Business Torts and Employment Litigation Blog

The Special Committee on Discovery and Case Management in Federal Litigation was established to examine the Federal Rules of Civil Procedure and local rules of courts and judges that address discovery and case management in litigation in federal court and to make recommendations as to rule amendments, if any, that concern those topics.

The Committee is also to make recommendations as to the need for rules, if any, that, inter alia, address preservation of documents needed for litigation. In doing so, the Committee will consider all relevant topics relating to discovery and inspection, including, but not limited to (a) the impact of increasing electronic communications and electronically stored information ("ESI"), (b) the length of time litigation takes, (c) costs, (d) the definition of "relevancy", and (e) appropriate use of court resources.

The Final Report of the Committee was issued on April 2, 2012:
Final Report Link
Committee Roster

NOTE: Opinions expressed are those of the Committee preparing the report and do not represent those of the New York State Bar Association unless and until the report has been adopted by the Association's House of Delegates or Executive Committee.

SEE ALSO:
Recent Entry on E-Discovery Case Developments in New York

Thursday, April 5, 2012
7:45AM - 9:00AM
$9/person
Continental Breakfast Buffet
(This Event is Open to Members and Non-Members)

Chief Judge William M. Skretny of the United States District Court for the Western District of New York will deliver remarks at the Mid-Day Club of Buffalo on April 5, 2012. The remarks by Chief Judge Skretny will be part of the Mid-Day Club's regular Breakfast Lecture Series, and will run from 7:45 am to 9:00 am. A continental breakfast will be served.

Founded in 1936, the Mid-Day Club has served as a meeting place for Western New York's leaders to meet to share delicious food and lively conversation. Located in the West Tower of the Liberty Building (21 stories above street level), the Mid-Day Club offers some of the best views in Buffalo.

It will be fitting that we will meet with Chief Judge Skretny directly beneath a 36 foot replica of Lady Liberty (perched over 300 feet above street level) to get a bird's eye view of the operation of the Western District and, in particular, the opening of the new Federal Courthouse.

Reservations Requested. Please call the Mid-Day Club at 852-7792, or email
Heath Szymczak.

THREE-CITIES, ONE MISSION: STREAMLINING LITIGATION
VIEWS FROM THE BENCH IN UPSTATE NEW YORK

When: March 7, 2012 from 3:30-5:30 pm (reception to follow 5:30-6:30 pm)

CLE Credits: 2 MCLE (Professional Practice)
(for experienced attorneys, credit not approved for newly admitted attorneys)

Cost: $25.00

"If we win another such battle . . . we will be completely lost"
- King Pyrrhus of Epirus (279 B.C.)

Courts are being asked to do more with less. At the same time, counsel (both inside and outside counsel) are faced with mounting pressures to quickly and cheaply navigate an increasingly complex system of rules, legislation, and decisions, all of which have made litigation riskier and more expensive. A litigant's "day in court" may take months or even years, and may result in a disproportionately large price tag as compared to the relief sought. "Justice delayed" has unexpected (but very real) economic and lost opportunity costs.

The New York State Bar Association will present a unique and exciting opportunity to participate in a dialogue with a panel of federal and state court judges from across Upstate, New York. The panel will discuss the nuts and bolts of litigation (with a focus on commercial litigation) and ways in which it can be made more efficient and cost-effective, including approaches to discovery (including electronic discovery), motion practice, case management, and ADR.

There will be a reception following the discussion. Relevant materials will also be provided. All judges and location participants in all three cities will be connected via live interactive video feed.

The panel will consist of six judges from Syracuse, Rochester and Buffalo (three New York State Commercial Division justices and three federal magistrate judges):

Hon. Deborah H. Karalunas
Justice of the Supreme Court
Onondaga County Supreme Court

Hon. Jeremiah J. McCarthy
United States Magistrate Judge
U.S. District Court, Western District of New York

Hon. John A. Michalek
Justice of the Supreme Court
Erie County Supreme Court

Hon. Marian W. Payson
United States Magistrate Judge
U. S. District Court, Western District of New York

Hon. David E. Peebles
United States Magistrate Judge
U.S. District Court, Northern District of New York

Hon. Matthew Rosenbaum
Justice of the Supreme Court
Monroe County Supreme Court

Moderators:
Mitchell J. Katz, Esq. - Menter, Rudin & Trivelpiece, P.C. (Syracuse) - Program Chair
Sharon M. Porceillo, Esq. - Ward Greenberg Heller & Reidy LLP (Rochester)
Heath J. Szymczak, Esq. - Jaeckle Fleischmann & Mugel, LLP (Buffalo)
David H. Tennant, Esq. - Nixon Peabody LLP - Ex Officio (Chair, Commercial and Federal Litigation Section)

You can attend and participate at any of the following locations:

SYRACUSE
Onondaga County Courthouse
Room 400
401 Montgomery Street
Syracuse, New York 13202

ROCHESTER
Hall of Justice
99 Exchange Boulevard
Rochester, NY 14614

BUFFALO
Ceremonial Courtroom
Old County Hall
92 Franklin Street, 2d Floor
Buffalo, New York 14202

RSVP INFORMATION:

ONLINE - Buffalo Location
ONLINE - Rochester Location
ONLINE - Syracuse Location

or

BY FAX to State Bar Service Center re: Streamlining Litigation March 7, 2012 at 518.487.5758. See the fax form for Discounts and Scholarship information. Click here for fax form

or

EMAIL to sbsc@nysba.org re: Streamlining Litigation March 7, 2012 and include information requested on the fax form

Questions?? Please contact Patricia Johnson, Esq. before 2/17/12 and after 2/26/12 at 518.487.5688

PLEASE NOTE: For security purposes you must RSVP to attend and no one will be admitted to the courthouses after 4:30. Please advise if you are attending the CLE only (3:30-5:30 p.m.) or the CLE and reception (3:30-6:30 p.m.). The $25.00 fee includes the reception.

Accommodations for Persons with Disabilities: NYSBA welcomes participation by individuals with disabilities. NYSBA is committed to complying with all applicable laws that prohibit discrimination against individuals on the basis of disability in the full and equal enjoyment of its goods, services, programs, activities, facilities, privileges, advantages, or accommodations. To request auxiliary aids or services or if you have any questions regarding accessibility, please contact Kathy Heider at (518) 487-5500 or kheider@nysba.org.

New York's First Department, in VOOM HD Holdings LLC v EchoStar Satellite L.L.C.,2012 NY Slip Op 00658, ___ N.Y.S.2d ___, 2012 WL 265833(1st Dept. January 31, 2012), has adopted the federal "Zubulake standard" (Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003), otherwise known as "Zubulake IV"), as follows: "Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold to ensure the preservation of relevant documents ... The preservation obligation is not limited simply to avoiding affirmative acts of destruction. Since computer systems generally have automatic deletion features that periodically purge electronic documents such as e-mail, it is necessary for a party facing litigation to take active steps to halt that process . . . Regardless of its nature, a hold must direct an appropriate employee to preserve all relevant records, electronic or otherwise, and create a mechanism for collecting the preserved records so they might be searched by someone other than the employee. The hold should, with as much specificity as possible, describe the ESI at issue, direct that routine destruction policies such as auto-delete functions and rewriting over e-mails cease, and describe the consequences for failure to so preserve electronically stored evidence ... Where a party is a large company, it is insufficient, in implementing such a litigation hold, to vest total discretion in the employee to search and select what the employee deems relevant without the guidance and supervision of counsel." See also, U.S. Bank N.A. v GreenPoint Mtge. Funding, Inc.,2012 NY Slip Op 01515, ___ N.Y.S.2d ___, 2012 WL 612361(1st Dept. February 28, 2012)(adopting Zubulake cost shifting analysis)

The Zubulake standard places a high burden upon in-house and outside lawyers, often requiring them to guess at whether a particular circumstance warrants implementation of litigation holds and to what degree. This issue will no doubt be heading to the New York Court of Appeals for consideration of the steps required by counsel when faced with possible litigation. In the meantime, counsel must review their internal litigation hold policies, protocols, and safeguards.

The NYSBA's Special Committee on Discovery and Case Management in Federal Litigation and the "Faster, Cheaper, Smarter Working Group" are presently considering these issues. The mandate of these committees is to make recommendations as to the need for rules, if any, that, inter alia, address preservation of documents needed for litigation. In doing so, they are reviewing all relevant topics relating to discovery and inspection, including, but not limited to (a) the impact of increasing electronic communications and electronically stored information ("ESI"), (b) the length of time litigation takes, (c) costs, (d) the definition of "relevancy", and (e) appropriate use of court resources.

These NYSBA committees are focusing upon possible amendments to the Federal Rules of Civil Procedure under consideration by the Civil Rules Advisory Committee of the Standing Committee on Rules of Practice and Procedure of the Judicial Conference of the United States. The Standing Committee develops proposed amendments to the Federal Rules of Civil Procedure which may eventually be presented to Congress under the Rules Enabling Act of 1934, 28 U.S.C. § 2071, et seq. The Civil Rules Advisory Committee (takes a while to load) is currently studying proposals for federal rules concerning preservation and spoliation.

The lack of a federal rule governing preservation complicates the analysis so that courts are often operating within their inherent authority. Consequently, a divergence has arisen in judicial viewpoints analyzing the concepts of preservation and spoliation, particularly in the area of ESI. An amendment of the Federal Rules of Civil Procedure (Rules 26 and 37) is no doubt necessary to ameliorate this lack of uniformity.

For a recent example of the far-ranging application of Zubulake, see the somewhat harsh decision of the Southern District of New York in Pippins v. KPMG LLP, --- F.R.D. ----, 2012 WL 370321 (S.D.N.Y., February 3, 2012)(also takes a while to load); see also, Monique Da Silva Moore, et al. v. Publicis Groupe and MSL Group, Case 11 Civ. 1279 (ALC)(AJP)(S.D.N.Y., February 24, 2012) (first federal judge to order litigants to use predictive coding in document review).

THIS TOPIC WILL BE COVERED HERE:
NYSBA UPSTATE NEW YORK TRI-CITY JUDICIAL SUMMIT - March 7, 2012

If you need a quick refresher on e-discovery issues, see the great primer on the subject recently provided by the NYSBA:
"Best Practices In E-Discovery In New York State and Federal Courts"
NYSBA Bar Journal Article on e-Discovery and Cloud Computing.

April 2, 2012:
NYSBA Committee Issues Report on E-Discovery and Proposed Changes to Federal Rules of Civil Procedure

Heath J. Szymczak, Esq.

DISCLAIMER: This site is for general informational purposes only and is not intended to provide legal advice. Please contact an attorney relative to the circumstances of your particular case. The use and receipt of the information offered on this web site is not intended to create, nor does it create, an attorney-client relationship.

In Amusement Industry, Inc. v. Midland Avenue Associates, LLC, ---F.Supp.2d ----, 2011 WL 3463117 (S.D.N.Y. 2011), the defendants, collectively referred to as the "Mark Stern Defendants", have been sued by plaintiff, Amusement Industry, Inc., in order to seek damages for a misappropriation of $13 million in funds that Amusement deposited in an escrow account for the purposes of purchasing eleven shopping centers. Mark Stern entered into a contract to purchase the shopping centers from Colonial Realty Limited Partnership and he sought the additional funds needed to close the purchase of the shopping centers from Amusement. Amusement entered into a "letter of understanding" ("LOU") with Mark Stern, according to which Amusement would deposit $13 million into an escrow account. There was an understanding on behalf of the parties that the funds would stay in escrow until the terms of the agreement were finalized, granting Amusement an ownership interest in the shopping centers, security interests in the properties and the repayment of the $13 million. Despite Amusement's proposals to finalize the terms of an agreement, an agreement was never reached.

At the instruction of Mark Stern, the $13 million was transferred, without the knowledge of Amusement, to FRG Corp., an entity controlled by Mark Stern. A fraction of the funds were used toward the purchase of the shopping centers, but more than half of the funds were used for other purchases. The funds were diverted to the other named defendants, including Stephen Stern, Midland Avenue Associates, LLC, and Payless Office Products Corp., among others. Mark Stern and Stephen Stern subsequently created false expenses so that it would appear that the expenses associated with buying the shopping centers were higher than they actually were. Essentially, Mark Stern wanted Amusement to believe that their money was still in escrow and was being used properly. On several occasions, Amusement requested that the funds be returned, but they received no response. Mark Stern also directed Amusement's funds to be transferred into multiple accounts belonging to his family, friends, and close associates. None of the transferees had any legitimate connection to the purchase of the shopping centers, but they did have close relationships with Mark Stern. Additional transfers were made later, following the initial transfers, to further obscure the location of Amusement's funds.

Under New York law, "if a conveyance is made without fair consideration and the transferor is a debtor who is insolvent or will be rendered insolvent by the transfer, the conveyance is deemed constructively fraudulent." N.Y. Debt. & Cred. Law § 273. Fair consideration requires both fair equivalency of the consideration given and good faith. The remedy available for a creditor in a fraudulent conveyance action where the fraudulently transferred funds are no longer in the possession of the transferee is a money judgment in an amount up to the value of the fraudulently transferred funds.

The Mark Stern Defendants only challenge the claim that they were insolvent or rendered insolvent by the transfers. Defendants concede "the other elements of the fraudulent conveyance claim: that is, the showing that Amusement was a creditor, the transferor was a debtor, there was no fair equivalency of consideration, and the lack of good faith by the transferor and the transferee." Defendants argue that because Mark Stern and his entities controlled the transfers and were the beneficiaries of the improper transfers, they could not have been rendered insolvent by the transfer "because any outgoing transfer of funds would have been 'zero[ed]' out by the subsequent receipt of funds." The court did not accept this contention. Instead, the court held that it was not beyond the fraudulent conveyance statute simply because there was common ownership and control by one of the entities. The court refused to create an exception where a set-aside of a transfer would not be allowed because the transferor had an interest in the transferee entity.

Regarding Amusement's claim for conversion against Stephen Stern and the Mark Stern Defendants, the defendants contend that Amusement failed to state a claim. Under New York law, to state a claim for conversion a plaintiff must show that "someone, intentionally and without authority, assume[d] or exercise[d] control over personal property belonging to someone else, interfering with that person's right of possession." The court disagreed with the defendants, finding that Amusement's allegations met all of the elements of a conversion claim. Amusement had a possessory interest in the $13 million it placed in escrow and the defendants intentionally, without permission of Amusement, took control of the funds and disbursed them to transferees who had knowledge that the funds lawfully belonged to Amusement.

In terms of the claim for aiding and abetting conversion, there must be proof of 1) the existence of a primary violation, 2) knowledge of the violation by the aider and abettor; and 3) proof that the aider and abettor substantially assisted the primary wrongdoer. See Lerner v. Fleet Bank, N.A., 459 F.3d 273, 292 (2d Cir. 2006). The court already held that conversion occurred and was sufficiently alleged, so the first element is proven. Moreover, knowledge of the conversion is clear on the part of both Mark Stern and Stephen Stern as they were aware of the requirement that the funds only be used for the shopping centers and despite this knowledge, Mark Stern still directed the release of the escrow funds. Mark Stern and Stephen Stern both provided wire instructions for the transfer of the funds; therefore, there is proof that defendants assisted in the conversion. Mark Stern also took steps to obscure the use of the funds by creating false expenses so that it would be more difficult for Amusement to know how their money was being used and to recover it, thus satisfying both elements two and three for a claim of aiding and abetting conversion.

The court ultimately held that the constructive fraudulent conveyance claim against the transferee attorney was not sufficiently alleged and that the aiding and abetting fraud claim was not sufficiently alleged. However, the court ruled in favor of Amusement by holding that the constructive fraudulent conveyance claim was sufficiently alleged against the corporation, officer, and transferee entities that Mark Stern controlled, the intentional fraudulent conveyance claim was sufficiently alleged, the conversion claim was sufficiently alleged, the aiding and abetting conversion claim was sufficiently alleged, and the unjust enrichment claim was sufficiently alleged. Therefore, defendants' motion to dismiss was granted in part and denied in part.

- Ashley Fasso, Second Year Law Student at the University at Buffalo Law School

DISCLAIMER: This site is for general informational purposes only and is not intended to provide legal advice. Please contact an attorney relative to the circumstances of your particular case. The use and receipt of the information offered on this web site is not intended to create, nor does it create, an attorney-client relationship.

Kosowsky, et al. v. Willard Mountain, Inc., et al.¸--- N.Y.S.2d ----, 2011 WL 5984277, 2011 N.Y. Slip Op. 08709 (3d Dept. December 1, 2011) presents some interesting issues involving the interplay between fraud and contract claims, as well as the potential slippery slope created when seeking to hold a corporate officer personally liable for an alleged breach of contract by a corporation.

Defendant Willard Mountain, Inc. is a corporation which operated a ski resort upon land owned by the plaintiffs. Plaintiffs leased the property to Defendant under a lease which provided for: (i) computation of rental payments as a percentage of Defendant's sales and income, (ii) required Defendant to provide plaintiffs with an annual accounting, and (iii) prohibited assignment or subletting without plaintiffs' consent. Defendant's owner also operated a separate company offering concessions services at the ski area.

Plaintiffs claimed that Defendant had been paying less than the full amount of rent due under the lease because its president (and owner) had packed down its annual income through "slick" bookkeeping, thereby resulting in lower rental payments. Defendant claimed that the rental amount paid was proper because its own income was a function of the income received by the concessions company pursuant to a separate agreement (which had never been disclosed to the plaintiffs). Plaintiffs claimed that this agreement with the concession company violated the lease's prohibition against assignment. Plaintiffs asserted seven causes of action, including breach of contract and fraud, as well as claims against defendant's owner (individually) and against the concessions company.

Defendants moved to dismiss all the claims (except the breach of contract claim) for failure to state a cause of action under CPLR § 3211(a)(7), and to dismiss all the claims as time-barred under CPLR § 3211(a)(5) (or at least cap the recoverable period). Plaintiffs cross-moved for leave to file an amended complaint.

The Supreme Court granted defendants' motion pursuant to CPLR § 3211(a)(7), in part, by dismissing the causes of action (i) seeking an accounting, (ii) alleging unjust enrichment, and (iii) alleging breach of the implied covenant of good faith and fair dealing. The Supreme Court also held that the claims were not time-barred, and granted plaintiffs' motion for leave to amend their complaint. Defendants appealed and plaintiffs cross-appealed.

Fraud Claim Not Duplicative Of The Cause Of Action For Breach Of Contract
Defendants argued on appeal that the Supreme Court erred in failing to dismiss plaintiffs' fraud claim because: (i) it was duplicative of the cause of action for breach of contract and (ii) it failed to contain allegations of justifiable reliance and special damages.

Generally, a misrepresentation premised directly on the same actions giving rise to a breach of contract does not give rise to a separate cause of action for fraud. Id. at *1 (citing Salvador v. Uncle Sam's Auctions & Realty, 307 A.D.2d 609, 611 (2003)). The Third Department, however, held that because of distinctions among the named parties (neither defendant's owner or the concessions company were parties to the lease) the breach of contract claim was not directed against the owner and could not be considered duplicative as to him. Further, as it was disputed that the concessions company was bound by the lease, the fraud claim against the concessions company could also proceed.

Moreover, the claim against Defendant Willard Mountain, Inc. could also proceed as plaintiffs claimed "that, after the contract was entered into, defendant [through the acts of its agent] repeatedly misrepresented or concealed existing facts" by failing to disclose the existence of the separate agreement with the concessions company and falsifying the annual income reports in order to (i) deceive them as to the true amount of rent owed, (ii) induce them to accept improperly low payments. Further, despite the absence of a fiduciary relationship, defendants allegedly breached a "duty of candor" (independent from their duty to perform under the contract) in that they had superior knowledge unavailable to plaintiffs and knew plaintiffs were relying on the information they supplied (citing Intl. Elecs., Inc. v. Media Syndication Global, Inc., 2002 WL 1897661, *2, 2002 U.S. Dist LEXIS 15200, *5-*6 (SD N.Y.2002)). The Third Department concluded that the conduct alleged in the fraud cause of action was sufficiently discrete from that underlying the breach of contract claim to state a viable separate cause of action.

Fraud Claim Not Lacking Allegations Of Justifiable Reliance And Special Damages
The Third Department also rejected defendants' contention that the fraud claim should have been dismissed for failure to plead the required elements of justifiable reliance and special damages (citing Dube-Forman v. D'Agostino, 61 AD3d 1255, 1257 (2009)). Plaintiffs alleged that they had relied upon the income figures provided by defendants in accepting the rent payments. They also claimed special damages (in addition to lost rent under the contract) as the alleged fraud prevented them from exercising their right to terminate the lease upon a breach of its terms, and thereby deprived them of other business opportunities and of the use and enjoyment of their property.

Tortious Interference Claim Permitted To Proceed Against Defendant's Owner Individually
Plaintiffs' claim against owner for tortious interference with contract was also not subject to dismissal for failure to satisfy the "enhanced pleading standard" that applies when a plaintiff seeks to hold a corporate officer personally liable for a corporation's breach of contract (citing Joan Hansen & Co. v. Everlast World's Boxing Headquarters Corp., 296 A.D.2d 103, 109 (2002)). Plaintiffs were required to allege that owner's actions "either were beyond the scope of [his] employment or, if not, were motivated by [his] personal gain, as distinguished from gain for the corporation" (citing Petkanas v. Kooyman, 303 A.D.2d 303, 305 (2003)).

The Third Department held that the owner's alleged actions (deliberately deceiving plaintiffs by allegedly falsifying the income figures of the corporations that he controlled) cannot be construed as within the scope of his corporate responsibilities (citing Murtha v. Yonkers Child Care Assn., 45 N.Y.2d 913, 915 (1978)). Moreover, the Court stated that the complaint alleged that he took these actions in bad faith for his personal pecuniary gain (citing BIB Constr. Co. v. City of Poughkeepsie, 204 A.D.2d 947, 948 (1994)). As such, plaintiffs were permitted to proceed with a claim for tortious interference with contract against defendant's owner individually.

Breach Of Implied Covenant Of Good Faith And Fair Dealing Claim Permitted To Proceed
Plaintiffs asserted a claim against Defendant Willard Mountain, Inc. and the concessions company for breach of the implied covenant of good faith and fair dealing. "This implied obligation encompasses any promise which a reasonable person in the position of the promisee would be justified in understanding was included" in a contract and "is breached when a party to [the] contract acts in a manner that, although not expressly forbidden by any contractual provision, would deprive the other party of the right to receive the benefits under their agreement" (citing Just-Irv. Sales v. Air-Tite Bus. Ctr., 237 A.D.2d 793, 794 (1997)). The Third Department stated that this claim should not have been dismissed as the allegations, taken as true, provided sufficient traction for the claim to move forward.

Unjust Enrichment Permitted To Proceed Against Concessions Company
However, the Court held that the unjust enrichment claim was properly dismissed as to Defendant Willard Mountain, Inc. because recovery in quasi contract is precluded where, as here, there is no dispute as to the validity and enforceability of the contract governing the dispute (citing M/A-Com, Inc. v. State of New York, 78 AD3d 1293, 1293-1294 (2010)). By contrast, where a disagreement exists as to "whether the scope of an existing contract covers the disagreement between the parties, a party will not be required to elect his or her remedies and may proceed on both quasi contract and breach of contract theories" (citing id., 78 AD3d at 1294). The Court, therefore, held that plaintiffs should be allowed to proceed upon their unjust enrichment claim against concessions company.

Accounting Claim Not Permitted To Proceed In Absence of Fiduciary Relationship
Finally, plaintiffs' cause of action seeking an accounting required "factual allegation[s] or evidence of a fiduciary relationship" between plaintiffs and defendants (citing Village of Hoosick Falls v. Allard, 249 A.D.2d 876, 879 (1998)). As plaintiffs did not allege the existence of a confidential relationship, and no such relationship was created by the lease, the Court held that this claim was properly dismissed.

Defendants Not Estopped From Asserting Statute Of Limitations
Defendants further contended that Supreme Court erred in finding that they were estopped from asserting a statute of limitations defense. Under the doctrine of equitable estoppel, a defendant may not rely on the statute of limitations defense when the plaintiff was prevented from commencing a timely action by reasonable reliance on the defendant's fraud, misrepresentation or other affirmative misconduct (citing Zumpano v. Quinn, 6 NY3d 666, 673-674 (2006)). However, "'equitable estoppel does not apply where the misrepresentation or act of concealment underlying the estoppel claim is the same act which forms the basis of [the] plaintiff's underlying substantive cause[s] of action'" (citing Robare v. Fortune Brands, Inc., 39 AD3d 1045, 1046 (2007)).

Here, the Court noted that the misrepresentations that allegedly prevented plaintiffs from filing a timely action--that is, defendants' falsified annual income reports--were also the basis for their substantive claims. Thus, despite the nefarious nature of the allegations against the defendants, the Court held that defendants were not precluded from asserting that plaintiffs' claims were time-barred (citing Lucas-Plaza Hous. Dev. Corp. v. Corey, 23 AD3d 217, 218 (2005)).

In turning to the merits of the claims, the Court applied the relevant statutes of limitation and capped plaintiffs' cause of action for breach of contract as subject to the applicable six-year statute of limitations (citing CPLR § 213(2)), and capped plaintiffs' tortious interference with contract as subject to the applicable three-year limitations period (citing CPLR § 214(4)). The fraud claim, however, was left intact as plaintiffs alleged that they did not discover the fraud until they learned of the falsified reports less than two years before this action was filed (citing CPLR § 213(8)).

Heath J. Szymczak, Esq.

DISCLAIMER: This site is for general informational purposes only and is not intended to provide legal advice. Please contact an attorney relative to the circumstances of your particular case. The use and receipt of the information offered on this web site is not intended to create, nor does it create, an attorney-client relationship.

Continue reading "PLAINTIFFS CLAIMED "SNOWED" BY SKI RESORT OPERATOR GET A LIFT FROM THE THIRD DEPARTMENT" »

Buffalo Law Journal Article Link

U.S. GSA Webpage

HIGH-TECH OUTREACH A RESOUNDING SUCCESS

NYSBA President Vincent E. Doyle, III and David Tennant, Section Chair of the Commercial and Federal Litigation Section, are inviting all members of the legal community (and law students and faculty) who live and practice in upstate New York to hear guest speaker Honorable Eugene F. Pigott, Jr. of the New York State Court of Appeals, and to experience the excitement of the NYSBA at work. The event will take place at SUNY at Buffalo Law School on November 8, 2011 at 6 pm (Room 106 in O'Brian Hall).

Driving and Parking w map.pdf

Judge Pigott will speak about appellate practice at all levels. He will describe creative techniques that can be employed to make your argument on appeal more persuasive. He will also discuss the diversity of practice rules among the appellate divisions, and the development of "best practices" guidelines to bring about greater uniformity between and among the various levels of appellate practice.

Judge Pigott is an Associate Judge of the Court of Appeals, was born in Rochester, New York, in September 1946. He graduated from LeMoyne College (B.A.1968). Judge Pigott served on active duty in the United States Army from 1968 to 1970. While in the service, he was stationed in the Republic of Vietnam, serving as a Vietnamese interpreter. He graduated from SUNY at Buffalo School of Law (J.D. 1973) and was admitted to the Bar of the State of New York in 1974. Judge Pigott practiced law in Buffalo, New York, with the firm of Offermann, Fallon, Mahoney & Adner from 1974 to 1982. In 1982 he was appointed Erie County Attorney and served in that position until 1986. In 1986 he became chief trial counsel for the firm of Offermann, Cassano, Pigott & Greco. On February 4, 1997, he was appointed to the New York State Supreme Court by Governor George E. Pataki and thereafter was elected to a full 14-year term. In 1998 he was designated to the Appellate Division, Fourth Department and was appointed Presiding Justice on February 16, 2000. On August 18, 2006, he was nominated by Governor Pataki to the Court of Appeals. His nomination was confirmed by the New York State Senate on September 15, 2006.

Following the remarks, the Executive Committee of the Commercial and Federal Litigation Section will also hold an open meeting/open house for anyone who is interested.

The event will be video-conferenced and/or teleconferenced across the State to the following "upstate" locations: Albany (Hiscock & Barclay), Binghamton (Federal Courthouse), Rochester (Nixon Peabody) and Syracuse (Bond Shoeneck). Food and beverages will available at each location.

* * *

Please email Mary Mann for more information and to confirm that you will be attending (and at which location).

In Winans v. Starbucks Corp., 2011 U.S. Dist. LEXIS 76066, 2011 WL 2693172 (S.D.N.Y. July 11, 2011), Plaintiffs, former Assistant Store Managers at various New York Starbucks, brought a state-wide class action lawsuit on behalf of all Assistant Store Managers. . They claimed that Starbucks violated New York Labor Law § 196-d by not allowing them to participate in distributions from collective tip boxes. New York Labor Law § 196-d prohibits employers, their agents or any other person from demanding, accepting or retaining any part of a gratuity received by or meant for an employee. See N.Y. Lab. Law § 196-d (McKinney 2009). The Court, holding that Plaintiffs did not have a right to participate in the collective tip box proceeds, granted Starbucks' motion for summary judgment.

There are four categories of employees at Starbucks: Baristas and Shift supervisors, who are part-time hourly employees that primarily handle customer service tasks; and Assistant Store Managers and Store Managers, who are full-time employees and who are eligible for certain benefits (e.g., holiday and sick pay and life insurance) that the part-time employees do not receive. Assistant Store Managers are responsible for hiring recommendations and other managerial tasks, however, like the Baristas and Shift Supervisors, they also perform customer service tasks.

Starbucks has a written policy governing the collection, storage and distribution of tips (the "Tip Policy"). Each store is required to place a collective tip box near the cash register. The Tip Policy allows only Baristas and Shift Supervisors to handle and receive the proceeds from the collective tip boxes. Every week a Shift Supervisor or Barista calculates the weekly tip totals and apportions the money to the Shift Supervisors or Baristas according to the number of hours each worked in that week. The Tip Policy does not address the handling of tips that customers give directly to employees.

Plaintiffs alleged that although their title was "Assistant Store Manager", their customer service duties rendered them similar to Barista and Shift Supervisor employees, which made them eligible under the statute to share in the collective tip box money. Plaintiffs also claimed that customers expected tips to be shared among all employees who served them, not just the part-time employees. Thus, Starbucks' Tip Policy violated the statute because it had the effect of demanding or redistributing the Assistant Store Managers' share of the tips. In addition, Plaintiffs contended that Starbucks violated the statute by compelling them to contribute tip money handed directly to them to the collective tip box.

The Court explained that § 196-d was enacted to prevent the unfair and deceptive practice of an employer retaining money paid by a patron under the impression that he/she was giving the tip to the employee and not to the employer. Accordingly, this statute prevents employers from retaining any portion of an employee's tips and from participating in their employees' tip pools.

Assuming, without deciding that Assistant Store Managers were similar to Baristas and Shift Supervisors (and therefore eligible to share in tips), the Court found that Plaintiffs could not demonstrate that they had a "right" to participate in the collective tip box proceeds. Relying on clear and unambiguous language of the statute, the Court explained that § 196-d did not grant all employees the right to participate in tip pools or to receive proceeds from such pools. Instead, the statute merely defined who was eligible and who was not eligible. And, according to the Court, being eligible to participate did not mean that any specific employee was entitled to participate in a tip pool and share in the proceeds. Thus, the Tip Policy, which did not allow Starbucks to retain any of the collective tip box proceeds for itself and merely directed who was eligible to share in the proceeds, did not violate the plain language of the statute.

In addition, the Court also found that Plaintiffs did not proffer specific facts in support of their claim that Starbucks forced them to relinquish tips handed directly to them. In support of this finding, the Court explained that Starbucks does not have a written policy with respect to tips handed directly to employees and that Plaintiffs did not demonstrate that Starbucks required them to put these personal tips in the collective tip boxes. Instead, Plaintiffs' "feeling" that they were expected to put the tips in the collective tip box -- because "it was the right thing to do" -- was insufficient to establish an issue of fact as to whether Starbucks violated the statute.

Mark J. Lemire, Esq.

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NLRB Report.pdf