Monday, August 18, 2014

Camelot Returns to Manhattan!

Gartner + Bloom is pleased to support the Washington Heights and Inwood Development Corp (WHIDC.org), which holds the annual Medieval Festival at Fort Tryon Park on Sunday, September 28, 2014 from 11:30 am to 6pm.


The festival is a unique chance to experience the Medieval period in the most authentic setting this side of the Atlantic.  The area around the Cloisters Museum in Fort Tryon Park is transformed into a medieval market village where knights in armor, jugglers, jesters, magicians, musicians, storytellers, and puppeteers will perform.  A blacksmith, manuscript illuminator, pottery decorator, wood carver and other artisans will demonstrate their crafts.  Performers and fairgoers dress in historical costumes.  Medieval food is available and craft items will be sold. 

The afternoon culminates with a jousting event between knights on horseback! Yes, they do knock each other off their horses!

Admission is free. This annual event is sponsored by the City of New York Parks and Recreation and the WHIDC. 

We hope to see everyone there!


Friday, August 15, 2014

Binding Arbitration: A New Timebomb for Lawyer and Client, by Arthur Xanthos

It is customary to recommend to a range of clients that they agree to binding arbitration as a mechanism to resolve future disputes under an agreement. Arbitration is often regarded as a cheaper, quicker alternative to litigation.  The typical arbitration clause reads as follows: "Any dispute arising under this agreement shall be resolved by arbitration before the American Arbitration Association in New York City under the commercial arbitration rules then in effect." It is just as customary in the same agreement to choose a particular State law, e.g., New York law, to govern the resolution of future disputes.  A simple version of this choice of law clause reads as follows: "This agreement shall be governed by the laws of the State of New York."

Yesterday, the New York State Appellate Division, First Department, had the opportunity to consider a case involving an agreement containing both clauses.  A limited liability company's operating agreement contained both an arbitration clause and a choice of law (New York) clause. But the commercial arbitration rules (mandated by the arbitration clause) conflicted with New York State law (mandated by the choice of law clause) in one important respect: commercial arbitration rules permit an arbitrator under some circumstances to assess punitive damages against a party to the arbitration.  New York State law, on the other hand, does not permit an arbitrator to assess punitive damages.  So when an agreement contains both clauses (commercial arbitration rules, and New York State choice of law), may an arbitrator award punitive damages?

Yes, said the Appellate Division in a sharply divided 3-2 decision. Matter of Flintlock Constr. Servs. LLC v. Weiss, 2014 NY Slip Op 05818 (8/14/2014).  The majority held that the operating agreement's choice of law provision, in the absence of additional limiting language, "is insufficient to remove the issue of punitive damages from the arbitrator".

The Flintlock decision is problematic for two reasons: First, what do contracting parties do about their already executed agreements that now have conflicting clauses? It is barely overstatement to say that the overwhelming majority of shareholder agreements, operating agreements, asset sale agreements, and even employment agreements contain both of these clauses.  Second, how should such agreements be drafted going forward?  Pending an appeal of the Flintlock decision, attorneys should follow the First Department's direction and place limits on the arbitrator's power to impose punitive damages.  The new clauses might read as follows:

              "ARBITRATION. Any dispute arising under this agreement shall be resolved by arbitration before the [NAME OF ARBITRATION TRIBUNAL] in [LOCATION].  The arbitration shall be conducted under commercial arbitration rules then in effect, but the arbitrator(s) shall resolve the dispute in accordance with the laws of the State of New York without giving effect to principles of conflict of laws. The arbitrator(s) shall have the limitations on his, her and their power and authority as are found in New York State law, including without limitation no power or authority to award or assess punitive damages."

                "CHOICE OF LAW. This agreement, its validity, construction, and enforcement, shall be governed by the laws of the State of New York, without giving effect to principles of conflict of laws."

                                                                                            APX 8/15/14 



     

  

Wednesday, August 6, 2014

Mold Up in the Air: Settled, by Arthur Xanthos

Our January 16, 2014 entry entitled “Mold Up in the Air” discussed the pending appeal of Cornell v. 350 West 51st St. Realty LLC, a case which concerned whether a plaintiff could get to a jury on her claim that indoor residential mold caused her respiratory injuries. We pointed out that the Court of Appeal’s questioning at oral argument portended a potential reversal and defeat for mold plaintiffs. And that is in fact what has happened. The Court of Appeals (2014 NY Slip Op 02096) granted the defendant landlord and coop summary judgment, and dismissed the bodily injury claims of the Cornell plaintiff. The decision is a difficult read, but the lessons yielded are clear.

Some background: the plaintiff in Cornell alleged that throughout her occupancy of a co-op apartment, the co-op building's "basement was in a wet, damp, musty condition"; that the radiator in her apartment's living room "leaked on numerous occasions" and "continued to leak and also released steam into the Apartment" despite the co-op’s attempts at repair; that in July 2003 she first noticed and notified the co-op that "there was mold growing in the [apartment's] bathroom," but the co-op "ignored" this condition; and that beginning in the first week of October, 2003, the landlord and/or its contractor performed demolition and/or construction work in the basement of the co-op building, permitting noxious dust, dirt, mold and debris to be released, which infiltrated her first-floor apartment.  What were her injuries? The Cornell plaintiff claimed that "[i]mmediately after" the landlord and/or its contractor performed the work in the basement, she became dizzy, disoriented, covered with rashes, unable to breathe, light-headed, congested, experienced tightness in her chest, had severe headaches, had shortness of breath, had a metallic taste in her mouth, and experienced other physical symptoms.

At the Frye hearing (brought on by defense motion), the defendants used an immunologist/epidemiologist who assessed plaintiff’s claim that "a significant portion of her physical and psychological problems is related to adverse reactions stemming from exposures to molds," and, after review of her medical records and the relevant science, opined with reasonable medical certainty that there was no relationship between the medical problems experienced by Ms. Cornell and exposures to molds (i.e., no specific causation). The defendants’ expert also opined that a causal relationship between indoor residential mold and Ms. Cornell’s injuries was not generally accepted in the medical community (i.e., no general causation).

Plaintiff’s medical expert opined to the contrary, and pointed to numerous studies that supported an association between indoor residential mold and illness. But as the Court of Appeals explained, “studies that show an association between a damp and moldy indoor environment and the medical conditions that [plaintiff's medical expert] attributes to Cornell's exposure to mold (bronchial-asthma, rhino-sinusitis, hypersensitivity reactions and irritation reactions of the skin and mucous membranes) do not establish that the relevant scientific community generally accepts that molds cause these adverse health effects.” (The causation/association battle line was explained in detail in our January 16 entry.)

The Court of Appeals could have ended its decision there (since without proof of general causation, plaintiff must be turned away), but it went further: even assuming that the plaintiff in Cornell demonstrated general causation, she did not show the necessary specific causation. (For a theory of causation to survive under Frye, both prongs of causation – general and specific – must be proved.) The Court of Appeals decision alludes to the fact plaintiff failed to show specific causation because she did not set forth “exposure to a toxin, that the toxin is capable of causing the particular illness and that plaintiff was exposed to sufficient levels of the toxin to cause the illness (specific causation)." The Cornell plaintiff’s expert had tried to prove specific causation by differential diagnosis. The Court of Appeals dismissed that attempt: “Differential diagnosis, of course, 'assumes general causation has been proven'". This last pronouncement is of incredible importance to the defense of toxic tort claims, as the number of clinicians who use differential diagnosis to support an opinion on causation is legion.

This Firm already has had opportunity to use the Cornell decision at the trial court level to our client’s advantage (see Benton v 80 Cranberry Street, in “Publications” above).  Absent a major change in the science of mold illness, there is every reason to believe the next few years will see many more summary judgment decisions in favor of land owners and against mold plaintiffs.

                                                        APX 8/6/14