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APPEALS

Court takes strict view of statute of limitations

The 1st U.S. Circuit Court of Appeals ruled on June 22 that a Georgia woman was time-barred from suing the FBI over her father’s murder by two government informants. Deegan v. U.S., No. 05-2093.

The FBI allegedly knew in advance of its informants’ plans but did nothing to block the March 1965 murder of Edward Deegan in Massachusetts, or to prevent the wrongful conviction of two other men in the crime. In 2000, the Boston Globe wrote articles detailing the FBI’s complicity in the slaying, but Deegan’s daughter, Yvonne Gioka, who lived in Georgia, did not learn of the FBI’s involvement until the summer of 2002. She and another daughter filed a claim in 2003 and then sued the government for wrongful death and intentional infliction under the Federal Tort Claims Act in August 2004.

A Massachusetts federal district court dismissed the suit on grounds it was filed outside the applicable two-year limit following the claim’s “accrual.” The 1st Circuit affirmed, saying accrual occurs when the plaintiff “knew or reasonably should have known” the cause of the injury. Despite the media focus on the case in Boston, and despite health problems including a stroke, Gioka should have known about the case, the court said.

Full text of the decision

Mich. attorney general’s wings are clipped

The Michigan state attorney general cannot initiate an appeal of a case as an intervenor when the losing party itself declines to appeal, a divided Michigan Supreme Court ruled on June 21. Federated Ins. Co. v. Oakland County Road Commission, No. 126886.

When petroleum leaked onto his land from adjacent property owned by the Oakland County Road Commission, Carl Schultz and his insurer filed a cost-recovery action in Michigan state court. The trial judge granted summary disposition on the ground that Schultz’s claim was barred by a six-year statute of limitations. Neither Schultz nor his insurer filed a timely notice of appeal.

Ruling 4-3, the justices dismissed the state attorney general’s bid to appeal, finding no justiciable controversy. The attorney general enjoys considerable statutory authority to intervene in court cases, but not when it is not an aggrieved party and does not represent the aggrieved party, the majority ruled.

The dissenters faulted the majority for “legislat[ing] from the bench a new restriction on the Attorney General’s authority to intervene by premising it on a losing party’s decision to pursue or not pursue an appeal.”

BUSINESS LAW

Selective waiver for privileges rejected

On an issue of first impression in its jurisdiction, the 10th U.S. Circuit Court of Appeals declined on June 19 to adopt a selective waiver rule to protect privileged material turned over to federal investigators by a corporate defendant. In re Qwest Communications Int’l Inc., No. 06-1070.

Although the U.S. Department of Justice and the Securities and Exchange Commission had agreed not to deliver Qwest’s attorney-client and work-product material to third parties, a Colorado federal district judge in a related securities action declined to recognize Qwest’s selective-waiver claim.

The 10th Circuit denied Qwest’s petition for writ of mandamus, finding “almost unanimous rejection of selective waiver” of the attorney-client privilege among the other circuits, with the 8th Circuit alone adopting it in circumstances applicable to Qwest. The 4th Circuit was the only jurisdiction to approve selective waiver in relation to the work-product doctrine.

The 10th Circuit rejected amicus arguments that such waivers are not quite voluntary, because companies make them to avoid being labeled uncooperative.

CONSTITUTIONAL LAW

Federal body armor ban survives scrutiny

The 10th U.S. Circuit Court of Appeals reached past recent U.S. Supreme Court commerce clause precedent to sustain a former gang member’s conviction for possession of body armor. U.S. v. Patton, No. 05-3169.

Carl Patton, on probation for a street gang-related shooting, had legally purchased a California-made bulletproof vest in 2001, following his parole to a Wichita, Kan., neighborhood where he was being menaced by former rival gangs. Subsequently, Congress approved 18 U.S.C. 931, banning possession of body armor by felons. Police found the vest in Patton’s possession in 2004, shortly after the law was passed.

The 10th Circuit, ruling on June 20, concluded that the statute fit none of the criteria in Gonzales v. Raich, 545 U.S. 1 (2005). There, the Supreme Court recognized congressional authority to regulate only “the channels of interstate commerce,” “the instrumentalities of interstate commerce, and persons or things in interstate commerce,” and “activities that substantially affect interstate commerce.”

The circuit court resorted instead to Scarborough v. U.S., 431 U.S. 563, 575 (1977), which held that Congress could regulate the possession of firearms solely because they previously had moved across state lines. Because Patton’s vest moved across state lines at some point following its manufacture in California, Congress may regulate it under Scarborough, the court said.

CRIMINAL PRACTICE

Police sustained in Oscar thief’s arrest

Police committed no violation in a warrantless arrest of a shipping worker suspected of stealing Academy Award statuettes, the 9th U.S. Circuit Court of Appeals held on June 19. Although police made the arrest outside his home, they’d done nothing to coerce him into leaving the dwelling, the court said in Hart v. Parks, No. 04-55553.

Los Angeles police suspected Anthony Hart, an employee of Roadway Express Shipping, of stealing “Oscar” statuettes that were to be presented during the 2000 Academy Awards ceremony. Police went to Hart’s home and requested that he come outside. He consented, and was arrested following questioning. He pleaded nolo contendre to receiving stolen property and drew three years’ probation.

Hart then sued the police under 42 U.S.C. 1983, arguing that the warrantless arrest at his home violated his constitutional rights. Affirming summary judgment against Hart, the 9th Circuit recognized that police could not make warrantless arrests in or just outside a suspect’s home, but noted that in the controlling precedent the police surrounded the suspect’s home and ordered him out at gunpoint.

“All admissible evidence shows that Hart was asked to leave his house and did so free from coercion, let alone free from ‘circumstances of extreme coercion’ commensurate with those presented in [the case law],” the court said.

License tag gave rise to reasonable suspicion

A license plate displayed in the rear window of a vehicle instead of affixed to the bumper constituted reasonable suspicion for police to stop a motorist, the U.S. Circuit Court of Appeals for the District of Columbia held on June 22. Hawkins v. U.S., No. 04-CF-57.

Washington police stopped Gregory Hawkins for failure to securely affix the license tag to his car as required by local regulations. They discovered marijuana and a handgun in the vehicle, and he subsequently was convicted of unlawful possession of the weapon and drugs.

On appeal, Hawkins argued that the evidence should have been suppressed because the stop was illegal. He said that nothing in District of Columbia law required the plate to be on the rear bumper.

The appeals court upheld the search. “It is sufficient for our purposes here to conclude that the officers had an objective reason to believe that Hawkins’ license plate did not comply with the applicable regulations because it was not ‘securely fastened’ to his vehicle, and that the police therefore were authorized to investigate the matter by initiating a traffic stop,” the court said.

INSURANCE LAW

Guaranty pool is still on the hook

When an insured is covered by both solvent and insolvent insurers, and the solvent insurer has paid an amount that exceeds the statutory per-claim maximum allowed by the New Jersey Property-Liability Insurance Guaranty Act, but that falls short of the total amount due, the insured may still seek compensation under the act, the New Jersey Supreme Court ruled on June 19. Thomsen v. Mercer-Charles, No. A-35-05.

Larry Spell sued Janice Mercer-Charles for injuries Spell suffered in a car accident. Mercer-Charles had two insurance policies, each with $1 million in coverage. Both insurers agreed to settle with Spell for an aggregate amount of $2 million, but one of them, Reliance Insurance Co., was declared insolvent. A state pool assumed responsibility for the claims, then asked a state trial court whether the $300,000 per-claim maximum payment it was allowed to make could be reduced by the amount already paid by the still-solvent insurer. The trial court said no, entering a $1.3 million judgment.

An intermediate appeal court thought otherwise, but the state Supreme Court said that interpreting the ambiguous statute the way the association suggested would leave Snell without the benefit of the relief the act was supposed to offer.

LEGAL PROFESSION

No getting around ban on claim assignment

The Washington Supreme Court on June 19 rejected an attempt to get around a ban on assigning the proceeds of a legal malpractice claim to an adversary in the underlying litigation. Kim v. O’Sullivan, No. 56035-2-I.

Thomas Reina was injured in a bar fight and sued bar owner Dong Wan Kim. Unhappy with his insurers’ attorney, Kim retained another lawyer and authorized him to settle with Reina for $3 million. In exchange for Reina’s agreement not to enforce the judgment against him, Kim assigned him his legal malpractice claims and promised to let him keep any recovery. Kim and Reina modified their agreement to instead have Kim pursue his malpractice action himself, although Reina still was to receive any recovery.

Affirming summary judgment for the insurers, the state Supreme Court said that notwithstanding the amended agreement, Reina remained the real party in interest in the malpractice claim. The arrangement therefore violated the case law forbidding such assignments.

TORTS

ERISA pre-empts generic drug suit

An intermediate state appellate court erred in holding for a class of breast cancer survivors in their state law claim that a health plan incorrectly charged brand name prices for a drug that should have been classified as generic, the Georgia Supreme Court held on June 26.

The state high court concluded that the claim was pre-empted by the federal Employee Retirement Income Security Act (ERISA). Advance PCS v. Bauer, No. S05G2011.

Deborah Bauer and a group of fellow breast cancer survivors sued Advance, a pharmaceutical benefits manager, alleging that it improperly classified the anti-cancer drug tamoxifen as a brand-name pharmaceutical, when it should have been classified as a generic drug. The patients argued that ERISA wasn’t implicated because their claim was not related to a denial of benefits and because Advance’s classification of tamoxifen was performed in a process outside their health plan. An intermediate appellate court held for the patients.

Reversing, the Georgia Supreme Court held that the patients’ claims were preempted by ERISA both expressly and by implied pre-emption. The court said that the patients were reading ERISA too narrowly.

“It is true that plaintiffs’ claims are not the typical ‘denial of coverage’ claims that are ubiquitous in health insurance disputes,” the court said.

“But plaintiffs’ right to obtain a drug by paying a particular co-payment, which requires their plan provider to cover the remaining cost of the drug, is undeniably a plan benefit.”

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