AFFIRMATIVE LITIGATION
CHIEF Gail Rubin DEPUTY Eric Proshansky
The A?rmative Litigation Division represents the City as plaintiff on a wide range of issues, including civil racketeering,
fraud, nuisance, restitution, antitrust, products liability, breach of contract, insurance, and state and federal funding
for government bene?ts and other programs. Its goal is to protect the City’s interests and to advance the City’s
agenda by instituting claims and recovering monies owed to the City.
Pursuing Lost Tax Dollars from Illegal Cigarette Sales
As part of New York City’s efforts to end illegal cigarette sales, Division attorneys filed a federal lawsuit against Washington
State-based tobacco manufacturer King Mountain Tobacco Company and its owners for illegally selling and distributing untaxed
cigarettes in New York in violation of three federal statutes. Sales of untaxed cigarettes undercut public health measures and cost
the City and State millions each year in lost tax revenue. In addition, in the City’s ongoing case against Native American retailers of
untaxed cigarettes, a federal appeals court affirmed aspects of the injunction obtained by the City, and the District Court found
three defendants in the case to be in civil contempt for violating an order barring them from selling tax-free cigarettes. The City
continues its aggressive efforts to halt all instances of illegal cigarette sales.
Pursuing Unpaid Real Estate Taxes from Foreign Nations
Following the U.S. Supreme Court’s 2007 ruling that federal courts have jurisdiction to hear the City’s property tax lien cases
against foreign governments, the District Court awarded summary judgment to the City, validating tax liens against India and
Mongolia for portions of the property used as residences for mission and consular staff. In 2009, the U.S. State Department
issued a notice purporting to exempt all diplomatic and consular staff housing from taxation. The Second Circuit Court of Appeals
subsequently upheld the validity of that notice. The City has petitioned the U.S. Supreme Court to ask that it hear the case.
The Division also took successful legal action to recover over $1 million in unpaid real estate taxes and fees from Nigeria for
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commercial offices and other non-tax exempt space in the 22-story building it owns in Manhattan.
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Seeking State Reimbursement When Appropriate
Division attorneys challenged the State’s interpretation of the Federal Stimulus Legislation—which would have deprived the City
of nearly $1 billion in Medicaid funds—and obtained a clarification of the statutory language and a favorable administrative
interpretation. In addition, in a case handled by the Division, the New York State Court of Claims required the State to reimburse the
City over $8 million for wrongfully charged Medicaid payments erroneously made by the State on behalf of ineligible people as
a result of a “glitch” in the State’s computer system. The Division has also sued the State over the exorbitant rates charged for City
youth sent to the State’s juvenile justice facilities, because those rates are arguably impermissibly inflated and based on costs for
idle staff, empty beds, and dormant facilities. The Division’s suit against the State Department of Health challenging a $26-million
audit of public health expenditures resulted in a decision by a state court upholding the City’s capacity to sue the State on similar
State-funded programs.
Practice Spotlight
Defending the City’s Right to A Legendary Trademark
The Division prevailed in the District Court on the City’s claim to the renowned “Tavern on the Green”
name, ending a trademark dispute with the former restaurant’s previous operators—the LeRoy family—
over rights to the name. The City operated the famed Central Park restaurant by a series of different
concessionaires, including the LeRoys, under the “Tavern” name, beginning in 1934. The court decision
invalidated Warner LeRoy’s registration of the name as a trademark on grounds of fraud, affirming the
City’s right to continue to use the storied title, and directing the assignment of the registration to the
City. Currently, Tavern on the Green is run by the City Parks Department as a public visitor center
with food concessions.
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