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Drive-Through Facilities and Walkable Communities – Can they Coexist?

Drive-Through Facilities and Walkable Communities – Can they Coexist?

There is a clear trend in planning and zoning to encourage pedestrian friendly access and walkability, particularly for communities throughout Westchester and the Hudson River Valley. This is not a surprise to anyone in the land use and real estate development fields. What does seem to be a surprise, however – at least to some municipalities – is that allowing drive-through facilities (dare I say, encouraging them in targeted locations) will not in and of itself jeopardize walkability.  Indeed, drive-throughs and walkability can and should coexist.

“Walkability” is a difficult term to define and often means different things to different people. A walkable area is generally understood to be a place that emphasizes people over cars by providing comfortable and convenient pedestrian facilities (such as sidewalks, cross walks, and bike paths) within a mix of land uses. The problem confronting many businesses is that municipalities often interpret this concept to mean that drive-through facilities have no place in a walkable area and so they ignore them or prohibit them through zoning.  This is a mistake. Drive-throughs are an important part of modern communities, even walkable ones and should be zoned appropriately, not excluded – and certainly not limited to one type of land use.

Businesses and property owners should pay close attention to rezoning processes to ensure that these facilities are permitted and reasonably regulated.

Years ago drive-through facilities were thought of only as fast food restaurants and banks. This may have been a historically accurate view but it has long since changed. Drive-throughs are now commonly associated with other land uses, important to a community, such as pharmacies, post offices and grocery stores. They provide an essential service for the community, often with the intention of serving those who are most susceptible to illness or fatigue. A perfect example of this is a pharmacy with a drive-through prescription window.   Picture this: It’s the early evening and a father is on his way home from the pediatrician’s office where he learned his toddler daughter is sick, and he needs to pick up medicine for her on their way home. While he would typically park his car and stroll along the sidewalk into the store, walking is not a viable option for him this night – as his daughter has a fever and is resting in the car. I can say with confidence that this father was grateful his town adopted zoning that allowed the pharmacy to install a drive-through window.

Municipalities seeking to update their zoning laws with the intention of improving walkability may incidentally (or strategically) adopt regulations that prohibit drive-throughs. Businesses and property owners should pay close attention to rezoning processes to ensure that these facilities are permitted and reasonably regulated. There are many design details and controls that an owner can suggest to a municipality in support of allowing drive-throughs in their community. A site containing a drive-through window, while also offering wide sidewalks, bike paths and textured crosswalks may be more walkable than a site without a drive-through and without these pedestrian features, for example. A site’s layout and place within the local road system may also lend itself well to accommodating a drive-through. Indeed, drive-throughs can even be designed and placed to strategically divert or prevent traffic from interfering with pedestrian facilities.

Early education about the benefits of drive-throughs can make a big difference in gaining traction with a local legislative body. Walkability does not have to end where a drive-through begins. They can actually work together. It is just a matter of perspective.

‘Liking’ the Next Frontier of Due Process: Service by Facebook

In 2015, Manhattan Supreme Court Justice Matthew Cooper issued what will likely come to be seen as a monumental opinion expanding the concept of due process in the U.S. justice system. In a case captioned Baidoo v. Blood-Dzraku, 2015 WL 1486978 (Sup. Ct. Mar. 27, 2015), Justice Cooper addressed the issue of whether the plaintiff in the case, Ellanora Arthur Baidoo, could serve her defendant-husband, whom she married in 2009, with a divorce summons “solely by sending it through Facebook by private message to his account.”

While other courts have allowed service by Facebook in conjunction with other forms of service – for example, in Fed. Trade Comm’n v. PCCare247 Inc., 2013 WL 841037 (S.D.N.Y. Mar. 7, 2013), the court allowed service by Facebook and email but questioned whether service by Facebook alone would comport with due process – the Baidoo case is groundbreaking because the court allowed the social networking site to function as the only means by which service on the defendant would be effectuated, declaring “service by Facebook, albeit novel and non-traditional, is the form of service that most comports with the constitutional standards of due process.”

By way of background, following Ms. Baidoo’s and Victor Sena Blood-Dzraku’s 2009 nuptials, the marriage became strained for a number of reasons and the two spouses lived apart, with their only correspondence coming over the telephone and the popular social networking website, Facebook. When Ms. Baidoo finally decided to pursue a divorce, she found that Mr. Blood-Dzraku’s last permanent residence was vacated in 2011 and that he was unemployed. In light of these circumstances and despite the absence of “the guiding light of clear judicial precedent,” Justice Cooper fashioned – as an alternative means of service pursuant to New York’s Civil Practice Law and Rules (“CPLR”) 308(5) – the method of service by Facebook.

Because Facebook accounts are free and merely require an e-mail address and some basic biographical information to be activated, the court required Ms. Baidoo to set forth, in a supplemental affidavit, that the account to which the summons would be sent was actually the defendant’s.

To be entitled to use this novel technological method, Ms. Baidoo had to demonstrate to the court that she was unable, despite diligent efforts, to have her husband served personally (i.e., by having it hand delivered to him personally by a process server) and that service by other means provided for under the CPLR were similarly futile. Additionally, the court required Ms. Baidoo to show that service by Facebook private message was “reasonably calculated, under all the circumstances, to apprise [the defendant] of the pendency of the action,” quoting the seminal United States Supreme Court case of Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950), in which the Justices clarified the basic standard of due process as it relates to service of process.

The court addressed several practical concerns before ordering service by Facebook. The first is the verifiability of Mr. Blood-Dzraku’s Facebook account. Because Facebook accounts are free and merely require an e-mail address and some basic biographical information to be activated, the court required Ms. Baidoo to set forth, in a supplemental affidavit, that the account to which the summons would be sent was actually the defendant’s. Similarly, the court addressed the concern that the defendant may not diligently check his Facebook account, and thus may not receive notice of the action until his time to respond had already passed. Ms. Baidoo was able to persuade the court, through submission of the same affidavit, that the defendant regularly logged onto his profile and therefore would receive notice of the action. Finally, because the defendant had no permanent physical or e-mail address, Ms. Baidoo had a “compelling reason” to make Facebook the sole, rather than a supplemental, method of service, a departure from the handful of previous cases allowing service by Facebook in conjunction with another form of service.

As precedent, Baidoo may be limited, at least in the near term, to divorce proceedings under New York’s Domestic Relations Law. However, as the court so aptly stated, “it would appear that the next frontier in the developing law of the service of process over the [I]nternet is the use of social media sites as forums through which a summons can be delivered.” That next frontier having already arrived, it is up to future courts to decide whether service by Facebook was an isolated foray into uncharted legal waters or a new method to be ‘liked’ and used by litigants to come.

Small Cell & DAS Permitting

Small Cell And DAS: Is there a local permitting process?

Introduction

The evolution of cell phones and computers demonstrates that technology is getting smaller and smaller and the need for connectivity is constantly rising. Consumers expect to be connected to the internet in the car, on the sidewalk, and in buildings. Realizing this need, the wireless industry and real estate owners are deploying Small Cell and Distributed Antenna Systems (“DAS”) in and around locations where traditional wireless signals may not meet high demands. For instance, stadiums, office buildings, mass transportation and new millennial transit oriented developments experience a high volume of consumers with a high demand for wireless services. As a result, real estate owners, project developers, and wireless companies are seeking to deploy Small Cell and DAS systems in and around such facilities. As this new technology evolves, the question becomes, how will the local permitting process adapt to new technology? What happens if the local permitting process does not adapt to emerging technologies? Should a developer or wireless company introduce these systems into their projects at the initial development stages?

Land Use and Technology

Municipalities react differently to new technologies. While some embrace technology and promote its use, other municipalities struggle with permitting new technologies and developing processes for deployment. The deployment of new Small Cell and DAS systems may bring additional confusion not yet experienced. Municipalities might be asking, how do we permit these technologies? How do we define these technologies? Do we need site plan review? Do we need to hire a consultant? Do we need to revise our local code? Wireless companies and real estate developers must study the local permitting process and engage with municipalities to better understand how these technologies will be permitted.

In addition to seeking an efficient permitting process for these new technologies through various interpretations of the existing local code, companies seeking to deploy these new technologies should introduce the technology early in the development process.

Working with municipalities to enact an efficient permitting process (i.e. building permit) for these small technologies is vital. However, until such local legislation is set in place, developers will likely need to seek certain determinations/interpretations of the existing local regulations to obtain needed approvals. A developer or wireless deployment company should not be subjected to a large scale zoning review solely for in-building wireless technologies. Nevertheless, without approaching the municipality with a legal framework for an efficient Small Cell and DAS permitting process, the municipality may “punt” these new technologies to a more cumbersome zoning process, i.e. processes used for macro wireless facilities.

In addition to seeking an efficient permitting process for these new technologies through various interpretations of the existing local code, companies seeking to deploy these new technologies should introduce the technology early in the development process. In other words, during the permitting process for office buildings, hotels, hospitals, etc., wireless companies and developers should work together to integrate Small Cell and DAS systems into the initial development plans. Thus, until the time comes where permitting processes for Small Cell and DAS systems are legislated, acting early in development stages may allow a municipality to roll these new technologies into the traditional land use process without additional layers of approval.

Conclusion

While new technologies can cause confusion in the local permitting process, it can also lead to great successes. Wireless deployment companies and real estate developers will need to work closely with local governments to create a more efficient Small Cell and DAS permitting process and help municipalities better understand this new technology and how it is going to positively impact its residents.

Key Membership Provisions for By-Laws of Not-for-Profit Entities

By-Laws for not-for-profit entities with members should include specific provisions regarding it’s the rights and requirements associated with membership. To start with, there are generally three basic types of membership classes – active, inactive and honorary.

The By-Laws of a non-profit entity should indicate how one becomes a member of each class, how many members can be in each class and what rights each class has.

Here are some other key areas where it’s also important for by-laws to provide clarity:

Eligibility of membership – process for applying for membership and any restrictions on who can be a member.

Dues structure – how much is charged and how is that amount set, when are dues paid, procedure for paying dues, what happens if a member does not pay dues and can such delinquent member attend meetings and events while in arrears, is there an initiation fee. Capital contribution can be required of its members.

Membership requirements – criteria for continuing as a member such as attendance requirements, educational criteria and serving on committees. How often will the members meet and for what purposes. Membership certificates can be issued.

Disciplinary procedures – sometimes separate documents govern this section. Unless otherwise provided, the members of a corporation shall not be personally liable for the debts, liabilities or obligations of the corporation. A member shall be liable to the corporation only to the extent of any unpaid portion of the initiation fees, membership dues or assessments which the corporation may have lawfully imposed upon such member or for any other indebtedness owed by such member to the corporation. Procedures for fining its members.

Resignation – how to withdrawal and be reinstated as a member. In general, unless provided otherwise, membership is terminated by death, resignation, expulsion, expiration of a term of membership or dissolution and liquidation of the entity.

Duties of members – right to elect directors, officers or conduct any other business. How many members make a quorum in order to act. Can members act by proxy. Right to examine books and records of account and minutes of the proceedings of its members, board and executive committee, if any, and list or record containing the names and addresses of all members, the class or classes of membership or capital certificates and the number of capital certificates held by each and the dates when they respectively became the holders of record thereof.

In New York Article 6 of the N.Y. NPC.LAW governs membership issues, as do some provisions in Article 5. In Connecticut, it is the Nonstock Corporations Chapter 602, Sec. 33-1055, et. seq., which governs membership issues.

The Golden Ticket(s) – New York State Awards Licenses to Three Upstate Casinos in a Process Encouraging Speed to Market

What Happens in Upstate New York, Stays in Upstate New York – While it might not have the same ring to it as “what happens in Vegas, stays in Vegas,” on December 21, 2015, the New York State Gaming Commission (the “Gaming Commission”) awarded licenses to three (3) Las Vegas-style destination resort casinos pursuant to The Upstate New York Gaming Act of 2013 (the “Gaming Act”). With the stated purposes of job growth and increased funding to local schools and municipalities for tax relief, the Gaming Act and its streamlined competitive application and land use development processes represent an effort by New York State to remove the red tape and other barriers that often inhibit doing business in New York.

Now only four (4) years after Governor Andrew M. Cuomo proposed an amendment to the state constitution to permit casino gaming, these licenses are the “golden tickets” for three (3) casino operators that hit the jackpot in a crowded pool of applicants that competed for a license in the first wave of new casino developments in New York State. With a fourth license anticipated for a casino in the Southern Tier, and the potential for three (3) additional casinos that could find their way into Westchester County and New York City (amongst other regions in New York) after a seven-year exclusivity period,1 the Gaming Act is an example of legislation that streamlines development in New York State – emphasizing the importance of speed to market.

The Gaming Act 

Signed into law on July 30, 2013, by Governor Andrew M. Cuomo, the Gaming Act authorized up to four (4) gaming resorts in three (3) defined regions of upstate New York: Hudson Valley/Catskill area, Capital Region, and Eastern Southern Tier.2 While the proposed amendment to Section 9 of Article 1 of the New York State Constitution permitted the state Legislature to authorize up to seven (7) total casinos in the state, under the Gaming Act, the Commission was only authorized to license up to four (4) casinos in the three (3) defined upstate regions – at least for now.

In a competitive market, with adjoining states adding casinos to keep gambling dollars within their borders and online/internet gaming and fantasy sports providing new avenues for gambling, speed to market will play a critical role in the next round of licensing in New York State.

The first three (3) of four (4) licenses were awarded on December 21, 2015, and a fourth license is anticipated for a casino in the Southern Tier, for applicant Tioga Downs, through a second round of bidding. While a series of lawsuits have been filed by the Oneida Indian Nation against one (1) licensee, Lago Resort & Casino in Tyre, Seneca County, a judge recently dismissed the latest action pursuant to the State Environmental Quality Review Act (“SEQR”), finding that the Town of Tyre properly considered the impacts to the community in compliance with SEQR.

A Full-Scale Casino Development in Westchester? 

After a seven-year exclusivity period, the New York State Legislature can reopen the process to permit the expansion of commercial gambling for up to three (3) more casinos in accordance with the constitutional amendment. Although significant amendments to the Gaming Act will likely be required, provided the Zones and Regions in the existing legislation, these casinos could find their way into areas including Westchester County and New York City.

Whether the residents of Westchester County and the communities that comprise Zone One will get the chance to consider a proposed full-table gaming casino development within their borders may be a story for another day.

During the first rush for casino licenses, officials and business leaders in Westchester County were quick to point out the potential impact that a new casino in Orange County (in the Hudson Valley/Catskill region) might have on a casino like Empire City Casino in Yonkers. While the Gaming Commission ultimately did not award a casino license to a facility in Orange County, citing amongst other concerns potential speed to market issues, including the SEQR process, Westchester and its “downstate” competitors will be keeping a close eye on the opportunity to permit full table gaming in the future.

In a competitive market, with adjoining states adding casinos to keep gambling dollars within their borders and online/internet gaming and fantasy sports providing new avenues for gambling, speed to market will play a critical role in the next round of licensing in New York State. While New York State initially bet big on its upstate casinos, it might not be long before the State doubles down to include similar licensing opportunities for downstate developments.

Borrowers Commercial Real Estate Due Diligence

How Borrowers Can Benefit from Doing Due Diligence

 

Are you considering obtaining financing for or cashing out equity in your commercial property? If so, I would recommend doing a little due diligence on your commercial real estate before you secure a lender’s commitment to lend you money. Your property will become the lender’s collateral for the repayment of their loan and, as such, the lender will want to make sure that there is nothing affecting your property that could negatively affect their collateral. As part of the lender’s due diligence they will order a title report on your property to confirm ownership of the property and to confirm that there are no other liens on the property. They will also obtain municipal searches for the property that will tell them whether the proper certificates of occupancy are in place for the property and whether there are any violations issued against the property by the municipality where the property is located.

In some limited cases, and especially where the violations are relatively minor, a lender might agree to close and fund the loan with an undertaking from the property owner to clear the violations post-closing.

When representing a lender closing a commercial loan, too often I see a situation where there are multiple violations on a property and the property owner is unaware that the violations have been issued against that property. When violations are first discovered during the loan closing process a property owner has limited options. Most often the lender will want the violations cured before they agree to close and fund their loan. In some limited cases, and especially where the violations are relatively minor, a lender might agree to close and fund the loan with an undertaking from the property owner to clear the violations post-closing. In that situation, the lender will provide that the failure to cure the violations within the time period specified following closing will be a default under the loan entitling the lender to all of their rights and remedies in the event of a default. Many lenders may also require, in addition to the post-closing undertaking, a hold back or escrow of some of the loan proceeds until the property owner has cleared the violations and complied with the lender’s post-closing undertaking. Neither option presents a good situation for a property owner expecting a timely closing and access to all of the money that they have borrowed. With a little advance planning and borrower’s due diligence all of this drama can be avoided and a timely closing and full availability of loan proceeds can be assured. Any title company can order municipal searches for a modest fee and they are usually readily available within a week or two depending on where the property is located. If issues are discovered in the municipal searches, a knowledgeable attorney can help you to navigate and resolve the issues. At Cuddy & Feder LLP, we have a team of experienced real estate attorneys with many years of experience dealing with such issues and would be pleased to offer any assistance you may need.

 

The Perils of Puerto Rican Time Shares

WARNING! If you intend to exclude a child from your Will, do not purchase property in Puerto Rico. Puerto Rico precludes a testator from disinheriting a descendant without cause. There are a number of ways that an heir can be disqualified for unworthiness – among them are the following:

  1. Parents who have abandoned their children or prostituted their daughters or made attempts against her chastity.
  2. Someone who has been sentenced in a trial for having made attempts against the life of the testator, his spouse, descendants or ascendants.
  3. Someone who has accused the testator of a crime for which the law imposes an exemplary punishment when the accusation is declared libelous.
  4. A person who is sentenced at a trial for adultery with the wife of the testator (Puerto Rico does not recognize same sex marriages, so it is ok to fool around with the testator’s partner).
  5. Where a child has accused his father or mother of a crime except for high treason (apparently you can accuse your parent of being a terrorist or voting for Trump without losing your inheritance rights).

There are a number of others, but you get the idea.

While you may think it is unlikely that you will ever own property in Puerto Rico, a time-share is considered real property and is therefore subject to these rules. So, feel free to purchase a time-share in Puerto Rico, and rest assured that at least if you have a child who has made attempts against your life, you will have proper statutory grounds in case you wish to disinherit him or her.

New Requirements For Projects Financed By New York State Industrial Development Agencies

BACKGROUND:
In 2015 the New York State Economic Development Council (“NYSEDC”) and the office of the State Comptroller agreed on proposed changes to the New York State Industrial Development Agency Act, and a bill to accomplish these changes was passed by the Assembly and State Senate. It was executed in December 2015 by Governor Andrew Cuomo and is fully effective June 15, 2016.

MAIN EFFECTS:
For certain industrial development agencies (“IDAs”) operating under Article 18-A of the General Municipal Law of the State of New York, as amended, the changes transform what has already been done as “best practices” into requirements. For other IDAs, changes to applications for financial assistance (to seek more information concerning firms and projects), to the cost-benefit analysis process (whether by IDA board, IDA staff and/or outside consultants) and to Project Agreements (especially in areas of covenants and potential cancellation/recapture of financial assistance).

In the case of some “in process” projects, the firm can close its IDA Bond issue and/or IDA Straight-Lease Transaction prior to June 15, 2016 and thus not be subject to the new provisions.

Full implementation of the changes will cause applicants to make certain representations and warranties under penalty of perjury and require far more information concerning costs of Projects at time of application. At multiple NYSEDC meetings, three Cuddy & Feder attorneys, Joseph P. Carlucci, Randall A. Huffman and Robert C. Schneider, have seen widespread agreement among many involved people that applications will only be possible at a later point in the Project development cycle than had been the case under prior law, which had been in effect since 1969.

“IN PROCESS” PROJECTS:
In the case of some “in process” projects, the firm can close its IDA Bond issue and/or IDA Straight-Lease Transaction prior to June 15, 2016 and thus not be subject to the new provisions.

For many “in process” projects, unlikely or impossible to close prior to June 15, 2016, the firm pursuing financial assistance for its IDA Project will need to go through additional and/or modified steps in order to fully comply with the new statute, including the changes.

Why Your Charitable Organization Needs A Written Gift Acceptance Policy

Whether your non-profit organization has been operating for a few months or several decades, the board of director and senior leadership should ensure there is a carefully considered written policy governing the review and acceptance of donations and planned gifts. The practical reasons are evident: with a gift acceptance policy, your organization’s leadership and staff can better maintain clear standards and consistency for the evaluation and acceptance of gifts, especially non-cash donations, while allowing your organization to enhance donor relations and undertake targeted marketing initiatives. However, complex laws and rules apply to charitable donations and planned giving that have the potential to affect the amount of, or even completely deny, a donor’s charitable contributions tax deduction––depending upon the nature of the gift and property donated, the substantiation and valuation of the donation, and the type of the donee organization. For that reason, any gift acceptance policy should be created with specific reference to the interests and needs of your organization and in consultation with your organization’s professional advisors, including attorneys and accountants.

While the details of a gift acceptance policy will differ from one organization to the next, any such policy should include certain basic provisions. The purpose of the policy should be stated clearly. The policy should be designed to ensure that all donations and gifts to your organization are aligned with your organization’s charitable mission. The policy should also expressly reserve to your organization the right to retain independent professional advisors for the purpose of evaluating and advising on any proposed donation or gift.

While unrestricted cash gifts are seldom problematic, non-cash gifts can also bring unanticipated costs and risks to your organization.

The gift review process should be set forth in the policy, including the identification of the individuals who are responsible for rendering the final decision to accept or reject a gift, such as the Executive Director for all routine cash gifts or a special committee for all non-routine gifts. The policy should also delineate as between your organization and the donor the costs and responsibilities of obtaining any appraisals, valuations, and other documentation required for the donor to take a tax deduction for the contribution.

Your organization’s Board and leadership should determine whether there are any certain types of gifts that are, by definition, not aligned with your organization’s mission and whether there are any certain types of gifts that would pose unreasonable administrative costs or risks, and will therefore not be accepted under any circumstances or at least not without satisfying certain conditions. If there are any such restrictions, they should be stated in the policy in order to provide clarity to donors and avoid potential missteps during the evaluation process. Types of gifts your organization may consider when preparing a gift acceptance policy can include cash, tangible personal property (such as art, vehicles, equipment), publicly traded and marketable securities, restricted stock, closely held securities, real estate, life insurance benefits, retirement plan benefits, deferred gifts (such as charitable remainder trusts, charitable lead trusts, bequests, charitable gift annuities, deferred gift annuities, pooled income funds, retained life estates), bargain sales, and other miscellaneous gifts (such as memorials, honorariums, intellectual property). Whether and to what extent a donor can take a tax deduction for the charitable contribution depends upon complex laws and rules that differ depending upon the type of gift donated.

While unrestricted cash gifts are seldom problematic, non-cash gifts can also bring unanticipated costs and risks to your organization. Before accepting a non-cash gift, your organization should consider the non-cash gift’s marketability, whether there are any liens or restrictions that would impair or prevent its liquidation, whether there would be any carrying costs such as insurance or maintenance requirements, and whether the gift could result in your organization incurring potential liability to a third party (especially with respect to environmental contamination of real property). The extent of the evaluation will necessarily depend on the type of gift offered.

After the final decision on whether to accept or reject the gift, your organization should ensure that the decision is communicated to the donor in writing – especially if the gift is accepted. In order for the donor to take a charitable contributions tax deduction, your organization must provide a contemporaneous written acknowledgement stating your organization’s name, date, and location; stating whether the gift was cash or a description of the non-cash contribution; and stating that no goods or services were provided in exchange for the contribution, if so, or a description and good faith estimate of the value of goods or services, if any.

After your organization adopts a written gift acceptance and planned giving policy, the policy should be reviewed at least annually to ensure that it remains aligned with your organization’s mission and interests while continuing to account for changes in applicable laws and rules. By having such a policy in place, your organization will be better positioned to undertake a targeted marketing initiative by knowing what types of gifts to pursue and accept while controlling potential legal risks and fostering positive relationships with donors.

Internet Defamation Law - Online Reviews Defamation

Recent Developments in Internet Defamation Law

If you own a business, you likely rely on positive reviews on the internet to expand your clientele. And, to that end, one of your worst nightmares may be a review on a consumer review website labeling you something along the lines of a “crook,” “thief,” “scammer,” or “fraudster.”

We are frequently asked by clients what recourse is available to them in response to such derogatory postings, which are etched in the tableau of the internet – absent voluntary or judicial intervention – for anyone with a computer, tablet, or smart phone to see. But because internet defamation remains a somewhat nascent area of the law, there is, at present, some inconsistency between lower court rulings as the legal landscape in this area continues to form, and thus uncertainty among potential internet defamation plaintiffs.

Four recent lower court decisions in New York are illustrative, with three of them providing internet defamation plaintiffs with a glimmer of hope in the face of Appellate Division law adhering to the perhaps antiquated notion that “readers give less credence to allegedly defamatory remarks published on the Internet than to similar remarks made in other contexts.” Sandals Resorts Int’l Ltd. v. Google, Inc., 86 A.D.3d 32, 43 (1st Dep’t 2011).

In one case, the court denied the defendant’s motion to dismiss the plaintiff’s entire claim for defamation where, among other things, the defendant posted on a prominent consumer review website that the plaintiff “is an incompetent and dishonest person. He defrauded me out of 15K and has a trail of people to which he has bounced checks (including me) and caused harm.” Torati v. Hodak, 2015 WL 5578264 (2015).

Given the extent to which consumers and business alike rely on online reviews, it bears following how courts continue to grapple with the sometimes blurry line between actionable and non-actionable derogatory statements made on the internet – statements which justifiably result in nightmares for business owners and professionals.

In another encouraging case for internet defamation plaintiffs, following a trial the court found the following statements to be defamatory:

  • “do not use mr sand less of staten island matt is the name he will destroy you [sic] floor he is a liar and a con artist beware.”
  • “This guy mat the owner is a scam do not use him you will regret doing business with his company I’m going to court he is a scam . . . he is nothing by [sic] a liar he robs customers and promises you everything if you want shit then go with him if you like nice work find another he is A SCAM LIAR . . . .”

Technovate LLC v. Fanelli, 49 Misc.3d 1201(A) at * 2 (Civ. Ct. 2015).

Then, in a case emanating from Long Island, the court required the internet poster to take down a website he had created where, among other things, he compared a physician to “to the notorious nazi doctor, Joseph Mengele and asserts that he is anti-semitic.” The poster also wrote, “Beware, he is stubborn, act [sic] like a mule, and will discriminate against you if you are not Italian with a Mercedes Benz.” Sachs v. Matano, 004586/2015, NYLJ 1202741327174, at *1 (Sup., NA, decided October 28, 2015). There, the court pointedly noted that “[t]he tone of plaintiff’s statements, and the statements themselves, are nothing more than an attack on the defendants designed to injure their reputation and business.” Id. at * 2.

Finally, in a decision issued in December 2015, the defendant, a former employee of the plaintiff, was accused of posting comments labeling the plaintiff “crooks, liars, and thieves,” stating that the plaintiff does not provide loans as promised, and that the plaintiff’s business was a “scam.” While the defendant disputed making these remarks, the court nevertheless held they could not be deemed defamatory, even though the plaintiff alleged a 55% reduction in business since their posting, because, among other things, “a reasonable reader would view the internet postings as grievances of angry consumers who utilized an internet forum as a way to express their opinions.” SBC Telecom Consulting, Inc. v. Vega, 2015 WL 9851737, at * 7 (Sup. Ct. 2015).

Given the extent to which consumers and business alike rely on online reviews, it bears following how courts continue to grapple with the sometimes blurry line between actionable and non-actionable derogatory statements made on the internet – statements which justifiably result in nightmares for business owners and professionals. Because while freedom of speech for angry, jilted consumers is essential, it is undeniable that every day more and more consumers turn to the internet as their primary source for business referral – and that unfounded remarks made with the sole purpose of injuring another’s livelihood can – and do – cause real, if not irreparable, harm to business owners and professionals.