Thank you for sharing!

Your article was successfully shared with the contacts you provided.
BANKRUPTCY No discharge for tax filed after IRS assessment A tax ‘return’ filed only after the Internal Revenue Service (IRS) had independently assessed the income taxes is ineligible for discharge in bankruptcy, the 7th U.S. Circuit Court of Appeals held on Dec. 14. Payne v. USA, No. 05-1941. John Payne filed no federal income tax returns from 1986 to 1992. In 1990, the IRS assessed him for taxes due for 1986. In 1997, Payne filed for bankruptcy and the next year received a discharge of his unpaid 1986 tax liability. The government argued that he was not entitled to a discharge because Section 523(a)(1)(B)(i) of the Bankruptcy Code forbids discharge of income tax liability for which a return was required to be filed but “was not filed.” It said that an untimely, post-assessment “return” is not a “return” within the meaning of the law. An Illinois federal court upheld the bankruptcy judge’s finding that the discharge was proper. The 7th Circuit reversed, using a four-pronged test for spotting a “return.” One prong-that the document must evince “an honest and genuine endeavor to satisfy the law”-was not met. There had been no reasonable effort to satisfy the requirements of filing a timely return and paying the tax. Since the IRS had already calculated Payne’s taxes, he defeated “the main purpose of the requirement that taxpayers file income-tax returns: to spare the tax authorities the burden of trying to reconstruct a taxpayer’s income and income-tax liability without any help from him.” Full text of the decision BUSINESS LAW No summary judgment for PepsiCo in bottler suit Pepsico Inc. is not entitled to summary judgment on a bottler’s claims of breach of contract and tortious interference with business relations, the 10th U.S. Circuit Court of Appeals held on Dec. 20. Pepsi-Cola Bottling Co. of Pittsburg Inc. v. PepsiCo Inc., No. 03-3134. The Pepsi-Cola Bottling Co. of Pittsburg (PP) had an exclusive bottling appointment with PepsiCo Inc. for Pepsi products in its territory. PP claimed that, in its efforts to consolidate its bottling operations, PepsiCo and its wholly owned subsidiary, Bottling Group LLC, allowed practices that undermined PP’s business. PP alleged six causes of action. One was breach of implied covenant of good faith and fair dealing because PepsiCo had refused to extend new product appointments to PP and denied funding and territorial protection from trans-shipment. Another alleged that Bottling Group tortiously interfered with PP’s contractual agreement with PepsiCo and that both defendants tortiously interfered with PP’s relationships with its customers. A Kansas federal court granted the defendants summary judgment on all claims. The 10th Circuit reversed on the breach of implied duty of good faith and fair dealing claim, premised on PepsiCo’s failure to protect PP’s territorial exclusivity, and reversed on the tortious interference with current and prospective business relations claim as it relates to Southeast Kansas Vending, which transshipped Pepsi products into PP’s territory, allegedly with the defendants’ consent. It affirmed on all other claims. CONSTITUTIONAL LAW Pastor’s alleged slander is not protected speech A pastor’s allegedly defamatory comments about a member of his congregation were not protected by the First Amendment, the District of Columbia Court of Appeals held on Dec. 22. Lipscombe v. Crudup, No. 04-CV-931. McKinley Crudup, a long-time member of Allen Chapel African Methodist Episcopal Church, sued the church’s pastor, Leon Lipscombe Sr., for defamation after Lipscombe allegedly told several church members that Crudup had been sued for sexual harassment. Lipscombe moved to dismiss, arguing that any comments he made were of “purely ecclesiastical concern,” and that the comments were privileged statements of mutual concern or common interest. A district court denied the motion to dismiss. Affirming, the district’s high court held that Lipscombe’s statements were not privileged despite his status as a pastor and the remarks’ relevance to church business. The court said, “Rev. Lipscombe’s ‘otherwise religious relationship’ to Crudup did not shield him from allegations . . . of ‘secular behavior’ tortious in nature.” CRIMINAL PRACTICE Jeopardy attaches after mistaken mistrial ruling A trial court erred in declaring a mistrial based on a defense counsel’s emotional state and alleged ineffective assistance, and thus jeopardy attached, the Idaho Supreme Court held on Dec. 20. State v. Manley, No. 31458. Joseph Manley was charged with killing his brother. At the beginning of his trial, Manley’s lawyer claimed that the judge was making adverse evidentiary rulings because the lawyer had supported the judge’s judicial opponent, and said, “God help me if I don’t have a heart attack over it. I need a little time to get recomposed so I can try to defend this young man as he deserves to be.” The trial court declared a mistrial based on the lawyer’s mental and physical condition. Manley moved to dismiss with prejudice, arguing that a new trial would constitute double jeopardy. Prosecutors also moved to dismiss. The trial court denied Manley’s motion, but granted the state’s motion without prejudice so it could refile. Reversing, the Idaho Supreme Court held that the trial court had erred in declaring a mistrial, and that jeopardy had attached, requiring dismissal after the erroneous mistrial. The court said, “Because the district court did not adequately consider alternatives or offer Manley an opportunity to be heard, and erroneously determined that Manley’s attorney was ineffective, we find the district court abused its discretion in declaring a mistrial . . . .[F]urther prosecution of Manley . . . is barred by the constitutional prohibition against double jeopardy.” Depraved unconcern isn’t lesser intentional murder Depraved indifference murder is not a lesser offense of intentional murder, and indictments alleging both offenses should be rare, the New York Court of Appeals ruled on Dec. 22. People v. Suarez, consolidated with People v. McPherson, nos. 178 and 179. Santos Suarez was indicted for depraved indifference murder and intentional murder for the stabbing death of his girlfriend. Suarez said that he had stabbed her as the two struggled over the knife she wielded. The woman was still alive when Suarez fled. Suarez was convicted of depraved indifference murder. In another case, Trisha McPherson said that she had stabbed her ex-boyfriend in self-defense. Claiming later that the man was abusive, McPherson called 911 after the stabbing, then fled before he died. She was also convicted of depraved indifference murder. Intermediate appellate courts affirmed both convictions. The New York high court reversed. Someone who acts with the conscious intent to cause serious injury, and who succeeds in doing so, is guilty only of manslaughter in the first degree. Depraved indifference murder should not be routinely charged. The focus should be on three factors: (1) circumstances evincing a depraved indifference to human life; (2) recklessness; and (3) a grave risk of death to another person. ENVIRONMENTAL LAW CERCLA allows EPA to recover cleanup costs The comprehensive Environmental Response, Compensation and Liability Act (CERCLA) allows the Environmental Protection Agency (EPA) to recover its costs for supervising a responsible private party’s hazardous waste cleanup, the 3d U.S. Circuit Court of Appeals ruled on Dec. 22. United States v. E.I. du Pont de Nemours & Co., No. 04-4546. DuPont entered into a two-part EPA order for the cleanup of a Delaware Superfund site. The first part involved the development of project specifications (the “removal” phase); the second involved the actual cleanup work (the “remedial” phase). The EPA sought to recover the $1.39 million in costs it incurred supervising both phases. A federal Delaware court, citing United States v. Rohm & Haas Co., 2 F.3d 1265 (3d. Cir. 1993), ruled that Section 107 of CERCLA doesn’t authorize recovery for both “removal” and “remedial” action oversight costs. The 3d Circuit reversed. In light of the plain meaning of CERCLA, the statutory framework, the functional benefits of agency oversight and the overall statutory objective of ensuring that the parties responsible for environmental harm are “tagged” with the “cost of their actions,” Section 107 authorizes the government to recover its costs for overseeing private-party removal and remedial actions. [ Related story] EVIDENCE Fingerprinting method fails ‘Daubert’ analysis Prosecutors failed to establish that using the ACE-V method of fingerprint analysis for multiple partial prints had been deemed reliable under the Daubert test for expert evidence, a requirement before fingerprints could be used in a trial for the murder of a Boston police officer, the Massachusetts Supreme Judicial Court held on Dec. 27. Commonwealth v. Patterson, No. SJC-09478. Terry Patterson was convicted of murdering a Boston police officer. Patterson’s conviction was based on expert evidence in which the expert used the most common method of fingerprint analysis, the ACE-V method, to interpret four latent prints, none of which could provide an individual print capable of incriminating Patterson. After Patterson’s conviction was reversed on other grounds, Patterson moved to exclude the fingerprint evidence, arguing that ACE-V was not a reliable, scientifically accepted method of fingerprint analysis. A trial court denied Patterson’s suppression motion, and the Massachusetts Supreme Judicial Court granted direct review. Vacating and remanding, the state high court held that prosecutors had failed to establish that the ACE-V method was generally accepted as reliable for use with multiple partial prints. The court said: “[T]he application of ACE-V to simultaneous impressions cannot rely on the more usual application of ACE-V for its admissibility, but must be independently tested against the Lanigan-Daubert standard. On the record before the motion judge, the Commonwealth has not yet established that the application of the ACE-V method to simultaneous impressions is generally accepted by the fingerprint examiner community.” INSURANCE LAW Limit on time to sue in policy is unreasonable A contractual limitation on time to sue contained in an uninsured-motorist policy is unreasonable, the Iowa Supreme Court found on Dec. 23. Faeth v. State Farm Mutual Automobile Ins. Co., No. 118/03-1552. On Nov. 15, 1997, Danyiel L. Simmons, a driver for Umthun Trucking Co., rear-ended Lynn Faeth while driving a truck owned by Umthun. At the time of the accident, Umthun was self-insured for the first $300,000 of liability on bodily injury claims. Faeth was insured under a policy with State Farm Mutual Automobile Insurance Co., which contained an uninsured-motorist coverage provision that required that actions to recover on uninsured motor vehicle coverage must be commenced within two years after the date of the accident. On Nov. 4, 1999, Faeth sued Umthun and Simmons. On Feb. 28, 2002, Umthun became insolvent and unable to make payments on claims made against it during its self-insured period. On Sept. 25, 2002, Faeth brought an uninsured motorist benefits claim against State Farm. The trial court denied State Farm’s motion for summary judgment. Another trial court denied Faeth’s motion for summary judgment. The Iowa Supreme Court reversed on Faeth’s motion, and affirmed on State Farm’s motion. Umthun became insolvent more than two years after the date of the accident. Because the contractual two-year limitation on time to sue would leave Faeth with no time to sue following the accident, the court imposed the statutory limitations period contained in Iowa Code � 614.1(5) instead. LABOR LAW Circuit orders NLRB to clarify position on layoffs The National Labor Relations Board (NLRB) must clarify why failure to bargain with employees on the decision to lay them off warrants a harsher remedy than failure to bargain on the layoff’s effects, the 1st U.S. Circuit Court of Appeals held on Dec. 22. NLRB v. Pan American Grain Co., No. 05-1274. Pan American Grain Co.’s employees were for years represented by a union. Due to reduced staffing needs as a result of a long-term modernization plan, Pan American laid off one or two employees each year from 1996 to 2002. In 2002, an employee strike caused a decline in sales. Soon afterward, the company decided to lay off 15 of the striking employees, citing declining sales and increased efficiency. The NLRB ruled that Pan American had engaged in unfair labor practices by failing to give the union advance notice and an opportunity to bargain on both the layoff decision and its effects. The NLRB ordered reinstatement and back pay. Pan American appealed, arguing that while it accepted that it was required to bargain with the union over the effects of the layoffs, it was not required to bargain with the dismissed employees regarding the decision to dismiss them. Hence, the remedy of reinstatement and full back pay was improper. Under NLRB precedent, only limited back pay could be required. The 1st Circuit remanded the issue for clarification as to why the NLRB views a decision to lay off as a subject mandating full-scale bargaining rather than bargaining solely about effects. The NLRB appeared to be treating a breached obligation to bargain over the decision as well as its effects as warranting the full remedy of reinstatement and full back pay. According to the court, to say that an employer “must bargain about whether to make layoffs caused by modernization does not seem far from saying . . . that it must bargain about whether to modernize.” SCHOOLS AND EDUCATION Law makes district liable over harassment claim The Vermont Public Accommodations Act (VPAA) allows for a claim against a school district for in-school student-on-student harassment, the Vermont Supreme Court ruled on Dec. 16. Washington v. Pierce, No. 2003-487. The daughter of a mixed-race couple alleged that she had to transfer out of her public high school due to the hostile environment created by the racially and sexually inappropriate comments of other students. The student sued the school district under the VPAA for racial- and gender-based student harassment that deprived her of the right to the educational benefits of a public school education. The student provided a school-sponsored letter acknowledging the existence of negative attitudes; a teacher said that she had reported at least 12 cases of harassing behavior to the school principal. The trial court granted summary judgment to the school district. The Vermont Supreme Court affirmed. While the VPAA allows for student-on-student harassment claims based on conduct so severe, pervasive and objectively offensive that it can be said to deprive the victims of access to public school educational opportunities, to maintain a claim, a student must demonstrate that she had exhausted her administrative remedies or explain why she hadn’t done so. The student in this case had failed to make such a showing. TORTS Seaman may be sued by shipowner for negligence A shipowner-employer may assert a negligence and indemnity claim in the federal courts against its seaman-employee for property damage, the 5th U.S. Circuit Court of Appeals held on Dec. 20 in an issue of first impression. Withhart v. Otto Candies LLC, No. 04-31267. On Dec. 3, 2001, Jeffrey Wayne Withhart was employed by Sea Mar Inc. as a mate/second captain aboard the M/V Cape Hatteras when it was involved in a collision with a vessel owned and operated by Otto Candies LLC. Withhart sued Otto and Stolt Offshore Inc. for personal injuries. Otto filed a third-party complaint against Sea Mar, and Sea Mar paid $26,310 for property damage to Otto’s vessel. Withhart amended his complaint to add Sea Mar and others as defendants. Sea Mar then filed a counterclaim against Withhart for property damage sustained by its vessel, alleging that Withhart was negligently absent from the wheelhouse when the collision occurred. Sea Mar also filed an indemnity counterclaim for the damages to Otto’s vessel. A Louisiana federal court dismissed the counterclaims. The 5th Circuit reversed and remanded, finding that no provision of the Federal Employers’ Liability Act or the Jones Act prevents a shipowner-employer from pursuing a claim against a negligent seaman-employee for property damage. While the aim of the Jones Act may be to give a negligence cause of action to ship personnel against their employers, allowing shipowner-employers to sue seaman-employees for negligence doesn’t narrow the remedies available to seaman-employees.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.