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BUSINESS LAW Successor company may be liable in Title VII suit When an insolvent company sells a substantial portion of its assets to another company, that company may be subject to successor liability in a Title VII of the 1964 Civil Rights Act employment discrimination case, the 3d U.S. Circuit Court of Appeals ruled on Feb. 23. Brzozowski v. Correctional Physician Svcs. Inc., No. 02-3659. In May 2000, Noreen Brzozowski filed an employment discrimination suit against Correctional Services Inc. (CSI). Unknown to Brzozowski, CSI had agreed two months earlier to sell a substantial amount of its assets to Prison Health Services (PHS). The sales agreement included a general disclaimer of PHS’ liability for suits pending against CSI, and it specifically mentioned Brzozowski’s suit. Brzozowski moved to join PHS as an additional defendant, but the district court denied the objection. The district court then entered a stipulation by CSI to award Brzozowski $150,000, accompanied by an agreement by Brzozowski not to sue or seek collection from any of the individual stakeholders in CSI. Brzozowski appealed. A divided 3d Circuit reversed. The court found that extension of successor liability was appropriate. Because there have been exemptions to the general common law presumption against successor liability, the potential for extending this obligation would not be unfair or prejudicial, it said. Full text of the decision H & R Block ads didn’t breach consent decrees H & R Block’s “Instant Money” advertisements for its “No Additional Cost Refund Anticipation Loan” (NACRAL) program did not violate a nationwide permanent injunction or consent decrees resulting from previous deceptive advertising practice allegations, the 4th U.S. Circuit Court of Appeals held on Feb. 25. JTH Tax, Inc. v. H & R Block E. Tax Servs. Inc., No. 03-1250. After several states alleged that H & R Block Tax Services Inc. engaged in deceptive trade practices by failing to disclose that its “refund anticipation loans” were actually loans rather than rapid refunds, Block entered into consent decrees with a number of states, including New York and Florida, in which it agreed not to misrepresent the loans as refunds or use the phrase “rapid refund” to describe them. During the 2000 tax season, Block began marketing the NACRAL program, a loan product similar to the refund anticipation loans, except that the company did not charge interest. JTH Tax Inc., operating as Liberty Tax Service, and others sued Block in federal court, alleging that Block’s advertising violated the Lanham Act and IRS regulations. The district court issued a permanent nationwide injunction requiring that Block’s advertisements “clearly and prominently” indicate that the products were loans. In 2002, JTH sued again, alleging that Block violated the injunction because its loan disclosures were in small print. The lower court denied JTH’s motion, holding that “clear and prominent” meant only something written so that a reasonable person would notice it. JTH appealed. Affirming, the 4th Circuit rejected JTH’s argument that the trial court erred in not using dictionary definitions of prominent. The court said, “While dictionary definitions are undoubtedly useful tools of construction, there is no requirement that district courts adopt the definitions contained therein when construing the terms of their own orders.” Full text of the decision CIVIL PRACTICE Whistleblowing worker can’t sue public employer Answering a certified question from the 7th U.S. Circuit Court of Appeals, the Illinois Supreme Court on Feb. 20 said that an Illinois law prohibiting retaliation against whistleblowers does not imply a private right of action by whistleblowers against state entities that retaliate. Metzger v. DaRosa, No. 95913. A federal jury found that Linette Metzger, an employee of the Illinois State Police, suffered retaliation by the police in violation of Illinois personnel code 20 Ill. Comp. Stat. 415/19c.1. The statute provides that no disciplinary action shall be taken against any employee for the disclosure of any alleged prohibited activity under investigation or any related activity. Metzger had blown the whistle on what she alleged were multiple instances of attendance-record abuse by some of her co-workers. Because the jury found for Metzger on the retaliation claim, but against her on other counts, both Metzger and the defendants appealed to the 7th Circuit, which then certified its question. The state Supreme Court concluded that Metzger enjoyed no private right of action under that statute. It explained that the personnel code was enacted primarily to benefit the state and its people by providing efficient government; that the code was not primarily designed to prevent retaliation against employees; that a private right of action is inconsistent with its underlying purpose; and that the creation of a private right of action for state employees was not necessary to achieve the purpose of the whistleblower statute. Full text of the decision CONSTITUTIONAL LAW Missouri gun-carry act withstands challenge Missouri’s concealed-carry firearms law does not violate the right to bear arms set forth in the state’s constitution, the Missouri Supreme Court ruled on Feb. 26. Brooks v. Missouri, No. SC85674. In 2003, the Missouri Legislature overrode a gubernatorial veto to enact the Concealed-Carry Act. The act allows citizens to pay a fee and get a permit to carry a concealed weapon upon application, and requires sheriffs to fingerprint applicants, conduct a criminal background check and then suspend or revoke permits. A group of taxpayers sued to block the law’s implementation, claiming that it contradicted the state constitution’s right to bear arms. A trial court agreed in part with the plaintiffs, but also denied some of their requested relief, prompting both sides to appeal. Reversing, a divided Missouri Supreme Court acknowledged that the provision ensuring the right of citizens to keep and bear arms also states that the right “shall not justify the wearing of concealed weapons.” But the court said that the provision prohibits only the invocation of the right to keep and bear arms to justify the wearing of concealed weapons, not the wearing of concealed weapons themselves. Therefore, the statute was not unconstitutional. Full text of the decision Sex offender registry is no due process violation Reversing a district court holding that the registry provisions of Michigan’s Sex Offenders Registration Act are unconstitutional, the 6th U.S. Circuit Court of Appeals said on Feb. 25 that the registry did not violate due process. Fullmer v. Michigan Dep’t of State Police, nos. 02-1731 and 02-1864. Daniel Fullmer was a prison guard who, according to the Detroit News and Detroit Free Press, was convicted of fourth-degree criminal sexual conduct for having consensual sex with a female inmate. Under Michigan’s Sex Offenders Registration Act, Fullmer was required to register as an offender, and the state listed him on its Web site as such. Fullmer sued, arguing that the public dissemination of his offender classification was unconstitutional because there had been no hearing on the issue of his continuing to pose a danger. A district court agreed and the state appealed. Reversing, the 6th Circuit held that, in light of the U.S. Supreme Court’s decision in Connecticut Dep’t of Pub. Safety v. Doe, 537 U.S. 1 (2003), Michigan’s statute was constitutional. Noting the similarities between the registration requirements in Michigan and Connecticut, the 6th Circuit adopted the high court’s reasoning that conviction-not dangerousness-triggers the registration requirement. Full text of the decision EVIDENCE Accused sexual harasser must hear victims’ tapes A man convicted of sexual harassment should have been given access to taped statements of the complaining witnesses who testified against him at trial, despite work-product claims by the third-party company that owns the tapes, the Oregon Supreme Court held on Feb. 26. State of Oregon v. Cartwright, No. SC S48816. While David Cartwright was general manager of Southern Curry Ambulance Association Inc. (SCAA), a female employee complained to the SCAA board that Cartwright had sexually harassed her. Upon investigation, the board found that other employees had similar complaints. The board taped interviews of some complainants, then retained counsel who recommended that it continue to conduct taped interviews. The state then charged Cartwright with criminal harassment of the women who had been interviewed. Cartwright later moved for production of the tapes by the SCAA. The trial court denied the request and Cartwright was convicted on all charges. An intermediate appellate court affirmed. Reversing and remanding, the Oregon Supreme Court found the trial court to have erred in quashing a subpoena to have the tapes produced at trial. Regardless of who owned or controlled the tapes, the defendant at least had a right to obtain them for use in cross-examination. It also said that Cartwright’s right to the tapes at that point was superior to any work-product privilege asserted by SCAA. Full text of the decision EMPLOYMENT Disability admission not a bar to filing ADA claim A man deemed totally and permanently disabled by Minnesota’s Public Employees Retirement Association can still assert his ability to do his job and not be fired in a suit he filed under the Americans With Disabilities Act (ADA), the 8th U.S. Circuit Court of Appeals held on Feb. 26. Murphey v. City of Minneapolis, No. 02-3824. Robert Murphey worked for the city of Minneapolis sporadically in various seasonal, temporary and part-time positions over several years, but frequent back injuries resulted in his having to take substantial time off. While not working for the city, he applied for disability benefits from the retirement association. Murphey’s doctor submitted a report stating that he met the association’s standards for “total and permanent disability,” his application was approved and he got the benefits. Later, Murphey started another job for the city, but a dispute ensued about the city’s termination of that employment. Murphey filed a charge of discrimination with the Equal Employment Opportunity Commission alleging that the city had discriminated against him based upon his disability and then sued the city under the ADA. After the case was removed from state to federal court, a district judge granted summary judgment for the city. Reversing and remanding, the 8th Circuit held that Murphey’s application for permanent disability benefits was not necessarily inconsistent with his ADA suit claim that he was able to perform the essential functions of his job with or without reasonable accommodation. The district court had relied heavily upon a U.S. Supreme Court requirement of an explanation for the apparent inconsistency between an ADA claim and a prior application for Social Security disability benefits. But the 8th Circuit distinguished the standards between the two benefits applications. Full text of the decision INSURANCE LAW Jewelry theft exemption too ambiguous to enforce A provision in a “jeweler’s block” insurance policy excluding coverage for jewelry stolen from vehicles unless the insured was “actually in or upon” a vehicle at the time of the theft, was ambiguous and unenforceable, the California Supreme Court held on Feb. 23. EMMI Inc. v. Zurich Am. Ins. Co., No. S109609. Jewelry salesman Brian Callahan had two bags containing jewels, some of which were owned by EMMI Inc., in the trunk of his vehicle. After Callahan’s car started making a noise, he stopped to investigate, but left the car running. While he was examining the exhaust pipes, someone jumped into the driver’s seat and stole the vehicle. The car was recovered, but the jewels were gone. EMMI filed a claim under its jeweler’s block policy with Zurich American Insurance Co. Because EMMI was unable to show that Callahan was “actually in or upon the vehicle” at the time of the theft, Zurich denied the claim. EMMI sued for breach of contract, but a trial court granted Zurich summary judgment. EMMI appealed. Reversing, the California Supreme Court held that “the vehicle theft exclusion is ambiguous and did not clearly and plainly appraise the insured that coverage would be lost merely by stepping out of the car.” Thus it was unenforceable. Full text of the decision LAND USE Suit to stall phone tower on historic site fails A petition seeking mandamus relief related to the construction of a cellular wireless phone tower on a tract of land listed on the National Register of Historic Places was dismissed by the U.S. Court of Appeals for the D.C. Circuit on Feb. 24. In re Tennant, No. 02-1060. Pursuant to a license issued by the Federal Communications Commission (FCC) to provide cellular wireless service in Georgetown, S.C., BellSouth Corp. began building network communications towers in the area. One of those towers was to be on the Hobcaw Barony, a tract of land listed by the National Register of Historic Places. Despite its proposed location, South Carolina’s state historic preservation officer told BellSouth that its construction should have “no effect on any properties included in or eligible for inclusion in” the national register. Consequently, no environmental-impact assessment was conducted. A Georgetown resident, James Tennant, asked the Advisory Council on Historic Preservation and the FCC to investigate the tower’s placement, which they failed to do. The preservation officer approved construction of a second tower on the property. Tennant sought a writ of mandamus. The D.C. Circuit dismissed the petition for lack of jurisdiction. Tennant had wanted a writ of mandamus to compel the council and the FCC to follow its procedures, but Tennant had not first sought a remedy from the FCC for its perceived failure to investigate the tower’s location before appealing to the circuit court. Full text of the decision TAXATION Foreign tax credits aren’t part of royalty contracts Interpreting an ambiguous clause contained in several music royalty contracts, the New York Court of Appeals found on Feb. 24 that foreign tax credits were not encompassed as part of a contemplated reimbursement scheme. Evans v. Famous Music Corp., No. 4. A music publisher entered into royalty contracts with several songwriters including Henry Mancini and Johnny Mercer. The contracts contained a provision requiring the publisher to pay 50% of all sums received for each song or musical composition “from any other source or right now known or which may hereafter come into existence.” The writers sued, alleging that the publisher breached the contract by failing to reimburse them for their proportional share of tax credits it received for the payment of foreign taxes. A trial court held that the publisher was liable under the contracts, but an intermediate appellate court reversed. Affirming, New York’s highest court said that the evidence strongly favors the publisher. It noted that the contracts had been performed for decades without the writers demanding reimbursement for credits and that industry practice had always required an explicit clause before the sharing of such credits. Full text of the decision

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