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News & Developments


October 21, 2014

SCOTUS Lets Stand Possible Exception to PLRA's Administrative-Exhaustion Requirement


On October 20, 2014, the U.S. Supreme Court declined to review a Ninth Circuit decision, Juan Roberto Albino v. Lee Baca, Los Angeles County Sheriff, et al., 9th Cir. Case No. 10-55702 (decided Apr. 3, 2014), that carved out a substantial exception to the administrative-exhaustion requirement of the Prison Litigation Reform Act (PLRA). The PLRA permits prison inmates to file civil-rights suits after they have exhausted all available administrative remedies, including local prison-grievance procedures. 42 U.S.C. §1997e(a). In an en banc decision in April 2014, the U.S. Court of Appeals for the Ninth Circuit determined that an inmate’s failure to exhaust administrative remedies was excusable where prison officials had not established that administrative relief was available to or at least known to be available by prisoners housed in their facility.


The petition, styled John Scott, Sheriff, Los Angeles County, California, et al. v. Juan Roberto Albino, Docket No. 14-82, arose from a civil-rights suit filed by an inmate in Los Angeles County Men’s Central Jail. Albino alleged that the Los Angeles County sheriff violated his civil rights by (1) failing to place him in protective custody after repeated assaults, and (2) denying him medical care. Albino also alleged that the sheriff’s deputies disregarded his complaints about the assaults, and instructed him that his only recourse was to speak with defense counsel.


At the district court, the sheriff moved for summary judgment, alleging that Albino failed to exhaust his administrative remedies, as required by the PLRA. The sheriff pointed to an internal manual as proof of the existence of a prison-grievance process that Albino should have followed. Additionally, the sheriff claimed inmates could file grievances by submitting complaint forms or written complaints directly to staff members or by placing them in locked complaint boxes in the jail’s housing units. Albino countered that neither the sheriff’s staff nor anyone else informed him of the alleged grievance process, and that he had never seen the complaint forms or any locked complaint boxes. Ultimately, the district court granted the motion for summary judgment on the grounds that Albino’s s lack of knowledge of the jail’s grievance procedure did not make the procedure unavailable or excuse his failure to exhaust administrative remedies.


On initial appeal from the district court, the Ninth Circuit affirmed the granting of summary judgment. However, the Ninth Circuit reversed itself on rehearing, en banc, because the sheriff failed to prove that he had informed Albino of the jail’s grievance procedure. This decision sharpened an existing circuit split relating to the PLRA. To wit, the Sixth, Seventh, Eighth, and Tenth Circuits have held that an inmate’s lack of knowledge about a prison grievance process does not excuse his or her failure to exhaust administrative remedies. Comparatively, the Third, Fifth, Ninth, and Eleventh Circuits have either excused inmate failure to exhaust administrative remedies based on a lack-of-knowledge claim, or disagreed with the approach taken by Sixth, Seventh, Eighth, and Tenth Circuits.


The Supreme Court’s denial of the petition, styled John Scott, Sheriff, Los Angeles County, California, et al. v. Juan Roberto Albino, Docket No. 14-82, has effectively increased access to federal courts for prisoners in the Ninth Circuit, and in so doing, may have added to the expansive dockets of overburdened district courts.


Keywords: litigation, young lawyer, Prison Litigation Reform Act, PLRA, civil rights, administrative exhaustion


Jarrell Mitchell, Los Angeles, California


 

October 21, 2014

SCOTUS Allows Enforcement of Texas Voter-ID Laws


On October 18, 2014, the U.S. Supreme Court issued an order that will allow Texas to implement a controversial voter-identification law. The Texas law requires voters to prove their voting eligibility by providing official photo identification. The Court’s decision to allow enforcement of the law came just two days before early voting was set to begin in the state. Eleven days earlier, the Court effectively blocked enforcement of a Wisconsin law that similarly required voters to provide photo identification at polling places.


The Court’s decision to treat the two similar laws differently—blocking one, and allowing the other—may seem curious, but it was an outcome predicted by many, including the Fifth Circuit. The Court has been reluctant to change the rules on the eve of election because of the risk that doing so will cause mass disruption for election officials. This was precisely the reason the Fifth Circuit stayed the district court’s injunction of the Texas law, which the district court entered just nine days before early voting began. And it may well be the rationale underlying the Supreme Court’s summary order vacating a stay of an injunction of the Wisconsin law—it wasn’t until September 12, 2014, that the Seventh Circuit stayed the district court’s April injunction.


It is important to note that the Court has yet to rule on the merits of challenges to either law. That said, those looking for tea leaves to read will find plenty in Justice Ginsburg’s dissent from the Court’s order affirming the Texas law, a dissent joined by Justices Sotomayor and Kegan. Justice Ginsburg pulled few punches in questioning the Court’s decision to avoid intervening in Texas, arguing that any disruption caused by enjoining the law paled in comparison to the risks of voter disenfranchisement and disillusionment posed by the law’s enforcement.


Scott Klausner, Paul Hastings LLP, Los Angeles, CA


 

October 17, 2014

Battles over Voter ID Laws Continue in Advance of Midterm Elections


With midterm elections fast approaching, voter-identification laws in Texas and Wisconsin continue to draw national scrutiny. Though they differ in their particularities, each state’s law requires would-be voters to provide official photo identification prior to voting. Officials in both states maintain that the voter-identification laws were designed to prevent voter fraud, while opponents counter that the laws are no more than a conservative ploy to disenfranchise a voting bloc that would otherwise lean Democratic.


On October 9, the Supreme Court effectively prevented enforcement of the Wisconsin law in the upcoming election by vacating the Seventh Circuit’s stay of a district court’s injunction of the law. The Supreme Court is expected to rule on the enforceability of the Texas law any day. The Court has not passed on the merits of challenges to either law, however. If those decisions are to come at all, they will have to wait until after the November 4 election.


In the meantime, Judge Richard Posner has provided plenty for both sides to mull over as they plot their eventual courses of action before the nation’s high court. The influential jurist has authored a blistering appraisal of the Wisconsin law. The opinion comes in the form of a dissent from the Seventh Circuit’s decision not to rehear a challenge to the Wisconsin law, and it offers the parties an important and persuasive counter-perspective as they prepare for possible Supreme Court review.


Posner’s dissent also signals an important about-face for the judge, who authored a 2007 opinion upholding Indiana’s similar (but slightly less restrictive) voter ID law in the case Crawford v. Marion County Election Board. The Supreme Court upheld Judge Posner’s Crawford opinion, and the three-judge panel of Seventh Circuit in turn relied heavily on that decision in upholding the Wisconsin law.


Posner argues that this reliance is misplaced, offering an array of reasons why Crawford is materially distinguishable from the situation in Wisconsin. These reasons center not only on the differences between the two laws but also on the quality of the factual record in each case. In Crawford, Posner argued, the plaintiffs simply had not established that the Indiana law would disenfranchise voters; the challengers to the Wisconsin law had.


Further, Posner argued, there is simply no indication that voter impersonation is actually a problem in Wisconsin, suggesting that the state’s purported justification (namely, fraud prevention) is “a mere fig leaf for efforts to disenfranchise voters likely to vote for the political party that does not control the state government.” He elaborated, in sweeping language that voting-rights advocates across the country will likely seize upon, that “[t]here is only one motivation for imposing burdens on voting that are ostensibly designed to discourage voter-impersonation fraud, if there is no actual danger of such fraud, and that is to discourage voting by persons likely to vote against the party responsible for imposing the burdens.”


Scott Klausner, Paul Hastings LLP, Los Angeles, CA


 

September 30, 2014

SCOTUS May Consider National Decision on Same-Sex Marriage


Today, the U.S. Supreme Court is set to discuss several petitions requesting a national decision on the issue of same-sex marriage. Currently pending before the Court are seven petitions from five different states requesting that the high court decide, on a nationwide basis, the constitutionality of same-sex marriage. Since the Supreme Court’s decision in United States v. Windsor, 133 S. Ct. 2675 (2013), which held that the Defense of Marriage Act’s definition of marriage was unconstitutional, 27 federal courts have held same-sex marriage bans unconstitutional with a lone dissenting federal court.


The currently pending petitions arise from federal appellate-court decisions striking down such bans in Indiana, Oklahoma, Utah, Virginia, and Wisconsin. Although each of the cases presents unique legal issues, the petitions all raise the issue as to whether states may prevent same-sex marriage (and in the case from Oklahoma, recognition of foreign same-sex marriages). The court has discretion whether to hear the petitions, but the court may decide as early as next week whether to hear the cases with a possible decision in 2015. In the absence of further guidance from the Supreme Court, state and lower federal courts will continue to address the vagaries of state law on the subject of same-sex marriage.


Keywords: litigation, same-sex marriage, constitutional, Defense of Marriage Act (DOMA), young lawyers


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

September 29, 2014

Charges and Discipline in NFL Raise Employment Issues


Recently, several NFL players have faced team or league discipline for off-field conduct. One of the more notable issues surrounds Ray Rice, formerly of the Baltimore Ravens, and the TMZ video capturing the altercation between him and his now-wife in an Atlantic City hotel. Notably, several other players have recently been disciplined by their team or the league relating to domestic-violence charges. In addition, the Minnesota Vikings’ star running back, Adrian Peterson, was placed on the NFL’s exempt/commissioner’s list, which precludes him from playing following allegations of child abuse. Indianapolis Colts owner and CEO Jim Irsay was suspended eight games by the NFL and fined $500,000 after pleading guilty to OWI, and the tem today announced the release of one of its players resulting from the player’s arrest for DUI.


Each of these cases raises its own independent issues, including the guilt or innocence of the accused in the eyes of judiciary, the individual team’s responses to the initial allegations, discipline prior to and after the resolution of judicial proceedings, and the league’s disciplinary actions in addition to or in lieu of individual team decisions. The NFL is currently undertaking a wholesale review of its policies and procedures relating to player discipline for off-field conduct. Indeed, former FBI director Robert Mueller is leading the investigation into the handling of the Ray Rice situation.


Issues of domestic violence and criminal charges, however, are not unique to the NFL. Many employers conduct background checks before hiring individuals, but what action can and should employers take in light of post-hiring conduct? The current developments in professional football highlight the needs of employers, unions, and staffing agencies to create and maintain appropriate personnel policies and procedures. Look for additional information on the NFL and its efforts to address these complex issues in these pages.


Keywords: litigation, employment, charges, off-duty, young lawyers


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

September 29, 2014

GM Warns Use of "Nanny Cam" May Raise Privacy Concerns


The rise of social media has led to increased concerns with respect to privacy for both the willing and the unwitting. Recently, a recording of David Sterling, one of the owners of NBA Los Angeles Clippers, led to him being banned for life from the NBA and the eventual sale of the team. Although the recording was a high-profile matter, the issues of privacy raised by such recording is not simply a matter for the rich and famous.


General Motors (GM) recently sent a letter to consumers and dealers regarding the potential privacy concerns raised by the use of the “nanny cam” in newer model Corvettes. The camera allows owners to record drivers of the vehicle, including an optional audio capability. The feature is designed to allow owners to record unauthorized use of the vehicle, such as a valet who takes the vehicle for a spin. GM’s letter warned consumers and dealers that the use of the audio feature may violate state law in those states that require consent of the person being recorded.


Individuals often record conversations for entertainment or to protect themselves from an anticipated dispute. While doing so seem the prudent thing, there are potential adverse legal consequences depending on variances in state law. Lawyers and their clients must be cognizant of these variances before recording, or more importantly, using such a recording in any legal proceeding or otherwise.


Keywords: litigation, privacy, recordings, state law, young lawyers


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

September 29, 2014

Arab Bank Held Liable for Terrorist Attacks


On September 22, 2014, after weeks of trial and three days of deliberation, a jury in the U.S. District Court for the Eastern District of New York found Arab Bank, based in Jordan, liable for 24 terrorist attacks committed by Hamas, a Palestinian group that has long been designated by the State Department as a Foreign Terrorist Organization, between 2001 and 2004 against civilians in Israel.


The case, Linde v. Arab Bank, Docket No. 04-cv-2799,was brought in 2004 by the victims of the terrorist attacks and their relatives pursuant to the civil remedies provision of the Anti-Terrorism Act, 18 U.S.C. § 2333(a). The plaintiffs claimed that Arab Bank violated 18 U.S.C. § 2339B by “knowingly” providing “material support or resources” to the organization. Specifically, the plaintiffs alleged that Arab Bank provided banking services to Hamas and its members and that Arab Bank knew that the amounts being deposited into the bank accounts were to be used for terrorist attacks.


One of the major issues in the case arose out of a sanctions order issued by the district court in 2010 against Arab Bank for failing to produce complete bank-account records for certain individuals alleged to be connected to terrorism organizations. See Linde v. Arab Bank, PLC, 269 F.R.D. 186 (E.D.N.Y. 2010). In that order, as a result of the bank’s failure to produce bank-account records due to a fear of violating the laws of certain foreign nations, the court barred Arab Bank from asserting that “it did not have a culpable state of mind because certain people or organizations were not ‘generally known’ to be terrorists” and also barred Arab Bank from “argu[ing] that it had no knowledge a certain Bank customer was a terrorist if it did not produce that person's complete account records.” Interlocutory appeals of the sanctions order to the Second Circuit and U.S. Supreme Court were denied as procedurally improper, although it was noteworthy that the U.S. Department of Justice filed an amicus brief relating to the bank’s petition for a writ of certiorari to the U.S. Supreme Court in which it argued that the district court erred by failing to properly apply principles of international comity. As a result of the sanctions order and the recent verdict, the Arab Bank has already announced that it will appeal the case.


In another case brought under the Anti-Terrorism Act, Weiss v. National Westminster Bank PLC, Docket Nos. 05–CV–4622 (DLI)(MDG) and 07–cv–916, also pending in the U.S. District Court for the Eastern District of New York, the Second Circuit on September 22, 2014, reversed the trial court’s entry of summary judgment in favor of NatWest, which is affiliated with the Royal Bank of Scotland. The Second Circuit held that the district court incorrectly required a showing that the bank knew that the Palestine Relief & Development Fund, a/k/a Interpal—an alleged fundraising front for Hamas—funded terrorist activities. In its decision, the Second Circuit held that the knowledge requirement of 18 U.S.C. § 2339B(a)(1) “requires only a showing that NatWest had knowledge that, or exhibited deliberate indifference to whether, Interpal provided material support to a terrorist organization, irrespective of whether Interpal’s support aided terrorist activities of the terrorist organization.”


The verdict in the Linde civil case is important as it is the first against a bank under the Anti-Terrorism Act. In addition, the Second Circuit’s decision in Weiss clarifies the standard for the scienter requirement under that act. These cases will serve as important precedent for other cases brought against financial institutions that have provided financial services to individuals or organizations linked to terrorist organizations.


Keywords: litigation, young lawyers, Anti-Terrorism Act, scienter, financial institutions


David Dobin, Cohen and Wolf, P.C., Bridgeport, CT


 

August 11, 2014

Players 1, NCAA 0: Athletes Win Round 1 in Fight for Pay


On August 8, federal district court Judge Wilken found that NCAA rules prohibiting college athletes from sharing in revenues enjoyed by college athletics constituted an unreasonable restraint of trade and a Sherman Act violation. Slip op. at 2. In O’Bannon v. National Collegiate Athletic Association, No. C 09-3329 CW (N.D. Cal.), the plaintiff, on behalf of a class of certain current and former college athletes, challenged the NCAA rules prohibiting compensation of elite men’s football and basketball players, alleging that such rules violated the antitrust rules. In response, among other things, the NCAA argued that such rules were necessary to protect its educational mission and the integrity of college sports. Following a three-week bench trial in June, the court issued its 99-page findings of fact and conclusions of law.


Elite college sports are big business. The class plaintiffs alleged that the NCAA restrained two identified markets: the “college education market” and the “group licensing market,” the latter market consisting of rights licensed for use in telecast, video games, and other media. Slip op. at 8–19. As the court observed, “NCAA rules prohibit current student-athletes from receiving any compensation from their schools or outside sources for the use of their names, images, and likenesses in live game telecasts, videogames, game re-broadcasts, advertisements, and other footage.” Id. at 19. In reaching its decision, the court considered and rejected the NCAA defense of the rules as protecting amateurism, preserving competitive balance, noting the unequal distribution of revenues to the larger (or “power”) conferences, the integration of academics and athletics, and increased output.


Based on its findings and the undisputed record, the only issue before the court on the plaintiffs’ antitrust claims was whether the challenged rules constituted an unreasonable restraint of trade. The court applied the “rule of reason,” which provides that a restraint violates antitrust laws if the “‘harm to competition outweighs its precompetitive effects’” and involves a burden-shifting framework. Id. at 49–50 (citation omitted). Applying this framework, the court found that price-fixing agreement with respect to scholarship packages offered to recruits constituted a restraint of trade in the “college education market,” noting that the NCAA’s own expert “acknowledged that the NCAA operates as a cartel.” Id. at 56.


As to the “group licensing market,” the court addressed three specific submarkets, including (a) live broadcasts, (b) video games, and (c) rebroadcasts or highlights. The court concluded that, as to live broadcasts, the plaintiffs had demonstrated harm to the college athletes but had not proven any anti-competitive effect of such rules in that submarket. Likewise, the court found that “Plaintiffs have not identified any injury to competition within [the video game] submarket.” Id. at 75–76, As to the final submarket, the Court concluded that the plaintiffs “have not presented sufficient evidence to show that the NCAA has imposed any restraints in this submarket.” Id. at 77–78.


Based on its conclusion that NCAA rules constituted a restraint of trade in the “college education market,” the court next considered the four pro-competitive justifications offered by the NCAA. The court found merit in only two of those justifications—preservation of amateurism and the integration of academics and athletics. As to those two justifications, the court found that they do not support the “sweeping prohibition on any student-athlete compensation”; rather, they might justify large payments to students while enrolled in school. The court ultimately accepted that “some circumscribed restrictions on student-athlete compensation may yield procompetitive benefits.” Id. at 89.


The court has now enjoined enforcement of the NCAA broad prohibition against compensation to student-athletes, set to “take effect [at] the start of next FBS football and Division I basketball recruiting cycle.” Id. at 97–98. But the game is only in the first quarter. NCAA President Emmert has already stated that he will use his first coach’s challenge, by appealing the decision to the Ninth Circuit. Previously, the NCAA chief legal officer, Donald Remy, reportedly stated the NCAA would appeal to the Supreme Court if it loses. Stay tuned, we aren’t even to halftime!


Keywords: litigation, college athletics, NCAA, antitrust, Sherman Act, young lawyers


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

August 4, 2014

FAA Explains Position on Drone Use


On July 18, 2014, the D.C. Circuit dismissed a petition against the Federal Aviation Administration (FAA) filed by Texas Equusearch Mounted Search and Recovery Team. The petition challenged the FAA’s authority to regulate unmanned aerial vehicles, or drones, which Texas Equusearch uses to conduct search-and-rescue operations. The D.C. Circuit based its dismissal on the conclusion that an FAA employee’s email to Texas Equusearch describing the FAA’s position was not appealable.


The D.C. Circuit’s decision delays, for now, judicial review of the FAA’s authority to regulate drone use. However, in response to the decision, the FAA published a press release on July 18 setting forth its position on the law concerning regulation of drones:


Texas Eqqusearch [sic] and all UAS [Unmanned Aerial Systems] operators need to be aware that the FAA’s safety mandate under 49 U.S.C. § 40103 requires it to regulate aircraft operations conducted in the National Airspace System (NAS) to protect persons and property on the ground and to prevent collisions between aircraft and other aircraft or objects.


The press release goes on to explain the FAA’s position in regards to its authority to regulate drones under the FAA Modernization and Reform Act of 2012, Public Law 112-95. In doing so, the FAA notes “[a]n important distinction for UAS operators to be aware of is whether the UAS is being operated for hobby or recreational purposes or for some other purpose.”


Under section 336(c) of the act, a “Model Aircraft” is defined as “. . . an unmanned aircraft that is (1) capable of sustained flight in the atmosphere; (2) flown within visual line of sight of the person operating the aircraft; and (3) flown for hobby or recreational purposes.” “Under Section 336(a) of the Act the FAA is restricted from conducting further rulemaking specific to Model Aircraft as defined in section 336(c) so long as the Model Aircraft operations are conducted in accordance with the requirement of section 336(a).”


The FAA makes clear its position, however, that although model-aircraft operations in compliance with section 336(a) of the act are not subject to further rulemaking, under section 336(b) of the act,


the FAA has the authority under its existing regulations to pursue legal enforcement action against persons operating Model Aircraft in accordance with section 336(a) and 336(c) when the operations endanger the safety of the NAS [National Airspace System]. Nothing in section 336 otherwise alters or restricts the FAA’s statutory authority to pursue enforcement action against any UAS operator, even those whose operations are conducted in accordance with sections 336(a) and (c) that endanger the safety of the NAS. So, for example, a Model Aircraft operation conducted in accordance with section 336(a) and (c) may be subject to an enforcement action for violation of 14 C.F.R. § 91.13 if the operation is conducted in a careless or reckless manner so as to endanger the life or property of another.


As for drones that do not qualify as model aircraft, the FAA explains that they can only be operated “with specific authorization from the FAA.” Such drone operations are authorized “through one of two avenues: (1) the issuance of Certificates of Waiver or Authorization; and (2) the issuance of special airworthiness certificates. The FAA also has a third avenue with which to potentially authorize UAS operations through its exemption process when it determines that such operations are in the public interest.” The press release then discusses these authorization “avenues” in more detail. The FAA’s July press release follows a June 23, 2014, announcement of the publication of an informational “do’s and don’ts” for flying model aircraft.


It is important to note that the FAA’s position regarding its authority to regulate drones, and specifically model aircraft, has been rejected by at least one administrative-law judge. Earlier this year, in Huerta v. Pirker, an administrative-law judge dismissed a $10,000 fine imposed by the FAA against an operator of a “glider aircraft” hired to take aerial photos in or around the University of Virginia. In a decision that was appealed by the FAA, the administrative-law judge held that where the FAA has only issued administrative guidance—but not promulgated any rules—concerning use of drones, the fine was invalid. It has been reported that the FAA will likely miss a September 2015 to promulgate such rules.


As the use of drones has increased—and the cost of acquiring drones has decreased—dramatically in recent years, their regulation has become a hot topic on federal, state, and local levels. Indeed, municipalities have begun considering steps to regulate the use of drones. For example, Santa Clarita, California, has banned the use of remote-controlled helicopters and planes, among other unmanned vehicles, in city parks. In addition, Iowa has enacted a rule of evidence providing that


[i]nformation obtained as a result of the use of an unmanned aerial vehicle is not admissible as evidence in a criminal or civil proceeding, unless the information is obtained pursuant to the authority of a search warrant, or unless the information is otherwise obtained in a manner that is consistent with state and federal law.


See IA ST § 808.15.


As drones become more widespread, expect drone-related legal issues to continue to pop up.


David Dobin, Cohen and Wolf, P.C., Bridgeport, CT


 

July 31, 2014

GOP Votes to Sue President Obama


Ending months of speculation, on July 30, House Republicans approved a resolution authorizing Speaker of the House John Boehner to sue President Barack Obama. The House voted 225– 201 in favor a resolution relating to claims that the president abused his powers, to the detriment of Congress and the Constitution. Although House Republicans take issue with many of the executive orders issued by the chief executive, the primary focus of their complaints is directed at the Affordable Care Act (or Obamacare in common parlance).


As a result of the passage of the resolution, House Republican leaders are authorized to investigate and pursue a potential lawsuit against the president. It is presently unclear whether a federal court would entertain the motion, given the general immunity from legal proceedings enjoyed by the chief executive. The House will need to demonstrate how it was harmed by the various challenged actions and will likely face an uphill battle in convincing a judge to take the matter. The potential lawsuit (as well possible impeachment proceedings intimated by both sides of the aisle) will no doubt keep lawyers and legal scholars busy for some time evaluating the implications of the GOP’s most recent moves.


Keywords: litigation, Obamacare, Republicans, president, lawsuit, immunity, young lawyers


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

July 25, 2014

Federal Judge Rules D.C. Gun Ban Unconstitutional


On July 25, 2014, federal district court Judge Scullin ruled that Washington D.C.’s ban on the possession of handguns in public was unconstitutional. Addressing cross-motions for summary judgment in Palmer, et al. v. District of Columbia, et al., the court concluded that “there is no longer any basis on which this Court can conclude that the District of Columbia's total ban on the public carrying of ready-to-use handguns outside the home is constitutional under any level of scrutiny.” Slip op. at 16. The court relied heavily on prior Supreme Court decisions, District of Columbia v. Heller, 554 U.S. 570 (2008), and McDonald v. City of Chicago, 130 S. Ct. 3020 (2010), overturning previous bans in the District of Columbia and Chicago. In sum, the court concluded that a complete ban on the carrying of registered firearms in public was unconstitutional as violative of the plaintiffs’ Second Amendment rights and enjoined the District of Columbia from enforcing any such ban.


Keywords: litigation, young lawyer, Second Amendment, handguns, constitution, firearm ban


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

July 25, 2014

New Streamlined Application Process for 501(c)(3) Organizations


On July 1, 2014, the Internal Revenue Service (IRS) introduced Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. Organizations can file the 1023-EZ instead of 1023 if their annual gross receipt amount and total assets fall below the threshold. To qualify for tax-exempt status under Internal Revenue Code Section 501(c)(3), these forms must be filed.


The types of entities that can seek 501(c)(3) federal tax exemption status from the IRS include organizations that serve the following purposes: charitable, religious, educational, scientific, literary, testing for public safety, to foster national or international amateur sports competition, or prevention of cruelty to children or animals. Such 501(c)(3) organizations can be grouped into the following types: public charities, private foundations, and private operating foundations. Each has distinguishing characteristics and varied significance for deductible income. Public charities receive a substantial portion of their revenue from the general public or the government. In contrast, private foundations are funded by a small number of supporters or a single one. Different tax rules apply to the deductibility of contributions and are subject to excise taxes. The last type is a hybrid of the first two organizations. Private operating foundations have active programs as do public charities, but closely govern them as in a private foundation.


In addition, to be eligible for tax-exempt status at the federal (and state or local level), an organization must be granted nonprofit status by the state. At the federal level, the IRS grants tax-exempt status, so that a qualifying organization is exempt from federal corporate and income taxes. The law varies by state, but at the state-level, tax exemptions may be granted for sales tax, income tax, and property tax. To be tax-exempt and to keep 501(c)(3) tax-exempt status once granted, there are a number of other requirements to be satisfied.


Until now, most organizations filed 1023 with the IRS to apply for recognition of its tax-exempt status. Form 1023 is 26 pages and takes approximately eight hours to complete per the IRS. This neither includes the time for recordkeeping for things such as expenses and revenue, nor does it include the months that the IRS takes to grant status. The user fee ranges from $400 to $850. Alternatively, the new1023-EZ enables certain small organizations to file a simplified three-page application, which must be filed electronically. The user fee for the 1023-EZ is $400.


The implications are that the IRS will be able to process these tax-exempt status applications more quickly, minimize delays for the organizations, and reduce the backlog of applications. Although critics have pointed out that streamlining the tax-exempt status application and processing with 1023-EZ means the loss of an important educational and compliance opportunity. Some critics doubt that the IRS will be able to manage follow-up reviews any better than upfront compliance with exemption standards. Nonetheless, the 1023-EZ will decrease the amount of and time spent on paperwork, leaving more time for the purposes of these smaller organizations. Also, rather than using large amounts of IRS resources in advance to review complex applications creating a backlog, the new form will defer the compliance evaluation to a later date when the organization has had an opportunity to operate for some time at which point the IRS can proceed with more information.


Patrick Markey, Law Offices of Patrick Markey P.C., Chicago, IL


 

July 1, 2014

SCOTUS: Officers Need Warrant to Search Phones Incident to Arrest


On June 25, 2014, in a unanimous opinion by Chief Justice Roberts, the Supreme Court held that officers may not, without a warrant, search digital information on a cell phone seized from an arrestee’s person. The case is Riley v. California, No. 13-132 (and the consolidated case of U.S. v. Wurie, No. 13-212).


Officers arrested petitioner Riley on weapons charges, seized a cell phone from his person, and accessed the phone’s messages, videos, and photographs. That evidence connected Riley to a gang shooting that occurred weeks earlier. He was tried and convicted of that earlier shooting.


Respondent Wurie was arrested for participating in an apparent drug sale, and officers seized his phone from his pocket. Officers noticed that the phone was receiving a call from the label, “my house.” The officers opened the phone and traced that number to Wurie's apartment. Officers then used that information to obtain a warrant to search Wurie’s apartment. The search revealed contraband.


The question for the Supreme Court was whether those searches were justified under the “search-incident-to-arrest” doctrine. Under prior Supreme Court precedent (Chimel/Robinson/Gant), officers, without a warrant, could search an arrestee’s person and the area within his immediate control. Officers could also open objects that they came across during those searches. Thus, an officer could look through an arrestee’s purse incident to an arrest, the theory being that officers could search those items to ensure that the arrestee is not armed and to prevent the destruction of evidence.


However, Riley held that the justifications for the search-incident rule are less compelling in cell-phone cases. That is, the data in cell phones don’t pose an immediate risk to officers. Similarly, even if a cell phone contains relevant evidence, once an officer seizes the phone, arrestees cannot readily delete the information in their cell phones.


Moreover, Riley recognized that a cell-phone search is substantially more intrusive than a search of other objects that we might carry on our person. “Cell phones differ in both a quantitative and a qualitative sense from other objects that might be kept on an arrestee's person.” The Court noted that, in today’s era, cell phones might just as easily be called “cameras, video players, rolodexes, calendars, tape recorders, libraries, diaries, albums, televisions, maps, or newspapers.” Furthermore, the Court stressed a phone’s “immense storage capacity.”


The Court noted that officers could still apply for a warrant to search a cell phone that was seized incident to arrest. The “exigent circumstances” exception—which allows for warrantless searches in emergency circumstances—would also still apply to cell-phone searches. Thus, the Court reasoned that law-enforcement interests are not unreasonably constrained by this ruling.


Fourth Amendment jurisprudence is always struggling to “keep pace with the inexorable march of technological progress.” U.S. v. Warshak, 632 F.3d 266, 281 (6th Cir. 2010). With its stunning 9–0 decision in Riley, the “Roberts-court” has given a clear signal that it will vigilantly protect privacy interests in the digital age.


Adam J. Sheppard, Sheppard Law Firm PC, Chicago, IL


 

June 30, 2014

Revision to California Law Paves Way for Bitcoin


On June 28, 2014, California Governor Jerry Brown signed into law a bill, AB 129, which legalizes the use of alternative currencies in California. Two weeks earlier, the California Senate Banking and Financial Institutions Committee voted in favor of the legislation 7–1. AB 129 accomplishes this result through the repeal of section 107 of the California Corporations Code. Section 107 provided that, “No corporation, flexible purpose corporation, association or individual shall issue or put in circulation, as money, anything but the lawful money of the United States.” Roger Dickinson (D-Sacramento) crafted AB 129 “to fine-tune current law to address Californians’ payment habits in the mobile and digital fields.” In light of the repeal, digital currencies such as Bitcoin and other alternative payment methods, including points accumulated through store rewards programs and community currencies designed to encourage shopping at local businesses, are now lawful forms of payment for goods and services in California.


States apart from California have also acted recently to clarify laws regarding digital currencies. For example, on March 11, 2014, Benjamin M. Lawsky, superintendent of financial services at the New York State Department of Financial Services issued an order soliciting “proposals and applications in connection with the establishment of virtual currency exchanges located in the State of New York[.]” Also, on April 3, 2013, Charles G. Cooper, banking commissioner for the Texas Department of Banking, issued Supervisory Memorandum—1037, which labeled decentralized virtual currencies such as Bitcoin, Litecoin, Peercoin, and Namecoin as “cryptocurrencies” that do not qualify as money under the Money Services Act.


It is unclear whether AB-129 will have any impact beyond modernizing one state’s laws. This is particularly true because the alternative currencies benefitted by AB-129 are still technically not “legal tender.” Per the Coinage Act of 1965, 31 U.S.C. § 5103, only “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.” Nonetheless, with the increasing popularity of virtual currency, it would seem a safe bet that other states may follow California’s lead.


Adam Reich, Paul Hastings LLP, Los Angeles, CA


 

June 27, 2014

Get a Warrant: Privacy Rights Win Against Searches of Cell Phones


With the technology behind today’s smartphones, they contain much more information than a log of phone numbers and simple text messages; they encompass, for some, a large extent of our lives.


This week, the U.S. Supreme Court grappled with an emerging issue to challenge traditional laws in regard to using a suspect’s portable technology to obtain evidence. The Court addressed Riley v. California and United States v. Wurie with its decision not to further widen the existing “search incident to arrest” exception to the Fourth Amendment. Instead, the government must obtain a search warrant before searching through a suspect’s smartphone.


Despite this ruling, the Court distinguished various circumstances where a warrant was not necessary to conduct a search incident to an arrest. Those incidences include physical objects concealed by the phone that may endanger the lives of the police officers, steps necessary to prevent remote erasure or the activation of encryption, and other exigent circumstances, such as child abduction and bomb threats.


“We cannot deny that our decision today will have an impact on the ability of law enforcement to combat crime,” Justice Roberts wrote for the Court. “Cell phones have become important tools . . . among members of criminal enterprises and can provide valuable incriminating information about dangerous criminals. Privacy comes at a cost.”


The Court’s ruling was a defeat for the Obama administration, which supported law enforcement’s stance in the cases. The proponents for the government claimed that there was no fundamental difference between a smart phone, or documents and other personal effects a person may carry. But the court decided that this view was overly simplistic because, “most people cannot lug around every piece of mail they have received for the past several months, every picture they have taken, or every book or article they have read—nor would they have any reason to attempt to do so. And if they did, they would have to drag behind them a trunk of the sort held to require a search warrant.”


This ruling now ensures information of all suspects is kept private.


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

June 24, 2014

EPA Retains Broad Authority to Regulate Greenhouse Gas Emissions


On June 23, 2014, the U.S. Supreme Court issued a decision that impacts the regulation of greenhouse gases (GHGs). The Court held in Utility Air Regulatory Group v. EPA, 573 U.S. ____ (2014), that the U.S. Environmental Protection Agency’s (EPA) recent rewrite of the statutory thresholds for federal air-permit issuance under the Clean Air Act (CAA), 42 U.S.C. § 7401 et seq., exceeded the scope of the agency’s authority. However, the Court also reaffirmed the EPA’s right to regulate GHGs under the CAA.


The CAA subjects power plants, steel mills, and other stationary sources of air pollutants to permitting requirements. Specifically, pursuant to the Prevention of Significant Deterioration (PSD) program, a “major emitting facility” that may produce more than 100 or 250 tons of air pollutants annually cannot be built or modified without a permit. 42 U.S.C. §§ 7475, 7479(1). Additionally, pursuant to Title V of the CAA, any facility that has the potential to emit at least 100 tons per year of air pollutants must also obtain a permit from the EPA. 42 U.S.C. § 7602(j).


Following the Supreme Court’s landmark decision, Massachusetts v. EPA, 549 U.S. 497 (2007), which identified GHGs as “air pollutants” subject to regulation under the CAA, the EPA promulgated new permitting rules for stationary facilities with the potential to emit GHGs. On June 3, 2010, the EPA issued the Tailoring Rule, which departed from the 100 or 250 tons-per-year permitting standard of the PSD program, and instead subjected only those facilities producing more than 100,000 tons of GHGs annually to permitting requirements. 75 Fed. Reg. 31,514 (June 3, 2010). The reason for the threshold departure was that GHGs, which include carbon dioxide, tend to be emitted in significantly greater quantities than other air pollutants, thus subjecting a potentially unwieldy number of facilities to permitting requirements, including facilities that are integral to the social fabric, like schools and hospitals.


Numerous parties challenged the EPA’s new permitting standards. In 2012, the U.S. Court of Appeals for the D.C. Circuit upheld the EPA’s Tailoring Rule in Coalition for Responsible Regulation v. EPA, 684 F.3d 102 (2012) (per curiam). The Supreme Court granted six petitions for certiorari last year.


In its opinion, the Court seemingly answered three distinct questions:


  • Question No. 1: Was, in light of Massachusetts v. EPA, 549 U.S. 497 (2007), the EPA right to conclude that the CAA imposes permitting requirements based on potential GHG emissions?
  • Answer No. 1: A majority led by Justice Scalia held that the EPA exceeded its authority. Per the opinion, “[i]t takes some cheek for EPA to insist that it cannot possibly give ‘air pollutant’ a reasonable, context-appropriate meaning in the PSD and Title V contexts when it has been doing precisely that for decades.” Utility Air Regulatory Grp.,No. 12-1146, slip op. at 12.

  • Question No. 2: Was the EPA’s adjustment of threshold permitting standards for GHGs permissible?
  • Answer No. 2: The same majority that decided the first question held that the EPA overstepped its bounds when it set new permitting thresholds for GHG emissions. Finding that it was “hard to imagine a statutory term less ambiguous than the precise numerical thresholds at which the act requires PSD and Title V permitting,” Justice Scalia opined that “[a]n agency has no power to ‘tailor’ legislation to bureaucratic policy goals by rewriting unambiguous statutory terms.”

  • Question No. 3: Could the EPA regulate GHG emissions from facilities already facing permitting requirements by mandating use of Best Available Control Technologies (BACT)?
  • Answer No. 3: A separate majority reaffirmed that the EPA may regulate GHG emissions from sources already subject to PSD and Title V permitting requirements, and held that the EPA may continue to regulate GHG emissions for purposes of requiring BACT for Sources already subject to PSD and Title V permitting.

Even though the Court criticized the EPA’s statutory interpretation and demonstrated a boundary for the deference it will show the EPA, Utility Air Regulatory Group does not vitiate the EPA’s authority to regulate GHGs. Accordingly, given President Obama’s recently announced broad climate-action plan focusing on GHG emissions, and the less than two years remaining on his final term in office, the EPA is likely to continue promulgating rules aimed at curbing GHG facility emissions in the near future.


Adam Reich, Paul Hastings LLP, Los Angeles, CA


 

June 10, 2014

New Laws Forcing Companies to Phase Out Microbeads


Microbeads have become standard ingredients in cosmetics and personal-care products, including toothpastes, cleansers, and scrubs. The term “microbead” generally refers to a microscopic plastic particle, but it can also be used to include other microscopic ingredients such as vitamin E, sand, flaxseed, and walnut shells. Recently, public outcry against plastic microbeads has grown, decrying the non-biodegradable “plastic soup”  accumulating in lakes, rivers, and oceans after microscopic plastics slip through screen holes at wastewater treatment plants. In response, several states are taking steps to legislate away these plastic pollutants. Just this week, on June 9, 2014, Illinois became the first state to pass a ban of the manufacture and sale of microbeads.


Illinois Senate Bill 2727 (SB2727) amends the Illinois Environmental Protection Act to prohibit the manufacture for sale and sale of any non-over-the-counter personal-care product that contains synthetic plastic microbeads by 2018 and 2019, respectively. The law also prohibits the manufacture for sale and sale of any over-the-counter drug that contains synthetic plastic microbeads by 2019 and 2020, respectively. Violators of SB2727 face civil penalties, including a $1,000 fine for an initial violation, and a $2,500 fine for each subsequent violation.


Interestingly, SB2727 exempts prescription drugs from these bans, presumably because of potential preemption problems. Also of note, SB 2727 specifically defines “synthetic plastic microbead” to mean “any intentionally added non-biodegradable solid plastic particle measured less than 5 millimeters in size [that] is used to exfoliate or cleanse in a rinse-off product.” This definition eliminates the potential for companies to incur civil penalties for manufacturing and selling products containing natural ingredients such as vitamin E, sand, flaxseed, and walnut shells, which are marketed as “microbeads.” However, the failure to define “rinse-off product” may provide a basis, (albeit a weak one in light of other language in SB2727), for manufacturers to argue that the law does not apply to them.


Illinois may be the first state to ban the manufacture for sale and sale of plastic microbeads but it certainly looks like it will not be the only one to do so. On February 11, 2014, Robert K. Sweeney, with the support of New York Attorney General Eric Schneiderman, introduced the Microbead-Free Waters Act to the New York State Assembly. The act prohibits the manufacture, distribution, and sale of personal cosmetic products containing plastic microbeads by 2017. Violators will face a $2,500 fine each day that the violation continues and will be subject to an injunction preventing the violation. The New York state assembly passed the Microbead-Free Waters Act in May 2015, but the state senate has yet to take any action.


Meanwhile, on February 13, 2014, Richard Bloom introduced AB 1699 to the California assembly, which would, starting January 1, 2016, prohibit the “selling or offering for promotional purposes any cleaning product, personal care product, or both containing microplastic.” AB 1699 also imposes a fine of $2,500 for each day the violation continues, and expressly authorizes civil actions brought by any “person in the public interest.” The California assembly voted 45–10 on May 23, 2014, to approve AB 1699, and the state senate is expected to take action on the bill this month.


While it is unclear how the New York and California senates will vote on the microbead bans, Illinois’ passage of the ban could be the start of a trend that dramatically impacts the cosmetics and personal-care-products industries.


Adam Reich, Paul Hastings LLP, Los Angeles, CA


 

May 29, 2014

SCOTUS Upholds Constitutionality of Prayer at Local Town Meetings


The Supreme Court, in a 5–4 decision, recently reversed the Second Circuit’s holding that the Town of Greece violated the Establishment Clause of the First Amendment. See Town of Greece, N.Y. v. Galloway, 134 S. Ct. 1811, 1843 (2014).


Since 1999, the Town of Greece began its monthly board meetings with a prayer by local clergy. The board at these meetings took legislative action as well as heard from members of the public on matters such as requests for variances. The town selected clergy from a list of local congregations. Because nearly all of the congregations in the town were Christian, from 1999 until after the plaintiffs complained, all of the participating clergy were Christian. Many of the prayers were sectarian in nature (for example, invoking the name of Jesus or religious holidays) and invited members of the public in attendance to participate in prayer.


A majority (Chief Justice Roberts and Justices Kennedy, Alito, Scalia, and Thomas) held that the town’s practice did not violate the Establishment Clause, relying on Marsh v. Chambers, 463 U.S. 783 (1983), which upheld the constitutionality of the Nebraska legislature’s opening each session with a prayer by a paid chaplain. The Court held that the town’s practice fits within a long-standing tradition of prayer before legislative sessions and legislative prayer may be sectarian “so long as the practice over time is not ‘exploited to proselytize or advance any one, or to disparage any other, faith or belief.’” Galloway, 134 S. Ct. at 1823 (quoting Marsh, 463 U.S. at 794–95). The Court further rejected the argument that the legislative prayer coerced participation by non-Christians because it made them “feel subtle pressure to participate in prayers that violate their beliefs in order to please the board members from whom they are about to seek a favorable ruling,” reasoning that, “[o]ffense . . . does not equate to coercion.”


Justice Kagan, joined by Justices Ginsburg, Breyer, and Sotomayor dissented. The dissent pointed out that “the Town never sought (except briefly when this suit was filed) to involve, accommodate, or in any way reach out to adherents of non-Christian religions.” The dissent also distinguished the type of legislative prayer sanctioned by Marsh from the prayers in the Town of Greece:


[T]he Board’s meetings are . . . occasions for ordinary citizens to engage with and petition their government, often on highly individualized matters. That feature calls for Board members to exercise special care to ensure that the prayers offered are inclusive—that they respect each and every member of the community as an equal citizen. But the Board, and the clergy members it selected, made no such effort. Instead, the prayers given in Greece, addressed directly to the Town’s citizenry, were more sectarian, and less inclusive, than anything this Court sustained in Marsh. For those reasons, the prayer in Greece departs from the legislative tradition that the majority takes as its benchmark.


Id. at 1845–46.


The impact of the Supreme Court’s decision is likely to be profound and open the door to more sectarian prayers at government meetings. Indeed, there have been a number of reports of government officials seeking to reintroduce sectarian prayer into their proceedings, and at least one federal court has vacated a temporary injunction that had previously enjoined a local government from opening its board meetings with sectarian prayers. See Hake v. Carroll Cnty., Md., CIV. WDQ-13-1312, 2014 WL 2047448 (D. Md. May 15, 2014).


Keywords: litigation, young lawyers, Constitution, Establishment Clause, First Amendment, prayer


David Dobin, Cohen and Wolf, P.C., Bridgeport, CT


 

May 21, 2014

Oregon and Pennsylvania Legalize Same-Sex Marriage


This week, federal judges in Oregon (May 19, 2014) and Pennsylvania (May 20, 2014) ruled that the respective state’s same-sex-marriage bans are unconstitutional. Oregon and Pennsylvania bring the total number of states legalizing same-sex marriage to 19. The other states are California, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Rhode Island, Vermont, and Washington.


In Pennsylvania, Federal District Court Judge John E. Jones issued an unequivocal order permanently enjoining authorities from preventing same-sex marriage applicants from applying for marriage licenses right away, even if the weddings happen later. This order is appealable; however, Pennsylvania’s attorney general was supportive of the court’s order.


In Oregon, District Court Judge Michael McShane overturned Oregon’s voter-approved ban on same-sex marriage, ruling that the law discriminated against individuals based on sexual orientation without a rational relationship to any legitimate basis, which thus violated the Fourteenth Amendment’s equal-protection clause. Similar to Pennsylvania, the state’s attorney general in February stated that she would not defend the ban on same sex marriage. Licenses were issued minutes after the ruling came down. The battle is not yet over. The National Organization for Marriage filed a motion with the Ninth Circuit asking that McShane’s ruling be blocked.


Keywords: litigation, young lawyers, same-sex marriage, unconstitutional


Christina Liu, Illinois Department of Insurance, Chicago, IL


 

May 7, 2014

D.C. Circuit Strikes Down Conflict-Mineral Reporting Requirements


The Circuit Court of Appeals for the District of Columbia recently struck down, on First Amendment grounds, certain Securities and Exchange Commission (SEC) provisions intended to force companies to disclose when they may be using conflict minerals from the Democratic Republic of the Congo in their products. Nat’l Ass’n of Mfgrs. v. SEC, No. 1:13-cv-00635, ___ F.3d ___, 2014 WL 1408274 (D.C. Cir. Apr. 14, 2014). The D.C. Circuit upheld the majority of the SEC’s rules, promulgated under the Dodd-Frank Wall Street Reform Act, that require certain issuers to investigate and disclose the source of “conflict minerals” used in their products. The court found unconstitutional, however, a requirement that public companies report and state on their website that any products they manufacture or contract to manufacture have “not been found to be ‘DRC conflict free’” based on their supply chain diligence.


The conflict-minerals rules require that issuers subject to sections 13(a) or 15(d) of the Securities Exchange Act and whose products require conflict minerals for production or functionality conduct a preliminary investigation of their supply chains “reasonably designed” to determine whether the conflict minerals originated in covered areas. The conflict minerals covered by the rules included the following derived from the Democratic Republic of Congo region of Africa: (a) coltan, tin, gold, tungsten or any derivatives of such minerals; and (b) any other mineral or derivatives the U.S. secretary of state determined to be involved in financing the conflict in the Democratic Republic of the Congo region.


If an issuer determines that its conflict minerals originated in the covered areas or “has reason to believe” that the conflict minerals “may have originated” in the covered areas, the issuer is required to conduct supply-chain due diligence, including a private-sector audit. If, following this due-diligence process, the issuer has reason to believe that the conflict minerals may have originated in the covered areas, it is required to include its findings in an annual disclosure. This disclosure was to detail the due-diligence and audit efforts, note which products have “not been found to be ‘DRC conflict free,’” and include as much information as known about the origin of the conflict minerals used.


After first rejecting the appellant’s arguments relating to the lack of a de minimis exception, the due-diligence threshold, and who is covered by the regulations, among others, the court turned to the First Amendment argument. The court concluded that the disclosure requirement that forced an issuer to describe its products as not “DRC conflict free” in filings and on its website violated issuers’ First Amendment rights.


The court was not persuaded by the SEC’s argument that the required disclosures were only factual. Rejecting the proposition that the disclosures contained no ideological statements requiring more exacting court scrutiny, the court stated that the disclosures were a statement about issuers’ role in the conflict and their moral capability. “The label ‘conflict free,’” the court wrote, “is a metaphor that conveys moral responsibility for the Congo war.” The court determined that the SEC did not provide evidence that its rules compelling speech were narrowly tailored to meet a substantial government interest.


Keywords: litigation, young lawyers, SEC, reporting, First Amendment, compliance, conflict minerals


Courtney L. Lindsay and Lindsey M. Nelson, Nixon Peabody LLP, Washington, D.C.


 

May 1, 2014

Department of Education Investigating Sexual Assault at 55 Campuses


The U.S. Department of Education (DOE) recently took the unprecedented step of releasing a list of 55 schools at which the department is investigating sexual violence, including rape, sexual assault, sexual battery, sexual abuse, and sexual coercion. A DOE official explained that the release of the names of the schools under investigation to bring more transparency to enforcement process and better public awareness of civil rights. These investigations are being conducted pursuant to Title IX, which prohibits gender discrimination in education or activities at schools that receive federal funding. The DOE’s investigation related to possible violations of federal law relating to the handling of sexual violence and harassment complaints. The campuses under investigation include several prominent colleges and universities, as well as Harvard University Law School.


Keywords: litigation, young lawyer, Title IX, investigation, sexual violence, Department of Education


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

April 30, 2014

Botched Lethal Injection Leads to Investigation and Possibly Changes


The state of Oklahoma scheduled two executions by lethal injection to be conducted April 29, 2014, despite questions and challenges regarding the testing of the drugs for executions. Clayton Lockett was scheduled to be the first inmate executed. Although details into the execution are still forthcoming, it appears the three-drug cocktail administered led to a “blown” vein and that it took 43 minutes for Lockett to die, ultimately of a heart attack. The second execution scheduled for the same day was then halted. In the aftermath, Governor Fallin ordered an independent review of the state’s execution procedures. Earlier this year, an Ohio inmate sentenced to death appeared to convulse and gasp for air for approximately 10 minutes before expiring.


These recent botched executions again raise the issue of whether the death penalty constitutes cruel and unusual punishment in violation of the 8th Amendment. Additional legal challenges to the method of execution are expected.


Keywords: litigation, young lawyer, death penalty, lethal injection, cruel and unusual, 8th Amendment


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

April 30, 2014

Government Investigation of GM Switch Issues in Overdrive


The U.S. Securities and Exchange Commission (SEC) recently announced that it has launched an investigation into General Motors’ (GM) handling of the ignition-switch problem, discovered over a decade ago, leading to the recall over 2.6 million vehicles. The SEC’s investigation is but the most recent in a long line of investigations, including a criminal investigation by the U.S. Department of Justice, a regulatory investigation by the National Highway Traffic Safety Administration, and by U.S. Senate and House investigations. GM also faces over 55 lawsuits throughout the country brought on behalf of consumers, and securities fraud complaints filed by shareholders. The company is also conducting its own investigation, which is being led by outside lawyer Anton Valukas, and has stated that it will publicly release the results of this investigation. Although in its infancy, the GM ignition-switch litigation and investigations will no doubt continue to command headlines.


Keywords: litigation, young lawyer, SEC, GM ignition switch, investigations, securities fraud


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

April 30, 2014

New FDA Labeling Rule Poses Litigation Risk to Late Actors


The consumer class-action landscape in this country has evolved to the point where using merely a few words can land a food or dietary-supplement manufacturer in court. Consequently, companies are now well versed in the need to amass significant evidence to support claims that products are “all natural” or “gluten-free.” On April 28, 2014, the U.S. Food and Drug Administration (FDA) published a new product label rule in the Federal Register, which gives these companies cause for concern about different food or dietary-supplement descriptors: “high in” certain omega-3 fatty acids; “rich in” certain omega-3 fatty acid; and “excellent source of” certain omega-3 fatty acids.


Under this new rule, which is scheduled to take effect on January 1, 2016, food-product manufacturers and dietary-supplement manufacturers are forbidden from touting their products as “high” or “rich” in docosahexaenoic acid (DHA) and eicosapentaenoic acid (EPA), or using synonymous language, including “excellent source of,” because the FDA has not set a baseline for these nutrients, and there has not been a consensus published by select scientific bodies that satisfies the baseline requirements of the Food, Drug & Cosmetic Act (FDCA). In addition, the new rule prohibits publication of claims that food or dietary supplements are “high in,” a “good source of,” or provide “more” alphalinolenic acid (ALA) than competitor products, when such claims are tethered to a reference amount customarily consumed (RACC) based on a population-weighted approach.


The FDA issued this rule in response to three notifications that it received in 2004 and 2005 for nutrient content claims regarding DHA, EPA, and ALA. Those claims asserted that the Institute of Medicine of the National Academies (IOM) had published nutrient-level baselines for DHA, EPA, and ALA, but they also revealed that IOM had published different, sometimes conflicting nutrient levels for these three omega-3 fatty acids. As a result, the FDA concluded that no baseline has in fact been set for the nutrient levels of DHA, EPA, and ALA, and it is therefore improper to make related nutrient-content claims in advertising food and dietary supplements. The FDA did note, however, that it is not taking regulatory action at this time with respect to nutrient-content claims for ALA that are based on an RACC derived from population coverage.


Given that this new rule applies to conventional foods and dietary supplements, it will impact an extensive list of products when it goes into effect in 2016. Moreover, the FDA is not permitting smaller manufacturers additional time to comply with this rule. Thus, manufacturers in the food and dietary-supplement space who are late to review and revise product labels, advertisements, and marketing materials containing claims about DHA, EPA, and/or ALA, face great litigation exposure, particularly in such an active consumer class-action landscape.


Adam Reich, Paul Hastings LLP, Los Angeles, CA


 

April 30, 2014

What Chicago NLRB's Decision Means for Future of College Athletics


On March 26, 2014, the Chicago district of the National Labor Relations Board (NLRB) ruled that Northwestern University football players qualify as employees of the university and can unionize. NLRB regional director Peter Sung Ohr determined that the players fell under the National Labor Relations Act’s definition of an employee and cited the players’ time commitment to their sport and the fact that their scholarships were tied directly to their performance on the field as reasons for granting them the right to unionize. On April 28, 2014, the players held a secret-ballot election to determine whether they want to unionize. Northwestern has indicated they will appeal to the NLRB, which could take anywhere from months to years to be decided. The result of the player vote will be impounded until the resolution of the appeal.


If the ruling is upheld, it will be much easier for college athletes at other schools to unionize. What does employee status for college athletes mean? There are potential tax implications for the players, but the players would not automatically be taxed. If the players vote “yes” to the union, then the university would be forced to bargain with the College Athletes Players Association, which would represent the players. However, Northwestern would probably refuse to bargain, be sued in court, and keep appealing the decision as far as they could, possibly to the U.S. Supreme Court. If the players vote no, then the case may never end up in the courts because there would be no union to file a lawsuit.


If the right to form a union is upheld, athletes would have real representation in determining their benefits, but they would be employees of their respective universities, not the National Collegiate Athletic Association (NCAA), which governs them. However, the NCAA’s model of the “amateur student-athlete” faces its own challenge with the antitrust lawsuit filed by high-profile sports-labor attorney Jeffrey Kessler in New Jersey federal court on behalf of a group of college basketball and football players. That lawsuit argues that the NCAA has unlawfully capped player compensation at the value of an athletic scholarship despite the billions of dollars of revenue that these players help generate. If either of these lawsuits is successful, it will mean significant changes for major college sports.


Patrick B. Markey, attorney at law, Chicago, IL


 

March 31, 2014

Death-With-Dignity Laws on the Books in Five States


In the past, ending someone’s life has been condemned as immoral. However, five states—Vermont, Montana, Oregon, New Mexico, and Washington—now have death-with-dignity (DWD) laws. Generally, these laws permit a competent and terminally ill patient to choose aid in dying. It is different from those who are clinically depressed or have other reasons for wanting assistance to commit suicide. But overt assistance to bring on death, by whatever name, remains illegal in most of the country.


Public support for assisted dying has grown in the past half-century, where in a recent survey 51 percent supported allowing doctors to help a dying patient “commit suicide.” In the past, support for allowing the terminally ill to die was at 31 percent.


On March 19, 2014, the Minnesota Supreme Court overturned the conviction of William Melchert-Dinkel, who was convicted in 2011 of two counts of aiding suicide, after a judge found he "intentionally advised and encouraged" two individuals, one in Canada and one England, to commit suicide. The court found that the terms “advises” and “encourages” within Minn. Stat. § 609.215 was overly broad and in violation of the First Amendment of the U.S. Constitution. This case was remanded to district court to determine if his actions amount to assisting others with suicide.


On January 13, 2014, in New Mexico, the 2nd District Court in Albuquerque ruled that terminally ill patients have the right to "aid in dying" under the state constitution and that such deaths are not considered suicide under New Mexico's assisted-suicide statute. Aid in dying refers to doctors prescribing a fatal dose of drugs so that patients can obtain a peaceful death by avoiding further suffering. However, assisted-suicide laws classify helping with suicide as a fourth-degree felony.


In Canada, on March 26, 2014, the Canadian media reported that a former cabinet minister, Steven Fletcher, who is now quadriplegic from a car accident, plans to introduce two bills in support of assisted suicide. However, opposition leader Justin Trudeau states that although people have individual freedoms to make decisions, “it is important in society that we protect our most vulnerable and make sure that we are keeping people safe.”


With both sides having strong arguments about permitting a person to choose death and protecting a person from choosing death, it is an issue that will continue to challenge legislatures and the courts for years to come.


Keywords: litigation, young lawyers, assisted suicide, death with dignity


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

March 31, 2014

Manufacturer Can Be Sued for Injuries from Drug It Did Not Make


Can a manufacturer be sued for injuries caused by a defective product that it did not manufacture or distribute? Before you answer this question, study the recent ruling by Judge Zagel in Dolin v. GlaxoSmithKline, et al., No. 12 C 6403, 2014 U.S. Dist. Lexis 26219 (N.D. Ill. Feb. 28, 2014). In Dolin, the court analyzed the continuing tension between the federal regulatory scheme governing prescription drugs and state tort law. As noted in the ABA Journal’s recent article, federal regulations frequently preempt claims arising from the ingestion of generic prescription drugs. This is because federal law requires generic drugs to have the same warnings and design as their brand-name equivalent. In fact, generic-drug manufacturers are prohibited from altering drug labels or warnings. Judge Zagel concluded that a brand-name manufacturer could be held liable for injuries caused by the ingestion of a generic drug that was manufactured by a separate generic manufacturer.


Mr. Dolin committed suicide six days after he began taking a generic form of Paxil, paroxetine, an anti-depressant. His wife filed a complaint against GlaxoSmithKline (GSK), Paxil’s manufacturer, and Mylan, Inc., the manufacturer of the paroxetine Mr. Dolin ingested. The plaintiff alleged that GSK knew of the connection between paroxetine and suicidal behavior; despite this knowledge, the warning label allegedly stated that the risk of suicidality did not extend to persons over age 24. The plaintiff claimed that GSK was aware of the risk, concealed its knowledge, and promoted Paxil as safe.


The plaintiff alleged claims for strict liability and negligence under common law and a product-liability framework. GSK argued that it could not be liable under any theory for a product that it did not manufacture, and relied on the multitude of cases that have agreed with its position. The crux of GSK’s argument rested on the notion that personal-injury claims arising out of the use of a product must be analyzed under the rubric of product-liability principles, which require a plaintiff to prove that the defendant manufactured the injury-causing product. This argument carried the day with regard to the plaintiff’s strict-liability claims, which were dismissed.


As to the plaintiff’s negligence claims, however, the court disagreed with GSK. Unlike some states, Illinois does not have a product-liability statute that requires plaintiffs to file claims arising from product use as product-liability claims.Judge Zagel found that the plaintiff was not limited to suing GSK in its capacity as a manufacturer. Moreover, the court found that nothing in Illinois law precluded a plaintiff from alleging that a defendant, even one who is not in the chain of distribution, could be liable in negligence as long as all of the elements were satisfied.


In Illinois, courts analyze four factors before imposing a duty of care: the foreseeability of the injury, the likelihood of the injury, the magnitude of the burden of guarding against the injury, and the consequences of placing the burden on the defendantThe court held that the plaintiff satisfied these factors. First, generic manufacturers of paroxetine were required by federal law to use GSK’s warnings. Accordingly, it was foreseeable that GSK’s negligence in the creation of warnings would result in harm to consumers of generic drugs. Second, the likelihood of injury from the drug’s warnings is the same regardless of whether the consumer ingested a brand-name or generic drug. Regarding the remaining factors, the court found that the burden of guarding against the injury was slight because the same warning applied to all paroxetine.


Thus, the court found that GSK owed the plaintiff a duty of reasonable care and that the plaintiff presented evidence regarding the remaining elements of negligence. In particular, regarding causation, the court rejected GSK’s argument that the plaintiff’s case was akin to those where the plaintiff was unable to identify the tortfeasor. In such cases, Illinois courts have repeatedly refused to relax the causation requirement and refused to impose liability. The Dolin court distinguished these cases because the plaintiff alleged that GSK itself was negligent in the development of the warnings, which is extrinsic to the manufacturing process. On March 24, the judge in Dolin refused to enter a briefing schedule on GSK’s motion for an interlocutory appeal.


Thus, in the prescription-drug context, a manufacturer who did not make the allegedly injury-causing product may still be liable in negligence for the plaintiff’s alleged injuries.


Rachel S. Nevarez, Wiedner & McAuliffe, Ltd., Chicago, IL


 

March 28, 2014

Jury Finds Madoff Employees Guilty


A jury in the U.S. District Court for the Southern District of New York has found five former employees of Bernard Madoff guilty on charges that they aided Madoff in defrauding investors of billions of dollars.


The charges included conspiracy to defraud investors and securities fraud.


Other than Madoff, who pled guilty to criminal charges and is serving a 150-year prison sentence, this is the first time anyone has been convicted for crimes arising out of the Madoff Ponzi scheme.


The defendants face decades in prison and their attorneys have promised to appeal.


The case is United States v. O'Hara et al, U.S. District Court, Southern District of New York, No. 10-cr-00228.


David Dobin, Cohen and Wolf, P.C., Bridgeport, CT


 

March 27, 2014

NY State Bar Association Issues Social-Media Ethics Guidelines


On March 18, 2014, the Commercial and Federal Litigation Section of the New York State Bar Association (NYSBA) issued social-media ethics guidelines “to assist lawyers in understanding the ethical challenges of social media.” The guidelines are based on the New York Rules of Professional Conduct (NYRPC) and related ethics opinions, and focus on five specific topics: (1) attorney advertising via social media; (2) providing legal advice through social media; (3) acquiring and using evidence through social media; (4) communicating with clients regarding their social-media presence and activities; and (5) using social media to learn about prospective and sitting jurors.


Regarding attorney advertising, the NYSBA provides that attorneys using social media for business purposes must adhere to the NYRPC regarding advertising and solicitation (Guideline Nos. 1.A-1.C).


As for legal advice, the NYSBA instructs that lawyers may provide general answers to legal questions on social media, but not provide specific advice (Guideline No. 2.A). Additionally, lawyers are instructed not to solicit clients through real-time computer-accessed communications such as instant-messaging applications (Guideline No. 2.B).


Regarding the use of social media to accumulate evidence, the NYSBA’s guidelines indicate that anything public on a social-media platform is fair game, even if the person is represented by counsel (Guideline No. 3.A). With respect to the restricted portions of social-media users’ profiles and accounts, the NYSBA indicates that lawyers cannot request access to these sections from persons represented by counsel, absent the persons’ express written permission (Guideline No. 3.C).


In terms of counseling clients about their social-media use, the NYSBA’s guidelines caution lawyers to make sure that potentially relevant information posted on social-media websites is not destroyed when litigation is reasonably anticipated, even if the information, including in the form of a post or a tweet, is removed by the client (Guideline No. 4.A). Additionally, the NYSBA instructs lawyers to avoid knowingly advising clients to post false or misleading statements on social media (Guideline No. 4.B) and to refrain from using any information or advocating any position that the lawyer learns to be false through a review of the client’s social-media use (Guideline No. 4.C).


Finally, the NYSBA’s guidelines permit lawyers to use social-media to learn about prospective jurors and sitting jurors, but forbid lawyers from contacting such jurors (Guideline Nos. 5.A-D). For purposes of the guidelines, “contacting” includes unintentional contact such as through automatic messages generated by a social-media site whenever a person’s profile is viewed. Finally, the NYSBA guidelines advise lawyers of their duty to promptly notify the court of any juror misconduct discovered through monitoring of sitting jurors’ social-media accounts and profiles.


Adam Reich, Paul Hastings LLP, Los Angeles, CA


 

February 28, 2014

Police May Enter Premises over Co-Resident's Objection


The Supreme Court this week upheld a California decision siding with law enforcement in a search and seizure of a residence over an occupant’s objection. In Fernandez v. California, No. 12-7822, 2014 WL 700100 (Feb. 25, 2014), the Court held 6–3 that the police may enter a home if a resident consents, even if a co-resident who is no longer present previously had objected to the search.


The case started when police showed up at Walter Fernandez’s residence as part of an investigation into a robbery. Mr. Fernandez and his domestic partner, Roxanne Rojas, answered the door. Mr. Fernandez denied the police entrance into the residence. Ms. Rojas appeared battered, however, and the police arrested Mr. Fernandez on suspicion of domestic abuse. About an hour later, the police returned to the residence and Ms. Rojas granted them entry. Inside the residence, they found evidence relating to the robbery, for which Mr. Fernandez was eventually convicted.


Mr. Fernandez had argued that the evidence should have been suppressed under the Supreme Court’s ruling in Georgia v. Randolph. The Supreme Court had ruled in that case that if one resident of a property objects to a search, the police cannot search without a warrant even if the other residents of the property consent. Mr. Fernandez argued that his objection should have stood until he withdrew it.


Justice Alito, who wrote the majority opinion, held that the Randolph decision was limited to occupants who were physically present at the residence. The opinion noted the practical problems with Mr. Fernandez’s arguments, including the duration of how long such an objection would last and what procedure would be required to register a continuing objection. “Petitioner’s rule would also require the police and ultimately the courts to determine whether, after the passage of time, an objector still had ‘common authority’ over the premises, and this would often be a tricky question.”

Judge Alito also noted the right of Ms. Rojas to consent to the search once Mr. Fernandez was no longer on the premises. “Denying someone in Rojas’ position the right to allow the police to enter her home would also show disrespect for her independence.”


Judge Ginsburg wrote the dissent, joined by Justice Sotomayor and Justice Kagan. The dissent largely focuses on the ability of law enforcement to get a warrant in circumstances such as the one presented in Fernandez. “Instead of adhering to the warrant requirement, today’s decision tells the police that they may dodge it, nevermind ample time to secure the approval of a neutral magistrate.” The dissent stated that it was “entirely feasible” for the police to obtain a warrant in this case.


Keywords: litigation, young lawyers, search and seizure; consent; Supreme Court


Lindsey Nelson, Nixon Peabody LLC, Washington, D.C.


 

February 28, 2014

Petitioning the Court for a Competent Expert


In February 2014, the U.S. Supreme Court held that an attorney in a capital murder case was ineffective by failing to petition the trial court for sufficient funds to hire a competent expert to rebut the state’s forensic evidence. Hinton v. Alabama, No. 13-6440, (Feb. 24, 2014) (per curiam). After analyzing the six bullets fired during the three crimes and test-firing the revolver, examiners at the state's Department of Forensic Sciences concluded that the six bullets had all been fired from the same gun: the revolver found at the defendant’s residence.


The only expert that defense counsel was able to obtain for $1,000 did not nearly have the same credentials and experience as the state’s experts. The Supreme Court held that counsel was deficient in failing to request more funds for a more competent expert. The Court remanded the case for reconsideration of whether the defendant’s attorney's deficient performance was sufficiently prejudicial to warrant reversal of his conviction.


Hinton is instructive for a variety of reasons. First, itreaffirms that counsel—particularly appointed counsel—must stay abreast of the relevant statutes that govern appointment of expert witnesses. Secondly, Hinton shows that defense counsel should not blindly accept the forensic analysis of the prosecution’s experts. Lastly, Hinton instructs that counsel must thoroughly vet an expert’s credentials and personal characteristics prior to putting the expert on the witness stand. It is not enough that the court will accept the witness as an “expert.”


Keywords: litigation, young lawyers, criminal law, expert, ineffective assistance of counsel, ballistics


Adam Sheppard, Sheppard Law Firm, P.C., Chicago, IL


 

February 26, 2014

Should Law Firms Accept Bitcoin?


Several law firms have been spotlighted in recent months for electing to accept “Bitcoin” as payment. This raises two questions: (1) What is Bitcoin? and (2) Should law firms accept it as a form of payment in lieu of traditional currency?


What is Bitcoin?
Bitcoin is a digital form of currency that was created in 2009 by an Internet user who goes by the pseudonym Satoshi Nakamoto. It is similar to paying cash, but it only exists online. There is cryptographic security, no central authority, and peers ensure authenticity. The federal government has recognized Bitcoin as a legitimate currency so it likely something we are going to see more of in the future. Bitcoin users have the ability to make payment into a service called Bitpay, which converts Bitcoins to U.S. dollars or other currency.


Currently Bitpay is the only major player in the Bitcoin industry, but more are likely to follow. The benefits of Bitcoin use are that it eliminates the risk of identity theft during a transaction. Online shoppers who use credit cards usually need to provide their name and address, date of birth, and phone number among other things to authenticate the credit card. As we have seen recently with the Target store hacking, identity theft from credit-card use is rampant and expensive. With Bitcoin (like cash), the money only needs to be verified as real, not the identity of the payor.


Should Law Firms Accept Bitcoin?
Bitcoin may present a nice alternative to payment by credit card, an acceptable form of payment for legal services by the vast majority of law firms. With few exceptions, a law firm needs to have a contract with a credit-card processing company to process credit-card payments. These companies charge substantial fees most of the time, even “hidden fees.” These fees include authorization fees, processing fees, annual fees, maintenance fees, reward-card fees, compliance fees, and statement fees. Comparatively, Bitcoin providers usually charge only a flat transaction fee. The lack of additional fees for Bitcoin is a positive for any merchant, including law firms.


In addition to limited fees, Bitcoin usage would seemingly protect law firms from “chargebacks.” In a chargeback situation, a credit-card holder disputes a charge and his or her credit-card processing company reclaims money already paid to the merchant. Chargebacks can happen at any time, and they are of even greater concern to law firms that accept credit-card payments into client trust accounts.


Although Bitcoins are still a novelty, it is more likely that they will enter the mainstream currency market if massive credit-card-related identify theft continues. In light of the benefits of Bitcoin, as well as this trend toward increasing identity theft, it is at least worthwhile for law firms to consider accepting Bitcoin payments at this time.


Patrick B. Markey, attorney at law, Chicago, IL


 

February 26, 2014

Young Advocates Leaders Provide Valuable Networking Advice


On February 19, 2014, our cochairs Christina Liu and Mor Wetzler spoke at our Lunch and Learn about networking tips, providing advice about how to make the most of networking events and how to follow up in valuable and memorable ways. We hope you were able to attend, but we also want to provide you with some of the tips from that call. Please tune in to other upcoming Lunch and Learn programs, which are held the third Wednesday of every month.


Some advice to prepare for the networking event:


  • • Plan ahead. If you have a guest list, pick out a few (two to five) people that you want to meet and seek them out. Do research about the attendees if possible. Ask your network whether there is somebody attending that you should meet. They may be able to provide you with interesting background and maybe even make the introduction.
  • • Think through some conversation topics so that you are comfortable during the event. Skim recent news headlines, review the schedule for related meetings or presentations, or think through interesting experiences you had recently (interesting case, trial, vacation, or family experience). Do not discount the value of a personal story as a way to connect—not everybody wants to talk about the weather!

Some tips to keep in mind during the event:


  • • For the initial approach, open body language, confidence, and a smile can go a long way. Remember that you automatically have things in common. You are in the same city, room, and event, likely share group membership (e.g., bar association), and may overlap networks.
  • • It is preferable to meet new people rather than spend the entire event speaking to people you knew beforehand. (You decided to attend the event, so should try to make the most of it). That of course does not discount the possibility of having your friends help with introductions or provide an exit if you are stuck in a long conversation and wish to move on.
  • • To meet others, you can stand near the bar, and even might want to pick the longer line to allow you a few more minutes to introduce yourself to those around you.
  • • It is helpful to have an “elevator speech” type introduction, but it should be tailored to your audience. Your answer to “what do you do?” or even “where are you from?” should come easily but should be different whether you are speaking to a group of firm litigators, law students, in-house counsel, judges, or a mixed group.

How to develop connections and follow up meaningfully:


  • • Approach conversations not with a “what can they provide for me” mindset but a “what value can I provide for them” approach. For example, could you introduce them to somebody else in your network, share a case or article you have read that they would find helpful, or even recommend a restaurant or activity that they might enjoy. This makes the request for contact information more natural and allows you to follow up in a much more meaningful way. Your goal is to develop a relationship, so connecting in a way that provides value (rather than sending a marketing pitch) is going to be more memorable and meaningful.

Want to read more? Here are some other suggestions for developing your network:



 

February 6, 2014

NJ Man Sacks NFL with Lawsuit over Super Bowl Ticket Policy


Less than one month before the kickoff of Super Bowl XLVIII, Josh Finkelman, a New Jersey resident, filed a class-action lawsuit against the National Football League (NFL) in New Jersey federal court accusing the league of violating the New Jersey Consumer Fraud Act by employing a ticket policy that prices the general public out of one of the most highly anticipated sporting events of the year—the Super Bowl.


According to Finkelman, only 1 percent of the available Super Bowl tickets each year are distributed directly to the general public through a lottery system. The other 99 percent are then allegedly forced to search the secondary market (NFL teams, the media, sponsors, and other league insiders) for tickets sold at prices that are inflated many times beyond their face value and often times repackaged with mandatory add-ons, such as multi-night minimum-stay hotel rooms, pregame parties, and limousine services.


Finkelman complains that the NFL and its franchise teams profit from these secondary market sales through lucrative contracts entered into with secondary ticket buyers who are required to purchase a certain number of regular season game tickets for an NFL franchise team in exchange for a small allotment of Super Bowl tickets. In turn, Finkelman claims that the secondary ticket buyers profit from repurposing their allotted Super Bowl tickets into expensive Super Bowl packages that further inflate the face value ticket price.


Under the NFL’s existing Super Bowl ticket policy, Finkelman alleges that he begrudgingly paid a marked-up price of $4,000 for two upper end zone tickets from a secondary market. His complaint also highlights a Super Bowl package, which includes a VIP ticket, hotel stay at the Four Seasons in midtown Manhattan, car service to the Super Bowl, and access to certain pregame social events, that sold for upwards of $19,000, exclusive of airfare. This policy, Finkelman alleges, violates the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-35.1, which prohibits the practice of withholding any more than 5 percent of the available tickets from sale to the general public for any event.


In his complaint, Finkelman asserts claims against the NFL for violation of the New Jersey Consumer Fraud Act and unjust enrichment on behalf of himself and a class of all persons who have already purchased tickets, who will purchase tickets, and those who cannot afford to purchase tickets to Super Bowl XLVIII. His lawsuit seeks unspecified damages and compensation from the NFL, including interest, disgorgement, costs of litigation, treble damages, and attorney fees as permitted under the New Jersey Consumer Fraud Act.


The NFL has not yet responded to Finkelman’s complaint and is not required to do so until February 21, 2014. Therefore, Super Bowl Sunday will have come and gone before Finkelman is afforded his day in court. Nonetheless, this is one “Rocky Balboa vs. Apollo Creed” bout that should not be ignored as it may impact the NFL’s ticket policy for future Super Bowl games.


For additional information about Josh Finkelman’s lawsuit against the NFL, see Josh Finkelman v. National Football League, in the U.S. District Court for the District of New Jersey, Case No. 3:14-cv-00096-PGS-DEA.


Christopher M. Staine, Crowe & Dunlevy, Oklahoma City, OK


 

January 30, 2014

Sperm Donor Ordered to Pay Government for Child Support


A court in Shawnee County, Kansas, has declared that a man who donates sperm must pay the State of Kansas for child support arrearages and future support from the child of a same-sex couple. The law that has sparked national controversy states, “the donor of semen provided to a licensed physician for use in artificial insemination of a woman other than the donor's wife is treated in law as if he were not the birth father of a child thereby conceived, unless agreed to in writing by the donor and the woman.” K.S.A. § 38-1114(6)(f). Ben Swinnen, lawyer for the sperm donor, claimed that the state has political motivations to pursue his client because Kansas does not permit same-sex marriage.


In this case, two primary facts are uncontested—(1) the results of the paternity test and (2) that a physician was not used in the artificial-insemination process. The judge primarily based her holding on the statutory requirement of the Kansas Parentage Act, rationalizing that this individual did not qualify as a sperm donor because a physician was not used at any point during the artificial-insemination process.


The issue arose in March 2009, when William Marotta responded to a Craigslist advertisement seeking sperm for a lesbian couple, Angela Bauer and Jennifer Schreiner. Marotta purportedly donated three cups of sperm. Then Marotta, Bauer, and Schreiner, without any legal counsel, created a document attempting to eliminate Marotta’s parental rights and responsibilities for the unborn child. Schreiner and Bauer romantically separated and Schreiner sought public assistance for the child, but did not list the name of the father or claim to know his whereabouts. The Kansas Department for Children and Families discovered his identity and, shortly thereafter, filed a lawsuit seeking to declare Marotta the father of the child and the party responsible for child support. The state argued, successfully, that the sperm-donor contract was invalid because a person cannot contract away personal obligations to support a child, as that right belongs to the child and not the parents.


Marotta intends to file an appeal, but many are wondering how such a ruling could have been handed down in the first place. Randall Kessler, an attorney who appeared on the Today show, postulated, “the point is that while technology and medicine are advancing quickly, the law is simply trying to keep up. And that creates situations like the one in Kansas.”


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

January 30, 2014

Judge Orders Hospital to Remove Pregnant Woman from Life Support


In Texas, a judge ordered that Fort Worth Hospital may not keep a brain-dead pregnant woman on life support against her family’s wishes. In a case that sparked national controversy regarding abortion, end-of-life care, and a law that prohibits a hospital to withdraw life support from a pregnant woman—this difficult ruling provided one family a form of relief. But it was a sad day when the ruling permitted this patient’s life support to be removed—her husband slumped in his seat and began to weep. On Friday, January 24, 2014, at approximately 11:30 a.m., Marlise Munoz, a 22-week pregnant woman, had her body disconnected from life support.


The patient, Marlise Munos, a pregnant paramedic, collapsed from a blood clot in her lungs and was later found on the kitchen floor not breathing, but still alive. Before the incident, Ms. Munos had expressed to her husband that she never wanted to be placed on a ventilator. For two months, her family members fought for the right to end their loved one’s life, including that of her unborn child. Both Fort Worth Hospital and the Munos family conceded that Ms. Munos met the criteria to be considered brain-dead, i.e., a total loss of all brain functions, which qualifies a person as dead both medically and under Texas law. But by the time the court heard the case, the fetus was 22 weeks old and, theoretically, a fetus can feel pain after 20 weeks of age.


Medical records indicated that the unborn child suffered from hydrocephalus, which is an accumulation of fluid in the cavities of the brain. Retrieving the fetus from the mother at this early stage was not a viable option—the baby would not be born alive. Cases such as these are rare, and researchers from Heidelberg University have only found 19 cases to exist from 1982 to 2010. Of the 19 cases, 12 were delivered by caesarian section, and of those delivered, half lived to develop normally by the time the case reports were written.


The hospital argued that Texas law does not permit pregnant women to have life support removed because the protected interest at issue is the right of the fetus to life. Nonetheless, the court held that this law was not applicable in this instance because Mrs. Munos was considered dead.


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

January 30, 2014

It May Be Greek to You, but Definitely Not to United Kingdom


On January 28, 2014, a U.K. appeals court affirmed a lower court’s decision precluding Chobani Inc. from marketing its yogurt as “Greek” in the United Kingdom. According to the England and Wales High Court (Chancery Division), the concept of Greek yogurt has a unique “goodwill” associated with it, such that “a substantial proportion of the relevant public not only believe that Greek yogurt comes from Greece but also believe it to be special.” Among other things, the court cited the minutes of a May 17, 2012, meeting of the Yoghurt and Short Life Dairy Products Committee of the Provision Trade Federation, which identified “[t]he term ‘Greek yoghurt’ [as] appl[ying] to a traditional yoghurt produced in Greece . . . .” Because Chobani is manufactured in the United States, the court concluded that it was misleading to label the product as “Greek” and a contemptible attempt “to take commercial advantage” of the favorable “reputation enjoyed by Greek yogurt.”


FAGE, the manufacturer of “Total” brand yogurt, a direct competitor of Chobani’s, filed the underlying lawsuit after Chobani first entered the U.K. market. In March 2013, following a seven-day trial, Justice Michael Briggs entered an injunction preventing Chobani from labeling its yogurt as “Greek” in the United Kingdom.


Although two U.K. courts have now declared it misleading for Chobani to market its yogurt as “Greek,” the company has vowed to appeal.


Adam Reich, Paul Hastings LLP, Los Angeles, CA


 

January 27, 2014

9th Cir. Reaffirms Trial Court's Expert-Testimony Gatekeeping Role


A recent case out of the Ninth Circuit highlights the important gatekeeping role of a trial court in reviewing and analyzing the relevance and reliability of expert testimony. In Estate of Barabin v. AstenJohnson, Inc., 10-36142, 2014 WL 129884 (9th Cir. Jan. 15, 2014), the en banc court reversed a multimillion dollar jury verdict for the plaintiff who alleged that dryer felts manufactured by the defendants caused the plaintiff to suffer from mesothelioma.


Prior to trial, the plaintiff offered two experts to prove that the defendants' products caused the plaintiff's mesothelioma. The defendants moved in limine to preclude both experts from testifying and to exclude any testimony on the theory that “every asbestos fiber is causative."Despite expressing doubts about the relevance and reliability of the experts' testimony and the "every exposure" theory, the district court admitted the expert evidence. Specifically, the court allowed the plaintiff to present the experts' testimony even though the court did not make any findings as to the scientific validity of the testimony or the methodology used by the experts, did not assess the relevance of tests conducted by one of the experts despite “marked differences” between the test conditions and the "actual conditions of the mill" where the plaintiff worked, and did not resolve a dispute as to the validity of the "every exposure" theory, but still admitted testimony about the theory "[i]n the interest of allowing each party to try its case to the jury."


After the defendants appealed and three judges of the Ninth Circuit agreed with the defendants, the en banc court unanimously held that that the "district court abused its discretion by admitting the expert testimony without first finding it to be relevant and reliable under" Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). The court reasoned: "Just as the district court cannot abdicate its role as gatekeeper, so too must it avoid delegating that role to the jury."


As for the remedy for the district court's error, a majority of the en banc court, after noting that the expert testimony was crucial to the plaintiff's case, held that the defendants were prejudiced and the error was not harmless, and remanded for a new trial. The dissenting judges would have instead remanded the case to the district court to make post-hoc findings regarding the admissibility of the expert testimony.


In federal courts and courts in states that have adopted Daubert, this case demonstrates that trial-court judges are expected to explore the scientific validity of methods employed by experts and to make findings concerning the relevance and reliability of expert testimony before allowing it to be presented to a jury. For practicing lawyers, it serves as an important reminder that post-Daubert, expert testimony must be thoroughly tested and analyzed before it can be admitted at trial, and the consequences of a failure to adequately assess an expert's methods can be fatal to a party's claims.


David Dobin, Cohen and Wolf, P.C., Bridgeport, CT


 

January 15, 2014

NM Court: Terminally Ill Patients Have Right to Assisted Death


On January 13, 2014, New Mexico Second Judicial District Judge Nan G. Nash ruled in Morris v. Brandenberg, Case No. D-202-CV 2012-02909 (N.M. Dist. Jan. 13, 2014) that terminally ill, mentally competent patients have the right to physician-assisted death. According to Judge Nash, “the liberty, safety and happiness interest of a competent, terminally ill patient to choose aid in dying is a fundamental right under our New Mexico Constitution.” Findings of Fact and Conclusions of Law at p. 13, ¶ II.


The plaintiffs in Morris—“two New Mexico physicians who regularly care for terminally-ill patients” and “a New Mexico citizen with advanced cancer”—asked the court for declaratory relief, namely “a declaration that a physician who provides aid in dying to a mentally-competent, terminally-ill patient who has requested such aid is not criminally liable.” First Amended Complaint at ¶ 2, Prayer for Relief. They also sought an injunction precluding criminal prosecutions of licensed physicians who provide aid in dying to mentally competent, terminally ill individuals.


The statute that gave rise to the Morris complaint, New Mexico’s assisted-suicide statute, reads:


Assisting suicide consists of deliberately aiding another in the taking of his own life.


Whoever commits assisting suicide is guilty of a fourth degree felony.


N.M. Stat. § 30-2-4. Persons convicted of fourth-degree felonies in New Mexico face the possible maximum sentence of 18 months in prison and a $5,000 fine. N.M. Stat. § 31-18-15.


Taking a textualist approach, the plaintiffs argued that New Mexico’s assisted-suicide statute does not offer grounds to prosecute physicians who provide aid in dying to mentally competent, terminally ill individuals because the “statute does not reference a physician providing aid in dying to a terminally-ill and mentally-competent person.” First Amended Complaint at ¶ 12. They also contended that the statute does not apply to terminally ill patients seeking physician aid in dying because for such individuals, the underlying terminal illness is the true cause of death. The plaintiffs further argued that the statute was inapposite because mentally competent, terminally ill patients seeking aid in dying are not per se seeking to commit “suicide.”


In addition or in the alternative, the Morris plaintiffs made a policy argument that because “New Mexico public policy is found in the [state] Constitution” and New Mexico’s constitution explicitly guarantees the “natural, inherent and inalienable rights” of “life and liberty . . . and of seeking and obtaining safety and happiness,” all New Mexican citizens should have the right to autonomy in medical decision making.


Ultimately, Judge Nash was more swayed by the plaintiffs’ policy arguments than their textual ones. Per Judge Nash, New Mexico’s assisted-suicide statute “is not ambiguous” and the “plain language of NMSA 1978, § 30-2-4 prohibits aid in dying.” Findings of Fact and Conclusions of Law at p. 9, ¶¶ O, Q. Notwithstanding these findings, Judge Nash opined that rights guaranteed by the state constitution are “fundamental rights”:


This Court cannot envision a right more fundamental, more private or more integral to the liberty, safety and happiness of a New Mexican than the right of a competent, terminally ill patient to choose aid in dying. If decisions made in the shadow of one’s imminent death regarding how they and their loved ones will face that death are not fundamental and at the core of these constitutional guarantees, than what decisions are?


Id. at ¶ HH. She reasoned that because “[s]ubstantive due process protects fundamental rights,” New Mexico’s assisted-suicide statute is subject to a strict scrutiny test, and that for the limited purposes of this case, the statute fails strict scrutiny because there is no “compelling state interest” in “criminalizing physician aid in dying.”


The long-term consequences of Judge Nash’s decision remain to be seen, as New Mexico’s Attorney General’s Office is reportedly “analyzing the decision to see if it would file an appeal.” If no appeal is filed, or if the decision is appealed and Judge Nash’s decision is affirmed, New Mexico will become the fifth state to permit physicians to aid terminally ill patients in dying, joining Montana, Oregon, Vermont, and Washington.


Adam Reich, Paul Hastings LLP, Los Angeles, CA


 

December 31, 2013

Court Holds NSA Phone Metadata Collection Likely Violates 4th Amendment


In Klayman v. Obama, No. 13–0881, 2013 WL 6598728 (D.D.C. Dec. 16, 2013), Judge Richard Leon of the U.S. District Court for the District of Columbia recently granted a preliminary injunction in favor of two plaintiffs who filed suit in response to revelations related to the collection and analysis by the National Security Agency (NSA) of telephone “metadata” from millions of Verizon customers, after holding that the program likely violates the Fourth Amendment.


Telephone “metadata” consists of the telephone numbers used to make and receive calls and the date, time, and length of the calls. In what the court describes as the “Bulk Telephony Metadata Program,” the NSA (pursuant to an order of the Foreign Intelligence Surveillance Court) collects and retains metadata from millions of Verizon customers’ telephone calls. Using an “identifier” (for example, a telephone number associated with a terrorist organization), intelligence analysts then query the database of metadata with the goal of identifying other telephone numbers associated with terrorist organizations. Slip Op. at 15–18.


The plaintiffs, two Verizon customers, sought a preliminary injunction against their inclusion in the Bulk Telephony Metadata Program, claiming a violation of their Fourth Amendment right to freedom from unreasonable searches. The court granted the preliminary injunction, which it stayed pending appeal.


First, the court held that the collection of telephone metadata constitutes a “search”—rejecting the application of Smith v. Maryland, 442 U.S. 735 (1979), which held that the warrantless tracking of numbers dialed from a telephone did not constitute a “search” because the target of the surveillance had no reasonable expectation of privacy in data (the dialed numbers) transmitted to the telephone company. Slip Op. at 44. In rejecting the applicability of Smith, the court found that the Bulk Telephony Metadata Program is for more intrusive: “In Smith, the Court considered a one-time, targeted request for data regarding an individual suspect in a criminal investigation, see Smith, 442 U.S. at 737, which in no way resembles the daily, all-encompassing, indiscriminate dump of phone metadata that the NSA now receives as part of its Bulk Telephony Metadata Program.” Slip Op. at 48. The court further noted that the Bulk Telephony Metadata Program involves the collection of “five years' worth of data,” the relationship between the NSA and Verizon effectively constitutes a joint intelligence-gathering operation, the technology used today is vastly superior to that used in 1979, and “the ubiquity of phones has dramatically altered the quantity of information that is now available and, more importantly, what that information can tell the Government about people's lives.” Slip Op. at 47–53 (emphases in original).


After concluding that the collection and analysis of metadata constitutes a “search,” the court held that there is a significant likelihood that plaintiffs will succeed in showing the searches—conducted without a warrant—to be unreasonable. Specifically, the court rejected the government’s argument that the warrantless searches are justified by “special needs”—an exception that generally gives the government the authority to conduct a warrantless search where obtaining a warrant would be impracticable. “To my knowledge . . . no court has ever recognized a special need sufficient to justify continuous, daily searches of virtually every American citizen without any particularized suspicion.” Slip Op. at 58. In addition, the court rejected the argument that the Bulk Telephony Metadata Program was necessary to investigate terrorist threats more quickly, finding an “utter lack of evidence that a terrorist attack has ever been prevented because searching the NSA database was faster than other investigative tactics.” Slip Op. at 62.


Interestingly, the court’s decision in Klayman v. Obama is not the first to address the NSA’s collection of telephone metadata but is the first to find that it violates the Constitution. Inthe recent case of United States v. Moalin, Crim. No. 10–4246, 2013 WL 6079518, at *5–8 (S.D. Cal. Nov. 18, 2013), Judge Jeffrey Miller reached the opposite conclusion, following Smith v. Maryland, supra, and holding that the NSA’s collection of a defendant’s telephone metadata does not constitute a search because he “had no legitimate expectation of privacy in the telephone numbers dialed.” Id. at *7. Opposing opinions about the constitutionality of the NSA’s data collection programs are likely to make their way to the federal appeals courts and, ultimately, the Supreme Court. The decisions present courts with the opportunity to define the scope of Fourth Amendment protections during the twenty-first century.


Keywords: litigation, young lawyers, criminal law, Fifth Amendment, self-incrimination; death penalty


David Dobin, Cohen and Wolf, P.C., Bridgeport, CT


 

December 31, 2013

Fifth Amendment Does Not Bar Admission of Psych Evaluation


In Kansas v. Cheever, the U.S. Supreme Court recently held that the prosecution could use a psychiatric evaluation to rebut a voluntary-intoxication defense despite the defendant having not agreed to the evaluation. Slip op. at 4–10. State authorities originally charged the defendant with capital murder. Slip op. at 2. After the Kansas Supreme Court ruled the state’s death penalty statute unconstitutional, state prosecutors dismissed their charges to allow federal authorities to prosecute the defendant. The defendant argued a voluntary-intoxication defense to negate specific intent during the course of his federal criminal proceedings. The district court ordered the defendant to submit to a psychiatric examination; however, the federal charges were subsequently dismissed without prejudice.


After the U.S. Supreme Court ruled the Kansas death-penalty scheme constitutional in Kansas v. Marsh, 548 U.S. 163 (2006), state prosecutors again charged the defendant with capital murder. Slip op. at 2–3. During the course of his state capital trial, state prosecutors offered evidence from the defendant’s prior psychiatric defense to rebut the defendant’s voluntary-intoxication defense. The state court allowed the evidence over defense counsel’s objection based on the Fifth Amendment that that defendant had not consented to the examination and thus it violated his right against self-incrimination. The Kansas Supreme Court vacated the conviction and sentence based on Estelle v. Smith, 451 U.S. 454 (1981), which held that a court-ordered psychiatric evaluation violated the Fifth Amendment where the defendant did not initiate the examination or put his mental capacity in issue. State v. Keever, 284 P.3d 1007, 1019–20 (Kan. 2012). In so ruling, the state supreme court distinguished Buchanan v. Kentucky, 483 U.S. 402 (1987), which held that the prosecution may offer such evidence to rebut a mental-status defense based on its interpretation of Kansas law. Keever, 284 P.3d at 1023.


In vacating and remanding the matter, the U.S. Supreme Court reaffirmed the holding in Buchanan. After reviewing Buchanan, the high court explained that the admission of such rebuttal testimony is in harmony with the principle that, once a defendant decides to testify at trial, he cannot refuse to answer related questions. The Court also rejected the Kansas Supreme Court’s attempt to distinguish Buchanan because voluntary intoxication is not a mental disease or defect under state law. The Court specifically held that where such a defense goes to the defendant’s mens rea, the prosecution may offer such rebuttal evidence. The Court declined to evaluate, in the first instance, whether the prosecutor’s use of the rebuttal testimony in Keever’s trial exceeded the limited rebuttal exception espoused in Buchanan.


Keywords: litigation, young lawyers, criminal law, Fifth Amendment, self-incrimination; death penalty


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

December 10, 2013

Court Holds Google's Scanning of Copyrighted Books Is Fair Use


In Author’s Guild, Inc. v. Google, Inc., the U.S. District Court for the Southern District of New York recently held as a matter of law that Google’s copying and digital reproduction of millions of copyrighted books without authorization is protected by the “fair use” doctrine.


As part of its Google Books program, Google has scanned millions of books in copyright from the collections of the New York Public Library, the Library of Congress, and a number of university libraries. Authors Guild, Inc. v. Google Inc., 05 CIV. 8136 DC, 2013 WL 6017130, at *1 (S.D.N.Y. Nov. 14, 2013). Google allows participating libraries to download digital copies of the books from their collections and makes snippets of the books available to the public via Google’s search engine.


Both sides moved for summary judgment. One of the Author’s Guild’s principal arguments in opposition to Google’s motion for summary judgment focused on Google’s use of copyrighted works for commercial purposes: “Whatever mantra Google may chant about the public value of making all of the world’s works available to everyone, Google is heart and soul an enormous commercial enterprise, and its various uses of the copyrighted books in its Library Project are designed to gain a competitive advantage over other search engines and to generate even greater advertising revenues.”


Ultimately, however, the court rejected the Author’s Guild’s arguments and entered summary judgment in favor of Google on the grounds that its use of copyrighted works is protected as fair use:


In my view, Google Books provides significant public benefits. It advances the progress of the arts and sciences, while maintaining respectful consideration for the rights of authors and other creative individuals, and without adversely impacting the rights of copyright holders. It has become an invaluable research tool that permits students, teachers, librarians, and others to more efficiently identify and locate books. It has given scholars the ability, for the first time, to conduct full-text searches of tens of millions of books. It preserves books, in particular out-of-print and old books that have been forgotten in the bowels of libraries, and it gives them new life. It facilitates access to books for print-disabled and remote or underserved populations. It generates new audiences and creates new sources of income for authors and publishers. Indeed, all society benefits.


Authors Guild, Inc., 2013 WL 6017130, at *10.


Supporters of Google hailed the decision as a major victory for consumers, researchers, and libraries. However, because the Author’s Guild has indicated it will appeal the decision, the Second Circuit will have an opportunity for a de novo review of whether Google’s actions constitute fair use.


David Dobin, Cohen and Wolf, P.C., Bridgeport, CT


 

December 10, 2013

Trial and Courtroom Tips from Behind the Bench


On September 18, 2013, two federal judges—the honorable Charles N. Clevert Jr. of the Eastern District of Wisconsin and the honorable Arthur J. Boylan of the District of Minnesota—participated in a panel presented by the ABA Section of Litigation Young Advocates Committee on trial and courtroom tips for young lawyers. The panel discussed the following overarching keys to effective courtroom advocacy.


Be Prepared
Young lawyers can never be over-prepared in advance of a court proceeding. The panel advised, however, that preparation does not mean being dependent on scripted materials during a proceeding. In fact, the worst thing a lawyer can do is to rely on the arguments or questions written in advance. That will make you appear unnatural and your presentation will lack flow.


The panel observed that lawyers with detailed notes in the courtroom tend to fall back on them too much and become preoccupied with presenting their preconceived arguments or questions rather than react appropriately to developments during a proceeding. Lawyers focused on notes tend not to listen carefully to the opposing counsel, which undermines their ability to counter-argue points made by their adversaries. Similarly, lawyers do not comprehend questions posed by the court and frustrate judges with unresponsive answers that merely repeat prepared points. The panel acknowledged that it is difficult to set aside detailed notes, but that young lawyers need to force themselves to do so in their preparation to know the facts and the law well enough to go off script.


Be Candid
Young lawyers should be candid and forthright with the court at all times. Do not exaggerate or ignore facts and legal authorities unfavorable to your position. The best practice is to acknowledge unhelpful facts and precedent, and distinguish them rather than ignore them. In particular, lawyers that ignore precedent do so at the risk of their reputation because opposing counsel and the judge will likely be aware of pertinent case law. You will be an ineffective advocate for your client if due to your lack of candor you lose the respect of judges and other members of your legal community.


Be Yourself
Young lawyers should not take on a persona different from their own in the courtroom. Lawyers should find and be comfortable with their own style of advocacy instead of trying to be someone that they are not to compensate for their lack of experience or anxiety in advance of a proceeding. Being yourself in the courtroom will also help you focus on keeping an appropriate demeanor, such as not showing flashes of disappointment and anger. Externalized reactions to a testimony or argument will only underscore counsel’s emotions rather than keep the focus on the factual and legal bases of the proceeding.


In closing, the panel noted a dilemma: Many of the tips discussed require practice but young lawyers increasingly face limited opportunities for courtroom experience. An important source of experience for young lawyers is volunteering with legal-services programs, including appearing as Criminal Justice Act counsel in federal courts.


Keywords: young lawyers, litigation, trial, argument, advocacy


Jona Kim, Robinson & Cole LLP, Stamford, CT


 

November 26, 2013

Rock Band Takes Trademark Case to Federal Circuit


The Slants, an Asian-American dance-rock band, are taking their fight to trademark their name to the Federal Circuit after the U.S. Patent and Trademark Office (USPTO) denied their application for the second time, on the ground that the moniker is “disparaging” to people of Asian descent.


The band, composed of six members from Portland Oregon, all of Asian origin, maintains that the name is a part of the group’s identity. Styling themselves as one of the first Asian-American rock bands, the Slants boast a large Asian-American fan base. In the past, the Slants have argued both that their name refers to musical chords and that it honors their Asian-American heritage and culture. Far from denigrating Asian-Americans, the band has claimed that the name, as used in connection with their entertainment services, is a “positive term of self-reference that promotes cultural pride and recognition.” They contend that the USPTO did not adequately consider contemporary attitudes in choosing to refuse their application.


The USPTO, on the other hand, has been singing a different tune. It has consistently rejected the Slants’ trademark efforts over the last four years. Under section 2(a) of the Lanham Act, a trademark is not eligible for registration if it “consists of or comprises . . . matter which may disparage . . . persons, living or dead.” The USPTO employs a two-prong test to determine whether a mark is disparaging. It asks 1) what the likely meaning of the mark is, taking into account dictionary definitions, the nature of the related goods or services, and the relevant marketplace, and 2) if that meaning refers to an identifiable group, whether the meaning is disparaging to a ‘substantial composite’ of the referenced group. In rejecting the Slants’ arguments, the USPTO stated that “the intent of the applicant to disparage the referenced group is not necessary to find that the mark does, in fact, disparage that group.”


The Slants’ dilemma has a struck a chord in the national consciousness, presenting as it does a dissonant blend of cultural and racial identity, the meaning of discrimination, and the limitations on federal rights. Before the Federal Circuit, the Slants plan to argue that the USPTO’s decision violates their First Amendment rights because the USPTO improperly considered the race of the band members in refusing the name trademark protection. In an interview with Seattle radio station KUOW 94.9, Simon Tam, the Slants’ founder, contended that the USPTO reasoned that “because of our ethnicity, people automatically think of the racial slur as opposed to any other definition of the term . . .” Tam contends that, “if I was white, this wouldn’t be an issue at all.”


Historically, courts have ruled that trademark registration decisions do not implicate First Amendment rights because no conduct is prescribed nor form of expression suppressed. When the USPTO declines to allow a mark to register, it does not deny the applicant the right to use the mark, but instead withholds from the applicant federal protection for the mark. By challenging the USPTO’s decision in the Federal Circuit, the Slants will sound out the limits of First Amendment protection in trademark-disparagement cases.


Katherine Bastian, Nixon Peabody LLP, Washington, D.C.


 

November 25, 2013

If You Like Your Plan, You Can Keep It


Under heavy pressure to adhere to the previous promise that consumers could keep their current health-insurance plans, President Barack Obama announced that his administration will allow insurance companies to keep individual customers on their existing plans for an additional year, even if the plans do not meet the law’s standards.


It was estimated that seven million people would be affected by the cancellation of their health-care plans when the first phase of the Affordable Care Act was to roll out on October 1, 2013. Nonetheless, if the insurance companies do not want to take back the insureds that were kicked off, the insurance companies do not have to do so. Then, state legislation can still prevent these subpar insurance plans from being reinstated. 


The young and healthy consumers are the most likely candidate to renew the canceled plans as they generally had inexpensive premiums and minimal coverage. For their part, insurers were counting on those healthy people to enroll in the more comprehensive plans to subsidize the influx of the more ill customers who are likely to buy coverage in the health-insurance marketplace created by the Affordable Care Act.


In several instances, reinstating this part of the policy will require insurers to rebuild policies and renegotiate terms for a subpar product with hospitals and doctors that the insurers do not want to be a part of. Robert Zirkelbach, spokesperson for America's Health Insurance Plans states, “they're changing the rules in the middle of the game.” Although the Obama administration has relented for one year, it argues that there are better insurance products at the federal marketplace for less that people simply are not aware of, but apologized for the rough rollout of the Affordable Care Act.


Keywords: litigation, young lawyers, Obamacare, Affordable Care Act, health insurance


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

November 21, 2013

Illinois Passes Freedom to Marry Act


On November 5, 2013, Illinois became the fifteenth state in the country to legalize same-sex marriage, with a 61–54 vote in the house. The “freedom to marry” law, officially known as the Illinois Religious Freedom and Marriage Fairness Act, was first passed by the state senate in February 2013. The bill was signed into law by Governor Pat Quinn on November 20, 2013, and is scheduled to go into effect on June 1, 2014. At that point, same-sex couples may apply for marriage licenses in Illinois.


The Marriage Fairness Act has opened the door for same-sex couples across Illinois to enjoy rights that different-sex spouses have always enjoyed, including: all of the benefits and protections under federal programs; legal presumption that both parents are the parents of any child born during a marriage; the right to make medical decisions or authorize treatment if a spouse is incapacitated; the right to inherit in the absence of a will; veterans’ benefits under state law; and the ability to file joint tax returns. Additionally, couples married outside of Illinois prior to passage of the Marriage Fairness Act will now be eligible for legal recognition of their marriage in Illinois.


Illinois-based same-sex couples who previously entered into civil unions under the Illinois Religious Freedom Protection and Civil Union Act will not automatically have their civil unions converted into marriages. Couples who wish to convert a civil union to a marriage will need to obtain a marriage certificate and take additional steps.


Further details regarding the rights and obligations of same-sex married couples under the Marriage Fairness Act is available at the following sites: www.lambalegal.org and www.eqil.org.


Keywords: litigation, same-sex marriage, freedom to marry, equal rights, young lawyers


Gabriela Sapia, Law Offices of Patrick Markey, Chicago, IL


 

November 15, 2013

6th Circuit: Employee Bound by Unsigned Arbitration Agreement


In Tillman v. Macy’s Inc., No. 2:11-cv-10994, 2013 WL 58227729 (6th Cir. Oct. 31, 2013) the plaintiff, Cecilia Tillman, filed suit pro se, alleging that the defendant, Macy’s, discriminated against her on the basis of her race in violation of Title VII when it terminated her employment in 2009. In response to Tillman’s complaint, Macy’s filed a motion to compel arbitration and stay the civil action pending arbitration. In its motion, Macy’s alleged that the pending action was impermissible because the parties had entered into an arbitration agreement to resolve such disputes.


The U.S. District Court for the Eastern District of Michigan denied the motion by Macy’s to compel arbitration. The court concluded that Tillman did not assent to arbitration or knowingly waive her right to a trial by jury when she failed to opt out of the arbitration agreement because she did not sign an arbitration agreement and was not required by her employer to read the arbitration documents that it provided her. On appeal, applying Michigan contract law, the court of appeals held that Macy’s made an offer to Tillman to arbitrate disputes arising from employment through its implementation of an arbitration program that consisted of the following: a welcome notice, detailed brochures describing the dispute-resolution process, and a mandatory video screening describing the program. The court highlighted the importance of Tillman’s receipt of detailed information regarding the program, including opt-out options and her participation in the video screening, which clearly communicated that arbitration replaced her right to a jury trial. Even though she did not sign an arbitration agreement, Tillman accepted the arbitration agreement by continuing her employment and not returning the opt-out forms provided by Macy’s.


The Sixth Circuit in Tillman recognized that “opt-out schemes for accepting arbitration contain a risk greater than in opt-in systems that some employees do not know what they have agreed to.” As the Tillman case makes clear, however, such opt-out systems may not be inherently insufficient and can create binding agreements to arbitrate.


Keywords: litigation, young lawyers, arbitration, employment discrimination, opt-out


Marcia M. Escobedo is an associate with Cohen & Wolf, Bridgeport, Connecticut


 

November 11, 2013

Barnes & Noble in Hot Water over "Inherently Dangerous" Hot Tea


Spill a cup of coffee, make a million dollars. . . . That’s us, that’s right. Gotta love this American ride.

- Toby Keith, American Ride (Show Dog Nashville 2009)


Considering the copious references made in popular culture to the McDonald’s hot coffee case, Liebeck v. McDonald's Restaurants, P.T.S., Inc., CV-93-02419, 1995 WL 360309 (N.M. Dist. Aug. 18, 1994), vacated sub nom. Liebeck v. Restaurants, CV-93-02419, 1994 WL 16777704 (N.M. Dist. Nov. 28, 1994), it is not surprising that another company now faces similar financial exposure for serving a hot beverage. What is surprising, however, is that that company is a bookseller, Barnes & Noble Booksellers, Inc., and that a New York trial court concurrently denied summary judgment to the bookseller and granted summary judgment to Barnes & Noble’s hot beverage supplier and codefendant, Starbucks Coffee Co. and Starbucks Corp.


The case stems from an incident in a Barnes & Noble Café in Brooklyn, New York, in 2008. Hassan ex rel. Hassan v. Barnes & Noble Booksellers, Inc., 41 Misc. 3d 1219(A) at *1 (N.Y. Sup. Court, Kings Cnty., Oct. 24, 2013). The Hassan family purchased a hot tea and went to sit at a table in the café to enjoy the beverage. The table, however, was uneven and unsteady, and the hot tea spilled and burned the Hassan infant. On July 22, 2009, the Hassans filed suit, alleging that Barnes & Noble and Starbucks negligently served unreasonably hot tea without a properly secured lid and were further negligent in having a wobbly table at the café, which purportedly caused the hot tea to spill, burning Hassan’s infant. Both defendants moved for summary judgment in 2013.


On October 24, 2013, Judge Francois A. Rivera, Jr. of the Kings County Supreme Court granted Starbucks’ motion for summary judgment but denied Barnes & Noble’s motions for summary judgment. According to Judge Rivera, even though Starbucks products were sold at the Barnes and Noble Café and Starbucks was responsible for training employees how to serve Starbucks products, Starbucks could not be liable to the plaintiffs because the tea that caused the harm was not a Starbucks product, the premises where the injury occurred were not owned, occupied, or controlled by Starbucks, Starbucks did not supervise or train the café employees who served the tea, and Starbucks had no control over the purchase and maintenance of the allegedly defective table.


With respect to Barnes & Noble, Judge Rivera denied summary judgment not because of the hot-beverage issue, but because Barnes & Noble failed to disprove constructive notice of a defective condition on its premises. As the business operator and lessor of the subject premises, Barnes & Noble “had [both] an affirmative duty to maintain the subject premises in a reasonably safe condition and the burden of avoiding the risk of foreseeable injury to the plaintiffs.” Barnes & Noble’s failure to offer evidence regarding “when the table in question was last cleaned or inspected relative to the time of the plaintiffs[’] accident” was fatal to their motion for summary judgment. Judge Rivera noted in his opinion that “hot tea is an inherently dangerous product,” but other than discussing Barnes & Noble’s efforts to establish that on the date of the accident the tea was not unreasonably hot or dangerous, he did not indicate any inclination to accede to this argument.


Backed into a corner without a codefendant, it will be interesting to see whether Barnes & Noble chooses to fight this lawsuit at trial, risking an astronomical McDonald’s hot beverage-type judgment, or opts to settle, opening the door to similar lawsuits from consumers.


Keywords: litigation, young lawyers, municipal code, taxi, Uber, Hailo, dial-a-car, black car


Adam M. Reich and Deborah Kang, Paul Hastings LLP, Los Angeles, CA


 

October 31, 2013

Taxis' "E-Hail" Pilot Program Legally Broadens Its Market


Livery car companies were twice unsuccessful in preventing medallion cabs from launching a 12-month “e-hail” taxi program, claiming the program violated applicable provisions of the New York City Administrative Code. Livery cars, or black cars, differ from yellow cabs because livery cars respond to radio calls using a zoned pricing system, while cabs pick up street hails and use a meter system for fees. Now, this e-hail pilot program permits passengers to use smartphone applications, such as Uber and Hailo, to reserve a pickup from medallion taxis, instead of hailing them on the streets of New York City, thereby directly competing with the potential clientele of livery-car companies that cannot pick up street hails.


“This decision paves the way for taxi passengers to have the ultimate say in how they want to travel . . . New York City has always been a taxi-hailing town, and we’re pleased to be able to offer passengers more than one way to accomplish that,” states Commissioner David Yassky of the NYC Taxi & Limousine Commission. However, black-livery-car companies argue that the pilot program is an unfair intrusion on their drivers’ right to earn a living and a violation of a myriad of New York laws and regulations, which should require input from the city counsel.


Contrary to the arguments on behalf of livery cars, the e-hail program complies with the plain language of New York City Charter because it was adopted for a limited purpose and time. While the full effects of this pilot program has limited data to prove the loss of business in taxi hotspots such as Manhattan, limited data suggest that people are using the e-hail system in locations that are outside of Manhattan, cutting into the traditional territory previously reserved for livery business.


Keywords: litigation, young lawyers, municipal code, taxi, Uber, Hailo, dial-a-car, black car


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

October 28, 2013

Judge Strikes Down Portions of TX Abortion Law as Unconstitutional


As previously reported in these pages, several controversial abortion laws were enacted this past summer, including a Texas law that created national news. Today, a federal district court judge struck down parts of that new law as unconstitutional. In Planned Parenthood of Greater Texas Surgical Health Services v. Gregory Abbott, the federal court struck two key provisions: (1) the requirement that an abortion doctor have admitting privileges at a hospital within 30 miles of the facility where he or she performs abortion, and (2) provisions regarding the availability of Mifeprex or RU-486, commonly known as the morning-after pill.


After reviewing the provisions of the law and testimony received, the district court concluded that “[t]he State fails to show a valid purpose for requiring that abortion providers have hospital privileges within 30 miles of the clinic where they practice.” As for the morning-after pill, after reviewing the medical history and FDA regulations surrounding the medication, the court concluded that the law did “not fail constitutional review because of the lack of a specific health-of-the-mother exception,” but the provision could “not be enforced against any physician who determines, in appropriate medical judgment, to perform a medication-abortion using the off-label protocol for the preservation of the life or health of the mother.”


A visit to the Fifth Circuit, and likely at least a petition to the U.S. Supreme Court, seems inevitable in light of the contentious nature of the legal issues involved.


Keywords: litigation, young lawyers, abortion, Texas, constitutional, morning-after pill


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

October 23, 2013

NYC Law Does Not Apply to Sexual Harassment of Unpaid Interns


According to a recent decision issued by the Southern District of New York, the New York City Human Rights Law (NYCHRL), which governs sexual-harassment claims in the workplace, does not provide protection for unpaid interns.


Lihuan Wang was an unpaid intern at Phoenix Satellite Television US, Inc., which is the American subsidiary of a Hong Kong based media conglomerate. Wang v. Phoenix Satellite Television US, Inc., ___ F. Supp. 2d ___, No. 13 Civ. 218, 2013 WL 5502803, at *1 (S.D.N.Y. Oct. 3, 2013). At the time of her internship she was 22 years old and in the process of obtaining a master’s degree. Zhengzhu Liu was the bureau chief of Phoenix’s Washington, D.C., bureau and supervised both the D.C. and New York City bureaus. In his capacity as bureau chief, Mr. Liu “exercised authority over both the hiring and termination of Phoenix employees and interns, including conducting interviews and making hiring decisions.” Moreover, because neither the New York City nor D.C. bureau had a human-resources department, “the hiring of employees and interns in those bureaus was within Mr. Liu’s sole discretion.”


After Ms. Wang had worked as an intern for approximately two weeks, Mr. Liu took Ms. Wang and a few other coworkers to lunch. After lunch, Mr. Liu allegedly asked Ms. Wang to stay so they could discuss her job performance. Mr. Liu then suggested that he and Ms. Wang go to his hotel because he needed to drop off his belongings. While at the hotel Ms. Wang claimed that Mr. Liu sexually harassed her, including making unwanted sexual advances and trying to kiss her “by force.” Ms. Wang asserts that after this incident, Mr. Liu was no longer interested in giving her a permanent position at Phoenix. Approximately sixth months after her internship ended, Ms. Wang contacted Mr. Liu about a permanent position, and Mr. Liu allegedly responded by asking Ms. Wang to go with him to Atlantic City for the weekend “to discuss job opportunities.” Ms. Wang refused to go and stopped seeking permanent employment at Phoenix.


Ms. Wang subsequently sued Phoenix, alleging, among other things, that under the NYCHRL, she was unlawfully subjected to a hostile work environment. Phoenix moved to dismiss the hostile-work-environment claim, arguing that as an unpaid intern, Ms. Wang “[was] not an employee within the ambit of the NYCHRL.” The court agreed with Phoenix, holding that “[t]he plain terms of § 8-107(1)(a) [of the NYCHRL] make clear that the provision’s coverage only extends to employees, for an ‘employer’ logically cannot discriminate against a person in the ‘conditions or privileges of employment’ if no employment relationship exists.” The court relied on interpretations of state and federal civil-rights statutes (Title VII and the NYSHRL) as well as the legislative history of the NYCHRL to conclude that “compensation is a threshold issue in determining the existence of an employment relationship,” and thus an unpaid intern does not qualify as an employee under the statute.Accordingly, Ms. Wang’s hostile-work environment claim under the NYCHRL was dismissed.


Adam Braveman, Paul Hastings LLP, New York, NY


 

October 15, 2013

Property Owners Can Challenge Permit Conditions Despite Denied Permit


The U.S. Supreme Court recently issued an important land-use decision, holding that even when a permit is denied and a permit condition requires payment, the condition must satisfy the test set forth in Nollan v. California Coastal Commission, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994). Under that test, there must be a “nexus” and “rough proportionality” between the permit condition and the effects of the proposed development to comply with the Takings Clause of the Fifth Amendment.


In Koontz v. St. Johns River Water Management District, 133 S. Ct. 2586 (2013), a local water-management district denied a permit after the landowner refused a condition requiring him to agree to reduce the size of his development (and increase the size of a conservation easement in favor of the district) or pay for improvements to other district-owned land. The landowner filed suit, claiming a violation of the Nollan/Dolan doctrine. The Florida Supreme Court ruled in favor of the district, holding that neither the denial of a permit nor a condition requiring the payment of money can form the basis of a claim under the Nollan/Dolan doctrine.


The Supreme Court reversed. The justices unanimously held that denial of a permit can give rise to a “taking” of property under the Fifth Amendment. However, on the question of whether a permit condition requiring the payment of money can violate the Nollan/Dolan doctrine, the Supreme Court was divided, 5–4. Writing for the majority, Justice Alito, joined by Chief Justice Roberts and Justices Scalia, Kennedy, and Thomas, concluded there must be a “nexus” and “rough proportionality” between land-use-permit conditions requiring the payment of money and the effects of a proposed development as required by Nollan/Dolan, if the payment condition burdens “ownership of a specific parcel of land” or there is “a direct link between the government’s demand and a specific parcel of real property.” Id. at 2599–2600. In dissent, Justice Kagan, joined by Justices Ginsberg, Breyer, and Sotomayor rejected this approach. The dissent reasoned that the protections of Nollan/Dolan only apply where a land-use condition would otherwise constitute a “taking” and “ordinary financial obligations” cannot constitute a “taking.” Id. at 2603–06 (Kagan, J., dissenting). The dissent also warned that the majority’s decision “threatens to subject a vast array of land-use regulations, applied daily in States and localities throughout the country, to heightened constitutional scrutiny” and “casts a cloud on every decision by every local government to require a person seeking a permit to pay or spend money.” Id. at 2604, 2608 (Kagan, J., dissenting).


While only time will tell whether the dissent’s dire predictions come to pass, land-use and municipal attorneys should read and understand this decision. In particular, attorneys advising developers and local land-use agencies or municipalities should be prepared to carefully scrutinize proposed conditions for permit approval to recognize those that run afoul of the rule established by this decision.


Keywords: litigation, young advocates, land use; taking, Fifth Amendment, municipality, Supreme Court


David Dobin, Cohen and Wolf, P.C., Bridgeport, CT


 

September 30, 2013

The New DUI: Disclosing Under the Influence


On September 20, 2013, the Securities and Exchange Commission (SEC) filed a complaint, alleging insider trading against an attorney and his investment advisor. According to the SEC’s complaint, the lawyer learned of an impending merger involving one of his clients several days before the merger became public knowledge. During a meal with his investment advisor, the SEC alleges that the lawyer “drank several glasses of wine and became intoxicated. He blurted out to [the financial advisor], ‘It would be nice to be King [the name of the client] for a day.” Trading on this information, the SEC alleges that that financial advisor realized almost $9,000 in profit for himself and approximately $320,000 in trades on behalf of his clients, including over $15,000 for the disclosing lawyer. The SEC filed suit against both defendants for violation of sections 10(b) and 14(e) of the Exchange Act and Rules 10b-5 and 14e-3 thereunder, seeking a permanent injunction, disgorgement, and penalties.


In light of the SEC's recent filings, lawyers should be wary of over-imbibing and disclosing confidential, non-public information.


Keywords: litigation, young lawyer, SEC, insider trading, Rule 10b-5, Rule 14e-3, Exchange Act


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

September 30, 2013

Supreme Court Continues to Refine Meaning of the Term "Supervisor"


The U.S. Supreme Court recently issued a decision meant to further clarify the meaning of the term “supervisor” for purposes of vicarious liability in Title VII actions. In Vance v. Ball State University, the high court explained that, while Congress did not use the term “supervisor” in Title VII, the Court’s prior decisions make clear that there is a bright line between coworkers and supervisors. Notably, the Court explained that prior decisions in Burlington Indus., Inc. v. Ellerth, 524 U.S. 742 (1998) and Faragher v. Boca Raton, 524 U.S. 775 (1998), make clear that the defining characteristic is the authority to take tangible employment actions.


By its opinion, the Court endeavored to adopt a definition of the term “supervisor” that courts could readily apply. In contrast to the definition used by the Equal Employment Opportunity Commission (EEOC), the Supreme Court sought to establish more precise and less vague definition of the term that could be understood and applied more readily by parties and the courts. Only time will tell whether the Supreme Court’s clarification is successfully applied by lower courts.


Keywords: litigation, young lawyer, Title VII, EEOC, supervisor, discrimination, employment


Justin Heather, The Quinlan Law Firm LLC, Chicago, IL


 

September 25, 2013

Federal ICWA No Defense for Lawful State Adoption


In June 2013, in Adoptive Couple v. Baby June, the U.S. Supreme Court found in a 5–4 decision that a non-custodial parent cannot invoke the Indian Child and Welfare Act (ICWA) to block an adoption voluntarily and lawfully initiated by a non-Indian parent when he or she did not have custody of the child. The Court held that the ICWA was designed to stop the practice of unwarranted removal of Indian children from Indian families “due to the cultural insensitivity and bias of social workers and state courts.” The child in the case had never been in the legal or physical possession of the father before or during the adoption proceedings, thus the ICWA did not apply as a defense.


When the biological mother was pregnant, her relationship with the biological father deteriorated. She asked him via text message if he wanted to provide financial support or have his rights terminated. He responded that he wanted his rights terminated. The mother then put the unborn child up for adoption and selected a couple who resided in South Carolina. The adopting couple provided financial and emotional support for the mother and was present for the birth of the child. Adoption proceedings were initiated immediately after the child was born. It was undisputed that had the biological father not been 3/256 Cherokee, the biological father would have had no right to object to her adoption under South Carolina or Oklahoma law. However, section 1912(f) of the ICWA states “no termination of parental rights may be ordered in such proceedings in the absence of a determination, supported by evidence beyond a reasonable doubt, . . . that the continued custody of the child by the parent or Indian custodians is likely to result in serious emotional or physical damage to the child.” Because father never had custody of the child and had signed a form relinquishing his rights to the child, he could not invoke the test in section 1912(f).


Justice Sonia Sotomayor wrote a dissent arguing that the majority’s opinion distorted the statute and led to a result that is contrary to both Congress’s intent and potentially devastating to the baby girl. She believed the majority’s interpretation of the ICWA will adversely affect all non-custodial Indian parents, even ones that are actively involved in their child’s life. Justice Scalia wrote a dissent arguing that the majority’s definition of “continued custody” should have also included future custody. He further wrote that the decision “needlessly demeans the right of parenthood” as it has been a constant practice of common law to respect the entitlement of those who bring a child into this world to raise that child.


Patrick B. Markey, Law Offices of Patrick Markey, Chicago, IL


 

September 9, 2013

Court Addresses Liability of Remote Texter in Vehicle Accident


In a case of first impression, a New Jersey Appellate Court held that the sender of a text message can be held liable in limited circumstances for causing a motor-vehicle accident. The case, Kubert v. Best, No. A-1128-12T4 (N.J. App. Ct. Aug. 27, 2013), involved a married couple severely injured when the motorcycle they were riding was struck by a pick-up truck driven by an eighteen-year-old, Kyle Best, who was texting while driving and crossed the center line of the road. After settling with Best, the plaintiffs filed suit against Best's 17-year-old friend, Shannon Colonna, who was texting Best throughout the day and sent a text message to him immediately before the accident.


The trial court granted Colanna's motion for summary judgment, ruling that a remote texter does not owe a legal duty to avoid sending text messages to one who is driving. The appellate court disagreed that such a duty never exists. Instead, the court held that a legal duty arises "if the texter knows, or has a special reason to know, the recipient will view the text while driving." In such cases, the texter is liable for injuries to third-parties caused by the distracted driver who is texting while driving.


In Kubert, the evidence suggested that Colonna sent only one text while Best was driving, the contents of the text were unknown, and no testimony established that she was aware Best would read her text as he was driving or would respond immediately. According to the appellate court, the plaintiffs failed to present sufficient evidence to prove that Colonna knew Best would read the text message while driving and would be distracted from attending to the road and the operation of the vehicle, and therefore affirmed the dismissal of the action.


Matthew Passen, Passen Law Group, Chicago, IL


 

August 30, 2013

Rare Fortuneteller Case Goes to Trial in Federal Court


On August 28, 2013, the trial of Rose Marks, a clairvoyant, who is accused of defrauding clients of over $25 million dollars over a period of decades, will begin in South Florida federal court. Her attorney has said Marks, 62, has psychic powers that have run in her family for over 1,500 years. Marks was mostly a life coach, but her services included tarot card readings, palm readings, astrology readings, and numerology readings.


According to prosecutors, Marks and members of her clan used their positions as fortunetellers to bilk emotionally fragile clients of money and other valuables. Marks allegedly scammed $17 million from Jude Deveraux, who is a best-selling romance novelist and the government’s star witness in the case. The indictment states that “the conspirators would offer services to walk-in customers, some of whom would be suffering from mental or emotional disorders, who had recently gone through personal traumatic events and/or were emotionally vulnerable, fragile, and/or gullible.” The client “would need to make ‘sacrifices, usually consisting of large amounts of money (but also at times jewelry, gold coins and other property) because ‘money was the root of all evil.’”


Fortune-teller scams are common and have gone on for years. However, police and prosecutors rarely know how to investigate these kinds of crimes. Victims are often too embarrassed to seek help or the police find the matter to be civil rather than criminal. Fortunetelling also has the perception as a small-time fringe activity and not a big business. The Marks case is proving that perception wrong.


Generally fortunetelling is a local issue, but with the mail-and-wire-fraud statues, the federal government can make almost anything a crime. It’s possible the federal government indicted Marks because of the millions she is accused of defrauding clients.


There have also been allegations of prosecutorial misconduct in the case. The indictment included charges involving victims the government had never spoken to. At least one alleged victim filed an affidavit saying he had not been victimized despite paying Marks $500,000. Many victims refuse to believe they have been victimized, making the Marks case in federal court a rare occurrence.


Patrick B. Markey, Law Offices of Patrick Markey, Chicago, IL


 

August 30, 2013

New Abortion Laws Stir Old Debate


Over 40 years after the landmark decision of Roe v. Wade, 410 U.S. 113 (1973), the contours of abortion rights are still very much in play. Several recently enacted state legislative initiatives affect the availability and options for pregnant women seeking to have abortions. Although none of these actions undermine the primary purpose of Roe v. Wade in the terms of a woman’s right to have an abortion, they do impact the meaning of that right within the various states.


For example, in July, Wisconsin governor Scott Walker signed into law a bill that requires abortion doctors to have admitting privileges to perform abortions. This requirement, used in other states (see below), is decried as greatly limiting the abortion practice because abortion doctors often find it difficult to obtain such privileges. Within days of enactment, the federal district court in Madison, Wisconsin, issued a temporary restraining order preventing enforcement of a recently enacted Wisconsin law governing abortion facilities. On August 2, U.S. District Judge William Conley, for the fourth time, temporarily blocked enforcement of the law (now, until at least November) stating that “[o]n this record, the admitting privileges requirement remains a solution in search of a problem.”


This summer, the state of Texas also created national news with the political turmoil surrounding its legislative initiatives surrounding abortion rights. In July, Texas governor Rick Perry also signed into law numerous restrictions on abortions. The law bans abortions after 20 weeks of pregnancy, requires abortion clinics to meet the same standards as hospital-style surgical centers, and mandates that a doctor have admitting privileges at a hospital within 30 miles of the facility where he or she performs abortion. There is little doubt that opponents will also challenge these new laws in court.


Wisconsin and Texas are but two of the states that most recently passed or enacted legislation directed at defining the availability and process for obtaining an abortion. Additional measures were also recently introduced in Ohio and North Carolina, among others. In short, 40 years after Roe v. Wade, the legal wrangling over abortions rights continues and the U.S. Supreme Court will likely very soon be called upon to resolve disputes surrounding these most recent laws.


Justin Heather, Korey Cotter Heather & Richardson, LLC, Chicago, IL


 

August 29, 2013

9th Circuit Ruling Relaxes Burden for Removal under CAFA


On August 27, 2013, the U.S. Court of Appeals for the Ninth Circuit opined that the U.S. Supreme Court’s March 19, 2013, decision in Standard Fire Insurance Co. v. Knowles, 133 S. Ct. 1345 (2013) “effectively overruled” law in the Ninth Circuit that obligated defendants seeking removal under the Class Action Fairness Act of 2005 (CAFA) to establish more than $5 million was in controversy to a “legal certainty.” Rodriguez v. AT&T Mobility Servs. LLC, No. 13-56149, at 2 (9th Cir. Aug. 27, 2013). Now, “the proper burden of proof imposed upon a defendant to establish the amount-in-controversy is the preponderance of the evidence standard.” Id.


Rodriguez involved a putative class-action suit filed by retail sales managers of AT&T wireless stores in Los Angeles and Ventura counties. The named plaintiff alleged that AT&T Mobility Services, LLC violated California law regarding wages and overtime compensation. Rodriguez filed the original complaint in Los Angeles County Superior Court.


AT&T removed the case to federal court, but shortly thereafter, Rodriguez moved for remand, alleging that the amount in controversy did not exceed the $5 million threshold for subject-matter jurisdiction imposed by 28 U.S.C. § 1332(d). To support his remand argument, Rodriguez cited the first amended complaint (FAC), which alleged that “the aggregate amount in controversy is less than five million dollars” and contained an express waiver of the plaintiffs’ rights to seek more than five million dollars for the class claims alleged. AT&T countered by presenting “several sworn declarations” from AT&T representatives, who established that the amount in controversy could not be less than roughly $5.5 million. Relying on the Ninth Circuit’s decision in Lowdermilk v. U.S. Bank National Association, 479 F.3d 994 (9th Cir. 2007), the district court rejected AT&T’s arguments and remanded the case. According to the district court, Lowdermilk required AT&T to “demonstrate to a legal certainty that more than $5,000,0000 is at issue in this case,” and this was impossible in light of the FAC’s “‘disclaimer’ of any recovery exceeding $5,000,000.”


After granting AT&T’s petition for certiorari, the Ninth Circuit overruled the district court, pointing out that the district court’s decision predated the U.S. Supreme Court’s opinion in Standard Fire. Per the Ninth Circuit, “the Court held [in Standard Fire] that a lead plaintiff of a putative class could not foreclose a defendant’s ability to establish the $5 million amount in controversy by stipulating prior to class certification that the amount in controversy is less than $5 million.” Id. at 6–7 citing Standard Fire Ins. Co., 133 S. Ct. at 1347. Accordingly, Rodriguez’s incorporation of a similar waiver statement in the FAC did not justify a remand order. Rodriguez, No. 13-56149 at p. 7. Said differently, “[a] lead plaintiff of a putative class cannot reduce the amount in controversy on behalf of absent class members, so there is no justification for assigning to the allegation weight so significant that it affects a defendant’s right to a federal forum under § 1332(d)(2).”


In addition to its discussion of waiver, the Ninth Circuit addressed the requisite burden of proof to establish the threshold dollar amount for federal subject-matter jurisdiction. Because Standard Fire “instructs courts to look beyond the complaint to determine whether the putative class action meets the jurisdictional requirements,” the Ninth Circuit held that “[t]he theory supporting our adoption of the legal certainty standard no longer holds true.” Instead, the Ninth Circuit opined in Rodriguez that “[a] defendant seeking removal of a putative class action must demonstrate by a preponderance of evidence, that the aggregate amount in controversy exceeds the jurisdictional minimum.”


The Ninth Circuit’s opinion in Rodriguez makes it significantly easier for class-action defendants to remove an action to federal court, particularly where the named plaintiff attempts to reduce the amount in controversy through waivers or allegations in the complaint.


Adam Reich, Paul Hastings LLP, Los Angeles, CA


 

August 16, 2013

New York City's Stop-and-Frisk Ruled Unconstitutional


In Floyd v. City of New York, a federal class-action lawsuit, the U.S. District Court for the Southern District of New York in a 198-page decision, following a two-and-a-half month non-jury trial, determined that New York City Police Department (NYPD) violated constitutional rights of the Fourth and the Fourteenth Amendment through its internal policies, customs, and implementation by making unlawful stops and conducting unlawful frisks.


The court in reaching its decision rationalized:


No one should live in fear of being stopped whenever he leaves his home to go about the activities of daily life. Those who are routinely subjected to stops are overwhelmingly people of color, and they are justifiably troubled to be singled out when many of them have done nothing to attract the unwanted attention.


(slip op. at 6.)


While the Fourth Amendment protects all individuals from unreasonable searches and seizures and the Equal Protection Clause of the Fourteenth Amendment guarantees individuals equal protection of laws prohibiting intentional discrimination based on race, the court held that these laws have been repeatedly violated.


While the Court discussed how “evaluating a stop in hindsight is an imperfect procedure,” it sorted out the facts surrounding a mishmash of 4.4 million stops, expert testimony, and numerous other witnesses. The court highlighted that between January 2004 and June 2012, in 52 percent of all stops, the person stopped was black, 31 percent were Hispanic, and 10 percent were white, while New York City’s resident composition is 23 percent black, 24 percent Hispanic, and 33 percent white. Out of those stopped, 23 percent blacks, 24 percent Hispanics, and 1.1 percent whites involved the use of force. Also in these stops, contraband not involving a weapon came from 1.8 percent blacks, 1.7 percent Hispanics, and 2.3 percent whites.


The Court held the city liable for damages and scolded senior officials in NYC and in the NYPD for being “deliberately indifferent to the discriminatory application of the stop and frisk at the managerial and officer level . . . and adopted willful blindness toward statistical evidence of racial disparities in stops and stop outcomes.


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

July 30, 2013

Appellate Court Affirms Ruling Striking Down NYC Soda Ban


As previously reported on these pages, in March 2013, just hours before it was to take effect, the New York Supreme Court permanently enjoined and restrained the enforcement of New York City’s proposed ban on large soda drinks. In April, a New York appellate court agreed to hear the city’s appeal of the ruling striking down the large soda bank, the Portion Cap Rule.


Following oral argument, First Division of the Supreme Court’s Appellate Division upheld Judge Tingling’s ruling that New York City could not enforce the Portion Cap Rule. Specifically, in a unanimous decision, the appellate court stated that “[l]ike the Supreme Court, we conclude that in promulgating this regulation the Board of Health failed to act within the bounds of its lawfully delegated authority.” Undeterred, Mayor Michael Bloomberg called the decision a “temporary setback” and stated that his administration will appeal the decision.


As previously opined, given the divide between interested parties, the appellate court’s decision will not be the last made on the issue by New York state courts. Stay tuned to learn the fate of large drinks in New York City.


Justin Heather, Korey Cotter Heather & Richardson, LLC, Chicago, IL


 

July 30, 2013

State of Florida v. George Zimmerman: Not Guilty


State v. Zimmerman has sparked national controversy about race, civil rights, and guns, and led to the termination of Sanford’s chief of police and the state’s information-technology director, the appellate court to grant the removal of a judicial officer, and a request for sanctions against the prosecutors.


After a three-week trial, 56 witnesses, and 16 hours of deliberation, George Zimmerman, a volunteer neighborhood-watch leader, was unanimously found not guilty by a jury of six women for second-degree murder and manslaughter for the fatal shooting of 17-year-old Trayvon Martin. The jury accepted as true that once the altercation began, Zimmerman reasonably believed his life was imminently in danger of at least great bodily harm when using defensive force that was intended or likely to cause death or great bodily harm, Fla. Stat. § 782.02. (Such laws, adopted by many states, are commonly known as “Stand Your Ground” laws.) Medical evidence presented by an expert witness for the defense supported the defendant’s version of events that at the time of the single fatal shot, Martin was leaning over George Zimmerman and that Zimmerman had sustained injuries on the back of the head and forehead, and a fractured nose, through his altercation with the unarmed Martin.


Although Zimmerman was acquitted for the crimes against him, he immediately went into hiding (although he reportedly emerged from his seclusion to help a family out of an overturned vehicle) and has received countless death threats. Days after the acquittal, public outcries call for the Department of Justice (DOJ) to bring a federal civil-rights lawsuit against biracial Zimmerman for allegedly having a racial bias against African American Martin. While the DOJ has taken certain evidence presumably for purposes of evaluating a potential civil-rights suit, no such charges have yet been announced. Further, Zimmerman will likely be subject to a wrongful-death civil lawsuit by the family of Martin for damages.


In the end, a young life was lost and, although Zimmerman was acquitted, his future is far from certain and his personal safety has been threatened. Florida lawmakers initially indicated no desire to amend its Stand Your Ground laws, but the public outcry surrounding the Zimmerman verdict may influence future legislative actions in Florida and elsewhere.


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

July 29, 2013

Motor City in Need of an Overhaul


For decades, the city of Detroit has been in severe decline. Detroit’s current population of 700,000 is approximately 1.1 million fewer than it was in the 1950s. Abandoned or burned-out buildings (often the result of the rampant drug trade), endemic poverty, high crime and murder rates, and police response times of almost one hour are but the tip of the iceberg when it comes to the problems facing Detroit and its residents. The flight of residents to the suburbs and the departure of its automotive base left the city with a dwindling tax base, unable to maintain essential services for its residents.


Facing over $19 billion in debt, Detroit recently filed for bankruptcy protection (under Chapter 9 of the Bankruptcy Code), upon the recommendation of emergency manger and bankruptcy lawyer, Kevyn Orr, and with the blessing of Michigan Governor Rick Snyder, who appointed Orr. The filing makes Detroit the largest U.S. city to seek bankruptcy protection. The filing also began a series of political and legal wrangling that will likely continue as the city seeks to transform itself and emerge from bankruptcy.


Immediately after the filing, three lawsuits were filed challenging the bankruptcy petition and at least one judge ruled that the decision to file by Governor Snyder was a violation of the Michigan Constitution and that he acted illegally in approving the filing. U.S. Bankruptcy Judge Steve Rhodes, however, granted Detroit’s request to permanently freeze those lawsuits. In short, the Chapter 9 proceedings shall run their course.


Detroit’s struggles and challenges in emerging from bankruptcy are just beginning, and further political rhetoric, protests, and legal machinations are certain. Moreover, public officials and lawyers in other cities and states no doubt will keep a watchful eye on Detroit’s experience with bankruptcy. For example, according to Forbes, New York City tops the list of American cities in terms of debt, with a debt load of approximately $65 billion, and Illinois is the state that is worst off, with its debt representing almost five percent of its gross state product. In other words, Detroit may be the largest thus far, but it is unlikely that it will be the last governmental unit to seek bankruptcy protection.


Justin Heather, Korey Cotter Heather & Richardson, LLC, Chicago, IL


 

July 23, 2013

GA Supreme Court to Rule on Application of Tort-Reform Legislation


In 2005, as part of a sweeping tort-reform package, the Georgia Legislature passed an emergency-medical-care statute that was designed to limit the liability of emergency-room (ER) physicians by requiring a plaintiff suing an ER physician to prove gross negligence on the part of the physician. Up to now, the ER statute has survived numerous challenges. This could soon change. On July 2, 2013, the Georgia Supreme Court held oral argument in an appeal of a trial court’s application of the ER statute’s gross-negligence standard.


The facts of the case are compelling: A teen entered the emergency room complaining of chest pain eight days after undergoing arthroscopic knee surgery. The teen was attended to by an ER physician who, after ordering a number of tests and diagnostic studies, determined that the teen was suffering from pleurisy, and prescribed medication. Two weeks later, after experiencing chest pain and difficulty in breathing, the teen died from a bilateral pulmonary embolism. Suit was initiated by the teen’s parents and, despite expert testimony criticizing the physician’s care, summary judgment was granted in favour of the physician under ER statute. In its decision, the trial court interpreted the ER statute to require plaintiffs to produce clear and convincing evidence that the physician failed to exercise even slight care. The trial court decided that the undisputed facts, showing the physician made multiple considerations and ordered numerous tests and imaging studies, made it impossible for the plaintiffs to prove by clear and convincing evidence that the physician had acted with gross negligence.


After the Georgia Court of Appeals affirmed the trial court’s decision, the Georgia Supreme Court granted certiorari on the issue of whether the court erred in its application of the gross-negligence standard under the ER statute.


Tort reform is a constantly debated issue in Georgia and the area of medical malpractice is often the focal point of the debate. The ER statute has withstood previous legal challenges and is one of the last standing provisions of the 2005 tort reforms. Given the divisive nature of the issue, this appeal has drawn the attention of interest groups on both sides of the issue and resulted in the filing of numerous amicus briefs.


Regardless of the supreme court’s ruling, there will be an immediate impact on the numerous other ER statute cases making their way through the Georgia appellate system. On a larger scale, the supreme court’s ruling could spark a new movement for tort-reform legislation similar to the measures enacted in 2005. The implications of the court’s decision will likely also reach beyond medical-malpractice litigation.


David Hayes, Owen, Gleaton, Egan, Jones & Sweeney, LLP, Atlanta, GA


 

June 28, 2013

Legalizing Equality in Love


A landmark case was decided by the U.S. Supreme Court this week that took a large step toward defending a fundamental Constitutional right of equality—irrespective of a person’s sexual orientation. It is a victory for all those who cared for someone but did not have the right to openly love any gender that he or she choses and for those same-sex couples that were treated as an inferior class. This decision is not, however, meant to disintegrate religious institutions’ views on marriage.


In United States v. Windsor, the Supreme Court declared the federal law known as the Defense of Marriage Act (DOMA) unconstitutional, telling Congress that it cannot create laws to “deny the liberty protected by the Due Process Clause of the Fifth Amendment.” DOMA excluded from its definition of “spouse” same-sex partners, which eliminates the rights of same-sex couples by not recognizing same-sex marriages in the same manner as heterosexual marriages, even if, the state or country they were married in, recognizes them as a married couple. DOMA controlled thousands of statutes and federal regulations pertaining to Social Security, housing, taxes, criminal sanctions, copyright, and veterans’ benefits.


DOMA diminishes the state’s integrity and authority to govern over domestic relations. The Supreme Court struck down DOMA because it


tells those couples, and all the world, that their otherwise valid marriages are unworthy of federal recognition, [which places] same-sex couples in an unstable position of being in a second-tier marriage . . . humiliates tens of thousands of children now being raised by same-sex couples . . . divests married same-sex couples of the duties and responsibilities that are an essential part of married life . . . and imposes a disability on the class by refusing to acknowledge a status the State finds to be dignified and proper.


Shortly after the DOMA decision, President Obama addressed the nation stating, “the laws of our land are catching up to the fundamental truth that millions of Americans hold in our hearts: when all Americans are treated as equal, no matter who they are or whom they love, we are all more free.”


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

June 25, 2013

Supreme Court Wrap-Up: Fisher v. University of Texas at Austin


On June 24, 2013, the U.S. Supreme Court, in a 7–1 ruling, declined to make a landmark ruling on the affirmative-action front and instead remanded an affirmative-action case back to the U.S. Court of Appeals for the Fifth Circuit because the lower court did not examine the case using the proper standard of review. Though the Court’s long-awaited decision in Fisher v. University of Texas at Austin, No. 11-345, 2013 WL 3155220 (U.S. June 24, 2013) was not the broad ruling many expected, it still contained significant undertones.


The case arose from the complaint of a white student, Abigail Fisher, who alleged that the University of Texas at Austin’s (UT) consideration of race in the admissions process violated the Fourteenth Amendment’s Equal Protection Clause. The U.S. District Court for the Western District of Texas granted summary judgment to UT and, on appeal, the Fifth Circuit affirmed. The Fifth Circuit’s decision to defer to UT’s judgment was purportedly predicated on the Supreme Court’s decision in Grutter v. Bollinger, 539 U.S. 306 (2003). Fisher v. University of Texas at Austin, 631 F.3d 213 (5th Cir. 2011). In that case, the Supreme Court concluded that admissions counsellors may consider race as one of many “plus factors” when evaluating the overall qualities of candidates for admission. Grutter, 539 U.S. at 341. The Supreme Court granted certiorari on February 21, 2012, and heard oral argument on October 10, 2012, after the court of appeals denied Fisher’s request for rehearing en banc.


Writing for the majority, Justice Anthony Kennedy reiterated the “clear precondition” of justifying race in a university admissions process: “[r]ace may not be considered unless the admissions process can withstand strict scrutiny.” Fisher, 2013 WL 3155220 at *7. Under strict scrutiny, the party making the classification has the burden to “prove that the reasons for any racial classification are clearly identified and unquestionably legitimate. Id. (internal quotation marks and brackets omitted). Put differently in Grutter, “racial ‘classifications are constitutional only if they are narrowly tailored to further compelling governmental interests.’” Id. at *8 (quoting Grutter, 539 U.S. at 326). Narrow tailoring requires a university’s use of race in the admission’s process to be “necessary” to achieve the educational benefits of diversity. Fisher, 2013 WL 3155220 at *9. Hence, if UT can demonstrate that its goals of diversity are consistent with strict scrutiny, and that the means its admissions officers have chosen to attain these goals are sufficiently narrowly tailored, the university’s admission policy is lawful.


Per the Court, the Fifth Circuit’s affirmance of UT’s admission’s policy was erroneous because it was based on the presumption that UT’s decision was “made in good faith.” Id. at *2, *9 (“[S]trict scrutiny does require a court to examine with care, and not defer to, a university’s ‘serious good faith consideration of workable race-neutral alternatives.’” (citation omitted)). While such consideration is necessary, it is not sufficient to satisfy strict scrutiny. Thus, in the Court’s eyes, the Fifth Circuit failed to perform the “searching examination” required under the law. Accordingly, the Court vacated the Fifth Circuit’s opinion and remanded the case for further proceedings consistent with the opinion.


Although the Supreme Court neither glowingly endorsed nor expressly rejected UT’s affirmative-action program, the Court’s decision here was more than just a standard grant-remand-vacate (more commonly known as GVR). On the one hand, the Court reemphasized that obtaining the educational benefits of student-body diversity is a compelling state interest, thereby endorsing the potential validity of considering race in university admissions. On the other hand, to use an analogy befitting a school such as UT, by obligating schools to make a clearer showing that affirmative-action plans are narrowly tailored to meet a compelling interest of student-body diversity, which is accomplished by more than just admitting students of different races and ethnicities, the Court effectively moved the end zone further downfield than the Fifth Circuit did, making it harder for UT’s affirmative-action program to pass constitutional muster in the future.


Adam Reich, Paul Hastings LLP, Los Angeles, CA, with Deborah Kang, Paul Hastings LLP, Los Angeles, CA


 

June 25, 2013

The FAA after American Express Co. v. Italian Colors Restaurant, Part 2


On February 21, 2013, we wrote that experts were predicting that the U.S. Supreme Court would continue a trend of pro-arbitration rulings when deciding the scope of the Federal Arbitration Act (FAA) in American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 594 (2012) (oral argument Feb. 27, 2013). Four months later, with the Court finally publishing a slip opinion, these predictions have become reality. The Court ruled on June 20, 2013, that: (1) the FAA does not form a basis for invalidating a contractual waiver of class arbitration solely because the costs of arbitrating an individual claim outweigh the potential recovery; (2) Congress has not said or done anything that effectively warrants rejecting any class-arbitration waiver; and (3) the “effective vindication” exception does not warrant invalidating a class-action waiver, provided the waiver does not prevent people from individually pursuing statutory claims. Am. Express Co. v. Italian Colors Restaurant, No. 12-133, 2013 WL 3064410 at *1 (U.S. June 20, 2013).


American Express Co. involved merchants claiming that American Express (Amex) violated federal antitrust laws by using its substantial charge-card market share to force merchants to accept credit cards at rates approximately 30 percent higher than fees for competing credit cards. In particular, the merchants were dissatisfied with Amex’s requirement that they pay the same transaction fees for charge cards that permitted consumers to make partial monthly payments. The agreement the merchants signed with Amex contained an arbitration clause and explicitly provided that “[t]here shall be no right or authority for any Claims to be arbitrated on a class action basis.”


Notwithstanding this agreement, dissatisfied merchants filed a class action against Amex. In response, Amex moved to compel individual arbitration. The merchants countered by submitting a declaration from an economist indicating that it was financially inefficient for individual merchants to pursue claims against Amex because the estimated cost of an expert analysis to prove an antitrust claim might range from hundreds of thousands of dollars to over one million, while potential individual recovery was at most tens of thousands of dollars.


Several times, the U.S. Court of Appeals for the Second Circuit agreed with the merchants regarding the unenforceability of the arbitration provision. In re Am. Exp. Merchants’ Litig., 554 F.3d 300 (2d Cir. 2009) (Amex I); In re Am. Exp. Merchants’ Litig., 634 F.3d 187 (2d Cir. 2011) (Amex II); In re Am. Exp. Merchants’ Litig.681 F.3d 130 (2d Cir. 2012) (Amex III). In Amex III, the Second Circuit sua sponte reconsidered its prior rulings in light of the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), which held that the FAA preempted a state law barring enforcement of a class-arbitration waiver akin to the clause contained in the merchant-Amex agreement. Nonetheless, the Second Circuit did not change its stance; rather, it reasoned that Concepcion was inapposite because that case addressed preemption and the Second Circuit focused “squarely on a vindication of statutory rights analysis—an issue untouched in Concepcion.” Amex III, 681 F.3d at 139.


The Supreme Court rejected the Second Circuit’s position, characterizing it as seeking a “judicially created superstructure” not sanctioned by the FAA. Am. Express Co., 2013 WL 3064410 at *6. First, the Court declared that the nation’s judiciary has an obligation to “‘rigorously enforce’ arbitration agreements according to their terms” including with respect to “claims that allege a violation of a federal statute, unless the FAA’s mandate has been ‘overridden by a contrary congressional command.’” Applying this logic, the Court found the class-action arbitration waiver enforceable because there was no contrary congressional command, even in the federal antitrust laws or Rule 23 of the Federal Rules of Civil Procedure. The Court further noted that Rule 23 does not “establish an entitlement to class proceedings for the vindication of statutory rights”; class actions are “an exception to the usual rule that litigation is conducted by and on behalf of the individual . . .”; and when parties agree to individual arbitration proceedings, i.e., the “usual” proceedings, any judicial action invalidating such agreements would be “remarkable.” Finally, the Court rejected the Second Circuit’s reference to the “judge-made” “effective vindication” exception to the FAA. This exception, according to the Court, only serves to invalidate waivers of a right to pursue statutory remedies. While this exception might cover a clause that imposes excessive administrative fees that make access to the judicial forum implausible, the Court refused to construe the exception to permit courts to invalidate class-action waivers merely when it would be more economically efficient for individuals to pursue a statutory remedy in a class setting.


The Court’s ruling in American Express Co. is significant. It empowers companies to use freedom of contract to reduce potential liability and avoid costly class-action litigation. Indeed, the plaintiffs’ bar has characterized the Court’s decision as “a major blow to America’s consumers.” Nevertheless, pursuant to the Court’s own commentary regarding “contrary congressional command[s],” the impact of this decision may be short-lived. Currently, there are two competing versions of proposed legislation circulating in the House of Representatives and Senate, both called the Arbitration Fairness Act, which, if passed, would prevent companies from using broad class-action waivers in arbitration clauses. With the legal battle concluded, it will surely be interesting to see what develops on the political front.


Adam Reich, Paul Hastings LLP, Los Angeles, CA, with Deborah Kang, Paul Hastings LLP, Los Angeles, CA


 

June 25, 2013

Genes That Exist in Nature Are Not Patentable


In a unanimous decision written by Justice Thomas, the U.S. Supreme Court held that each human gene, encoded as deoxyribonucleic acid (DNA), is a “product of nature” and is not patent-eligible. Ass’n for Molecular Pathology v. Myriad Genetics, Inc., ___ S. Ct. ___, 2013 WL 2631061 (June 13, 2013). In its 9–0 opinion, the Supreme Court reversed the U.S. Court of Appeals for the Federal Circuit, and held that synthetically created DNA was not naturally occurring and thus could be patented.


Section 101 of the Patent Act provides: “whoever invents or discovers any new and useful . . . composition of the matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 35 U.S.C. § 101.


The respondent, Myriad Genetics, properly identified two genes, BRCA1 and BRCA2, and their sequences, which if mutated, would significantly increase the risk of breast or ovarian cancer. Ass’n for Molecular Pathology, 2013 WL 2631061, at *3. Myriad used a chemical alteration to sever chemical bonds to isolate a particular strand of DNA creating a non-naturally occurring molecule. Myriad sought patents for these discoveries where it identified the genes on chromosomes among millions of nucleotides where competitors have been unsuccessful and have admitted to using a methodology that would not have led to discovery of BRCA1 and BRCA2. Myriad argued that Diamond v. Chakrabarty, 47 U.S. 303, 305 (1980), wherein Chakrabarty scientists applied plasmids to bacterium enabling it to break down these modified bacterium, was held to be patentable. Ass’n for Molecular Pathology, 2013 WL 2631061, at *8.


The Court, however, applied Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 128–29 (1948), which rejected a patent for a composition of several nitrogen-fixing bacteria because the bacteria themselves were not altered in any way. Ass’n for Molecular Pathology, 2013 WL 2631061, at *8–9. The Supreme Court held that synthetic DNA created in the laboratory, known as, complementary DNA, is patentable; unlike naturally occurring DNA. The Supreme Court also declined to consider the patentability of DNA in which the order of the naturally occurring nucleotides has been altered.


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

May 29, 2013

Patent Exhaustion Does Not Protect Farmer’s Sale of Harvested Seeds


The doctrine of patent exhaustion provides that the authorized sale of a patented article gives the purchaser, or any subsequent owner, a right to sell or resell the purchased item. The doctrine, however, does not allow the purchaser to sell new copies of patented articles. This month, in Bowman v. Monsanto Co., the U.S. Supreme Court addressed whether a farmer who buys patented seeds may reproduce those seeds through the process of planting and harvesting.


Monsanto invented a genetically modified strain of soybeans that is resistant to glyphosate, an active ingredient in certain herbicides. The company actively sells these soybean seeds to farmers, allowing them to plant use herbicides containing glyphosate without damaging their crops. Monsanto holds two patents related to this technology, including one with respect to the seeds involved in the matter. Under the agreements for sale of these seeds, farmers may plant these seeds and sell or otherwise consume the harvested crops, but may not keep any of the harvested soybean seeds for replanting or resale to others.


In answering the question at issue in the negative, the Supreme Court affirmed the lower courts’ decisions rejecting application of the patent-exhaustion doctrine. The Court concluded that the farmer’s use of the harvested seeds was not protected by the patent-exhaustion doctrine because it would effectively eliminate any value for the patent after the first sale of the seeds. The Court also rejected the farmer’s argument that the soybean’s seeds are inherently self-replicating and thus the copying of the item was not done by the farmer, but by the seeds themselves. The Court rejected this “blame the beans” argument. The Supreme Court, however, did limit its holding to the situation before it and expressly stated that its holding did not resolve “every [situation] involving a self-replicating product,” thus leaving open the question for another day and another set of facts.


Justin Heather, Korey Cotter Heather & Richardson, LLC, Chicago, IL


 

May 29, 2013

Supreme Court Expands Exception to Procedural Default Rules


A finding of procedural default is usually an insurmountable hurdle for a defendant challenging a state-court criminal conviction. As the Supreme Court made clear in Coleman v. Thompson, a procedural default rests on an “independent and adequate” state-law ground effectively foreclosing review of constitutional claims. 501 U.S. 722, 729–30 (1991). A recent Supreme Court decision, however, further expands an exception to this near-preclusive doctrine.


In Martinez v. Ryan, the Court held that “a procedural default will not bar a federal habeas court from hearing a substantial claim of ineffective assistance at trial if, in the [state’s] initial-review collateral proceeding, there was no counsel or counsel that proceedings was ineffective.” 132 S. Ct. 1309, 1320 (2012). Martinez involved an Arizona state prisoner challenging his conviction. Under Arizona law, the inmate was required to raise any ineffective-assistance claim during the first collateral review of the conviction, i.e., on direct appeal.


Trevino v. Thaler involved a Texas inmate’s challenge to his capital conviction. Unlike Arizona law, Texas law allows, but does not require, an inmate to bring any ineffective-assistance-of-counsel claim on direct appeal. Expanding upon the exception it created in Martinez, on May 28, 2013, the U.S. Supreme Court held that when a state’s procedural framework, by reason of its design and operation, makes it highly unlikely in a typical case that a defendant will have a reasonable opportunity to raise an ineffective-assistance-of-trial-counsel claim on direct appeal, such a claim will not be barred as a result of a procedural default. Slip op. at 5–15. In short, the decision recognized the practical difficulties of raising ineffective-assistance claims on direct appeal where the record has not yet been fully developed to properly evaluate the claim.


Justin Heather, Korey Cotter Heather & Richardson, LLC, Chicago, IL


 

May 29, 2013

Marijuana Possession No Longer Automatic Immigration Violation


Under the Immigration and Nationality Act (INA), a non-citizen convicted of an aggravated felony is not only deportable but is also ineligible for discretionary relief. 8 U.S.C. §§ 1101(a)(43)(B) and 1227(a)(2)(A)(iii). In Moncrieffe v. Holder, the non-citizen pled guilty under Georgia law to possession of marijuana with intent to distribute with respect to 1.3 grams of marijuana being found in his car. 133 S. Ct. 1678, 1683 (2013). The immigration judge ordered the defendant removed, a decision affirmed by the Board of Immigration Appeals, and the Fifth Circuit denied the petition for review.


The Supreme Court first confirmed the continued use of the categorical approach to determining whether a state-court conviction is comparable to an offense listed in the INA. Under the categorical approach, the Court reviews the similarity between the offenses and not the actions of the defendant. In reviewing the non-citizen’s conviction, the Court determined that the non-citizen’s conviction constituted a violation of the INA because it was an offense under the Controlled Substances Act (CSA); however, the decision noted that the offense must constitute an aggravated felony under the CSA to trigger the above provisions of the INA.


Reviewing the state-court offense and the federal offense, the Court determined that the non-citizen’s conviction could qualify as either a misdemeanor or a felony under the CSA. The Court determined that under the categorical approach, the non-citizen was not convicted of an aggravated felony as a result of this ambiguity. In so holding, the Supreme Court abrogated prior appellate court holdings in Garcia v. Holder, 638 F.3d 511 (6th Cir. 2011) and Julce v. Mukasey, 530 F.3d 30 (1st Cir. 2008).


Justin Heather, Korey Cotter Heather & Richardson, LLC, Chicago, IL


 

May 29, 2013

Supreme Court Clarifies Meaning of "Defalcation" in Bankruptcy Court


A party exiting bankruptcy usually has all of its debts discharged under the Bankruptcy Code. There are, however, certain exceptions to this general discharge of debts following bankruptcy. For example, section 523(a)(4) of the Bankruptcy Code excepts from discharge a debt “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” The meaning of the term “defalcation” within the Bankruptcy Code has been subject to varying interpretations.


Confronted with a dispute involving the meaning of the term, the U.S. Supreme Court recently concluded that the meaning of “defalcation” in the Bankruptcy Code includes a culpable-state-of-mind requirement involving knowledge of, or gross negligence in respect to, the improper nature of the relevant fiduciary behavior. Bullock v. BankChampaign, N.A., Slip op. at 5–7. In so doing the Court abrogated prior appellate court decisions in In re Sherman, 658 F.3d 1009 (9th Cir. 2011) and In re Uwimana, 274 F.3d 806 (4th Cir. 2001).


In Bullock, the Court concluded that “where the conduct at issue does not involve bad faith, moral turpitude, or other immoral conduct, the term requires an intentional wrong.” Slip op. at 6. The Court “include as intentional not only conduct that the fiduciary knows is improper but also reckless conduct of the kind that the criminal law often treats as the equivalent.” The Court’s decision drew upon the Model Penal Code in determining those actions that would constitute defalcation and thus not be exempt from discharge under the Bankruptcy Code.Among the many reasons noted by the Supreme Court in defining defalcation, the high court emphasized that “it is important to have a uniform interpretation of federal law.”


Justin Heather, Korey Cotter Heather & Richardson, LLC, Chicago, IL


 

April 29, 2013

Appellate Court Agrees to Hear NYC Soda Ban Appeal


As previously reported, in March 2013, just hours before it was to take effect, the New York Supreme Court permanently enjoined and restrained the enforcement of New York City’s proposed ban on large soda drinks. A New York appellate court recently agreed to hear the city’s appeal of the prior rule striking down the large soda bank, or what has become known as the Portion Cap Rule.


The appellate court is set to hear the appeal during the first week of June. Mayor Michael Bloomberg expressed confidence that the ruling would eventually be overturned. The Supreme Court decision ruled that the mayor-appointed health board overstepped its authority and that the exceptions to the Portion Cap Rule rendered the regulation “arbitrary and capricious.” Given the divide between interested parties, it is quite possible that any ruling by the appellate court will not be the last made on the issue by New York state courts.


Justin Heather, Korey Cotter Heather & Richardson, LLC, Chicago, IL


 

April 29, 2013

Supreme Court Reaffirms Heightened Standards for Class Certification


In the recent decision Comcast Corp. v. Behrend, the U.S. Supreme Court raised the bar for plaintiffs seeking class certification under Rule 23(b)(3) of the Federal Rules of Civil Procedure. 133 S. Ct. 1426 (2013). The Court reaffirmed the recent trend toward heightening pleading and evidentiary requirements in federal class-action litigation.


In Comcast, the plaintiffs brought suit under the Sherman Act accusing Comcast of engaging in monopolistic behavior. The district court rejected three of the theories advanced by the plaintiffs, but found that they could pursue their case on a class-wide basis on an "overbuilder" theory. As the dissent aptly described this theory of liability, it consisted of "a number of potential competitors (called "overbuilders"), whose presence in the market would have limited Comcast's power to raise prices, [and who] were ready to enter some parts of the market but decided not to do so in light of Comcast's anticompetitive conduct."


The Court reversed the Third Circuit, emphatically reminding would-be class litigants that, "The class action is 'an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.' . . . To come within the exception, a party seeking to maintain a class action 'must affirmatively demonstrate his compliance' with Rule 23." In effect, the majority in Comcast required that the plaintiffs affirmatively demonstrate not only that common questions of law or fact predominated over their claims, but also that calculations of class-wide damages could be adequately determined and calculated on a class-wide basis in accordance with a particular theory of liability by the district court in a certification proceeding, with "evidentiary proof" sufficient to meet the demanding certification requirements of Rule 23(b)(3).


The end result of the Comcast decision is that plaintiffs will have yet another pleading and evidentiary burden to satisfy before obtaining class status, and that defendants will have another tool to defeat a request for class certification at the preliminary pleadings stage, thus closing the door on class litigation before it has even truly begun.


Michael B. Lopez, Epstein Law Firm, Marin County, CA


 

April 24, 2013

Return of Child to a Foreign Country Does Not Render Appeal Moot


The U.S. Supreme Court recently decided in Chafin v. Chafin, that s 133 S. Ct. 1017 (2013). The majority opinion, written by Chief Justice Roberts, vacated the judgment of the U.S. Court of Appeals for the Eleventh Circuit holding the case to be moot as the child at issue was no longer living in the United States.


The International Child Abduction Remedies Act (ICARA) implements the Hague Convention on the Civil Aspects of International Child abduction in the United States. ICARA grants federal and state courts concurrent jurisdiction over actions arising under the Hague Convention. If those courts find children to have been wrongfully removed or retained, the children “are to be promptly returned” to their country of habitual residence. ICARA also provides that courts may require defendants to pay court costs, legal fees, and transportation costs associated with the return of children.


The petitioner was a citizen of the United States and the respondent a citizen of the United Kingdom (Scotland). They were married and had a three-year-old child. The petitioner filed for divorce and child custody in Alabama state court. During this time the respondent was arrested for domestic violence in Alabama and then deported because she had overstayed her visa. The child stayed with the petitioner who was granted temporary custody of the child. The respondent then initiated a case in the U.S. District Court for the Northern District of Alabama seeking return of the child under the Hague Convention and ICARA. The district court held a bench trial and ruled in favor of the respondent and ordered the immediate return of the child to Scotland along with denying the petitioner’s request for a stay of the order pending appeal. The court also ordered the petitioner to pay $94,000 in costs. Within hours the respondent left for Scotland and initiated custody proceedings there.


The Eleventh Circuit dismissed the petitioner’s appeal as moot because when the child was returned to the foreign country, it believed the court was powerless to grant further relief. The U.S. Supreme Court found that the dispute was still very much alive. The petitioner continued to contend that the child’s country of the habitual residence was the United States and the respondent argued it was the United Kingdom. The petitioner wanted the orders that he pay the respondent vacated while the respondent asserted the money is rightfully owed.


The Court did not address the merits of the custody claim, the child’s country of habitual residence, or the order of costs. It only addressed the issue of mootness. The Court reasoned that as long as parties have a concrete interest, however, small, in the outcome of litigation, the case is not moot. Even if enforcement of an order would be difficult, in this case, the United Kingdom ignoring the order or refusing to assist in enforcing it, the case is not moot. Uncertainty of enforcement of an order does not render it moot.


Another concern for the Court was the increased likelihood that courts would grant a stay of an order as a matter of course instead of complying with the Hague Convention, which requires a prompt return. A mootness holding may also encourage flight in future Hague Convention cases as prevailing parents try to flee the jurisdiction to moot the case. The lower courts should apply the traditional stay factors as outlined in Nken v. Holder, 556 U.S. 418, 434 (2009) when determining whether to grant a stay pending appeal of these orders.


Patrick Markey, the Law Offices of Patrick Markey, P.C., Chicago, Illinois


 

April 24, 2013

The Dog-Sniffing Cases: U.S. Supreme Court Draws Line at Doorstep


The U.S. Supreme Court recently decided in Florida v. Jardines, that a police officer’s use of a drug-sniffing dog at the entrance of a home was a search under the Fourth Amendment. 133 S. Ct. 1409, 1414–18 (2013). The majority opinion, written by Justice Scalia, affirmed the Florida Supreme Court’s holding based on an analysis of property rights, not reaching the question of whether the dog sniff violated an individual’s reasonable expectation of privacy.


The Court’s decision in Jardines followed its decision handed down in the previous month, which upheld a police officer’s use of drug-sniffing dog to search a truck during a routine traffic stop. In Florida v. Harris, 133 S. Ct. 1050 (2013), a police officer pulled over a driver who appeared nervous and had an open beer can. He used a drug-sniffing dog around the exterior of the car. The dog “alerted,” which the officer concluded gave him probable cause to search the truck’s interior. The officer discovered ingredients for manufacturing methamphetamine.


The driver contested the search, arguing that the dog’s certification and field performance did not make it a reliable indicator of illegal substances. The Florida Supreme Court agreed, holding that the officer lacked probable cause because he had not demonstrated the dog’s reliability. The Florida Supreme Court stated that additional evidence could demonstrate reliability including the dog’s training and certification records, an explanation of that training and certification, records of the dog’s field performance, and evidence concerning the experience and training of the dog’s handler.


The U.S. Supreme Court reversed, rejecting the Florida Supreme Court’s checklist of items to determine a dog’s reliability. Instead, the Supreme Court emphasized a “reasonable and prudent” person test in which the state should evaluate the totality of circumstances under a “practical and common-sensical standard.”


One month later in Jardines, the Supreme Court did not reach the question of the dog’s reliability. The dog was used around the perimeter of a home, eventually sitting at the base of the front door and signaling the odor’s strongest point. Unlike the decision in Harris, the Supreme Court began its analysis with a homeowner’s property rights. Jardines, 133 S. Ct. at 1414–15.


Justices Kagan, Ginsburg, and Sotomayer joined Justice Scalia’s opinion but filed a concurrence, explaining that the decision was an easy one whether it was based on property rights or an expectation of privacy. It was easy because it had already been decided in Kyllo v. United States, 533 U.S. 27 (2001). The use of a drug-sniffing dog was an invasion of an occupant’s reasonable expectation of privacy in the same way that a pair of “super-high-powered binoculars” or thermal-imaging equipment would be.
The Supreme Court’s decisions in Jardines and Harris not only clarifies the use of a drug-sniffing dog, but also emphasizes a long line of cases in which courts have repeatedly held that a person’s expectation of privacy in one’s home is much higher than in one’s automobile.


Deborah Kang, Paul Hastings LLP, Los Angeles, CA


 

March 25, 2013

The Beginning of an End to Working Remotely?


Cancelling work-at-home arrangements to tighten  employee productivity is the controversial subject spearheaded by Yahoo! in a workplace-flexibility debate. Marissa Mayer, one of thirteen women who have climbed the corporate ladder as a CEO of a Fortune 500 company, confronted and eliminated the work-at-home perk for Yahoo! employees to salvage work morale and corporate culture.


This work-at-the-office policy, which has received national attention, is one of the first major unpopular decisions that CEO Mayer has made. She has chosen to prioritize fixing the company from within by motivating employees instead of focusing on factors that have external effects on the company. Yahoo! tracked productivity of its nearly 200 work-at-home employees and found that many of them spent those hours working on their own businesses instead. This type of business morale led to Yahoo! missing out on two of the biggest trends on the Internet: social networking and mobile connectivity.


Supporters of work-at-home arrangements fought back pointing out that Yahoo!’s CEO has the financial means to build a nursery next to her office, which permits her the luxury of working on the employment site while fulfilling her role as a mother and maintaining her quality of life. Brandon Holley, former editor of Shine (a Yahoo!’s women’s website) stated that she created the website and attracted big-name advertisers while working from home because it prevented her from having to deal with the distractions in a “very distracted company.”


To compensate for the dissatisfied employees now commuting to the workplace, Yahoo! implemented perks, such as free food in cafeterias and providing  smartphones. Further, in a recent internal employee survey, Yahoo! found that 95 percent of its employees were optimistic about the company’s future, a 32 percent increase from the previous survey.


In a time when the economy and economic growth appear grim, Yahoo! took a profound step toward ensuring its survival at the cost of demanding location changes for its employees.


Wing-Sze W. Sun, attorney at law, Minneapolis, MN


 

March 22, 2013

Supreme Court Addresses Copyrights and "Gray Market Goods"


On March 19, 2013, the Supreme Court held in Kirtsaeng v. John Wiley & Sons, Inc. (11-697) that the “first sale” doctrine of the federal Copyright Act of 1976 is not geographically limited to goods made in the United States. Copyright holders who manufacture and distribute products outside of the United States may be affected by the Court’s ruling because it indicates that someone can buy a cheaper copy of such products and resell personal copies within the United States at a profit.


The petitioner, Kirtsaeng, is a citizen of Thailand who moved to the United States in 1997 to study mathematics. To pay for his education, Kirtsaeng asked friends and family in Thailand to buy copies of foreign-edition English-language textbooks at Thai book shops and send them to him in the United States. John Wiley & Sons. Inc., an academic-publishing company, had published and sold these textbooks in Thailand at much lower prices. Kirtsaeng then resold the books, reimbursed his family and friends, and kept the profit (approximately $100,000). In 2008, Wiley filed a copyright-infringement suit against Kirtsaeng under the Copyright Act. Wiley argued that Kirtsaeng’s unauthorized importation and resale of books infringed on Wiley’s exclusive right to distribute under 17 U.S.C. § 106(3) and violated the prohibition against importation under 17 U.S.C. § 602(a). Kirtsaeng argued that under the first-sale doctrine, he had the right to resell the books purchased in Thailand.


First-Sale Doctrine
Under the “first sale” doctrine, the owner of a particular copy can resell it as long as the copy was “lawfully made under this title” (“title” referring to the Copyright Act). The issue for the Court was whether the words “lawfully made under this title” imposed a geographical limitation on the first-sale doctrine. Wiley argued that because the books were printed in Thailand they were not made “under this title” and Kirtsaeng could not resell them lawfully. Kirstaeng argued that the books were “lawfully made” because they were made under a license from Wiley. In other words, the question was whether the first-sale doctrine was applicable when the goods were made outside of the United States. The Court ultimately held that the doctrine does not have geographical limitations as section 109(a)’s common-law history, principles of statutory interpretation, and context within the Copyright Act all favored a non-geographical interpretation.


The Court noted that amici for Kirtsaeng—including associations of libraries, used-book dealers, technology companies, consumer-goods retailers, and museums—all supported a non-geographical interpretation of the first-sale doctrine because a geographical limitation would “subject many, if not all, of them to the disruptive impact of the threat of infringement suits.” Slip op. at 22. This concern regarding the potential “horribles” of extending the publishers’ arguments was discussed at oral argument, although the publishers and Justice Ginsburg (in dissent) suggest the concerns are overrated. For example, amici from technology companies stated that items such as cars, cell phones, or personal computers, among others, contain copyrightable software programs or packaging and a geographical limitation on the first-sale doctrine could prevent resale of these items without consent from each software publisher or copyright holder. Id., at 19–22.


Importation Provision
Under section 602(a)(1) of the Copyright Act, importing a copy of a copyrighted work without permission violates the owner’s exclusive right to distribute such copies under section 106(3). Wiley argued that section 602(a)(1) must prohibit importation of lawfully made copies after a first sale because the provision otherwise would be “superfluous.” The Court disagreed and held that section 602(a)(1) retains significance even if it does not apply after the first sale because the section would prevent companies or individuals who were not the “owner” of the copies (e.g., before an authorized sale) from importing them without permission. The Court held that section 602(a)(1) “refers explicitly to the §106(3) exclusive distribution right” and does not override the first-sale doctrine under section 109.


Read the decision and the oral-argument transcript.


Mor Wetzler and Jeanette Kang, Paul Hastings LLP, New York, NY


 

March 18, 2013

Roundtable: How to Develop an Effective Business-Development Plan


On February 14, 2013, the Young Advocates Committee along with the Young Lawyers Division presented a Roundtable titled “Launching the Young Litigator: How to Develop an Effective Business Development Plan.” The panel was moderated by David J. Scriven-Young of Peckar & Abramson, P.C., and included Anne Collier, a business-development and career coach with Arudia; John Grimley, an international-business-development consultant; Paramjit Mahli, a business-development consultant for lawyers; and Andrea Tecce, managing director at Navigant.


The panelists provided insight into navigating business development as a newer attorney. In particular, the panelists emphasized defining a personal brand and approach that will set you apart from your peers, as well as the importance of establishing a business-development strategy and capitalizing on networking opportunities both online and in person.


Developing a Personal Brand
As a young attorney, it is essential to identify your strengths to clarify what makes you a unique asset to your client. This will serve not only to boost your confidence regarding your professional contributions, but also to define your own personal brand that will differentiate you from your peers. As part of this process, you should be able to articulate why you do what you do, and to identify the values that you will associate with your personal brand. Anne Collier has put together a workbook to assist you in the process of establishing your personal brand.


Identifying Your Ideal Client
Early in your career, as you determine what path you will take in the legal profession and the assets you have to offer your clients, it is also important to determine who your ideal clients will be. The panelists suggested that the best way to begin this process is to put together a dream list of people or organizations with whom you would like to work, which will help to sharpen your focus as you develop your book of business. One way to tackle this is to begin by considering those clients with whom you have worked that you would not want to work with again, as well as those clients you liked working with the best. Preparing such lists will help to define the attributes you are looking for in a client, both from a substantive and a professional-relationship standpoint.


Establishing an Effective Networking Plan
As this profession is all about relationship building, the panelists emphasized that networking should form a cornerstone of your business-development plan. The most important step a newer attorney can take in this regard is to get involved wherever possible, either in legal organizations or organizations about which you are passionate. Prior to attending networking events, it is helpful to seek out an attendee list and to do a little research regarding who those attendees are. At the event itself, you should emphasize the quality of the contacts you make, rather than the quantity. Establish a connection with those you talk to so that you can follow up in a meaningful way to continue the dialogue and advance the relationship.


Becoming a Rainmaker
Social networking is one of the best ways to remain visible to your professional network, and one of the best ways to make new connections and maintain existing ones. In addition to the ubiquitous LinkedIn, on which your profile should be detailed and up-to-date, the panelists recommended maintaining a personal Twitter account and a blog (bearing in mind that your firm or company may have specific guidelines about your online presence). Use your blog and Twitter to attract your ideal potential client by focusing on those issues that will be of interest to that particular client base. It is important that you remain cognizant of your professionalism and ethical obligations in developing your online presence, but doing so will increase your visibility with respect to both current and prospective clients.


Transforming Prospects into Clients
As you look for ways to form new client relationships, you should start looking for opportunities within your professional and social network. Lay some groundwork with potential clients by asking open-ended questions to determine what they might be seeking from an attorney, and what you might be in a position to offer. In this regard, it is also critical to have an understanding of what other attorneys in your firm are doing—while you might not be the right fit for a particular prospect, you might still be able to bring the business into the firm and play a role in developing the relationship. You should also be clear with your professional and social network regarding what you do (another way that an up-to-date LinkedIn profile can help). Again, a clear and well-defined personal brand will position you to effectively communicate how you will be able to work with and assist these prospective clients.


Ann O'Connor, Tressler LLP, Chicago, IL


 

March 15, 2013

Success Tips from "Superachievers"


In the young attorney’s quest for success, there are lessons to be learned outside the legal world. Josh Gosfield and Camille Sweeney recently wrote a book titled The Art of Doing: How Superachievers Do What They Do and How They Do It So Well. The authors interviewed superachievers, identified as individuals who achieved incredible success in their field and made their work an art form. The 36 interviewed superachievers included athletes, musicians, actors, a tightrope walker, a civil-rights lawyer, and more.

Based on their research, the authors identify 10 core values that these so-called superachievers possess, including dedication, intelligent persistence, community, listening, and happiness.


The authors also note that a big indicator of success is how people react to failure. When the inevitable obstacles occurred, instead of blaming external influences or events, those who reached great success “took a really mercilessly clear look at their own assumptions and biases. And because of that, it allowed them to reinvent themselves and create entirely new ways of doing what they did.” (Josh Gosfield, interview with Business Insider). The authors explain that it is your self-awareness combined with what you do in the face of the inevitable roadblocks that makes the difference between superachievers and everyone else.


The book points out the importance of having inspiration, but inspiration is not enough. Rather, it is important to have a holistic approach to your goals, and to learn how to manage (and in some cases channel) your emotions to deal with the challenges. They emphasize having a combination of self-awareness—to acknowledge your emotions—and a focus on your goals.


To learn more, read the book, watch this MSNBC interview with the authors (including why the authors selected Yogi Berra), or read this Forbes article that describes the 10 core values identified in the book.


Mor Wetzler, Paul Hastings, New York, NY


 

March 15, 2013

NYC Ban on Large Sodas Decaffeinated


On March 11, 2013, just hours before it was to take effect, Justice Milton Tingling of the New York Supreme Court permanently enjoined and restrained the enforcement of New York City’s proposed ban on large soda drinks. Section 81.53 of the New York City Health Code, set to take effect on March 12, 2013, sought to “limit the sale of ‘sugary drinks’ to containers no larger than 16 ounces.” New York Statewide Coalition of Hispanic Chambers of Commerce v. The New York City Department of Health & Mental Hygiene, Index. No. 653584 (N.Y. Sup. Ct. Mar. 11, 2013), slip op. at 4. Commonly referred to as the Portion Cap Rule, the NYC Health Board created the ban to address the purported “‘obesity epidemic among New York City residents which severely affects the public’s health.’” Id. at 6.


The petitioners comprised a consortium of interested parties, including chambers of commerce, trade associations, and unions. They challenged the constitutional validity of the Portion Cap Rule as exceeding the respondents’ authority and trespassing on legislative jurisdiction, as well as being arbitrary and capricious. In short, the petitioners challenged the link between sugary drinks (i.e., soft drinks) and obesity and argued that the Portion Cap Rule would have limited effect in addressing the problem of obesity.


The court, relying on the seminal New York case on the subject, Boreali v. Axelrod, 71 N.Y.2d 1 (1987), addressed the argument that the Portion Cap Rule exceeded the respondents’ authority and trespassed on the legislative function. After reviewing the applicability of Boreali, the court set forth the pertinent four-part analysis under New York law. Reviewing each of these factors in turn, none of which is dispositive, the court invalidated the Portion Cap Rule. Slip op. at 10–13.


First, the court held that the provision was “laden with exceptions based on economic and political concerns” because of an existing memorandum of concern that exempted certain retailers—such as 7-ll, who sells the Big Gulp—and because the stated reasons were in part based on the economic costs of health care to address obesity. Slip op. at 14–15. Second, the court, after a comprehensive review of the NYC Charter from the Colonial Era to the present, held that the Portion Cap Rule was not written on a clean slate and that the NYC Charter “did not grant the Health Department the sweeping and unbridled authority to” implement and enforce the provision. Id. at 16–29. Third, because of the numerous unsuccessful attempts by the NYC City Counsel and state legislature to pass laws governing the subject, the court held that the provision intruded upon ongoing legislative debate. Id. at 29–31. Although the court found that the regulation was promulgated verbatim as a directive of the mayor’s office, it held that it was a proper exercise of expertise and technical competence. Id. at 32–33.


The court next turned to the administrative challenge of the regulations, noting that “[a]n administrative regulation is upheld only if it has a rational basis and is not unreasonable, arbitrary or capricious.” Id. at 33. Ignoring the illegality of the Portion Cap Rule’s promulgation, the court found that there was a rational basis for the enactment of the provision. Id. at 33–34. The court invalidated the rule, however, finding it arbitrary and capricious because of the numerous loopholes for certain food establishment and non-soft drinks, such as iced coffees. Id. at 34.


The Portion Cap Rule having been permanently enjoined from enforcement, it appears the battle against obesity in NYC must be fought by individuals in the gym and at their own table—at least for now. Only time will tell as to whether additional, and possibly more comprehensive, legislation in this arena is forthcoming.


Justin Heather, Korey Cotter Heather & Richardson, LLC, Chicago, IL


 

February 26, 2013

U.S. Government Joins FCA Lawsuit Against Lance Armstrong


Lance Armstrong, the biking champion accused of bilking the U.S. Postal Service (USPS) out of millions of dollars, faces another uphill climb after the U.S. government recently decided to join the False Claims Act case against the disgraced Tour de France winner. Such a move significantly increases the chance of a successful resolution for the plaintiffs.


The original complaint was filed in 2010 by one of Armstrong’s former teammates on the USPS cycling team, Floyd Landis, who has faced his own share of negative press. On February 22, 2013, a second amended complaint was filed. The basis for the lawsuit is that Armstrong, among others, submitted false claims to the federal government for the sponsor funds from USPS. The theory is that Armstrong and others violated the express terms of the sponsorship agreement by using banned performance-enhancing substances. In addition to naming Armstrong, the complaint names five other defendants, although the government only joined the suits against Armstrong, former team manager Johan Bruyneel, and Tailwind Sports, which was a sports-management company that owned the professional cycling team sponsored by USPS.


A violation of the False Claims Act, 31 U.S.C. § 3729, occurs when one “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.” Here, the false claims alleged are the claims for the $31 million in sponsorship fees from USPS. The sponsorship agreements with the USPS required that the cyclists on the team obey the rules of the governing bodies of cycling. These rules include prohibitions against specified performance-enhancing drugs and methods. The second amended complaint alleges that Armstrong gave Landis testosterone packages and that the two participated in blood transfusions, both of which were banned by cycling governing bodies.


“Lance Armstrong and his cycling team took more than $30 million from the U.S. Postal Service based on their contractual promise to play fair and abide by the rules—including the rules against doping,” said Ronald C. Machen Jr., U.S. attorney for the District of Columbia in a statement made through the Department of Justice.


The Postal Service has now seen its sponsorship unfairly associated with what has been described as “the most sophisticated, professionalized, and successful doping program that sport has ever seen.” This lawsuit is designed to help the Postal Service recoup the tens of millions of dollars it paid out to the Tailwind cycling team based on years of broken promises. In today’s economic climate, the U.S. Postal Service is simply not in a position to allow Lance Armstrong or any of the other defendants to walk away with the tens of millions of dollars they illegitimately procured.


Under the qui tam provisions of the False Claims Act, Landis, who has admitted to his own wrongdoing, stands to profit quite handsomely from the matter if the plaintiffs win the case in court or enter into a large settlement agreement. The False Claims Act calls for treble damages, meaning the case is worth $90 million or more. Landis is entitled to receive between 15 and 25 percent of any recovery.


Lindsey Nelson, Nixon Peabody LLP, Washington D.C.


 

February 21, 2013

The FAA after American Express Co. v. Italian Colors Restaurant


On February 27, 2013, the U.S. Supreme Court will hear oral arguments regarding the scope of the Federal Arbitration Act (FAA) in American Express Co. v. Italian Colors Restaurant, No. 12-133, 2012 WL 3096737 (U.S. Nov. 9, 2012). Specifically, the Court will determine if the FAA authorizes courts to invoke federal substantive law of arbitrability to invalidate arbitration agreements. The outcome of this case may continue the pro-arbitration trend reflected in the Court’s most recent decisions concerning the FAA or it may halt the tide and recognize a “vindication of rights” exception to arbitration agreements.


In American Express, a group of merchants claims that American Express Co. (Amex) violated federal antitrust laws. This group agreed to pay fees for each transaction where consumers used Amex credit cards, notwithstanding the fact that Amex’s fees are generally higher than competitor companies. Until recently, Amex only offered one type of credit card, which required consumers to pay off their balances in full. Amex later introduced a credit card requiring only partial monthly payments. While Amex diversified its credit card offerings to consumers, it continued to require that merchants pay the same fees for both kinds of credit cards even though one does not guarantee immediate payment in full.


This case has a long procedural history. At the trial level, the U.S. District Court for the Southern District of New York dismissed the suit because the agreement included a bilateral-arbitration provision and a class-arbitration waiver. On appeal, the U.S. Court of Appeals for the Second Circuit held the provision unenforceable because it immunized Amex from antitrust liability by “removing the plaintiffs’ only reasonably feasible means of recovery.” In re Am. Exp. Merchants’ Litig., 554 F.3d 300, 320 (2d Cir. 2009) (Amex I). The U.S. Supreme Court subsequently vacated and remanded this case for reconsideration in light of Stolt-Nielson S.A. v. Animal Feeds Int’l Corp., 599 U.S. 662 (2010).


On remand, the Second Circuit reaffirmed its decision that the arbitration provision was unenforceable. In re Am. Exp. Merchants’ Litig., 634 F.3d 187, 204 (2d Cir. 2011) (Amex II). The Second Circuit later reasoned that its decision was consistent with the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) because its analysis “rest[ed] squarely on a vindication of statutory rights analysis—an issue untouched in Concepcion.” In re Am. Exp. Merchants’ Litig., 681 F.3d 139, 139 (2d Cir. 2012) (Amex III). The U.S. Supreme Court in Concepcion held that the FAA preempted California law, which barred class-action waivers in consumer contracts. 131 S. Ct. at 1750–51.


By distinguishing American Express from Concepcion, the Second Circuit created an opportunity for the U.S. Supreme Court to clarify ambiguity that has abounded since Concepcion was decided. Read narrowly, Concepcion merely deals with state preemption laws and unconscionability principles and leaves intact a mechanism for consumers to challenge a class waiver under a “vindication of rights” theory. Read broadly, Concepcion rejects that theory and related policy concerns. See, e.g., Coneff v. AT&T, 673 F.3d 1155 (9th Cir. 2012) (construing Concepcion broadly). Experts are predicting that the Court will ultimately continue its pro-arbitration trend and find the vindication-of- rights theory inapplicable. In any event, the legal world will be watching.


Deborah Kang, Paul Hastings LLP, Los Angeles, CA, with Adam Reich, Paul Hastings LLP, Los Angeles, CA


 

February 19, 2013

Debating the Two-Year Option and Declining Enrollment


The fate of law schools and legal education has taken center stage lately as law schools face declining enrollment and questions about the utility of the 3L year. First came New York University (NYU) School of Law’s announcement last fall that it was revamping its third-year curriculum, offering more international learning opportunities, and increased internships in Washington, D.C. with federal government agencies. In January, the dean of Northwestern University School of Law, Daniel Rodriguez, and Professor Samuel Estreicher at NYU School of Law co-authored an opinion piece in the New York Times describing a proposed rule change that would allow students to sit for the New York bar exam after two years of law school. (The chief judge of the New York Court of Appeals agreed that the proposal has merit and should be studied and considered.) Dean Rodriguez and Professor Estreicher argued that law schools should offer two-year and three-year options, with students opting for which one they want to take.


The cost of three years of legal education and the shrinking of the legal market from the pre-2008 heyday appears to be influencing potential law students. For example, as of late January 2013, the number of law-school applications was approaching a 30-year low. Applications to law school in 2013 are down 20 percent from 2012 and 38 percent from 2010, while medical-school applications and business-school applications are staying steady or rising. With the average graduate from a private law school $125,000 in debt from legal education, and the number of recent law-school graduates finding full-time jobs requiring a state bar license down to less than 60 percent, law school is no longer the route to financial stability it once was.


The ABA Task Force on the Future of Legal Education is studying all of these issues as it considers proposals to improve the legal-education system. The two-year law-school proposal is popular, as is requiring more practical training. One proposal calls for the creation of legal-technician training outside of the formal law-school degree, which would create a class of limited-license legal technicians similar to nurse practitioners in the medical field. The task force plans to issue a report this fall and bring final recommendations to the ABA House of Delegates in early 2014.


Lindsey Nelson, Nixon Peabody LLP, Washington D.C.


 

February 7, 2013

Developing Litigation Skills Through Pro Bono Work


On November 8, 2012, the Young Advocates Committee along with the Pro Bono & Public Interest Committee presented a webinar, "Developing Litigation and Trial Skills Through Pro Bono." The panel was moderated by Justin Heather and included Angela C. Vigil, partner/director of Pro Bono and Community Service at Baker & McKenzie, and Margaret (Peggy) Jurow, vice president and assistant general counsel at Legal Services of New Jersey. The panelists described how each reached their present positions and covered the why, how, and where of pro bono work. The panel provided not only inspiration for why attorneys should do pro bono work but also practical tips for incorporating pro bono work into young attorneys' already busy workloads.


Why do pro bono work? Perhaps most obviously, there is a large need for pro bono attorneys, especially in the current economy where many people cannot afford attorneys. Even with all the necessary information, an unrepresented individual is statistically less likely to win their case. Pro bono cases also provide young attorneys with opportunities to develop skills that are otherwise harder to develop as early on. Young attorneys can be lead lawyers on a case, make the important decisions, and try cases in court. Additionally, pro bono work provides opportunities to network, and, in some cases, even be publicly recognized for exceptional work.


Who are pro bono clients? One often overlooked aspect of the discussion covered the kinds of clients typically found in pro bono work. Often, the client has less legal or business knowledge than the typical big firm client. This requires slightly different communication skills from the attorney. Pro bono clients also have a limited budget that the litigation plan needs to reflect, so attorneys may need to find creative and less expensive alternatives than they might be used to, such as free research resources.


What skills are developed? Pro bono work allows attorneys to develop many skills. While the specific skills depend on the type of work, almost all pro bono work includes working with a client. That helps attorneys develop their people management or client service skills, such as identifying client needs and establishing a client relationship. Pretrial skills (such as writing briefs and taking depositions), trial skills, and transactional skills can be acquired through pro bono work. All of these skills can be developed earlier than the usual firm structure might permit, because a junior attorney can be in the decision-making role. While making decisions can initially be intimidating, it is an extremely important skill. Also, your employer and the referring/partner organization should have mentors who can provide advice on strategy and decision making. Similarly, the panel noted that attorneys will also learn how to present both their decisions and potential action plans to their clients.


How do you manage your time? Pro bono work also helps new attorneys learn how to balance their commitments and develop good time management skills. It is imperative to remember that attorneys have the same duties to pro bono clients as to the firm's paying clients. Attorneys must define and communicate the scope of the engagement both with the partner/referring organization and with the specific client. It may also be helpful to work with others or as a team so that the case is covered if schedule problems arise.


Where can people find pro bono opportunities? When looking for pro bono opportunities, look for organizations based on the skills or type of work sought. Some suggested resources include speaking with your employer’s pro bono coordinator/office, legal services offices, legal aid offices, law schools, or local bar associations, or calling a legal aid lawyer you may know. Some specific organizations include the ABA’s Center for Pro Bono and the Section of Litigation’s Pro Bono & Public Interest Committee.


Two subject-matter specific groups raised included the American Immigration Lawyers Association and the ABA's Children's Rights project. Both panelists stressed the importance of being persistent and talking to someone directly rather than emailing an organization and getting discouraged if you do not hear back. Lastly, it was suggested that you could design your own project and find and seek support from an organization involved in that area to see if you can work with them to implement your project.


What to do with your pro bono hours? The panelists stressed the importance of telling your firm you are doing pro bono work because firms like to see that and it will help your reputation. You may also want to advocate that your pro bono hours count towards billable hours if your firm does not already recognize that time.


Jennifer Goldsmith, Washington D.C.


 

January 29, 2013

Gun Control—The Debate Is Now


In light of the horrific school shooting that took the lives of 26 victims at Sandy Hook Elementary, in Newtown, Connecticut, the White House is fighting to keep alive Obama's new gun legislation while debate about Second Amendment rights to own weapons and the relationship between guns and violence continues.


As part of President Obama's inaugural address, he crafted his message for future legislation regarding gun control by saying "Our journey is not complete until all of our children, from the streets of Detroit to the hills of Appalachia to the quiet lanes of Newtown, know that they are cared for, and cherished, and always free from harm." So far, the administration has introduced several different gun-control bills, calling for various restrictions and bans on sales of various guns and related items. The president also recently signed 23 executive orders strengthening existing gun laws and particularly directed at mental health issues and school safety. Strategies for gun-control laws are taking shape while the administration is inviting the National Rifle Association (NRA) and other gun-owner groups along with victims' organizations with the hope of forging a consensus to curb gun violence.


Organizations such as the NRA propose placing armed guards in every school, examining mental health policies and the impact of violent media on the public, and rejecting stricter control on gun legislation. The NRA's recent campaign labeled President Obama as an "elitist hypocrite," stating his daughters go to school with armed guards but do not embrace this proposal by the NRA. On the other hand, victims' organizations propose placing a ban on new assault weapons guns and large-capacity ammunition magazine (also more commonly known as a clip) sales, and checks on all firearm transactions at gun shows.


While it is not clear that guns cause violence, it is clear that guns change the outcomes for its victims. The United States is not uniquely violent compared to Australia, Canada, and Western Europe, but where the United States stands out is the resulting deaths. According to the Coalition for Gun Control, death rate by firearms, which includes homicides, suicides, and accidents, is 10.2 per 100,000 people in 2009, while the next developed country has a rate of 4.47 per 100,000 people in 2008. Further, the Department of Justice Bureau of Justice Statistics, shows that from 1976 to 2005, the percentage of homicide victims killed with a gun has steadily decreased since 1993.


Where there has been some common ground, according to a recent poll, is that the general population, including gun owners, support stricter background check measures for gun purchasing. Perhaps this can be the sticking point that leads to solutions on gun violence and preventing those lives that should not have been lost.


Wing-Sze W. Sun, Esq., Minneapolis, Mineesota


 

January 23, 2013

Implications of the "Intangible" on the Value of Professional Service Practices


On October 2, 2012, the Arizona Court of Appeals ruled that in divorce proceedings the "realizable benefits" standard was insufficient to determine the value of a husband's law practice (Walsh v. Walsh [PDF], Case No. 1 CA-CV 11-0269). The court affirmatively held that the marital community had an interest in the personal goodwill associated with the husband's law practice. While the court addressed the valuation of professional goodwill in the context of a marital dissolution, the goodwill valuation issues in the Walsh decision are significant for lawyers where value of a professional practice may become an issue.

 

Jeffrey Walsh and Cheryl Walsh, both Arizona licensed attorneys, filed for divorce in 2010. Jeffrey Walsh is a partner in the Phoenix office of a national law firm. In the divorce proceedings, the parties disagreed over the value of the community's interest in the law practice.

 

Jeffrey Walsh argued that the value of his interest in the firm should be limited to "realizable benefits," which was the $140,000 redemption value of his stock in the firm as established by the firm's stockholder agreement. A "realizable benefits" standard essentially limits the value of a business to assets that can be bought or sold on the open market. 

 

Cheryl Walsh applied a capitalization-of-earnings approach to value Jeffrey Walsh's professional practice at $1,269,000. In applying the capitalization-of-earnings approach, Jeffrey Walsh's tax returns were considered along with his historical income performance, earning sustainability, reputation, and client loyalty.

 

The Maricopa County Superior Court found that Jeffrey Walsh's interest in the law firm, which was and value of his law practice, were limited to the $140,000 stock redemption value established by the stockholder agreement.

 

A New Standard
The Arizona Court of Appeals reversed the lower court’s decision and remanded the case for a determination of the value of Jeffrey Walsh's professional goodwill. Calling it "the most intangible of intangibles," the Arizona Court of Appeals described goodwill as "reputation that will probably generate future business." While courts generally have recognized the value of goodwill as a fact-specific determination, the Arizona Court of Appeals held that the value of a professional practice should not be limited to "realizable benefits" and must take into account the value of professional goodwill. 

 

The court reasoned that limiting the value of a professional practice to "realizable benefits" improperly limits the value to the party's interest in business net assets. The court held that professional goodwill should be considered in determining the value of a professional practice; factors in determining the value of professional goodwill include "the practitioner's age, health, past earning power, reputation in the community for judgment, skill and knowledge, and his or her comparative professional success." However, the court was careful to differentiate between professional goodwill and future earning capacity, and it noted that professional goodwill (and not future earning capacity) is to be considered in valuing a party's business interest.

 

The implications of the court's decision appear to reach beyond family law practice. The court's consideration of "the most intangible of intangibles" in valuing business could likely be viewed in a variety of contexts, including litigation, business formation, mergers and acquisitions, and estate planning. The court itself surveyed authorities from other jurisdictions indicating, at the very least, the opportunity (if not the established authority) for those jurisdictions to adopt a similar standard.

 


Stephanie McCoy Loquvam, Aiken Schenk Hawkins & Ricciardi P.C., Phoenix, Arizona


 

January 22, 2013

Emerging Legal Guidelines on Discoverability of Social Media in Federal Courts


At the turn of the century, while being interviewed by Cable News Network's Wolf Blitzer, President Bill Clinton remarked, "That is, we're into a whole new world with the Internet." One of the more notable results of this "new world" has been a palpable public embrace of social media. This, in turn, has spawned a bevy of questions regarding the "public" nature of people's activities on social media websites like Facebook, Twitter, and LinkedIn, and whether social networking evidence is admissible in civil disputes.

 

This year, federal courts made significant contributions to the burgeoning foundation for this "new world" subject matter. Young lawyers should be cognizant of these developments, as they will ultimately affect a significant number of clients and potential clients.

 

In general, courts have held that there is no common law right of privacy or privilege that protects an individual's activities on a social media website from discovery. E.g., Tompkins v. Detroit Metropolitan Airport, 278 F.R.D. 387, 388 (E.D. Mich. 2012) ("[M]aterial posted on a 'private' Facebook page that is accessible to a selected group of recipients . . . is generally not privileged, nor is it protected by common law or civil law notions of privacy."). Nonetheless, multiple courts have denied discovery requests seeking such information because such requests are overbroad. E.g., id. at 388–89 (denying a request for the plaintiff to sign authorizations to access her Facebook account because the requesting party "does not have a generalized right to rummage at will through information that Plaintiff has limited from public view" on a Facebook page only accessible to a select group of recipients); Howell v. Buckeye Ranch, Inc., No. 2:11-cv-1014, 2012 WL 5265170, *1 (S.D. Ohio Oct. 1, 2012) (denying a discovery request seeking a party's username and password for social media sites because "a litigant has no right to serve overbroad discovery requests that seek irrelevant information"). Below is a snapshot of relevant court decisions from 2012 regarding this subject matter.


Cases Permitting Discovery of Social Media Information
Mailhoit v. Home Depot U.S.A., Inc., No. CV 11-03892 DOC (SSx), 2012 WL 3939063 (C.D. Cal. Sept. 7, 2012)
In an action initiated by a former employee against a former employer, the court granted the request for production of all social media website communications between the plaintiff and any current or former employees of her former employer, which referred to her employment or the subject of the lawsuit.

 

Glazer v. Fireman's Fund Ins. Co., No. 11 Civ. 4374(PGG)(FM), 2012 WL 1197167 (S.D.N.Y. Apr. 5, 2012)
In an employment discrimination action, the court ordered the plaintiff and a third party social media company, LivePerson, to turn over all chats that she had conducted on the website to the requesting defendant.

 

Davenport v. State Farm Mut. Auto. Ins. Co., No. 3:11-cv-632-J-JBT, 2012 WL 555759 (M.D. Fla. Feb. 21, 2012)
In a personal injury case, the court denied a request for production of every photograph that the plaintiff had ever added to any social networking site following her accident on the grounds of being "overly broad on its face and not reasonably calculated to lead to the discovery of admissible evidence," but ordered the plaintiff to produce any photographs depicting her, taken since the date of the subject accident, and posted to an SNS by anyone, including third parties.


Cases Denying Discovery of Social Media Information
Howell v. Buckeye Ranch, Inc., No. 2:11-cv-1014, 2012 WL 5265170 (S.D. Ohio Oct. 1, 2012) In an employment discrimination action, the court denied the defendants' request for the plaintiff's usernames and passwords for the social media sites she used because this account information would provide the defendants access to irrelevant information in the private sections of her social media accounts.

 

Tompkins v. Detroit Metropolitan Airport, 278 F.R.D. 387 (E.D. Mich. 2012)
In a personal injury case, the court denied the defendant's request for production of the plaintiff's entire Facebook account, including sections designated as private, because the request might lead to production of "voluminous personal material having nothing to do with this case. . . ."

 

Mailhoit v. Home Depot U.S.A., Inc., No. CV 11-03892 DOC (SSx), 2012 WL 3939063 (C.D. Cal. Sept. 7, 2012)
In an action initiated by a former employee against a former employer, the court denied three requests for production of information from social media websites for failing Federal Rule of Civil Procedure 34(b)(1)(a)'’s "reasonable particularity" requirement.


Adam Reich, Paul Hastings LLP, Los Angeles


 

January 15, 2013

New Year's Resolutions to Help Your Career in 2013


Getting back into the swing of things after the holidays can be challenging for lawyers at every stage, but it is a great time to set some professional goals for 2013. Here are our Top 10 New Year's resolutions you may want to implement to help your career throughout the coming year:



  1. Take Charge of Your Career. This is your life, and your career. Don't wait for your firm, your boss or someone else to plan it for you. What do you want to do professionally? How are you going to get there? It's time to step up and create and achieve your own vision.
  2. Set Goals, Action Items, and Deadlines. It's time for strategic planning. What do you want to work on this year? Client development? A new subspecialty or skill? Meeting deadlines? Pick one or two big goals, break them down, and calendar some benchmark deadlines to get you there.
  3. Solicit Feedback. You need it, and not just at your annual evaluation. Don't be afraid to take a client out to lunch and ask them about your strengths and weaknesses or to ask a senior associate, partner, or staff member how you could improve.
  4. Join the Friend of the Month Club. Make it a point to add one new connection a month—on your own. Reach out to someone at a bar meeting or the courthouse. Stop in and introduce yourself to the new company in your building, on your block, or in town.
  5. Strategize. If your latest case did not come to you with a well-organized plan and legal theories (and when does that ever happen), take some time to thoroughly evaluate it, do your research, and start out prepared. It's a lot easier to do discovery and argue a case when you understand it and know where you think you are going—even if that means taking time you don’t think you have up front.
  6. Ask for Help. Want to go to that CLE but need some funding? Not sure how to prepare a motion for supervisory order, how to use the new e-fax program, or what that notice of commencement of bankruptcy case means for you? Don't hesitate, guess, ignore, or reinvent the wheel. Ask for help. It’s easier than you may think.
  7. Give Back. How about taking on at least one new pro bono client or professional activity this year? Write an article or a news and development piece. Do a Sound Advice podcast. Volunteer to be a mentor. Help plan a networking event. Volunteer to contribute in some way. Look at your local bar, a state or ABA committee, or the ABA's Good Works projects. Better yet, start something that means something to you and your community.
  8. Mind Your Manners. Please and thank you go a long way. Make it a point to thank your secretary, receptionist, mentor, significant other, courthouse clerk, and anyone else who puts up with your crazy schedule and personality. And think before overreacting to opposing counsel.
  9. Keep Your Nose to the Books, or Your Ears to the IPOD. YAC and the rest of the ABA offer a variety of free programs and advice (like this column!). Make it a point to take one thing in per month, even if it's just a three-minute Sound Advice or a short podcast.
  10. Celebrate. All work and no play can make you a boring and unsatisfied lawyer. Celebrate all your hard work and be sure to set aside time for your personal life. It's a must.


Feel free to share these tips or add your own.


Laura Schrick, Mathis Marifian & Richter, Belleville, IL


 

January 2, 2013

Supreme Court Ready to Nix Affirmative Action in College Recruitment?


On October 10, 2012, the U.S. Supreme Court heard oral arguments in the case of Fisher v. University of Texas. This case has spurred conversation within the legal community because of the possibility that the Court could overturn affirmative action in higher education as it was established in Grutter v. Bollinger, 539 U.S. 306 (2003). Grutter involved the denial of admission of a Caucasian student to the University of Michigan Law School. The student sued on equal protection grounds and argued that the admissions committee’s consideration of race violated his constitutional rights under the Fourteenth Amendment. The Court disagreed. In an opinion written by former Justice O'Connor, the Court determined that universities can consider race or ethnicity as a "plus" factor when individually considering each applicant. However, the majority in Grutter made it clear that looking at race singularly or setting up quotas for members of certain racial groups is strictly prohibited.           


The University of Texas follows Grutter's "plus" factor analysis of race in its admissions criteria of students. Two Caucasian female applicants, Abigail Fisher and Multer Michalewicz, challenged this policy after being denied admission to the school even though they had SAT scores within the 25–75 percentiles of the incoming class. Although the university's policy is essentially the same as the one upheld in Grutter, the Court’s composition has changed since Grutter. Justices Scalia, Thomas, and Kennedy all dissented in Grutter. With the additions of Justices Roberts and Alito to the Court, who seemed opposed to the logic of Grutter in former cases, the outcome in Fisher v. University of Texas is uncertain. Judging by oral argument before the Court, the answer may be the overturning of Grutter.


Counsel for Fisher opened oral argument by stating that the University of Texas admissions policy's consideration of race as a factor in general was unnecessary because the school already met a critical mass of underrepresented students. Justice Sotomayer questioned this conclusion and cited a study that the university conducted, which suggested that minorities at the school felt underrepresented and without a proper voice. Counsel responded by dismissing this study as isolated and noted that it occurred before the school implemented Grutter. The Court continued to propound questions on the topic of critical mass as laid out in Grutter. Justices Breyer, Ginsburg, and Sotomayer challenged Fisher's argument that critical mass had been met by the university. Justice Scalia, however, questioned whether demographics were ever necessary to achieve critical mass.


During the University of Texas's oral argument, Justices Scalia and Chief Justice Roberts immediately doubted the value of using race as a factor in the admissions process. Of key concern to Chief Justice Roberts was where such classifications ended. Because the University of Texas does not employ a measurement system in their analysis of race, it seemed probable to Chief Justice Roberts that someone who is 1/8 Hispanic could just as easily qualify for consideration as someone who is 1/2 Hispanic. Counsel countered that such classifications should not be narrowly construed and that it was up to applicants to determine which racial box to check. According to the university, if applicants lie about their race, they could be penalized under university rules and regulations. Chief Justice Roberts and Justices Scalia and Alito also questioned what factors comprised the university's critical mass goal and whether that critical mass was based on a percentage or number. The university replied that under Grutter, percentage could not be used exclusively to determine whether critical mass is met. Rather, the university strived to employ race as a factor to create a level of diversity on campus that created educational benefits.


Throughout oral argument, the Court seemed focused on the concept of "critical mass." This language, which is pulled directly from the Grutter opinion, will likely be a central focus of the Court's opinion. It seems unlikely, with the apparent positions of the justices during oral argument, that critical mass will be defined to require a structured numeric goalpost that would generate quotas. Since the Court seems uncomfortable with a more subjective "we'll know it when we see it" approach, the distinct possibility is race could be nixed as a factor that universities may consider when trying to achieve a critical mass of underrepresented individuals. Such a decision could severely restrict or end affirmative action in higher education.


A complete transcript of the Court's argument is available.


Benjamin Rundall, Sandra Day O’Connor College of Law at Arizona State University


 

January 1, 2013

Revealing Confidential Information: A Lesson for Young Attorneys


A conversation between friends regarding an associate's stress over being put on a project with difficult partners has led to two former stockbrokers being charged criminally and civilly for insider training. The charging documents offer a glimpse into how seemingly innocent communications between friends can lead to client confidences being revealed and used to violate insider training laws.


In United States v. Conradt and Weishaus, pending in the Southern District of New York under Case No.12 Crim. 887, Thomas Conradt and David Weishaus, who were law school classmates, were indicted on trading on inside information regarding IBM's acquisition of SPSS. The federal Securities and Exchange Commission also has filed a civil lawsuit against them.


Conradt and Weishaus became aware of IBM's acquisition of SPSS before it was made public through an individual who has been identified in the charging documents as "the source." The source, a young research analyst at an international financial services firm, had learned the information from his close friend, an associate at a major New York law firm. The indictment describes the communication between the research analyst (identified as CC-3) and the associate (identified as "Attorney-1") as follows:


    On or about May 31, 2009, following Attorney-1's assignment to the IBM/SPSS transaction, Attorney-1 met his close friend, CC-3, for brunch at a restaurant in Manhattan. During the meeting, Attorney-1 confided in CC-3 that he was feeling significant stress as a result of being assigned to the IBM/SPSS Transaction. Attorney-1 told CC-3, among other things, that Attorney-1 worried that he (Attorney-1) had limited experience working on transactions like the IBM/SPSS Transaction, that one of the attorneys at the New York Law Firm working on the deal was known to be particularly demanding, and that Attorney-1's performance on the assignment would affect his professional standing at the New York Law Firm.


As the indictment details, the conversation that the associate thought would be held in confidence between him and his friend (as they had discussed work-related matters like this before) led to the associate's friend purchasing SPSS stock. The friend also told Conradt about the IBM/SPSS deal; Conradt traded on that information himself and informed Weishaus about the transaction. Weishaus then bought SPSS stock as a result of the insider information.


The attorney at the center of this matter has not been charged with any wrongdoing. The story, however, serves as a reminder to all young attorneys regarding the dangers of revealing any client information, even when they are speaking with their closest friends or family. A comprehensive look at the story can be found in the Am Law Daily.


Lindsey Nelson, Nixon Peabody LLP, Washington D.C.


 

December 11, 2012

America Redefining the Definition of Marriage?


During the November 6, 2012, election, voters in three states approved of same-sex marriage while a fourth state refused to adopt a constitutional ban on same-sex marriage. For the first time in the country, same-sex marriage was approved by popular vote in Maine. Washington and Maryland voters approved previously enacted laws providing for same-sex marriage. Currently, same-sex couples are able to or will be able to marry in nine states: Connecticut, Iowa, Maine, Maryland, Massachusetts, New Hampshire, New York, Vermont, and Washington, as well as the District of Columbia. Rhode Island and New Mexico honor out-of-state marriages between same-sex couples but do not perform them in-state. Full domestic partnerships or civil unions are recognized in eight states: California, Delaware, Hawaii, Illinois, Nevada, New Jersey, Oregon, and Rhode Island. Domestic partnerships recognition occurs in Colorado and Wisconsin, but it is more limited in scope than others. Thirty-eight states have anti-same sex marriage laws, which includes 20 states prohibiting the freedom to marry. 


By states approving of same-sex marriage, they provide all individuals, without regard to sex, the same rights and privileges in a marital setting, including automatic rights under areas of law such as family and medical benefits. Now, same-sex couples in those states can file for divorce and pursue child custody matters, wrongful death actions, and claims for loss of consortium. 


Minnesota, Washington, Maryland, and Maine approved of same-sex marriage in different ways in the election. In Maine, voters approved same-sex marriage in its ballot initiated campaign, "Yes on 1," through issuing marriage licenses to same-sex couples where 54 percent of voters favored marriage equality. In Maryland, voters narrowly passed an initiative in favor of same sex marriage with 51.9 percent of voters approving same-sex marriage as part of the campaign to "Vote for Question 6 Marriage, Equality & Fairness" in a ballot initiative. In Washington, "Referendum 74," which asked voters to approve or deny a bill that would legalize same-sex marriage, passed with 52 percent of the vote. In Minnesota, with the "Vote No" to the marriage amendment campaign, the voters rejected the proposed constitutional amendment that defined marriage as between a man and a woman in the most expensive ballot contest in state history. However, the rejection of the Minnesota constitutional amendment did not change Minnesota law, which currently bans same-sex marriages (Minn. Stat. § 517.03 (2012)).


In short, although progress is slow, advocates of same-sex marriage have reason to be hopeful for the future of same-sex marriage in light of the success of recent ballot initiatives.

 

Wing-Sze W. Sun, The Wong Sun Law Office, Minneapolis, MN


 

November 6, 2012

Hurricane Sandy after the Storm: A Flood of Litigation?


Bloomberg News and other media outlets estimate that the overall costs of Hurricane Sandy, the "Superstorm" that hit the Northeast last week, will exceed $20 billion. While private insurance will cover at least a portion of these losses, it is clear that a significant percentage of the total losses are not covered. In these cases, the cost of cleanup and repairs will be paid by individuals and businesses or by federal, state, or local governments. 


If history is any guide, the financial responsibility for storm losses and cleanup costs will lead to disputes and will generate considerable litigation. Nearly anyone impacted by the storm’s damage could end up a litigant, including property owners battling their insurers over coverage issues; insurance companies litigating scope of policy with their own insurers (called reinsurers); and individuals suing government entities. These litigants will likely employ an assortment of legal theories and may turn to litigation generated by prior storms for guidance. 


A recent example of how natural disasters affect litigation is Hurricane Katrina, the 2005 storm that impacted several Gulf States. Following Katrina, insurance litigation arising out of the storm extended beyond claims addressing policy coverage, limits, and exclusions to include causes of action for bad faith and infliction of mental and emotional distress. For example, in Bradley v. Allstate Ins. Co., 620 F.3d 509 (5th Cir. 2010), the plaintiffs’ home was “destroyed from a combination of hurricane winds and flooding” and was rendered a total loss. However, after Allstate refused to pay the full policy limits, plaintiffs sued Allstate for breach of contract, negligence, and bad faith; they also sought damages for the loss of their home and property and compensation for mental anguish and emotional distress related to Allstate’s handling of the claim. Bradley offers just one example of claims sought post-Katrina, and we might expect the same number and breadth of claims to arise in the wake of Hurricane Sandy.


Although a significant amount of the litigation following Hurricane Sandy will likely involve insurance claims, federal and state governments also will likely be drawn into the fray as individuals and businesses attempt to recoup losses caused by the storm. After Hurricane Floyd, owners of property along the Hudson River in New York sued the State of New York for negligence, intentional trespass, and nuisance arising out of flood damage to their homes in Keller v. State, 5 Misc. 3d 1008(A), 798 N.Y.S.2d 710 (Ct. Cl. 2004). Claimants alleged that New York was negligent in its design and building of a state highway after it failed to provide adequate drainage systems that would prevent flooding from major storms. Similarly, a plaintiff in Mississippi brought claims of negligence, gross negligence, and trespass against government agencies operating the Mississippi State Port Authority after debris from the port allegedly collided with the plaintiff’s home and caused extensive damage. Young v. Mississippi State Port at Gulfport, 1:06CV966LG-RHW, 2007 WL 141906 (S.D. Miss. Jan. 12, 2007).


It is not clear that plaintiffs will successfully litigate insurance claims, actions for negligence, or other torts and obtain damages for storm losses. What is clear, however, is that many will likely turn to the courts and the litigation process to attempt to regain some of what was lost to Hurricane Sandy.

 

Mary J. Bortscheller, Williams Montgomery & John, Chicago, IL


 

November 6, 2012

Court Defines "Supervisor" for Determinations of Employer Liability under Title VII


On June 25, 2012, the Supreme Court granted certiorari in the case of Vance v. Ball State University to address the existing circuit split over the scope of "supervisor" liability for hostile work environment harassment claims under Title VII of the Civil Rights Act of 1964. The current circuit split arises out of the Court’s previous opinions in the companion cases of Burlington Industries, Inc. v. Ellerth and Faragher v. City of Boca Raton, in which the Court held that an employer can be liable for a hostile work environment created by a supervisor with immediate or successively higher authority over employees. If a coworker engages in the harassment instead of a supervisor, however, an employer may only be liable if it was negligent in discovering or remedying the harassment. Noticeably absent from the opinions, however, was a determination as to when an employee is considered to be a supervisor rather than merely a coworker. 


In the Vance opinion, the U.S. Court of Appeals for the Seventh Circuit held that an individual must have the power to “hire, fire, demote, promote, transfer, or discipline an employee” to be considered a "supervisor" under Title VII. The First and Eighth Circuits have adopted the Seventh Circuit’s test requiring that a supervisor have the power to affect the terms and conditions of employment.


In contrast, the Second, Fourth, and Ninth Circuits have endorsed a much broader definition of the term supervisor. In those circuits, it is enough that a supervisor be able to direct the particular actions of employees' daily work activities regardless of the ability to affect the terms of employment. This position reflects the enforcement guideline promulgated by the federal Equal Employment Opportunity Commission (EEOC) in 1999. Since then, EEOC continues to maintain that position, which is reflected in its amicus brief filed with the Supreme Court.


Previous Supreme Court decisions have noted that the common law rules of agency should provide guidance in determinations of employer liability for hostile work environment harassment perpetrated by supervisory employees. Despite this admonition, the circuit courts' interpretations of the rules of agency are widely varied. The Court’s decision in Vance should clear up the ambiguity and provide a consistent rule for all federal jurisdictions. 


While it is difficult to surmise the Court's leanings, the broader definition of supervisor that is adopted by the Second, Fourth, and Ninth Circuits could ultimately prevail. Despite the uncertainty leading up to the Court's ultimate determination, a diligent labor and employment attorney may wish to counsel her clients to review their employee policies and to preemptively investigate the questionable or challenged conduct of all employees meeting the broader definition of a supervisor. This might ultimately prove unnecessary when the Court's opinion is released, but the possibility of such a pronounced increase in employer liability means one can never be too safe.


Sean T.H. Dutton, J.D. candidate, DePaul University College of Law


 

October 22, 2012

Changes to Income-Based Repayment Plans Are Beneficial to Borrowers with Graduate Degrees


Changes to the federal government's Income-Based Repayment Plan (IBR) could allow attorneys to discharge more than $150,000 in student loan debt, according to a study released this October by the New America Foundation. Described by the New York Times as a "nonprofit and nonpartisan policy institute," the New America Foundation issued the study "Safety Net or Windfall? Examining Changes to Income-Based Repayment for Federal Student Loans," which found that students with graduate degrees who have the most debt will glean the greatest benefit from the changes. The report states that middle- and high-income borrowers who attend graduate school, such as law school, will receive substantial new benefits from the changes to IBR, while low-income borrowers will not experience significant new benefits.   


In 2010, Congress and President Obama modified the IBR program, which allows recipients of federal student loans who meet certain debt-to-income qualifications to make monthly payments on their loans that are based on their income. Before the changes, borrowers in the IBR program were required to pay 15 percent of their discretionary income for 25 years before the loan would be discharged. Under the new program, borrowers will only be required to pay 10 percent of their discretionary income for 20 years before they are eligible for loan forgiveness.


The New America Foundation’s report [PDF] includes a hypothetical look at how a law school graduate's loans would be affected under the new IBR program. In that hypothetical, a law school graduate who leaves law school with $121,974 in federal student loans, with a starting salary of $65,000 and a salary of $164,228 in year 20, will have $160,536 in loans forgiven after 20 years. Under the previous IBR program, with the same amount of debt and the same salary, the loan balance forgiven after 25 years would only be $22,867.


The revisions to IBR originally were to take effect for loans originating in July 2014 or later. In October 2011, however, President Obama announced that under an executive action titled "pay as you earn," the changes would apply to borrowers who took out federal loans after October 1, 2007 (Fiscal Year 2008) and who either (1) received a disbursement on a federal student loan after October 1, 2011, or (2) took out a direct consolidation loan after October 1, 2011. The latter qualification means that attorneys who have graduated from law school in the past few years may be able to take part in the program even though they are no longer receiving disbursements on student loans. The pay-as-you-earn regulations are expected to be finalized later this year, at which point borrowers can begin to enroll.


Lindsey Nelson, Nixon Peabody, Washington, D.C.


 

October 15, 2012

Consumer Litigation Poised to Increase in California if Proposition 37 Is Passed


"Never stir up litigation. A worse man can scarcely be found than one who does this." One of the most pivotal figures in American history, Abraham Lincoln, penned these words. While Lincoln intended his advice for prospective lawyers, it is especially relevant to California voters heading to the polls on November 6, 2012, to determine the fate of Proposition 37. This state ballot initiative will, if passed, expand opportunities for consumer litigation against food producers, manufacturers, and related retailers.


The expressed purpose of Proposition 37, also known as the California Right to Know Genetically Engineered Food Act, is "to create and enforce the fundamental right of the people of California to be fully informed about whether the food they purchase and eat is genetically engineered and not misbranded as natural[.]" To accomplish this broad goal, Proposition 37 authorizes "any person" to sue food producers, manufacturers, and related retailers who fail to abide by strict labeling requirements and restraints for raw and processed foods produced from organisms with artificially altered genetic material. Proposition 37 encourages courts to "liberally construe[]" its language when determining these suits, and authorizes a vast array of remedies.


Specifically, Proposition 37 mandates three labeling changes, effective July 1, 2014. First, the label of any "raw agricultural commodity" offered for retail sale that has been or may have been at least partially genetically engineered must contain the phrase "Genetically Engineered" in "clear and conspicuous words." This terminology must appear either on the front of the product package or, in the case of products that are not individually packaged or otherwise labeled, on a label on the retail store’s shelf or bin where the "raw agricultural commodity" is displayed. Second, the label of any "processed food" (broadly defined to mean "any food other than a raw agricultural commodity") that is or may have been produced with at least some genetically engineered organism must clearly and conspicuously display on the front or back of the product's packaging either "Partially Produced with Genetic Engineering" or "May be Partially Produced with Genetic Engineering." Third, any label or corresponding advertisement, promotional material, or in-retail store signage for any "genetically engineered" food or "processed food," unless specifically exempted by Proposition 37, may not "state or [even] imply that said food is 'natural'[,] 'naturally made', 'naturally grown', 'all natural' or any words of similar import that would have any tendency to mislead any consumer."


Food producers, manufacturers, and related retailers who violate Proposition 37's labeling regulations could face dire consequences. Proposition 37 relaxes pleading standards for plaintiffs and leaves potential defendants exposed to windfall judgments. For example, plaintiffs may obtain injunctive relief even if they do not allege facts necessary to show, or tending to show: (1) a lack of adequate remedy at law; (2) irreparable damage or loss; and (3) unique or special individual injury or damages. Proposition 37 also statesthat a violation of any of its provisions "shall [automatically] be deemed a violation of [California] Civil Code section 1770(a)(5)," without requiring the plaintiff to establish any specific damage from, or prove any reliance on, the alleged violation. This particular provision is especially notable because California Civil Code section 1770(a)(5) is part of the Consumer Legal Remedies Act (CLRA), a statute which authorizes recovery of punitive damages. Beyond injunctive relief and punitive damages, Proposition 37 also expressly indicates that violators may be liable for damages "in at least the amount of the actual or offered retail price of each package or product" and "reasonable attorney's fees and all reasonable costs incurred in investigating and prosecuting the action as determined by the court."


Recent polls suggest California voters may disregard Lincoln's words of caution and pass Proposition 37 on November 6, 2012. If voters act accordingly, lawyers need to be prepared for an inevitable uptick in consumer litigation in California.


Adam Reich, Paul Hastings LLP, Los Angeles


 

October 15, 2012

The UBE: What Does It Mean for Me?


Whether you graduated from law school in 2010 or in 1950, you undoubtedly remember the anxiety that you experienced waiting for bar examination results. For many of us, our first bar exam was enough; it is not an experience that we ever want to repeat. As states across the country welcome newly minted lawyers to the ranks of the legal profession, members of the bench and bar continue to critically analyze the current model for legal education. They debate the value of the socratic method and law schools’ abilities to produce "real" lawyers. And, now there is a new trend to discuss which represents a fundamental change in the admission to practice law and could have a profound impact on our profession—the uniform bar exam (UBE).


The UBE is a testing paradigm developed by the National Conference of Bar Examiners (NCBE). According to the NCBE, the UBE is intended to "test knowledge and skills that every lawyer should be able to demonstrate prior to becoming licensed to practice law." The UBE includes three testing instruments that states have adopted to varying degrees: the multistate bar examination, a six-hour, 200-question multiple-choice examination covering constitutional law, contracts, criminal law and procedure, evidence, real property and torts; the multistate essay examination consisting of six essay questions; and the multistate performance test, two 90-minute skills questions the NCBE describes as "covering legal analysis, fact analysis, problem solving, resolution of ethical dilemmas, organization and management of a lawyering task, and communication." The UBE is uniformly graded so that the bar exam is weighted as 50 percent of the total score, the essay exam 30 percent, and the performance test 20 percent.


In April 2010, Missouri became the first state to adopt the UBE. In August 2010, the American Bar Association's Council of the Section of Legal Education and Admissions to the Bar adopted a resolution "urg[ing] the bar admission authorities in each state and territory to consider participating in the development and implementation of a uniform bar examination." That same month, the Conference of Chief Justices adopted a similar resolution. As of July 2012, 10 jurisdictions have adopted the UBE: Alabama, Arizona, Colorado, Idaho, Missouri, Montana, Nebraska, North Dakota, Utah, and Washington. Possibly the biggest news regarding this developing trend is that Washington will begin administering the UBE in July 2013. Washington has been a "holdout" in the changing bar examination landscape. Although many states have integrated individual components of the multistate tests into their own bar examinations, Washington does not currently administer the MPT, MBE, or MPRE. Washington's adoption of the UBE indicates a growing acceptance of the UBE model.


The NCBE aspires to expand the services offered to jurisdictions that adopt the UBE to include centralized registration of examinees, test administration, decision-making regarding testing accommodations, and scoring of the written components.


Although the purpose of the UBE is to standardize the bar-examination process, jurisdictions still maintain authority over local requirements for bar admission, including education, character and fitness, and UBE score requirements. A passing score in one jurisdiction does not necessarily translate to a passing score in another jurisdiction. Jurisdictions can still test an applicant's knowledge of local law by adding a jurisdiction-specific section to the bar exam or implementing a course requirement to "bridge the gap" between basic legal knowledge and required competency in local law.


A primary benefit of the UBE is that scores (though not pass status) are portable to other UBE jurisdictions. This offers many benefits. Portable UBE scores may help foster personal and professional mobility for lawyers of all experience levels and result in cost efficiencies for clients with legal needs in multiple jurisdictions. For new lawyers, the portability of the UBE score is particularly helpful because admission on motion, in the jurisdictions that offer it, usually requires that the applicant have practiced a minimum time—typically five of the last seven years—rendering this option unavailable to new lawyers.


It remains to be seen how the UBE will affect the legal profession, but the possibilities are profound. Will the legal profession adopt an apprenticeship model like the medical profession? Will multi-jurisdictional practice become the norm? Does this trend indicate a movement toward the nationalization of the law? Remember waiting for bar results with baited breath. Be aware of the changing face of the legal profession. And, consider what the UBE means for you.


Stephanie McCoy Loquvam, Aiken Schenk Hawkins & Ricciardi P.C., Phoenix


 

August 1, 2012

Same-Sex Marriage on the Ballot and in the Courts in Minnesota


On November 6, 2012, Minnesota will become the 31st state to vote on an amendment to its constitution regarding the definition of marriage. Minnesotans will vote on the following proposed amendment to Article XIII of the Minnesota Constitution: “Section 13. Only a union of one man and one woman shall be valid or recognized as a marriage in Minnesota.”


At the same time that the proposed constitutional amendment will be on the ballot, three same-sex couples and the son of one of the couples will be litigating their claims against the Hennepin County Local Registrar for the registrar’s refusal to accept the same-sex couples' applications for marriage licenses. In Benson v. Alverson, No. 27 CV 10-1 1697 (Hennepin County Dist. Ct.), the couples allege that Jill Alverson, the registrar, violated their due-process, equal-protection, freedom-of-conscience, and freedom-of-association rights under the Minnesota Constitution, and the single-subject provision of the Minnesota Constitution. On March 7, 2011, Hennepin County District Court Judge Mary Dufresne dismissed the couples’ complaint in its entirety for failure to state a claim upon which relief can be granted. On January 23, 2012, the Minnesota Court of Appeals affirmed in part, and reversed in part, Judge Dufresne’s order, and held the couples’ constitutional challenges based on equal protection, due process, and freedom of association were inappropriately dismissed. On April 17, 2012, the Minnesota Supreme Court declined to review the case, permitting the couples' trial to proceed in Hennepin County District Court.


The question then becomes: What impact, if any, will the proposed amendment to Article XIII of the Minnesota Constitution, if passed, have on Benson v. Alverson? Retroactive application of laws is highly disfavored, and, unless the terms of the proposed constitutional amendment clearly evidence intent to make the amendment retrospective in operation, the presumption is that the constitutional amendment would be given only prospective application. Absent from Minnesota’s proposed constitutional amendment is any sign of intent or language making the proposed amendment retrospective in operation. Thus, Benson v. Alverson should proceed unimpeded by the outcome of the November 6, 2012, election. However, if the proposed amendment to Article XIII of the Minnesota Constitution passes, and subsequently the couples succeed in establishing that the registrar’s actions violated their equal-protection, due-process, and/or freedom-of-association constitutional rights under the pre-November 6, 2012, Minnesota Constitution, the Benson v. Alverson holding may be unconstitutional. Obviously, there is more to come from Minnesota on this issue.


Brandon Schwartz, Schwartz Law Firm


 

August 1, 2012

Write Right: Tips for a Better Reply Brief


Although reply briefs may be optional, it is generally advisable to file one. Otherwise, the opponent’s unanswered arguments will be the last word before the court (or before oral argument is heard). The lack of a reply brief also might be viewed as a concession of the validity of the opponent’s arguments or facts as presented. And of course, lawyers may have a tough time resisting the opportunity to have the last word. But there are some guidelines that can improve a reply brief.


Overall, it is important to keep in mind that a reply brief’s purpose is different from that of an opening brief. The reply brief is an opportunity to answer the questions that the reviewing court may have after reading the opposition brief. The court may need to know more about the key facts, the relevant case or statutory law, or the policy considerations that militate against the opponent’s position. All too often, however, reply briefs either rehash the main arguments without replying to the opposing arguments in any meaningful fashion, or they challenge every factual and legal argument in the opponent’s brief. These types of reply briefs do little to advance the litigant’s cause and should be avoided.


To focus on some strategies for improving reply briefs, consider the “10 simple commandments” offered in this article. Suggestions include avoiding weak arguments, embracing a theme, and maintaining credibility. Mastering these instructions will help you “master the art of writing an effective reply brief and in the process increase your chances of prevailing in any given case.”


Mor Wetzler, Paul Hastings, New York, NY


 

July 30, 2012

Law Grads Get Lesson in Caveat Emptor


A federal judge in Michigan recently dismissed suit against one of the first law schools accused of misrepresenting graduate employment data. Former students of Cooley Law School had accused their alma mater of misrepresenting recent graduate job-placement statistics. The grads claimed fraud, negligent misrepresentation, and violation of Michigan’s Consumer Protection Act, seeking $250 million in damages. The plaintiffs claimed that they would not have enrolled at Cooley or would not have paid its high tuition if they had realized its jobs statistics included temporary and part-time employment and employment for which a JD was not required or preferred.


The judge dismissed the case, finding that purchasing a legal degree is not protected by the Michigan Consumer Protection Act. Moreover, the court found that the job numbers at stake were “literally true” whether they differentiated between recent grads in legal jobs vs. non-legal jobs. The court added that the grads “unreasonably relied upon the representations” in question in their law-school decision. “With red flags waiving and cautionary bells ringing, an ordinary prudent person would not have relied on the statistics to decide to spend $100,000 or more.” The court found the numbers unreliable: “Without question, the Employment Reports are inconsistent, confusing, and inherently untrustworthy.” And the court explained that the numbers had limited utility—for example, a stated average starting salary of $54,796 could not reasonably be thought to represent a figure for all graduates, because it could only represent the average salary of graduates who responded to the school’s survey and chose to reveal their salaries. “The bottom line is that the statistics provided by Cooley and other law schools in a format required by the ABA were so vague and incomplete as to be meaningless and could not reasonably be relied upon. But, as put in the phrase we lawyers learn early in law school—caveat emptor."


The decision is available here. In March, a New York court dismissed a similar state law suit against New York Law School.


Mor Wetzler, Paul Hastings, New York, NY


 

July 30, 2012

Cease and Desist, Please


Jack Daniel’s Properties recently sent an author a cease-and-desist letter that demonstrated attorney civility, even kindness. Jack Daniel’s Properties, the owner of the Jack Daniel’s trademarks, wrote to the author of a book whose cover resembles the whiskey’s label (compare for yourself).


While some companies enforcing trademarks have been called “bullies” for protecting their intellectual property, the letter from Jack Daniel’s, available at Mashable, takes a very polite approach. The letter explains the company’s need to protect its brand and thus its trademark. The letter then asks that the author redesign the cover when the book is reprinted. Indeed, Jack Daniel’s Properties even offers to help pay for the cost of designing a new cover.


Read more about the news here, including comments from Jack Daniel’s Properties and the author.


Mor Wetzler, Paul Hastings, New York, NY


 

July 30, 2012

Business Development: The Elevator Pitch


You know that you need to be responsive and do great work. But what else can you, the young litigator, do to improve your business-development skills? You should develop and use your “elevator speech,” a short description of what you do that distinguishes you from others (hint: “I’m a lawyer” is too vague). You may not be pitching business in an elevator, but you are likely to be introduced to people in many different contexts, including social settings and conferences. Can you describe what you do so that that a layperson can understand it?


Consider this advice from BusinessWeek on developing and improving your elevator pitch, including keeping it fresh and tailoring it to your audience. To develop and to tailor your introduction, be sure you know your firm’s business and that you get to know your clients. Read your firm’s website and intranet to glean valuable information about the firm’s practice areas and client base, recent victories, and strategy. You also should learn about the firm’s clients—what work do they do, what do they look for in associates, and what you can provide to them. A good source of inspiration is other successful attorneys’ biographies. Note how they describe their work, their specialties, and the way that they help clients, moving beyond identifying the practice area or a dry list of recent representations. Identify how you provide a service to clients beyond just billing them, and then describe it in a way that your grandmother would understand. And now that you have that “elevator pitch” introduction, remember to keep it fresh and tailor it to your audience when appropriate.


Mor Wetzler, Paul Hastings, New York, NY


 

April 30, 2012

Series of Law Grad Class Actions Facing Uncertain Future


Recent law-school graduates suffer acutely as a result of the recent prolonged economic downturn. Most graduates took on substantial debt to pursue their legal studies. U.S. News & World Report stated that the average law-school debt for students graduating in 2011 exceeded $100,000. Having taken on this heavy financial burden, many of these graduates find that high-paying jobs are extremely rare and a large number find themselves unemployed, underemployed, or working outside the legal profession.


In response to these circumstances, many graduates and current law school students have turned to the courts to address their grievances, with assistance from the Law Offices of David Anziska and counsel from the states in which the defendant law schools are located. The plaintiffs’ counsel has filed class-action complaints on behalf of former students against 14 different law schools and is seeking named plaintiffs for approximately six other law schools. These complaints allege a variety of causes of action, including violations of state consumer-protection laws, fraud, and negligent misrepresentation.


The crux of these complaints is that various law schools inaccurately reported the employment statistics and salaries of their recent graduates. The plaintiffs allege that the defendant law schools deceive prospective students by reporting inflated post-graduation employment rates without distinguishing between those graduates with full-time positions in the legal industry and those working part-time, temporary jobs, or completely outside the legal profession. With respect to reported median salaries, the plaintiffs allege that the reported numbers are inaccurate because they are based on the small number of graduates who report their salaries and that these numbers do not reflect the actual compensation graduates should expect upon completion of their legal training.


A New York state court recently granted a motion to dismiss one of these complaints brought on behalf of several individuals against the New York Law School. In dismissing the plaintiffs’ state consumer-fraud claims, the court found that the law school made no materially misleading statement and, based on the documentary evidence submitted by the plaintiffs, found that a “reasonable consumer” should have considered the evidentiary materials submitted with the complaint in evaluating the prospects of legal employment post-graduation. In other words, with the amount of information available about the law school and post-graduation employment, the plaintiffs cannot complain solely based on marketing materials distributed by the law school. The court also found the plaintiffs’ damages claim both remote and speculative; thus, the damages could not be directly linked to the statements purportedly made by the law school. In addition, the court dismissed the plaintiffs’ fraud and negligent misrepresentation claims because of the lack of a materially misleading statement and lack of demonstrated reliance on any statements made by the law school.


The ABA and ABA Young Lawyers Division have passed a resolution that calls for greater transparency in law-school statistics; such action has prompted changes to National Association in Legal Career Professionals reporting requirements and the creation of the ABA YLD Truth in Law School Education Committee, which is exploring other ways to disseminate pertinent information to prospective law-school students. It is unclear what impact these efforts will make or whether other courts will follow the lead of the New York state court. But one thing is clear: recent law-school graduates will continue to struggle under heavy debt in an unhealthy employment environment. The impact of these difficult economic times on legal profession is yet to be seen.


Justin Heather, Korey Cotter Heather & Richardson, LLC, Chicago, IL


 

April 30, 2012

Ninth Circuit Limits Reach of Computer Fraud and Abuse Act


On April 10, 2012, the Ninth Circuit explained how a person “exceeds authorized access” under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030. The CFAA prohibits a person from “exceed[ing] authorized access” and thereby obtaining “information” from a computer “used in or affecting interstate or foreign commerce.” In the en banc decision in United States v. Nosal, the issue was whether an employee who violated his employer’s “policies prohibiting the use of work computers for nonbusiness purposes” violated the CFAA.


According to the indictment, Nosal quit his job at a company, signed a non-compete agreement, and then enlisted several former colleagues who still worked at the company to download information from a confidential company database so he could use the information to start a competing company. The former colleagues were authorized to access the database, but the company’s computer-use policy prohibited disclosing confidential information. The government indicted Nosal for aiding and abetting his former colleagues’ alleged crime of “exceed[ing] authorized access” for a fraudulent purpose under the CFAA, as well as for wire fraud, trade-secret theft, and other violations. The district court initially rejected Nosal’s argument, holding that when a person accesses a computer “knowingly and with the intent to defraud . . . [it] renders the access unauthorized or in excess of authorization.” Shortly afterward, however, the Ninth Circuit decided LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009), which construed narrowly the phrases “without authorization” and “exceeds authorized access” in the CFAA. Nosal then filed a motion for reconsideration and a second motion to dismiss. This time, the district court dismissed the CFAA counts, holding that use of information for a forbidden purpose was insufficient, by itself, to bring the challenged conduct within the scope of “exceed[ing] authorized access.” A Ninth Circuit panel initially reversed, but then the circuit granted en banc review.


The Ninth Circuit determined that the “CFAA does not extend to violations of use restrictions.” The court noted that the “general purpose [of the CFAA] is to punish hacking—the circumvention of technological barriers—not misappropriation of trade secrets.” In addition to reviewing the text and intent of the act, the panel found that “exceeds authorized access” has to be interpreted narrowly to avoid turning the CFAA into the statute that inadvertently criminalizes a tremendous scope of innocuous activity. The panel was concerned that a broad reading of the CFAA, as advocated by the government, could create federal criminal liability based not on federal statute, but rather on employer computer-use restrictions or even on a website’s terms-of-use statement. The court considered that a violation of the terms of use of websites such as Facebook, eHarmony, eBay, YouTube, Google, or Craigslist could result in criminal liability if a Facebook user lets another person access his or her account, if an eBay item is posted in an incorrect category, or if an online dating site user describes himself or herself inaccurately. Interpreting the CFAA as prohibiting improper use of a computer could, in the en banc majority's view, “transform whole categories of otherwise innocuous behavior into federal crimes simply because a computer is involved.” Id. at 3867.


The Ninth Circuit recognized that this decision increases disagreement among the circuits. Indeed, the Fifth, Seventh, and Eleventh Circuits have interpreted the CFAA broadly to cover violations of corporate-computer-use restrictions or violations of a duty of loyalty.


The decision is available here. The legislative implications and the potential for Supreme Court review remain to be seen.


Mor Wetzler, Paul Hastings, New York, NY


 

April 30, 2012

Write Right: More Tips to Improve Your Writing


There are many great resources for attorneys to improve their writing. While there are many great books available (see, e.g., The Elements of Legal Style, The Winning Brief, Plain English for Lawyers, Legal Writing in Plain English, Making Your Case), it is always good to get some quick writing tips. Here are several to keep in mind.


To improve your writing, read! Read great writing for technique. Sources such as the New York Times, the New Yorker, the Economist, or the Wall Street Journal will shape and improve your writing style. Also find great writers in your company, firm, or department, and gravitate toward them. Read their works, try to co-author articles with them, seek their advice and input, and even adopt them as writing mentors.


Back to basics: Pay attention to proper grammar and vocabulary. A brief full of grammatical errors suggests carelessness. Keep a writing usage book handy or find a good online resource along with a dictionary and thesaurus.


Clear writing is persuasive writing. Your goal should not be to show off your research or knowledge but to clarify the issues. If a judge understands your writing, the judge is more likely to trust it. Are your legal and factual issues clear? Does your brief have a roadmap? Have you framed your brief clearly and concretely?


Read your writing out loud. If it does not sound right, rewrite. Sentences should be short enough or structured clearly enough to withstand oral presentation.


Edit profusely. Justice Brandeis said that there are no good writers, only good rewriters. Try to take time away from a writing project so that you can return to it with a fresh and more critical mind. Ask other good writers to edit your work. Don’t blindly accept all changes but review and analyze their edits. Discuss any that you disagree with or don’t understand.


Mor Wetzler, Paul Hastings, New York, NY


 

April 26, 2012

McDonald’s Hot Coffee Lawsuits: Déjá Vu?


McDonald’s is now facing a new generation of hot-coffee lawsuits. In 1994, a 79-year-old woman in New Mexico sued McDonald’s over the temperature of its coffee, accusing them of serving coffee so hot that it gave her third-degree burns when the cup spilled on her when she removed the lid to add cream and sugar. The jury found McDonald’s to be partly responsible for the woman's injuries, awarding her $2.7 million in punitive damages. The final award amount was appealed by both sides, and the parties eventually settled the case. Now, plaintiffs in Illinois have brought two new hot-coffee lawsuits against the fast-food chain.


According to the Chicago Tribune and Crain's Chicago Business, a four-year-old girl asked a McDonald’s employee to refill her grandmother's cup of coffee; the employee did so but failed to secure the lid. The girl spilled the coffee on herself, suffering second-degree burns and permanent scarring. The suit alleges that McDonald’s violated its policy of not serving coffee to minors, failed to place the coffee in a holder, and failed to warn the girl about the coffee’s temperature. The plaintiffs are requesting almost $4 million in total damages, including $2.5 million in punitive damages and $1 million for pain and suffering.


Crain's Chicago Business reports that, in the second case, a woman ordered coffee from a McDonald's drive-thru window and suffered "horrific burns" when coffee spilled onto her thighs and abdomen. The lawsuit contends that the burns were a result of an improperly secured lid.


Mor Wetzler, Paul Hastings, New York, NY


 

April 26, 2012

How to Improve Your Oral Argument Skills


In this article, the Honorable Marvin Aspen, District Judge for the Northern District of Illinois, shares his top 10 tips for effective oral advocacy of contested motions. As Judge Aspen notes, oral argument on motions to dismiss and motions for summary judgment is an increasingly rare occurrence. Therefore, he offers several tips on how to improve your oral argument skills. These range from the basics (arrive on time!) to paying attention to the judge’s signals as to what he or she may wish to learn about the case or what is preventing the judge from ruling in your favor. Judge Aspen’s suggestions include:


  • Don’t forget the basics: arrive on time and properly dressed, know the facts, the record, and the law (with a focus on your jurisdiction).

 

  • Be proactive and ask for oral argument; be prepared to explain why it would be helpful to the court.

  • Know the judge’s conduct on the bench; for example, find out the judge’s questioning style by watching other oral arguments or asking other lawyers.

  • Maintain your credibility by representing the law and the facts accurately; do not embellish the facts, ignore contrary law, or misstate a case’s holding.

  • Use your oral argument effectively: “Don’t rehash your brief.” Rather, offer your strongest arguments. Use your limited time to address the court’s questions and skip unnecessary time use, such as summarizing the facts.

  • Do not be aggressive, sarcastic, or demeaning toward your opponent; counter his or her argument with the facts and law, and let the court deal with deficiencies in your opponent’s argument.

Take note of Judge Aspen’s helpful suggestions to improve your client’s chances for success. A Sound Advice with these tips is also available here.


Mor Wetzler, Paul Hastings, New York, NY


 

April 25, 2012

Future of Agriculture at Issue in Hearings on Expiring Farm Bill


In April 2012, the House Committee on Agriculture held its final hearing for public input on the 2012 Farm Bill. The 4-stop series of “field hearings” was designed to allow stakeholders a voice in the next iteration of the bill. The Farm Bill actually is an expansive set of laws covering much more than farming. Its provisions address certain portions of the food-stamp program, national nutrition initiatives, various tax credits and subsidies, and green-energy schemes.


Rather than work from scratch, legislators will most likely simply amend the current version, which was passed in 2008 and is set to expire on September 30, 2012. The Farm Bill is a contentious issue that is subject to much debate. The 2008 version only passed after overriding two vetoes from then President Bush. After its passage, various constituents took issue with the bill’s continued support for ethanol subsidies, meager programs for small-scale local farming, and method for distributing subsidies.


Considering the timing of the renewal with the presidential election, at least as much debate around this year’s bill is expected. Some, such as Congressman Bill Owens, do not believe that a bill will be passed in 2012. This is bad news for farmers and many other constituents whose long-term planning hinges on the policy decisions made in the bill.


At the first three hearings, hot issues were programs for crop insurance and risk management, or what most people think of as subsidies to farmers for growing crops. These programs were modified heavily in the 2008 version. Various participants at the hearings supported a proposal that shifts the method of how benefits are paid, but those speakers remained steadfast with respect to their position that eligibility requirements and the overall quantity of the payments should not be altered. These demands fly in the face of intimations from legislators that the new bill will have to contribute to deficit reduction by reducing its price tag by $35 billion in the next 10 years. Risk management was again highlighted at the final hearing on April 20, 2012, in Dodge City, Kansas, where Texas cotton producer Woody Anderson noted the importance of a flexible set of tools rather than a generalized program. With the hearings completed, the burden now falls to the legislators to take the requests and put them into a bill acceptable to all stakeholders.


Matthew Gipple, Latham & Watkins, San Francicso, CA


 

March 30, 2012

Lessons Learned: Career Development


There are many resources offering suggestions for young lawyers’ career development and success. This article offers great advice through a different perspective, concluding that “You can’t survive the practice of law unless you can survive yourself.” The article offers tips and examples of how to learn from others, be a leader at any stage, communicate effectively, and take action in imperfect situations. Some of the tips for success include these bits of wisdom:


“No one should care more than you do about the cases you are handling or the research you are conducting.”


“Don’t ask your supervising partner questions about the law. Know the law and the facts, and get the strategy from your mentors.”


“Always stay one step ahead of the client. Anticipate the client’s needs.”


“If you don’t know what to do, do something.”


“Execution, not perfection, matters most. Your job is to get things done, not get them done perfectly.”


Through offering this advice, the article turns to its conclusion. It is important to learn from others but you must make those lessons your own. It is important to know about people generally more than knowing about rules, statutes, regulations, and legal opinions. And in the end, it might be most important to be yourself and believe in yourself.


Read the entire article here.


Mor Wetzler, Paul Hastings, New York, NY


 

March 30, 2012

Mentoring Models from Columbia Law School


Throughout the legal world, organizations recognize the importance of having formal and informal mentoring programs for their attorneys. As mentoring programs expand, they have also moved earlier into the lawyers’ development. Columbia Law School has recognized the importance of helping its students through mentoring and has created a hybrid group/peer mentoring program for its first-year students.


At the law school, a group of 80 second-year and third-year law students serve as mentors for first-year students after participating in a training program and other preparation with the administration. The first-year students are divided into groups of 15 people and each group is matched with three mentors. The program includes a series of set times for the first-year students to meet with their mentors, including meetings at orientation, after the first exam, and before studying for final exams. The mentors also arrange activities for their group (subsidized by the administration) such as going out to a movie. The administration has noted that this mentoring program, in place for three years, has helped build community across the classes and helped the first-year students develop relationships with second-year and third-year students. This is a challenge in many law schools, where first-year students spend most of their time in 1L-only classes.


Practicing lawyers may learn from this program and adapt parts of the formula to their own mentoring programs. Interesting aspects include the small group “micro-community” format, which the administration found was large enough to have diversity but small enough to feel intimate. Also, the training offered to mentors may play an important role in the program’s success. These aspects of the mentoring programs help the students succeed in their legal education, but also can help practicing lawyers learn the skills needed to do their jobs effectively.


Mor Wetzler, Paul Hastings, New York, NY


 

March 15, 2012

Supreme Court Grants Cert in Affirmative Action Case


One of the more highly anticipated cases in the Supreme Court’s October 2012 term is likely to be Fisher v. University of Texas at Austin. The case presents the question of whether the Court’s 2003 decision in Grutter v. Bollinger—interpreting the Equal Protection Clause of the Fourteenth Amendment and allowing the University of Michigan’s law school to use race as a factor in granting admission—permits the University of Texas at Austin (UT) to consider race in its undergraduate admissions. On certiorari from a decision issued by the Fifth Circuit in 2010, the case arises from a suit filed by Abigail Fisher, whom the University of Texas rejected when she applied for admission in 2008. Fisher alleges that the admissions policy adopted by the state’s flagship university, following the Grutter decision, unduly utilizes race as a factor in selecting UT’s freshman class. She believes that minority students that had less impressive credentials than she had were admitted, whereas she herself was rejected because she is white.


The university had argued rather strenuously that the case did not merit a grant of certiorari because of “intractable” procedural issues, including that Fisher will graduate from Louisiana State University in May of 2012, making her ineligible for future admission to the University of Texas as a freshman, and thus arguably mooting her case. Fisher and her team of lawyers had chosen to pursue the case as an individualized claim, rather than as a class action, and another individual whose claim would have potentially extended the life of the case had decided earlier to drop from the suit, removing two potential solutions to the timing obstacle. Nonetheless, the Court granted review on February 21, 2012, with Justice Elena Kagan recusing herself from the decision and future argument. Many commentators initially thought the Court would set an expedited schedule to hear the case prior to Fisher’s impending graduation, though it ultimately decided not to.


As the case proceeded to the Court, it appeared that it would be taken up solely on the issue of whether the university’s policy violated the guidelines provided by the Court in Grutter. However, in their request for certiorari, Fisher’s team also put before the Court a request that, if the University’s policy was in line with Grutter, the Court take the opportunity to overrule its earlier decision in its entirety. Thus, Fisher sets the stage for the latest battle in the fate of affirmative action in university admissions and has the potential to overturn almost a decade of university-admissions policies.


The Court’s docket page for the case is located here. The docket number is 11-345. A date for the argument in the fall has not yet been set.


Adam R. Thomas, Latham & Watkins, San Francisco, CA


 

March 5, 2012

Final NEPA Efficiency Projects Selected


On February 9, 2012, the Council on Environmental Quality (CEQ) announced the selection of the final of five projects in its ongoing effort to improve the efficiency of federal environmental reviews. The CEQ, which oversees National Environmental Policy Act (NEPA) implementation and promulgated NEPA’s implementing regulations (40 C.F.R. pt. 1500), issued a call for federal projects to be part of this new efficiency drive in March 2011, as part of the Obama administration’s evaluation of the environmental-review process, but had taken its time in selecting projects to further research best practices in implementation of NEPA.


Originally intended to encourage thorough public input and well-considered decision making in environmental projects, NEPA frequently has been the target of criticism for not including important stakeholders early enough in the project-approval process. Through its selection of these five test cases, the CEQ is looking to understand what role early and frequent involvement can have on increasing efficiency, transparency, and broader public engagement in environmental review. It is hoped that the lessons learned through close study of these projects will result in improved efficiency across federal environmental reviews. The administrative policies that may grow out of these projects could revolutionize the approach to such reviews, a particularly important consideration in light of the increased spotlight on the use of public lands as sites for green-energy facilities.


One of the selected projects will look at two forest restoration proposals, one in Arizona and the other in Oregon, being shepherded through NEPA review by the U.S. Department of Agriculture, Forest Service. Such projects have become increasingly popular as mechanisms to bolster the environmental health of forests, by encouraging once-taboo forest management tools, such as controlled burns and timber thinnings. The other four efficiency test cases include an information technology system being implemented by the Forest Service and the National Park Service that would speed NEPA review; a gathering of best practices from agencies with significant experience in the preparation of environmental assessments to be shared across entities; an information-technology tool to make the NEPA process more readily accessible to the public; and a cooperative review of a high-speed passenger-rail service in the Northeast Corridor being supervised by the U.S. Department of Transportation. It is unclear precisely what the final outcome of the CEQ’s review of these projects will be; however, the CEQ’s own call for nominations states that it seeks to “facilitate a review of provisions of the CEQ's NEPA regulations that may be outmoded, ineffective, insufficient, or excessively burdensome.”


For more information, visit the CEQ’s website on the recent call here.


Adam R. Thomas, Latham & Watkins, San Francisco, CA


 

February 28, 2012

Public Speaking: Overcome the Fear


Some studies have shown that far above the fear of death and disease is glossophobia: the fear of public speaking. Yet attorneys in almost any field will be called on to speak at some point. And so, what can you do about that fear? There are many resources available that offer suggestions. The most common pointers are discussed below.


Focus on the audience. The speech is not about you. It’s about what the audience can learn or how you can help them in some way. And if you focus on that, so will the audience. Also, if you think about the audience, you might realize that probably 75 percent of your audience has the same fear you have. Even if they notice that you’re nervous, they’ll understand!


Prepare, prepare, and prepare some more. To put your best foot forward, and to ease your nerves, focus on knowing your material backwards and forwards. Prepare so thoroughly that you can present the subject as a conversation with the audience. Preparation will give you the knowledge and the confidence to discuss the subject comfortably and intelligently.


Practice as often as possible. Almost every resource suggests practicing as often as you can. This can include moderating a panel, introducing other speakers, joining a Kiwanis Club, National Institute for Trial Advocacy meeting, or your local Toastmasters International. Practice your speech so that you know how long it will take. Practice in front of a mirror or video camera so that you can see what the audience will see. Or do a trial run in front of a friend you feel comfortable with, so that you can get their feedback.


For more specific tips and some excellent resources, check out some of the free resources available from Toastmasters International (especially their speech-related resources), or these helpful articles at CNET and Attorney at Work.


Mor Wetzler, Paul Hastings, New York, NY


 

February 24, 2012

Indiana’s Shield Law Does Not Protect Anonymous Posters


In In re Indiana Newspapers Inc. (Miller v. Junior Achievement of Central Indiana, Inc.), No. 49A02-1103-PL-234 (Ind. App. Feb. 21, 2012), the Indiana Court of Appeals addressed whether a non-party news organization can be compelled to disclose to a plaintiff who has filed a defamation lawsuit the identity of an anonymous commenter—an issue of first impression in the state.


The court held that Indiana’s shield law—which creates an absolute privilege for a journalist’s source—does not apply to anonymous posters who comment online on newspaper websites. The court explained that an anonymous person who comments on an already-published online story and whose comment was not used by the news organization in carrying out its news-gathering and reporting function cannot be considered a “source” protected by the shield law.


Read the full case note.


Mor Wetzler, Paul Hastings, New York, NY


 

February 13, 2012

Supreme Court Oral Argument: Challenging the EPA


On Monday, January 9, 2012, the U.S. Supreme Court heard oral arguments in Sackett v. USEPA—widely considered the most important environmental case on the Court's docket this term. Six years ago, Mike and Chantell Sackett bought a small piece of land in Priest Lake, Idaho, for $23,000. The land is located in a typical residential subdivision with sewer and water hookups, and the Sacketts proceeded to grade the lot in preparation to build a home there. As they began laying gravel, however, the Environmental Protection Agency (EPA) issued an administrative compliance order (ACO) to the Sacketts charging them with violations of the Clean Water Act—essentially that they had illegally filled a protected wetlands area without a permit. The Sacketts sought to contest the EPA's opinion that the parcel constitutes a wetland, but all efforts to obtain an administrative hearing before the EPA failed. The Sacketts then sued the EPA in federal court. The district court dismissed the lawsuit and the Ninth Circuit affirmed in 2010—ruling that an ACO is not a final agency action and recipients of ACOs can seek judicial review of such an order only if the EPA first goes to court to enforce the ACO.


At oral argument before the Supreme Court, the Sacketts' counsel argued that the Sacketts' rights have been infringed as they had never been offered a meaningful opportunity for judicial review of the ACO. He argued that they have a right under the Administrative Procedure Act and Clean Water Act to seek judicial review of the ACO, or if such review is not provided by these laws, that their constitutional due process rights have been violated. Counsel for the EPA then faced an openly hostile court, but argued that no actual fines have been assessed here, the Sacketts could elect to apply for a federal permit, and that it has been widely recognized by courts that recipients of ACOs have no immediate right to a judicial determination of the issue. In response, Justice Scalia referred to what he described as the EPA's "high-handedness," Justice Alito stated that "this kind of thing can't happen in the United States," and Chief Justice Roberts defied counsel for the EPA to explain what he would personally do if "he received this compliance order."


It seems clear from the oral argument that the Sacketts will prevail and the Ninth Circuit will once again be reversed. The case though is important as it examines what recourse, if any, a land owner has once threatened with a potentially devastating administrative order. The key issue for practitioners to watch is the reach of the decision; i.e., will it be limited to the EPA's enforcement of just the Clean Water Act or extend to other laws routinely enforced by the EPA (or other administrative agencies) through ACOs? As a host of Supreme Court watchers have already noted, this decision appears likely to join the growing chorus of disapproval toward the EPA and its enforcement mechanisms.


The case is Sackett v. USEPA (10-1062). The oral argument transcript is available here, and audio is available here.


Daniel E. Durchslag, Cohen Kennedy Dowd & Quigley, P.C., Phoenix, AZ


 

February 9, 2012

Ninth Circuit: Ban on Gay Marriage Is Unconstitutional


On February 7, 2012, the Ninth Circuit Court of Appeals held that California’s voter-approved ban on same-sex marriage is unconstitutional. Proposition 8, narrowly passed by voters in 2008, stripped same-sex couples of the right to marry in California. Two same-sex couples challenged the constitutionality of Proposition 8 shortly after the amendment was passed, resulting in a 12-day bench trial that examined the nature of sexual orientation and marriage. In August 2010, former Chief U.S. District Judge Vaughn R. Walker struck down Proposition 8, saying a ban on same-sex marriage wasn’t supported by any public or state interest. Judge Walker had noted that the institution of marriage had changed over time and compared the ban on same-sex marriage to race restrictions that were once common, but now seem shameful and even bizarre.


The Ninth Circuit, in a 2–1 decision, affirmed the district court ruling that Proposition 8 discriminates against same-sex couples in violation of the Equal Protection Clause of the U.S. Constitution. The court ruled that Proposition 8 violates the Fourteenth Amendment because it “serves no purpose, and has no effect, other than to lessen the status and human dignity of gays and lesbians in California, and to officially reclassify their relationships and families as inferior to those of opposite-sex couples.” The court added: “The constitution simply does not allow for ‘laws of this sort.’”


The Ninth Circuit pointed out that Proposition 8 stripped gays and lesbians of rights they had been entitled to before the amendment was passed by voters. “Before Proposition 8, California guaranteed gays and lesbians both the incidents and the status and dignity of marriage. Proposition 8 left the incidents but took away the dignity and the status.” The opinion compared the case to Evans v. Romer, a Supreme Court case that addressed an amendment passed in Colorado in 1992 that prohibited the state from providing residents protection from discrimination on the basis of sexual orientation. The Supreme Court had found that amendment unconstitutional because it denied legal protections to a certain class of people, finding that the amendment “withdraws from homosexuals, but no others, specific legal protection.”


Separately, the Ninth Circuit also rejected Proposition 8 supporters’ offensive argument that Judge Walker should have refused to preside over the case because he is gay and in a relationship with a man. That decision affirmed a decision in June that Judge Walker did not need to recuse himself from hearing the case because he was gay. The court explained that it would be unreasonable to assume that a judge couldn’t make impartial decisions about the constitutionality of a law solely because he or she is affected by the outcome of the decision. “To hold otherwise would demonstrate a lack of respect for the integrity of our federal courts.”


The supporters of Proposition 8 have 15 days to ask the Ninth Circuit panel to reconsider its decision or to ask for reconsideration by a larger panel of judges on that court. Alternatively, they have 90 days to request that the Supreme Court of the United States review the case. In the meantime, the Ninth Circuit kept in place a stay on the ruling pending the completion of the appeals process, so that there is no immediate effect on gay marriage in California.


The cases are Perry et al. v. Brown et al., case numbers 10-16696 and 11-16577, in the U.S. Court of Appeals for the Ninth Circuit. The opinion is available here and the Ninth Circuit docket including all filings is available here.


Mor Wetzler, Paul Hastings, New York, NY


 

January 30, 2012

Amicus: PPACA Stands Even if Individual Mandate Unconstitutional


Last week brought another update in the Supreme Court’s upcoming review of the Patient Protection and Affordable Care Act. The White House filed an amicus brief, stating that even if the central mandate of the act, which requires all individuals to have health insurance, were deemed unconstitutional, the rest of the act could survive almost intact.


The Supreme Court is slated to hear challenges to provisions barring insurers from denying coverage to people with pre-existing conditions or charging higher premiums to those in poorer health. These challenges come in the form of three petitions for writ of certiorari on cases regarding the law, one filed by the Justice Department, a second filed by 26 states challenging the law, and a third filed by the National Federation of Independent Business.


In the amicus brief, the administration argued that the challenged provision is severable, and that if the minimum-coverage provision were found unconstitutional, other provisions of the bill that could remain.


The brief states: “When this court identifies a constitutional defect in a portion of a statute, its normal rule requires partial, rather than total, invalidation, in order to respect the judgments of the democratically accountable branches of government.” According to the brief, there is not sufficient basis to find that Congress would have wanted the entire act to fail if the minimum-coverage provision were invalidated. The brief also points out that those opposing the bill have not identified any example in which the modern court struck down a comprehensive bill after finding that one portion was unconstitutional.


The Obama administration also argued that opponents of the bill lack standing to challenge the numerous provisions detailed in the act that do not apply to them. On the same day, 10 states led by California’s attorney general filed an amicus brief supporting the president’s position and asking the Supreme Court to uphold health-care reform even if the coverage mandate, which is set to take effect in 2014, does not survive.


The cases are National Federation of Independent Business et al. v. Sebelius et al., case number 11-393; Florida et al. v. Department of Health and Human Services et al., case number 11-400; and U.S. Department of Health and Human Services et al. v. Florida et al., case number 11-398; all in the U.S. Supreme Court.


The ABA provides a collection of Supreme Court merits briefs and amicus briefs here.


Mor Wetzler, Paul Hastings, New York, NY


 

January 30, 2012

Supreme Court Limits Warrantless GPS Tracking


Last week, the Supreme Court unanimously ruled that the police violated the Constitution when they placed a global positioning system (GPS) tracking device on a suspect’s car and tracked its movements for 28 days without a warrant.


In 2004, the FBI launched an investigation on two business partners for possible drug trafficking. As part of the investigation, a federal judge in the District of Columbia approved a warrant authorizing the FBI agents to install a GPS tracking device on a Jeep that Jones routinely used. The warrant permitted the agents to install the GPS device within 10 days and only within the District of Columbia, but the agents installed the GPS 11 days later in a public parking lot in Maryland.


Police used the GPS to track Jones for a month, during which time they detected a pattern of repeated trips to a suspected stash house, a building used for storing drugs. Agents later obtained and executed search warrants on the Jeep and the stash house, finding approximately $850,000 in cash, firearms, 97 kilograms of cocaine, and one kilogram of crack cocaine, among other items. FBI agents arrested Jones and his business partner, Lawrence Maynard, for drug possession. A jury acquitted Jones on all charges except for conspiracy, on which the jury was hung. The prosecutors re-filed a single count of conspiracy against Jones and Maynard.


During the second trial, Jones challenged the admissibility of the GPS tracking evidence, arguing it was an unreasonable search and seizure. The district court excluded some GPS data gathered from private areas for lack of a warrant, but allowed the rest because it came from public areas. Jones and Maynard were convicted of conspiracy. Both appealed their convictions to the U.S. Court of Appeals for the D.C. Circuit, where Jones again challenged the GPS tracking data as violating his Fourth Amendment rights. A three-judge panel upheld Maynard’s conviction, but overturned Jones’ conviction, holding that the GPS evidence violated Jones’s Fourth Amendment rights.


The Supreme Court granted the United States’ petition for certiorari. The United States argued that a warrant was unnecessary because Jones had no reasonable expectation of privacy in his movements in public and was never deprived use of his Jeep. Jones responded that he has a privacy interest in the aggregation of his movements over a prolonged period and that the aggregation of such information interferes with his use of the Jeep.


The Supreme Court affirmed, holding that the installation of a GPS tracking device on Jones’ vehicle without a warrant constituted an unlawful search under the Fourth Amendment. The Court rejected the government’s argument that there is no reasonable expectation of privacy in a person’s movement on public thoroughfares and emphasized that the Fourth Amendment provided some protection for trespass onto personal property.


Justice Alito concurred and criticized the framing of the question in terms of trespass to property. He believed that it would be better to analyze the case by determining whether the government violated Jones’s reasonable expectations of privacy. Justice Alito explained that reliance on the law of trespass raises “particularly vexing problems” in government-surveillance cases that do not involve physical contact with a suspect’s property. The majority opinion explicitly declined to weigh in on whether the government would violate the Fourth Amendment if it tracked citizens digitally without invading their property. “It may be that achieving the same result through electronic means, without an accompanying trespass, is an unconstitutional invasion of privacy,” the majority opinion stated, “but the present case does not require us to answer that question.”


While the majority also declined to weigh in on the public’s expectations of privacy, Justice Alito stated that individuals might expect relatively “short-term monitoring” of an individual’s movements on public streets but not long-term tracking.


Justice Sonia Sotomayor signed onto the majority but filed her own separate concurring opinion, agreeing that the government had obtained information by usurping Jones’ property and by invading his privacy. However, she agreed with Justice Alito’s analysis that the Fourth Amendment was not only concerned with trespasses onto property. She stated that a Fourth Amendment search occurs whenever the government violates a subjective expectation of privacy that society recognizes as reasonable, which is particularly important in an era where physical intrusion is unnecessary to many forms of surveillance.


The decision is available here (PDF); oral argument transcript is available here (PDF).


Mor Wetzler, Paul Hastings, New York, NY


 

January 4, 2012

11th Circuit Affirms Discrimination Finding for Transgender Individual


The 11th Circuit last month affirmed a lower court’s ruling in favor of a former Georgia state legislative aide who was fired after making plans to transition from a male to a female, finding her termination constituted sex discrimination.


Vandiver Elizabeth Glenn, formerly known as Glenn Morrison claimed that she was fired from her job as an editor in the Georgia General Assembly’s Office of Legislative Counsel (OLC) by then-state legislative counsel Sewell R. Brumby based on sex discrimination. When the state OLC hired Glenn in 2005, she dressed as and appeared to be male, but her doctors later diagnosed her with gender identity disorder and decided that “gender transition, including real-life experience, was a medically necessary treatment,” according to the complaint.


In 2007, Glenn told her immediate supervisor that she intended to proceed with a sex change and would begin coming to work as a woman, and after her supervisor notified Brumby, she was terminated. Glenn sued after she was fired, alleging that Brumby had told Glenn that “her gender transition and presentation of herself as a woman would be seen as immoral, could not happen appropriately in the workplace . . . and would make other employees uncomfortable.”


At summary judgment, the Georgia district court found in favor of Glenn on her sex-discrimination claim and in favor of Brumby on Glenn’s medical-discrimination claim. Both parties appealed.


The Eleventh Circuit affirmed the summary-judgment finding in favor of Glenn on the sex-discrimination claim, finding that discriminating against someone on the basis of his or her gender nonconformity constituted sex-based discrimination under the Equal Protection Clause of the 14th Amendment. The court referred to other cases that found plaintiffs couldn’t be discriminated against for wearing jewelry that was considered too effeminate, carrying a serving tray too gracefully or taking too active a role in child-rearing. “An individual cannot be punished because of his or her perceived gender nonconformity. Because these protections are afforded to everyone, they cannot be denied to a transgender individual.”


Brumby had argued on appeal that he was motivated by a concern over litigation regarding Glenn’s restroom use. However, the Eleventh Circuit agreed with the district court that this argument was overwhelmingly contradicted by specific evidence of Brumby’s intent and noted that the OLC had only single-occupancy restrooms.


The Eleventh Circuit emphasized Brumby’s testimony that he had fired Glenn because he considered it inappropriate for her to appear at work dressed as a woman, that he found it “unsettling” and “unnatural” that Glenn would appear in women’s clothing, and that his decision to fire Glenn was based on the “sheer fact of the transition.” This testimony was sufficient support for the district court’s finding that Brumby acted on the basis of Glenn’s gender nonconformity.


The Eleventh Circuit did not address Glenn’s cross-appeal on her medical-discrimination claim, finding that the decision provided her with all the relief she sought.


The case is Vandiver Elizabeth Glenn v. Sewell R. Brumby, case numbers 10-14833 and 10-15015, in the U.S. Court of Appeals for the Eleventh Circuit.


Mor Wetzler, Paul Hastings, New York, NY


 

January 4, 2012

Iowa Court Finds Unused Bathroom Camera Invades Privacy


Last month, Iowa’s high court faced the question of whether the mere placement of an operable camera in a workplace bathroom was sufficient to support an invasion-of-privacy claim. Speirs, an insurance agent, attempted to videotape his assistants’ activities in the bathroom, claiming he had first placed the security camera in the reception area in December 2005 to monitor one assistant’s activities after he noticed her work performance deteriorating, and that he then moved the camera to the bathroom after he discovered a hypodermic needle in the parking lot near her parking spot.


The camera had transmitted images from the reception area to a monitor located in Speirs’s office; the equipment allegedly did not send images properly once he moved the camera to the bathroom. Instead, the camera displayed only static or a “no signal” message on the monitor in his office. The two assistants separately sued Speirs, their boss at the insurance company, after they discovered the camera in their shared bathroom.


The trial court granted Speirs summary judgment based on the finding that, although Speirs had intended to view the plaintiffs in the bathroom, the tort of invasion of privacy required proof that the equipment had worked properly and had allowed Speirs to actually view the plaintiffs. That is, evidence of an attempted intrusion was insufficient to maintain the suits. The appeals court overturned this ruling, finding that evidence indicating the camera was operational in the bathroom was sufficient to survive summary judgment on the issue of invasion of privacy.


And the Iowa Supreme Court affirmed, holding that an invasion of privacy occurs when a device could have been used to violate an individual’s reasonable expectation of privacy, as it did when Speirs attempted to monitor his two female assistants’ bathroom activities using an operable camera that failed to transmit images to a screen in his office as he had intended.


As the court explained: “Direct evidence that an actual viewing occurred can be difficult to establish, and a person who is inclined to secretly place a camera in a private area can easily incapacitate the camera when it is not in use so as to minimize any responsibility upon discovery.” Moreover, “[a] plaintiff who learns a camera was placed in a private place should not be forced to live with the uncertainty of whether an actual viewing occurred.” The opposite conclusion, as was reached by the trial court, “fails to provide full protection to a victim, while giving too much protection to people who secretly place recording devices in private places.”


The supreme court stressed, however, that the element of intrusion is not satisfied if the device could not have intruded into the privacy of the plaintiff, making proof that the equipment was actually functional and had the capability to transmit or record images key to the survival of an invasion-of-privacy claim.


The cases are Deanna Miller v. Robert Speirs, case number 08-1957, and Sara Koeppel v. Robert Speirs, case number 08-1927, in the Supreme Court of Iowa.


Mor Wetzler, Paul Hastings, New York, NY


 

December 19, 2011

The Supreme Court to Review Health Care Reform


On Monday, November 14, 2011, the U.S. Supreme Court issued an order agreeing to review and decide the litigation challenging the constitutionality of the health care law, the Patient Protection and Affordable Care Act. The act was passed by Congress and signed into law by President Barack Obama on March 23, 2010. It reforms aspects of private health insurance and care, increases coverage of pre-existing conditions, expands Medicaid coverage for low-income individuals as a condition to the states’ ability to receive federal Medicaid dollars and increases national medical spending. The act also includes an individual mandate to take effect in 2014 which requires certain individuals to maintain a minimum level of health insurance or pay a tax penalty.


The cases in which the Court has granted the petitions for certiorari are: Deptartment of Health and Human Services v. Florida (11-398); NFIB v. Sebelius (11-393); and Florida v. HHS (11-400).


The cases to be reviewed are briefly described below.


Department of Health & Human Services v. Floridaand Florida v. Deptartment of Health & Human Services: The state of Florida brought a lawsuit against the U.S. Department of Health and Human Services seeking to nullify the act as unconstitutional. On January 31, 2011, Judge Roger Vinson declared the act unconstitutional on grounds that the individual mandate to purchase insurance exceeds the authority of Congress to regulate interstate commerce. Judge Vinson further held that the clause was not severable such that the entire law should be declared unconstitutional. On August 12, 2011, a divided Eleventh Circuit Court of Appeals affirmed Judge Vinson’s ruling in part—it agreed that the individual mandate was unconstitutional, but held that the provision was severable. Both sides petitioned the Supreme Court for certiorari.


National Federal of Independent Business v. Sebelius: This case was brought by Virginia’s attorney general to declare the act unconstitutional. Judge Henry E. Hudson declined the request of the U.S. Justice Department to dismiss the action. Judge Hudson then held that the individual-mandate provision was unconstitutional, that the tax was a a penalty outside the federal government’s authority to raise revenues, and that the Commerce Clause or the General Welfare Clause did not encompass a regulation of a person’s decision not to purchase a product. Thereafter, the Fourth Circuit Court of Appeals unanimously decided that the state did not have the authority to challenge the act and remanded with the instruction to dismiss the lawsuit for lack of subject-matter jurisdiction.



The Supreme Court scheduled over four hours of oral argument for March 2012 with a decision expected in June 2012. The issues to be heard by the Supreme Court are: (1) whether Congress had the power under Article I of the Constitution to enact the minimum-coverage provision of the act and if not, whether it is severable from the remainder of the act; (2) whether the suit brought by respondents to challenge the minimum coverage provision of the act is barred by the Anti-Injunction Act, 26 U.S.C. § 7421(a); and (3) whether the expansion of Medicaid for low-income individuals exceeded Congress’s spending powers.


Cindy C. Albracht-Crogan, Cohen Kennedy Dowd & Quigley, P.C., Phoenix, AZ

 

December 19, 2011

New Sound Advice for Young Attorneys in Practice


In the wake of the recent New York Times article on how law schools are failing to train law-school graduates how to practice, (see post below), clearly there is a need for practical advice for law school graduates and young attorneys. Some practical advice comes from experiences from the trenches of actual day-to-day practice.


The most recent Sound Advice clip, by Christina Liu, gives practical tips in three areas: 1) focusing on yourself, but maintaining awareness of other people, 2) civility with opposing counsel, and 3) your relationship with your staff.


For example, Ms. Liu advises young attorneys to observe the power structures in the firm or workplace, by seeking out the people with the most information, which may not be the most obvious person in the firm. For example, it may be the longest serving legal secretary or the office manager. Those people will be able to reveal the unwritten rules, practices, and policies of the workplace. Ms. Liu goes on to discuss day-to-day civility with opposing counsel. She warns young attorneys not to get distracted by minutiae. You can do that by choosing your battles with opposing counsel and by waiting to respond to emails or phone calls until after you cool off if you are in a heated situation. Finally, Ms. Liu recommends developing a strong relationship with staff. Three principles guide that relationship: patience, respect, and consistency. For example, teach expectations by sending back work to your staff if there are mistakes. Also, invest in face-to-face conversations with your staff if there are misunderstandings or issues that need to be ironed out.


For more tips, listen to Christina Liu’s Sound Advice piece and many other great ones here.


 

December 17, 2011

Diversity in "The New Normal"


Developing a diverse workforce is a recognized and valuable goal that helps both law firms and clients understand and efficiently address a host of legal issues. But in the post-recession era—“the new normal”—what model should we look toward to ensure that diversity goals are not pushed aside as law firms cut back and streamline? The Columbus School of Law at the Catholic University of America took a new look at that very topic in its Summer 2011 special report, "Pursuing Diversity in the New Economy: A Shared Responsibility."


On March 25, 2011, Catholic University hosted a three-panel program with more than a dozen experts to share their experiences on the subject of diversity within the legal profession. While there have been modest gains in the number of minority attorneys and law students over the past 15 years, other trends paint a more troubling picture.


Catholic’s first panel, The Corporate Perspective, discussed exactly that, focusing on issues that surfaced perceptibly during the recession. For example, recession-induced law-firm layoffs resulted in a drop of approximately six percent of all associates. But, when those layoffs were broken out by minority group, attorneys of color suffered a disproportionate impact, with percentage losses in the double digits. The panelists highlighted the importance of mentoring associates of color to help them navigate the political climate of their firms. “All of this sink-or-swim stuff is really a falsehood. . . . They don’t just throw people in the barrel and see who swims to the top, and then whoever stays is the best. Somebody champions people,” stated Ernest A. Tuckett, corporate counsel with the DuPont Corporation’s legal department.


The second panel, The Law Firm Challenge, questioned the traditional diversity paradigm. The panelists agreed that diversity should expand beyond widely accepted categories of race, ethnicity, religion, and gender. Generational differences also must be taken into account because, for the first time, the workforce comprises four separate generations working side-by-side. Consequently, differences in one’s life views and work habits are becoming important considerations.


Additionally, one of the panelists, Monica Parham, Diversity Counsel at Crowell & Moring LLP, noted that “as a result of the recession, the pipeline is not going to look the same.” The panelists noted that the shrinking economy forced many firms to accept smaller summer-associate classes, which means that the number of diverse new attorneys is correspondingly smaller. Firms may need to rethink their recruiting process, as many diverse students may elect to attend schools out of the top tier because of tuition breaks. A firm looking only at top-tier schools may overlook diverse candidates making a valid economic choice.


The way forward might be found in the discussions of the third panel, A Shared Responsibility. The members of this panel emphasized the need to start early in the process, beginning with the law-school pipeline. However, current recruiting processes, with their emphasis on the LSAT and its importance to the U.S. News & World Report ranking system, could leave future diverse lawyers out in the cold. The panel noted that, although there have been modest gains in minority law students generally over the past 15 years, the overall number of African American and Mexican American students has fallen. This is attributed to the emphasis on LSAT scores, from which panelist Conrad Johnson, clinical professor of law at Columbia Law School, concluded “many, though not all, law schools have abdicated their responsibility as gatekeepers to a magazine. . . . I don’t think it’s a terribly good way for us to maintain the gate.”


Beyond the recommendation to reduce reliance on the LSAT, however, panelists also had several innovative suggestions to improve the pipeline and so improve diversity in the profession. One such suggestion was to provide supplemental writing assistance to minority applicants. Another recommendation was to ask applicants to gain real-world experience before applying to law school, and for law schools to take those experiences into account.


Clearly, a shared approach to achieving and maintaining diversity in the new normal is required. Law schools must take a hard look at their recruiting practices in light of the growing trend to admit students with an eye toward their effect on the rankings. Law firms must maintain their commitment to recruiting and retaining diverse candidates, even in the face of the precarious economic climate. Finally, diverse attorneys must recognize their responsibility to understand the law-firm business model and seek out mentors to help them channel their legal interests toward growing practice areas in the legal profession. As the panels noted, mentoring support of minority attorneys is critical to their success.


Sonia M. Pedraza and Michelle L. Querijero, Shipman & Goodwin LLP, Hartford, CT


 

December 17, 2011

Using Gestures to Improve Your Public Speaking


The most effective litigators and public speakers recognize that they have a natural instinct to gesture when they speak and make the most of that natural instinct, according to Brian K. Johnson, a professional-communications consultant who addressed leaders from the Section of Litigation at their Fall Leadership Meeting. He recommended that speakers begin speaking with their hands in the “ready position,” with their hands directly in front of their waist, to be ready to gesture naturally when the urge to gesture is triggered.


Referring to techniques in his book, The Articulate Advocate, Johnson urged the audience to use the three types of gestures that most people use in general conversation: the give (hands open with palms facing upward); the chop (turning the hands sideways and employing “a gentle karate chop”); and the show (using “a literal enactment of your words,” such as explaining how an actor gripped a briefcase handle). He also advised consciously relaxing one or both arms in a straight position to provide a break from gestures and variation in a presentation.


Johnson asserted that effective gesturing not only helps the audience better understand the speaker’s message, but it also helps the speaker think and speak more clearly and effectively. Johnson explained that scientific research has “revealed the important connection between thinking, speaking, gesturing and listening.” For instance, one study “found that people who were allowed to gesture while recalling a list of memorized words recalled on average 20% more than people who were not allowed to gesture.”


For more information on Johnson, his co-author Marsha Hunter, and their suggestions for becoming an articulate advocate, visit http://www.johnson-hunter.com/aboutus.html.


Christina Plum, Milwaukee, WI


 

December 7, 2011

Hon. John Roll to be Honored at Special Session


A special session of the U.S. District Court for the District of Arizona in Tucson, Arizona, will be held on January 6, 2012, to honor the memory of Chief Judge John M. Roll. The special session will be held at the Tucson Music Hall in the Tucson Convention Center beginning at 3 p.m. Judge Roll died on January 8, 2011, in the mass shooting at a congressional event for U.S. Representative Gabrielle Giffords that left six people dead and thirteen injured, including Congresswoman Giffords.


Judge Roll received his J.D. from the University of Arizona College of Law in 1972, and an LL.M. from the University of Virginia School of Law in 1990. He worked as a state and federal prosecutor before joining the Arizona Court of Appeals in 1987. President George H.W. Bush appointed Judge Roll to the federal bench in 1991. He was named chief judge in 2006 and served in that capacity until his death.


A new federal courthouse building in Yuma, Arizona will be named for Judge Roll. Judge Roll was a strong advocate for the new courthouse and shortly before his death had approved the design for the building. Construction on the John M. Roll United States Courthouse is scheduled to begin in July and be completed by 2013. Judge Roll and Congresswoman Giffords worked together to secure $28 million in federal stimulus funding for the new courthouse.


Judge Roll and Congresswoman Giffords also worked together on other issues relating to the Arizona federal courts. In December 2010, Congresswoman Giffords sent a letter to the Ninth Circuit Court of Appeals, which oversees Arizona’s federal courts, in support of Judge Roll’s effort to obtain a judicial emergency declaration in Arizona to allow overcrowded federal courts additional time to prosecute felony cases relating to human and drug smuggling across the U.S.-Mexico border. The overcrowding issues stemmed in part from a shortage of federal judges in Arizona, as well as tougher enforcement of border immigration and drug laws. The emergency declaration was granted on January 25, 2011, shortly after Judge Roll’s death. Judge Roll had stopped by the congressional event on January 8 to thank Congresswoman Giffords for her continued attention to federal-court issues in Arizona.


Rebecca van Doren, Cohen Kennedy Dowd & Quigley, P.C., Phoenix, AZ


 

November 29, 2011

Young Attorneys—Learning to be Lawyers?


A recent New York Times article reported on something that is not news to many young lawyers—that law school might teach students how to research, write and think a certain way, take exams, and more, but it does not teach the practical skills needed for day-to-day practice. For example, how to handle a tough client or how to close a merger (draft a certificate of merger and file it with the secretary of state). Using property law as an example, the article notes that law schools “have long emphasized the theoretical over the useful” and adds that clients increasingly are hesitant to subsidize the ensuing learning curve in a young attorney’s early years. First-year criminal-law classes don’t discuss plea bargaining, and contracts classes rarely involve studying actual contract drafts. The article suggests that one reason for the situation is that law professors are rewarded for publishing law-review articles, not for excelling at teaching. The article quotes Justices Stephen Breyer and Chief Justice John Roberts on the utility of law-review articles, or lack thereof. According to Roberts, “Pick up a copy of any law review that you see, and the first article is likely to be, you know, the influence of Immanuel Kant on evidentiary approaches in 18th-century Bulgaria, or something, which I’m sure was of great interest to the academic that wrote it, but isn’t of much help to the bar.”


The article goes on to discuss the selection of professors and the apparent preference for those who did not practice, or at least practiced law only a few years. Is there a solution? There have been articles before about legal clinics, but one study found that “only 3 percent of law schools required clinical training.” To succeed in the harsh environment that the article describes for new law school graduates, “graduates will need entrepreneurial skills, management ability and some expertise in landing clients.” But how?


The article itself offers more theoretical discussion than practical advice. Law students must turn to other resources to find advice and support on succeeding in the workplace. Free materials are available online, such as this e-book: 25 Tips for the New Lawyer or the many resources available through the ABA. For example, the Young Lawyers Division publication The Young Lawyer offers many articles with practical advice (e.g. “How to Shine as a Second Chair”) and the Section of Litigation’s publication Litigation News offers many useful articles, such as those in the Trial Skills archive.


Mor Wetzler, Paul Hastings, New York, NY

 

November 16, 2011

Mentoring's Impact on Mentors


Many people have heard about the benefits of mentoring and everybody who has had a good mentor knows the benefits of that relationship. But people often overlook the benefits of being a mentor. The human resources department of Sun Microsystems recently compiled interesting statistics, as quoted by Anne Fisher, Fortune senior writer, on money.cnn.com. Sun Microsystems compared the career progress of approximately 1,000 employees over a 5-year period and found significant benefits to participating in a mentoring program—as both mentee and mentor. Indeed, the study found that mentoring might be even more beneficial to mentors than to mentees.


• Both mentors and mentees were approximately 20 percent more likely to get a raise than people who did not participate in the mentoring program.

• 25 percent of mentees and 28 percent of mentors received a raise—versus only 5 percent of managers who were not mentors.

• Employees who received mentoring were promoted five times more often than people who didn’t have mentors.

• Mentors were six times more likely to have been promoted to a bigger job.


It isn’t clear whether these numbers are based on causation or correlation. After all, those that volunteer to mentor others are likely to be more engaged and energetic, and therefore their chances for promotion may be higher regardless of their mentoring. But these benefits are not surprising, whether they are based on causation or correlation. Just as a successful mentoring program can help an organization, mentors increase their value to the company. Mentors can help their departments or organizations grow, can help produce star performers, and can develop a reputation for caring about people. Serving as a mentor permits people to create a larger network, and to better understand the business and the issues facing others in the organization. And mentors experience personal satisfaction through actively helping others succeed, enriching the mentor’s own work experience, career, or life.


A mentor helps and guides another individual’s development, and this guidance is not done for personal gain. And although mentors should be sincerely interested in someone else’s growth, the mentoring relationship benefits both mentee and mentor.


Mor Wetzler, Paul Hastings, New York, NY

 

November 3, 2011

Facebook Timeline: Evolving E-Discovery and Litigation Strategies


Facebook has created a new tool for users, called Timeline. The most prominent new feature of Timeline is that it acts as a repository for all of a user’s information on the site. Thus, with Timeline, users can flip through wall posts and other actions organized neatly by year.


Attorneys will find that the streamlined data organized by Timeline will be easier to search. However, with an ever-increasing number of users and correspondingly growing volume of data, attorneys will have to spend increased resources mining that data.


Another feature of Timeline includes retroactive posting, enabling users to add content to past year’s posts. However, the metadata will indicate the actual post date. A drawback to retroactive posting is likely increased costs in doing in-depth analysis on the timing of the content’s time of post. If attorneys are aware of the ability, they can also warn their clients to make sure they do not go back and alter past posts.


Timeline also will be beneficial for other litigation/trial uses including case strategy, juror research, and aiding in closing arguments in narrating chronologies.


These new developments on Facebook have led to more courts grappling with balancing individual privacy interests and fair access to discoverable information in this new arena. For example, just last week a New York appeals court overturned a lower court’s ruling that had permitted a construction company access to all the information in a personal injury plaintiff’s Facebook account that was posted following an accident. The appeals court held that the company should only have access to information that is relevant to the case. More information about the case, including the opinion, is available here.


— Christina Liu, Andrew M. Hale & Associates, Chicago, IL


 

November 1, 2011

High Court Tackles Attorney Mistakes, Plea Bargaining, and Remedies


On Monday, October 31, the Supreme Court heard oral argument in two cases dealing with whether plea negotiations in a criminal trial require effective legal counsel, and if so, what remedy should be available to defendants who do not have the benefit of effective assistance of counsel at the plea-negotiations stage.


In Lafler v. Cooper, the question was what happens when an attorney advises his or her criminal client to reject a favorable plea based on an incorrect understanding of the law and the client is then sentenced to a harsher sentence after a fair trial. Among other charges, respondent Anthony Cooper was charged with assault with intent to murder. Cooper had aimed a gun at the victim’s head but the bullets hit her in the buttocks and thighs. After the preliminary hearings, the prosecutor communicated an initial plea offer that allowed Cooper to plead guilty to assault with intent to murder and face a minimum sentence of 51 to 85 months’ imprisonment. Cooper testified that he wanted to plead guilty but his attorney advised him not to take the deal. Cooper’s attorney told him that because the victim was shot below the waist, the government could not prove an assault with intent to commit murder charge. The prosecutor later offered another plea deal with a minimum sentence of 126 to 210 months, but Cooper again rejected the plea based on his attorney’s advice. The case went to trial and the jury found Cooper guilty on all crimes charged. He was sentenced to 185 to 360 months imprisonment.


The Sixth Circuit relied on the Sixth Amendment ineffective-counsel analysis adopted in Strickland v. Washington to find that Cooper’s counsel was “obviously” deficient and prejudicial to the proceedings by telling his client that it was impossible for the government to prove the charge based on the location of the victim’s wounds. The Sixth Circuit noted that because the Strickland analysis applied equally at the plea bargaining stage, Cooper was essentially deprived of his constitutional rights. The court also affirmed the lower court’s determination of remedies, finding that the state must either offer Cooper his original plea sentence of 51 to 85 months or release him from custody. A new trial would not be appropriate because it does not “restore him to the position in which he would have been had the deprivation not occurred; namely, serving a sentence for 15 to 25 years.”


In the second case, Missouri v. Frye, after being charged with a felony for driving with a revoked license, respondent Galin E. Frye was offered two plea bargain options: (1) plead guilty to the felony with a recommended three years of imprisonment, or (2) plead guilty to a misdemeanor with a recommended 90 days in jail. However, Frye’s counsel never informed him of the plea options, and he subsequently pled guilty to the original felony charge. Frye appealed, arguing that his counsel’s failure to inform him of the plea bargain violated his Sixth Amendment right to effective assistance of counsel. The state of Missouri, as petitioner, argued that Frye’s situation falls outside of Sixth Amendment protections, and that, even if he was wronged, there is no available remedy.


The Supreme Court recently handed down Padilla v. Kentucky, finding that the Sixth Amendment requires criminal-defense attorneys to advise their immigrant clients of the possible deportation consequences of a guilty plea before accepting. Based on this existing law, and as suggested by the justices’ questioning at oral argument, it appears that the more difficult question in these two cases—and the one that will drive the Supreme Court’s decision—is the remedy, if there is even any. In Lafler v. Cooper, both the state and the United States, filing as amicus, argued that because Cooper has no constitutional right to a plea bargain, it would be illogical to provide a remedy when he had no legal entitlement to a plea, and might even put him in a better position than if he had accepted the original plea. Similarly, in Missouri v. Frye, the state argued that defendants alleging ineffective assistance of counsel for failure to communicate a plea offer should not be entitled to any remedies, if the defendant later pled guilty to less favorable terms, where the defendant had access to a constitutionally adequate proceeding.


The Supreme Court’s decision in these cases will determine whether courts can relieve a defendant convicted pursuant to constitutionally adequate procedures if his or her lawyer made an error during plea negotiations. And the Court will undoubtedly struggle with the question of an appropriate remedy, because the traditional remedy for ineffective counsel is to put the defendant in the same position he or she would have been in had the violation not occurred—a difficult analysis in these cases.


Mor Wetzler, Paul Hastings, New York, NY

 

October 12, 2011

Job Applicant and Employee Credit Checks: Proceed With Caution


On October 9, 2011, California Governor Brown signed Assembly Bill 22 into law. The new law takes effect on January 1, 2012, and significantly changes the legal landscape for employers who request and consider credit-related information as part of job applicant and employee background checks. The law prohibits employers from obtaining credit information about applicants for employment as part of the background-check process and deciding whether or not to continue the employment of an existing employee, unless the applicant/employee occupies a position specified in the law. The law also requires employers who obtain credit information as part of a background check to identify the specific basis in the law that authorizes the credit check.


New Limits on the Use of Consumer Credit Reports
AB 22 creates a new section of the California Labor Code (section 1024.5), which prohibits private-sector employers from obtaining a consumer credit report as part of the background-check process in connection with an application for employment or decision to continue employment of a current employee, except for applicants for, or employees in, the following positions:


• a “managerial” position, which is defined in the new law as meaning an employee who qualifies for the executive exemption from overtime pay requirements under Industrial Welfare Commission Order 4

• a position that involves regular access—other than for routine solicitation and processing of credit-card applications in a retail establishment—to bank or credit-card account information, Social Security numbers, or dates of birth of others

• a position in which the person would be a named signatory on the employer’s bank or credit-card account, authorized to transfer money on behalf of the employer, or authorized to enter into financial contracts on behalf of the employer

• a position that involves regular access to confidential or proprietary information, including a formula, pattern, compilation, program, device, method, technique, process, or trade secret

• a position that involves regular access to the employer’s (or a customer’s or client’s) cash totaling at least $10,000

• a position for which credit information about the applicant/employer is required by law to be disclosed or obtained


The specified exceptions to the general prohibition against using credit checks raise more questions than they answer. For example, what does it mean to have “regular access” to bank-account or credit-card information, Social Security numbers, dates of birth, or $10,000 in cash?


Effect of AB 22 on the Background-Check Process
AB 22 does not fundamentally alter the process for obtaining a credit report as part of a background check: Before obtaining a credit check, an employer must continue to provide written notice to the applicant/employee that a report will be obtained and used; inform the applicant/employee of the source of the report; provide the applicant/employee with an opportunity to request a free copy of the report; and if the applicant/employee requests a copy, provide the copy at the same time that the report is provided to the employer. In addition, the new law does not change the requirement for an employer to notify the applicant/employee when there is an adverse employment decision that is based wholly or partially on information contained in a consumer credit report.


However, AB 22 adds a new, important requirement: If an employer requests a credit report on an applicant/employee, the employer must identify which of the exceptions to the general prohibition against such reports applies.


Remedies for Violations

AB 22 does not add any new remedies for applicants/employees. They continue to have the ability to bring a private action for actual damages suffered as a result of the failure of an employer to comply with the procedural requirements in the California Civil Code for obtaining credit checks (i.e., advance notice to the applicant/employee containing all required information), and the law does not eliminate an employer’s ability to avoid liability for violation of the procedural requirements by showing it has adopted “reasonable procedures” to ensure compliance.


Mor Wetzler, Paul Hastings, New York, NY

 

September 20, 2011

Unauthenticated Text Messages Lead to Overturned Conviction


A prosecutor in Pennsylvania recently learned what can happen if you don’t authenticate crucial evidence consisting of text messages. Amy Koch, defendant in a drug prosecution, was convicted of possession with intent to deliver marijuana and possession of marijuana as an accomplice. But text messages found on the defendant’s phone were not authenticated, i.e., the prosecutor did not establish the identity of the sender or recipient of the text messages.  Indeed, the detective that transcribed the text messages, together with identifying information from the cellular phone, acknowledged that he could not confirm the defendant was the author of the text messages and that it was apparent that she did not write some of the messages. Under Pennsylvania’s rule of evidence on authentication, the proponent of the evidence must introduce sufficient evidence that the matter is what it purports to be. Pa.R.E. 901(a).


As the appeals court explained: “Glaringly absent in this case is any evidence tending to substantiate that appellant wrote the drug-related text messages. No testimony was presented from persons who sent or received the text messages. There are no contextual clues in the drug-related text messages themselves tending to reveal the identity of the sender.” The trial court had found that doubts regarding the text messages went to the weight of the evidence rather than admissibility, but the appeals court disagreed. “Authentication is a prerequisite to admissibility.” Rather, authentication of electronic communications, like documents, requires more than mere confirmation that the number or address belonged to a particular person. Circumstantial evidence, which tends to corroborate the identity of the sender, is required.” The court also found that the text messages constituted inadmissible hearsay, and that the improper admission of the text messages warranted a new trial.


Mor Wetzler, Paul Hastings, New York, NY

 

September 9, 2011

Senate Passes Patent Reform Bill, Signaling Significant Changes


On September 8, 2011, the U.S. Senate endorsed all provisions in H.R. 1249: Leahy-Smith America Invents Act, a comprehensive patent-reform bill.


The Senate’s passage of the bill by a vote of 89 to 9 means that the bill will make it to the president’s desk shortly. When passed (President Obama had previously pledged that he would sign a patent-reform bill when it reaches his desk), the legislation would offer the first significant change to the U.S. patent system in nearly 60 years.


The Senate’s successful vote on the bill came just days after a cloture vote held on September 6, where the Senate garnered enough votes required to effectively limit consideration of the bill that had passed in the House of Representatives by a vote of 304–117 back in June, to an additional 30 hours. Majority Leader Harry M. Reid (D-Nev.) filed a cloture motion last August, just before the Senate adjourned for vacation, to which the Senate gave unanimous consent. Today, several amendments were proposed, yet none approved.


Despite the differences between H.R. 1249 passed by the House last June, and S.23, the original Senate bill passed last March, the Senate today still managed to pass the Leahy-Smith America Invents Act. Arguably the biggest difference between the two involved the issue of U.S. Patent and Trademark Office (PTO) funding, which had threatened to derail patent reform. The House bill, unlike the original Senate bill, did not ban fee diversion, the oft-criticized practice of diverting PTO revenue that exceeds the agency’s budget to other government programs. Today’s bill passed by the Senate does not ban fee diversion. Starting October 1, 2011, fee collections by the PTO during a fiscal year that exceed the amount appropriated to the PTO for that fiscal year will be deposited in a Reserve fund and made available to the extent and in amounts provided in appropriations acts.


The passed bill contains numerous provisions, some of which include:


• modification of inventor’s oath or declaration requirements so that a person to whom an inventor has assigned (or is under an obligation to assign) an invention can file a patent application as an agent of the inventor

• replacement of the current “first to invent” system with a new “first inventor to file” system

• the addition of a “commercial use” defense, which permits an accused infringer to prove that it had commercially used the claimed subject matter more than one year before the earlier of the effective filing date of the claimed invention, or the date on which the claimed invention was disclosed to the public in a matter that qualified for the exception from prior art under 35 U.S.C. § 102(b)

• elimination of the patent-infringement defense of failure-to-comply-with-the-best-mode requirement of section 112

• a limitation prohibiting issuance of any patent claim directed to or encompassing a human organism

• changes false marking legislation (35 U.S.C. § 292) eliminating the qui tam provision (which permits any person to sue on behalf of the United States); the passed bill states that only the United States or a person who has suffered a competitive injury may bring a false-marking case. Patentees are protected from false-marking actions based on the marking of a product with matter relating to a patent that covered that product but has expired.

• mandates a PTO study on genetic diagnostic testing to determine whether providing independent, confirming genetic diagnostic-testing activity (for second opinions to patients) would impact existing patent and license holders of exclusive genetic tests


All provisions, including other significant provisions not above can be found in the full bill here. The PTO has also created a website seeking comments relating to “Leahy-Smith America Invents Act Implementation” that can be found here.


Mor Wetzler, Paul Hastings, New York, NY

 

August 19, 2011

Employer Might Have Duty to Accommodate Employee’s Commute


The Second Circuit Court of Appeals recently held that, under certain circumstances, an employer may have a duty to accommodate an employee in his or her commute to and from work. The court reversed the lower court’s decision that held that an employer has no legal duty to accommodate a worker’s commute, as the commute is “outside the scope” of the employee’s job. The plaintiff in the case had a hearing impairment, cancer, heart problems, and asthma, and was transferred from Queens to Manhattan for 13 months, during which she complained about problems associated with her commute. The Second Circuit found that possible accommodations for her may have included “transferring her back to Queens or another closer location, allowing her to work from home, or providing a car or parking permit.” The Court’s reference to the accommodation of working from home deviated from traditional disability-accommodation law.


The Court did say that accommodating the commute depends on the specifics of the case. As the court explained:


On remand, the district court shall consider factors such as the number of employees employed by DOHMH, the number and location of its offices, whether other available positions existed for which Tinkelman showed that she was qualified, whether she could have been shifted to a more convenient office without unduly burdening DOHMH’s operations, and the reasonableness of allowing her to work without on-site supervision.

Notably, the court rejected the plaintiff’s suggestion of an accommodation consisting of a special telephone or device for the hearing impaired while she worked in the Manhattan office.


The case is Nixon-Tinkelman v. N.Y.C. Dept. of Health & Mental Hygiene, No. 10-3317-cv (2d Cir. Aug. 10, 2011).


Mor Wetzler, Paul Hastings, New York, NY

 

July 28, 2011

Law Firms Support LGBT Youth Through It Gets Better Project


A number of national law firms and their attorneys have created videos that provide words of support for lesbian, gay, bisexual, and transgender (LGBT) youth and adults. The videos were inspired by the It Gets Better Project, which was started in September 2010 by syndicated columnist and author Dan Savage in response to the suicides of several LGBT teens who were bullied at school. The project’s website features over 10,000 user-created videos by individuals, organizations, companies, and other entities that offer words of encouragement to those who are coping with harassment and uncertainty.


Shearman & Sterling, LLP’s, video features members of Sterling Pride, the gay-affinity group at the firm, speaking about their experiences as LGBT youth. They discuss the bullying they encountered and the paths they eventually took to find happiness as adults. The video is available on the project’s website and on YouTube. In the video, one speaker said that one of his greatest fears was telling his mother that he is gay because he thought “it would be the end of his world,” But, he was wrong. Another speaker said: “When I got to college, it was a completely transformative experience . . . The perception that people had of me also changed because I accepted myself.”


Littler Mendelson, P.C., created two videos, which are on the project’s website and You Tube. One video is designed for professionals and the other video is designed for youth. The videos feature firm employees who are LGBT or straight allies discussing their personal experiences and expressing positive support for LGBT individuals. For example, one man said that when he was growing up, he “did not think that there was anyone else in the world that was gay.” He told viewers: “It is an amazing time to be gay, it is an amazing time to be progressing towards understanding who you are, understanding what the possibilities are for you as an individual, as a professional, regardless of what you decide to do with your life. You can be and do anything you want.” A woman encouraged youth to stay strong, stating: “You matter. You matter today, and you matter tomorrow and in the future. If you’re having a hard time, stick with it. There are lots of resources.”


Three LGBT lawyers from the law firm of Morrison & Foerster, LLP, shared an encouraging message with viewers in their video. One man explained that he and his colleagues “lead open lives surrounded by colleagues who respect who we are and who welcome the important people in our lives into theirs.” Another attorney encouraged young people who are not safe to reach out for help. She encouraged those youth who are safe to stay in school and receive an education. She also noted that while it might not be easy and those youth “might feel completely alone,” there are people “who love you, who care about you, and want to help you get through this.” She encouraged youth to contact the Trevor Project at thetrevorproject.org, which is an organization that provides crisis and suicide prevention for LGBT youth through a 24-hour nationwide hotline and other programs.


Christina Plum, Milwaukee, WI

 

July 28, 2011

FAA Preempts Rule Classifying Class-Action Waivers Unconscionable


In AT&T Mobility LLC v. Concepcion, 563 U.S. __ (Apr. 27, 2011), the U.S. Supreme Court held 5–4 that the Federal Arbitration Act (FAA) preempts California's rule classifying most class-action waivers in consumer arbitration agreements as unconscionable. The holding suggests that most consumer contracts that require complaints to be arbitrated individually and not as part of a class action are enforceable under the FAA.


The plaintiffs in AT&T Mobility entered into an agreement for the sale and servicing of cellular phones with AT&T. The contract provided for arbitration of all disputes between the parties and required all claims be brought in an individual capacity rather than as part of a class action. The plaintiffs sued AT&T, in the U. S. District Court for the Southern District of California, alleging that AT&T engaged in false advertising and fraud by charging them $30.22 in sales tax for phones advertised as free. The lawsuit was then consolidated with a putative class action.


Both the district court and the U.S. Court of Appeals for the Ninth Circuit held that the arbitration provision was unconscionable under the California Supreme Court’s decision in Discover Bank, which prohibited class-action waivers in arbitration agreements “in a setting in which disputes between the contracting parties predictably involve small amounts of damages, and when it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money.” The courts further held that the Discover Bank rule was simply a refinement of the unconscionability analysis applicable to contracts generally and was not preempted by the FAA.


The Supreme Court reversed and held that the Discover Bank rule interferes with the “principal purpose” of the FAA to enforce private arbitration agreements. Accordingly, the arbitration agreement was upheld. It remains to be seen what impact AT&T Mobility will have in other contexts, including employment and civil-rights class actions.


Matthew Passen, Passen Law Group, Chicago, IL


 

July 8, 2011

High Court Narrows Reach of Courts in Products Liability Litigation


In two recent decisions, the U.S. Supreme Court both clarified and reshaped how the law of personal jurisdiction applies to foreign corporations selling their products to customers in the United States. In Goodyear Dunlop Tires Operations, S.A. v. Brown, No. 10-76 (June 27, 2011), the Supreme Court reaffirmed that foreign companies are not subject to state courts’ general jurisdiction—the power to decide claims unrelated to a company’s activities in a state—unless the company’s contacts with the state were “continuous and systematic.” Specifically, the Court held that a foreign corporation’s placement of goods in the stream of interstate commerce alone cannot support general jurisdiction in a state where those goods end up being sold. In J. McIntyre Machinery, Ltd. v. Nicastro, No. 09-1343 (June 27, 2011), the Supreme Court imposed limits on a state court’s specific jurisdiction—the power to decide claims related to activities occurring within or affecting the state. The majority of the justices concluded that a foreign corporation’s targeting of the U.S. market as a whole for sales of its products through an independent distributor would not permit a state to exercise specific jurisdiction over the corporation unless it had also targeted that specific state.


The Supreme Court’s decisions in Goodyear and Nicastro will have important implications for foreign companies that face potential exposure to products-liability suits in the United States. In the wake of these decisions, foreign corporations should consider carefully whether to structure their sales activity in the United States so as to limit the number of U.S. states in which they may be expected to defend against products-liability lawsuits.


Mor Wetzler, Paul Hastings LLP, New York, NY


 

June 20, 2011

Supreme Court Resolves Circuit Split in Section 10(b) Case


In a highly anticipated 5–4 decision, in Janus Capital Group, Inc. v. First Derivative Traders, the Supreme Court resolved a split in the circuits and held that an investment adviser to a mutual fund could not be sued under Rule 10b-5 in a private action for incorrect or misleading statements in a mutual-fund prospectus, even though the adviser may have prepared those statements. In so holding, the Court addressed the meaning of a fundamental element needed to plead a private securities-fraud claim under section 10(b) of the Securities Exchange Act of 1934: what constitutes “making a statement” sufficient to hold a party liable for any alleged misstatements or omissions. In holding that the “maker” of a statement can only be someone who has ultimate authority over and actually makes the statement, the Court found that only the fund (which is a separate legal entity), and not the investment adviser, can be deemed to “make” a statement in a fund prospectus.


In reversing the Fourth Circuit’s ruling, the Court adopted the bright-line rule “that the maker of a statement is the entity with authority over the content of the statement and whether and how to communicate it.” The Court found that the language in Rule 10b-5 imposing liability on a person or entity that “makes” was not ambiguous, and that to be a “maker” of a statement one must have actually made and have the ultimate authority over the statement. “Without control, a person or entity can merely suggest what to say, not ‘make’ a statement in its own right.” The Court analogized to the relationship between a speechwriter and a speaker: “When a speechwriter drafts a speech, the content is entirely within the control of the person who delivers it. And it is the speaker who takes credit—or blame—for what is ultimately said.”


The Court noted that its decision “follows from” the Court’s earlier holding in Central Bank, under which a private action pursuant to Rule 10b-5 does not include suits against aiders and abettors. Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 180 (1994) “Such suits—against entities that contribute substantial assistance to the making of a statement but do not actually make it—may be brought by the SEC [ ], but not by private parties.”


Finally, the Court refused to find that the adviser, JCM, “made” the statements merely because it may have participated in writing and disseminating the prospectuses—and did not address the unique and close relationship between advisors and mutual funds asserted by both First Derivative and the United States. In particular, the Court did not address the fact that mutual funds typically have no employees, they outsource all of their functions and therefore there are, in fact, no individuals, other than Fund’s officer’s (which are typically employees of the adviser or other service provider) or the Board of Directors, who could actually “make” a statement in a fund’s prospectus. Nevertheless, the Court found that only the Fund “bears the statutory obligation to file the prospectuses with the SEC,” and the evidence showed that only the Fund, not the advisor, did file them. “Nor did anything on the face of the prospectuses indicate that any statements therein came from JCM rather than Janus Fund.”


The Court’s opinion likely will have far-reaching implications for investment companies, advisors, investment banks, attorneys, accountants, and other service providers who are involved in the preparation of documents, such as prospectuses, that are publicly disseminated to investors.


Mor Wetzler, Paul Hastings LLP, New York, NY


 

May 4, 2011

Supreme Court Ruling Continues Strong Federal Policy Favoring Arbitration


In a decision with broad implications for the use of pre-dispute arbitration agreements in a variety of contexts, the Supreme Court has held that courts cannot refuse to enforce an arbitration agreement because it does not permit the class-based arbitration of claims. In the decision, AT&T Mobility LLC v. Concepcion, No. 09-893, 2011 WL 1561956 (Apr. 27, 2011), the Court held that states may not use state contract law principles as a means to impose limitations or requirements that “stand[] as an obstacle” to the unfettered use of arbitration agreements. Under Concepcion, obstacles of this sort will be suspect and ripe for challenge on Federal Arbitration Act (FAA) preemption grounds.


Read the full case note.


 

May 3, 2011

Supreme Court Further Limits Class Arbitration


On April 27, 2011, in AT&T Mobility LLC v. Concepcion, a sharply divided U.S. Supreme Court ruled that the Federal Arbitration Act (FAA) preempted California’s judicially created Discover Bank rule, which found waivers of class arbitration in most consumer contracts to be unconscionable and therefore unenforceable. Specifically, the Supreme Court held that the FAA prohibits states from conditioning the enforceability of certain arbitration agreements on the availability of classwide arbitration procedures. AT&T Mobility reflects the ongoing commitment of the Supreme Court to ensure that the FAA preempts state laws or court rulings that are perceived to present an “obstacle” to the enforcement of private parties’ mutual consent to arbitrate in accordance with the terms of their written agreements.


The AT&T Mobility decision is not surprising. It was foreshadowed by the Supreme Court’s decision last year in Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 599 U.S. ___, 130 S.Ct. 1758 (2010), in which the Court held that where an arbitration agreement is silent on the question of whether class-action proceedings are authorized, the parties’ consent to class arbitration may not be inferred absent evidence of the parties’ intent or a governing rule of law authorizing that inference. Taken together, Stolt-Nielsen and AT&T Mobility may well lead to the effective demise of class arbitrations unless those decisions are abrogated by federal legislation or subsequent Supreme Court decisions. For companies that seek to avoid the risk of class-action lawsuits or arbitrations, AT&T Mobility and Stolt-Nielsen indicate that properly drafted arbitration clauses can minimize, and perhaps even eliminate, that risk in many circumstances. 

 

April 12, 2011

J&J Reaches Settlement of Charges with Enforcement Agencies


On April 8, 2011, Johnson & Johnson (J&J) entered into a deferred prosecution agreement (DPA) with the Department of Justice (DOJ) and a consent decree with the Securities and Exchange Commission (SEC) resolving criminal and civil liabilities for alleged violations of the Foreign Corrupt Practices Act (FCPA) by wholly owned subsidiaries in Greece, Poland, and Romania, as well as allegations relating to concerns with regard to the United Nations Oil for Food Program (OFFP). Simultaneously, J&J announced that it had reached a corresponding agreement with the U.K. Serious Fraud Office (SFO).


The company was charged with making improper payments to government doctors in Greece, Poland, and Romania in violation of the FCPA and with paying kickbacks to the former government of Iraq under the OFFP. The SEC alleged that since at least 1998, subsidiaries of the New Brunswick, New Jersey-based company paid bribes to doctors in Greece who selected J&J surgical implants, to public doctors and hospital administrators in Poland who awarded contracts to the company, and to public doctors in Romania to prescribe J&J pharmaceutical products.


J&J agreed to settle the SEC’s charges by paying more than $48.6 million in disgorgement and prejudgment interest. J&J also agreed to pay a $21.4 million fine to settle parallel criminal charges brought by the DOJ.


In the DPA, the U.S. government cited: 1) J&J’s voluntary disclosure, 2) its thorough internal investigation, 3) its cooperation with the U.S. government; and 4) the substantial remedial measures undertaken by the company early on to improve its anticorruption compliance program as reasons for substantially reducing the monetary penalties assessed against the company, which were 25 percent below the minimum range as set out in the DPA from the U.S. Federal Sentencing Guidelines.


The settlements also included some unique components, such as the close coordination between prosecutorial bodies in the United States and the United Kingdom, the additional compliance undertakings J&J has committed to implement, and self-monitoring by J&J during the three-year term of the DPA.


The DPA and consent decree demonstrate the U.S. government’s continued interest in ensuring that companies in the healthcare industry comply with the FCPA. DOJ officials have commented publicly about the numerous active investigations within the healthcare sector, and the DOJ and SEC issued letters to a number of major pharmaceutical companies in June 2010 inquiring into their sales-and-marketing practices, particularly with regard to the use of third parties in high-risk countries. Moreover, the U.S. government’s close cooperation with the SFO in this matter may also indicate a global interest in healthcare enforcement.


 

April 5, 2011

U.S. Supreme Court Expands Retaliation Risks for Employers


The Supreme Court recently decided the second of two retaliation cases that continued a long and nearly unbroken series of losses for employers. In both cases, the Court broadened the scope of employers’ potential exposure to claims of unlawful retaliation.

In the first case, Thompson v. North American Stainless, LP, ___ U.S. ___, No. 09-291 (decided January 24, 2011), the Court held that third parties, who do not themselves engage in a protected activity, may nevertheless bring retaliation claims under Title VII of the Civil Rights Act of 1964. The decision arguably limits this new category of potential plaintiffs to employees with close relationships with the employee who engaged in the protected activity—a range of relationships the Court refused to define—but it plainly broadens the risks that an employer must consider whenever an employee engages in protected activity. And for now, the scope of that risk remains for further development in the lower courts.

In the second case, Kasten v. Saint-Gobain Performance Plastics Corp., ___ U.S. ___, No. 09-834 (decided March 22, 2011), the Court held that oral complaints of a violation of the Fair Labor Standards Act (FLSA) may constitute protected conduct under FLSA’s anti-retaliation provision. The Court refused to decide a separate but related question: whether the FLSA’s anti-retaliation provision applies only to complaints made to the government. For now, at least, employers must consider internal complaints as possible predicates for retaliation claims.


Retaliation Risks after Thompson and Kasten

Both decisions require employers to think more broadly when assessing the risks of retaliation claims.


Thompson requires employers to consider that individuals who themselves have not engaged in protected activity may still be potential plaintiffs. Employees who are family members and fiancées fall into that new category, for sure. But beyond that, the category is not well-defined. Employers must consider carefully whether actions to be taken against a third party, known by the employer to be a close friend or colleague of someone who has engaged in protected activity, “well might have dissuaded a reasonable worker” for engaging in protected activity. Employers may want to revisit their employee-fraternization-and-dating policies to see if they are adequately protected.


The impact of the decision in Thompson may go beyond Title VII. It necessarily applies to the Age Discrimination in Employment Act because the relevant language of that statute mirrors Title VII. The reasoning in Thompson just as easily could be applied by the plaintiff’s bar to retaliation claims brought under the Equal Pay Act and the FLSA. Like Title VII, those statutes define the activities that are unlawful and then separately define a category of individuals who may bring suit that is not limited to those who engage in protected activity. Therefore, Thompson creates a risk of third-party retaliation claims under those statutes as well.


The impact of the decision in Kasten is more uncertain. While overruling decisions that have held oral complaints under the FLSA insufficient predicates for retaliation claims, the Court established an objective standard for determining whether an employee orally has “filed any complaint.” So there remains room for employers still to argue that the alleged predicate act does not meet that standard, and that because it fails to meet that standard of notice, the plaintiff cannot prove that the adverse action was “because” the employee “filed any complaint.”


In short, when considering an adverse action against an employee, employers must now consider (a) whether that employee has a relationship with another who has engaged in protected activity such that the contemplated action “well might have dissuaded a reasonable worker” from engaging in protected activity; and (b) whether the employee has made any oral or written complaints that might reasonably be construed as “as an assertion of rights protected by the statute and a call for their protection.” In either case, employers should take care to evaluate the strength of the evidence that will show the action was taken because of legitimate, non-retaliatory reasons.


 

April 5, 2011

Seventh Circuit Enforces U.S. Discovery Against Foreign Litigant


In Heraeus Kulzer, GmbH v. Biomet, Inc.,a German firm suing an American firm in Germany for theft of trade secrets, sought to take discovery under the judicial assistance statute, 28 U.S.C. § 1782, to require its opponent (an international corporation with offices in the United States) to produce various documents that likely could not have been discovered within the foreign case itself. The statute at issue authorizes a federal district court to direct persons “found” within its district to produce documents and things for use in proceedings before foreign tribunals.


Read the full case note.


 

March 29, 2011

EEOC Releases Final Regulations Significantly Expanding Coverage under the ADA


Last week, the Equal Employment Opportunity Commission (EEOC) released its Final Regulations to Implement the Equal Employment Provisions of the Americans with Disabilities Act, as Amended, and accompanying Interpretive Guidance. The final regulations confirm and amplify the expanded Americans with Disabilities Act (ADA) coverage contemplated by the Americans with Disabilities Act Amendments Act of 2008 (ADAAA).


The ADAAA, which became effective on January 1, 2009, amended the language of the original ADA, substantially expanding the statute’s coverage. Among its many new provisions, the ADAAA granted the EEOC broad rulemaking authority to interpret the meaning of the term “disability” and to issue updated regulations interpreting the ADA.


Over a year ago, the EEOC proposed new regulations that included significant changes from the former ADA regulations. The far-reaching proposals provoked over 600 written comments from members of the public, civil-rights groups, employers, and professional organizations. After more than a year, the EEOC has now released the final regulations, which will take effect on May 24, 2011.


Together with the text of the ADAAA, the final regulations make sweeping changes to disability law as applied to the American workplace. They dramatically expand the proportion of the population that will qualify for ADA coverage, and thereby effectively impose additional obligations on employers.


the Securities Litigation Practice, Paul Hastings, New York, NY


 

March 28, 2011

Supreme Court Rejects Test of "Statistical Significance" for Materiality


On March 22, 2011, the U.S. Supreme Court issued a decision in the matter of Matrixx Initiatives, Inc., et al. v. Siracusano, et al., No. 09-1156. The unanimous decision, written by Justice Sotomayor, rejected a bright-line test of statistical significance to determine when information must be disclosed to investors under the securities laws.


The underlying securities-fraud complaint alleged that Matrixx, the maker of Zicam Cold Remedy, an over-the-counter product, failed to disclose “adverse event reports” indicating that some users suffered from a loss of smell (anosmia). Matrixx moved to dismiss, arguing that the investors had failed to plead materiality adequately under section 10(b) of the Securities Exchange Act because they did not allege that the undisclosed reports reflected statistically significant evidence that Zicam caused anosmia. Matrixx argued that because the number of users suffering from anosmia was statistically insignificant, the information was immaterial as a matter of law and the company had no duty to disclose it. The district court granted Matrixx’s motion to dismiss, and the Court of Appeals for the Ninth Circuit reversed.  


Writing for the Court, Justice Sotomayor held that the materiality of adverse-event reports cannot be reduced to a bright-line rule based on statistical significance. The Court reaffirmed the traditional test of Basic, Inc v. Levinson, 485 U.S. 224, 231–32 (1988) and TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976), that the materiality requirement under section 10(b) of the Exchange Act is satisfied when there is “a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” In Basic, the Court had rejected a bright-line test for determining materiality, observing that “[a]ny approach that designates a single fact or occurrence as always determinative of an inherently fact-specific finding such as materiality, must necessarily be overinclusive or underinclusive.” Id., at 236.


Matrixx argued that adverse-event reports regarding a pharmaceutical company’s products are not material unless a sufficient number of such reports establishes a statistically significant risk that the product is causing the events. The Court noted this argument rests on the flawed premise that statistical significance is the only reliable indication of causation. A lack of statistically significant data does not mean that medical experts have no reliable basis for inferring a causal link between a drug and adverse events. “As Matrixx itself concedes, medical experts [often] rely on other evidence to establish an inference of causation.” Justice Sotomayor also observed that the Food and Drug Administration (FDA) does not limit the evidence it considers in reviewing drugs to statistically significant data. “Given that medical professionals and regulators act on the basis of evidence of causation that is not statistically significant, it stands to reason that in certain cases reasonable investors would as well.”


Applying Basic’s “total mix” standard in this case, the Court concluded that the investors adequately pleaded materiality. Moreover, the Court held that applying a bright-line test of statistical significance would artificially exclude information that would otherwise be considered significant to a reasonable investor’s trading decision. “Although in many cases reasonable investors would not consider reports of adverse events to be material information, respondents have alleged facts plausibly suggesting that reasonable investors would have viewed these particular reports as material.”


Notably, the Court cautioned that pharmaceutical manufacturers need not disclose all reports of adverse events. The existence of such adverse events, which can be common occurrences, “says nothing in and of itself about whether the drug is causing the adverse events.” Something more than the “mere existence of reports of adverse events” is necessary, the decision states, but that “something more” need not be statistical significance. The issue is whether, in context, a reasonable investor would have viewed reports of adverse events as material even in the absence of statistically significant evidence of a causal link.


The decision also reiterated the principle that absent a duty to speak, silence cannot be the basis for securities liability; disclosure is required only to make previous statements not misleading: “Even with respect to information that a reasonable investor might consider material, companies can control what they have to disclose under these provisions by controlling what they say to the market.” The Court noted that “[t]his is not a case about a handful of anecdotal reports, as Matrixx suggests.” Rather, assuming the complaint’s allegations to be true, as required at the motion-to-dismiss stage, the Court found that “Matrixx received information that plausibly indicated a reliable causal link between Zicam and anosmia.” Based on the information allegedly available to Matrixx, the Court found that the complaint alleged facts “suggesting a significant risk to commercial viability of Matrixx’s leading product.” Because it was substantially likely that a reasonable investor would have viewed this information as having significantly altered the “total mix” of information made available, the investors adequately pleaded a material misrepresentation or omission.


The Court also found that the plaintiffs alleged scienter sufficiently. The Court noted that it has not yet determined whether recklessness alone is sufficient to satisfy the scienter requirements, and is saving that question for another day. The Court found that the allegations, “taken collectively,” give rise to a “cogent and compelling” inference that Matrixx elected not to disclose the adverse-event reports not because it believed they were meaningless but because it understood their likely effect on the market. Therefore, the Court found that respondents had adequately pleaded scienter.


the Securities Litigation Practice, Paul Hastings, New York, NY


 

March 24, 2011

Just the Facts: Federal and State Litigation


Litigation is fundamental to the legal profession, and lawsuits are carried out daily in federal and state courts. But, just how much litigation is conducted in the federal and state courts? Here are “just the facts.”


U.S. Supreme Court Cases

According to the U.S. Supreme Court, during each Court term, over 10,000 petitions are filed that seek review of a case. The Court reviews, hears arguments, and decides through written opinions in only about 100 of those cases.


See and find out more about U.S. Supreme Court cases. (A Reporter’s Guide to Applications Pending Before the Supreme Court of the United States.)


U.S. Courts of Appeals Cases

According to the Administrative Office of the United States Courts, for 2009, filings in the “regional” courts of appeals decreased 6 percent to 57,740. This number of filings approximates the amount of filings before 2003.


U.S. District Courts Cases

According to the Administrative Office of the United States Courts, for 2009, the civil and criminal case filings in U.S. district courts increased 4 percent to 353,052. Among the number of cases filed: diversity of citizenship cases grew 10 percent, federal question cases rose 1 percent, and criminal cases peaked at their “highest level since 1932.”


U.S. Bankruptcy Courts Cases

According to the Administrative Office of the United States Courts, for 2009, U.S. courts received 1,402,816 bankruptcy petitions, which represent a 35 percent growth in petitions filed from 2008. It also represents the highest number of bankruptcy filings for fiscal years after 2005.


See and find out more about U.S. Courts of Appeals, U.S. District Court, and U.S. Bankruptcy cases. (Administrative Office of the United States Courts. 2009 Annual Report of the Director: Judicial Business of the United States Courts. Washington, D.C.: U.S. Government Printing Office, 2010.)


State Courts of Appeals Cases

According to the Court Statistics Project of the National Center for State Courts, in 2008, there were about 300,000 appellate cases that came into state courts.


State Trial Courts Cases

According to the Court Statistics Project of the National Center for State Courts, state trial courts received 106 million “incoming” cases in 2008, which represents the highest number of such initial filings in the 35-year history of the project.


See and find out more about state courts of appeals and trials court cases. (R. LaFountain, R. Schauffler, S. Strickland, C. Bromage, S. Gibson & A. Mason, Examining the Work of State Courts: An Analysis of 2008 State Court Caseloads (National Center for State Courts 2010.))


Rachel DuFault, BNA, Arlington, VA


 

March 2, 2011

Supreme Court Rules No Personal Privacy Rights for Corporations


On March 1, 2011, the U.S. Supreme Court ruled unanimously that a corporation, unlike an individual, does not have "personal privacy" that could be violated by disclosure of facts obtained during a law-enforcement investigation.


AT&T participated in the Federal Communications Commission’s (FCC) "E-Rate Program," providing telecommunications equipment and services to elementary and secondary schools in exchange for federal reimbursement. AT&T later informed the FCC that it had violated E-Rate rules and overbilled the government for its services. The FCC’s Enforcement Bureau began an investigation and requested that AT&T produce certain information. AT&T complied with the information requests. In December 2004, the Enforcement Bureau terminated its investigation and AT&T agreed to pay the FCC $500,000, without conceding liability.


In April 2005, CompTel, a non-profit trade association, brought a request under the Freedom of Information Act (FOIA) seeking all information that the Enforcement Bureau obtained in its investigation of AT&T and the E-Rate program. The FOIA allows the public to gain access to some documents filed with the government, unless the documents fall within a statutory exception. AT&T objected to the disclosure under several FOIA exemptions. Exemption 7(C) of the FOIA, 5 U.S.C. § 552(b)(7)(C), exempts from mandatory disclosure records or information compiled for law-enforcement purposes when such disclosure could reasonably be expected to constitute an unwarranted invasion of "personal privacy."


In August 2005, the FCC granted in part and denied in part the FOIA request. The FCC determined that certain information fell within various FOIA exemptions, but rejected AT&T’s argument that it was a "corporate citizen" with personal privacy rights. In denying AT&T’s administrative appeal, the FCC held that Exemption 7(C) applies only to individuals. AT&T appealed to the Third Circuit, which held that because a "person" includes a corporation as defined under FOIA, a corporation may have a personal privacy interest within Exemption 7(C)’s meaning. The Third Circuit held that a corporation, like a person, can suffer "public embarrassment, harassment, and stigma" due to law-enforcement investigations. The FCC appealed to the Supreme Court.


The Supreme Court rejected the argument—relied on by AT&T and the Third Circuit—that by expressly defining the noun "person" to include corporations, Congress necessarily defined the adjective form of that noun—"personal"—also to include corporations. The Court used several examples to establish that a noun and its adjective form can have a different meaning. The Court then turned to the ordinary meaning of "personal," finding that the word ordinarily refers to individuals. Especially within the context of the statutory phrase "personal privacy," the word "personal" "suggests a type of privacy evocative of human concerns—not the sort usually associated with an entity like, say, AT&T." Moreover, the Court considered that treatises in print around the time the exemptions were drafted support the conclusion that "personal privacy" did not apply to corporations.

AT&T argued that the Court recognized "privacy" interests of corporations in the Fourth Amendment and double-jeopardy contexts, but the Court limited its analysis to the statutory language of the FOIA exemption, finding those other cases "too far afield to be of help here." The Court instead compared the term "personal privacy" to the language of other FOIA exemptions and agreed with a memorandum issued by the attorney general shortly after Exemption 7(C) was passed. That memorandum explained that the exemption applies to individuals and not to corporations. In so holding, the Court noted its prior dicta that the memorandum is a reliable guide for the Court in interpreting FOIA.


In a bit of humor perhaps not appreciated by AT&T, the Court concluded: "The protection in FOIA against disclosure of law-enforcement information on the ground that it would constitute an unwarranted invasion of personal privacy does not extend to corporations. We trust that AT&T will not take it personally."


Mor Wetzler and Carla Walworth, Paul Hastings, New York, NY


 

March 1, 2011

Resources to Improve Your Legal Writing


Hopefully your legal-writing professor encouraged you to avoid legalese—that dreaded mind-numbing abundance of superfluous words. Maybe you have forgotten. Maybe the verbiage has crept back into your papers. Here comes your reminder: Survey data published in the Journal of the Legal Writing Institute found that judges find unclear writing and legalese less persuasive than plain English or informal writing. Shocking? Probably not. Judges are less likely to skim and thus more persuaded by straightforward presentation of legal concepts (even complex concepts). The full article is at: Flammer, S., “Persuading Judges: An Empirical Analysis of Writing Style, Persuasion, and the Use of Plain English,” 16 Legal Writing 183–221 (2010). Or catch the survey data highlights in this easy-to-follow slideshow (listed under “Advocacy SlideShows”) by ComCon Kathy Kellermann Communication Consulting.


If you aren’t convinced, please check out Jim McElhaney’s article, “The Power of Plain Talk.” The article includes several examples of how attempts to “sound like a lawyer” end up as verbal clutter. The article offers the following plain language tips (among others):


  • First, speak in simple sentences. Compound and complex sentences invite confusion. One idea at a time is enough.
  • Second, use simple words. You want everything you say to command instant understanding.
  • Third, facts, not opinions, have the power to convince others.

 

But there’s hope! Another resource suggests that certain tips and tricks can even make a lawyer’s writing as easy and pleasurable to read as The Economist. In “Five Ways to Write Like The Economist“ (PDF), Ross Guberman offers practical advice to improve your papers’ readability, using guidance from recent Economist samples. His tips include using colons, choosing visual action verbs, conjuring evocative examples and analogies, trying shorter sentence openings, and using parallel construction. Give these ideas a whirl in your next editing session. The result may make your audience want to keep reading, and may make you want to keep writing!


 

February 23, 2011

Ninth Circuit Rules Pharmaceutical Sales Reps Are Exempt from Overtime Laws


On February 14, 2011, the U.S. Court of Appeals for the Ninth Circuit held that pharmaceutical sales representatives are properly classified as exempt from the Fair Labor Standards Act overtime-pay requirements as “outside sales” employees.


Read the full case note.


 

February 11, 2011

New E-Discovery Guidance from Judge Scheindlin


Judge Shira Scheindlin in the Southern District of New York authored the well-known Zubulake and Pension Committee opinions on electronic discovery. Her most recent e-discovery decision offers useful guidance on the acceptable format for production, whether and to what extent parties must produce metadata, and counsel’s communication and cooperation obligations regarding those issues. National Day Laborer Organizing Network v. U.S. Immigration and Customs Enforcement Agency, 10 Civ. 3488, 2011 WL 381625 (S.D.N.Y., Feb. 7, 2011).


The defendants in the case had produced several thousand pages of documents in five non-searchable PDF files, merging all records—paper or electronic—without indicating any separate files, and without producing email attachments or any associated metadata. Judge Scheindlin compared that format to Rule 34 of the Federal Rules of Civil Procedure, which addresses the form of production of records in discovery. The rule, like the Sedona Principles, encourages production in the form in which information is ordinarily maintained or in a reasonably usable form. Fed. R. Civ. P. 34(b)(2)(E)(ii). See also The Sedona Principles: Best Practices Recommendations and Principles for Addressing Electronic Document Production (2d ed. 2007), Principle 12.


Considering whether parties must produce metadata, Judge Scheindlin explained that: "By now, it is well accepted, if not indisputable, that metadata is generally considered to be an integral part of an electronic record." Because the dispute arose in the context of a Freedom of Information Act  request, Judge Scheindlin found that the metadata is a part of the public record and therefore must be disclosed pursuant to a request for public records. She noted that the issue has been resolved similarly by the state courts that have addressed it.


Next, Judge Scheindlin set forth the metadata fields for future productions in the case, adding "that these are the minimum fields of metadata that should accompany any production of a significant collection of ESI." The decision recognized that the proposed protocol will not apply to all cases, and that reasonable production format depends on the scope and nature of litigation. Nonetheless, Judge Scheindlin explained that Rule 34 requires that records be produced in a reasonably usable format, which at a minimum requires searchability.


Finally, Judge Scheindlin emphasized that such e-discovery disputes are avoidable if parties communicate and confer as required under the rules. She noted that production specifications in any case are subject to negotiation by the parties on a case-by-case basis. If the parties cannot reach agreement, "the court must determine the appropriate form of production, taking into account the principles of proportionality and considering both the needs of the requesting party and the burden imposed on the producing party." Thus, Judge Scheindlin concluded that the expense of litigation could be reduced "if lawyers met their own obligations to ensure that document production is handled as expeditiously and inexpensively. This can only be achieved through cooperation and communication."


Mor Wetzler, Paul Hastings, New York, NY


 

February 8, 2011

Facebook Argues Consent in California Friend Finder Privacy Suit


On January 11, 2011, Facebook Inc. moved to dismiss a putative class action accusing the social-networking site of violating its users' publicity rights by misappropriating their names and likenesses to promote its Friend Finder service. Cohen et al v. Facebook Inc., 3:10-cv-05282 (N.D. Cal. 2011).  Facebook claimed that users consented to the company's use of their names and images and that, even if they had not, the plaintiffs could not prove they had been injured by the company's actions.


The plaintiffs had filed suit in federal court in November, asserting that Facebook violated their rights by advertising the Friend Finder service to those in their friend network by posting their names and pictures along with a statement that they had "'found friends using the Friend Finder,' and suggesting that the user also 'give it a try!'" The suit alleges that Facebook’s use of its users’ names and photographs to advertise Friend Finder to their friends constitutes misappropriation of the right of publicity, a violation of the Lanham Act and a violation of California law. The plaintiffs claim that Facebook uses the service—which searches a user’s email contacts to identify people already on Facebook and alert the user to these possible connections—increases the website’s user population and thus boosts advertising revenue. The plaintiffs seek to bring their claims on behalf of a class comprising Facebook users whose names, images, or likenesses were used without their consent to advertise Friend Finder since November 2006.


In its motion to dismiss, Facebook argued that by visiting the site and agreeing to its terms of use, its users consented to having their names and photographs used in the manner alleged in the suit. Facebook argued that the terms of use unambiguously give Facebook the right to use any photographs posted on the site in any manner on Facebook, subject to the users’ privacy and application settings. According to the motion papers, the terms of use also inform users that, unlike other content they post on the site, they cannot limit the use of their names or profile photos in association with general services provided by Facebook. Facebook also argued that the plaintiffs lack standing because they cannot show they were injured by Facebook’s Friend Finder feature.


In their opposition, filed February 3, the plaintiffs argued that Facebook's terms of use should not be considered by the court, that their applicability to plaintiffs is a disputed issue not resolvable at the pleadings stage, and that even if applicable, the terms of use do not grant Facebook unlimited powers to exploit plaintiffs’ rights.


The motion is scheduled to be heard on March 3, 2011.


 

January 26, 2011

Supreme Court Holds Denial of Summary Judgment May Not Be Appealed Post-Trial


On January 24, 2011, the U.S. Supreme Court issued a unanimous decision in Ortiz v. Jordan, No. 09-737. At issue in the case was whether a party may appeal an order denying summary judgment after a full trial on the merits. The Supreme Court resolved a circuit split on the issue, finding that an order denying summary judgment is simply a step along the route to final judgment. Once the case proceeds to trial, the full record developed in court supersedes the record existing at the time of the summary-judgment motion.


Read the full case note.


 

January 20, 2011

Delaware Court of Chancery Adopts Guidelines for Preservation of ESI


The Delaware Court of Chancery has adopted Guidelines for Preservation of Electronically Stored Information. The guidelines are designed to educate counsel about the duty to take steps to preserve electronic evidence. The court noted that it has not yet adopted a comprehensive set of rules regarding electronic discovery, but sought to emphasize the preservation duty for electronically stored information (ESI). Given their narrow focus, the guidelines provide the minimum process parties and counsel must apply to preserve electronic evidence. Should a problem arise, preservation efforts will be evaluated on a case-by-case basis.


Some of the baseline requirements are:


  • A written litigation-hold notice distributed to all custodians of potentially relevant ESI. The litigation hold should be implemented when litigation is reasonably anticipated, which could occur before litigation is filed.

  • The party, its in-house and outside counsel, and the proper representative from the party's information technology function (if applicable) should work together to identify, locate and preserve potentially relevant information.

  • Counsel should document the steps taken to prevent the destruction of potentially relevant electronic evidence.


  • As noted by the court, experience has shown that potential problem areas regarding ESI tend to include business laptop computers, home computers, external or portable storage devices such as USB flash drives (also known as "thumb drives" or "key drives"), and personal email accounts. The list is meant merely as a starting point for parties and their counsel in considering the often overlooked sources of potential relevant electronic evidence.


    The court also referred practitioners generally to other resources regarding the discovery of ESI, such as the Sedona Guidelines: Best Practices & Commentary for Managing Electronic Information in the Electronic Age and the Conference of Chief Justices: Guidelines for State Trial Courts Regarding Discovery of Electronically-Stored Information.


     

    January 13, 2011

    Supreme Court Hears Oral Argument in J. McIntyre Machinery Ltd. v. Nicastro


    On January 11, 2011, the U.S. Supreme Court heard oral argument on a product-liability case that may drastically change when a foreign corporation can be sued in state court in the United States. The key question before the court is whether the "new reality" of a "contemporary international economy" allows a state to exercise specific, personal jurisdiction over a foreign manufacturer solely because the manufacturer targets the national market as a whole and a consumer buys the product in the forum state.


    Robert Nicastro injured his hand while operating a three-ton metal-shearing machine made by J. McIntyre Machinery. Nicastro sued McIntyre and its exclusive American distributor, McIntyre Machinery of America, Inc., in New Jersey state court. Nicastro argued that New Jersey has specific jurisdiction over McIntyre under the stream-of-commerce theory as described in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987). McIntyre argued that New Jersey courts do not have personal jurisdiction over it because it never targeted the New Jersey market for its products. The trial court dismissed the case for lack of personal jurisdiction. The Appellate Division reversed, and the New Jersey Supreme Court affirmed. In a decision that began, "Today, all the world is a market," it rejected the "minimum contacts" (after finding none) and "purposeful availment" tests as "outmoded" and no longer applicable to a new global marketplace. Instead, the court held that McIntyre’s national distribution was sufficient to support New Jersey’s exercise of personal jurisdiction, and that McIntyre knew or should have known that its distribution scheme could make its products available to New Jersey consumers. McIntyre appealed, arguing that it has insufficient contacts with New Jersey to be subject to personal jurisdiction in that state. Nicastro countered that McIntyre's decision to distribute its products throughout the U.S. does not make McIntyre's relationship with New Jersey or any other state distant enough to prevent McIntyre from being subject to personal jurisdiction.


    At oral argument, McIntyre argued that upholding jurisdiction over it would "radically revise the test for personal jurisdiction over a foreign manufacturer." It maintained that personal jurisdiction should rest on the quality of the defendant’s activities directed toward the forum state, not on a consumer's activity or where a product ultimately ends up. Nicastro argued in opposition that McIntyre had the requisite minimum contacts with New Jersey—that it purposefully marketed its product nationwide and put it into a distribution scheme for national sales, and that the manufacturer and distributor worked together to promote and sell McIntyre’s products in the United States.


    The Supreme Court heard argument in this case in tandem with Goodyear Dunlop Tires Operations v. Brown, which concerns state general-personal jurisdiction over a foreign manufacturer whose products occasionally enter the state through its global parent company.


    The Supreme Court’s decision will resolve what plaintiffs must establish before U.S. state courts can exercise specific jurisdiction over foreign manufacturers who do not market their products in specific states, but rather target the U.S. market generally.


    Mor Wetzler, Paul Hastings, New York, NY