of reasons related to absences from work when the employee or the employee’s family member has been a victim of domestic violence or another family offense, sexual offense, stalking, or human trafficking.

Other Provisions of the Law

Other provisions of the Law include the following:

  • Employees may begin to take accrued sick leave on January 1, 2021 and may do so in partial-day increments. Employers may set a reasonable minimum increment of sick time use provided it is no more than four hours.
  • Employers must allow employees to carry over unused sick leave to the next calendar year. However, employers may limit employees to 40 or 56 hours of sick leave- as determined above – in a particular calendar year.
  • Employers are not required to pay out unused sick leave at any time, including separation from employment.
  • Upon return from leave, an employee must be restored to the same position that the employee held prior to the sick leave with the same pay and other terms and conditions of employment.
  • Employers are also required to provide employees with a summary of the amount of sick leave they have accrued and used in the current calendar year and/or any previous calendar year within three business days of a request by an employee. Additionally, employer payroll records must reflect the amount of sick leave provided to an employee for each week worked. The employer also must maintain records of sick leave provided to all employees for six years.
  • Employers may not require disclosure of confidential information from an employee as a condition of taking sick leave.
    Collective bargaining agreements entered into on or after the effective date of the Law must provide sick leave benefits that are at least “comparable” to those provided for under the Law and such agreements “must specifically acknowledge” the provisions of the Law.
  • The Law expressly states that it does not preempt or diminish existing city or county sick leave laws and therefore employers covered by any such additional laws must continue to provide leave to employees that meets or exceeds the requirements of both statewide and local laws.
  • The Law provides that an employer may not retaliate or discriminate against or otherwise penalize any employee for requesting or using sick leave.

Paul Millus Writes, “Will Your Fiduciary Duty Claim be Timely When the Statute of Limitations Is No Longer Tolled?”

All attorneys should be aware that, pursuant to Governor Cuomo’s Executive Order 202.8 issued on March 20, 2020, the expiration of the applicable statute of limitations (“SOL”) on any claim has been tolled equal to the amount of the time left on the applicable SOL, without such tolling, until April 19, 2020.  We all should know as well that this tolling period has been extended several times-now until July 6, 2020.  So what better time than to get your ducks in a row on your breach of fiduciary duty claim?

To help in that regard, I refer you to a First Department decision on May 28, 2020 in the case of Habberstad, et al. v. Revere Sec. LLC, et al., 2020 NY Slip Op. 03071 which has reminded me  that a refresher may be in order regarding the SOL for a breach of fiduciary duty claim.

In this case, plaintiffs were thoroughly banished by the court for a number of reasons including, but not limited to, the fact that their breach of fiduciary claim was barred by a relevant trust agreement’s exculpatory clause which expressly relieved the defendant Trustees of liability for acts and omissions other than willful misconduct. (Duh- but to be fair, plaintiffs had an argument to escape this conundrum, it just did not carry the day!).  Nevertheless, the court brings to the fore the various issues regarding the applicable SOL in a breach of fiduciary duty claim.

Starting with the basics, the applicable statute of limitations for a breach of fiduciary duty depends on the substantive remedies sought.  Such that where the relief sought is equitable in nature (i.e., an accounting) the six-year limitations period of CPLR 213(1) applies.  However, if the claim is for monetary relief (which is often the case), a three-year statute of limitations alleging injury to property applies.  See Kaufman v. Cohen, 307 A.D.2d 113 (1st Dep’t 2003).

There are certain exceptions, however.  A cause of action for breach of fiduciary duty based upon allegations of fraud is subject to a six-year period or more if the doctrine of equitable estoppel or the fraud discovery accrual rule applies, but I digress.  Nevertheless, as is often the case, there are exceptions to the exception. One such exception to the rule I just cited is when the fraud allegation is merely “incidental” to the claim asserted, such that the allegation of fraud is not essential to the cause of action pleaded except as an answer to an anticipated defense of statute of limitations.  As per Kaufman, the courts “look for the reality, and the essence of the action and not its mere name.”  Id. at 119. The Courts, of course, want to prevent the revival of otherwise stale claims.

So what does that mean to be “incidental” to the fraud claim?  In Marketxt Holdings Corp. v. Engel & Reiman, P.C., 693 F.Supp.2d 387 (S.D.N.Y. 2010), plaintiffs claimed that the defendants knowingly assisted in devising and implementing a fraudulent scheme to deprive plaintiffs of certain stock and to convert the proceeds of that stock to their own benefit. Plaintiff identifies two distinct transactions in which, it was alleged, the defendants aided and abetted fraud, breach of fiduciary duty, and conversion and that they participated in a conspiracy to effectuate a fraudulent conveyance.  Defendants argued that the plaintiff’s allegations of fraud were merely incidental to its conversion claims and that the shorter statute of limitations for conversion applied, thereby barring all of the plaintiff’s claims for accessorial liability.  On a motion to dismiss, the court held that the fraud claims were indeed incidental to the claim of conversion, reasoning that the gravamen of plaintiff’s amended complaint was that the defendants helped steal assets properly belonging to plaintiffs, yet all of the alleged fraudulent conduct was in furtherance of this scheme to divert corporate assets and that this conduct did not cause cognizable damage to plaintiff independent of that conversion.   From my review of the case law, this is a complicated issue which will require a well thought-out and drafted complaint

In Habberstad, the court also found the claims of fraud incidental to the fiduciary duty claims, stating that the plaintiff’s accusations against one of the defendants was not that he actively participated in the alleged fraud but that he “endorsed it rather than opposed it.”

If this was not enough, I have one further note to remember.  As noted by the court, in a breach of fiduciary duty action seeking equitable relief, under the Open Repudiation Toll Doctrine, if the defendants openly repudiate all of the fiduciary duties that are alleged to have been breached, the six-year period runs from the date of that “open repudiation.”  Finally, the Open Repudiation Toll Doctrine does not apply to claims asserted for monetary damages.

Paul Millus Authors, “What You Say On Your Tax Return Can And Will Be Used Against You In A Court of Law in a BCL Dissolution Proceeding”

You may be saying, after reading the title of this piece, that how can that not be true.  Indeed, it appears axiomatic.  Not so fast.  Yes, one would think that their signature on a government document warrants the truth of the contents therein, and, thus, the signatory would be bound by that confirmed fact if it were somehow relevant in a court proceeding.  However, it might not be as clear as one would think, or at least was not so clear in the First Department until May 21, 2020.

In its decision in the case of PH-105 Realty Corp. v. Elayaan, 2020 WL 2562558 (1st Dep’t 2020), the First Department ordered the unanimous reversal on the law of the lower court’s order granting defendants a motion for summary judgment and dismissing declaratory and unjust enrichment claims alleged by plaintiff in connection with its assertion that the plaintiff had a 75% ownership interest in 181 Edgewater LLC (“Edgewater”).

I will return to that decision in a moment, but the confusion lied in the First Department’s decision in the matter of Bhangi v. Baluch, 99 A.D.3d 587 (1st Dep’t 2012).  In Bhangi the trial court denied a petition for dissolution of a company where the petitioner alleged that she had a 50% ownership interest in Flag Time as required by Business Corporation Law § 1104.  The basis for her contention was that Flag Time’s federal tax return for the year 2000 indicated that she was a 50% owner of the corporation.  However, the lower court held and the First Department agreed that “without more, to satisfy petitioner’s burden, since corporate and personal tax returns, even when filed with government agencies are ‘not in and of [themselves] determinative’” citing Matter of Heisler v. Gingras, 90 N.Y.2d 682, 688 (1997).  To be sure, in the Bhangi case there was evidence which contravened petitioner’s contention, but the tax return was the tax return and, indeed, it was not enough.

Yet, in PH-105 Realty Corp., the First Department made it clear that to the extent its decision in Bhangi had been “interpreted as making the doctrine generally inapplicable with respect to factual statements of ownership and tax returns, we clarify that the doctrine [known as the ‘Tax Estoppel Doctrine’] applies where, as here, the party seeking to contradict the factual statements as to ownership in the tax returns signed the tax returns, and has failed to assert any basis for not crediting the statements.”

In so holding, the court ruled that the defendants were estopped to deny the 75% ownership interest in Edgewater that was asserted, it did not follow that plaintiff was entitled to summary judgment on its claim for a declaration that the individual remained a 75% owner of Edgewater or in the alternative unjust enrichment claim alleging an unlawful deprivation of that ownership right.  The court simply determined that, for the period 2010 through 2014, the signature by the defendant on the federal tax return was enough to counter an argument that, for that period, the plaintiff was not a 75% owner of the LLC.

The takeaway seems rather straightforward, which is something we all would have thought was rather straightforward from the outset.  If the party seeking to contradict factual statements as to ownership in tax returns sign the tax returns and could not discredit (which you generally would not), his assertion in those returns, it is, indeed, axiomatic that, for that particular period, he could not deny that which he confirmed on the returns—period.

Kevin Schlosser Authors, “Renewed Allure In Hiring “Private Judges” Under the CPLR”

In the wake of the Covid-19 crisis, there should be renewed interest in the often over­looked yet extremely useful provisions of the CPLR authorizing parties to hire a “referee,” or as I will call it here, a private judge, to de­termine commercial and business disputes. Believe it or not, the utility of a private judge to determine legal disputes has been around under the New York justice system for over a century. See Woodruff v. Dickie, 31 How. Pr. Rep. 164 (Sup. Ct. N.Y. Co., 1866).

The administrative judges and the office of court administration have certainly made pru­dent and understandable decisions in juggling issues of public health and safety in adminis­tering the massive New York state system of justice during this pandemic. Yet, counsel and their clients sure had a wake-up call when the entire e-filing system of the New York Courts was shut down except for cases deemed “essential.”

Authority and powers of pri­vate judges

Enter the availability of “pri­vate judges” as authorized by the CPLR. The authority for such an appointment is contained in CPLR 4001: “A court may appoint a referee to determine an is­sue, perform an act, or in­quire and report in any case where this power was hereto­fore exercised and as may be hereafter authorized by law.” The section governing the power and authority of the private judges who “determine an issue” is CPLR Article 43.

The parties to a case (once it is filed) can immediately stipulate to the ap­pointment of the private judge. CPLR 4317(a) provides: “The parties may stipulate that any is­sue shall be determined by a ref­eree.” Only in three limited cir­cumstances must leave of court by sought first: “Leave of court and designation by it of the referee is required for references in matrimonial actions; actions against a corporation to ob­tain a dissolution, to appoint a receiver of its property, or to distribute its property, un­less such action is brought by the attorney-general; or ac­tions where a defendant is an infant.” Id. Once the parties so stipulate and name their private judge, the clerk must issue an order effectuating the stipulation: “Upon the filing of the stipulation with the clerk, the clerk shall forthwith enter an order referring the issue for trial to the referee named there­in.” Id.

CPLR 4301 affords the private judge broad powers, equivalent to an elected Supreme Court Justice: “A referee to determine an issue or to perform an act shall have all the powers of a court in performing a like func­tion; but he shall have no power to relieve himself of his duties, to appoint a successor or to adjudge any person except a witness be­fore him guilty of contempt.”

The private judge has the power not only to issue a decision, but also a fully effective and enforceable judgment. See CPLR 5016(c) (“Judgment upon the decision of a court or a referee to determine shall be entered by the clerk as directed therein. When relief other than for money or costs only is granted, the court or referee shall, on motion, determine the form of the judgment.”)

Benefits and advantages of a private judge

There are plenty of benefits to hiring a pri­vate judge who is dedicated exclusively to the case at hand.

Flexibility and certainty

While the authority to appoint a private judge to determine issues in dispute derives from the CPLR, the private judge is free to conduct the affairs and proceedings at times, places and in a manner at his or her discre­tion. The parties chart their own course by stipulating to the private judge and coordinat­ing their respective schedules and procedural preferences with just one person, rather than the entire administration of the court system. Further, dates of all proceedings can be coor­dinated based upon the respective schedules of the parties and only one other person – the private judge. Imagine dates certain for hear­ings, trials and/or written submissions, which afford for advance planning.

Expertise

The parties jointly select the best person for the job. They can identify and choose some­one with precisely the experience, knowledge and temperament that fits the case needs.

Avoid cost and bureaucracy of ADR forums

Hiring a private judge can afford advantag­es over resolving a dispute in arbitration or adminis­tered through the large well-known dispute resolution or­ganizations. For one, hiring a private judge can avoid the administrative bureaucracy and cost associated with the large ADR forums and venues. In short, the private judge is at the “beck and call” of the parties themselves.

An Enforceable Judgment

Unlike arbitration awards, as noted above, the decision of a private judge can immedi­ately be reduced to an enforceable judgment. CPLR 5016(c). There is no extra step to insti­tute an entirely new proceeding under CPLR 7511 to confirm the private judge’s decision like there is after an arbitration award is is­sued. Thus, the additional time, expense and litigation is eliminated.

Full appeal rights preserved

Unlike in arbitration, the decision and judgment of the private judge are fully re­viewable on appeal through the New York Court system based upon all the grounds available to challenge any decision of a court. See Bed­ford v. Hol-Tan Co., 140 App.Div. 282, 285–286, 125 N.Y.S. 173, 175–176 (1st Dep’t 1910)(“A referee appointed to hear and determine has the same power and au­thority as a justice of the court, and his de­cision stands as the decision of the court. [CPLR 4319.] His decision can be reviewed and set aside only for the same reason and in the same manner as can a decision of the court.”); Hampton Bays Supply Co. v. Adler, 3 Misc.2d 224, 226, 147 N.Y.S.2d 775, 778 (N.Y. Sup. 1955). Therefore, the reluctance that attorneys and their clients may have to the relatively unchecked power of an arbitra­tor to definitively determine their dispute is ameliorated by the appellate review process.

In New York, we are very fortunate to have experienced, dedicated Commercial Divi­sion judges who work hard to provide a so­phisticated forum for resolving commercial disputes. Nevertheless, as we all try to find ways to resolve commercial disputes in the most cost-efficient and expeditious manner, thought should be given to the use of private judges as well. It may not be appropriate for all circumstances but it certainly presents an additional option.

Kevin Schlosser is a partner at Meyer, Suozzi, English & Klein, P.C., where he is chair of the Litigation and Alternative Dispute Resolution Department, which has a full roster of available private judges from virtually all disciplines of law.

Matthew Marcucci Authors, “Case Law May Guide NY Employers On COVID-19 Bias Risks”

Matthew MarcucciBy: Matthew Marcucci

The COVID-19 outbreak has affected all aspects of American life, and perhaps none so much as the employer-employee relationship. Important new federal and state laws now provide employees with virus-related paid leave and other protections.[1]

For example, the federal Families First Coronavirus Response Act mandates paid leave for certain categories of affected employees. And New York state has gone even further by passing COVID-19-related paid leave legislation that forbids employers from firing employees subject to orders of quarantine or isolation.

In short, COVID-19 has thrown the employer-employee relationship into flux. The new status quo includes enhanced obligations for employers under the New York State and New York City Human Rights Laws, or HRLs. These laws prohibit discrimination on the basis of traits such as race, creed, national origin and disability.

Now, the HRLs extend to discrimination involving COVID-19. Accordingly, New York employers must carefully navigate the post-pandemic world. As employers implement measures to mitigate the virus’s effects, they must ensure that such measures do not rise to the level of unlawful COVID-19-based discrimination.

New York City has responded most strongly to the outbreak. The city’s Commission on Human Rights announced that “[h]arassment and discrimination on the basis of race, national origin, age, and disability (including having COVID-19 or another serious illness) is illegal under the New York City Human Rights Law.”[2] This language strongly implies that the virus itself qualifies as a disability that triggers liability under the city’s HRL.

While New York state has not gone quite as far as the city, its Division of Human Rights, or DHR, has declared that discrimination involving COVID-19 can violate the state’s HRL. The DHR recently issued a fact sheet outlining some of the upshots of this development:[3]

  • Employees can file a complaint with the DHR if they believe they have been discriminated against because of a perceived connection between their race, national origin or disability and COVID-19.
  • Employers cannot fire their employees, send them home or tell them not to come to work because they think they may have been exposed to COVID-19 based solely on their race, national origin or disability.
  • Employers cannot terminate their employees or prevent them from working based on speculation that their race, national origin or disability indicates possible exposure to COVID-19.
  • Employers cannot discriminate against employees who choose to wear face masks as protection against possible exposure to COVID-19.
  • Employers who terminate or send home their employees for a discriminatory reason may be responsible for the employees’ missed wages.

At the federal level, things are less certain. The Americans with Disabilities Act also prohibits disability-based discrimination. But the agency that enforces the ADA, the U.S. Equal Employment Opportunity Commission, has not determined whether COVID-19 qualifies as a disability under the ADA.[4]

As the legal landscape continues to adjust to COVID-19, it is clear that the outbreak is changing basic aspects of some the most important laws for employers. And while courts have not yet had the opportunity to adjudicate claims of COVID-19-based discrimination under the HRLs, prior court opinions involving analogous claims provide critical guidance on how employers can limit their liability exposure going forward.

The definition of “disability” under the state’s HRL is expansive. Not only do physical or medical impairments count, but so too does a “record of such impairment” or a “condition regarded by others as an impairment.”[5] Even if an employee does not actually have COVID-19, therefore, employers likely will face liability for discrimination predicated on the false assumption that the employee does.

Employers should also consider whether they can provide their disabled employees with reasonable accommodations that would enable these employees to continue performing their essential job functions.

As a general matter, employers can terminate disabled employees without fear of violating New York law if their disabilities totally prevent these employees from performing their duties — even with the benefit of a reasonable accommodation.[6] But if the employer can provide disabled employees with reasonable accommodations that enable them to perform their essential job functions, then the law prohibits disability-based discrimination.

Courts apply a rigorously fact-specific test to assess whether an employer who terminated a disabled employee did so in a discriminatory manner. The “particular disability must be such that it prevents the particular individual from performing in a reasonable manner the particular activities involved in the job or occupation before an employer is permitted to terminate the individual employee.”[7]

Just because an employee has COVID-19 or is displaying symptoms is not enough to justify termination. Rather, employers should only begin contemplating adverse actions such as termination where no reasonable accommodation would enable an employee affected by the virus to perform his specific duties. And even then, employers must proceed with caution.

In Antonsen v. Ward in 1991, for example, a New York City police officer with Crohn’s disease convinced the New York Court of Appeals that his dismissal violated the state’s HRL. Although the officer had been successfully treated for the disease, the police commissioner argued that certain scientific literature established that the disease would recur.

Accordingly, the police commissioner contended that the officer’s dismissal did not violate the law. The court completely rejected this argument, stating:
Employment may not be denied based on speculation and mere possibilities, especially when such determination is premised solely on the fact of an applicant’s inclusion in a class of persons with a particular disability rather than upon an individualized assessment of the specific individual.[8]

The Antonsen case has powerful lessons in the COVID-19 era. First, employers cannot terminate employees on the assumption that, at some indeterminate point in the future, the virus’s lingering effects will prevent affected employees from doing their jobs.

Such a decision, based on speculation and mere possibilities, almost certainly would violate the law. More broadly, the Antonsen case demonstrates the highly individualized nature of a court’s inquiry into the reasons for an employee’s termination. Now, courts may assess whether an employer who terminated an employee affected by COVID-19 based its decision on the employee’s inclusion in the class of persons with the virus rather than an individualized assessment of the employee’s specific role in the company.

As to reasonable accommodations, employers should make every effort to engage in a good faith dialogue with their disabled employees about measures that might enable them to continue working. This point may become particularly important in situations where an employee has recovered from COVID-19 but continues to suffer long-term respiratory or other impairments resulting from the virus.

In Jacobsen v. New York City Health and Hospitals Corp. in 2014, for example, an employee of the New York City Health and Hospitals Corp., or HHC, who performed site inspections of asbestos abatement projects contracted a serious lung disease.

Upon returning to work after a medical leave of absence, the employee complained that he had difficulty breathing and repeatedly requested protective respiratory equipment. But the HHC denied these requests, and instead merely provided the employee with a dust mask. Eventually, the HHC terminated the employee, who alleged that the HHC had violated the state’s and city’s HRLs.

The HHC sought summary judgment dismissing the employee’s claims. But the New York Court of Appeals found that, as a matter of law, the HHC could not prevail. Specifically, the court held that the HRLs
generally preclude summary judgment in favor of an employer where the employer has failed to demonstrate that it responded to a disabled employee’s request for a particular accommodation by engaging in a good faith interactive process regarding the feasibility of that accommodation.[9]

Had the HHC taken the simple step of responding in good faith to the employee’s request, it might have entirely avoided this adverse result. Indeed, according to the court in Jacobsen, “where the employee seeks a specific accommodation for his or her disability, the employer must give individualized consideration to that request and may not arbitrarily reject the employee’s proposal without further inquiry.”[10]

The court wrote, “as a matter of common sense,” the employee’s request for a respirator “would have reduced [his] dust exposure and logically might have allowed him to continue working at construction sites at the time he asked for that accommodation.”[11]

The court’s decision placed the employee in a commanding position. Short of agreeing to settle the case, the HHC had no choice but to proceed to a full trial on the merits of the employee’s claims. Similarly, employees who recover from COVID-19 but suffer lingering effects may propose accommodations to enable them to work, and employers would be mistaken not to take these requests seriously.

In sum, employers must balance their efforts to deal with COVID-19 against their enhanced legal obligations under New York law. This changing landscape will continue to evolve, and employers should make every effort to keep pace.

 

Matthew A. Marcucci is an associate at Meyer, Suozzi, English & Klein, P.C.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] https://www.msek.com/publication/paid-covid-19-leave-navigating-available-benefits-under-the-federal-ffcra-and-new-york-state-law/.

[2] https://www1.nyc.gov/site/cchr/media/covid19.page.

[3] https://dhr.ny.gov/sites/default/files/pdf/postings/DHR_COVID19_DiscriminationHandout_032420.pdf.

[4] https://www.eeoc.gov/transcript-march-27-2020-outreach-webinar (“[I]t is unclear at this time whether COVID-19 is or could be a disability under the ADA.”).

[5] Matter of Antonsen v. Ward , 77 N.Y.2d 506 (1991).

[6] Jacobsen v. New York City Health and Hosps. Corp. , 22 N.Y.3d 824 (2014).

[7] Matter of Antonsen, supra.

[8] Id.; see also Matter of Brentwood Union Free School Dist. v. Kirkland, 126 A.D.3d 898 (2d Dep’t 2015) (“Although the petitioner proffered some evidence at the hearing that the complainant’s [lung disease] may have prevented him from performing the duties of the job in a reasonable manner, the petitioner did not have this information at the time it made its determination and, in any event, this evidence merely conflicted with other evidence in the record indicating that the complainant’s disability did not render him incapable of performing the duties of the job in a reasonable manner.”).

[9] Jacobsen v. New York City Health and Hosps. Corp., supra .

[10] Id.

[11] Id.

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Hon. Ira Warshawsky Authors, “The Neutral Facilitator – The Solution for Equitable and Fair Resolutions During Troubling Times”

What Day is it? Is it Tuesday?

No, It’s Sunday.

How was I able to solve this conundrum?   A question many of us have asked ourselves when all structure seems to have gone out of our lives in the last few weeks, so we literally don’t recall the day of the week. In my case I knew it was Sunday when I brought in the morning paper and it had the Sunday comics neatly folded within.

Regretfully, such a simple solution is not available to businesses across the nation on what has become known as “the time of coronavirus.” [a play on words from the book, Love in the Time of Cholera, by Gabriel Garcia Marquez.]

What do you say when your client comes to you and complains that he had to stop manufacturing widgets in that the main components of his widgets come from India and they just shut down the country?

Another client (landlord) complains that his rent hasn’t been paid because the tenant contends he is a “non—essential” business and all his employees are home (and barely) working from there?

Let’s look at the flip side – the client complains “how do I pay my rent when I have no income and my accounts receivable collection attempts have utterly failed?”

How about another more traditional example for those of us involved in business litigation. A client is a 50% shareholder in a profitable business. Her partner is the managing partner of the business. He changed the password on their bank accounts and she thinks he is moving funds to another account under his name only. In the good old days, a month ago, we would be preparing an OSC (Order to Show Cause) with a TRO (Temporary Restraining Order) and charging into court. But now…?

The New York Supreme Court-Civil, initially was only handling “essential matters” (as defined in Administrative Order 78/20; March 22, 2020). The Court now, as of April 13, 2020, started handling non-essential matters, including torts (medical malpractice and asbestos for example) commercial, matrimonial as well as trusts and estates. All of these matters are to be handled remotely via telephone conference or Skype for Business. Well, clearly this is good news. But this newest directive only applies to Pending Matters. Thus all the examples that I gave previously are still left outside the courthouse doors.

The disruptions caused by super storm Sandy or in fact any other natural disaster that might have struck the New York metro area will soon pale in comparison to the pandemic of 2020.

Your problems, and those of your clients or putative clients are not disappearing as time passes.

People enter into contracts to assure themselves of the reliability and the predictability of their relationship with another party. They expect the agreement to be fulfilled. When it is not, they expect recourse pursuant to the terms of the agreement. But now…?

Where is the legal process to handle these “non-essential” not yet pending, but very important matters? Does it exist? Are you or your clients willing to wait for some future date when a judge, jury or arbiter rules on your claim? Three or more years down the road? I think not.

The easiest, least expensive possible solution is the Neutral Facilitator. The Neutral Facilitator wants to help both sides reach their goals in times of crisis.

The solution to our commercial conundrum requires that our parties are willing to be flexible, and while we’re at it, creative. For example: A restauranteur in a high end Manhattan restaurant owed a meat supplier a great deal of money. Solution – He made partial payment in cash and gave the supplier meal coupons to use for himself or for anyone he wished to give them. The restauranteur gained new customers, the meat supplier created good will with an untold number of people and the business relationship continued. They entered into an agreement for what was supposed to be a long-term relationship. They did not want to see it destroyed, but rather looked to maintain it into the future.

Litigation looks to compensate one side or the other for damages. We don’t have the luxury of such a path at this time.

The Neutral Facilitator should work with the lawyers and their clients (the team-lawyer and client) to resolve their problems toward a continued future relationship, if at all possible.

He or she may frequently use collaborative negotiation.- sometimes called constructive, principled or interest-based negotiation. The key is an approach that treats the “relationship” as an important and valuable element of what’s at stake, while seeking an equitable and fair agreement. It could be the landlord-tenant or manufacturer-purchaser relationship, or the two partners in a battle for control of the company.

The Neutral Facilitator, along with the lawyer-client teams, will seek to uncover the true interests of both parties so that there can be more potential points of agreement. The bigger the pie (so to speak), the more likely that both parties can obtain a large enough piece to continue their relationship.

Just as a mediator may save the parties time, money and continued aggravation, a Neutral Facilitator may quickly act to assist the parties to revise an agreement, contract or lease to weather the current storm and continue their business relationship. In our shareholder example above, a Neutral Facilitator could hopefully convince both sides to reach an agreement that would prevent any further animosity and cobble together a resolution that could be revisited on a quarterly basis for review.

Obviously we need two (or more) parties willing to sit down (virtually) and discuss their issues, but it can be done.

The Neutral Facilitator IS the pathway to travel in this time of the Coronavirus.

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Hon. Ira B. Warshawsky, is a retired Justice of the Supreme Court, Nassau County, Commercial Division. He is a member of NAM’s (National Arbitration and Mediation) Hearing Officer Panel and is available nationwide for arbitrations and mediations.  He was voted a Top Ten Arbitrator in the New York Law Journal Reader Rankings Survey in 2013, 2015 & 2016. Further, in 2018, he was named a National Law Journal Alternative Dispute Resolution Champion, as part of a select group of only 46 nationwide. Judge Warshawsky is Of Counsel to Meyer, Suozzi, English & Klein, P.C., in Garden City, NY.

For any questions or comments, please contact Jacqueline I. Silvey, Esq. / NAM General Counsel, via email at jsilvey@namadr.com or direct dial telephone at 516-941-3228.

STOP THE WORLD (PLEASE!) I WANT TO GET OFF!

“Stop the World: I Want to Get Off” was a musical with Anthony Newley. It originally opened in London in 1961 and made it to Broadway in 1962. It was followed by a film in 1966 and a revival in 1978.

In the play, whenever something unsatisfactory happened to the lead character, named Littlechap, he called out, “Stop the World” and proceeded to address the audience directly.  This occurred multiple times throughout the performance.

During the week of March 9, 2020, there were numerous occasions where many of us wanted to scream “stop the world” as the markets plunged, the world of sports was put on hold and our country struggled to come to terms with a combination of threats (health, social, and economic) that most of us have never witnessed in our lifetimes. The coronavirus, Covid-19, has now been added to our lexicon.

We, as individuals, cannot do much about most of these things except to “soldier on” and follow good health habits.  The world continues to spin and our economy must go on as well. We cannot yell out, “stop the world.” It won’t work. We obviously are prioritizing the health and well-being of our employees, colleagues and families while keeping our organizations and economies moving forward.

The court system is practically on hold. Leadership has pushed the pause button. That does not mean, however, that legal matters must vegetate and become even older than they already are. Just because you cannot get your jury trial, that does not mean you cannot resolve your case in mediation or in arbitration. We all know that over 90% of all cases within our civil system settle before trial, so why delay?

The answer is Virtual Mediation and Virtual Arbitration.

What should you look for in order to accomplish either a virtual mediation or arbitration?  As you search for the right ADR vendor, who has both ADR and technical expertise, you may want to consider asking the following questions:

  1. Will my people be able to converse (virtually) without being in contact with the adversary? Are private virtual conference rooms available through your service?
  2. Will my exhibits be easily exchanged and used by the witness and my adversary? Bottom line, do you utilize and support document sharing technology?
  3. Will my staff be able to use their own devices from home, office or even on the road? Or must they be using specific equipment provided by the vendor?
  4. Is special software needed for my employee’s equipment and, if so, is there training available for my people as well as technology support during the course of the mediation or arbitration?
  5. What about security? How do you, the ADR vendor, provide for cybersecurity? Remember, as a lawyer you have an ethical duty to protect your client’s secrets. This carries over to how you choose a vendor. You have the responsibility for vetting a vendor who will, in some fashion, be in possession of your client’s information which may, or may not, be of a confidential nature.
  6. Does the ADR vendor offer flexibility in providing for multiple parties in different locations?

Remember the importance of your choice. This could be a substantial savings to you and your client in travel costs. And, perhaps more important, the ADR vendor you select should be able to provide you and your client with the confidence of a physically safe environment.

Remember also that one of the advantages of mediation is that it puts you in control of your case and not the court system, which should make for a more efficient and cost-effective process.

What may have been a nice novelty to experiment with a month ago, virtual dispute resolution is now a necessity, and appears to be for at least some months to come. Don’t wait. At least look seriously into the world of virtual mediation and arbitration as soon as possible. You might actually impress your clients with your ability to find an ADR firm that has successfully harnessed technology to serve your clients’ needs and save them money, now and in the future.

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Hon. Ira B. Warshawsky, is a retired Justice of the Supreme Court, Nassau County, Commercial Division. He is a member of NAM’s (National Arbitration and Mediation) Hearing Officer Panel and is available nationwide for arbitrations and mediations.  He was voted a Top Ten Arbitrator in the New York Law Journal Reader Rankings Survey in 2013, 2015 & 2016.  Further, in 2018, he was named a National Law Journal Alternative Dispute Resolution Champion, as part of a select group of only 46 nationwide. Judge Warshawsky is Of Counsel to Meyer, Suozzi, English & Klein, P.C., in Garden City, NY. 

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