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CIVIL PRACTICE ‘Market timer’ is unable to challenge SEC rules A “market timer” lacks standing to challenge Securities and Exchange Commission (SEC) rules, as it can establish neither an injury-in-fact nor the causation and redressability elements of standing, the 7th U.S. Circuit Court of Appeals held on Sept. 7. DH2 Inc. v. U.S. Securities and Exchange Commission, No. 04-2242. DH2 Inc. is a “market timer,” i.e., a firm that takes advantage of short-term price/value discrepancies that occur when the current value of a fund’s portfolio securities has changed and that change is not yet reflected in the fund’s share price. Investigations by New York Attorney General Eliot Spitzer into abuses in the mutual fund industry prompted the SEC to issue certain rules releases that changed the interpretation of rules on how mutual funds calculate their daily prices. DH2 challenged statements in the releases that require mutual fund companies to estimate the current “fair value” of a security when the market price at which that security closed has become unreliable. DH2 challenged some releases in an Illinois federal court, which transferred the case to the 7th Circuit, where it was consolidated with a second petition challenging another release. The circuit court treated them as petitions for review of orders of the SEC. The 7th Circuit dismissed the petitions, holding that DH2 lacks standing to challenge the SEC’s releases as it cannot establish an injury-in-fact, nor the causation and redressability elements of standing. DH2 is neither an investment company nor an investment advisor, and is therefore not subject to the requirements of the SEC’s compliance or disclosure rule or any of the terms of the accompanying rules releases. Full text of the decision Distribution of assets to victims of Nazism upheld A district court’s plan for distributing funds from a settlement for Swiss banks to “Jews, homosexuals, Jehovah’s Witnesses, the disabled and Romani” targeted by Nazi Germany, was upheld by the 2d U.S. Circuit Court of Appeals in three separate opinions issued on Sept. 9. In re Holocaust Victim Assets Litigation, Nos. 04-1898, -2466 and -2511. In a Holocaust victims’ class action against several Swiss banks and financial institutions, one of the five certified classes consisted of survivors and heirs whose assets were looted by the Nazis and laundered through Swiss banks. The settlement initially approved by the district court required 90% of $100 million to go to needy Jewish survivors, while the remaining 10% would go to other Nazi targets and their heirs. The court then approved a further distribution of 75% of the $90 million to go to survivors in the former Soviet Union, and 4% to survivors living the United States. More money was added to the total assets for distribution, but the distribution shares remained the same. The U.S. recipients said that they should receive a bigger percentage. The Pink Triangle Coalition opposed the distribution, saying that because homosexual survivors were hard to identify, their share should go to scholarly, educational and outreach efforts related to Nazi treatment of homosexuals. The district court rejected both claims, as well as claims from a group that wanted money to go to trusts to provide grants to disability-oriented, nonprofit nongovernmental organizations. An attorney whose work resulted in some of the additional funds being added to the $100 million was denied attorney fees. The 2d Circuit affirmed the district court in all respects, praising that court for its thoughtful analysis and research. The court further noted that the work the attorney did was merely tangential to the overall litigation, then expressed dismay that the settlement, which was sought to prevent groups from “squabbling” over assets, has not achieved the “desired harmony.” CIVIL RIGHTS OK to fire clerk for affair with co-worker’s spouse A county court system did not improperly fire a former court clerk for her adulterous relationship with a local attorney who was still married to another court clerk, the 6th U.S. Circuit Court of Appeals ruled on Sept. 9. Beecham v. Henderson County, Tenn., No. 04-5845. Attorney Steve Milam proposed marriage to a deputy circuit court clerk, June Beecham, in October 2002. At the time, Milam was still married to, but separated from, a clerk at the local chancery court. The two courts were housed on the same floor in the same business. After consulting with the county attorney, the clerk of the circuit court fired Beecham, saying her relationship with Milam was causing tension in the courthouse in general and the circuit court in particular. Beecham sued the county for retaliatory discharge under 42 U.S.C. 1983, saying the county violated her First Amendment rights of intimate association. The U.S. district court granted the county’s summary judgment motion, in which the county argued Beecham was not entitled to First Amendment protection because her relationship with Milam was adulterous. The 6th Circuit affirmed. Though agreeing that there was no specific evidence to support a finding that Beecham’s relationship with Milam was adulterous, the court nonetheless found that the county was entitled to fire Beecham over a sexless romantic relationship with Milam essentially as an anti-nepotism policy, even though no such official policy existed. Section 1983 not usable against Pa. foster parents An 18-year-old woman cannot sue her former foster parents for a civil rights violation from injuries she suffered as a 2-year-old in their care, the 3d U.S. Circuit Court of Appeals ruled on Sept. 9. Leshko v. Servis, No. 04-2610. As a baby, Karen Leshko pulled a pot of scalding-hot water onto herself while her foster mother, Judy Servis, was out of the room. Leshko suffered severe burns across her torso and legs, yet Servis did not get treatment for the girl for more than 12 hours. As an 18-year-old, Leshko sued the Dauphin County, Pa., social services department, as well as Servis, for civil rights violations under 42 U.S.C. 1983. A Pennsylvania federal district court dismissed the cases against both parties. Leshko appealed only the dismissal of the case against Servis. The 3d Circuit affirmed, holding that Servis-and all foster parents under the Pennsylvania foster-care system-cannot be considered state actors for purposes of Section 1983. While Pennsylvania has recently begun to administer part of the foster-care system, traditionally the hands-on care of children in the foster system has never been an exclusively governmental function. DAMAGES Alternatives halt ‘Bivens’ prison-operator lawsuit Alternative remedies preclude Bivens suits against privately operated prisons, the 10th U.S. Circuit Court of Appeals held on Sept. 7. Peoples v. CCA Detention Centers, No. 04-3071. Cornelius Peoples filed claims for damages pursuant to Bivens v. Six Unknown Fed. Narcotics Agents, 403 U.S. 388 (1971), alleging that his constitutional rights were violated while he was in pretrial detention at a privately run prison. A Kansas federal court dismissed his complaints. His appeal was limited to claims against individuals employed by the private prison-operating company, but not the company itself. The 10th Circuit panel affirmed with one partial dissent. The court noted that Bivens allows suits against federal officials in their official capacities for damages for Fourth Amendment violations, even in the absence of an express statutory cause of action analogous to 42 U.S.C. 1983. According to Correctional Services Corp. v. Malesko, 534 U.S. 61, there is no private right of action for damages against private entities that engage in alleged constitutional deprivations. Here, the 10th Circuit held, there is no implied private right of action for damages under Bivens because alternative state or federal causes of action for damages are available to the plaintiff. EMPLOYMENT Firing based on mistaken conclusion is not racism A race discrimination claim must fail because the discharge did not occur in circumstances that gave rise to an inference of unlawful discrimination where there was evidence that an employee may have made bomb threats, the 8th U.S. Circuit Court of Appeals held on Sept. 7. Johnson v. AT&T Corp., No. 04-2305. Michael Johnson, a 40-year-old African-American, was an account representative for the National Telemarketing Agency (NTA), a division of AT&T Corp. In July 2001, the Consumer Sales and Service Center of NTA in Lee’s Summit, Mo., received a number of bomb- threat calls. There were also 911 calls saying that a bomb had been planted at the Lee’s Summit facility. The company receptionist who received the call believed that the caller was an African- American male between the ages of 30 and 40. The 911 dispatcher who answered the call also believed that the caller was an African-American male between 30 and 40. No bombs were ever found. When tapes of the 911 calls were provided to AT&T and played at a staff meeting, nine of Johnson’s co-workers identified the voice as being his. Despite Johnson’s repeated denials of involvement in the bomb threats, he was terminated based on the identifications. Police subsequently traced the cellphone numbers used to make the 911 calls, and neither was connected to Johnson. Johnson sued AT&T for race discrimination. A Missouri federal court granted AT&T’s motion for summary judgment. The 8th Circuit affirmed, finding that that there was sufficient evidence to show that AT&T honestly believed Johnson was involved in the bomb threats and fired him based on that belief. Even if AT&T was mistaken in its belief that Johnson made the threats, such a mistake does not automatically show that the decision was instead motivated by unlawful discrimination. ENVIRONMENTAL LAW Mont. fish kill needs no Clean Water Act permit Pesticides placed in a Montana river to reduce a fish population were not “chemical wastes,” and thus, not a “pollutant” requiring a permit for discharge under the federal Clean Water Act, the 9th U.S. Circuit Court of Appeals held on Sept. 8 in a case of first impression. Fairhurst v. Hagener, No. 04-35366. The Montana Department of Fish, Wildlife and Parks initiated a 10-year program known as the Cherry Creek Native Fish Introduction Project, a program attempting to reintroduce a threatened fish species, the westslope cutthroat trout. As part of the program, the department introduced a pesticide, antimycin, into the waters of Montana’s Cherry Creek in an attempt to kill other non-native species of trout, which threatened the westslope cutthroat. William Fairhurst sued Jeff Hagener, the director of the department, arguing that, under the federal Clean Water Act, 33 U.S.C. 1251 et seq., Hagener was required to obtain a National Pollutant Discharge Elimination System (“NPDES”) permit before dispersing pesticides into U.S. waters. A federal district court granted summary judgment to Hagener. Affirming and noting that the department had followed Environmental Protection Agency and Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) requirements, the 9th Circuit held that no violation had taken place. The court said, “[W]e conclude that pesticides that are applied to water for a beneficial purpose and in compliance with FIFRA, and that produce no residue or unintended effects, are not ‘chemical wastes,’ and thus are not ‘pollutants’ regulated by the CWA. Because intentionally applied and properly performing pesticides are not ‘pollutants,’ a potential discharger is not required to secure a NPDES permit for such pesticides before discharge.” EVIDENCE Police use of surveillance tape didn’t breach law Police use of a convenience store surveillance tape in the investigation of the robbery and murder of the store’s clerk violated neither the Massachusetts wiretap statute nor federal law under 18 U.S.C. 2510, the Massachusetts Supreme Judicial Court held on Sept. 7. Commonwealth v. Rivera, No. SJC-08717. Individuals wearing masks modeled after those in the film Scream allegedly robbed a convenience store in Lowell, Mass., and one of the alleged robbers shot the store’s clerk, wounding him fatally. Police obtained a tape from the store’s surveillance camera, which contained audio and video recordings of the incident. Using the tape, police questioned Vincent Rivera, who admitted committing the crime. After he was convicted of first-degree murder, Rivera moved for a new trial and then appealed, arguing that the store’s owner violated the Massachusetts wiretap statute, Mass. Gen. Laws ch. 272, � 99, and the federal wiretap statute, 18 U.S.C. 2510, by making a secret interception of an oral communication. Affirming in part, the Massachusetts Supreme Judicial Court held that police use of the tape violated neither Massachusetts nor federal law. The court held that there was no violation of the commonwealth statute because the police had no role in the making of the tape. It held there was no violation of the federal statute because Rivera had no expectation of privacy when he made the statement. Regarding the Massachusetts statute, the court said, “Absent an explicit statement from the Legislature to the contrary, we will not read the ‘use’ provisions of the wiretap statute as forcing police and prosecutors to avert their eyes from information procured by private individuals, without any encouragement from the State.” IMMIGRATION LAW Genital-mutilating tribe’s females may get asylum Being a female member of a tribe may be membership in a “social group,” such that persecution on that basis may create asylum eligibility, the 10th Circuit U.S. Court of Appeals held on Sept. 8. Niang v. Gonzales, No. 04-9547. Awa Niang faced removal from the United States because she had overstayed her visa, among other things. She sought asylum and restriction on removal, claiming that she suffered past persecution, involving female genital mutilation, in her country of Senegal. She sought relief under the United Nations Convention Against Torture, claiming a likelihood of torture if she went back. An immigration judge found no evidence of past persecution, disbelieving her on how the female genital mutilation occurred. The Board of Immigration Appeals (BIA) affirmed. The 10th Circuit affirmed on the issue of denial under the torture convention, but reversed on the denial of asylum and restriction on removal issues, due to the BIA’s and the immigration judge’s failure to address Niang’s claim that her family forcibly performed the mutilation on her because she was a female member of the Tukulor Fulani tribe, and had to adhere to the tribe’s strict gender roles. After she fled to the United States and married a man other than her tribe-arranged Sengalese match, a friend told Niang her family planned to kill her if she returned. The circuit court said that Niang may be entitled to relief if females in Niang’s tribe constitute a “social group” within the meaning of the Immigration and Nationality Act, and that genital mutilation had been forced on her because she is a member of that group. LEGAL PROFESSION Disbarment merited for suspension rules breach Disbarment was the appropriate sanction for an attorney who, suspended for making false accusations in pleadings about child molestation, practiced law during her suspension, the Florida Supreme Court held on Sept. 8. Florida Bar v. Forrester, nos. SC01-1819; SC02-1752. In court pleadings, Geneva Forrester, an attorney licensed in Florida, accused a person of being a child molester. The Florida Supreme Court suspended Forrester after accepting a referee’s report finding that Forrester knowingly misrepresented facts in making the allegations. During the term of her suspension, Forrester hired an attorney who was an inexperienced recent law school graduate to handle cases that she had not referred to other attorneys, but she remained involved in matters. Finding that Forrester was not being supervised as a nonlawyer, but rather, was supervising the associate and practicing law, a bar referee found that Forrester violated the suspension order willfully, and recommended that she be suspended for an additional year. The Florida Supreme Court, while accepting the referee’s recommendation on Forrester’s culpability, held that disbarment was the appropriate sanction, given Forrester’s conduct. The court said, “Upon review, we find that the recommendation of a one-year suspension lacks a reasonable basis in case law or the standards and conclude that Forrester should be disbarred. A survey of cases where an attorney has been held in contempt for practicing law while either suspended, disbarred, or permitted to resign reveals that disbarment is most often the chosen sanction.”

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