NYC Landlords Sue To Overturn Second Year Of Imposed Rent Stabilization Freeze

New York City landlords want the courts to intervene on the rent freeze on rent stabilized units that takes effect for second straight year.  According to the Courthouse News Service, four landlords, Benson Realty LLC, Danielle Realty LLC, Milagros Huertas and Marilyn Percy, and the Rent Stabilization Association, a trade group that represents 25,00 landlords across New York City, filed a petition in Manhattan Supreme Court seeking to overturn an order adopted by the New York City Rent Guidelines Board that freezes rent increases at 0 percent for one-year leases and 2 percent for two-year leases. This is the second year in a row that the freeze has been ordered. The petition claims that the Order in question is “arbitrary and capricious,” as well as “constitutionally dubious” and asks the Court to annul the Order in question, declaring it unconstitutional under the 5th and 14th Amendments, alleging violations of the

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Buying a Business in New York

When buying a business in New York, we recommend a more nuanced approach that contemplates matters beyond a mere cost benefit analysis.  Small businesses are the engine of the American economy.  According to a 2012 Small Business Administration report, small businesses “produced 46 percent of the private non-farm GDP in 2008 (the most recent year for which the source is available), compared with 48 percent in 2002.”  New York is one of the best places to establish a business in many industries, because of its educated labor force, high net worth and business infrastructure. Here are a few of the important steps to consider when buying a New York business. What is the Deal Structure? When buying a NY small business, consider the reason for the purchase. The reasons shall, often, dictate the structure of the purchase and the risks associated with the anticipated deal. What is the primary reason for the

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Cuomo Signs Law That May Cripple Airbnb in NYC

After a summer of discontent, New York Governor Andrew Cuomo signed the toughest restrictions on short-term apartment rentals in the country that may cripple the operations of Airbnb in the state. As discussed in many previous blog posts here, Airbnb is an online marketplace where prospective guests look for a bed to stay in from hosts listing spare rooms and properties for short term rentals. Under the new rules, which we discussed in an earlier posting here, the liability for advertising short-term rentals would shift from building owners to the renters in “Class A” multiple dwellings (buildings designed for three or more families) and those who place the advertisements on sites like Airbnb. Penalties range from $1,000 for a first offense to $7,500 for third and subsequent violations. The stated intent behind the proposed bill is to protect New York’s hotel industry and owners of multiple dwelling properties by preventing illegal

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Suit Claiming NY’s Daily Fantasy Sports Law Is Gambling, Not Skill

An anti-gambling reform group filed a lawsuit last week claiming that New York’s “Daily Fantasy Sports” law violates the NY State constitution by characterizing daily fantasy sports contests as games of skill, rather than games of chance. The suit was filed in New York Supreme Court in Albany County by an organization called Stop Predatory Gambling on behalf of four New York resident plaintiffs who claim to have been negatively impacted by gambling. According to published reports, the suit “seek(s) to protect the public from predatory gambling consistent with the constitution.” Article 1, Section 9 of the state constitution, states, in part that “[n]o law shall be passed… except as hereinafter provided, no lottery or the sale of lottery tickets, pool-selling, bookmaking, or any other kind of gambling, except lotteries operated by the state… except pari-mutuel betting on horse races…  and except casino gambling at no more than seven facilities

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Pokémon Go Lawsuit Claims Game Creators Entice Users To Trespass

Creators of the popular Pokémon Go augmented reality game are litigants in a lawsuit claim that the game entices users to trespass on other’s properties. Nintendo, the Pokemon Company and Niantic Labs are named in a lawsuit filed in New Jersey on behalf of Jeffrey Marder, a homeowner who claims to have had a number of unwanted encounters with Pokémon Go Players on his property. As dicussed in a previous blog posting, augmented reality games involve live direct or indirect views of a physical, real-world environment whose elements are augmented (or supplemented) by computer-generated sensory input such as sound, video, graphics or GPS data. When playing the game players use their smartphone’s camera feature  to “see” Pokémon’s fictional creatures. In the case of Pokémon Go, fictional creatures are projected onto a mobile device’s camera through the game’s app and overlays project Pokémon over the physical world, as well as other items called “Pokéstops” and “Pokémon gyms” that

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Fox Sues Netflix For Poaching Key Employees: Tortious Interference Law

Media giant Fox filed a lawsuit against Netflix claiming it has been damaged by Netflix’s aggressive and improper campaign to unlawfully target, recruit, and poach valuable Fox executives by inducing them to break their employment contracts. The claim that Fox will attempt to articulate is called tortious interference. The elements of a NY tortious interference claim which Fox would have to prove are: The existence of a valid contract between Fox and a third person; Netflix’s knowledge of the contract; Netflix’s intent to interfere with the contract between Fox and a third person; Actual interference by Netflix, which must be “improper” in nature; and Fox suffered damage as a result of Netflix’s “improper” interference. The exact employee contract specifications that would serve as the basis of Fox’s lawsuit is not clear from reading the court filings. Claims for tortious interference can be difficult to prove because proving mere interference with a

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Apple Sued In Class Action For Breach of Contract Over iPhone 7 Pre-Orders

Apple iPhone users who signed up for a program to pay extra with the promise of receiving the latest device each year have filed a class action for a breach of contract claiming that they’ve been told to wait longer for their new gadgets than they should. In a proposed federal class action filed this week filed filed in the U.S. District Court for the Northern District of California by Emil Frank, a Brooklyn resident who participated in Apple’s “iPhone Upgrade Program,” attorneys claim that Apple breached its contract when Frank and others were unable to pre-order the new iPhone 7 prior to its release in stores. The suit claims that participants who had paid into the program were given a lower priority than ordinary buyers when ordering from Apple, resulting in participants having to make additional payments on older phones while they waited in limbo. Additionally, claimants allege that

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Use A Cease and Desist Letter in New York

Proper use of a cease and desist letter is the first measure a business can take to protect itself from copyright and trademark infringement – as seen in recent news articles.  GiGi New York sent Gigi Hadid and her Tommy Hilfiger collaboration a cease and desist letter because of the similarities in the styling of their name of a new line of clothing called “GiGi,” which GiGi New York believes has the potential for customer confusion between the brands. GiGi New York has owned their trademark, “GiGi New York” for certain leather goods it produces, but only filed an application for the trademark “GiGi” after Hadid’s recent runway show. A cease and desist letter is a tool that businesses use for any number of reasons including to stop harassment, assert ownership rights, or when they just want to formally tell someone to stop doing something harmful to their business. It

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U.S. Government Formally Recalls Samsung Galaxy Note 7 For Dangerous Battery

The U.S. federal government issued a formal recall of the Samsung Galaxy Note 7 devices for a defective and dangerous battery. The Consumer Products Safety Commission published a statement on its website urging owners of the Samsung Galaxy Note 7 smart phone to turn them off and stop charging devices due to explosive batteries causing fires, property damage and the potential for personal injury. After reports of some 35 incidents of Samsung Galaxy Note 7 devices exploding, an investigation by Samsung found an issue with the battery cell overheating, characterized as a “very rare manufacturing process error.” The consumer warning is based on recent reports involving lithium-ion batteries resulting in fires while charging and during normal use, which has led to government’s call for consumers to power down their devices. The Federal Aviation Administration has also issued a ban of the use of Note 7 devices on all aircraft. Samsung had already

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Suing a non-New York Company in a New York court: Understanding New York’s “Long Arm” Statute

A recent decision highlights the importance of understanding New York’s “Long-Arm” Statute when considering to sue an overseas business.  A New York court ruled that a flight attendant claiming that a defectively designed jump seat on an Airbus made in France caused her injury on a flight from Boston to Washington D.C. could not sue for damages in New York because she had failed to fulfill the requirements of New York’s “long arm” statute contained in CPLR 302(a). To sue an entity in New York under New York’s “long arm” statute, you must be able to prove that the other party: transacts business within New York or contracts anywhere to supply goods or services in the state;  or commits a tortious act within New York, except as to a cause of action for defamation of character arising from the act;  or commits a tortious act or causes injury to person or

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FDA Cracking Down on Underage Sale of Electronic Smoking Devices

NY Small businesses that sell electronic smoking devices like vape pens and e-cigarettes will now have to treat them as “tobacco products” thanks to new FDA regulations intended to crack down on underage sales of these items. This week, a earlier ruling from the U.S. Food and Drug Administration (FDA) goes into effect which prohibits the sale of vape pens, e-cigarettes and other electronic smoking devices to consumers under 18 years of age. For small business retailers, this means the sale of e-cigarettes is no different from the sale of cigars and other traditional cigarettes, meaning they must verify a consumer’s age using a valid photo ID.  Adults under the age of 26 must show a photo identification to buy them. The FDA will also require manufacturers to register with it and place warning labels on all product packaging. The regulation is intended to immediately impact the use of these

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NY Agency Law Basics: Obtaining an agent to distribute your products in New York

New York Agency law deals with the relationship between an “agent,” and a “principal.” An agency relationship forms when a principal asks an individual to act on behalf of the principal and the action of the agent may bind the principal in some way.  Agency, in short, is a fiduciary relationship where an agent acts for a principal subject to control of the principal. Under these circumstances, a principal will be liable for contracts entered into by agents when (1) the a fiduciary relationship exists between an agent and principle  (2) the agent acted with some kind of authority, and (3) a contractual obligation is created between the agent and a third party.  The idea of authority can be a tricky one to nail down. Actual, Apparent  & Inherent Authority to Act for a Principal in New York An agency relationship can be, and often is, enforced by written agreements

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Federal Trademark Basics: What You Can Learn From The “New York Fashion Week” Trademark Controversy

A growing controversy over the use of a widely-known phrase in the New York fashion industry is a perfect example of why you need to protect your trade names and marks immediately. If you are fashion-forward, or a New York resident, then you have probably heard of the phrase “New York Fashion Week,” which signifies a week-long grouping of events where designers reveal their latest creations put on by the Council of Fashion Designers of America (“CFDA”) and WME-IMG (formerly known as William Morris Endeavor.) Recently, CFDA and WME-IMG were sued by Fashion Week, Inc. for infringing upon its use of the trademarked phrase “New York Fashion Week.” The lawsuit follows a ruling from earlier this year by the Trademark Trial and Appeal Board (TTAB) determining that CFDA and WME-IMG do not have legal rights to the name. In that trademark proceeding, CFDA argued that the trade organization and “its predecessors-in-interest

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Private Settlements of Federal and New York Fair Labor Claims: Cheeks v. Freeport Pancake House

Several federal district courts and federal circuit courts of appeals – including those affecting New York – have issued decisions characterized by many attorneys as overly-protective toward plaintiffs in Fair Labor Standards Act (FLSA) cases. In Cheeks v. Freeport Pancake House, an employee brought a claim for overtime wages against his employer under the FLSA and New York Labor Law. After the parties reached a private settlement and filed a joint stipulation of dismissal with prejudice, the district court rejected it, holding that a FLSA plaintiff cannot enter into a private settlement stipulating dismissal with prejudice without either court approval or without that of the U.S. Department of Labor. The Second Circuit Court of Appeals, which includes New York within its jurisdiction, affirmed the trial court decision.  This ruling separates FLSA cases from the default provisions contained in the Federal Rules of Civil Procedure which set forth the general rule

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Consumer Safety Alert: 500K “Hoverboard” Scooters Recalled For Fire Hazard

If you purchased a “hoverboard” self-balancing scooter in the past year, be aware that ten major companies and retail stores that produced over 500,000 of them have issued a recall of the devices.  I bought one for my child and, thus, this news was interesting for me. The recall is due to a design defect where the lithium ion battery packs overheat, posing a risk of the hoverboard smoking, catching fire and even exploding. Most of the defective “hoverboards” were purchased from June of 2015 to May of 2016 for between $350 and $900. According to the Wall Street Journal, self-balancing scooters that don’t meet a new safety standard that governs the electrical drive train system, including the battery and charger system have been recalled. The U.S. Consumer Product Safety Commission endorsed the standard, called UL 2272, in February. To date, defective “hoverboards” have caused over $11 million in property damage,

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Settlement In VW Emissions Litigation

New York is set to accept a partial settlement in the Volkswagen emissions case pending in a U.S. Federal District Court. Currently, 44 states have signed off on a settlement whereby VW would pay $14.7 billion to settle claims that it deceives states and customers by fraudulently misrepresenting its vehicles’ emission numbers, in clear violation of state environmental laws and regulations. Last September, the Environmental Protection Agency (EPA) issued VW a notice of violation of the Clean Air Act after it was found that Volkswagen had intentionally programmed turbocharged direct injection (TDI) diesel engines to activate certain emissions controls only during laboratory emissions testing. That caused the vehicles’ emissions to meet US standards during regulatory testing but emit up to 40 times higher emissions on the road for 500,000 cars on the road in the U.S. from 2009 to 2015. The scandal extends across the world to 11 million vehicles

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Revised New York Court Rule for Submitting Confidential Documents in Commercial Litigation in NY

New changes in how New York Court’s Commercial Division will have litigant file confidential documents submitted takes effect today.  The changes are part of an amendment to the division’s Standard Form of Confidentiality Order that establishes a more formal process for submitting confidential documents in an e-filed case in New York. Litigants in counties with mandatory e-filing (like New York County) will be able to file redacted versions of the confidential documents, but then must move to seal the documents within seven days or they will be required to take steps to replace the redacted filings with un-redacted versions. Previously, litigants could file confidential documents as hard copies with a motion to seal, or sidestep the process of obtaining a formal motion to seal and submit papers directly to the assigned judge’s chambers without filing them. This created problems for New York appeals because without a proper motion on file,

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What Brexit Means For The New York Real Estate Market

With the shocking news breaking that the United Kingdom has voted to leave the European Union, many New York businesses who transact business internationally, or who cater to an international clientele here at home are left to wonder what Brexit means for them.  For the real estate market, the effects are probably the easiest to sort out. We have had many real estate and corporate clients contact us requesting advice on the effect the U.K. leaving the E.U. will have on their business in New York.  We will be writing about this issue over the next couple of weeks here and, also, on our sister blog at: The Korean Law Blog.  First, don’t expect an interest rate increase this summer because the volatility created by this unexpected news means that the Federal Reserve will want to keep rates as consistent as possible.  So if your New York business has interest

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Vimeo Prevails in New York Copyright Infringement Appeal

Vimeo, an internet service provider that allows users to upload audio and video content, is not liable for copyright infringement  in New York after the Second Circuit Court of Appeals reversed a Manhattan Federal Court decision. By reversing and remanding the decision of a Manhattan Federal Court, the Second Circuit Court of Appeals has affirmed that the Digital Millennium Copyright Act (DMCA) grants an internet service provider a “safe harbor” from infringement claims, regardless of the publish date of recordings. In the matter of Capitol Records v. Vimeo, Capitol Records sued in Manhattan Federal Court for copyright infringement, claiming that Vimeo should be held liable for users publishing copyrighted materials, including music recorded before 1972. The Second Circuit disagreed, holding that construing DMCA as leaving service providers like Vimeo subject to liability for the acts of users posting materials that may infringe copyright “defeats the very purpose Congress sought to

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New York Alternative Dispute Resolution: New York Arbitration Basics

Many New York small businesses are turning to arbitration to solve disputes for a variety of reasons. Arbitration is an out-of-court proceeding where parties contract to have a third party neutral, called an arbitrator, hear evidence and then make a decision. Often, parties to a contract agree to arbitration when they sign an agreement, which outlines the location of the arbitration, number of arbitrators and apportionment of fees. Arbitration can be binding, which means that the parties are bound by arbitrator’s decision, or non-binding (sometimes called mediation), which means that either party may reject the arbitrator’s decision and go to court or binding arbitration. Arbitration can be voluntary, where the parties agree to arbitrate, or required by a contract or law. It is quite common for parties to a contract to agree to an arbitration clause for disputes arising out of and related to the subject matter of the contract.  Arbitration

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