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ANTITRUST

Aviation fuel isn’t motor vehicle fuel under law

Minimum markup provisions applicable to “motor vehicle fuel” do not apply to aviation fuel, the Wisconsin Supreme Court held on May 19. Orion Flight Services Inc. v. Basler Flight Service, No. 2003AP1731.

Basler Flight Service and Orion Flight Services Inc. engaged in a price war over the sale of jet fuel at the Wittman Regional Airport in Oshkosh, Wis. Orion sued Basler, alleging that it sold motor vehicle fuel below the statutory minimum required for motor vehicle fuel, and thereby violated the state’s Unfair Sales Act. A Wisconsin trial court issued a preliminary injunction requiring Basler to set the price of its aviation fuel pursuant to the act’s minimum markup provisions for motor vehicle fuel. An intermediate appellate court reversed.

The Wisconsin Supreme Court affirmed, holding that “motor vehicle fuel” does not include aviation fuel and that the minimum markup provisions in Wis. Stat. § 100 do not apply to aviation fuel. Also, the Wisconsin Administrative Code does not incorporate aviation fuel in its definition of “motor vehicle fuel” and is thus consistent with the statute.

Full text of the decision

CONSTITUTIONAL LAW

Utah can make it hard to pass laws on some issues

Utah’s supermajority voting requirement for enacting laws on specific topics going together with a simple majority requirement for enacting laws on other topics does not violate the First Amendment of the U.S. Constitution, the 10th U.S. Circuit Court of Appeals held on May 17. Initiative and Referendum Institute v. Walker, No. 02-4105.

The Utah Constitution allows voters to initiate legislation to be adopted upon a majority vote of those voting on it. But initiatives relating to wildlife management must be approved by two-thirds of the voters. Several wildlife and animal advocacy groups and legislators challenged this “supermajority” requirement, saying that it imposes a chilling effect on the exercise of their First Amendment rights, as it is impermissibly content-discriminatory. A Utah federal court dismissed their claim.

The 10th Circuit affirmed, holding that the supermajority requirement does not restrict “expressive conduct.” With free speech not implicated, the court observed that the “First Amendment ensures that all points of view may be heard; it does not ensure that all points of view are equally likely to prevail.”

EMPLOYMENT

Pension loss not subject to statute of limitations

A trial court erred in applying a statute of limitations to the commonwealth of Massachusetts’ suit for the forfeiture of a convicted legislator’s pension because the forfeiture occurred as an operation of law upon conviction, the Massachusetts Supreme Judicial Court held on May 15. State Bd. Of Retirement v. Woodward, No. SJC-09575.

Francis Woodward, a member of the Massachusetts Legislature, was convicted of various crimes in 1996, making his pension subject to forfeiture under Massachusetts law. However, the commonwealth did not file suit for forfeiture until 2002. Woodward moved to dismiss the suit, arguing it was time-barred under Massachusetts’ six-year statute of limitations for contracts. A trial court agreed, and dismissed the commonwealth’s suit.

Reversing, the Massachusetts Supreme Judicial Court, held that Woodward’s retirement was forfeited as an operation of law upon conviction, making the statute of limitations inapplicable. The court said, “The board’s implementation of § 15(4) is not an ‘action in contract’ subject to the six-year contract statute of limitations, but a ministerial step to effectuate formally what already has occurred by operation of law.”

GOVERNMENT

County can’t exempt itself from state tort law

A county cannot exempt itself from the Tennessee Governmental Tort Liability Act (GTLA) by adopting an “exclusive” policy for dealing with on-the-job injuries, the Tennessee Supreme Court ruled on May 19. Crawley v. Hamilton County, No. E2003-03028-SC-R11-CV.

Noel Crawley, a corrections officer in Hamilton County, Tenn., tripped and fell at work, injuring his shoulder and inflaming a pre-existing back condition. The county paid Crawley a year’s salary and three years of medical expenses, which was the maximum allowed by the county’s civil service policy. When Crawley sued the county for negligence under the GTLA, the state trial court granted the county’s summary judgment on the ground that Crawley had been paid all he was entitled to under the county policy. An intermediate appellate court reversed, saying the county could not exempt itself from the GTLA.

The Tennessee Supreme Court affirmed. When the GTLA was enacted, the Legislature granted counties the authority to define certain relevant elements, such as fringe benefits. That authority did not grant those same counties the power to suspend or remove the statutorily-based negligence action that the GTLA provides. The county law in this case conflicts with a state law of universal application and is repugnant to public policy because it allows employers to insulate themselves from tort liability over an injury at work.

IMMIGRATION LAW

Illegal alien can make claim on state trust fund

An undocumented alien can form the necessary intent to establish residency and thus be eligible to receive benefits from the New Jersey Unsatisfied Claim and Judgment Fund, the New Jersey Supreme Court ruled on May 18. Caballero v. Martinez, No. A-8-05.

Victor Caballero, a Mexican national, came to this country illegally in 2001 as a 17-year-old, joining four family members in New Jersey. Caballero was severely injured in a car wreck caused by his co-worker falling asleep while driving. Neither the co-worker, Caballero nor Caballero’s family had insurance to cover the more than $38,000 in medical bills. Caballero initiated claims against various individuals including the Unsatisfied Claim and Judgment Fund (UCJF), a trust fund for victims of motor-vehicle accidents involving uninsured and hit-and-run motorists. A trial court ruled that Caballero did not satisfy the UCJF standard for residency because his “tenuous ties to the State of New Jersey . . . evidence a relationship with the state that falls short of those of a bona fide resident.” An intermediate appellate court affirmed.

The New Jersey Supreme Court reversed. Federal immigration law and policy do not factor into state court evaluation of whether an illegal alien can be a “resident” of New Jersey. The meaning of “resident” is to be interpreted under state law. Under state law, Caballero demonstrated the requisite intent to be considered a “resident” of New Jersey: he intended to live in New Jersey for at least five years, he was surrounded by family members in the state, he had steady employment and he had not been the target of deportation proceedings.

INSURANCE LAW

Intentional-acts bar stops coverage for acts of staff

An intentional-acts exclusion in a professional liability policy barring coverage for an insured’s dishonest acts bars coverage for the attendant acts of an insured’s employee, the Louisiana Supreme Court held on May 17. Bonin v. Westport Ins. Corp., No. 05-CC-0886.

Attorney Allen J. Borne negotiated a $450,000 settlement of a wrongful death case without his clients’ knowledge or consent. He forged their signatures on the release agreement and instructed his employee, Fonda Doucet, to sign the agreement and corresponding acknowledgement as a witness to the signatures of his clients. Borne then forged the signatures of his clients on the settlement checks and deposited them into his account. The clients sued Westport Insurance Corp., Borne’s legal malpractice insurer, and added Doucet as a defendant. A Louisiana trial court denied Westport’s motion for summary judgment.

The Louisiana Supreme Court reversed. Borne’s professional-liability policy contained an exclusion for claims based on any criminal, dishonest, malicious or fraudulent act committed by an insured. The claim against Doucet falls within the policy exclusion because it is based upon or arises from a dishonest and fraudulent act committed by Borne, the insured under the policy.

INTELLECTUAL PROPERTY

Sheriff’s software use is copyright infringement

The Los Angeles County Sheriff’s Department committed copyright infringement by loading 6,007 copies of a software application onto its computers when it had purchased only 3,663 licenses, despite its never using more than 3,663 copies at any given time, the 9th U.S. Circuit Court of Appeals held on May 17. Wall Data Inc. v. Los Angeles County Sheriff’s Dept., No. 03-56559.

The Los Angeles County Sheriff’s Department purchased 3,663 licenses of the software application, RUMBA, owned by Wall Data Inc. The department installed copies of the application on 6,007 of its computers, but configured the system so that only 3,663 copies could be used at any given time. Wall sued the department for copyright infringement, but the department countered that because it never used more copies than it had licenses at any given time, it was entitled to the defenses of fair use and the essential step doctrine of 17 U.S.C. 117. A California federal court granted summary judgment to Wall.

Affirming, the 9th Circuit held that by loading more copies than it had licenses, the department committed copyright infringement, despite never using more than 3,663 licenses at any given time. The court held that neither the four-pronged fair-use test nor the essential step doctrine provided a defense. The court said, “Even under time pressure, there was no need for the Sheriff’s Department to copy the RUMBA Office software onto the hard drives of nearly all of its Twin Towers computers. Instead, the Sheriff’s Department could have used hard drive imaging to install RUMBA software onto the number of computers for which it had licenses. Its decision not to do so was an effort to save time and preserve flexibility . . . .We conclude that the essential step defense was not intended to cover such situations.”

PRODUCTS LIABILITY

Post-FDA approval, state law claim is pre-empted

Section 360k(a) of the 1976 Medical Device Amendments to the Food, Drug and Cosmetic Act pre-empts common law tort claims for medical devices that enter the market pursuant to the Food and Drug Administration’s premarket approval (PMA) process, the 2d U.S. Circuit Court of Appeals ruled on May 16. Riegel v. Medtronic Inc., No. 04-0412.

The FDA approved Medtronic Inc.’s PMA application for the Evergreen Balloon Catheter in August 1994, and its supplemental applications in 1995 and 1996 dealing with revised labeling. In 1996, Charles Riegel underwent a coronary angioplasty. The physician treating him inserted the catheter into his artery and inflated the device several times, up to a pressure of 10 atmospheres. The device label specifies that the catheter should not be inflated beyond the “rated burst pressure” of eight atmospheres. On the final inflation, the catheter burst, and Riegel’s condition deteriorated rapidly. He suffered severe and permanent injuries.

Riegel sued Medtronic in a New York federal court, based on diversity jurisdiction, advancing five state common law claims, including negligent design, manufacture and sale of the catheter. The district court granted Medtronic’s summary judgment motion on all claims.

The 2d Circuit affirmed, holding that the PMA process proscribes a maker’s ability to deviate from approved standards. For the “relatively small subset” of devices that go through the PMA process, state common law is pre-empted. Claims for devices that deviate from PMA-approved standards are not pre-empted.

TRANSPORTATION

Federal law pre-empts Tobacco Delivery Law

Portions of a Maine law that restrict and regulate the transport of electronically purchased tobacco products are pre-empted by federal law, the 1st U.S. Circuit Court of Appeals ruled on May 19. New Hampshire Motor Transport Assoc. v. Rowe, No. 05-2136.

Maine enacted a so-called Tobacco Delivery Law to regulate the sale and delivery of tobacco products purchased via the Internet or by other electronic means. Some trade associations representing air and motor carriers, including United Parcel Service Inc. (UPS), sued Maine’s attorney general alleging that parts of the law, i.e., Me. Rev. Stat. Ann. tit. 22, §§ 1555-C(3)(C) and 1555-D, are pre-empted by 49 U.S.C. 14501(c)(1) and 49 U.S.C. 41713(b)(4)(A), which are parts of the Federal Aviation Administration Authorization Act of 1994. Those FAA provisions bar states from enacting laws relating to prices, routes or services of air or motor carriers of property. A Maine federal court granted summary judgment for the associations.

The 1st Circuit affirmed, holding that because Maine’s tobacco law requires carriers to implement state-mandated procedures in the delivery of packages, it is pre-empted by the 1994 FAA law. This law pre-empts Section 1555-C(3)(C), which requires tobacco retailers seeking to ship tobacco products directly to Maine consumers to use only carriers that deliver packages directly to addressees, require the signatures of addressees and conduct age verifications on addressees. Because Section 1555-D has the effect of forcing UPS to change its uniform package-processing procedures, it is also pre-empted.

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