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CIVIL PRACTICE Defendant can’t end class action by plaintiff payoff A class action defendant cannot defeat jurisdiction by “picking off” the lead plaintiff with an offer of maximum individual relief, the 3d U.S. Circuit Court of Appeals ruled on Sept. 29. Weiss v. Regal Collections, No. 03-4033. On behalf of himself and others, Richard Weiss filed a class action against Regal Collections, alleging violations of the Fair Debt Collections Practices Act (FDCPA). He asked for maximum statutory damages and injunctive and declaratory relief. Regal offered Weiss $1,000, plus attorney fees, the maximum relief available to an individual claimant under the FDCPA. Weiss declined the offer and Regal moved to dismiss the case for lack of jurisdiction, arguing that once an offer of maximum relief was declined, Fed. R. Civ. P. 68 deprived the district court of further jurisdiction. The district court agreed. The 3d Circuit reversed and remanded. Confirming that the offer was the maximum allowed under the statute to Weiss individually, the court ruled that it was not the maximum relief available to the putative class. Class actions, under federal rules allow for greater relief. Rule 68 cannot be used to “pick off” the representative plaintiff with an offer of judgment so as to defeat judgment of the whole class action. To rule otherwise would be to defeat the purposes of class actions, which include efficient judicial management of cases, and ignores the FDCPA’s allowance for class actions. Full text of the decision CONSTITUTIONAL LAW Testing noncustodial law officers for drugs is OK Michigan’s program of randomly testing civil service employees for drugs and alcohol does not violate workers’ Fourth Amendment rights, the 6th U.S. Circuit Court of Appeals ruled on Sept. 30. International Union, United Automobile, Aerospace and Agricultural Implement Workers of America v. Winters, No. 03-1574. Michigan’s Civil Service Commission began performing random drug and alcohol tests on probation and parole officers and noncustodial prison employees. The UAW, which represents these employees, challenged the policy, noting that the program applied both to groups that had direct law enforcement powers and those that didn’t. The district court ruled in favor of the state. The 6th Circuit affirmed, holding that the state offered evidence of “special needs” sufficiently vital to overcome the traditional requirements of individualized suspicion. Though there was no evidence of particularized substance abuse among these employees, the potential for substantial harm exists because the employees have either law enforcement duties or direct and unsupervised contact with prisoners that would be jeopardized if their providers were under the influence of drugs or alcohol. Full text of the decision Sealing police records is First Amendment breach A district court did not err in unsealing documents produced by the Virginia Department of State Police (VDSP) relating to a murder investigation because the police had failed to establish a compelling government interest in keeping the records sealed, the 4th U.S. Circuit Court of Appeals ruled on Oct. 1. Virginia Dep’t of State Police v. Washington Post, No. 04-1375. Earl Washington Jr. was convicted of a 1982 rape and murder, and sentenced to death after confessing to the crime. He was later pardoned after DNA tests implicated another suspect. Washington filed a civil rights action challenging his arrest and conviction, and the VDSP produced certain documents regarding its investigation in the case under seal pursuant to a subpoena duces tecum. The Washington Post and various media organizations moved to lift the protective order sealing the documents, and a district court granted the motion. VDSP appealed, arguing that release of the records would hinder its ongoing investigation. Affirming as to the unsealing of most of the documents and remanding as to the remainder, the 4th Circuit held that VDSP failed to establish a compelling government interest in keeping the documents sealed. The court said, “[Not] every release of information contained in an ongoing criminal investigation file will necessarily affect the integrity of the investigation.” Full text of the decision CONTRACTS Noncompete clause for franchisee is enforceable A covenant not to compete in a franchise agreement is enforceable because it is more like a business sale contract than an employment contract, the Massachusetts Supreme Judicial Court held on Oct. 1, in a case of first impression. Boulanger v. Dunkin’ Donuts Inc., No. SJC-09215. After working for Dunkin’ Donut for many years, Craig Boulanger purchased his own Dunkin’ Donuts franchise in 1996. The franchise agreement Boulanger executed with Dunkin’ Donuts Inc. contained a noncompete clause, which provided that if the agreement was terminated, Boulanger could not open a similar business within five miles of a Dunkin’ Donuts shop for a period of five years. Boulanger later purchased two additional franchises, executing similar noncompete agreements. Shortly after selling his three franchises in 2002, Boulanger asked Dunkin’ Donuts to waive the noncompete provisions so he could begin a business relationship with Honey Dew Donuts. Dunkin’ Donuts refused, and Boulanger sought a declaratory judgment invalidating the noncompete clause, arguing that the covenant constituted unfair competition. A trial judge ruled against Boulanger, holding that the covenant did not violate state law. In affirming, the Massachusetts Supreme Judicial Court agreed that the noncompete clause was valid under state law. Using the standard for business sale contracts rather than the more stringent standard for covenants not to compete in employment contracts, the court held the covenant to be valid, and said, “in the circumstances of this case, giving due consideration to the fact that Dunkin’ Donuts was protecting the very franchise system from which the plaintiff himself benefited, the covenants not to compete were reasonable.” Full text of the decision ELECTION LAW No error in refusal to put Nader on Illinois ballot A federal district court did not err in refusing to issue an injunction to force the state of Illinois to put presidential candidate Ralph Nader on the state’s ballot after Nader failed to meet the requirements of Illinois’ election laws, the 7th U.S. Circuit Court of Appeals held on Sept. 29, rejecting Nader’s argument that keeping him off the ballot violated the First and 14th amendments. Nader v. Keith, No. 04-3183. Presidential candidate Ralph Nader submitted 32,437 signatures on a petition to have his name placed on the Illinois ballot. After more than 19,000 of the signatures were challenged, the state struck more than 12,000 of them, making Nader ineligible to appear on the ballot because the Illinois Election Code requires at least 25,000 signatures. Nader sued, challenging the 25,000 provision, as well as provisions such as the requirement that petitions list voters’ address and that petitions be submitted at least 134 days before the election. He argued that the three rules put an unconstitutional burden on third-party and independent candidates. A district court refused to order Illinois to put Nader on the ballot, and Nader appealed. In affirming, the 7th Circuit balanced Nader’s interest in being on the ballot with the state’s interest in a properly run election. Noting Illinois’ history of election fraud and what it called the “fiasco” of the 2000 presidential election, the court held that the three provisions of the Illinois Election Code did not violate the Constitution. Although it acknowledging that some Nader voters might be harmed without an injunction to put him on the ballot, the court observed, “But there are innocents on the other side as well-the people who will be harmed if a last-minute injunction disrupts the Presidential election in Illinois.” Full text of the decision INSURANCE LAW Insurer may not deduct legal fee from policy limit A surplus lines insurer may not deduct from the policy limits legal fees incurred on its own behalf, the Louisiana Supreme Court held on Oct. 1. Edwards v. Daugherty, nos. 03-C-2103, 03-C-2104. A jury found a sheriff at fault in a case stemming from an automobile accident that severely injured a driver. The sheriff was insured by Sphere Drake Insurance under an excess law enforcement liability insurance policy. The policy had a $1 million liability coverage per claim, with the $1 million coverage being an aggregate for each sheriff’s department. The trial court entered judgment against Sphere Drake for $1.76 million, subject to its policy limits. Sphere Drake deposited $334,000 into the court’s registry, claiming that that was the amount left of its policy limit. The plaintiffs obtained a judgment against Sphere Drake for $1 million. On appeal, the Louisiana Supreme Court remanded the case for determination of the amount available based on the policy terms. The trial court found that the reduction from the policy limits for attorney fees for defending both Sphere Drake and the sheriff was contracted for by the parties. The court of appeal affirmed that finding. The Louisiana Supreme Court reversed. The policy authorizes defense costs, which are defined as “payments allocated to a specific claim for its investigation, settlement, or defense, including: attorney fees and all other litigation expenses.” A claim is defined as “a written demand . . . received by an Insured for money damages.” Given that there is no clear language in the policy authorizing a deduction for defense costs incurred by the insurer, there was no basis for the lower court’s finding. Full text of the decision EVIDENCE Personal notes are not subject to disclosure Personal notes are not public records subject to disclosure, the Ohio Supreme Court ruled on Sept. 29. State ex rel. Cranford v. Cleveland, No. 2004-0490. Following his termination by the Cleveland City Planning Commission director for offensive conduct toward women, the secretary of the Board of Zoning Appeals and the Board of Building Standards and Appeals appealed the decision to the Cleveland Civil Service Commission. He requested certain public documents, including all documents related to his investigation and his personnel files, and the city complied with his request. At the hearing before the commission, the director read from his personal notes taken the day of the predisciplinary conference, which had not been included as part of the records provided. The court of appeals granted the city’s motion for summary judgment. The state Supreme Court affirmed, holding that Ohio Rev. Code 149.43(A)(1) defines “public record” as a “record that is kept by any public office.” The court stated that the notes were kept for the director’s own convenience and were not part of the city’s official records, nor did city officials have access to them. Furthermore, the secretary and his attorney could have taken their own notes. Full text of the decision INTELLECTUAL PROPERTY Fed. Cir. applies to issues unrelated to patent law In patent case appeals, Federal Circuit case law applies even to procedural rules not specific to patent law when those issues require national uniformity, the U.S. Court of Appeals for the Federal Circuit ruled on Sept. 30. Laboratory Corp. of Am. Holdings v. Chiron, No. 03-1572. Chiron filed a patent infringement suit against LabCorp in a California district court. Unknown to Chiron, the same day LabCorp filed a declaratory judgment action in a Delaware district court over the same patents. The Delaware court granted LabCorp’s motion to enjoin the California action and denied Chiron’s cross-motion to dismiss, stay or transfer the Delaware action. Chiron argued that Federal Circuit case law should apply, according to which the Delaware court’s ruling was immediately appealable. LabCorp argued for application of 3d Circuit case law, since that’s where Delaware sits, according to which the Delaware court’s ruling to enjoin the California action was interlocutory, reviewable only by a petition for writ of mandamus. The Federal Circuit affirmed, applying its own case law, not the 3d Circuit’s. While the Federal Circuit applies the procedural law of the regional circuits in matters not unique to patent law, regional circuit practice need not control when the question is important to national uniformity in patent practice. As to the case’s merits, the court found no abuse of discretion in the Delaware court’s ruling. Full text of the decision LEGAL PROFESSION Class action legal fees excessive in simple case A trial court erred in awarding $3.6 million in attorney fees to a law firm in a class action settlement over the city of Miami’s parking surcharges, because the case was neither complex nor uncertain, Florida’s 3d District Court of Appeal held on Sept. 29. Homer & Bonner P.A. v. Miami-Dade County, No. 3D04-1752. A class action against the city of Miami challenged the surcharges at city parking facilities. After the surcharges were declared unconstitutional, the parties settled with the city and, as part of the settlement, a trial court awarded $3.6 million in attorney fees, based on a calculation of hourly rates between $400 and $450 an hour and a 3.8% multiplier. Various parties appealed various aspects of the settlement. Reversing, Florida’s intermediate 3d District Court of Appeal held that the fee was excessive because the matter was neither complex nor uncertain. Reducing the attorney fees to $952,389, the court said, “Once the statute was declared unconstitutional, the attorneys simply had to negotiate the best deal.” Full text of the decision

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