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THE RECORD20062006200620062006 V V V V Vol. 61, Nool. 61, Nool. 61, Nool. 61, Nool. 61, No. 2. 2. 2. 2. 2

OF THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK

THAWING A FROZEN CONFLICTThe Separatist Crisis in Moldova

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THE RECORD2006 Vol. 61 , No. 2

Contents

THE RECORD OF THE ASSOCIATION OF THE BAR OF THE CITY OF NEWYORK is published four times a year by The Association of the Bar of the Cityof New York, 42 West 44th Street, New York, NY 10036-6689. Available bysubscription for $60 per volume. For information call (212) 382-6695. Periodi-cals postage paid at New York, NY and additional mailing offices. USPS number:012-432/ISSN: 0004-5837. Postmaster: Send address changes to THE RECORDOF THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK, 42 West44th Street, New York, NY 10036-6689. THE RECORD is printed on paper whichmeets the specifications of American National Standard ANSI Z39.49-1984,Permanence of Paper for Printed Library Materials. Copyright © 2006 The Asso-ciation of the Bar of the City of New York. All rights reserved.

OF NOTE

ANNUAL MEETING OF THE ASSOCIATIONFAREWELL ADDRESS: Bettina B. Plevan

INAUGURAL ADDRESS: Barry M. Kamins

THE BENJAMIN N. CARDOZO LECTUREINTRODUCTION: Bettina B. Plevan

LECTUREPUNITIVE DAMAGES AND DUE PROCESS:HOW MUCH IS TOO MUCH?Sheila L. Birnbaum

THE ORISON S. MARDEN LECTURELECTUREKEEPERS OF THE RULE OF LAWLouis A. Craco

MISSION TO MOLDOVATHAWING A FROZEN CONFLICT:LEGAL ASPECTS OF THE SEPARATIST CRISIS IN MOLDOVA

The Special Committee on European Affairs

RETIREMENT AND PRO BONO ACTIVITIESThe Committee on Senior Lawyers

A PROPOSAL TO APPLY ETHICS AGREEMENTS ON THE STATE ANDLOCAL GOVERNMENT LEVEL

The Committee on Government Ethics

OPEN SOURCE SOFTWARE AND THE FREE SOFTWARE MOVEMENTThe Committee on Information and Technology Law

FORMAL OPINION 2006-02DUTIES TO PROSPECTIVE CLIENTS

The Committee on Professional and Judicial Ethics

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Of Note

TWO OUTSTANDING LAW STUDENTS HAVE BEEN AWARDED THURGOODMarshall Fellowships for the 2006-2007 academic year. The program pro-vides two exceptional minority students from New York area law schoolsthe opportunity to work with the Association to advance the goals ofcivil rights and equal justice. Fellowships have been awarded to LaTanyaHarry of Rutgers University School of Law and Klara Ng of Brooklyn LawSchool.

Ms. Harry will assist the Association’s Civil Rights Committee andMs. Ng will work with the City Bar Justice Center.

The fellowships are funded by the Orison S. Marden Lecture Fund.Fellows were nominated by their schools and selected by the Association’sCommittee on the Thurgood Marshall Fellowship Program, chaired byIra M. Feinberg.

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THE ANNUAL PRESENTATION OF THE HENRY L. STIMSON MEDAL TOoutstanding Assistant United States Attorneys in the Southern Districtand in the Eastern District of New York, was held on June 6 at the Associa-tion. Mark Hellerer, Chair, Committee on the the Stimson Medal, pre-sented the medals.

This year’s recipients are: John M. McEnany (Criminal Division) andAndrew W. Schilling (Civil Division) of the Southern District, and MarkE. Feldman (Criminal Division) and Richard K. Hayes (Civil Division) ofthe Eastern District.

The Stimson Medal, made possible by the firm of Pillsbury WinthropShaw Pittman LLP, honors Mr. Stimson, who served as United States At-torney for the Southern District from 1906-1909 during a career of distin-guished public service.

The awards are sponsored by the Committee on the Stimson Medaland the Committee on Federal Courts (Molly S. Boast, Chair). PillsburyWinthrop Shaw Pittman LLP co-sponsored the event.

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THE ANNUAL MUNICIPAL AFFAIRS AWARDS, GIVEN TO OUTSTANDINGAssistant Corporation Counsels, were presented June 27 at the Associa-tion. This year’s recipients and their bureaus are: Carlos Cruz-Abrams,legal Counsel; Krishna Jayaram, Economic Development; LavanyaPisupati, Torts, Bronx; Stephanie Schwartz, Family Court, Queens; andTracy Triplett, Environmental Law.

The awards are sponsored by the Committee on New York City Af-fairs (Peter Kiernan, Chair).

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THE SIXTEENTH ANNUAL LEGAL SERVICES AWARDS WERE PRESENTEDto honor attorneys and nonlawyers who provide outstanding civil legalassistance to New York’s poor. Hon. Victor Marrero, United States DistrictJudge, Southern District of New York, presented the awards, May 16, atthe Association.

This year’s recipients are: Tara Foster, Senior Attorney, Education RightsProject, Queens Legal Services; Andrew Goldberg, Supervising Attorney,MFY Legal Services, Inc.; Joyce Heller, Director of Government BenefitsUnit & New Initiatives, South Brooklyn Legal Services, Inc.; Cary LaCheen,Senior Staff Attorney, Welfare Law Center; and Ellen Friedland, Accred-ited Representative, Safe Horizon Immigration Law Project.

The awards are administered by the Special Committee on the LegalServices Awards, chaired by James H. R. Windels, and sponsored by theCommittee on Pro Bono and Legal Services, chaired by William T. Russell,Jr. The awards have been endowed by a generous contribution from theHorace W. Goldsmith Foundation.

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THE ANNUAL KATHRYN A. MCDONALD AWARD HONORING JUDGES OFthe Family Court and the vital services of those who work in the FamilyCourt in New York City were presented May 8 at the Association.

Hon. Judith S. Kaye, Chief Judge, New York State Court Of Appeals,presented this year’s award to: Frand D. Argano, Former First Deputy ChiefClerk, NYC Family Court, and Gary S. Solomon, Director of Legal Sup-port, Juvenile Rights Division, The Legal Aid Society.

The Kathryn A. McDonald Award is named in honor of the former

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Presiding Judge of the New York City Family Court, and is sponsored bythe Association’s Committees on Children and the Law, Family Courtand Family Law, and Juvenile Justice and its Council on Children.

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THE NEW YORK CITY BAR’S ENHANCE DIVERSITY COMMITTEE PRESENTEDthe inaugural Diversity Champion Award at the Third Annual DiversityConference, May 16, at the Association. The award recognizes the criticalrole individuals have played in initiating and sustaining change withintheir organizations and the overall New York legal community.

The 2006 Diversity Champion Award winners are: Hon. Daniel M.Donovan, Jr., District Attorney, Richmond County; William Malpica, As-sociate, Mayer, Brown, Rowe & Maw LLP; and Elizabeth D. Moore, Part-ner, Nixon Peabody LLP.

The Award is sponsored by the Committee to Enhance Diversity inthe Profession (Susan Kohlmann and Elipidio Villarreal, co-chairs.)

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THE FOLLOWING ARE THE NEWLY APPOINTED CHAIRS OF ASSOCIA-tion Committees for the 2006-07 year:

Ronald S. Goldbrenner (Administrative Law); Raymond J. Burke, Jr.(Admiralty); Daniel M. Weitz (Alternative Dispute Resolution); Nancy Nelson(Arbitration); Kathleen A. Scott (Banking Law); Joyce Raskin (BioethicalIssues); Tanya Gill (Career Advancement and Management); John Will-iam Spollen (Citybar Public Service Network); Valerie L. Fitch (CLE); WillaI. Lewis (Condemnation & Tax Certiorari); Frederick Cohen (Construc-tion Law); Robert A. Martin (Consumer Affairs); Daniel James Horwitz(Criminal Advocacy); Robert S. Dean (Criminal Justice Operations & Bud-get); Daniel R. Alonso (Criminal Justice); Noah Ben Potter (Drugs & theLaw); Paul T. O’Neill (Education & the Law); Marjorie M. Glover (Em-ployee Benefits); Edna Rubin Sussman (Energy); Peter William Dizozza(Entertainment); Joan Morgan McGivern (Entertainment Law); Karen FisherGutheil (Family Court & Family Law); Ona T. Wang (Federal Legislation);Norman D. Slonaker (Financial Reporting); Michael S. Sackheim (FuturesRegulation); Miriam M. Breier (Housing Court); Jaya K. Madhavan (HousingCourt Public Service Projects); Linda Marie Kenepaske (Immigration &Nationality Law); Michael H. Byowitz (International Affairs); John Rousakis(International Environmental Law); Mark R. Shulman (International Human

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Rights); Philip L. Kirstein (Investment Management Regulation); Debra L.Raskin (Labor & Employment Law); Carol L. Ziegler (Legal Education andAdmission to the Bar); John P. Herrion (Legal Issues Affecting People withDisabilities); Jane Ellen Hoffman (Legal Issues Pertaining to Animals); ThomasP. Valet (Medical Malpractice); Michael W. Oshima (Minorities in the Pro-fession); Babcock MacLean (Personal Income Taxation); George J. Mazin(Private Investment Funds); Madeleine Schachter (Pro Bono and LegalServices); Stephanie R. Mann (Science & Law); Adele Hogan (SecuritiesRegulation); Christina E. Daigneault (State Affairs); Eileen E. Huggard(Telecommunications Law); Amanda C. Samuel (Trademarks & UnfairCompetition); Andrew W. Hayes (Transportation); David W. Dykhouse(Uniform State Laws); Christopher J. Borgen (United Nations); Pui C. Cheng(Women in the Courts); and Harry A. Valetk (Young Lawyers).

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Recent Committee Reports

African AffairsLetter to the Prime Minister of Ethiopia expressing concern over the arrestand detention of human rights attorney Daniel Bekele. The letter arguesthat the arrest and detention of Mr. Bekele may constitute a grave viola-tion of his right to a fair trial, and that Ethiopia may be in violation ofits international legal commitments.

Alternative Dispute ResolutionReport on mediator quality in New York State. The report examines thecurrent systems now in place that address the mediator quality issue inNew York and recommends that membership organizations for New YorkState mediators develop voluntary accreditation systems and that a regis-tration system be established for the filing of publicly accessible state-ments of qualifications by mediators, on a mandatory basis for compen-sated mediators and optionally for others.

Banking LawLetter to the Federal Reserve Board urging that it finish the process ofissuing a final version of its proposed interpretation and supervisory guidanceon the Anti-Tying Restrictions of Section 106 of the Bank Holding Com-pany Act Amendments of 1970. The letter argues that an interpretationthat brings Section 106 in line with the general federal antitrust laws is tobe preferred over an approach of implementing a number of exemptions,and that there is substantial legal support that proves that such an inter-pretation is required and permissible.

Bioethical Issues/Health LawReport supporting A.5406-A which would amend the Public Health Lawto establish procedures for selecting and empowering a surrogate to makehealth care decisions for persons who lack capacity to do so on their ownbehalf and who have not otherwise appointed an agent to make suchdecisions under Article 29-C of the Public Health Law. The report arguesthat the proposed legislation is greatly needed as it would establish a sys-

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tem sensitive to the clinical reality in which decisions are being made;balance the vesting of decision making authority with several safeguardprovisions; is a patient centered bill which will provide for the best inter-ests of the patient; and blocks the intervention of third parties unknownto the patient in such decisions.

Civil RightsReport supporting the Voting Rights Act Reauthorization and Amend-ments Act of 2006 (VRARA) (H.R.9/S.2703). The report supports the VRARAas its provisions would: (1) renew the preclearance requirements; (2) as-sure minorities the right to elect candidates of their choice and to pro-hibit any voting changes that deny the right to vote on the basis of raceor color; (3) renew the Act’s language assistance requirements; (4) facili-tate the use of federal observers; and (5) allow recovery of expert fees bysuccessful plaintiffs in voting rights suits. Amicus Brief: Center for Constitutional Rights v. Bush filed in the USDistrict Court, Southern District of New York.

Amicus Brief: ACLU v. National Security Agency (NSA) filed in the USDistrict Court, Eastern District of Michigan. The briefs contend that NSA’sadmitted practice of wiretapping privileged communications in the nameof national security—without a court warrant and pursuant to undis-closed standards that are never subjected to judicial scrutiny—chills a broadspectrum of constitutionally-protected speech, including communicationsbetween attorneys and their clients. The brief argues that the NSA Sur-veillance Program should be enjoined because it fails to comply with For-eign Intelligence Surveillance Act of 1978 (FISA) which is the exclusivemeans by which electronic surveillance may be conducted within the UnitedStates, and does not comply with the Fourth and First Amendments.

Civil Rights/Election LawLegal Issues Affecting People With Disabilities Statement regarding NewYork’s failure to comply with sections 301 and 303(a) of the Help AmericaVote Act(HAVA), which call for the creation of a computerized statewidevoter registration list and the development of and implementation ofvoting systems standards including standards for accessibility for voterswith disabilities, and the Justice Department’s pending lawsuit againstthe state. The statement notes specific concerns with the systems underconsideration by the State Board of Elections for interim implementation

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in 2006 as the “accessible” option for voters with disabilities at pollingplaces and urges that any interim system not create impediments to vot-ers with particular disabilities, preserve the anonymity of voters, and thatany votes cast on such system be treated equally with all other votes. Inaddition, the statement urges the State of New York and the Justice De-partment to resolve this lawsuit in a way that provides a statewide regis-tration list that avoids fraud but preserves the right of all eligible votersto vote, allows for adequate public input, preserves the federal moneyprovided for HAVA implementation, and ensures access to the voting sys-tems by all voters, including those with disabilities, so that the importantgoals of HAVA are achieved.

Drugs and the LawLetter to the Drug Enforcement Administration (DEA) expressing supportfor the registration of a bulk manufacturer of marijuana as it is consistentwith “the public interest” as that term is used in 21 USC 823(a) because(1) the statutory scheme established by Congress, in the Controlled Sub-stances Act, contemplates that controlled substances may be, throughresearch, shown to have medicinal uses and (2) such registration is neces-sary to break an impasse in the application of the regulatory system thatthwarts the development of marijuana as a pharmacotherapy for variousadverse medical conditions and potentially undermines public trust inthe integrity of the government agencies entrusted with supervising theregulatory system.

Education and the LawAmicus Brief: Bronx Household of Faith v. Board of Education of the City of NewYork filed in the US Court of Appeals for the Second Circuit. The briefargues that District Court’s decision should be reversed and that the De-partment of Education should be allowed to enforce Standard OperatingProcedure Sec. 5.11 which precludes parties from conducting worship ser-vices in the New York City public schools.

EnergyLetter to Governor Pataki and legislative leaders expressing opposition toproposed amendments to the New York State Finance Law (S.6459-C/A.9559-B) which would subject funds generated through the Systems Benefit ChargeProgram and the Renewable Portfolio Standard to the annual state ap-propriations process. The proposed amendments, the letter argues, wouldundermine the New York State Energy Research and Development Authority’s


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energy efficiency, energy conservation, energy management and renew-able energy initiatives, and risk impairing New York’s favorable invest-ment environment for energy efficiency and renewable energy projects.

Environmental Law/Land Use Planning and ZoningLetter to the New York State Department of Environmental Conservation(NYSDEC) commenting on the recently proposed brownfield regulations.Although the proposed regulations will in fact clarify the State’s require-ments under the current proliferation of remediation programs, and re-duce confusion within the brownfield community, the letter urges thatthe proposed regulations should also promote consistency among NYSDECregions, improve public awareness of what is required for each brownfieldsite’s cleanup and lower the transaction costs for both the agency and theuser community. European AffairsThawing a Frozen Conflict: Legal Aspects of the Separatist Crisis inMoldova. In May 2005 the City Bar sent a legal assessment team to theRepublic of Moldova, including the breakaway region of Transnistria. Thereport, based on the team’s assessment, examines the key legal issues ofthis “frozen” conflict, and concludes that: effective control of the of theTransnistrian part of Moldova is that of a de facto regime and may beviewed as analogous to control by an occupying power; under the rulesgoverning de facto regimes and the law of occupation, the privatizationprogram can leave investors with no confidence that these transactionswould be enforced if the Transnistria is reintegrated into Moldova; andRussia’s activities concerning the Transnistrian situation lead to credibleclaims of responsibility on the part of Russia for the continuing separatistcrisis.

Family Court and Family LawThe Report on Family Court Services provides current information aboutthe types of services provided in New York City’s family courthouses andhow to access the assistance they offer. The report also includes a partici-pant/observer study undertaken by law students which chronicles the stu-dents’ experiences during visits to each of the City’s family court court-houses.

Report supporting the passage of S.8096/A.10447 which would amend theJudiciary Law to allow for the assignment of counsel to the indigent by


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Supreme Court in proceedings over which family court has a jurisdiction. Thislegislation would eliminate the current gap where an indigent person in-volved in a custody dispute in Family Court is entitled to court-appointedlegal counsel, but not if the same dispute is in, or moved to, SupremeCourt.

Federal CourtsA Guide to Mediation in the Southern and Eastern Districts of New York.The Guide provides best practices tips to attorneys engaged in mediationor alterative dispute resolution; highlights the local rules in each District;and provides relevant sources and contact information.

Letter to the Administrative Office of the United States Courts discussingwhether or not problems in practice exist under Federal Rule of Civil Pro-cedure 30(b)(6) that would best be addressed through an amendment tothe Rule or whether continued development of case law would suffice.The letter argues that Rule 30(b)(6) serves an important purpose in stream-lining the pretrial search for information held by organizational litigantsand that any potential for abuse is suitably managed by the district court’ssupervision of the process. In addition, existing case law surrounding theRule provides sufficient guidance about which practices are unlikely tomeet with the court approval in the event disputes arise. The letter con-cludes that any proposed amendment would not improve the effective-ness of Rule 30(b)(6) or provide any greater protection against attemptedabuse. Government EthicsA Proposal to Apply Ethics Agreements on the State and Local Govern-ment Level. The report concludes that ethics agreements, an oral or writ-ten promise by a reporting individual, typically a candidate or nomineefor public office or employment, to undertake specific actions in order toremedy an actual or apparent conflict of interest, could add significantvalue to state and local government appointment processes and shouldbe implemented. Immigration and Nationality LawLetter to the US Citizenship and Immigration Services commenting onthe proposed changes to the affirmation asylum application procedures.The changes, the letter argues, would have a negative impact on asylumseekers, the asylum adjudication process and the over-burdened immigra-


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tion court system. The letter further notes that the changes are based onscant or no research or statistical support and fail to adequately analyzethe consequences of such changes.

Letter to Congress expressing opposition to legislation currently underconsideration by the Senate Judiciary Committee, S.2611, which wouldnegatively affect immigrant communities in the United States in severalsignificant regards including, criminalizing millions of non-citizens solelyon the basis of their immigration status; placing judicial review of allfederal immigration cases before the Federal Circuit Court of Appeals whichtraditionally handles patent cases and is neither equipped nor experiencedin the area of immigration law; implementing new penalties that willmake it more difficult for deserving asylum seekers to obtain the protec-tion they deserve under the law; and putting into place a hastily-con-ceived and flawed guest worker program without adequate input fromimmigrant representatives or the business community. Information Technology LawLetter to the Free Software Foundation urging that, given the increaseduse of open software in business and commercial use, the rules governingsuch software should be clarified. The letter provides comments as tohow best to amend the current version of the General Public License tomake it both clear and fair to both licensors and licensees.

International Human RightsLetter to the President of Colombia expressing concern about recent state-ments he made which could be perceived as threatening and which areinconsistent with international standards that safeguard the indepen-dence of lawyers and judges. Insurance LawLetter to the New York State Legislature commenting on S.8166, The ViaticalSettlements Act (the “Bill”) which would amend the New York InsuranceLaw to expand the current regulation of sales of life insurance policiesinsuring terminally or critically ill insureds prior to death to cover “lifesettlements”, which are sales of life insurance policies insuring personswho are not critically ill. The letter supports the consumer protectionswhich the Bill provides. However, there are a number of critical provisionsin the bill regarding restrictions on viators’ rights to transfer their poli-cies, which the Committee finds troublesome and should be modified.


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Judicial Selection, Task ForceAmicus Brief: Torres v. New York State Board of Elections (US Court of Ap-peals for the Second Circuit). The brief argues that the district court didnot abuse its discretion in enjoining operation of New York’s judicial nominat-ing convention system and ordering direct primary elections as a temporaryremedy. The brief goes on to urge that the district court and the legis-lature should consider thoroughly all available options, including im-proving the judicial convention system and, in what the City Bar wouldconsider a more preferable option, moving to a merit-based appointmentsystem.

Legal Issues Affecting People with DisabilitiesReport supporting S.7469/A.10071 (“P.J.’s law”) which would require school-bus drivers and attendants transporting children with disabilities to com-plete training at least twice a year on the special needs of any students forwhich they may be responsible.

Legal Issues Pertaining to AnimalsReport supporting S.663/A.9266 which would amend the Penal Law toprovide that a person is guilty of grand larceny in the 4th degree (a class Efelony) when he/she steals property and when the property, regardless ofits value, consists of a pet which is taken from: the person of the owner orthe lawful custodian of the pet; the dwelling of the owner or lawful custo-dian of the pet; or any enclosure of yard within 500 feet of such dwelling.

Report supporting S.7691/A.10767 which would amend the Family CourtAct and Criminal Procedure Law, in relation to animals being protectedunder the provisions of a court order of protection. The proposed legisla-tion would amend current law to provide that a court order of protectionmay require that the respondent refrain from attacking or otherwise abusingor threatening abuse to any animal owned, possessed, leased, kept or heldby the petitioner or a minor child residing in the household.

Mental Health LawReport supporting the passage of “The Children’s Mental Health Act of2006" (A.9649/S.6672), which would provide for the establishment of achildren’s mental health plan; and to amend the education law to requirethe incorporation of social and emotional development standards in thedevelopment of elementary and secondary school educational guidelines. The report also offers several suggestions which would make the Act moreeffective.


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Letter expressing support of S.2207-C which would address the inhumaneand unjust treatment of prisoners with psychiatric disabilities by outlaw-ing their placement into solitary confinement, by creating alternativetherapeutic housing areas for them and by providing training for correc-tional staff who work in mental health housing areas.

Letter to the New York State Office of Mental Health expressing concernsregarding Part 550 of 14 NYCRR, the Fingerprinting Regulations. The pur-pose of the existing regulations is to allow providers of direct mental healthservices to investigate the criminal history of prospective employees andvolunteers . However, the letter argues these rules are being applied in anover-inclusive manner and that individuals are being disqualified eventhough their past criminal offense does not fall within the law’s sphere ofdisqualifying crimes. The letter recommends a set of adjustments regard-ing the promulgation and implementation of the Fingerprinting Regula-tions to assure that qualified “professionals, including peer specialists”are not unnecessarily prevented from joining the mental health workforce.

Mergers Acquisitions and Corporate Control ContestsLetter to the SEC commenting on the proposal regarding disclosure ofcompensation of directors serving on special committees of boards of direc-tors. The letter urges that the SEC clarify the rule and specifically exempt suchcompensation arrangements from the disclosure requirement unless anduntil the public disclosure would be required in any related filing or inthe first periodic report filed by the registrant post-announcement.

Letter to the SEC commenting on the proposed NASD Rule 2290 Regard-ing Fairness Opinions in Corporate Control Transactions (May 2006). Infollow-up to a letter sent earlier to the SEC, the Committee, though gen-erally supportive of the proposed rule, reiterates its concern with proposed Rule2290(b)(3), noting that it is inappropriate and should be removed or atleast recast more narrowly.

Military Affairs and JusticeLetter to Congress urging opposition to the Administration’s issuance ofa revised Army Field Manual on Intelligence Interrogation as it wouldundercut the McCain Amendment by rewriting the document which theamendment sought to preserve as the standard for prisoner treatment.

New York City AffairsTestimony delivered before the New York City Council supporting Intro.


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260 which would amend New York City Law to enhance the legal protec-tions for persons that testify before hearings of the Council.

Private Investment FundsLetter to Governor Pataki expressing opposition to S.6831/A.10399 whichwould amend the proposed sanction for failure to comply with the pub-lication requirements under the New York Limited Liability Company Lawand the Partnership Law, by imposing joint and several liability for theowners of limited liability companies or limited partnerships. Professional ResponsibilityComments on the NY State Bar Association’s Proposed Amendments tothe New York Code of Professional Responsibility Rules 1.1-1.4, 3.1, 3.2,3.5-3.9 and 8.1-8.4 (May 2006).

Science and LawLetter to Congress expressing support for the passage of H.R.1227, the GeneticInformation Nondiscrimination Act of 2005. The bill provides nationaluniform protection that would allow individuals to take advantage ofgenetic testing, research and their benefits without fear of compromisingor being denied health care coverage or employment opportunities.

Securities RegulationLetter to the SEC commenting on its proposed amendments to the disclo-sure requirements for executive and director compensation, related partytransactions, director independence and other corporate governance mattersand security ownership of officers and directors.

Letter to the SEC commenting on its proposed recommendations for changesin the current regulatory system for smaller companies under the securi-ties laws of the United States.

Senior LawyersReport on retired lawyers and pro bono activities which recommends thatlaw firms adopt the practice of utilizing senior lawyers, who would other-wise be subject to mandatory retirement, by offering them major roles intheir firm’s pro bono practices, in return for the lawyers commitment todevote all or substantially all of their working time to such pro bonoefforts.


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State Courts of Superior JurisdictionLetter to Hon. Jonathan Lippman, Chief Administrative Judge of theCourts, expressing concerns about Section 202.8(h) of the Uniform CivilRules for the Supreme and County Courts which mandates that lawyersremind judges in writing when a submitted motion has not been decidedwithin 60 days (“ Rule 23”). Taxation of Business EntitiesLetter to the IRS offering comments on the application of the proposedregulations under Internal Revenue Code Section 409A, service arrange-ments between partnerships and partners

Tort LitigationReport supporting S. 5555/A.8114 which would amend the Civil PracticeLaw and Rules to exempt all settlements from collateral source offsets intort claims for personal injury, property damage or wrongful death, andin related subrogation claims.

Copies of the above reports are available to members at the Association’swebsite, www.nycbar.org, by calling (212) 382-6624, or by e-mail,

at [email protected].


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Farewell Address

Annual Meetingof the Association

Bettina B. Plevan

t has been a privilege to serve as President of this Association forthe last two years and I know, like others before me, that I amgoing to miss the excitement and stimulation that I have experi-enced every day. The New York City Bar plays an important role inthe city, the state, the country and increasingly in the world. While

This address was delivered at the Annual Meeting of the Association, held onMay 23, 2006.

Ithe President has the platform and access to express and shape opinionsin many situations, it is the membership of the Association, in particularour committees and their chairs, who make the greatest contribution. Itis their work on behalf of the Association that makes this a great institu-tion and enables us to have an impact on elected and appointed govern-ment officials, regulators and the courts. So, my greatest thanks tonightgo to the members, not only for giving me this wonderful opportunity toserve, but also for the spectacular work you have done during the last twoyears.

We undertook many institutional initiatives in the past two years.My right hand in those endeavors was our Executive Director, BarbaraOpotowsky. She is deserving of enormous praise and thanks from me andall of you. She is always cheerful, always willing to take on a challengeand enthusiastic about almost every idea I had. She keeps the place run-

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ning in an effortless way and somehow finds time to maintain a leader-ship role in our diversity initiatives, the CBJC and many other projects.We started with a rebranding of the City Bar Justice Center, then changedthe logo and public name of the Association, changed the format of The44th Street Notes and ended with the CBJC gala. Barbara did not hesitateto throw herself into each one of these projects and bring the ideas toreality. And now how about that espresso bar, Barbara?

In this organization the President actually has two right hands. Thesecond is the very steady hand of Alan Rothstein, whose in-depth knowl-edge on hundreds of subject areas is awesome. He helped the committeesrealize their efforts and counseled me daily on how best to proceed. Hepersonally made a significant contribution to our reports relating to thewar on terrorism. When combined with his even temperament, there isno better person to have by your side.

I also want to thank the other senior members of the staff who haveserved with dedication, loyalty and enthusiasm throughout my tenure, in-cluding our CFO—Carol Rosenbaum; our Director of Communications—JayneBiegelsen; our Director of Marketing and Membership—Adele Lemlek; NickMarricco—Head of Catering; our Director of the Office of Diversity—Meredith Moore; our CLE Director—Michelle Schwartz Clement; Al Charne—Director of our Legal Referral Service; Richard Tuske, Director of our Library;and Maria Imperial, Executive Director of the City Bar Justice Center.

Other key members of the team here are the chairs of the ExecutiveCommittee and I was fortunate to have two fantastic chairs during mypresidency—Barry Kamins, our next President, and Bill Kuntz. Both wereeasy to work with, helpful and creative, as well as supportive. A Presidentcould not ask for anything more.

I have also had the benefit of working with James Lipscomb as ourtreasurer for most of the last two years. His pragmatic, careful and thoughtfuladvice has been invaluable. We are fortunate that he will serve at leastone more year.

I also want to thank my family, especially those that suffered themost by my being totally occupied for the last two years—my mother andmy husband, both of whom remain enthusiastic about our work here, ashave my sons, Bill, Jeff, daughter-in-law Sara, and grandson Ariel.

Let me turn now to the work of the Association, in particular in theareas where I think we made the greatest contribution to the public goodin the past year. Examples of our contributions are numerous and wedon’t have time for me to recount them all this evening, but I would liketo mention a representative group.

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First, enhancement of Diversity of the Profession continued to be animportant priority and with your help we have devoted resources andtime to this challenge. I am very proud of what we as an Association havedone, what our staff has accomplished and what our committees haveinitiated to focus attention and offer help to employers, to individuallawyers, to bar groups and special interest groups who are looking forhelp. We now have 117 signatories to our statement of diversity prin-ciples, up from about 85 in may 2004. I believe now our diversity initia-tives are so institutionalized in our office of diversity and the work of ourcommittees is so intense in this area that we will continue to be in theforefront of bar associations around the country. This year, for example,the Los Angeles County Bar Association, giving us full credit for our ini-tiative, adopted much the same approach that we did in our diversityprinciples three years ago. The saying “imitation is the sincerest form offlattery” certainly comes to mind. Nothing could be more flattering thanthis new initiative by the Los Angeles County Bar. We hope that otherscopy us too and share their experiences with us.

This year our committee on Women in the Profession chaired by CarrieCohen has been in overdrive with initiatives that will keep us moving inthe right direction for years to come, including a wonderful celebrationof pioneering women (including our Chief Judge); roundtable mentoringdiscussions; a survey to be completed soon on parental leave and part-time work policies; an impressive document of best practices for the reten-tion of women lawyers and a sell-out program on rainmaking for womenlawyers.

Some of the most difficult and most important work we have donein the past year has been through two task forces I appointed to under-take some herculean projects. The Task Force on the Role of Lawyers inCorporate Governance, chaired by Tom Moreland, with a stellar group ofexperienced lawyers from all corners of the profession has worked unbe-lievably hard and very thoughtfully for over a year. They have developedrecommendations that were vetted at a recent program and are now un-der final consideration, to be followed by a report, addressing the rolethat lawyers should play when corporate management strays, includingbest practices guidelines for lawyers, law firms and corporate legal depart-ments to follow. When completed, I believe we will be the only bar asso-ciation in the post-Enron era to grapple with these very difficult issues ina meaningful way.

A new Task Force on Judicial Selection, the second one to be chairedby Bob Joffe, is helping the Association articulate its position on judicial

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selection in the wake of many recent developments, in particular the deci-sion by Judge Gleeson in the Lopez/Torres case, invalidating judicial con-ventions, including filing of an amicus brief just last week. Here too, weare an important voice and making an enormous contribution to judicialreform in an effort that will continue under Barry’s leadership.

This year we also continued to focus on the need to preserve indi-vidual rights and the rule of law in the age of terrorism. Many of ourcommittees, in particular, the Civil Rights Committee chaired by SidneyRosdeitcher, the International Law Committee chaired by Scott Hortonand International Human Rights chaired by Martin Flaherty have refo-cused their energies from their traditional agendas to ensure that theAssociation’s voice was heard in Washington and elsewhere in oppositionto legislation restricting habeus corpus, permitting unauthorized surveilance,and in other ways restricting our civil liberties. They have been ably as-sisted by the Criminal Law Committee chaired by Margie Peerce, the Com-mittee on Military Law and Justice chaired by Michael Mernin, and theFederal Courts Committee chaired by Molly Boast.

Other important work was done this past year by our ImmigrationCommittee Chaired by Claudia Slovinsky, including assisting the secondcircuit with new procedures for handling the unbelievable workload ofthat court due to the onslaught of immigration appeals and expressingour opinion in Washington on proposed immigration legislation withdetailed comment letters.

In the international arena, another important effort was our mis-sion to Transnistria, a section of Moldova, near the Ukraine. The missionwas conceived and organized by Mark Meyer, chair of the Committee onEuropean affairs, who led the mission. A report of over 100 pages address-ing the frozen states conflict issue, the role of the Russian governmentand separatism has just been released and has already generated praisefrom many experts in the field.

Finally, I want to speak about our work on access to justice issuesand, in particular, our initiatives in the area of pro bono legal services. AsI am sure many of you know all too well, at least 80 percent of the civillegal needs of the poor in this City are not met. I would like to take thisopportunity to encourage all of you once again to support increased fundingof legal services for the poor. This year, thanks to the Committee on ProBono and Legal Services chaired by Bill Russell, we launched a new initia-tive through the statement of pro bono principles approved by our Execu-tive Committee and signed now by over 30 law firms. We are pleased tohave made that progress. The principles provide a road-map for any law

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firm or corporate legal department that wants to enhance its pro bonoinitiatives. But we have more work to do and we need to reach out tomore firms to join this group that is committed not only to 50 hours ofpro bono work per lawyer/per year, but to many other important pro-grammatic activities designed to encourage pro bono legal service.

I also want to thank the committees that have participated in probono efforts, in particular, the Bankruptcy and Corporate Reorganiza-tion Committee that worked very hard over the last two years under twoof its chairs, Mark Abrams and Alan Kornberg, to develop a Pro BonoProject with the City Bar Justice Center and in conjunction with the bank-ruptcy court. Our Project on the Homeless chaired by Catherine O’HagenWolfe has also worked hard for many years to encourage pro bono effortsfor the homeless.

We also launched some collaborative efforts between the City BarJustice Center and our committees in the wake of the hurricanes in thegulf region. We wanted to help and, largely due to the success of programsinitiated here after 9/11, we were able to do so quickly and effectively.

In closing, I want to express my deepest thanks and affection to mycolleagues at Proskauer who gave me the wonderful gift of their completesupport over the last two years. Our firm has a long tradition of publicservice in the bar and other community organizations. I am enormouslyproud of that tradition and the culture we have fostered at our firm andhope that it will continue for many years to come.

And now it is my pleasure to introduce the next President, Barry Kamins.Barry has extensive experience in leadership roles as the President of theBrooklyn Bar Association, as Chair of the City Bar’s Judiciary Committeeand as a member and then Chair of our Executive Committee. I havebeen fortunate to work with Barry for the last two years, and I know hewill be a great President. But, of course, he can’t start tomorrow unless hecan get in the office, so as my last act as President I present him with thekey and let me be the first to congratulate him.

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Inaugural Address

Annual Meetingof the Association

Barry M. Kamins

hank you Betsy for that gracious introduction and thankyou for your inspiring leadership over the past two years.The 22,000 members of the Association owe you a tremen-dous debt for the goals you have achieved and for preserv-ing the core mission of this great Bar Association—excel-T

lence in the service of the public and the profession.Before I outline some of the goals I have set for my Presidency, I want

to thank all the members of the judiciary who are in attendance tonightincluding numerous appellate judges, administrative and supervising judgesas well as a number of New York City Commissioners, and Deputy May-ors, dean of laws schools and presidents of various bar groups. Forgive mefor not personally acknowledging each and every one of you but I learneda long time ago that once you go down that path you inadvertently omitsomeone. Please know, however, that I am honored by your presence andsincerely appreciate your support.

I do want to acknowledge the presence of the Chief Judge of theState of New York, Hon. Judith Kaye whose contribution to our courtsystem and profession have been immeasurable. I also want to acknowledge:

This address was delivered at the Annual Meeting of the Association, held onMay 23, 2006.

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Court of Appeals Judges (including Hon. Joseph Bellacosa)

Chief Administrative Judge—Hon. Jonathan Lippman

Presiding Justices of the 1st and 2nd Department

Hon. John T. Buckley

Hon. A. Gail Prudenti

District Attorneys of

Kings County—Charles J. Hynes

Queens County—Richard Brown

Bronx County—Robert T. Johnson

Richmond County—Daniel M. Donovan

New York County—Robert Morgenthau

In setting an agenda one cannot help but be influenced, to someextent by the rich and impressive history of this unique Association whichwas formed in 1870 in large measure to confront a crisis of confidence inthe judiciary. Two years earlier in 1868, the New York Times wrote an edito-rial in which the paper called upon the bar for help. The Times said: “If itbe the guilty silence of the lawyers which have brought us to our presentsituation, it is their reawakened public spirit which must help us back toa better state of things. The bar must lead the way.”

The bar must lead the way. Over the next 136 years the Association ofthe Bar has led the way by speaking out on issues that others were toointimidated to address and by taking positions that have led to signifi-cant reform. No President could hope to assume leadership without mak-ing a commitment to continue the efforts made in certain signature areasof the Association. I pledge to continue the efforts made by Betsy andother past presidents to enhance diversity in our profession, to providelegal services in this city for those who do not have adequate resources toobtain them, and to pursue pro bono initiatives.

And I will continue to have this Association speak out about civilrights that may be threatened by policies of our Government that do notmeet constitutional standards. We must continue to advocate for a properbalance between issues of national security and civil rights. In the endthe rule of law must prevail. Whether the issue is one of surveillance bywiretapping without a warrant or court-stripping by legislation, our Asso-ciation will forcefully remind others of what John Adams said over 200years ago, “we are a Government of laws and not of men.”

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And as we go forward in the next two years, I have set some newgoals for this Association that are consistent with our overall mission:improving the quality, delivery and access to justice and adhering to ourresponsibilities to our clients.

Having spent my career as both a prosecutor and criminal defenseattorney, I learned very quickly that a criminal conviction has direct andtransparent consequences as well as indirect or collateral consequences.The court system imposes the direct consequences by sentencing defen-dants to periods of incarceration, periods of probation, fines, etc. How-ever, it is the collateral and often hidden consequences that can be moredevastating to a defendant and his or her family.

It is surprising to learn that many members of our legal community,including some judges, prosecutors and even defense attorneys do notfully appreciate the possible repercussions of a conviction for a felony,misdemeanor or even a non-criminal offense. Such convictions can haveconsequences in any of the following areas:

· Immigration

· Employment

· Housing (including private, public and federally-subsidized housing)

· Public benefits and welfare

· Family law (including custody, visitation and family offenseproceedings)

· Driver’s licenses

· Forfeitures

· Voting and jury service

· Federal student loans

· Military service

· Government contracting

· Insurance coverage

· International travel

The problem can be more acute in New York City where a high per-centage of defendants plead guilty at arraignment and defense counselspend relatively little time with their clients before a plea is entered.

It is ironic that it is when dealing with some of the most benignoffenses that the consequences can be the most devastating—for example,

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two convictions for turnstile jumping (theft of services) make a lawfulpermanent resident deportable. A possession of one marijuana cigarettewill cut off federal student loans for a year.

During my presidency, I pledge that the Association will use its re-sources, through our Justice Center, to accomplish a number of goals inthis area. First, we can educate practitioners who lack sufficient knowl-edge and training in this area. Before an attorney has a client plead guilty,the attorney must be able to advise that client about the hidden conse-quences of that conviction. An attorney cannot give that advice if he orshe does not know what the consequences are. After understanding theconsequences, the client may still wish to plead guilty but at least it willtruly be an informed and knowing plea.

Second, the Association can serve as a resource center for individualswho need to locate the appropriate agency that can deal with the adverseconsequences of a conviction. In this way, I hope to build on the effortbegun by Chief Judge Kaye last year when she organized the Partners inJustice Colloquium that brought judges, practitioners and academics to aforum at the Judicial Institute to begin a dialogue on this topic. Throughher efforts, a website was subsequently developed by Professor ConradJohnson and his students at a Columbia Law School clinic. The websiteprovides an invaluable and much needed on-line resource.

Moving on to other priorities, the Association cannot be effectiveunless we work with the judiciary to improve the quality of justice. I pledgeto advocate for a strong and independent judiciary and to address unwar-ranted attacks on jurists who are then prevented from publicly respond-ing to those accusations. I will also have the Association speak out on atleast one issue that renders the judiciary a less than equal branch of gov-ernment. That issue is mandatory retirement. The executive and legisla-tive branches of our state government are not saddled with term limits.And yet, there is a mandatory retirement age of 70 for judges. While someof our judges can be certified for three additional periods of two yearseach, why is there any mandatory age limitation at all? Term limits wereimposed almost 50 years ago by our state constitution when life expect-ancy was lower and society’s view on retirement was vastly different. Andtoday, citizens above the age of 76 are qualified to serve as jurors in trialsbefore the New York State Supreme Court, but judges above the age of 76are not qualified to preside where such jurors are seated. Something iswrong with that picture.

I will have the Association use its resources to seek reform. Reformcould be a legislative amendment to expand the category of judges eli-


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gible for certification. Reform could be a constitutional amendment topermit judges to serve beyond 70 years of age, or with certification, be-yond 76 years of age. Reform could be an amendment to remove anymandatory age limit. The point is, reform is needed. We will seek it.

Of course the hot topic relating to the judiciary is not age limits, butthe manner in which judges are selected in New York following JudgeGleason’s decision in the Eastern District of New York. As Betsy mentioned,our Task Force is busy working on its recommendations. The issue is quitecomplex because each solution to the problem has its own merits anddrawbacks. Our position in favor of merit selection is clear. However, inlieu of that goal which cannot be achieved without a constitutional amend-ment, the Task Force will focus on other alternatives; legislation requiringcandidates to run in open primaries; or legislation revising the judicialconvention process to remedy the constitutional issues highlighted byJudge Gleason’s decision. Our goal is to recommend a system that pro-vides a higher caliber bench independent of that influence.

The Association also needs to address a growing concern about theparole system in New York State. The issue has been raised by an increas-ing number of court decisions around the state, a series of articles in theNew York Law Journal, proposed legislation by three members of the As-sembly and Senate and a class action lawsuit in the Southern District ofNew York. With increased frequency, courts have found that the ParoleBoard has not applied appropriate statutory criteria to release inmates.

Thirteen years ago the Parole Board released 62 percent of inmateswho appeared before it. Last year the Board released only 38 percent. I willask one of our criminal justice Committees to review this subject andmake recommendations.

Another priority is the status of our profession and professionalism.Part of my practice involves representing attorneys who are accused ofunprofessional conduct and violation of our disciplinary rules. I haveseen an alarming increase in the number of younger attorneys who arereceiving complaints from Grievance Committees. And yet the two lawschools at which I teach as well as all other in New York provide courses inprofessional responsibility that educate students about the ethical pitfallsin the practice of law.

And there is the conundrum. There seems to be a disconnect betweenwhat is taught in law school and the predicament young attorneys findthemselves in soon after they are admitted to practice. We must find abetter way to reach students while in school in order to reduce the likeli-hood that they will face grievances as young attorneys. There is some-


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thing we are not doing and I will take this up with our Committees onProfessional Discipline, Professional Responsibility and Professional andJudicial Ethics. At some point I hope to enter a dialogue with the Deansof our law schools.

On the issue of professional responsibility, I will also ask our Com-mittees to review the lack of uniformity among the four departments insanctions imposed by our eight State Grievance Committees and the mannerin which they are imposed. The legal profession is the only profession inNew York State that is not regulated uniformly throughout the state. AndNew York is the only state in the country in which attorneys are disci-plined in a less than uniform manner. Our Grievance Committees do notuse the same sanctions throughout the state and they also use sanctionswith the same names but which are different in nature and effect. It hasbeen argued that this creates an appearance of unfairness and disparatetreatment of attorneys that does not serve to enhance the image of thedisciplinary process.

One priority will focus on the role of young attorneys in the life ofthis Association. Quite often young attorneys feel removed from the main-stream of the Association and even though we have 160 Committees, it isoften difficult for this group to feel involved and relevant. I want to tryto change that. One goal is to create a program in which young attorneyscan second seat experienced lawyers at trials and pre-trial proceedings. Inaddition, it is no secret that young men and women graduate with lawschool with substantial indebtedness. I want to explore the concept of aloan forgiveness program in which selected attorneys would be able toreduce their debts.

In moving forward over the next two years, I will tap into the energyof the engine that drives this Association—our 160 Committees. The menand women who serve on these Committees speak out on an extraordi-nary variety of issues that impact on the legal community and on thelives of New Yorkers. I have begun to read their reports and have beenstunned by the clarity, intellect and depth with which these Committeesspeak. The reports they generate are not abstract documents that sit on ashelf. Committee reports are read carefully by governmental leaders andhave had a direct impact on legislation that has been enacted in this city,in this state and even at a national level.

Finally the Association of the Bar is an Association of the City ofNew York. The last time I checked, the City of New York was comprised offive counties. Without losing its identity, this Association can make abetter effort to recruit members from other counties and can be more


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inclusive in a variety of ways. My first directive as President will be to banthe phrase “outer borough.”

I would like to close on a personal note. There are some special peopleto whom I owe a great deal and my Presidency could not possibly beaccomplished without their support. First is my wonderful family. Presenttonight are my mother, my sister Irene and her husband, my daughterAlly and her husband and most important my wife, Fern who has self-lessly encouraged me to pursue these goals.

Second, I owe a special thanks to my partners, Stephen Flamhaft,Harold Levy, Marvin Hirsch and Andrew Rendeiro and our learned coun-sel Edward Rappaport. Without their support I would not have been ableto assume the leadership of this Association.

Third, I want to thank my new partners at the Association—AlanRothstein and Barbara Opotowsky. Barbara and Alan are, to use a crimi-nal justice term, the DNA of this Association. They and their incrediblytalented staff have spent the last two months preparing me for this newrole and I look forward to working with all of them over the next twoyears as well as the incredibly dedicated members of the Executive Com-mittee. If I have learned one thing so far, it is that the strength of theAssociation derives from both the commitment of its members and theskill and dedication of its staff.

Finally I want to thank the members of the Association who haveelected me your President. It is a humbling experience to accept the Presi-dency of an association whose list of Past Presidents include names suchas Elihu Root, Charles Evan Hughes and Cyrus Vance. You have entrustedme with the leadership of this unique institution and I pledge to followthe words in that New York Times editorial from long ago. I pledge to leadthe way.


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elcome to the 2006 Benjamin N. Cardozo Lecture.The Association established this lecture in 1941 tohonor the memory of Justice Cardozo in the hopethat his life “may be revered and forever shared bythe members of this Association and of our profes-

The Benjamin N. Cardozo Lecture

IntroductionBettina B. Plevan

Wsion generally.”

As I am sure all of you who remember your first-year torts class willrecall, Benjamin Cardozo made his mark on the Court of Appeals in NewYork with some groundbreaking decisions in the field of tort law, includ-ing the Palzgraf case. It is therefore particularly fitting that we have as ourlecturer tonight someone who has achieved greatness in this field, notjust in New York but around the country and, no doubt, the world, as theleading expert in the field of mass torts and the related field of productsliability, toxic torts and insurance coverage litigation.

Sheila Birnbaum has also distinguished herself in the academic com-munity, as a member of the faculties of two law schools. She has alsogiven thousands of hours of her time to many important public serviceendeavors. It is difficult to select just a few of the varied and importantcontributions that she has made, usually in positions of leadership, but Iwill try to do that. She was President of the New York Womens’ Bar Asso-ciation; she is a member of the Council of the American Law Institute;she chaired the New York State Advisory Committee on Civil Practice; shewas a member of the ABA House of Delegates; she served as the Executive

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Director of the Second Circuit Task Force for Racial, Ethnic and GenderFairness; and recently she has served as Chair of the Commission for Fi-duciary Appointments by appointment of Chief Judge Judith Kaye.

Considering her many accomplishments, it is no surprise that shehas been named by Fortune Magazine as one of the fifty most powerfulwomen in American business. She has also been honored by her peers onnumerous occasions as a recipient of many coveted awards, including theMargaret Brent Women Lawyers of Achievement Award from the Ameri-can Bar Association.

Sheila has had many important professional accomplishments as apartner at the law firm of Skadden, Arps, Slate, Meagher & Flom, whereshe has practiced more than twenty years. Most recently, she argued twoimportant tort damages cases in the United States Supreme Court. One ofthem—the State Farm case—was the impetus for our lecture tonight: “Pu-nitive Damages and Due Process—How Much Is Too Much?”

It is my pleasure to introduce to you the 2006 Cardozo Lecture, myfriend, Sheila Birnbaum.

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The Benjamin N. Cardozo Lecture

Punitive Damagesand Due Process:

How Much Is Too Much?Sheila L. Birnbaum1

INTRODUCTIONPunitive damages have been part of American jurisprudence since this

country’s beginnings. The United States Supreme Court has noted that“[c]ompensatory damages ‘are intended to redress the concrete loss thatthe plaintiff has suffered by reason of the defendant’s wrongful conduct.’By contrast, punitive damages serve a broader function; they are aimed atdeterrence and retribution.”2 Courts have long recognized the risk of un-

1. The author wishes to thank Barbara Wrubel, Ellen Quackenbos and William Mack for theirassistance in preparing this lecture.

2. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003) (quoting CooperIndus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 432 (2001)).

Sheila L. Birnbaum, head of Skadden Arps’s Complex Mass Tort and Insur-ance Group, delivered the Benjamin N. Cardozo Lecture, March 28, 2006 atthe Association. A former Associate Dean at New York University School of Law,Ms. Birnbaum is co-author of the Practitioner’s Guide to Litigating Insur-ance Coverage Actions. She is the recipient of numerous awards, includingthe Margaret Brent Women Lawyers of Achievement Award from the Ameri-can Bar Association, the John L. McCloy Memorial Award from the Fund forModern Courts, and the Law and Society Award from the New York Lawyersfor the Public Interest. She has also recieved the New York University LawAlumni Award for outstanding achievement in the legal profession, the GeorgeA. Katz Torch of Learning Award, and the Milton S. Gould Award for Out-standing Appellate Advocacy. Ms. Birnbaum was honored with the Louis D.Brandeis Award by the American Jewish Congress and an award from Touro LawSchool for achieving the highest standards of professional excellence.

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predictable and unconstrained punitive damages awards imposed at a jury’s“passionate impulse”—as the New York Court of Appeals once describedit.3 As the United States Supreme Court stated in 1852, “[i]t is a well-established principle of the common law, that in actions of trespass andall actions on the case for torts, a jury may inflict what are called exem-plary, punitive, or vindictive damages upon a defendant, having in viewthe enormity of his offence rather than the measure of compensation tothe plaintiff,” but “the propriety of this doctrine has been questioned.”4

Questioning the propriety of punitive damages has intensified in re-cent decades, as punitive damage awards of increasing size and severityhave raised increasingly urgent constitutional concerns. The United StatesSupreme Court has now addressed the constitutionality of excessive puni-tive damages awards in six major opinions. Most recently, in its 2003 landmarkdecision in State Farm Mutual Automobile Insurance Co. v. Campbell,5 theCourt reversed on due process grounds a $145 million punitive damageaward in an insurance bad faith failure to settle action. The Court inCampbell reiterated the principle that, “[w]hile States possess discretionover the imposition of punitive damages, it is well established that thereare procedural and substantive constitutional limitations on these awards.The Due Process clause of the Fourteenth Amendment prohibits the im-position of grossly excessive or arbitrary punishment on a tortfeasor.”6

Campbell set forth new and stronger limitations on punitive damage awardsand gave additional guidance to the bar and bench on the punitive dam-ages analysis the Supreme Court first set forth in BMW of North America v.Gore in 1996.7 I had the privilege of representing State Farm before theSupreme Court in the Campbell case.

In Campbell, the Supreme Court made important pronouncementson the punitive damages guideposts of reprehensibility, ratio, and com-parable civil penalties that it first enumerated in Gore. The Court heldthat it is impermissible to impose punitive damages based upon conductthat is dissimilar to the conduct at issue in the case. The Court also madeclear that a State has no legitimate interest in punishing conduct thatoccurs in other States whether lawful or unlawful. The Court noted thatthe wealth of a defendant cannot justify an otherwise unconstitutional

3. Bishop v. New York Times Co., 233 N.Y. 446, 451 (1922).

4. Day v. Woodworth, 54 U.S. 363, 371 (1852).

5. 538 U.S. 408 (2003).

6. Id at 416 (citations omitted)

7. 517 U.S. 559 (1996).


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punitive damages award. These pronouncements were a major step for-ward in defining the due process constraints on excessive punitive dam-age awards.

Since Campbell, state and federal courts have applied the Campbellanalysis to varied factual circumstances and claims, and on the whole(although there are some notable exceptions), the analysis has proved aflexible and effective tool and has brought a greater measure of predict-ability and uniformity to punitive damages awards. In addition, a num-ber of important issues remain to be resolved by the courts, including areasoned approach to punitive damages in the mass tort and class actioncontext. Although Campbell involved a single plaintiff, the Campbell de-cision, read carefully and in light of the Supreme Court’s evolving puni-tive damages jurisprudence, provides some important guidance as to howthe Supreme Court is likely to view some of these issues.

OVERVIEW OF SUPREME COURT’S PUNITIVE DAMAGES JURISPRUDENCEFrom the Supreme Court’s first signal that it might recognize a due

process limitation on punitive damage awards, it took nearly a decadeand a half to arrive at Campbell.

In 1989, the Supreme Court decided Browning-Ferris Industries of Ver-mont v. Kelco Disposal, Inc.8 In that case, the jury awarded approximately$6 million in punitive damages as a result of antitrust violations andtortious interference claims. The defendant appealed, and argued thatsuch a large punitive award violated the Eighth Amendment’s prohibi-tion on excessive fines. The Supreme Court rejected this argument, hold-ing that the Excessive Fines Clause “does not constrain an award of moneydamages in a civil suit when the government neither has prosecuted theaction nor has any right to receive a share of the damages awarded.”9

Nevertheless, in an important signal, the Court recognized that “[t]hereis some authority in our opinions for the view that the Due Process Clauseplaces outer limits on the size of a civil damages award made pursuant toa statutory scheme.”10 The Court, however, had never addressed the ques-tion of “whether due process acts as a check on undue jury discretion toaward punitive damages in the absence of any express statutory limit.”11

8. 492 U.S. 257 (1989).

9. Id. at 263-64.

10. Id. at 276.

11. Id. at 276-77.

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But because the defendant had not raised this argument, the Court heldthat the question “must await another day.”12

Justice O’Connor, who has played an extremely influential role inthe development of the Court’s punitive damages jurisprudence, concurredin part and dissented in part in Browning-Ferris, sounding the alarm over“skyrocketing” punitive damages awards and the “trend toward multimil-lion dollar awards.”13 In particular, Justice O’Connor observed that “[t]hethreat of such enormous awards has a detrimental effect on the researchand development of new products. Some manufacturers of prescriptiondrugs, for example, have decided that it is better to avoid uncertain liabil-ity than to introduce a new pill or vaccine into the market.”14 In Brown-ing-Ferris, Justice O’Connor also laid the initial groundwork for what wouldlater develop into the three guideposts in the constitutional punitive damagesexcessiveness analysis adopted by the Court in Gore and Campbell. Conced-ing that “[d]etermining whether a particular award of punitive damagesis excessive is not an easy task,” Justice O’Connor suggested that the courtshould adopt a “proportionality framework” that would “accord ‘sub-stantial deference’ to legislative judgments concerning appropriate sanc-tions for the conduct at issue,” and examine the gravity of the defendant’sconduct and the harshness of the award of punitive damages.”15

Just two years later, the Court squarely addressed a due process chal-lenge to a punitive damages award. In Pacific Mutual Life Insurance Co. v.Haslip,16 the Court considered a punitive damage award of over $1 millionagainst an insurance company whose agent had misappropriated the plain-tiffs’ health insurance premiums instead of remitting them to the com-pany, resulting in the cancellation of the plaintiffs’ health insurance.Although the Court ultimately upheld the exemplary damages in thatcase, it expressed “concern about punitive damages that ‘run wild’” andstated that “unlimited jury discretion—or unlimited judicial discretionfor that matter—in the fixing of punitive damages may invite extremeresults that jar one’s constitutional sensibilities.”17 In Haslip, the Courtconcluded that the punitive damages awarded were constitutional, pri-marily focusing on the procedural protections such as instructions that

12. Id. at 277.

13. Id. at 282 (O’Connor, J., concurring in part, dissenting in part).

14. Id.

15. Id. at 300-01.

16. 499 U.S. 1 (1991).

17. Id. at 18.


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“enlightened the jury as to the punitive damages’ nature and purpose,identified the damages as punishment for civil wrongdoing of the kindinvolved, and explained that their imposition was not compulsory.”18 TheCourt noted, however, that the punitive damage award—which stood atmore than four times the compensatory award—was “close to the line.”19

In a strong dissent, Justice O’Connor again expressed her concernswith punitive damage awards. She wrote: “Punitive damages are a power-ful weapon. Imposed wisely and with restraint, they have the potential toadvance legitimate state interests. Imposed indiscriminately, however, theyhave a devastating potential for harm. Regrettably, common-law proce-dures for awarding punitive damages fall into the latter category. Statesroutinely authorize civil juries to impose punitive damages without pro-viding them any meaningful instructions on how to do so. Rarely is ajury told anything more specific than ‘do what you think best.’ . . . Juriesare permitted to target unpopular defendants, penalize unorthodox orcontroversial views, and redistribute wealth. Multimillion dollar losses areinflicted on a whim.”20 Justice O’Connor opined that the Alabama juryinstructions in Haslip gave the jury “complete, unfettered, and unchanneleddiscretion” in determining whether to impose punitive damages and theamount of punitive damages.21

Two years later, the issue of punitive damages was once again beforethe Court in TXO Production Corp. v. Alliance Resources Corp.,22 which cen-tered around slander of title claims based upon the defendant’s attemptto use a worthless quitclaim deed to force a renegotiation of the terms ofoil and gas leases with the plaintiff. In the plurality opinion authored byJustice Stevens, the Court upheld a $10 million punitive damage awardfor slander of title. That award stood at a 526-to-1 ratio to the $19,000 inactual damages awarded. In arguing for a reduction of the award, thedefendant focused primarily on the dramatic discrepancy between actualand punitive damages.23 The Court, however, noted that it has “eschewedan approach that concentrates entirely on the relationship between pu-nitive and actual damages” 24 and again refused to “draw a mathematical

18. Id. at 19.

19. Id. at 23.

20. Id. at 42-42 (O’Connor, J. dissenting) (citation omitted).

21. Id. at 46; see generally id. at 44-52

22. 509 U.S. 443 (1993).

23. 509 U.S. at 453, 459.

24. Id. at 460.


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bright line between the constitutionally acceptable and the constitution-ally unacceptable that would fit every case.”25 In addressing the relation-ship between punitive and actual damages and the 526-to-1 ratio, theCourt found that it was “appropriate to consider the magnitude of thepotential harm that the defendant’s conduct would have caused to its in-tended victim if the wrongful plan had succeeded, as well as the possibleharm to other victims that might have resulted if similar future behaviorwere not deterred.”26 Noting that the “jury could well have believed thatTXO was seeking a multimillion dollar reduction in its potential royaltyobligation,” the Court stated that the disparity between the punitive awardand the potential harm did not “‘jar one’s constitutional sensibilities.”

Justice O’Connor delivered another strong dissent in TXO, attackingthe punitive damage system as “arbitrary and oppressive” and criticizingthe procedures that converted a “commercial dispute into a $10 millionpunitive verdict” – an award Justice O’Connor termed “monstrous.”27 Grosslydisproportionate jury awards, Justice O’Connor wrote, “evidence caprice, passion,or bias” and are indicative of procedural infirmity.28 Terming the $10 millionpunitive award in a case involving only $19,000 in compensatory dam-ages “a dramatically irregular, if not shocking, verdict,” which bore no“understandable relationship to compensatory damages,”29 Justice O’Connorcriticized the plurality for choosing “no course at all” by erecting “not asingle guidepost to help other courts find their way through this area.”30

In 1995, the Court for the first time reversed a punitive damage awardas unconstitutionally excessive, fashioning the three-prong analysis fordetermining excessiveness that it reaffirmed in Campbell. In BMW of NorthAmerica, Inc. v. Gore,31 the plaintiff alleged that the paint on his new luxuryautomobile had been damaged in transit, and that BMW had re-paintedthe car, concealing the fact of the corrosion and repair. Under some states’disclosure statutes, BMW did not have to disclose such repair, if repaircosts were less than a defined percentage of suggested retail price or acertain monetary amount. The plaintiff was awarded $4,000 in compen-satory damages and $4 million in punitive damages, which was reduced

25. Id. at 458 (quoting Haslip, 499 U.S. at 18).

26. Id at 460 (emphasis in original).

27. Id. at 472-73 (O’Connor, J., dissenting).

28. Id. at 476 (O’Connor, J., dissenting).



31. 517 U.S. 559 (1996).


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to $2 million by the Alabama Supreme Court. As a preliminary matter,the Court made clear that the Alabama Supreme Court had been correctin remitting the jury’s original award to the extent that the award wasbased upon lawful conduct in other jurisdictions. As the Court held, toavoid encroaching on the policy choices of other states, “the economicpenal ties that a State such as Alabama inflicts on those who transgress itslaws, whether the penalties take the form of legislatively authorized finesor judicially imposed punitive damages, must be supported by the State’sinterest in protecting its own consumers and its own economy. . . . Ala-bama does not have the power, however, to punish BMW for conductthat was lawful where it occurred and that had no impact on Alabama orits residents.”32 The Court explicitly left undecided the question of “whetherone State may properly attempt to change a tortfeasor’s unlawful conductin another State.”33

The Court then turned its attention to evaluating the constitution-ality of the remitted $2 million punitive award, making the requirementof fair notice a lynch pin of its analysis. The Court stated that “[e]lementarynotions of fairness enshrined in our constitutional jurisprudence dictatethat a person receive fair notice not only of the conduct that will subjecthim to punishment, but also of the severity of the penalty that a State mayimpose.”34 Whether a defendant had fair notice of the amount of a punitiveaward, the Court held, should be ascertained through analysis of three guide-posts: (i) the degree of reprehensibility of the conduct; (ii) the disparity be-tween the harm or potential harm suffered by the plaintiff and the punitivedamages award; and (iii) the difference between the punitive damagesaward and the civil penalties authorized or imposed in comparable cases.35

The Court stated that reprehensibility is “[p]erhaps the most impor-tant indicium of the reasonableness of a punitive damages award.”36 Indetermining that the conduct at issue in Gore was not particularly repre-hensible, the Court noted that the harm was entirely economic, and thatthe re-finishing of the car had no effect on its performance or safety.Thus, “BMW’s conduct evinced no indifference to or reckless disregardfor the health and safety of others.”37 For purposes of reprehensibility,

32. Id. at 572-73.

33. Id. at 573 n.20.

34. Id. at 574.

35. Id. at 574-75.

36. Id. at 575.

37. Id. at 576.


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the Court also declined to view BMW as a “recidivist,” finding that BMWhad reasonably relied on state disclosure statutes and that there was noevidence that BMW had persisted in a course of conduct after it had beenadjudged unlawful.38

As for ratio, the Court once again declined to impose a mathematicalbright-line rule, noting that “low awards of compensatory damages mayproperly support a higher ratio than high compensatory awards, if, forexample, a particularly egregious act has resulted in only a small amountof economic damages.”39 However, the Court did stress that the ratio ap-proved in Haslip had been approximately 4 to 1 and that the ratio ap-proved in TXO had been approximately 10 to 1, taking into account thepotential harm to the victim that would have ensued if the tortuous planhad succeeded.40 The 500 to 1 ratio of the punitive damages award in Gorewas dramatically greater and there was no suggestion of additional po-tential harm as there had been in TXO. Quoting Justice O’Connor’s dis-sent in TXO, the Court noted that “[w]hen the ratio is a breathtaking 500to 1 . . . the award must surely ‘raise a suspicious judicial eyebrow.’”41

Thus, the Court in Gore left a large grey area between 4-to-1 or 10-to-1ratios on the one hand and the unacceptable 500-to-1 ratio on the other.

The disparity between the punitive award and the comparable civiland criminal penalties, the third Gore factor, also weighed in favor ofremittur in that case. Indeed, the Court noted that Alabama law providedfor penalties of only $2,000 for this type of conduct. Other states’ penal-ties reached only as high as $10,000. “None of these statutes would pro-vide an out-of-state distributor with fair notice that the first violation—or, indeed the first 14 violations—of its provisions might subject an of-fender to a multimillion dollar penalty.”42

STATE FARM MUTUAL AUTOMOBILE INSURANCE CO. V. CAMPBELLIn 2003, seven years after Gore, the Court delivered its landmark opinion

in State Farm Mutual Automobile Insurance Co. v. Campbell.43 In that case,

38. See id. at 576-79.

39. Id. at 582.

40. See id. at 580-81.

41. Id. at 583 (citing TXO, 509 U.S. at 481 (O’Connor, J., dissenting)).

42. Id. at 584.

43. 538 U.S. 408 (2003).


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the plaintiffs alleged that State Farm, their automobile insurance com-pany, had improperly declined to settle the lawsuit filed against themafter an automobile accident. After the verdict against the Campbells inexcess of Mr. Campbell’s $50,000 automobile policy, the plaintiffs in theunderlying case settled in exchange for the Campbells’ agreement to pur-sue a bad faith lawsuit against State Farm and assign most of the proceedsto the original plaintiffs and their lawyers. In the trial of the bad faithaction, the jury returned a verdict of $2.6 million in compensatory dam-ages—largely for emotional distress—and a $145 million in punitive dam-ages. The trial court reduced these awards to $1 million and $25 million,respectively. The Utah Supreme Court, however, reinstated the jury’s $145million punitive award.44

In overturning that $145 million punitive award, the United StatesSupreme Court gave new and expanded analysis and explanation of allthree of the Gore guideposts. In analyzing the reprehensibility of the con-duct at issue, the Court held that that “reprehensibility” should be ana-lyzed under a series of factors gleaned from the Gore decision: (i) whetherthe harm caused was physical as opposed to economic; (ii) whether thetortious conduct evinced an indifference to or a reckless disregard of thehealth or safety of others; (iii) whether the target of the conduct hadfinancial vulnerability; (iv) whether the conduct involved repeated ac-tions or was an isolated incident; and (v) whether the harm was the resultof intentional malice, trickery, or deceit, or mere accident.45 The Courtelaborated on the reprehensibility analysis, explaining that the “exist-ence of any one of these factors weighing in favor of a plaintiff may notbe sufficient to sustain a punitive damages award; and the absence of allof them renders any award suspect.”46

The Court was particularly concerned with the fact that the Campbelllitigation had been “used as a platform to expose, and punish, the per-ceived deficiencies of State Farm’s operations throughout the country.The Utah Supreme Court’s opinion makes explicit that State Farm wasbeing condemned for its nationwide claims policies and practices ratherthan for the conduct directed toward the Campbells.”47 In fact, the Utahcourts had relied upon evidence of practices as diverse as State Farm’shandling of hail damage claims in Colorado, its treatment of employees

44. Id. at 415.

45. Id. at 419.

46. Id.

47. Id. at 420.


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in California, its purported discrimination against the young, the old,minorities and newlyweds, and a host of other practices that had noth-ing to do with the Campbells’ claims that State Farm had improperly failedto settle the personal injury claims brought against them. As a result, theSupreme Court not only reiterated its holding in Gore that punitive damagesmay not be used to punish a defendant for action that was lawful in thejurisdiction in which it occurred, but also opined that “[n]or, as a generalrule, does a State have a legitimate concern in imposing punitive damagesto punish a defendant for unlawful acts committed outside of the State’sjurisdiction.”48 Even more significantly, the Court held that the Utah courtshad unconstitutionally “awarded punitive damages to punish and deterconduct that bore no relation to the Campbells’ harm.”49 The Court stated:

A defendant’s dissimilar acts, independent from the acts uponwhich liability was premised, may not serve as the basis for punitivedamages. A defendant should be punished for the conduct thatharmed the plaintiff, not for being an unsavory individual orbusiness. Due process does not permit courts, in the calculationof punitive damages, to adjudicate the merits of other parties’hypothetical claims against a defendant under the guise of thereprehensibility analysis . . . .50

Accordingly, the Court clarified that the reprehensibility analysis mustfocus on the reprehensibility of the specific conduct that harmed theplaintiff. And in determining if a defendant is a “recidivist” (and there-fore more reprehensible) a court must look to “‘the existence and fre-quency of similar past conduct.”51 Thus, conduct that is dissimilar to thatwhich harmed the plaintiff is not relevant to the reprehensibility analysisand cannot provide a basis for punitive damages.

The Court also significantly strengthened the ratio guidepost andsubstantially clarified the Court’s prior holdings with regard to ratio. Whilethe Court once again refused to fashion a bright-line mathematical for-mula, it did articulate a detailed analysis upon which lower courts mustrely in determining whether the ratio guidepost has been violated. TheCourt explained that “few awards exceeding a single-digit ratio betweenpunitive and compensatory damages, to a significant degree, will satisfy

48. Id. at 421 (emphasis added).

49. Id. at 422.

50. Id. at 422-23.

51. Id. at 423 (emphasis added).


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due process.”52 The Court reiterated that “an award of more than fourtimes the amount of compensatory damages might be close to the line ofconstitutional impropriety.”53 Moreover, the Court noted that “[w]hencompensatory damages are substantial, then a lesser ratio, perhaps onlyequal to compensatory damages, can reach the outermost limit of the dueprocess guarantee.”54 The Court did not provide guidance on what dollarvalue constitutes a “substantial” compensatory award. Nevertheless, theCourt concluded that the $1 million in compensatory damages in thiscase was “substantial,” and “likely would justify a punitive damages awardat or near the amount of compensatory damages.”55 This endorsement ofa one-to-one ratio where compensatory damages are substantial is one of themost important of the Court’s

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