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.