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BUSINESS LAW Fund investors were on notice about Enron woes Shareholders’ knowledge that their mutual fund had invested in Enron, that Enron had filed for bankruptcy and that the fund had Enron-specific losses meant that they were on inquiry notice more than a year before the filing of their suit, the 3d U.S. Circuit Court of Appeals ruled on Jan. 13. Benak v. Alliance Capital Management LP, No. 05-1070. Alliance Capital Management’s May 2001 annual report identified the large number of Enron shares the fund had. Reports about Enron’s financial woes surfaced in September 2000, and Enron filed for bankruptcy on Dec. 2, 2001. On Dec. 7, 2001, an Alliance board member was identified as also being on the Enron board of directors. Shareholders filed a securities fraud suit on Dec. 13, 2002, in a New Jersey federal court. The court dismissed the suit, saying that once shareholders knew that the fund had Enron stocks, they were on inquiry notice when reports of Enron’s financial troubles surfaced. The relevant statute of limitations, 15 U.S.C. 78i(e), is “one year after discovery of the facts constituting the violation and within three years after such violation.” The 3d Circuit affirmed, analyzing the different standards for inquiry notice for mutual fund investors, as opposed to direct investors. There is a difference between storm warnings showing that a company is in trouble and public reports regarding a fund’s investment in the troubled company. Though the fund investor has less reason to monitor the health of the companies the fund invests in than a direct investor, media accounts linking Alliance to Enron put the shareholders on inquiry notice prior to Dec. 13, 2001, more than a year before the filing of the suit. Full text of the decision CIVIL RIGHTS Employer’s English-only rule may violate Title VII A city in Oklahoma may have violated Title VII’s disparate impact/disparate treatment standards when it enacted a rule that bilingual city workers must speak only English during work, the 10th U.S. Circuit Court of Appeals held on Jan. 11. Maldonado v. Altus, Okla., No. 04-6062. The city of Altus, Okla., enacted a policy that all work-related communications during the workday shall be in English except when necessary to communicate with certain nonemployees whose ability to speak English is limited. Some Hispanic, bilingual city employees claimed that the policy discriminates against them based on race and national origin in violation of titles VI and VII of the Civil Rights Act of 1964. They also claimed intentional discrimination under 42 U.S.C. 1981 and 1983, saying that the policy deprives them of equal protection and free speech. A federal Oklahoma court granted the city summary judgment. The 10th Circuit reversed and remanded on the Title VII disparate impact and disparate treatment issue, but affirmed on the other claims. The court said, “the very fact that the City would forbid Hispanics from using their preferred language could reasonably be construed as an expression of hostility to Hispanics.” A court could find that the city had failed to establish a business necessity for the rule and intended to create a hostile work environment. CONSTITUTIONAL LAW Taxpayers can fight faith-based initiatives Taxpayers have standing to challenge executive branch programs that allegedly violate the establishment clause, the 7th U.S. Circuit Court of Appeals held on Jan. 13. Freedom From Religion Foundation Inc. v. Chao, No. 05-1130. Taxpayers complained about the use of money appropriated by Congress to fund conferences that various executive-branch agencies hold to promote President Bush’s “Faith-Based and Community Initiatives,” which is a program created by executive orders whose stated goal is to promote community organizations, whether secular or religious. The plaintiffs claimed that the conferences are designed to promote religious community organizations over secular ones. A Wisconsin federal court held that a taxpayer lacks standing under Article III of the U.S. Constitution to litigate an alleged violation of the Constitution’s establishment clause unless Congress had earmarked money for the program or activity that was under challenge. The plaintiffs had claimed that the conferences are funded by money derived from appropriations, although not appropriations “earmarked for these conferences.” The 7th Circuit vacated and remanded, saying that “[t]axpayers have standing to challenge an executive branch program, alleged to promote religion, that is financed by a congressional appropriation, even if the program was created entirely within the executive branch, as by Presidential executive order.” No warrantless search of vehicle following arrest Despite U.S. Supreme Court Fourth Amendment precedent to the contrary, the New Jersey Constitution does not allow police to conduct a warrantless search of a vehicle after the occupants have been removed from the vehicle and secured in police custody, the New Jersey Supreme Court ruled on Jan. 10. State of New Jersey v. Eckel, No. A-95-04. Police stopped a car driven by Dana Sanfillipo because one of her passengers, William Eckel, was wanted on an outstanding warrant. Officers placed Eckel in the police cruiser, while Sanfillipo stood by. A police officer noticed a plastic bag, which appeared to contain cocaine. He also found a bag of marijuana in the car. Eckel and Sanfillipo were charged with multiple counts of drug possession. The trial court denied Eckel’s motion to suppress the evidence, saying that the officer’s entry into the car was reasonable. An intermediate appellate court reversed, saying it would not follow the 1981 U.S. Supreme Court decision in New York v. Belton, which held that searches incident to arrest were permissible under the Fourth Amendment. The New Jersey Supreme Court affirmed, though it remanded other questions for consideration: “We decline to adopt Belton and its progeny because to do so would require it to accept a theoretically rootless doctrine that would erode the rights guaranteed to New Jersey citizens” under the state constitution. Once the occupants are secured and cannot jeopardize officer safety or destroy evidence, a warrantless search is unreasonable. CONSUMER PROTECTION Colorado law permits claims against attorneys A client may sue an attorney under the Colorado Consumer Protection Act (CCPA) for false and deceptive advertising, the Colorado Supreme Court held on Jan. 9. Crowe v. Tull, No. 04SA385. Azar & Associates, a personal injury law firm, aired television advertisements throughout Colorado representing itself as a law firm that was superior to other firms at recovering money for its clients. Richard Crowe was involved in a car accident in which he sustained mild traumatic brain injury with speech impairment. He retained Marc Tull of the Azar firm to represent him. Crowe followed Tull’s advice to accept the $4,000 settlement offer proffered by the opposition’s insurance company, despite lost wages in excess of $7,000 and medical expenses in excess of $17,000. Crowe sued Tull and the Azar firm for legal malpractice, violation of the CCPA and breach of fiduciary duty. He alleged that the Azar firm’s practice of quick settlements with minimal effort constituted an illegal scheme against the public through the use of false and deceptive advertising. The trial court dismissed the CCPA and breach of fiduciary duty claims as being duplicative of the legal malpractice claim, and found that the “actual practice of law” was not regulated by the CCPA. Crowe requested the Colorado Supreme Court to issue a rule to show cause why he should not be granted relief from the trial court’s dismissal. The Colorado Supreme Court reversed and remanded. The CCPA requires that a claimant show “(1) that the defendant engaged in an unfair or deceptive trade practice; (2) that the challenged practice occurred in the course of defendant’s business, vocation, or occupation; (3) that it significantly impacts the public as actual or potential consumers of the defendant’s goods, services, or property; (4) that the plaintiff suffered injury in fact to a legally protected interest; and (5) that the challenged practice caused the plaintiff’s injury.” The court concluded that attorneys may be covered under the plain language of the CCPA, because it protects consumers of legal services from fraud against the public. CRIMINAL PRACTICE 55-year prison term for drug/firearms crime OK A mandatory 55-year jail term under federal law for possessing but not using guns during drug offenses is not cruel and unusual punishment, the 10th U.S. Circuit Court of Appeals held on Jan. 9. USA v. Angelos, No. 04-4282. Weldon Angelos, with no prior adult criminal history, was convicted of multiple drug, firearms and money laundering offenses, including three counts of carrying or possessing a firearm during a drug trafficking crime in violation of 18 U.S.C. 924(c). The mandatory minimum sentences required under Section 924(c) called for a 55-year incarceration. The court sentenced him to 55 years and one day in prison. The 10th Circuit affirmed, holding that “this is not an ‘extraordinary’ case in which the sentences at issue are ‘grossly disproportionate’ to the crimes for which they were imposed.” The court said that in enacting Section 924(c), Congress intended to protect society by incapacitating those criminals who repeatedly engage in serious felonies while possessing firearms and to deter them from possessing firearms while committing certain felonies. EMPLOYMENT Kidney dialysis is major life activity under ADA A federal district court erred in granting summary judgment to an employer in a disability discrimination suit because elimination of bodily wastes through kidney dialysis was a “major life activity” under the Americans With Disabilities Act (ADA), the 4th U.S. Circuit Court of Appeals held on Jan. 10. Heiko v. Colombo Savings Bank F.S.B., No. 04-2046. James Heiko, an assistant vice president at Colombo Savings Bank suffering from renal failure, had to rearrange his work schedule so that he could undergo kidney dialysis several hours a week. After he was denied a promotion, Heiko sued Colombo in a Maryland state court, arguing that the bank denied his promotion and took other adverse action against him because of his medical condition. Colombo removed the case to federal court on diversity grounds, and a federal district court granted summary judgment to Colombo, holding that Heiko was not disabled under the ADA because elimination of bodily wastes was not a “major life activity” under ADA. Reversing in part, the 4th Circuit held that summary judgment was improper because elimination of bodily wastes through kidney dialysis was a major life activity under ADA. The court said, “The elimination of bodily waste is basic to any person’s daily regimen. It is also a daily activity that the average person can accomplish with little effort by urinating several times a day. The elimination of bodily waste is, moreover, not only ‘of central importance to daily life,’ but of life-sustaining importance.” LEGAL PROFESSION Anthrax suit malpractice claim should go forward A trial court erred in dismissing a legal malpractice action filed by the estate of a postal worker killed in the 2001 anthrax attacks because the estate satisfied the “fairly minimal pleading standards” of District of Columbia law, the District of Columbia Court of Appeals held on Jan. 12. In re Estate of Curseen, No. 05-CV-277. Joseph Curseen, a Washington postal worker, died after contact with a letter addressed to Senator Tom Daschle, D-S.D., which was one of multiple letters containing anthrax mailed in the fall of 2001. Buchanan Ingersoll of Pittsburgh, and its attorney, Steven Hilton, represented Curseen’s estate in matters stemming from Curseen’s death. The estate eventually retained new counsel, who filed medical malpractice and Fifth Amendment claims against the U.S. Postal Service. The estate, through its new counsel, also filed the instant medical malpractice action against Buchanan Ingersoll and Hilton. A trial court granted Buchanan Ingersoll’s motion to dismiss. Reversing, the District of Columbia high court said that the estate would not know if it sustained damages until the litigation’s conclusion. The court said, “Thus, appellants seem to make an anticipatory claim of legal malpractice. One doubts that the appellants could, if called upon to do so today, prove any damage that has yet resulted from the alleged malpractice. Nevertheless, appellants have specifically alleged causation and damages. The filing of a motion pursuant to Rule 12 (b)(6) does not call upon the plaintiff to offer his proof. All that is required . . . is ‘a short and plain statement of the claim showing that the pleader is entitled to relief.’ ” TORTS Banker’s civic activity not within scope of job A bank manager who was involved in an accident while making deliveries for the United Way during normal banking hours was not within the scope of his employment, the Mississippi Supreme Court ruled on Jan. 12. The Commercial Bank v. Hearn, No. 2004-IA-02095-SCT. Dexter Thornton was a manager at the Commercial Bank of DeKalb. As an officer of the bank, he was not required to work on a specific schedule. On Oct. 5, 2000, during normal banking hours, Thornton used his personal vehicle to deliver a United Way pledge solicitation package to a local business. During that delivery, he struck a vehicle driven by Pattie Hearn, killing her infant. Hearn filed a wrongful death suit against Thornton, the bank and Progressive Gulf Insurance Co. A trial court denied the bank’s motion for summary judgment. The Mississippi Supreme Court reversed. The bank was not a member of the United Way and it didn’t reimburse Thornton for his solicitation on its behalf. While community involvement is a factor in the hiring of bank officers and the bank may have indirectly received a benefit from Thornton’s United Way activities, the court could not find respondeat superior liability where there was no evidence that solicitations on behalf of the United Way were a part of Thornton’s employment responsibilities.

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