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BANKRUPTCY Fee request by special counsel must cite � 328 A special counsel’s request for compensation under � 328 of the Bankruptcy Code must specifically invoke that section, and the reasonableness of the fee must be evaluated, the 6th U.S. Circuit Court of Appeals ruled on Oct. 4. Nischwitz v. Miskovic, nos. 03-3303 and 03-3484. Airspect Air filed a breach-of-contract suit against the city of Akron, Ohio, and then subsequently filed for Chapter 11 bankruptcy. The contract suit was transferred to the bankruptcy court as an adversary proceeding, and Airspect applied for authorization under � 328 to keep its attorney, Jeffrey Nischwitz, as special counsel to litigate the suit on a contingency fee basis. The parties eventually settled the suit. Nischwitz then asked for $189,750 in attorney fees, in accordance with the contingency fee agreement. The bankruptcy court awarded some attorney fees, but not under the contingency fee agreement. An Ohio bankruptcy appellate panel reversed, finding that the lower court had “pre-approved” payment per the agreement, and should have awarded the fees accordingly. The 6th Circuit reversed and remanded, holding that it is the totality of the circumstances that matter when seeking preapproval of compensation under Sec. 328. Factors to consider include whether the debtor’s motion for appointment specifically requested fee preapproval, whether the court’s order assessed the reasonableness of the fee and whether either the order or the motion expressly invoked � 328. The motion did not refer to � 328, so the proposed compensation was never properly evaluated. Full text of the decision CIVIL PRACTICE New trial doesn’t depend on verdict form request Insufficient evidence on one of a case’s multiple theories necessitates a new trial, since the verdict form did not specify which theory succeeded and the appellant had not waived a claim of error by failing to demand a special verdict form, the 1st U.S. Circuit Court of Appeals ruled on Oct. 6. Gillespie v. Sears, Roebuck and Co., No. 03-2087. Frank Gillespie was injured when his hand touched the spinning blade of a table saw that he had shut off six seconds earlier. He and his wife sued Emerson Electric Co., the saw designer and maker, in Massachusetts state court. The Gillespies alleged negligence and breach of implied warranty of merchantability. Their theories of defect concerned the design of the blade guard, the lack of a brake for the wheel and inadequate labeling. The defendants removed the case to a Massachusetts federal court. The jury found that Emerson had breached its warranty of merchantability and that it was negligent, but that Gillespie was 49% contributorily negligent and that damages totaled $850,000, for which judgment was entered. Emerson appealed. The 1st Circuit reversed, holding that the evidence on the blade-guard theory was inadequate on causation grounds. Since the jury’s verdict was not broken down by theory, it may have rested solely on the flawed theory. Thus, a new trial was required. The circuit court cited its practice of requiring remand in civil cases if one of several theories encompassed in a general verdict was flawed. A few circuits have held that an appellant who did not request a special verdict form had waived a claim of error that such a verdict form could have isolated. But the 1st Circuit declined to adopt that rule, noting that division by causes of action alone may not solve the problem, without a further division by theories of defect. Full text of the decision Bank isn’t citizen of each state where it has branch A national bank isn’t a citizen of every state in which it has a branch, the 5th U.S. Circuit Court of Appeals ruled on Oct. 5. Horton v. Bank One N.A., No. 03-50865. During the course of a lawsuit against Bank One in Texas state court for violation of certain consumer protection-type statutes, the plaintiff sent a settlement offer. As a result, Bank One realized for the first time that the amount in controversy exceeded $75,000, and it removed the case to federal district court. The plaintiff moved to remand due to lack of diversity of citizenship, arguing that Bank One was a citizen of Texas because it was located in that state. A Texas federal court denied the plaintiff’s motion to remand but granted her motion to certify the order for interlocutory appeal. The 5th Circuit affirmed, holding that, while 28 U.S.C. 1348 states that for purposes of diversity jurisdiction, “[a]ll national banking associations shall . . . be deemed citizens of the States in which they are respectively located,” in order to maintain jurisdictional parity between national banks and state banks, the term “located” means the national bank’s principal place of business and the state listed in its organization certificate and its articles of association. Full text of the decision Inadmissible evidence no basis to reduce verdict A trial court erred in reducing a jury’s $1.35 million verdict to $1 in a case where the trial court based its remittitur decision on what it considered to be its own evidentiary error, the Connecticut Appellate Court held on Oct. 5, in an apparent case of first impression. Message Ctr. Management Inc. v. Shell Oil Prods. Inc., No. AC 22987. Message Center Management Inc., a manager of sites for telecommunications towers and antennae, executed a contract with Shell Oil Products Co. to market Shell’s various properties as sites for mobile telecommunications antennae. After Message Center failed to obtain any leases, Shell said that it was terminating the agreement. Message Center sued Shell for breach of contract, alleging that Shell had interfered with its ability to perform under the contract. Although it limited the scope of her testimony, the trial court-over Shell’s objection-admitted the expert testimony of Message Center’s office manager on the issue of lost profits. A jury found for Message Center and awarded $1.35 million in damages. However, the trial court granted Shell’s motion to set aside the verdict and for remittitur, and reduced the award to $1, holding that it had erred in admitting the office manager’s testimony. Message Center appealed. The Connecticut Appellate Court reversed, holding that the remedy for the erroneous admission of causation evidence was the setting aside of the verdict and a new trial, not remittitur to nominal damages. In addition, while the trial court erred in setting aside the verdict, its original decision to admit the office manager as an expert was correct. Full text of the decision CIVIL RIGHTS Inability to remove body waste is ADA disability The inability to eliminate body waste impairs a major life activity, and is thus a disability covered by the Americans With Disabilities Act (ADA), the 3d U.S. Circuit Court of Appeals ruled on Oct. 5. Fiscus v. Wal-Mart Stores Inc., No. 03-2513. After nine years as a Sam’s Club employee, Cathy Fiscus was diagnosed with kidney failure. She had to undergo dialysis and sought an accommodation under the ADA because she could not perform all of her job functions. Fiscus was advised to take disability leave. She did so, and received a kidney transplant. Since she had not fully recuperated during her leave period she didn’t return to work, and was fired. Fiscus sued Wal-Mart under the ADA, arguing that she was substantially limited in the major life activity of “processing body waste and cleaning her blood.” Wal-Mart asserted that her kidney failure was not a covered disability, because the inability to cleanse one’s own blood and eliminate body waste does not amount to the limitation of a major life activity under the statute. A Pennsylvania district court agreed with Wal-Mart. The 3d Circuit reversed, holding that a physical impairment that limits a person’s ability to cleanse and eliminate body waste does impair a major life activity. A major life activity is not limited to volitional behavior. Breathing, for example, is largely involuntary, but courts have held it to be a major life activity. Furthermore, a major life activity doesn’t need to be performed regularly or frequently, though it has to have importance to human life comparable to that of activities listed in the ADA regulations. Full text of the decision CRIMINAL PRACTICE Forger who uses real bills deserves lesser sanction A counterfeiter who printed his fakes on chemically erased genuine bills is entitled to a sentence 16 months shorter than one who prints fakes on other paper, the 7th U.S. Circuit Court of Appeals held on Oct. 8. USA v. Schreckengost, No. 04-1921. James Schreckengost removed the ink from $5 bills with a chemical solution and used an inkjet printer to produce facsimiles of $100 bills on the blank sheets. He was arrested after cashiers noticed that the bills’ watermark depicted Lincoln rather than Franklin, and that the security strip said $5 rather than $100. An Illinois federal court sentenced him to eight months’ imprisonment, pursuant to U.S.S.G. 2B1.1, the generic provision for frauds. The Department of Justice appealed the sentence, arguing that � 2B5.1, the provision for counterfeiting, applies, which would increase his sentence to 24 to 30 months. Application Note 3 to � 2B5.1 restricts the definition of “counterfeit” to an instrument that has been “falsely made or manufactured in its entirety,” and expressly excludes from that section “genuine instruments that have been altered.” The 7th Circuit affirmed, concluding that the federal government’s willingness in its damaged-currency exchange process to treat even an erased bill as a legal obligation of the Treasury shows that the paper remains an “instrument.” The sentencing guidelines for counterfeiting therefore do not apply. Full text of the decision GOVERNMENT Agency immune on lead paint if it failed to insure A Housing Authority providing low- and moderate-income housing has governmental immunity from lead poisoning claims, but only if it has not waived immunity by purchasing liability insurance that covers lead paint claims, the North Carolina Supreme Court held on Oct. 7. Evans v. Housing Authority of the City of Raleigh, N.C., No. 216PA03. Tyrone Horton lived as a child in housing owned and operated by the city of Raleigh, N.C., which allegedly had an excessive lead hazard. Horton suffered lead poisoning and was injured. He sued in a North Carolina court, which denied the housing authority’s motion to dismiss on sovereign and/or governmental immunity grounds. The North Carolina Supreme Court granted discretionary review. The court said that although the Housing Authorities Law does not specifically provide for immunity, the authority is a municipal corporation and, as such, is immune for acts committed in its governmental capacity, but not for any proprietary functions it may undertake, and not to the extent it has waived immunity. The housing authority’s provision of housing to low- and moderate-income tenants does not constitute a proprietary function, said the court. But a housing authority can waive its tort immunity by the purchase of liability insurance, to the extent of the insurance obtained. The authority argued that its liability insurance excluded coverage for lead paint liability, thus precluding waiver of immunity from lead paint claims. The court remanded the matter for a determination of the extent of the housing authority’s insurance coverage for lead paint claims. Full text of the decision No immunity for officers’ nondiscretionary acts A district court erred in holding that two parole officers, one of whom was accused of deliberately withholding exculpatory evidence in a parole revocation proceeding, were entitled to absolute immunity because their alleged conduct was distinct from the discretionary act to grant, deny or revoke parole, the 9th U.S. Circuit Court of Appeals held on Oct. 5. Swift v. Christian, No. 02-57136. After serving time in a California prison for check forgery, Michael Swift was paroled and placed under supervision in Iowa under the Interstate Parole Compact. During his probation, Swift was arrested for domestic violence, causing his parole to be suspended. However, he was later acquitted, and he completed his probation. Iowa informed California’s interstate parole supervision unit, but failed to notify California’s Board of Prison Terms (BPT), and a warrant for Swift’s arrest remained active. Upon learning of the warrant, Swift asked for its recall. Swift alleged that, one week later, two parole officers, Steve Christian and Maritza Rodriguez, arrested him, resulting in his incarceration for more than a month. Swift filed a federal civil rights action, alleging that the parole officers had violated his Fourth Amendment rights and that Christian had deliberately withheld exculpatory evidence. The officers countered that they were entitled to absolute immunity because their actions were associated with a parole revocation. A district court agreed and dismissed the action. Swift appealed. In reversing and remanding, the 9th Circuit agreed that parole officers had absolute immunity for actions such as parole revocations that were the functional equivalent of judicial actions. However, the allegations against the parole officers were distinct from the decision to grant, deny or revoke parole. The court said, “Christian and Rodriguez’s actions requesting that the BPT initiate revocation proceedings, were more akin to a police officer seeking an arrest warrant, than to a prosecutor exercising quasi-judicial discretion to initiate criminal proceedings. Thus, Christian and Rodriguez are not entitled to absolute immunity for recommending that the BPT initiate revocation proceedings.” Full text of the decision TORTS No class certification in DaimlerChrysler action A trial court was correct to deny class certification in a case alleging faulty seat-belt buckles in vehicles manufactured by DaimlerChrysler and its predecessor because, inter alia, the seat-belt buckle in question operated differently in different DaimlerChrysler vehicles, the California 1st District Court of Appeal held on Oct. 8. Quacchia v. DaimlerChrysler Corp., No. A102544. Alleging that the “Gen-III” seat-belt buckle was defective, Eileen Quacchia, the owner of a Dodge Caravan minivan, sought class certification for herself and all Californians who, at the time, owned or leased DaimlerChrysler vehicles from model years 1993 to 2002 containing the Gen-III buckle. Quacchia excluded only those who had purchased used vehicles, those who had sustained injuries due to the buckle and those who had already filed separate actions. A trial court denied class certification, holding that questions of fact common to the class were not substantially similar, and that they would not predominate over the questions affecting the individual members, a requirement for class certification under California law. Quacchia appealed. California’s 1st District Court of Appeal affirmed the refusal to certify the class and denied rehearing on the matter, holding that, because Quacchia’s proposed class included owners of 17 different makes of DaimlerChrysler vehicles and because the Gen-III buckle operated differently in different vehicles, Quacchia had not met the burden of showing that common questions would predominate over questions affecting the individual class members. Full text of the decision

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