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ADR Offending arbitration terms may be severable Arbitration terms limiting the time in which an employee can file a claim and requiring the parties to bear their own costs are unconscionable under federal and Virgin Islands law, the 3 rd U.S. Circuit Court of Appeals ruled on May 13. Parilla v. IAP Worldwide Svcs. VI Inc., nos. 03-2009 and 03-2308. The offending provisions, however, may not invalidate the entire agreement. Virgen Parilla entered into an employment contract with her Virgin Islands employer that included an arbitration provision. Fired two years later, she sued her now ex-employer, its parent company and two employees, asserting claims under both Virgin Islands law and Title VII of the 1964 Civil Rights Act. The defendants moved to compel arbitration. The trial court denied that motion, finding that the time-limit and cost-bearing provisions were unconscionable, as was another clause mandating confidentiality of any award. The lower court found that the terms so permeated the agreement that they could not be severed. The 3d Circuit reversed in part, holding that the confidentiality limitation, unlike the time limit and cost provisions, was not unconscionable, nor were terms insisting on an administrative forum for review and requiring the arbitrator to be a Virgin Islands resident. Remanding for reconsideration of whether the terms could be severed, it told the lower court that “where disregard of the offending conditions leaves a fair agreement that will accomplish the primary objective of the parties, enforcement of that agreement will normally be appropriate.” Full text of the decision CIVIL PRACTICE No heightened pleading for civil rights lawsuits Reversing a lower court ruling, the 1 st U.S. Circuit Court of Appeals on May 10 abandoned circuit precedent requiring heightened pleading standards for civil rights cases. Educadores Puertorriquenos en Accion v. Hernandez, No. 03-1588. In a � 1983 action against the secretary of Puerto Rico’s Department of Education (PRDE), members of the New Progressive Party who were career PRDE employees alleged constitutional violations after losing their jobs when a governor from the rival Popular Democratic Party was elected. These employees had been hired or given some sort of employment preference by the outgoing administration in violation of Puerto Rico’s ban on certain public sector personnel actions during the two months before and after a general election. Citing the circuit’s heightened pleading requirement, Puerto Rico’s federal court dismissed the suit for failure to state a claim. Following the U.S. Supreme Court’s 2002 ruling in Swierkiewicz v. Sorema N.A., 534 U.S. 506, the 1 st Circuit remanded. Heightened pleading standards, it said, only apply when a federal statute or rule requires such a result. It noted that no statute or rule requires such standards from civil rights cases. Full text of the decision CRIMINAL PRACTICE 911 emergency exception warrants search of home Applying the emergency-aid exception to the search warrant requirement, the New Jersey Supreme Court ruled on May 12 that a police officer’s limited search of a home for a possible victim following a mysterious 911 call was justified. State v. Frankel, No. A-90-02. Responding to a silent 911 call originating from Gary Frankel’s home, an officer went to the house and knocked on the door. Frankel responded by opening the door while peering out from behind a sheet that had been strung past the doorway and a window. After being told that a 911 call had been received from his address, Frankel replied that he did not make the call and lived alone. Although he let the officer pat him down, Frankel refused a request for a search of the house. Fearing that there may be an injured person inside, the officer radioed for backup. After backup arrived, the officer conducted a limited search of the house, discovering marijuana, marijuana plants and equipment to grow them. Frankel was arrested and a search warrant was obtained. Although the trial court granted Frankel’s motion to suppress the marijuana evidence, an intermediate appellate court reversed. He pleaded guilty to possession but preserved the suppression issue for appeal as part of the plea agreement. On appeal, the intermediate court affirmed. The New Jersey Supreme Court affirmed, concluding that while the 911 call placed from Frankel’s home was generated by his computer modem, the officer was justified in his warrantless search. The officer had an objectively reasonable and good-faith basis to believe that there was an emergency, and no evidence existed that he had the ulterior motive of conducting the search to look for evidence of a crime. Full text of the decision EVIDENCE W.Va. court rejects plea to monitor smokers’ class a jury verdict rejecting medical monitoring of certain smokers for two smoking-related diseases was supported by the evidence, the West Virginia Supreme Court of Appeals ruled on May 6. In re Tobacco Litigation (Medical Monitoring Cases), No. 31157. In a state class action against several cigarette manufacturers, plaintiffs with a “five-pack-year” history of smoking (smoking one-half pack a day for 10 years, one pack a day for five years or two packs a day for 2 1/2 years), but who had not been diagnosed with lung cancer and chronic obstructive pulmonary disease (COPD), asked for the creation of a monitoring program for the early detection of those diseases, to be paid for by the defendants. At trial, the plaintiffs were required to prove six elements, including: whether a five-pack-year smoking history constituted a significant exposure to a hazardous substance; whether the manufacturers’ conduct in designing and selling cigarettes was tortious under theories of strict liability, negligence or breach of a voluntary undertaking; whether exposure to a minimum of five-pack-years of cigarette smoke results in an increased risk of contracting lung cancer and/or COPD; and whether that increased risk makes it reasonably necessary for the plaintiffs to undergo periodic medical tests different from what would be prescribed in the absence of smoking. Prevailing on only four of the six required issues, the plaintiffs appealed. Affirming, the West Virginia Supreme Court of Appeals noted that the jury’s defense verdict on the issues of the manufacturers’ conduct and increased risk was supported by the evidence. It noted that the plaintiffs’ expert’s suggestion that the class members get CT scans every year after the age of 50 was challenged as not being up to national standards. Also, the expert’s suggestion that breathing capacity be tested periodically was controverted by proof that no federal or state agency, nor any national or international health organization, recommends such a regimen. Full text of the decision IMMIGRATION LAW Lack of well-founded fear spikes asylum claim A Nigerian regime change in 1998 undermines a Nigerian national’s claim for asylum based on the alleged persecution of journalists, the 8 th U.S. Circuit Court of Appeals ruled on May 14. Agada v. Ashcroft, No. 02-3942. Benjamin Agada was a radio journalist in Nigeria in the late 1970s and early 1980s. He was also an officer in the Nigerian Union of Journalists, which frequently expressed opposition to the government. In response to a piece Agada wrote criticizing Nigeria’s secret enrollment in the Organization of Islamic States, Agada was demoted, accused of embezzling and questioned, though he was never fired. He came to the United States in 1991, overstayed his visa and was then targeted for removal. Agada sought withholding of removal and asylum. The immigration judge denied relief, and the Bureau of Immigration Appeals affirmed. The 8 th Circuit affirmed. Though Agada claimed he had a well-founded fear of persecution were he to return to Nigeria, because of his identification as a journalist, which may have been true when he last lived there, the court said that since the death of General Sani Abacha in 1998, the conditions Agada feared no longer existed. Press and speech restrictions have been “significantly relaxed” and journalists are no longer threatened. Full text of the decision LABOR LAW Airport screeners can’t unionize, D.C. court says Federal airport screeners are not entitled to have the government employee union represent them in collective bargaining, the U.S. Circuit Court for the District of Columbia ruled on May 14. American Federation of Gov’t Employees v. Loy, No. 03-5256. Shortly after Sept. 11, 2001, the Aviation and Transportation Security Act created a federal work force of commercial airport passenger and cargo screeners. The act vested all power to hire, fire, discipline and set terms of conditions for the work force in Under Secretary of Transportation for Security James M. Loy. The American Federation of Government Employees petitioned the Federal Labor Relations Authority to certify it as the screeners’ exclusive collective bargaining representative. Loy responded by issuing a directive denying the right of screeners to engage in collective bargaining. The federation then filed for an injunction and declaratory judgment, challenging the directive on statutory and constitutional grounds. The district court dismissed the statutory claim for lack of jurisdiction and the constitutional claim for failure to state a cause of action. Meanwhile, the FLRA denied the petitions based on Loy’s directive, plus the terms of the security act. Affirming, the D.C. Circuit said, “We do not say the FLRA was correct. That issue is not properly before us. We do say the FLRA had the exclusive authority to render judgment on the question, subject to review only in a court of appeals” pursuant to a provision of Title VII of the Civil Service Reform Act. Review is proper in a court of appeals, and only if it occurs after the claim has been presented to and finally decided by the FLRA. The district court was correct to dismiss the constitutional claims, too, but those should similarly have been dismissed for lack of jurisdiction, the court concluded. Full text of the decision SECURITIES LAW Fraud class certification must look past pleadings Before granting class certification to securities fraud plaintiffs who seek a “fraud on the market” presumption that they relied on misrepresentations, a court must first go beyond the complaint and find that the transactions occurred in an “efficient market,” the 4 th U.S. Circuit Court of Appeals held on May 12. Gariety v. Grant Thornton LLP, No. 03-1629. The accounting firm of Grant Thornton (GT) was sued by shareholders of the failed First National Bank of Keystone. GT had been the bank’s auditor and failed to report any significant problems before its 1999 collapse. The plaintiffs alleged violations of Securities Exchange Act � 10(b) and state law fraud. Over GT’s objection, a West Virginia federal court certified a class consisting of purchasers of Keystone stock after GT’s audit report and before Keystone’s closure. On appeal, the 4 th Circuit noted that Fed. R. Civ. P. 23(b)(3) requires a court to find that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members,” it said. Such a finding requires a look at the elements of the fraud claims. To prove the �10(b) violation and “analogous elements” of the state law claims, a plaintiff must prove that he traded his securities in justifiable reliance on a misrepresentation knowingly made by the defendant. Reliance can be presumed under the fraud-on-the-market theory, if the plaintiffs prove that GT made material public misrepresentations and that the shares were traded on an “efficient market.” The 4 th Circuit remanded for analysis of the factors that establish “efficiency,” including whether the stock is actively traded, the trade volume and the extent to which market professionals follow it. Full text of the decision

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