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CIVIL PRACTICE Minister’s claims against church lack jurisdiction A church’s right to religious freedom precludes court jurisdiction over a congregational minister’s complaint that he was mistreated in disciplinary proceedings that church officials brought against him, the Massachusetts Supreme Judicial Court said on May 18. Callahan v. First Congregational Church, No. SJC-09190. Minister John Callahan was interim pastor at the First Congregational Church of Haverhill, Mass. When his relationships there became hostile, he resigned and applied for interim ministries elsewhere. But church officer Robert Clark and others filed a complaint against Callahan with the conference authorizing ministers to practice in the state. Clark also told a church leader that Callahan had had an inappropriate relationship with a seminarian, betrayed a confidence and had engaged in bizarre behavior. After a disciplinary proceeding, Callahan was suspended as a minister and told that he could apply for reinstatement only if he underwent medical and psychological evaluations. Callahan filed a complaint with the state Commission Against Discrimination, which dismissed it for lack of subject-matter jurisdiction. He then filed suit in state court against Clark, the other church officials and the conference, alleging, among other things, defamation, intentional infliction of emotional distress and breach of contract. The trial court denied a defense motion to dismiss for lack of subject-matter jurisdiction. Massachusetts’s highest court, however, dismissed all but one claim. Addressing a lower court distinction between congregational and hierarchical churches, the court said, “constitutional rights of religious freedom apply equally to congregational and hierarchical churches . . . and prohibit the court from exercising subject matter jurisdiction over the claims at issue, with the single exception of the defamation count” against Clark. Full text of the decision CONSTITUTIONAL LAW Ordinance tantamount to taking of company’s land Vacating a Texas federal court ruling, the 5th U.S. Circuit Court of Appeals held on May 21 that a Texas town’s ordinance prohibiting quarrying within city limits is a categorical taking of a company’s interest in land. Vulcan Materials Co. v. The City of Tehuacana, No. 02-51182. In 1997, Vulcan Materials purchased the assets of Smith Crushed Stone Inc., which included limestone quarry rights on three contiguous tracts of land next to the Tehuacana, Texas, city limits and four contiguous tracts of land within the city limits. The next year, Vulcan began plans to quarry on the tracts within the city limits. City residents opposed the action and, on Dec. 8, 1998, the city council passed an “Ordinance Forbidding Quarrying or Blasting Operations Within the City Limits.” Vulcan sued, contending that the ordinance was a taking in violation of its constitutional rights, but the lower court granted summary judgment for the city. Remanding for further proceedings, the 5th Circuit said that because the only property interest possessed by Vulcan was the right to mine limestone, the ordinance renders the property interest valueless. But if the quarrying was found to constitute a nuisance, then no property rights would have been taken. Full text of the decision CRIMINAL PRACTICE No privacy right to a bag passenger failed to claim Law enforcement officials can search a bus passenger’s stored baggage without violating the Fourth Amendment, if the passenger knowingly abandoned the bag, the 3d U.S. Circuit Court of Appeals ruled on May 20. United States v. Fulani, No. 03-3835. Drug enforcement agents in Pennsylvania boarded a California-bound bus to investigate possible drug trafficking. After announcing their presence and their intention, the agents questioned all passengers on board and inspected all of their tickets, matching passengers with their bags. Though they were free and able to leave, none of the passengers, including Ibrihim Fulani, did so. One bag remained unclaimed. After several requests for someone to identify the bag went unanswered, the agents opened it and found five bags of heroin, as well as an airline ticket and a Nigerian passport in Fulani’s name. Agents again questioned the passengers until they found Fulani. He was arrested on drug trafficking charges, but the district court granted his motion to suppress the heroin. The 3d Circuit reversed. Though the Fourth Amendment protects unreasonable searches and seizures of a person’s personal luggage, that protection is forfeited when the property is abandoned, it said. Fulani had no reasonable expectation of privacy in a suitcase that he abandoned by not speaking up and claiming it when asked. While the presence of his nametag on the bag may create some indicia of a privacy expectation, it added, that expectation died when Fulani refused to claim the bag as his own. Full text of the decision DAMAGES Connecticut clarifies its collateral source rules Reversing an intermediate appellate court judgment, the Connecticut Supreme Court held on May 18 that an award for economic damages may not be reduced by payments from collateral sources for medical bills for which the jury did not award the plaintiff damages. Pikulski v. Waterbury Hosp. Health Ctr., No. SC 17048. In a slip-and-fall case, plaintiff Mary Pikulski introduced evidence of medical bills for $92,013.23. The jury returned a verdict in her favor but found that she was 49% contributorily negligent. The jury calculated the total damages to be $93,860-$48,980 for economic damages and $44,880 for noneconomic damages-before reduction for Pikulski’s negligence or collateral source payments. The trial court used the amount of economic damages actually awarded as the gross amount of collateral source payments that could be considered. It then reduced that amount by the amount of unpaid medical bills and by 49% of the economic damages. Finally, the trial court offset the net collateral reduction by the total amount of insurance premiums paid for the years in which the plaintiff received treatment. The appellate court reversed, finding that the amount of economic damages must be reduced by the total amount paid by collateral sources for medical bills. Reversing, the high court held that just payments specifically corresponding with damages included in the jury’s verdict are to be deducted as collateral sources from the economic damages award and not the total amount paid by collateral sources for the medical bills. Full text of the decision EVIDENCE Social service reports not admissible hearsay Reports compiled by social services agencies describing home visits and supervised visitations do not qualify as business records and are not admissible as an exception to the hearsay rule, the Indiana Supreme Court ruled on May 20. In re The termination of the parent-child relationship of E.T. and B.T., No. 02S03-0308-JV-367. After proceedings were initiated to terminate the parental rights of a couple, the trial court ordered the parents to enroll in a program offered by a social services agency called SCAN, which works to prevent child abuse and neglect. The SCAN program included home visits and supervised visitation between the children and their parents. SCAN workers prepared reports based on these visits, incorporating both firsthand observations and statements from others who observed the parents at various times. The reports were introduced during the termination hearing over the parents’ objection. The trial court terminated their parental rights and an appeals court affirmed, holding the reports to be admissible into evidence as business records exceptions to the hearsay rule. The Indiana Supreme Court reversed. Unlike financial statements, inventory records or other administrative or operational documents, the SCAN reports are the substantive end products of services offered by that company, solely for an external government agency, to become the permanent property of that agency. To be admissible as business records, the records must be relied upon in the regular course of business. SCAN does not appear to rely on these reports to operate its business, the court concluded; ruling instead that they are part of a service offered to a third party. Full text of the decision LABOR LAW Federal court can’t hear laid-off workers’ claims A plant closure settlement between a corporation and a union that abrogated a collective bargaining agreement (CBA) also divested a federal district court of jurisdiction over certain types of claims brought by former employees, the 6th Circuit U.S. Court of Appeals held on May 17. Bauer v. Bennett, No. 02-4327. After the closure of a facility run by RBX Industries, the former employees’ national union, United Steel Workers of America, and RBX signed an agreement that cancelled the parties’ CBA. But the former employees sued RBX, the steelworkers’ union, and the employees’ union local, alleging a “hybrid” � 301 breach of contract and breach of duty of fair representation claim under the Labor Management Relations Act and various claims relating to the denial of benefits under the Employee Retirement Income Security Act (ERISA). An Ohio federal district court granted the defendants’ motions for summary judgment and denied the employees’ motion to amend the complaint to make a claim under the Labor-Management Reporting and Disclosure Act. Affirming, the 6th Circuit held that federal courts lack jurisdiction to hear claims filed under � 30 and pursuant to ERISA when an accord between the corporation and the employees’ union terminates a previously negotiated CBA, the breach of which provided the factual basis for both claims. The lower court erred in reaching the merits of the � 301 claim because the settlement superseded the CBA. It also ruled that the federal courts have no power to hear an ERISA claim regarding a welfare benefit plan that has been superseded. Finally, the 6th Circuit found that the plaintiffs did not state a disclosure act claim that would survive a motion to dismiss and affirmed the lower court’s denial of the motion to amend. Full text of the decision SECURITIES LAW Fraud class certification must look past pleadings A corporation’s misrepresentation that it owned patents that were merely pending was material and actionable under the Virginia Securities Act (VSA), the 4th U.S. Circuit Court of Appeals ruled on May 19. Dunn v. Borta, No. 03-1362. Edward Dunn was asked by the officers of Ronbotics Corp. to invest in the company, which made electric motion platforms used in arcade games and training seminars. In response to Dunn’s concern that stock in the company was not worth the investment Ronbotics wanted, Ronbotics’ officers assured Dunn that it owned two patents that were “worth millions.” Dunn signed a convertible note, but the company failed to make payments and eventually declared bankruptcy. Dunn filed a securities fraud claim under the VSA, arguing Ronbotics made a material misrepresentation because the patents were merely pending. The district court threw the case out for failure to state a claim, holding that a reasonable investor would have investigated the patents’ status. A divided 4th Circuit reversed. The representations made by Ronbotics about its patents was material and stated a cause of action under the VSA, it said. The court added that the statute does not include a provision requiring a potential investor to investigate the status of a patent. It added that, Dunn, as an individual investor, is not assumed to possess knowledge of all publicly available information on the patents. Full text of the decision

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