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ANTITRUST Deep cut in air fares shows predatory pricing A low-fare airline presented enough evidence of predatory pricing against Northwest Airlines to survive summary judgment, the 6th U.S. Circuit Court of Appeals ruled on Nov. 9. Spirit Airlines Inc. v. Northwest Airlines Inc., No. 03-1521. Spirit Airlines claimed that Northwest engaged in predatory pricing for certain East Coast routes from Detroit. For instance, when Spirit began offering three daily flights between Detroit and Boston for $69, $89 and $109, Northwest increased the number of similar flights it ran and cut its price from $411 to $69 for all flights. Spirit claimed the fares were below Northwest’s relevant costs for the routes in a geographical market in which Northwest already had overwhelming market share. A Michigan district court granted summary judgment to Northwest, finding that its fares did not fall below the airline’s total average variable costs. The 6th Circuit reversed, holding that the district court should have narrowed the relevant market to the low-fare or leisure-passenger market. Further, the market should have been limited geographically. Spirit also introduced evidence that barriers to entry into those markets were high, another factor indicating that Northwest was engaged in predatory pricing. Additionally, Spirit showed how Northwest’s fares went up once Spirit exited the market, which a reasonable jury could interpret to mean that Northwest was trying to recoup the losses it sustained in offering low fares.   Full text of the decision BANKRUPTCY Lawyer’s stroke after deal didn’t undo deal In a bankruptcy proceeding in which a lawyer-debtor executed an agreement to forfeit a portion of his American Bar Association (ABA) retirement funds if payments were not made by a certain day, the lawyer was still bound by the agreement despite suffering a cerebral aneurysm and stroke later in the day, the 9th U.S. Circuit Court of Appeals held on Nov. 8. In re Rains, No. 03-16538. Omar Rains, an attorney and a debtor in a bankruptcy proceeding, executed an agreement with his bankruptcy trustee and a creditor, in which he agreed to forfeit a portion of his ABA retirement funds if he did not pay funds by a certain date. Immediately after executing the agreement, Rains was diagnosed with a cerebral aneurysm and a stroke. He underwent surgery, and claimed to have no recollection of the events of that day. The bankruptcy trustee moved the bankruptcy court for approval of the settlement. Rains sought rescission, presenting expert testimony that his medical condition made him incompetent to execute the agreement. The bankruptcy court approved the settlement, as did a California federal district court. Affirming, the 9th Circuit held that witnesses to the agreement testified that Rains was lucid and knew what he was doing. The court said, “The bankruptcy court was not bound to follow these expert opinions. In the face of conflicting testimony, the bankruptcy court did not clearly err in discounting the theoretical speculation of Rains’s experts, or in finding that Rains was mentally competent to enter into the settlement agreement.” CRIMINAL PRACTICE Zoloft defense fails to annul murder conviction New research results about possible connections between the antidepressant Zoloft and violent behavior don’t warrant a new trial for a businessman convicted of murdering two of his business associates, the Massachusetts Supreme Judicial Court held on Nov. 8. Commonwealth v. Shuman, No. SJC-08364. A Massachusetts state jury convicted Richard Shuman of murdering two of his business associates. At trial, a defense expert from Harvard University testified that Shuman suffered from depression, and that the Zoloft he was taking had exacerbated his condition. After Shuman’s conviction, he moved for a new trial, arguing that newly discovered evidence linking Zoloft and other antidepressants to a state of violent urges and agitation known as akathisia warranted a new trial. A trial court denied Shuman’s motion. Affirming, the Massachusetts Supreme Judicial Court held that the new Zofoft research was not different enough from the evidence available at the time of trial to warrant the granting of a new one. The court said, “The new evidence proffered here is merely a broadening of the research regarding SSRIs and violence already present in legal and scientific circles. The mere addition of further information to the preexisting debate does not amount to ‘newly discovered evidence’ for the purposes of a new trial motion.” Ban on alcohol during supervised release is OK It was not plain error to bar a robber from consuming alcohol during supervised release, despite the absence of alcoholism or the involvement of alcohol in the crime, the 7th U.S. Circuit Court of Appeals held on Nov. 8. USA v. McKissic, No. 04-3377. After pleading guilty to one count of armed bank robbery, Robert McKissic was sentenced by an Illinois federal court to 60 months’ imprisonment followed by 60 months of supervised release, with special conditions, including a ban on consumption of alcohol. Section 3563(b) of the Federal Sentencing Guidelines permits a court to use its discretion to require a defendant to “refrain from excessive use of alcohol,” but a total ban on alcohol use is not specifically listed as a discretionary condition. McKissic appealed the special conditions. The 7th Circuit affirmed, holding that though McKissic has not been diagnosed with alcoholism and his offense did not involve alcohol, he had once been cited for operating a vehicle with open alcohol containers in it, and had admitted to consuming alcohol and to using marijuana. The circuit court said that the district court had grounds to conclude that further use of alcohol would create an obstacle to his rehabilitation. ENVIRONMENTAL LAW State, federal laws match determines jurisdiction Because Oklahoma’s statutes are roughly comparable to relevant federal Clean Water Act provisions, Oklahoma’s claims against a plant bar federal jurisdiction over a union’s Clean Water Act civil penalties claims, the 10th U.S. Circuit Court of Appeals held on Nov. 8 in a matter of first impression. Paper, Allied-Industrial, Chem. & Energy Works Int’l Union v. Continental Carbon Co., No. 03-6243. A union brought a citizen suit against Continental Carbon Co. under the federal Clean Water Act, claiming that the plant made unauthorized wastewater discharges, misrepresented facts in a permit application and failed to report unauthorized discharges in lagoons. The union sought a declaratory judgment, civil penalties and an injunction. At the same time, the Oklahoma Department of Environmental Quality (ODEQ) was working with Continental Carbon to resolve related issues. An Oklahoma federal court granted Continental Carbon’s motion to dismiss the civil penalties claim, holding that the Oklahoma proceedings precluded federal jurisdiction over those claims, under the Clean Water Act, 33 U.S.C. 1319 (g)(6)(A)(ii). The 10th Circuit affirmed, holding that to satisfy Section 1319(g)(6)(A)(ii), the state’s penalty-assessment and judicial review provisions must be “roughly comparable” to the corresponding categories of the federal provisions. The court held that because Oklahoma’s provisions are roughly comparable to Section 1319(g), ODEQ’s proceedings bar jurisdiction for the civil penalties claims. INTELLECTUAL PROPERTY State, federal law don’t pre-empt IP rights Ownership of intellectual property (IP) rights is not an issue that is pre-empted by state or federal law, the Kansas Supreme Court held on Nov. 10 in a matter of first impression. Pittsburg State University/Kansas Nat’l Education Association v. Kansas Bd. of Regents/Pittsburg State University, No. 01,305. In 1997, the Kansas Board of Regents/Pittsburg State University (KBR) proposed that it retain ownership and control of any product the Pittsburg State University faculty created. The Pittsburg State University/Kansas National Education Association (KNEA), a public employee organization representing some of the university faculty, opposed this and insisted on negotiating the matter. KBR stated that it was not required under the Public Employer-Employee Relations Act (PEERA) to negotiate because IP rights aren’t a condition of employment, and are pre-empted by state and federal law. KNEA filed a complaint with the Public Employee Relations Board (PERB). While the complaint was pending, KBR adopted a policy that gave some IP rights to employees of KBR’s institutions. KNEA amended its complaint, stating that unilateral adoption of this policy was barred. The hearing officer concluded that KBR didn’t do anything that was barred because IP issues are pre-empted by federal and state law. PERB adopted the hearing officer’s decision without modification. The trial court reversed. An intermediate appellate court reversed. The Kansas Supreme Court reversed and remanded to PERB. The PEERA requires that a public employer must negotiate in good faith with a recognized public employee organization on matters pertaining to employment conditions. Federal copyright and patent law contemplate that parties may negotiate the subject of IP rights, and that no state law may be interpreted as concluding that IP rights are not a condition of employment. The trial court should have remanded the case to PERB for additional findings on whether ownership of intellectual property is a condition of employment. LEGAL PROFESSION Firm’s representation by nonattorney voids case In a case in which a corporation was represented by a nonattorney, the case and all legal documents signed by the nonattorney were void from the beginning, the North Dakota Supreme Court ruled on Nov. 9. Wetzel v. Schlenvogt, No. 20050122. Cenex Oil, a corporation, filed a disorderly conduct restraining order through its manager, Brian Schneider, a nonattorney, against customer Orville Paul Schlenvogt. Schlenvogt had struck Curt Wetzel, a Cenex employee, during an altercation triggered by Schlenvogt’s complaint about service. At the hearing on the restraining order, though no lawyer appeared for Cenex, the trial court granted Cenex’s restraining order. Vacating Cenex’s restraining order, the North Dakota Supreme Court ruled that Cenex was never represented by an attorney. The common law rule states that a corporation may not be represented by a nonattorney in a legal proceeding in the same way that a nonattorney may not represent a natural person in a legal proceeding. TAXATION Michigan governor can shift sales tax allocation Michigan’s governor is not constitutionally prohibited from reducing the legislature’s allocation of general sales taxes to the state’s Comprehensive Transportation Fund (CTF) and transferring the revenue to the state’s general fund, the Michigan Supreme Court ruled on Nov. 8. County Road Assoc. of Michigan v. Governor of Michigan, No. 125665. In 2002, Michigan’s governor signed an executive order to transfer $12.75 million in sales tax revenue from CTF to the state’s general fund. A coalition of transportation-related groups-from county road associations to public transit authorities-challenged the governor’s authority to make such a transfer, arguing that the allocation to CTF was “constitutionally dedicated” by Mich. Const. of 1963, art. 9, � 9. The trial court granted a preliminary injunction to the plaintiffs, enjoining the transfer. An intermediate appellate court reversed. The Michigan Supreme Court affirmed, holding that the language of the constitution clearly provides that the Legislature can allocate funds to comprehensive transportation in an amount up to 25% of general sales taxes, but there is no minimum amount set, nor any requirement that any money be set aside at all. TORTS No punitives after death of alleged malefactor A claim for punitive damages doesn’t survive the death of the alleged tortfeasor, the Indiana Supreme Court held on Nov. 9 in a case of first impression. Crabtree v. Estate of Crabtree, No. 55S01-0409-CV-431. Alicia and Jacelyn Crabtree sustained injuries as passengers in a vehicle driven by their father, Jackie Crabtree Jr. Crabtree was intoxicated by alcohol at the time of the incident, and Crabtree’s insurer paid for the medical expenses of the daughters. Crabtree died from unrelated causes a year after the incident, and the daughters-through their mother-sued Crabtree’s estate for compensatory and punitive damages. An Indiana state jury awarded each daughter $11,500 in compensatory damages, but the trial court granted the estate’s motion to dismiss the claim for punitive damages, holding that Indiana law does not permit the collection of punitive damages from an estate. The daughters appealed, and an intermediate appellate court ruled that the punitive damages claim did survive Crabtree’s death. Reversing, the Indiana Supreme Court held that punitive damages do not survive the death of the alleged tortfeasor. Noting that, once a tortfeasor has died, punitive damages would not serve as a deterrent, the court said, “We believe the majority view is persuasive and hold that Indiana law does not permit recovery of punitive damages from the estate of a deceased tortfeasor. The central purpose of punitive damages is to punish the wrongdoer and to deter him from future misconduct, not to reward the plaintiff and not to compensate the plaintiff.”

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