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BUSINESS LAW Corporate buyout wrong fix for fiduciary breach A trial court abused its discretion in ordering a corporate buyout to remedy a breach of fiduciary duty, the Nevada Supreme Court held on Jan. 19. Bedore v. Familian, No. 42075. Rory Bedore, Bruce Familian and Jon Athey incorporated City Stop Inc. to purchase and manage convenience stores in Clark County, Nev. Bedore and Familian then incorporated Silver State Gaming Inc. to oversee the gaming operations in the stores, with Bedore as president and director. After some disputes, Familian and Athey removed Bedore from his positions when Bedore refused to sell his interest in Silver State to them. Familian and Athey then named themselves as president and secretary/treasurer, respectively, and decided to use their own gaming company in the new convenience stores instead of Silver State. Bedore sued Familian and Athey for breach of fiduciary duty for taking excessive salaries and usurping corporate opportunities. The trial court ruled that the salaries of Familian and Athey were excessive and that they acted out of self-interest in pursuing an opportunity in the same line of business as Silver State. The court ordered Silver State to be sold to the highest bidder in a blind bid process. Bedore was the successful bidder. The Nevada Supreme Court reversed. Nev. Rev. Stat. � 78.650 allows shareholders to request dissolution or appointment of a receiver if the corporation’s directors are “guilty of fraud or collusion or gross mismanagement,” or if the “assets of the corporation are in danger of waste, sacrifice or loss through attachment, foreclosure, litigation or otherwise.” Nev. Rev. Stat. � 78A.140(1)(a) allows shareholders of a close corporation the same remedy when division among the shareholders threatens “irreparable injury.” Courts may order a corporate buyout only if it is the only practical alternative to dissolution. Since there was no threat of irreparable injury, and the misconduct in this case did not amount to fraud or gross mismanagement, the court concluded that there were no grounds for a corporate buyout. Full text of the decision CIVIL RIGHTS Disabled-parking signs fee is discriminatory Under the Americans With Disabilities Act (ADA), the imposition of a fee for disabled-parking placards is discriminatory, the 8th U.S. Circuit Court of Appeals ruled on Jan. 17. Klingler v. Director, Dep’t of Revenue, No. 03-2345. The state of Missouri charges a fee for the use of windshield placards that allow disabled people to park in reserved spaces close to the entrances of buildings. The plaintiffs, disabled people who had purchased the placards, filed suit against the state of Missouri, claiming that the fee violates the ADA. A Missouri federal court granted the plaintiffs’ motion for summary judgment. After the 8th Circuit upheld the position of the state of Missouri on constitutional grounds in two separate opinions, the U.S. Supreme Court vacated the second judgment and remanded in light of current case law. The 8th Circuit reversed and invalidated the fee. 28 C.F.R. 35.130(f), part of the regulations promulgated by the Department of Justice to implement and enforce the ADA, prohibits public entities from placing “a surcharge on a particular individual with a disability or any group of individuals with disabilities to cover the costs of measures . . . that are required to provide that individual or group with the nondiscriminatory treatment required by the Act or this part.” Because Missouri’s fee scheme imposed a fee only on disabled people who need the windshield placards, the fee violated the ADA. Litigation exception bars sequestration suit The litigation exception protects an attorney from a civil rights suit based on the attorney’s request for a sequestration motion to exclude a spectator from a public hearing, the New Jersey Supreme Court ruled on Jan. 18. Loigman v. The Township Committee of Middletown, No. A-99-04. A police officer sued the Township of Middletown, N.J., for wrongfully denying him a promotion. The officer moved to sequester all witnesses except the ones helping the town’s counsel, Thomas Savage. Savage then asked the court to sequester a community activist and attorney, Larry Loigman, saying that he was a potential witness, though Loigman denied it. The administrative law judge did not make a ruling, but on the day of the hearing, Savage again urged the ALJ to order Loigman to leave, and to adjourn the proceedings if he did not do so. Rather than delay the proceedings, Loigman voluntarily left the public gallery. Loigman later filed a civil rights suit against Savage and the town, saying that his First Amendment right to attend a public hearing was violated. The trial court ruled for Loigman, and an intermediate appellate court affirmed. The New Jersey Supreme Court reversed, holding that the litigation privilege bars Loigman’s suit. Also, by hiring Savage, the town didn’t make him an official with final policymaking authority, an element Loigman had to prove under 42 U.S.C. 1983. No Eighth Amendment relief for Dahmer’s killer Though his mental illness was likely to have been exacerbated by prison conditions, the inmate who killed Jeffrey Dahmer and others is unable to prove that prison officials violated his Eighth Amendment rights, the 7th U.S. Circuit Court of Appeals held on Jan. 18. Scarver v. Litscher, No. 05-2999. Christopher Scarver, who murdered cannibal/murderer Jeffrey Dahmer in prison and two other people, is schizophrenic, suicidal, dangerous and hears voices constantly. He said that officials of the Wisconsin Secure Program Facility-the so-called Supermax-where he once lived, violated his constitutional right not to be subjected to cruel and unusual punishment by imposing conditions that one district judge called “so severe and restrictive that they exacerbate the symptoms that mentally ill inmates exhibit.” A Wisconsin federal court dismissed all defendants, despite holding that a jury could reasonably find that some of them had violated his constitutional rights by subjecting him to conditions that had significantly aggravated his mental illness. The 7th Circuit affirmed. Although it is “a fair inference that conditions at Supermax aggravated the symptoms of Scarver’s mental illness and by doing so inflicted severe physical and especially mental suffering,” the court found no evidence that the defendants knew that he was at risk of severe distress. Though they probably “should have known,” the court said, the conduct of the defendants fell short of the “deliberate indifference” mental state needed for an Eighth Amendment violation. CONSTITUTIONAL LAW Lease from church is no First Amendment breach A public school system did not violate the establishment clause of the U.S. Constitution by making lease payments to a Baptist church, the Georgia Supreme Court held on Jan. 17. Taetle v. Atlanta Independent School System, No. S05A1632. To alleviate overcrowding at one of its elementary schools, the Atlanta Independent School System (APS) leased classroom space from Buckhead Baptist Church. A lawsuit alleged that the agreement violated the establishment clause of the Georgia Constitution, and sought to enjoin the school system from making payments to the church. On cross motions for summary judgment, a trial court held for the school system. Affirming, the Georgia Supreme Court held that because the lease had a nonsectarian purpose, it did not violate the establishment clause. The court said, “[A] political subdivision of this state cannot give money to a religious institution in such a way as to promote the sectarian handiwork of the institution. But that is not to say that a political subdivision of the state cannot enter into an arms-length, commercial agreement with a sectarian institution to accomplish a non-sectarian purpose. And that is what happened here . . . .The payments made by APS under that lease do not constitute the giving of monetary aid to the church and do not, therefore, violate the Establishment Clause of our Constitution.” CONSUMER PROTECTION Recipient of credit ads may represent class A person who received unsolicited credit solicitations should not be precluded from representing a class of 1.2 million recipients in a suit, even though she had brought many similar suits, the 7th U.S. Circuit Court of Appeals held on Jan. 17. Murray v. GMAC Mortgage Corp., No. 05-8035. Nancy Murray received a credit solicitation from GMAC Mortgage Corp., which got her information from credit bureaus without her consent and offered her a loan to be secured by a home mortgage. She was deluged by such offers and concluded that GMAC had violated the Fair Credit Reporting Act by not making the essential “firm offer of credit,” and by not including a clear and conspicuous notice of her right to close her credit information to those who lacked her prior consent. She filed suit proposing to represent a class of about 1.2 million recipients of similar offers, and demanded statutory damages ranging from $100 to $1,000 per person. An Illinois federal court refused to allow Murray to represent the class. The 7th Circuit reversed, rejecting the four reasons the district court cited for denying certification, i.e., that counsel did not try to cut a deal for Murray personally; that the complaint seeks statutory but not compensatory damages; that statutory damages, if awarded to a class, would be ruinously high; and that Nancy Murray is a “professional plaintiff” who is unfit to represent a class. CRIMINAL PRACTICE DNA testing right can’t be waived by implication The right to DNA analysis created by the Post-Conviction DNA Analysis Act of 2001 may not be waived by implication, the Tennessee Supreme Court ruled on Jan. 13 in a matter of first impression. Griffin v. State, No. M2003-00557-SC-R11-PC. Steven Griffin was charged with multiple counts of aggravated rape and kidnapping. He asked for a speedy trial, and he was convicted in October 1993. The conviction and the 85-year sentence were affirmed on appeal. His subsequent petition for post-conviction relief, based on ineffective assistance of counsel, was denied, and that judgment was affirmed. In 2002, Griffin filed a petition for DNA testing under the 2001 DNA law. The trial court denied the petition without an evidentiary hearing, holding that Griffin had “opted out” of getting any testing when he asked for a speedy trial. An intermediate appellate court affirmed. The Tennessee Supreme Court reversed. There is no statutory limit on filing a DNA petition, and there is no provision for waiver for failure to ask for testing at a prior proceeding. Though the right may be expressly waived or abandoned, it cannot be waived by implication. ENVIRONMENTAL LAW Wireless facility can’t be barred on aesthetic basis Construction of a wireless telephone facility cannot be blocked on the ground of aesthetic injury because governing state law does not permit such aesthetic considerations in permit denials, the 9th U.S. Circuit Court of Appeals held on Jan. 17. Sprint PCS Assets LLC v. City of La Canada Flintridge, No. 05-55014. The city of La Canada Flintridge, Calif., denied Sprint PCS Assets LLC’s applications seeking to construct two wireless telecommunications facilities. The city claimed that the facilities would interfere with rights-of-way and would have a negative aesthetic impact. Sprint sued in California federal court, arguing that the city’s denial violated both the federal Telecommunications Act of 1996 and the California Public Utilities Code, Cal. Pub. Util. Code � 7901. The court held that the city had failed to establish a right-of-way problem. But the court held for the city on the aesthetic injury claim. Reversing, the 9th Circuit held that the state’s utilities code pre-empted municipal ordinances, and that Section 7901 did not provide for permit denials based on aesthetic injury. The court said, “[T]he most natural reading of � 7901 grants broad authority to telephone companies to install necessary wires and fixtures, so long as they do not interfere with public use of the roads. The text focuses on the function of the road-its ‘use,’ not its enjoyment.” FAMILY LAW Res judicata doesn’t bar visitation order change A custodial parent may modify a grandparent visitation order when the law upon which the order was based was subsequently found to be unconstitutional, the Iowa Supreme Court held on Jan. 21. Spiker v. Spiker, No. 147/04-1182. Kelly and Sherry Spiker are the parents of two children, Paige and James. After the couple divorced in 1999, Sherry Spiker was given primary physical custody, and Kelly Spiker was allowed visitation. Jim and Wanda Spiker, Kelly Spiker’s parents, filed a petition for grandparent visitation in 2001. The grandparents and Sherry Spiker entered into a stipulation agreement to allow grandparent visitation. Following Sherry Spiker’s refusal to allow the grandparents to see either child, the grandparents began contempt proceedings against her in 2004. Ignoring the mother’s assertions that denial of the visitation was in the children’s best interest and that the grandparent-visitation statute was unconstitutional, the trial court found her in contempt and awarded the grandparents an additional seven days of visitation with the children. Spiker filed a petition to modify, vacate or stay the visitation order, again challenging its constitutionality. The trial court granted her motion for summary judgment and vacated the visitation order. The Iowa Supreme Court affirmed. Since the visitation order, parts of the grandparent-visitation statute had been found to be unconstitutional. While res judicata would normally bar a challenge to the constitutionality of the visitation order, courts may generally modify decrees concerning child custody and visitation when there has been a substantial change in circumstances-such as the newly recognized unconstitutionality of the grandparent-visitation statute. GOVERNMENT City MTBE suits must yield to state MTBE suit Suits filed by New Hampshire cities against manufacturers and suppliers of the gasoline additive MTBE must yield to state suits against the same entities, the New Hampshire Supreme Court ruled on Jan. 18. State of New Hampshire v. City of Dover, No. 2005-552. The state of New Hampshire sued 61 MTBE defendants in September 2003. Over the next two months, the governments of the New Hampshire cities of Portsmouth and Dover filed suit against the same 61 defendants. The suits raised the same seven theories of liability-ranging from strict products liability to trespass and deceptive trade practice-and added two more theories of civil conspiracy and private nuisance. Both sets of suits asked for the same type of relief. All of the suits were removed to a New York federal court, which denied the plaintiffs’ request to remand. The state appealed that ruling, and sued in a New Hampshire state court seeking a declaration that the cities’ suit had to yield to the state’s suit, which was granted. The New Hampshire Supreme Court affirmed. The state has parens patriae standing to bring the MTBE suit because its interest in protecting its waters from MTBE is sufficiently concrete to be a quasi-sovereign interest, and it involves a substantial segment of the population. The cities’ interests are represented by the state’s suit.

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