Amendments to Federal Appellate Rules Effective Today

by Kirsten E. Small

Quite a few amendments to the federal court rules became effective today, but since this is an appellate blog I'm only going to discuss the changes to the Rules of Appellate Procedure.

(1) "Housekeeping" Amendments

Rule 1 is amended to make clear that the definition of "state" includes the District of Columbia, federal territories, and commonwealths (i.e., Kentucky, Massachusetts, Pennsylvania, and Virginia.)*

Rule 4 is amended to replace references to Civil Procedure Rule 58(a)(1) with references to Rule 58(a).

(2) Amicus Disclosure Rules Let's suppose you are not satisfied with the 14,000-word limit for a principal brief (Rule 32(a)(7)(B)) and you either don't want to ask for extra pages or your request has been denied. What's a lawyer to do? Engage an amicus, of course! The federal courts of appeal have long suspected "that amicus briefs are often used as a means of evading page limitations on a party's briefs." Glassroth v. Moore, 347 F.3d 916, 919 (11th Cir. 2003).

As one commenter aptly noted, "A court is entitled to know whether a brief is submitted by a friend of the court or the friend of a party." Amendments to Rule 29 aim to curtail the improper use of amicus briefs by mandating certain disclosures.

New Rule 29(c)(5) requires "a statement that indicates whether:

(A) a party's counsel authored the brief in whole or in part;
(B) a party or party's counsel contributed money that was intended to fund preparing or submitting the brief;
(C) a person--other than the amicus curiae, its members, or its counsel--contributed money that was intended to fund prparing or submitting the brief and, if so, identifies each such person."

The revised rule is modeled on Supreme Court Rule 37.6, enacted in 1997.


*I got that list by Googling "States that are Commonwealths." I kid you not.

Get Back to Where You Once Belonged: Fourth Circuit Upholds Application of Forum Selection Clause

by Kirsten E. Small

The Fourth Circuit yesterday affirmed a district court order remanding a case to the state courts of Virginia. FindWhere Holdings, Inc. v. Systems Environment Optimization, LLC (No. 09-2155)

FindWhere, a seller of global positioning systems, entered into a distribution contract with Homeland Security Systems. The contract included a forum selection clause, which provided that venue any suit under the contract "shall lie exclusively in, or be transferred to, the courts of the State of Virginia." After FindWhere sued Homeland in Loudoun County, Virginia, Homeland removed the action to the Eastern District of Virginia on the basis of diversity jurisdiction. The district court granted FindWhere's motion to remand, holding that the forum selection clause allowed suits only in state court. Homeland appealed.

The Fourth Circuit first held that it had jurisdiction over the appeal, holding that the general prohibition of appellate review of remand orders does not include remands based upon forum selection clauses. In so holding, the court joined every other circuit that has considered the issue.

The court then affirmed the remand order. Homeland argued that the "or be transferred to" language of the forum selection clause established that venue in federal court was proper, because only a federal court can "transfer" a case to another jurisdiction. In rejecting this argument, the court first applied the "widely accepted rule" that when a forum selection clause uses the phrase "of [a state]," venue is exclusively in state court; only the phrase "in [a state]" indicates an intent to allow suit in state or federal court.

The Fourth Circuit then rejected Homeland's argument that the reference to "transferring" a case was evidence of an intent to permit suits in federal court. Although the language of the opinion is not crystal clear, the court appeared to hold that a proper reading of the word "transfer" includes not just district-to-district transfers under 28 U.S.C. § 1404(a), but also remands from federal to state courts in Virginia.

A Tale of Two Doctrines (Res Judicata and Differing Capacities)

By Kirsten E. Small

On Friday, the Fourth Circuit issued a helpful primer on the differing capacities doctrine and its application in employment litigation. Brooks v. Arthur (No. 09-1551)

Virginia corrections officers Donald Hamlette, James Brooks, and Samuel St. John were fired by Lieutenant Howard Arthur, allegedly because they complained of discrimination by Arthur and Major Randal Mitchell. In administrative proceedings, the Department of Employee Dispute Resolution (EDR) reinstated each officer with back pay, concluding that the officers' misconduct (consisting of various instances of dereliction of duty) did not warrant termination. The EDR also found that none of the officers had established a connection between the protected activity and the termination.

Thereafter, the officers sued Arthur and Mitchel in their individual capacities, alleging civil rights violations (discrimination and witness intimidation) and tortious interference with contract. The district court dismissed, holding that because Arthur and Mitchell were in privity with the Department of Corrections, the EDR proceedings were res judicata as to the civil suit.

The Fourth Circuit reversed. Describing the problem as one of "transitive capacity," the court explained that the EDR proceedings could have preclusive effect only if Arthur and Miller in their individual capacities were in privity with the Department of Corrections, a state entity. Privity could exist only if (1) the Department was in privity with Arthur and Mitchell in their official capacities, and (2) Arthur and Mitchell in their official capacities were in privity with themselves in their individual capacities.

Relying on Andrews v. Daw, 201 F.3d 521 (4th Cir. 2000) ("Daw II"), the court concluded that the analysis failed at the second step: under the doctrine of differing capacities, Arthur and Mitchell could not be in privity with themselves. If sued in their official capacities, Arthur and Mitchell would serve as proxies for the Department of Corrections, the real party in interest. When sued in their individual capacities, however, Arthur and Mitchell would be personally liable for any damages. Additionally, the theories of liability and defenses would differ--for example, the Department of Corrections could claim sovereign (but not qualified) immunity, while Arthur and Mitchel could claim qualified (but not sovereign) immunity.

The court remanded for further proceedings.

An advocacy tip from the Ninth Circuit: Brief your issues!

By Kirsten Small

The Fourth Circuit hasn't published any decisions this week, so instead I'm going to borrow from the Ninth which this week issued a vivid reminder that if you don't brief an issue, you can't win on it--because the court won't consider it.

The case is a familiar one: The Christian Legal Society's suit against Hastings College of Law. CLS alleged that Hastings's "all comers" policy violated CLS's First Amendment rights, a position it advocated all the way to the Supreme Court. Then, in a single sentence in its reply brief, CSL alleged that "the peculiarity, incoherence, and suspect history of the all-comers policty all point to pretext." The Supreme Court affirmed the Ninth Circuit's First Amendment ruling and remanded the pretext claim, stating that the Ninth Circuit could consider that claim if it was preserved. CLS then moved for a remand from the Ninth Circuit back to the district court for consideration of the pretext claim.

On Wednesday, the Ninth Circuit denied the motion. Noting that appellate courts "review only issues that are argued specifically and distinctly in a party's opening brief," the court admonished that all claims "must be articulated" in the statement of issues, the summary of argument, and the argument itself. CLS did not raise the pretext argument in any portion of its Ninth Circuit briefs, nor did it allude to the claim during oral argument.

The court rejected as insufficient references to "pretext" and "selective enforcement" appeared in CLS's opening brief. "[A] bare assertion in the fact section of the opening brief will not preserve a legal argument that is never made."

"Judges are not like pigs, hunting for truffles buried in briefs," the court concluded. Claims that are not clearly articulated will not be considered by the court.

Two plaintiffs and a petitioner walk into a courthouse...

by Kirsten E. Small

The Fourth Circuit issued three published opinions yesterday. Let's get to 'em.

The Plaintiff
For my money, the most noteworthy of the bunch is Coleman v. Maryland Court of Appeals. Former procurement officer Daniel Coleman alleged that the Court of Appeals violated the Family and Medical Leave Act by terminating him after he requested sick leave for "a documented medical condition." The Fourth Circuit held that the Eleventh Amendment barred the claim.

The court began its analysis by discussing Nevada Dep't of Human Resources v. Hibbs, 538 U.S. 721 (2003), in which the Supreme Court held that Congress validly abrogated states' sovereign immunity when it enacted the family-care provision of the FMLA (which entitles employees to leave to care for a spouse, child, or parent with a serious health condition). The Hibbs Court held that the family-care provision was a proper exercise of Congress' power to enforce the 14th Amendment because that provision was a necessary remedy for gender discrimination.

The Fourth Circuit recognized that Hibbs requires separate constitutional evaluation of each of the four FMLA entitlements (childbirth, adoption, family care, and self-care). Joining the 5th, 6th, 7th, and 10th Circuits, the Fourth Circuit held that there is no discrimination-based justification for the self-care provision, and hence Congress did not validly abrogate sovereign immunity in enacting the self-care provision.

The Other Plaintiff
JTH Tax, Inc. v. Frashier concerns the amount-in-controversy requirement. JTH Tax, owner of Liberty Tax franchises (the ones who put people on the side of the road in Statue of Liberty costumes), sued a former franchisee in federal court alleging $80,000 in damages. At summary judgment, JTH claimed damages of about $60,000, whereupon the district court dismissed for lack of subject matter jurisdiction. The Fourth Circuit reversed, noting first that there was no allegation of bad faith in JTH's original allegation. Second, the Court held that the actual damages claims, when combined with the value to JTH of injunctive relief, satisfied the jurisdicational threshold. No new law here, but a good walk-through of the relevant principles.

The Petitioner
Finally, in Barnes v. Holder, the Court held that the BIA has properly interpreted immigration regulations to require "an affirmative communication attesting to the alien's prima facie eligibility" before removal proceedings may be terminated.

"It's not fair" is not one of the canons of statutory construction.

by Kirsten E. Small

The Fourth Circuit issued one published opinion yesterday: West Va. Highlands Conservancy v. Huffman, No. 09-1474.

Coal miners in West Virginia (well, everywhere really) are required by the Clean Water Act to control acid mine drainage. When they fail to do so, the West Virginia Department of Environmental Protection forfeits the mine owner's performance bond and starts remediating the drainage itself.

Or at least, that's the theory. In actuality, WVDEP was allowing acid mine drainage to continue at 18 bond forfeiture sites. The West Virginia Highlands Conservancy sued, claiming that WVDEP was required to obtain a permit for such discharges. The district court agreed based on the very broad language of the CWA, which covers "any addition of any pollutant ... from any point source" by "any person" (defined to include states and municipalities).

The district court held that WVDEP was required to obtain a permit under the plain statutory language. On appeal, WVDEP resorted to playground rhetoric, arguing that the CWA shouldn't apply to it because: (1) it's a state agency ("the rules don't apply to me"); (2) it didn't cause the discharges in the first place ("he did it"); and (3) application of the CWA to it would produce "absurd" results ("it's not fair").

The Fourth Circuit rejected these "policy" arguments and affirmed.

4th Circuit creates "lost child" exception to warrant requirement

by Kirsten E. Small

May 1, 2009 was a bad day for Melvin Taylor, but it could have been a worse day for the 4-year-old daughter of Taylor's girlfriend. A cab driver found the child wandering on a busy street in Richmond, Virginia, and contacted the police. Officer Anthony Ratliff responded, and the girl took him to a nearby--and apparently empty--row house. Ratliff followed her inside, shouting "hello" periodically as he looked for an adult who might be responsible for the child.

The adult Ratliff found was Taylor, who was sleeping in an upstairs bedroom. The bag of bullets on the bedside table gave Ratliff some pause as to the "responsible" part, so he asked Taylor his name (he gave a false one) and if he knew the address of the house he was in (he claimed not to). Ratliff's concerns not having been allayed, he performed a protective sweep and found a handgun under Taylor's mattress.

About that time, Taylor's cell phone rang with a call from "Baby's Mama," who helpfully provided Ratliff with the name "Orlando Taylor," which Ratliff then traced back to Melvin Taylor, who turned out to have a prior felony which made his possession of the gun illegal.

Taylor appealed his subsequent conviction, arguing that Ratliff was required to have a search warrant, or at least probable cause, before entering the house. The Fourth Circuit rejected this argument, holding that a warrant was unnecessary because there was no criminal investigation afoot--just an attempt to reunite a lost child with her parents. Aside from the warrant requirement, the court concluded that the search was reasonable, in its occurrence and its scope, in light of the exigent circumstances.

The case is United States v. Taylor.

Fifth Circuit Tells District Court It Has No “Inherent Authority” To Impose Sanctions For Actions Arising Out Of An Arbitration Proceedings

By Stephen P. Groves, Sr.

In Positive Software Solutions, Inc. v. New Century Mortgage, et. al. v. Camina, ___ F.3d ___ (5th Cir. 2010) (Docket No. 09-10355, filed 13 September 2010), the United States Court of Appeals for the Fifth Circuit concluded a Federal District Court did not have the “inherent authority” to impose monetary sanctions for actions allegedly occurring during an arbitration proceeding, even though the District Court had ordered the arbitration to take place.

Positive Software Solutions sued New Century Mortgage for allegedly infringing on certain software patents associated with telemarketing software licensed to New Century. Camina, a partner in Susman Godfrey, LLP, represented New Century in a court-ordered contractual arbitration even though Positive Software opposed the proceeding.

During the arbitration Camina advised New Century on discovery issues. After an award was rendered, the District Court vacated due to an alleged undisclosed relationship between Camina and the arbitrator. In an initial appeal, the Fifth Circuit reversed the vacatur and remanded the case. After remand, New Century declared bankruptcy. Positive Software ultimately settled its dispute with New Century and, as an interesting part of the settlement, “New Century waived and assigned to Positive Software its attorney-client and work-product rights.” The District Court later ordered Susman Godfrey LLP to turn over its files to Positive Software for sanctions investigation purposes.

Positive Software subsequently moved for sanctions against Camina and other under, Rule 37, F.R.Civ.P., 28 U.S.C. § 1927 (counsel’s liability for excessive costs, expenses, and attorneys’ fees), and the District Court’s “inherent authority”. In February 2009, the District Court sanctioned Camina $10,000.00 via the District Court’s “inherent authority”.

On appeal, the Fifth Circuit recognized that a District Court had the “inherent authority” to impose sanctions in order to (a) control the litigation before it, (b) sanction conduct in direct defiance of the sanctioning court, and (c) sanction conduct which constitutes disobedience to court orders. Nevertheless, the Court of Appeals noted such “inherent authority” must only be used when essential to preserve the court’s authority.

The District Court had imposed the sanctions on Camina based upon a theory that the arbitration proceeding was an “annex” to litigation. The District Court believed, since it had ordered the arbitration to proceed, it retained the authority to impose sanctions for conduct occurring during the arbitration. The Fifth Circuit easily dismissed this theory, noting arbitration is an alternative means of dispute resolution – separate from litigation. In fact, the Court of Appeals concluded if the District Court was correct and arbitration was a mere “annex” of litigation, then the very purpose of such private (i.e.; non-judicial) ADR/arbitration would be completely undermined. Consequently, the Court of Appeals acknowledged “[p]arties agree to avoid litigation; they voluntarily surrender judicial remedies in favor of an extrajudicial process.” (Emphasis in original).

Interestingly, Positive Software argued that the sanctions were appropriate in a court-ordered arbitration, but agreed that sanctions would not have been proper had the parties voluntarily entered into the arbitration. The Fifth Circuit found this to be an unjustifiable “significant and perverse asymmetry”.

Additionally, the Court of Appeals concluded the sanctions order likely violated the Federal Arbitration Act, 9 U.S.C. §§ 1, et. seq., which significantly limits a court’s ability to interfere with an arbitration proceeding. Furthermore, the Fifth Circuit did not want a District Court to “become a roving commission to supervise private method[s] of dispute resolution and exert authority that is reserved, by statute, caselaw, and longstanding practice, to the arbitrator.”

To Heir Is Human, To Do It Too Late Is Fatal

By Stephen P. Groves, Sr.

In a series of four cases, released on 16 August 2010, the South Carolina Supreme Court affirmed the Court of Appeals’ prior decisions to uphold a summary judgment in four 2005 actions to set aside a 1966 quite title decision. See Robinson v. Estate of Harris, ___ S.C. ___, ___ S.E.2d ___ (2010) (Four cases) (Opinion Nos. 26862, 26863, 26864, and 26865).

Simeon B. Pinckney died intestate in 1921. He was survived by his wife, Laura, and his two sons, Herbert and Ellis. At the time of his death he owned 20 acres of land on James Island in Charleston County. For various reasons, not important herein, the relevant property was “whittled down” to 4.3 acres and deeded to Mr. Pinckney’s son, Herbert Pinckney, in 1946. After Herbert passed his wife, Laura Pinckney Heyward, filed a quiet title action in 1966. None of the appealing parties to this action or any of their predecessors-in-interest responded to the 1966 action and the title was resolved in Ms. Heyward’s favor.

Due to a number of subsequent conveyances, the 4.3-acre tract was eventually divided into four separate lots owned by (a) The Converse Company, (b) Martine A. Hutton, (c) David Savage and Lisa M. Shogry-Savage, and (d) Debbie (Shogry) Dinovo. Each lot owner was a Defendant-Respondent in one of the four Robinson v. Estate of Harris cases.

In February 2005, Sara Mae Robinson and others (“Petitioners”) filed their own quiet title action involving several tracts of land located on James Island, including the 4.3-acre tract. They sought “ ‘to establish their legitimate relationship as lineal descendants and heirs’ " of Mr. Pinckney. The first 25 named Petitioners claimed they were Mr. Pinckney’s heirs and “the remaining Petitioners claimed they purchased interests in the property and were the legitimate owners of those interests.”

In bringing the cases, the Petitioners asserted the 4.3 acre tract was fraudulently transferred to Herbert and, in turn, Ms. Heyward fraudulently obtained the property deed through the 1966 action. Moreover, the Petitioners asserted they did not learn of the 1946 deed or the 1966 quiet title action until 2004. After the issues were joined the Lot Owners all moved for summary judgment. The Petitioners countered with several detailed affidavits delineating their alleged evidence of extrinsic fraud. The Trial Court granted the Lot Owners’ motion and the Court of Appeals affirmed. On certiorari appeal, the Supreme Court agreed.

In order to resolve these cases, the Supreme Court was required to determine if S. C. Code Ann. § 15-67-90 constituted an "absolute bar" to Petitioners' action or whether their claim of extrinsic fraud superseded the applicable statute of limitations set forth therein. This provision contains a three year statute of limitations after which a court is prohibited from setting aside a quiet title action “for any reason”.

The Supreme Court agreed with the Petitioners that S. C. Code Ann. § 15-67-90 gave either the trial court and/or the appellate courts “the inherent authority to set aside the 1966 quiet title action and the underlying 1946 cross-deeds if in fact they were procured as the result of extrinsic fraud.” Nevertheless, since the Petitioners waited 39 years to challenge the 1996 action, the doctrine of laches applied to bar their claims. Moreover, notwithstanding the laches bar, the Supreme Court, in a “it just ain’t fair” moment, noted the innocent purchasers would be significantly prejudiced since they had (a) purchased the lots for significant monetary consideration, (b) generally been in possession of the property for a number of years, and (c) some of the Respondents had even constructed family residences thereon.

The united Supreme Court affirmed the Court of Appeals in all four cases.

Water, Water Everywhere, but not a Drop to Drink

By Stephen P. Groves, Sr.

In M & M Corporation of South Carolina v. Auto-Owners Insurance Company, ___ S.C. ___, ___ S.E.2d ___ (2010) (Sup. Ct. Op. No. 26883, filed 11 October 2010), a divided South Carolina Supreme Court (3-2), answered several certified questions from the United States District Court for the District of South Carolina. The Supreme Court determined Auto-Owners was required to provide property damage insurance coverage to its insured hotel for damages caused by overflowing water.
Auto-Owners issued M&M Corporation a commercial all-risk insurance policy for its hotel property located in Blythewood, South Carolina. In August 2006, the South Carolina Department of Transportation (“SCDOT”) initiated a road improvement project near the hotel which involved, in part, installation of a new underground stormwater drainage system. Before the system could be completed the Blythewood area sustained a significant rain event during which more than four inches of rain fell in a single day. As noted by the Supreme Court:

The incomplete stormwater drainage system comprised 1,600 feet of pipes and collected water from an area of approximately 15.9 acres, terminating at an exposed, above-ground [30]-inch pipe [50’] from the edge of the hotel property line and [150’] from [the] hotel building. The total volume of water discharged from the pipe on the day at issue was over 830,000 gallons at a rate of 6.3 feet per second.

Unfortunately, the discharged water filled the hotel’s parking lot to a level sufficient to allow water to enter into the interior of the hotel building and, in turn, cause significant property damage. M&M Corporation sued Auto-Owners for the damages. Auto-Owners denied and defended the claim on the basis of the insurance policy’s “flood” and “surface water” exclusions. After the parties filed their respective cross-summary judgment motions, the District Court certified three questions to the Supreme Court.

1. Under an all-risk Commercial Property Policy of insurance, does "surface water" encompass rainwater collected and channeled in a stormwater collection system?

The Supreme Court noted that since the insurance policy did not define either the term “surface water” or “flood water” then it was free to use the “plain, ordinary, and popular meaning[s]” of those terms. Moreover, the Supreme Court noted insurance policies are construed in favor of coverage with all exclusions, such as those asserted by Auto-Owners, interpreted against the insurer.

Looking to a definition of “surface water” reached in 1901, the Supreme Court concluded that “[o]nce surface water is deliberately contained, concentrated, and cast onto an adjoining landowner's property, it is no longer naturally flowing, diffuse water. Water spewing in an unnatural concentration from a stormwater drainage system lacks the identifiable characteristics of surface water . . . .” . The Supreme Court therefore answered the first certified question with a rather emphatic “No”.

2. If the answer to Question I is no, can such non-surface water reacquire its classification as surface water upon exit from the stormwater collection system and, if so, under what circumstances?

Following, in essence, the same 100+ year old definition, the Supreme Court also answered the second certified question with a similar rather emphatic “No”. The Court stated once the rampaging waters had lost their “surface water” characteristics when expelled from the pipe, the unnatural flow cannot be transformed back into “surface water”.

3. Under an all-risk Commercial Property Policy of insurance, does "flood water" encompass water discharged from a stormwater collection system in concentrated form, pooled, and that thereafter enters a building?

Finally, interpreting Auto-Owners’ “flood water” exclusion, the Supreme Court noted South Carolina had not yet defined the term. Looking to an Idaho case, the Supreme Court impliedly approved a definition reading “ ‘[f] waters are waters which escape, because of their height, from the confinement of a stream and overflow adjoining territory; implicit in the definition is the element of abnormality.’ ” See Milbert v. Carl Carbon, Inc., 406 P.2d 113, 117 (Idaho 1965). Since the waters in this case did not “breach” the containment of a stream or other natural land formation, but was intentionally channeled, then the waters cannot be defined as “flood waters”.

Chief Justice Toal authored the opinion and was joined by Justices Beatty and Kittredge. Justices Pleicones authored a dissenting opinion joined in by Justice Hearn.

1. See Lawton v. South Bound Railroad Co., 61 S.C. 548, 39 S.E. 752 (1901). The Supreme Court defined “surface water” as:

waters of a casual and vagrant character, which ooze through the soil or diffuse or squander themselves over the surface, following no definite course. They are waters which, though customarily and naturally flowing in a known direction and course, have nevertheless no banks or channels in the soil, and include waters which are diffused over the surface of the ground, and which are derived from rains and melting snows . . . .

Lawton v. South Bound Railroad Co., 61 S.C. 548, 552, 39 S.E. 752, 753.

The limits of public nuisance: North Carolina v. TVA

by Kirsten E. Small

About a month ago, the Fourth Circuit vacated an injunction that required the Tennessee Valley Authority to immediately install emissions controls at four of its plants. The Court determined that the "defined standards of the Clean Air Act" preempted a common law public nuisance claim--"an ill-defined tort of last resort." (Judge Wilkinson is a poet, and he didn't even know it.) The Court also concluded that the district court had erred in applying North Carolina law extraterritorially.

I know next to nothing about environmental law, but evidently this decision is kind of a big deal. Law360 yesterday published an article explaining that the decision is significant because of how thoroughly it responds to the arguments in support of the tort of public nuisance for environmental claims.

Happy weekend, everyone!

Fourth Circuit holds that lay opinion testimony must be based on the witness' own perception

by Kirsten E. Small

Federal Rule of Evidence 701 permits lay opinion testimony when, among other things, the opinion is "rationally based on the perception of the witness." In United States v. Johnson,the Fourth Circuit held that a DEA agent's "training and experience" did not provide a basis for Rule 701 opinion testimony not based on the agent's own perceptions.

At Johnson's drug trafficking trial, the government presented testimony from DEA Agent Randy Smith regarding the meaning of certain words used by Johnson during recorded telephone conversations. Smith's interpretations were based on his "training and experience" as a DEA agent, not on his participation in surveillance of Johnson's alleged drug dealing activities.

The Fourth Circuit reversed Johnson's conviction, holding that because Smith did not personally participate in the investigation of Johnson, his testimony was not "based on the perception of the witness" as required by Rule 701.

The Court also rejected the government's argument that the error was harmless because Smith could have testified as an expert under Rule 702. Although Smith had the requisite qualifications, he provided no methodology or guiding principles for his interpertation of the phone calls, and therefore did not meet Rule 702's requirement that expert testimony must rest on reliable principles and methods.

Fourth Circuit rejects First Amendment challenge to SC's "sore loser" statute

by Kirsten E. Small

One of the things I love about being a lawyer is that I learn something new every day. Yesterday, I learned two things: (1) A candidate who appears on the ballot for more than one party (e.g., the Green Party and the Constitution Party) is a fusion candidate, and (2) a "sore loser" law prohibits a defeated primary candidate from appearing on the general election ballot for another party. South Carolina is one of only eight states that permit electoral fusion. All but three states prohibit failed primary candidates from appearing on general election ballots.

The Fourth Circuit yesterday rejected a constitutional challenge to South Carolina's sore loser law, S.C. Code Ann. § 7-11-10, by the South Carolina Green Party. SC Green Party v. SC State Election Comm'n, No. 09-1915 (July 20, 2010). In 2008, Eugene Platt sought the nomination for SC House seat 115 from the Democratic Party, the Green Party, and the Working Families Party. After the Green and Working Families Parties had selected Platt as their nominee for the seat, Platt was defeated in the Democratic Party primary election. As a result, the sore loser law prohibited Platt from appearing on the ballot for the Green and Working Families Parties.

The Green Party sued, claiming that Platt's removal from the ballot violated its First Amendment right to freedom of association.

The Fourth Circuit rejected this challenge, holding first that the burden on the Party's associational rights was only "moderate" (as opposed to "severe") because, while the Party was deprived of its ability to nominate a particular candidate, the SC sore loser law does not permit members of one political party to select the candidate of a rival party (as was the case with the "blanket primary" law struck down by the U.S. Supreme Court in California Democratic Party v. Jones, 530 U.S. 567 (2000)). Second, the court held that SC's sore loser statute is a reasonable, nondiscriminatory restriction that is justified by important regulatory interests. These interests, the court said, are in minimizing factionalism, avoiding voter confusion, and ensuring orderly, fair, and efficient procedures for the election of public officials.

One interesting procedural note: Judge Barbara Keenan, who has been on the court for all of four months, was the lead judge on the panel (the other two judges were Senior Judge Clyde Hamilton and District Judge Samuel Wilson).

Just don't drop it on your foot--U.S. files 268-page brief in public corruption case

by Kirsten E. Small

Update 7/21/10: The Third Circuit has directed to reduce the length of its brief to 42,000 words, about a 20 percent cut. --KES

There's an aphorism that you'll sometimes hear from appellate judges: "The longer the brief, the worse the argument." Lengthy briefs tend to appear when (1) counsel take the "kitchen sink" approach, raising every conceivable issue instead of focusing on the two or three (or maybe four) issues that have a decent chance of success, or (2) counsel fail to take the time to present a clear, concise argument.

I am guessing that both issues are at play in the 268-page, 53,500-word opening brief filed by the United States in its appeal of the sentences imposed on Pennsylvania State Senator Vincent Fumo and his aide, Ruth Arnao. That's nearly four times longer than the presumptive length of 14,000 words for a party's opening brief.

What's more, the government's appeal is directed solely to claims of procedural error at sentencing (e.g., that the court should have imposed an obstruction-of-justice enhancement based on Fumo's perjurious trial testimony). The brief is not available online, but according to the goverment's motion to file the brief, it challenges seven specific guidelines rulings and "multiple, additional procedural errors made by the district court."

In fairness to the government, the trial lasted four months and involved testimony of 108 witnesses and roughly 26 hours of closing arguments. But I'm still not buying that 268 pages is really necessary. If nothing else, I'm willing to bet that a good many of the "multiple, additional procedural errors" are not worth raising to the Court, either because they are not well supported by law or because they didn't affect the outcome of the sentencing proceeding.

The really frightening thing is that Fumo and Arnao have cross-appealed their convictions, which means that the government (as Appellee instead of Appellant) will have to file another primary brief. The judges and clerks of the Third Circuit are going to have to start eating their Wheaties.

Plaintiffs are not required to name all co-tortfeasors under the Tort Claims Act

by Manton Grier, Jr.

In Chester v. South Carolina Dept. of Public Safety, Op. No. 26833 (S.C. July 12, 2010), the Supreme Court of South Carolina held that a plaintiff is not required to join other co-tortfeasors for purposes of determining proportionate liability under Section 15-78-100(c) of the Tort Claims Act.

In that case, the plaintiff’s estate sued three state agencies after the decedent died in a multiple-vehicle accident on I-95 allegedly caused by heavy smoke from a controlled fire conducted by the Forestry Commission. The state agencies argued that Section 15-78-100(c) of the Tort Claims Act required the plaintiff’s estate to name all potential co-tortfeasors, even those that previously settled with the plaintiff’s estate. In actions under the Tort Claims Act, Section 15-78-100(c) provides that “when an alleged joint tortfeasor is named as a party defendant, the trier of fact must return a special verdict specifying the proportion of monetary liability of each defendant against whom liability is determined.”

The trial court read this statute as requiring the plaintiff to name all co-tortfeasors in order to determine proportional liability. It then dismissed the action under Rule 19 because the necessary parties had already settled. The Supreme Court reversed. It stated that “a plaintiff has the sole right to determine which co-tortfeasor(s) she will sue.” Requiring a plaintiff to name co-tortfeasors at the request of a defendant agency violates this principle. The statute does not “force the plaintiff to choose between settling with some parties and thereby forego her right to sue a [Tort Claims Act] defendant, or going to trial against all co-tortfeasors.” The Court also noted that the defendants still have a remedy, as any party liable will be entitled to an equitable set-off against the settlements the plaintiff has already received.

SC Supreme Court clarifies amount of time an offender may be punished for violating terms of release

Manton Grier, Jr.

In State v. Picklemeiser, Op. No. 26831 (July 6, 2010), the Supreme Court of South Carolina clarified the amount of time an offender may be incarcerated or required to participate in a community-supervision program after violating the terms of parole or release. Although the Department of Probation, Parole, and Pardon Services had refused to impose an additional sentence for a probation violation beyond the unsuspended portion of the original sentence, the Supreme Court held that the maximum amount of time that may be imposed for parole violations includes both the unsuspended and suspended sentence. In other words, when an offender violates probation or another condition, a trial court may impose a longer term of incarceration or extend community service or probation, so long as the aggregate period of service does not extend beyond the period of the total sentence, which includes both the unsuspended and suspended portions.

Bad Settlement Decisions And Failure To Make Statutory Demand Result In Pyrrhic Victory

by Gary Beaver

In Brooks Millwork Co. v. Levine, the plaintiff won its breach of contract claim at trial but the jury awarded plaintiff only $25,575.61 -- over $10,000 less than defendants highest settlement offer. Both sides moved for attorney fees – plaintiff on the basis of contract under NCGS § 6-21.2 and defendant under NCGS § 44A-35, which allows a judge to award reasonable attorneys’ fee to the “prevailing party . . . upon a finding that there was an unreasonable refusal by the losing party to fully resolve the matter. . .” A prevailing party is a plaintiff who recovers more than 50% of the amount claimed or a defendant found liable for less than 50% of the amount claimed. Plaintiff had initially claimed over $98,000 but acknowledged partial satisfaction of its lien reducing the principal amount owed to $63,358.48.

The Court of Appeals held on June 15, 2010, that plaintiff was not entitled to contractual attorney fees because it had not complied with the mandatory provision in NCGS § 6-21.2(5) requiring it to give the defendant 5 days to pay the principal amount owed to avoid the attorney fees. Plaintiff never made that demand before filing the lawsuit. Very big “OOPS.” The court then granted attorney fees and costs to defendant as the prevailing party under § 44A-35. The trial court used the $98,000 figure rather than $63,358.48. [Note: the Court of Appeals did not give a satisfactory explanation of what claimed damages number it considered and noted that “excluding contractual attorneys’ fees – to which plaintiff is not entitled. . . – from plaintiff’s calculation, the final judgment totals less than half of plaintiff’s claimed amount.” So did the plaintiff claim attorney fees as part of the $98,000 or of the $63,358.48? Did the court then exclude those claimed fees? What number did the court use as the claimed amount? Inquiring minds want to know.] The attorney fees and costs awarded to defendant totaled about $21,000 which was only about $4600 less than the damages plaintiff won at trial. It got worse. Plaintiff’s counsel was also ordered to pay sanctions to defendant in the amount of twice the printing costs of the appeal for his many violations of the appellate rules. The court listed 7 specific violations – 6 of them involving the brief.

This is a reminder to counsel your clients to be reasonable in settlement discussions and not hold out for the homerun. There is not enough detail in the decision about the merits of the breach of contract claimed damages to know if that is what happened here but, regardless, rolling the dice with the jury obviously did not work out. Also, obey the appellate rules or bear the consequences; plaintiff’s counsel was lucky the appeal was not dismissed or the consequences could have been even worse for him.

The “Sovereignty of the People” Prevails

by Gary Beaver

On June 17, 2010, in State Employees Ass’n of NC, Inc., v. NC Dep’t of State Treasurer, the N.C. Supreme Court reversed the decision of the NC Court of Appeals affirming a trial court’s dismissal of a complaint seeking public records under the Public Records Act, NCGS §§ 132-1 to 132-10. The plaintiff sought records regarding the investment decisions and performance of the Retirement Systems Division of the Department of State Treasurer. Plaintiff began investigating after reading a February 2007 article in Forbes magazine about “pay-to-play” issues involving state retirement pension funds. The defendant had produced hundreds of pages of documents in several installments over the course of a year but plaintiff believed that defendant had not produced all it had.

The lower court had dismissed under Rule 12(b)(6) for failure to state a claim. The Supreme Court held that the allegations were based on reasonable inferences drawn by plaintiff from the documents that were produced. For example, one produced email referred to another email not produced. The Court rejected defendant’s contention that “possession” of the sought information is a necessary element of a Public Records Act lawsuit. The Court noted that NCGS § 132-9(a) provides the cause of action and it makes no mention of a possession element. The defendant can raise that as a substantive defense but it cannot act as the final authority in deciding possession or custody of the requested public records. To allow it to do so would undermine the strong public policy favoring release of public records to increase transparency in government.

This is a sound and needed decision. Given what we have seen in recent years from Jim Black and other “public servants” while our media sat idly by not, or belatedly, investigating or reporting misfeasance and malfeasance by elected and appointed officials, the Public Records Act is the public’s last, best hope at ferreting out and preventing corruption in government.

Fourth Circuit upholds county furlough against Contract Clause challenge

by Kirsten E. Small

As the slow economy continues to put state and municipal governments under pressure to fund necessary services while maintaining balanced budgets, furloughs of government workers are increasingly common. In areas where local government workers are unionized, a furlough may run afoul of the Constitution's Contract Clause, which provides that "[n]o State shall ... pass any ... Law impairing the Obligation of Contracts." U.S. Const. art. I, § 10, cl. 1.

The Fourth Circuit addressed such a challenge in Fraternal Order of Police v. Prince George's County, No. 09-2187 (June 23, 2010). Nexsen Pruet represented the County; yours truly wrote the brief and the case was argued by William "Billy" Wilkins.

Faced with declining revenues and unable to raise taxes, Prince George's County declared a two-week furlough of all County employees during fiscal year 2009. The County acted pursuant to § 16-229 its Personnel Code, which allows furloughs when "required" by "an ascertained shortfall in revenue."

Approximately 80-95% of county employees are union members; the Unions challenged the furlough on the basis that the County was impairing its own contractual obligations (specifically, the wage and hour provisions of collective bargaining agreements) in violation of the Contract Clause. The Unions also argued that (1) the furloughs violated a county ordinance providing that specific terms of CBAs override contrary county law, and (2) the furloughs were not "required."

The district court rejected the Unions' claims under county law, holding (1) that the CBAs did not specifically prohibit furloughs, and therefore § 16-229 was incorporated into the CBAs as a matter of law; and (2) that the County properly determined that a furlough was "required."

However, the court held that the furlough violated the Contract Clause because (1) it impaired the County's obligations under the CBAs to pay certain wages, (2) the impairment was substantial, and (3) the impairment was not "reasonable and necessary to serve an important public purpose." U.S. Trust Co. v. New Jersey, 431 U.S. 1 (1977). The County argued on appeal that there could be no impairment because (as the district court held) § 16-229 was a term of the Unions' contracts. Alternatively, the County argued that the furlough was reasonable and necessary. A key dispute between the parties--and the aspect of the case most watched by locoal governments and unions across the country--was the degree of deference to which the County was entitled in making this determination.

The Fourth Circuit accepted the County's first argument, that the CBAs were not impaired because the furlough ordinance was, by operation of law, a term of the collective bargaining agreements. Because the CBAs therefore gave the County the right to furlough union employees when "required," and because the Unions had not cross-appealed the district court's holding that the furlough was "required" within the meaning of county law, the Fourth Circuit reversed the district court.

While this is a big win for Prince George's County, it is unclear how much help the decision will provide to other local governments facing budget shortfalls. The Court addressed only the narrow question of the impact of county law, and did not reach the larger question of when a furlough of union employees may be "reasonable and necessary" and, most importantly, the degree of deference to which a local government is entitled in making this determination.

N.C. Supreme Court Teaches Interesting Ethics Lesson

by Gary Beaver

Rule 4.3 of the N.C. Revised Rules of Professional Conduct provides in pertinent part:

In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not:
. . .
(b) state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyers’ role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.

On June 17, 2010, in Sisk v. Transylvania Community Hospital, Inc. et al., the N.C. Supreme Court reversed the Court of Appeals and upheld a trial judge who had revoked pro hac vice status for two out-of-state attorneys for their conduct in a matter in another state that was inconsistent with Rule 4.3 (Note: not “a violation of” but rather merely “inconsistent with fair dealings as reflected in Rule 4.3”). The N.C. lawsuit involved a medical malpractice claim. The two attorneys had represented a plaintiff in Kentucky in a similar lawsuit and had sued Abbott Laboratories, Inc. (among others) in that case. Abbott had a consulting expert in the Kentucky case. The out-of-state lawyers contacted that expert as the Kentucky case was settling but before it was dismissed and asked him to assist on a second Kentucky lawsuit with a similar medical issue but in which they had not sued Abbott. However, at the time they contacted the expert, they knew that they were likely to add Abbott as a defendant. The expert had a contract with Abbott to assist in all cases involving the medical issue at stake in both Kentucky cases and the N.C. case. In the second Kentucky case, Abbott moved to disqualify the two attorneys for failing to advise the expert that Abbott was a potential expert and depriving Abbott of its expert. The Kentucky court denied the motion. Abbott tried again to disqualify the lawyers in the N.C. case. The N.C. court granted the motion. The N.C. Supreme Court ultimately affirmed the trial court due to the lawyers admitted intent to keep the expert “in the black” about Abbott’s potential as a defendant.

The ruling is a strong one in favor of lawyers ensuring that they are not misleading potential witnesses in any way about the lawyers’ status and the possible parties in a case. We should all give this decision some thought in the context of all witnesses, not just expert witnesses. Infrequently (but once is too often), you may have seen instances where you know other attorneys mislead or suspect other attorneys of having mislead a witness when they question that witness while investigating a case. This decision may prove to be a big stick to use in such instances.

As for the pro hac vice aspect, the Court of Appeals had correctly noted that an attorney is not subject to discipline under the NC Rules of Professional Conduct if the attorney’s conduct conforms to the rules of the jurisdiction in which the lawyer reasonably believes the predominant effect of that conduct will occur. RPC 8.5. However, though it appears that the predominant effect may have been in Kentucky, the NC Supreme Court held that the trial court did not abuse its discretion under NCGS Section 84-4.2 to revoke the pro hac vice status because it has inherent power to control trials and discipline attorneys and the fact that Rule 4.3 may not apply to this conduct does not limit the trial court from taking some guidance from the rule in exercising such discretion.

South Carolina Supreme Court holds that County Councils may directly engage professionals to conduct investigations

By Manton Grier, Jr.

The Supreme Court of South Carolina recently held that a county council may bypass the council administrator and directly engage professionals when investigating members of the council. Bradshaw v. Anderson County, Op. No. 26830 (S.C. June 28, 2010). In that case, voters in Anderson County elected a new county council in November 2008. After the election, but prior to the installation of the new council, the former council declared an anticipatory breach of the county administrator’s contract and awarded him over $1 million.

When the new council was sworn into office, it voted to investigate several transactions by the former council and elected several accountants and lawyers to lead the investigation. Three Anderson County taxpayers brought an action to enjoin the investigation and sought a judgment declaring that the investigation violated the Home Rule Act. The trial court dismissed the Complaint under Rule 12(b)(6), and the plaintiffs appealed.

On appeal, the Supreme Court held that the Home Rule Act authorizes the Council to conduct an investigation and engage professionals to carry it out. Although the Home Rule Act states that “the council shall deal with county officers and employees . . . solely through the administrator,” it is prefaced with the limiting language of “[e]xcept for the purposes of inquiries of investigations.” S.C. Code Ann. § 4-9-660. Thus, the Court held that because the council engaged investigators “for the purpose of inquiries and investigations,” the unambiguous language allowed the council to retain outside professionals. Further, the Court stated that it would be absurd to require the administrator to investigate himself.

Failure To Give Notice To All Parties, Including Non-appealing Parties, Results In Dismissal Of Appeal

by Gary Beaver

North Carolina Rule of Appellate Procedure 3(a) requires an appellant to serve all other parties with a notice of appeal. In case anyone thinks that it is not mandatory, the NC Court of Appeals made it clear on May 18, 2010, in Lee v. Winget Road, LLC, that it is. There were originally eight plaintiffs and eight defendants in the lawsuit until plaintiffs voluntarily dismissed two of the defendants. Subsequently, the trial court granted summary judgment to the remaining defendants. Five of the Plaintiffs filed a notice of appeal as to the remaining six defendants but, thereafter, withdrew the appeal as to one of the defendants. The appellants served the five remaining defendants but did not serve the three non-appealing plaintiffs or the two previously dismissed defendants.

Citing in support Dogwood Dev. & Mgmt. Co. LLC v. White Oak Transp. Co., 362 N.C. 191, 657 S.E.2d 361 (2008) and Hale v. Afro-American Int’l, 335 N.C. 231, 436 S.E.2d 588 (1993), the Lee court held that the failure to serve the notice of appeal on the three non-appealing plaintiffs or to obtain a waiver of service from them violated Rule 3(a) and that the violation was a “significant and fundamental” one and a “’gross violation’ of the [appellate] rules which ‘frustrates the adversarial process’” requiring dismissal of the appeal. The court did not reach the issue of whether failure to serve previously dismissed defendants was a similar egregious violation. Bottom line: follow the appellate rules to a “T” or run the risk of dismissal. [Note: the appellants’ brief was submitted by their counsel but not signed by him. I wonder what is up with that?]

A mom tomato and a dad tomato are walking down the street ...

Kirsten E. Small

Time to play a little "ketchup." While I have been busy vacationing and brief writing (thankfully, not at the same time), the Fourth Circuit has been busy issuing published opinions. Most of them have not been terribly noteworthy, but there are a few worth pointing out, to wit:

United States v. Richardson: Holds that AOL was not acting as a government agent when it reported (pursuant to a mandatory reporting statute) information it had acquired by use of an internally-developed, non-mandatory filtering program. The panel distinguished Skinner v. Railway Labor Execs. Ass'n, 489 U.S. 602 (1989), on the basis that Skinner involved a regulatory scheme that dictated certain procedures by the railway that were designed to preserve evidence for government use. The regulatory scheme challenged by Richardson was entirely passive ("If you find something, do please let us know") and thus did not create the kind of government involvement that sparks Fourth Amendment protections.

United States v. Joshua: Holds that a person is "in the custody of the Bureau of Prisons" for purposes of 18 U.S.C. § 4248 (authorizing indefinite civil commitment of sexually dangerous persons) only when in the BOP's legal custody. Joshua, who was convicted by a military tribunal and merely housed at a BOP facility as a "contractual boarder," was not in the BOP's legal custody and therefore not subject to civil commitment under § 4248.

In Norfolk Southern Railway v. City of Alexandria, the court held that the Interstate Commerce Commission Termination Act (ICCTA) preempted the City's attempts to regulate Norfolk Southern's transport of bulk ethanol. At least, I think that was the holding. It was kind of hard to stay awake all the way through.

Did you know there is a statute that provides a damages remedy for the wrongful conviction of an innocent person in federal court? Neither did I. The Fourth Circuit considered the application of the statute in United States v. Graham. Interesting stuff.

Supreme Court Rolls Over Myrtle Beach’s Attempt To Regulate Motorcycle Rallies By Requiring All Riders To Use Helmets And Protective Eyewear

by Stephen P. Groves, Sr.

In a unanimous opinion released today, Aakjer v. City of Myrtle Beach, the South Carolina Supreme Court struck down Myrtle Beach’s long-running attempt to curtail motorcycle rallies in the Grand Strand city. After a number of annual and/or semi-annual bike rallies reportedly “placed a heavy burden on the local medical community, police, and other emergency responders” in Myrtle Beach, the City enacted several ordinances and/or amended existing ordinances (the “Motorcycle Ordinances”) which, among other things, required “any person riding a motorcycle [to] wear a protective helmet and eyewear” (the “Helmet Ordinance”). During a subsequent rally, a number of individuals (the “Petitioners”) were cited for violation of the Helmet Ordinance.

Since a violation of the Helmet Ordinance was considered an "administrative infraction", Myrtle Beach established an administrative hearing system to hold trials on citations charging violations of various municipal ordinances, including the Helmet Ordinance. After the administrative hearing system was later repealed, Myrtle Beach then issued each of the Petitioners a Uniform Ordinance Summons requiring them to appear before a municipal court judge.

The Petitioners brought an action in the original jurisdiction of the Supreme Court seeking “a declaratory judgment finding the Helmet Ordinance and the Motorcycle Ordinances invalid and a writ of prohibition barring the municipal court from exercising jurisdiction over the alleged violations of the Helmet Ordinance.” The Supreme Court accepted the case in its original jurisdiction before any Petitioners’ charges were adjudicated.

A. Implied Preemption

The Supreme Court noted that the South Carolina Legislature had previously “addressed motorcycle helmet and eyewear requirements in S.C. Code Ann. §§ 56-5-3660 and 56-5-3670 (2009), respectively [which] generally require all riders under age [21] to wear a protective helmet and utilize protective goggles or a face shield.” On the other hand, the Supreme Court noted the “Helmet Ordinance . . . require[d] all riders, regardless of age, to wear a helmet and eyewear.” Furthermore, even though S.C. Code Ann. § 56-5-30 (2009) later “authorized local authorities to act in the field of traffic regulation if the ordinance [at issue did] not conflict with the provisions of the [South Carolina] Uniform Traffic Act”, such authorization did not save the Helmet Ordinance. The Supreme Court concluded the Helmet Ordinance was impliedly preempted by State law, noting both the important and pragmatic “need for uniformity [wa]s plainly evident in the regulation of motorcycle helmets and eyewear.” The Supreme Court further stated:

Were local authorities allowed to enforce individual helmet ordinances, riders would need to familiarize themselves with [all of] the various ordinances in advance of a trip, so as to ensure compliance. Riders opting not to wear helmets or eyewear in other areas of the state would be obliged to carry the equipment with them if they intended to pass through a [municipality] with a [local] helmet ordinance. Moreover, local authorities might enact ordinances imposing additional and even conflicting equipment requirements. Such burdens would unduly limit a citizen's freedom of movement throughout the State [of South Carolina].

B. Implied Repeal

Additionally, the Supreme Court struck down the Motorcycle Ordinances as a whole based upon the previous repeal of the ordinances establishing the so-called “administrative hearing system”. The Supreme Court concluded that since the sole enforcement of the Motorcycle Ordinances, as an “administrative infraction”, was so tied to and intertwined with the administrative hearing system, its abolition impliedly repealed the Motorcycle Ordinances themselves.

Scalia on Kagan: You got it half right, Your Honor.

Kirsten E. Small

This item is getting a bit long in the tooth, but I think it's still worth comment. On May 26, Justice Scalia spoke at an event in D.C. and commented that he is "pleased" that Elena Kagan is not a member of the judiciary; he basically praised President Obama for taking a chance on a non-judge nominee.

I'm with Scalia to a point. It matters not one whit to me that Ms. Kagan has never been a judge. She's been a law clerk (Judge Mikva, Justice Marshall), an academic (Chicago, Harvard), a policy wonk (Clinton administration), an administrator (Dean of Harvard Law), and the nations chief appellate lawyer (Solicitor General). All of these things make her thoroughly qualified for the essential work of a Supreme Court justice: research, analysis (of law and policy), debate and defense of positions, and coalition building.

I think Justice Scalia got it wrong, however, when he favorably compared Ms. Kagan's route to nomination to the civil law system in Europe, where "[p]eople who have never been in private practice ... [or] been on the other side of a case are judges." Private practice--particularly litigation--is precisely the experience Ms. Kagan--and every other justice except Justice Sotomayor--lacks.


What bothers me about Ms. Kagan's nomination is that she has never been "on the other side of the case." There isn't much information on her brief stint in private practice, but at the very least, it appears she spent little or no time inside a courtroom. Certainly she never tried a case.

The Supreme Court deals with a lot of big, important questions, but it also deals with the nitty-gritty of litigation--witness yesterday's decision in Krupski v. Costa Crociere, construing Rule 15(c). Theory will only get you so far in these cases; equally necessary is a familiarity with the actual, in-the-trenches practice of law. Currently, the only justice who has such experience is Justice Sotomayor.

As litigation becomes more and more complex, it becomes more important that appellate judges, and the Supreme Court in particular, are able to understand the practical consequences of their decisions for lawyers, their clients, and trial court judges. The current, all-but-mandatory path to a Supreme Court seat eschews litigation experience in favor of academic credentials, creating a Court so high up in the ivory tower that the realities of the practice of law seem tiny and insignificant.

A Pinkerton instruction is not a constructive amendment, says the Fourth Circuit

Kirsten E. Small

The Fourth Circuit issued two published opinions today. In United States v. Ashley, the Court rejected Ashley's various challenges to his convictions for witness tampering, retaliation against an informant, and possessing a weapon in furtherance of a crime of violence. Of particular note is the court's holding--joining every other circuit to have considered the issue--that "a district court does not constructively amend an indictment by giving a Pinkerton instruction when Pinkerton liability has not been charged by the grand jury." Slip op. at 13.

In United States v. White, the court addressed the defendant's argument that his conviction under 18 U.S.C. § 922(g) for possession of a firearm after a misdemeanor domestic violence was invalid because his prior offense--for assault and battery of a family member--did not involve "physical force." See 18 U.S.C. § 921(a)(33)(A) (defining "misdemeanor crime of domestic violence" as requring the use of physical force). In support of White's conviction, the government argued that any intentional physical contact constitutes "physical force" within the meaning of the statute. This is the view of the First, Eighth, and Eleventh Circuits.

To make a long opinion short, the Fourth Circuit disagreed, joining the Seventh, Ninth, and Tenth Circuits in holding that common law battery is not "physical force." The court concluded that the outcome was determined by Johnson v. United States, 130 S. Ct. 1265 (2010), in which the Supreme Court held that "physical force" (there, under the Armed Career Criminal Act) means "violent force ... capable of causing physical pain or injury" and therefore excluded common law battery which may be accomplished by even the slightest offensive touching.

The guidelines are advisory, except not really--Fourth Circuit holds the Ex Post Facto Clause still applies

Kirsten E. Small

The Fourth Circuit issued two published opinions yesterday. In United States v. Roe, No. 08-5203, the majority found sufficient evidence to support Roe's conviction for impersonating a federal police officer, even though he was a federal security officer with arrest authority (albeit one out of his jurisdiction at the time of the alleged impersonation). Judge Gregory dissented.

Although Roe is certainly worth a perusal, the far more intersting case is United States v. Lewis, No. 09-4343, in which Judge King, joined by Judge Gregory, held that the Ex Post Facto Clause applies to the post-Booker advisory guidelines. Judge Goodwin dissented.

Those familiar with federal sentencing law will recall that in 2000, the Supreme Court held in Apprendi v. New Jersey that all facts necessary to the imposition of a certain sentence must be admitted by the defendant or proved to a jury beyond a reasonable doubt. Subsequently, in United States v. Booker, the Court held that a mandatory guidelines regime was inconsistent with the Sixth Amendment as interpreted by Apprendi, and declared them advisory.

Now, back to Lewis. Mr. Lewis was arrested for felon-in-possession in May 2006, at which time the applicable guideline range for his offense was 21-27 months. By the time Lewis was sentenced in 1998, however, the guidelines had been amended and the applicable guideline range was 41-51 months. Concluding that application of the amended guidelines would result in a retroactive increase in punishment, in violation of the Ex Post Facto Clause, the district court sentenced Lewis to 27 months imprisonment. The government appealed.

The majority affirmed, concluding that even though the guidelines are no longer "law," they "represent the crucial starting point, as well as the initial benchmark, for the regimented sentencing process." Slip op. at 10. Therefore, there was a "significant risk" that application of the amended guidelines would result in increased punishment, and therefore their application would violate the Ex Post Facto Clause. Judge Goodwin dissented, noting that if the guidelines do not have the force of law, then application of an amended guideline cannot possibly violate the Ex Post Facto Clause.

The majority cannot possibly be correct. If the guidelines are not "law" for the purposes of the Sixth Amendment, how then can they be "law" for purposes of the Ex Post Facto Clause? Of course they cannot, but the majority does not seriously dispute this. Instead, the majority ignores the clear limitation of the Clause to "laws" that retroactively increase punishment, holding that the controlling criterion for the Ex Post Facto analysis is whether there is a significant risk of increased punishment.

The case the majority relies on for its "significant risk" test, Garner v. Jones, 529 U.S. 244 (2000), does not support such a fundamental change in the jurisprudence of the Ex Post Facto Clause. Garner involved an extension of time (from 3 to 8 years) between parole hearings for certain offenders. The Court held that whether such an extension on its face violated the Ex Post Facto Clause depended upon whether it created a significant risk that an inmate's punishment would be increased. Significantly, the Court did not back off of the premise that before the Clause applies, the change must be a law, or have the effect of law--as the rule change extending the time between parole hearings unquestionably did.

In reaching this holding, the Fourth Circuit joined the D.C. Circuit and rejected the position of the Seventh Circuit. I imagine a cert. grant will be coming on this issue sooner or later.

Nominees Diaz and Wynn continue to wait

Kirsten E. Small

I was excited to see a hopeful line of text pop up in my Google Alert this morning: "[Senator] Kay Hagan says North Carolina judges Albert Diaz and James Wynn are on the next tier of judicial nominees who could come up for a full vote in the Senate." Unfortunately, the article as a whole is not so hopeful; you can read it here (scroll down to the bottom).

The essence of the piece is that Diaz and Wynn are still stuck in a "political logjam," with no estimated date of escape.

One could argue that, for the moment at least, there is no particular urgency to confirming Diaz and Wynn. The Fourth Circuit has completed its last sitting for the current term and will not again convene in Richmond until September. On the other hand, I imagine that Judges Wynn and Diaz would far prefer to get settled in their Fourth Circuit digs while activity at the court is relatively light, rather than during the rush of new business that precedes the September sitting.

SC Supreme Court holds that what a jury might do is irrelevant to summary judgment analysis.

by Kirsten E. Small

Earlier this month, the South Carolina held that the Court of Appeals improperly applied a jury-focused standard in reviewing a grant of summary judgment by the circuit court. Hoard v. Roper Hospital, Inc. (S.C. May 3, 2010).

Neonatologist Marshall Goldstein directed the placement of an umbilical vein catheter (UVC) as part of his treatment of newborn Jamia Hoard for respiratory distress. One risk of a UVC is that it will be improperly placed, piercing the right atrium. Radiologist Robert Smith reviewed an x-ray and noted in his report that the catheter had pierced Jamia's atrium. Aware of this information, Dr. Goldstein decided not to reposition the catheter. As a result of the improper placement of the UVC, Jamia suffered a cardiac arrest that resulted in significant brain damage.

All defendants except Dr. Smith settled. The circuit court granted summary judgment to Dr. Smith, concluding that even if Dr. Smith was negligent, Dr. Goldstein's decision not to adjust the UVC was an intervening and independent proximate cause of the injury. This conclusion was based in large part upon Dr. Goldstein's deposition testimony regarding his decision not to adjust the UVC, which was uncontradicted by any other record evidence.

The Court of Appeals reversed on the basis of the established rule that a jury is not required to accept even uncontroverted testimony. The Supreme Court reversed the Court of Appeals, noting that while a jury may reject uncontroverted testimony at trial, this rule does not apply on summary judgment, where the burden rests on the plaintiff to "affirmatively demonstrat[e] the presence of a genuine issue of material fact." It was therefore irrelevant, and counter to the very purpose of summary judgment, to consider how a jury might view the evidence.

The 4th Circuit holds that district courts should not employ "lodestar" analysis in contingency-fee cases.

by Kirsten E. Small

Only one published opinion from the Fourth Circuit yesterday (there were none Monday). In In Re Abrams & Abrams, P.A., the court vacated and remanded a district court order that reduced an award of attorney's fees from $6 million to $600,000. Primarily, the panel concluded that the district court had erred in calculating a "lodestar" hourly fee when the plaintiff and counsel had agreed to a 33% contingency fee.

Mark Pellegrin was severely brain damaged when a co-worker, driving a company truck while intoxicated, ran into him. Pellegrin's father ("Mr. Pellegrin"), as his guardian, sued the co-worker with the aid of two law firms. The firms and Mr. Pellegrin agreed to a 33% contingency fee, to be divided equally between the firms.

Counsel obtained a $75 million verdict after the company's insurer denied coverage and refused to provide a defense. Thereafter, counsel sought a declaration from the court that the insurer was liable for the entire amount pursuant to North Carolina law. The insurer removed the action to federal court, and the parties eventually reached a mediated settlement of $18, of which $6 milllion was intended to satisfy the 33 percent contingency arrangement between plaintiff and counsel.

Because the plaintiff was incompetent, the district court was required to approve the settlement. During the hearing, Mr. Pellegrin specifically approved the amount of the settlement allocated to counsel. Unimpressed, the court reduced the fee to $600,000, reverting the remaining $5.4 million to Pellegrin.

The Fourth Circuit reversed. Initially, the court rejected counsel's contention that fee awards in contingency cases should be enforced unless the resulting fee is "clearly excessive." Instead, the court adhered to the traditional standard of reasonableness, on the theory that if it ain't broke, don't fix it. (Judge Wilkinson did not phrase it quite that way, but that's the jist.)

Nevertheless, the panel concluded that the district court had abused its discretion, holding that "[t]he chief error in the district court's analysis was its failure to recognize the significance of the contingency fee in this case." The panel noted that contingency fee arrangements provide plaintiffs access to court they would not be able to afford if charged on an hourly basis; they do so by transfering the risk to the attorneys, who would be disinclined to accept such a risk if compensated on only an hourly basis. The court compared the attorney in a contingency-fee case to the realtor on commission, who knows that not every effort will result in a commission.

The panel next concluded that the district court had discounted the various difficulties involved in the merits of the case (including a strong contributory negligence defense) and the value of the results obtained (an $18 million settlement where the insurer had a $21 million policy limit). Further, the district court should have considered Mr. Pellegrin's satisfaction and specific approval of the award (an approval he felt so strongly about that he hired his own lawyer to seek reversal of the district court's fee decision on counsel's behalf).

Finally, the panel concluded that the district court erred in deciding that the "customary fee" for the case should be based on an hourly rate. Rather, the panel said, the proper analysis required the court to consider whether the 33% contingency fee arrangement was reasonable. In this vein, the panel noted that several North Carolina lawyers had submitted affidavits stating that they would have insisted on a 40% contingency fee for the case.

The panel did not specifically approve the fee as reasonable but rather vacated and remanded for "a more rigorous analysis" of the applicable factors, including a recognition of the value of contingency-fee arrangements.

Commentary: This decision surprises me a bit, especially given that the opinion was written by Judge Wilkinson. However, I think the panel got it entirely right. Lawyers who practice plaintiff-side personal injury work take cases knowing that they will lose some cases and win others, and that the fees in the cases that they win must be sufficient to offset their losses. This requires prudent case selection on the part of the attorneys, but it also mandates that courts respect reasonable fee arrangements between clients and counsel. Were it not for the fact that Pellegrin was rendered incompetent by the accident, the court would not have had a say in the reasonableness of the fee; that being so, the court should have given greater respect to Mr. Pellegrin's adamant support of the award.

Fourth Circuit continues to chip away at Carter

by Kirsten E. Small

In this post I summarized United States v. Hernandez, in which a panel of the Court relaxed U.S. v. Carter's apparently stringent requirements for explanation of within-Guideline sentences.

Yesterday, in United States v. Boulware, the Court further blunted Carter's force by holding harmless an inadequate explanation.

Boulware pleaded guilty to false statements in a bankruptcy proceeding and sought a below-guidelines sentence on the basis of family obligations. The district court rejected this request and imposed a sentence at the bottom of the advisory guideline range, noting in the process that it had "taken into account all the factors requied of me by Section 3553(a)."

Assuming that this explanation was inadequate and thus constituted a procedural flaw in the sentence (the panel did not cite Hernandez), the panel concluded that the error was harmless, i.e., it did not substantially and injuriously affect the outcome of the proceedings. Contrasting the facts before it to U.S. v. Lynn, 592 F.3d 572 (4th Cir. 2010), the panel found the error harmless because "the record ... leaves us with no doubt that the district court considered [Boulware's] argument for a below-guidelines sentence" and because Boulware's arguments for such a sentence "were very weak."

In short, the panel held that a Carter error is harmless so long as it appears from the record that the district court actually considered a defendant's arguments, even if it made no mention of them in the course of its sentencing decision.

It seems to me that this decision has the potential to substantially undermine Carter; we'll have to see how it plays out.

Deposition Testimony From Another Case Can be Used in Summary Judgment Filings in N.C.

by Gary Beaver

On 4/6/10, in First Gaston Bank of North Carolina v. City of Hickory, et. al., a bank sued Hickory and others when a storm drain collapsed on property owned by the bank. The bank appealed after the trial court granted the city summary judgment on the bank’s claim for negligence and inverse condemnation. The NC Court of Appeals affirmed holding:

(1) deposition testimony from another case, if it meets the requirement of an affidavit, may be used in summary judgment proceedings even if the party against whom it is used was not present or represented at the deposition;

(2) plaintiff’s inverse condemnation claim against the city failed because of lack of evidence of a taking; and

(3) plaintiff’s negligence claim against city failed because city did not owe a duty to the bank to inspect, maintain, and repair a collapsed storm drain or to warn the bank of the condition of the pipe which ran across property that the bank purchased.

The holding on the use of the deposition testimony makes eminent good sense as, in summary judgment proceedings, parties cannot stop the use of affidavits from witnesses to which the opposing party had no access. The lack of access to the deponents in the prior case is logically no different. The court reviewed leading commentators and federal court opinions interpreting and applying Rule 32(a) of the Federal Rules of Civil Procedure, which rule is similar to North Carolina’s Rule 32(a), and agreed with them in allowing the use of the deposition testimony.

4th Circuit extends rule on curing improper removals.

by Kirsten E. Small

The Fourth Circuit issued one published opinion on May 3, holding in Moffit v. Residential Funding Company, LLC that the establishment of federal jurisdiction cures an improper removal even when the issue is brought to the court's attention before final judgment.

Plaintiffs filed this case in Maryland state court in 2003. In 2009, plaintiffs notified defendants by letter of their intent to file an amended complaint containing allegations that would establish jurisdiction in federal court under the Class Action Fairness Act. Defendants removed to federal court pursuant to 28 U.S.C. § 1446(b). Following removal, plaintiffs filed the amended complaint; they then sought remand on the basis that federal jurisdiction did not exist at the time of removal.

On interlocutory review, the Fourth Circuit affirmed the district court's denial of the motion to remand. Under settled authority, an erroneous removal is cured by the plaintiff's subsequent voluntary amendment of the complaint to allege facts giving rise to federal jurisdiction.

Plaintiffs acknowledged this authority but argued that the rule applies only after final judgment. The Fourth Circuit disagreed, holding that "this line of precedent is grounded not only in the interest of 'finality' but also in larger considerations of 'judicial economy.'" Because defendants would have had the right to remove even if the district court had granted the motion to remand, judicial economy favored application of the rule that an erroneous removal is cured by subsequent amendment of the complaint.

Review Your CGL Policy's False Advertising Coverage

by Gary Beaver

In Harleysville Mutual Insurance Company v. Buzz Off Insect Shield, LLC, et. al., plaintiff insurer filed a declaratory judgment action to determine if it owed coverage and a defense for defendants in a federal lawsuit in which claims were made alleging defendants made false ads. The trial court and NC Court of Appeals held that coverage existed. The N.C. Supreme Court reversed on April 15, 2010.

The defendants made insect-repellent clothing and were sued by a competitor for alleged false ads. The NC Supreme Court reviewed the CGL policies’ language and noted that they provided coverage for injury resulting from some false statements made in ads, but not injury caused by false statements an insured makes about its own products. The court then made a detailed analysis of the complaint in the false advertising lawsuit to determine whether the alleged false ads were covered and held that they were not.

The opinion provides a good application of the “comparison test” by which a court reviews the policies and complaint at issue “side-by-side….to determine whether the events as alleged are covered or excluded.” It is also an example of when defendants probably would have preferred that its competitor had overstated its claims, i.e., stated them more broadly rather than with the detail and specificity actually used so that the court might have found that coverage was at least a possibility which, in turn, would have given rise to the insurer’s duty to defend in the federal lawsuit even if a later determination was made that coverage did not exist.

Fourth Circuit tolls service period for IFP plaintiffs.

by Kirsten E. Small

The Fourth Circuit held today that a magistrate judge's order prohibiting issuance and service of process by the court clerk until instructed otherwise by the court tolls the 120-day service period unter Rule 4(m). Robinson v. Clipse, No. 08-6670 (April 28, 2010).

The issue arose as a result of the court's application of the "relation back" rule of Rule 15(c). Robinson named the wrong defendant (the South Carolina Highway Patrol) in a § 1983 action alleging excessive force by Trooper Joseph Clipse. The magistrate judge directed the district court clerk not to serve the complaint until further order* and recommended to the district court that the complaint be dismissed. Robinson moved to add Clipse as a defendant but the court denied the motion and dismissed the complaint on the basis that Clipse was entitled to qualified immunity.

After the Fourth Circuit reversed, Robinson sought to file an amended complaint naming Clipse. Rule 15(c)(1)(C) allows such amendments provided the new party has knowledge of the complaint "within the period provided by Rule 4(m) for serving the summons and complaint." The district court authorized service on July 3, 2007.

The district court dismissed the complaint, holding that the amended complaint did not relate back because Clipse did not have notice of the complaint "within the limitation period" for Robinson's claim, i.e., by November 14, 2005. As the Fourth Circuit noted in reversing, Rule 15(c)(1)(C) requires that the party have notice within the 120-day service window of 4(m), not within the statute of limitations for the claim.

The Court further held that because IFP plaintiffs are at the mercy of the court for service, entry of an order prohibiting service tolls the 120-day service period. Thus, Rule 15(c)(1)(C) only required Robinson to show that Clipse had notice within 120 days of July 3, 2007, the first time the court authorized service. Because Clipse had actual notice well before the expiration of this period, the amendment related back and dismissal was improper.

Commentary: This seems like a pretty common-sense ruling to me. Magistrate judges routinely forbid service of IFP complaints pending an initial evaluation of the claim. As the Court noted, it is manifestly unfair to place the burden of this pre-service review on the litigant, who has no control over its length. Moreover, the holding is consistent with the federal courts' general policy of leniency to pro se litigants (as IFP filers almost universally are)--it is hardly surprising that Robinson would name Clipse's employer, rather than Clipse himself, as the entity responsible for paying damages. The tolling rule adopted by the Fourth Circuit provides some protection from mistakes like Robinson's.

*Because Robinson was proceeding in forma pauperis, the complaint was to be served by the U.S. Marshals Service.

Fourth Circuit clarifies Carter; Holds escape under SC law is not a per se violent felony.

by Kirsten E. Small

The Fourth Circuit issued two published opinions today, both in criminal cases. In United States v. Hernandez, the rejected (on plain error review) the defendant's argument that the district court inadequately explained the reasons for imposing a sentence at the bottom of the guidelines range. Specifically, Hernandez contended that the explanation was inadequate under the Court's prior decision in United States v. Carter, 564 F.3d 325. Carter held that "Regardless of whether the district court imposes an above, below, or within-Guidelines sentence, it must place on the record an 'individualized assessment' based on the particular facts of the case before it. This individualized assessment need not be elaborate or lengthy, but it must provide a rationale tailored to the particular case at hand and adequate to permit 'meaningful appellate review.'" 564 F.3d at 330. Carter has been the subject of substantial litigation.

Hernandez clarifies (some might say "narrows") Carter by stating that a district court sufficiently explains a within-guidelines sentence by, essentially, recognizing the wisdom and experience embodied in the Sentencing Guidelines and concluding that the case is a typical one.

The second decision, United States v. Bethea, addressed the question of whether escape under South Carolina law is categorically a violent felony for purposes of the Armed Career Criminal Act. The Court concluded that it was not, reasoning that because the statutory term "escape" encompasses a failure to report--a non-violent felony under the ACCA--the decision of the Supreme Court in United States v. Chambers, 129 S. Ct. 687 (2009), required the Fourth Circuit to hold that the South Carolina escape statute did not necessarily constitute a violent felony. The Court further concluded that Bethea's offense could not be considered a violent felony under the modified-categorical approach because the charging documents and sentencing sheet simply identified the offense as "escape." The court therefore vacated Bethea's sentence and remanded for resentencing.

Chapter 75 Does Not Apply to Breaches of Fiduciary Duties Between Partners in N.C.

by Gary Beaver

On April 5, 2010, White v. Thompson, the N.C. Supreme Court held that NCGS §§ 75-1.1 (NC’s unfair and deceptive trade practices act) does not extend to a partner’s breach of his fiduciary duty owed to his partners within a single business. The Court ruled that such misconduct is not “in or affecting commerce.” This holding serves as a reminder that Chapter 75 claims are supposed to be directed at stopping bad business behavior between competing businesses and not designed to regulate purely internal business operations.

Fourth Circuit holds forced medication not appealable after guilty plea.

by Kirsten E. Small

It was a quiet week in the Fourth Circuit--by my count, there were only two published decisions, and only one of them is particularly notable.

That "one" is United States v. Bowles. Bowles was charged on drug and weapons charges but found incompetent and committed for treatment. After four years of treatment for paranoid delusions, the district court granted the government's motion to forcibly medicate Bowles in order to render him competent to stand trial.

Bowles pleaded guilty, then sought to have his conviction vacated on the basis that the forcible medication was improper. The Fourth Circuit today dismissed the appeal, holding that forced medication is a "nonjurisdictional defect" that is waived by a guilty plea. The Court noted that Bowles could have obtained review of the medication order through an interlocutory appeal.

Third Circuit grants ADA protection for side effects of medication; the U.S. Senate has nothing on Ms. Stucky's fourth graders.

by Kirsten E. Small

This morning I visited my son's fourth grade class to talk about the Supreme Court and the process for confirming a new justice. The students had a great time questioning the "nominee" (their teacher, Ms. Stucky), and then had a rigorous debate over her qualifications, ability to be fair, and whether or not she had a hidden agenda (seriously!). In the end, the "Senate" narrowly confirmed Mrs. Stucky to the Supreme Court. Would someone please get the President on the line for me? ...

In other (some would say "actual") news, the Third Circuit on Monday ruled that side effects from a medication can constitute a "disability" under the Americans with Disabilities Act and the Rehabilitation Act, even if the condition for which the medication is prescribed is *not* a disability. The ruling, in Sulima v. Tobyhanna Army Depot, can be accessed here. The Third Circuit joins the Seventh Circuit in explicitly holding that side effects from medication (in this case, gastrointestinal disress from a weight-loss drug, which required the plaintiff to take long bathroom breaks during work hours) can constitute a "disability" under the ADA and the RA. The Eighth Circuit and the Eleventh Circuit have indicated that they, also, would treat side effects from medication as a possible disability.

The Third Circuit adopted the Seventh Circuit's three-part test for determining whether side effects of a medication may constitute a disability: "(1) the treatment is required “in the prudent judgment of the medical profession,” (2) the treatment is not just an “attractive option,” and (3) that the treatment is not required solely in anticipation of an impairment resulting from the plaintiff’s voluntary choices." Applying this test, the court concluded that Sulima was not disabled because his doctor changed the medication after Sulima reported his work problems, indicating that the treatment was not "required."

Which came first, Daubert or class certification? 7th Circuit says Daubert.

by Kirsten E. Small

Class action practitioners will want to take a look at American Honda Motor Co. v. Allen (No. 09-8051), decided by the Seventh Circuit last week.

Richard Allen sued Honda on behalf of a putative class, claiming that a design defect in the company's Gold Wing GL1800 motorcycle made it, and I am not kidding here, too wobbly. Allen's theory was supported by Mark Ezra, whom Allen offered as an expert in motorcycle engineering. Honda challenged Ezra's opinion under Daubert, arguing that his opinion was deficient in a number of respects. Honda further argued that the admissibility of Ezra's opinion had to be decided before class certification because absent the opinion, Allen could not establish that common issues predominated, as required by Rule 23(b)(3).

The district court agreed with Honda, sort of. It concluded that Ezra's opinion was shaky (pun intended), but nevertheless admitted it and certified two classes of consumers who had purchased GL1800s.

The Seventh Circuit accepted Honda's petition for review and reversed in a per curiam opinion that reads very much like something Judge Posner would write. The heart of the ruling is as follows: "[W]hen an expert's report or testimony is critical to class certification ... a district court must conclusively rule on any challenge to the experts qualifications or submissions prior to ruling on a class certification motion." Slip op. at 6. The court did not address when the Daubert analysis might be "critical to class certification," but presumably that is a common-sense determination.

It will be interesting to see what kind of play this decision gets in other design defect cases, particularly the glut of Toyota sudden acceleration claims.

Fourth Circuit Update: April 8, 2010

by Kirsten E. Small

"They" tell you never to do this, but I'm starting with an apology: I've got a brief due in the Fourth Circuit today, so there will be no scintillating analysis of yesterday's Fourth Circuit decisions. Maybe I'll get back to y'all over the weekend, or maybe I'll sleep and play with my kids.

The Fourth Circuit published two decisions yesterday:

In United States v. Ayala, the court affirmed RICO and VICAR convictions against several MS-13 gang members.

Westmoreland Coal Co. v. DOWCP may warrant more comment over the weekend (sorry, kids). The court affirmed an award of black lung benefits (no biggie there) but vacated the award of attorney's fees because--even though the award was "not unreasonable in sum"--the the ALJ failed to identify a specific hourly rate after rejecting the hourly rate proposed by claimant's counsel.

Fourth Circuit holds that authority to hire/fire is not essential to a finding of supervisor status.

by Kirsten E. Small

Employment lawyers should take note of Whitten v. Fred's, Inc. (09-1265) decided yesterday by the Fourth Circuit. The case is chock-full of important rulings. Although the court was addressing state law claims, South Carolina discrimination law mirrors federal law, and the court applied federal case law in its holdings. Therefore, it would seem that these holdings would apply to federal Title VII claims.

Whitten was allegedly sexually harrassed by the store manager (Green) of the Belton store where she worked. The harrassment occurred on Whitten's first two days working at the store, a Friday and Saturday. Whitten informed the district manager, who told Whitten she was "overreacting." Feeling otherwise, Whitten quit.

Whitten subsequently filed a complaint with the EEOC and requested that the complaint also be filed with the South Carolina Human Affairs Commission (SHAC).
The EEOC issued a right-to-sue letter, and Whitten subsequently filed suit. Because her federal claims were time-barred (more on this anon), Whitten pleaded a hostile environment claim only under state law.

The district court granted summary judgment to Fred's, concluding that Green's conduct was not imputable to Fred's because Green was not Whitten's supervisor. This was so, the court reasoned, because Green did not have the authority to hire or fire Whitten.

The Fourth Circuit reversed and remanded in an opinion written by Chief Judge Traxler.

1. Authority to hire/fire is not essential to a finding that an employee is a supervisor. The court held that the test for whether an employee is a supervisor is whether the employee's harrassing conduct is "aided by the agency relation." While this is always the case when an employee has hiring and firing authority, such authority is not a requirement because an employee can be a supervisor even when lacking such authority.

Here, Green was the highest ranking employee in the store, bore the formal title of store manager, and directed Whitten's activities and work schedule. The Court determined that this evidence established that Green was a supervisor.

2. State administrative remedies are exhausted when the EEOC forwards a complaint to a state agency. Fred's argued that Whitten had failed to exhaust administrative remedies because she filed her complaint with the EEOC rather than the SCHAC. The EEOC then forwarded the complaint to the SCHAC, which acknowledged receipt. The Court held this sufficient, reasoning that nothing in the statute requires that a complainant personally file with the SCHAC.

3. Untimeliness under federal law does not establish untimeliness under state law. A federal discrimination complaint must be filed within one year of the discrimination or 120 days of EEOC dismissal, whichever comes first. Whitten's federal claims were time-barred because she failed to file her complaint within 120 days of the EEOC's right-to-sue letter (although she filed within one year of the discrimination). Fred's argued that this time bar was also fatal to Whitten's state claims, which are subject (as a matter of state law) to the same limitations period. The Court disagreed, holding that the state statute refers only to the SCHAC, not to the EEOC. Since the SCHAC never dismissed Whitten's complaint, her federal suit was timely.