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BANKRUPTCY Woman can’t profit from suit she didn’t list as asset a woman whose no-asset discharge in bankruptcy omitted any mention of her ongoing discrimination lawsuit is judicially estopped from pursuing money damages in that suit, the 11th U.S. Circuit Court of Appeals ruled on Oct. 28. Barger v. City of Cartersville, Ga., No. 02-14820. Donna Barger filed a discrimination suit against the city of Cartersville, Ga., seeking reinstatement, after she was demoted from a salaried job to an hourly one. Barger filed for Chapter 7 bankruptcy protection less than a year later. Her bankruptcy petition did not list the pending lawsuit as an asset and Barger told the bankruptcy trustee that she was only seeking reinstatement. Barger was granted a “no asset discharge” in bankruptcy. She then included that order, which did not mention the suit as an asset, in discovery papers sent to Cartersville. After a Georgia federal court granted Cartersville’s motion for summary judgment on the basis of judicial estoppel, Barger then got the bankruptcy court to reopen her discharge and add the discrimination suit to her list of assets. With the bankruptcy judge’s order, she asked the district court to reconsider, but it denied her motion. Affirming, the 11th Circuit ruled that Barger was estopped from pursuing her discrimination claim for money damages, but could maintain her claim for reinstatement. Stating that Barger’s efforts in the two suits were “calculated to make a mockery of the judicial system,” the court rejected Barger’s argument that it was her attorney’s fault for omitting the lawsuit. It noted that Barger herself mischaracterized the nature of the discrimination suit to the trustee when she said she only sought reinstatement.   Full text of the decision BUSINESS LAW Demand on board ‘futile’ in derivative lawsuit reinstating a shareholders’ derivative suit aimed at recouping money spent by a corporation to defend its CEO against illegal campaign contribution charges, the New York Court of Appeals on Oct. 30 said it would have been futile for the plaintiffs to petition the company’s board of directors before suing because the board had authorized the expenditures. Bansbach v. Zinn, No. 105. Under state law, shareholders are ordinarily required to petition the board for redress before filing suit. Michael Zinn was the majority stockholder, chairman and CEO of Besicorp Group Inc. Zinn was indicted for making illegal contributions to the 1992 reelection campaign of Congressman Maurice Hinchey, for which Besicorp reimbursed him, then took a tax writeoff. Besicorp’s board decided the company would indemnify Zinn for legal costs and fines incurred during the investigation. Zinn pleaded guilty to some of the charges and was jailed. When minority shareholder John Bansbach filed the derivative suit accusing the board of wasting corporate assets, a trial court granted the defendants’ motion to dismiss for failure to make the requisite pre-suit demand. An intermediate appeals court reversed the dismissal of Bansbach’s case, but then dismissed a parallel action for failure to make the demand, prompting the defendants to move for summary judgment in Bansbach’s case on collateral estoppel grounds. The trial court denied that motion, but the intermediate appellate court reversed. Overturning the intermediate court ruling, the state’s highest court noted that the statute, Business Corporation Law § 262, requires only that a plaintiff-shareholder set forth his attempts to “secure the initiation of such action by the board or the reasons for not making such effort.” The demand is excused if it would be futile, as happens when the board is an interested party and is unable objectively to determine if it should sue. Ruling that Bansbach was not estopped from raising the futility argument and citing his allegations that Zinn dominated the board and that it had lost its independence, the court ruled that the demand would have been futile.   Full text of the decision CIVIL PRACTICE Health insureds can sue administrator, not agents policyholders of a failed health plan can be certified as a class against a claim administrator, but not the agents, the 4th U.S. Circuit Court of Appeals held on Oct. 30. Gunnells v. Healthplan Services Inc., No. 01-2419. Fidelity Group and other companies created a fund that offered a health plan. Fidelity hired Third Party Claims Management Inc. to process claims under the plan. But the company failed to keep up with the claims and the plan collapsed. The policyholders sued the creators of the plan, Third Party, and the insurance agents from whom the plan was purchased. The plaintiffs moved for class certification of all South Carolina plan beneficiaries. They also moved for certification against the agents. The district court granted conditional certification with respect to the claims against Third Party and certified for breach-of-contract claims against 23 agents. Third Party and the agents filed an interlocutory appeal. The 4th Circuit upheld the conditional certification against Third Party, concluding that common questions predominated over individual questions as to liability and damages, but it held that the district court erred in certifying the class actions against the agents, because those actions cannot satisfy the same predominance and commonality requirements.   Full text of the decisionDoor closing’ law does not bar asbestos suit a suit arising from a latent injury discovered decades later outside the state, but caused within the state, is not foreclosed by a “door closing” statute, the South Carolina Supreme Court said on Oct. 27. Murphy v. Owens-Corning Fiberglas Corp., No. 25740. Janet Murphy’s father was exposed to asbestos at his workplaces, including a South Carolina plant of E.I. du Pont de Nemours & Co. from 1966 to 1969. In 1995, Janet was diagnosed with mesothelioma, which is caused exclusively by exposure to asbestos. She brought suit in South Carolina, alleging that she developed the disease from childhood exposure to fibers and dust on her father’s clothing while he worked at the South Carolina plant. The trial court held that the suit is barred by South Carolina’s door-closing statute, which requires that the cause of action should have “arisen” in South Carolina. The Court of Appeals reversed. The South Carolina Supreme Court affirmed, finding that the door-closing statute didn’t apply. The court held that no fundamental policy behind the statute is offended by the suit. The issue to consider was whether what the company did allegedly to expose the victim to asbestos was within the state. If so, the legal wrong was committed in the state, and thus, the cause of action arose there.   Full text of the decision CIVIL RIGHTS ADA requires more than mere ‘access’ for disabled in a case filed against the Kansas State Fair by a group of disabled attendees alleging they were denied adequate access to restrooms, parking and other facilities, the 10th U.S. Circuit Court of Appeals on Oct. 28 ruled that the Americans with Disabilities Act (ADA) does not limit private rights of action to only those suits involving discrimination with a hostile purpose. Chaffin v. Kansas State Fair Bd., No. 02-3410. Seeking injunctive relief against the fair for its alleged intentional discrimination and violation of the ADA, the attendees-all of whom rely on wheelchairs for mobility-complained of problems related to seating, parking and restroom access. The plaintiffs argued that the fair had failed to comply with the act and with accessibility guidelines promulgated under it. The defendants countered that the U.S. Supreme Court’s 2001 ruling in Alexander v. Sandoval bars plaintiffs from asserting a private right to enforce ADA regulations, barring the suit. (In Sandoval, the high court held that regulations may not create a private cause of action if Congress did not intend such a right in the authorizing statute.) They also said that the accessibility guidelines prescribe conduct that the ADA itself does not require and that because the plaintiffs had “access” to the fairground, they were not “denied the benefits of” the fair. Nevertheless, a Kansas federal court found for the plaintiffs. Affirming, the 10th Circuit ruled that the fair had misinterpreted Sandoval. Sandoval holds only that federal regulations may not create a private cause of action if Congress did not intend such a right in the statute authorizing the regulations. The Supreme Court did not say that there was no private right of action to enforce statute regulations that ban intentional discrimination. The court also said that the ADA requires more than mere physical access; it requires public entities to provide the disabled “meaningful access” to their programs and services. “A look at the findings made by Congress in enacting the ADA confirms the conclusion that Congress prohibited a broad, comprehensive concept of discrimination, beyond discrimination motivated by a hostile discriminatory purpose,” it said.   Full text of the decision ELECTION LAW Need for crossover votes is no bar to rights claim a need to receive crossover votes to establish a numerical majority in a district is not fatal to the plaintiffs’ Voting Rights Act challenge to the Rhode Island state senate redistricting plan, the 1st U.S. Circuit Court of Appeals held on Oct. 28. Metts v. Murphy, No. 02-2204. Black voters challenged Rhode Island’s state senate redistricting plan, alleging that, although they did not constitute a numerical majority in any state senate district before redistricting, historically they had the ability to elect a representative with crossover votes in one of the former districts. The voters claimed that the redistricting plan adversely affected this ability by reducing the number of black voters. A district court dismissed the challenge because the black voters could not form a numerical majority in any district, and needed crossover votes to elect their candidate. The voters appealed. The 1st Circuit reversed, holding that dismissal was premature because the need for crossover votes to create the required numerical majority did not bar a Voting Rights Act challenge. The court said, “If plaintiffs ultimately prevail, it will be because they have proven that the Rhode Island legislature, acting for the majority, has violated the Voting Rights Act by impermissibly denying members of the African-American community in Providence an equal opportunity to elect a state senator of their choice.”   Full text of the decision EMPLOYMENT Sham reason for nonhire may prove discrimination a teacher alleging race, color and age discrimination in promotion satisfied his burden of proof by showing that his employer’s race-neutral reasons for denying the promotion were pretextual, the Connecticut Supreme Court held on Oct. 28. Board of Ed. v. Comm’n on Human Rights and Opportunities, No. SC16796 John Sanders was a 49-year-old black teacher with 23 years of teaching experience. He applied for the position of assistant principal at Norwalk, Conn.’s Nathan Hale Middle School, but the school hired a 28-year-old white male with two years of teaching experience and four years of experience as a guidance counselor. Sanders filed a complaint alleging age, race and color discrimination in violation of state and federal law. Connecticut’s human rights commission decided in Sanders’ favor, finding that Sanders had made his prima facie case and showed that the school board’s race-neutral reasons for not promoting Sanders were pretextual. The school board appealed, arguing that Sanders had to prove that the reasons for his nonpromotion were a pretext for intentional discrimination. Affirming, the state Supreme Court rejected the board’s argument, and, citing the U.S. Supreme Court’s 2000 decision in Reeves v. Sanderson Plumbing Products Inc., held that Sanders satisfied his burden of proof. Responding to the board’s argument, the court said, “In making such a claim, the [board] fails to acknowledge the explicit holding in Reeves that evidence establishing the falsity of the legitimate, nondiscriminatory reasons advanced by the employer may be, in and of itself, enough to support the trier of fact’s ultimate finding of intentional discrimination.”   Full text of the decision LABOR LAW Union can name mall tenant in labor dispute a california shopping mall’s policy of banning the distribution of leaflets identifying its tenants by name violates the state’s constitution, the 9th U.S. Circuit Court of Appeals on Oct. 30 said. Glendale Associates Ltd. v. National Labor Relations Bd., No. 01-71556. In 1997, Local 57, a unit of the Communication Workers of America representing tape editors, was engaged in a contract dispute with American Broadcasting Company Inc. (ABC). Intending to pressure ABC and its corporate parent, Disney Enterprises Inc., the local elected to distribute handbills outside a Disney store in the Glendale Galleria Mall. The leaflets criticized the labor practices of both ABC and Disney. Citing its policy banning the distribution of handbills naming tenants, Galleria officials demanded that the union reps stop leafletting. When they refused, they were ordered off the premises. The union filed an unfair labor practice charge against the mall owner under the National Labor Relations Act. An administrative law judge found that the mall’s actions violated the First Amendment. The National Labor Relations Board affirmed, ordering the Galleria to end its ban on handbills that name its tenants. The mall appealed, arguing that its policy conformed with state law because it has a substantial interest in ensuring that its tenants’ business operations are not disrupted. The 9th Circuit affirmed, holding that the labor relations act guarantees employees “the right to self-organization, to form, join, or assist labor organizations.” It also said that the Galleria did not have a sufficient property interest to exclude the reps from distributing handbills that name a mall tenant. The policy, it said, violated the union’s free speech protections guaranteed by the California Constitution. “As part of California’s broader free speech protections, privately-owned shopping centers are required to respect individual free speech rights on their premises to the same extent that government entities are bound to observe state and federal free speech rights,” the 9th Circuit said.   Full text of the decision LEGAL PROFESSION Attorneys can contact adversary’s ex-employees massachusetts rule of Professional Conduct 4.3, the state’s “no-contact rule,” does not bar lawyers from having ex parte communications with an adverse party’s former employee, the Massachusetts Supreme Judicial Court held on Oct. 29, in a case of first impression. Clark v. Beverly Health and Rehab. Servs., No. SJC-08953. The rule is identical to American Bar Association Model Rule 4.2. Frank Clark allegedly died from a morphine overdose while he was a patient at a facility owned by Beverly Health. After his estate sued Beverly, the estate’s lawyer deposed an ex-Beverly nurse who was on duty on the night Clark died. Beverly then moved for a protective order, barring the estate from having ex-parte contact with Beverly’s ex-employees. When a trial court granted the motion, the estate appealed. The state’s intermediate appellate court affirmed, but a single Massachusetts Supreme Judicial Court justice granted relief from the order. Affirming, the state high court expanded its 2002 decision in Patriarca v. Center for Living & Working Inc., which authorized contacts with former employees in limited circumstances. It held that Rule 4.2 did not bar contacts with former employees of an adverse party where that ex-employee is not represented by counsel. “Immunizing former employees from all ex parte interviews would permit the organization to monitor the flow of nonprivileged information to a potential adversary at the expense of uncovering material facts,” it said.   Full text of the decision

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