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ADMIRALTY Maritime society liable for wrong certification Having certified as seaworthy a decommissioned passenger ferry despite obvious defects, a maritime classification society was liable to the boat’s buyer for negligent misrepresentation, the 5th U.S. Circuit Court of Appeals said on Oct. 8 in a revised opinion. Otto Candies LLC v. Nippon Kaiji Kyokai Corp., No. 02-30842. As a precondition to buying the boat, which had been registered in Japan, Otto required the seller to restore the ferry to its previous coastal classification, as certified by Nippon Kaiji Kyokai Corp. (NKK). A maritime classification society, NKK certified the boat as having no outstanding deficiencies. Upon learning that the vessel had several defects, including a fractured hull, Otto sued NKK for negligent misrepresentation. When a Louisiana federal court held that NKK owed a duty to Otto and awarded the cost of repairs, $328,096, NKK appealed. The 5th Circuit warned that holding maritime classification societies liable could diminish ship owners’ sense of responsibility for the safety of their vessels. Nonetheless, it said that Otto had met the requirements for a negligent misrepresentation claim under Restatement (Second) of Torts � 552: NKK had provided false information, it failed to take reasonable care, Otto relied on that information and suffered a pecuniary loss. Full text of the decision CIVIL PRACTICE State rights waiver OK if party is sophisticated Where a party to an employment contract was sophisticated in business and represented by counsel, her acceptance of choice of law provisions surrendering state law employment rights was valid, the Arizona Supreme Court ruled on Oct. 6. Swanson v. Image Bank Inc., No. CV-02-0176-PR. Arizona resident Mary Swanson sold her fine art photography business to The Image Bank Inc., a New York corporation with its principal place of business in Texas. As part of the sale, the parties entered into an contract under which Swanson would be Image Bank’s president and CEO. The contract was to be governed by Texas law. After Image Bank fired Swanson and failed to pay her severance, she sued. A trial court ruled that Image Bank had breached the contract and awarded $150,000 in damages, which were trebled under an Arizona law mandating trebled damages for failure to pay wages. Image Bank appealed, contending that the trial court erred in applying Arizona law. But an intermediate appeals court rejected that argument, holding that a contractual waiver provision violated fundamental state policy. Image Bank appealed. Vacating the trebling portion of the award, the state’s highest court said, “Parties experienced in business, represented by counsel, and having relatively equal bargaining strength, may, by express provision in a negotiated contract, surrender the statutory remedy under [Arizona law].” Full text of the decision CONSTITUTIONAL LAW No right to hand out jury nullification pamphlets A protester had no constitutional right to distribute jury nullification pamphlets at a courthouse and a deputy sheriff had probable cause to arrest him, the 7th U.S. Circuit Court of Appeals held on Oct. 10. Braun v. Baldwin, No. 02-4143. On Sept. 5, 2000-Jury Rights Day in Milwaukee-Robert Braun and William “Whistleblower” Currier distributed pamphlets inside the Milwaukee County Courthouse, which advocated nullification, the disregard of jury charges during deliberations. Deputy Sheriff Frank Franckowiak demanded that Braun leave the courthouse. When he refused, Franckowiak arrested him for disorderly conduct. Braun sued Franckowiak, County Sheriff Leverett Baldwin and the county for violation of his free speech rights and false arrest. After a trial court granted summary judgment for the defendants, Braun appealed. Affirming, the 7th Circuit said, “Although advocacy of jury nullification could no more be flatly forbidden than advocacy of Marxism, nudism, or Satanism, we cannot think of a more reasonable regulation of the time, place, and manner of speech than to forbid its advocacy in a courthouse.” Full text of the decision ELECTION LAW Notarization demand burdens ballot access Puerto Rico’s law requiring groups seeking recognition as political parties to have their petitions notarized by a lawyer violates individual First Amend-ment rights, the 1st U.S. Circuit Court of Appeals said on Oct. 9. P�rez-Guzm�n v. Gracia, nos. 03-1621 and 03-1622. When one party challenged the requirement in 1998, the trial court ruled then that the regulation did not unduly burden the group’s First Amendment rights. That decision was affirmed by Puerto Rico’s highest court. Later, Jos� Emilio P�rez-Guzm�n and other party members filed a separate suit raising the same issues. After denying a government motion to dismiss based on res judicata, the lower court held that the rule does violate individual rights of free speech. Affirming, the 1st Circuit said that res judicata does not apply because unlike labor unions or trade associations, political parties do not serve as the duly constituted representatives of their members in litigation affecting common interests. The court added that the regulation burdens the ability to register new parties, which, in turn, burdens the right of access to the ballot. Full text of the decision ENVIRONMENTAL LAW EPA wrong to claim that Mexico caused pollution The Environmental Protection Agency erred in determining that a California region’s noncompliance with Clean Air Act air quality standards was caused by emissions from Mexico, the 9th U.S. Circuit Court of Appeals held on Oct. 9. Sierra Club v. EPA, No. 01-71902. The Imperial Valley Planning Area, a region of Southern California, was found to be in moderate nonattainment of Clean Air Act particulate-matter air standards. Under the act, if particulate-matter levels result from sources outside the U.S., an area can avoid reclassification as being a “serious nonattainment area.” Rejecting a Sierra Club challenge, the EPA found that the region would have attained the national air quality standards but for the Mexican emissions. Seeking 9th Circuit review the club argued that the EPA’s conclusion was wrong because on the two days when particulate-matter levels exceeded acceptable standards, winds were not blowing from Mexico and the measuring stations closer to Mexico had lower readings. Agreeing, the 9th Circuit granted the club’s petition and ordered EPA to classify Imperial Valley as a serious nonattainment area. “Based on the data and the reports in the record,” it said, “there simply is no possibility that Mexican transport could have caused the observed PM-10 exceedences on January 19 and January 25,” it said. Full text of the decision EVIDENCE Crack use doesn’t prove intent to distribute Evidence of personal crack use was inadmissible to show intent to distribute crack cocaine, because it lacked probative value and unduly prejudiced a defendant who was paid to receive and forward unopened packages of crack, the 6th U.S. Circuit Court of Appeals held on Oct. 9. U.S. v. Jenkins, No. 02-5573. Candy Jenkins, an admitted crack user, agreed to sign for a series of Express Mail packages, then give them unopened to another person in exchange for $50 per package. After the U.S. Postal Service became suspicious of the packages, some law enforcement officers searched her home with her consent. They opened a package and found it contained crack. She was convicted of possession with intent to distribute in a Tennessee federal court. Reversing, the 6th Circuit said that the trial court had erred in introducing evidence of her crack use, because it was not probative of any issue other than character and was potentially prejudicial. Absent that evidence, the court said, no reasonable jury could have found beyond a reasonable doubt that Jenkins knew what was in the package. Full text of the decision INTELLECTUAL PROPERTY Dismissal with prejudice doesn’t bar later claim In a dispute over the Internet domain name, “cello.com,” a district court erred in holding that a previous dismissal with prejudice of an action under the federal Anticybersquatting Consumer Protection Act (ACPA) barred a later claim for continuing unlawful use, the 1st U.S. Circuit Court of Appeals held on Oct. 9. Storey v. Cello Holdings LLC, No. 02-7281. In 1997, Lawrence Storey registered the Internet domain name “cello.com” with Network Solutions Inc. Two years earlier, Cello Holdings LLC had registered the trademark “cello” for use in the audio equipment business. Cello sued Storey for trademark dilution, adding ACPA claims after the act came into law. But Cello dropped its claims shortly before trial, and a trial court dismissed the action with prejudice. Storey then offered to sell the domain name to Cello. Cello filed an arbitration action under the Uniform Domain-Name Dispute-Resolution Policy (UDRP), and a UDRP arbitration panel ordered the transfer of cello.com to Cello. Storey then sued under ACPA, seeking rights to the domain name. A New York federal court granted summary judgment to Storey, holding that Cello’s claims in the UDRP arbitration were barred by the doctrine of res judicata because of the dismissal with prejudice of the initial action. Reversing, the 2d Circuit held that Storey’s later offer to sell the domain name to Cello amounted “to a new claim under the ACPA that did not exist when the First Action was brought,” making res judicata inapplicable and summary judgment inappropriate. Full text of the decision MEDIA LAW Circuit will not clear Dow Jones of libel A New York federal judge did not abuse his discretion when he dismissed a declaratory judgment action filed by Dow Jones Inc. in the wake of an April Fool’s Day joke gone awry, the 2d U.S. Circuit Court of Appeals said on Oct. 10. Dow Jones & Co. Inc. v. Harrods Ltd., No. 02-9364. Based on a press release issued by Harrods, the London retailer, the Wall Street Journal ran an April 1, 2002 story about Harrods’ plan to float shares in a public offering. The release proved to be hoax, prompting the Journal to run a correction. But on April 5 the paper ran an item suggesting that if Harrods ever did go public, investors should be leery about the accuracy of information Harrods released. After refusing Harrods’ demands for a retraction, Dow Jones filed for a declaratory judgment that the April 5 story was not libelous. Harrods countered by suing Dow Jones for libel in the United Kingdom. When U.S. District Judge Victor Marrero granted Harrods’ motion to dismiss to U.S. action, Dow Jones appealed. Upholding the dismissal, the 2d Circuit agreed with Marrero that when it was filed, the U.S. action was not ripe for adjudication. It also affirmed Chin’s findings that there was no actual controversy, as required by the act, and that to hear the case would violate principles of international comity. Full text of the decision PUBLIC UTILITIES Cable modem service can be treated as carrier Broadband Internet service provided by cable television companies is not a cable service, but rather a hybrid telecommunications and information service that can be regulated by the Federal Communications Commission, the 9th U.S. Circuit Court of Appeals said on Oct. 6. Brand X Internet Svcs. v. Federal Communications Comm’n, No. 02-70518. In March 2002, the FCC exempted cable modem Internet services from most of its regulatory scheme, finding that they were neither cable television services nor common-carrier telephone services, leaving cable Internet service providers subject to fewer restrictions than their telephone line-using counterparts. A group of those counterparts argued before the 9th Circuit that the FCC should also have said that cable modem service is an information service and a telecommunications service, subjecting it to regulation as a common carrier. A cadre of trade groups representing cities and localities said cable modem services should be subject to local regulation, too. Agreeing with the challengers, the 9th Circuit noted that in its 2000 case, AT&T v. City of Portland, it had ruled that cable modem service was distinct from ordinary cable television service. Then, citing its 1988 holding in Mesa Verde Construction Co. v. Northern Calif. Dist. Council of Laborers, the panel said that a circuit court could adopt an agency’s interpretation its own regulation-if different from circuit precedent-only where the precedent constituted deferential review of the agency’s decision making. Because the FCC was not involved in the Portland case, not even as amicus curiae, there was no deferential review, freeing the circuit to depart from the agency’s interpretation. Full text of the decision SCHOOLS AND EDUCATION Principal who hit boy not entitled to immunity Because it is unconstitutional for a school principal to strike repeatedly an unarmed student with a metal cane, a principal so charged cannot invoke qualified immunity, the 11th U.S. Circuit Court of Appeals held on Oct. 7. Kirkland v. Greene County Bd. of Education, No. 03-10583. A 13-year-old Alabama student who was sent to the principal’s office for disciplinary reasons alleged that the principal struck him with the cane in the head, ribs and back, causing a large knot on his head and continuing migraines. The boy’s mother sued on his behalf, under the 14th Amendment and 42 U.S.C. 1983. An Alabama federal court denied the principal’s motion for summary judgment based on qualified immunity. Affirming, the 10th Circuit said that corporal punishment is actionable under the due process clause when it involves egregious, conscience-shocking behavior, such as when an official intentionally uses force that is obviously excessive under the circumstances and has a reasonably foreseeable risk of serious bodily injury. Full text of the decision

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