Appellate Division Review: July 2017

First Department

Taxes. In Sprint Communications Co., L.P. v. City of New York Department of Finance, 2017 N.Y. Slip Op. 05194 (1st Dep't June 27, 2017), the First Department was called upon to decide whether a telephone company is a utility for tax purposes. Under the New York City Administrative Code, a "utility"—defined as "[e]very person subject to the supervision of the department of public service"—is subject to a Utility Tax but not the Unincorporated Business Income Tax (UBT). N.Y.C. Admin. Code §§11-1101(6), 11-502[a]. In contrast, a "vendor of utility services," not under such supervision, is subject to both taxes.

Sprint sought a ruling that it was exempt from the UBT on the grounds that it is supervised by the Department of Public Service's Public Service Commission. The Department of Finance, however, maintained that Sprint is subject to only "light regulation," not "supervision," and therefore does not meet the definition of a utility. On cross motions for summary judgment, Supreme Court sided with the Department of Finance.

In a unanimous opinion authored by Presiding Justice John W. Sweeny Jr., the First Department affirmed. The court explained that while Sprint may be required to comply with various Public Service Commission regulations, the term "supervision" refers to the strict regulation of a public utility that has been granted a monopoly, not the lighter regulation of a market-driven business. While significant changes in the telecommunications industry may have blurred this distinction, "changing the definition of utility would require legislative activity rather than judicial action."

Habeas Corpus. It has been said that an infinite number of monkeys typing on an infinite number of typewriters would eventually reproduce Shakespeare. But if the monkeys wrote a petition for habeas corpus to escape their ordeal, would a court entertain it? In Matter of Nonhuman Rights Project v. Lavery, 2017 N.Y. Slip Op 04574 (1st Dep't June 8, 2017), the First Department joined other departments by ruling in the negative.

Supreme Court denied plaintiff's request for an order to show cause granting habeas corpus relief to Tommy and Kiko. Plaintiff sought to have the two chimpanzees transferred from their respective cages to a primate sanctuary.

In a unanimous opinion authored by Justice Troy K. Webber, the First Department affirmed. The court noted that CPLR §7002(a) limits the availability of a petition for habeas corpus to a "person illegally imprisoned or otherwise restrained in his liberty." After reviewing various expert affidavits and amicus curiae briefs regarding the cognitive abilities of chimpanzees and the medieval practice of trying animals for attacking humans and eating crops, the court nonetheless concluded that "[n]o precedent exists, under New York law, or English common law, for a finding that a chimpanzee could be considered a 'person.'"

Second Department

Products Liability. Manufacturers and sellers of products rented to consumers take note: In Fasolas v. Bobcat of N.Y., 150 A.D.3d 147 (2d Dep't 2017), the Second Department held you may be liable for failing to install "optional" safety features.

Decedent rented a Bobcat skid-steer loader from a rental center and was killed when a tree entered the open cab. The loader did not have a protective door installed—an optional feature the rental center did not purchase. Decedent's estate sued the rental center, the Bobcat manufacturer and the distributor, alleging the loader was defectively designed because the safety door should have been installed. The manufacturer and distributor argued they were not liable under Scarangella v. Thomas Built Buses, 93 N.Y.2d 655 (N.Y. 1999), which held that a product with an optional safety feature is not defective if sold to a knowledgeable buyer in a position to balance the benefits and risks of installing the safety feature. Supreme Court denied their request for a Scarangella jury charge, and the jury returned a verdict for the plaintiff against all defendants.

In a unanimous opinion authored by Justice John M. Leventhal, the Second Department affirmed. The court explained that Scarangella does not apply to products that would ultimately be used by consumers for personal use. While a company purchasing products for its employees' use may be able to evaluate the need for a safety device in light of the product's particular use, the Bobcat manufacturer and distributor could not have "reasonably expected the rental company to be in a better position than [they] to balance both the costs and benefits associated with inclusion of the option safety device."

Due Process. An individual's due process right to attend a hearing yields to the overwhelming state interest in classifying sex offenders, the Second Department held in People v. Parris, 2017 N.Y. Slip Op. 05252 (2d Dep't June 28, 2017).

In 2008, defendant pled guilty to sexual abuse in the first degree. In connection with defendant's release from prison, Supreme Court held a risk assessment hearing to determine his classification under the Sex Offender Registration Act (SORA). N.Y. Correction Law Art. 6-C. During the hearing, defendant made several outbursts and was ordered removed from the courtroom. The hearing continued in defendant's absence, and the court accepted the state's request that he be classified as a high risk offender.

Writing for the unanimous panel, Justice Sheri S. Roman rejected defendant's argument that the court should have discontinued the hearing, ordered a competency examination, and continued the hearing with defendant present only after he had been found competent. Although defendant had a due process right to attend his SORA hearing, the court explained, SORA is a remedial statute intended to prevent future crime and therefore "the due process protections required for a risk level classification proceeding are not as extensive as those required in a plenary criminal or civil trial." The court also held, however, that defendant is entitled to a de novo hearing if and when he is competent, where the burden of establishing his risk level will remain with the state.

Third Department

Education Law. The Third Department gave the New York State Commissioner of Education some remedial reading instruction in DeVera v. Elia, 2017 N.Y. Slip Op. 04522 (3d Dep't May 1, 2017), concluding that the Commissioner's interpretation of Education Law §3602-ee to permit extensive regulation of a charter school was erroneous.

In 2014, the legislature added Education Law §3602-ee to establish a statewide universal full-day pre-kindergarten program. The New York City Department of Education (DOE) received state funding under the program and solicited applications from charter schools interested in participating. Petitioner Success Academy's application was conditionally approved, subject to completing a contract with DOE. Petitioner refused to sign the contract, however, because it would permit DOE to regulate virtually all aspects of its prekindergarten program in violation of charter schools' rights under the Education Law to regulate themselves. As a result, DOE refused to provide funding. Petitioner unsuccessfully appealed to the Commissioner of Education, and the Supreme Court dismissed its subsequent Article 78 petition.

In a unanimous opinion authored by Justice William E. McCarthy, the Third Department reversed. The court noted that the contract was so detailed, it "mandated, down to the minute, the daily amount of time that students were to have access to certain educational materials." The court concluded that while Education Law §3602-ee permits school districts to "inspect" charter schools, "a right to inspect does not indicate a right to regulate." Thus, "contrary to the Commissioner's determination, the Legislature did not intend for a school district to 'regulate … [the] program requirements' of a charter school prekindergarten program that was included in the district's consolidated application."

Fourth Department

Discovery. Records of 911 calls, which are protected from public disclosure under County Law §308, are not protected from discovery in court proceedings, the Fourth Department held in Abate v. County of Erie, 2017 N.Y. Slip Op. 05351 (4th Dep't June 30, 2017).

When decedent was stranded inside his car during an intense snow storm, the 911 dispatcher advised him that help was on the way and he should wait in his car. By the time help arrived almost 24 hours later, it was too late. In the ensuing negligence action, decedent's estate moved to compel production of copies of the 911 calls of decedent and several others stranded in his vicinity. Supreme Court rejected the county's argument that County Law §308 (providing that records of 911 calls "shall not be made available to or obtained by any entity or person," except law enforcement and public safety entities) prohibited disclosure.

In a unanimous opinion authored by Justice Patrick H. NeMoyer, the Fourth Department affirmed. The court explained that County Law §308 must be read in its statutory and legislative history context. As such, it was intended "not as a restriction on discovery pursuant to CPLR article 31—whose scope must be liberally construed—but rather as a narrow carve out that exempts 911 records from requests under the Freedom of Information Law and similar sunshine regimes."

Reprinted with permission from the July 20, 2017 edition of the New York Law Journal ©2017 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com, or visit almreprints.com.