To be Argued by: JOHN M. FLANNERY (Time Requested: 30 Minutes) No. CTQ-2017-00001 Court of Appeals of the State of New York IN RE: WORLD TRADE CENTER LOWER MANHATTAN DISASTER SITE LITIGATION. ------------------------------ STANISLAW FALTYNOWICZ, et al., Appellants, - and - STATE OF NEW YORK, Intervenor-Appellant, - against - BATTERY PARK CITY AUTHORITY, et al., Respondents. ------------------------------ (For Continuation of Caption See Inside Cover) BRIEF FOR RESPONDENT BATTERY PARK CITY AUTHORITY WILSON ELSER MOSKOWITZ EDELMAN & DICKER, LLP Attorneys for Respondent Battery Park City Authority 1133 Westchester Avenue White Plains, New York 10604 Tel.: (914) 323-7000 Fax: (914) 323-7001 Date Completed: September 7, 2017 SANTIAGO ALVEAR, Appellant, - and - STATE OF NEW YORK, Intervenor-Appellant, - against - BATTERY PARK CITY AUTHORITY, Respondent. ------------------------------ PETER CURLEY and MARY ANN CURLEY, Appellants, - and - STATE OF NEW YORK, Intervenor-Appellant, - against - BATTERY PARK CITY AUTHORITY, Respondent. i 6674056v.3 TABLE OF CONTENTS Page TABLE OF AUTHORITIES ................................................................................... iv ISSUES PRESENTED .............................................................................................. 1 SUMMARY OF ARGUMENT ................................................................................ 2 COUNTERSTATEMENT OF FACTS .................................................................... 4 I. Battery Park City Authority ................................................................. 4 II. Plaintiffs’ Claims against Battery Park City Authority ....................... 5 III. The Legislature Revived Over 170 Time-Barred Claims against BPCA .................................................................................................... 6 IV. The District Court Decision ................................................................. 7 V. Plaintiffs Already Settled Claims for World Trade Center Clean-up Related Injuries at BPCA Properties .................................... 8 VI. The Second Circuit Decision ................................................................ 9 ARGUMENT .......................................................................................................... 10 I. BPCA Has Capacity to Challenge Jimmy Nolan’s Law on Due Process Grounds ................................................................................. 10 A. A Particularized Inquiry Must Be Conducted to Determine Whether the Capacity Doctrine Applies to BPCA in the Context of this Case ........................................... 10 1. This Court has consistently performed a particularized inquiry in cases involving public benefit corporations, without exception ........................ 14 2. This Court has never applied the “capacity rule” to public benefit corporations ............................................ 17 3. The particularized inquiry applies here ......................... 23 ii 6674056v.3 B. BPCA Is Not a Political Subdivision of the State for Purposes of the Capacity Rule ................................................. 25 1. BPCA’s powers, functions and obligations show that it is separate from the State .................................... 25 2. BPCA is financially independent from the State ........... 26 3. BPCA is being sued for its actions as a private landlord .......................................................................... 28 4. The Attorney General fails to analyze the “particular” characteristics of BPCA ............................. 28 5. Patterson applies here ................................................... 30 C. Even if BPCA Were a Political Subdivision of the State, It Would Have Capacity to Sue under the “Specific Funds” Exception to the Capacity Rule ................................... 34 II. Regardless of Whether a “Serious Injustice” or “Reasonableness Standard is Applied, Jimmy Nolan’s Law is Unconstitutional as Applied to BPCA ............................................... 36 A. A Revival Statute Is Only Constitutional Where There Are Exceptional Circumstances and Barring Suit Would Result in a “Serious Injustice” to “Plaintiffs Not Guilty of Any Fault” ................................................................................ 37 B. The “Serious Injustice” Standard Applies to Statutes Which Revive Time-Barred Claims against Public Corporations ............................................................................. 41 1. This Court’s precedents do not contain a private v. public distinction ........................................................... 42 2. The moral obligation cases do not apply here ............... 44 3. Jimmy Nolan’s Law fails under a “moral obligation” test ............................................................... 46 C. Jimmy Nolan’s Law Was Not a “Reasonable Response” to a “Situation Calling for a Remedy” ..................................... 48 iii 6674056v.3 1. The latent nature of Plaintiffs’ alleged injuries is already addressed by CPLR §214-c .............................. 50 2. Lack of knowledge of a causal connection also was already addressed by CPLR 214-c(4) and would not have been an obstacle to claims by licensed hazardous environmental cleaners ................................. 51 3. Existing law already provided relief from the 90- day notice of claim requirement where necessary ......... 54 4. Plaintiffs were not prevented from filing timely suits due to misinformation at their worksites ............... 56 5. Lack of knowledge of a limitations period is not an “injustice” warranting the revival of time-barred claims ............................................................................. 58 CONCLUSION ....................................................................................................... 59 iv 6674056v.3 TABLE OF AUTHORITIES Page(s) Cases 423 S. Salina Street, Inc. v. City of Syracuse, 68 N.Y.2d 474 (1986) ............................................................................................ 6 Black River Regulating District v. Adirondack League Club, 307 N.Y. 475 (1954) .................................................................... 16, 20, 21, 22, 31 Bordeleau v. New York, 18 N.Y.3d 305 (2011) .................................................................................... 13, 20 Brown v. New York City Transit Auth., 172 A.D.2d 178 (1991) ........................................................................................ 54 Capital District Regional Off-Track Betting Corp. v. Levitt, 65 A.D.2d 842 (3d Dep’t 1978) .......................................................................... 16 City of New York v. Lawton, 128 A.D.2d 202 (3d Dep’t 1987) ........................................................................ 35 City of New York v. State of New York, 86 N.Y.2d 286 (1995) .............................................................................. 17, 18, 34 Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382 (1987) ................................................................................... passim Collins v. Manhattan & Bronx Surface Transit Operating Auth., 62 N.Y.2d 361 (1984) .............................................................................. 12, 13, 24 Corcoran v. New York Power Auth., 202 F.3d 530 (2d Cir. 1999) .......................................................................... 54, 55 County of Cayuga v. McHugh, 4 N.Y.2d 609 (1958) ............................................................................................ 18 County of Chemung v. Shah, 28 N.Y.3d 244 (2016) .......................................................................................... 47 County of Rensselaer v. Regan, 173 A.D.2d 37 (3d Dep’t 1991), aff’d 80 N.Y.2d 988 (1992) ................ 34, 35, 36 v 6674056v.3 Covington v. Kentucky, 173 U.S. 231 (1899) ............................................................................................ 34 Davidson v. Bronx Mun. Hosp., 64 N.Y.2d 59 (1984) ............................................................................................ 54 Dormitory Auth. of State of N. Y. v. Span Elec. Corp., 18 N.Y.2d 114 (1966) .......................................................................................... 15 Edwards v. City of New York, 2 A.D.3d 110 (1st Dep’t 2003) ............................................................................ 55 Fennell v. City Sch. Dist. of City of Long Beach, 118 A.D.3d 783 (2d Dep’t 2014) ........................................................................ 55 Gallewski v. H. Hentz & Co., 301 N.Y. 164 (1950) ..................................................................................... passim Giordano v. Market America, Inc., 15 N.Y.3d 590 (2010) .................................................................................... 51, 52 Grant v. Nassau County Indus. Dev. Agency, 60 A.D.3d 946 (2d Dep’t 2009) .......................................................................... 58 Hopkins v. Lincoln Trust Co., 233 N.Y. 213 (1922) ............................................................................................ 36 Hymowitz v. Eli Lilly & Co., 73 N.Y.2d 487 (1989) ................................................................................... passim In re World Trade Ctr. Lower Manhattan Disaster Site Litig., 846 F.3d 58 (2d Cir. 2017) .................................................................... 2, 9, 42, 53 Jackson v. New York, 261 N.Y. 134 (1933) ................................................................................ 43, 44, 46 Jeter v. Ellenville Cent. Sch. Dist., 41 N.Y.2d 283 (1977) .......................................................................................... 18 John Grace & Co., Inc. v. State Univ. Constr. Fund, 44 N.Y.2d 84 (1978) ..................................................................................... passim vi 6674056v.3 Lombardi v. Whitman, 485 F.3d 73 (2d Cir. 2007) .................................................................................. 57 Matter of Crespo, 123 Misc.2d 862 (Sup. Ct. N.Y. Cnty. 1984) ...................................................... 47 Matter of Daniel J. v. New York City Health & Hosps. Corp., 77 N.Y.2d 630 (1991) .......................................................................................... 55 McCann v. Walsh Const. Co., 282 A.D. 444 (3d Dep’t 1953) ..................................................................... passim Methodist Hosp. of Brooklyn v. State Ins. Fund, 282 A.D. 444 (3d Dep’t 1953) ............................................................................ 20 Methodist Hosp. of Brooklyn v. State Ins. Fund, 306 N.Y. 904 (1954) ............................................................................................ 20 Methodist Hosp. of Brooklyn v. State Ins. Fund, 64 N.Y.2d 365 (1985) .................................................................................... 19, 42 Negron v. City of New York, 163 A.D.2d 198 (1st Dep’t 1990) ........................................................................ 45 New York Charter Schools Ass’n, Inc. v. DiNapoli, 857 N.Y.S.2d 450 (Sup. Ct. Albany Cnty. Apr. 29, 2008) ................................. 23 New York Post Corp. v. Moses, 10 N.Y.2d 199 (1961) .......................................................................................... 14 New York Schools Ass’n, Inc. v. DiNapoli, 13 N.Y.3d 120 (2009) .......................................................................................... 24 Patterson v. Carey, 41 N.Y.2d 714 (1977) ................................................................................... passim People v. Miller, 70 N.Y.2d 903 (1987) .............................................................................. 14, 15, 16 Plumbing, Heating, Piping & A.C. Contrs. Ass’n, Inc. v. New York State Thruway Auth., 5 N.Y.2d 420 (1959) ................................................................................ 12, 14, 29 vii 6674056v.3 Price v. New York City Hous. Auth., 92 N.Y.2d 553 (1998) .......................................................................................... 26 Purcell v. Regan, 126 A.D.2d 849 lv. denied, 69 N.Y.2d 613 (1987) ....................................... 34, 35 Rivera v. Laporte, 120 Misc.2d 733 (Sup Ct. N.Y. Cnty. 1983) ....................................................... 47 Robinson v. Robbins Dry Dock & Repair Co., 238 N.Y. 271 (1924) ..................................................................................... passim Ruffino v. Rosen & Sons, 142 A.D.2d 177 (3d Dep’t 1988), aff’d on lower court opinion by 74 N.Y.2d 861 (1989) ............................................................................................... 18 Ruotolo v. New York, 83 N.Y.2d 248 (1994) ........................................................................ 43, 44, 45, 46 Santangelo v. New York, 193 A.D.2d 25 (2d Dep’t 1993) .................................................................... 43, 44 Schiavone v. City of New York, 92 N.Y.2d 308 (1998) .......................................................................................... 44 Schulz v. State of New York, 84 N.Y.2d 231 (1994) .......................................................................................... 11 Smith v. Smith, 2 N.Y.2d 120 (1956) ............................................................................................ 47 Subway-Surface Supervisors Ass’n. v. New York City Transit Auth., 44 N.Y.2d 101 (1978) .......................................................................................... 33 Town of Black Brook v. New York, 41 N.Y.2d 486 (1977) .......................................................................................... 17 Village of Herkimer v. Axelrod, 58 N.Y.2d 1069 (1983) ........................................................................................ 18 Worsham v. West, 2005 WL 4683963 (S.D.N.Y. Dec. 22, 2005) ..................................................... 58 viii 6674056v.3 Statutes Conservation Law §431 (1915) .............................................................................. 20 Conservation Law §434 (1915) .............................................................................. 21 Conservation Law §443 (1915) .............................................................................. 21 Gen. Mun. Law §50-e ......................................................................................... 7, 50 Gen. Mun. Law §50-e(1) .......................................................................................... 5 Gen. Mun. Law §50-e(5) .................................................................................... 6, 54 Gen. Mun. Law §50-i ................................................................................................ 6 Gen. Mun. Law §50-i(4)(a) ....................................................................................... 7 Gen. Mun. Law §205-e ........................................................................................... 44 General Construction Law §66(4) .......................................................................... 11 N.Y. Envtl. Conserv. Law §15-2103(1-a) .............................................................. 21 New York State Labor Law §200 ............................................................................. 5 New York State Labor Law §241(6) ........................................................................ 5 PUB. AUTH. LAW §1971 ................................................................................ 4, 25, 26 PUB. AUTH. LAW §1970 ............................................................................................ 4 PUB. AUTH. LAW §1972(5) ........................................................................................ 4 PUB. AUTH. LAW §1972(13) .................................................................................... 35 PUB. AUTH. LAW §1973(6) ................................................................................ 27, 28 PUB. AUTH. LAW §1974(1) ...................................................................................... 26 PUB. AUTH. LAW §1974(3) ...................................................................................... 26 PUB. AUTH. LAW §1974(4) ...................................................................................... 26 PUB. AUTH. LAW §1974(5) ...................................................................................... 26 ix 6674056v.3 PUB. AUTH. LAW §1974(6) ...................................................................................... 26 PUB. AUTH. LAW §1974(24) .................................................................................... 26 PUB. AUTH. LAW §1975 .......................................................................................... 34 PUB. AUTH. LAW §1978 .............................................................................. 27, 30, 32 PUB. AUTH. LAW §1979 .......................................................................................... 27 PUB. AUTH. LAW §1984, Law 1990 c. 804, §72 (eff. Aug. 24, 1990) ...................... 5 PUB. AUTH. LAW §1984, Law 2012, c. 500, §61 (eff. June 15, 2013) ...................... 5 Other Authorities 1929 N.Y. Op. Att’y Gen. 223 (July 8, 1929) ........................................................ 28 N.Y. Const. Convention Comm., Report, v.11 Problems Relating to Home Rule and Local Government (1938) .................................................................... 11, 12, 20 Weinstein, Korn & Miller, New York Civil Practice: CPLR P-214-c.01 .............. 50 Rules Fed. R. Civ. P. 5.1 ..................................................................................................... 7 N.Y. CPLR §214-c .............................................................................. 5, 6, 49, 50, 54 N.Y. CPLR §214-c(2) ............................................................................................. 49 N.Y. CPLR §214-c(4) ....................................................................................... 51, 52 Constitutional Provisions N.Y. Const. art. I, §6 ............................................................................................... 48 N.Y. Const. art. XIV, § 2 ........................................................................................ 21 Internet Sources A. G. Sulzberger and Mireya Navarro, Ground Zero Deal Gives Plaintiffs $712.5 Million, N.Y. TIMES, (June 10, 2010), available at http://www.nytimes.com/2010/06/11/nyregion/11zero.html?_r=0 .......................... 9 x 6674056v.3 BATTERY PARK CITY AUTHORITY, FINANCIAL STATEMENTS: YEARS ENDED OCTOBER 31, 2016 AND 2015 (Jan. 31, 2017), available at bpca.ny.gov/wp- content/uploads/2015/03/BPCA-Financials-10-31-2016.pdf ................................. 27 BATTERY PARK CITY AUTHORITY, OFFICIAL STATEMENT, $362,785,000 BPCA SENIOR REVENUE BONDS (Oct. 17, 2013), available at bpca.ny.gov/wp- content/uploads/2015/04/2013-Bond-Offering-Series-A.pdf ................................. 27 Who We Are, BATTERY PARK CITY AUTHORITY, http://bpca.ny.gov/about/who-we- are/ (last visited August 16, 2017) ............................................................................ 4 1 6674056v.3 ISSUES PRESENTED The United State Court of Appeals for the Second Circuit certified the following questions to this Court: (1) Before New York State’s capacity-to-sue doctrine may be applied to determine whether a State-created public benefit corporation has the capacity to challenge a State statute, must it first be determined whether the public benefit corporation “should be treated like the State,” see Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., [70 N.Y.2d 382, 521 N.Y.S.2d 653] 516 N.E.2d 190, 192 ([ ]1987), based on a “particularized inquiry into the nature of the instrumentality and the statute claimed to be applicable to it,” see John Grace & Co. v. State Univ. Constr. Fund, [44 N.Y.2d 84, 404 N.Y.S.2d 316] 375 N.E.2d 377, 379 ([ ]1978), and if so, what considerations are relevant to that inquiry?; and (2) Does the “serious injustice” standard articulated in Gallewski v. H. Hentz & Co., [301 N.Y. 164] 93 N.E.2d 620 ([ ]1950), or the less stringent “reasonableness” standard articulated in Robinson v. Robins Dry Dock & Repair Co., [238 N.Y. 271] 144 N.E. 579 (1924), govern the merits of a due process challenge under the New York State Constitution to a claim-revival statute? 2 6674056v.3 In re World Trade Ctr. Lower Manhattan Disaster Site Litig., 846 F.3d 58, 60-61 (2d Cir. 2017). SUMMARY OF ARGUMENT Public benefit corporations are not necessarily political subdivisions of the State, barred from challenging the constitutionality of state statutes. Almost a century ago, the Legislature created public benefit corporations to operate as quasi- private entities, capable of accomplishing things in ways that the State, itself, could not. BPCA was established for such a purpose and was given numerous powers to accomplish those objectives, including the power to issue debt for which the State was not responsible. The State covenanted not to impair the rights of BPCA’s debt holders. This Court has never automatically treated public benefit corporations as political subdivisions of the State akin to municipalities, but rather has required a “particularized inquiry” into whether the public benefit corporation should be treated as the State for purposes of the specific law at issue. Such an inquiry, when conducted here, will find that BPCA should be treated as a private entity with capacity to challenge Jimmy Nolan’s Law. Just as BPCA has capacity to challenge Jimmy Nolan’s Law, it has Due Process Rights that are violated by that law. Revival of a time-barred claim is considered a harsh and drastic result. Accordingly, in order to find a statute reviving time-barred claims to be constitutional, this Court has always required 3 6674056v.3 circumstances that are “exceptional” and “satisfy the court that serious injustice would result to plaintiffs not guilty of any fault if the intention of the Legislature were not effectuated.” Gallewski v. H. Hentz & Co., 301 N.Y. 164, 174 (1950). Jimmy Nolan’s Law cannot satisfy the “serious injustice” standard. Even if a lesser “reasonableness” or “moral obligation” standard were applied, as advocated by Appellants, their claim would also fail, as there simply is no “injustice” that would be corrected by reviving these claims against BPCA. If Jimmy Nolan’s Law is constitutional as applied to BPCA, then the Legislature is effectively free to revive any time-barred claim without restriction-a proposition this Court has forcefully rejected and should reject again here. 4 6674056v.3 COUNTERSTATEMENT OF FACTS I. Battery Park City Authority Battery Park City Authority (“BPCA”) is a public benefit corporation created by the New York State legislature in 1968 to rehabilitate and maintain 92 acres on the west side of lower Manhattan, bounded by Battery Place to the south, Stuyvesant High School to the north, West Street to the east and the United States Pierhead Line to the west. N.Y. Pub. Auth. Law §§1971, §1972(5). Since then, BPCA has planned, created, and coordinated a balanced community of commercial, residential, rental and park space in cooperation with private enterprise known as Battery Park City. Pub. Auth. Law §1970 et seq. . BPCA’s first task was to eliminate urban blight and remove the dilapidated piers that marked the landscape. Id. at § 1971. Over the last 45 years, BPCA, in conjunction with private partners, has wholly transformed Battery Park City into “one of the most successful urban renewal projects in the world.” Who We Are, BATTERY PARK CITY AUTHORITY, http://bpca.ny.gov/about/who-we-are/ (last visited August 16, 2017). “The neighborhood has grown into a well-rounded community home to more than 13,000 residents and a thriving commercial presence, encompassed by 36 acres of world class parks and open spaces.” Id. 5 6674056v.3 II. Plaintiffs’ Claims against Battery Park City Authority Plaintiffs in the underlying litigation are licensed asbestos handlers and members of the union, Local 78, that allegedly performed clean-up work (though not employed by BPCA) in a number of buildings in lower-Manhattan in the months following the September 11, 2001 attacks. A247 at ¶2; A250 at ¶11; A69. Plaintiffs asserted claims against BPCA pursuant to New York State Labor Law §§ 200 and 241(6) and common law negligence, A248-49 at ¶¶5-7, based solely on BPCA’s capacity as the owner of the parcels of land on which the buildings within Battery Park City were constructed, see e.g., A69. BPCA did not hire Plaintiffs but, as ground lessor, leases the land on which these buildings are situated to various commercial and residential tenants. A442:6-43:21; A231 at ¶¶29-30. Such tenants, pursuant to their leases, are responsible for the construction and maintenance of their respective buildings. A501:14-20; A231 at ¶¶29-31. Plaintiffs originally filed their claims against BPCA between 2005 and 2009. At the time, Plaintiffs’ claims were subject to a three-year statute of limitations. See N.Y. CPLR §214-c; Pub. Auth. L. §1984, Law 1990 c. 804, §72 (eff. Aug. 24, 1990).1 Plaintiffs were also required to serve BPCA with a notice of claim within 90 days of accrual of their claims. Pub. Auth. Law §1984; Gen. Mun. Law § 50- 1 The statute of limitations was amended in 2013 to require commencement of an action against BPCA within one year and 90 days of accrual. See L. 2012, c. 500, §61 (eff. June 15, 2013). 6 6674056v.3 e(1). Pursuant to New York General Municipal Law §50-e(5), a court may extend the time for service of a notice of claim, as long as the extension does not exceed the applicable statute of limitations. Here, the accrual date for both the running of the statute of limitations and the 90-day period for service of a notice of claim is the date the plaintiff discovers the injury. CPLR §214-c. Failure to serve a timely notice of claim, or obtain leave to serve a late notice of claim, requires dismissal of a plaintiff’s claim. See 423 S. Salina Street, Inc. v. City of Syracuse, 68 N.Y.2d 474, 494 (1986). None of the Plaintiffs served a timely notice of claim on BPCA or obtained leave to serve a late notice of claim within the three year statute of limitations, prior to filing suit against BPCA, despite the fact they could have done so. A780, A793. III. The Legislature Revived Over 170 Time-Barred Claims against BPCA On September 16, 2009, the New York Legislature enacted Jimmy Nolan’s Law, which amended section 50-i of the New York General Municipal Law. The law provides, in pertinent part: [A]ny cause of action against a public corporation for personal injuries suffered by a participant in World Trade Center rescue, recovery or cleanup operations as a result of such participation which is barred … because the applicable period of limitation has expired is hereby revived, and a claim thereon may be filed and served and 7 6674056v.3 prosecuted provided such claim is filed and served within one year of the effective date of this subdivision. Gen. Mun. Law §50-i (4)(a). Plaintiffs filed notices of claim upon BPCA during this one-year revival period. IV. The District Court Decision On August 12, 2014, BPCA moved for summary judgment against eight Plaintiffs on the grounds that Jimmy Nolan’s Law violated the Due Process Clause of the New York State Constitution and that, without Jimmy Nolan’s Law, the Plaintiffs’ claims were untimely. A222. In opposition, Plaintiffs acknowledged that, but for Jimmy Nolan’s Law, their claims would be untimely for failure to satisfy the notice of claim requirement of General Municipal Law §50-e. Cannata Plaintiffs’ Memo. in Opposition (hereinafter “Cannata Opp.”), 21 MC 102 ECF#5411 (S.D.N.Y. Aug. 22, 2014). In response to BPCA’s motion, the Attorney General intervened pursuant to Federal Rule of Civil Procedure 5.1 to defend the constitutionality of Jimmy Nolan’s Law. The Attorney General argued that BPCA did not have standing to challenge Jimmy Nolan’s Law and that the law satisfied due process requirements because it remedied an “injustice” to workers who would not have recognized their injury or the cause of the injury during the limitations period applicable to BPCA. In a December 8, 2014 decision, the District Court held that (1) BPCA had 8 6674056v.3 standing to challenge Jimmy Nolan’s Law because, under the facts of the case, BPCA was more like a private corporation than a political subdivision of the State, A785-86, and (2) Jimmy Nolan’s Law was an unconstitutional deprivation of BPCA’s due process rights because, in light of the discovery rule applicable to Plaintiffs’ claims, there was no “lingering injustice that Jimmy Nolan’s Law had to correct,” and Plaintiffs had not been subject to a “practical and total inability to commence [an] action” within the original time period for service of a notice of claim and filing suit, A790 (internal quotation marks omitted). Consequently, the District Court granted summary judgment to BPCA with respect to the eight plaintiffs covered by the August 12, 2014 motion. In an April 13, 2015 order, the District Court granted summary judgment to BPCA on the claims of another 171 plaintiffs who failed to timely serve notices of claim and whose claims were revived by Jimmy Nolan’s Law. A793-800. Eighteen Plaintiffs appealed. V. Plaintiffs Already Settled Claims for World Trade Center Clean-up Related Injuries at BPCA Properties In addition to their claims against BPCA, Plaintiffs asserted claims against dozens of other defendants including the lessees of buildings on BPCA-owned properties (including New York City) and the employers for whom Plaintiffs worked at such buildings. Plaintiffs, including Appellants here, settled their claims 9 6674056v.3 with all of the other defendants, including those defendants that owned, controlled, and cleaned-up the buildings located on the ground owned by BPCA.2 Notably, BPCA did not contract for or supervise the clean-up of any buildings located within Battery Park. VI. The Second Circuit Decision The United States Court of Appeals for the Second Circuit certified two questions to this Court due to a lack of clear guidance in state law concerning (1) whether a public benefit corporation should be treated like a private corporation or like the State for purposes of capacity to sue and (2) what standard should be applied to assess a claim that a revival statute violates the Due Process Clause of the New York Constitution. In re World Trade Ctr. Lower Manhattan Disaster Site Litig., 846 F.3d 58, 60-61 (2d Cir. 2017). 2 See, e.g., 21 MC 102, ECF #3730-2 (S.D.N.Y. Mar. 12, 2010) (World Trade Center Litigation Settlement Process Agreement), ECF #3966 (S.D.N.Y. Dec. 30, 2010) (Order Accepting Report of Special Counsel and Providing for Effectiveness of Settlement); A. G. Sulzberger and Mireya Navarro, Ground Zero Deal Gives Plaintiffs $712.5 Million, N.Y. TIMES, (June 10, 2010), available at http://www.nytimes.com/2010/06/11/nyregion/11zero.html?_r=0. All but one of the Plaintiffs-Appellants allegedly worked at 345 Chambers Street (Stuyvesant High School) and thus settled with the City of New York for their work at that property. 10 6674056v.3 ARGUMENT I. BPCA Has Capacity to Challenge Jimmy Nolan’s Law on Due Process Grounds The Attorney General argues that BPCA, a public benefit corporation, may not raise a constitutional challenge to Jimmy Nolan’s Law because municipal corporations and political subdivisions of the State lack capacity to raise such challenges. This argument is inconsistent with this Court’s precedent and should be rejected. This Court has never held that public benefit corporations lack capacity to raise constitutional challenges to state laws. Instead, the cases repeatedly and consistently hold that, due to the quasi-private nature of public benefit corporations, a “particularized inquiry” must be conducted to determine whether the public benefit corporation at issue should be treated as an arm of the State under the facts and circumstances of each case. This Court has held, on at least one occasion that a public benefit corporation could raise a constitutional challenge to state legislation. A. A Particularized Inquiry Must Be Conducted to Determine Whether the Capacity Doctrine Applies to BPCA in the Context of this Case A “public benefit corporation,” also known as a “public authority,” is “a corporation organized to construct or operate a public improvement wholly or partly within the state, the profits from which inure to the benefit of this or other 11 6674056v.3 states, or to the people thereof.” General Construction Law §66(4). Unlike municipal corporations and district corporations, public benefit corporations “are not identical to the State or any of its agencies, but rather enjoy, for some purposes, an existence separate and apart from the State, its agencies and political subdivisions.” John Grace & Co., Inc. v. State Univ. Constr. Fund, 44 N.Y.2d 84, 88 (1978) (internal citations omitted). The first public benefit corporations can be traced back to 1921. See N.Y. Const. Convention Comm., Report, v.11 Problems Relating to Home Rule and Local Government (1938) (hereinafter “the 1938 Report”) at 240. As explained in Chapter 9 of the 1938 Report, “Constitutional Aspects of Public Authorities”: The governmental mechanism known as authorities are intended to resemble in many respects a private business corporation. They carry with them the duty of a corporation to be financially and organizationally self-sustaining. They issue their own obligations, and are expected to retire them by means of their own revenues, which take the form of fees or tolls. They operate on a business basis, and have complete control over the hiring and firing of employees and over their own organization and method of operation. They have no power to levy taxes or to make assessments, but they do have power to charge for their services. Id. at 238. Public benefit corporations were created to “get[] something done without being a financial drain on the State or the city,” by “plac[ing] legal liability on the enterprise itself, instead of on the State or on the municipality.” Id. at 239; see also Schulz v. State of New York, 84 N.Y.2d 231, 244 (1994) (“a public authority would be self-supporting, able to meet debt obligations through revenues 12 6674056v.3 obtained from its own valuable assets, such as fares and user fees. Such public benefit corporations would separate their administrative and fiscal functions from those of the State (1929 Opns. Atty. Gen. 223, 224)”). Additionally, public benefit corporations are used when “the nature of the object to be attained may lend itself especially to independent business treatment.” 1938 Report at 239. In the decades since their creation, this Court has consistently held that public benefit corporations are separate and distinct from the State, more akin to a private business than a local government. In Plumbing, Heating, Piping & A.C. Contrs. Ass’n, Inc. v. New York State Thruway Auth., this Court explained that public benefit corporations, “[a]lthough created by the State and subject to dissolution by the State . . . are independent and autonomous, deliberately designed to be able to function with a freedom and flexibility not permitted to an ordinary State board, department or commission.” 5 N.Y.2d 420, 423 (1959). Public authorities are [C]orporation[s] having some of the characteristics of a private corporation and some of a state instrumentality. . . [the] prime purpose for creating such corporations was to separate their administrative and fiscal functions from the State and its subdivisions. . . . [and are]” intended “to resemble in many respects a private business corporation . . . They operate on a business basis, and have complete control over the hiring and firing of employees and over their own organization and methods of operation.” Collins v. Manhattan & Bronx Surface Transit Operating Auth., 62 N.Y.2d 361, 367-68 (1984) (quoting the 1938 Report at 238). Even where “a public authority 13 6674056v.3 may provide governmental service often provided by the State or a civil division, it is intended to operate with greater autonomy than permitted by the legal and procedural barriers to which civil divisions are subject.” Id. at 369. This Court reaffirmed the independence of public authorities and their business-like function just six years ago in Bordeleau v. New York, 18 N.Y.3d 305 (2011), stating, “[i]t is well settled that ‘public benefit corporations exist independently of the State’ . . . This Court has ‘consistently recognized public authorities as legal entities separate from the State, enjoying an existence separate and apart from the State, its agencies and political subdivisions.’” Id. at 316; see also id. at 317 (the constitutional amendments “demonstrated the approval for the ability of public benefit corporations to . . . be independent of the State”). “Essentially, these public benefit corporations serve ‘to protect the State from liability and enable public projects to be carried on free from restrictions otherwise applicable.’” Id. at 315 (internal citations omitted). In contrast to municipalities, there is no blanket rule that all public benefit corporations are political subdivisions of the State. Indeed, the rule is exactly the opposite. This Court has instructed that “a particularized inquiry is necessary to determine whether-for the specific purpose at issue-the public benefit corporation should be treated like the State.” Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382, 387 (1987). In applying this “particularized inquiry,” 14 6674056v.3 this Court has “repeatedly held that public benefit corporations are not identical to the State or one of its political subdivision, but only may be treated as such for certain purposes.” People v. Miller, 70 N.Y.2d 903, 906 (1987) (collecting cases). 1. This Court has consistently performed a particularized inquiry in cases involving public benefit corporations, without exception. In Plumbing, Heating, Piping and Air Conditioning Contractors Ass’n, Inc.., this Court analyzed whether the Thruway Authority should be treated as the State for purposes of contract bidding requirements established by the State Finance Law. This Court observed that there were numerous enabling provisions emphasizing the “separate and independent existence” of the Authority, including the ability to independently “make contracts, acquire real property, borrow money and issue its own negotiable obligations without public referendum.” 5 N.Y.2d at 424. Also significant was the fact that the Authority’s notes and bonds were its primary obligation and were only partially guaranteed by the State. Id. Under the circumstances, it was “abundantly clear that the Authority stands on its own feet, transacts its business affairs through its own personnel and on its own initiative and is not subject to the strict requirements imposed upon a board or department of the State” by the State Financial Law provision at issue. Id. at 424-25; see also New York Post Corp. v. Moses, 10 N.Y.2d 199 (1961) (public authority not an arm of the city for purposes of public records laws). 15 6674056v.3 In Dormitory Auth. of State of N. Y. v. Span Elec. Corp., 18 N.Y.2d 114, 117 (1966), this Court examined “whether the Authority is identified with the State” for purposes of entitlement to the defense of sovereign immunity and concluded: “[c]onsidering and weighing all the above powers, functions, and obligations, it is clear that this Authority, enjoying a separate existence, transacting its own business, hiring and compensating its own personnel, is not identical with the State” for purposes of asserting sovereign immunity as a defense in a civil contract dispute. Id. at 118. In John Grace & Co., Inc. v. State Univ. Constr. Fund, this Court performed “a particularized inquiry into the nature of the instrumentality and the statute claimed to be applicable to it,” and concluded that “upon consideration of its powers, functions and obligations, that the Fund, which enjoys a separate existence, independently transacts business and hires and compensates its own personnel outside of the civil service system, is not identical with the State, nor is it one of its various agencies.” 44 N.Y.2d at 89-90. Clark-Fitzpatrick, Inc. v. Long Island Railroad Co., 70 N.Y.2d 382 (1987) and People v. Miller, 70 N.Y.2d 903 (1987), which were decided the same year yet reached different conclusions as to whether a public benefit subsidiary corporation of the MTA was equivalent to the State, serve as a clear example that there is no blanket rule as to whether a public authority should be treated like the State, rather 16 6674056v.3 it is fact specific and may vary depending on the law sought to be applied. In Clark-Fitzpatrick, Inc., this Court held that the LIRR, a public benefit subsidiary corporation of the MTA, should be treated as a subdivision of the state for purposes of immunity from punitive damages because the LIRR received “much of its funding from taxpayer revenues,” consequently, the imposition of punitive damages “would ultimately punish only the innocent taxpayers of New York State.” 70 N.Y.2d at 388. Consequently, given LIRR’s governmental purpose and the public sources of much of its funding, LIRR was treated as a state entity, entitled to immunity from punitive damages. Id. In Miller, this Court concluded that another public benefit subsidiary of the MTA was not “the state or a political subdivision thereof” for purposes of a provision of the Penal Law punishing the submission of false instruments to the state, in the prosecution of a Metro-North employee accused of submitting false time sheets. This Court looked to the circumstances of the case and concluded that it was “significant” that “Metro-North was acting in its role as a private employer and not as agent of the sovereign.” 70 N.Y.2d at 906-07.3 3 Capital District Regional Off-Track Betting Corp. v. Levitt, 65 A.D.2d 842 (3d Dep’t 1978), cited by the Attorney General, which relied on Black River to hold that a public benefit corporation lacked capacity to raise a constitutional challenge to a state statute, is not inconsistent with a particularized inquiry. The Off-Track Betting Corporation was created to raise revenue “which would otherwise be raised by taxation,” via betting activities that are illegal unless operated by the State. Id. at 843 Under the circumstances of the case, the public benefit corporation was treated as an arm of the State. 17 6674056v.3 2. This Court has never applied the “capacity rule” to public benefit corporations. There is no support for the Attorney General’s arguments that the particularized inquiry is unnecessary here and that BPCA automatically lacks capacity to sue because the State has plenary authority over public corporations. The Attorney General has not pointed to a single case in which this Court (1) held that a public benefit corporation lacked capacity to raise a constitutional challenge to a state statute or (2) declined to apply a particularized inquiry before treating a public benefit corporation as equivalent to the State. The cases cited by the Attorney General simply do not concern public benefit corporations, and consequently are inapplicable. The capacity rule does not bar all public corporations from challenging the validity of all state statutes. Rather, it holds only that “municipalities and other local governmental corporate entities and their officers lack capacity to mount constitutional challenges to acts of the State and State legislation.” City of New York v. State of New York, 86 N.Y.2d 286, 289 (1995); see also e.g., Town of Black Brook v. New York, 41 N.Y.2d 486, 488 (1977) (“The general rule of law is that a political subdivision of the State may not challenge the constitutionality of an act of the State Legislature restricting its governmental powers.”). The cases cited by the Attorney General concern municipal corporations or district corporations, that is, local governmental entities attempting to challenge laws restraining their 18 6674056v.3 delegated governmental functions. See e.g., City of New York, 86 N.Y.2d at 289 (city lacked capacity to challenge state statutory scheme for funding of schools); Village of Herkimer v. Axelrod, 58 N.Y.2d 1069, 1071 (1983) (village lacked standing to challenge statute modifying operating certificate of village hospital where power to operate the hospital was a governmental “power delegated by the Legislature”); Jeter v. Ellenville Cent. Sch. Dist., 41 N.Y.2d 283, 287 (1977) (municipality could not challenge section of Education Law regarding provision of public education to foster children); County of Cayuga v. McHugh, 4 N.Y.2d 609, 615 (1958) (county could not challenge closure of county jail because “[t]he care and custody of criminals is a function of government”); see also Ruffino v. Rosen & Sons, 142 A.D.2d 177, 181 (3d Dep’t 1988), aff’d on lower court opinion by 74 N.Y.2d 861 (1989) (Special Disability Fund under Workers’ Compensation Law was “performing a governmental function on behalf of the State”). These cases do not concern public benefit corporations like BPCA, which are specifically intended to be separate from the State. Indeed, this Court held that a public benefit corporation had capacity to bring a constitutional challenge to a state statute in Patterson v. Carey, 41 N.Y.2d 714, 716 (1977). There, the Jones Beach State Parkway Authority, a public benefit corporation, and its bondholders, had standing to challenge state legislation under “the due process clause of the State Constitution.” Id. Pursuant to its powers, the 19 6674056v.3 Parkway Authority issued bonds to finance the reconstruction of a state parkway. Id. at 717. Within the enabling legislation, the State had pledged that it would not “limit or alter the rights vested in the authority to the detriment of holders of authority bonds.” Id. (citing PUB. AUTH. LAW §158-a). This Court held “that the governmental plaintiffs, as well as the institutional representative of the bondholders, have sufficient standing to maintain this action,” id. at 717 n*, reiterating that “public benefit corporations are not political subdivisions of the State. ... ‘[A] public authority enjoys an existence separate and apart from the State, even though it exercises a governmental function,’” id. at 724 (citation omitted). Additionally, in McCann v. Walsh Const. Co., 282 A.D. 444 (3d Dep’t 1953), the State Insurance Fund, a state agency with more ties to the State than BPCA, brought exactly the type of Due Process challenge that BPCA seeks to raise here. There, a private employer and the State Insurance Fund challenged the constitutionality of a statute reviving time-barred workers’ compensation claims on state Due Process grounds. Id. at 450; 306 N.Y. 904 (1954) (“The former employer and the State Insurance Fund appealed to the Court of Appeals, contending that giving the amendments retrospective effect in absence of specific authority therefore violated . . . article 1, section 6 of the New York Constitution.”); see also Methodist Hosp. of Brooklyn v. State Ins. Fund, 64 20 6674056v.3 N.Y.2d 365, 375 (1985) (State Insurance Fund is a State agency). The Appellate Division considered the Fund’s Due Process challenge on the merits, 282 A.D. 444, 450 (3d Dep’t 1953), and this Court affirmed without opinion, 306 N.Y. 904 (1954). On the issue of BPCA’s capacity, Appellants rely principally on Black River Regulating District v. Adirondack League Club, 307 N.Y. 475 (1954), describing it as a “seminal decision” extending the capacity rule to public authorities like BPCA. See AG Br. at 27-28. There is just one problem: Black River did not concern a public authority “like BPCA.” Black River Regulating District was created in 1915. Its enabling legislation identified river regulating districts only as “public corporations,” not “public benefit corporations.” Conservation Law §431 (1915). In fact, the first public benefit corporation was not created until 1921. See Bordeleau, 18 N.Y.3d at 315. That the Regulating District in Black River was not a public benefit corporation is confirmed by the 1938 Report, which lists the “thirty-three public authorities” then in existence. 1938 Report at 239-40. Black River Regulating District is not on this list. Id. Before the Second Circuit, the Attorney General argued that the Black River Regulating District was a public benefit corporation because the current river Regulating District’s website refers to it as such. However, the website provides no citation for the assertion. Rather, the current statute provides that the 21 6674056v.3 Regulating District is to be considered a “municipal corporation” for a variety of purposes. See N.Y. Envtl. Conserv. Law §15-2103(1-a). Indeed, the Second Circuit opined that Black River may be irrelevant to the instant case. A22. Even if Black River Regulating District was a public benefit corporation, the case is easily distinguishable and is not inconsistent with the particularized inquiry requirement. In Black River, the Regulating District was created “for the sole State purpose of constructing reservoirs for river regulation.” 307 N.Y. at 488 (citing CONSERVATION LAW §434); see also Conservation Law §443 (1915). The State Constitution provided that the reservoirs would be “constructed, owned, controlled and operated by the State,” 307 N.Y. at 488 (citing N.Y. Const. art. XIV § 2), and that the regulating districts were subject to the State’s control and direction. The Regulating District sought to challenge a law that limited its power to create reservoirs “for any other purpose except for municipal water supply.” Id. at 483. Thus, the Regulating District was attempting to challenge a statute that directly addressed and restricted its sole governmental function of creating reservoirs. Id. at 487-88. In contrast to the River Regulating District, the State does not own the land within Battery Park City; BPCA does. Nor does the State direct BPCA’s operations. Moreover, Jimmy Nolan’s Law has nothing to do with BPCA’s 22 6674056v.3 governmental powers and functions of rehabilitating Battery Park City, encouraging affordable housing, and leasing property. Even if the Regulating District was a public benefit corporation, nothing in Black River negates this Court’s exhortation in Clark-Fitzpatrick, Inc. and John Grace & Co. to perform “a particularized inquiry . . . to determine whether-for the specific purpose at issue-the public benefit corporation should be treated like the State.” 70 N.Y.2d at 387. Rather, Black River can be viewed as one example of the application of the “particularized inquiry.” Given the Regulating District’s limited governmental purpose and operations, and the nature of the statute being challenged, the Regulating District was a political subdivision of the State with no authority to challenge a statute directly addressing its sole power over the State’s reservoirs. Finally, Appellants argue that permitting public benefit corporations to raise constitutional challenges to state laws would “impermissibly ‘tie the hands’” of the Legislature. See AG Br. at 29, 30, 31 (allowing public benefit corporations capacity would “thwart the Legislature’s ability to accomplish [its] ends”); Napoli Br. at 9 (allowing public benefit corporations to challenge the constitutionality of legislation would “create a monster”). Appellants’ doomsday predictions find no basis in this Court’s precedents or the facts of this case. The “particularized inquiry” is fact-specific and does not mean that all public benefit corporations have 23 6674056v.3 capacity to challenge all laws. BPCA is not challenging the Legislature’s authority to alter its delegated powers or duties. Rather, BPCA seeks to challenge a retrospective revival of expired claims that could potentially affect BPCA’s proprietary funds and its bondholders. Finding that BPCA has capacity to challenge Jimmy Nolan’s Law does not “thwart” state policy. Rather, it upholds it. 3. The particularized inquiry applies here. The Attorney General argues that a particularized inquiry is not applicable because “[t]hat test determines only the relationship between third parties and public benefit corporations-specifically whether such corporations should be treated as the State in matters affecting third parties,” not in matters between a public benefit corporation and the state. AG Br. at 32. The Attorney General’s argument fails for several reasons. First, the Attorney General cites no authority holding that the particularized inquiry test should only be applied in cases with third parties. This Court has never even hinted at such a limitation. Instead, the language used in this Court’s jurisprudence on the issue is expansive and speaks of the private nature of public authorities in broad terms. Moreover, to the extent the issue has arisen, at least one case indicates that there is no such limitation. See New York Charter Schools Ass’n, Inc. v. DiNapoli, 857 N.Y.S.2d 450, 457 (Sup. Ct. Albany Cnty. Apr. 29, 24 6674056v.3 2008) (permitting plaintiff entities to argue that they were not “political subdivisions” of the State for purposes of capacity rule in litigation against the State); New York Schools Ass’n, Inc. v. DiNapoli, 13 N.Y.3d 120, 130 n.8 (2009) (“Supreme Court also rejected respondents’ argument that charter schools lack the legal capacity to assert a constitutional challenge against the State, finding that petitioners have standing.”). Thus, public benefit corporations may challenge their status for purposes of the capacity rule in lawsuits with the State. Second, even if the particularized inquiry were only required in litigation with third parties, it would still be required here. In this case, BPCA is challenging its status as a political subdivision of the State as part of its defense to civil tort claims raised by third parties. It is not defending claims against the State. BPCA’s posture is analogous to that of public benefit corporations throughout this Court’s precedents. See John Grace & Co., Inc., 44 N.Y.2d at 89-90 (defense to plaintiff construction company’s attempt to impose price adjustment law applicable to public contracts); Collins, 62 N.Y.2d at 369 (defense to employees’ attempt to apply Civil Service Law requirements); Clark-Fitzpatrick, Inc., 70 N.Y.2d at 386- 87 (defense against punitive damages on plaintiff’s negligence claims). Thus, the particularized inquiry applies, and there is no basis to discard it merely because the Attorney General decided to intervene in this case. 25 6674056v.3 B. BPCA Is Not a Political Subdivision of the State for Purposes of the Capacity Rule Based on the precedents discussed above in Part I. A, the following factors can be distilled as relevant to the “particularized inquiry”: the “powers, functions and obligations” of the public benefit corporation, as evidenced by its enabling act and relevant legislation; the nature of the corporation’s finances, including whether it is State-funded or self-sufficient; and the nature of the corporation’s activities at issue in the case. When the “particularized inquiry” factors are applied here, it is clear that BPCA should not be treated as a political subdivision of the State for purposes of the capacity rule. 1. BPCA’s powers, functions and obligations show that it is separate from the State. Like most public benefit corporations, BPCA was created to perform largely non-governmental tasks and to operate like a private corporation, while insulating the State from liability. BPCA’s enabling legislation repeatedly emphasizes that BPCA is to work closely with the private sector and in some cases fill voids in services provided by the private sector. See PUB. AUTH. LAW §1971. The purpose of BPCA was “replanning, reconstruction, and redevelopment” of the area, including the filling of the Hudson River to the pierhead line, preparing the land for development, and “the creation in such area, in cooperation with the city of 26 6674056v.3 New York and the private sector, of a mixed commercial and residential community[.]” Id. (emphasis added). BPCA’s primary functions-to plan and spur economic redevelopment through mixed-use projects and to act as a landlord-are largely private, non-governmental functions, typically performed by private actors. See generally PUB. AUTH. LAW §1971; Price v. New York City Hous. Auth., 92 N.Y.2d 553, 557 (1998) (“a public entity acts in a proprietary capacity as a landlord”). BPCA was granted powers “necessary and proper” to accomplish these purposes, PUB. AUTH. LAW §1971, including, inter alia, the powers to: borrow money and issue negotiable bonds, notes or other obligations and to provide for the rights of the holders thereof[.]” PUB. AUTH. LAW §1974(24); to sue and be sued, PUB. AUTH. LAW §1974(1); to acquire, lease, hold, mortgage and dispose of real property “for its corporate purposes,” §1974(3); to acquire, construct, improve, enlarge, operate and maintain a project within the project area, §1974(4); to control the hiring, firing, and compensation of its employees, §1974(5); and to make its own by-laws, §1974(6). Though some of BPCA’s powers are subject to agreement by BPCA’s bondholders, see, e.g., §1974(6), none of its powers are subject to agreement by the State. 2. BPCA is financially independent from the State. BPCA does not receive any funding from the State of New York. Rather, 27 6674056v.3 BPCA is financed primarily by its operating revenues, as well as the issuance of debt for which it alone is liable. BATTERY PARK CITY AUTHORITY, FINANCIAL STATEMENTS: YEARS ENDED OCTOBER 31, 2016 AND 2015 (Jan. 31, 2017), available at bpca.ny.gov/wp-content/uploads/2015/03/BPCA-Financials-10-31- 2016.pdf at 16. (showing that over 95% of BPCA’s revenue is from operations (leasing activity) with remainder from interest and other income). As of October 31, 2016, BPCA had approximately $1 billion in outstanding bonds. Id. at 11. The State is not liable for BPCA’s debt, which is special non-recourse debt of BPCA and is not “payable out of any funds other than those of the authority”. PUB. AUTH. LAW §1979; BATTERY PARK CITY AUTHORITY, OFFICIAL STATEMENT, $362,785,000 BPCA SENIOR REVENUE BONDS (Oct. 17, 2013), available at bpca.ny.gov/wp-content/uploads/2015/04/2013-Bond-Offering-Series-A.pdf at 2 (the “BPCA 2013 Official Statement”). Indeed, as in Patterson, the State has specifically vowed not to interfere with BPCA’s obligations to its bondholders. PUB. AUTH. LAW §1978 (“The state of New York does pledge . . . that the state will not limit or alter the rights hereby vested in the authority . . . or in any way impair the rights and remedies of such bondholders and noteholders until the bonds and notes . . . are fully met and discharged.”). Indeed, even the Attorney General now acknowledges that the Legislature lacks the power to terminate BPCA “so long as the authority shall have bonds, notes, and other obligations outstanding.” Id. at 28 6674056v.3 §1973(6); AG Br. at 35 n.6. Thus, in its operations and financing, BPCA is independent of the State, functioning more like a private enterprise than a governmental subdivision.4 3. BPCA is being sued for its actions as a private landlord. In the underlying actions, BPCA is clearly being sued for its actions as a landlord and not a governmental entity. BPCA is sued by Plaintiffs here as the owner of property located within Battery Park City. See e.g., A69 at ¶43-39 (E). 4. The Attorney General fails to analyze the “particular” characteristics of BPCA. In arguing that BPCA should be treated as a political subdivision of the State, the Attorney General fails to assess any of the specific factors this Court has identified as part of a “particularized inquiry.” Instead, the Attorney General relies only on general assertions about the nature of public benefit corporations- assertions which this Court already rejected in John Grace & Co., as insufficient to warrant treating a public benefit corporation as equivalent to the State. The Attorney General does not explain how BPCA’s primary purposes of redeveloping Battery Park City in conjunction with private partners or its role 4 Notably, the Attorney General’s Office previously rendered an opinion that public benefit corporations are not divisions of the State for purposes of laws applicable to state employees, reasoning that “the chief reasons for creating such entities to perform specific public services are administrative and fiscal advantages attained by separating the function from the general administrative machinery of the State and its ordinary subdivisions.” 1929 N.Y. Op. Att’y Gen. 223, 224 (July 8, 1929). 29 6674056v.3 here as a defendant in a private tort action relate to any governmental purposes that would make it appropriate to treat it as a subdivision of the State. Instead, the Attorney General broadly asserts that BPCA should be treated as a subdivision of the State because (1) it is “subject to the Legislature’s plenary control,” and (2) it has a “public” purpose. AG Br. at 35-37. But every public benefit corporation is subject to “plenary” Legislative control (as defined by the Attorney General) and is created to benefit the “public.” This Court already has held that having a public purpose and performing governmental functions are not enough to show that a public benefit corporation should be equated with the State in a particular case: “The mere fact that the Fund is an instrumentality of the State, and as such, engages in operations which are fundamentally governmental in nature does not inflexibly mandate a conclusion that it is the State or one of its agencies . . . Instead, a particularized inquiry into the nature of the instrumentality and the statute claimed to be applicable to it is required.” John Grace & Co., 44 N.Y.2d at 88; see also Plumbing, 5 N.Y.2d at 424 (“a public authority enjoys an existence separate and apart from the State, even though it exercises a governmental function.”). Like Jimmy Nolan’s Law, the law at issue in John Grace & Co., was a remedial one with a retroactive effect, providing for an increase in prices for materials containing petroleum derivatives in all contracts awarded by the State to 30 6674056v.3 provide relief to contractors affected by the “energy crisis.” 44 N.Y.2d at 87. This Court rejected contractors’ claim for upward price adjustments in their contracts with the State University Construction Fund, concluding that, though it was a public benefit corporation, the Fund was not a subdivision of the State for purposes of the price-increase law. Id. at 89-90. This Court explained that, despite the performance of a governmental function, public benefit corporations “are not identical to the State or any of its agencies, but rather enjoy, for some purposes, an existence separate and apart from the State, its agencies and political subdivisions.” Id. at 88. The John Grace court also rejected the Attorney General’s argument that the Legislature’s “plenary” powers to create and dissolve public benefit corporations made them political subdivisions of the State. Id. Given BPCA’s non-governmental purpose, the broad powers it was given to accomplish this purpose, the separation between its own liabilities and that of the State, and the fact that it is being sued based on its status as a landlord, BPCA is an independent entity for purposes of this lawsuit, not a political subdivision of the State. 5. Patterson applies here. The Attorney General argues that this Court’s holding in Patterson does not control because (1) this Court’s finding regarding the public authority’s capacity 31 6674056v.3 was too cursory; (2) it is not clear that BPCA has authority to raise the bondholders’ rights in litigation; and (3) BPCA’s bondholders will not actually be harmed by the claims revived by Jimmy Nolan’s Law. The Attorney General’s attempts to diminish and distinguish Patterson must be rejected. First, though addressing the issue in only “one-sentence,” the Patterson Court went out of its way to acknowledge that it “agreed with Special Term, however, that the governmental plaintiffs, as well as the institutional representative of the bondholders, have sufficient standing to maintain this action.” Patterson, 41 N.Y.2d 714, 719 n.* (emphasis added). This ruling could not be clearer and there is no basis to disregard it. Second, contrary to the Attorney General’s suggestion, it is quite clear that BPCA may raise grievances on behalf of its bondholders. See AG Br. at 41 n.7. In BPCA’s enabling legislation, the State vowed not to impair the rights and remedies of BPCA’s bondholders. Pub. Auth. Law §1978.5 The 2003 General Bond Resolution, which governs BPCA’s current outstanding debt, provides that the “Authority shall at all times, to the extent permitted by law, defend, preserve and protect . . . all the rights of the Bondholders under the Resolution against all 5 This further distinguishes the case from Black River Regulating District, where the enabling legislation for Black River Regulating District contained no limitation on the Legislature or protection for the bondholders. 32 6674056v.3 claims and demands of all persons whomsoever.” RA59-606 (Section 905 of the 2003 General Bond Resolution); BPCA 2013 Official Statement at 1. Thus, not only is BPCA permitted to raise a claim to protect bondholder rights, BPCA is required to do so. Third, the Attorney General’s contention that BPCA lacks capacity because it has not shown that its bondholders interests will not be harmed by the outcome of this appeal lacks merit. There is no requirement that a party establish that its debts will necessarily be impaired. It is enough to show that the law negatively affects the entity’s finances and threatens to impair obligations to bondholders. In Patterson, there was no showing that the Parkway Authority’s debt necessarily would be impaired. Rather, the Parkway Authority wanted to raise its toll by 15 cents to cover both its debt service and highway improvements, while the State Comptroller believed that a 5 cent increase was enough to pay bondholders. 41 N.Y.2d at 718. The challenged legislation rescinded the 15-cent increase, but did nothing to stop the Authority from imposing a new increase. Indeed, at the time of suit, the Authority already had successfully paid off over 75% of its debt. Id. Like the Parkway Authority in Patterson, BPCA has issued bonds and the State has pledged that it “will not limit or alter the rights hereby vested in the authority . . . or in any way impair the rights and remedies of such bondholders and 6 Citations to RA___ are to the Respondent’s Appendix. 33 6674056v.3 noteholders[.]” Pub. Auth. Law §1978. By reviving claims against BPCA under Jimmy Nolan’s Law, the State has violated its pledge not to take any action that could impair the rights and remedies of BPCA’s bondholders because BPCA’s funds are being depleted by amounts it must expend to defend these actions and will be further decreased if BPCA is found liable on any of these claims. A625 at ¶12. Accordingly, by virtue of the fact that Jimmy Nolan’s Law might impair BPCA’s debt obligations in violation of the State’s pledge, it causes a cognizable injury and BPCA has standing to challenge Jimmy Nolan’s Law. See Patterson, 41 N.Y.2d at 719-20. Moreover, prohibiting BPCA from challenging state statutes which might impair the rights of its bondholders could have a chilling effect on private financial investment in BPCA’s projects, directly undermining BPCA’s statutory purpose. See Subway-Surface Supervisors Ass’n. v. New York City Transit Auth., 44 N.Y.2d 101, 114 (1978) (impairment of bond obligations has far- reaching “potentially more destructive” consequences for an entity’s future operations) In making the argument that BPCA cannot establish a concrete injury to its bondholders, the Attorney General ignores that in Patterson the impact to the Parkway Authority and its bondholders was also indeterminate. In this instance, Jimmy Nolan’s Law revived the time barred claims of over 170 individuals against BPCA, with each individual plaintiff demanding $20,000,000 in damages. A315- 34 6674056v.3 16. Just as with the repeal of the toll increases in Patterson, the application of Jimmy Nolan’s Law might deprive BPCA of monies that should be available to repay its debts to its bondholders. This deprivation of funds is a concrete injury regardless of how the Attorney General attempts to characterize it.7 C. Even if BPCA Were a Political Subdivision of the State, It Would Have Capacity to Sue under the “Specific Funds” Exception to the Capacity Rule BPCA’s revenues are maintained in a general fund to which BPCA has title and ownership. A624 at ¶6; see also PUB. AUTH. LAW §1975. The monies in this fund are used to reimburse bondholders, and to pay BPCA’s operating expenses, including legal commitments. A624-25 at ¶7. BPCA is not covered by any insurance for these 9/11-related claims. A625 at ¶10. Thus, its defense costs and any judgments on claims revived by Jimmy Nolan’s Law will be paid from the aforementioned fund. See id. at ¶¶10-12. Consequently, BPCA has capacity to challenge the law pursuant to an exception for challenges by political subdivisions to state laws affecting their “proprietary interests in a specific fund of moneys.” City of New York, 86 N.Y.2d at 291-92 (citing County of Rensselaer v. Regan, 173 A.D.2d 37 (3d Dep’t 1991), aff’d 80 N.Y.2d 988 (1992)); see also Purcell v. 7 BPCA is insured by private insurers, all of whom have disclaimed coverage for the claims asserted by Plaintiffs. 35 6674056v.3 Regan, 126 A.D.2d 849 lv. denied, 69 N.Y.2d 613 (1987).8 In County of Rensselaer, the county plaintiffs had standing to challenge a state law which would have reduced the amount of DWI fines to which the County was entitled by 2% because they were “asserting a proprietary claim of entitlement to a specific fund, namely, their entitlement to receive all of the fines, forfeitures and penalties collected by the [county] courts in [DWI proceedings].” 173 A.D.2d at 40, aff’d 80 N.Y.2d 988. In Purcell, a county had standing to challenge a state law which permitted the State Comptroller to withhold funds which would otherwise have been allocated to the county “for per capita assistance.” 126 A.D.2d at 849. Purcell rejected the argument that the county could not challenge the law because it did not have any legal or equitable title to the anticipated assistance funds, holding that: “Title in the fund is not a mandatory prerequisite to a finding of standing. It is sufficient that Nassau County is entitled to possession of the fund[.]” Id. at 850 (citation and emphasis omitted); see also City of New York v. Lawton, 128 A.D.2d 202, 206 (3d Dep’t 1987) (“[T]he rule that a subdivision of the State has no standing to challenge acts of the Legislature is applicable only to situations in which the statute concerns the subdivision’s governmental as opposed to proprietary rights. [The City] claims entitlement to a 8 Covington v. Kentucky, 173 U.S. 231, 242 (1899), cited by the Attorney General, supports this exception, holding that “with respect to its private or proprietary rights and interests [a municipal corporation] may be entitled to the constitutional protection.” 36 6674056v.3 specific fund, a proprietary right, and thus has standing.”). Here, BPCA asserts a proprietary claim of entitlement to its general fund, which would be affected by any liability on claims revived by Jimmy Nolan’s Law. The Attorney General’s argument, that the “specific funds” exception only applies where there is a specific amount of money at issue, is specious. See AG Br. at 44. For example, there was no “specific sum” at issue in County of Rensselaer. Rather, the challenged law would have withheld 2% of future fees to be collected under the DWI program - an indeterminate amount at the time of the lawsuit. 173 A.D.2d at 39. II. Regardless of Whether a “Serious Injustice” or “Reasonableness Standard is Applied, Jimmy Nolan’s Law is Unconstitutional as Applied to BPCA Under New York law, revival of time-barred claims “is an extreme exercise of legislative power,” considered so “drastic” that “[t]he will to work it is not deduced from words of doubtful meaning.” Hopkins v Lincoln Trust Co., 233 N.Y. 213, 215 (1922). Accordingly, this Court has held that statutes reviving time- barred claims are constitutional only “where the circumstances are exceptional and are such as to satisfy the court that serious injustice would result to plaintiffs not guilty of any fault if the intention of the Legislature were not effectuated.” Gallewski v. H. Hentz & Co., 301 N.Y. 164, 174 (1950). This Court has never 37 6674056v.3 upheld a revival statute that did not meet the “serious injustice” standard and has repeatedly refused to permit the Legislature to revive claims without limitation. Jimmy Nolan’s Law cannot satisfy the “serious injustice” standard. Even if a more lenient reasonableness standard applied, Jimmy Nolan’s Law would still fail as there was no potential injustice for the Legislature to remedy. BPCA did not contract for or supervise the clean-up of any buildings located within Battery Park City, or have responsibility for maintenance of such buildings. Moreover, Plaintiffs’ failure to serve timely notices of claim was due to their own dilatory conduct or lack of knowledge of the notice of claim requirement, neither of which justifies the revival of time-barred claims or the deprivation of BPCA’s due process rights. A. A Revival Statute Is Only Constitutional Where There Are Exceptional Circumstances and Barring Suit Would Result in a “Serious Injustice” to “Plaintiffs Not Guilty of Any Fault” Since 1924, this Court has considered due process challenges to at least four statutes which revived otherwise time-barred claims. The statutes only survived challenge “where the circumstances are exceptional and are such as to satisfy the court that serious injustice would result to plaintiffs not guilty of any fault if the intention of the Legislature were not effectuated.” Gallewski, 301 N.Y. at 174 (interpreting Robinson v. Robbins Dry Dock & Repair Co., 238 N.Y. 271 (1924)). Jimmy Nolan’s Law does not come close to meeting this standard. 38 6674056v.3 In Robinson v. Robbins Dry Dock & Repair Co., the plaintiff, a widow, successfully pursued a worker’s compensation claim following the death of her husband, only to later have the worker’s compensation statute declared unconstitutional by the U.S. Supreme Court after the statute of limitations expired on a wrongful death claim against the husband’s employer. In response, the state Legislature passed a law effectively reviving the plaintiff’s wrongful death claim. Id. at 276. In considering the employer’s challenge to the revival statute, this Court declined to adopt the federal rule under the Fourteenth Amendment that a legislature may revive any time-barred claim without violating Due Process. Id. at 279-80; see also McCann v. Walsh Constr. Co., 282 A.D. 444, 449 (3d Dep’t 1953), aff’d, 306 N.Y. 904 (1954). Instead, this Court upheld the statute at issue based on the specific facts of the case, focusing on the reason the plaintiff failed to file a timely claim and concluding that the invalidation of the original worker’s compensation statute, which was the exclusive remedy at the time and upon which the plaintiff had reasonably and diligently relied, “deprive[d] a plaintiff without fault of a cause of action based on defendants’ wrong” and was a situation that “reasonably calls for remedy.” Robinson, 238 N.Y. at 279-80. In Gallewski, this Court assessed a statute which revived time-barred claims of individuals who were unable to file timely suit because they were in Nazi- 39 6674056v.3 occupied territories during World War II. 301 N.Y. at 174. Analyzing Robinson, this Court concluded that: [t]he case may be read, we think as holding that the Legislature may constitutionally revive a personal cause of action where the circumstances are exceptional and are such as to satisfy the court that serious injustice would result to plaintiffs not guilty of any fault if the intention of the Legislature were not effectuated. 301 N.Y. at 174 (emphasis added). The Court proceeded to apply the “serious injustice” standard to the facts. The plaintiff’s decedent, Gutmann, had been a resident of the Netherlands, deported to a concentration camp in Czechoslovakia upon the Nazi invasion and was later presumed dead. Id. at 168. Just four days after the invasion, the defendant, a New York brokerage firm, began selling off the deported man’s assets in violation of their brokerage agreement. Id. at 168. Following the liberation of the Netherlands, the administrator of Gutmann’s estate commenced an action against the brokerage firm which would have been barred by the applicable statute of limitations absent the revival statute. Id. at 169. This Court upheld the revival statute under the “serious injustice” standard, again focusing on the reason the plaintiff failed to file a timely claim: the Nazi invasion and occupation of Europe had “resulted in a complete and thorough disruption of communication” and “the residents of occupied territory were, during such occupation, under a practical and 40 6674056v.3 total inability to commence action in the courts of this State to protect and effectuate their rights.” Id. at 175. Following Gallewski, New York courts applied the “serious injustice” standard to a number of revival statutes. In McCann, the Appellate Division, Third Department considered a statute which revived certain workers’ compensation claims based on injuries caused by the latent effects of exposure to compressed air, where the original law provided for the statute of limitations to run from the time of exposure. 282 A.D. at 446. Given that this Court “declin[ed] ‘to adopt the broad and unqualified view that a State may constitutionally revive any personal cause of action, whatever the circumstances,’” and instead adopted the “serious injustice” standard, the court applied that standard and upheld the revival statute Id. at 449. The court found that, under the original scheme, a claimant’s opportunity to bring a cause of action “might be barred by the operation of the Statute of Limitations before the claimant was aware of the fact that he had [a] disease.” Id. at 450. This Court affirmed. 306 N.Y. 904 (1954).9 Finally, in Hymowitz v. Eli Lilly & Co., 73 N.Y.2d 487 (1989), this Court considered the constitutionality of legislation reviving time-barred claims for injuries resulting from ingestion of the drug DES. Like the claims at issue in 9 See also Barrett v. Wojtowicz, 66 A.D.2d 604, 614 (2d Dep’t 1979) (“serious injustice” standard). 41 6674056v.3 McCann, prior to the revival legislation, the statute of limitations for injuries resulting from exposure to toxic substances began to run from the time of exposure, such that a plaintiff’s DES-related claims were often time-barred before discovery of the injury. Id. at 503-04. To address the issue, the Legislature revived claims against DES manufacturers for a period of one-year. In evaluating the constitutionality of the revival statute, this Court questioned whether the “apparent injustice” language of Robinson was a “less strict” standard than the “serious injustice” test of Gallewski, but ultimately declined to answer that question, because the DES revival statute “meets the highest standard.” Id. at 514. Thus, this Court has repeatedly rejected the proposition that the Legislature is free to revive time-barred personal actions under any circumstances. Instead, the court has consistently required “serious injustice” to plaintiffs in exceptional circumstances through no fault of their own. While the Second Circuit questioned whether Robinson suggested a more lenient standard, that question should be answered in the negative. In Gallewski, this Court firmly stated that, to be constitutional, a revival statute must meet the “serious injustice” standard, and that this standard was derived from the Robinson decision. 301 N.Y. at 174. As set out above, New York courts, including this Court in Hymowitz and McCann, have applied that standard consistently ever since. While the Hymowitz court questioned the standard, it did not reject it in favor of a more lenient one, but rather 42 6674056v.3 upheld the revival statute at issue because it met the “serious injustice” standard of Gallewski. There is no basis for this Court to disregard or depart from the clear language of Gallewski. B. The “Serious Injustice” Standard Applies to Statutes Which Revive Time-Barred Claims against Public Corporations The Attorney General argues that the “serious injustice” standard applies only to the revival of claims against private defendants, while statutes reviving claims against public entities are judged by a less stringent, reasonableness or “moral obligation” standard. AG Br. at 51-57. This argument must be rejected because it is wholly unsupported and contrary to New York law, which has applied the serious injustice standard to statutes reviving claims against private and public entities. 1. This Court’s precedents do not contain a private v. public distinction This Court has never indicated that the “serious injustice” standard applied only to private defendants. The Attorney General’s assertion that “this Court has never applied a standard stricter than reasonableness in evaluating the constitutionality of a claim revival statute involving public entities,” see AG Br. at 52, is incorrect. Both Gallewski and McCann concerned revival statutes involving claims against public entities. 43 6674056v.3 The statute at issue in McCann revived claims against both private and public entities, as it revived worker’s compensation claims, which implicate not only the private employer, but the State Insurance Fund which is a State agency. See Methodist Hosp. of Brooklyn, 64 N.Y.2d at 375 (State Insurance Fund is a State agency). The Appellate Division applied the “serious injustice” test of Gallewski to the revival statute in McCann, and this Court affirmed.10 Additionally, while the particular defendant in Gallewski was private, the revival statute at issue applied to claims against public and private defendants, and this Court applied the “serious injustice” standard to a facial challenge to the statute. The statute tolled the statute of limitations for “a person entitled to maintain an action,” not “a person entitled to maintain an action against a private defendant.” 301 N.Y. at 172. Thus, contrary to the Attorney General’s argument, the “serious injustice” standard has been applied to revival of claims against public entities. 10 The distinction proposed by the Attorney General is also undermined by the Attorney General’s own prior argument that Robinson applied only a “reasonableness” standard. See AG Brief in the Second Circuit, In re World Trade Center Lower Manhattan Disaster Site Litig., Dkt. No. 15-2181, DE#79 at 41-42 (Dec. 2, 2015). Robinson involved a private defendant. Additionally, in Hymowitz, where this Court questioned whether the standard was one of “serious injustice” or reasonableness, it did not answer the question by pointing to a private v. public distinction. Hymowitz, 73 N.Y.2d at 514. 44 6674056v.3 2. The moral obligation cases do not apply here The Attorney General primarily relies on “moral obligation” cases in support of a reasonableness standard, but these cases do not apply. These cases involve newly-created causes of action against the State itself, not revival of time-barred claims against a public benefit corporation. Ruotolo v. New York, 83 N.Y.2d 248, 253 (1994) (police officers and widow sued State pursuant to new statute allowing officers to sue for injuries caused by State’s negligence); Jackson v. New York, 261 N.Y. 134, 137 (1933) (plaintiff sued State for negligence of state bridge maintenance supervisors pursuant to statute whereby State subjected itself to suit for negligence of its employees); Santangelo v. New York, 193 A.D.2d 25 (2d Dep’t 1993) (claims against State under same statute at issue in Ruotolo). These cases recognize only “the Power of the Legislature to waive defenses available to the State and to create liabilities against the State[.]” Santangelo, 193 A.D.2d at 30, quoted in AG Br. at 54; see also Ruotolo, 83 N.Y.2d at 253 (observing that State may “surrender[] some of the State’s own vested rights”). Jimmy Nolan’s Law differs significantly from the statutes at issue in those cases First, Ruotolo, Jackson, and Santangelo do not concern the revival of time- barred claims; rather, they concern the creation of new causes of action that did not previously exist. See, e.g., Schiavone v. City of New York, 92 N.Y.2d 308, 315 45 6674056v.3 (1998) (upholding retroactive amendments of General Municipal Law §205-e, where “plaintiff’s cause of action would not have been actionable, even after the effective date of the original enactment”). Jimmy Nolan’s Law did not give Plaintiffs a new cause of action; it revived expired claims that Plaintiffs failed to timely assert. Second, the moral obligation cases do not apply to public benefit corporations like BPCA. Ruotolo explicitly recognized that the “moral obligation” standard it put forward applied only to actions “against the state itself or any of its political subdivisions.” 83 N.Y.2d at 259.11 As explained above, BPCA should not be treated as the State or one its “political subdivisions” for purposes of this case. See supra at Part I. B. Indeed, the Attorney General does not cite any cases involving the due process rights of a public benefit corporation. Nor do the cited cases recognize any power of the State to waive the defenses available to public benefit corporations or to create liabilities against public benefit corporations without restriction where the State has vowed not to impair the rights of the corporation’s bondholders. 11 The two-paragraph opinion in Negron v. City of New York, 163 A.D.2d 198 (1st Dep’t 1990) which concerned revival of a claim for permanent injuries sustained at birth, is too cursory to determine whether the case is relevant here. It discusses claims against the City, which is a “political subdivision” of the State. Moreover, it is not clear whether the City raised a due process challenge; under the Attorney General’s capacity theory, the City could not have raised such an argument. 46 6674056v.3 Consequently, these cases-and the “moral obligation” standard-are irrelevant to the standard applicable for whether a revival statute is constitutional as against a public benefit corporation. 3. Jimmy Nolan’s Law fails under a “moral obligation” test Even if the “moral obligation” standard applied here, Jimmy Nolan’s Law would not satisfy it because the law does not compensate Plaintiffs “for a wrong peculiarly attributable to the State as the responsible agent.” Ruotolo, 83 N.Y.2d at 259. In Ruotolo, the basis for the plaintiffs’ suits was the State’s failure to revoke the parole of a repeat-violent offender where State parole officers knew of the parole violations. Id. at 254; see also Jackson, 261 N.Y. at 136 (State had moral obligation because injury to plaintiff was caused “by the sole negligence of employees of the State.”). Thus, “a moral obligation” stems from wrongdoing by the State defendant. The Attorney General has not pointed to any wrongdoing by BPCA that would give rise to a moral obligation to compensate Plaintiffs. Here, any injuries caused by Plaintiffs’ exposure to toxic dust are not “peculiarly attributable” to BPCA; they are attributable to the 9/11 hijackers who caused the collapse of the World Trade Center towers. Moreover, like the “serious injustice” standard of Robinson and Gallewski, the moral obligation standard still requires that a plaintiff’s claims were previously barred through no fault of his or her own. 238 N.Y. at 280-81; 301 N.Y. at 174. In 47 6674056v.3 the cases cited by the Attorney General, the plaintiffs could not timely assert their claims because the claims did not exist at the time they would have accrued. The legislation did not revive claims of individuals who could have sued the State but slept on their rights. Plaintiffs here had an opportunity to assert timely claims against BPCA had they acted diligently. Indeed, in the court below, Plaintiffs conceded that they had the opportunity to assert timely claims. Cannata Opp. at 6 (“The fact these lawsuits may have been previously commenced is of no moment.”); see also Div. of the Budget Bill Mem., reprinted in Bill Jacket A.B.7122 at 10 (Sept. 14, 2009) (Jimmy Nolan’s Law “would extend the time to file a notice of claim for persons who have known for years that they may have symptoms related to the attacks on the World Trade Center”). The Attorney General cites no case from this Court holding that a public benefit corporation does not have due process rights, or rights that are less than those of a private corporation. Rather, existing law holds that public benefit corporations are entitled to the same level of due process as private entities. See Smith v. Smith, 2 N.Y.2d 120, 124 (1956) (“Prior and timely notice is ordinarily an elemental incident of due process, whether the one to be charged is an individual or a private or public corporation”); see also Matter of Crespo, 123 Misc.2d 862, 866 (Sup. Ct. N.Y. Cnty. 1984) (“public benefit corporation[] . . . like any other litigant, [is] entitled to due process of law.”); see also Rivera v. Laporte, 120 48 6674056v.3 Misc.2d 733, 739 (Sup Ct. N.Y. Cnty. 1983) (“Corporations are ‘persons’ entitled to the protection of the due process clause of the Fourteenth Amendment. Municipal corporations, e.g., the City of New York, should have the same procedural protection as business or not-for-profit corporations.” (internal citation omitted)).12 Thus, there is no basis for applying a less stringent standard to Jimmy Nolan’s Law merely because BPCA is a public benefit corporation. C. Jimmy Nolan’s Law Was Not a “Reasonable Response” to a “Situation Calling for a Remedy” Even if the applicable standard requires only a reasonable response to a situation calling for a remedy, the result remains the same: Jimmy Nolan’s Law violates the Due Process Clause because there was no situation calling for a remedy, that is, the amendment does not remedy any “injustice,” N.Y. Const. art. I, §6. Plaintiffs’ latent injuries were not subject to an exposure rule, thus, even if Plaintiffs’ did not discover their injuries until years after the World Trade Center clean-up, they had a full opportunity to file a notice of claim or seek leave to file a late notice of claim within the requisite periods. Moreover, whether this Court applies the “serious injustice” standard or a reasonableness standard, both tests 12 County of Chemung v. Shah, 28 N.Y.3d 244, 262 (2016), is inapposite, as it found that the State waived the argument that a county lacked due process rights under the state constitution and did not address the merits of the issue. 49 6674056v.3 hold that the Legislature may only revive claims of plaintiffs who are “without fault”; a standard that Plaintiffs here, whose claims are barred due only to their dilatory conduct, cannot meet. Appellants fail to identify any potential injustice that was not already remedied by existing law. The Sponsor’s Memo in support of Jimmy Nolan’s Law stated that workers “should not be denied their rights to seek just compensation simply because they were provided with incorrect information about their work conditions, did not immediately recognize the causal connection between their injuries and their exposure, or were unaware of the applicable time limitations.” N.Y. State Assembly Mem. in Supp. Legislation, reprinted in Bill Jacket for 2009 A.B. 7122, Ch. 440, at 6 (July 17, 2009). These arguments must be rejected because existing law already accounted for any injustice due to the latent nature of an injury, lack of knowledge of its cause, and the need for more time beyond the standard 90-day notice of claim period.13 13 Contrary to the Attorney General’s assertion, this Court may not simply defer to the Legislature’s finding of injustice. In Gallewski, this Court held that circumstances must “satisfy the court that serious injustice would result to plaintiffs not guilty of any fault.” 301 N.Y. at 174 (emphasis added). 50 6674056v.3 1. The latent nature of Plaintiffs’ alleged injuries is already addressed by C.P.L.R. §214-c. In 1986, when the Legislature revived the DES claims at issue in Hymowitz, it also adopted a prospective rule, CPLR §214-c, to correct the “serious injustice” caused by the running of a statute of limitations from the time of exposure to a disease-causing substance. CPLR §214-c corrected the injustice by creating a discovery rule: for personal injury “caused by the latent effects of exposure to any substance,” the statute of limitations to recover for such injury “shall be computed from the date of discovery of the injury by the plaintiff or from the date when through the exercise of reasonable diligence such injury should have been discovered[.]” CPLR §214-c(2) Plaintiffs’ argument that Jimmy Nolan’s Law rectifies the injustice suffered by them due to the unique, latent nature of their alleged injuries must be rejected. Though the nature of the 9/11 attacks was certainly unique and horrific, the attacks did not in any way inhibit Plaintiffs’ ability to timely file a notice of claim as required by General Municipal Law §50-e. Unlike in Gallewski, Plaintiffs here had access to the means necessary to serve a timely notice of claim or seek leave to serve a late notice. Plaintiffs’ claimed injuries are no different from those injuries alleged in any suit arising from the latent effects of exposure to a purportedly toxic substance. Thus, any potential injustice arising from the latent nature of Plaintiffs’ 51 6674056v.3 alleged injuries was remedied thirty years ago when the Legislature enacted CPLR §214-c. The enactment of CPLR §214-c distinguishes this case from McCann and Hymowitz which were governed by an exposure rule. Plaintiffs here enjoyed the benefits of the discovery rule and were not required to serve a notice of claim until they discovered their injury. Thus, CPLR §214-c already directly accounted for and corrected any injustice arising from the latent nature of injuries caused by toxic substances. See Weinstein, Korn & Miller, New York Civil Practice: CPLR P- 214-c.01 (CPLR §214-c was designed to “ameliorate a fundamental injustice . . . resulting from the archaic rule that measured the statute of limitations from the date of exposure” (internal citations omitted)). There was no risk here, as there was in pre-discovery rule cases, that a plaintiff’s claims would be time-barred before he or she discovered the injury. See 73 N.Y.2d at 503. 2. Lack of knowledge of a causal connection also was already addressed by CPLR 214-c(4) and would not have been an obstacle to claims by licensed hazardous environmental cleaners. Appellants also claim that Jimmy Nolan’s Law remedied injustice due to Plaintiffs’ lack of knowledge about the causal connection between their injuries and “exposure to the toxic dust,” a connection which “was not widely known or accepted by the medical community.” Cannata Br. at 13; see also AG Br. at 58. 52 6674056v.3 First, CPLR §214-c(4), of which Plaintiffs could have taken full advantage, “extends the statute of limitations for certain tort victims who do not, for some time, know the cause of their injuries.” Giordano v. Market America, Inc., 15 N.Y.3d 590, 593-94 (2010). That section provides that where the discovery of the cause of injury occurs less than five years after discovery of the injury, an action may be commenced within one year of discovering the cause, provided “that technical, scientific or medical knowledge and information sufficient to ascertain the cause of his injury had not been discovered, identified or determined prior to the expiration of the period within which the action or claim would have been authorized.” CPLR §214-c(4). Thus, CPLR §214-c(4) directly addresses and accounts for any potential injustice due to the lack of a known causal connection between exposure to a toxic substance and a latent injury. See Giordano, 15 N.Y.3d at 599-600. Therefore, if Plaintiffs were unaware of the potential causal connection between their injuries and their work at the World Trade Center, under §214-c(4), they could have filed a notice of claim within 90 days of discovering the cause of their injuries. Again, Plaintiffs simply failed to do so. Furthermore, even if §214-c(4) did not apply, the purported obstacle of lack of knowledge of harm from toxic materials is inapplicable to Plaintiffs here. Plaintiffs are not the first responders who ran to and worked on the pile at Ground 53 6674056v.3 Zero in the immediate aftermath of the attack and might not have known the risk of exposure to any toxins. Rather, Plaintiffs are licensed hazardous environmental contaminant handlers who were trained and hired to work with and remove toxic materials. Indeed, any risks associated with Plaintiffs’ post-9/11 cleanup work were the exact same risks Plaintiffs exposed themselves to on jobs before and after the World Trade Center clean-up. Moreover, the potential hazardous conditions in and around the World Trade Center site were widely publicized shortly after the attacks. In addition to the mainstream media reports concerning the health effects of exposure to the World Trade Center related dust, the aptly named “World Trade Center Worker and Volunteer Medical Screening Program at Mount Sinai,” which provided, inter alia, free medical assessments for workers and volunteers potentially exposed to hazards during the World Trade Center rescue and recovery effort, began seeing patients in July 2002. By early 2003, in light of the widespread claims of a potential link between the conditions at the World Trade Center site and certain health conditions and the commencement of numerous lawsuits alleging such a causal connection, the District Court in the World Trade Center cases established master dockets specifically designed to consolidate thousands of claims for personal injury brought by first responders and clean-up workers in and around the World Trade 54 6674056v.3 Center site. See February 13, 2003 Order (21 MC 100, ECF #1) (approximately 10,000 cases alleging personal injury based on work at World Trade Center site); In re World Trade Ctr. Lower Manhattan Disaster Site Litig., 954 F. Supp. 2d 192, 195 (S.D.N.Y. 2012); id. at 194 (approximately 800 cases alleging injury from clean-up activities outside World Trade Center site). For all of these reasons, Plaintiffs conceded to the District Court that they could have filed timely notices of claim but failed to do so. Cannata Opp. at 6 (no dispute that “plaintiffs could have previously commenced their lawsuit under CPLR 214-c”). Indeed, on appeal, the Napoli Plaintiffs do not even bother to argue that they could satisfy a “serious injustice” standard. See Napoli Br. at 14- 17. Thus, Plaintiffs were clearly aware, or certainly should have been aware, that their injuries may have been related to their work around the World Trade Center site. The attempt by the Attorney General to suggest otherwise is meritless. 3. Existing law already provided relief from the 90-day notice of claim requirement where necessary. The notice of claim requirement is intended “to afford the public corporation ‘an adequate opportunity to investigate the circumstances surrounding the accident and to explore the merits of the claim while information is still readily available.’” Brown v. New York City Transit Auth., 172 A.D.2d 178, 180 (1991); Davidson v. Bronx Mun. Hosp., 64 N.Y.2d 59, 62 (1984). Moreover, the 90-day requirement has been held to be “practicable” even in cases concerning the development of 55 6674056v.3 latent injuries from exposure to toxic substances. Corcoran v. New York Power Auth., 202 F.3d 530, 540 (2d Cir. 1999). Appellants contend that CPLR §214-c did not fully resolve the injustice because of the “fleeting ninety-day period to file a notice of claim against public corporations.” AG Br. at 59. Plaintiffs do not elaborate on what specifically would have prevented them from serving a notice of claim within 90 days of discovering their injury. However, even if the 90-day period were considered too short, existing law already provided a remedy for any injustice that might occur. General Municipal Law §50-e(5) provides that a court, upon application, may extend the time to serve a notice of claim. Among the factors considered in extending the time for service is whether “the petitioner demonstrated a reasonable excuse for the failure to serve a timely notice of claim[.]” Fennell v City Sch. Dist. of City of Long Beach, 118 A.D.3d 783, 783 (2d Dep’t 2014). Additionally, a court may extend the period for service of a notice of claim for the duration of the applicable statute of limitations, so that the period during which an extension may be granted is coextensive with the statute of limitations. See Matter of Daniel J. v. New York City Health & Hosps. Corp., 77 N.Y.2d 630, 633 (1991). To the extent that the latent nature of Plaintiffs’ injuries or a lack of knowledge of their cause reasonably prevented clean-up workers from filing a notice of claim within 90 days of discovering the injury, Plaintiffs had three years 56 6674056v.3 to move to serve a late notice of claim. See Edwards v. City of New York, 2 A.D.3d 110, 110-11 (1st Dep’t 2003) (affirming leave to serve late notice of claim to sanitation worker alleging injuries from post 9/11 work). Indeed, the late notice procedure essentially allows for an individualized assessment of whether the 90- day time limit creates an injustice for a particular plaintiff. The Attorney General points to the denial of several applications for leave to serve a late notice of claim as evidence that the late notice procedure did not remedy the injustice of the 90-day time limit. See AG Br. at 69-70. However, denial of leave to file a late notice of claim in a particular case “does not compel the conclusion that New York’s statutory regime is inherently unjust or even unfair.” Corcoran, 202 F.3d at 540. To the extent motions for leave to file a late notice of claim were denied, this serves only as evidence that the New York courts rejected the proposition that, for those particular plaintiffs, applying the 90-day notice-of-claim requirement resulted in injustice. 4. Plaintiffs were not prevented from filing timely suits due to misinformation at their worksites. The contention that “false assurances of workplace safety contributed to workers’ failure to file timely notices of claim, AG Br. at 59, is unsupported and illogical. As an initial matter, the Attorney General relies on “legislative history” as evidence of the “false assurances.” But, the cited Sponsor’s Memo contains a single phrase on this issue, stating “These individuals should not be denied their 57 6674056v.3 rights to seek just compensation simply because they were provided incorrect information about their work conditions.” Sponsor’s Mem., reprinted in Bill Jacket A.B.7122 at 6. The only other reference in the legislative history to any misinformation is a similarly vague phrase in a letter from the State Trial Lawyers Association. Letter from Richard Binko, NYSTLA, reprinted in Bill Jacket A.B.7122 at 18 (Sept. 11, 2009) (“Many 9/11 rescue and recovery workers . . . were simply given the wrong information.”). Neither document identifies any specific misinformation.14 Recognizing the lack of evidence to support the statements in the legislative history, the Attorney General also cites two cases which concern entirely different facts from the current appeals. In Lombardi v. Whitman, 485 F.3d 73, 76-77 (2d Cir. 2007), emergency responders who arrived at Ground Zero on September 11 or in the days immediately thereafter sued the Environmental Protection Agency for issuing false press releases in September and October 2001 about the air quality in Lower Manhattan. The Attorney General also cites allegations by one Plaintiff, Marek Socha (not a party to this appeal), that while he was working at 2 World Financial Center (a building not at issue on this appeal), his supervisors from 14 Tellingly, the letter submitted by the Local 78 Asbestos, Lead & Hazardous Waste Laborers’ Union, of which Plaintiffs were members, makes no mention of an inability to meet the 90-day notice of claim requirement due to “false assurances” or “wrong information.” Letter of Edison Severino (July 31, 2009), reprinted in Bill Jacket A.B.7122 at 35-37. Instead, Local 78 cites only the latent nature of the injuries as a basis for revival. Id. at 36. 58 6674056v.3 Blackmon-Mooring Steamatic Catastrophe, Inc. “told him that respirators were unnecessary,” AG Br. at 12 (citing 44 F. Supp. 3d 409, 422 (S.D.N.Y. 2014)), as well as some other allegations by Mr. Socha as to the adequacy of the safety equipment he was provided, AG Br. at 12-13. Even if the allegations in these cases were true, they would not have misled a plaintiff about the 90-day period in which to file a notice of claim upon discovery of an injury. The Attorney General’s assertions regarding misleading statements about workplace safety are a red herring which does not establish an “injustice” warranting the revival of time- barred claims against BPCA. 5. Lack of knowledge of a limitations period is not an “injustice” warranting the revival of time-barred claims. Finally, lack of knowledge of the notice of claim requirement does not constitute an “injustice” which would justify a revival statute like Jimmy Nolan’s Law. See e.g. Grant v. Nassau County Indus. Dev. Agency, 60 A.D.3d 946, 947 (2d Dep’t 2009) (“petitioner’s assertion that he was unaware of the notice of claim requirement was not a reasonable excuse for his initial delay in serving a notice of claim upon the respondent”); Worsham v. West, 2005 WL 4683963, at *2 (S.D.N.Y. Dec. 22, 2005) (“Lack of knowledge about the statute of limitations does not qualify as an extraordinary circumstance beyond the petitioner’s control.”). If it were, then the Legislature could revive all time-barred personal injury actions without restriction, and this Court has repeatedly declined to adopt 59 6674056v.3 such a rule. See McCann, 282 A.D. at 449 (citing Gallewski and Robinson). Thus, such an excuse cannot provide justification for the violation of BPCA’s due process rights. CONCLUSION For the above-stated reasons, this Court should conclude that a particularized inquiry is required to determine whether BPCA should be treated as the State for purposes of the capacity rule, and that under a particularized inquiry, BPCA should not be treated as a political subdivision of the State. This Court should also find that the serious injustice standard applies to BPCA’s Due Process Challenge to Jimmy Nolan’s Law, and that the Law fails even under a lesser “reasonableness” standard. Dated: White Plains, New York September 7, 2017 Respectfully submitted, WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP Attorneys for Respondent ____________________ John M. Flannery Eliza M. Scheibel 1133 Westchester Avenue White Plains, NY 10604 (914) 323-7000 Our File No. 06867.00041
