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ANTITRUST Microsoft wins review of some factual findings When deciding whether factual findings made in the Microsoft antitrust case, and affirmed by the U.S. Circuit Court for the District of Columbia in 2002, can be relitigated in multidistrict litigation, a district court must determine if the findings were “necessary” to the judgment, meaning they were “critical and essential,” and not simply “supportive,” the 4th U.S. Circuit Court of Appeals ruled on Jan. 15. In re Microsoft Corp., No. 03-1817. In 2001, the D.C. district court found that Microsoft had violated various antitrust laws as they applied to the sales of personal computer operating systems. The trial court made 412 factual findings in conjunction with its later-affirmed judgment. The claims were ultimately transferred to a Maryland federal court for multidistrict litigation procedures where several of the states that were suing Microsoft moved to estop it from relitigating 356 of the court findings. The Maryland court granted the motion on all but six of them, ruling that offensive collateral estoppel prevented Microsoft from relitigating the remaining 350 because they supported the prior judgment. Reversing, the 4th Circuit found that the proper standard was whether the findings were “critical and essential” to the judgment affirmed by the D.C. Circuit. It reasoned that the “supportive” standard was too broad and might include findings that were merely relevant but not dispositive of the prior judgment. Full text of the decision ATTORNEY FEES Connecticut prescribes fee-application criteria Clarifying the standard for awarding attorney fees to a prevailing litigant, the Connecticut Supreme Court, in a decision to be released on Jan. 27, said that the fee request must be accompanied by detailed support. Smith v. Snyder, No. SC16801. Previously, a state court could award fees without a detailed break-down, based simply upon its general knowledge of the case. The ruling arose in a shareholders’ derivative suit on behalf of Enfield, Conn.’s Lectron Labs Inc., alleging that officer/director Charles Snyder and others had breached their fiduciary duties by secretly embarking on a competing venture. Two shareholders also sued as individuals. The trial court awarded the plaintiffs more than $300,000 in damages for unfair trade practice and trade secret violations. It also awarded $20,000 in attorney fees. While it upheld the fee award despite a lack of documentation, the high court said that a fee applicant must present a statement of the amount sought and a description of the services rendered. It declined to reverse the fee award in this case because the defendants had not objected to the request before the appeal. It also ruled that the two individuals lacked standing to sue. The court upheld the remaining trial court findings. Full text of the decision BANKRUPTCY 1st Circuit unravels nexus of divorce, bankruptcy During divorce proceedings, a spouse who holds title to marital property and files for bankruptcy holds that property in constructive trust for the other spouse until the divorce becomes final and the marital assets are divided, the 1st U.S. Circuit Court of Appeals held on Jan. 15. Davis v. Cox, nos. 02-1962, 02-1963. When his wife filed for divorce, attorney Thomas Cox began withdrawing funds from an Individual Retirement Account (IRA) which was in his name only, and disposing of other marital assets in violation of a trial court injunction. To prevent further fund dissipation, the trial court ordered each side’s lawyers to escrow some of their clients’ money. When Thomas filed for Chapter 13 protection, the bankruptcy court relieved his wife, Laurie, from the � 362 automatic stay long enough to continue with the divorce. Granting the divorce, the trial court ruled that the bulk of the IRA was to go to Laurie to put her back in the position she would have been in had Thomas not used the funds for his own purposes. The escrow was to be used to pay various taxes and debts of the parties. But when Laurie moved the bankruptcy court for relief from its stay and for relief under the divorce decree, that court held that the IRA had became part of the Ch. 13 estate because Laurie’s right to any marital property held in Thomas’ name did not vest until the handing down of the decree. It also ruled that the decree was superior to the rights of the bankruptcy estate in the escrow funds because the state court’s placement of the funds in escrow before the bankruptcy filing operated as an attachment. A Maine federal court agreed. Reversing, the 1st Circuit found that Laurie had a beneficial interest in the IRA when she filed for divorce, which excluded it from the estate. The court affirmed the federal court’s escrow decision, ruling that the placement of the funds in custodia legis divested Thomas of legal title. Full text of the decision CIVIL RIGHTS Foreign-flag cruise ships beyond reach of ADA The Americans with Disabilities Act (ADA) does not apply to foreign-flagged cruise ships, even those operating in U.S. waters, the 5th U.S. Circuit Court of Appeals held on Jan. 12 in a case of first impression. Spector v. Norwegian Cruise Line Ltd. nos. 02-21154, 03-20056. A group of disabled travelers who took cruises on two Bahamian-flagged Norwegian Cruise Line ships later sued the line under Title III of the ADA, alleging that physical barriers denied them access to emergency evacuation equipment as well as to some programs, facilities and amenities. They also claimed that they had been surcharged for handicapped-accessible cabins and for crew members’ assistance. They sought declaratory and injunctive relief. A Texas federal court ruled that the ships were subject to Title III, but dismissed the claim concerning removal of physical barriers because the federal government has failed to promulgate the necessary regulations. Reversing, the 5th Circuit explained that, although Congress may enact legislation that governs foreign ships operating within U.S. waters, U.S. Supreme Court precedent prohibits U.S. courts from applying domestic statutes to foreign-flagged ships without specific evidence of congressional intent. There was no such specific evidence of intent in the enactment of Title III of the ADA, it said. Full text of the decision CONSTITUTIONAL LAW Panel slams parole board for delayed habeas grant In a Jan. 14 opinion highly critical of Pennsylvania’s parole board, the 3d U.S. Circuit Court of Appeals granted the habeas corpus petition of a 75-year-old prisoner who served 39 years in prison for a 1964 murder, and said the parole board acted vindictively, in bad faith and violated the constitutional prohibition against ex post facto laws. Mickens-Thomas v. Vaughn, No. 03-3714. Despite his claims of innocence, in 1969 Louis Mickens-Thomas was convicted in a re-trial of the murdering of a 12-year-old girl. In 1994, Governor Robert Casey commuted his sentence, but the state probation and parole board refused to parole him. Mickens-Thomas filed a habeas petition in a Pennsylvania federal court, which granted him conditional relief, holding that the board had violated the constitutional prohibition on ex post facto law by applying stricter post-1996 parole standards. The board appealed, but the 3d Circuit affirmed. Nonetheless, the board again denied Mickens-Thomas’ application, and he filed another petition. Although the district court said that the board had refused to follow court orders, it declined to substitute its judgment for that of the board on the issue of parole. Vacating the district court decision and granting the petition, the 3d Circuit ordered his release within seven days. “We expected Board sensitivity to respect constitutional concerns,” it said, adding, “The combination of willful noncompliance, bad faith, and a sufficient inference of retaliation or vindictiveness on the part of the Board convinces us that it would be futile to further remand Thomas’s parole application to the Board for a fair disposition under the pre-1996 regime of parole laws and guidelines.” Full text of the decision FAMILY LAW Grown foster child loses equitable adoption bid A man who came to live with a family as a 2-year-old foster child, and continued to maintain a close relationship with the family for more than 40 years, cannot inherit from his foster father’s estate under the equitable adoption theory, the California Supreme Court ruled on Jan. 15. Bean v. Ford, No. S105508. Terrold Bean joined the Fords in 1955 and stayed with them until adulthood. His natural mother’s parental rights were terminated in 1958 and his natural father’s identity was unclear. Bean cared for his foster parents until their deaths, and their daughter regarded him as her brother. When his foster father, Arthur Ford, died intestate in 2000, his niece and nephew-Ford’s closest then-living blood relations-petitioned to determine entitlement to his estate. Bean filed a statement of interest under the foster child heirship statute and the equitable adoption statute, but a trial court rejected the application. The state’s intermediate appeals court affirmed. Bean appealed only the denial of the equitable adoption, arguing that Ford’s wife had told a friend that she wanted to adopt Bean as a child but was afraid he would be placed in another foster home while the adoption was pending. Upholding the lower court rulings, the high court said that equitable adoption in California is characterized as the specific enforcement of a contract to adopt; yet case law consistently favors fairness and intent over ordinary rules of contract. But it rejected Bean’s argument that the doctrine should be measured under equitable estoppel principles that would arise under the existence of a familial relationship, explaining that it applies only to those who, though having filled the place of a natural-born child, through inadvertence of fault have not been legally adopted. Ford’s wife’s statement was not, by itself, clear and convincing proof of the Fords’ intent to adopt Bean, it said. Full text of the decision LEGAL PROFESSION Georgia ratifies bar rule on unauthorized practice Backing the state bar’s standing committee on the unauthorized practice of law, the Georgia Supreme Court approved on Jan. 12 the committee’s advisory opinion that a collection agent suing to collect a debt on behalf of a physician committed an unauthorized practice of law. In re UPL Advisory Opinion 2002-1, No. S03U1532. The committee’s advisory opinion set a standard to determine whether a bill collector committed an unauthorized practice of law in the course of collecting an unpaid medical bill. It said that if a collector had obtained all legal interest in the debt as part of the collection agreement, he or she was merely collecting his or her own debt, and was not guilty of unauthorized practice of law. But if the collector were merely entitled to a fee or percentage under the collection contract, he or she would be in violation. The state bar sought review. Approving the opinion, the state’s high court held that the collector’s ownership interest in the debt determines the unauthorized practice status. “In order to determine whether the collector may file suit to collect on the physician’s delinquent account,” it said, “courts must assess exactly what sort of interest in the account the physician has transferred to the collector.” Full text of the decision Failure to pay her dues no basis for suspension an attorney who was suspended for nonpayment of state bar dues, but didn’t know it because she moved and never got the mailed notice, could not be disciplined for unauthorized practice of law, the Utah Supreme Court held on Jan. 16. In re Sonnenreich, No. 20020187. All Utah attorneys must pay an annual fee to the state bar by July 1. Sharon Sonnenreich failed to pay her 1999 fee on time, but claimed that she paid it on July 30 by faxing her credit card number to the bar with her change of address. The bar never charged the fee to her card and suspended her, sending notice only by certified mail to her old address. When Sonnenreich learned from the Internet that she had been suspended, she contacted the bar’s licensing administrator and mentioned that she was “a practicing attorney in Utah.” She then paid her fee plus a late fee and was promptly reinstated, but the bar’s office of professional conduct filed a complaint, alleging she had engaged in the unauthorized practice of law during her suspension. Sonnenreich’s motions for summary judgment and for attorney fees were granted. Affirming, the high court held that the bar has the right to suspend attorneys who fail to pay their dues in a timely fashion, rejecting Sonnenreich’s argument that the office lacked the authority to file the complaint or discipline her for nonpayment of dues. But it also held that the bar must prove that an attorney had actual notice of her suspension, before it may seek sanctions against her for unauthorized practice of law during the suspension. The court also found that the trial court did not sufficiently explain the factual basis for finding that the office brought it in bad faith, as required for the attorney fee award, and remanded for reconsideration of that issue. Full text of the decision REAL PROPERTY Bank loses mortgage improvidently granted Citing a clause restricting the “transfer” of a parcel of land, which was contained in the contract-for-deed conveying the property from a couple to their son and daughter-in-law, the Minnesota Supreme Court invalidated on Jan. 16 a bank’s mortgage on the property after the bank had already moved to foreclose. Bank Midwest Minnesota, Iowa NA v. Lipetzky, No. C1-02-1747. The contract between James and Tamara Lipetzky and his parents enabling James and Tamara to buy part of the family farm contained a clause stating, “Buyer agrees they cannot sell, transfer or assign this property without written permission or consent of seller.” Despite the clause, James and Tamara mortgaged their interest and assigned their rights in the contract to the lender as additional security. When they defaulted, the bank foreclosed and the parents tried to cancel the contract. The bank then sought a declaration that the mortgage and assignment were valid and enforceable. Although the trial court ruled that both documents were invalid, an appeals court reversed as to the mortgage. Reversing, the high court found that the mortgage too was invalid. The contract was recorded and the bank had taken an assignment of it, imputing to the bank knowledge of its terms, it said. Full text of the decision

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