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BUSINESS LAW Stock ownership doesn’t mean asset ownership Shareholders in a water-pipeline company lack ownership interest in the assets of the company and cannot sue for alleged injuries arising from the transfer of the assets to a city, the Utah Supreme Court held on April 18. Dansie v. City of Herriman, No. 20050024. In order to provide water to its residents, the city of Herriman, Utah, acquired the assets of Herriman Pipeline and Development Co. The company’s shareholders sued the city, disputing the propriety of the acquisition. A Utah trial court dismissed their claims, finding that their share ownership in the company gave them no ownership of company assets. The Utah Supreme Court affirmed, holding that if, under the terms of the company’s articles of incorporation, the shareholders own an interest in company assets, then they likely suffered injury when company assets were transferred to the city. But upon reviewing the relevant statutes and the company’s articles of incorporation, the court concluded that the plaintiff shareholders did not own company assets. The articles say that the stock evidences the stockholders’ “interests” in corporate assets, including water rights, pipelines, water control facilities and other property. But the “interest” evidenced by the stock is in the “use” of company assets, not in ownership of them.   Full text of the decision CONSTITUTIONAL LAW Court has no jurisdiction over island depopulation A dispute over the U.S. military’s depopulation of an Indian Ocean island in the 1960s is a nonjusticiable political question, the U.S. Circuit Court of Appeals for the District of Columbia held on April 21. Bancoult v. McNamara, No. 05-5049. In the 1960s, the U.S. military forcibly removed the residents of the Indian Ocean island of Diego Garcia so that it could build a military base. Claiming they were mistreated during their forced removal, Oliver Bancoult and other native Chagossian residents of Diego Garcia sued several individuals who were departments of State and Defense employees at the time. A federal D.C. court held that the individual defendants were not liable under the Westfall Act, 28 U.S.C. 2679. The suit was converted into a claim against the United States under the Federal Tort Claims Act. The district court dismissed the suit. Affirming, the D.C. Circuit held that the court lacked subject-matter jurisdiction because the dispute over the removal was a nonjusticiable political question. The court said, “If we were to hold that the executive owed a duty of care toward the Chagossians, or that the executive’s actions in depopulating the islands and constructing the base had to comport with some minimum level of protections, we would be meddling in foreign affairs beyond our institutional competence.” Probation officers cannot work in law enforcement The probation officer Community Safety Unit Act is unconstitutional and void because it compromises the independence of the judiciary and blurs the line between courts and law enforcement, the New Jersey Supreme Court said on April 19. Williams v. State, No. A-129-04. The probation officer act establishes the Probation Officer Community Safety Unit within the Administrative Office of the Courts. The unit is made up of more than 200 probation officers, each authorized to carry a weapon and enforce warrants for arrest against probationers who have violated the terms of their probation. The administrative director of the courts filed a complaint, seeking a judgment declaring the act to be in violation of the New Jersey Constitution. The court granted him summary judgment, and an intermediate appellate court affirmed. The panel held that the act contravened New Jersey high court directives prohibiting probation officers from acting in a law enforcement capacity. The New Jersey Supreme Court affirmed. The statewide system of probation has been entrusted to the judiciary. By authorizing probation officers to be armed and make arrests, the act is “fatally at odds” with the court’s administrative rules governing probation, which prohibit probation officers from performing traditional police functions. CONSUMER PROTECTION Loan refinancing doesn’t end right of rescission Refinancing does not extinguish the rights extended under the Truth in Lending Act to rescind a loan transaction, even if the lender no longer holds a security interest in the home, the 6th U.S. Circuit Court of Appeals ruled on April 18. Barrett v. JP Morgan Chase Bank N.A., nos. 05-5035 and 05-5146. William and Sandra Barrett refinanced their home in 2000 through a local government housing grant. In May 2000, the Barretts again refinanced their home with a loan from Bank One. In January 2001, the Barretts consolidated and refinanced all of their past loans with another new loan through Bank One. In May 2001, the Barretts refinanced the January Bank One loan with another company, and Bank One released all of its security interests in the home. In September 2002 and in January 2003, the Barretts asked Bank One to rescind the January 2001 and May 2000 loans, for failure to make certain disclosures under the Truth in Lending Act. When Bank One refused, the Barretts sued. A Kentucky federal court granted summary judgment to Bank One, ruling that the Barretts’ right of rescission under the act was extinguished when Bank One released its security interest in the house. The 6th Circuit reversed. The Truth in Lending Act gives home-loan borrowers three years in which to rescind a loan transaction when the lender fails to disclose certain terms. Nowhere in the legislation, its exceptions or its implementing regulations does it say that this right is extinguished by refinancing. CRIMINAL PRACTICE Cocaine find suppressed due to trooper’s mistake Twenty-three kilograms of cocaine found in a truck are not admissible as evidence against its owner, because the random search of the truck was based on the mistaken belief it was a regulated commercial vehicle, the 10th U.S. Circuit Court of Appeals held on April 19. USA v. Herrera, No. 05-3057. A Kansas regulatory scheme permits random inspections of certain commercial vehicles. The Fourth Amendment generally allows warrantless inspections of such vehicles, because the regulations give notice to the affected individuals that they are subject to random inspection. Robert Herrera’s truck is not a vehicle within the Kansas regulation, but resembles one. A Kansas state trooper pulled him over, inspected his vehicle and found 23 kilograms of cocaine. Herrera moved to suppress the cocaine in the ensuing drug case against him. After a Kansas federal district court denied his motion, Herrera entered a conditional guilty plea, reserving his right to appeal the suppression issue. The 10th Circuit reversed, finding the search to be a violation of the Fourth Amendment. A regulatory search does not require probable cause because owners and operators of commercial premises in a closely regulated industry have a reduced expectation of privacy. But, “Herrera was not engaging in a closely regulated industry and, thus, would not have had any reason to know that his truck could be subject to random inspection,” the court said. EMPLOYMENT Sunday late shift isn’t proper accommodation A federal district court erred when it ruled that The Home Depot Inc. made a reasonable accommodation for a worker’s religious beliefs when it offered him Sunday mornings off, but not the entire day, the 2d U.S. Circuit Court of Appeals ruled on April 19. Baker v. The Home Depot Inc., No. 05-1069. Home Depot employee Bradley Baker said that he could not work on Sundays because his religious beliefs required him to observe the Sabbath. A new supervisor began scheduling Baker to work on Sundays. When Baker objected, the store manager offered him the option of working a later shift on Sunday. Baker refused, and was fired for unexcused absences. Baker sued in a New York federal court, which ruled that though Baker had met his initial burden of proving a prima facie case of religious discrimination, Home Depot’s offer of late Sunday shifts was a reasonable accommodation. The 2d Circuit reversed. The shift change that Home Depot offered Baker was really no accommodation at all because, although it would allow him to attend church services on Sunday morning, it would not allow him to observe his religious requirement to abstain from work entirely on Sunday. Act’s employee minimum merely element of relief The threshold number of employees required for application of the Family Medical Leave Act of 1993 (FMLA) is an element of a plaintiff’s claim for relief and not a jurisdictional requirement, the 5th U.S. Circuit Court of Appeals held on April 18. Minard v. ITC Deltacom Communications Inc., No. 04-030230. ITC Deltacom Communications Inc. granted Melissa Minard’s request for FMLA leave, sending her a memo stating that she was an “eligible employee” under the statute. Under the FMLA, an eligible employee must work at or within 75 miles of a work site where the employer employs at least 50 employees. On the day Minard was scheduled to return to work, ITC terminated her employment. After Minard went on leave, ITC discovered that it employed fewer than 50 employees at or within 75 miles of her work site. Minard sued ITC under the FMLA. A Louisiana federal court granted ITC’s motion for summary judgment, holding that the defendant wasn’t an employer within the meaning of the FMLA. The 5th Circuit reversed, adhering to the U.S. Supreme Court’s February 2006 ruling that the employee-threshold requirement in Title VII of the Civil Rights Act of 1964 of 15 or more employees doesn’t limit federal court jurisdiction, but only sets a limit on who may qualify for relief. Arbaugh v. Y & H Corp., dba The Moonlight Cafe, 126 S. Ct. 1235. The threshold number of employees for application of Title VII is an “element of a plaintiff’s claim for relief, not a jurisdictional issue.” In light of Arbaugh, the 5th Circuit concluded that the definition section of the FMLA, which defines terms like “eligible employee” is a substantive ingredient of a plaintiff’s claim for relief, not a jurisdictional limitation. IMMIGRATION LAW Widow remains a spouse for immigration purposes A widow, whose late husband had filed a change-of-status application and petition for her before his death, was still classified as a “spouse” for purposes of adjustment of her immigration status, the 9th U.S. Circuit Court of Appeals held on April 23 in a case of first impression. Freeman v. Gonzales, No. 04-35797. Carla Freeman, a national of South Africa and Italy, married Robert Freeman, a United States citizen. After their marriage, Robert Freeman filed a Petition for Immediate Relative and an Application to Register Permanent Resident or Adjust Status. Shortly before the couple’s first anniversary and, while the application and petition were pending, Robert Freeman was killed in an automobile accident. A district director of the United States Citizenship and Immigration Services ordered Carla Freeman removed from the United States, ruling that, due to Freeman’s death, she was no longer a “spouse” for purposes of the Immigration and Nationality Act. Carla Freeman sought a writ of habeas corpus from a federal district court, which denied the petition. The 9th Circuit vacated, holding that an alien widow whose citizen spouse filed the necessary immediate-relative petition form but died within two years of the qualifying marriage nonetheless remains a spouse for immigration purposes. The court said, “We conclude, through our review of the language, structure, purpose and application of the statute, that Congress clearly intended an alien widow whose citizen spouse has filed the necessary forms to be and to remain an immediate relative . . . for purposes of � 1151(b)(2)(A)(i), even if the citizen spouse dies within two years of the marriage.” TORTS Present suicide intent triggers notification need A student’s present intent to commit suicide is required to trigger a school’s duty to notify the student’s parents, the Idaho Supreme Court held on April 24 in a case of first impression. Carrier v. Lake Pend Oreille Sch. Dist., No. 31812. Brian Carrier, a high school student, wrote an essay in which he described past thoughts of suicide, but also wrote that he was happy at that time. His teacher told him to let him know if those thoughts ever returned. After Carrier transferred schools, he committed suicide. Carrier’s parents sued the school district and the teacher, arguing that they failed to comply with Idaho Code �� 33-512(4) and 33-512B, which required the school to notify parents if a student exhibited “suicidal tendencies.” The district said that any indication of suicidal tendencies was in the past only. A trial court certified the question to the Idaho high court in an interlocutory appeal. The Idaho Supreme Court held that the duty to notify required a present intent to commit suicide and found that Carrier had not exhibited such present intent. The court said, “Brian’s clearly stated thoughts and feelings indicate that he was happy at that time and was no longer contemplating suicide.” INSURANCE LAW No coverage for costs of polluted-water defense Defense costs and fees arising from a suit alleging that women had miscarriages due to polluted city drinking water are excluded from insurance coverage by the pollution exclusion, the Virginia Supreme Court held on April 21. City of Chesapeake v. States Self-Insurers Risk Retention Group Inc., No. 051986. More than 200 women alleged that they suffered miscarriages due to exposure to trihalomethanes (THMs) in the water supply of the city of Chesapeake, Va. The city sought insurance coverage for the more than $2.4 million it spent in legal fees and costs in defending the suit. A Virginia federal court certified a question to the Virginia Supreme Court asking whether coverage for those fees and costs was excluded under the pollution exclusion in the relevant policy. The Virginia Supreme Court said that THMs are pollutants within the plain meaning of the insurance policy. Since the women’s underlying complaint alleged bodily injury caused by a “discharge” of the THMs by the city, “[t]hese allegations bring the underlying suit, and its associated legal fees and costs at issue in this certified question, into the ambit of the exclusion provision.”

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