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ADMINISTRATIVE LAW No urination in drug test means certification loss A Northwest Airlines mechanic’s inability to produce a urine sample during a random drug test was a sufficient reason for revoking his certification, the 8th U.S. Circuit Court of Appeals ruled on April 1. King v. National Transp. Safety Bd., No. 02-3798. William K. King, a mechanic with 14 years of experience and no prior disciplinary or drug problems, was called in for a random drug test. King was asked to provide a urine sample. Unable to do so, he was told to drink water. Still unable to do so after three hours, the standard time frame for producing a sample, the test was ended. Under Federal Aviation Administration regulations, King’s failure to produce a sample was considered a refusal to produce, and a ground for certification revocation. In his appeal to an administrative law judge, King was allowed to change the time of his first attempt from 4:50 p.m. to as late as 5:20 p.m., and the ALJ said that he had not been given the full three hours. The ALJ also said that the test administrator did not personally dispense the water to King during the test. The ALJ reversed the revocation, but the National Transportation Safety Board reversed the ALJ. Affirming, the 8th Circuit said that King should not have been allowed to change the time on his petition without good cause. It also said that the ALJ was wrong to hold that the test administrator must personally ensure that King drank the water. The administrator had urged King to drink and made the connection for him between drinking and urinating. Full text of the decision BANKRUPTCY Only prepetition debt may be set off by creditor The U.S. department of Agriculture may not claim government program proceeds due a twice-bankrupt family farm, and use those funds to set off sums owned by the debtors to the USDA, because the program payments were not owed to the debtors before the start of their second bankruptcy proceeding, the 10th U.S. Circuit Court of Appeals held on March 29. In re Myers, No. 02-2350. Farmers Wesley and Sonja Myers borrowed money from the USDA’s Farm Services Agency (FSA), and then defaulted on the loans. The Myerses then entered into a seven-year executory production flexibility contract (PFC) with the federal Commodity Credit Corp., which agreed to make annual payments in exchange for their compliance with various planting and land-use restrictions. After the Myerses got one payment, the next was set off by the FSA and applied to their defaulted loans. When the FSA filed to foreclose on the Myers’ real property, they filed for bankruptcy, staying the foreclosure and terminating the PFC. The Myerses obtained a discharge of all personal liability and stipulated to the entry of a judgment by the FSA. When the FSA resumed its foreclosure, the debtors again filed for bankruptcy, which again stayed the proceedings. The bankruptcy court then allowed the Myerses to reassume the terminated PFC without interference from the FSA. A bankruptcy appellate panel affirmed. Agreeing, the 10th Circuit noted that under Bankruptcy Code � 553, a creditor may set off a corresponding debt that “arose before the commencement of” the bankruptcy proceedings. But, because the PFC payments were terminated during the first bankruptcy and were not revived until after the filing of the second, the court concluded that the government’s debt to the Myerses did not arise before the start of the second bankruptcy and was not subject to setoff. Full text of the decision BUSINESS LAW Below-cost gas sale not necessarily breach of law The state of Missouri failed to prove that QuikTrip, a chain of gas stations and convenience stores, injured its competitors and violated a state statute when it sold gas below cost, the Missouri Supreme Court held on March 30. State ex rel. Nixon v. QuikTrip Corp., No. SC85399. After one QuikTrip store priced its retail gas below its wholesale cost on 23 days, Missouri’s attorney general brought an action alleging that it had violated the state’s Motor Fuel Marketing Act. The act bars the below-cost sale of gas if the intent or effect of the offer is “to injure competition” or to “induce the purchase of other merchandise, to unfairly divert trade from a competitor, or otherwise to injure a competitor.” A trial-level court agreed, granting summary judgment for the state. Reversing, the state Supreme Court said that it wasn’t clear from the record that QuikTrip’s actions diverted trade from its competitors because its competitors were unable to lower prices to compete. The court explained that the injury the statute seeks to proscribe is the lowering of prices to hurt a competitor by forcing it to sell below cost, which over time would eliminate competition and result in higher gas prices. Full text of the decision CIVIL PRACTICE Divorce state jurisdiction applies to wife not in U.S. In a divorce action, a wife who lives in Great Britain is subject to personal jurisdiction in Georgia, the Georgia Supreme Court determined on March 29. Cooke v. Cooke, No. S04F0347. In 1991, Irish citizen Hugh Cooke married a British citizen now known as Miranda Cooke, in Great Britain. The couple then moved to Ohio and later to Georgia, where they managed a business. The Cookes had six children, five of whom were born in Great Britain. The youngest was born in Georgia. The couple and their five oldest children are all permanent U.S. residents. In 1999, Miranda and children returned to Great Britain, while Hugh stayed in Georgia. On their tax returns, they declared themselves to be residents of Georgia. In 2003, Hugh filed for divorce in Georgia. Miranda moved to dismiss the suit for a lack of personal jurisdiction. Finding that Miranda was not subject to personal jurisdiction in Georgia, a trial court granted her motion. Reversing, the state Supreme Court ruled that by residing in Georgia from at least 1992 to 1997, Miranda purposely availed herself of the privileges of her domicile. Thus, requirements of due process were satisfied and the court could exercise personal jurisdiction over her. Full text of the decision ELECTION LAW AG must adjust initiative to cap med-mal legal fees An Oregon ballot initiative limiting attorney fees in medical malpractice cases to $100,000 is procedurally deficient and must be modified by the state attorney general, the Oregon Supreme Court ruled on April 2. Crew v. Meyer, nos. S51148 and S51150. The caption of the ballot initiative read: “AMENDS CONSTITUTION: LIMITS ATTORNEY FEES NEGOTIATED BETWEEN ATTORNEYS, PATIENTS INJURED BY HEALTHCARE PROVIDER TO MAXIMUM $100,000.” The measure caps attorney fees, no matter how many attorneys work on the case, at $100,000, but still allows for costs, regardless of what the hourly rate or contingency agreement allow. It applies to damages received through court judgments and settlements. And it covers personal injury and wrongful death cases. According to the initiative, a “yes” vote “limits [the] right of patient . . . injured due to fault of healthcare provider to negotiate fee their attorney will receive,” while a “no” vote “retains current law allowing attorneys and their clients to negotiate amount of fee attorney receives in action arising from fault of healthcare provider.” Rejecting the initiative, the Oregon Supreme Court said that the caption does not reasonably identify the measure because it discusses negotiation of fees rather than the real purpose: the limitation of fees. It also gives the impression that it applies to more cases than it does and that the cap applies to cases involving any injury, without regard to fault. Full text of the decision IMMIGRATION LAW Alien seeking change of status is not time-barred An alien applying for adjustment of status must wait five years from the date of a scheduled departure date, and the five-year period continues to run during the appellate process, the 9th U.S. Circuit Court of Appeals ruled on April 1. Velezmoro v. Ashcroft, No. 02-73244. Gerardo Velezmoro, a Peruvian national, illegally entered the United States in 1992. The Immigration and Naturalization Service (INS) initiated deportation proceedings against him in 1994. Velezmoro conceded his deportability but applied for asylum. The claim was denied, and a voluntary departure date was set for April 1998. In the meantime, Velezmoro married a U.S. citizen. He did not leave on the set date and, instead, moved to reopen his deportation hearing on the ground that his marriage was a new basis for an adjustment of status. That claim was denied because, under � 242B of the Immigration and Nationality Act, Velezmoro was ineligible for an adjustment of status for five years from the date of a scheduled departure date or date of unlawful re-entry. The 9th Circuit reversed, granting Velezmoro’s petition for review and remanding to the Board of Immigration Appeals. It noted that at the time of Velezmoro’s BIA petition, five years had not yet elapsed, so he was still barred from seeking an adjustment of status. But, at the time of his appeal, the five-year bar had expired. The court ruled that were it to deny the petition, Velezmoro would have no realistic opportunity to present his meritorious claim for adjustment, since the INS regulations limit to one the number of allowable motions to reopen. The court found that because the five-year period had passed, the case should be remanded to the BIA to determine if Velezmoro continues to be barred from applying for adjustment of status. Full text of the decision LEGAL PROFESSION Law associate must hand over secret side fees An ex-law firm associate must hand over fees he earned doing secret side work and may not recover any fees for a big contingency case he brought to the firm and handled exclusively, the Utah Supreme Court held on March 30. Prince Yeates & Geldzahler v. Young, No. 20020347. The firm Prince Yeates & Geldzahler of Salt Lake City hired Robert Young as a lateral associate. When hired, Young was told firm attorneys receive increased compensation based on their performance and that the usual partnership track for his experience was two to three years. Young secured contingent-fee work in two cases arising from a helicopter crash in which Charles Krause was injured. Young was the only attorney who handled the case. Young and the firm reached a tentative verbal agreement that Young would take one-third and the firm two-thirds of the Krause fee. But before signing his acceptance, Young counteroffered the same split, but with his getting shareholder status and other privileges. The firm rejected this. Young resigned. Upon discovering that Young had secretly been representing clients on the side, using the firm’s name and resources but keeping the profits, the firm sued for breach of fiduciary duty. Young counterclaimed for breach of his employment contract. The trial court denied the firm’s summary judgment motions and granted Young’s. A jury awarded Young a $280,000 fee for Krause (about 43% of settlement). Reversing, the Utah Supreme Court held that the terms of Young’s original employment contract and any agreement relating to Krause were too vague to be enforceable. As a matter of first impression, it also said that a “mere employee” owes his employer a fiduciary duty of noncompetition, where the employee is an attorney, and that Young breached that duty as a matter of law. Full text of the decision PRODUCTS LIABILITY Smokers were aware of smoking perils in 1990s Finding that cigarettes are not an unreasonably dangerous product, the 11th U.S. Circuit Court of Appeals ruled on March 29 that the ordinary cigarette consumer could not have been unaware of the dangers of smoking during the 1990s. Spain v. Brown & Williamson Tobacco Corp., No. 99-15021. A smoker who had been smoking since she was a teenager in 1962 contracted lung cancer and died in 1999. Her widower filed a claim under the Alabama Wrongful Death Act against cigarette manufacturers for liability under the Alabama Extended Manufacturer’s Liability Doctrine. Under the statute, a plaintiff must show that “an injury was caused by one who sold a product in a defective condition that made the product unreasonably dangerous to the ultimate user or consumer.” An Alabama federal court dismissed the claim. The 11th Circuit affirmed, citing the existence of the surgeon general’s warning against smoking that dates back to 1965 to show that the danger of smoking was common knowledge. Full text of the decision TORTS Docs can be sued if their acts result in miscarriage Even absent a showing of independent physical injury, the New York Court of Appeals on April 1 said that a mother may recover damages for emotional harm when medical malpractice causes a miscarriage or stillbirth. Broadnax v. Gonzalez, No. 31. In two cases involving either miscarriage or stillbirth, the mothers sued their doctors for malpractice and claimed emotional harm. The trial courts in both suit ruled against the mothers. The intermediate appellate courts affirmed, holding that the mothers could not recover damages for emotional harm where they sustained no physical injury separate from that suffered by the fetus. Reversing, the state Court of Appeals discarded precedent that allowed for malpractice liability when the fetus survived but not if the fetus did not. It concluded that doctors owe an expectant mother a duty of care, entitling her to damages for emotional distress. Full text of the decision Sovereign immunity loss requires negligence proof A personal injury plaintiff suing the Texas Department of Parks and Wildlife must raise a genuine issue of material fact regarding the park’s gross negligence to survive a challenge to the jurisdiction, the Texas Supreme Court ruled on April 2. Texas Dept. of Parks and Wildlife v. Miranda, No. 01-0619. While camping at Garner State Park at a site recommended by a ranger as being safe for children, Maria Miranda suffered extensive head, neck and spine injuries when a tree limb fell on her head. She and her husband sued the state parks department, alleging gross negligence. The park filed a plea to the jurisdiction, saying that the Mirandas had not established facts sufficient to waive the department’s sovereign immunity. The trial court denied the motion, and that ruling was upheld on appeal. Reversing, the Texas Supreme Court ruled that the department’s immunity could not be waived under the state’s recreational-use statute without an actual showing of gross negligence. To assess whether that showing had been made, the trial court should have considered extrinsic evidence offered by the state, which did not show that the department had actual, subjective knowledge of the risk and failed to act. Full text of the decision

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