A Fond Farewell to Two of the Commercial Division’s Most Senior Judges

by Patterson Belknap Webb & Tyler LLP
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The arrival of the new year is a bittersweet time for the Commercial Division as it bids farewell to two of its most senior judges: Justice Charles E. Ramos and Justice Eileen Bransten.  Notably, both will be staying on to serve the Court as Judicial Hearing Officers.

Both Justice Ramos and Justice Bransten had illustrious judicial careers that began similarly.  After graduating from Fordham Law School, they both spent time in private practice before pursuing judicial careers first as Civil Court Judges.  Thereafter, both were elected to the Supreme Court and then assigned to the Commercial Division.

Together their combined service on the Commercial Division bench exceeds 30 years.  During that time, they wrestled with complex legal issues and issued innovative decisions that helped shape New York commercial law.  They also both contributed significantly to the way in which practice is handled in the Division, including through their service on the Commercial Division Advisory Council.  Below are short biographies with a sampling of a few of their decisions.[1]

Justice Charles E. Ramos served as a New York County Commercial Division Justice since 1996 and—before his retirement from the bench—was the Division’s Senior Justice.  In 2013, Justice Ramos was designated as the Justice to handle all international arbitration cases filed in the New York County Commercial Division.  In 2018, the New York State Bar Association conferred the Hon. Stanley H. Fuld Award upon him for his contributions to commercial law. 

No Oral Modification Clause

In Obsessive v. Sephora,[2] Justice Ramos denied the defendant’s motion to dismiss breach of contract and promissory estoppel claims.  Even though the written contract contained a no oral modification clause, Justice Ramos ruled that an exception to the terms of that clause existed.  Justice Ramos explained that an oral modification may be enforced—despite a no oral modification clause—when partial or complete performance of the oral modification has occurred and that performance is “unequivocally referable to the oral modification” and not contemplated in the original agreement.[3]

Despite the clause barring oral modifications, Justice Ramos held that both oral modifications were enforceable because the plaintiff had unequivocally performed[4] and the performance was not covered by the written agreement.[5]

Arbitration

In confirming an arbitration award in NSB v. C.L. King, Justice Ramos explained that New York gives “extreme deference to arbitrators.”[6]  Therefore, to vacate an arbitration award on the basis of a claimed manifest disregard of the law, “a court must find that (1) the arbitration panel knew of a governing law yet refused to apply it or ignored it, and (2) the governing law was well defined, explicit, and clearly applicable.”[7]  Justice Ramos further explained that the manifest disregard doctrine is “severely limited” and that courts will enforce an arbitration award so long as it offers a “barely colorable justification for the outcome reached.”[8]

Justice Ramos confirmed the arbitration award, finding the record to be lacking because the defendant failed to “provide a complete record of the Arbitration[]” and the parties had failed to request a written explanation for the arbitration award, as they were entitled to.[9]  Given that the award did not explain how the Panel reached its decision, Justice Ramos ruled that the defendant had presented “mere conjecture” regarding the Panel’s decision and “[s]uch speculation is inconclusive and fails to show that the Panel lacked colorable justification for its decision.”[10]  Therefore, Justice Ramos denied the defendant’s cross-motion to vacate the arbitration award. 

Employer’s Computer Use Policy

In Scott v. Beth Israel Med. Ctr.,[11] Justice Ramos denied the plaintiff-employee’s motion for a protective order seeking the return of privileged emails, ruling that the plaintiff had waived attorney-client privilege when he used a work email address to communicate with counsel.  The defendant-employer had a computer use policy providing that its system “should be used for business purpose[s] only[]” and “employees have no personal privacy right” in any materials created using the defendant’s computer system.[12]  Justice Ramos determined that the effect of such a policy “is to have the employer looking over your shoulder each time you send an e-mail.”[13]

Since there was no New York case on point, Justice Ramos looked for guidance to a federal bankruptcy case, which was “virtually identical.”[14]  Accordingly, Justice Ramos adopted the Asia Global court’s four factor test to determine if the employee had waived attorney-client privilege by using his work email to communicate with counsel: “‘(1) . . . the corporation maintain[s] a policy banning personal or other objectionable use, (2) . . . the company monitor[s] the use of the employee's computer or e-mail, (3) . . . third parties have a right of access to the computer or e-mails, and (4) . . . the corporation notif[ies] the employee, or was the employee aware, of the use and monitoring policies?’”[15]

Justice Ramos found that the Asia Global factors weighed in favor of the plaintiff having waived the privilege, holding that the plaintiff had both actual and constructive notice of the defendant’s policy to regulate and monitor the use of its computer system.[16]

Justice Eileen Bransten was elected to the Supreme Court in 1999 and assigned to the New York County Commercial Division in 2008.  In 2013, Chief Judge Jonathan Lippman appointed her to serve on the Commercial Division Advisory Council.  She was formerly President of the Association of Supreme Court Justices of the State of New York.

Personal Jurisdiction Based on an Alter Ego Theory

In Gowen v. Helly Nahmad Gallery,[17] Justice Bransten held that the Court acquired personal jurisdiction over a non-domiciliary defendant based on an alter ego theory.  The case involved a painting that the Nazis had allegedly seized.  Justice Bransten ruled that the Court had personal jurisdiction over the defendant-corporation under CPLR 302(a)(1) (transacting business in the State) and 302(a)(2) (committing a tortious act in the State).  Justice Bransten then determined that the court also acquired personal jurisdiction over the individual defendant based on an alter ego theory.  The Court reasoned that “by and through his conducting business vis-à-vis [his corporation] and, in so doing, so perverting its corporate form such that this court cannot determine a substantial difference between the [individual defendant and the corporation].”[18] Justice Bransten further ruled that the painting’s absence from the State of New York was of no consequence because it is an “overarching principle of New York law” that “one party cannot hide its assets outside of New York” to render the New York judgment unenforceable. [19]

Plaintiffs typically use alter ego theories to establish a party’s liability.  However, Justice Bransten’s decision in Gowen demonstrates that an alter ego theory can also be used to establish personal jurisdiction. 

Partnership Deadlock

In what appears to be an issue of first impression, in Magid v. Magid, Justice Bransten ruled that when seeking judicial dissolution under N.Y. Partnership Law § 63, a 50/50 divide among the partners is not necessary in order for the Court to find that a “partnership is irretrievably deadlocked.”[20] Justice Bransten denied both parties’ summary judgment motions, ruling that there was an issue of fact as to the level of dysfunction among the partners.[21]

Long-Arm Jurisdiction

In Ace Decade Holdings v. UBS,[22] Justice Bransten dismissed a fraud suit involving non- domiciliary parties due to lack of personal jurisdiction and inconvenient forum.  Justice Bransten found no basis to exercise jurisdiction over a foreign defendant “with respect to claims arising out of an entirely foreign transaction.”[23]

In a post-Daimler world, Justice Bransten explained that “New York courts have recognized that ‘doing business’ in New York is no longer a constitutionally sufficient basis for the exercise of general jurisdiction over foreign entities[,]” and therefore, the defendant’s contacts with New York are not sufficient to “render it essentially at home” in New York.[24]

Having found no basis for general jurisdiction, Justice Bransten held that the “Plaintiff has failed to establish that long-arm jurisdiction may be exercised under any subsection of CPLR § 302(a).”[25]  Notably, Justice Bransten rejected the plaintiff’s argument that its move to New York— after entering into the relevant agreements—was sufficient to establish jurisdiction, finding that the plaintiff “cannot manufacture jurisdiction over [the defendant] by moving its operations to New York[]” since none of the defendant’s alleged acts “were performed in New York.” [26]

Justice Bransten further held that, even if jurisdiction could be established, dismissal of the case was also warranted based on the doctrine of forum non conveniens.  The Court reasoned that the claim lacked a “substantial nexus with New York” and nearly “all relevant documents and all witnesses” were located outside of New York.[27]

*          *          *

These two standouts of the Commercial Division and their years of experience will be sorely missed.  As of January 1, 2019, their posts have been filled by Hon. Joel M. Cohen and Hon. Andrew S. Borrok.


[1] Both have also been involved with RMBS litigations but those cases will not be covered here. 

[2] Obsessive Compulsive Cosmetics, Inc. v. Sephora USA, Inc., 2016 BL 307244 (Sup. Ct. 2016).

[3] Id. at *2 (quoting Rose v Spa Realty Associates, 42 N.Y.2d 338, 341, 397 N.Y.S.2d 922, 924 (1977)).

[4] Oral modification 1: Defendant verbally agreed to become the exclusive non-online purchaser of plaintiff’s products, a condition not covered in the written agreement.  Plaintiff unequivocally performed by refusing to sell its products to other stores.  Id. at *1.

Oral modification 2: To induce the plaintiff to place it products in twenty-six of its locations, the defendant verbally agreed to share the fixture costs 50/50 with the plaintiff.  Id.  The written agreement was not a requirements contract, and the plaintiff initially refused the defendant’s purchase orders because the fixture costs would be too great. Id. at *3.  After the oral agreement, the plaintiff unequivocally performed by producing new products to fill the defendant’s purchase orders, but when the plaintiff insisted that the defendant share the fixture costs, the defendant cancelled its purchase orders.  Id. at *1.

[5] In the written agreement, the plaintiff agreed to sell its product to the defendant and the plaintiff was responsible for covering certain expenses, such as fixture costs.  Id.

[6] NSB Advisors, LLC v. C.L. King & Associates, Inc., No. 657034/2017, 2018 BL 388363, at *3 (Sup. Ct. 2018).

[7] Id. at *3.

[8] Id. (internal quotations omitted).

[9] Id. at *4.

[10]Id.

[11] Scott v. Beth Israel Med. Ctr. Inc., 847 N.Y.S.2d 436 (Sup. Ct. 2007).

[12] Id. at 439.

[13] Id. at 440.

[14] Id. at 441.

[15] Id. at 442 (quoting In re Asia Global Crossing, Ltd., 322 BR 247, 257 (S.D.N.Y. 2005)).

[16] Id. at 442 – 43.

[17] Gowen v. Helly Nahmad Gallery, Inc., No. 650646/2014, 2018 BL 164601 (Sup. Ct. 2018).

[18] Id. at *7.

[19] Id. at *9 – 10.

[20] Magid v Magid, 2017 NY Slip Op 32603(U), at *5 (Sup. Ct. 2017).

[21] Shortly thereafter, the parties resolved the dispute and entered into a stipulation of discontinuance.  See NYSCEF Doc. No. 175.

[22] Ace Decade Holdings Ltd. v. UBS AG, No. 653316/2015, 2016 BL 413780 (Sup. Ct. 2016).

[23] Id. at *8.

[24] Id. at *5.

[25] Id. at *11.  Under 302(a)(1), Justice Bransten ruled that based on the totality of the circumstances, the claim did not arise out of business transacted in NY.  Id. at *8.  Under 302(a)(2),  she found that defendant did not commit a tortious act within the State.  The record was not clear whether plaintiff alleged the defendant made ongoing misrepresentations once the plaintiff moved to NY.  In any event, Justice Bransten found that the misrepresentations alone would not be sufficient to exercise jurisdiction.  Id. at *8.  And under 302(a)(3), Justice Bransten held that the defendant did not cause injury in NY because the money used for the investment was never held in a NY account, and further, the plaintiff’s residency in NY alone is not sufficient to establish jurisdiction.  Id. at *10 – 11.

[26] Id. at *7 – 8.

[27] Id. at *11 – 12.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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