In the middle of the 2017-2018 Term, the Court of Appeals answered a wide range of questions: does an “avatar” constitute a “portrait” within the meaning of the Civil Rights Law? whether an exchange of email, without more, constituted “documentary evidence” of the existence of a contract? must materials from the private portion of a Facebook account be disclosed by the plaintiff in a personal injury action? was a general partnership dissolution covered by the partnership agreement or the Partnership Law? and whether, in response to a request under the Freedom of Information Law, the agency could decline to acknowledge whether or not relevant documents existed?
Does a computer-generated image – a so-called “avatar” – constitute a “portrait” within the meaning of the Civil Rights Law; and, if so, were the subject images recognizable as the actress, Lindsay Lohan? Answer: An avatar may constitute a “portrait”; however, the subject images were not recognizable as Lohan.
Lohan v. Take-Two Interactive Software, Inc., 2018 NY Slip Op 02208 (March 29, 2018)
Defendants develop and sell video games, including “Grand Theft Auto”. In one episode, the player encounters a character, “Lacey Jonas” hiding from paparazzi in an alley. The player then helps Jonas escape from the photographers. The game was released and distributed domestically and abroad, including within New York State
Supreme Court denied defendants’ motion to dismiss the misappropriation claim under New York’s Civil Rights Law. The Appellate Division reversed and dismissed the claim.
Lohan described herself as a figure “recognized in social media” and as “a celebrity actor who has been regularly depicted in various media for the past 15 years.” Lohan claimed that the Jonas character was her “look-a-like” and misappropriated her portrait, voice and persona.
Section 51 of New York State’s Civil Rights Law provides that:
“[a]ny person whose name, portrait, picture or voice is used within this state for advertising purposes or for the purposes of trade without the written consent first obtained as [provided in Civil Rights Law § 50] may maintain an equitable action…to prevent and restrain the use thereof; and may also sue and recover damages for any injuries sustained by reason of such use[.]”
The Court of Appeals held that “an avatar (that is, a graphical representation of a person, in a video game or like media) may constitute a portrait within the meaning of Article 5 of the Civil Rights Law”.
The Court then proceeded to the question of whether the subject images were recognizable as Lohan. The Court concluded that the “amended complaint was properly dismissed because the artistic renderings are indistinct, satirical representations of the style, look, and persona of a modern, beach-going young woman that are not reasonably identifiable as plaintiff[.]”.
Thus, the Court concluded that the images in question did not constitute a “portrait” of Ms. Lohan.
Did an exchange of correspondence and email constitute “documentary evidence” of the existence of a contract? Answer: Yes, under the facts of this case.
Kolchins v. Evolution Mkts., Inc., 2018 NY Slip Op 02209 (March 29, 2018)
Andrew Kolchins worked as a commodities broker with Evolution Markets, Inc. beginning in 2005 and the parties entered into a three-year employment agreement in 2006 and 2009. Under the 2009 agreement, Kolchins was an employee at will. As the three-year term of the 2009 agreement approached, Evolution’s Chief Executive Officer sent Kolchins an email listing the terms of an offer of a new three-year employment term which involved certain specified changes to his about-to-expire contract. A month later, Kolchins responded by email: “I accept”, [please] send contract[.]”. The CEO replied “Mazel. Looking forward to another great run.”
Email communications and in-person comments ensued; however, the parties were not successful in reducing their understanding to a formal written agreement. Evolution then notified Kolchins that his employment ceased upon the end of the 2009 agreement.
Kolchins sued for breach of contract claiming that the initial email exchange constituted an enforceable agreement.
Evolution moved to dismiss the complaint, claiming that the email exchange established, as a “documentary defense”, that a binding agreement had not been reached. Supreme Court denied the motion to dismiss. And, upon appeal, the Appellate Division affirmed.
The Court of Appeals held that dismissal was warranted only if the documentary evidence established a defense to the asserted claim as a matter of law. The Court found Evolution failed to sustain its burden of proof that the proffered documents conclusively refuted Kolchins’ claim.
The Court noted that, while a mere agreement to agree on a material term in future negotiations is unenforceable, the terms of a contract do not have to be fixed with absolute certainty to give rise to an enforceable agreement. Under the facts of this case, the Court concluded that “based on all the documentary evidence proffered by [Evolution], a reasonable fact-finder could determine that a binding contract was formed [with Kolchins].
What materials from the private portion of a Facebook account must be disclosed by a party in a civil action? Answer: The party must disclose Facebook postings from her account that are reasonably likely to yield relevant evidence.
Forman v. Henkin, 2018 NY Slip Op 01015 (February 13, 2018)
Kelly Forman was seriously injured when she fell from a horse owned by Mark Henkin. Prior to the accident, Forman posted photographs on her Facebook account showing her pre-accident active lifestyle; she deactivated the account six months after the accident; and could not recall whether any post-accident photographs were posted.
Henkin sought unlimited authorization to obtain Forman’s private Facebook posting; Forman failed to provide the requested authorization; and Henkin moved to compel disclosure.
Henkin argued that the photographs on the Facebook account would be relevant to Forman’s pre-accident and post-accident activities. Forman claimed that, even if potentially relevant, the private posts should be shielded from disclosure on privacy grounds.
Supreme Court granted the motion to compel to the extent of directing Forman to produce all photographs of herself privately posted on Facebook prior to the accident that she intended to use at trial; photographs privately posted after the accident unless depicting nudity or romantic matters; and Facebook records showing data about each time Forman posted a private message after the accident. The Appellate Division modified by limiting disclosure of photographs posted on Facebook that Forman intended to introduce at trial (both before or after the accident) and eliminating the authorization relating to post-accident messages.
The Court of Appeals noted that disclosure in civil actions is generally covered by CPLR 3010(a) which directs “full disclosure of all matters material and necessary to the prosecution or defense of an action, regardless of the burden of proof; and that the words “material and necessary” are to be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity. The test is one of usefulness and reason and the threshold requirement for disclosure is that “the request is reasonably calculated to yield information that is [relevant]”.
CPLR 3101 itself protects three categories of materials: privileged material (which is absolutely immune from disclosure); attorneys’ work product (also absolutely immune); and trial preparation materials (which are subject to disclosure only on a showing of substantial need and undue hardship).
The Court of Appeals rejected the notion that commencement of a personal injury action renders a party’s entire Facebook account automatically discoverable. The Court noted that litigants are protected from “unnecessarily onerous application of the discovery statute” and rejected a one-size-fits-all approach. The Court also rejected the need for a specialized or heightened factual predicate to avoid fishing expeditions” into social media.
The Court of Appeals then concluded that, with respect to discovery of social media, courts should first consider the nature of the event giving rise to the litigation and the injuries claimed, as well as any other information specific to the case, to assess whether relevant material is likely to be found on the Facebook account. The court should then balance the potential utility of the information sought against any specific privacy or other concerns raised by the account holder. And the court should then issue an Order “tailored to the particular controversy that identifies the type of materials that must be disclosed while avoiding disclosure of non-relevant materials.”
As to the particular case, the Court of Appeals found that Henkin “more than met his threshold burden of showing that [Forman’s] Facebook account was reasonably likely to yield relevant evidence because Forman claimed active lifestyle changes due to the accident and post-accident photographs [were] reasonably likely to yield relevant evidence.”
Is dissolution of a general partnership governed by a partnership agreement or the default provisions of New York’s Partnership Law? Answer: When dissolution is addressed by a partnership agreement, that agreement supercedes the default provisions of this Partnership Law.
Congel v. Malfitano, 2018 NY Slip Op 02119 (March 27, 2018)
At the outset, the Court of Appeals, as follows, summarized the legal template:
In the agreement establishing a partnership, the partners can chart their own course. New York’s Partnership Law creates default provisions that fill gaps in partnership agreements, but where the agreement clearly states the means by which a partnership will dissolve, or other aspects of partnership dissolution, it is the agreement that governs the change in relations between partners and the future of the business.
Malfitano and seven others entered into a written agreement in 1985 to form a general partnership to own and operate a shopping mall. The agreement provided that the partnership “shall continue until it is terminated as hereinafter provided”; stated that the partnership would dissolve upon “the election by the “Partners to dissolve the Partnership” or the “happening of any event which makes it unlawful for the business of the Partnership to be carried on or for the Partners to carry it on in Partnership”. Approval of matters for decision required the affirmative votes in a meeting of no less than fifty-one percent (51%) of the partners. The day-to-day affairs of the partnership were governed by a three-member Executive Committee.
Malfinato decided to withdraw from the partnership and gave his partners a notice, pursuant to Section 62(1)(b) of the Partnership Law, and as a general partner, to dissolve the partnership. Section 62(1)(b) provides that a partner may unilaterally dissolve a partnership, without violating the partnership agreement, if “no definite term or particular undertaking is specified” in the agreement; and the partnership therefor is “at will”.
At the time of the notice, the partnership was in the process of refinancing its mortgage on the mall; Malfitano recorded a notice of pendency against the property; and plaintiffs took the position that Malfitano had wrongfully dissolved the partnership. The members of the Executive Committee commenced a breach of contract action on behalf of the partnership seeking a declaratory ruling that Malfitano had wrongfully dissolved the partnership and for damages. Malfitano asserted counterclaims.
The law suit spent several years in motion practice in the Supreme Court and appeals before the Second Department. After a bench trial, at which valuation experts testified, the Court entered a judgment for damages in the amount of $1.1 million in favor of Malfitano for his interest.
The threshold issue presented to the Court of Appeals was whether or not Malfitano had wrongfully dissolved the Partnership. In a 2013 case, the Court found that an alleged oral partnership agreement lacked a definite term of duration. In marked contrast, the Court of Appeals found that, in this case, the written partnership agreement here specified that the partnership would continue until terminated by a majority vote of the partners; and thus was not dissolvable at will by a single partner.
The Court (7-0) noted that the Partnership Law provisions are, for the most part, “default requirements that come into play in the absence of an agreement”. And concluded that, in this case: “the partners clearly intended that the methods provided in the Agreement for dissolution were the only methods whereby the partnership would dissolve in accordance with the Agreement, and by implication that unilateral dissolution would breach the Agreement”. Thus, the Court concluded that “Partnership Law § 62(1)(b) had no application here, because the parties to the agreement clearly specified under what terms it could be properly dissolved”, holding that “this was plainly not intended to be an ‘at-will’ partnership”.
Parenthetically, dueling opinions outlined a debate between the majority and dissenters about whether or not to apply a minority interest discount to the valuation. According to the majority: “A minority discount is a standard tool in valuation of a financial interest, designed to reflect the fact that the price an investor is willing to pay for a minority ownership interest in a business, whether a corporation or a partnership, is less because the owner of a minority interest lacks control of the business.”
The dissenting justices took the position that: “[M]inority discounts are not applicable in the valuation of a minority partner’s interest after the partner exits a business that remains a going concern.”
Based upon a section of the Partnership Law, the majority prevailed and concluded that:
[T]he statute does not contemplate a valuation of the entire business as if it were being sold on the open market, but rather a determination of the fair market value of the wrongfully dissolving partner’s interest as if that interest were being sold piecemeal and the rest of the business continuing as a going concern. Given that the focus is on one partner’s interest in a persisting concern, we agree with the Massachusetts high court that a minority discount is applicable, because a minority interest is worth less to anyone buying that interest alone.
May an agency (in this case the New York City Police Department) decline to acknowledge whether or not records exist in response to a Freedom of Information Law request? Answer: Yes, under the circumstances of this case, when necessary to safeguard statutorily-exempted information.
Matter of Abdur-Rashid v. New York City Police Department, 2018 NY Slip Op 02206 (March 29, 2018)
Talib Abdur-Rashid and Samir Hashmi separately sought records possessed by the NYPD related to any “surveillance” and “investigation” of them as individuals or of certain entities with which they associated for a six-year period. The NYPD denied the requests and declined to reveal whether the documents existed, stating in each case that the information, “if possessed by the NYPD”, would be protected from disclosure under various statutory exemptions, including the law enforcement, public safety and personal privacy provisions.
Following an administrative appeal, Abdur-Rashid and Hashmi commenced separate CPLR Article 78 proceedings challenging the determination. They both asserted that the NYPD “was engaged in an ongoing domestic surveillance program in which, as alleged in press articles, it had targeted Muslim individuals, places of worship, businesses, schools, student groups and the like.” Abdur-Rashid and Hashmi sought to ascertain whether they were the subjects of surveillance or investigation. The proceedings were assigned to different justices.
The NYPD moved to dismiss the petitions and, in doing so, acknowledged that the agency was actively engaged in covert surveillance and other intelligence gathering in its effort to preempt acts of terrorism in New York City; and asserted that disclosure of whether or not the NYPD possesses records responsive to the FOIL requests would necessarily reveal whether petitioners had been the subjects of its investigation.
In the Abdur-Rashid proceeding, Supreme Court granted the NYPD’s motion to dismiss and denied the petition. In the Hashmi proceeding, Supreme Court denied the motion to dismiss. The two proceedings were consolidated for appeal. The First Department affirmed the dismissal in Abdur-Rashid and reversed the order denying the motion to dismiss in Hashmi. The Appellate Division found that the NYPD “had establish[ed] that confirming or denying the existence of the records would reveal whether petitioners or certain locations or organizations were the targets of surveillance, and would jeopardize NYPD investigations and counterterrorism efforts.”
Upon appeal to the Court of Appeals, Abdur-Rashid and Hashmi argued that “when declining to disclose records which fall squarely within an exemption, the NYPD must specify whether or not when declining to disclose records it possess materials responsive to the FOIL request even when doing so would reveal information safeguarded by the same FOIL exemption.”
The NYPD argued, based upon analogous Federal Court precedents, that an agency may “decline to acknowledge possession of responsive records when the fact that responsive records exist would itself reveal information protected under a FOIL exemption. The Court of Appeals ruled (4-3) that there was no specific statutory language requiring an agency to certify the existence of records wholly-protected under an exemption.
The majority opinion and both dissenting opinions contain extensive analysis of the history and policy considerations applicable to freedom of information requests under New York’s FOIL and the federal FOIA.