Blogging Live from the Albany Government Law Review Symposium, God and the Land: Conflicts Over Land Use and Religious Freedom

     From this Wednesday, October 1st, to Friday, October 3rd, the Albany Government Law Review, along with the Government Law Center of Albany Law School, will present God and the Land: Conflicts Over Land Use and Religious Freedom, a symposium on what defines religion in American law, the political and constitutional implications where land use regulation and religious freedom intersect, and the legal implications of Religious Land Use and Institutionalized Persons Act of 2000.  Speakers will include Chief Justice Randall T. Shepard of the Indiana Supreme Court and Hon. Michael McConnell of the 10th U.S. Circuit Court of Appeals, along with America’s leading thinkers in this dynamic area of law.  Take a look at the symposium’s agenda here.

    Over the next few days we will be providing panel-by-panel, speaker-to-speaker feedback live from the symposium, including audio of our speakers’ presentations, and an opportunity for our readers to comment on and participate in the dialogue the symposium will undoubtedly generate.

    We hope you find occasion over the next two days to follow the goings on at the symposium and to offer your thoughts.

Nassau County Publishes Photos of Accused Drunk Drivers: An Ethical Quandary

Steven Sharp, Staff Writer, SSharp@albanylaw.edu 

      Nassau County Executive Thomas Suozzi initiated a controversial anti-drunken driving campaign in late May. (1)  The Nassau police asked news organizations to publish the names and photos of people charged with driving while intoxicated (DWI) over Memorial Day weekend. (2)  Some news organizations followed suit, and Suozzi deemed the display “The Wall of Shame.” (3)

     Nassau County continues to release the personal information of people charged with drunk driving as an “ongoing initiative.” (4)  To date, Nassau County police have arrested 900 drivers since Memorial Day weekend; the county published photos of these drivers. (5) The sole exception precludes photos of drivers, who are under the age of nineteen, from being published in the media. (6)

     To be sure, Nassau County is flush with drunk drivers and the legal ramifications have not been successful in preventing the proscribed conduct. Last year, 4,013 drivers were arrested in Nassau County for drunken-driving related offenses, including twenty-two fatal alcohol related accidents. (7)  Estimates state that one in ten drivers in Nassau County may be impaired. (8)  Thus, Suozzi is hoping that the Wall of Shame “send[s] a message” that “if you’ve been drinking, and you decide to get behind the wheel of a car . . . we’re going to make sure that their friends, neighbors and families know about it.” (9) Continue reading “Nassau County Publishes Photos of Accused Drunk Drivers: An Ethical Quandary”

The Bailout Bluff that Saved Wall Street

Eric Schillinger, Editing Chair, ESchillinger@albanylaw.edu

In the wake of September’s now infamous banking collapse, New York State Governor David Paterson played an instrumental role in saving the world’s largest insurance company from bankruptcy and staving off a total collapse of the market. New York based American International Group (A.I.G.) nearly filed bankruptcy on September 15 after the declaration of bankruptcy by Lehman Brothers, and sale of Merrill Lynch to Bank of America for a price roughly half its estimated value twelve months ago. (1)  The market began dropping at a rate frightening to the average investor and high stakes financial planner alike. (2)  Paterson intervened, restoring a modicum of stability in the economy, and freezing the market before its downward spiral went out of control. (3)

Amazingly the bailout Paterson proposed was a bluff, halting the collapse, but not actually bailing out anything. Paterson’s “subsidiary restructuring” plan simply steadied the market’s invisible hand, buying time for A.I.G., while he devised a broad strategy to combat the harsh realities of a market suffocated by foreclosure. The bailout plan Governor Paterson proposed for A.I.G., would have allowed the insurance giant to collateralize its subsidiary holdings, in an effort to obtain needed loans and stave off bankruptcy. (4)  All in all, the deal would have unlocked over twenty billion dollars in capital for the insurance company, presently held by A.I.G. subsidiaries; essentially the governor suggested the state would allow A.I.G. to raid its subsidiaries for cash. (5)  Funds not previously available to A.I.G. would have been liquidized for use as collateral, putting A.I.G. subsidiaries on the line, but allowing the huge corporation to stay afloat. (6)

The substance of the plan was less important then the fact that a plan existed. By placing the state in the center of the collapse, the governor helped to slow down the downward spiral sparked by the collapse of Lehman Brothers. Patterson’s plan restored trust in the market, showing that, while the government might let the situation get bad, it would not stay uninvolved in the face of system-wide collapse. This action bought Paterson time, and with total disaster staved off for the moment, to move past his initial plan and draw the Federal Reserve into the mix. (7)  With the collapse at least on pause, the governor sent New York State Insurance Department Superintendent Eric Dinallo to negotiate with the Federal Reserve. Dinallo secured a Federal loan for A.I.G. totaling more than eighty billion dollars. ( 8 )  That loan would never have happened without the state first stabilizing the market. Just like private investors, the federal government was unwilling to throw money at a terminally ill market. (9)  Paterson put the market in stable but critical condition, and showed the Federal Reserve a capital injection would likely restore the market to relatively good health.

Amazingly, Paterson’s authority to “bailout” A.I.G under the proposed plan violated the State’s Insurance Law. (9)  The state bailout system presented by Paterson and Dinallo emphasized the fact that no tax payer money was going to A.I.G. (11)  Under the Paterson plan, capital would have been generated by A.I.G. restructuring itself to produce liquid funds. In effect, the state offered to allow A.I.G. to loot its own subsidiaries to stave off bankruptcy, in blatant violation of New York State Insurance Law § 1608. That section of the code states in part that:

The business operations, corporate proceedings and fiscal and accounting records of subsidiaries organized or acquired pursuant to this article shall be conducted or maintained so as to assure the separate legal and operating identities of the parent and subsidiary . . . . (12)

The bailout plan that Paterson proposed would have allowed A.I.G. to pull capital out of its subsidiaries solely for the purposes of generating collateral to borrow more money and keep the company running. Doing so would have obliterated the separate operating identities of the companies, as A.I.G. would have been reliant solely on its subsidiaries as a source of operating capital. With all the money mixed, the critical but sometimes fine line between parent corporation and subsidiary would have evaporated. However, the legal validity of the plan was of no consequence. Implementation took a back seat to involvement – by showing that the state was not going to let the market collapse without a fight, investors developed a restored sense of stability. With stability restored, Paterson had time to figure out another means of bailing out A.I.G. that was both legal and effective. The initial plan bought him time, and with that time he enabled the Federal Reserve’s involvement, eventually securing over eighty billion dollars in bailout money for the injured insurance giant. (13)

Essentially, the governor stalled the market’s collapse for one critical day by merely proposing a state-based regulatory bailout of A.I.G. With the market stabilized, Paterson bought enough time for Eric Dinallo to seek and secure federal aid. When eighty five billon dollars in aid from the Federal Reserve came down the pipeline, Paterson’s proposed plan became unnecessary. The legal issues surrounding it were mooted – A.I.G. never actually restructured its subsidiaries, instead they took a high interest loan directly from the federal government.

Paterson’s plan was successful because it was never implemented. The governor over-reached his authority in offering to allow A.I.G. to restructure itself and draw capital out of its subsidiaries, but in an amazingly frail market, a functional sounding but potentially illegal legal bailout plan saved the day. By demonstrating New York’s willingness to help prevent enormous corporate collapses, Paterson generated enough trust to create market stability when no other factors encouraged it. With the collapse frozen, Paterson had the time he needed to secure a functional and legal bailout of A.I.G. from the Federal Reserve. In effect, he offered a bluff of a bailout, holding the market at bay just long enough to get the federal government involved to save the day.

Robert Magee, _____________ editors.

____________________________________________________________________________________

1 – Andrew R. Sorkin, Bids to Halt Financial Crisis Reshape Landscape of Wall St., N.Y. TIMES, Sept. 15, 2008, at A1.

2 – Id.

3 – Posting of Irene J. Liu to Capital Confidential, http://blogs.timesunion.com/capitol/archives/8720 (Sept. 15, 2008, 12:48 EST).

4 – Id.

5 – Id.

6 – Id.

7 – Press Release, Boards of Governors of the Federal Reserve System, Federal Reserve Board, with full support of the Treasury Department, authorizes the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG) (Sept. 16, 2008 ) (stating that the Federal Reserve was providing an $85 billion dollar bailout to A.I.G.) available at http://www.federalreserve.gov/newsevents/press/other/20080916a.htm.

8 – Michael Gromley, N.Y. Gov. Paterson Praises Insurance Chief Dinallo on A.I.G. Rescue, INSURANCE JOURNAL, Sept. 18, 2008 available at http://www.insurancejournal.com/news/east/2008/09/18/93807.htm.

9 – Liu, supra note 4.

10 – N.Y. INS. LAW § 1608 (2008 ).

11 – Liu, supra note 4.

12 – N.Y. INS. LAW § 1608 (a) (2008); see generally Counties of Warren & Wash. Indus. Dev. Agency v. Adirondack Res. Recovery Assocs., 283 A.D.2d 846, 849 (N.Y. App. Div. 3d Dep’t 2001) (discussing separate identities of corporate parents and subsidiaries).

13 – Federal Reserve Board, supra note 7.

Sending the City Up the River: Criminal Municipal Liability in Manhattan

Robert Magee, Fireplace Chairperson, RMagee@albanylaw.edu

Manhattan District Attorney, Robert M. Morgenthau, has suggested that he may present evidence to a grand jury in the hopes of indicting the City of New York for criminally negligent homicide arising out of the deaths of two firefighters, Joseph Graffagnino and Robert Beddia, in the Deutsche Bank fire of August 2007. (1) The possibility of such a charge raises the specter of the sort of complex case-making typically reserved for civil litigation and the revival of a kind of enforcement not seen in many years.

New York Penal Law provides that “a person is guilty of criminally negligent homicide when, with criminal negligence, he causes the death of another person.” (2) Further, criminal negligence is defined thusly:

A person acts with criminal negligence with respect to a result or to a circumstance described by a statute defining an offense when he fails to perceive a substantial and unjustifiable risk that such result will occur or that such circumstance exists. The risk must be of such nature and degree that the failure to perceive it constitutes a gross deviation from the standard of care that a reasonable person would observe in the situation. (3)

If District Attorney Morgenthau were to take corporate personhood as far as its logic would allow he might seek to send everyone in the city government, from Mayor Bloomberg to the people trimming hedges in Central Park, up the river for a no less than one and a half and as many as four year stint at Sing Sing. (4) It’s far more likely, though, that the Manhattan DA will accept New York City’s status as a municipal corporation and acknowledge that in seeking punishment he is limited accordingly.

As a corporation, there are only three possible sentences which may accompany New York City’s potential conviction: 1) a fine of up to $20,000, (5) 2) conditional discharge or 3) unconditional discharge. (6) The conditional discharge may require the city to make certain modifications as to how it goes about inspecting construction sites, but only for three years. (7)

No theory of criminal punishment would be much satiated by this result. For a corporation with $60 billion of weight to throw around, ( 8 ) a $20,000 fine is not so much a slap on the wrist as a disapproving glare from someone the city does not really like anyway. (9) Further, the possibility of conditional discharge cannot do much more than the glare of public opinion or an indeterminate degree of commitment to sound municipal administration already has. (10) Though there is no quantifying the joy which will accompany its opponents’ ability to snarl, “the criminally negligent Bloomberg Administration,” the question we have to ask is, what is the point?

Where an actor wrongs another actor, liability is jettisoned into the ever-present haze of the law and can only be brought down by certain actors against other actors and, according to each of their positions, in certain forms. When Mr. Graffagnino and Mr. Beddia tried to escape from the Deutsche Bank building, smoke blew downward onto them from fans meant to keep asbestos in the building. They were unable to get water onto the fire since the city’s Buildings Department had failed to ensure that a standing pipe was in place to get water up to the building’s higher floors. As they rushed down the stairs, away from an uncontrollable fire, they threw themselves against plywood barriers put in place, once again, to keep asbestos from getting out onto the street. (11) When they went into cardiac arrest, one of their bodies draped over one such barrier. (12) When they later died at the hospital, liability was so jettisoned.

Given that the number of actors here, from the contractors to the sub-contractors, to city authorities to the victims’ estates and the numerous subdivisions therein, and all the conventional means of imposing liability, from simple tort to Section 1983 actions, it is interesting that a District Attorney would seek it in the form of criminal sanction against a whole municipality. (13)

The practice of a state government entity criminally prosecuting a local government is not new, but it was never common and it is unclear whether they were ever very effective. (14) It arose in two ways, either in the enforcement of criminal corporation laws (15) or as a means of insulating municipalities from criminal nuisance liability by instituting an enforcement monopoly presided over by the state. (16) Criminal corporation laws only accrued where a public harm was suffered and it only arose from either positive municipal action or negligence. (17) In one case, State v. City of Bangor, (18 ) a city was criminally assessed a fine for failing to repair a bridge, which ultimately led to a citizen’s death.

In both their corporate-criminal, municipal tort functions, criminal indictments and prosecutions of municipalities by state government filled what one would think would be a crucial niche in state-municipality relations: the prerogative of the state to keep municipalities in line in much the same way as the federal government has found need to keep state governments in line. (19) Yet it’s an awkward solution, since it’s implication for the wayward municipality is minimal. A neater solution is provided by New York’s enabling statute, on the books since 1846, which states that the legislature “may from time to time amend, a statute of local governments granting to local governments powers including but not limited to those of local legislation and administration in addition to the powers vested in them by this article. A power granted in such statute may be repealed, diminished, impaired or suspended only by enactment of a statute.” (20) If New York City was so failing in its building inspection effort, the legislature could simply do it themselves.

This highlights another interesting train of thought; it’s really not the place for the District Attorney’s office to sanction municipal governments. A District Attorney is vested with the authority “to conduct all prosecutions for crimes and offenses cognizable by the courts of the county for which he or she shall have been elected or appointed.” (21) Local governments are vested with the authority to act in lieu of and in conformity with the state within their sphere of authority. (22) Each is ultimately an agent of Albany. If Albany doesn’t like what a DA is doing, it can adjust the crimes and offenses cognizable by the courts of the county through legislation or the edicts of the Court of Appeals (23) and if it doesn’t like what a municipality is doing, it can amend its charter. From this perspective, the situation arising in Manhattan gives the impression of two squabbling siblings who need separating.

An analysis of New York State and local government animosity and resolution is beyond the ken of this or any blog post and in any event we don’t stray far from a fully informed conclusion when we render this uninformed one: like most quirky legal developments, the Manhattan District Attorney’s possible indictment doesn’t mark a new era in law or a gross departure from it as it exists. In this case, due to the utter lack of material ramification, negative or otherwise, there’s no good reason for the legislature to step in this case.

Besides, one of the de facto roles of a District Attorney is to express, through the criminal law, the outrage of the community. Such outrage is present here and it is certainly deserved. Whether Mr. Morgenthau’s potential prosecution is wasting resources in attempting to brand the Bloomberg administration with a criminal condemnation is really up to his constituency. For now, Albany should let them have at it. After all, what doesn’t kill us . . .

Steven Sharp, Eric Schillinger editors.

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1 – William K. Rashbaum & Charles V. Bagli, Prosecutors Said to Weigh Charging City In Fatal Blaze, N.Y.TIMES, Aug. 17, 2008 at A25.

2 – N.Y. PENAL LAW § 125.10 (McKinney’s 2008 ).

3 – N.Y. PENAL LAW § 15.05(4) (McKinney’s 2008 ).

4 – N.Y. PENAL LAW § 70.02(3)(d) (McKinney’s 2008 ).

5 – N.Y. PENAL LAW § 80.10(1)(a) (McKinney’s 2008 ). It is worthwhile to note that a $10,000 fine attaches to all felonies, unless the felony is a uniquely corporate one with its own sentence defined within its own statute. Since the instant case presents the possibility of two criminal negligent homicide, class E felony, convictions, the worst case scenario for the city in terms of fines are two maximum convictions at $10,000 a piece. The N.Y. Times article which sparked our interest reports that the city faces up to $5,000 in fines. See supra note 1. However, $5,000 is the fine for misdemeanor convictions. Rashbaum and Bagali, supra note 1.

6 – N.Y. PENAL LAW § 60.25 (McKinney’s 2008 ).

7 – N.Y. PENAL LAW § 65.05 (McKinney’s 2008 ).

8 – Diane Cardwell, Mayor Preaches Frugality but Uses Windfall, N.Y. TIMES, Sept. 17, 2007 at A1.

9 – See Rashbaum & Bagli, supra note 1 (speculating that the potential indictment is the product of a long-standing animosity).

10 – Mark Giannotto, City is Moving to Modernize Construction Site Inspection Process, N.Y. SUN, July 17, 2008; Jay DeDapper, Changes Come Year After Deutsche Bank Blaze, WNBC.COM, July 16, 2008.

11 – Rashbaum & Bagli, supra note 1.

12 – A Year After the Deutsche Bank Fire, Abatement Continues (WNYC radio broadcast Aug. 17, 2008 ) available at http://www.wnyc.org/news/articles/106060.

13 – See, e.g., People v. West, 780 N.Y.S.2d 723 (N.Y.J. Ct. Ulster County 2004) (dismissing charges against New Paltz Mayor Jason West for solemnizing marriages without a license under New York domestic relations law sections 13, 17).

14 – Stuart P. Green, The Criminal Prosecution of Local Governments, 72 N.C. L. REV. 1197, 1201 (1994).

15 – See, e.g., State v. City of Portland, 74 Me. 268 (1883).

16 – Green, supra note 15 at 1202-03; see, e.g., City of Newport v. Commonwealth, 55 S.W. 914 (Ky. 1900) (state charging municipality for municipal law criminal nuisance); Commonwealth v. City of Boston, 33 Mass. 442 (1835) (state charging City of Boston for neglect of road maintenance).

17 – Green, supra note 15.

18 – State v. City of Bangor, 41 Me. 533 (1856).

19 – See The Civil War. It’s hard not to contrast the paradigms of authority here and speculate on their import. The federal government was ostensibly created by the states’ agreement to give (or lease) power to the federal government. This understanding ultimately left some states feeling betrayed and wanting their power back and so they were incited to act out since the authority to do so, they felt, was plenary. In New York State, however, municipalities have always known from where the power flows, and this may be the cause of the utter dearth of recalcitrant local governments and the accoutrement solutions for placating them.

20 – N.Y. CONST. art. IX, § 2 (b)(1).

21 – N.Y. COUNTY LAW § 700 (1) (McKinney’s 2008 ).

22 – N.Y. CONST. art. IX, § 2 (b)(1).

23 – See Gorghan v. DeAngelis, 7 N.Y.3d 470, 474 (2006) (sanctioning prosecutorial misconduct in causing a mistrial).