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ADMINISTRATIVE LAW Required driver’s license suspension constitutional Statutes that require mandatory driver’s license suspension or revocation procedures upon the conviction of certain criminal traffic offenses do not violate due process, the Washington Supreme Court held on Aug. 11. City of Redmond v. Bagby, No. 7329-3. The respondents, convicted of various criminal traffic offenses, had their driver’s licenses revoked for a length of time, with no opportunity for either a presuspension or post-suspension hearing. The city of Redmond charged them with driving with suspended licenses. The cases were consolidated and the respondents moved to dismiss the charges, asserting that the suspensions unconstitutionally denied them the opportunity for a hearing. The trial judge granted the motion, finding that the respondents’ due process rights were violated. An intermediate appellate court affirmed. Reversing, the Washington Supreme Court held that the statutes are constitutional under the U.S. Supreme Court’s 1976 Mathews v. Eldridge due process test. This test addresses the private interest affected by the government action and the risk of erroneous deprivation of that private interest. The court concluded that while a driver’s license is a substantial private interest, in this case there was minimal risk that a criminal defendant would be erroneously deprived of his or her driver’s license, because it is unlikely that a defendant convicted of driving under the influence would have his license incorrectly suspended by the sentencing judge. The likelihood of erroneous deprivation does not exist, since a criminal proceeding provides sufficient due process protections. BANKRUPTCY State criminal restitution orders not dischargeable A restitution order imposed in state criminal court cannot be discharged in a Chapter 13 bankruptcy, the 3d U.S. Circuit Court of Appeals ruled on Aug. 11 in a matter of first impression for all federal circuit courts. In re Thompson, No. 04-3220. Hired to build Robert Hewitt a house in New Jersey, Gerald Thompson diverted more than $20,000 of the money paid for the project. Hewitt filed a criminal complaint against Thompson in state court and the state began prosecution. Thompson then filed for Chapter 7 bankruptcy. Thompson pleaded guilty to issuing bad checks. Though Hewitt was listed as a creditor in Thompson’s bankruptcy proceeding, he didn’t object when Thompson sought to have his debt discharged, which it was. A week later, Thompson filed for Chapter 13 bankruptcy. Two months later, Thompson was sentenced to probation and ordered to pay Hewitt $22,785 in restitution. Thompson asked for an injunction under Bankruptcy Code � 523(a)(7) for relief from paying the restitution order, but the district court denied his request. The 3d Circuit affirmed. Relying on Kelly v. Robinson, 479 U.S. 36 (1986), the circuit court said that bankruptcy courts should defer to the principles of federalism. Even though the restitution payments are directed toward Hewitt, it is still the state that is overseeing the administration of the payment, and deference should be given by bankruptcy courts to state criminal judgments. CIVIL PRACTICE ‘Total activities’ test will reveal firm’s citizenship The “total activities” test to determine a corporation’s principal place of business for diversity jurisdiction applies to a defendant corporation that once operated in the same state as the plaintiff but has since been purchased by, and integrated into, an out-of-state corporation as a holding company, the 11th U.S. Circuit Court of Appeals ruled on Aug. 12 in a matter of first impression. MacGinnitie v. Hobbs Group LLC, No. 04-15675. In 1998, Hobbs Group LLC, an insurance brokerage firm, hired Douglas MacGinnitie as senior vice president and general counsel. MacGinnitie signed an employment agreement that included restrictive covenants. Hobbs is incorporated in the state of Delaware and had its principal place of business in the state of Georgia until 2002. In 2002, Hilb, Rogal & Hobbs Co., incorporated in the commonwealth of Virginia, acquired Hobbs. Shortly afterward, MacGinnitie left to open a new insurance brokerage business. In 2004, MacGinnitie filed an action for declaratory and injunctive relief in Georgia state court alleging that the employment agreement he had signed with Hobbs prevented him from competing with Hilb Rogal. The defendants removed the case to federal court. MacGinnitie filed a motion for remand. A Georgia federal court denied MacGinnitie’s motion, finding that diversity jurisdiction existed, and his motion for a preliminary injunction barring enforcement of the allegedly unenforceable covenants. MacGinnitie appealed, asserting that the Georgia federal court lacked subject- matter jurisdiction due to lack of complete diversity between the parties. The 11th Circuit affirmed in part and reversed in part. For diversity jurisdiction purposes, a corporation is a citizen of both the state where it is incorporated and the state where it has its principal place of business. Under the “total activities,” test, “if a corporation conducts a vast majority of its physical operations in a particular state, that state will contain its principal place of business; however, if a corporation’s physical activities are negligible or are dispersed across several states, the nerve center, or corporate offices, will be the principal place of business.” At the time the lawsuit was filed, Hobbs no longer did business in Georgia but conducted other business activity in Virginia as an active holding company under the direction of Hilb Rogal. Federal diversity existed because Hobbs was a citizen of Virginia and not Georgia when the action was filed. The court affirmed the district court’s denial of the plaintiff’s motion to remand this case to state court. However, it vacated the district court’s denial of the plaintiff’s motion for a preliminary injunction. CONSTITUTIONAL LAW Parade ordinance isn’t crafted narrowly enough Paving the way for an Arab-American group to protest the war in Iraq, the 6th U.S. Circuit Court of Appeals on Aug. 12 struck down as unconstitutional portions of a Michigan city’s parade ordinance. American-Arab Anti-Discrimination Committee v. City of Dearborn, No. 04-1433. Following a protest rally in April 2002, a member of the Arab-American Anti-Discrimination Committee (AAC) was prosecuted for not following the Dearborn, Mich., ordinance on parade permitting. Fearing future prosecutions, the AAC sued Dearborn over the ordinance. The district court rejected all of AAC’s challenges and granted summary judgment to Dearborn. The 6th Circuit reversed, holding that, though the ordinance is not void for vagueness, it unconstitutionally stifled spontaneous speech because there is no exception to the requirement that groups give 30 days’ advance notice of their protests. The ordinance is also overly broad because its application to any “organized group having a common purpose or goal” could include “almost any imaginable procession” on city streets and sidewalks. Also, the ordinance is unconstitutional on its face because it holds march participants strictly liable if a march proceeds without a permit. HEALTH LAW Perinatal rule accords with needs process Regulations requiring that all licensed children’s hospitals operate a regional perinatal center do not conflict with the statutory requirement that a certificate of need be issued, a divided New Jersey Supreme Court ruled on Aug. 11. Saint Peter’s Univ. Hosp. v. Lacy, No. A-74-04. In April 2002, the state commissioner for the Department of Health and Senior Services adopted a rule under the Health Care Facilities Planning Act stating that any licensed children’s hospital had to operate a regional perinatal center (acute care for high-risk mothers and babies) by Oct. 21, 2003. A New Brunswick, N.J., hospital that had been legislatively designated in 1992 as an acute-care children’s hospital for five counties said that the rule would place undue economic pressure on new licensees and undue competitive practices on existing centers. The rule was adopted anyway, and the hospital appealed. An intermediate appellate court didn’t address the hospital’s claims directly, but instead found that the new rule conflicted with a 30-year-old statute requiring all new health-care facilities to get a certificate of need. The New Jersey Supreme Court reversed, adhering to the presumption of validity and reasonableness accorded to administrative regulations. Given that the legislature earlier allowed a hospital to be an acute-care center without getting a certificate of need, it is clear that the current rule and its mandate, too, operates independently of the certificate-of-need process. TORTS Firm owes no legal duty to wife for HIV infection A pharmaceutical company that failed to inform an employee that he may have contracted HIV in the course of his employment owed no legal duty to the employee’s spouse when she contracted HIV after sexual relations with the employee, the Maryland Court of Appeals held on Aug. 11. Doe v. Pharmacia & Upjohn Co. Inc., No. Misc. 13. From 1974 to 1991, “John Doe” was employed by Phamacia at a Maryland viral production facility that produced both HIV-1 and HIV-2 viral agents. Doe had repeated negative test results for HIV-1. Pharmacia had the capacity to test for HIV-2, but such tests were unavailable commercially, and the company didn’t test for it. Although at one point John Doe had a “false positive” test for HIV-1, Pharmacia failed to warn him that such a false positive for HIV-1 could be an indication of an HIV-2 infection. Doe later developed AIDS as a result of his workplace exposure to HIV-2, and his wife, “Jane Doe,” was infected with HIV-2 after having sexual relations with him. Jane Doe sued Pharmacia for negligence in state court. Pharmacia removed the case to federal court, which dismissed it. Doe appealed to the 4th Circuit, and the court certified to the Maryland Court of Appeals the question of whether Pharmacia owed a legal duty to Jane Doe. Maryland’s high court answered in the negative, holding that the relationship between Jane Doe and her husband’s employer was too attenuated to establish a legal duty. The court said, “The alleged failure of Pharmacia to inform Mr. Doe of the possibility that the ‘false positive’ could have indicated that he was infected with HIV-2 may support a finding of negligence against him. It does not support moral blameworthiness or a duty of care to Ms. Doe.” Med-mal action doesn’t need expert affidavit In a medical malpractice action filed under Nevada’s res ipsa loquitur (“the thing speaks for itself”) statute, a medical expert affidavit is not required, the Nevada Supreme Court determined on Aug. 11. Szydel v. Markman, No. 42663. Following a breast lift performed by Dr. Barry Markman on Annette Szydel, a surgical needle was left inside Szydel’s right breast. In her medical malpractice action against Markman, Szydel alleged negligence under the statute, Nev. Rev. Stat. � 41A.100. Section 41A.100 lists certain exceptions to the general rule that expert testimony is required to prove negligence in a medical malpractice suit, including a foreign object being unintentionally left in a patient’s body following surgery. Markman moved to dismiss for failure to comply with Section 41A.071, and the court dismissed without prejudice. The Nevada Supreme Court reversed and remanded. The purpose of the medical expert affidavit requirement is to “lower costs, reduce frivolous lawsuits, and ensure that medical malpractice actions are filed in good faith.” In this case, requiring an affidavit would not further the purpose behind the requirement and would entail unnecessary effort and expense, since a layman’s knowledge is sufficient to determine negligence. WORKERS’ COMPENSATION Drug users hurt on job eligible for compensation A law conditioning workers’ compensation on a worker proving that drugs and alcohol didn’t add to the injury is unconstitutional, an en banc Arizona Supreme Court held on Aug. 10. Grammatico v. Industrial Commission, No. CV-04-0197. The Arizona Constitution mandates that an employee gets workers’ compensation if the necessary risk or danger inherent to the job contributed to the injury. But under Ariz. Rev. Stat. � 23-1021(D) (Supp. 2004), an employee who fails a drug test may not be compensated for work-related injuries unless he can prove that his use of the unlawful substance “was not a contributing cause” of his injury. David Grammatico tested positive for illegal drugs after being injured at work. His employer’s insurer denied him benefits for the injury. After an Industrial Commission hearing, an administrative law judge found his claim noncompensable because he had failed to prove that his use of the substances “was not even a ‘slight contributing cause’ ” of his injuries. An intermediate appellate court reversed, holding that the relevant statutory subsection violates the Arizona Constitution. Similarly, Austin Komalestewa tested positive for alcohol after a work injury for which he sought compensation. His claim was denied. In these consolidated cases, the Arizona Supreme Court affirmed in Grammatico’s case and reversed in Komalestewa’s case. The court held that the statute impermissibly restricts legal causation by requiring the employee to prove that a necessary risk or danger of employment wholly caused the accident, while the Arizona Constitution merely requires that the risk contribute to it.

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