Chief Judge Loretta A. Preska


October 23, 2014


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Thank you. Good afternoon, ladies and gentlemen, and welcome to the first annual State of the District report. During the last few sparse budget years, our Court came shockingly close to being unable to fulfill our constitutional duty to resolve the cases that came before us. We appealed to you, to the Bar, to help us get our message out, and you came to our assistance splendidly. Indeed our Court unit executives, others and I testified in this very room to the details of staff reductions, layoffs, insufficient funds for mental health and drug treatment and the Bankruptcy Court’s having to close the doors at 5:00 while assets were dissipated and jobs were lost. With your able assistance, our pleas were heard. Although we are not out of the woods, funding has at least returned to pre sequester levels.


And so I commend you for recognizing the need, and I commend our Congressional appropriators for answering the call. After surviving this near death experience, today it is my privilege as Chief Judge of the Southern District of New York to report to you on the current state of our Court.


225TH Anniversary


2014 is a special year for this court. This year marks our 225th anniversary. On the first Tuesday in November of 1789 we became the first court to sit under the new Constitution. For this reason—and because the Judge in New Jersey who was scheduled to sit on the same day fell ill—we are known as the “Mother Court.” In just a few weeks, on November 4 – the first Tuesday in November 2014 – we will hold a special session of the court to celebrate, and I look forward to seeing you all there. There is also available today a list of events during the anniversary year.




Looking forward, this year we finally broke ground on our long-discussed security screening pavilion for the Moynihan Courthouse that will make our courthouse much more secure and will ease your entry. The project is on schedule with substantial completion in August. We thank you and the New York Congressional delegation for your support of this important project.


Also on schedule is the backfill project to return Probation and Pretrial from the Woolworth Building to 500 Pearl Street.


Speaking of Congress, we had the pleasure this year of hosting the Subcommittee of the House Judiciary Committee on the Internet, the Courts and Intellectual Property [photo]. Chairman Bob Goodlatte, in the green tie, presided over the hearing and was joined by Representatives Jason Chaffetz, Jerrold Nadler, Ted Deutch, and George Holding. They later toured various high tech facilities in Manhattan.




In general, the state of our Court is healthy. With the swearing in of 16 judges over the last 4 years we are at full judicial staff. Sworn in during that time were Judges Briccetti, Oetken, Engelmayer, Forrest, Nathan, Ramos, Carter, Furman, Abrams, Schofield, Failla, Torres, Roman, Broderick, Woods, and Caproni. Also, with the swearing in of Magistrate Judges Cott and Netburn and the formal swearing in on October 28 of Magistrate Judge McCarthy, we will be at full magistrate judge strength. In addition to this raft of new judges, we also enjoy very significant assistance from our senior judges, many of whom retain a docket at or close to the level of an active judge. Without them, we would be swamped.


15 judges are housed at the Thurgood Marshall Courthouse and 42 judges are housed at the Moynihan Courthouse while 7 judges are housed at the Brieant Courthouse in White Plains. As part of the Judicial Conference space reduction program, we will move our magistrate judge operations at Middletown to White Plains or Poughkeepsie.


On the security front, while not widely known, there was a move in 2013 to strip all courthouses of 24/7 security, primarily for budgetary reasons. Without boring you with the gory details, with the support of then-Police Commissioner Ray Kelly, Chief Judge Carol Amon and I worked successfully to defeat that move. Certainly at Foley Square, we run a 24/7 operation, including U.S. Attorney’s Office trial war rooms where witnesses, including cooperators convicted of various crimes, are prepared at all hours of the day and night. Also defense lawyers in national security cases regularly work in the classified document rooms all night.


Talking about late hours, I know in recent years many bar groups were denied evening access to our courthouses because of GSA’s charges for overtime utilities. Rules prevent the Court even from being reimbursed for the cost. Thankfully, a better budget situation has relaxed the evening restrictions, and we are able to welcome you again to our courthouses.


Our civil case filings have decreased very slightly over the past 3 years. We continue to see a large number of employment and other civil rights cases but have seen an increase in Fair Labor Standards Act cases and in Pro Se Social Security appeals. We continue to get 5 or 6 new multidistrict litigations every year, including the GM ignition cases, London Silver Fixing case, and the Gold Futures and Options Trading Litigation. On the criminal side, cases are down somewhat, primarily due to lack of funding for investigators in the agencies such as the FBI, the ATF and the like. We continue with a steady hit of terrorism cases and saw a good number of insider trading cases recently. We continue to see a number of gang cases, particularly the northern counties.




I turn now to the state of our Bankruptcy Court.


From July 2013 to July 2014, the Southern District saw 10,300 bankruptcy cases filed, roughly the same number as the prior year although most other courts have seen a decrease. This total includes some 8,600 filings under chapters 7 and 13, and 500 under Chapter 11.


This year saw the departure of Judge James Peck and the coming retirement of Judge Alan Gropper. However, two new judges have been selected and are undergoing background checks, and in the meantime, visiting Bankruptcy Judge Robert Grossman from the Eastern District is assisting the court with its massive workload.


The Clerk’s Office in the Bankruptcy Court remains under intense pressure. Since 2011, the Clerk’s Office has reduced staff from 98 to 58, an unprecedented decrease. Work processes have been streamlined, and more computer applications implemented, and the Court shares certain resources with the District Court. Despite these measures, though, the situation remains critical, and we continue to seek additional funding from the Administrative Office.


One of the reasons for the Clerk’s Office personnel crisis is the large number of mega cases in our district, cases not seen any place else other than Delaware. Funding guidelines only credit is for work done on cases for five years from the date of filing. Work on mega cases, however, regularly extends much longer.


For example, as recently noted in The Wall Street Journal, “While the New York-based company officially exited bankruptcy in 2012, Lehman’s liquidation process is expected to continue for several more years.” Lehman filed in 2008 but today, 6 years later, thousands of contested claims remain unresolved, and substantial additional litigation will be necessary to resolve the approximately $100 billion in claims Similarly in the Madoff case, which is now over 6 years old, so far, the litigation has involved 953 adversary proceedings – lawsuits in themselves, and close to one thousand claims objections remain pending. Under current funding rules, it is as though we are not doing this work, so we continue to struggle.


The Bankruptcy Court has recently developed programs to settle claims more efficiently. In response to the housing crisis beginning in 2009, for example, the Court developed a loss mitigation program that continues to provide relief to thousands of debtors seeking to adjust mortgage obligations and save their homes. Loan modifications were granted in about half the cases, and the program has been replicated around the country.


Finally, while the Bankruptcy Court is primarily concerned with the cases before it, it also continues its educational outreach. Outreach efforts include a moot court with school students, who, as you can see, are very grateful and hosting foreign judges seeking to learn about US bankruptcy law. The Court also hosts bankruptcy “baby judge school” and continues to work with pro bono organizations such as the City Bar and the Bankruptcy Assistance Project.


Clerk’s Office


Let’s move to the District Court where the Clerk’s Office is down some 40 positions since 2008. Like the Bankruptcy Court, the district court Clerk’s Office has also increased the use of technology to conserve resources and make things easier for the bar, the litigants, and the Court. In the past few years we have implemented electronic filing of civil appeals and Rule 7.1 statements and electronic payment of appellate filing fees and pro hac vice fees. We have begun docketing on ECF all standing orders and the majority of miscellaneous civil cases. As of this March, we implemented e-filing of amended initiating documents such as amended complaints, amended notices of removal, third party complaints.


The Clerk’s Office has also implemented electronic issuance of amended summonses, so attorneys do not have to bring their summonses to the Clerk for issuance. Now, the entire process is electronic: the Clerk’s Office receives summonses, affixes the seal, signs the documents, and returns them to counsel without ever producing a paper copy. The office has received over 1,100 electronic summonses so far this year.


We have also started issuing text-only orders in civil cases and have implemented electronic filing of the Social Security Administrative Record (e-CAR) – often a voluminous document. Think of the time saved by not having to docket those records!


As you probably know, we changed the Local Rule to permit electronic filing of letters and letter motions in all civil cases, making the entire process more transparent and making it easier for counsel to make applications. Similarly, we established electronic case tracking for pro se cases. All pro se submissions are scanned and docketed, making it easier for the parties to review and retrieve documents and creating a permanent record that can be viewed by all PACER users. And shortly in 2015, we expect to use ECF to allow attorneys to open their own civil cases with assignment of a judge to follow after Clerk’s Office review.


Pursuant to a Judicial Conference Committee recommendation, we have started e-filing of transcripts. Court reporters docket their transcripts, which are then locked for a period of 90 days. After 90 days, the transcripts are unlocked and can be viewed by all PACER users.


As you can imagine, the massively expanded functionality of CM/ECF has changed the way we conduct our business, and we hope that it makes things easier and more transparent for you.


Pro Se


Let’s move to the Office of Pro Se Litigation. As you know, the staff attorneys in that office screen all pro se cases and make an initial evaluation of a case’s merits. Some of these cases then come to me, at which point I dismiss, sua sponte, cases that are frivolous or malicious, fail to state a claim, lack subject matter jurisdiction, or seek monetary relief from a defendant who is immune from such relief. Cases that are not dismissed or transferred to a proper venue are assigned to a judge, and the staff attorney drafts a memo and proposed service order for that judge.


To give you a sense of exactly how hard these staff attorneys work, in the fiscal year 2013, the Pro Se Office handled 2,192 cases – approximately a quarter of all new civil cases on the court’s docket. Of those, 1,133 were prisoner cases, 504 were nonprisoner civil rights cases, 174 were employment cases, and 197 were social security appeals. In total, the Office drafted and docketed 1,280 Screening memos, 1,759 Administrative orders, and prepared over 1000 sua sponte orders for my review.


In addition, in FY 2014, the Office of Pro Se Litigation placed 100 cases with pro bono counsel, of which 45 were for settlement or mediation, 15 were for trial, and 16 were for limited scope discovery. In limited scope discovery, counsel accepts a pro bono appointment but only for the discovery phase of a pro se case. This helps to build a more robust record for the court to examine when deciding dispositive motions and weighing settlement offers and often entails document discovery and a deposition or two. We hope you will volunteer.


Finally, pro se employment cases are exempt from automatic referral to mediation. Judges may, however, refer pro se cases employment to mediation and direct that the Pro Se Office to locate pro bono counsel for the plaintiff . The Seton Hall Mediation Clinic currently handles almost all of the pro se employment mediations to very good effect.




The Mediation Office has moved to lovely new space in the Thurgood Marshall Courthouse which includes several new conference rooms for mediations. The Court has sent nearly 600 cases into our Mediation Program in 2014. Two categories of cases, 1983 police misconduct claims and counseled employment claims, are automatically referred into the mediation program along with a wide variety of cases that are referred by individual judges. Our year-to-date settlement rate through the Mediation Office is 72% for police misconduct cases, 59% for general civil referrals, and 49% for employment with a cumulative overall settlement rate of 60%.


In addition, the Mediation Program has continued to enhance the quality of mediation at the Court by offering training, a program on mediator assessment, and hosting events to facilitate dialogue between our mediators and the bench and bar. Most recently, our district and magistrate judges met with a group of mediators to discuss referring more complex cases to mediators with subject matter expertise. Judges may request mediators with expertise in areas such as securities, ERISA, environmental, products liability and other types of complex class actions. I encourage all of you to consider mediation for your complex cases and to lend your expertise as mediators of complex cases.




Moving on to the Probation Department, some of you might not be aware that much like the District Court, our Probation Department holds special historical significance. As the Judicial Conference reported in 2007, the first salaried federal probation officer in the nation, Major George A. Daly, was sworn in as an officer in our district on April 20, 1927. Thus, as the Southern District is known as the “Mother Court,” perhaps our Probation Department should be known as the “Father Probation Department.” While perhaps that doesn’t have quite the same ring to it, what is certain is that since that ever since 1927, the Probation Department has served a vital role in dispensing justice in our court.


At the beginning of the fiscal year, the probation department had 126 employees, down 20% from September 2008. The staffing formula actually calls for 164 employees, and it was not a reduction in need, but simply insufficient funding that caused the change. With funding restored to pre sequester levels, we have been able to hire seven additional officers [photo], but retirements reduced the net gain to two. Even at this low staffing level the probation department ranks as the 11th largest probation office in the federal system.


Of these 128 employees, 94 are probation officers. They are the only employees within the judiciary who have law enforcement status. These officers are extremely experienced and well educated: the average probation officer in our district has 15 years of experience; every officer holds at least a bachelor’s degree, and 41% have a master’s degree as well.


In the last two years, the Department’s Mental Health Team and the Special Operations and Response Team (SORT) have won Federal Executive Board Awards. The Mental Health team [photo] won in 2013 at a time when staff levels were decreasing and the need for services was increasing, including services for those who are schizophrenic, bi-polar, delusional and sex offenders. These officers worked harder and maintained both their professionalism and their compassion for the individuals they supervise. Again at a time when officers were being asked to do more with less, this dedicated SORT team [photo] signed up for extra training and extra work (but no extra pay) to keep our communities safe. It is they who, with military precision in full gear, execute the searches of high risk offenders and routinely recover illegal firearms, narcotics, pornography and the like. In 2012 they executed a record number of 21 searches and 11 High Intensity Field Operations.


The Probation Department consists of two divisions: the presentence division that prepares presentence reports for the court, and the supervision division that monitors offenders who have been released on probation, supervised release, or parole.


During the 12 month period ending June 30, 2014, the presentence division submitted 1664 reports, the most among districts with more complicated non-immigration cases. Not only do we have the highest number of complicated reports but we also have the most qualitatively complicated ones. For example, Bernie Madoff’s PSR was 61 pages and Ahmed Ghailani was 57 pages.


In FY 2013, 1,548 defendants were sentenced in our district: 40.5% for drugs; 23.3% for fraud; 10.7% for firearms; 6.3% related to immigration; 4.8% for non-fraud white collar offenses; 1.9% for larceny; .8% for child pornography, and the remaining 11.8% for other offenses. Among the drug cases, our district had the highest number of offenders convicted of crack cocaine offenses (182) and heroin trafficking offenses (120).


During the last year, the supervision division looked after 3,868 offenders. There has been a significant increase both in the number of offenders supervised and the degree of risk they present. Risk is measured by an actuarial risk assessment tool, created by the Federal Judicial Center, which uses factors such as the offender’s age, criminal history, and substance abuse history to predict the likelihood of recidivism. Between 2009 and 2014, the average risk score in our district grew from 3.09 to 3.96 – a substantial increase.


In FY 2014, the Probation Department started several programs in order to improve the presentence process, to expedite the designation of offenders to BOP facilities, and to improve offender supervision techniques, including e-filing of these reports and standardizing the timetable for the completion of Pre-Sentence Reports. Since these procedures took effect on June 2, we have seen the time to designate a defendant to a facility fall from 37 days to 18 days, thus helping to alleviate overcrowding at the MCC.


Finally, as part of a change in philosophy in the federal system, the Probation Department has recently started to use evidence-based practice. That is, it uses the best evidence available to inform decisions about the supervision of individual offenders. The practice prioritizes supervision and treatment resources for higher-risk offenders; targets interventions to criminogenic needs; and uses cognitive behavioral programs to be responsive to the characteristics of the individual supervisee. We will report in the future on outcomes.




Last but not least, we have Pretrial Services, which, as you know, evaluates defendants upon arrest, makes recommendations as to bail, and supervises defendants on pretrial release.


Because of the budget cuts, Pretrial is working at about 70% of authorized staffing. In fiscal year 2014, Pretrial activated 1,583 cases, somewhat of a decline over the previous 2years. That same year, SDNY’s pretrial detention rate (excluding Illegal Aliens) was 45.6%, down from 51.3% and 52.7% in FY13 and FY12, respectively. In spite of the staffing shortfall and heavy workload, however, pretrial continues to maintain a high level of performance. In FY14, the overall violation rate by supervisees was 4.7%. This is down from 5% in FY13, and 4.9% in FY12.


Despite reduced staff, Pretrial has implemented new programs to benefit its supervisees. In April 2012, it began a BOP Information Session program to describe for defendants and families the process after conviction — from presentence investigation, through sentencing and surrendering to a facility. It provides useful information about the Bureau of Prisons, including the types of facilities, items that can be brought to facilities, visitation rules, and available programs. The sessions include a question and answer session with a BOP representative and a former inmate who discuss what to expect while in prison and how “to do your time in a productive manner.” We have run 7 programs benefitting 150-175 defendants and their families.


Another segment, called “Little Children Big Challenges: Incarceration,” was recently added. It includes a guide and video created by Sesame Street to help parents who are facing incarceration explain their situation to their small children.


Finally, Pretrial has started offering a reentry program provided by The Focus Forward Project, a non-profit organization. By the end of the 12-week course, participants are equipped with a working resume, interview skills, conflict resolution techniques, public speaking skills and both long- and short-term goals. The program has had a significant impact on the lives of the 75 graduates since July 2012. Perhaps as a result of their teachers’ letters to sentencing judges, 30% of graduates have received a sentence of less than 1 year, and 14% have received a nonincarceratory sentence. 100% have gone on to pursue additional educational courses. We will continue to report on results.



Finally, I’d again like to take a moment to recognize another group that is absolutely vital to the successful stewardship of the Southern District of New York: our fantastic bar. As our esteemed colleague, the late Judge Edward Weinfeld put it, the New York bar is nothing less than “illustrious,” and it is the support of you members of that illustrious bar that makes it possible for us to do what we do. For that, I thank you all. I look forward to seeing you at our anniversary events.