author: Graffeo, J. Smith, J.

text:
    [19 NE3d 480, 994 NYS2d 554]
    The People of the State of New York, Respondent, v Marquan M., Appellant. County of Albany, Intervenor-Respondent.
    Argued June 5, 2014;
    decided July 1, 2014

      POINTS OF COUNSEL

      New York Civil Liberties Union Foundation, New York City 0Corey Stoughton, Daniel Mullkoff and Arthur Eisenberg of counsel), and Christian DeFranqueville, Ballston Spa, for appellant.
    I. The cyberbullying law is a facially invalid criminalization of constitutionally protected speech. (People ex rel. Arcara v Cloud Books, 68 NY2d 553; Gooding v Wilson, 405 US 518; People v Shack, 86 NY2d 529; Cohen v California, 403 US 15; Chaplinsky v New Hampshire, 315 US 568; Brandenburg v Ohio, 395 US 444; Miller v California, 413 US 15; Texas v Johnson, 491 US 397; Purtell v Mason, 527 F3d 615; Virginia v Black, 538 US 343.) II. The cyberbullying law is unconstitutionally vague on its face. (United States v Lanier, 520 US 259; People v Bright, 71 NY2d 376; NAACP v Button, 371 US 415; Reno v American Civil Liberties Union, 521 US 844; People v Dietze, 75 NY2d 47; Chicago v Morales, 527 US 41; Grayned v City of Rockford, 408 US 104; Baggett v Bullitt, 377 US 360; Houston v Hill, 482 US 451; Coates v Cincinnati, 402 US 611.) III. The cyberbullying law is unconstitutional as applied to the appellant’s speech. (Purtell v Mason, 527 F3d 615; People v Dietze, 75 NY2d 47; United States v Playboy Entertainment Group, Inc., 529 US 803; Cliffs Notes, Inc. v Bantam Doubleday Dell Publ. Group, Inc., 886 F2d 490.)

      Thomas Marcelle, Albany, Patrick J. Collins and Lisabeth Jorgensen for intervenor-respondent.
    I. The First Amendment does not protect the dissemination of false sexual information for the purpose of inflicting emotional harm on a minor. (Herbert v Lando, 441 US 153; Hustler Magazine, Inc. v Falwell, 485 US 46; BE&K Constr. Co. v NLRB, 536 US 516; Virginia Bd. of Pharmacy v Virginia Citizens Consumer Council, Inc., 425 US 748; Philadelphia Newspapers, Inc. v Hepps, 475 US 767; Phelps v Hamilton, 59 F3d 1058; People v Stuart, 100 NY2d 412; Babbitt v Sweet Home Chapter, Communities for Great Ore., 515 US 687; People v Davis, 13 NY3d 17.) II. The cyberbullying law survives defendant’s vagueness challenge. (People v Stuart, 100 NY2d 412; People v Shack, 86 NY2d 529; United States v Thompson, 653 F3d 688; Hobbs v County of Westchester, 397 F3d 133; Roth v United States, 354 US 476; Staley v Jones, 239 F3d 769; People v Lombardo, 61 NY2d 97; Colautti v Franklin, 439 US 379; Screws v United States, 325 US 91; Ward v Utah, 398 F3d 1239.) III. Should the Court take issue with any specific term within the cyberbullying law, it may sever such language and preserve the protections afforded by the law. (People ex rel. Alpha Portland Cement Co. v Knapp, 230 NY 48; National Adv. Co. v Town of Niagara, 942 F2d 145; Alaska Airlines, Inc. v Brock, 480 US 678.)

      Morrison & Foerster LLP, New York City {Dennis P. Orr and Cindy P. Abramson of counsel), for Advocates for Children of New York and others, amici curiae.
    I. Criminalizing cyberbullying is counterproductive and harmful. II. Better alternatives exist for dealing with cyberbullying. (Ashcroft v American Civil Liberties Union, 542 US 656.)
   OPINION OF THE COURT

Graffeo, J.

Defendant, a 16-year-old high school student, anonymously posted sexual information about fellow classmates on a publicly-accessible Internet website. He was criminally prosecuted for “cyberbullying” under a local law enacted by the Albany County Legislature. We are asked to decide whether this cyberbullying statute comports with the Free Speech Clause of the First Amendment.

I

Bullying by children in schools has long been a prevalent problem but its psychological effects were not studied in earnest until the 1970s (see Hyojin Koo, A Time Line of the Evolution of School Bullying in Differing Social Contexts, 8 Asia Pac Educ Rev 107 [2007], available at http://files.eric.ed.gov/fulltext/ EJ768971.pdf). Since then, “[b]ullying among school-aged youth” has “increasingly be[en] recognized as an important problem affecting well-being and social functioning,” as well as “a potentially more serious threat to healthy youth development” (Tonja R. Nansel et al., Bullying Behaviors among US Youth, 285 JAMA 2094 [2001], available at http:// jama.jamanetwork.com/article.aspx?articleid=193774). At its core, bullying represents an imbalance of power between the aggressor and victim that often manifests in behaviors that are “verbal (e.g., name-calling, threats), physical (e.g., hitting), or psychological (e.g., rumors, shunning/exclusion)” (id. at 2094; see Koo at 112). Based on the recognized harmful effects of bullying, many schools and communities now sponsor anti-bullying campaigns in order to reduce incidents of such damaging behaviors.

Educators and legislators across the nation have endeavored to craft policies designed to counter the adverse impact of bullying on children. New York, for example, enacted the “Dignity for All Students Act” in 2010 (see L 2010, ch 482, § 2; Education Law § 10 et seq.), declaring that our State must “afford all students in public schools an environment free of discrimination and harassment” caused by “bullying, taunting or intimidation” (Education Law § 10). In furtherance of this objective, the State prohibited discrimination and bullying on public school property or at school functions (see Education Law § 12 [1]). The Act relied on the creation and implementation of school board policies to reduce bullying in schools through the appropriate training of personnel, mandatory instruction for students on civility and tolerance, and reporting requirements (see Education Law § 13). The Act did not criminalize bullying behaviors; instead, it incorporated educational penalties such as suspension from school.

Despite these efforts, the problem of bullying continues, and has been exacerbated by technological innovations and the widespread dissemination of electronic information using social media sites. The advent of the Internet with “twenty-four hour connectivity and social networking” means that “[b]ullying that begins in school follows students home every day” and “bullying through the use of technology can begin away from school property” (L 2012, ch 102, § 1). Regardless of how or where bullying occurs, it “affects the school environment and disrupts the educational process, impeding the ability of students to learn and too often causing devastating effects on students’ health and well-being” (id.; see e.g. American Psychiatric Association, Resolution on Bullying among Children & Youth [2004], available at https://www.apa.org/about/policy/bullying.pdf). The use of computers and electronic devices to engage in this pernicious behavior is commonly referred to as “cyberbullying” (see e.g. Education Law § 11 [8]; L 2012, ch 102, § 1; Simone Robers et al., Indicators of School Crime & Safety: 2012 at 44, National Center for Education Statistics, United States Departments of Education & Justice [2013], available at http://nces.ed.gov/ pubs2013/2013036.pdf). Unlike traditional bullying, victims of cyberbullying can be “relentlessly and anonymously attack[ed] twenty-four hours a day for the whole world to witness. There is simply no escape.”

The Dignity for All Students Act did not originally appear to encompass cyberbullying, particularly acts of bullying that occur off school premises. As the ramifications of cyberbullying on social networking sites spilled into the educational environment, in 2012, the state legislature amended the Act to expand the types of prohibited bullying conduct covered by its provisions. It added a proscription on bullying that applied to “any form of electronic communication” (Education Law § 11 [8]), including any off-campus activities that “foreseeably create a risk of substantial disruption within the school environment, where it is foreseeable that the conduct, threats, intimidation or abuse might reach school property” (Education Law § 11 [7]).

Before the addition of the 2012 amendments to the Dignity for All Students Act, elected officials in Albany County decided to tackle the problem of cyberbullying. They determined there was a need to criminalize such conduct because the “State Legislature ha[d] failed to address th[e] problem” of “nonphysical bullying behaviors transmitted by electronic means” (Local Law No. 11 [2010] of County of Albany § 1). In 2010, the Albany County Legislature adopted a new crime — the offense of cyberbullying — which was defined as

“any act of communicating or causing a communication to be sent by mechanical or electronic means, including posting statements on the internet or through a computer or email network, disseminating embarrassing or sexually explicit photographs; disseminating private, personal, false or sexual information, or sending hate mail, with no legitimate private, personal, or public purpose, with the intent to harass, annoy, threaten, abuse, taunt, intimidate, torment, humiliate, or otherwise inflict significant emotional harm on another person” (id. § 2).

The provision outlawed cyberbullying against “any minor or person” situated in the county (id. § 3). Knowingly engaging in this activity was deemed to be a misdemeanor offense punishable by up to one year in jail and a $1,000 fine (see id. § 4). The statute, which included a severability clause (see id. § 7), became effective in November 2010.

n

A month later, defendant Marquan M., a student attending Cohoes High School in Albany County, used the social networking website “Facebook” to create a page bearing the pseudonym “Cohoes Flame.” He anonymously posted photographs of high-school classmates and other adolescents, with detailed descriptions of their alleged sexual practices and predilections, sexual partners and other types of personal information. The descriptive captions, which were vulgar and offensive, prompted responsive electronic messages that threatened the creator of the website with physical harm.

A police investigation revealed that defendant was the author of the Cohoes Flame postings. He admitted his involvement and was charged with cyberbullying under Albany County’s local law. Defendant moved to dismiss, arguing that the statute violated his right to free speech under the First Amendment. After City Court denied defendant’s motion, he pleaded guilty to one count of cyberbullying but reserved his right to raise his constitutional arguments on appeal. County Court affirmed, concluding that the local law was constitutional to the extent it outlawed such activities directed at minors, and held that the application of the provision to defendant’s Facebook posts did not contravene his First Amendment rights. A Judge of this Court granted defendant leave to appeal (21 NY3d 1043 [2013]).

m

Defendant contends that Albany County’s cyberbullying law violates the Free Speech Clause of the First Amendment because it is overbroad in that it includes a wide array of protected expression, and is unlawfully vague since it does not give fair notice to the public of the proscribed conduct. The County concedes that certain aspects of the cyberbullying law are invalid but maintains that those portions are severable, rendering the remainder of the act constitutional if construed in accordance with the legislative purpose of the enactment. Interpreted in this restrictive manner, the County asserts that the cyberbullying law covers only particular types of electronic communications containing information of a sexual nature pertaining to minors and only if the sender intends to inflict emotional harm on a child or children.

Under the Free Speech Clause of the First Amendment, the government generally “has no power to restrict expression because of its message, its ideas, its subject matter, or its content” (United States v Stevens, 559 US 460, 468 [2010] [internal quotation marks omitted]). Consequently, it is well established that prohibitions of pure speech must be limited to communications that qualify as fighting words, true threats, incitement, obscenity, child pornography, fraud, defamation or statements integral to criminal conduct (see United States v Alvarez, 567 US —, —, 132 S Ct 2537, 2544 [2012]; Brown v Entertainment Merchants Assn., 564 US —, —, 131 S Ct 2729, 2733 [2011]; People v Dietze, 75 NY2d 47, 52 [1989]). Outside of such recognized categories, speech is presumptively protected and generally cannot be curtailed by the government (see United States v Alvarez, 567 US at —, 132 S Ct at 2543-2544; Brown v Entertainment Merchants Assn., 564 US at —, 131 S Ct at 2734; United States v Stevens, 559 US at 468-469).

Yet, the government unquestionably has a compelling interest in protecting children from harmful publications or materials (see Reno v American Civil Liberties Union, 521 US 844, 875 [1997]; see also Brown v Entertainment Merchants Assn., 564 US at —, 131 S Ct at 2736; see generally Bethel School Dist. No. 403 v Fraser, 478 US 675, 682 [1986]). Cyberbullying is not conceptually immune from government regulation, so we may assume, for the purposes of this case, that the First Amendment permits the prohibition of cyberbullying directed at children, depending on how that activity is defined (see generally Brown v Entertainment Merchants Assn., 564 US at —, —, 131 S Ct at 2735-2736, 2741; cf. United States v Elonis, 730 F3d 321 [3d Cir 2013] [affirming conviction premised on threatening Facebook posts], cert granted 573 US —, 134 S Ct 2819 [June 16, 2014]). Our task therefore is to determine whether the specific statutory language of the Albany County legislative enactment can comfortably coexist with the right to free speech.

Challenges to statutes under the Free Speech Clause are usually premised on the overbreadth and vagueness doctrines. A regulation of speech is overbroad if constitutionally-protected expression may be “chilled” by the provision because it facially “prohibits a real and substantial amount of’ expression guarded by the First Amendment (People v Barton, 8 NY3d 70, 75 [2006]). This type of facial challenge, which is restricted to cases implicating the First Amendment, requires a court to assess the wording of the statute — “without reference to the defendant’s conduct” (People v Stuart, 100 NY2d 412, 421 [2003]) — to decide whether “a substantial number of its applications are unconstitutional, judged in relation to the statute’s plainly legitimate sweep” (United States v Stevens, 559 US at 473 [internal quotation marks omitted]). A law that is overbroad cannot be validly applied against any individual (see People v Stuart, 100 NY2d at 421, citing Tribe, American Constitutional Law § 12-32 at 1036 [2d ed 1988]). In contrast, a statute is seen by the courts as vague if “it fails to give a citizen adequate notice of the nature of proscribed conduct, and permits arbitrary and discriminatory enforcement” (People v Shack, 86 NY2d 529, 538 [1995]). Hence, the government has the burden of demonstrating that a regulation of speech is constitutionally permissible (see United States v Playboy Entertainment Group, Inc., 529 US 803, 816-817 [2000]; cf. People v Davis, 13 NY3d 17, 23 [2009]).

A First Amendment analysis begins with an examination of the text of the challenged legislation since “it is impossible to determine whether a statute reaches too far without first knowing what the statute covers” (United States v Williams, 553 US 285, 293 [2008]). In this regard, fundamental principles of statutory interpretation are controlling. Chief among them is the precept that “clear and unequivocal statutory language is presumptively entitled to authoritative effect” (People v Suber, 19 NY3d 247, 252 [2012]; see e.g. People v Williams, 19 NY3d 100, 103 [2012]).

Based on the text of the statute at issue, it is evident that Albany County “create[d] a criminal prohibition of alarming breadth” (United States v Stevens, 559 US at 474). The language of the local law embraces a wide array of applications that prohibit types of protected speech far beyond the cyberbullying of children (see id. at 473-474; People v Barton, 8 NY3d at 75). As written, the Albany County law in its broadest sense criminalizes “any act of communicating ... by mechanical or electronic means . . . with no legitimate . . . personal . . . purpose, with the intent to harass [or] annoy . . . another person.” On its face, the law covers communications aimed at adults, and fictitious or corporate entities, even though the county legislature justified passage of the provision based on the detrimental effects that cyberbullying has on school-aged children. The county law also lists particular examples of covered communications, such as “posting statements on the internet or through a computer or email network, disseminating embarrassing or sexually explicit photographs; disseminating private, personal, false or sexual information, or sending hate mail.” But such methods of expression are not limited to instances of cyberbullying — the law includes every conceivable form of electronic communication, such as telephone conversations, a ham radio transmission or even a telegram. In addition, the provision pertains to electronic communications that are meant to “harass, annoy . . . taunt . . . [or] humiliate” any person or entity, not just those that are intended to “threaten, abuse . . . intimidate, torment ... or otherwise inflict significant emotional harm on” a child. In considering the facial implications, it appears that the provision would criminalize a broad spectrum of speech outside the popular understanding of cyberbullying, including, for example: an email disclosing private information about a corporation or a telephone conversation meant to annoy an adult.

The County admits that the text of thé statute is too broad and that certain aspects of its contents encroach on recognized areas of protected free speech. Because the law “imposes a restriction on the content of protected speech, it is invalid unless” the County “can demonstrate that it passes strict scrutiny— that is, unless it is justified by a compelling government interest and is narrowly drawn to serve that interest” (Brown v Entertainment Merchants Assn., 564 US at —, 131 S Ct at 2738). For this reason, the County asks us to sever the offending portions and declare that the remainder of the law survives strict scrutiny. What remains, in the County’s view, is a tightly circumscribed cyberbullying law that includes only three types of electronic communications sent with the intent to inflict emotional harm on a child: (1) sexually explicit photographs; (2) private or personal sexual information; and (3) false sexual information with no legitimate public, personal or private purpose.

It is true, as the County urges, that a court should strive to save a statute when confronted with a Free Speech challenge (see e.g. People ex rel. Alpha Portland Cement Co. v Knapp, 230 NY 48, 62-63 [1920], cert denied 256 US 702 [1921]). But departure from a textual analysis is appropriate only if the statutory language is “fairly susceptible” to an interpretation that satisfies applicable First Amendment requirements (People v Dietze, 75 NY2d at 52; see e.g. United States v Stevens, 559 US at 481). The doctrine of separation of governmental powers prevents a court from rewriting a legislative enactment through the creative use of a severability clause when the result is incompatible with the language of the statute (see e.g. People v Dietze, 75 NY2d at 52-53; Reno v American Civil Liberties Union, 521 US at 884-885). And special concerns arise in the First Amendment context — excessive judicial revision of an overbroad statute may lead to vagueness problems because

“the statutory language would signify one thing but, as a matter of judicial decision, would stand for something entirely different. Under those circumstances, persons of ordinary intelligence reading [the law] could not know what it actually meant” (People v Dietze, 75 NY2d at 53; see e.g. Houston v Hill, 482 US 451, 468-469 [1987]).

We conclude that it is not a permissible use of judicial authority for us to employ the severance doctrine to the extent suggested by the County or the dissent. It is possible to sever the portion of the cyberbullying law that applies to adults and other entities because this would require a simple deletion of the phrase “or person” from the definition of the offense. But doing so would not cure all of the law’s constitutional ills. As we have recently made clear, the First Amendment protects annoying and embarrassing speech (see e.g. People v Golb, 23 NY3d 455 [2014]; People v Dietze, 75 NY2d at 52-53), even if a child may be exposed to it (see Brown v Entertainment Merchants Assn., 564 US at —, 131 S Ct at 2736), so those references would also need to be excised from the definitional section. And, the First Amendment forbids the government from deciding whether protected speech qualifies as “legitimate,” as Albany County has attempted to do (see Snyder v Phelps, 562 US —, —, 131 S Ct 1207, 1220 [2011], quoting Erznoznik v Jacksonville, 422 US 205, 210-211 [1975]; cf. People v Shack, 86 NY2d at 536-537).

It is undisputed that the Albany County statute was motivated by the laudable public purpose of shielding children from cyberbullying. The text of the cyberbullying law, however, does not adequately reflect an intent to restrict its reach to the three discrete types of electronic bullying of a sexual nature designed to cause emotional harm to children. Hence, to accept the County’s proposed interpretation, we would need to significantly modify the applications of the county law, resulting in the amended scope bearing little resemblance to the actual language of the law. Such a judicial rewrite encroaches on the authority of the legislative body that crafted the provision and enters the realm of vagueness because any person who reads it would lack fair notice of what is legal and what constitutes a crime. Even if the First Amendment allows a cyberbullying statute of the limited nature proposed by Albany County, the local law here was not drafted in that manner. Albany County therefore has not met its burden of proving that the restrictions on speech contained in its cyberbullying law survive strict scrutiny.

There is undoubtedly general consensus that defendant’s Facebook communications were repulsive and harmful to the subjects of his rants, and potentially created a risk of physical or emotional injury based on the private nature of the comments. He identified specific adolescents with photographs, described their purported sexual practices and posted the information on a website accessible world-wide. Unlike traditional bullying, which usually takes place by a face-to-face encounter, defendant used the advantages of the Internet to attack his victims from a safe distance, 24 hours a day, while cloaked in anonymity. Although the First Amendment may not give defendant the right to engage in these activities, the text of Albany County’s law envelops far more than acts of cyberbullying against children by criminalizing a variety of constitutionally-protected modes of expression. We therefore hold that Albany County’s Local Law No. 11 of 2010 — as drafted — is overbroad and facially invalid under the Free Speech Clause of the First Amendment.

Accordingly, the order of County Court should be reversed and the accusatory instrument dismissed.

Smith, J.

(dissenting). Albany County has conceded that certain provisions of its Cyber-Bullying law are invalid. It seems to me that those provisions can be readily severed from the rest of the legislation and that what remains can, without any strain on its language, be interpreted in a way that renders it constitutionally valid.

The operative provision of the law says simply: “No person shall engage in cyber-bullying against any minor or person in the County of Albany.” The County does not defend the law as it applies to adults, and the majority acknowledges that we may consider the statute as if the words “or person” were deleted (majority op at 11). But the majority finds irreparable constitutional flaws in the definition of Cyber-Bullying, which is as follows:

“ ‘CYBER-BULLYING’ shall mean any act of communicating or causing a communication to be sent by mechanical or electronic means, including posting statements on the internet or through a computer or email network, disseminating embarrassing or sexually explicit photographs; disseminating private, personal, false or sexual information, or sending hate mail, with no legitimate private, personal, or public purpose, with the intent to harass, annoy, threaten, abuse, taunt, intimidate, torment, humiliate, or otherwise inflict significant emotional harm on another person.”

The County concedes that the words “embarrassing” and “hate mail” are “vague and thus unenforceable” (brief of intervenor-respondent Albany County [County Brief] at 8 n 4). It argues, correctly I think, that these terms can be dealt with in the same way as the reference to “person” in the operative section: simply by crossing them out. Once these deletions are made, I see nothing in the law that renders it unconstitutional.

The majority, it seems, is troubled by two other aspects of the definition of “Cyber-Bullying”: the requirement that the forbidden communications be made “with no legitimate private, personal, or public purpose”; and the series of verbs — “harass, annoy, threaten, abuse, taunt, intimidate, torment, humiliate”— that precedes the words “or otherwise.” Neither requires us to invalidate the law.

I grant that the words “no legitimate . . . purpose” are not remarkable for their precision. We have twice held, however, that they are clear enough to withstand a constitutional challenge for vagueness (People v Shack, 86 NY2d 529, 533, 538 [1995] [holding valid a prohibition on the making of a telephone call “with intent to harass, annoy, threaten or alarm another person . . . with no purpose of legitimate communication”]; People v Stuart, 100 NY2d 412, 428 [2003] [holding valid an anti-stalking statute prohibiting a described course of conduct when engaged in “for no legitimate purpose”]). We said in Shack:

“the phrase ‘no purpose of legitimate communication’ . . . notwithstanding its subjective quality, would be understood to mean the absence of expression of ideas or thoughts other than threats and/or intimidating or coercive utterances.” (86 NY2d at 538.)

Similarly here, the phrase “no legitimate purpose” should be understood to mean the absence of expression of ideas or thoughts other than the mere abuse that the law proscribes.

It is true, as the majority says (majority op at 11 n 4) that the criminal conduct at issue in Shack and Stuart was different from the conduct at issue here — but that does not make the words “no legitimate purpose” any more or less vague. The majority is also correct in saying that “the First Amendment forbids the government from deciding whether protected speech qualifies as ‘legitimate’ ” (majority op at 11), but this begs the central question of what speech is “protected” and what is not. The Cyber-Bullying law prohibits a narrow category of valueless and harmful speech when the government proves, among other things, that the speaker had no legitimate purpose for engaging in it. The speech so prohibited is not protected speech.

As for the list of verbs beginning with “annoy” and ending with “humiliate,” it is fair to read them, as the County urges, as “a non-exhaustive list of ways that the wrongdoer may formulate his or her intent to inflict emotional harm on the victim” (County Brief at 8). In other words, the acts within the scope of the Cyber-Bullying law — disseminating sexually explicit photographs or private, personal, false or sexual information— are prohibited only where they are intended to “inflict significant emotional harm” on the victim, and the verbs merely serve as examples of ways in which significant emotional harm may be inflicted. That is not the only possible way to read the text of the law, but it is a perfectly reasonable way — indeed, the word “otherwise” seems to signal that the verbs preceding it are only illustrative. So read, the law does not prohibit conduct intended to harass, annoy, threaten or the like unless the actor specifically intended “significant emotional harm.” I do not find such a prohibition to be unconstitutionally vague or overbroad.

In short, I think the majority makes too much of what it sees as flaws in the draftsmanship of the Cyber-Bullying law. The crux of the case, in my view, is whether Albany County constitutionally may do what it is trying to do — to prohibit certain kinds of communication that have no legitimate purpose and are intended to inflict significant emotional injury on children. The answer to this question is not self-evident. The First Amendment protects some extremely obnoxious forms of speech, including insults offered to a dead soldier at his funeral (Snyder v Phelps, 562 US —, 131 S Ct 1207 [2011]) and horrifyingly violent video games marketed to teenagers (Brown v Entertainment Merchants Assn., 564 US —, 131 S Ct 2729 [2011]). But Snyder itself makes clear that speech designed to inflict serious emotional injury is protected only when, as in Snyder, the speech is directed at a matter of public concern:

“Whether the First Amendment prohibits holding Westboro liable for its speech in this case turns largely on whether that speech is of public or private concern, as determined by all the circumstances of the case. . . . [Restricting speech on purely private matters does not implicate the same constitutional concerns as limiting speech on matters of public interest” (562 US at —, 131 S Ct at 1215; see also Hustler Magazine, Inc. v Falwell, 485 US 46, 53 [1988] [speech about a “public figure” is constitutionally protected even if uttered with intent to cause emotional distress because regulation of emotionally harmful speech about public figures would chill debate on public matters]).

It is thus clear that the emotional abuse involved in Snyder would not have been constitutionally protected if, like Marquan’s remarks about his fellow students, it had referred to no matter of public importance and had been uttered purely out of private rage or spite. And the victims of the abuse in Snyder were adults; in that respect, the present case is a fortiori. The Albany County Cyber-Bullying law is valid.

Chief Judge Lippman and Judges Read, Rivera and AbdusSalaam concur with Judge Graffeo; Judge Smith dissents in an opinion in which Judge Pigott concurs.

Order reversed and accusatory instrument dismissed.

      . Naomi Harlin Goodno, Houi Public Schools Can Constitutionally Halt Cyberbullying, 46 Wake Forest L Rev 641, 641 (2011).

      . The term “person” was broadly defined to include “any natural person, individual, corporation, unincorporated association, proprietorship, firm, partnership, joint venture, joint-stock association, or other entity or business organization of any kind” (Local Law No. 11 [2010] of County of Albany § 2).

      . We offer no opinion on whether cyberbullying should be a crime or whether there are more effective means of addressing this societal problem outside of the criminal justice system.

      . Contrary to the dissent’s position, People v Shack (86 NY2d 529 [1995]) and People v Stuart (100 NY2d 412 [2003]) are distinguishable because they addressed statutes that criminalized conduct — repeated telephone harassment and stalking — without regard to the content of any communication. Here, however, the Albany County law facially allows law enforcement officials to charge a crime based on the communicative message that the accused intends to convey, as evidenced by the fact that defendant was prosecuted because of the offensive words he wrote on Facebook.


source: Caselaw Access Project

author: Read, J.

license: Public Domain

text:
    [20 NE3d 264, 995 NYS2d 534]
    In re Thelen LLP. Yann Geron, as Chapter 7 Trustee of the Estate of Thelen LLP, Appellant, v Seyfarth Shaw LLP, Respondent. In re Coudert Brothers LLP, Debtor. Development Specialists, Inc., Respondent-Appellant, K&L Gates LLP et al., Appellants-Respondents, Akin Gump Strauss Hauer & Feld LLP et al., Appellants-Respondents.
    Argued June 4, 2014;
    decided July 1, 2014

      POINTS OF COUNSEL

      Rich Michaelson Magaliff Moser, LLP, New York City (Howard P. Magaliff of counsel), for appellant in the first above-entitled proceeding.
    Hourly fee matters are partnership property under New York law. (Ederer v Gursky, 9 NY3d 514; Reiner v North Am. Newspaper Alliance, 259 NY 250; Matter of DaimlerChrysler Corp. v Spitzer, 7 NY3d 653; Patrolmen’s Benevolent Assn. of City of N.Y. v City of New York, 41 NY2d 205; Kabir v County of Monroe, 16 NY3d 217; Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Farrington v Pinckney, 1 NY2d 74; Adler v Deegan, 251 NY 467; Paterson v University of State of N.Y., 14 NY2d 432; Maresca v Cuomo, 64 NY2d 242.)

      Thompson Hiñe LLP, Cleveland, Ohio (Michael R. Levinson and Thomas L. Feher of counsel), and Seyfarth Shaw LLP, Chicago, Illinois (Lori L. Roeser and M. Ryan Pinkston of counsel), for respondent in the first above-entitled proceeding.
    I. Law firms do not own client matters, regardless of how such matters are billed. (International News Service v Associated Press, 248 US 215; Verizon New England Inc. v Transcom Enhanced Servs., Inc., 21 NY3d 66; Matter of Cooperman, 83 NY2d 465; Demov, Morris, Levin & Shein v Glantz, 53 NY2d 553; Stem v Warren, 227 NY 538; People v Ryan, 274 NY 149; Braschi v Stahl Assoc. Co., 74 NY2d 201; Sheresky v Sheresky Aronson Mayefsky & Sloan, LLP, 35 Misc 3d 1201 [A], 2011 NY Slip Op 52504[U]; McDonald v Fenzel, 233 AD2d 219; Shandell v Katz, 217 AD2d 472.) II. The Court need not answer the second certified question, but to the extent it chooses to do so, the Court should define “client matter” narrowly and conclude that the law firm actually providing services is entitled to retain all fees generated by such services. (Matter of Cooperman, 83 NY2d 465; Demov, Morris, Levin & Shein v Glantz, 53 NY2d 553; Kirsch v Leventhal, 181 AD2d 222.)

      Miller & Wrubel P.C., New York City (Joel M. Miller, S. Christopher Provenzano and Nicholas Cutaia of counsel), for Dechert LLP, Morrison & Foerster LLP (Brett H. Miller of counsel) for Morrison & Foerster LLP, K&L Gates LLP (.Richard S. Miller and Brian D. Koosed of counsel) for K&L Gates LLP, Quinn Emanuel Urquhart & Sullivan LLP (Eric J. Emanuel, Susheel Kirpalani and Eric M. Kay of counsel), for Akin Gump Strauss Hauer & Feld LLP, Duane Morris LLP (Lawrence J. Kotler of counsel) for Duane Morris LLP, Dorsey & Whitney LLP, Minneapolis, Minnesota (Patrick J. McLaughlin of counsel), for Dorsey & Whitney LLP, Arent Fox LLP (Allen G. Reiter of counsel) for Arent Fox LLfi Kramon & Graham, PA. (James P. Ulwick, of the District of the Maryland bar, admitted pro hac vice, and Jean E. Lewis, of the District of the Maryland bar, admitted pro hac vice, of counsel) and Meister Seelig & Fein LLP, New York City (Jeffrey Schreiber and Howard Davis of counsel), for DLA Piper LLP (US), and Sheppard Mullin Richter & Hampton LLP (Daniel L. Brown of counsel) for Sheppard Mullin Richter & Hampton LLP, appellants-respondents in the second above-entitled proceeding.
    I. The former client matters are not Coudert Brothers LLP’s property. (Sexter v Kimmelman, Sexter, Warmflash & Leitner, 19 AD3d 298; Murov v Ades, 12 AD3d 654; Shandell v Katz, 217 AD2d 472; Kirsch v Leventhal, 181 AD2d 222; Santalucia v Sebright Transp., Inc., 232 F3d 293; Matter of Cohen v Grainger, Tesoriero & Bell, 81 NY2d 655; Cohen v Lord, Day & Lord, 75 NY2d 95; Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375; Nixon Peabody LLP v de Senilhes, Valsamdidis, Amsallem, Jonath, Flaicher Associes, 20 Misc 3d 1145[A], 2008 NY Slip Op 51885[U];
      Graubard Mollen Horowitz Pomeranz & Shapiro v Moskovitz, 149 Misc 2d 481.) II. The law firms are entitled to retain their profits because those profits are attributable to their efforts, skill and diligence. (Matter of Cooperman, 83 NY2d 465; Graubard Mollen Horowitz Pomeranz & Shapiro v Moskovitz, 149 Misc 2d 481; Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375; Martin v Camp, 219 NY 170; Johnson v Ravitch, 113 App Div 810; Kirsch v Leventhal, 181 AD2d 222.)

      Jones Day, Washington, D.C. (Shay Dvoretzky of counsel), Jones Day, New York City (Geoffrey S. Stewart of counsel), and Jones Day, Atlanta, Georgia (Jeffrey B. Filman of counsel), for Jones Day, appellant-respondent in the second above-entitled proceeding.
    I. Coudert Brothers LLP’s retainer agreements did not give it any right to the matters at issue or to the profits from those matters. (Campagnola v Mulholland, Minion & Roe, 76 NY2d 38; Demov, Morris, Levin & Shein v Glantz, 53 NY2d 553; Matter of Cooperman, 83 NY2d 465; Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375; Cohen v Lord, Day & Lord, 75 NY2d 95.) II. The duty among Coudert Brothers LLP partners to account for profits earned from partnership business did not give Coudert any right to profits earned from Jones Day’s partnership business. (Ederer v Gursky, 9 NY3d 514; Denver v Roane, 99 US 355; Consaul v Cummings, 222 US 262; King v Leighton, 100 NY 386; Stem v Warren, 227 NY 538; Meinhard v Salmon, 249 NY 458; Simonds v Simonds, 45 NY2d 233; Santalucia v Sebright Transp., Inc., 232 F3d 293; Vollgraff v Block, 117 Misc 2d 489.) III. Development Specialists, Inc.’s approach would produce inequitable results, conflict with the public policy of client choice, and destabilize law firms. (Matter of Cooperman, 83 NY2d 465; Campagnola v Mulholland, Minion & Roe, 76 NY2d 38; Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375.)

      McCarter & English, LLP, New York City (David J. Adler, Joseph R. Scholz and Eduardo Glas of counsel), for respondent-appellant in the second above-entitled proceeding.
    I. The client matters are partnership property of Coudert Brothers LLP. (Stem v Warren, 185 App Div 823; DelCasino v Koeppel, 207 AD2d 374; Rhein v Peeso, 194 App Div 274; Dwyer v Nicholson, 89 AD2d 597; Kirsch v Leventhal, 181 AD2d 222; Shandell v Katz, 217 AD2d 472; Murov v Ades, 12 AD3d 654; Grant v Heit, 263 AD2d 388; McDonald v Fenzel, 233 AD2d 219.) II. Decisions from other Uniform Partnership Law jurisdictions consistently reach the same result on the issue before the court. (Robinson v

      Nussbaum, 11 F Supp 2d 1; Sufrin v Hosier, 896 F Supp 766; Kirsch v Leventhal, 181 AD2d 222; Dwyer v Nicholson, 89 AD2d 597.) III. The trial court decisions in Sheresky v Sheresky Aronson Mayefsky & Sloan, LLP (35 Misc 3d 1201 [A], 2011 NY Slip Op 52504[U] [2011]) and Burke v Clifton, Budd & DeMaria (Sup Ct, NY County, index No. 1454/1991) are misplaced. IV Application of the Partnership Law to the client matters is consistent with New York law and policy concerning the attorney-client relationship. (Matter of Greene, 54 NY2d 118; Cohen v Lord, Day & Lord, 75 NY2d 95; Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375; Messersmith v American Fid. Co., 232 NY 161; Nishman v De Marco, 62 NY2d 926; Scholastic, Inc. v Harris, 259 F3d 73; Sufrin v Hosier, 896 F Supp 766; Santalucia v Sebright Transp., Inc., 232 F3d 293; Martin v Curran, 303 NY 276.) V In a dissolution and liquidation, the no-compensation rule applies. (Stem v Warren, 185 App Div 823; King v Leighton, 100 NY 386; Kirsch v Leventhal, 181 AD2d 222; Shandell v Katz, 217 AD2d 472.)

      Kaye Scholer LLP, New York City (James M. Cotter son and Margaret A. Rogers of counsel), DLA Piper LLP (US) (Joshua S. Sprague of counsel), Hogan Lovells US LLP (Scott W. Reynolds of counsel), Mayer Brown LLP (Michael O. Ware of counsel), Schulte Roth & Zabel LLP (Michael L. Cook and David M. Hillman of counsel), Drinker Biddle & Reath LLP (Michael P Pompeo of counsel), Holland & Knight LLP (Barbara R. Parlin of counsel), Proskauer Rose LLP (Steven E. Obus of counsel), Sutherland Asbill & Brennan LLP (Robert D. Owen of counsel), Venable LLP (Lawrence H. Cooke II of counsel), Weil, Gotshal & Manges LLP (Mindy J. Spector and Michael F. Walsh of counsel), and Willkie Farr & Gallagher LLP (John C. Long-mire and Stephen Greiner of counsel), amici curiae in the first above-entitled proceeding.
    I. From the beginning of the common law clients have had the unfettered right to choose their counsel. (Cohen v Lord, Day & Lord, 75 NY2d 95; Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375; Tenney v Berger, 93 NY 524; Matter of Dunn [Brackett], 205 NY 398; Martin v Camp, 219 NY 170; Gelder Med. Group v Webber, 41 NY2d 680; Matter of Cooperman, 83 NY2d 465; Demov, Morris, Levin & Shein v Glantz, 53 NY2d 553; Missan v Schoenfeld, 111 Misc 2d 1022; Judge v Bartlett, Pontiff, Stewart & Rhodes, 197 AD2d 148.) II. The trustee’s application of the unfinished business rule to hourly fee matters infringes on the client’s right to choose his counsel. (Neal v Ecolab, Inc., 252 AD2d 716; Perkins v Elbilia, 90 AD3d 543; J.G. Wentworth S.S.C. Ltd. Partnership v Serio,
      33 AD3d 761; Stem v Warren, 227 NY 538; Tenney v Berger, 93 NY 524; Demov, Morris, Levin & Shein v Glantz, 53 NY2d 553.) III. Prohibiting Thelen LLP from obtaining profits earned by the firms is consistent with application of the unfinished business rule to contingent fee matters. (In re Snyder, 190 NY 66; King v Fox, 7 NY3d 181; Shandell v Katz, 217 AD2d 472; Kirsch v Leventhal, 181 AD2d 222; Sexter v Kimmelman, Sexter, Warmflash & Leitner, 19 AD3d 298; Fischer-Hansen v Brooklyn Hgts. R.R. Co., 173 NY 492.)

      Diamond McCarthy LLP, New York City (Allen B. Diamond, Howard Ressler and Andrew B. Ryan of counsel), for Alan M. Jacobs, Liquidating Trustee for Dewey & LeBoef Liquidation Trust, Diamond McCarthy LLP, Dallas, Texas (Andrew B. Ryan, James D. Sheppard and Michael Fishel of counsel), for Allan B. Diamond, Chapter 11 Trustee for Howrey LLP, and Greenfield Sullivan, San Francisco, California (Christopher D. Sullivan of counsel), for Michael Burkhart, Plan Administrator for Heller Ehrman LLP Liquidating Trust, amici curiae in the first above-entitled proceeding.
    I. A defunct law firm’s pending client matters constitute the firm’s unfinished business, entitling the defunct law firm to the profits earned from the completion of those client matters. (King v Leighton, 100 NY 386; Stem v Warren, 227 NY 538; Rhein v Peeso, 194 App Div 274; Denver v Roane, 99 US 355; New York v O’Neill, 359 US 1; Ueland v United States, 291 F3d 993; Robinson v Nussbaum, 11 F Supp 2d 1; Kirsch v Leventhal, 181 AD2d 222; Shandell v Katz, 217 AD2d 472; Santalucia v Sebright Transp., Inc., 232 F3d 293.) II. Under the no compensation rule, the new law firm cannot retain any of the profits derived from completing the old firm’s unfinished business. (Denver v Roane, 99 US 355; King v Leighton, 100 NY 386; Rhein v Peeso, 194 App Div 274; Kirsch v Leventhal, 181 AD2d 222; Shandell v Katz, 217 AD2d 472; Santalucia v Sebright Transp., Inc., 232 F3d 293.)

      Glenn Lau-Kee, New York State Bar Association, Albany, Damian Schaible, The Association of the Bar of the City of New York, New York City, and Barbara Moses, New York County Lawyers’ Association, for New York State Bar Association and others, amici curiae in the first and second above-entitled proceedings.
    I. Applying the unfinished business doctrine to hourly fee matters conflicts with established New York law regarding the application of that doctrine to contingency fee matters. (Grant v Heit, 263 AD2d 388; Kirsch v Leventhal, 181 AD2d 222; Musso v Ostashko, 468 F3d 99; In re Mid-Island Hosp., Inc., 276 F3d 123; Santalucia v Sebright Transp., Inc., 232 F3d 293; Shandell v Katz, 217 AD2d 472; Shiboleth v Yerushalmi, 58 AD3d 407; Murov v Ades, 12 AD3d 654; Liddle, Robinson & Shoemaker v Shoemaker, 304 AD2d 436; Lai Ling Cheng v Modansky Leasing Co., 73 NY2d 454.) II. Applying the unfinished business doctrine to hourly fee matters conflicts with basic principles that govern the attorney-client relationship under New York law and the Rules of Professional Conduct (22 NYCRR 1200.0). (Demov, Morris, Levin & Shein v Glantz, 53 NY2d 553; Campagnola v Mulholland, Minion & Roe, 76 NY2d 38; Shaw v Manufacturers Hanover Trust Co., 68 NY2d 172; Teichner v W & J Holsteins, 64 NY2d 977, 70 NY2d 606; Crowley v Wolf, 281 NY 59; Martin v Camp, 219 NY 170, 221 NY 631; Cohen v Lord, Day & Lord, 75 NY2d 95; Stem v Warren, 227 NY 538; Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375.)

      Keker & Van Nest LLP, San Francisco, California {Steven A. Hirsch and John C. Bostic of counsel), and Lawrence E. Zabinski, Chicago, Illinois, and Daniel J. Donnelly, for Attorneys’ Liability Assurance Society, Inc., amicus curiae in the first and second above-entitled proceedings.
    I. Treating hourly work as unfinished business violates best law-firm practices, harming clients and attorneys alike. II. Attempts to apportion profits on hourly unfinished business inevitably lead to absurd results. (In re Taylor, 599 F3d 880.) III. Hourly-billed client matters are not law-firm “property.” (Demov, Morris, Levin & Shein v Glantz, 53 NY2d 553; Kaiser Aetna v United States, 444 US 164; Cohen v Lord, Day & Lord, 75 NY2d 95; Shandell v Katz, 217 AD2d 472; Sheresky v Sheresky Aronson Mayefsky & Sloan, LLP, 35 Misc 3d 1201 [A], 2011 NY Slip Op 52504[U].)
   OPINION OF THE COURT

Read, J.

The United States Court of Appeals for the Second Circuit has asked us two questions relating to “whether, for purposes of administering [a] . . . related bankruptcy, New York law treats a dissolved law firm’s pending hourly fee matters as its property” (In re Thelen LLP, 736 F3d 213, 216 [2d Cir 2013]). We hold that pending hourly fee matters are not partnership “property” or “unfinished business” within the meaning of New York’s Partnership Law. A law firm does not own a client or an engagement, and is only entitled to be paid for services actually rendered.

L

Thelen

On October 28, 2008, the partners of the law firm Thelen LLP (Thelen) voted to dissolve the firm, which was insolvent. In carrying out the dissolution, Thelen’s partners adopted the Fourth Amended and Restated Limited Liability Partnership Agreement (Fourth Partnership Agreement) and a written Plan of Dissolution. The Fourth Partnership Agreement provided that it was governed by California law and, unlike its predecessor agreements, included an “Unfinished Business Waiver.” The waiver recited that

“[n] either the Partners nor the Partnership shall have any claim or entitlement to clients, cases or matters ongoing at the time of the dissolution of the Partnership other than the entitlement for collection of amounts due for work performed by the Partners and other Partnership personnel prior to their departure from the Partnership. The provisions of this [section] are intended to expressly waive, opt out of and be in lieu of any rights any Partner or the Partnership may have to ‘unfinished business’ of the Partnership, as the term is defined in Jewel v. Boxer, 156 Cal.App.3d 171 [203 Cal Rptr 13] (Cal. App. 1 Dist. 1984), or as otherwise might be provided in the absence of this provision through the interpretation or application of the [California Uniform Partnership Act of 1994, as amended].”

This kind of waiver is referred to as a “Jewel Waiver,” after Jewel v Boxer (156 Cal App 3d 171 [Cal Ct App 1984]), the intermediate appellate court case that inspired it. Applying the Uniform Partnership Act (UPA), the Jewel court held that, absent an agreement to the contrary, profits derived from a law firm’s unfinished business are owed to the former partners in proportion to their partnership interests. The Thelen partnership adopted the waiver with the

“hope that [it would] serve as an inducement to encourage Partners to move their clients to other law firms and to move Associates and Staff with them, the effect of which will be to reduce expenses to the Partnership, and to assure that client matters are attended to in the most efficient and effective manner possible, and to help ensure collection of existing accounts receivable and unbilled time with respect to such clients.”

Following Thelen’s dissolution, 11 Thelen partners joined Seyfarth Shaw LLP (Seyfarth) — 10 in its New York office and one in California. The former Thelen partners transferred unfinished matters to Seyfarth, which billed clients for their services. On September 18, 2009, Thelen filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.

After his appointment as the chapter 7 trustee of Thelen’s bankruptcy estate, Yann Geron (Geron) commenced an adversary proceeding against Seyfarth in the United States District Court for the Southern District of New York. Geron sought to avoid the “Unfinished Business Waiver” as a constructive fraudulent transfer under 11 USC §§ 544 and 548 (a) (1) (B) and California state law, and to recover the value of Thelen’s unfinished business for the benefit of the estate’s creditors. On the assumption that pending hourly matters were among a law firm’s assets, Geron argued that Thelen’s partners fraudulently transferred those assets to individual partners without consideration when they adopted the “Unfinished Business Waiver” on the eve of dissolution.

Seyfarth moved for judgment on the pleadings, arguing that New York rather than California law defined whether it received any “property interest.” In a decision dated September 4, 2012, the District Court Judge first agreed with Seyfarth that New York law governed. He then concluded that under New York law, the “unfinished business doctrine” does not apply to a dissolving law firm’s pending hourly fee matters, and that a partnership does not retain any property interest in such matters upon the firm’s dissolution. In the Judge’s view, to rule otherwise would “conflict[ ] with New York’s strong public policy in favor of client autonomy and attorney mobility” (Geron v Robinson & Cole LLP, 476 BR 732, 742-743 [SD NY 2012]); and “result in an unjust windfall for the Thelen estate, as ‘compensating a former partner out of that fee would reduce the compensation of the attorneys performing the work’ ” (id. at 740, quoting Sheresky v Sheresky Aronson Mayefsky & Sloan, LLP, 35 Misc 3d 1201[A], 2011 NY Slip Op 52504[U], *6 [Sup Ct, NY County 2011]). He further observed that “[s]uch an expansion of the [unfinished business] doctrine would violate New York’s public policy against restrictions on the practice of law” and “clash directly with New York’s Rules of Professional Conduct”; specifically, the rule generally forbidding fee splitting (id. at 740). Accordingly, the Judge granted Seyfarth’s motion for judgment on the pleadings; he sua sponte certified his order for interlocutory appeal (id. at 745-746).

By decision dated November 15, 2013, the Second Circuit agreed with the District Court that New York law governed the parties’ dispute, and asked us to answer two unresolved questions of New York law regarding the applicability and scope of the “unfinished business doctrine”; specifically,

“Under New York law, is a client matter that is billed on an hourly basis the property of a law firm, such that, upon dissolution and in related bankruptcy proceedings, the law firm is entitled to the profit earned on such matters as the ‘unfinished business’ of the firm?
“If so, how does New York law define a ‘client matter’ for purposes of the unfinished business doctrine and what proportion of the profit derived from an ongoing hourly matter may the new law firm retain?” (736 F3d at 225).

Coudert

On August 16, 2005, the law firm Coudert Brothers LLP (Coudert) dissolved in accordance with the terms of its partnership agreement. That same day, the equity partners adopted a “Special Authorization,” whereby the equity partners authorized

“the Executive Board ... to take such actions as it may deem necessary and appropriate, including, without limitation, the granting of waivers, notwithstanding any provisions to the contrary in the Partnership Agreement ... , in order to:
“a. . . . sell all or substantially all of the assets of . . . the Firm to other firms or service providers, in order to maximize the value of the Firm’s assets and business;
“b. wind down the business of the Firm with a view to continuing the provision of legal services to clients and the orderly transition of client matters to other firms or service providers, in order to maximize the value of the Firm’s assets and business to the extent practicable.”

Coudert partners were subsequently hired by several different firms. As of the date of the firm’s dissolution, there remained between Coudert and its clients partly performed contracts for the provision of legal services. When former Coudert partners joined other firms, those firms were retained by Coudert’s former clients to conclude these unfinished legal matters. The client matters were completed by the new firms on an hourly basis, with only two exceptions.

In September 2006, Coudert filed for protection from its creditors pursuant to chapter 11 of the Bankruptcy Code. Developmental Specialists, Inc. (DSI), as administrator of Coudert’s bankruptcy estate, brought 13 separate adversary proceedings against the firms that had hired the former Coudert partners. These lawsuits were premised on the unfinished business doctrine. More specifically, DSI argued that the defendant firms were liable to Coudert for any profits derived from completing the client matters that the former Coudert partners brought to those firms. The firms moved for summary judgment, arguing that the unfinished business doctrine did not apply to matters billed on an hourly basis. DSI cross-moved for a declaration that the unfinished client matters were Coudert’s property on the day it dissolved.

In a decision dated May 24, 2012, the District Court denied the firms’ motion for summary judgment and granted DSI’s cross motion. The Judge agreed with DSI that

“[ujnder the Partnership Law, the Client Matters are presumed to be Coudert’s assets on the Dissolution Date. While the Coudert Partnership Agreement could have provided otherwise, it does not; on the contrary, it confirms the statutory presumption, as does the text of the Special Authorization adopted by the partners who voted to dissolve the firm. In the absence of any evidence that Coudert’s partners intended to exclude pending but uncompleted client representations from the firm’s assets, DSI is entitled to a declaration that the Client Matters were Coudert assets on the Dissolution Date. Because they are Coudert assets, the Former Coudert Partners are obligated to account for any profits they earned while winding the Client Matters up at the Firms” (Development Specialists, Inc. v Akin Gump Strauss Hauer & Feld LLP, 477 BR 318, 326 [SD NY 2012]).

Upon the District Court’s certification, the law firms appealed. By order dated December 2, 2013, the Second Circuit certified the same two questions asked in Thelen (In re Coudert Bros. LLP, 2013 WL 9363394, 2013 US App LEXIS 26016).

IL

The Role of the Partnership Law

Geron and DSI (collectively, the trustees) base their claims principally on the unfinished business doctrine as originally articulated and applied by the Jewel court in the context of a law firm dissolution. The doctrine derives from an interpretation of various provisions of the Partnership Law; primarily, sections 12, 40 (6) (the so-called “no compensation” rule), 43 (1) (the so-called “duty to account”) and 66 (1) (a). The trustees also rely on Partnership Law § 4 (4), which directs that the statute “shall be so interpreted and construed as to effect its general purpose to make uniform the law of those states which enact it.”

The legislature enacted the Partnership Law in 1919, thereby adopting the UPA, which was approved and recommended to the states by the Conference of Commissioners on Uniform State Laws in 1914. Prior to the Conference’s approval and recommendation for adoption of the Revised Uniform Partnership Act in 1994, the UPA had been enacted in every state except Louisiana. Generally speaking, the unfinished business doctrine provides that profits arising from work begun by former partners of dissolved law firms are a partnership asset that must be finished for the benefit of the dissolved partnership, absent an agreement to the contrary. The doctrine rests on the legal principle that because departing partners owe a fiduciary duty to the dissolved firm and their former partners to account for benefits obtained from use of partnership property in winding up the partnership’s business, they may not be separately compensated. This rule has been applied by courts in other jurisdictions to both contingent and hourly matters.

Importantly, though, the Partnership Law does not define property; rather, it supplies default rules for how a partnership upon dissolution divides property as elsewhere defined in state law. As a result, the Partnership Law itself has nothing to say about whether a law firm’s “client matters” are partnership property. When discussing what constitutes “property,” we have explained that the

“expectation of any continued or future business is too contingent in nature and speculative to create a present or future property interest. Although property is often described as a ‘bundle of rights,’ or ‘sticks,’ with relational aspects . . . the ability to terminate the relationship at any time without penalty . . . cannot support a finding that a transferable property right existed” (Verizon New England Inc. v Transcom Enhanced Servs., Inc., 21 NY3d 66, 72 [2013] [emphases added]).

In New York, clients have always enjoyed the “unqualified right to terminate the attorney-client relationship at any time” without any obligation other than to compensate the attorney for “the fair and reasonable value of the completed services” (Matter of Cooperman, 83 NY2d 465, 473 [1994] [emphasis added]). In short, no law firm has a property interest in future hourly legal fees because they are “too contingent in nature and speculative to create a present or future property interest” (Verizon New England, 21 NY3d at 72), given the client’s unfettered right to hire and fire counsel. Because client matters are not partnership property, the trustees’ reliance on Partnership Law § 4 (4) is misplaced. As the District Court Judge in Geron pointed out, “[t]he purpose of [the] UPA is to harmonize partners’ duties regarding partnership property, not to delineate the scope of such property ” (Geron, 476 BR at 742 [emphasis added]).

The Contingency Fee Cases

Moreover, contrary to the trustees’ contentions, New York courts have never suggested that a law firm owns anything with respect to a client matter other than yet-unpaid compensation for legal services already provided. Appellate Division decisions dealing with unfinished business claims in the context of contingency fee arrangements uniformly conclude that the dissolved partnership is entitled only to the “value” of its services (see Grant v Heit, 263 AD2d 388, 389 [1st Dept 1999]; Shandell v Katz, 217 AD2d 472, 473 [1st Dept 1995]; DelCasino v Koeppel, 207 AD2d 374, 374 [2d Dept 1994]; Dwyer v Nicholson, 193 AD2d 70, 73 [2d Dept 1993]; Kirsch v Leventhal, 181 AD2d 222 [3d Dept 1992, Levine, J.]).

The Appellate Division has occasionally referred to a contingency fee case as an “asset” subject to distribution (see e.g. Shandell, 217 AD2d at 473; Kirsch, 181 AD2d at 225). But as then-Justice Levine stressed in Kirsch, a former partner “is only entitled to ‘the value of his interest at the date of dissolution . . . with interest’ ” (id. at 226, quoting Partnership Law § 73; see also Santalucia v Sebright Transp., Inc., 232 F3d 293, 298 [2d Cir 2000] [“(I)n a case where a lawyer departs from a dissolved partnership and takes with him a contingent fee case which he then litigates to settlement, the dissolved firm is entitled only to the value of the case at the date of dissolution, with interest. Stated conversely, the lawyer must remit to his former firm the settlement value, less that amount attributable to the lawyer’s efforts after the firm’s dissolution”], citing Kirsch, 181 AD2d at 225-226). The trustees have not cited any New York case in which the law firm was awarded the client matter itself, or any fee not earned by the law firm’s own work. This is hardly surprising since, as already discussed, a client’s legal matter belongs to the client, not the lawyer.

And notably, these cases have involved disputes between a dissolved partnership and a departing partner, not outside third parties. In this context, statements that contingency fee cases are “assets” of the partnership subject to distribution simply means that, as between the departing partner and the partnership, the partnership is entitled to an accounting for the value of the cases as of the date of the dissolution. Kirsch, Shandell and other Appellate Division decisions involving contingency fee arrangements do not suggest that law firms own their clients’ legal matters, or have a property interest in work performed by former partners at their new firms.

Stem v Warren

The trustees rely heavily on our decision in Stem v Warren (227 NY 538 [1920]), as did the District Court Judge in DSI. But Stem involved claims for breach of fiduciary duty; we did not hold “that executory contracts to perform professional services are partnership assets unless a contrary intention appears” (DSI, 477 BR at 333), or define unfinished client engagements as partnership property.

In Stem, one architectural partnership (Reed & Stem) entered into an agreement with another architectural partnership (Warren & Wetmore) for the purpose of “securing] a contract for architectural services in the construction of the Grand Central Station and buildings in connection therewith” (Stem, 227 NY at 542). The agreement stated that the partnerships would “share and share alike as firms and not as individuals the profits and losses” (id. at 543). On the same day, the joint venture entered into a separate contract with the railroad company agreeing, among other things, to jointly act as architects for the company. It was the clear intent of the parties that the contract was to be performed notwithstanding the death of Reed, the “executive head” of the joint venture, if this should occur; that is, the agreement between the partnerships contemplated that the joint venture would survive either partnership’s dissolution and that the contract with the railroad company would be performed by the survivors.

The joint venture worked on the Grand Central Station project for over seven years before Reed died. The trial court found that, without consent from Reed’s surviving partner or his estate, Wetmore sent the railroad company a proposed new contract that was, in substance, the same as the joint venture’s existing contract, except that the partnership of Warren & Wet-more was named sole architect. The railroad company immediately terminated its contract with the joint venture and entered into the new, identical contract exclusively with Warren & Wetmore.

Stem, the surviving partner, filed suit to recover one half of the profits on two separate projects of the joint venture: the work performed pursuant to the joint venture agreement and the contract with the railroad regarding Grand Central Station; and the work performed on what became the Biltmore Hotel, for which the joint venture had prepared preliminary plans prior to Reed’s death. We determined that “the firm of Warren & Wetmore are to be held accountable to the plaintiff’ for the profits from work on Grand Central Station {id. at 547), but denied Stem compensation from the Biltmore project for anything other than the value of the actual work performed (the preliminary plans) by the joint venture before the dissolution.

Thus, Stem is not a case that defines what makes up the partnership property or “assets”; it is a breach-of-fiduciary-duty case in which one joint venturer underhandedly cut a surviving joint venturer out of a contract expressly intended (including by the client) to survive dissolution. We specifically held that as a result of Wetmore’s “breach of duty,” Warren & Wetmore was liable to account to the joint venture for the usurped opportunity. We recited that the railroad contract was intended to survive Reed’s death and, from that, concluded that the surviving members of the joint venture had a duty to complete the contract for the joint venture’s benefit. Stem does not hold that the joint venture “owned” the railroad contract to the exclusion of others; rather, we decided that Stem’s former joint venturers (Warren & Wetmore) did not have the right to exclude him from the contract. Certainly, if the railroad had terminated its contract with the joint venture and hired a new, unrelated firm, nothing in Stem suggests that Stem could have pursued the new firm to recover a percentage of its profits.

Public Policy Considerations

Treating a dissolved firm’s pending hourly fee matters as partnership property, as the trustees urge, would have numerous perverse effects, and conflicts with basic principles that govern the attorney-client relationship under New York law and the Rules of Professional Conduct (22 NYCRR 1200.0). By allowing former partners of a dissolved firm to profit from work they do not perform, all at the expense of a former partner and his new firm, the trustees’ approach creates an “unjust windfall,” as remarked upon by the District Court Judge in Geron (476 BR at 740).

Next, because the trustees disclaim any basis for recovery of profits from the pending client matters of a former partner who leaves a troubled law firm before dissolution, their approach would encourage partners to get out the door, with clients in tow, before it is too late, rather than remain and work to bolster the firm’s prospects. Obviously, this run-on-the-bank mentality makes the turnaround of a struggling firm less likely.

And attorneys who wait too long are placed in a very difficult position. They might advise their clients that they can no longer afford to represent them, a major inconvenience for the clients and a practical restriction on a client’s right to choose counsel. Or, more likely, these attorneys would simply find it difficult to secure a position in a new law firm because any profits from their work for existing clients would be due their old law firms, not their new employers.

The trustees answer that clients do not care whether they pay one law firm or another, so long as their legal affairs are handled properly, and that requiring law firms to forfeit the fees earned by their lawyers’ efforts has no impact on attorneys or clients. We disagree for the reasons already mentioned. Additionally, clients might worry that their hourly fee matters are not getting as much attention as they deserve if the law firm is prevented from profiting from its work on them. The notion that law firms will hire departing partners or accept client engagements without the promise of compensation ignores common sense and marketplace imperatives. Followed to its logical conclusion, the trustees’ approach would cause clients, lawyers and law firms to suffer, all without producing the desired financial rewards for the estates of bankrupt firms.

Ultimately, what the trustees ask us to endorse conflicts with New York’s strong public policy encouraging client choice and, concomitantly, attorney mobility. In Cohen v Lord, Day & Lord (75 NY2d 95, 96 [1989]), the partnership agreement provided that a departing partner forfeited his right to departure compensation if he practiced law in competition with his former firm. The lower court held that the provision was a “valid . . . financial disincentive to competition and did not prevent plaintiff from practicing law in New York or in any other jurisdiction” (id. at 97 [internal quotation marks omitted]).

We reversed, holding that these financial penalties impermissibly interfered with clients’ choice of counsel — i.e., “[t]he forfeiture-for-competition provision would functionally and realistically discourage and foreclose a withdrawing partner from serving clients who might wish to continue to be represented by the withdrawing lawyer and would thus interfere with the client’s choice of counsel” (id. at 98). In this regard, we quoted approvingly from an opinion of the New York County Lawyers’ Association issued in 1943, which stressed that

“[c]bents are not merchandise. Lawyers are not tradesmen. They have nothing to sell but personal service. An attempt, therefore, to barter in clients, would appear to be inconsistent with the best concepts of our professional status” (id. at 98; see also Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375, 381 [1993] [finding unacceptable a provision in a partnership agreement that “improperly deter(red) competition and thus impinge(d) upon clients’ choice of counsel” by creating an incentive for a partner changing firms to discourage a Parker Chapin client from coming along]).

Finally, the trustees seek to entice us to hold in their favor on the ground that a law firm may always avoid the unfinished business doctrine by placing a well-crafted Jewel waiver in the partnership agreement. This suggestion fails to consider the possibility that classifying clients’ pending hourly fee matters as firm property may lead to untoward unintended consequences. For example, the trustees, as noted before, limit their sought-after recoveries to client matters that remain unresolved as of the date of a law firm’s dissolution. As Seyfarth pointed out, though, if a client’s pending matter is partnership property, why doesn’t every lawyer whose clients follow him to a new firm breach fiduciary duties owed his former law firm and partners? In the end, the trustees’ theory simply does not comport with our profession’s traditions and the commercial realities of the practice of law today, a deficiency beyond the capacity of a Jewel waiver to cure.

Accordingly, the first certified question should be answered in the negative, and the second certified question should not be answered as it is unnecessary to do so.

Chief Judge Lippman and Judges Graffeo, Smith, Pigott, Rivera and Abdus-Saiaam concur.

In each case: Following certification of questions by the United States Court of Appeals for the Second Circuit and acceptance of the questions by this Court pursuant to section 500.27 of this Court’s Rules of Practice, and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, first question answered in the negative and second question not answered as unnecessary.

      . Section 12 (1) provides that “[a]ll property originally brought into the partnership stock or subsequently acquired, by purchase or otherwise, on account of the partnership is partnership property”; section 12 (2), that “[u]n-less the contrary intention appears, property acquired with partnership funds is partnership property.”
      Section 40 (6) provides that “[n]o partner is entitled to remuneration for acting in the partnership business, except that a surviving partner is entitled to reasonable compensation for his services in winding up the partnership affairs.”
      Section 43 (1) specifies that “[e]very partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property.”
      Section 66 (1) (a) specifies that “[a]fter dissolution a partner can bind the partnership . . . [b]y any act appropriate for winding up partnership affairs or completing transactions unfinished at dissolution.”

      . It is not entirely clear to what extent the post-dissolution attorney fees at issue in Jewel were for hourly or contingency fee matters.

      . By contrast, contracts between a law firm and a client cannot contemplate survival of the law firm’s dissolution without impermissibly infringing the client’s right to terminate an attorney at will (see Demov, Morris, Levin & Shein v Glantz, 53 NY2d 553, 556 [1981]).


author: Smith, J. Graffeo, J.

text:
    [18 NE3d 383, 993 NYS2d 672]
    Manuel Reis, Individually and as Administrator of the Estate of Sara Reis, Deceased, Respondent, v Volvo Cars of North America et al., Appellants. (And a Third-Party Action.)
    Argued June 4, 2014;
    decided July 1, 2014

      POINTS OF COUNSEL

      Simpson Thacker & Bartlett LLP, New York City (Roy L. Reardon, Andrew S. Amer and Alicia N. Washington of counsel), and Hardin, Kundla, McKeon & Poletto, PA. (Mark S. Kundla and Stephen J. Donahue of counsel) for appellants.
    I. The Appellate Division erred in affirming judgment for plaintiff on his negligent design claim because the charge incorporated instructions inapplicable to design defect cases and failed to include the risk-utility balancing test required under this Court’s precedent. (Voss v Black & Decker Mfg. Co., 59 NY2d 102; Cover v Cohen, 61 NY2d 261; Denny v Ford Motor Co., 87 NY2d 248; Crespo v Chrysler Corp., 75 F Supp 2d 225; Adams v Genie Indus., Inc., 14 NY3d 535; Nestorowich v Ricotta, 97 NY2d 393; McGinn v Sellitti, 150 AD2d 967; Riley v Wieman, 137 AD2d 309; Cornbrooks v Terminal Barber Shops, Inc., 282 NY 217; John v Great Neck Union Free School Dist., 42 AD3d 437.) II. The Appellate Division erred in refusing to grant defendants a new trial based upon the trial court’s admission of highly prejudicial evidence on plaintiff’s later-dismissed failure to warn claims. (Perazone v Sears, Roebuck & Co., 128 AD2d 15; Haran v Union Carbide Corp., 68 NY2d 710; Cover v Cohen, 61 NY2d 261; Liriano v Hobart Corp., 92 NY2d 232; Schultz v Barber Asphalt Paving Co., 127 App Div 305; People v Williams, 81 NY2d 303; People v Melendez, 55 NY2d 445; People v Acosta, 174 AD2d 181; Riley v Hollingshead Corp., 29 AD2d 848; Wagman v Bradshaw, 292 AD2d 84.) III. The Appellate Division erred in upholding the trial court’s refusal to charge the jury on plaintiffs comparative negligence where evidence arguably supported a finding that plaintiff, using reasonable care, could have avoided his injuries. (Shea v New York City Tr. Auth., 289 AD2d 558; Johnson v New York City Tr. Auth., 88 AD3d 321; Bruni v City of New York, 2 NY3d 319; Delemos v White, 173 AD2d 353; Thoma v Ronai, 189 AD2d 635.)

      Kreindler & Kreindler LLP, New York City (Steven R. Pounian, Noah H. Kushlefsky, Megan W. Benett, Joseph P. Musacchio and Therese Stevens Loucks of counsel), for respondent.
    I. The jury’s negligence verdict must be upheld since defendants: (1) agreed to the negligence charge and verdict form used by the jury; (2) have abandoned their objection to the verdict; (3) cannot raise issues before this Court that were not preserved below; and (4) no longer challenge the sufficiency of the trial evidence of their negligence. (Bradley v Earl B. Feiden, Inc., 8 NY3d 265; Up-Front Indus. v U.S. Indus., 63 NY2d 1004; Barry v Manglass, 55 NY2d 803; Passantino v Consolidated Edison Co. of N.Y., 54 NY2d 840; Grzesiak v General Elec. Co., 68 NY2d 937; Jarvis v Ford Motor Co., 283 F3d 33; Altshuler Shaham Provident Funds, Ltd. v GML Tower, LLC, 21 NY3d 352; Hecker v State of New York, 20 NY3d 1087; Bingham v New York City Tr. Auth., 99 NY2d 355.) II. Defendants failed to preserve their objections and there was no prejudicial error in the jury charge or evidentiary rulings. (Donaldson v County of Erie, 209 AD2d 947; Robillard v Robbins, 78 NY2d 1105; Sawyer v Dreis & Krump Mfg. Co., 67 NY2d 328; Cekic v Royal-Pak Sys., Inc., 59 AD3d 485; Trimarco v Klein, 56 NY2d 98; Resolution Trust Corp. v Eason, 17 F3d 1126; Micallef v Miehle Co., Div. of Miehle-Goss Dexter, 39 NY2d 376; Cover v Cohen, 61 NY2d 261; Bethel v New York City Tr. Auth., 92 NY2d 348.) III. The jury’s separate negligence and strict liability findings that defendants’ failure to warn was a proximate cause of plaintiff’s injuries were based on sufficient evidence and should be upheld. (Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539; Johnson v UniFirst Corp., 90 AD3d 1539; Vail v KMart Corp., 25 AD3d 549; Johnson v Johnson Chem. Co., 183 AD2d 64; Baker v St Agnes Hosp., 70 AD2d 400; Anderson v Hedstrom Corp., 76 F Supp 2d 422; Sosna v American Home Prods., 298 AD2d 158; Guadalupe v Drackett Prods. Co., 253 AD2d 378; Cohen v Hallmark Cards, 45 NY2d 493; Vega v Restani Constr. Corp., 18 NY3d 499.)
   OPINION OF THE COURT

Smith, J.

The standard jury charge in malpractice actions tells the jury that a defendant who has or claims to have “special skills” in a trade or profession is required to use the same degree of skill and care that others in the same trade or profession would reasonably use in the same situation (NY Pattern Jury Instructions [PJI] 2:15). Here, the trial court erred by giving this charge in a case alleging not malpractice, but defective design of a product. We hold that in the situation presented here the error requires reversal and a new trial.

I

On May 24, 2002, plaintiffs friend, Americo Silva, was showing plaintiff a 1987 Volvo station wagon that Silva had recently bought. The car had a manual transmission. As the two stood in front of the car, looking under the hood, Silva asked plaintiff if he would like to see the engine running. Plaintiff said he would, and Silva walked to the driver’s side door, leaned into the car and turned the key in the ignition. The car lurched forward, pinning plaintiff against a wall and causing him to lose his left leg.

Plaintiff brought this action claiming that the car’s manufacturer, Volvo, was at fault for the accident. (We use “Volvo” to refer collectively to both defendants-appellants, which are affiliated corporations.) There was evidence that, when the car was manufactured, it was well known in the automobile industry that a manual transmission car could, if left in a forward gear when it was parked, lurch as this one did when the engine was turned on. Plaintiff asserted that Volvo should have equipped the car with a “starter interlock,” which would have made it impossible to start the engine while the car was in gear, or at least should have warned users of the car about the danger.

Volvo moved for summary judgment. Supreme Court denied the motion, Volvo appealed to the Appellate Division, and the case went to trial while the appeal was pending.

Much of the proof at trial concerned the practices of other car manufacturers at the time the car that injured plaintiff was made. Plaintiff presented evidence that General Motors, Ford and Toyota used starter interlocks on their manual transmission cars in the 1987 model year (though Chrysler did not), and that as a result most 1987 manual transmission cars sold in the United States had starter interlocks. Volvo presented evidence that many other manufacturers did not use an interlock, and defended its own decision not to do so: According to Volvo’s witnesses, the chance of an accident like the one that happened here was extremely small, and the interlock had possible disadvantages. In some situations, they said, the ability to start a car in gear might help avoid an accident.

At plaintiff’s request, and over Volvo’s objection, the court included PJI 2:15 (“Common Law Standard of Care — Defendant Having Special Knowledge”) and PJI 2:16 (“Common Law Standard of Care — Customary Business Practices”) in its charge to the jury. It also gave the jury a verdict sheet, to which Volvo made no objection. The verdict sheet presented plaintiffs two theories of liability — absence of an interlock and failure to warn — both as negligence and as design defect claims. As to the absence of an interlock (our main concern here), the jury was asked, “Was the defendant Volvo negligent in failing to use a starter interlock device in its vehicle?” and also “Was defendant Volvo’s vehicle not reasonably safe in that it was defective without a starter interlock device?” Our decision in Denny v Ford Motor Co. (87 NY2d 248, 258 [1995]) had strongly implied, and our decision in Adams v Genie Indus., Inc. (14 NY3d 535, 542-543 [2010]) later confirmed, that these two questions were redundant, because claims for negligent design and for defective design are essentially identical. However, no party pointed out the redundancy to the trial court.

The jury answered “yes” to the question of whether Volvo was negligent in omitting the interlock, but “no” to the question of whether the product was “not reasonably safe” and thus “defective” without the device. No party complained of the inconsistency in the verdict before the jury was discharged. The jury also found for plaintiff on his failure to warn claims. It awarded damages totaling, after the addition of interest, roughly $10,000,000.

After the verdict was rendered, but before judgment was entered, the Appellate Division decided Volvo’s appeal from Supreme Court’s order denying summary judgment. It modified the order by dismissing the failure to warn claims, holding that “there is no evidence that any such failure was a proximate cause of the injury,” and otherwise affirmed (Reis v Volvo Cars of N. Am., Inc., 73 AD3d 420, 423 [1st Dept 2010]). The trial court then set aside the verdict on the failure to warn claims, but it entered judgment on the design defect claim in plaintiffs favor.

Both parties appealed the judgment to the Appellate Division, which modified it in a way not relevant here and otherwise affirmed, with two Justices dissenting (Reis v Volvo Cars of N. Am., 105 AD3d 663 [1st Dept 2013]). The Appellate Division held, among other things, that “[t]he trial court properly set aside the jury’s verdict on plaintiffs’ failure to warn claim” (id. at 663), but that the court “did not commit error by charging the jury on special knowledge (PJI 2:15) and customary business practices (PJI 2:16), as tailored to the facts of this case” (id. at 664). The dissenting Justices would have remanded for a new trial on the ground that PJI 2:16 was given in error. The dissenters found “no evidence of a customary procedure or policy that was ‘reflective of an industry standard or a generally-accepted safety practice’ ” (id. at 665 [Abdus-Salaam, J., dissenting], quoting 1A NY PJI3d 2:16 at 260 [2013]).

Volvo appeals to this Court as of right, pursuant to CPLR 5601 (a). Plaintiff also sought to appeal as of right, but we granted Volvo’s motion to dismiss plaintiff’s appeal (21 NY3d 1051 [2013]).

It may be useful to explain briefly what is and is not before us. CPLR 5601 (a) allows an appeal as of right from an Appellate Division order only where there is a two-Justice dissent “in favor of the party taking such appeal.” We dismissed plaintiffs appeal from so much of the Appellate Division order as dismissed his failure to warn claims because the Appellate Division dissent was not in plaintiffs favor. Plaintiff did not move for permission to appeal under CPLR 5602 (a), and therefore the part of the order unfavorable to plaintiff is now beyond our review. Plaintiff suggests that his failure to warn claims may furnish an alternative ground for affirming the Appellate Division’s order, but the suggestion is incorrect. The failure to warn claims have been dismissed, and may not be reinstated in the absence of a properly taken appeal from the dismissal.

On the other hand, an appeal properly taken under CPLR 5601 (a) brings up for review all issues that the Appellate Division decided adversely to the appellant, even those on which no Appellate Division justice dissented (Holtslander v Whalen & Sons, 69 NY2d 1016 [1987]; Karger, Powers of the New York Court of Appeals § 6:6 at 207-208 [3d ed rev 2005]). This rule benefits Volvo here, because while we do not agree with the Appellate Division dissenters that PJI 2:16 was improperly given, we do find error in the court’s decision to charge PJI 2:15. We therefore reverse and remit the case for a new trial.

II

The court gave PJI 2:15 to the jury in the following language:

“A manufacturer like Volvo that has special training and experience in designing and manufacturing automobiles, when acting in that capacity, has a duty to use the same degree of skill and care that others in the business of manufacturing and selling automobiles in the United States would reasonably use in the same situation.
“Volvo has special skills in designing and manufacturing automobiles. If you decide that Volvo did use the same degree of skill and care that other manufacturers selling automobiles in the United States would reasonably use in the same situation, then you must find that Volvo was not negligent, no matter what resulted from defendant’s conduct.
“On the other hand, if you decide that Volvo did not use the same degree of skill and care, then you must find that Volvo was negligent.”

This charge should not have been given in this case. It was designed for malpractice cases. As the Committee on Pattern Jury Instructions says: “The principle stated in the pattern charge is the underlying basis of malpractice actions” (1A NY PJI3d 2:15 at 259 [2014]). The Committee goes on to say that “the principle extends to skilled trades and to professions not generally thought of in connection with malpractice” (id.), but we know of no basis for including automobile manufacturers in that category. This is not a malpractice case, but a negligent design or (what amounts to the same thing) a design defect case.

PJI 2:15 is reserved for malpractice cases because the standards of care applicable to malpractice cases and to other negligence cases are different. In a malpractice case against, for example, a doctor or a lawyer, the defendant is generally held to the level of skill and care used by others in the community who practice the same profession (see Spensieri v Lasky, 94 NY2d 231, 238 [1999] [“Generally, the standard of care for a physician is one established by the profession itself’]; Toth v Community Hosp. at Glen Cove, 22 NY2d 255, 262 [1968] [same]; Riley v Wieman, 137 AD2d 309, 314 [3d Dept 1988] [holding that in some cases national, rather than local, standards may be applicable]). In negligence cases generally, by contrast, the jury must compare the defendant’s conduct to that of a reasonable person under like circumstances (Restatement [Second] of Torts § 283; Bethel v New York City Tr. Auth., 92 NY2d 348, 353 [1998]). In negligent design/design defect cases, the reasonable-person standard has been given more specific form: the question is whether the product is one as to which “if the design defect were known at the time of manufacture, a reasonable person would conclude that the utility of the product did not outweigh the risk inherent in marketing a product designed in that manner” (Voss v Black & Decker Mfg. Co., 59 NY2d 102, 108 [1983]).

The difference between the “community” and “reasonable person” standards is a subtle one, and in some cases an error like the one that the trial court committed here might not require reversal. So long as the charge as a whole adequately explains general negligence principles, a reviewing court may feel confident in concluding that an isolated mistake in referring to the skill and care of others in the field did not affect the jury’s verdict. But here, we have no such confidence. The verdict was, as we have said, inconsistent: The jury found for plaintiff on the negligent design claim and for Volvo on the design defect claim, though the claims were in substance identical. And it did so after hearing extensive evidence about the practices of other manufacturers, and after hearing a charge that said, erroneously, “if you decide that Volvo did not use the same degree of skill and care [as other manufacturers selling automobiles in the United States], then you must find that Volvo was negligent” (emphasis added). Thus while Volvo may not complain of the inconsistency in the verdict, because it failed to object to it before the jury was discharged (Grzesiak v General Elec. Co., 68 NY2d 937, 938-939 [1986]), that inconsistency leads us to believe that the error in the charge — to which Volvo did make a timely objection — may have confused the jury.

m

While the error in giving PJI 2:15 requires reversal, we will, for the guidance of the court at a retrial, also discuss Volvo’s objection to PJI 2:16. The court gave PJI 2:16 to the jury as follows:

“You have heard evidence of the practices of other manufacturers selling automobiles in the United States. This evidence is to be considered by you in determining whether the conduct of Volvo was reasonable under the circumstances.
“Volvo’s conduct is not to be considered unreasonable simply because someone else may have used a safer practice.
“On the other hand, a general custom, use or practice by those in the same business or trade may be considered some evidence of what constitutes reasonable conduct in that trade or business.
“You must first decide from the evidence presented in this case whether there was a general custom or practice by automobile manufacturers selling manual transmission vehicles in the United States in 1987.
“If you find that there was a custom or practice, you may take that general custom or practice into account in considering the care used by defendant Volvo in this case.
“However, a general custom or practice is not the only test. What you must decide is whether, taking all the facts and circumstances into account, defendant Volvo acted with reasonable care or failed to act with reasonable care.”

We conclude that this charge was properly given. It differs from PJI 2:15 in the amount of leeway it gives the jury. PJI 2:15, as given here, told the jurors flatly that “Volvo has special skills in designing and manufacturing automobiles,” and said that if Volvo failed to meet community standards the jury “must find that Volvo was negligent.” But PJI 2:16 told the jury that it should “decide from the evidence . . . whether there was a general custom or practice,” and that if it found there was it “may take that general custom or practice into account” (emphasis added). While the issue of custom and practice was disputed here, there was evidence from which the jury could find that a large majority of the 1987 manual transmission cars sold in the United States had starter interlocks. This was enough to permit a finding of custom and practice, though not to require it.

We agree with the courts below that the record here furnishes no basis for a comparative negligence charge (PJI 2:36). Volvo’s remaining arguments need not be considered in light of our decision.

Accordingly, the order of the Appellate Division should be reversed, with costs, and a new trial ordered.

Graffeo, J.

(dissenting). Plaintiff Manuel Reis was grievously injured when a 1987 manual transmission station wagon, designed and manufactured by the Volvo defendants, unexpectedly lurched forward after the ignition was started, pinning him against a building. Plaintiffs left leg was crushed and subsequently amputated. Undisputedly, this accident and plaintiffs resulting injuries would not have occurred if Volvo had designed the station wagon with a starter interlock device.

Throughout the lengthy trial of plaintiff’s negligence and strict liability causes of action for design defect and failure to warn, both sides presented extensive evidence bearing upon the reasonableness of Volvo’s decision not to use a starter interlock device in its automotive design. Plaintiffs proof included expert testimony establishing that the starter interlock device was a feasible safety feature available in 1987 that would have cost Volvo approximately $5 per vehicle, and which was, in fact, incorporated in many manual transmission automobiles of other manufacturers that year. According to plaintiffs experts, the automobile industry was generally aware of the risk to motorists and pedestrians inherent in vehicles designed without these devices. Plaintiffs experts further opined that the station wagon in question was dangerous as designed without a starter interlock.

Volvo conceded feasibility, but contended that the station wagon was reasonably safe as designed. To that effect, Volvo presented expert testimony contradicting plaintiffs proof regarding the extent to which other manufacturers used the device in 1987. Volvo asserted that it had reasonably decided to omit starter interlock devices from its vehicles because the risk of an accident such as the one that occurred here was minimal and, without the device, a vehicle could be moved for a short period of time in an emergency situation if the engine was not functioning properly.

At the close of proof, the trial court charged the jury with the principles of negligence reflected in PJI 2:125 (Products Liability — Negligence), PJI 2:15 (Common Law Standard of Care — Defendant Having Special Knowledge), and PJI 2:16 (Common Law Standard of Care — Customary Business Practices) with respect to plaintiffs negligent design claim. The PJI 2:15 charge, in essence, instructed the jury that Volvo, possessing special training and experience, owed a duty to use the same degree of skill and care as other manufacturers in the automobile industry. Typically, the community standard of care embodied in PJI 2:15 applies to claims grounded in malpractice (see 1A NY PJI3d 2:15 at 259 [2014]). Liability in negligent design cases turns more properly — not on this community standard of care — but on whether “if the design defect were known at the time of manufacture, a reasonable person would conclude that the utility of the product did not outweigh the risk inherent in marketing a product designed in that manner” (Voss v Black & Decker Mfg. Co., 59 NY2d 102, 108 [1983]; see Adams v Genie Indus., Inc., 14 NY3d 535, 543 [2010]; Denny v Ford Motor Co., 87 NY2d 248, 257 [1995], rearg denied 87 NY2d 969 [1996]). It follows then, that PJI 2:15 should ordinarily not be charged in relation to negligent design claims. As the majority points out, however, the difference between these two standards of care is a subtle one and, in some cases, this type of slight misstep may not require reversal (see majority op at 42-43). I believe that this is such a case.

The trial judge charged PJI 2:15 in the context of its instructions to the jury on the general principles of negligence set forth in PJI 2:125. Significantly, the PJI 2:125 charge instructed the jury that the degree of care owed by Volvo was that of a “reasonably prudent manufacturer.” The propriety of this instruction is beyond our review, having been submitted to the jury at Volvo’s request (see Bradley v Earl B. Feiden, Inc., 8 NY3d 265, 272 [2007]; Barry v Manglass, 55 NY2d 803, 805-806 [1981], rearg denied 55 NY2d 1039 [1982]; Rupert v Sellers, 50 NY2d 881, 882-883 [1980]). Viewed in this light, the PJI 2:15 charge, in effect, merely repeated a similar standard of care as that which was charged to the jury at Volvo’s insistence.

Moreover, PJI 2:16 was charged to the jury after PJI 2:15. This later charge explained to the jury that, when considering the trial evidence pertaining to the practices of other automobile manufacturers, Volvo’s conduct was “not to be considered unreasonable simply because someone else may have used a safer practice” and, further, that it must take into account “all the facts and circumstances” when determining whether Volvo acted reasonably in designing the station wagon without a starter interlock device. PJI 2:16 therefore dispelled any notion that the jury’s determination should be based solely on the conduct of other manufacturers. Viewing the contested jury instructions as a whole and “as tailored to the facts of this case,” I agree with the Appellate Division majority that the PJI 2:15 charge does not warrant reversal under these circumstances (Reis v Volvo Cars of N. Am., 105 AD3d 663, 664 [1st Dept 2013]; see generally Wild v Catholic Health Sys., 21 NY3d 951, 955 [2013]; Nestorowich v Ricotta, 97 NY2d 393, 401 [2002]).

As the courts below held and the majority of this Court concedes, Volvo failed to preserve any challenge to the consistency of the negligent design and strict liability design defect verdicts (see Bradley, 8 NY3d at 272 n 2; Barry, 55 NY2d at 806). But the majority relies exclusively on this claimed inconsistency in concluding that PJI 2:15 confused the jury. In my view, under these unique facts, the majority’s holding allows Volvo to evade the well-settled preservation requirement and benefit from its failure to provide the trial court with the opportunity to cure any inconsistency before discharging the jury. Because ample evidence supported the jury’s negligent design verdict and I find Volvo’s other arguments for reversal unpersuasive, I would uphold the jury verdict.

Chief Judge Lippman and Judges Read, Pigott and Rivera concur with Judge Smith; Judge Graffeo dissents and votes to affirm in an opinion; Judge AlBDus-Salaam taking no part.

Order reversed, with costs, and a new trial ordered.

       I agree with the majority that sufficient evidence was presented to justify submitting the customary business practices charge to the jury.