Inter-Jurisdictional Certification of Questions of Law in New York
The New York Court of Appeals and the United States Court of Appeals for the Second Circuit continue to work together to address cases involving unsettled or novel questions of New York law by means of a constitutionally-rooted bridge between the federal and state judiciaries: inter-jurisdictional certification of questions of law. Legal developments in January 2014 confirm the continuing utility of the inter-jurisdictional certification mechanism in New York.
Justice Ruth Bader Ginsburg, speaking for a unanimous Supreme Court, observed: "Through certification of novel or unsettled questions of state law for authoritative answers by a State's highest court, a federal court may save time, energy, and resources and help build a cooperative judicial federalism." Arizonans for Official English v. Arizona, 520 U.S. 43, 77 (1997) (citations omitted). New York's inter-jurisdictional certification procedure is predicated on the New York State Constitution (N.Y. Const. art. VI, § 3(b), cl. 9), and the applicable state rule provides that: "[w]henever it appears to the Supreme Court of the United States, any United States Court of Appeals, or a court of last resort of any other state that determinative questions of New York law are involved in a case pending before that court for which no controlling precedent of the Court of Appeals exists, the court may certify the dispositive questions of law to the Court of Appeals." N.Y. Ct. R. § 500.27(a) (N.Y. Ct. App.). The Second Circuit considers inter-jurisdictional certification under Second Circuit Local Rule 27.2 and, before exercising its discretion to certify a question, weighs: "(1) whether the New York Court of Appeals has addressed the issue and, if not, whether the decisions of other New York courts permit us to predict how the Court of Appeals would resolve it; (2) whether the question is of importance to the state and may require value judgments and public policy choices; and (3) whether the certified question is determinative of a claim before us." Geron v. Seyfarth Shaw LLP (In re Thelen LLP), 736 F.3d 213, 224 (2d Cir. 2013) (citation omitted).
The history of New York's constitutional amendment was the subject of an outstanding and exhaustively researched article authored by Chief Judge Judith S. Kaye and Kenneth I. Weissman (Read PDF »), and was also the subject of Chief Judge Sol Wachtler's superb address at Albany Law School of Union University. (Read PDF »)
As of January 2014, a survey of the landscape demonstrates the continued use of the inter-jurisdictional certification mechanism.
For example, on January 14, 2014, the New York Court of Appeals accepted two certified questions from the Second Circuit in In re: Coudert Brothers. (Read PDF»). On December 2, 2013, the Second Circuit certified these two questions: "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?" (Read PDF»). On November 15, 2013, the Second Circuit certified the same two questions to the New York Court of Appeals, through a comprehensive opinion authored by Circuit Judge Gerard E. Lynch (Read PDF»), and these questions were likewise accepted for briefing and argument by the New York Court of Appeals. (Read PDF»)
By further example, on January 14, 2014, in Tire Engineering and Distribution L.L.C. v. Bank of China Limited, the Second Circuit certified the following two questions to the New York Court of Appeals: "First, whether the separate entity rule precludes a judgment creditor from ordering a garnishee bank operating branches in New York to turn over a debtor's assets held in foreign branches of the bank; and Second, whether the separate entity rule precludes a judgment creditor from ordering a garnishee bank operating branches in New York to restrain a debtor's assets held in foreign branches of the bank." Circuit Judge Denny Chin's comprehensive opinion for the Court reserved decision pending certification. (Read PDF»)
These cases, and others that will surely follow, underscore the continued utility of the inter-jurisdictional certification mechanism in New York as a means for resolving unsettled or novel issues governed by the law of New York.