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ADR No-appeal clause in agreement is enforceable A no-appeal clause in an arbitration agreement is enforceable, the 10th U.S. Circuit Court of Appeals held on Oct. 26 in a matter of first impression. MACTEC Inc. v. Gorelick, nos. 03-1290 and 03-1378. MACTEC Inc. and Steven Gorelick were involved in a dispute over the payment of royalties for a patented invention. They differed as to the meaning of a term in a contract between them and, pursuant to the agreement, arbitrated their dispute. After a hearing, the arbitrator found for Gorelick and awarded him $4.5 million. MACTEC filed an application in a Colorado federal court to vacate the arbitration award, pursuant to the Federal Arbitration Act. The court ruled in Gorelick’s favor. The 10th Circuit affirmed. The arbitration provision of the relevant stock- purchase provision contained a nonappealability clause, which states that judgment on the arbitrator’s award “shall be final and nonappealable and may be entered in any court having jurisdiction thereof.” The 10th Circuit held that a nonappealability clause in an arbitration agreement that forecloses judicial review of an arbitration award beyond the district court level is enforceable. Full text of the decision BUSINESS LAW Products liability claim against successor limited A successor company is ordinarily not liable for the debts of its predecessor except in certain specified circumstances, the South Carolina Supreme Court ruled on Oct. 24, answering three certified questions by a federal district court regarding the application of successor-liability theory in state law-based products liability cases. Simmons v. Mark Lift Industries Inc., No. 26050. In 1991, Terex Corp. bought the assets of Mark Industries during Mark’s bankruptcy proceeding. Terex then created a wholly owned subsidiary of the two companies, pursuant to a purchase agreement, called Mark Lift Industries, and Mark’s assets were transferred to the new company. In 1999, James Simmons sued Mark, Mark Lift and Terex for products liability related to the collapse of a “scissorlift” platform at a work site. Simmons’ only basis of liability against Terex and Mark Lift was successor-liability theory. The case was removed to federal court, and the court certified three questions related to successor liability in South Carolina. Relying on existing state precedent, Brown v. American Railway Express Co., the court said that a successor is ordinarily not liable for the debts of its predecessor unless there was a prior agreement, there was a merger, the successor company was a mere extension of the original company or the transaction was entered into fraudulently. Furthermore, a state products liability claim against a successor corporation that purchased the predecessor’s assets in a voluntary bankruptcy sale may be maintained provided one of the above factors is present. Finally, a plaintiff may maintain a products liability claim under this theory against a defendant such as Terex even if there are one or more other viable defendants. CRIMINAL PRACTICE Mother’s protest cancels father’s consent to search A father’s consent to a police search of his home for evidence of his son’s involvement in an alleged murder was invalidated by an objection to the search by the suspect’s mother, the Connecticut Supreme Court held on Nov. 1. State of Connecticut v. Brunetti, No. SC 16788. New Haven, Conn., police suspected Nicholas Brunetti in a murder. While questioning Brunetti at a police station, police officers sought permission from Brunetti’s parents, Anthony Brunetti Sr. and Dawn Brunetti, to search their home, where Nicholas Brunetti had been living. Anthony Brunetti consented to the search, but Dawn Brunetti refused to sign a consent form. Police conducted the search and found bloody clothing. Nicholas Brunetti was convicted of first-degree murder. Brunetti appealed, arguing the search was invalid due to his mother’s refusal to consent to the search. Reversing and remanding for a new trial, the Connecticut Supreme Court held that the search was invalid. Distinguishing the instant case from cases where one occupant was absent, the court said, “We conclude that the rule requiring the consent of both present joint occupants strikes the appropriate balance between individual liberties and police expediency. Specifically, requiring the consent of both present joint occupants for a valid consent search is consistent with our manifest preference for warrants and our well established regard for the sanctity of the home.” AG must serve exhibits in habeas proceeding A federal district court erred in denying a prisoner’s petition for a writ of habeas corpus because the attorney general of Maryland failed to serve the prisoner the exhibits accompanying her answer to the prisoner’s petition, the 4th U.S. Circuit Court of Appeals held on Oct. 25. Thompson v. Greene, No. 03-7401. A Maryland state court jury convicted Roland Thompson of second-degree murder. After exhausting his state court appeals, Thompson filed a petition for writ of habeas corpus. The attorney general of Maryland filed an answer to Thompson’s petition, but did not serve the answer’s 20 exhibits on Thompson. The attorney general’s office had a policy of not serving habeas petitioners with exhibits if an answer had more than five exhibits. Thompson filed a response, arguing that his ability to reply to the attorney general’s answer was hindered materially by the lack of exhibits. A district court denied Thompson’s habeas petition, rejecting his request for the exhibits. Thompson sought a certificate of appealability, arguing that denial of the exhibits violated his constitutional rights, which the 4th Circuit granted. Vacating and remanding, the 4th Circuit rejected the attorney general’s argument that she was not required to serve the exhibits under either habeas rules or the Federal Rules of Civil Procedure. Relying on procedural rules and declining to reach the constitutional issues, the court said, “Both the Habeas Rules and the Federal Rules of Civil Procedure (the ‘Civil Rules’) specify that exhibits constitute contents of such an answer. And, in light of the Advisory Committee Notes on the Habeas Rules, and the relevant provisions of the Civil Rules and the Local Rules of the United States District Court for the District of Maryland . . . service of an answer and its exhibits on a habeas corpus petitioner is plainly mandated.” FAMILY LAW Husband doesn’t have to support unadopted child Where a husband and wife housed-but did not adopt-a minor child, the husband was not obligated to pay the wife child support after their divorce, the Georgia Supreme Court held on Oct. 24. Dial v. Dial, No. S05A0657. A child lived with Bryan and Juanita Dial, a married couple, for a number of years. However, the couple did not adopt him. At the Dials’ divorce, a trial court ordered Bryan Dial to pay child support. Dial appealed, arguing that he was not the child’s father, and thus, not liable for support. Reversing a lower court ruling, the Georgia Supreme Court held that Bryan Dial was not liable for child support because he was not the child’s biological father and had not taken any actions indicating an acceptance of paternity or responsibility for the child. The court said, “Mr. Dial has made no assertion of paternity . . . .Rather, the evidence simply shows that he allowed his wife to bring into their home a child who otherwise would have been in unfortunate circumstances . . . .[T]his situation is similar to one in which a couple takes a minor relative into their home for a period of time; providing support for a child in such a voluntary manner does not, by itself, create a legal obligation to provide that support.” GOVERNMENT State retirement system entitled to immunity A state retirement system is an arm of the state, and so is entitled to 11th Amendment immunity from a 42 U.S.C. 1983 suit for monetary damages, a divided 6th U.S. Circuit Court of Appeals ruled on Oct. 26. Ernst v. Rising, No. 02-2287. Four Michigan state judges sued the state retirement system, saying retirement benefits for judges were less favorable in their jurisdictions than they were in other jurisdictions around the state. Raising equal protection claims and complaints under state law fiduciary duties, among other remedies involving the restructuring of the retirement system, the judges sought restitution for the difference between the retirement benefits they received and the amounts they would have received if they had been in one of the other jurisdictions. Rejecting the judges’ argument that the retirement was merely a political subdivision of the state, and not entitled to immunity, the district court dismissed the case, finding the retirement system to be an arm of the state entitled to 11th Amendment immunity from suit. The 6th Circuit affirmed. The retirement system is run by appointed state officials; it serves all state officials, not just judges; it is funded by the state treasury and from contributions of various officials; and, if the system faces a monetary shortfall, the legislature can order the treasury to fund it properly. IMMIGRATION LAW BIA must state basis for affirming IJ’s opinion If the board of Immigration Appeals fails to state its basis for affirming an immigration judge’s decision which contained both a reviewable and a nonreviewable basis, the court should remand for specification, the 7th U.S. Circuit Court of Appeals held on Oct. 26. Cuellar Lopez v. Gonzales, No. 04-2959. Maria Cuellar Lopez left the United States, leaving three of her children with a friend. When she returned after about 10 days, she showed a false birth certificate to U.S. immigration officials, who spotted the fraud but let her in because of her minor children. They issued a Notice to Appear for removal proceedings. She conceded removability and applied for cancellation of removal. An immigration judge (IJ) denied it on two grounds: First, he found that she was unable to meet the statutory requirement of being physically present in the U.S. for 10 years because of her attempted unlawful entry. Second, he found that she lacked “good moral character” because of her unlawful re-entry, and thus she was statutorily barred from cancellation of removal. Alternatively, even if not statutorily barred, the IJ found that as a matter of discretion her application should be denied for lack of good moral character. The Board of Immigration Appeals (BIA) affirmed without opinion. The 7th Circuit remanded for the BIA to state the basis for its ruling, so as to be able to determine whether it has jurisdiction over the case or not. The IJ’s interpretation of the term “continuous physical presence” raises a nondiscretionary question of statutory interpretation. If the BIA affirmed the IJ’s decision on that ground, then the 7th Circuit would have jurisdiction over the case. The IJ’s determination that Cuellar lacks good moral character, however, is a discretionary decision. If the BIA affirmed on that ground, then its decision could not be reviewed by the circuit court, in accordance with “8 U.S.C. � 1252(a)(2)(B)(i) (‘[N]o court shall have jurisdiction to review . . . any judgment regarding the granting of relief under section . . . 1229b [cancellation of removal].’).” SOCIAL SERVICES LAW Cigarette sale may keep store out of U.S. program A vendor under the federally funded Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) may be disqualified for inadvertently accepting a WIC voucher in exchange for groceries that included a pack of cigarettes, the Minnesota Supreme Court held on Oct. 27. Hy-Vee Food Stores Inc. v. Minnesota Department of Health, No. A04-548. The WIC program, which is administered by the United States Department of Agriculture (USDA), provides supplemental foods and nutrition education to low-income infants and pregnant and breast-feeding women. Participants in the program use WIC vouchers in payment for WIC-eligible products at authorized vendors. The father of a WIC-eligible child bought eight grocery items with a WIC voucher at a Windom, Minn., Hy-Vee store. All of the items except one, a pack of cigarettes, were WIC-approved food items. The cashier accepted the voucher for all eight items, and the store redeemed the voucher for the full amount of the items. According to their affidavits, neither the cashier nor the father intended to include the cigarettes as part of the WIC transaction. Upon discovering that the voucher had been used to purchase cigarettes, the Minnesota Department of Health (MDH) terminated the Hy-Vee store’s authorization as a WIC vendor for three years. An administrative law judge recommended summary disposition for the MDH, and an intermediate appellate court affirmed. The Minnesota Supreme Court affirmed. The WIC tobacco rule, 7 C.F.R. 246.12(l)(1)(iii)(A), provides that “[t]he State agency must disqualify a vendor for three years for [o]ne incidence of the sale of . . . tobacco products in exchange for food instruments.” The vendor agreement between Hy-Vee and the MDH contained the same provision. The USDA defines vendor violation as “any intentional or unintentional action of a vendor . . . that violates the vendor agreement or Federal or State statutes, regulations, policies, or procedures governing the Program.” While the cigarette transaction entered into by the father and Hy-Vee may have been unintentional, the court found that the rules plainly show that proof of intent is not necessary before imposing sanctions for a violation of the WIC tobacco rule.

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