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Since the 1970s, our environmental practice has focused on meeting all our clients’ needs; in addition to our focus on litigation, we offer advice and legal support on business and regulatory issues.
Our lawyers have a long track record of success in litigating high profile environmental matters. Our experience in these matters dates back to the worldwide defense of DDT in the 1970s. Since then, as the number and diversity of state and federal environmental programs have grown, we have stayed on the leading edge of environmental litigation. We have a thorough understanding of the relevant science and unparalleled experience in litigating cases involving issues of environmental law, toxic torts, and federal regulations.
We now routinely work with the world’s leading experts in medicine, environmental engineering, forensic chemistry, chemical fate and transport, geology, hydrogeology, natural resource damages, natural resource economics, industry practices, metallurgy, risk assessment, and toxicology. Our ability to both understand and advocate sound scientific principles has provided significant advantage to our clients in the successful resolution of their matters,, which have included: defense of governmental enforcement, cost recovery, and natural resource damage actions under CERCLA, as well as actions under RCRA, the Clean Water Act, the Clean Air Act, the Endangered Species Act, the Act to Prevent Pollution from Ships, the Toxic Substances Control Act, the Federal Insecticide, Fungicide, and Rodenticide Act, the National Environmental Policy Act, the Coastal Zone Management Act, as well as state environmental statutes of every sort. We also defend clients facing criminal prosecution under these federal and state environmental statutes, as well as private actions of every sort based upon the release of a chemical in circumstances that lead to allegations of injury to people, property, or the environment.
As the United States now enters a new generation of environmental law, our lawyers are ready for the challenge. Our past experience and constant monitoring of new scientific and legal developments positions us to litigate, on behalf of our present and future clients, complicated cutting-edge issues, such as whether the release of hydrocarbons into the atmosphere leads to global warming, whether global warming leads to sea level rise, and whether the migration of our population from the northeastern states to the south and west imposes too great a burden on environments that have limited sources of fresh water.
Long Island aircraft manufacturing site. We currently represent a government contractor in connection with chemical releases from a facility that had been in operation since the 1930s.
Hudson River. We currently represent General Electric in connection with ongoing remediation and natural resource damages issues surrounding New York’s Hudson River.
Alexander v. Halliburton, et al., Case No. 5:11-cv-01343 (W.D. Ok. 2015). We obtained a voluntary dismissal (without any payment by our client) for an environmental consulting firm named as a defendant in this multi-plaintiff case, seeking personal injury and property damages arising from the presence of perchlorate in offsite drinking water wells. The perchlorate arose from the reclamation of missile casings for the U.S. military.
Arias v. DynCorp, 752 F.3d 1011 (D.C. Cir. 2014). This litigation was brought by over 3,300 Ecuadorian farmers and three Ecuadorian provinces alleging that aerial eradication operations on illicit coca conducted as part of the “Plan Colombia” anti-narcotics initiative had resulted in herbicide drift into Ecuador. The provincial and individual plaintiffs sought more than $1 billion in damages for alleged impacts of the herbicide on the Ecuadorian environment and natural resources, agricultural crops, farm animals and fish, and human health. We won dismissal of the provincial government’s natural resource claim in 2010, based on standing principles, and secured summary judgment on the individual farmers’ claims in 2013, based on the plaintiffs’ failure to present reliable expert testimony.
Dickey v. Northrop Grumman, et al., Civ. Action No. 2:11-CV-37 (W.D.N.C. 2011). We represented co-defendants in an action brought by a manufactured home community to recover property damages allegedly caused by the presence of volatile organic compounds in ground and surface water, which allegedly originated from our clients’ property. The court granted our motion to dismiss CERCLA and other federal statutory claims and the case was resolved.
Avondale v. Norfolk Southern, No. 1:05-2817-MBS (D.S.C. 2008). We defended the railroad in connection with the largest property damages action in South Carolina history, arising from a train derailment that led to a release of chlorine gas that allegedly caused corrosion at a manufacturing facility and forced it out of business. The plaintiff sought $500 million in compensatory damages alone. Our defense included a four-month successful effort to remove and keep the case in federal court (rather than an inhospitable state forum); assembly of a team of experts specializing in corrosion science, financial damages, and the textile industry; Daubert attacks on plaintiff’s expert witnesses; and acceptance at trial of responsibility for the accident and a proper measure of damages. These defense efforts resulted in a successful resolution for our client after three weeks of trial and on the eve of the cross-examination of plaintiff’s CEO.
New Mexico v. Gen. Elec. Co., 467 F.3d 1223 (10th Cir. 2006). New Mexico brought natural resource damages claims against General Electric and others in connection with the South Valley Superfund Site in Albuquerque, New Mexico. The state sought roughly $4 billion in damages under CERCLA and state common law theories for groundwater contamination allegedly emanating from U.S. Air Force Plant 83, which was the subject of ongoing remediation. After extensive briefing on both summary judgment and Daubert issues, a six-day Daubert hearing, and nearly twenty-five days of pretrial hearings, the court issued a series of lengthy legal and evidentiary rulings in which it rejected plaintiffs’ theories of recovery, excluded the opinions of plaintiffs’ expert hydrologist, engineers, and economist, and ultimately granted summary judgment to defendants. Subsequently, we successfully defended that ruling on appeal to the 10th Circuit.
Allgood v. General Motors Corp., No. 1:02-cv-1077-DFH-TAB (S.D. Ind. 2006). Neighbors of a manufacturing plant sought property damage and medical monitoring costs from our client allegedly arising from PCB contaminated groundwater, surface water, and soil. We prevailed in Daubert motions excluding plaintiffs' medical and risk assessment experts and obtained summary judgment as to most of plaintiffs’ claims. The plaintiffs then settled.
Anchor v. Novartis, et al., Civ. Action No. 05-CV-0007 (WMS) (W.D.N.Y. 2006). We defended a pharmaceutical manufacturer in connection with a multi-plaintiff personal injury, property damage, and CERCLA cost recovery suit arising from the release of hazardous substances from a chemical plant that manufactured our client’s product. We obtained dismissal of the case.
In re Pfohl Brothers Landfill Site (W.D.N.Y. 2003). We represented Litton Systems in litigation in connection with a large industrial and municipal waste disposal site in Buffalo, New York. The litigation involved defense of EPA and DEC enforcement actions, defense and prosecution of CERLCA private cost recovery actions, as well as defense of personal injury, property damage, and medical monitoring class actions. All matters were successfully settled.
Hoyte v. Stauffer Chemical Co., Case No. 98-3024-CI-7, 2002 WL 31892830 (Cir. Ct. Pinellas County Florida Nov. 6, 2002). A putative class of former phosphorus plant workers alleged work place exposure to a variety of hazardous substances and sought a court-supervised fund for a monitoring program designed to detect future injuries. Following a four-day evidentiary hearing in Florida state court, we obtained a favorable ruling rejecting class certification. A nominal settlement followed shortly thereafter.
South Carolina Department of Health and Environmental Control v. Western Atlas, Inc., et al., No. 00-1759 (D.S.C. 2000); South Carolina Department of Health and Environmental Control v. Carolina Steel & Wire, et al., No. 00-1760 (D.S.C. 2000). We represented Northrop Grumman in two CERCLA cost recovery and natural resource damages cases brought by the State of South Carolina arising from the alleged release of chlorinated solvents at two different facilities. Both cases resulted in entries of favorable consent decrees. We also resolved a purported class action seeking personal injury and property damage and two other private tort suits related to the sites.
Nease v. Occidental, (N.D. Ohio 1999). We represented Velsicol in this private CERCLA contribution action seeking to recover response costs relating its manufacture of a pesticide for Velsicol at its property. The case was settled.
Rutherford v. ITT Industries, Inc., Civil No. 4:98 CV263-WS (N.D. Fla. 1999). We defended a major class action in Madison County, Florida, in which property owners alleged damage due to solvent contamination of potable water supplies. The case settled on the eve of class certification hearings based on the strategy of enlarging the settlement class to preclude future filings. The company achieved a very favorable settlement, and no further lawsuits were filed.
Mathis Brothers Marble Top/Shaver’s Farm (N.D. Ga. 1998). We represented Velsicol in defense of EPA’s claim for past costs for carpet waste disposal sites in northern Georgia, and in connection with a CERCLA private cost recovery/contribution action against PRPs. All claims were resolved on favorable terms.
Carroll v. Litton Systems, 47 F.3d 1164, 1995 WL 56862 (4th Cir. 1995). We defended personal injury and property damage claims arising from releases of chlorinated solvents. We obtained exclusion of plaintiffs' expert testimony and summary judgment from the district court because plaintiffs’ experts were unable to demonstrate exposure to levels of chemicals sufficient to cause harm. The case ultimately settled on favorable terms.
Hassayampa Steering Comm. v. Velsicol Chem. Corp., 942 F.2d 791, 1991 WL 159823 (9th Cir. 1991). The Ninth Circuit affirmed summary judgment for our client Velsicol Chemical Company in a CERCLA cost recovery action in which the “district court correctly concluded that diphacinone was not a hazardous substance as defined by CERCLA” because diphacinone (a rodenticide waste allegedly disposed at a landfill) was neither a listed hazardous waste nor exhibited any of the characteristics of a hazardous waste.
Firm talks to Law360 on the proliferation of public nuisance litigation.
"CERCLA settlement jurisprudence is about as improvisatory as one can imagine."
Oil & Gas Journal reports as the Firm hails the decline of Supreme Court deference to administrative agencies.
SAIC EE&I secures dismissal in suit by neighboring property owners alleging groundwater contamination at former industrial site in Oklahoma.
Alexander v. Halliburton et. al., No. CIV-11-1343-M (W.D. Okla. Apr. 8, 2015); Wilmes v. Halliburton et. al., No. CIV-11-1323-M (W.D. Okla. Apr. 8, 2015), Doc. Nos. 95, 183.
Fisher v. CIBA Specialty Chems. Corp., 238 F.R.D. 273 (S.D. Ala. 2006).

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[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] WALTER B. TOLUB, J.
This is Petitioner's motion for an order direction conveyances in the sum of $75,000 made by Respondent Easton Echtman, PC to Respondent David Etkind, be set a side and a judgment rendered in favor of Petitioner for said amount from Mr. Etkind.
As stated in this Court's findings of fact and conclusion of law dated August 18, 2008, Easton and Echtman P.C. was formed in 1972 by the late Henry Easton and Irwin M. Echtman. Mr. Easton died in 1986 and thereafter Mr. Echtman was its sole shareholder. In 1998 the firm had grown to four lawyers and 10 employees. Mr. Etkind joined the firm in 1997 before leaving to work with a competing firm in or about 2002.
In February 1998, the "Texaco" case, which gave rise to the fee dispute at issue, was settled resulting in a substantial fee being earned by Easton and Echtman. Entitlement to that fee was claimed by Joel Martin Aurnou and Peretz Amir. The fees were placed in escrow pending the resolution of the dispute.
Importantly, Respondents claim that prior to settlement of that suit, Mr. Etkind wanted to leave Easton and Echtman. Mr. Etkind claims, and Mr. Echtman's transcript from the March 26-27, 2008 trial confirms, that Mr. Etkind and Mr . Echtman entered into an oral agreement in December 1997, whereby Mr. Echtman agreed to pay Mr. Etkind $125,000 if it recovered money in the employment discrimination action and that in exchange Mr. Etkind would continue working at the firm on the Texaco case during a financially difficult time for the firm.
Shortly after the litigation over the fee dispute, Mr. Echtman suffered cardiac arrest and was unable to continue practicing law. The offices of Easton and Echtman essentially stopped working, the staff was disbandened and the firm's only function was collecting its receivables.
On April 17, 2002, Judge York granted Defendants' motion for summary judgment and dismissed all of Plaintiff's claims for attorney's fees owed.
On June 20, 2002, Easton and Echtman entered into a settlement agreement with Joel Martin Aurnou for the release of $1,000,000 to Easton and Echtman with an additional $800,000 to be released to Eaton and Echtman in January 2003.
Additionally, in 2002 Easton and Echtman paid Mr. Etkind $50,000, marked as payroll on Easton and Echtman's records. In 2003, Mr. Echtman also paid Mr. Etkind $75,000 which was marked as payroll. Both Mr. Echtman and Mr. Etkind state that the $125,000 was in satisfaction of the oral agreement they entered into in 1997.
Although Mr. Echtman never officially disbanded Easton and Echtman, in early 2003, he established the Law Firm of Erwin M. Echtman P.C.
On December 9, 2003, the Appellate Division reversed the April 17, 2002 decision dismissing Plaintiff's claims for attorneys' fees and set the case for trial on the issues of whether Plaintiff was an associate at the Easton Echtman firm and whether he had worked on the "Texaco" case.
In 2005 a trial was held. The defense advanced by Mr. Echtman, as the judgment debtor's sole principal, was that while he had agreed to share the fee, it was not with Peretz Amir, but rather with Sharon Amir, who had no relationship to Echtman or the firm. Mr. Echtman argued that he was not required to pay the counsel fee to Sharon Amir because it would violate the prohibition under DR-2-107 of sharing a fee with someone who was not an associate of his law firm. Mr. Echtman's other defense was that even if it were to be determined that the agreement was to pay Peretz Amir the counsel fee, Peretz Amir was not entitled to the money because he did not qualify as an associate at the judgement debtor's firm. Following the trial, the court dismissed Peretz Amir's claims for counsel fees.
In 2007, the Appellate Division reversed and judgment was entered in favor of Plaintiff. The Appellate Division calculated the damage of one-third (1/3) of the legal fee of $2,880,000 to be $960,000 with interest from February 4, 1998. The Judgment was entered on May 8, 2007 in the amount of $1,762,454.80 in favor of Peretz Amir and against Easton and Echtman.
Easton and Echtman then claimed that it was unable to pay Peretz Amir since it was no longer solvent. Mr. Amir claimed that the Chase account which held his counsel fees was drained by Mr. Echtman and Easton and Echtman through fraudulent conveyances. The underlying action then ensued.
On September 5, 2007 this court ordered Echtman to show why deposits made in, and then withdrawn from, the account of Easton and Echtman at HSBC in the amount of $1,000,000, which were then deposited in The Chase Manhattan Bank (Chase), and an additional $801,748.87 deposited in, and then withdrawn from, the account of Easton and Echtman at HSBC, and then deposited in Picet Et Cie Geneva (Swiss Bank), should not be turned over to Plaintiff's attorney. This court ordered that, to the extent that the monies were withdrawn from the above listed accounts, the Defendant was to advise the Plaintiff of the amount of the withdrawals, the dates and payees and to explain why each payment was not a fraudulent conveyance.
In response to this court's order, Easton and Echtman only explained a small portion of transactions. For example, Echtman admitted that he lent $145,000 of the $801,748.47 deposited in the Swiss Bank, to one of his son's corporations. Overall Echtman's response to the order issued by this court was incomplete and vague at best. A trial on fraudulent conveyances followed.
A trial was held on March 26, 2008 and March 27, 2008. The rule is that a transfer without consideration by one who is then a debtor raises a rebuttable presumption of fraud (Scola v. Morgan, 66 AD2d 288 [1st Dept 1979]). This Court found that it was clear from the evidence presented at trial that the conveyances and transfers of Easton and Echtman and Mr. Echtman were fraudulent. More specifically, this Court found that Easton and Echtman was a company which, at the time of the initial judgment through the present, essentially stopped functioning other than collecting its receivables. The company had no employees and its office was Mr. Echtman's living room. Even for the collection of its receivables, Echtman engaged another firm, Eachtman and Etkind, LLP. Mr. Echtman also established the Law Firm of Irwin M. Echtman PC in 2003.
This Court pointed out that at trial, Mr. Echtman was unable to answer why, inter alia; (1)Easton and Echtman paid a bookkeeping company when it had no employees; (2) why it paid a different company for legal work when all legal work was done through Irwin M. Echtman PC; (3) why bonuses were being paid to employees that did not work for Easton and Echtman; (4) Mr. Echtman could not remember what his office expenses were; (5) Mr. Echtman claimed that there had been mistaken deposits in Easton and Echtman PC by Irwin Echtman; and (6) Mr. Echtman could not explain how he was drawing such a large salary from Easton and Echtman when no work was being performed ( emphasis added). Furthermore, Easton and Echtman loaned hundreds of thousands of dollars to third-parties, including Mr. Echtman's son's company of which Mr. Echtman owns a 40% interest. Mr. Echtman also unilaterally transferred company money to his retirement account at Merrill Lynch. There was no consideration for any of those conveyances.
Mr. Echtman's transfers and conveyances were made without fair consideration from the time the underlying action was commenced through the present. This Court found that such transfers without the required consideration raises the presumption of fraud (Scola v. Morgan, 66 AD2d 288 [1st Dept 1979]). Mr. Eachtman's testimony and the evidence presented had not overcome the presumption of fraud. Mr. Echtman's actions constituted fraudulent conveyances pursuant to Debtor Creditor Laws § 273 and 273-a.
Mr. Etkind did not testify at the trial.
Accordingly, this Court held that Mr. Echtman's actions constituted fraudulent conveyances and that Mr. Amir was entitled to $1,762,454.80 plus interest from May 8, 2007 from Mr. Echtman. Mr. Amir has not recovered on his judgment.
The issue now presented is whether Mr. Amir may recover $75,000 that was conveyed to Mr. David Etkind based on Mr. Echtman's fraudulent acts.
Petitioner argues that based on this Court's finding that Mr. Echtman fraudulently conveyed funds, that he may recover pursuant to Debtor and Creditor Law § 278. Specifically, Petitioner argues that included in Mr. Echtman's fraudulent conveyances were payments to Mr. Etkind in the amount of $75,000.
1. Where a conveyance or obligation is fraudulent as to a creditor, when his claim has matured, may, as against any person except a purchaser for fair consideration without knowledge of the fraud at the time of the purchases. . .
(Debtor and Creditor Law § 278 [ emphasis added]).
Petitioner points to two payments made to Mr. Etkind in 2003, in which Mr. Echtman's records indicate that the payments were part of payroll. Petitioner argues that Mr. Echtman's explanation at trial and Mr. Etkind's submitted affidavit, that the payments were a bonus for work performed on the Texaco case, years after the work was actually completed, is insufficient to constitute fair consideration and that Mr. Etkind knew at all times about the litigation between Mr. Amir and Mr. Echtman regarding fees in the Texaco case.
Respondent, Mr. Etkind argues that he entered into an oral agreement with Mr. Echtman in 1997, years before there was a dispute with Petitioner and that Mr. Echtman promised to pay $125,000 depending on the outcome of the Texaco matter, in consideration for Mr. Etkind staying at the firm and working on cases during the financially difficult times. After Mr. Echtman received money from the Texaco matter he made partial payments to Mr. Etkind, two of which comprise the $75,000 Petitioner is seeking in this motion. Moreover, Mr. Etkind states that he was not aware of the litigation or the outcome of litigation between Mr. Amir and Mr. Echtman and that he dealt with Mr. Echtman at arm's length while working at a competing law firm.
In order to have a conveyance set aside, the party attacking the conveyance must prove that the conveyance is not founded upon a valuable consideration [fraudulent] and that the grantee had knowledge of the fraud at the time of the purchase ( See generally Sabatino v. Cannizzaro, 247 AD 20 [1st Dept 1934]; Weiser v. Kling, 38 AD 266 [2nd Dept 1903]) .
Even when there is a fraudulent transfer of a debtor's assets there must still be evidence that the receiver had knowledge of any intent to defraud creditors (Chemtex, LLC v. St. Anthony Enterprises, Inc., 490 F.Supp.2d 535).
Here there are questions of fact as to whether Mr. Echtman transferred the $75,000 in performance of the 1997 oral agreement between Mr. Echtman and Mr. Etkind and whether Mr. Etkind knew the $75,000 transfer was fraudulent back in 2003 because of the ensuing fee dispute between Petitioner and Mr. Echtman.
ORDERED that a copy of this order with notice of entry shall be served on the Clerk of the Judicial Support Office (Room 311) to arrange a date for the reference to a Special Referee.


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On April 8, 2014, the Grand Chamber of the European Court of Justice found that Hungary’s cutting short the terms of office of its old data protection ombudsman with its new Fundamental Law violated the Data Protection Directive (C-288/12, Commission v Hungary), while the European Court of Human Rights found that Hungary’s divesting of several previously registered churches from their church status under its new church law violated the Convention (Magyar Keresztény Mennonita Egyház and others v Hungary). The two judgments came two days after the Hungarian national elections in which the party of PM Viktor Orbán, FIDESz, won an overwhelming majority. While after the electoral victory PM Orbán emphasized that the renewed government will continue its work to preserve the achievements of the recent wave of constitution-making, these recent European judgments are clear reminders that there is still work to be done to bring the reinvented Hungarian constitutional and legal order in line with European minimum standards.
The European dimension of these recent developments is noteworthy, as the judgments arrive on the tails of the Commission’s communication on a new EU Framework to strengthen the Rule of Law. This new Framework is the Commission’s reaction to the Parliament’s resolution of July 2013 on the situation of fundamental rights: standards and practices in Hungary, calling for the establishment of a mechanism which ensures continuing compliance with the common values of the EU, as expressed in Article 2 TEU. In her initial response Commissioner Reding was far from enthusiastic about embracing the Parliament’s proposal, in September 2013, however, she outlined a formal notice procedure under Article 7 TEU (similar to the infringement procedures), while she mentioned that a farther reaching mechanism would take a treaty amendment. The Commission’s new proposal from March 2014 is built on the premise that infringement procedures are an important instrument of enforcing EU law in the member states. Individual violations of fundamental rights are to be handled by the national judiciaries and through mechanisms in the European Convention on Human Rights system. For systemic violations (but not for individual breaches) which fall outside EU law the Commission envisions a new three-stage preventive and sanctioning mechanism, which could be activated in case of a “clear risk of a serious breach” of Article 7(1) TEU. This new three-stage process builds on continuing dialogue with the member states, and intense cooperation between expert bodies in the EU and the Council of Europe.
The two recent European judgments on Hungarian developments provide an important reality check on key components of the proposed EU Framework for the very national context which is largely credited for triggering the conversation on the need for a European mechanism to prevent the systemic decline of constitutional institutions in the member states. Both cases concern the evaporation of key constitutional guarantees and test the application of European minimum standards, as well as the capacity of European institutions to defend, restate and reinforce those standards in the face of fundamental changes introduced to a pre-existing legal framework which had been in place at the time when Hungary joined the elite clubs of European democracies. Both judgments were handed down amidst an ongoing exchange concerning these rules, after a relevant aspect of respective cases had already been assessed – respectively – by the Hungarian Constitutional Court, the European Commission as well as the Venice Commission, and the contested legal rules had been amended by the Hungarian Parliament in response to these interventions or to prevent further criticism.
The saga of the data protection ombudsman is relatively straightforward: the new Fundamental Law redefined the office of the ombudsman (officially: commissioner for fundamental rights). Data protection was not included in the mandate of the new ombudsman (Article 30, Fundamental Law). Instead, the newly adopted 2011 data protection act established the National Authority for Data Protection and Freedom of Information (Article 38). The Authority was meant to “collaborate with the bodies and persons defined in specific other legislation to represent Hungary in the joint data protection supervisory bodies of the European Union” (Article 38(4)(4)). The president of the Authority is appointed by the President of the Republic upon the proposal of the Prime Minister (Article 40(1)), for a 9-year term (Article 40(3)). The operative provisions of the 2011 data protection act on the Authority entered into force together with the new Fundamental Law on January 1, 2012 (Article 73(2)).
The data protection ombudsman (similarly to the chief justice of the Supreme Court) became the subject of a targeted and highly individualized liquidation effort through constitutional reform. When the Fundamental Law entered into force, the old data protection ombudsman elected by (the previous) parliament under the old data protection law had almost two years left of his 6-year tenure, until the end of September 2014. The Transitional Provisions to the Fundamental Law, and then the Fourth Amendment bringing the substance of the Transitional Provisions back to the Fundamental Law after the judgment of the Constitutional Court, provided that the old data protection ombudsman’s terms of office shall expire with the entry into force of the Fundamental Law (point 17, Closing and miscellaneous provisions). Unlike the data protection ombudsman, the transitional rules of the Fundamental Law permitted the sitting general ombudsman to stay in office until his term expired (point 16, Closing and miscellaneous provisions).
The Commission commenced accelerated infringement proceedings against Hungary in January 2012 in three cases, the data protection ombudsman’s early termination being one of them. In response the 2011 data protection act was amended to introduce safeguards for the independence of the data protection authority. The Venice Commission’s opinion on the 2011 data protection act of October 2012 draws on Article 8 of the European Convention, as well as Council of Europe Conventions no. 108 and 205 (which Hungary has ratified). Despite the amendment of the 2011 data protection act, the Venice Commission remained vary that the new data protection authority is appointed by the president of the republic, while Parliament is left out of the appointment process completely (note: the old data protection ombudsman used to be elected by parliament) (para. 36).
[i]t is true that Member States are free to adopt or amend the institutional model that they consider to be the most appropriate for their supervisory authorities. In doing so, however, they must ensure that the independence of the supervisory authority under the second subparagraph of Article 28(1) of Directive 95/46 is not compromised, which entails the obligation to allow that authority to serve its full term of office (para 60).
The CJEU highlighted that the early dismissal of the data protection ombudsman cannot be justified by the overall restructuring of the institution, stressing that the remodeling itself has to meet requirements of independence (para 54): transitional measures have to ensure that the already appointed officer is allowed to serve until the end of the term (para 61). The CJEU’s reasoning echoes the opinion of AG Wathelet from December 2013, who considered the security of the tenure of the data protection supervisor to amount to a guarantee of its complete independence required by the Directive.
While the clearcut finding of a violation is a welcome conclusion in the case one cannot but notice that it took over two years to reach this conclusion since the starting of the accelerated infringement proceedings. Although the CJEU found a violation of the requirement of the independence under the Directive, it only addressed the narrow question of the early dismissal of the old data protection ombudsman, and did not tackle the more comprehensive issue of the independence of the new data protection authority. It is of little consolation that the Venice Commission expressed its reservations about the independence of the new Authority and its scope of powers in its opinion on the 2011 data protection act already in October 2012.
The constitutional reduction of the mandate of the ombudsman, as well as the removal of a lawfully elected and appointed official entrusted with the protection of fundamental human rights raise fundamental constitutional questions on the national level. The CJEU was clearly aware of the constitutional gravity of the case, as the Court went as far as reminding that “a Member State cannot plead provisions prevailing in its domestic legal system, even its constitutional system, to justify failure to observe obligations arising under EU law” (para 35). Still, the judgment of the CJEU was reached on a narrow and technical ground, based primarily on Article 28(1) of the Data Protection Directive. The general principle of legal certainty was addressed in the Opinion of AG Wathelet and also by the CJEU (para 35) on account of the potential remedy (ie. the reinstatement of the old data protection ombudsman), but not as a fundamental consideration. The Court itself indicated that the requirement of independence of the national data protection authority is based on Article 8(3) of the Charter and Article 16(2) TFEU (para 47). The judgment itself, however, is based on the Data Protection Directive, and not directly on the Charter. A less than enthusiastic reader therefore may easily conclude that the CJEU found a technical violation of EU law, and not a fundamental one.
In contrast, the ECtHR left little doubt that it considered Hungary’s new legal regulation on the redistribution of church status to be in violation of European minimum standards on the associational aspect of freedom of religion. On account of the Hungarian case the Court elaborated on the practical implications of state neutrality and impartiality in state-church relations, confirming limitations on the powers of the national government to reshuffle an existing legal framework.
With the 2011 church law and subsequent amendments to the Fundamental Law the Hungarian Parliament discontinued the legal recognition of more than 300 previously recognized churches. Under the new rules Parliament selects via a discretionary decision those religious communities which may continue to operate as “incorporated churches.” Other religious communities are permitted to operate in a special religious association status. So far 32 such incorporated churches were re-recognized by Parliament. Previously registered churches which were not re-recognized by Parliament under the 2011 church law turned to the ECtHR, challenging various aspects of the regulation and the procedure of re-recognition. As under Hungarian law there was no judicial recourse against the decision of Parliament refusing to re-register a previously recognized church, applicants turned to the ECtHR swiftly, between the fall of 2011 and the summer of 2012.
Hungary has been in an even more intense exchange internally as well as with the Venice Commission on the regulation of church status under the new Fundamental law than with the 2011 data protection act. The ECtHR judgment records the amendments to the 2011 church law, the three major constitutional amendments transforming the Fundamental Law, the decision of the Constitutional Court as well as the opinions of the Venice Commission on the regulation of church status in Hungary on more than 30 pages. The current regime which consists of a higher tier of “incorporated churches” (recognized by Parliament) and a lower tier of “religious communities (registered by court) is the result of a comprehensive amendment passed to the 2011 church law in the summer of 2013. Parliament’s decision to grant church status to a religious community ultimately depends on whether Parliament wishes to cooperate with that particular community to jointly perform community goals (Article VII(4) of the Fundamental Law, as amended by the Fifth Amendment).
The chamber judgment of the ECtHR (5-to-2) found that the newly introduced two-tier church de-/re-registration system violates Article 11 in conjunction with Article 9. Although the ECtHR did not consider the discrimination claim under Article 14 in detail in a separate part of the judgment (see paras. 116-118), an anti-discrimination logic inherent in the application of Articles 9 and 11 is readily apparent from the reasoning under Article 11 in conjunction with Article 9. The ECtHR reinforced the fundamental premise of its previous jurisprudence on the centrality of the requirement of neutrality and impartiality “in exercising … regulatory power in the sphere of religious freedom” (para. 76). The Court stressed that the power of the state in this sphere must be used sparingly (paras. 80 and 84), and the government has to demonstrate compelling reasons for the interference (para. 84). The Court acknowledged the diversity of models of state-church relations in Europe (which includes member states with established churches), and emphasized that under the Convention the state’s choice of religious partners for cooperation in delivering public interest tasks cannot be arbitrary, and has to be based on transparent criteria (para. 109). The Court reiterated that neutrality is also a requirement when the state allocates monetary resources and related privileges (para. 107), noting that the funding of churches cannot be discriminatory or excessive when compared to other organizations in society (para. 100).
Similarly to the CJEU, the ECtHR was not simply interested in the compatibility of the newly established regulatory framework, but was equally concerned about the changes it introduced to the existing regulatory framework. When examining the new church recognition regime in Hungary, the ECtHR was keen to emphasize that the lawfulness of the operation of the applicant churches, which were divested of their church status as a result of the 2011 church law (and its subsequent amendments), has not been questioned by the government before (para. 104). In accordance with previous case law, the Court emphasized that the requirement of re-registration of such churches has to meet particularly weighty and compelling reasons (para. 104). In this respect the ECtHR also noted that while preventing disorder and crime was a legitimate aim in regulating state-church relations (para 86), in the case the Hungarian government did not manage to demonstrate that a “less drastic solution” to the problem of “too many churches” in Hungary was not available (para 96).
The ECtHR noted that two-tier systems of church recognition are known in Europe, adding that these typically (“normally”) result from historical arrangements, predating the member states’ entry into the Council of Europe (para. 100). Thereafter the Court found that the newly introduced two-tier system in Hungary does not fully reflect historical traditions, as is also illustrated by the parliamentary record (para. 101). The ECtHR agreed with the Venice Commission that the political discretion inherent in the new Hungarian church recognition regime “carries with it the disregard of neutrality and the peril of arbitrariness” (para 102). Also, the ECtHR found that the differentiation between incorporated churches and religious associations in the Hungarian law (as was also established by the Constitutional Court (6/2013 (III. 1.) AB decision)) is not based on objective grounds (para 112).
A key theme, infusing the reasoning of the ECtHR on multiple issues was that religious communities at the lower tier of recongnition, and their believers, cannot be relegated to second-class citizenship as a result of the administration of the recognition regime. This was emphasized by the ECtHR both on account of the nature of positive obligations in establishing a system of recognition, which provides access to legal entity status (paras. 92-94), and also on account of the co-operation regime between the state and religious communities (para 109).
The lessons from these cases for the Commission’s new proposal for an EU Framework to strengthen the Rule of Law are certainly early and tentative, nonetheless are worthy of reflection. The Commission’s proposal to rely primarily on judicial processes for individual violations, and leave the three-stage monitoring process for systemic concerns needs to be looked at in light of how national scenarios which may come within the new monitoring mechanism develop, as well as, how those court cases unfold.
Similarly to the earlier infringement proceeding in the case of the forced early retirement of judges (C-286/12, Commission v Hungary) the CJEU judgment on the data protection ombudsman is spectacularly technical, despite the admittedly broad implications of an infringement procedure for the reinvented Hungarian data protection regime. Individual cases like this, whether brought by the Commission in infringement proceedings, or by individuals through national courts are unlikely to be able to shatter a government engaging in a systemic undermining of a constitutional regime.
In contrast, the ECtHR judgment on the 2011 church law is certainly much more comprehensive. It is important to point out, however, that it took three seasoned litigators and more than a dozen highly motivated clients, who together raised a range of issues which permitted the Court to reexamine and reinstate the basic premises of its jurisprudence before reaching a conclusion on the Hungarian law. It helped that these cases went directly to the ECtHR due to the lack of a domestic remedy at about the same time, and did not get scattered around on the various levels of the Hungarian judicial system for multiple years before reaching Strasbourg on segmented technical issues. The ECtHR judgment also seized on the momentum built by the Venice Commission’s opinions on the Hungarian law and the provisions of the Fundamental Law. Also, it is unlikely that a similarly compelling judgment would have been possible on a subject where the jurisprudence is less developed or the standard is less clear. Therefore, the ECtHR judgment in this case is more an exception than a rule, when it comes to sizing up the impact individual cases can make to challenge the declining constitutional record of a member state.
A final word on the dialogue component of the envisioned three-stage monitoring process: the Hungarian government has undoubtedly engaged in an exchange with a range of actors (such as the Commission, the Venice Commission and the Constitutional Court) and amended the legal and constitutional rules which were challenged in the two cases. Since the case on the 2011 church laws had been communicated by the ECtHR, the 2011 church law was subject to one major statutory overhaul and two constitutional amendments (the Fourth Amendment, and than the Fifth Amendment, amending the Fourth Amendment) until it reached the shape which was then invalidated by the ECtHR. These adjustments did not aspire to align the freshly enacted rules with European standards, rather, Hungarian authorities made an effort to find a formulation for their original ideas which they believed was going to comply with the European minimum.
To conclude, the two recent European judgments bring sobering and timely reminders to a freshly reelected Hungarian government on the shortcomings of Hungary’s reinvented constitutional framework. At the same time, the two judgments can be read as a timely reality check on some key aspects of the Commission’s newly envisioned EU Framework for strengthening the Rule of Law. It appears that for the new mechanism to function, legal expertise is as important as lucky coincidences. So far all that is clear is that European institutions may use petitions challenging various aspects of the constitutional decline in member states to take stock of their own jurisprudence, in the hope that their reminders on the European minimum standards will contribute to piling political pressure on the violators, nudging them to comply. If so, the proposed Framework in its current form is best understood as a collective constitutional learning experiment which is more likely to benefit the instructor and the top students than those who are lagging behind.On April 8, 2014, the Grand Chamber of the European Court of Justice found that Hungary’s cutting short the terms of office of its old data protection ombudsman with its new Fundamental Law violated the Data Protection Directive (C-288/12, Commission v Hungary), while the European Court of Human Rights found that Hungary’s divesting of several previously registered churches from their church status under its new church law violated the Convention (Magyar Keresztény Mennonita Egyház and others v Hungary). The two judgments came two days after the Hungarian national elections in which the party of PM Viktor Orbán, FIDESz, won an overwhelming majority. While after the electoral victory PM Orbán emphasized that the renewed government will continue its work to preserve the achievements of the recent wave of constitution-making, these recent European judgments are clear reminders that there is still work to be done to bring the reinvented Hungarian constitutional and legal order in line with European minimum standards.
To conclude, the two recent European judgments bring sobering and timely reminders to a freshly reelected Hungarian government on the shortcomings of Hungary’s reinvented constitutional framework. At the same time, the two judgments can be read as a timely reality check on some key aspects of the Commission’s newly envisioned EU Framework for strengthening the Rule of Law. It appears that for the new mechanism to function, legal expertise is as important as lucky coincidences. So far all that is clear is that European institutions may use petitions challenging various aspects of the constitutional decline in member states to take stock of their own jurisprudence, in the hope that their reminders on the European minimum standards will contribute to piling political pressure on the violators, nudging them to comply. If so, the proposed Framework in its current form is best understood as a collective constitutional learning experiment which is more likely to benefit the instructor and the top students than those who are lagging behind.
SUGGESTED CITATION Uitz, Renáta: Collective Constitutional Learning in Europe: European Courts Talk to Hungary (Again), VerfBlog, 2014/4/10, https://verfassungsblog.de/collective-constitutional-learning-in-europe-european-courts-talk-to-hungary-again/.

matches: CJEU CJEU CJEU CJEU CJEU CJEU CJEU


In 2011, the Treasury Department published a proposed regulation setting forth the conditions under which a domestic entity would be required to report specified foreign financial assets. Reporting by domestic entities was deferred, however, due to issuance of Notice 2013-10, which provided that such obligation would not be effective until issuance of final regulations. After receiving comments, the Treasury Department published the final regulation for domestic entity reporting on February 23, 2016. The new rules are effective for tax years beginning after December 31, 2015.
Section 6038D provides that a “specified domestic entity” that has any interest in a “specified foreign financial asset” during the taxable year must attach Form 8938 to its tax return. The Final Regulations define “specified domestic entity” as any domestic corporation, a domestic partnership, or a domestic trust “formed or availed of for purposes of holding, directly or indirectly, specified foreign financial assets.” The determination as to whether a domestic corporation, a domestic partnership, or a domestic trust is a “specified domestic entity” is to be made on an annual basis.
In the case of corporations and partnerships, such entities are considered to have been “formed or availed of” for purposes of holding specified foreign financial assets if (1) the entity is “closely held” by a specified individual and (2) at least 50 percent of the entity’s gross income for the taxable year is passive income or at least 50 percent of the assets held by the entity for the taxable year are assets that produce or are held for the production of passive income. The Final Regulations provide that the percentage of passive assets held by a corporation or partnership for a taxable year is the weighted average percentage of passive assets (weighted by total assets and measured quarterly), and the value of assets of a corporation or partnership is the fair market value of the assets or the book value of the assets that is reflected on the corporation’s or partnership’s balance sheet (as determined under either a U.S. or an international financial accounting standard).
In the preamble to the Final Regulations, Treasury stated that the “weighted average test” for determining whether at least 50 percent of an entity’s income or assets are passive “provides an administrable way to determine the passive asset percentage.” Corporation or partnerships may be required to substantiate their determination of the passive asset percentage upon request by the IRS.
The Final Regulations provide that a domestic corporation is deemed to be “closely held” by a specified individual if at least 80 percent of the total combined voting power of all classes of stock of the corporation entitled to vote, or at least 80 percent of the total value of the stock of the corporation, is owned, directly, indirectly, or constructively, by a specified individual on the last day of the corporation’s taxable year.
The Final Regulations provide that the constructive ownership rules of IRC § 267(c) apply in making the determination of whether a corporation or partnership is “closely held” by a specified individual. The Final Regulations further specify that the constructive ownership rules apply as if the family of an individual includes the spouses of the individual’s family members.
Capital gains from the sale or exchange of property giving rise to passive income in the form of dividends, interest, income equivalent to interest, and rents and royalties.
The Final Regulations provide an exception applicable to a corporation or partnership that regularly acts as a dealer in property that gives rise to passive income, forward contracts, option contracts, or similar financial instruments (including notional principal contracts and all instruments referenced to commodities). In the case of such an entity, the term “passive income” does not include (1) any item of income or gain (other than any dividends or interest) from any transaction (including hedging transactions and transactions involving physical settlement) entered into in the ordinary course of such dealer’s trade or business as such a dealer; and (2) if such dealer is a dealer in securities (within the meaning of section 475(c)(2)), any income from any transaction entered into in the ordinary course of such trade or business as a dealer in securities.
The Final Regulations provide a special rule for related entities. All domestic corporations and domestic partnerships that are closely held by the same specified individual and that are connected through stock or partnership interest ownership with a common parent corporation or partnership are treated as owning the combined assets and receiving the combined income of all members of that group. For purposes of this rule, assets relating to any contract, equity, or debt existing between members of such a group, as well as any items of gross income arising under or from such contract, equity, or debt, are eliminated. A domestic corporation or a domestic partnership is considered connected through stock or partnership interest ownership with a common parent corporation or partnership if stock representing at least 80 percent of the total combined voting power of all classes of stock of the corporation entitled to vote or of the value of such corporation, or partnership interests representing at least 80 percent of the profits interests or capital interests of such partnership, in each case other than stock of or partnership interests in the common parent, is owned by one or more of the other connected corporations, connected partnerships, or the common parent.
The Final Regulations provide a series of examples to illustrate these rules.
Example 1. Closely held and constructive ownership.
(i) Facts. DC1 is a domestic corporation the total value of the stock of which is owned 60% by A, a specified individual, 30% by B, a member of A’s family for purposes of section 267(c)(2) who is not a specified individual, and 10% by FC1, a foreign corporation. DC1 owns 90% of the total value of the stock of DC2, a domestic corporation. FC2, a foreign corporation, owns 10% of DC2. Neither A nor B owns, directly, indirectly, or constructively, any stock in FC1 or FC2.
(ii) Closely held ownership determination. A is considered to own 90% and 81% of the total value of DC1 and DC2, respectively, by application of the rules of section 267(c) and this section. DC1 and DC2 are closely held by A within the meaning of paragraph (b)(2) of this section because A, a specified individual, is considered to own more than 80% of their total value.
Example 2. Application of aggregation rule and reporting threshold.
(i) Facts. L is a specified individual. In Year X, L wholly owns DC1, a domestic corporation, and also owns a 90% capital interest in DP, a domestic partnership. DC1 owns 80% of the sole class of stock of DC2, a domestic corporation. DC1 has no assets other than its interest in DC2. DC2’s only assets are assets that produce passive income, with a maximum value in Year X of $40,000 on October 12. DC2’s assets are comprised in relevant part of specified foreign financial assets with a maximum value in Year X of $15,000 on October 12. DP’s only assets are assets that produce passive income and that are specified foreign financial assets with a maximum value of $90,000 in Year X on October 12.
(ii) Specified domestic entity status.
(A) DC1 and DC2. DC1 and DC2 are closely held by a specified individual for purposes of paragraph (b)(2) of this section. DC1 and DC2 are considered related entities that are connected through stock ownership with a common parent corporation under paragraph (b)(3)(iii) of this section, because DC1 and DC2 are closely held by L, and DC2 is connected with DC1 through DC1’s ownership of stock of DC2 representing at least 80% of the voting power or value of DC2. As a result, for purposes of applying paragraph (b)(1)(ii) of this section, each of DC1 and DC2 is considered as owning the combined assets, and receiving the combined income, of both DC1 and DC2; however, DC1’s equity interest in DC2 is disregarded for this purpose under paragraph (b)(3)(iii) of this section. Therefore, DC1 and DC2 each satisfies the passive asset threshold of paragraph (b)(1)(ii) of this section, because 100 percent of each company’s assets is passive. DC1 and DC2 are specified domestic entities for Year X.
(B) DP. DP is closely held by a specified individual for purposes of paragraph (b)(2) of this section. DP is not considered a related entity with DC1 and DC2 under paragraph (b)(3)(iii) of this section, because DC1 and DP are not owned by a common parent corporation or partnership. As a result, whether the passive income or passive asset threshold of paragraph (b)(1)(ii) of this section is met with respect to DP is determined solely by reference to DP’s separately earned passive income and separately held passive assets. DP holds only passive assets during Year X and therefore satisfies paragraph (b)(1)(ii) of this section. DP is a specified domestic entity for Year X.
(A) DC1. Under §1.6038D-2(a)(6)(ii), DC1 is not treated as owning the specified foreign financial assets held by DC2 and DP for purposes of applying the reporting threshold of §1.6038D-2(a)(1), because DC1 does not have an interest in any specified foreign financial assets. DC1 is not required to file Form 8938 because DC1 does not satisfy the reporting threshold of §1.6038D-2(a)(1).
(B) DC2 and DP. Under §1.6038D-3, DC2 and DP each has an interest in specified foreign financial assets. For purposes of applying the reporting threshold of §1.6038D-2(a)(1), §1.6038D-2(a)(6)(ii) provides that DC2 is treated as owning in addition to its own assets the assets of DP, and DP is treated as owning in addition to its own assets the assets of DC2. As a result, DC2 and DP each satisfies the reporting threshold of §1.6038D-2(a)(1), because the value of the specified foreign financial assets each is considered as owning for purposes of § 1.6038D-2(a)(1) is $105,000 on October 12, Year X, which exceeds DC2’s and DP’s $75,000 reporting threshold. DC2 and DP must each file Form 8938 for Year X to report their respective specified foreign financial assets in which they have an interest and disclose their maximum values as provided in § 1.6038D-4 ($15,000 in the case of DC2 and $90,000 in the case of DP).
Example 3. Application of aggregation rule and entity with an active trade or business.
(i) Facts. The facts are the same as in Example 2, except that DC2 also owns an active business. The assets attributable to the business are not passive assets and constitute at least 60% of the value of DC2’s assets at all times during Year X. The income from the business is not passive income and constitutes at least 60% of the gross income generated by DC2 in Year X.
(A) DC1 and DC2. DC1 and DC2 are considered related entities that are connected through stock ownership with a common parent corporation under paragraph (b)(3)(iii) of this section because DC1 and DC2 are closely held by L, and DC2 is connected with DC1 though DC1’s ownership of stock of DC2 representing at least 80% of the voting power or value of DC2. As a result, for purposes of applying paragraph (b)(1)(ii) of this section, each of DC1 and DC2 is treated as owning the combined assets, and receiving the combined income, of both DC1 and DC2; however, DC1’s equity interest in DC2 is disregarded for this purpose under paragraph (b)(3)(iii) of this section. As a result, no more than 40 percent of the value of DC1’s and DC2’s assets at all times during Year X are passive and no more than 40 percent of DC1’s and DC2’s gross income for Year X is passive. DC1 and DC2 do not satisfy the passive income or passive asset threshold in paragraph (b)(1)(ii) of this section for Year X. DC1 and DC2 are not specified domestic entities for Year X.
(B) DP. For the reasons described in paragraph (ii)(B) of Example 2, DP is a specified domestic entity for Year X.
(A) DC1 and DC2. DC1 and DC2 are not specified domestic entities for Year X, and are not required to file Form 8938.
(B) DP. Under §1.6038D-3, DP has an interest in specified foreign financial assets. Under §1.6038D-2(a)(6)(ii), DP is treated as owning in addition to its own assets the assets of DC2. As a result, DP satisfies the reporting threshold of §1.6038D-2(a)(1) because the value of the specified foreign financial assets it is considered to own for purposes of §1.6038D-2(a)(1) is $105,000 on October 12, Year X, which exceeds DP’s $75,000 reporting threshold. DP must file Form 8938 for Year X to report the specified foreign financial assets in which it has an interest and disclose their maximum values as provided in §1.6038D-4, which is $90,000.
A domestic trust is considered to “formed or availed of” for purposes of holding specified foreign financial assets only if it has one or more specified persons as a current beneficiary. The term “current beneficiary” means, with respect to the taxable year, any person who at any time during such taxable year is entitled to, or at the discretion of any person may receive, a distribution from the principal or income of the trust (determined without regard to any power of appointment to the extent that such power remains unexercised at the end of the taxable year). A “current beneficiary” also includes any holder of a general power of appointment, whether or not exercised, that was exercisable at any time during the taxable year, but does not include any holder of a general power of appointment that is exercisable only on the death of the holder.
any trust which is exempt from tax under section 664(c), or is described in section 4947(a)(1).
is (1) a bank that is examined by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, or the National Credit Union Administration; (2) a financial institution that is registered with and regulated or examined by the Securities and Exchange Commission; or (3) a domestic corporation whose stock is regularly traded on an established securities market or is a member of the same expanded affiliated group as a corporation whose stock is regularly traded on an established securities market.
Finally, the Final Regulations exempt domestic grantor trusts owned by one or more specified persons.
The Final Regulations provide a special rule for purposes of determining the aggregate value of specified foreign financial assets held by a specific domestic entity. Under the existing regulations, a taxpayer is not required to report a particular asset on Form 8938 if such asset is reported on any of the following international information returns: Forms 3520, 5471, 8621, 8865, and 8891. The Final Regulations provide that the value of any specified foreign financial asset which is reported on one of the enumerated information returns is excluded for purposes of determining the domestic entity’s aggregate value of specified foreign financial assets.
The Final Regulations further provide that purposes of determining the aggregate value of specified foreign financial assets, a specified domestic entity that is a corporation or partnership and that has an interest in any specified foreign financial asset is treated as owning all the specified foreign financial assets held by all domestic corporations and domestic partnerships that are closely held by the same specified individual.
The Final Regulations apply to taxable years beginning after December 31, 2015.
 The Final Regulations exclude (1) any commodity hedging transaction described in IRC § 954(c)(5)(A), determined by treating the corporation or partnership as a controlled foreign corporation; or (2) active business gains or losses from the sale of commodities, but only if substantially all the corporation or partnership’s commodities are property described in IRC § 1221(a)(1), (2), or (8).
This entry was posted in FATCA and tagged FATCA, Foreign Account Tax Compliance Act by Matthew D. Lee. Bookmark the permalink.


“Plaintiffs Carol Johnson and her husband, Larry Johnson (“the Johnsons”) commenced this action in New York State Supreme Court alleging that Carol Johnson’s mother ingested diethylstilbestrol (“DES”) manufactured by Eli Lilly in 1952, and that Carol Johnson has been injured as a result. Eli Lilly removed the action to this Court on the basis of diversity jurisdiction.
JOHNSON v. ELI LILLY & CO., Leagle, 1988859689FSupp170_1839, April 7, 1988.
The Johnsons now move for partial summary judgment, contending that Eli Lilly is collaterally estopped from disputing certain facts based on the special jury verdict returned in a prior DES case against Eli Lilly. Defendants cross-move for summary judgment dismissing the complaint, contending that plaintiffs are barred from bringing this action under the doctrine of res judicata. I find that plaintiffs are barred from bringing this action under the doctrines of res judicata and collateral estoppel, and, therefore, grant defendants’ motion to dismiss the complaint.
Plaintiffs allege that Carol Johnson’s mother, Elizabeth Philbin, took DES in 1952 while she was pregnant with Carol Johnson. The prescription written by Mrs. Philbin’s physician called for a five milligram dose of an Eli Lilly product known as Enseals Stilbestrol. “Enseals” is a trade-name used exclusively by Eli Lilly.
Carol Johnson has been diagnosed as having carcinoma in situ of the cervix, vaginal adenosis with focal dysplasis and typical DES changes in the cervix. She entered the Genesee Hospital on July 6, 1981, and received a total abdominal hysterectomy.
On February 23, 1983, the Johnsons commenced a products liability action against Eli Lilly in the United States District Court for the Western District of Pennsylvania based on Mrs. Philbin’s ingestion of DES and Carol Johnson’s development of cancer. (“Johnson I“) In an Order dated September 19, 1983, the court granted Eli Lilly’s motion to dismiss, finding that the action was barred by the New York statute of limitations which accrued at the time Mrs. Philbin ingested the DES.
On December 13, 1986, the Johnsons commenced a second action in the court of Common Pleas for Allegheny County, Pennsylvania. (“Johnson II“) The case was removed on January 12, 1987 to the United States District Court for the Western District of Pennsylvania pursuant to 28 U.S.C. § 1441. The Johnsons subsequently moved for partial summary judgment, seeking to collaterally estop Eli Lilly from litigating certain issues based upon the verdict in Bichler v. Eli Lilly and Co.. Eli Lilly cross-moved for dismissal on statute of limitations and res judicata grounds.
In a Memorandum Decision and Order dated October 28, 1987, the court denied the Johnsons’ motion for summary judgment and granted Eli Lilly’s motion to dismiss. The court held that the suit was barred by res judicata because the dismissal of Johnson I constituted a decision on the merits. Applying Pennsylvania’s borrowing statute and the Pennsylvania accrual date, the judge further found that the suit was barred by the Pennsylvania statute of limitations. However, the court noted that it made no judgment as to whether the New York revival statute served to reviveJohnson I because no formal motion requesting such relief had been filed. The court then granted Eli Lilly’s motion for summary judgment without prejudice to the Johnsons filing a motion to revive Johnson I.
…continue reading the full paper JOHNSON v. ELI LILLY & CO., on Leagle.
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SOUTH JERSEY CATHOLIC TEACHERS ORGANIZATION, et al.
DIOCESE OF CAMDEN, et al.
By: L. Anthony Gibson, J.S.C.
Gerard W. Quinn and Lloyd D. Levenson for Defendants St. Mary's Church and St.
This is a dispute between rival labor unions in which the court has been asked to deternine which entity may act as the bargaining representative for lay teachers at two Catholic high schools. The plaintiff union and several of its members claim that the two defendant unions were illegally created and then wrongfully recognized by the parishes that own the high schools and the Diocese within which they operate. The defendant unions deny any wrongdoing and affirmatively seek a declaration as to their legitimacy. They are joined in that position by the parishes as well as the Diocese. Procedurally, these claims are before the court by way of crossmotions for summary judgment; all parties support their position by invoking the right to orgaruize and bargain collectively as guaranteed by the New Jersey Constitution.
Joseph's Lay Teachers Association (hereafter SJLTA). Also named as defendants are the two parishes that own the high schools in which each of those unions operate, Saint Mary's parish in Gloucester County (hereafter St. Mary's) and Saint Joseph's in Hammonton (hereafter St. Joseph's). The final defendant is the Diocese of Camden (hereafter Diocese) which exercises certain supervisory powers over these and other Catholic schools within its jurisdiction.
For a number of years prior to 1997, the SCTO acted as the exclusive bargaining representative for all of the lay teachers in the eight Catholic high schools which operate within the Diocese. Each of those schools is subject to supervision by the Bishop for the Diocese, both spiritually and administratively. The Diocese sets tuition, establishes wage limits and has the authority to hear appeals from teacher grievances. It also selects the principal and the vice principal for each school. On the other hand, each school maintains a level of independence. For example, each has its own administration and faculty. Although the Diocese has approval power for all teaching applicants, the hiring and firing of lay teachers generally occurs at the local level. The Diocese sometimes makes loans to a school but each school is responsible for its own funding and each administers its own budget. Also, each of the eight schools is either a separate corporate entity sponsored by the Diocese or it is owned and sponsored by a parish within the Diocese, which is itself a separate corporate entity. For example, Saint Joseph's High School is owned and operated by St. Joseph's parish in Hammonton; Gloucester Catholic High School is owned and operated by St.
Mary's parish in Gloucester County. In addition, all of the schools are physically separate; that is, they are located at separate sites throughout the Diocese.
In 1981, the Diocese and teacher representatives from all eight high schools met and agreed that a council should be formed for purposes of improving communications among the teachers, the school administrations and the Diocese. The result was the formation of an entity known as the Secondary Contracted Teachers Council (SCTC). The areas of common concern which were identified included educational policy, problem solving procedures and wages and fringe benefits. With regard to wages and ftinge benefits, the Council was to be given the exclusive right to negotiate with the Diocese. Although the agreement was in writing, it was stipulated to be "tentative" and was subject to approval by the faculties at each of the schools. No document or certification has been submitted that indicates that that approval was ever obtained. Nevertheless, the Council was created and it acted as the teachers' representative in subsequent negotiations. Indeed, several such contracts were negotiated over the years, each of which covered a specific terin, usually three years. The 1981 Agreement itself made no reference to duration.
Not including the contracts which were negotiated following the contested 1997 elections, the most recent collective bargaining agreement covered the time period from September 1, 1994 to August 31, 1997. By that time the Council had changed its name to the SCTO. Included in the 1994 contract between the SCTO and the eight Catholic high schools (referred to in the agreement collectively as the "Diocese") were provisions relating to wages, employee benefits and certain noneconomic subjects. One such provision gave the Superintendent of Schools for the Diocese the authority to resolve teacher grievances. The participants in the negotiations that lead to that agreement included the SCTO, the Diocesan Superintendent and the principals from each of the individual schools.
For some time prior to 1997 many, if not most, of the lay teachers at Gloucester Catholic and St. Joseph's High School were dissatisfied with the manner in which they were being represented by the SCTO. For example, the Gloucester Catholic teachers were disgruntled by SCTO's refusal to recogmize the site representative that they had selected. Most of the dissatisfaction, however, was generated by the SCTO's reaction to the failure to reach a new contract at the expiration of the 1994-97 contract. Contrary to the wishes of the majority of the teachers at Gloucester Catholic and St. Joseph's, the SCTO decided to strike. Not only was the decision to strike contrary to their wishes but the attitudes expressed by SCTO's leadership and the tactics they embraced were viewed as offensive. For example, at one of the union meetings, SCTO's president referred to the Bishop as a scum-bag and suggested that he was someone who could not be trusted. Since the Bishop is not only the administrative head of the Diocese but also its spiritual leader, many of the Catholic teachers at the defendant schools saw these remarks as insulting to them and their religion. Another example of the conduct which most of the teachers found offensive was the decision by the SCTO to invoke the cooperation of the Teamsters. Once involved, the Teamsters threatened to use sound trucks and homs to disrupt the classes which were being conducted by the teachers that had chosen to cross the picket lines.
electing officers, the new unions then sought and received recognition from the Diocese and the panishes; collective bargaining agreements were negotiated thereafter. By then, the SCTO had also negotiated a new contract and the strike ended. As part of the negotiations that lead to that contract, the SCTO took the position that the new unions were unlawful and that it, the SCTO, still represented the lay teachers in all eight schools. However, all sides agreed to disagree on this issue and to allow the question to be decided by the courts. This suit was initiated three months later.
the event of a strike. Finally, plaintiffs have supplemented the factual history by submitting evidence that in January of 2000 six of the lay teachers that are currently represented by the SJLTA expressed their wish to join, or as the case may be, rejoin the SCTO, thereby undermining the SJLTA's majority status.
Plaintiffs' case has two fundamental components. First, they claim that the constitutional right of the individual plaintiffs to organize and collectively bargain was violated, initially by defendant unions by purporting to represent the lay teachers at the two Catholic high schools, and thereafter by the parishes and the Diocese when they agreed to recognize them. Essentially plaintiffs contend that the new unions cannot exist as independent bargaining unlits, that is, independent of the SCTO - at least not in this setting. Secondly, plaintiffs claim that even if the creation and subsequent recognition of these new unions was proper, the elections which produced them were not; that is, the elections were the product of undue influence by the school administrations. Defendants deny these claims and affirmatively seek a declaration as to the legitimacy of the new unions.
Collective Bargaining Rights in New Jersey; Implementing Self-Executing State Constitutional Rights, 18 Rutgers L.J. 729, 743 (1987).
employees under Article 1, paragraph 19 remain unclear, adjudications under the NLRA are considered "appropriate and helpful guidelines." Comite Orgranizator v. Molinelli, supra at 98. On the other hand, given the lack of a statutory foundation for those rulings here, "they are in no sense binding." Cooper v. Nutley Sun Printing Co., Inc. 36 N.J. 189, 200 (1961). Moreover, in view of the somewhat unique circumstances of this case, it is an open question as to just how helpful the federal rulings are.
the NLRA, the federal experience is nevertheless useful in attempting to understand the parameters of the rights that are at issue. Comite Organizador v. Molinelli, supra at 98. Thirdly, there are certain identified public policies that underlie these rights and they should be kept in mind when one attempts to apply paragraph 19 to this particular factual setting. See e.g. S. Jersey Catholic School Teachers v. St. Teresa, supra at 600. Finally, it is appropriate that one apply equitable principals to the resolution of disputes of this nature. Cooper v. Nutley Sun Printing, Inc., supra at 198-200.
law. Instead, plaintiffs point to the history of the bargaining process up until 1997, the so-called "recognition agreement" of 1981 and the federal rulings that they believe support their position. I find these arguments unpersuasive.
As for the bargaining history, plaintiffs are correct that the SCTO and/or its predecessor acted as the exclusive bargaining representative for the lay teachers at all of the eight high schools during the period from 1984 to 1997. Although St. Joseph's High School was inadvertently left out of one of the collective bargaining agreements, it is clear that during the above time period the majority of the lay teachers in the eight high schools were content to act as a single bargaining unit. Plaintiffs are also correct that the history of the bargaining process is a significant factor in determining the appropriateness of a bargaining unit. See Lay Fac. Assoc. v. Newark Archdiocese, 122 N.J. Super. 260, 276 (App. Div. 1973). This is particularly true under the federal legislation. See General Electric Company, 180 NLRB 1094, 1095 (1970); Westinghouse Electric Corporation, 227 NLRB 1932, 1933 (1977); Kalamazoo Paper Box Corp., 136 NLRB 134, 136 (1962).
Despite its significance, however, bargaining history is but one of the several factors that should be considered in assessing the legitimacy of new bargaining units. Kalamazoo Paper Box Corp., supra; Archibald Cox, et al. Labor Law, Cases and Materials at 274-276 (12th ed 1996); 48 Am Jur 2d, Labor and Labor Relations § 1291 et seq. (1994). Nor is it appropriate to view bargaining unit designations as exclusive. In other words, the fact that a certain group of employees may share sufficient areas of interest to qualify as a bargaining unit does not mean that there is only one unit into which those employees may legitimately fit. Indeed, there may be several qualifying units. Cox, et at., supra.; 48 Am Jur 2d, supra at §1286. Thus, it is incorrect to suggest that, because of the common interests that these teachers share, an eight school bargaining unit such as the SCTO is the only unit appropriate for collective bargaining purposes. Ibid.
1153, 1156 (5th Cir. 1980).
If one applies these considerations here, it is clear that certain factors support plaintiffs' unit and some support defendants' units. Indeed, if equal weight is given to each factor, the greater number seem to support plaintiffs. However, not all factors are equal in weight and, as already noted, this is not an "either-or" process; that is, even when there is a single employer, more than one group of employees may constitute "a unit appropriate" for collective bargaining purposes. Cox, et al., supra at 276; 25 USCA § 158. As stated by Professor Cox, the term "community of interest" refers to the combination of factors. Nor does it lend itself to mechanical application. Cox, et al., supra at 276.- see also 48.11m Jur 2d, supra at § 1286.
Plaintiffs nevertheless contend that in this setting, the SCTO should be the only appropriate bargaining unit. In so arguing, they emphasize the history of the bargaining process, the commonality among the teachers (including the similarities in working conditions, wages, and qualifications), as well as the supervisory role of the Diocese. Defendants, on the other hand, point to their right of selfdetermination, the fact that they work for different schools, their geographic separation from the other schools, their distinct status as parish sponsored schools and the differing philosophies between the teaching groups regarding the nature of their role, both at work and in the bargaining process. It is their position that the views of the lay teachers in their units are so opposed to those of the majority of the teachers in the SCTO, that to compel them to utilize the SCTO as their representative, effectively means that they will be disenfranchised.
teachers at other schools and/or they had previously chosen to be part of a different bargaining unit, would take away with one hand what one gives with the other.
Secondly, the fact that the teachers at the defendant schools share a community of interests with lay teachers at other schools in the Diocese, although significant, is also not dispositive. All teachers share some commonality of interests, not just lay teachers at Catholic high schools within the Diocese of Camden. That fact does not bind every lay teacher in the State to the SCTO. Nor does it bind all those in the Diocese. Thirdly, one's exercise of a constitutional right to choose a bargaining representative is not a one-time event. The teachers at the defendant schools did not agree to utilize the SCTO as their representative for all time. Finally, if one evaluates this issue based on equitable considerations, the balance does not favor plaintiffs simply because the SCTO's strength has been somewhat diluted by defendants' choice, or because the number of schools to which displaced teachers may look for employment had been reduced.
Returning to the issue of commonality, despite plaintiffs' arguments to the contrary, there is no clear rule of law, federal or otherwise, that mandates the adoption of plaintiffs' position regarding the non-legitimacy of defendants' bargaining units. Stated differently, even when one utilizes the "community of interest" factors that have been considered relevant in determining appropriate bargaining units, plaintiffs' right to override the choice that the lay teachers at the two defendant schools have made is not persuasive. It is true, as plaintiffs point out, that the lay teachers in all of these schools share some community of interest. All of them are teachers, all work within the Camden Diocese, all of their jobs are similar, their wages are comparable and they have all been part of a single bargaining unit in the past.
to the collective bargaining process.
Cox, et al., supra. When one factors into the analysis the constitutionally guaranteed right of self organization and employee choice, the argument favoring the legitimacy of the defendant units becomes even stronger. See generally Ind Dairy Workers, etc. v. Milk Drivers, etc., Local.,Vo. 680, supra.
If the analysis is shifted from an assessment of commonality to a balancing of the equities, Cooper v. Nutley Sun Printing Co., Inc., supra, the support for defendants' position is further enhanced. An equitable analysis requires the court to consider not only the relevant similarities and differences between these competing bargaining umits, but also what it is that each side has to gain and lose in this process. The factors that plaintiffs have identified are (1) the SCTO will not be as large and thus may lose some of its bargaining strength and (2) by permitting the defendant schools to remove themselves from the pool of potential employers, there are fewer schools to which a teacher who is let go by one school may then transfer without losing seniority. The factors that defendants have identified are as follows: (1) the undermining of their night of self-determination; (2) the loss of an effective voice in bargaining process, particularly with regard to the economic tactics one should choose (e.g the decision to strike) and (3) the impairment of their ability to work smoothly within the parishes that sponsor them, that is, the requirement that the members of the defendant unions defer their views to those of the SCTO, an entity with which they and their parishes have relatively few connections.
In evaluating these factors, the greater equities favor the defendants. SCTO's loss of some of its strength because of a reduction in membership does not outweigh the loss that defendants' units will suffer if they are compelled to disband. Stated differently, a ruling in defendants' favor will not preclude the SCTO from continuing to act as bargaining representative for most of the lay teachers in the Diocese (175 out of 230). On the other hand, if the court rejects the defendants' position and endorses the result plaintiffs seek, defendants' right to act as independent units would be lost entirely. Even when one factors in the reduction, of schools available in the event of transfers by SCTO members, the balance still favors defendants. If one adds to the mix defendants' right of self-determination and the philosophical differences that separate these groups, the support for defendants' position is even stronger.
the long history of the multi-unit bargaining outweighed the petitioner's position. General Electric, supra at 1095.
First of all, this case is factuafly distinguishable. We are not dealing here with integrated production units of a single employer. These are separate schools that are owned by different entities and which, for the most part, do not interact. The successful completion of the collective bargaining process for the six schools still represented by the SCTO is not necessarily dependent on what happens at the two defendant schools. Nor is there any evidence to support the notion that separation of these schools from plaintiffs unit adversely affect the employers at the individual schools. If there is a strike at St. Joseph's, for example, that is not going to impede operations at some other Diocesan high school or vice versa. In General Electric, in contrast, although the NLRB is not explicit in its rationale, it appears clear that the success of the company's operation there is dependent upon the effective linkage of its' various components.
Factual distinctions aside, the General Electric ruling is simply not very helpful. Other than referencing the history of the collective bargaining process, the NLRB tells us nothing about the factors that would arguably distinguish the units in question. The opinion does not reveal, for example, what these units have in common and what they do not. The Board appears to treat this as a single factor case; that is, collective bargaining history. That may be because the petitioner failed to present any other factors or, it may be that he did so but the Board considered them irrelevant. We are not told. Certainly this ruling fails to consider the factors that were discussed in other rulings such as NLRB v. Kalamazoo Paper Box Corp., supra and.NLRB V. Harry T. Campbell & Sons Corp., supra at 975-976. Thus, unless one assumes that the only factor this court needs to examine is the collective bargaining history, the General Electric case is neither on point nor helpful.
The other case that plaintiffs' counsel advances as on point is NLRB v. Westinghouse Electric Corp., supra. This too is a "decertification" case. Petitioner is an employee of a large multiplant electric company who sought to separate the apparatus service plant from the other production and maintenance employees. Once again, the case involves a multiplant operation with a history of multiplant representation, plus consent by the local plant to merge with the larger national unit. The same union involved here was involved in the General Electric ruling and like that case, the NLRB concluded that the history of a multiplant national unit precluded the proposed unit from acting alone. Since, as in the General Electric case, no other factors relevant to a "community of interest" are discussed, for the same reasons discussed above, this ruling is neither "on point" nor helpful. It is also worth noting that what was at stake in the Westinghouse case was an effort to separate one of the service plants from the production and maintenance employees; the latter group was already separated from the rest of the Westinghouse employees. No one in that case was suggesting that all Westinghouse employees had to be in the same union.
The next component of plaintiffs' cause of action relates to the impact of the 1981 agreement, the so-called Recognition Agreement. Plaintiffs argue that that agreement precludes defendants from choosing another unit. I disagree. The 1981 agreement, assuming it is biding on anyone, simply acknowledges the common interests of the Diocese, the eight schools and the teachers to communicate effectively on the subjects of wages, working conditions and other matters and to recogaize the Council as the exclusive bargaining representative. It certainly does not purport to bind the parties for all time. Indeed the agreement makes no mention of duration. Generally, when a contract contains no express term as to duration, it is terminable at will or after a "reasonable time." In re Miller, 90 N.J. 210, 219 (1982). Thus, other than underscoring the bargaining history and the commonality of interests shared by these schools, both of which have been previously considered, I do not see how an invocation of the 1981 agreement changes the analysis.
I am not persuaded, for example, that by having a teacher representative from each school sign the 1981 agreement that all of the lay teachers at all of the schools, including future teachers, gave up their right to ever seek a representative other than the Council. Nor do I agree that, having once been a member of the Council or its successor, that the ability of such teachers to choose a new representative was dependent on their getting the permission of their original union. Although the lay teachers at St. Joseph's and Gloucester Catholic were bound to bargain through the SCTO during the term of their collective bargaining agreements, once those contracts expired they were free to reconsider the make-up of their bargaining unit and, if appropriate, choose a new representative. That is what they did.
Before considering the final component of plaintiffs' claims, that is, the election process, it is useful to assess defendants' actions in accordance with the public policy considerations that are generally recognized as being advanced by labor legislation; that is, (1) the right to self organization and employee choice and (2) the fostermig of industrial peace. S. Jersey Catholic School Teachers v. St. Teresa, supra at 600; NLRB v. Harry T Campbell Sons Corporation, supra at 976. As to the first component, it is clear that the events that occurred here advanced rather than impeded employee choice. With regard to industrial peace, although plaintiffs' proofs fail to demonstrate how defendants' conduct has undermined industrial peace, one may argue that, given the lengthy history of bargaining through a single unit, any change in that process might reduce stability between labor and management. On the other hand, if employee choice is to mean anything, change, if not inevitable, is at least natural. Moreover, if what occurred here had any impact on industrial peace, it advanced it. Finally, even if one assumes that, in general, the existence of three bargaining units is less conducive to industrial peace than one, there is no suggestion that that was the experience in this case. As noted, the kind of interdependence among units that exists in a setting such as those involved in the Westinghouse and General Electric cases, does not exist here.
The final component of plaintiffs' claim relates to the integrity of the 1997 elections. Plaintiffs argue that the elections were invalid for several reasons: (1) the SCTO leadership did not receive adequate notice and thus was deprived of an opportunity to campaign for a different result; (2) the elections themselves were tainted because of the allegedly improper involvement and intimidation by the administrations at the two schools; and (3) the presidents chosen by each of the defendant unions were both administrators. Plaintiffs' contend that all of this supports their charge of undue influence and invalidates the new unions as well as the recognition by the schools and the Diocese thereafter.
Plaintiffs have cited no case law, either at the federal or state level, that requires the voiding of a bargaining unit election based on the activity described here. Nor, as a matter of first impression, am I persuaded that such should be the law. There is no question that, to be valid, elections regarding bargaining representatives must truly represent the sentiment of the employees and not be a product of undue influence or control by the employer. See generally NLRB v. North Shore University Hosp., 724 F 2d 269, 272 (2d. Cir. 1983); Ind. Dairy Workers, etc. v. Milk Drivers, etc., Local No. 686, supra at 96. On the other hand, unless the alleged taint is clear or the potential for taint is high, an election should not be overturned. NLRB v. North Shore University Hospital, supra at 273. As for the claim regarding lack of notice, the undisputed facts show that members of SCTO were notified; that is, those lay teachers who would have been likely to oppose the defendants' action were notified. They simply chose not to vote. It is true that the leadership had no direct notice but there is no such requirement here. Although such a practice is preferable, defendants' failure to have given direct notice here cannot be considered fatal. See NLRB v. Air Master Corporation, 339 F2d. 553 (3d Cir. 1964).
With regard to the alleged undue influence by each of the administrations at the two schools, the conduct complained of is not of the caliber to cause this court to question the bona fides of the process. The fact that ballots, otherwise secret, were collected at the principal's office at one of the schools, while generally inappropriate given the risk of intimidation, does not, without considerably more, demonstrate a material adulteration of the process. There was no showing here that the principal counted the ballots or that he/she knew how a particular teacher voted. Nor was the collection itself likely to have been intimidating in this case. The same is true with regard to defendants' use of the public address system.
As for the involvement of Messers Scharff and Petito, for the reasons to be discussed below, I do not see them as "administrators" for these purposes. On the other hand, even if they were, their involvement would not automatically disqualify the resulting units as valid bargaining representatives. Bowman, et al. v. Hackensack Hospital Assoc., 116 NJ Super.
260, 273 (Ch. Div. 1975), NLRB v. North Shore Univ. Hosp., supra at 273. As for the Diocese's payment of legal fees, however one views that fact, it occurred after the fact and cannot undermine the integrity of the elections themselves. Absent proof of a "clear and present danger" of a conflict of interest which interfered with the collective bargaining process, resort to disqualification, or in this case invalidation, is inappropriate. NLRB v. North Shore University, supra at 273; NLRB v. AirMaster Corp., supra at 556.
The final issue is whether the recent changes in sentiment regarding union affiliation expressed by six of the teachers who are now members of one of the defendant umions should change the result in this case. I think not. The fact that the current majority of the lay teachers at one of the two schools may now want to return to the SCTO is significant and may not bode well for the future of SJLTA as a bargaining unit. However, until the current contract expires this summer, their change of mind cannot affect their earlier choice of a bargaining representative, at least not based on the circumstances presented here. Nor would this change in sentiment have any impact on the status of the GCLTO.
Anti-Injunction Act, N.J.S.A. 2A:15-51. Given the rejection of plaintiffs' claims, however, these defenses need not be addressed. I would note parenthetically, however, that it is difficult to see how plaintiffs' delay in the pursuit of the remedies sought here has worked any hardship on defendants. The same can be said of the delay in the service of process. As for the Anti-Injunction Act, no case has ever applied that legislation to labor disputes under Article 1, paragraph 19 except with regard to picketing issues. See e.g. Comite Organizador v. Molinelli, supra, S. Jersey Catholic School Teachers v. St. Teresa, supra; Johnson v. Christ Hospital, 45 N.J 108 (1965); Lay Fac Assoc. v. Newark Archdiocese, 122 N.J Super. 260 (App. Div. 1973); and Cooper v. Nutley Sun Co., Inc., supra; cf Ind Dairy Workers, etc. v. Milk Drivers, etc., Local No 680, supra.
This is a case of first impression in which the court has been asked to determine which union may act as the exclusive bargaining agent for the lay teachers at two Catholic high schools. Based on the undisputed facts and the analysis recited above, my conclusion is that that question should be resolved in favor of the defendants, the GCLTO and the SJLTA. Plaintiffs have failed to demonstrate that the new bargaining units are inappropriate for collective bargaining purposes or that their members could not have chosen a new representative when they did. Nor have the plaintiffs successfully demonstrated that the election process that produced these units was fatally defective. The lay teachers in the two defendant schools have the constitutional night to organize and select their own bargaining representative. Having exercised that right at the expiration of the 1994-97 contract the weight of the evidence, as well as the equities, supports the viability of the new unions they created. To the extent that there has been a subsequent change in sentiment on the part of some of the teachers at one of the schools, those teachers are free to exercise their prerogative at the expiration of the current contract. However, that does not change the result here. Judgment will be entered accordingly. No costs.
 The "Diocese of Camden" is a term that can be used to refer to either the geographic area that the Diocese embraces (six southern New Jersey counties) or the office of the Bishop for the Diocese.
 Following the submission of these motions, the plaintiff union again changed its name, this time to the Catholic Teachers Union (hereafter CTU).
 Not counting the members of the two new unions, the CTU now represents 175 out of 230 lay teachers that teach at the high school level within the Diocese.
 As noted, these claims are before the court on cross-motions for summary judgment. No one has challenged the appropriateness of that process. See generally R- 4:46-2; Brill v. Guardian Life Ins. Co. of America, 142 NJ 520 (1995).
 Contrary to plaintiffs' contention, the Diocese is not the sole employer of these teachers. A more accurate label is that they have dual employers, that is, the Diocese and their own parishes. See factual findings supra at pp. 2-3.
 As noted, there is no proof that the 1981 agreement was ever ratified.
 In pursuing this issue, one must acknowledge there are legitimate limits to how small a unit can be and still be constitutionally viable. However, one need not define those limits in order to conclude that what defendants did here was permissible. See generally, 48 Am Jur 2d, Supra at 1297.


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