Breaking and associated brands will be offline for scheduled maintenance Saturday May 8 3 AM US EST to 12 PM EST. We apologize for the inconvenience.


Thank you for sharing!

Your article was successfully shared with the contacts you provided.
ATTORNEY FEES No fees for rich activist mired in Clinton probe Millionaire conservative activist Richard Mellon Scaife was not a “subject” of the federal Office of Independent Counsel (OIC)’s Whitewater investigation, and thus was not entitled to reimbursement of any attorney fees he incurred during the investigation, the U.S. Circuit Court for the District of Columbia held on Jan. 23. In re Madison Guaranty Savings & Loan, No. 94-1. After the American Spectator, a conservative magazine funded by Scaife, was accused of being involved in bribes allegedly paid to an anti-Clinton Whitewater witness, Scaife was subpoenaed to appear before the Whitewater grand jury. The Office of Special Review (OSR) eventually found the bribery allegations to be unfounded. Then, pursuant to � 593(f)(1) of the Ethics in Government Act, Scaife petitioned the D.C. Circuit for reimbursement of $80,904 in attorney fees he incurred during the investigation. Rejecting petition, the D.C. Circuit held that Scaife had failed to establish that he was a “subject” of the OIC’s Whitewater investigation. The court said, “Although Scaife argues that he ‘easily meets’ the Act’s requirement for being a subject of the OIC/OSR investigation, we are not persuaded that the OSR, or at any other time the OIC, was focused on any possible criminal culpability by Scaife.” Full text of the decision BUSINESS LAW Fluctuating stock market is not accountant’s fault Though an accounting firm breached its duty to its client to provide competent accounting services, it had no duty to protect the client against fluctuations in stock prices due to market forces, the Oregon Supreme Court ruled on Jan. 22. Oregon Steel Mills Inc. v. Coopers & Lybrand, No. S48978. Based on advice from its accountants at the firm then known as Coopers & Lybrand (now PricewaterhouseCoopers), Oregon Steel Mills in 1994 reported the sale of stock of one of its subsidiaries as a $12.3 million gain in its financial statements. That advice turned out to be wrong. In anticipation of a public offering of Oregon Steel stock in 1996, the 1994 financial statements were included in the documents required by the Securities and Exchange Commission. Withdrawal of those statements and substitution of corrected ones delayed the offering by more than a month. By then, the stock’s value had fallen from $16 per share to $13.50. Oregon Steel sued Coopers to recover the difference. The trial court granted summary judgment for Coopers, but the intermediate appellate court reversed. Overturning that decision, the state’s high court ruled that even if Coopers’ negligence delayed Oregon Steel’s offering, it was not liable for any loss traceable to market factors unrelated to its conduct. Oregon Steel’s loss was not a reasonably foreseeable result of Coopers’ negligent conduct, it said. Full text of the decision CIVIL PRACTICE Carrier can’t avoid suit by relying on policy term A Massachusetts woman, who did not learn that her “lifetime” annuity was something less than that until it was cut off after 60 monthly payments, could pursue contract and negligent misrepresentation claims against her insurer even though she sued more than six years after buying the policy. Foisy v. Royal Maccabees Life Ins. Co., No. 03-1382. The 1st U.S. Circuit Court of Appeals on Jan. 21 ruled that applicable statutes of limitation did not apply because the woman, Rita Foisy, could not have had notice of the claim until she stopped receiving the payments. Foisy bought the annuity in April 1994. On its face, it promised lifetime payments of $710.99 a month, with a guaranteed minimum of 60 payments totaling $42,659.40. After the payments stopped, she learned from the carrier that the guaranteed 60 installments was all she would get. In March 2001, she sued and received a $49,150 jury award. The carrier had raised the state’s applicable statutes of limitations-six years on contracts, three years for torts-as a defense, but the Massachusetts federal court ruled that the claims were timely. The 1st Circuit upheld that ruling. Full text of the decision COMMUNICATIONS Filed rate doctrine no bar to suits against retailers the filed rate doctrine, which shields telecommunications companies from certain types of consumer lawsuits, does not insulate a third-party retailer from state law causes of action arising out of its marketing and sale of prepaid calling cards, the New Jersey Supreme Court said on Jan. 21. Smith v. SBC Communications Inc., No. A-56-02. BJ’s Wholesale Club Inc. sold prepaid phone cards from Southern New England Telephone Co. in vending machines at its stores. In a consumer fraud and breach of contract action, a purchaser suing on behalf of a putative class alleged that the telephone company and BJ’s falsely advertised the cards as yielding more time than they actually did. The vendors allegedly concealed surcharges and rounding up call times to the nearest minute. A trial court dismissed claims against both defendants under the doctrine. The intermediate appellate court, however, reinstated the suit against BJ’s. Affirming, the state’s high court explained that the doctrine promotes the prevention of price discrimination by carriers and preservation of the exclusive role of federal agencies in approval of reasonable rates. It concluded that the suit against BJ’s impaired neither of those doctrinary principles. Full text of the decision CRIMINAL PRACTICE Jurisdiction not affected by border in road center A motorist who was arrested for driving while intoxicated on a highway where the center line was the county line was subject to the jurisdiction of either county, the Indiana Supreme Court held on Jan. 15. Baugh v. Indiana, No. 29S02-0301-CR. The road on which Harry Baugh was arrested straddled the county line between Marion and Hamilton counties. When Hamilton prosecuted Baugh, he moved for judgment on the evidence, arguing that prosecutors had failed to prove Hamilton was the proper venue. A trial court denied the motion and Baugh was convicted. Indiana’s intermediate appeals court reversed, stating, “when all evidence points to the existence of venue in a particular county, the statute must yield to the defendant’s state constitutional right to be tried in the county where the crime is committed.” Reversing, Indiana’s high court said the road provided sufficient nexus to both counties to make venue appropriate in either. “Because the risks created by drunken driving on a boundary road do not stop at the county boundary, a sufficient nexus exists between the place of operation and either county,” it said. Full text of the decision FBI agents may be liable for framing an informant In a civil suit alleging that agents of the Federal Bureau of Investigation framed an ex-informant, the agents’ conduct went beyond conspiracy to commit perjury, invoking the U.S. Supreme Court’s 1963 decision, Brady v. Maryland and defeating the agent’s claims of sovereign immunity, the 7th U.S. Circuit Court of Appeals held on Jan. 21. Manning v. Miller, No. 03-1762. Steven Manning, a former police officer and FBI informant, was convicted of murder and other crimes, and sentenced to death. After his conviction was reversed, Manning sued the FBI agents involved under 42 U.S.C. 1983, claiming that they had suborned perjury and framed him because he refused to continue as an informant. The agents moved for summary judgment, arguing that they were entitled to qualified and absolute sovereign immunity. A district court denied the motion. Affirming, the 7th Circuit held that the allegations against the officers went beyond conspiracy to commit perjury, a claim for which they would be entitled to immunity. Instead, it held, Manning’s claims included the withholding of exculpatory evidence, which, under Brady v. Maryland, does not allow for immunity. Full text of the decision EMPLOYMENT ALJ must consult expert to determine disability An administrative law judge must consult a vocational expert when a claimant has exertional limitations preventing the performance of a full range of basic work skills, the 11th U.S. Circuit Court of Appeals ruled on Jan. 23. Phillips v. Barnhart, No. 03-13705. A state employee applied for disability insurance benefits, claiming to be unable to work due to a number of conditions including fibromyalgia, chronic fatigue, and irritable bowel syndrome. After reviewing her medical history, an administrative law judge (ALJ) found the employee not to be disabled based on the Medical Vocational Guidelines (“grids”) of the Social Security regulations. The grids allow the ALJ to consider factors such as age, inability to speak English and lack of job experience in determining qualification for disability benefits. Remanding, the 11th Circuit said that the ALJ did not specifically determine whether the claimant’s exertional limitations prohibited her from a full range of work at the sedentary level. Only when these limitations are determined may the ALJ consult the grids. Full text of the decision ENVIRONMENT Crop yield is basis of reclamation land order A water master considering a petition to reclassify reclamation lands is not required to hold a hearing or follow the rules of evidence or procedure, the 9th U.S. Circuit Court of Appeals ruled on Jan. 20, but the master’s decision should be based on crop-yield reduction rather than beneficial use. United States v. Matley Family Trust, No. 01-15778. As the result of litigation over water rights to the Truckee and Carson rivers, as part of the Newlands Reclamation Project in western Nevada, land was classified as either “bench” or “bottom,” though no system was developed to apply this classification. The Department of Interior eventually developed a scheme that was primarily based on soil characteristics. Initial litigation over the standard led to the appointment of a water master to set a new standard that took crop yield into consideration. When the Matley Family Trust petitioned for a reclassification of its land from bottom to bench, the master notified the Bureau of Reclamation and the Natural Resources Conservation Service, but not the Pyramid Lake Paiute Tribe of Indians nor the United States, both of which demanded an evidentiary hearing on the master’s report recommending that the Matley petition be granted. The master held the hearing, but reiterated the earlier conclusion. The district court adopted the master’s report. Reversing, the 9th Circuit held that the master was not required to hold a hearing or to follow the federal rules of evidence during it. Neither the tribe nor the government was denied due process because they were ultimately told of the Matley petition. The court held, however, that the standard the master applied for granting the Matley petition was incorrect. Reclassification is appropriate only in cases where a crop-yield reduction is reasonably significant in light of the applicable beneficial-use standard. Full text of the decision LEGAL PROFESSION Rule breaches by lawyer for poor earn suspension An attorney committed to representing the poor must be suspended for one year after committing several rule violations during a period of illness, the Florida Supreme Court held on Jan. 22. Florida Bar v. Smith, No. SC02-111. Jeanette Smith, a Florida lawyer, suffered a series of medical problems from late summer 1999 to early 2001. During that time, she deposited a client’s check into her operating account instead of a trust account and bounced a check to her phone-answering service. As a result, the bar initiated disciplinary proceedings against her. After a hearing, a referee recommended she be found guilty of several violations and suspended for two years, then placed on probation for two years and made to pay restitution to a former client. The Florida high court affirmed that Smith’s conduct violated several rules, such as her depositing of client funds into her operating account. But it disagreed with the referee that Smith intended fraud with her bounced check. The court reduced the suspension to one year, and rejected the recommendation that she pay restitution to a former client, because disciplinary action was no substitute for malpractice action. Full text of the decision TORTS Employer not liable for rape of worker by her ex Claims asserting the intentional infliction of emotional distress brought by an employee whose supervisor ignored the terms of a protective order and allowed the employee’s ex-boyfriend to abduct and rape her were correctly dismissed in part, the 4th U.S. Circuit Court of Appeals ruled on Jan. 23. Gantt v. Security USA, No. 03-1033. Dominque Gantt, a security guard, got a protective order against her former boyfriend and showed it to her employer, Security USA. Supervisors were told that Gantt was to be assigned to secured inside posts only. Gantt’s supervisor nonetheless twice transferred the boy-friend’s phone calls to Gantt. Then, while working at a government building, the supervisor instructed Gantt to take up a post outside the building, despite her objections. Within 15 minutes, the supervisor transferred another call from the boyfriend to Gantt and refused her request to move back inside. The boyfriend showed up 45 minutes later with a shotgun, kidnapped Gantt and held her captive for six hours, raping and verbally terrorizing her, before surrendering to police. Gantt sued Security USA for sexual harassment and intentional infliction of emotional distress. A Maryland federal court granted the company’s motion for summary judgment. The 4th Circuit affirmed in part and reversed in part. It held that the sexual harassment claim, which she raised under the Fifth Amendment, was properly dismissed because a constitutionally based claim cannot be sustained against a private entity. The company’s work at a government building did not transform it into an agent of the government. The emotional distress Gantt suffered because of her supervisor’s conduct should not have been dismissed, but Gantt failed to offer evidence demonstrating that Security USA desired to bring about her emotional distress. Without such evidence, the Maryland workers’ compensation laws were Gantt’s only remedy. Full text of the decision Child born prematurely can’t sue mom for crash A child cannot recover from her mother for illness caused by premature birth resulting from a car accident allegedly caused by her mother’s negligence, the Massachusetts Supreme Judicial Court held on Jan. 12. Remy v. MacDonald, No. SJC-09049. The child, Andre Remy, sued her mother, Christine MacDonald, alleging that MacDonald’s negligent driving while pregnant caused an accident that caused Remy’s premature birth, which allegedly led to ongoing respiratory distress and asthma. A trial court granted the mother’s motion for summary judgment. The state high court affirmed, stating that the imposition of a legal duty of care on a pregnant woman to refrain from conduct that may harm the child could raise a multitude of problematic issues. The high court held that “no set of clear existing social values . . . exist” for a finding that a duty exists under common law. Full text of the decision

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

Reprints & Licensing
Mentioned in a story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.