Italian Forum Selection Clause Contained In Order Confirmation Form Upheld

In Allied Dynamics Corp. v. Kennametal, Inc., 12-CV-5904 (JFB)(AKT) (E.D.N.Y. Aug. 5, 2014), Judge Joseph F. Bianco granted defendants’ motion to dismiss plaintiff’s claims for breach of contract and tort based on improper venue. Plaintiff, a New York manufacturer of turbine parts, had ordered blade parts from defendant, an Italian company, for gas turbine assembly. Plaintiff alleged that defendant had failed to provide goods of the quality and quantity promised.
When plaintiff filed suit in New York, defendants asserted that the parties had chosen Milan, Italy, as the exclusive forum for disputes. This forced the court to determine, first, which documents constituted the parties’ agreement, and, second, whether that agreement included the forum selection clause. The court resolved these questions by applying the United Nations Convention on Contracts for the International Sale of Goods (“CISG”). After an evidentiary hearing, the court held that plaintiff’s initial purchase orders constituted offers but defendants’ order confirmations—which included the forum selection clause in dispute, among other general terms and conditions—constituted rejections and counteroffers that plaintiff was deemed to have accepted under the CISG when it failed to object within fifteen days of receipt of each confirmation.
But that did not end the inquiry. Even valid forum selection clauses can be overcome if the partyresisting enforcement can show that enforcement would be “unreasonable or unjust, or that the clause is invalid for reasons such as fraud or overreaching.” Slip op. 15 (internal quotation and citation omitted). The court found no evidence of fraud or overreaching and concluded that the Italian forum would not deprive plaintiff of a remedy. As a result, Judge Bianco dismissed the case in favor of the Italian courts.

Pro Se Plaintiff Should Have Been Allowed To Amend Complaint

On August 19, 2014, the Second Circuit issued a decision in Garay v. Novartis Pharmaceuticals Corp., 13-3762-CV, reversing a denial by the EDNY of leave to amend a complaint that had been dismissed on the pleadings.

In Garay, the EDNY dismissed with prejudice a pro se plaintiff’s age discrimination and retaliation claims. The Second Circuit affirmed the dismissal, but reversed the EDNY’s refusal to allow the plaintiff to file an amended complaint, explaining:

While the District Court’s ruling was otherwise sound, it erred in denying [the plaintiff] leave to amend her complaint on futility grounds. As a general rule, leave to amend should be freely given, and a pro se litigant in particular should be afforded every reasonable opportunity to demonstrate that she has a valid claim. We have thus held that a pro se complaint should not be dismissed without the Court granting leave to amend at least once when a liberal reading of the complaint gives any indication that a valid claim might be stated. An amendment to a pleading is futile if the proposed claim could not withstand a motion to dismiss pursuant to Rule 12(b)(6).

(Internal quotations and citations omitted). After reviewing the plaintiff’s opposition to the defendant’s motion for judgment on the pleadings, the Second Circuit concluded that she should have been allowed to file an amended complaint because such an amendment might not have been futile in light of her allegations regarding retaliation.

Defendant Liable for Malicious Prosecution Even Though No Actual Prosecution Took Place

On July 30, 2014, the Second Circuit issued a decision in Stampf v. Trigg, Docket No. 11-3225-CV, affirming an EDNY decision finding a defendant liable for malicious prosecution.

In Stampf, a defendant, Trigg, accused the plaintiff, her co-worker Stampf, of touching her inappropriately and filed a complaint with the MTA police.  Trigg’s complaint led to Stampf’s arrest, during which she “was handcuffed” in front of co-workers, “placed in a police car,” “held in a locked cell for approximately four hours, and “issued a desk appearance ticket (‘DAT’), which listed Forcible Touching as the offense charged.”  Stampf was subsequently released and no criminal complaint ever was filed against her. However, Stampf’s employer, the LIRR, suspended her for 21 days without pay; “an arbitration panel convened pursuant to the Railway Labor Act and affirmed the” LIRR’s “determination that [the plaintiff] violated [its] Anti-Harassment Policy, but reduced the suspension to ten days and awarded [the plaintiff] compensation for lost time.”

Stampf subsequently sued Trigg, the LIRR “and other defendants” in the EDNY “asserting violations of the Federal Employers Liability Act (‘FELA’) and 42 U.S.C. § 1983; state law claims of false arrest, malicious prosecution, negligent and intentional infliction of emotional distress; and violations of state and city human rights laws.” The EDNY granted the defendants summary judgment on all of Stampf’s claims except her “malicious prosecution against Trigg . . . and her discrimination claims against the LIRR.” At trial, “the jury found Trigg liable for malicious prosecution and awarded Stampf damages of $200,000 for past mental and emotional suffering, $100,000 for future mental and emotional suffering, $30,000 as compensation for out-of-pocket losses, and $150,000 as punitive damages, totaling $480,000.”

On appeal, the Second Circuit affirmed the jury’s finding of liability but found the damages excessive. As to liability, the Second Circuit explained:

To establish a malicious prosecution claim under New York law, a plaintiff must prove (1) the initiation or continuation of a criminal proceeding against plaintiff; (2) termination of the proceeding in plaintiff’s favor; (3) lack of probable cause for commencing the proceeding; and (4) actual malice as a motivation for defendant’s actions. . . . .

As to the first element, the Second Circuit held that the MTA’s issuance of a DAT to Stampf constituted “the initiation or continuation of a criminal proceeding.” It explained:

In Rosario v. Amalgamated Ladies’ Garment Cutters’ Union, Local 10, 605 F.2d 1228, 1249-50 (2d Cir. 1979), . . . this court concluded that a New York court would rule that the issuance of [a Desk] Appearance Ticket commences a prosecution for purposes of determining whether an action for malicious prosecution lies. The Rosario court reasoned:

[When a DAT is issued,] the accused bears the inconvenience and expense of appearing in court and, perhaps more important, is subject to the anxiety induced by a pending criminal charge. Moreover, if others learn that charges have been lodged against the accused, his character is no less traduced because the accusation is contained in an Appearance Ticket rather than in a summons.

Trigg urges us to reject our holding in Rosario in light of the subsequent New York Civil Court decision in McClellan v. New York City Transit Authority, 444 N.Y.S.2d 985 (Civ. Ct., Kings Co. 1981). McClellan ruled that the issuance of a D.A.T. by the police, without a concomitant filing of an accusatory instrument, or other judicial intervention, is not the commencement of a criminal action and cannot support a cause of action for malicious prosecution. The court noted its respectful disagreement with the United States Court of Appeals for the Second Circuit.

However, the Appellate Division, Fourth Department has explicitly declined to follow McClellan and instead adopted Rosario’s reasoning, holding that a DAT was sufficient to support a claim of malicious prosecution. See Snead v. Aegis Sec., Inc., 482 N.Y.S.2d 159, 160-61 (4th Dep’t 1984). Likewise, in reversing the dismissal of a malicious prosecution claim, the Third Department, citing Snead, treated the issuance of a DAT as constituting initiation of a criminal proceeding. Allen v. Town of Colonie, 583 N.Y.S.2d 24, 26 (3d Dep’t 1992).

Trigg also relies on the Second Department’s ruling in Stile v. City of New York, 569 N.Y.S.2d 129 (2d Dep’t 1991), which dismissed a malicious prosecution claim on the ground that such a claim may arise only after an arraignment or indictment or some other evaluation by a neutral body that the charges were warranted. However, Stile is not on point because the plaintiff in that case was not issued a DAT or any other command to appear in court.

We recognize that several courts of first instance, following the language of Stile, have ruled that a DAT does not initiate a criminal proceeding. Nonetheless, in view of the fact that the Second Department has never held that a DAT does not initiate a criminal proceeding for the purposes of a malicious prosecution claim, and that the Third and Fourth Departments in Snead and Allen held, in accordance with Rosario, that it does, we adhere to the position we took in Rosario that, under New York law, the issuance of a DAT sufficiently initiates a criminal prosecution to sustain a claim of malicious prosecution.

(Internal quotations and citations omitted).

The Second Circuit rejected the argument that Trigg “played [no] role in the issuance of the DAT,” holding that “[i]n order to initiate a criminal proceeding for the purposes of a malicious prosecution claim, Trigg need not have explicitly named each element of a particular crime[ and i]nstead, it must be shown that the defendant played an active role in the prosecution, such as giving advice and encouragement or importuning the authorities to act,” something which she clearly did.

Finally, the Second Circuit rejected the argument that “the proceeding” against Stampf did not terminate in her favor, explaining that a “dismissal without prejudice qualifies as a final, favorable termination if the dismissal represents the formal abandonment of the proceedings by the public prosecutor.”

Second Circuit Affirms EDNY Award Of Attorneys’ Fees Against Civil Rights Plaintiff

On July 21, 2014, the Second Circuit issued a decision in Carter v. Incorporated Village of Ocean Beach, 13-815-CV, affirming an award by the EDNY of attorneys’ fees to defendants in a civil rights action.

In Carter, the “[p]laintiffs, five former seasonal and part-time police officers . . . pursued a variety of wrongful termination and defamation claims against” a collection of defendants, including Suffolk County and several of its employees and agencies (the “County Defendants”). The plaintiffs dismissed some of their claims and the EDNY “granted summary judgment to all Defendants” on the remaining claims. After that ruling was affirmed by the Second Circuit, the EDNY “awarded attorney’s fees and costs to the County Defendants.” The plaintiffs appealed. The Second Circuit affirmed.

One issue raised by the plaintiffs was that the EDNY awarded fees to the County Defendants on claims that were not addressed by the EDNY summary judgment decision. The Second Circuit rejected the argument, explaining:

Plaintiffs rely on Nemeroff v. Abelson, 620 F.2d 339, 350‐51 (2d Cir. 1980) (per curiam), which observed that generally the defendant is not considered the prevailing party when, as here, there is a voluntary dismissal of the action by the plaintiff with prejudice. Plaintiffs argue that they therefore cannot be held liable for any fees and costs that the County Defendants would have incurred anyway to defend against the claims that were dismissed voluntarily. But Nemeroff’s general statement of fee-shifting law was dictum because the order of dismissal in that case expressly reserved defendants’ right to move for costs. The court had no occasion to apply the rule it posited. Moreover, the only authority Nemeroff cited, Mobile Power Enterprises, Inc. v. Power Vac, Inc., 496 F.2d 1311, 1312 (10th Cir. 1974), has since been overruled by a unanimous en banc Tenth Circuit, which explained that Mobile Power was illogical, a misreading of both the Federal Rules and earlier precedent, and contrary to the decisions of most other courts. Nemeroff is also in tension with subsequent case law from the Supreme Court. In Buckhannon, the Supreme Court held that, to prevail for purposes of attorney’s fees, a party (the plaintiff in that case) must have gained through the litigation a material alteration of the legal relationship of the parties. A voluntary dismissal of an action with prejudice works such alteration, because it constitutes an adjudication on the merits for purposes of res judicata, and any action so dismissed could not be brought again. Because the Nemeroff dictum suggests to the contrary, and has no redeeming justification, we reject it.

(Internal quotations and citations omitted) (emphasis added). Having dealt with the precedent of Nemeroff, the Second Circuit went on to affirm because the combination of their victory on summary judgment and the voluntary dismissal meant that “the victory for the County Defendants was total,” and that the plaintiffs “are barred by res judicata from relitigating any of” their claims.

With respect to the plaintiffs’ state law claims, over which the EDNY declined to exercise jurisdiction (and thus which were not determined on the merits by the EDNY), the Second Circuit explained:

Other courts have ruled that a declination to exercise supplemental jurisdiction is insufficient to confer prevailing party status on a defendant, since those claims could later be refiled. In the circumstances of this case, however, a state court had dismissed the state law claims on the pleadings before the district court resolved the motion for attorney’s fees in the federal case. Accordingly, there was no chance that these claims would be refiled, and the defendants are properly considered prevailing parties on these claims. Moreover, the state law claims against the County Defendants were frivolous for the same reason that the federal claims were frivolous: the County Defendants had nothing to do with the alleged improper termination and the defamation underlying Plaintiffs’ complaint.

Plaintiffs argue that even if the state law claims were frivolous, fees cannot be imposed without adjudication of these claims by the federal court. This argument is implicitly at odds with [the Supreme Court’s decision in] Fox, in which the district court granted summary judgment on the federal claims (which were frivolous) and remanded the state claims (which were not). The issue was how to allocate between work associated with the former and work associated with the latter; the Supreme Court held that plaintiffs could be liable only for costs and fees that the defendant would not have incurred but for the frivolous claims. If Plaintiffs were correct, there would have been no need in Fox to draw a line between claims that were frivolous and those that were not: claims remanded to state court would never be subject to fee-shifting.

(Internal citations omitted). Finally, as to the plaintiffs’ argument that “no fees should have been awarded as to all their” claims other than federal civil rights claims, the Second Circuit explained that:

The state claims in Fox were not specifically listed in § 1988. Under Plaintiffs’ logic, the Court would have disposed of the appeal by explaining that fees associated with those claims were unavailable, without reference to frivolousness. More importantly, Plaintiffs’ argument distorts the text of § 1988, which provides that in any action or proceeding to enforce a federal civil rights provision, the prevailing party may be entitled to fees. Plaintiffs’ action sought to enforce (inter alia) federal civil rights provisions, and the County Defendants prevailed.

(Internal quotations omitted).