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CIVIL PRACTICE Amount-in-controversy pegs second-party claims Under the federal supplemental jurisdiction statute, each plaintiff in a diversity action must separately satisfy the amount-in-controversy requirement, the 1st Circuit U.S. Court of Appeals said on June 2 in a first impression case. Del Rosario Ortega v. Star-Kist Foods Inc., No. 02-2530. A child, Beatriz Blanco-Ortega, cut her finger on a Star-Kist tuna can, sustaining permanent injuries. Beatriz, her parents and a sister filed suit in Puerto Rico federal court. Beatriz’s family members asserted emotional distress. Her mother also claimed medical expenses. The Ortegas asserted diversity jurisdiction, but the trial court held that it was a legal certainty that none of the plaintiffs’ claims was worth $75,000 and dismissed the case for lack of jurisdiction. The 1st Circuit found it possible that Beatriz could recover more than $75,000, but upheld the finding that her family could not. It then tackled the first impression issue on which the circuits have split: Can Beatriz’s family stay in the case under the supplemental jurisdiction statute, 28 U.S.C. 1367? The court concluded that, by limiting supplemental jurisdiction to “civil action[s] of which the district courts have original jurisdiction,” Congress preserved the traditional rule that each plaintiff in a diversity action must satisfy the amount-in-controversy requirement. Accordingly, it affirmed the dismissal of her family’s claims. Full text of the decision CIVIL RIGHTS Transsexual’s Title VII suit withstands scrutiny A transsexual may maintain a claim for sex discrimination under Title VII, the 6th U.S. Circuit Court of Appeals said on June 1. Smith v. City of Salem, No. 03-3399. Jimmie Smith was a fire department lieutenant in Salem, Ohio, for seven years before he was diagnosed with gender identity disorder. Smith told his supervisor that he would begin expressing a more feminine appearance at work, in accordance with international protocols for treating GID, as he moved toward the likely goal of physically transforming himself into a woman. After first setting aside a plan to force Smith to resign, the department eventually suspended him for a minor infraction. Smith sued the department and the city for sex discrimination and retaliation under Title VII of the 1964 Civil Rights Act. The trial court dismissed the suit, holding, among other things, that Title VII protection is unavailable to transsexuals. The 6th Circuit reversed. Relying primarily on Price Waterhouse v. Hopkins, the 1989 U.S. Supreme Court case on sex stereotyping claims, the circuit court said, “Sex stereotyping based on a person’s gender non-conforming behavior is impermissible discrimination, irrespective of the cause of that behavior; a label, such as ‘transsexual,’ is not fatal to a sex discrimination claim where the victim has suffered discrimination because of his or her gender nonconformity.” Full text of the decision ELECTION LAW Missouri speeds vote on anti-gay marriage rule The Missouri secretary of state must speed preparation for a vote on a proposed state constitutional amendment that would bar same-six marriage, the Missouri Supreme Court held on June 3. Missouri, ex rel. Nixon v. Blunt, No. SC86013. Missouri’s Senate and House passed Senate Joint Resolution 29, proposing an amendment that would add to the constitution the statement that “a marriage shall exist only between a man and a woman.” Last month, Governor Bob Holden called for a special election on Aug. 3, 2004, directing that SJR 29 be voted on by the people. Responding that same day, Secretary of State Matt Blunt wrote to Holden that he had not received the bill from the Legislature and that he would take appropriate action upon its receipt. The next day, May 25, Attorney General Jay Nixon filed suit to compel Blunt to prepare SJR 29 for the Aug. 3 ballot. The trial court denied relief, holding that Blunt’s duties under state law were not yet triggered because he did not have an official copy of the bill, signed by the House speaker and the Senate president pro-tem. The day after the AG petitioned the state Supreme Court, that court entered a scheduling order directing Blunt to be prepared to place SJR 29 on the August 2004 ballot if the court so ordered. The presiding officers signed SJR 29, and Blunt received it on May 28. Despite a Missouri law requiring the secretary of state to send notice with a sample ballot to each election authority with 10-week notice, the Supreme Court said that nothing precludes the secretary from sending an amended notice after the 10-week notice period. The court held that the law did not preclude putting this proposal on the August ballot. Full text of the decision EMPLOYMENT Assignee can’t sue plan, where terms forbid it In a case of first impression, the 11th U.S. Circuit Court of Appeals ruled on June 3 that a provider-assignee cannot sue a medical benefit plan pursuant to the Employee Retirement Income Security Act (ERISA), where the terms of the plan forbid the assignment. Physicians Multispecialty Group v. The Health Care Plan of Horton Homes Inc., No. 03-14202. Horton Home’s medical benefit plan included coverage of dependents, as long as the dependents met certain criteria. The plan contained an unambiguous anti-assignment provision. An employee under the plan had five children. After one of his children became ill and died, the child’s estate assigned its claim to the medical provider, which filed a claim with the plan for medical services. Denying the claim, the plan’s third-party administrator maintained that the child was not “principally dependent” on the employee for financial support. Horton upheld the decision. When the provider sued under ERISA, a Georgia federal court granted its motion for summary judgment and awarded the costs of medical services rendered. Reversing, the 11th Circuit noted that ERISA allows only plan beneficiaries and plan participants to sue under the statute, and is silent as to assignment of claims. Because the plan at issue contained an unambiguous anti-assignment provision, the court concluded that benefits were nonassignable. Congressional silence on the assignability issue, it said, meant that the issue was left up to the contracting parties. Full text of the decision INTERNATIONAL LAW Sovereign immunity fails if agent has authority The “commercial activity” exception to foreign state immunity from suit can be triggered only in transactions by agents with actual authority, the 4th U.S. Circuit Court of Appeals ruled on June 3. Velasco v. Government of Indonesia, No. 02-1980. In the late 1980s, the Indonesian government repudiated 505 promissory notes, valued at $3.2 billion, that were signed by an unauthorized agent for the alleged purpose of establishing trade and investment in Syria. Long after the scandal broke, George Velasco purchased a note in Panama purportedly worth $2.8 million. The day after the note’s maturity date, Velasco presented it for payment at the Banaico Bank in Panama City. The bank told him that Indonesia refused payment as did the Indonesian consulate. He sued to compel payment. A North Carolina federal court ruled that because the agents who originally signed the notes lacked the authority to do so, the signing of the notes was not an act of a foreign state, and that the “commercial activity” exception to the Foreign Sovereign Immunities Act (FSIA) applied. The 4th Circuit affirmed. The FSIA, as the sole source of subject-matter jurisdiction in suits against a foreign state, contains some exceptions to the general grant of immunity, including one for “commercial activity” in certain circumstances. Though the issuance of the note was a commercial activity that caused a direct effect in the United States, the 4th Circuit joined with the 9th Circuit in finding that the exception could only be invoked against a foreign state when its officials have actual authority. Though the agents who signed the notes had authority to assist the Indonesian president in determining national security and defense policy, they did not have authority to incur debt from a foreign source on behalf of the country. Their issuance of the notes was, therefore, an ultra vires act in violation of Indonesian law. Consequently, their unlawful issuance did not trigger the exception to FSIA immunity. Full text of the decision LEGAL PROFESSION Ohio reprimands lawyer for misleading ads, signs An Ohio lawyer violated a disciplinary rule banning attorneys in private practice from practicing under a misleading trade name, when he approved of signs and advertisements that contained his name along with the name of a credit counseling company, the Ohio Supreme Court said on June 2. Medina County Bar Ass’n v. Baker, No. 2004-0035. Martin Baker, a private practice attorney, shared office space at two locations with a credit counseling company, Confidential Credit Counselors (CCC). Baker served as CCC’s vice president of legal affairs, answering legal questions and accepting referrals of customers. In exchange, CCC paid for his rental, secretarial and telephone expenses and signage and telephone directory advertisements. Three signs at one office displayed CCC’s name and logo, with Baker’s law practice identified immediately below. Baker and CCC were listed as having the same phone number at both locations, and a description of the services provided by both businesses appeared together in local directory advertisements. Ohio’s high court found that the signs and advertisements misled clients as to whether Baker was practicing law under CCC’s trade name and whether his law practice offered the same services that CCC did. Concluding that the signage and ads violated DR 2-102(B), the court ordered a public reprimand. Full text of the decision SCHOOLS AND EDUCATION Free speech infringed in fight over ‘Fighting Illini’ A university chancellor’s directive that communications to prospective student-athletes must be prescreened violated the free speech rights of people wishing to contact the students about objections to the school’s Native American mascot, the 7th Circuit U.S. Court of Appeals held on June 1. Crue v. Aiken, No. 023627P. A group of University of Illinois teachers objected to the school’s use of the mascot “Chief Illiniwek,” who symbolizes the University’s “Fighting Illini” sports nickname, which was based upon a loose confederation of Native American tribes. When the school learned of the group’s plan to contact prospective student-athletes to tell them of the Chief Illiniwek controversy, its chancellor, Michael Aiken, circulated an e-mail forbidding contact with prospective student athletes without express authorization of the director of athletics. The objectors filed suit in an Illinois federal court, alleging that the preclearance directive was an unconstitutional prior restraint on their free speech rights. The district court agreed and enjoined the chancellor from enforcing the directive. It also awarded nominal damages plus attorney fees. Over a dissent, the 7th Circuit affirmed. Calling the directive a “broad prohibition on speech on a matter of significant importance and public concern [which] applied to 44,000 members of the university community, including students,” the majority applied a balancing test and concluded that the impact of the speech on the actual operation of the university and its athletic program did not outweigh the plaintiffs’ right to free expression on this matter. Thus, said the court, the directive had infringed plaintiffs’ free speech rights. Full text of the decision

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