Bad faith is a hybrid tort similar to, yet different and distinct from, an action for breach of contract. In fact, bad faith was developed in common law because contract remedies were inadequate to deal with types of inappropriate, oppressive and unfair behavior. The use of bad faith is not limited to insurance contracts alone, but when applied in the insurance context, it offers the best consumer remedy to individual insureds whose insurance claims are not handled fairly.
third party claims where an insured is sued by a claimant who is a "third party" to the insurance contract.
when an insurance company acts based upon a legitimate question which has not been settled by an appellate decision.
Bad faith claims are usually paired with Chapter 75 unfair trade practice claims. Therefore, this article concludes with a brief discussion of the application of Chapter 75 to these claims.
The first stop in the General Statutes, when analyzing a bad faith claim, should be N.C. Gen. Stat. §58-63-15 , entitled "Unfair Methods of Competition and Unfair or Deceptive Acts or Practices." This statute was amended and renumbered, so earlier appellate decisions refer to the predecessor statute, N.C. Gen. Stat. § 58-54.4. There are thirteen sub-parts to the statute, but two of the sub-parts, (1) and (11), are particularly important.
Section (11), entitled "Unfair Claim Settlement Practices", sets forth fourteen specifically described prohibited practices, lettered a. - n. Those fourteen prohibited practices are a verbatim copy of a model act which has been adopted by a majority of states and specifically included in the training materials of all major insurance carriers.
This is not a list of all possible bad faith practices, but it is quite a thorough list from which to start. Despite the limiting language at the beginning of Section (11) that no violation "shall of itself" create a cause of action for anyone but the Insurance Commissioner, evidence showing violations of these prohibited practices has been relied on by the North Carolina Court of Appeals in upholding plaintiffs' pleadings and verdicts in bad faith cases.
Section (1) is not utilized as frequently as Section (11), but it has great utility especially when used in conjunction with the Chapter 75 claim. Statements and correspondence from carriers regarding claims frequently include misrepresentations or mischaracterizations of policy language, and such statements are made to induce policyholders to take less or no benefits. Silence when there is a duty to speak has been construed as a misrepresentation. There are no references in Section (1) to "frequency" or to the Commissioner of Insurance.
The object of a bad faith claim is an award of punitive damages. In pleading bad faith claims, counsel should be aware of Rule 9(k) of the Rules of Civil Procedure which requires specificity in pleading claims for punitive damages.
North Carolina General Statutes, Chapter 1D controls all bad faith cases which are not already in suit. The provisions of Chapter 1D are not a hindrance to the cause of action itself. The aggravation element necessary for a bad faith cause of action will probably be characterized as either fraud, malice, or willful or wanton conduct. N.C. Gen. Stat. §1D-15(a).
The requirement that, in order to justify punitive damages, aggravation must be proven by "clear and convincing evidence", set forth in N.C. Gen. Stat. §1D-15(b), should not be a deterrent because a bad faith case without clear and convincing evidence would neither be worth taking nor strong enough to warrant a jury's imposition of punitive damages.
Insurance companies have so many levels of authority and so many internal audit procedures that tracing acts and omissions from the front line to supervisors usually is not difficult. N.C. Gen. Stat. §1D-15(c) Bad faith is a tort, and it is not warranted for a simple, aggravated breach of contract.
The $250,000 cap set forth at N.C. Gen. Stat. §1D-25 may well come into play in cases where bad faith acts and omissions were used in handling small insurance claims. A strong bad faith case may offer a particularly good vehicle for a constitutional challenge to the punitive damages' cap. With their immense wealth and power, insurance companies are unlikely to be deterred by punitive damage awards which are capped at $250,000. An individual policyholder who obtains a large punitive damage verdict may be able to argue that they will be denied equal protection and other constitutional guarantees, if the punitive damages are capped.
if the breach itself is tortious.
Insurance bad faith was first discussed in dictum in a decision decided later in 1976, Newton v. The Standard Fire Ins. Co., 291 NC 105, 229 S.E.2d 297 (1976). Newton owned a furniture store which was insured by The Standard Fire Insurance Company. There was a burglary at the store, and Newton made a claim for payment under his insurance policy. His claim was denied, and Newton filed a lawsuit alleging breach of contract and seeking compensatory and punitive damages.
The trial court dismissed the punitive damages claim, and Newton appealed. The Supreme Court affirmed the dismissal because the complaint neither specified a cognizable bad faith claim nor did it specify facts which would allow a finding of bad faith. The opinion, however, devoted several pages to the insurance bad faith tort.
Newton noted that insurance companies are responsible for protecting the public interest and therefore subject to regulation. Insurance carriers were analogized to utilities and common carriers; thus, they owe a high duty to the consuming public. Insurance companies have tremendous financial resources which create a "great disparity" of power and bargaining ability between the companies and claimants.
These "facts of life" led the court to "recognize the wisdom of a rule which would deter refusals on the part of insurers to pay valid claims when the refusals are both unjustified and in bad faith". Id. at 116.
Since Newton v. The Standard Fire Ins. Co ., the North Carolina Supreme Court has not rendered an opinion dealing with the insurance bad faith cause of action. However, numerous decisions of the North Carolina Court of Appeals have addressed the pleading and proof requirements of the tort, and bad faith has continued to evolve through those opinions.
In Dailey v. Integon General Ins. Corp., 57 N.C. App. 346, 291 S.E.2d 331 (1982) [hereinafter "Dailey I"], the Court of Appeals reversed a 12(b)(6) dismissal of an insurance bad faith claim. The court examined the minimum pleading requirements for bad faith. In order to withstand 12(b)(6), a complaint must allege a specific tortious act (either the breach of contract or some accompanying tort) and facts constituting aggravated conduct. The case centered on a first-party claim in which the plaintiff was seeking to recover for a fire loss which the insurer refused to negotiate and settle in good faith.
that the carrier misrepresented its coverage by claiming that a policy provided coverage and then discouraging payment of claims.
The Olive v. Great American Ins. Co., 76 N.C. App. 180, 333 S.E.2d 41, discretionary review denied, 314 N.C. 668, 336 S.E.2d 400 (1985), case affirmed summary judgment in favor of a homeowner's insurer. If an insurance carrier denies a claim based upon a reasonable interpretation of the language in the insurance policy there is no bad faith tort claim. This holding is consistent with decisions defining bad faith as something other than an "honest disagreement".
In Hornby v. Pennsylvania National Mutual Casualty Ins. Co., 77 N.C. at 475, 335 S.E.2d 335 (1985), discretionary review denied, 316 N.C. 193, 341 S.E.2d 570 (1986), the Court of Appeals vacated a punitive damage award in favor of a plaintiff in a case involving fire insurance. Plaintiffs maintained that the carrier should be liable for punitive damage because it dragged its feet processing policy applications.
The jury decided issues of negligence, compensatory damages, and punitive damages in plaintiff's favor. The court held that there was no evidence of aggravated conduct so there could be no punitive damages. The court affirmed the jury award of compensatory damage based on negligence.
Summary judgment in favor of an insurance company on a bad faith claim was reversed in Robinson v. N.C. Farm Bureau Ins. Co., 86 N.C. App. 44, 356 S.E.2d 392, discretionary review allowed, 320 N.C. 633, 360 S.E.2d 93 (1987), discretionary review dismissed, 321 N.C. 592, 364 S.E.2d 140 (1988). In Robinson , the insurer and insured disagreed on the extent of a fire loss; the damage amount was resolved by an arbitration procedure set forth in the policy. The carrier paid the claim within three weeks of the umpire's decision (less than seven months after the fire) and prior to institution of the bad faith action.
The court held that the claim payment did not bar the bad faith claim and rejected Farm Bureau's argument that there must be an unresolved breach of contract claim to sustain the bad faith tort claim. There was a jury issue on bad faith alone because the evidence taken in the light most favorable to the plaintiffs created an issue of fact that the insurance company had committed three specific violations of the prohibited claims settlement practices described in N.C. Gen. Stat. §58-54.4(11) [the predecessor to present N.C. Gen. Stat. §58-63-15(11)].
In Smith v. Nationwide Mutual Fire Ins. Co., 96 N.C. App. 215, 385 S.E.2d 152 (1989), discretionary review denied, 326 N.C. 265, 389 S.E.2d 816 (1990), the North Carolina Court of Appeals reversed dismissal of a bad faith claim. The case arose from the handling of a claim for damage to the plaintiff's mobile home. The day the mobile home was damaged, Nationwide promised to engage a repair company to estimate the damage; yet Nationwide never obtained an estimate. Nationwide raised additional obstacles which delayed adjustment of the claim; none of those "requirements" was based on provisions of Nationwide's policy.
The Smith court held that the plaintiff's allegations of three violations of N.C. Gen. Stat. §58-54.4(11) satisfied the aggravation element of the bad faith tort. Additional facts alleged in support of the aggravation element included a five month passage of time between the adjuster's initial contact and issuance of a claim check; extended negotiations with little progress towards resolution; and large differences between plaintiff's estimates and Nationwide's estimates. The Smith court also endorsed the holding from Payne , supra, that aggravated conduct could be shown by a pattern of excuses raised by an insurance company for refusing to pay a claim.
In Lovell v. Nationwide, 108 N.C. App. 416, 424 S.E.2d 181, aff'd in part, discretionary rev. improvidently allowed in part, 334 N.C. 682, 435 S.E.2d 71 (1993), was an extremely significant decision. Both the Court of Appeals and the Supreme Court affirmed a $225,000 punitive damages award against Nationwide in a case involving Nationwide's bad faith refusal to pay a $2,000 med pay claim. The Court of Appeals' opinion contains a retrospective analysis of the state of the tort and clear listings of the requisites of a bad faith claim for refusal to settle. The Supreme Court accepted the case for review, but then reconsidered and declined to address the bad faith issues.
The Lovells' daughter was killed while riding in a car insured by Nationwide. Nationwide's policy provided med pay coverage; therefore the daughter was an "insured" for med pay purposes and a claimant for liability purposes. Plaintiffs submitted bills for funeral expenses under the med pay coverage, but the bills had not been paid at the time the bad faith lawsuit was filed a little over nine months later.
In contrast, funeral bills submitted on behalf of the driver of the car, also an insured, were paid promptly two or three weeks after they were received by Nationwide. This disparate claims' handling treatment was of note to the court. Nationwide maintained there was no bad faith for two reasons - - first, Nationwide "just plumb forget" to pay the med pay claim; and second, plaintiff failed to make a formal written demand for med pay.
The court noted that there was no requirement in Nationwide's policy that a formal written demand be made. Nationwide also contended that the med pay claim had never been denied or refused -- it was just delayed. That contention was rejected, and the court adopted plaintiff's characterization that Nationwide's failure to pay the med pay claim for nine months (up to the time the bad faith action was filed) was tantamount to a refusal to pay.
The Lovell court relied upon, quoted, and reiterated the definition of bad faith first enunciated in Dailey II that "bad faith means 'not based on honest disagreement or innocent mistake'." 108 N.C. App. at 4214. Bad faith could be proven by evidence of a pattern of excuses for nonpayment -- a standard first recognized in Payne v. N.C. Farm Bureau Mutual Ins. Co ., supra.
In a subsection of the Lovell opinion entitled "Aggravated Conduct", numerous cases were cited for the proposition that evidence of specific violations of N.C. Gen. Stat. § 58-63-15(11) establishes the aggravation element of the bad faith tort. In addition to such statutory violations, other evidence of aggravation or outrageous conduct may be considered. For example in Lovell, aggravation was demonstrated by Nationwide's failure to conduct a timely investigation of a claim under the liability coverage and delay in paying med pay in order to affect a lower settlement of the pending liability claim.
disregarded its own insurance policy provisions.
"These allegations of plaintiffs complaint, if proven, are sufficient to support an award of damages, including punitive damages, based upon a bad faith refusal to pay plaintiff's claim." 112 N.C. App. at 306.
There are two duties that a liability insurance company owes to an insured when a claim is made against that insured. First, there is a duty to defend; second, there is a duty to settle. These obligations are usually specified in the liability insuring agreement of an insurance policy, but one should study the entire policy because general conditions or endorsements may modify the duties. In the context of automobile insurance, the Financial Responsibility Act specifically addresses an insurance company's right to settle and contemplates that the insurance company should exercise that right subject to a standard of good faith. N.C. Gen. Stat. §20-279.21 (f)(3).
An insured has the right to bring an action against its liability insurer if the carrier breaches either the duty to defend or the duty to settle. The North Carolina Supreme Court seems to have adopted different legal standards for measuring the carriers' performance with respect to the duty to defend and the duty to settle.
The duty, or right, to settle must be exercised in good faith (a higher standard), and the duty to defend is subject to a lower negligence standard. Wynnewood Lumber Company v. The Travelers Ins. Co., 173 N.C. 269, 91 S.E.2d 946 (1917). There is some uncertainty or confusion regarding the legal standard applicable to the duty to defend. One decision since Wynnewood appears to have raised the duty to defend standard from negligence to bad faith. Connor v. State Farm Mutual Automobile Ins. Co ., 265 N.C. 188, 143 S.E.2d 98 (1965).
The definitive case spelling out the test used to determine when a liability carrier has to defend a case is Waste Management of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 340 S.E.2d 374, rehearing denied, 316 N.C. 386, 346 S.E.2d 143 (1986). North Carolina adopted the "comparison test" which is accomplished by comparing the allegations of the complaint with the language of the insurance policy. Thus, the duty to defend is broader than the ultimate duty to indemnify (or pay a judgment) because the allegations of the complaint are assumed to be true when the "comparison test" is applied; conversely, the evidence proven at trial may not support recovery under the terms of the policy.
The breadth of the duty to defend is measured by the terms of the insurance contract, and depending on the policy language the duty to defend may not be extinguished by payment of policy limits. Brown v. Lumbermen's Mutual Casualty Co ., 326 N.C. 387, 390 S.E.2d 150 (1990).
If one is interested in the obligations a carrier might have after refusing to provide a defense, Duke University v. St. Paul Fire and Marine Ins. Co. is instructive. 96 N.C. App. 635, 386 S.E.2d 762 (1990). In that case, summary judgment for the insured was affirmed, and the carrier was required to pay the full amount the insured paid to settle plus expenses including attorneys' fees for obtaining the settlement.
For another analysis of the rights of an insured to recover costs in a case where coverage was in dispute, see Collins & Aikman Products, Inc. v. Hartford , 125 N.C. App. 5412, 481 S.E.2d 96, petition for discretionary review denied, 345 N.C. 752, 485 S.E.2d 51 (1997) [umbrella insurer not responsible for attorneys' fees in legitimate coverage dispute where there was no bad faith].
Plaintiffs' counsel should be attuned to the potential obligation an insurance carrier might have to pay a judgment in excess of liability insurance limits. As previously stated, the North Carolina courts have consistently held that a carrier's duty or right to settle is measured by the standard of good faith.
Subsequent to Wynnewood , it has consistently been held that there is a good faith standard applicable to the duty to settle. See for example, Alford v. Textile Ins. Co., 248 N.C. 224, 103 S.E.2d 8 (1958) [a decision in which the court observed that an insurer owes a duty to act diligently and in good faith to make settlements up to policy limits, and "if necessary to accomplish that purpose, to pay the full amount of the policy"].
One noteworthy case held that there was a jury issue whether a carrier exercised good faith with respect to settlement and therefore whether the carrier could be made to pay an excess judgment. Abernathey v. Utica Mutual Ins. Co., 373 F.2d 565 (4th Cir. 1967). Abernathy owned a vehicle which was insured by Utica Mutual. There was a wreck in which four of Abernathey's passengers was killed and one was seriously injured. Separate death and personal injury actions were filed. Two death claims and the injury claim were resolved. The last two death cases were tried, and there was a verdict in excess of the remaining liability coverage limit. Abernathey then brought an action against Utica Mutual to pay the entire judgment including the amount in excess of Utica's liability coverage.
The trial court entered judgment in favor of Utica at the conclusion of Abernathey's evidence, and the case was appealed. The Fourth Circuit reversed the directed verdict and determined there was a jury issue whether Utica acted in good faith. The court observed that when deciding whether a carrier exercised good faith a jury must be allowed to consider whether the insurance company acted in both the best interest of the insured and the best interest of the insurance carrier. There was evidence that the jury was entitled to weigh and decide whether Utica had flatly refused to negotiate or whether Utica's defense counsel had failed to communicate with Utica regarding the evidence offered during the wrongful death trial.
There is no question that an insured covered by liability insurance is entitled to bring an action against the insured's own carrier for breach of the duty to defend or duty to settle. The rights of injured third parties to seek recovery from the insurance carriers covering tortfeasors are not so clear.
A plaintiff who has succeeded in obtaining a judgment against a tortfeasor can bring an action against the insurance carrier to collect the liability policy limit; that right is well established. Hall v. Harleysville Mutual Casualty Co., 233 N.C. 339, 340, 64 S.E.2d 160 (1951). "The injured party in an automobile accident is an intended third-party beneficiary to the insurance contract between insurer and the tortfeasor/insured party." Murray v. Nationwide Mutual Ins. Co ., 123 N.C. App. 1, 15, 472 S.E.2d 358 (1996), petition for discretionary review denied, 345 N.C. 344, 483 S.E.2d 172 (1997).
The North Carolina Supreme Court has held that plaintiffs could not collect a consent judgment which was in excess of the policy limit in a subsequent action directly against a tortfeasor's insurance company. In Wilson v. State Farm Mutual Automobile Ins. Co ., 327 N.C. 419, 394 S.E.2d 807 (1990). The plaintiffs contended they should be able to collect damages in excess of the policy limit because of the liability carrier's failure to defend its insured driver was in bad faith. The Supreme Court rejected that argument noting that the plaintiffs probably had an easier time getting the judgment since no defense was interposed; the Court held that the liability insurer would be liable for payment up to its policy limit but for no amount in excess of that limit.
Whatever rights an injured party might have to pursue a direct action against a tortfeasor's insurance carrier, it appears that the injured party must wait until there is some resolution of the case. An innovative effort to roll a tort claim for auto negligence together with bad faith and Chapter 75 claims against the liability carrier in the same action was unsuccessful in Wilson v. Wilson and Nationwide , 121 N.C. App. 662, 468 S.E.2d 495 (1996).
Mrs. Wilson was a passenger in a car operated by her husband. Disappointed with the liability carrier's settlement offer, she filed a negligence action against her husband and included Chapter 75 and punitive damages claims against Nationwide in the same suit. The Court of Appeals affirmed a 12(b)(6) dismissal of the claims against the carrier. Careful reading of the decision reveals that the plaintiff did not rely upon her status as an intended third-party beneficiary of the automobile insurance contract, but it is doubtful that argument would have saved her extracontractual claim.
The majority of jurisdictions in the country apparently allow an insured to assign his third-party bad faith claim to a successful claimant, but two North Carolina Court of Appeals' decisions reject that as a means for third parties to assert bad faith and Chapter 75 claims. Horton v. New South Ins. Co., 122 N.C. App. 265, 268, 468 S.E.2d 856, petition for discretionary review denied, 343 N.C. 511, 472 S.E.2d 8 (1996), held that an unfair and deceptive trade practice claim was not assignable and that a bad faith claim was a personal tort claim which was not assignable as against public policy and assignment would promote champerty. Terrell v. Lawyers Mutual Liability Ins. Co., 131 N.C. App. 655, 507 S.E.2d 923 (1998) relied on Horton, supra , to reject defendant attorney's effort to assign a bad faith claim against his malpractice liability carrier to a creditor with a confession of judgment. The attempt to assign in Terrell was unlikely to succeed because the insurance policy contained a provision prohibiting an assignment.
So is it impossible for a third-party claimant to recover extracontractual damages from a tortfeasor's liability carrier in excess of the liability limit? Apparently not! Murray v. Nationwide Mutual Ins. Co., 123 N.C. App. 1, 15, 472 S.E.2d 358 (1996), petition for discretionary review denied, 345 N.C. 344, 483 S.E.2d 172 (1997) reversed summary judgment for two liability carriers (tortfeasor's primary and excess carriers) thus allowing plaintiff to proceed on unfair trade practice claims even though the carriers had paid their respective policy limits following an excess judgment in the underlying auto case.
Crucial to the decision was the court's recognition that the injured party was an intended third-party beneficiary of the liability contracts. 123 N.C. App. at 15. The Murray case is also important because summary judgment for the plaintiff's own UIM carrier (a third carrier) was reversed for both unfair trade practice and bad faith claims.
Unfair methods of competition and unfair or deceptive trade practices in the field of insurance are set forth in N.C. Gen. Stat. §58-63-15 . Sections (1) and (11) are frequently relied upon in making insurance tort claims.
It is beyond the scope of this paper to completely discuss Chapter 75. A Chapter 75 claim may be used as an alternative to, or in conjunction with, a claim for bad faith. Successful use of Chapter 75 may provide a greater remedy, treble damages, and an avenue for receiving attorneys' fees than a bad faith tort claim alone.
The Pearce v. American Defender Life Ins. Co., 343 SE 2d 174, NC Sup. Ct. 1986, case held that a violation of the predecessor statute to N.C. Gen. Stat. §58-63-15 (N.C. Gen. Stat. §58-54.4) "as a matter of law constitutes an unfair or deceptive trade practice in violation of N.C. Gen. Stat. §75-1.1." 316 N.C. 461, 470, 348 S.E.2d 174 (1986). Pearce recognized the obvious - - that insurance is a business which affects commerce.
Since Pearce, it has been held that a violation of N.C. Gen. Stat. §58-63-15 constitutes an unfair and deceptive trade practice as a matter of law. Bentley v. N.C. Insurance Guaranty Association, 107 N.C. App. 1, 418 S.E.2d 705 (1992); Kron Medical Corp. v. Collier Cobb & Associates, 107 N.C. App. 331, 420 S.E.2d 192, discretionary review denied, 333 N.C. 168, 424 S.E.2d 920 (1992), reconsideration dismissed, 333 N.C. 345, 426 S.E.2d 706 (1993). Accord, Miller v. Nationwide Mutual Ins. Co ., 112 N.C. App. 295, 435 S.E.2d 537, discretionary review denied, 335 N.C. 770, 442 S.E.2d 519 (1993).
Pearce, supra, and Kron Medical, supra, establish that N.C. Gen. Stat. §75.1.1 , provides a remedy which is a private action for a violation of the more specific insurance unfair trade practice statute, N.C. Gen. Stat. §58-63-15. According to Pearce, noted that N.C. Gen. Stat. §75-16 mandates treble damages once a violation was proven. Kron held that silence when there is a duty to speak constituted a misrepresentation prohibited by N.C. Gen. Stat. §58-63-15(1); that "silent misrepresentation" entitled plaintiff to proceed under Chapter 75.
The Court of Appeals has held that the damage element necessary to prevail with an unfair and deceptive trade practice claim may be satisfied by "potential damages" such as punitive damages or treble damages potentially available in an unfair and deceptive trade practice claim. Murray v. Nationwide Mut. Ins. Co ., supra, 123 N.C. App. at 13, 16-17.
A bad faith claim against an insurance carrier for both first-party and third-party claims are possible. However, they are not easy as an insurance carrier will aggressively defend a bad faith case. Therefore, counsel analyzing potential bad faith cases should exercise extreme caution before accepting a case. Numerous potential bad faith cases often have facts often do not satisfy the elements of bad faith or the potential of the case does not justify the high costs that these suits entail.
Before taking a bad faith case, one should examine the insurance contract in question in its entirety, conduct a careful study of the statutes, conduct legal research, interview and evaluate witnesses, and examine all documents and correspondence relating to the underlying claim and its handling. Even if an action for bad faith cannot be justified, counsel should consider an action under the unfair or deceptive trade practices statutes.


text:
We at Argus Partners want to provide only the best of our expertise and services. Our lawyers are equipped to handle numerous domains to deliver the best advice.
The expertise of our team straddles across all our practice areas, including general corporate advisory, mergers and acquisitions, private equity, banking and finance, projects and project finance, competition, real estate, indirect tax, employment, litigation and dispute resolution.
On February 12, 2018, the Reserve Bank of India (“RBI”) introduced a revised framework for resolution of stressed assets by scheduled commercial banks and the all-India financial institutions (“Revised Framework”).
With the introduction of the Revised Framework, all extant instructions on resolution of stressed assets such as Framework for Revitalising Distressed Assets, Corporate Debt Restructuring Scheme, Flexible Structuring of Existing Long-Term Project Loans, Strategic Debt Restructuring Scheme (SDR), Change in Ownership outside SDR and Scheme for Sustainable Structuring of Stressed Assets (S4A) (“Erstwhile Framework”) stood withdrawn with immediate effect. Accordingly, the Joint Lenders’ Forum was also discontinued.
The Revised Framework was formulated to provide for a harmonised and simplified generic framework for resolution of stressed assets in view of the enactment of the Insolvency and Bankruptcy Code, 2016 (“IBC”).
On April 2, 2019, the Supreme Court of India (“Supreme Court”), in the case of Dharani Sugars and Chemicals Ltd. v. Union of India & Ors. (“Dharani Sugars case”), held that the Revised Framework is ultra vires section 35AA of the Banking Regulation Act, 1949 (“BR Act”) and consequently, all actions taken under the Revised Framework, including proceedings by financial creditors against debtors under section 7 of the IBC pursuant to the Revised Framework, shall be null and void.
This note discusses the impact which the decision by the Supreme Court in the Dharani Sugars case may have on the ‘dirty dozen’ and other insolvency proceedings filed pursuant to directions and/ or notifications issued by the RBI from time to time, the Project Sashakt inter-creditor agreement and the restructurings under the Revised Framework for which exemptions from applicability of the SEBI regulations in respect of issuance of shares have already been availed and whether all extant instructions on resolution of stressed assets in the pre-Revised Framework era will be restored.
Under the Revised Framework, all lenders were required to formulate policies approved by their board of directors for resolution of stressed assets, including the timelines for resolution. Further, as soon as a default was committed by a borrower vis-à-vis any lender, all lenders (singly or jointly) were required to initiate steps to cure the default including formulating a resolution plan as a first step.
In case of large accounts (i.e. accounts where the aggregate exposure was INR 20 billion or above), on or after March 1, 2018 (“Reference Date”), the resolution plan was required to be implemented, if the default existed as on the Reference Date, within 180 days of the Reference Date, and if the default was committed after the Reference Date, within 180 days from the date of the first default.
The Revised Framework also provided that if a resolution plan in respect of such large accounts was not implemented within the specified timelines, the lenders shall have to mandatorily file an insolvency application (singly or jointly) under the IBC within 15 days from the expiry of such timeline. For other accounts with exposure ranging from INR 1 billion to INR 20 billion, the RBI was required to announce the reference dates for implementation of a resolution plan over a two-year period. However, this transition arrangement was unavailable for borrowers in respect of which specific instructions was already issued by the RBI to banks for reference under the IBC.
Certain exemptions from regulatory requirements promulgated by the RBI and the Securities and Exchange Board of India (“SEBI”) had been accorded in case of acquisition of shares upon conversion of debt to equity during a restructuring process under the Revised Framework.
The Revised Framework was introduced by the RBI in exercise of its powers under sections 35A, 35AA (read with the gazette notification S.O.1435(E) dated May 5, 2017 issued by the Government of India (“Central Government”)) and 35AB of the BR Act and section 45(L) of the Reserve Bank of India Act, 1934 (“RBI Act”).
Sections 35AA and 35AB of the BR Act were initially introduced by the Banking Regulation (Amendment) Ordinance, 2017 (“Ordinance”) on May 4, 2017. The Ordinance was subsequently replaced by the Banking Regulation (Amendment) Act, 2017 (“BR Amendment Act”).
“35A. Power of the Reserve Bank to give directions.
(c) to secure the proper management of any banking company generally, it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions.
(2) The Reserve Bank may, on representation made to it or on its own motion, modify or cancel any direction issued under sub-section (1), and in so modifying or canceling any direction may impose such conditions as it thinks fit, subject to which the modification or cancellation shall have effect.
35AA. Power of Central Government to authorise Reserve Bank for issuing directions to banking companies to initiate insolvency resolution process.
Explanation. – For the purposes of this section, “default” has the same meaning assigned to it in clause (12) of section 3 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).
35AB. Power of Reserve Bank to issue directions in respect of stressed assets.
(1) Without prejudice to the provisions of section 35A, the Reserve Bank may, from time to time, issue directions to any banking company or banking companies for resolution of stressed assets.
The Revised Framework has led to several petitions being filed before different high courts across the country, especially by companies and associations in the power sector. On September 11, 2018, the Supreme Court, in Reserve Bank of India v. Dharani Sugars and Chemicals Ltd. & Ors. Etc., allowed all such petitions to be transferred to itself and ordered maintaining status quo until final disposal of the matters.
In the instant matter, the petitioners primarily challenged the constitutional validity of sections 35AA and 35AB of the BR Act in view of the provisions being violative of Article 14 of the Constitution of India (“Constitution”) and also being arbitrary on the ground of excessive delegation of power to the RBI. The petitioners further argued that the Ordinance and the BR Amendment Act are unconstitutional as (i) sections 35AA and 35AB of the BR Act are manifestly arbitrary and (ii) they suffer from absence of guidelines.
The Supreme Court discussed that the sections 35AA and 35AB of the BR Act provide certain regulatory powers to the RBI and the ‘statement of objects and reasons’ and the ‘preamble’ to the BR Act, read together with various regulatory provisions in the BR Act (such as sections 14A, 17, 18, 20, 22, 25, 29, 30, and 31) provide ample guidance to the RBI to exercise the powers conferred pursuant to insertion of sections 35AA and 35AB of the BR Act.
Further, the Supreme Court relied on its recent decision in Swiss Ribbons Pvt. Ltd. and Anr. v. Union of India & Ors. wherein it was held that an economic legislation should be viewed with greater latitude. In view of this, the Supreme Court held that sections 35AA and 35AB of the BR Act cannot be said to be manifestly arbitrary and thus, the constitutional validity of the provisions was upheld.
It was contended by the petitioners that section 35A of the BR Act cannot be treated as a source of power authorising the RBI to introduce the Revised Framework as the same is an old provision which was introduced in 1956 i.e. much before the enactment of the IBC. In this regard, reliance was placed by the petitioners upon the decision of the Supreme Court in Indian Banks’ Association v. Devkala Consultancy Service for the proposition that the RBI’s functions under section 35A of the Banking Act, are confined to the boundaries of the RBI Act and the BR Act, and not to other statutes, such as the IBC.
The Supreme Court held that statutes are deemed to be ‘always speaking’ and there is nothing which indicates that the RBI cannot give directions under section 35A of the BR Act in relation to the IBC. The Supreme Court relied on various judicial precedents and rejected the contention that since section 35A of the BR Act was introduced prior to enactment of the IBC, therefore it cannot be a source of power for the introduction of the Revised Framework.
Whilst dealing with the present contention, the Supreme Court referred to sections 35AA and 35AB of the BR Act and held that any direction by the RBI to initiate insolvency resolution process under IBC can be given only pursuant to section 35AA of the BR Act. In this regard, the Supreme Court stated that when a statute confers power to do a particular act and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any manner other than that which has been prescribed. In view of this, it can be said that section 35A of the BR Act, being generic in nature, cannot empower the RBI to initiate insolvency resolution process under IBC.
At the same time, the Supreme Court clearly stated that any direction issued by the RBI in respect of stressed assets, other than those pertaining to the IBC, will get covered under section 35AB of the BR Act read together with section 35A of the BR Act. Further, such powers have to be exercised separately by the RBI from the powers conferred by section 35AA of the BR Act.
In the instant matter, it was contended by the petitioners that a ‘one size fits all’ approach cannot be taken by the RBI and that the power sector should not be treated at par with the other sectors as it has faced multiple regulatory and other challenges such as shortage of resources due to government policies and judicial pronouncements. Further, applying a 180 days’ limit to all sectors in the economy without considering the particular issues or problems faced by each sector, randomly picking all defaults amounting to INR 2000 crore and above and requiring an agreement by 100% of the lenders for restructuring makes the Revised Framework manifestly arbitrary and violative of Article 14 of the Constitution.
The Supreme Court has held that the Revised Framework is not in compliance with the provisions of section 45L(3) of the RBI Act as the condition of exercising ‘due regard’ as contemplated in the said provision was absent whilst introducing the Revised Framework. It further stated that non-banking financial institutions are inseparable from banks vis-à-vis the application of the Revised Framework and accordingly, the Revised Framework cannot be made applicable to non-banking financial institutions as well.
In view of the foregoing, the Revised Framework was declared ultra vires as a whole, having no effect in law, as a result of which, all actions taken under the Revised Framework, including proceedings initiated by financial creditors against debtors under section 7 of the IBC pursuant to the Revised Framework, would become null and void.
In view of the retrospective effect of the judgment by the Supreme Court, the consequences of this decision can be far reaching especially in cases where matters have already been referred to the IBC pursuant to the Revised Framework. In cases where moratorium is underway and a resolution professional has taken over the charge of the affairs of a corporate debtor or a resolution process has been duly completed in accordance with the provisions of the IBC, it may become a practical challenge to deal with such situations in light of the Supreme Court’s decision in the Dharani Sugars case.
A significant question which the Supreme Court’s decision in the Dharani Sugars case has raised is whether the Erstwhile Framework will now be restored. In this regard, it may be noted that the judgment specifically lays down that “… the impugned circular will have to be declared as ultra vires as a whole, and be declared to be of no effect in law.”. However, the RBI vide press release dated April 4, 2019 declared that it will take necessary steps, including issuance of a revised circular, for expeditious and effective resolution of stressed assets. It will have to be seen whether the RBI moves in the direction of revising the Revised Framework or going back to the Erstwhile Framework.
It appears that the Supreme Court’s decision will certainly give more time and discretion to the banks and all-India financial institutions on finalizing a resolution plan and any eventual referral to insolvency proceedings will also no longer be time-bound.
In case of the restructurings under the Revised Framework for which exemptions from applicability of the SEBI regulations in respect of issuance of shares have already been availed, it has to be seen what the practical implication will be in light of this judgment.
Further, given the Project Sashakt inter-creditor agreement was implemented subsequent to the introduction of the Revised Framework, it remains to be seen whether the intercreditor agreement itself will need to be re-executed by banks pursuant to the Revised Framework being declared unconstitutional.
It will have to be seen how things practically pan out pursuant to the Supreme Court’s decision in the Dharani Sugars case and what circular/ notification/ direction the RBI comes up with, for resolution of stressed assets but it is evident that the consequences of this decision will be far reaching.
This note has been prepared by Debopam Dutta, Managing Associate and Vishesh Arora, Senior Associate.
 Transferred Case (Civil) No. 66 of 2018 in Transfer Petition (Civil) No. 1399 of 2018.
 As defined in section 5(7) of the IBC.
 The RBI vide press release dated June 13, 2017 identified 12 accounts for immediate reference under the IBC whose fund and non-fund based outstanding amount was greater than INR 5000 crore, with 60% or more classified as non-performing by banks as of March 31, 2016.
 Writ Petition (C) No. 1086/ 2018.
 State of U.P. v. Singhara Singh, (1964) 4 SCR 485.
 Paragraph 45, Dharani Sugars and Chemicals Ltd. v. Union of India & Ors., Transferred Case (Civil) No. 66 of 2018 in Transfer Petition (Civil) No. 1399 of 2018.
e) in cases where the user has any legal issues, the user must seek independent legal advice.

matches: v. v. v. v. v. v.


In this proceeding, Minnesota Northern Railroad, Inc. (MNN) filed a notice of exemption under 49 C.F.R. § 1152.50 seeking exemption from the requirements of 49 USC § 10903 in connection with the abandonment of a line of railroad in Norman and Polk Counties, Minnesota. The rail line proposed for abandonment extends approximately 5.8 miles between Milepost 40.2 at the north end of the Marsh River Bridge south of Shelly and Milepost 46.0 at Second Street in Nielsville, (the Line). A map depicting the Line in relationship to the area served is appended to this Environmental Assessment (EA). If the notice becomes effective, the railroad would be able to salvage remaining track, ties, and other railroad appurtenances and to dispose of the right-of-way.
MNN submitted a combined Environmental and Historic Report that concludes that the quality of the human environment would not be affected significantly from the proposed abandonment. MNN seeks to consummate the abandonment and salvage the Line. MNN served the Environmental and Historic Report on appropriate federal, state, and local agencies as required by the Surface Transportation Board’s (Board) environmental rules [49 C.F.R. § 1105.7(b)]. The Board’s Office of Environmental Analysis (OEA) has reviewed and investigated the record in this proceeding.
According to MNN, the Line has been out of service and embargoed since December 14, 2015, due to a defective bridge at Milepost 43.8. No local or overhead traffic has moved over the Line for more than two years. Therefore, no traffic would need to be rerouted if the proposed abandonment were approved. Accordingly, the proposed abandonment would not adversely impact the development, use, and transportation of energy resources or recyclable commodities; adversely impact the transportation of ozone-depleting materials; or result in the diversion of rail traffic to truck traffic that could result in significant impacts to air quality or the local transportation network.
Salvage and disposal of a rail line typically include the removal of tracks and ties, removal of ballast, dismantling of any bridges or other structures that may be present on the rail right-of-way, and regrading of the right-of-way. MNN states that, if abandonment were authorized, it would remove remaining track materials such as rails and ties, leaving the right-of-way, ballast, bridges, and culverts in place. MNN states that no soil disturbance would occur. MNN would remove and remediate any road crossings and signaling, working with governing road authorities. Several comments on the Environmental Report were submitted by state and federal agencies and are discussed in the corresponding sections below.
According to MNN, the right-of-way along the Line is approximately 100 feet wide. Adjacent land use consists primarily of farmland, low-density housing, and light industry. If abandonment were approved, MNN would remove any remaining road crossings and restore them in accordance with governing transportation authorities. The City of Nielsville states that it has no objection to the proposed abandonment. Though neither MNN or OEA have received comment from the United States Department of Agriculture, Natural Resource Conservation Service, based on OEA’s review of the environmental and historic report, the proposed abandonment would not cause any impacts to prime, unique, or important agricultural lands.
The National Geodetic Survey (NGS) identified seven geodetic station markers that may be located within the area of the proposed abandonment. Accordingly, OEA recommends adding a condition to any decision granting abandonment authority that requires MNN to consult with NGS and notify NGS at least 90 days prior to beginning salvage activities that will disturb or destroy any geodetic station markers.
The proposed abandonment would result in the removal of the remaining road crossings. There are three bridges: one at MP 41.7, one at MP 42.8, and a defective one at MP 43.8. According to MNN, the bridge at MP 43.8 cannot support train traffic, but is still structurally sound. Because the Line is out of service, no freight traffic would be diverted from rail to truck transportation.
According to MNN, Norman and Polk counties are not in Minnesota’s designated coastal zones or included in Minnesota’s coastal zone management program.
According to MNN, there are several bridges and/or stream crossings on the Line. MNN intends to leave the right-of-way, culverts, and ballast intact so as not to alter prevailing waterflows along the Line.
MNN plans to conduct abandonment activities by using the existing right-of-way for access, along with existing public and private road crossings, and no new access roads are contemplated. According to MNN, abandonment activities would not cause sedimentation or erosion of the soil, and MNN does not anticipate any dredging or use of fill when conducting salvage activities. MNN states that debris would not be discarded along the right-of-way and any work along the right-of-way would be subject to appropriate measures to prevent or control spills from fuels, lubricants, or any other pollutant materials.
According to MNN, no in-stream work, dredging, or use of fill materials is contemplated. Additionally, MNN does not anticipate any excavation or other ground-disturbance activity, or the need for related storm water mitigation measures. The Minnesota Department of Natural Resources (DNR) has not, to date, commented on the potential need for a permit under Section 402 of the Clean Water Act (33 U.S.C. § 1342). Because the proposed abandonment would not result in the discharge of wastewater or storm water, OEA concurs with MNN that a Section 402 permit likely would not be required. Accordingly, no mitigation related to impacts to water quality is recommended. OEA will provide a copy of this EA to DNR for review and comment.
OEA has not received comment from the US Army Corps of Engineers (Corps) on the potential impact of the proposed abandonment to waterways and wetlands or the potential need for a Corps permit under Section 404 of the Clean Water Act (33 U.S.C. § 1344). Because abandonment activities would be limited and not involve alterations of any bridges over waterways, OEA concurs with MNN that the proposed abandonment would likely not result in the discharge of any dredge or fill material into waters of the United States, including wetlands, and that these activities would therefore not require a Section 404 permit. Accordingly, no mitigation related to impacts to waterways or wetlands is recommended. OEA will provide a copy of this EA to the Corps for review and comment.
MNN states that it is not aware of any releases of hazardous substances on or near the Line. OEA’s review has not found any federally-listed remediation sites near the Line. Accordingly, no mitigation regarding hazardous waste sites or hazardous material spills is recommended.
MNN included in its report a letter from the U.S. Fish and Wildlife Service (USFWS) indicating that the proposed abandonment, if approved, would have no effect to threatened or endangered species, any designated critical habitat, or lands owned or secured by easements with USFWS.
Because abandonment activities would be limited in scope and areal extent, and any air emissions associated with abandonment activities would be temporary, OEA believes that these activities would not have a significant impact on air quality.
OEA believes that any noise impacts from abandonment activities would be temporary and should not have a significant local impact.
Based on all information available to date, OEA does not believe that abandonment activities would cause significant environmental impacts. OEA is providing a copy of this EA to the following agencies: Corps and DNR.
MNN served the Historic Report on the Minnesota State Historic Preservation Office (SHPO), pursuant to 49 C.F.R. § 1105.8(c). According to MNN, the Line was originally part of a line of the Great Northern Railway between the Canadian border near Noyes, MN, and Minneapolis, MN via Moorhead, MN. The Line came under the ownership of BNSF Railway Company through a series of mergers. MNN acquired the Line in 1997. An adjacent segment between Shelly and Perley, MN, was abandoned in 2009. According to MNN, the bridges on the Line do not meet any criteria for listing on the National Register of Historic Places (NRHP). SHPO confirmed, in a letter, that even though the Great Northern Railway may be considered to have historic significance meeting the NRHP criteria, this segment does not retain sufficient integrity to be eligible for listing in the NRHP. Considering information provided by MNN and SHPO, OEA concludes that the no historic properties would be affected by the proposed undertaking. Guidance regarding the Board’s historic preservation review process is available on the Board’s website at http://www.stb.dot.gov/stb/environment/preservation.html.
Pursuant to 36 C.F.R. § 800.2, OEA conducted a search of the United States Department of Housing and Urban Development (HUD) Tribal Directory Assessment Tool (TDAT) to identify federally recognized Tribes that may have ancestral connections to the project area. The database identified eleven federally-recognized Tribes that may have knowledge regarding properties of traditional religious and cultural significance within the right-of-way of the proposed abandonment: Apache Tribe of Oklahoma; Cheyenne and Arapaho Tribes, Oklahoma; Fort Belknap Indian Community of the Fort Belknap Reservation of Montana; Lac du Flambeau Band of Lake Superior Chippewa Indians of the Lac du Flambeau Reservation of Wisconsin; Leech Lake Band of the Minnesota Chippewa Tribe; Menominee Indian Tribe of Wisconsin; Minnesota Chippewa Tribe; Red Lake Band of Chippewa Indians, Minnesota; Turtle Mountain Band of Chippewa Indians of North Dakota; Upper Sioux Community, Minnesota; and the White Earth Band of the Minnesota Chippewa Tribe. Accordingly, OEA is forwarding these Tribes a copy of this EA for their review and comment.
· The Minnesota Northern Railroad, Inc. shall consult with the National Geodetic Survey (NGS) and notify NGS at least 90 days prior to beginning salvage activities that will disturb or destroy any geodetic station markers.
Based on the information provided from all sources to date, OEA concludes that, as currently proposed, and if the recommended condition is imposed, abandonment of the Line would not significantly affect the quality of the human environment. Therefore, the environmental impact statement process is unnecessary.
A request for a notice of interim trail use (NITU) is due to the Board, with a copy to the railroad, within 10 days of publication of the notice of exemption in the Federal Register. Nevertheless, the Board will accept late-filed requests if it retains jurisdiction to do so in a particular case. This request must comply with the Board’s rules for use of rights-of-way as trails (49 C.F.R. § 1152.29).
The Board’s Office of Public Assistance, Governmental Affairs, and Compliance responds to questions regarding interim trail use, public use, and other reuse alternatives. You may contact this office directly at (202) 245-0238, or mail inquiries to Surface Transportation Board, Office of Public Assistance, Governmental Affairs, and Compliance, 395 E. Street SW, Washington, DC 20423.
If you wish to file comments regarding this Environmental Assessment, comments may be mailed to the Surface Transportation Board, 395 E. Street SW, Washington, DC 20423, to the attention of Adam Assenza, who prepared this Environmental Assessment. Environmental comments may also be filed electronically on the Board’s website, www.stb.gov, by clicking on the “E-FILING” link. Please refer to Docket No. AB 497 (Sub-No. 7X) in all correspondence, including e-filings, addressed to the Board. If you have any questions regarding this Environmental Assessment, please contact Adam Assenza, the environmental contact for this case, by phone at (202) 245-0301, fax at (202) 245-0454, or e-mail at adam.assenza@stb.gov.
Comment due date: October 29, 2018.
 The Environmental and Historic Report is available for viewing on the Board’s website at www.stb.gov by going to “E-Library,” selecting “Filings,” and then conducting a search for AB 487 (Sub-No. 7X).
 See Docket No. AB-497 (Sub-No. 4X), Minnesota Northern Railroad, Inc. – Abandonment Exemption – in Norman County, MN.
 https://egis.hud.gov/TDAT (visited October 10, 2018).


text:
Courts generally require a class to be defined based on how the defendant acted toward an ascertainable group of persons. Gemberski v. PartsSource, Inc. So, class action defendants frequently argue that a need to review documents to determine class membership defeats “ascertainability.” That is not the law.
The test for ascertainability is whether class membership can be determined through objective criteria. See Rikos v. Procter & Gamble Co.
Sometimes, class definitions fall short. For example, in Bungard v. Department of Job & Family Services, 10th Dist. No. 05AP- 43, the plaintiffs defined the class as including persons “who did not receive services in compliance with all state and federal … requirements.” Id. at 11. The 10th District rejected that class definition because “determining membership in this case requires an analysis of the merits of the legal claims of potential members.” (Emphasis added.) Id. at 15. In other words, the Bungard class was not ascertainable because identifying class members required individual determinations on the merits – in essence, hundreds of mini-trials would be required.
But when a class is defined using objective criteria, not implicating the merits, class certification should not be denied due to the necessity of a ministerial document review: The “size of a potential class and the need to review individual files to identify its members are not reasons to deny class certification.” Young v. Nationwide Mutual Ins. Co. In Young, the Sixth Circuit quoted with approval a district court’s holding that the need to manually review files was not sufficient to defeat class certification: “‘If it were, defendants against whom claims of wrongful conduct have been made could escape class-wide review due solely to the size of their businesses or the manner in which their business records were maintained.’” Id. at 540. The Third Circuit has explained that “no Rule 23(b)(3) class could ever be certified” if “no level of inquiry as to the identity of class members can ever be undertaken.” Byrd v. Aaron’s Inc. Finding that a class was ascertainable despite a need to review individual loan files, a California district court observed that if the “class were not certified and instead myriad lawsuits were brought by individual plaintiffs, such a review would still be required.” Peel v. BrooksAmerica Mortgage Corp., 2012 WL 3808591, *3 (C.D. Cal. Aug. 30, 2012).
Courts across the country routinely reject challenges to ascertainability premised on an argument that a ministerial document review would be unduly burdensome. For example, in Moreno v. Napolitano (the defendants complained that ascertaining class membership would require a manual review of tens of thousands of documents. Id. at *6. The district court held that “the fact that [d]efendants may need to conduct a manual review to determine the composition of the class is not sufficient grounds for denying class certification.” Id. at *7. Also, in Dunnigan v. Metropolitan Life Insurance Co., the district court held that membership in a class with an estimated 6,700 members could be ascertained through an examination of individual files. Id. at 136. The “fact that [a] manual process may be slow and burdensome cannot defeat the ascertainability requirement.” Id. Similarly, in Cummings v. Starbucks Corp., the plaintiff alleged that Starbucks failed to provide required rest breaks. Id. at *1. The plaintiff proposed to identify class members through copies of schedules, time records, and payroll summaries. Id. at *15. Starbucks complained that a laborious document review would be necessary. Id. at *16. Rejecting Starbucks’ argument, the district court observed that there is no requirement that a class be ascertainable through “‘reasonable effort.’” Id. Finally, in Ohio, the Eighth District has held that “the mere fact that evidence as to each transaction would have to be gathered did not preclude the finding of a common question of law or fact, nor did it preclude class certification.” Washington v. Spitzer Management, Inc.

matches: v. v. v. v. v. v. v. v. v. v.


text:
Order, Supreme Court, New York County (Eileen A. Rakower, J.), entered March 4, 2010, which granted defendants' motion to set aside the jury verdict in plaintiffs' favor and directed that judgment be entered in favor of defendants, reversed, on the law, without costs, the motion denied, and the matter remanded for a collateral source hearing.
Defendants failed to preserve their argument that a particular ANSI/AMSE standard did not form a proper basis for liability under General Municipal Law Sec. 205-e, and we decline to review it in the interest of justice (Harris v. Armstrong, 64 N.Y.2d 700, 702, 485 N.Y.S.2d 523, 474 N.E.2d 1191 ). Indeed, defendants not only failed to object to the trial court's charge regarding the subject standard before the jury rendered its verdict (see CPLR 4110-b), they actually argued that the standard should be given to the jury. Accordingly, the trial court erred in setting aside the verdict based on the unpreserved argument (see Harris, 64 N.Y.2d at 702, 485 N.Y.S.2d 523, 474 N.E.2d 1191; Kroupova v. Hill, 242 A.D.2d 218, 220, 661 N.Y.S.2d 218 , lv. dismissed in part and denied in part 92 N.Y.2d 1013, 684 N.Y.S.2d 484, 707 N.E.2d 439 ).
The awards for loss of earnings and benefits, and for future medical expenses, are not excessive. However, defendants timely moved for a collateral source hearing and therefore are entitled to that hearing (Szpakowski v. Shelby Realty, LLC, 48 A.D.3d 268, 269-270, 851 N.Y.S.2d 487 , lv. denied 12 N.Y.3d 708, 879 N.Y.S.2d 55, 906 N.E.2d 1089 ). We note, in regard to the dissent's position, that plaintiffs' briefs do not request a new trial on damages.
CATTERSON, J. (dissenting in part).
I must respectfully dissent in part since I agree with the majority in reinstating the verdict, but believe that a new trial on damages is warranted before proceeding to a collateral source hearing. Under the statutory scheme, the Legislature was clear that evidence on the issue of collateral source reimbursement should be introduced only after judgment in favor of the plaintiff has been awarded. As set forth more fully below, precedent is further clear that references to collateral sources at trial potentially prejudice the plaintiff insofar as a jury is likely to take them into account when assessing a negligent defendant's liability for damages. In this case, defense counsel repeatedly, impermissibly and over objection, questioned the plaintiffs' experts on collateral sources. Subsequently, the jury returned a verdict and award considerably lower than the losses projected by the plaintiffs' expert. Since it appears that the evidence adduced as to the plaintiffs' collateral source payments was indeed prejudicial, in my opinion, proceeding directly to a collateral source hearing would compound the error by reducing an award that may already have been reduced by the jury on the basis of the plaintiffs' collateral source payments.
This action for damages arises out of an incident occurring in Pennsylvania Station during the blackout of August 2003. The plaintiff New York City Transit Authority police officer was injured in the course of rescuing two women trapped in an elevator. The plaintiffs sought recovery under General Municipal Law Sec. 205-e alleging that the New York City Transit Authority violated a standard of the American Society of Mechanical Engineers (hereinafter referred to as "ASME"). Specifically, the plaintiffs alleged that the defendants failed to have proper tools and equipment on hand in the event of an emergency evacuation, including foldable ladders, lifelines and forcible entry tools.
The record reflects that doctors diagnosed the plaintiff police officer with complex regional pain syndrome, a pain syndrome that leaves a patient with abnormal sensations. By November, 2004, the NYPD formally deemed the plaintiff disabled. The plaintiff testified that, after the accident, he suffered from severe pain in his knee and that he underwent arthroscopic surgery followed by other treatments, but that nothing worked to alleviate his chronic knee pain. The plaintiff further testified that following the surgery, he continued to be in pain, and could only hope to bring the pain "sort of, under control," but there was no hope of eliminating it.
The plaintiff's prognosis was a lifetime of chronic pain that, at times, "may get worse and may get minimally better." In addition to the chronic pain, the plaintiffs' medical expert testified that it was probable the plaintiff would suffer from depression as a result of his injury. The plaintiffs' economic expert projected a loss of income and benefits of more than $4.1 million.
At trial, defense counsel was allowed, over the plaintiffs' objections, to extensively question the plaintiffs' economist as to the accidental disability benefits, patrolman benefit funds, and other funds that the plaintiffs were receiving. Additionally, defense counsel questioned the plaintiffs' expert as to why he had not deducted collateral source payments from his projections. The jury found the defendants liable for violating the ASME standard requiring "a rescue plan and suitable equipment" and that the violation caused the plaintiff police officer's injury. The jury awarded $2,673,154 for lost income and benefits, and future loss of earnings. This constituted 65% of the loss projected by his economic expert. Additionally, the jury awarded $500,000 in medical expenses, despite the plaintiffs' economic expert's estimate of $707,076.
Nonetheless, the defendants argued in post‑trial motions that (1) the jury award for future medical expenses and loss of earnings was excessive, and (2) that the ASME provision on which the jury had premised liability could not serve as a legally viable GML Sec. 205-e predicate. The trial court granted the defendants' motion on the ASME claim by setting aside the verdict.
On appeal, the plaintiffs assert that the verdict should be reinstated, that the jury award was not excessive, and that the defendants' argument was waived at trial when defense counsel failed to preserve the issue. The defendants argue that, should we reinstate the jury's verdict as the majority has done, the defendants are entitled to a collateral source hearing. For the following reasons, I would remand for a new trial on damages prior to a collateral source hearing.
CPLR 4545 provides, in general, for a reduction in an award of damages based on reimbursement to the plaintiffs from collateral sources. Specifically, section 4545 is titled "Admissibility of collateral source of payment," and it is therefore an evidentiary rule governing when such evidence may be presented: The provision is clear that "evidence [of collateral source payments] shall be admissible for consideration by the court" and that any collateral source deduction "shall be made by the trial court after the rendering of the jury's verdict" (emphasis added). CPLR 4545[a]; see also Wooten v. State of New York, 302 A.D.2d 70, 73, 753 N.Y.S.2d 266, 269, 753 N.Y.S.2d 266 (4th Dept.2002), lv. denied 1 N.Y.3d 501, 775 N.Y.S.2d 239, 807 N.E.2d 289 (2003), citing Teichman v. Community Hosp. of W. Suffolk, 205 A.D.2d 16, 19, 617 N.Y.S.2d 338, 340 (1994), mod. on other grounds, 87 N.Y.2d 514, 640 N.Y.S.2d 472, 663 N.E.2d 628 (1996) ("the Legislature intended the statute to define an evidentiary rule which is to be applied only where the matter is tried and a judgment in favor of a plaintiff has been 'awarded' ").
Because the requirement of deducting from the plaintiffs' award is left solely for the court, no evidence of collateral source payments should be presented to the jury. On the contrary, the jury should determine the plaintiffs' losses without reference to any reimbursement that the plaintiffs may have received. CPLR 4545 ("[t]he plaintiff may prove his or her losses and expenses at the trial irrespective of whether such sums will later have to be deducted from the plaintiff's recovery"); see Alexander, Practice Commentaries, McKinney's Cons. Laws of N.Y., Book 7B, CPLR Sec. 4545:3; see also Kish v. Board of Educ. of City of N.Y., 76 N.Y.2d 379, 384, 559 N.Y.S.2d 687, 689, 558 N.E.2d 1159, 1161 (1990), citing Healy v. Rennert, 9 N.Y.2d 202, 213 N.Y.S.2d 44, 173 N.E.2d 777 (1961).
In Healy, the Court found that evidence of the plaintiff's collateral source payments which was submitted to a jury was prejudicial to the plaintiff since the jury "may well have considered that plaintiff had sustained no damage." Healy, 9 N.Y.2d at 207, 213 N.Y.S.2d at 47, 173 N.E.2d 777. Subsequently, in Kish, the Court elaborated on the theory underlying the collateral source rule by observing that "the damages recoverable for a wrong are not diminished by the fact the party injured has been wholly or partly indemnified for his loss." Kish, 76 N.Y.2d at 384, 559 N.Y.S.2d at 689. Thus, the Court held that "a negligent defendant should not, in fairness, be permitted to reduce its liability in damages by showing that the plaintiff is already entitled by contract or employment right to reimbursement." Id.
In this case, notwithstanding the statutory scheme as to inadmissibility of collateral source evidence at trial, defense counsel extensively questioned the plaintiffs' economist as to disability benefits, and why the plaintiffs' expert had not deducted those collateral sources from his projections. Over the plaintiffs' objections, the defendants continued to question the plaintiffs' economist about collateral source payments including social security payments received by his children. More egregiously, on summation, defense counsel concluded by telling the jury that the economist's failure to deduct for collateral source payments was "like cheating."
The jury awarded the plaintiffs 29 years of future expenses and $500,000 in future medical expenses, despite uncontroverted testimony that the plaintiff police officer's life expectancy was 36.18 years, and an unrebutted projection of $707,076 for future medical expenses. In my opinion, the only inference to be made from such a drastic reduction is that defense counsel's impermissible references to collateral source payments prejudiced the jury, and likely led to the reduction of the defendants' damages.
Thus, in my opinion, the plaintiffs would be severely prejudiced by a collateral source hearing that aimed to deduct the plaintiffs' collateral source payments from a jury award that in all likelihood already factored in those payments.

matches: v. v. v. v. v. v. v.


text:
Nayak, H.., and N.. Krishnamurthy, "Corrosion Behaviour of Plasma Sprayed Alumina and Yttria Stabilised Zirconia Composite Coatings Applied on Al6061Substrate", Journal of Material Science and Manufacturing Technology, vol. 3, issue 1, pp. 911–930, 2018.
Ramanujam, S. K., and S. S. Katte, Numerical investigation and correlations for heat diffusion through planar ablative thermal protection systems, , vol. 7, pp. 279 - 287, 2018.
Dhanyashree, P.., and N.. Nagesha, "Application of Modern Quality Tools in Reducing Rejections : A Case in Machining Section of a Foundry", International Journal of Darshan Institute on Engineering research and Emerging Technologies, vol. 6, issue 1: IJDI - ERET, pp. 1 - 6, 2017.
Javed, S., and R. Ulla Baig, "Artificial Neural Network modeling of a hydrogen dual fueled diesel engine characteristics: An experiment approach", International Journal of Hydrogen Energy, vol. 42, issue ISSUE: Hydrogen Energy Publications LLC. Published by Elsevier Ltd., pp. 14750-14774, 2017-05-15.
Varun, M.., and K. N. Nikhil, "DESIGN AND FABRICATION OF AUTOMATIC SUGARCANE NODE CUTTING MACHINE", Indian National Conference of Applied Mechanics (INCAM-2017), issue 04: Indian National Conference of Applied Mechanics (INCAM-2017), 2017-07-06.
Reddy, S. Murali A., and M. Syed. Naqvi, "Design & Performance Analysis of Single Axis Solar Tracking Mechanism Using a Micro Controllers", Renewable Energy Technology: Future, Opportunity, and Challenges for India: RET: FOAC, 2017.
Nayak, H.., and N.. Krishnamurthy, "DEVELOPMENT AND MICROSTRUCTURE ANALYSIS OF THERMAL BARRIER COATING ON CAST IRON SUBSTRATE", IEEE, vol. 1, issue 1: IEEE, pp. 752-758, 2017-02-21.
J. Murali, G., and S. S. Katte, "Experimental Investigation Of Radiating Pin Fin With Cylindrical And Conical Cavities", Heat Transfer Research, vol. 48: Begel House, Inc, in cooperation with The American Society of Thermal and Fluids Engineers, pp. 309–318, 2017.
Dhanyashree, P.., and N.. Nagesha, "Friction Stir Welding : An Overview", International Journal of Engineering Research in Mechanical and Civil Engineering, vol. 1, issue 8: IJERMCE, pp. 173 - 178, 2017.
Dhanyashree, P.., and N.. Nagesha, "Friction Stir Welding : An Overview", National Conference on Advances in Civil and Mechanical Engineering: GSIT, Karwar, 2017.
Ahmad.S, T., S. Datta, S. Kumar Singha, S. Prasad Datta, and P. Kumar Das, "A comparative study of temporal evolution of air and steam bubbles emerging out from an orifice in a quiescent water media", 9th International Conference on Multiphase Flow, Firenze, Italy, 2016.
Reddy, V.., S. K. Hulloli, and N. H. N. Murthy, "Development Of Pvdf Thin Films", International Journal of Advanced Technology in Engineering & Science, vol. 4, issue 1: IJATES, pp. 83 - 94, 2016.
Reddy, S. Murali A., and V. M. Kulkarni, "Experimental Investigation of Heat Transfer Performance for Forced Convection of Water in a Horizontal pipe partially filled with a Porous Medium", IOSR Journal of Mechanical and Civil Engineering, vol. 13, issue 4: IOSR-JMCE, pp. 131-140, 2016.
Reddy, S. Murali A., and V. M. Kulkarni, "Review of heat transfer enhancement in a heat exchanger with partially filled porous media", International Journal of Current Research, vol. 8, issue 6: International Journal of Current Research, pp. 33245-33252., 2016.
Javed, S.., Y.. Murthy, and R. Ulla Baig, "Vibration analysis of a diesel engine using biodiesel fuel blended with nano particles by dual fueling of hydrogen", Journal of Natural Gas Science and Engineering, vol. 33: Journal of Natural Gas Science and Engineering, pp. 217-230, 2016-05-07.
Madhusudan, M.A.., and B.. Manjunath, "Comparison of Power output by Airfoil shaped 3-Blade and 4-Blade Vertical Axis Wind Turbine for the local wind conditions", Recent Innovations in Science and Engineering: PESIT BANGALORE SOUTH CAMPUS BENGALURU, INDIA, 2015.
Varun, M.., C.. Santosh, A.. Kashyap, and M.. Santhosh, "Crack Propagation Analysis using FEM Approach in Titanium and Titanium Aluminide", International Research Journal of Engineering and Technology, vol. 2, issue 3, pp. 1976-1980, 2015.
Sachin, R.. C., S.. K. Surender, S.. Kumar, I.. Alam, and S.. V. Satish, "Design and Fabrication of Automatic Pneumatic Screen Printing Machine", International Journal of Science and Research(IJSR) ISSN(Online): 2319-7064: IJSR, pp. 168-172, 2015.
Sajjan, S. C., N. M. Manohar, P.. Vinay, and E.. Preetham, "Design and Fabrication of Block Laying Robot", International Journal of Current Engineering and Scientific Research (IJCESR), vol. 2, issue 12: IJCESR, 2015.
Shreyas, P.., and M.A.. Trishul, "Design and fabrication of dual specimen rotating bending fatigue testing machine", International Advanced Research Journal in Science, Engineering and Technology, vol. 2, issue 1: IARJSET, pp. 2394-1588, 01-2015.
Shreyas, P.., and M.A.. Trishul, "Design and fabrication of dual specimen rotating bending fatigue testing machine", International Advanced Research Journal in Science, Engineering and Technology, vol. 2, issue 1: International Advanced Research Journal in Science, Engineering and Technology, pp. 2394-1588, 01-2015.
Baig, R. Ulla, and S.. Pugazhenthi, "Design Optimization of Stewart Platform Configuration for Active Vibration Isolation.", Indian Journal of Science and Technology, vol. 8, issue 23: Indian Journal of Science and Technology, pp. Page No., 2015.
Nayak, H.., and N.. Krishnamurthy, "Development and Microstructure Analysis of Thermal Barrier Coating on Aluminium 6061 Substrate (title of paper/patent)", International conference on Materials and Manufacturing Technology ICMMT-2015, issue ISBN 13:9789385880759, Bangalore, McGraw-Hill, New Delhi, pp. 7-15, 2015.
Syed, J.., S. Y. V. V. Murthy, R. Ulla Baig, and P. D. Rao, "Development of ANN model for prediction of performance and emission characteristics of hydrogen dual fueled diesel engine with Jatropha Methyl Ester biodiesel blends", Journal of Natural Gas Science and Engineering, vol. 26: Journal of Natural Gas Science and Engineering, pp. 549-557, 2015-06-29.
Varun, M.., and M.. M. M. Patnaik, "DYNAMIC CHARACTERIZATION OF ORIFICE TYPE AEROSTATIC BEARING", International Research Journal of Engineering and Technology (IRJET), vol. 02, issue 04: IRJET, 2015-07-08.
Bahl, S.., and M.A.. Trishul, "Enhancing the mechanical and biologicalperformance of a metallic biomaterial for orthopedic applications through changes in the surface oxide layer by nanocrystalline surface modification", Nano Scale, vol. 10: Royal Society of Chemistry, 2015.
Santosh, C.., "Finite Element Analysis of shrink fitted shaft and disc Assembly and its Strenghth Prediction", International Conference on Modern Intelligent and Green Manufacturing, Erode Sengunthar Engineering College, Erode, pp. 403-411, 2015.
Yerrennagoudaru, H.., and S. Murali A. Reddy, "Investigation and Performance Evaluation ofHonge Seed oilblendedwith DieselUsing the Twin Cylinder Diesel Engine", International Journal of Advance Foundation And Research In Science & Engineering, vol. 2, issue 3: Wiley Subscription Services, Inc., A Wiley Company (publisher), 2015.
Satish, S.. V., A.. Chandru, and S. J. Krishna, "Manufacture of Aluminum Foam Using Water Beads", International Journal of Science and Research(IJSR) ISSN(Online): 2319-7064: IJSR, pp. 98-102, 2015.
Madhusudan, M.A.., C. C. Rajesh, and K. V. S. Ajay, "Optimization of angle of attack for a vertical axis wind turbine for local wind condition", Role of Mechanical Engineering and Computational Science for a Sustainable Future: DAYANANDA SAGAR COLLEGE OF ENGINEERING BENGALURU, INDIA, 2015.
Trishul, M.A.., and P.. Shreyas, "Production and testing of Al-Fe2O3 particulate composite", International Advanced Research Journal in Science, Engineering and Technology, vol. 2, issue 4: International Advanced Research Journal in Science, Engineering and Technology, pp. 2393-8021, 2015.
Satish, S.. V., A.. Chandru, and .. Ashok, "Studies on Production of Aluminium Sponge", International Journal of Applied Engineering Research (IJAER), vol. 10, issue 48: Research India Publications, pp. 32733-32736, 2015.
Chandru, A.., and S.. V. Satish, "Studies on production of Aluminum Foam by powder metallurgy method", INternational Conference on Materials and Manufacturing Technology, issue ISBN 13:9789385880759, Bangalore, McGraw-Hill, New Delhi, pp. 1-6, 2015.
Kazi, A.., M.. Safiulla, and S.. V. Satish, "Study of Moisture Effect on the Mechanical Properties of Epoxy Nano Composites", International Journal of Science and Research(IJSR) ISSN(Online): 2319-7064, vol. 12, issue 1: IJSR, pp. 285-288, 2015.
Prasad, S. K. S., R.. Chaturvedi, S. Niwas. Sahu, A.. Sekar, and K.V.. Govinda, "Study of Shock Isolation by Nonlinear Wire Rope Isolators", Indian National Conference of Applied Mechanics, IIT Delhi, 2015.
Kazi, A.., and M.. Safiulla, "Study on Mechanical Properties of Epoxy nano Composites", International conference on Direct Digital Manufacturing and Polymers ICDDMAP-2015, Dharwad, India, Director Prasaranga Karnataka University, Dharwad, 2015.
Trishul, M.A.., and P.. Shreyas, "Testing of Al 7075 specimen using dual specimen Rotating Bending Fatigue Testing Machine", International Advanced Research Journal in Science, Engineering and Technology, vol. 2, issue 4: Journal Name -International Advanced Research Journal in Science, Engineering and Technology, pp. 2393-8021, 2015.
Bhat, K. G., U.M.. Jumyung, and I. Anthony. Stroud, "Eco Evaluation for remote laser welding", CAE Conference, 2014.
Shreyas, P.., and M.A.. Trishul, "Experimental Setup of Surface Mechanical Attrition Treatment (SMAT) and study of the treated Specimen", International Advanced Research Journal in Science, Engineering and Technology, vol. 1, issue 3: International Advanced Research Journal in Science, Engineering and Technology, pp. 2393-8021, 2014.
Baig, R. Ulla, and S.. Pugazhenthi, "Neural Network Optimization of Design Parameters of Stewart Platform for Effective Active Vibration Isolation", Journal of Engineering and Applied Sciences, vol. 9, issue 4: Journal of Engineering and Applied Sciences, pp. 78-84, 2014.
Shreyas, P.., and M.A.. Trishul, "Overview of research on Surface Mechanical Attrition Treatment (SMAT)", International Advanced Research Journal in Science, Engineering and Technology, vol. 1, issue 4: Journal Name -International Advanced Research Journal in Science, Engineering and Technology, pp. 2393-8021, 2014.
Nayak, H.., and N.. Krishnamurthy, "Overview of Thermal barrier Coatings in IC Engine", 1st national conference on Advances in Mechanical Engineering, Bangalore, 2014.
Abishek, S.., S. K. Ramanujam, and S. S. Katte, "View Factors Between Disk/Rectangle and Rectangle in Parallel and Perpendicular Planes", Journal of Thermophysics and Heat TransferJournal of Thermophysics and Heat Transfer, vol. 28, issue 2: American Institute of Aeronautics and Astronautics, pp. 363 - 363, 2014/04/01.
Sajjan, S. C., and S.. Surendran, "Effect of Pretension on Moored Ship Response", International Journal of Ocean System Engineering. ISSN: 2233- 6478., vol. 3, issue 4: International Journal of Ocean System Engineering, pp. 175-187, 2013.
Sajjan, S. C., S.. Surendran, and S.K.. Lee, "Experiments to determine thruster design parameters of a moored floating platform", The 9th IFAC Conference on Control Applications in Marine Systems (CAMS 2013) Osaka, Japan, 17-20 Sept. 2013., 2013.
Sajjan, S. C., and S.. Surendran, "Model tests on the moored vessel with different moonpool shapes", Ocean Systems Engineering, vol. 3, issue 2: Techno-Press, pp. 137-147, 2013.
Chandru, A.., and S.. V. Satish, "Evaluation of Surface Properties of Commercially Available Copper by Friction Stir Surfacing", International Conference on Challenges and Opportunities in Mechanical Engineering, Industrial Engineering and management Studies (ICCOMIM-2012), vol. 2, issue ISBN 9789382338048: Bangalore, 2012.
Chandru, A.., and S.. V. Satish, "FRICTION STIR SURFACING OF BRASS AND EVALUATION OF SURFACE PROPERTIES", International Journal of Global Technology Initiatives (IJGTI) ISSN 2277-6591, vol. 1, issue 1: Rizvi College of Engineering, Mumbai, pp. 11-16, 2012.
Surendran, S.., and S. C. Sajjan, "Piston mode effects of moonpool on moored vessel response", The 8th International Conference on Marine Technology (MARTEC-2012) Kuala Terengganu, Malaysia, 20-22 October 2012., 2012.
Chandru, A.., and S.. V. Satish, "Studies on Surface Properties of Brass Subjected to Friction Stir Surfacing", International Conference on Challenges and Opportunities in Mechanical Engineering, Industrial Engineering and management Studies (ICCOMIM-2012), vol. 2, issue ISBN 9789382338048: Bangalore, pp. 490-496, 2012.
Baig, R. Ulla, and S.. Pugazhenthi, "Design optimization of an active vibration isolation system", International Journal of the Physical Sciences, vol. 6(30): International Journal of the Physical Sciences, pp. 6882-6890, 2011.
Abishek, S.., and S. S. Katte, "Magneto hydrodynamic buoyant convection of an electrically conducting fluid in a tilted square cavity", Heat Transfer—Asian Research, vol. 40: Wiley Subscription Services, Inc., A Wiley Company, pp. 49–68, 2011.
Kazi, A.., M.. Safiulla, N. M. Manohar, and P. G. Kumar, "Design and Fabrication of sun flower seed Extracting Machine", International Journal of Latest Technology in Engineering, Management & Applied Science., vol. 11., issue 1: International Journal of Engineering Simulation., pp. 1468-1137, 2010.
Abishek, S.., and S. S. Katte, "Magneto hydrodynamic Thermo-Solutal Buoyant Darcy Convection in a Square Enclosure", International Journal of Heat and Technology, vol. 28, issue 2: Edizioni ETS, pp. 107-118, 2010.
Baig, R. Ulla, and S.. Pugazhenthi, "Modelling of a class of Stewart platform for six degree of freedom active vibration isolation", International Journal of Engineering Simulation., vol. 11, issue 1: International Journal of Engineering Simulation., pp. 1468-1137, 2010.
Akash, A.., K.. Krishnan, D. Raghu. Srikar, and S.. V. Satish, "Study and Analysis of six sigma strategies and tools in a manufacturing organization", International Conference on Advances in Industrial Engineering Applications (ICAIEA2010): Chennai, 2010.
Rao, S. Sashankh., and S.. V. Satish, "Design Enhancement of Engine Oil Cooler", PACE Forum: Detroit,USA, 2008.
J. Murali, G., and S. S. Katte, "Experimental Investigation of Heat Transfer Enhancement in Radiating Pin Fin", Jordan Journal of Mechanical and Industrial Engineering, vol. 2, issue 3, 2008.
J. Murali, G., and S. S. Katte, "Experimental Investigation of Threaded, Grooved, and Tapered Radiating Pin-Fin", 2008, vol. 15, issue 3: Begell House, pp. 199-209, 2008.
J. Murali, G., and S. S. Katte, "Experimental study of threaded and grooved radiating pin fin", International Journal of Heat & Technology, vol. 26, issue 1, 2008.
Katte, S. S., Correlations and Artificial Neural Network Techniques for Ablation Problems, : Department of Science and Technology, 2007.
J. Murali, G., and S. S. Katte, "Experimental Study of Threaded and Grooved Radiating Pin Fin", ASME/JSME 2007 Thermal Engineering Heat Transfer Summer Conference collocated with the ASME 2007 InterPACK Conference: American Society of Mechanical Engineers, pp. 763–769, 2007.
Baig, R. Ulla, and S.. Pugazhenthi, Modelling of a class of Stewart Platform for Active vibration isolation, : Coimbatore Institute of Technology, Coimbatore, pp. 59-64, 2007.
Katte, S. S., Thermal Analysis of Various Elements in an Enclosure Accounting for the Shadowing Effects, : ISRO, 2007.
Abishek, S.., S. K. Ramanujam, and S. S. Katte, "View Factors between Disc/Rectangle and Rectangle in Parallel and Perpendicular Planes", Journal of Thermophysics and Heat Transfer, vol. 21, issue 1: American Institute of Aeronautics and Astronautics, pp. 236 - 239, 2007/01/01.

matches: V. V. V. V. V. V. V. V. V. V. V. V.


§ 206-1 Open burning prohibited.
§ 206-4 Application for permit.
§ 206-5 Open burning regulations.
§ 206-6 Fire hazard conditions.
§ 206-7 Violations and penalties.
§ 206-9 Declarations of emergency.
§ 206-10 Regulation of fires, burning materials and fireworks.
§ 206-11 Period of emergency.
Fire prevention standards — See Ch. 300.


Appeal from the District Court of the United States for the Western District of Arkansas.
Mr. Gordon Dean, of Washington, D.C., for the United States.
A duly interposed demurrer alleged: The National Firearms Act is not a revenue measure but an attempt to usurp police power reserved to the States, and is therefore unconstitutional. Also, it offends the inhibition of the Second Amendment to the Constitution, U.S.C.A.—'A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.' The District Court held that section 11 of the Act violates the Second Amendment. It accordingly sustained the demurrer and quashed the indictment.
The cause is here by direct appeal.
Considering Sonzinsky v. United States, 1937, 300 U.S. 506, 513, 57 S.Ct. 554, 81 L.Ed. 772, and what was ruled in sundry causes arising under the Harrison Narcotic Act2—United States v. Jin Fuey Moy, 1916, 241 U.S. 394, 36 S.Ct. 658, 60 L.Ed. 1061, Ann.Cas.1917D, 854; United States v. Doremus, 1919, 249 U.S. 86, 94, 39 S.Ct. 214, 63 L.Ed. 493; Linder v. United States, 1925, 268 U.S. 5, 45 S.Ct. 446, 69 L.Ed. 819, 39 A.L.R. 229; Alston v. United States, 1927, 274 U.S. 289, 47 S.Ct. 634, 71 L.Ed. 1052; Nigro v. United States, 1928, 276 U.S. 332, 48 S.Ct. 388, 72 L.Ed. 600—the objection that the Act usurps police power reserved to the States is plainly untenable.
In the absence of any evidence tending to show that possession or use of a 'shotgun having a barrel of less than eighteen inches in length' at this time has some reasonable relationship to the preservation or efficiency of a well regulated militia, we cannot say that the Second Amendment guarantees the right to keep and bear such an instrument. Certainly it is not within judicial notice that this weapon is any part of the ordinary military equipment or that its use could contribute to the common defense. Aymette v. State of Tennessee, 2 Humph., Tenn., 154, 158.
The Constitution as originally adopted granted to the Congress power—'To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions; To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress.' U.S.C.A.Const. art. 1, § 8. With obvious purpose to assure the continuation and render possible the effectiveness of such forces the declaration and guarantee of the Second Amendment were made. It must be interpreted and applied with that end in view.
The Nilitia which the States were expected to maintain and train is set in contrast with Troops which they were forbidden to keep without the consent of Congress. The sentiment of the time strongly disfavored standing armies; the common view was that adequate defense of country and laws could be secured through the Militia—civilians primarily, soldiers on occasion.
The signification attributed to the term Militia appears from the debates in the Convention, the history and legislation of Colonies and States, and the writings of approved commentators. These show plainly enough that the Militia comprised all males physically capable of acting in concert for the common defense. 'A body of citizens enrolled for military discipline.' And further, that ordinarily when called for service these men were expected to appear bearing arms supplied by themselves and of the kind in common use at the time.
Blackstone's Commentaries, Vol. 2, Ch. 13, p. 409 points out 'that king Alfred first settled a national militia in this kingdom' and traces the subsequent development and use of such forces.
Most if not all of the States have adopted provisions touching the right to keep and bear arms. Differences in the language employed in these have naturally led to somewhat variant conclusions concerning the scope of the right guaranteed. But none of them seem to afford any material support for the challenged ruling of the court below.
We are unable to accept the conclusion of the court below and the challenged judgment must be reversed. The cause will be remanded for further proceedings.
Mr. Justice DOUGLAS took no part in the consideration or decision of this cause.
'Sec. 1 (Section 1132). (a) The term 'firearm' means a shotgun or rifle having a barrel of less than eighteen inches in length, or any other weapon, except a pistol or revolver, from which a shot is discharged by an explosive if such weapon is capable of being concealed on the person, or a machine gun, and includes a muffler or silencer for any firearm whether or not such firearm is included within the foregoing definition, (The Act of April 10, 1936, c. 169, 49 Stat. 1192, 26 U.S.C.A. § 1132, added the words) but does not include any rifle which is within the foregoing provisions solely by reason of the length of its barrel if the caliber of such rifle is .22 or smaller and if its barrel is sixteen inches or more in length.
'Sec. 3 (§ 1132b). (a) There shall be levied, collected, and paid upon firearms transferred in the continental United States a tax at the rate of $200 for each firearm, such tax to be paid by the transferor, and to be represented by appropriate stamps to be provided by the Commissioner, with the approval of the Secretary; and the stamps herein provided shall be affixed to the order for such firearm, hereinafter provided for. The tax imposed by this section shall be in addition to any import duty imposed on such firearm.
'Sec. 4 (§ 1132c). (a) It shall be unlawful for any person to transfer a firearm except in pursuance of a written order from the person seeking to obtain such article, on an application form issued in blank in duplicate for that purpose by the Commissioner. Such order shall identify the applicant by such means of identification as may be prescribed by regulations under (sections 1132 to 1132q) this Act: Provided, That, if the applicant is an individual, such identification shall include fingerprints and a photograph thereof.
'(c) Every person so transferring a firearm shall set forth in each copy of such order the manufacturer's number or other mark identifying such firearm, and shall forward a copy of such order to the Commissioner. The original thereof with stamps affixed, shall be returned to the applicant.
'(d) No person shall transfer a firearm which has previously been transferred on or after the (thirtieth day after June 26, 1934), effective date of this Act, unless such person, in addition to complying with subsection (c), transfers therewith the stamp-affixed order provided for in this section for each such prior transfer, in compliance with such regulations as may be prescribed under (sections 1132 to 1132q) this Act for proof of payment of all taxes on such firearms.
'Sec. 5 (§ 1132d). (a) Within sixty days after the (thirtieth day after June 26, 1934) effective date of this Act every person possessing a firearm shall register, with the collector of the district in which he resides, the number or other mark identifying such firearm, together with his name, address, place where such firearm is usually kept, and place of business or employment, and, if such person is other than a natural person, the name and home address of an executive officer thereof: Provided, That no person shall be required to register under this section with respect to any firearm acquired after the (thirtieth day after June 26, 1934) effective date of, and in conformity with the provisions of, (sections 1132 to 1132q) this Act.
'Sec. 6 (§ 1132e). It shall be unlawful for any person to receive or possess any firearm which has at any time been transferred in violation of section (1132b or 1132c) 3 or 4 of this Act.
'Sec. 11 (§ 1132j). It shall be unlawful for any person who is required to register as provided in section (§ 1132d) 5 hereof and who shall not have so registered, or any other person who has not in his possession a stamp-affixed order as provided in section (1132c of this title) 4 hereof, to ship, carry, or deliver any firearm in interstate commerce.
'Sec. 12 (§ 1132k). The Commissioner, with the approval of the Secretary, shall prescribe such rules and regulations as may be necessary for carrying the provisions of (sections 1132 to 1132q) this Act into effect.
'Sec. 14 (§ 1132m). Any person who violates or fails to comply with any of the requirements of (sections 1132 to 1132q) this Act shall, upon conviction, be fined not more than $2,000 or be imprisoned for not more than five years, or both, in the discretion of the court.
'Sec. 16 (§ 1132o). If any provision of (sections 1132 to 1132q) this Act, or the application thereof to any person or circumstance, is held invalid, the remainder of (sections 1132 to 1132q) the Act, and the application of such provision to other persons or circumstances, shall not be affected thereby.
'Sec. 18 (§ 1132q). This (chapter (1132 to 1132q)) Act may be cited as the 'National Firearms Act."
Act December 17, 1914, c. 1, 38 Stat. 785, February 24, 1919, c. 18, 40 Stat. 1057, 1130, 26 U.S.C.A. §§ 1040—1054, 1383 1391.
Concerning The Militia—Presser v. Illinois, 116 U.S. 252, 6 S.Ct. 580, 29 L.Ed. 615; Robertson v. Baldwin, 165 U.S. 275, 17 S.Ct. 326, 41 L.Ed. 715; Fife v. State, 31 Ark. 455, 25 Am.Rep. 556; Jeffers v. Fair, 33 Ga. 347; Salina v. Blaksley, 72 Kan. 230, 83 P. 619, 3 L.R.A., N.S., 168, 115 Am.St.Rep. 196, 7 Ann.Cas. 925; People v. Brown, 253 Mich. 537, 235 N.W. 245, 82 A.L.R. 341; Aymette v. State, 2 Humph., Tenn., 154; State v. Duke, 42 Tex. 455; State v. Workman, 35 W.Va. 367, 14 S.E. 9, 14 L.R.A. 600; Cooley's Constitutional Limitations, Vol. 1, p. 729; Story on The Constitution, 5th Ed., Vol. 2, p. 646; Encyclopaedia of the Social Sciences, Vol. X, p. 471, 474.


text:
Introduction On December 1, 2015, the National Futures Association (the NFA) issued a notice to members to remind them of certain Commodity Futures Trading Commission (CFTC) regulations that require any person claiming an exemption or exclusion under CFTC Regulation §4.5, §4.13(a)(1), §4.13(a)(2), §4.13(a)(3), §4.13(a)(5) or §4.14(a)(8) from the requirement to register as a commodity pool operator (CPO) or commodity trading advisor (CTA) to annually affirm their notice of exemption or exclusion within 60 days of the calendar year end, which is February 29, 2016 for the current affirmation cycle.
The guidance states that failure by a member to affirm such active exemption or exclusion from CPO or CTA registration by February 29, 2016 will result in the automatic withdrawal of such member’s exemption or exclusion on March 1, 2016. Accordingly, by failing to reaffirm in time, a person that would otherwise be exempt or excluded from registration will be subject to the regulations applicable to CPOs or CTAs (regardless of whether the entity remains eligible for the exemption or exclusion) and to possible CFTC enforcement action for non-compliance.
Below, we (1) briefly discuss the procedural matters for making the annual NFA affirmations, (2) provide a more detailed discussion of compliance maters for CPOs and CTAs, and, (3) in conclusion, provide a brief summary of EU regulations applicable to funds and fund advisors.
Offices: London New York Washington, D.C.

matches: §4 §4 §4 §4 §4 §4