Arbitration Award Stands Even Though One Of The Arbitrators Was Later Convicted Of Crime

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Arbitration awards are, by design, difficult to vacate. But what happens when one of the arbitrators who entered the award is later convicted of a crime related, at least to some extent, to an issue in the arbitration. In Litton v. Litton, the Appellate Division addressed this interesting but (hopefully) uncommon occurrence.

In Litton, plaintiff and defendant were married in 1982 and had one child. In 2008, the Family Part entered a judgment of divorce and ordered them to share joint custody of their son. They were also directed to proceed to arbitration before a rabbinical panel, or Beth Din, which they did. The panel, which was comprised of three rabbis, entered an award requiring the husband to pay the wife $5,000 per month until he gave her a Get. (As the Appellate Division explained, a Get is a "written document a husband must obtain and deliver to his wife when entering into a divorce. Without a Get, a wife cannot remarry under Jewish law.") Once the wife received the Get, the husband's monthly support obligation would be reduced to $3,500. The husband was also ordered to pay $20,0250 in arrears, $100,000 in the wife's legal fees, and a fine of $250,000 for "his refusal to disclose information about the couple's joint funds."

Several months later, the wife moved to enforce the award and, apparently, have the husband jailed for not complying with it. The Family Part denied the request and found that the husband was not capable of complying with the support order.

Four years later, the Family Part reduced the husband's support obligation from $5,000 per month to $23 per week. Around the same time, in a "wholly unrelated matter," one of the arbitrators on the panel was charged with, and apparently later convicted of, "criminal conspiracy to threaten and coerce Jewish husbands to give Gets to their wives." The husband moved to vacate the arbitration award, arguing that, in light of these charges against one of the rabbis on the panel, "the award was the product of corruption." The trial court denied the motion, holding that there was no causal connection between the arbitration in 2008 and the charges against the rabbi five years later, and that there were two other rabbis on the panel who were not charged as part of the conspiracy. The husband appealed.

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Do Lawyers Have A Duty To Disclose, To The Client, Significant Errors Committed By Co-Counsel?

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

This was the question posed to the Committee on Professional Ethics of the New York State Bar Association. Its answer was a qualified yes — counsel has a duty to disclose the alleged error to the client but only if it was a significant error that could give rise to a malpractice claim.

The issue presented to the Committee was the following:

The inquirer was engaged to represent a client on the eve of trial. The client’s prior counsel is serving as co-counsel. In preparing the case, the inquirer has learned that co-counsel conducted virtually no discovery and made no document requests, although the inquirer believes correspondence and emails between the parties could be critical to the case. The inquirer believes this was a significant error or omission that may give rise to a malpractice claim against co-counsel. The outcome of the case, however, has yet to be decided. The inquirer is concerned about disclosing this situation to the client because it would undermine inquirer’s relationship with co-counsel, but the inquirer also believes it is in the client’s best interests to disclose the facts as soon as possible.

It is already established in New York (and several other jurisdictions, including New Jersey) that lawyers must report their own significant errors or omissions to clients. This requirement is based partly on Rule 1.4 and partly on Rule 1.7, each of which the Committee discussed in its opinion.

Rule 1.4 requires lawyers to keep clients informed about any material developments in their representation, and to explain issues "to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." A client may decide not to continue to retain a lawyer who makes significant errors or omissions, and the client cannot make an informed decision on this issue unless the lawyer self-reports his own errors. Accordingly, clients must self-report their own significant errors or omissions to their clients. The Committee held that this rationale applied equally to lawyers reporting significant errors or omissions committed by co-counsel because the decision facing the client in both situations was the same — whether to continue to retain the lawyer who committed the errors or omissions — and the client cannot make an informed decision on that issue without full disclosure.

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Public or Private? Right To Counsel Of Your Choosing May Depend On Whether You Have Private Counsel Or Appointed Counsel

by: Peter J. Gallagher (@pjsgallagher)

I don't usually post about criminal law cases but the Appellate Division's recent opinion in State v. Martinez hit close enough to home that I thought it was worth a few words. (I apologize for the uncharacteristically long title. Professor Cole, one of my journalism professors from college, would not be proud.)

A few years back I was fortunate enough to be asked to represent the Association of Criminal Defense Lawyers of New Jersey (ACDL-NJ) as amicus curiae in a case before the New Jersey Supreme Court — State v. Miller — that involved a similar issue to the one addressed in Martinez. Miller involved a defendant who was represented by the public defender's office. In the weeks and months leading up to the trial, defendant had been dealing with one public defender, but on the morning of trial a different public defender showed up to represent him. The trial court denied defendant's request for an adjournment, and forced defendant to go to trial with a lawyer he met for the first time on the morning of trial. Defendant was convicted and appealed the trial court's denial of his adjournment request. Both the Appellate Division and the Supreme Court affirmed the trial court's decision. Over an impassioned dissent from Justice Albin, the Supreme Court held that "it would have been preferable for the trial judge to have postponed the commencement of the [trial]," but that the decision to not do so was not an abuse of the trial court's broad discretion to control its own calendar and did not violate the defendant's right to counsel.

In Martinez, the facts were slightly different. Most importantly, as it turns out, unlike Miller, the defendant in Martinez was not represented by a public defender but was instead represented by private counsel. In Martinez, defendant retained a law firm to represent him and expected a specific partner from that firm to represent him at trial. However, the partner was not available on the trial date because of a conflict with another matter. It appears that both the prosecution and defense expected and agreed that the trial date would be adjourned to accomodate the partner's schedule, but the trial court refused to do so. Over defendant's objection, the trial court forced defendant to go to trial, not with the partner that he expected would handle the case, but with an associate from the partner's firm. By all accounts, the associate was capable and experienced, but defendant nonetheless objected to having to go to trial with counsel that was not the counsel he chose.

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Enforcement Action Against Rating Agency Allowed To Proceed

by: Peter J. Gallagher (@pjsgallagher)

In an interesting decision issued today, Judge Katz (Essex County) denied a motion to dismiss filed by the ratings agency Standard & Poor's ("S&P") in an enforcement action brought against S&P by the New Jersey Attorney General. In Hoffman v. McGraw-Hill Financial, Inc., the Attorney General alleged that S&P violated the Consumer Fraud Act ("CFA") by misrepresenting to New Jersey consumers that S&P's analysis and rating of structured finance securities was independent and objective. The opinion contains decisions on both procedural personal jurisdiction issues and substantive CFA issues that all litigators should find interesting.

[Lawsuits against ratings agencies are nothing new. Several years ago, I wrote an article about these lawsuits and, at the time, the relative success the rating agencies had defending against them. (If you did not save your copy of the article, click here for another copy.) Historically, the rating agencies argued that their ratings were proetced under the First Amendment, but at least one court rejected this argument in the context of a motion to dismiss in a lawsuit that eventually settled.]

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New Jersey Supreme Court Refuses To Hear Challenge To Waiver Rule

by: Peter J. Gallagher

The New Jersey Supreme Court has denied a request by a group of challengers to the so-called Waiver Rule (N.J.A.C. 7:1B-1.1, et seq.) — which allows the New Jersey Department of Environmental Protection (”DEP”) to waive certain environmental regulations on a case-by-case basis — to review an Appellate Division decision upholding the rule. On behalf of amicus New Jersey Business and Industry Association, Porzio helped to defend the Waiver Rule before the Appellate Division.

As we previously reported here, the Waiver Rule is not a blanket waiver of all regulations. Instead, a waiver will only be available when one of four criteria are met: (1) a public emergency has been formally declared; (2) conflicting rules between Federal and State agencies or between State agencies are adversely impacting a project or preventing an activity from proceeding; (3) a net environmental benefit would be achieved; and/or (4) undue hardship is being imposed by the rule requirements. N.J.A.C. 7:1B-2.1. Moreover, the Waiver Rule identifies 13 rules and requirements that cannot be waived under any circumstances.

A group of Appellants challenged the Waiver Rule on several grounds, but the Appellate Division rejected the challenge and held that the Waiver Rule was a proper exercise of the DEP's rule-making authority. The New Jersey Supreme Court has now refused to hear the case, which leaves intact the Appellate Division's decision.