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BANKRUPTCY No discharge of student loan absent hardship before discharging student loan indebtedness, a bankruptcy judge must determine that the debtor meets the “undue hardship” standard set out in a provision specifically dealing with student loans, and may not rely on a general, catchall provision authorizing “necessary and appropriate” relief, the 6th U.S. Circuit Court of Appeals ruled on July 28. In re Miller, No. 03-5167. After accumulating more than $90,000 in student loan debt in pursuit of her undergraduate, master’s and unfinished doctoral degrees through 1997, Patricia Miller filed for bankruptcy in 2001 and asked that more than $89,000 of the debt be discharged. Her annual income was about $26,000, and she had contributed only $368 toward her debt. Though the bankruptcy court found no evidence of undue hardship (as required by 11 U.S.C. 523(a)(8)), it nonetheless discharged more than $55,000 under the catchall “necessary and appropriate” standard of 11 U.S.C. 105(a). The 6th Circuit reversed, holding that the undue hardship test applied to all discharges of student loan debt. It said that the lower court should look at such factors as whether Miller’s debt had reduced her to straitened circumstances, whether her income was likely to increase and whether she had made a good-faith effort to satisfy the debt.   Full text of the decision CONSTITUTIONAL LAW Sex offender can be banned from parks A municipality did not violate the First and 14th amendments to the U.S. Constitution when it banned a convicted sex offender from its public parks, a majority of the en banc 7th U.S. Circuit Court of Appeals held on July 30. Doe v. City of Lafayette, No. 01-3624. The unnamed John Doe had a quarter-century history of arrests and convictions for child molestation, voyeurism, exhibitionism and peeping. In 2000, the city of Lafayette, Ind., banned him from all public parks under the city’s jurisdiction after he admitted that the sight of children in a park tempted him to commit a crime. By a 9-2 vote, the 7th Circuit found that Doe was not being punished for “expression” or “pure thought.” Instead, the ban was aimed at thought plus the potential for action. Nor did the ban violate Doe’s substantive due process rights under the 14th Amendment, said the majority. While the right to enter public parks for innocent purposes is “not unimportant,” it has not been established to be “fundamental.”   Full text of the decision CONSUMER PROTECTION Dunning letter misstated settlement terms A debt collection letter was deceptive under the Fair Debt Collections Practices Act because it was misleading as to the terms of a settlement offer, the 5th U.S. Circuit Court of Appeals held on July 28. Goswami v. American Collections Enterprise Inc., No. 03-20834. A collection agency sent a letter to a delinquent credit-card holder saying she had only 30 days to take advantage of a settlement offer that would have taken 30% off her outstanding debt. In fact, the credit-card company had authorized the agency to offer discounts of up to 50% with no 30-day deadline. The act makes illegal “[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” The 5th Circuit found the statements in the letter to be false and calculated to pressure debtors into rapid payment.   Full text of the decision CONTRACTS Losing boxer bound by minimum-purse clause A boxing-promotions contract that does not specify the minimum amount to be paid for bouts after a loss suffered by the boxer is still enforceable, the 3d U.S. Circuit Court of Appeals ruled on July 30. Echols v. Pelullo, No. 03-2740. Boxer Antwun Echols entered into an exclusive promotional agreement with Arthur Pelullo and Banner Promotions. Under the agreement, Banner was to secure, arrange and promote a certain number of bouts a year and set a minimum amount of payment Echols would receive for each type of bout arranged. The minimum purse, however, was subject to renegotiation at Banner’s discretion should Echols lose a fight. When Echols lost a world championship, Banner exercised the option to negotiate minimum-purse agreements on a bout-by-bout basis. Echols eventually challenged the enforceability of the contract when Banner tried to block a fight Echols wanted to set up on his own. A district court struck down the entire agreement for indefiniteness, due to the omission of a minimum purse amount. A divided 3d Circuit reversed. It found that the minimum purse amount was not a material term and did not in any way affect the remaining contract provisions: Echols must still deal only with Banner, and Banner must still secure a minimum number of bouts. The dissent countered that this type of agreement leaves boxers without guaranteed purses or bargaining power, and puts promoters in total control of the boxer’s career for several years.   Full text of the decision PUBLIC RECORDS Prosecutors must justify keeping files sealed Though a court granted a prosecutor’s request that certain records be put under seal, the prosecutor still bore the burden of showing that the seal should be kept in place when a newspaper and a group of plaintiffs sought the records some 11 years later, the Massachusetts Supreme Judicial Court ruled on July 27. The Republican Co. v. Appeals Court, No. SJC-09209. During a 1993 investigation into the 1972 murder of a 13-year-old boy, a prosecutor submitted documents justifying a search warrant against the boy’s Catholic priest, Richard Lavigne. Although a sample of Lavigne’s blood was taken pursuant to the warrant, no charges were brought against him, and the prosecutor asked that the supporting documents be put under seal. In 2003, a newspaper and group of plaintiffs alleging sexual abuse at the hands of Lavigne sought to unseal the records. The Massachusetts high court said that the records should be released (subject to some redaction) since the prosecutor had not proven that the seal needed to be continued given how much had been revealed about Lavigne over the years. The court acknowledged that requiring the original seeker of a seal to justify its continuation might lead some people to take multiple bites at the apple, but expressed confidence that the courts could filter out frivolous requests.   Full text of the decision EMPLOYMENT No tort remedy for workplace spanking An employee injured by a “birthday spanking” administered by his coworkers had no remedy other than workers’ compensation, the Minnesota Supreme Court ruled on July 29. Meintsma v. Loram Maintenance of Way Inc., No. A03-416. It had been a long-standing tradition at Loram Maintenance of Way Inc. for employees to be wrestled to the ground and spanked on their birthday. But a 2001 spanking with a two-by-four sent Jeremy Meintsma to the emergency room with cuts, abrasions and muscle spasms. The court held that although Meintsma could sue his colleagues who administered the spanking, he had no claim for damages against the company, because it had no deliberate intent to injure him, even if it was aware of horseplay.   Full text of the decision FAMILY LAW No compelling reason needed for mom’s move A custodial parent need not prove that she has a “compelling reason” for moving, even if her move takes her children away from another parent who has joint custody, the Rhode Island Supreme Court held on July 30. Dupr� v. Dupr�, No. 2002-300. A divorced mother of two living in Rhode Island wanted to move to a Polynesian island, where she had once supported herself by selling her art. Her ex-husband, who had joint custody of the children, objected. A family court said the mother could not take the children with her because she had no compelling reason for moving. The Rhode Island Supreme Court reversed, saying that the proper question was what was in the best interests of the child. It instructed the lower court to look at such factors as quality of life in the new location, the ex-husband’s ability to maintain contact and whether the mother’s new home had signed a treaty providing for the return of abducted children.   Full text of the decision INSURANCE Foot-dragging insurer hit with $300,000 punitives An insurer that failed to promptly defend and settle lawsuits against its insured arising out of her auto accident is liable for punitive damages, the Idaho Supreme Court held on July 23. Myers v. Workmen’s Auto Ins. Co., No. 28552. Jessica Myers had a policy with Workmen’s Auto Insurance Co. that provided that the insurer would “settle or defend” any claim for damages arising from an auto accident. When Myers was sued twice as a result of an accident, Workmen’s initially failed to come to her defense, leaving her with a $5,755 default judgment and the suspension of her driving privileges. Workmen’s paid the default judgment only after Myers hired her own lawyer, who promptly sued the insurer. The Idaho Supreme Court upheld a jury’s award of $735 in damages and $300,000 in punitives.   Full text of the decision SECURITIES LAW ‘Should have known’ doesn’t equal abetting The “extreme recklessness” scienter for aiding and abetting securities violations requires more than a “should have known” finding, the U.S. Circuit Court for the District of Columbia held on July 30. Howard v. SEC, No. 03-1098. Nicholas Howard, senior vice president of broker-dealer James Capel Inc., helped market an initial public offering in which closing was conditioned on a certain level of sales. When sales fell short, Howard participated in transactions designed to close the gap. The Securities and Exchange Commission punished him with a three-month suspension of his broker-dealer license and a $50,000 penalty, saying that Howard should have known that the stopgap transactions were improper or should have been more fully disclosed. Calling the SEC’s opinion “confused and confusing,” the D.C. Circuit reversed most of the violations and remanded two of them. The court noted that the SEC may suspend any person associated with a broker or dealer who “has willfully aided, [and] abetted” any violation of the securities laws. It described the minimum scienter as “extreme recklessness,” requiring a showing that the actor “should have been alerted by ‘red flags’ signifying obvious problems.” It is not enough that the person “should have known” he was assisting violations.   Full text of the decision TORTS Landlord not liable for tenant’s dog’s bite A landlord was not liable to a third party for injuries caused by a tenant’s dog merely because he purportedly “should have known” that a pit bull terrier had dangerous propensities, the Nebraska Supreme Court ruled on July 30. Plowman v. Pratt, No. S-02-1357. A meter reader was attacked by a tenant’s pit bull terrier when she came onto the property to read a meter, resulting in a hospital stay. Although the tenant did not have the landlord’s written consent to keep the dog (as required under the lease), the landlord admitted that he knew the dog would be living there on a temporary basis. However, the court dismissed the meter reader’s negligence action against the landlord because he had no actual knowledge that the dog was dangerous. It declined to enlarge its precedents to allow for liability based on what a landlord “should have known,” pointing to the fact that such a standard would interfere with the right of tenants to the privacy of their homes.   Full text of the decision Med-mail cap applies to wrongful death cases A state cap on noneconomic damages in medical malpractice cases applies to “loss of society and companionship” damages in a wrongful death case premised on such malpractice, the Michigan Supreme Court ruled on July 26. Jenkins v. Patel, No. 123957. Margaret Jenkins brought a wrongful death action against Dr. Jayesh Patel over the death of Jenkins’ mother. A jury awarded Jenkins $10 million for the loss of society and companionship suffered by Jenkins, her six siblings and seven aunts and uncles. Patel moved to have the award capped under the statute, which limits noneconomic damages to between $280,000 and $500,000. A divided Michigan Supreme Court held that the cap applied, even though, unlike most medical malpractice actions, wrongful death was the subject of a separate statute that specifically makes available damages, including for loss of society, that are usually unavailable in other cases. The state high court’s majority noted that it was commonplace to read the wrongful death statute in the light of other provisions, such as when statutes of limitation are borrowed from other torts to determine if a wrongful death action is timely.   Full text of the decision

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