This column reports on several significant representative decisions handed down recently in the U.S. District Court for the Eastern District of New York. Judge Eric N. Vitaliano found that New York's "recklessness" requirement for fourth-degree arson did not meet the more rigorous requirement of "purposefulness" for a "crime of violence" under the federal sentencing guidelines. Judge Nicholas G. Garaufis declined to dismiss claims of an antitrust conspiracy. And Judge Ann M. Donnelly granted in part, and denied in part, a motion for summary judgment by a plaintiff contesting the summary suspension of his right to represent taxi drivers before the City's OATH tribunal.

Fourth-Degree Arson Not a Crime of Violence

In United States v. Saunders, 18 CR 656 (EDNY, Jan. 28, 2020), Judge Vitaliano held that fourth-degree arson, New York Penal Law §150.05, is not a "crime of violence" for purposes of calculating the federal sentencing guidelines range. U.S.S.G. §4B1.2(a).

Defendant pleaded guilty to being a felon in possession of a firearm, 18 U.S.C. §922(g)(1), and was sentenced to 21 months' imprisonment and three years' supervised release. The parties had disagreed as to whether the underlying New York state felony, fourth-degree arson, should be considered a "crime of violence" under U.S.S.G. §4B1.2(a). In imposing sentence, Vitaliano agreed with defendant that the prior felony was not a crime of violence. This opinion explains the reasons for that decision.

Under N.Y. Penal Law §150.05, a person who "recklessly damages a building or motor vehicle by intentionally starting a fire or explosion" commits fourth-degree arson. A state of mind is "reckless" when a person "is aware of and consciously disregards a substantial and unjustifiable risk … ." N.Y. Penal Law §15.05(3).

In defining a crime of violence, the federal sentencing guidelines list several kinds of crimes, including arson. U.S.S.G. §4B1.2(a)(2). The question is whether the basic elements of fourth-degree arson, as set forth in New York's Penal Law, satisfy the mens rea requirement of "willful and malicious" conduct for generic arson. The Second Circuit found in United States v. Hathaway, 949 F.2d 609, 610 (2d Cir. 1991), that "recklessness", as used in New York's definition of fourth-degree arson, does not require a "willful or malicious" state of mind.

In Begay v. United States, 553 U.S. 137, 144-45 (2008), the Supreme Court noted that arson and certain other listed crimes "typically involve purposeful … conduct." The Second Circuit has emphasized the "purposeful" requirement for "crimes of violence" in applying U.S.S.G. §4B1.2(a)(2). Citing Begay, the Second Circuit rejected "reckless endangerment" as a crime of violence. United States v. Gray, 535 F.3d 128, 131-32 (2d Cir. 2008).

As Vitaliano explained, both the Seventh Circuit, Brown v. Caraway, 719 F.3d 583, 591 (7th Cir. 2013), and a district court in the Third Circuit, United States v. Mitchell, 218, F. Supp. 3d 360, 371 (N.D. Pa. 2016), have held that generic arson contemplates purposeful, not merely reckless, conduct. Vitaliano found a contrary decision in the Southern District of New York, McNaught v. United States, 646 F. Supp. 2d 372, 379 (S.D.N.Y. 2009), to be less persuasive

Antitrust: Motion To Dismiss

In O.E.M. Glass Network v. Mygrant Glass Company, 19 CV 742 (EDNY, Jan. 31, 2020), Judge Garaufis denied most of defendants' motions to dismiss claims of an antitrust conspiracy and related state law violations.

Plaintiffs O.E.M. Glass Network and Brooklyn Wholesale Glass (together, OEMGN), aftermarket auto glass wholesalers, alleged a conspiracy between competing wholesalers Mygrant Glass, Interstate Glass of Amityville and Metroglass Distributing (wholesale defendants), whereby wholesale defendants induced certain manufacturers of autoglass products (the manufacturer defendants) to boycott OEMGN as a condition to continuing to do business with the wholesale defendants.

Garaufis found the complaint stated a claim against the wholesale defendants under the Sherman Act, 15 U.S.C. §1, et seq. At the pleading stage, it is sufficient that a complaint "put forward sufficient factual matter to plausibly suggest an inference of conspiracy." Gelboim v. Bank of Am., 823 F.3d 759, 782 (2d Cir. 2016). The complaint included detailed allegations of conspiratorial conversations, "including the names of people involved, dates of conversations, and direct quotations. If plaintiffs' allegations here are insufficient to allege an agreement between the wholesaler defendants, the court is not sure what kind of allegations could, as a practical matter, allege such an agreement." Slip op. 20.

The claims against most of the manufacturer defendants also survived. Their argument that the complaint alleged only permissible "parallel refusals to deal" failed for the same reason as in the recent Southern District decision, In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig., 383 F. Supp. 3d 187 (S.D.N.Y. 2019), which the court found "particularly instructive." Allegations of "conscious parallelism" are sufficient when accompanied by circumstantial evidence and "plus factors," such as a high level of interfirm communication and actions taken against defendants' apparent economic self-interest in refusing to deal, all of which were alleged. Slip op. 22-23.

The Sherman Act claim against manufacturer defendant Sika was dismissed because Sika explicitly refused to deal with OEMGN on Feb. 9, 2015, more than four years before the complaint was filed. Merely continuing that refusal, without an additional overt act, did not prevent application of the Sherman Act's four-year statute of limitations. Garaufis rejected a similar argument by manufacturer defendant Xinyi Auto Glass of North America, because Xinyi did not announce its refusal to deal with OEMGN until May 12, 2015, within four years of the complaint's filing. Slip op. 14-17.

As defendants sought dismissal of claims under the Donnelly Act, N.Y. Gen. Bus. Law §§340-347, based only on the contention that it was required by dismissal of the Sherman Act claims, the Donnelly Act claims survived as to all defendants but Sika. Slip op. 23-24. The remaining state law claim, for tortious interference with contract, survived as to all defendants. Defendants' argument that plaintiffs were obliged to plead "prospective negotiations that reasonably could be expected to result in one or more contracts" failed because OEMGN alleged that it had entered into two such contracts that were later canceled as a result of the manufacturer defendants' pressure. Slip op 24-25.

Procedural Due Process

In Raja v. Burns, 19 CV 1328 (EDNY, Feb. 5, 2020), Judge Donnelly granted plaintiff's summary judgment motion for liability insofar as it related to certain federal and state due process claims arising from the summary suspension of his right to represent taxi drivers before the New York City Office of Administrative Trials and Hearings (OATH). The court denied summary judgment on plaintiff's claims that the OATH statute was unconstitutionally vague and cross-examination was improperly precluded.

Plaintiff had been a non-attorney registered to appear before the OATH tribunal since 2005. He represented taxi drivers appearing before OATH accused of rule violations and facing suspension or fines. On March 1, 2019, plaintiff was summarily suspended pursuant to section 6-25 of Title 48 of the Rules & Regulations of New York City, which authorizes the Chief Administrative Judge to suspend representatives who fail to abide by the rules after being given notice and a reasonable opportunity to be heard. The Chief ALJ may summarily suspend a representative on finding a "lack" of "honesty and integrity" that will directly affect his or her practice before OATH.

Here, it was alleged that plaintiff (1) failed to register as a representative, (2) misrepresented his qualifications, (3) appropriated money under false pretenses, (4) submitted a false statement to OATH, and (5) engaged in disruptive verbal conduct. Plaintiff commenced his federal action by seeking a TRO, which Judge Pamela K. Chen denied. On March 19 OATH filed new charges, sought to bar plaintiff permanently from appearing before OATH, and set a hearing before an OATH Administrative Law Judge for March 22. Near the end of the hearing the parties negotiated a settlement agreement which did not include any admission of wrongdoing by plaintiff.

Under the Fourteenth Amendment, a state may not "deprive any person of life, liberty, or property without due process of law." Applying the factors set forth in Matthews v. Eldridge, 424 U.S. 319 (1976), Donnelly found that the private interest was significant and that Rule 6-25 did not guarantee a prompt hearing or provide a meaningful opportunity to challenge the suspension on the merits. But addressing the second Matthews factor, the risk of an erroneous deprivation of plaintiff's private interest and the value of additional procedural safeguards, Donnelley agreed with Chen's earlier finding that the Chief ALJ's conclusion that "plaintiff lacked 'honesty and integrity' was based on more than just subjective beliefs." Slip op. 11. Nonetheless, the delays in the OATH investigation showed that the City's interest was not as pressing as defendants alleged. As the court stated: "Given the strength of the plaintiff's interest in his license and the important, but not immediate, need for OATH to maintain the integrity of its tribunals, I find as a matter of law that depriving the plaintiff of a pre-suspension hearing violated his due process rights." Slip op. 14.

As to plaintiff's claim that he was deprived of his right to cross-examine witnesses, there is no absolute right to cross-examine during an administrative hearing or trial. In addition, plaintiff waived any challenge to the way the hearing was handled when he reached a settlement before an OATH decision.

The settlement did not bar this action or preclude a claim for compensatory damages. Plaintiff never conceded that the original summary suspension was valid, and he agreed to a brief suspension because he otherwise faced a permanent loss of his livelihood. Slip op. 17-19.

Harvey M. Stone and Richard H. Dolan are partners at Schlam Stone & Dolan. Bennette D. Kramer, a partner of the firm, assisted in the preparation of the article.