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CIVIL PRACTICE Dismissal of suit, but not sanctions is final decision An order compelling arbitration but retaining jurisdiction over a motion for sanctions is a final decision, the 11th U.S. Circuit Court of Appeals ruled on Sept. 21 in an issue of first impression. Jackson v. Cintas Corp., No. 04-15679. On being hired as a sales representative at Cintas Corp., Krista Jackson signed an employment agreement that contained an arbitration clause. When her employment ended in February 2003, Jackson sued her employer for discrimination. Cintas moved to dismiss under the arbitration provision of the employment agreement. Jackson argued that the agreement was unconscionable. Cintas filed a motion for sanctions under Fed. R. Civ. P. 11. A Georgia federal court compelled arbitration and dismissed the complaint, retaining jurisdiction over the motion for sanctions. The 11th Circuit affirmed. Under the Federal Arbitration Act, a “final decision with respect to arbitration” may be appealed. A final decision is one where the court “dispose[s] of the entire case on the merits and [leaves] no part of it pending before the court.” Although the Georgia federal court retained jurisdiction to decide a motion for sanctions, the court determined that the lower court’s judgment resolved “the entire case on the merits.” The motion for sanctions raised a collateral issue and did not “alter the order.” Full text of the decision Jury must decide issue of respondeat superior A jury can decide if respondeat superior applies to an injury incurred by an employee’s family member who used a facility when it wasn’t open for business, the Alaska Supreme Court held on Sept. 23. Ondrusek v. Murphy, No. S-11196. Travis Locke, an employee of Chilkoot Horseback Adventures, took his mother and stepfather for a horseback ride on a day when it was closed for business. Locke’s mother, Mary Anne Ondrusek, fell while dismounting, and was injured. The Ondruseks sued Chilkoot for negligence under a theory of respondeat superior, whereby an employer may be liable for the acts of its employees that occur within the scope of employment. An intermediate appellate court denied the Ondruseks’ motion for summary judgment, and a jury returned a verdict in favor of Chilkoot. The Alaska Supreme Court affirmed, holding that denial of summary judgment was proper, because genuine issues of material fact existed as to whether Locke acted within the scope of his employment. On days that Chilkoot was closed for business, it sometimes permitted trail guides to ride Chilkoot horses and to take friends and family riding. There was a dispute as to whether Chilkoot authorized Ondrusek’s ride that day. But Chilkoot expected its guides to follow safety procedures at all times, including directions on proper dismounting and a ban on dismounting without assistance from a guide. CONSTITUTIONAL LAW FAA airspace regulation isn’t a regulatory taking FAA restrictions on navigable airspace near the U.S. Capitol after the terrorist attacks of Sept. 11, 2001, were not a “taking” from a nearby heliport operator, a divided U.S. Court of Appeals for the Federal Circuit ruled on Sept. 21. Air Pegasus of D.C. Inc. v. U.S., No. 04-5108. Air Pegasus held a lease on property on South Capitol Street in Washington to operate a heliport. Following the Sept. 11 attacks, the Federal Aviation Administration (FAA) shut down much of the airspace around the capitol to commercial aircraft. As helicopters could no longer use the Air Pegasus heliport, it abandoned its lease and stopped operating at that location. Air Pegasus sued the United States, asserting that the restriction resulted in a regulatory taking of its heliport business. The Court of Federal Claims ruled against Air Pegasus, saying that it had voluntarily chosen to operate in a highly regulated industry, and that the FAA had previously exercised control over the navigable airspace there. The Federal Circuit affirmed. Air Pegasus did not assert a cognizable property interest under the Fifth Amendment, as its interest was in its leasehold, and the FAA’s restrictions did not regulate that interest; it regulated only the operations of helicopters owned and operated by third parties. EMPLOYMENT Even if firing was proper, � 1983 liability is possible An unconstitutional retaliatory motive for a firing yields � 1983 liability even if executed by an intervening actor with untainted motives, the 1st U.S. Circuit Court of Appeals held on Sept. 20. Tejada-Batista v. Morales, No. 03-1841. Bernabe Tejada-Batista, a law enforcement agent in the Puerto Rico Justice Department, told his division head, Domingo Alvarez, and bureau director, Lydia Morales, as well as a local newspaper, that he had observed irregularities in his bureau. Alvarez recommended in a memo that Tejada be discharged for his alleged leaks. The next day, Alvarez wrote another memo urging dismissal, referring to Tejada’s conviction for domestic abuse a few years earlier. Morales gave Alvarez’s memoranda to the incoming acting director, who suggested to the new secretary of justice, Jos� Fuentes Agostini, that he discharge Tejada because of his criminal record. Fuentes fired Tejada, who sued his supervisors under 42 U.S.C. 1983. A Puerto Rico federal jury awarded $125,000 against Morales and Alvares. The 1st Circuit affirmed, rejecting the claim that there was no � 1983 liability because Fuentes had fired Tejada for a proper reason, unconnected with the allegedly protected speech. The 1st Circuit noted that the first actor here was a “but-for” cause of the firing and had an unlawful motive. The court said it was unlikely, absent the appellants’ prompting, that Tejada would have been fired. INSURANCE LAW Auto exclusion in general policy covers all insureds The term “any insured” in an auto exclusion clause of a commercial general liability policy excludes from coverage all automobile occurrences attributable to any of the insureds, the Oklahoma Supreme Court determined on Sept. 20, answering a certified question of first impression. BP America Inc. v. State Auto Property & Casualty Ins. Co., No. 102,299. Under a construction contract with Doyal W. Rowland Construction Inc., BP America Inc. was required to obtain $1 million general liability coverage and automobile liability insurance. State Auto Property and Casualty Insurance Co. issued the two polices, naming Rowland and BP as the insured. On July 23, 2002, three people were killed and a fourth seriously injured as a result of a multiple car accident involving a dump truck driven by a Rowland employee. Multiple lawsuits were filed, naming the dump truck driver, Rowland, BP and the insurer as defendants. The insurer contributed $1,000,000 to settle the suits in accordance with the automobile liability policy. BP then sued the insurer in Oklahoma federal court seeking recovery under the general liability policy. The Oklahoma federal court certified questions of law to the Oklahoma Supreme Court. The Oklahoma high court said that the clear and unambiguous language of the policy indicates that coverage will be denied for all insureds, including innocent parties. The commercial general liability policy states that “[t]his insurance does not apply to ‘bodily injury’ or ‘property damage’ arising out of the ownership, maintenance, use or entrustment to others of any . . . ‘auto’ . . . owned or operated by or rented or loaned to any insured.” Blood insurance doesn’t cover transfusion costs An insurance policy covering blood or blood plasma for transfusions to cancer patients does not cover the 30-times-greater cost of actually performing the transfusions, the 7th U.S. Circuit Court of Appeals held on Sept. 23. Geschke v. Air Force Association & Monumental Life Ins. Co., No. 04-3205. Clarence Geschke bought a defined-benefit supplemental cancer insurance policy that promised to reimburse him for “incurred expenses for the cost of blood or blood plasma.” He got leukemia and required many blood transfusions. When he died, his widow filed an insurance claim that included $33,689.81 in expenses for blood and transfusion-related charges. The insurer paid only the cost of the blood product itself, i.e., $1,245.10, and denied coverage for the related charges. Geschke filed suit in state court against the insurer and the association that marketed the policy to her late husband, alleging breach of contract. The defendants removed the case to an Illinois federal court, which granted them summary judgment. The 7th Circuit affirmed, holding that the policy stated clearly and unambiguously that only the blood and plasma itself were covered, not any related transfusion charges. Gun makers not covered against municipal suits Commercial liability insurance policies issued to gun manufacturers don’t cover lawsuits brought by municipalities for expenses related to gun violence, the Florida Supreme Court held on Sept. 22. Taurus Holdings Inc. v. United States Fidelity and Guaranty Co., No. SC04-771. A number of municipalities sued Taurus Holdings Inc. and other gun manufacturers, arguing that they were liable for costs associated with gun violence because they had failed to provide adequate warnings, and had manufactured guns in excess of the amount that could possibly be used for legitimate purposes. Taurus sought coverage from several of its insurance carriers, including United States Fidelity and Guaranty Co. The insurers argued that a “products-completed operations hazard” exclusion in Taurus’ policies relieved them of any obligation of coverage. A federal district court initially agreed with Taurus but, upon motion for reconsideration, reversed itself, holding that the exclusion was not ambiguous. The 11th U.S. Circuit Court of Appeals certified the question of coverage under Florida law to the Florida Supreme Court. The Florida Supreme Court affirmed, holding that the insurers were not obligated to cover Taurus’ potential losses. Relying on the views of other jurisdictions, the court said, “[A]ll three courts that have considered the precise issue before us have concluded that the products-completed operations hazard exclusion operates to exclude coverage for claims against a gun manufacturer where the injuries alleged were caused by the guns the defendants had manufactured.” TAXATION Open-space easement bars tax on golf holes A town cannot tax a golf course with a discretionary easement for open space at the same time that it taxes the tees, fairways and greens of the course as improvements to the property, the New Hampshire Supreme Court ruled on Sept. 21. Portsmouth Country Club v. Town of Greenland, No. 2004-501. The Portsmouth Country Club signed an agreement with the town of Greenland, N.H., that would subject 247 acres of the golf course to an open-space easement. The club’s remaining five acres-the pro shop, clubhouse, snack area and parking lot-would be taxed at fair market value. Starting in 1992, the town taxed the club’s property accordingly, except that the town also taxed the holes on the 247 acres as improvements to the property. The club didn’t realize this until 2001, when it sued the town. The trial court sided with the club, though it refused to grant a rebate on the improperly assessed taxes because the complaint was filed in an untimely fashion. The New Hampshire Supreme Court affirmed both rulings. Though the term “improvements” was not defined in the deed, and though the tees, greens and other course characteristics would be improvements under a new statute, the court said that the overall statutory scheme treats these features as part of the land on which a discretionary easement has been granted.

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