In 2007. Tony Castro approached Angelo Giacchi, knowing Giacchi required the performance of certain carpentry work. By handshake, they agreed that Castro would bill $57,000 for the work. At the time the agreement was entered into, Giacchi did not reveal that he was operating on behalf of any entity. The initial progress payments were made by a check drawn on an account owned by Ang LLC. Castro submitted the final bill to ANG, stating later that he did not care who paid the bill as long as it was paid. It wasn’t paid, and he sought judgment against Giacchi, who defended by asserting he could not be held responsible for the debt of the LLC.
The Appellate Division, in Castro v. Giacchi (A-6220-12T2 Dec. 5, 2014), agreed with Giacchi, reversing the trial court that had entered judgment against him for the unpaid $30,000. The upper court pointed to the LLC statute, NJSA 42:2B-23 which states, in relevant part:
“[N]o… agent of a limited liability company shall be obligated personally for any such debt, obligation or liability of the limited liability company, by reason of being a[n]… agent of the the limited liability company.”
The court accepted as a fact that, at the time of entry of the oral contract, Castro had did not know and had no reason to know Giacchi was acting as an agent for ANG. Finding that the statutory text was unambiguous, the court held that the agent’s failure to disclose was immaterial to his personal liability.
That can’t be right.
The court acknowledged that, “ordinarily, an agent who fails to disclose he is entering into a contract on behalf of a principal is individually liable on the contract, unless the other party knows or had reason to know the agent was acting on behalf of a principal,” citing African Bio-Botanica, Inc. v. Leiner, 264 N.J. Super. 359, 363-64 (App. Div.). The African Bio-Botanica court addressed a similar fact pattern related to a corporation rather than an LLC, and evaluated the agent’s responsibility under the influential treatise the Restatement (2nd) of Agency. Under Section 322 of the Restatement, an agent purporting to act on his own account, but in fact making the contract on behalf of an undisclosed principal, is a party to the contract.
Under the court’s reasoning, even if the only person who possibly could have known a principal existed was the sole member of a just filed, uncapitalized LLC, the party acting in reliance on an individual’s word has no recourse against that individual. Besides the glaring injustice of such a result, and its strange disparity from a similarly situated corporation, it is plain that Giacchi isn’t being held liable BECAUSE he is in agent of ANG, but because he is individually responsible for the debt, under agency law, for his failure to reveal his agency status. As he made the agreement directly with Castro, he would have been responsible for the debt even if ANG never existed.
The statute in effect when the dispute arose has since been repealed. Although the Castro court stated that the new language closely tracks the old, it does not. The new statute, N.J.S.A. 42:2C-30, states, perhaps more clearly than did the prior statute, that LLC debts “do not become the debts, obligations, or other liabilities of a member or manager solely by reason of the member acting as a member or manager acting as a manager” (emphasis added, and note the lack of any exclusion for a mere “agent”). Thus, if any court is tempted to go down the Castro court’s misguided path for causes arising after the change in the statute, it will have an easier time arriving at the correct result. The Castro court, however, should not have had much trouble with the language as it was. Fortunately, it is a non-precedential decision
The Real Housewife and Galileo
Teresa Giudice, star of Bravo TV’s Real Housewives of New Jersey, has filed a malpractice suit (complaint here) against her bankruptcy lawyer, alleging that he committed negligence in the 2009 Chapter 7 filing, causing damages that include a forfeiture order arising from her criminal conviction. In angling to shift responsibility to counsel despite her plea, she stands uncomfortably on the shoulders of a giant.
In 1633, Galileo Galilei was required by the inquisition to state, following his conviction for suspicion of heresy, that “with sincere heart and unfeigned faith I abjure, curse, and detest the aforesaid errors and heresies,” namely that the earth moves around the sun. He is purported to have muttered to himself shortly after the sentence, with due insolence, “And yet it moves” (“Eppur si muove”). Giudice’s post-sentence repudiation of the factual basis of her plea, as demonstrated by her malpractice claim, follows in Galileo’s footsteps.
Guidice and the DOJ signed a plea agreement (here) on February 26, 2014. The indictment set forth several misstatements Giudice made in her petition, including concealment of proceeds from sales at TGFabulicious.com (which now directs to her personal website).
The government acknowledged in its agreement that Guidice “clearly demonstrated a recognition and affirmative acceptance of personal responsibility for the offenses charged,” thereby justifying a two level downward adjustment of her offense level,which bore on her likely sentence. Although the fact of the plea in itself is considerable evidence of acceptance of responsibility, it is not necessarily the only factor that contributes to a finding of such acceptance.
In U.S. v. Whitehead, 912 F.2d 448 (10th Cir. 1990), the defendant, despite his plea to charges of creating false social security cards, was denied a sentence reduction for acceptance of responsibility. Although he expressed sympathy for the individual victims of his identity fraud scheme, he expressed lack of remorse for cheating large businesses. The appellate court held that the denial of a downward adjustment was within the sound discretion of the trial judge.
The timing of the Giudice malpractice complaint, coming after the sentencing, is not coincidental. The complaint is a direct rejection of the notion that she accepted responsibility for her offense, alleging, in essence, that she did not “knowingly” sign a false petition. If, at sentencing, she had an open claim against her bankruptcy counsel, the sentence may well have been more severe. Nonetheless, the sentence has been imposed, and she will not be the last to enter jail screaming she was railroaded, but she should be estopped by her plea in her new claim from asserting her petition was anything other than knowingly fraudulent.
The statutes she pleaded to required that she “know” that she was making a false statement of fact. An attorney error, subject to correction during the course of proceeding, would not be grounds for a conviction. At her plea, she stated under oath, that she knowingly and fraudulently (18 USC Sec.1852) made misstatements on her petition. It makes no logical sense to blame her attorney’s errors once she waived her right to that defense in her criminal trial.
That is not to say the attorney’s work was ideal. Although the original petition listed prior years’ income, a subsequent amendment failed to list any prior income in the statement of financial affairs, a deficiency highlighted by the bankruptcy trustee. The debtor listed no current income from G&G Stucco, despite listing gross income of $575,000 from G&G in the year prior to filing, an anomaly that called for further investigation. Giudice noted in an interview that no vehicles were listed, and no real housewife of New Jersey doesn’t have a car.
However, the misrepresentations that subjected her to prosecution were the handiwork of Teresa herself. Other than her concealment of her website income, she falsely swore under oath at a deposition that her investment real estate was not rented out. That’s a very hard lie to blame on counsel, absent a showing that he affirmatively advised the debtor to lie, which is not alleged here. In the unlikely event this matter gets past summary judgment, and the matter goes to trial, it’s a safe bet that a jury yet will not be moved.
Ray Rice vs. the Arbitrary Commissioner: The King can do some wrong
On November 28, 2014, retired U.S. District Court Judge Barbara Jones, acting in her private capacity as a hearing officer in her New York office, determined that the NFL’s indefinite suspension of running back Ray Rice was “arbitrary”. In extending Rice’s original two game suspension for a domestic violence event in Atlantic City, the league acted in a manner lacking in rational explanation.
According to Jones, the Commissioner’s judgment in disciplinary matters can only be overturned if the action constituted an “abuse of discretion”. She noted that an abuse of discretion can be found when the decision maker acted in an “arbitrary or capricious” manner, citing an immigration case Qi Xing Huang v. Bureau of Citizenship & Immigration Servs., 269 F. App’x 138, 139 (2d Cir. 2008) in her written summary.
We know what constitutes arbitrary in Jones’s mind, but how did Qi Xing Huang, the subject of Jones’s citation, fare in establishing that the director of the CIS acted without any foundation in reason? Not as well as Ray Rice. The Huang decision is an unremarkable denial of an asylum applicant’s appeal of a motion to reopen her proceeding. The court held that the immigration judge’s determination that Huang was not credible was not properly challenged on appeal.
The Huang court, in defining the “arbitrary or capricious” standard of review, however, cited Ke Zhen Zhao v. U.S. Dep’t of Justice, 265 F.3d 83, 93 (2d Cir. 2001), where the asylum applicant met with greater success in showing the decision below was more like Goodell’s. The Zhao court in overturning the asylum denial wrote:
[G]ranting deference to administrative tribunals does not mean we have clothed their rulings with that kind of power expressed in the maxim the “king can do no wrong.” To the contrary, administrative tribunals are not royal judges, and their rulings are not unfettered; instead they are constrained to decide cases in a non-arbitrary manner.
An arbitrary decision, the court noted, is one found in those circumstances where the Board of Immigration Appeals provides no rational explanation, inexplicably departs from established policies, is devoid of any reasoning, or contains only summary or conclusory statements. Zhao, like Huang, was a Chinese national seeking asylum based on the forced sterilization policy of his government, alleging at his initial hearing that he suffered persecution as a result of coercion applied to his wife. At the time of the 1994 hearing, those subjected to China’s coercive population control policy were not presumptively eligible for asylum.
While the appeal was pending, Congress modified the asylum statute to state that those who were subject to forced sterilization or abortion, or those who had been persecuted for resistance to such policy, were deemed to have suffered prosecution. The 2nd Circuit found that, to the extent the Board or the Immigration Court in fact determined that Zhao’s wife had been sterilized, the immigration court was obliged to consider new evidence in light of the statutory change and that the failure to do so was arbitrary.
In Lewis Carrol’s Alice in Wonderland, a deck of cards speak among themselves:
‘You’d better not talk!’said Five. ‘I heard the Queen say only yesterday you deserved to be beheaded!’
‘What for?’ said the one who had spoken first.
‘That’s none of your business, Two!’ said Seven.
‘Yes, it is his business!’ said Five, ‘and I’ll tell him — it was for bringing the cook tulip-roots instead of onions.’
Seven flung down his brush, and had just begun ‘Well, of all the unjust things —
Presupposing the immateriality of the onion/tulip-root distinction, the Queen of Hearts is the benchmark for the arbitrary monarch. Decision makers, even if more apparently judicious than the Queen, can nonetheless be held to account by a reviewing authority that imposes a probing, though deferential, evaluation of the essential fairness of an underlying proceeding.
The first rule of sports betting authorization is there is no sports betting authorization
New Jersey’s persistent efforts to legalize sports gambling in its casinos and racetracks have fared unfavorably in the face of restrictions set forth in the federal Professional and Amateur Sports Protection Act (“PASPA”). The 1992 act states that is it “unlawful for… a governmental entity to… authorize by law or compact… gambling, or [a] wagering scheme based, directly or indirectly… on competitive games in which amateur or professional athletes participate…”
Because only such gambling that is “authorized by law” is subject to the federal ban, New Jersey recently enacted S.2460 (2014) repealing its ban on sports gambling. However, the statute restricted such gambling to racetracks and casinos, as well as to those over 21. It also barred gambling on events occurring in New Jersey, and any event involving a New Jersey college team. The rationale for denominating the act a repeal was to avoid the appearance that the gambling was authorized by law.
Various sports leagues sued the state in federal court, challenging the state act’s legality. The District Court on November 21, 2014 agreed with the leagues and enjoined any casinos or racetracks from commencing sports betting. New Jersey has promised an appeal to the Third Circuit, where they will again lose.
Although the court wrote that “the present case is not nearly as clear as either the Leagues or the Defendants [New Jersey and the racetrack associations] assert,” the court correctly held that only a complete, unrestricted repeal of sports gambling would avoid the limitation under PASPA that the gambling not be authorized by law. This repeal of the sports gambling ban was unquestionably a limited one. After all, lawmakers can easily recast even the most complex statutory scheme as an elimination of all regulation, except regulation alpha through zeta that runs two hundred pages. The restrictions that remain, especially the limitation to racetracks and casinos, constitute significant regulation.
The state’s position, that gambling is not “authorized” under the recent statute, is muddled all the more by the provision in the New Jersey constitution authorizing sports betting. The constitution states that “No gambling… shall be authorized by the Legislature… except that, without any such submission or authorization… it shall be lawful for the Legislature to authorize” sports gambling at racetracks and casinos. In other words, all gambling is illegal in New Jersey, unless authorized in the constitution, and the constitution allows sports betting if it in turn is authorized by the legislature.
The leagues argued, I believe with persuasive force, that “[i]f the 2014 Sports Wagering Law does not constitute the authorization by law of sports gambling in violation of PASPA, then it violates Article IV, Section VII of the New Jersey Constitution.” However, the District Court declined to grant relief on the alternative ground that the statute violated the state constitution, noting that, under the 11th Amendment to the U.S. Constitution, the court is barred from ordering state officials to comply with state law.
The court’s inability in grant relief does not make the non-authorization authorization any more lawful. Even if the state connects on its Hail Mary in the Third Circuit, it will still face a struggle in a subsequent state court suit where the 11th Amendment will not impose a burden. Moreover, the state should be estopped from asserting in that theoretical state court action that the legislature in fact authorized state betting pursuant to the constitution, a position diametrically opposed to its current Federal court litigation position. In any event, the constitutional requirement that sports betting be “authorized” at a minimum informs the analysis as to whether the current scheme is “authorized by law,” and thus unlawful under PASPA.
Upon the Third Circuit’s denial of the appeal, it is highly unlikely the Supreme Court will exercise its discretionary authority to hear the case. The matter lacks sufficient complexity or other factors to justify the high court’s attention. New Jersey’s options are to (1) obtain Congressional approval for fewer limits on sports gambling, or (implausibly) (2) again amend the constitution to allow commercial betting without restriction as to place, age or object of the bet. The latter will not happen.
Announcement on Executive Action on Immigration
The President’s Executive Actions on Immigration will potentially benefit 5.9 million people unlawfully present in the United States, and who either have children who are U.S. citizens or permanent residents or who can demonstrate their arrival into the United States prior to their 16th birthday.
Subject to certain restrictions, an undocumented individual continuously present in the United States since January 1, 2010. and who either:
1. Entered prior to his or her 16th birthday, or
2. Is the parent of a permanent resident or U.S. citizen child born before November 20, 2014, the date of the announcement
will be eligible for work authorization under the executive’s deferred action program.
The principal restrictions will apply to those applicants who pose national and border security and public safety threats. See the new enforcement memorandum here.
There are two aspects of note. First, if an individual entered prior to her 16th birthday, she did not have to have remained continuously present since that time. She merely had to remain present since January 1, 2010. Formerly under the Deferred Action for Childhood Arrivals, an individual could not file if she was not at least age 31 by June 15, 2012. As there is no longer an upper limit on the age of filing, significantly more potential applicants may benefit from fortuitous presence before age 16, even if they traveled home for a long spell, so long as they returned to the U.S. prior to January 1, 2010. This provision will put great weight on demonstrating childhood travel for a subclass of potential applicants.
Second, the president’s action grants the parents of U.S. citizens and permanent residents the right to obtain deferred action status, without regard to the age of the child. In other words, the applicant can rely on her relationship with an adult child, and not only a minor. On the other hand, women who are pregnant with their first U.S. children, and that expected child’s father, face the inevitably cruel consequence of deadline setting, as the parents cannot derive rights from any child born after November 20, 2014.
The expansion of DACA for children who arrived before their 16th birthday will be in effect in approximately 90 days. The latter, more expansive provision is estimated to be in effect 180 days from November, 20, 2014. The president announced other provisions that may be the subject of a separate post.
Fly with US, and Don’t Get Hurt by Someone Else
US Airways v. McCutchen, Third Circuit, Precedential, 11/16/11, No. 10-3836
James McCutchen suffered serious injuries in an automobile accident in 2007. As a result of the accident, he became functionally disabled, and was forced to undergo a hip replacement. His then employer, US Airways, paid over $66,000 in medical expenses related to this accident. McCutchen, in his claim for personal injury, collected $110,000, the maximum available in aggragate under the tortfeasor’s policy and McCutchen’s underinsured coverage. McCutchen’s net recovery, after legal expenses, was $41,500, less than the amount of the costs incurred by his employer.
US Airways, Inc., the employer of 36,500 people, self-administers its health insurance plan, and the company and its members are subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). Pursuant to ERISA and the plan language, McCutchen was required to reimburse US Air for the funds expended for his medical care in the event he received a settlement from a third party or a separate insurer. US Air argued it was entitled to full reimbursement, without any deduction for counsel fees. In essence, the employer sought to force the employee to pay $25,000 from his own pocket, putting him in a considerably worse position than if he never filed the action at all. Based on the plan’s plain language, the District Court agreed with this harsh result, and granted summary judgment to the airline.
The Third Circuit, in reversing, held that, since ERISA limits the plan administrator to “equitable relief” under 29 U.S.C. § 1132(a)(3), the Court has the authority to fashion equitable, or just, relief in appropriate circumstances. Since it would constitute unjust enrichment for the court not to recognize the substantial costs of collection, the court remanded the case to the district court to fashion an equitable remedy to account for the substantial legal fees. The injured party will not be forced to reimburse more than the reasonable net proceeds.
The decision affords victims of negligence and willful conduct more leverage in negotiating with ERISA-based health plans, while still providing the plans with the fair reimbursement rights that allow for a reduction in the cost of coverage for its insureds. US Air, in a litigation position that bordered on cruelty against its disabled former employee, sought an absurd result, and the Court happily did not oblige.
In fairness to US Airways, McCutchen, in the District Court litigation, sought to be relieved of any obligation of reimbursement to the health plan whatsoever, on the theory that the case settled for so much less than its fair value due to a lack of insurance coverage. It might be that US Air negotiated in good faith, and that only in its legal position was it so hard-nosed in trying to beat up on McCutchen and his new hip. There is no evidence of that good faith in either the precedential opinion or in the opinion below.
Court Finds Constitution in Her Pocketbook
Pascale v. State of New Jersey, Mercer County trial court opinion, 10/17/11
Rule of Professional Conduct 3.2 states that a lawyer “shall treat with courtesy and consideration of all persons involved in the legal process.” It is unlikely U.S. Attorney Chris Christie would in essence accuse a judge of self-dealing. Governor Christie is not so constrained.
Judge Linda Feinberg, in an unpublished trial court decision, determined that the increased contribution toward benefit costs under the Pension and Health Care Benefits Act is unconstitutional as applied to appointed judges and justices. (But not their clerks. Sorry, underling.)
The Governor’s response was highly intemperate. His office responded, “[t]his outrageous, self-serving decision, where a judge is protecting her own pocketbook and those of her colleagues, is why the public has grown to have such little faith in the objectivity of the judiciary.” All was fine with our faith in the objectivity of the judiciary, and then yesterday, bam, Judge Feinberg ruined everything. That makes all kind of sense, no?
Assuming he meant that this is an example of the kind of decision that causes us to lose faith, his attack on the decision as “self-serving” still lacks coherence. The court acknowledged its conflict in rendering a decision that protects her own pay increase, but there was no other way for the matter to be resolved. The governor would be on firmer ground in attacking the merits of the decision, and not the integrity of the judge.
The opinion itself is not fully convincing, based on the plain language of the constitution. The prior 1844 constitution (article VII, section 2, para 1 ), like the extant federal one (article III, section i), barred a decrease in “compensation” during a judge’s tenure, but the New Jersey 1947 constitution modified the restriction only to a reduction in “salary” for judicial appointees. Article Six, Section 6, para. 4. The DePasacale court rejected the State’s argument that this distinction between “salary” and “compensation” was meaningful, but the New Jersey constitution in Article VI, § 8, ¶ 1 defines “judicial costs” just a few lines later as including “salaries, health benefits and pension payments,” demonstrating that the adopters knew the difference between regular salary and other benefits.
The court also cited a law nearly contemporaneous to the current constitution in which “compensation” was deemed synonymous with “salary”. NJSA 43:16A-1(26)(a)(effective 1944). Its reliance on this statute as a means of construing the constitution is misplaced. The statute relates to the calculation of police and fire pensions. At least as currently enacted in the NJSA 43:16-1, “base salary” and “compensation” are synonyms for the purpose of calculating pensions. It is thus axiomatic that salary (compensation) is not the equivalent of pension benefits under that statute. The court shows that in some cases “compensation” and “salary” are synonyms, but not that compensation encompasses the total of all regular payment plus benefits. Venn is turning over in his grave, of which he is a subset.
Judge Feinberg also relied on Hyland v. Twp. of Lebanon, 419 N.J. Super. 375 (App. Div. 2011), which interpreted a statute that barred the reduction of a tax assessor’s salary during his tenure. The appellate court held that the township’s elimination of paid sick days and vacation time constituted a reduction in salary as such paid days were a “financial benefit” akin to salary. While not square on point, the Hyland court’s analysis of the phrase “salary” in a similar context lends substantial credibility to Feinberg’s determination of the constitutional issue before her. On balance, however, the trial court’s holding fails to give due regard to the high presumption of validity of an act of the state legislature.
The decision has little practical import. There are more than 400 judges and justices at all levels of the state judiciary, with 9000 support staff. The judicial exemption for the privileged 400, even if sustained on appeal, is a drop in the bucket of entitlement costs that apply to over 500,000 state and local workers. The more notable aspect of this kerfuffle is the governor’s unsubstantiated implied allegation that a member of the judiciary was acting in her self-interest in arriving at her conclusions.
3rd Circuit Holds Removal Statute of Limitations Not Available for Immigrants who Consular Process
Malik v. Attorney General, 3rd Circuit, 9/23/2011,
Muhammed Malik entered the United States from Pakistan as a permanent resident in April, 1999 based upon his marriage to a United States citizen, Margarita Ramos. Soon upon his entry, however, Ramos told Malik she was pregnant from another man, and they obtained a divorce in 2000. As some point, the Department of Homeland Security came to believe the marriage was entered into solely for immigration purposes, and sought to remove him from the United States. The immigration judge ordered removal, and her order was sustained by the Board of Immigration Appeals.
In defending against removal, Malik cited INA §246(a), which, under Third Circuit precedent, requires that, if adjustment of status is granted erroneously by the service, removal shall commence within five years of the erroneous grant, even if the error was made due to fraud. DHS did not commence proceedings within five years against Malik, but the government argued §246(a) did not apply to him.
A legal permanent resident may obtain his status either through consular processing outside the country, or adjustment/change of status inside the country. By its plain terms, §246(a) only applies to those individuals who obtain their green card inside the United States. The Third Circuit held, using the statute’s plain meaning, that there was no time limitation to commence removal hearings for someone, like Malik, who obtained his immigrant visa at the consulate. He was ordered removed.
The Third Circuit was right on the law, but two questions remain. Why has Congress chosen to treat the two manners of immigration disparately? In some measure, it’s the same task Job’s friends had in explaining why all those bad things were happening. Cliff Notes version: Ours is not to reason why. The statutory scheme is a meld of history and politics that does not always rest upon pure logic.
More generously, though, a recipient of adjustment may be seen as having stronger ties to the United States, as they were present in the country before the adjustment. Moreover, at least the adjustment applicant obtained a proper first entry into the United States at least one time, unlike a consular processed fraudster, who never entered properly at all in any status.
The second arena for inquiry is whether the statute of limitations is an appropriate policy measure, and, if it is, whether it should be expanded to encompass the consular processed. While it seems unpalatable to award fraudsters for their successful schemes, it is also so that, in time, the misdeed may fade in relation to the inequity of removing someone who has long planted their roots in this country. Moreover, memories fade, and it becomes harder for an alien to prove facts, such as the validity of a marriage, that occurred long ago. In sum, even though there is no time limitation on removal for those who consular process, the service should sparingly use its authority in prosecuting cases of osteoperotic vintage.
AAA Membership: Free Jump Start, Unlimited Maps, and a Facially Meritorious Complaint against Port Authorty
In its complaint filed in the Southern District of New York on September 27, the Automobile Club of America chapters of both New York and New Jersey allege that Port Authority’s new toll hikes violate the Federal-Aid Highway Act of 1987, and thus are illegal.
The Federal-Aid Highway Act of 1987, 33 USC 508, requires that tolls related to interstate crossings be “just and reasonable,” hardly a term that defines itself.
In Automobile Club of New York, Inc. v. Port Authority of New York and New Jersey, 887 F.2d 417 (2d Cir. 1989), the 2nd Circuit affirmed the dismissal of AAA’s suit to bar a Port Authority toll increase. Port Authority’s proposed increase in 1987 was intended to fund a subsidy for the cross-Hudson PATH trains, and AAA argued the bridge and tunnel tolls could not be used to fund this unrelated deficiency. The 2nd circuit, in approving the subsidy, held that PATH “is related to the other river crossing facilities,” and that this relational determination was “dispositive” of whether the increase was reasonable.
In its current suit, AAA alleges that an unspecified but substantial part of Port Authority’s $25.1 billion ten year capital program will be used to re-build the World Trade Center site, and only $3.5 billion has been specifically earmarked for interstate bridge and tunnel improvements. AAA further alleges that the tolls collected already cover all costs related to both upkeep and any capital funding needs. By way of partial verification of AAA’s allegations, the 2011 PA $3.9 capital budget includes $1.9 billion for World Trade Center redevelopment. Budget, Page 20. AAA argues, quite plausibly, that the WTC rebuilding is not related to the river crossing facilities.
If the Second Circuit struggled, over one dissent, in approving a toll increase used for a PATH subsidy, it could well be unable to approve, as “just and reasonable,” that part of the hike used for generic real estate development. Port Authority’s defense will be that it had already committed itself, stretching back to 1961, to the development of this site. The entity now has financial responsibility, either legal or practical, to work toward revitalizing the site destroyed on September 11. The toll hikes are part of a set of financing tools needed to effectuate the revenue generating purpose of the site over the very long run.
The flaw in this argument, if that’s the only arrow in their quiver, is that Port Authority decided on the scope of the new project, and they could have chosen another development plan that would not have pushed the cost of rebuilding arbitrarily onto the cross-Hudson travelers.
In Unreported Decision, Appellate Division Appears to Lower Bar for Negligent Transmission of STDs
B.F. v. Accurate Dental Group,August 26, 2011, N.J. App.Div, A-6369-08T3, Not for Publication
Charles Zebe Jr., DDS, owner of Accurate Dental Group, began a sexual relationship with plaintiff BF in February, 2003, which ended in July of that same year. The sexual relationship resumed shortly after he hired her as his dental assistant in February, 2004. Prior to commencement of the original relationship, Zebe showed the plaintiff a lab report asserting he did not have sexually transmitted disease. Unknown to either party, however, the test did not preclude his contraction of HPV and chlamydia. He in fact transmitted these diseases to B.F.
Zebe had known that he dated women with HPV, and that the disease “went away” on its own. It does not appear Zebe had symptoms of HPV. He was non-exclusive in his relationship with BF, who terminated the relationship upon testing positive for the two diseases. BF sought damages for the transmission of HPV and chlamydia. The jury awarded her $15,000 for her claim. In a separate count, she recovered $9,000 (plus healthy legal costs) for her unlawful termination, which occurred once she told him their personal relationship was over. The appellate division affirmed the decision in its entirety.
The unreported appellate opinion states, without equivocation, that “New Jersey recognizes a cause of action for the negligent transmission of venereal diseases or HIV. The law does not establish such a broad, undefined proposition, and the Dr. Zebe’s conduct should not form the basis of a cause of action on the facts presented. It is fortunate that the opinion lacks precedential value.
The test for transmission of a sexually transmitted disease should be whether the transmitter knew or should have known he was currently infected with the disease, and failed to advise his or her partner. The implied test in the Zebe matter is that the transmitter is responsible if he knew he might have been infected, as there is no assertion in the statement of facts that he had knoweldge. That is a quite wrong decison, and the cases cited by the court do not imply the broad right asserted.
In Williamson v. Waldman, 150 N.J. 232, (1997), the Supreme Court held that a medical professional, who negligently caused a discarded needle to prick a cleaning person, was responsible for the person’s fear of contracting HIV from the lancet. The opinion did not address the sexual transmission of HIV, nor any disease other than HIV. In the United States in 2008, 16,605 people died with an AIDS diagnosis, and the court only addressed the standard of care related to this much more serious disease in a medical context.
In F.S. v. L.D., 362 N.J. Super. 161 (App. Div. 2003), the appellate division allowed a claim by plaintiff against her former fiancé for emotional distress based on her exposure to HIV. In that case, however, the defendant knew that he was infected with HIV, and he intentionally did not tell his partner.
In G.L. v. M.L., 228 N.J. Super. (Ch. Div. 1988), a published trial level case, the plaintiff was found to have a cause of action for defendant’s transmission of herpes. The opinion is a mish-mosh that never defines the duty of care. The plaintiff alleged intercourse occurred after defendant “knew” he had herpes. The court stated, in the passage most favorable to the plaintiff here, that “the intentional act [that formed the basis for the tort] was not that of knowingly transmitting herpes to plaintiff but, rather, it was the act of sexual intercourse with the plaintiff after sexual relations with someone else with whom he carried on a two year relationship.” Yet, the opinion also stressed that the defendant knew of his infection, similar to FS v. LD.
In our dentist’s case, the appellate division did not evaluate the standard of care in light of Zebe’s actions. After all, anyone with less purity than Caesar’s wife (pre-marital only; her husband conquered France) might be infected with an STD. According to the CDC, HPV is contracted by at least 50% and up to 80% (CDC report, page eight) of the sexually active population at some point during their lives. Since absolutely anyone engaged in unprotected sex might become infected, to hold transmitters responsible in court assures arbitrary and unjust results.
A similar analysis applies to the transmission of any STD. For example, most people are unaware they are infected with chlamydia, the most commonly reported sexually transmitted disease. To pont to the absurdity of the potential tort, there’s no reason Zebe could not have third partied in his past paramours, turning this into no more than Facebook with interrogatories.
In summary, the only completely safe way to protect ourselves against such vexatious lawsuits is to never allow such broad torts at all.
Thought question: Should a tort exist for the negligent transmission of a non-sexually transmitted disease, such as the flu? No matter the answer, Gwyneth Paltrow, call your homeowner’s insurance. But I don’t see a reasoned distinction between STDs and other illnesses.
Postscript: In its decision, the court used the parties’ initials, but included the name of the dental company. The website for Accurate Dental is CharlesZebe.com.
wfhenning 
