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Court of Appeals Expands Environmental Standing to Challenge SEQRA Determinations

Posted: November 23rd, 2015

On November 19, 2015, in Sierra Cub v. Village of Painted Post, New York’s highest court, the Court of Appeals, reversed a decision by the Appellate Division, Fourth Department, which had found that an individual petitioner lacked standing to challenge actions of the Village of Painted Post on State Environmental Quality Review Act (“SEQRA”) grounds.  In so doing, the Court continued a trend towards loosening restrictions on people to gain relief from the courts based on claims of environmental harm.  The question of standing when it comes to SEQRA challenges asks whether the petitioner has a sufficient interest in the environmental issues to be permitted to ask the court for help.

In 1991, the Court of Appeals decided Society of Plastics Industries v. County of Suffolk.  A trade organization sought to challenge a Suffolk County ban on plastic bags on the ground that the County failed to comply with SEQRA.  The Court of Appeals dismissed the challenge, stating, in part, that “[i]n land use matters … the plaintiff, for standing purposes, must show that it would suffer direct harm, injury that is in some way different from that of the public at large.”  Because there was no showing of direct environmental (as opposed to economic) harm to the members of the trade organization, the Court of Appeals found they lacked standing to challenge the County law.

In 2009, in Matter of Save the Pine Bush Inc. v. Common Council of City of Albany, the Court of Appeals took up the standing question again, exploring whether members of an environmental group concerned with protecting the Pine Barrens in Albany County had a sufficient interest different from the public at large to claim they were directly injured by the challenged municipal actions.  The Court of Appeals agreed the petitioners had standing because they alleged “repeated, not rare or isolated use” of the pine barrens recreational area, so they suffered harm different that “the public at large.”

In the Village of Painted Post case, the Village entered into a lease to permit a railroad company to construct a water transloading facility on an 11.8 acre parcel of land.  It also entered into an agreement with a subsidiary of Shell Oil to sell it up to 1.5 million gallons of water per day, which would be loaded onto trains at the new transloading facility.   A number of environmental groups and individuals who resided along the railroad tracks challenged the lease and bulk water sales agreement on the ground that the Village failed to comply with SEQRA’s strict procedural requirements.  The lower court found that none of the environmental groups had standing, in part, because none of the individual petitioners claimed to be members and the organizational interest was too generalized to establish standing.  Further, the lower court found that all but one of the individual petitioners lacked standing because the noise they encountered from trains on the tracks and their concern about water quality from the sale of water was general harm of concern to the public at large.  One petitioner, however, Marvin, was found to have standing.  Marvin alleged he could see the loading facility from his house, and that noise from the trains kept him up at night.  The Appellate Division disagreed, finding that Marvin’s concern about the noise of the trains was no different from those of all the residents of the Village who resided near the tracks.

The Court of Appeals addressed only Marvin’s standing.  It found that it does not matter that more than one person is directly impacted by the noise created from increased train traffic.  It quoted with approval a 1973 US Supreme Court case [United States v. Students Challenging Regulatory Agency Procedures (SCRAP)], where the Supreme Court said:

“[W]e have … made it clear that standing is not to be denied simply because many people suffer the same injury … To deny standing to persons who are in fact injured simply because many others are also injured, would mean that the most injurious and widespread Government actions could be questioned by nobody.” )

The Court of Appeals thus rejected the reasoning of the Appellate Division that, “because there are multiple residents who are directly impacted, no resident of the Village would have standing to challenge the actions of the Village”.  Because Marvin alleged that increased train traffic kept him awake at night, even without differentiating between train traffic on the tracks and noise form the loading facility, he had standing to challenge the actions of the Village pursuant to SEQRA.

It thus appears that, as long as an individual can assert direct harm from the challenged municipal action of the type that falls within the interests that SEQRA is intended to protect, he or she will be found to have standing, even though many others suffer the same direct harm.

The result will be that more challenges to municipal actions will be decided on their merits.

Takedown Notices under the DMCA

Posted: November 20th, 2015

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A “Takedown Notice” under the Digital Millennium Copyright Act (“DMCA”) exempts certain online service providers (“OSPs”) from liability for copyright infringing acts by its users, provided they meet certain conditions.

The definition of an OSP for purposes of the DMCA is quite broad: “a provider of online services or network access, or the operator of facilities therefor.” 17 USC §512(k)(1)(B).  This would include most sites that offer user-generated content such as web hosting companies, blogging platforms, discussion forums, and so on.

Among the conditions that an OSP must meet to be exempt from liability are:

  1. No actual or constructive knowledge of infringing behavior;
  2. No financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity;
  3. When given a proper notice of infringing material being posted on its network, the OSP “responds expeditiously to remove, or disable access to, the material that is claimed to be infringing.”

17 USC §512(c)(1).

The notification referred to in (3) above has become known as the “DMCA Takedown Notice.” In brief, when an OSP receives such a notice from a copyright holder, it is required to remove or disable access to the accused material in order to avoid being held liable itself.

Compliance with the Takedown Notice will shield the OSP from being held as a contributory or vicarious infringer, and it also shields the OSP from liability to its members if the material is ultimately held not to be infringing.  See 17 USC §512(g)(1) (“a service provider shall not be liable to any person for any claim based on the service provider’s good faith disabling of access to, or removal of, material…regardless of whether the material or activity is ultimately determined to be infringing”).

The DMCA Takedown Notice can be posted on an OSP’s website, blog, or included in the Terms of Use.  Therefore, if you are an OSP or operate a blog or website with member-posted content, you should consider having a DMCA Takedown Notice on your website to help protect yourself.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

The SEC Reminds Us: An Ounce of Prevention is Worth a Pound of Cure

Posted: November 20th, 2015

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On November 4, 2015, Andrew Ceresney, the head of the Security and Exchange Commission’s (“SEC”) enforcement division, delivered the keynote address to the National Society of Compliance Professionals’ annual meeting.  The key takeaway from Mr. Ceresney’s remarks is that is the compliance function—and specifically the role of the Chief Compliance Officer (“CCO”)—is more important than ever in today’s highly regulated economy, and companies that short-change or ignore this function do so at their own peril.

In speaking to this gathering of compliance professionals, Mr. Ceresney explained that “the Commission is in your corner . . . and . . . you must be provided with the resources and support necessary to succeed.”  Recent SEC enforcement actions support this position.

Compliance personnel may be held liable for security law violations, but this is a rare case.  The SEC more often will charge business executives for compliance failures.  Earlier this year, in Pekin Singer, the SEC suspended an advisory’s firm’s former president for 12 months after he consistently ignored pleas for help from the firm’s CCO.  In 2013, in the Carl Johns enforcement action, the SEC filed its first-ever charge against an individual for misleading and obstructing a CCO.  According to Mr. Ceresney, the SEC “will aggressively pursue business line personnel and firms who mislead or deceive [compliance officers], or obstruct the compliance function, or who fail to support [them] in a manner that causes compliance violations.”

The SEC understands that the poorer the state of a firm’s compliance function, the more likely they are to engage in misconduct and face sanctions.  Mr. Ceresney believes that “you can predicate a lot about the likelihood of an enforcement action by asking a few simple questions about the role of the company’s compliance department in the firm.”  Are compliance personnel included in critical business decisions?  Are their views are sought and, more importantly, followed?  How visible is the compliance function to the Board of Directors and does the CCO report directly to a company’s CEO?  Does the company provide its compliance function with the resources and personnel necessary to get the job done correctly?

Mr. Ceresney’s remarks were geared toward financial services companies.  His message, however, should be heard loud and clear by companies in all sectors, especially those subject to anti-money laundering regulations, the Foreign Corrupt Practices Act, and other complex laws challenging today’s compliance professionals.  As far as the U.S. government is concerned, the compliance function is no longer a corporate backwater to be thought of only as a cost center.  Compliance is now a C-suite function that must be supported by the entire organization.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Pay Your Attorney Now: Supreme Court Considers Legality of Seizing Untainted Money

Posted: November 20th, 2015

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The headline is not just shameless attorney self-promotion, but in fact reflects sound advice to anyone or any company facing a government investigation.  More often than not, the U.S. Attorney’s Office seizes a defendant’s assets at the same time he is placed under arrest.  In these cases, the defendant not only finds himself under arrest facing charges, but also unable to use any of his own money to hire a defense attorney of his choice to fight the charges.

This practice began in the 1970s and was ultimately sanctioned in the Supreme Court case of United States v. Monsanto, 491 U.S. 600 (1989).  Under Monsanto, the pretrial seizure of assets a defendant wishes to use to hire a defense attorney is acceptable so long as probable cause exists to believe the property will ultimately be proved forfeitable.  Probable cause is already determined by a judge who signs an arrest complaint, or by a grand jury that hands up an indictment.  Thus, federal prosecutors will start a prosecution with the ability to seize a defendant’s assets from the very beginning.  The clear advantage they gain with this tactic is devastating.

Challenges to the tactic have thus far been unsuccessful.  Last year, the Supreme Court decided Kaley v. United States, __U.S.__, 134 S.Ct. 1090 (2014), in which it rejected the defendants’ request to hold a hearing post-indictment on whether the assets the grand jury indicted as tainted assets were indeed tainted.  In its decision, the Court held that the grand jury already decided that probable cause existed to seize the assets, so revisiting the issue at a post-indictment hearing would have “strange and destructive consequences.”

As if these two Supreme Court cases don’t seem unbelievably unfair to a defendant who is “innocent until proven guilty,” last week the Court heard arguments in Luis v. United States, 14-419.  In a twist from Monsanto and Kaley, the Luis Court considered the question of whether seizure of a defendant’s untainted assets needed to retain counsel of choice in a criminal case violates the Fifth and Sixth Amendments.  The defendant in Luis was charged with Medicare fraud, and the government seized her assets.  She then sued for the right to use $15 million of her own money that all sides agree is not connected to any criminal activity in order to defend herself.  She has been denied that right.

Shockingly, comments from the justices, including Chief Justice Roberts, implied that whether assets are tainted should not matter.  He said, “I just don’t understand that if you can freeze the assets despite the Sixth Amendment when they’re tainted, why it’s not the same rule when they’re untainted.”

Justice Kennedy commented that, “This would, in effect, prevent the private bar from practicing law unless it did so on a contingent basis.”

The lesson here is this: pay your attorney early to ensure you have retained your counsel of choice the moment you learn that you are under investigation.  This will always present ethical challenges.  Consider Clarence Darrow, the legendary attorney as portrayed by Arthur Miller in his play “All Too Human.”  In the play, a client promises to pay his bill with ill-gotten gains, to which Darrow answers, “I told him I could never accept money that was stolen.  So recently.”

An attorney cannot legally or ethically help a client launder money or hide ill-gotten gains, but if a client retains counsel early in an investigation, it maximizes the chance that the attorney may get paid, and thus be available to defend the client in an ensuing prosecution.  Early retention may also allow an attorney to enforce or draft compliance plans to address the shortcoming under investigation, or to conduct an internal investigation that could convince the government that the controversy is civil, not criminal.

It remains to be seen what will happen to criminal defense if the Supreme Court decides in Luis that the government can seize even untainted assets at the beginning of a prosecution.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Healthcare Providers with Health Republic Patients Must Act Now to Protect Ability to Receive Payment

Posted: November 20th, 2015

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Healthcare providers must proactively pursue timely payments under New York’s Prompt Pay Law and conduct credentialing verification to protect their income in the wake of the Health Republic insurance company closing.

In October 2015, the New York State Department of Financial Services (DFS) announced that Health Republic would halt coverage at the end of November 2015 due to its risk of insolvency.  This announcement started a scramble among healthcare providers.  The state Healthcare Association, an industry group representing hospitals, estimates that hospitals alone are owed at least $160 million from Health Republic.

Newsday reported that the DFS has told Magnacare that payments for many services “are on hold to conserve assets.”  While payments are placed on hold, healthcare providers are still obligated to provide services.  As a result, many providers, like Mariwalla Dermatology in West Islip, will continue to provide care, but only if its Health Republic patients pay out of pocket.  According to the practice manager, the most recent payments received from Health Republic are from February, representing a potentially serious crisis.[1]

Kemp Hannon (R-Garden City), chair of the Health Committee in the New York State Senate, has pledged to urge passage of legislation creating a funding pool from which providers can recover payments from insolvent health insurers, given the Health Republic crisis.

Healthcare providers should protect their right and ability to receive payments now.  New York’s Prompt Pay Law, Insurance Law Section 3224-a, requires an insurer to pay undisputed claims within 30 days after receipt of an electronic submission or within 45 days after receipt by other means.  Failure to pay promptly renders an insurer liable for payment of the full amount of the claim plus 12 percent interest per annum.  Thankfully for providers, a 2014 case, Maimonides Med. Ctr. v. First United Am. Life Ins.  Co., 116 A.D.3d 207 (2d Dept. 2014), held that healthcare providers possess an implied private right of action to sue under the Prompt Pay Law.  This means that, contrary to earlier court holdings, doctors can sue an insurer directly if the insurer fails to comply with the Prompt Pay Law deadlines.  Healthcare providers should take full advantage of this fact in order to protect their ability to receive payment for outstanding Health Republic claims as it prepares to shut down November 30.

Additionally, providers should confirm their credentialing status with Fidelis, Excellus BlueCross Blue Shield, and MVP Health Care.  These three insurers will be absorbing the 200,000 plus Health Republic members pursuant to assignment from New York DFS.  If Health Republic members do not sign up for alternate coverage, the DFS will automatically enroll them in one of these three insurers.  Therefore, healthcare providers who presently have a significant Health Republic patient base will want to make sure they can keep these patients as they are moved into the other plans.

Providers with questions about remedies to pursue payment from Health Republic or about their credentialing status in the other plans should feel free to contact us for assistance.

[1] “NY State puts hold on processing Health Republic medical insurance claims,” Newsday, November 12, 2015, last accessed on November 13, 2015 at [http://www.newsday.com/news/health/health-republic-medical-insurance-claims-processing-put-on-hold-by-new-york-state-1.11117985].

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Client Advisory: NYC’s “Ban the Box” Legislation Now in Effect

Posted: November 20th, 2015

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Joining state and local jurisdictions across the country, New York City has enacted a “Ban the Box” law that limits employers’ inquiries into the criminal background of job applicants and imposes stringent requirements on employers who intend to make hiring decisions based on such information.

The Fair Chance Act, effective as of October 27, 2015, prohibits employers who are based in NYC or otherwise have employees in NYC from asking candidates about their pending arrests or criminal convictions until after extending a conditional offer of employment.  Further, employers are restricted from publishing job postings that state or imply that a person with a criminal record is automatically ineligible for the position.

An NYC employer who chooses to inquire about an applicant’s criminal history at that time faces strict requirements.  An employer cannot take adverse employment action against the applicant before:

  • Providing a written copy of the inquiry to the applicant in a manner to be determined by the NYC Commission on Human Rights;
  • Performing an analysis of the applicant pursuant to the New York State Correction Law (discussed below) and providing a written copy of the analysis to the applicant specifying the basis for the adverse employment action; and
  • Giving the applicant at least three business days to respond, during which time the position must be held open.

The Fair Chance Act incorporates the New York State Correction Law, which already prohibits employment discrimination against candidates with criminal backgrounds and requires employers in New York State to consider the following factors when evaluating a prospective employee with a criminal background:

  1. New York State’s public policy to encourage the employment of individuals with prior criminal convictions
  2. The duties of the position
  3. The bearing of the criminal offense(s) on the applicant’s fitness to perform those duties
  4. The amount of time that has passed since the offense(s) occurred
  5. The applicant’s age at the time of the offense(s)
  6. The seriousness of the offense(s)
  7. Any information produced by or for the applicant regarding his or her rehabilitation and good conduct
  8. The employer’s interest in protecting property and ensuring safety

An exception to the Fair Chance Act applies when the employer is required by federal, state, or local law to conduct criminal background checks or to hire only those applicants who pass certain screening requirements.  Applicants for employment as police officers and in certain city departments and agencies are also not covered by the law.   The Act also specifies that it is not intended to prevent an employer from taking adverse action against an employee or denying employment to an applicant for reasons other than criminal background history.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Can an E-mail Exchange Create a Binding Contract?

Posted: November 20th, 2015

Published In: The Suffolk Lawyer

By Patrick McCormick

Can an e-mail exchange create a binding contract?

The short answer is yes!

With the proliferation of electronic communications, it is not surprising that courts are increasingly called upon to address claims alleging the creation of a binding contract based upon an exchange of e-mails.

The Appellate Division, Second Department recently held that e-mail communications between parties were sufficient to create a binding contract.  Law Offs. of Ira H. Leibowitz v. Landmark Ventures, Inc., 131 A.D.3d 583, 15 N.Y.S.3d 814 (2d Dep’t 2015) involved breach of contract claims related to services provided by the plaintiff.  In examining e-mail communications between the parties, the Court found “[b]y the plain language employed” by the parties in e-mail communications, it was clear that the plaintiff made an offer to provide services for a certain fee and that the defendant accepted the offer, creating a binding contract.

The Appellate Division, Third Department addressed a similar situation in the recent case In re Estate of Wyman, 128 A.D.3d 1157, 8 N.Y.S.3d 493 (3d Dep’t 2015).  The decedent and the respondent purchased an improved parcel of real property.  After the decedent’s death, her executor commenced a proceeding against the respondent to turn over ownership of the entire parcel to the estate, claiming that a series of e-mails between the decedent and respondent had created an enforceable contract to transfer sole ownership of the property to decedent.  Upon examining the e-mails, the Appellate Division found that there was no contract because the e-mails did not establish a necessary term of the claimed contract: the price to be paid for the transfer of the property.  It appears from this decision that if the e-mails in question contained evidence of an agreement on price, the Court would have found a binding and enforceable contract in the e-mail exchange.

While communicating by e-mail may seem informal, these cases make clear that parties to an e-mail exchange must exercise care to avoid unintentionally creating a binding contract.  An otherwise valid contract cannot be undone simply by concluding with “Sent from my iPhone.”

Best of Long Island 2016 – VOTE NOW!

Posted: November 9th, 2015

BOLI 2016

October 1, 2015

The Long Island Press Bethpage Best of Long Island Awards nomination period is over, the voting is OPEN, and we’re on the ballot again!

As the winners of 2 “Bethpage Best of Long Island 2015” awards, for CMM and Joe Campolo, we’re honored to be in the running again. Please take a moment to vote for us, to help us maintain our title.

VOTE HERE!

 

McCormick and Basso Receive Leadership in Law Awards

Posted: November 6th, 2015

CMM congratulates Patrick McCormick and Jeffrey Basso on being selected to receive the 2015 “Leadership in Law” Awards. They will be honored at a gala dinner hosted by the Long Island Business News on Thursday, November 19, 2015 at Crest Hollow Country Club in Woodbury.

Patrick McCormick will receive the Partner Award.  Head of the firm’s commercial litigation and appellate practice groups, he received his J.D. from St. John’s University School of Law and his undergraduate degree from Fordham University.  Mr. McCormick serves as President of Child Abuse Prevention Services (CAPS) and as a member of the Board of Directors for Developmental Disabilities Institute (DDI).

Jeffrey Basso will receive the Associate Award.  A senior associate in the firm’s commercial litigation and labor and employment groups, Mr. Basso is also an Advisory Board member of Ronald McDonald House of Long Island.  He is a graduate of St. John’s University School of Law and the University of Delaware.

Long Island Business News created the “Leadership in Law” Awards to recognize individuals whose leadership, both in the legal profession and in the community, has had a positive impact on Long Island.