Decision summaries from the NLJ

ADMINISTRATIVE LAW Ephedra ban was within FDA’s authority Federal regulators acted within their statutory authority in banning sales of ephedrine-alkaloid dietary supplements, including those found in ephedra, the 10th Circuit U.S. Court of Appeals held on Aug. 17. Nutraceutical Corp. v. Von Eschenbach, No. 05-4151. The Food and Drug Administration banned the products, said to promote weight loss and boost athletic performance, in 2004 after seven years of scientific review linked them to increased risk of heart attack, stroke and death. Nutraceutical Corp. sued in U.S. District Court in Utah, where the judge ruled that the agency’s risk-benefit analysis was contrary to the intent of Congress and had failed to prove by a preponderance of the evidence that the dietary supplements posed an unreasonable risk of illness or injury at small doses. The judge granted summary judgment for Nutraceutical and enjoined enforcement of the ban. The 10th Circuit reversed. It said that the agency’s cost-benefit analysis did not improperly shift the burden to require Nutraceutical to prove that its product was safe, but rather found ample evidence that there is no safe dosage level.   Full text of the decision CIVIL PROCEDURE No legal fees because outcome lacked sanction A plaintiff who settled an Individuals with Disabilities Education Act (IDEA) suit without judicial sanction of the agreement was not a prevailing party entitled to attorney fees, the 9th U.S. Circuit Court of Appeals held on Aug. 15. P.N. v. Seattle Sch. Dist. No. 1, No. 04-36141. The mother of a schoolchild filed an administrative claim against a Seattle school district, alleging failure to evaluate her child for learning disabilities. She and the district reached a deal under which the district agreed to reimburse her for costs associated with her child’s psychological evaluation and study at a private school. She then filed suit in U.S. district court in Washington state, seeking $13,653 in attorney fees as a prevailing party under IDEA. The district court dismissed her suit. Affirming, the 9th Circuit noted that the litigation achieved its intended end and the parties reserved the question of legal fees. However, no court ever signed off on the settlement, as required under U.S. Supreme Court, 9th Circuit and myriad other circuit court precedents. To recover her fees, the court said, the mother needed to prevail on the merits of her claim or obtain a consent decree rendering the pact enforceable by the courts. Judgment may be offset against side settlements State law allows a losing party to offset a judgment for breach of contract and warranty by the amount the prevailing party received in settlements with co-defendants, the Nevada Supreme Court ruled on Aug. 17. Western Technologies Inc. v. All-American Golf Center Inc., No. 41930. A golf course developer sued its general contractor, architect and Western Technologies Inc.-the engineer and soil tester-over construction defects at its Calloway Golf Center in Las Vegas. The other parties agreed before trial to pay the plaintiff $880,000; the engineering firm went to trial, where in a split verdict the jury ordered it to pay $660,000. The trial judge refused to allow the company to offset its obligation using money from the settlement. The Nevada Supreme Court reversed after analyzing the the state Uniform Joint Obligations Act and the Restatement (Second) of Contracts. The court concluded that the offset between co-obligors in contract actions was permitted, but only by the amount of the settlement that duplicated the engineering firm’s liability. CRIMINAL PROCEDURE No sanction for sharing grand jury’s secrets A criminal defense attorney was not in contempt of court for releasing grand jury information to his private investigator, a divided South Carolina Supreme Court ruled on Aug. 14. State v. Sowell, No. 26199. In a methamphetamine trafficking case, the trial judge gave secret grand jury information to defense counsel Kenneth Sowell, subject to a protective order. Sowell shared the information with his private investigator. During trial, the jury deadlocked. On retrial, evidence indicated that the investigator had shared information with the man who allegedly was the source of the drugs at issue, and who had been paying the defendant’s legal bills. The trial judge later found Sowell in criminal contempt, declaring that he’d violated the protective order and had failed to explain the obligation of secrecy to his investigator. An intermediate state appellate court affirmed. The South Carolina Supreme Court voted, 3-2, to reverse. The majority said that the controlling state code section applies only to the state’s law enforcement authorities, not to private attorneys. The minority said the majority was reading the statute too narrowly, and that the outcome would allow the compromise of grand jury proceedings “by engaging a lawyer’s office in a game of ‘whisper down the line.’ ” ELECTION LAW Court should not have blocked citizen initiative A trial court acted too hastily in ruling that the city of Boise, Idaho, was not obliged to stage a citizen initiative election over the display of a Ten Commandments monument, the Idaho Supreme Court ruled on Aug. 14. City of Boise v. Keep the Commandments Coalition, No. 31308. The monument in question had stood in a city park for nearly 40 years before officials moved it to a local cathedral in 2004. A citizen committee collected signatures to place an initiative on the ballot authorizing replacement of the monument, along with secular affirmations of religious freedom. The city claimed the issue was an administrative matter not legally subject to citizens’ initiative, and a judge agreed, blocking a vote. Reversing, the Idaho Supreme Court ruled that the time for court intervention was after the election, if the question carried. The majority ruling cited an array of harm from the courts interjecting themselves into such electoral matters, including loss of the benefits of public debate. “It is not an inconvenience created by rabble rousers and malcontents to vex established authority,” the court said. “The initiative process is a mandate, significant enough to be embodied in the Idaho Constitution, that enables voters to address issues of concern. Sometimes it compels authorities to listen when nothing else will.” FAMILY LAW Child’s welfare counts more than res judicata Res judicata did not bar a second petition to terminate parental rights when a child’s welfare outweighed judicial policy, a divided South Dakota Supreme Court ruled on Aug. 16. People v. S.O.B., No. 23560-a-JKK. The state Department of Social Services removed the children of a woman who, instead of eliminating contact with the man who exposed himself to one of the children, married him. The agency’s petition to terminate her parental rights was dismissed after she divorced the man, but she secretly continued to see him. Contending that the mother just didn’t “get it,” the state asked a Lincoln County judge to reconsider, but the judge refused. The agency filed a second petition, this time in Minnehaha County, alleging the same facts plus the clandestine meetings. That court agreed to terminate the woman’s rights. The Supreme Court voted, 3-2, to affirm, saying that a “hyper-technical application of res judicata is simply not appropriate in these extraordinary circumstances.” The children’s welfare was more important than a judicial policy against repeat litigation. The dissent complained that the majority was sending a disturbing message: “If at first you don’t succeed in terminating an individual’s parental rights, do not bother appealing to this Court, just keep filing additional petitions in different counties until you find a judge that will rule in your favor.” GOVERNMENT LAW State’s public records are open to nonresidents Out-of-state residents are entitled to invoke a state’s public records laws, the 3d U.S. Circuit Court of Appeals ruled on Aug. 16. Lee v. Minner, No. 05-3329. Matthew Lee, a New York lawyer, author and consumer activist, requested public records involving the Delaware attorney general’s decision to join a nationwide settlement against a lending company. The state refused on the ground that Delaware’s Freedom of Information Act requires disclosure only to “any citizen of the State.” Lee sued in U.S. district court in Delaware, alleging violation of the privileges and immunities clause of the U.S. Constitution. The trial judge granted summary judgment against the state and forbade future refusals against nonresidents. The 3d Circuit affirmed, ruling that access to public records is protected under the privileges and immunities clause. There is no nexus between the state’s limits on access and its goal of defining its own political community, the court said, adding: “No state is an island.” LABOR AND EMPLOYMENT Target must go to trial in discrimination case A trial judge gave Target Corp. too much credit for reforming its hiring procedures in granting summary judgment against black applicants passed over for management jobs, the 7th U.S. Circuit Court of Appeals ruled on Aug. 23. U.S. Equal Employment Opportunity Commission v. Target Corp., No. 04-3559. Target conceded it violated its own policy and federal law requiring it to retain job applications for at least one year, but denied any discriminatory motives in ignoring qualified applicants whose resumes, names or telephone voices suggested they might be black. A U.S. district court judge in Wisconsin ruled that Target appeared to have good reasons for overlooking the applicants and had improved its record keeping. Reversing, the 7th Circuit found plenty of genuine issues of material fact regarding the alleged discrimination and revamped oversight. It noted that one of the applicants drew an interview offer after she adjusted her application to make her appear white and got a white friend to call the company in her stead. LEGAL MALPRACTICE Harm from faulty prenup begins on wedding day The statute of limitations on a legal malpractice claim alleging negligent work on a prenuptial agreement began running when the couple were married, the Minnesota Supreme Court ruled on Aug. 17. Antone v. Mirviss, No. A04-1367. Richard Antone hired Israel Mirviss to draft an agreement that would protect the appreciation value in rental properties he owned before his 1986 marriage to Debra Schmidt. However, the final draft that the couple signed failed to do so-as Antone discovered only upon their divorce in 1998. After extensive litigation he was ordered to share the asset with his ex-wife and sued Mirviss for malpractice. The trial court ruled that any claim accrued either when he signed the agreement or when his property values appreciated, barring the action. The intermediate state Court of Appeals placed it when the divorce court awarded Schmidt a share of the asset, permitting the lawsuit. The Minnesota Supreme Court reversed. Reaffirming the “some damage” rule of accrual, the justices said that the statute of limitations begins to run when any compensable damage occurs, whether identified in the complaint or not. Here, the marriage was the event that exposed Mirviss to Schmidt’s entitlement to a portion of the asset, regardless of whether the exact amount of damages was ascertainable at that point. Since the end of the marriage happened outside the six-year limitations period, the malpractice claim was barred. TORTS No retroactive lifting of statute of limitations An Alaska state law lifting the statute of limitations for lawsuits alleging sexual abuse does not apply retroactively, the Alaska Supreme Court ruled on Aug. 18. Catholic Bishop of Northern Alaska v. Does 1-6, No. S-11295. Six former altar boys filed suit in 2003 against the Roman Catholic Church, alleging that it permitted a Jesuit priest to molest them as children from the 1950s through to the 1970s. The state Legislature repealed the applicable statute of limitations in 2001, but the youngest plaintiff had reached his majority, starting the clock running, more than 20 years earlier. The trial judge delayed a ruling on the church’s motion to dismiss to give the parties time to clarify their facts; meanwhile, the state Supreme Court agreed to consider the matter. The justices reviewed the statute’s legislative history and found no evidence the Legislature even considered making the law retroactive. Additionally, the state code expressly declares that no statute is retroactive “unless expressly declared therein,” they said. End-user sophistication an affirmative defense A bungee cord manufacturer may invoke the “sophisticated user” doctrine to defeat claims arising from an accident at a Boy Scouts camp, the Massachusetts Supreme Judicial Court held on Aug. 15. Carrel v. National Cord & Braid Corp., No. SJC-09541. Hyman Carrel, 16, was injured when a knot attached to a bungee cord manufactured by National Cord & Braid Corp. came undone and caused the bungee cord to recoil into his eye. Carrel settled claims against the Boy Scouts and the company that sold the camp the bungee, but went to trial against National Cord, alleging breach of the implied warranty of merchantability and fitness. The state trial court instructed the jury that National Cord’s duty to warn might be lessened or absent if the user’s experience, expertise and knowledge far exceeded its own. The jury found National Cord not liable, and Carrel appealed, claiming that the jury instruction misstated the law. Affirming, the state’s highest court held that the sophisticated user doctrine was an affirmative defense that applied not only to failure to warn actions, but also in breach of warranty claims, such as Carrel’s, that allege a failure to warn. In addition, the court rejected Carrel’s claim that he was the end user, noting that he had failed to make the argument at trial and that the case was tried under the theory that the Boy Scouts and Project America were the end users. WARRANTIES Appraisal rendered clock a work of ‘fine art’ In only the second reported case to define “fine art” under New York law, the 1st U.S. Circuit Court of Appeals held on Aug. 15 that a couple deserves a new trial on their claim that they paid too much for an antique clock. Levin v. Dalva Bros. Inc., No. 05-2284. Mark and Becky Levin paid $750,000 for furniture, including the clock, using their decorator to make a blind purchase from a New York antiques dealer. They later learned that the objects were worth perhaps one-third of what they paid. They sued the dealer in U.S. district court in Massachusetts, where they lived. The judge ruled that New York law governed the sale, imposing a higher burden of proof on the couple, and rejected their unjust enrichment claims. A jury rejected their claims of misrepresentation and breach of express warranty. On appeal, the 1st Circuit ruled that the trial judge was right to apply New York’s Cultural Arts Law, but partly misread it. The statute protects dealers’ expressions of opinion about a “painting, sculpture, drawing, or work of graphic art.” However, the law also says that a representation that a piece is from a specific artist or period establishes an express warranty. A jury instruction to the contrary in the lower court justifies a new trial, the court said. The clock qualified as more than a merely functional object because of painted details that were highlighted in the sales materials as adding to its value.