Texas Courts and Covid-19

As coronavirus cases continue to climb in Texas, courts are adapting to the changing circumstances. The Federal Courthouses for the Southern District of Texas in the Houston and Galveston Divisions had previously re-opened in May.  However, due to a rise in cases in Harris County and the surrounding areas, the Courthouses have been re-closed to the public through July 10, subject to further developments and guidance from local health officials.

In addition, the Supreme Court of Texas has recently issued its Eighteenth Emergency Order regarding Covid-19. This revised order extends a ban on all jury proceedings to September 1, 2020. The order also removes a previous requirement that parties consent to online proceedings, and grants all courts the ability to modify or suspend any deadlines through September 30, 2020. This wide discretion will continue to allow courts to operate while delaying large in-person gatherings until it is safe, or sufficient protective measures have been put in place.

Along with the Supreme Court’s revised order, the Governor of Texas issued an order requiring Texans living in counties with more than 20 coronavirus cases to wear a face covering over the nose and mouth while in a business or other building open to the public, as well as outdoor public spaces, whenever social distancing is not possible.

To read a copy of the Eighteenth Emergency Order Issued by the Supreme Court of Texas click here. 

For more information, please do not hesitate to contact us at info@chaloslaw.com

Melissa Russo of Chalos & Co, P.C. Set to Speak at CMA Conference October 16th

On October 16, 2020, Melissa Russo of Chalos & Co, P.C. – New York, will be speaking at the 35th annual Connecticut Maritime Association (CMA) conference in Stamford, Connecticut.  This year, CMA has teamed up with SHIPPINGInsight to create the first ever “North American Shipping Week” from October 12-16, 2020, set to focus on technology, innovation, and the commercial aspects of shipping.  Ms. Russo will be speaking during the CMA’s legal session on the ever-changing landscape of U.S. sanctions.

To register for the conference and see the latest agenda, click here.

For more information, please do not hesitate to contact us at info@chaloslaw.com.

Virtual Courthouse Auction for the Interlocutory Sale of the M/V EVOLUTION Held in South Carolina

Since mid-March individuals, businesses, and the Court system have turned to virtual meetings and video conferencing in response to the need to practice safe social distancing in the wake of the COVID-19 pandemic.  A byproduct of the need to shelter-in-place has been the opportunity to increase efficiency and connectivity around the world through technology.  This intersection of traditional Court business with the assistance of virtual video conference capabilities was recently on full display in Charleston, South Carolina.

U.S. District Judge Richard Gergel of the United States District Court for the District of South Carolina issued an order authorizing the interlocutory sale of the M/V EVOLUTION.  The Vessel had been under attachment and arrest since January 31, 2020, after numerous Plaintiffs had filed lien and contract claims for unpaid services and necessaries provided to the Vessel.  The Vessel’s Owners were unable (or unwilling) to post substitute security for the release of the Vessel.  Accordingly, in mid-April, Judge Gergel granted the Plaintiffs’ motion seeking to sell the Vessel.  Traditionally, vessel auctions in the United States are required to be administered by the U.S. Marshals Service “on the Courthouse steps” and the highest in-person bidder that presents a certified check representing ten percent (10%) of the purchase price wins the rights to buy the vessel free and clear of all liens, claims, and encumbrances.

In the case of the M/V EVOLUTION, the Court (and the parties) recognized that a traditional in-person auction was not going to be possible as the Courthouse had limited accessibility to the public and South Carolina remained under a directive limiting gatherings to fewer than ten (10) people.  Furthermore, with travel and self-quarantine restrictions in place, there was significant concern that a sufficient number of bidders would not be able to attend.  This presented the serious risk that the auction would not even obtain the minimum bid price of $1,250,000.  Accordingly, District Judge Gergel authorized the auction to proceed both in-person and virtually through the use of a secure Zoom meeting.   The Court appointed London-based ship broker CW Kellock & Co. Ltd. to serve as the broker for the auction in an effort to promote interest in the Vessel and assist in administering the auction.

The custodian for the Vessel conducted a walkthrough survey by video and photos, all of which were available for prospective bidders to view prior to the auction.  The Court permitted participants to satisfy the earnest money requirement through the transmission of funds to the trust account(s) of local South Carolina law firms instead of requiring the traditional hard copy check in-person.  The virtual public auction was held on May 19, 2020.

The vessel sale was administered by the Deputy Marshal for the District of South Carolina in conjunction with the broker.  To streamline the proceedings from the Courthouse and obtain a sufficient signal, the in-person auction was relocated to the corner of the parking lot with a laptop propped up on the trunk of a red convertible.  All those in attendance outside the Courthouse made sure to practice safe social distancing.  Individuals and companies from around the world were able to “log-in,” participate, and observe the proceedings.  The virtual auction was successfully completed with Wickwar Shipping Ltd. achieving the highest bid of $1,340,000.00.  The sale was confirmed by the Court on May 26, 2020.

These are indeed uncertain times we all are facing, but one thing COVID-19 has taught everyone is that the show must go on, even virtually. We look forward to the practice of law post-COVID-19 as law firms and Courthouses adjust to the “new normal” and hopefully the continued use and integration of virtual conference platforms for Court hearings, auctions, and other proceedings.

If you have any questions, contact us at info@chaloslaw.com.

SMART PHONES: What is Your Right to Privacy?

In a recent decision out of the Western District of Washington, District Judge Coughenour ruled that the FBI violated the Fourth Amendment’s protection against unlawful searches when an agent switched on a suspect’s phone to look at his lock screen without a search warrant.  The lock screen showed the name “STREEZY” under the time and date, which is the alleged alias of the defendant Joseph Sam.  In ruling that the FBI’s search was unlawful, Judge Coughenour focused on the physically intrusive nature of the search as it involved manipulating the device to power on the phone.  Decades of U.S. Supreme Court precedent have held that physical manipulation of an object by law enforcement for the purposes of evidence gathering without a warrant is a violation of the Fourth Amendment and unconstitutional.  In extending this protection to a phone lock-screen, Judge Coughenour cited to other cases of “physical manipulation” such as a GPS tracking device placed on a car, squeezing a bag, and moving stereo equipment to view concealed serial numbers.  See United States v. Sam, No. 2:19-cr-115-JCC (W.D.Wa. May 18, 2020).

In another recent case from the District of Connecticut, Judge Bolden found that there was not a Fourth Amendment violation where police turned on a phone which the defendant claimed was “not his” at the time of the arrest.  The phone was in the defendant’s pocket and was used by law enforcement to establish the defendant had been calling the victim from that phone.  In denying the defendant’s motion to suppress (and subsequent motion for a new trial), the District Court found that turning a phone on and viewing the lock screen was not an unlawful search where the defendant disclaimed ownership of the phone and the lock screen did not reveal any personal information.  United States v. Hamlett, No. 3:18-cr-24 (VAB), 2019 U.S. Dist. LEXIS 125248 (D. Conn. July 26, 2019).

It will only be a matter of time before U.S. Courts of Appeal and the U.S. Supreme Court will be tasked with providing clarity on what constitutes a “search” of increasingly “smart phones.” As encryption technologies evolve, the legal discussions around privacy and security will become increasingly more complex as it relates to search and seizure protections afforded by the Fourth Amendment.

A copy of Judge Coughenour’s opinion can be found here.

For any questions about the decision or Fourth Amendment protections, please contact us at info@chaloslaw.com.

New York State Court Update – Electronic Filing of NEW CASES Set to Resume

On May 18, 2020, Chief Judge DiFiore released a message announcing the start of limited in-person court operations in the Finger Lakes, Mohawk Valley, Southern Tier, North Country and Central New York regions.  Jury operations remain suspended.  These regions have also started accepting the filing of new non-essential matters via the New York State Court Electronic Filing System (“NYSCEF”).  Courthouse traffic will be limited and courts will continue using the virtual technology implemented over the past two (2) months.

On May 20, 2020, Chief Administrative Judge Lawrence K. Marks issued a memorandum announcing that starting May 25, 2020, all electronic filings, including new non-essential cases,  would resume in the five (5) New York City Counties, as well as Nassau, Suffolk, Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester counties via the NYSCEF.  In-person court operations remain suspended in these counties as to date, they have not yet met the benchmarks required to participate in Governor Cuomo’s regional reopening plan.

Courts across the state have also adopted new protocols and safety measures to be maintained going forward as limited in-person operations begin, including deep cleaning of court facilities before resumption of operations, upgraded regular cleaning, the availability of masks and gloves for court personnel, sanitizing agents for visitors, installation of plexiglass barriers in certain courthouse locations, and placement of blue tape indicators in public areas to ensure physical distancing.    For sure, the reopening of electronic filing for all matters is great progress in broadening access to civil litigation and we are hopeful that the downstate counties will reopen for limited in-person operations in the near future.

To read Judge DiFiore’s message please click here.

To read Judge Marks’ memorandum please click here.

If you have a question or need assistance with a legal matter, please contact us at info@chaloslaw.com

U.S. Issues New Sanctions Advisory to Maritime Industry

The U.S. Department of State, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), and the U.S. Coast Guard have issued a global advisory​ alerting the maritime industry, and those actively engaged in the energy and metals sectors, to deceptive shipping practices used to evade sanctions throughout the world, and specifically in Iran, North Korea and Syria.  The new advisory is intended to provide specific guidance and recommended best practices to be used by those in the maritime industry to ensure sanctions compliance.  The advisory highlights the most common practices used by sanctions evaders, including (1) disabling or manipulating the AIS on the vessel; (2) physically altering vessel identification; (3) falsifying cargo and vessel documents; (4) STS transfers; (5) voyage irregulates; (6) false flags and flag hopping; and (7) complex ownership or management structures.

The advisory also includes a detailed set of general practices which should be adopted for various sectors of the industry to assist in identifying potential sanctions evaders.  An internal compliance program and strict “know your customer” guidelines should be developed and implemented with these guidelines in mind in order to ensure compliance with U.S. sanctions regulations. 

To read a copy of the advisory please click here.

If you have any questions, contact us at info@chaloslaw.com

Civil Liberties in the Age of COVID-19

Texas has turned into a legal and political battleground as individuals, businesses, and the Courts wrestle with how best to protect the general population without infringing on people’s civil liberties.   Two recent cases have made headlines as the limits of Texas Governor Greg Abbott’s Executive Orders have been challenged.

On May 1, 2020, Executive Order GA-18 went into effect which permitted Texas dine-in restaurants to reopen with specific limitations, including limiting the number of patrons and minimum distancing between parties.  The Blue Onyx, a gentlemen’s club in Houston, Texas opened on Friday May 1, 2020 at 12:01 AM with a menu and procedures in place to ensure social distancing.  City of Houston officials and police shut down the club shortly after opening, claiming that the Blue Onyx was in violation of the Governor’s Executive Orders and threatened the owner with citations and arrest.  Undeterred, Blue Onyx filed an emergency petition in Federal Court in the Southern District of Texas for a Temporary Restraining Order against the City.  The self-proclaimed Judicial Diva, District Judge Vanessa Gilmore (appointed by President Bill Clinton in 1994), issued a Temporary Restraining Order permitting the Club to immediately reopen and prohibiting the City of Houston from arresting any employee or representative of the Club.  Judge Gilmore found that the Club had made the necessary showing that immediate and irreparable injury, loss, or damage would occur unless the City was ordered to refrain from closing or attempting to close Club Onyx pursuant to Governor Abbott’s Executive Order GA 18.

In another case, Shelley Luther, a single mother who operates a hair salon, defied Governor Abbott’s Executive Orders and opened for business.  City and County officials in Dallas issued several citations for Ms. Luther’s failure to comply with the Executive Order requiring hair salons to remain closed since late March.  In the 14th Civil District Court, Judge Eric Moyé (a Democrat who has held the elected position since 2008 and is up for re-election on November 3, 2020), issued a restraining order against the salon and Luther for violating the Governor’s Executive Orders.  When the salon reopened in defiance of the restraining order; Judge Moyé held an emergency hearing on Tuesday, May 5, 2020.  At the hearing, Judge Moyé issued a $7,000 fine and sentenced Ms. Luther to seven (7) days in jail for civil contempt.  The order was surprising to many given the fact that Texas (and Courts across the United States) have released thousands of non-violent offenders from jail in response to the COVID-19 pandemic to limit spread of the virus.  The Judge’s ruling sparked political ire from Republicans across Texas and the United States and has become a political rallying cry.  Texas Attorney General Ken Paxton wrote an open letter calling for Ms. Luther to be released from jail immediately and Lt. Governor Dan Patrick chipped in that he would serve out her sentence on house arrest so that Ms. Luther could be home with her family. Twelve District Judges in Dallas County responded in an Open Letter calling the Texas politicians’ public comments and attempted interference with the judiciary improper. A GoFundMe page for Shelley Luther has already raised over $500,000.

In response, on May 6, 2020 Governor Abbott issued a new Executive Order permitting the re-opening of hair and cosmetology salons in Texas starting on Friday May 8, 2020.

To read a copy of Judge Gilmore’s Temporary Restraining Order, please click here.

If you have any questions, contact us at info@chaloslaw.com

Michelle Otero Valdés of Chalos & Co, P.C. – Miami to speak at Webinar May 6, 2020 on Complex Regional Pain Syndrome

We are pleased to announce that Mrs. Otero Valdés is scheduled to present via webinar at the International Underwriting Association Market Briefing to discuss the symptoms, diagnosis, and challenges of handling insurance claims involving “Complex Regional Pain Syndrome” (“CRPS”).  The webinar will take place on May 6, 2020 at 9:00 EST.  Mrs. Otero Valdés will explore a recent case study and focus on the keys to success in the early stages of claims management and litigation.

To register for the program please click here.

For more information, please do not hesitate to contact us at  info@chaloslaw.com or mov@chaloslaw.com.

U.S. Discovery in Aid of Foreign Arbitration – A Split in U.S. Authority

The United States has a statute which provides a very helpful tool for parties seeking testimony or documents from individuals or entities located in the United States in aid of a foreign dispute.  Specifically 28 U.S.C. § 1782 provides that a U.S. district court may, on the request of an interested party, provide assistance in connection with a proceeding before “a foreign or international tribunal” by ordering a person in its district “to give his testimony or statement or to produce a document or other thing for use in [the] proceeding.”  There has long been a lingering question among Courts and lawyers as to whether a private foreign arbitration proceeding qualified as a “tribunal.”

The leading authorities on the subject had been decisions from the Second Circuit Court of Appeals (NBC, Inc. v. Bear Stearns & Co., Inc., 165 F.3d 184 (2d Cir. 1999)) and the Fifth Circuit Court of Appeals (Republic of Kazakhstan v. Biedermann International, 168 F.3d 880 (5th Cir. 1999)), which both held that private arbitral bodies are not “tribunals” under the statute and therefore the use of Section 1782 was not permitted in aid of a foreign arbitration.  The Supreme Court of the United States stated in a 2004 decision that the tribunal definition in the statute was “unbounded by categorical rules” and quoted from a 1965 law review article by Professor Hans Smit which stated that the legislative history of the statute intended to include “arbitral tribunals.”   Intel Corp. v. Adv. Micro Devices, Inc., 542 U.S. 241 (2004).

Many district courts took this statement by the Supreme Court to mean that the definition of tribunal had been broadened and started granting discovery requests in aid of foreign private arbitrations.  However, other district courts rejected the statement as “mere dicta” and not binding authority which overruled the Second Circuit or Fifth Circuit decisions.   As District Judge Rakoff of the Southern District of New York held, NBC is still the law of the Circuit and Professor Smit’s quote has been taken out of context as there is no dispute that arbitration’s created by governmental entities would qualify as a tribunal under the statute, but the Supreme Court has not held that such a right extends to private arbitration created by parties.  In re Petrobras Sec. Litig., 393 F. Supp. 3d 376, 385 (S.D.N.Y. 2019).

Since Judge Rakoff’s decision, two (2) Federal Courts of Appeal have reviewed the issue and have ruled in favor of private arbitration qualifying as a tribunal.  Specifically, the Sixth Circuit Court of Appeals and the Fourth Circuit Court of Appeals have now ruled that both the original legislative intent and the Supreme Court’s ruling in Intel Corp. stand for the proposition that private arbitrations are covered by the statute.  See, e.g., In Servotronics, Inc. v. Boeing Co. 954 F.3d 209 (4th Cir. 2020) (citing In re Application to Obtain Discovery for Use in Foreign Proceedings, 939 F.3d 710, 723 (6th Cir. 2019)). The Fourth Circuit ruled that even though the arbitration was private, under the UK Arbitration Act of 1996, the arbitration was subject to governmental regulation and oversight, and therefore qualified as a “foreign tribunal” for purposes of § 1782. Finally, the Fourth Circuit stated that there was a built in protection for parties worried about excessive and expansive discovery in the United States, as any discovery under the statute is subject to the discretion of the district court and may be challenged by any interested respondent.  Said another way, it is not an unfettered right to general discovery.

There are currently pending appeals in the Fifth Circuit, Ninth Circuit, and Seventh Circuit on this question.  It is possible the issue will eventually make its way to the Supreme Court of the United States for further clarification and to resolve the circuit split.  Until then, the ability to obtain discovery in aid of a foreign arbitration proceeding could vary from jurisdiction to jurisdiction (and even from Judge to Judge within the same district).

The Fourth Circuit’s opinion can be found here.

For assistance in obtaining discovery in aid of a foreign arbitration, please contact us at info@chaloslaw.com

U.S. Courts Functioning Amid the COVID-19 Crisis

U.S. Federal and State Courts are grappling with the delicate balance between keeping the courthouses open for business, while also ensuring the health and safety of courthouse staff, jurors, and the public is not jeopardized.  Judges and courthouse staff around the country are taking numerous measures to manage and respond to the pandemic. We briefly summarize the current status and procedures implemented at Courts in New York, Texas, and Florida as of April 15, 2020.

New York: In the Southern District of New York, activity in federal courthouses has been dramatically curtailed. Jury trials have been suspended until June 31, and courthouses are generally closed for all but essential matters. Electronic filing of new cases, pleadings, and other filings remain available via the Court Managed-Electronic Case Filing (cm-ECF) system. Judges have implemented telephonic and videoconference appearances to attempt to minimize case interruptions where possible. In addition, the U.S. Marshal Service and court clerks have adjusted the procedure for ex parte relief, to limit the necessity for in person meetings to obtain and serve the Orders, writs, and warrants in attachment and arrest cases.

In the New York state court system, the filing of new cases and the use of the electronic filing system for existing cases remains prohibited until further notice. All Courts are continuing to allow for the filing of emergency applications. Starting April 13, 2020, Court proceedings for pending non-essential matters in New York State Courts will be heard virtually, with all interactions taking place by video (utilizing Skype and Zoom) or telephone.  Courts in Kings County, New York County, and Bronx County will release protocols as electronic conferencing systems are implemented. New York state Chief Judge DiFiore has acknowledged and commended the Court staff’s ability to adapt to a “virtual court system” to “stop the spread of the virus and save lives.”

Texas: In Texas, all the federal courthouses in the Southern District of Texas are closed to the public until further notice. This includes courthouses in Corpus Christi, Victoria, Brownsville, Galveston, Laredo, McAllen and Houston. To ensure public safety, Chief Judge Rosenthal of the Southern District of Texas has ordered all civil and criminal jury trials previously scheduled to begin through May 31, 2020 are continued and will be rescheduled. The Southern District of Texas clerks’ offices are all operating with a skeleton crew, enough to keep up with the mail and criminal intake needs. The Judges of the Southern District of Texas have already started holding conferences, hearings, and mediations via Zoom, and have even acknowledged the potential long-term use (and cost savings) of such technology even after things start to return to normal. In the Eastern District of Texas, the Beaumont Division is also closed to the public until further notice. In both the Southern District and Eastern District, the U.S. Marshal Service has confirmed their continued assistance with admiralty and maritime matters to attach/arrest vessels during COVID-19 and have made social distancing changes to procedures as well, including but not limited to, seizing vessels through service of the seizure order on the vessel’s agent to avoid unnecessary travel to/from foreign flagged vessels by the deputy marshals.

The Supreme Court of Texas has similarly encouraged Texas State Courts to modify deadlines and procedures as necessary to manage their docket. Notably, Texas has granted courts wide latitude to modify or suspend deadlines and procedures as needed. Civil statute of limitations have also been extended. The Harris County District Clerk is operating in a reduced capacity and monitoring a dropbox at the courthouse for those who lack e-filing capability and need to physically file court materials. Despite the physical closure of the courthouses, functionally the courts and clerks’ offices remain open for business and the state’s e-filing system permits filing of new cases, pleadings, and motions in all courts.

Florida: All federal courthouses in the Southern District of Florida remain open for business, albeit with minimum staffing levels. The clerk’s office, probation, and bankruptcy courts are also operating with reduced capacity. All jury trials have been continued until no earlier than July 6. Joining other districts across the country, Chief District Judge Michael Moore has encouraged the adoption of video and teleconferencing for court proceedings where practicable. All Florida state courthouses in Miami-Dade County are closed to the public except for essential matters. Florida’s federal and state courts all continue to accept new pleadings and filings electronically.

While it remains unclear how long these measures will be necessary, the legal system has proved itself capable of adapting to these unusual circumstances. We hope you and your loved ones continue to stay safe and healthy.

If you have a question or need assistance with a legal matter, please contact us at info@chaloslaw.com