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ANTITRUST Texas law can’t remedy out-of-state injuries Texas antitrust laws cannot be used to resolve and remedy an out-of-state injury unless the relief sought would benefit Texas consumers, the Texas Supreme Court ruled on Oct. 20. The Coca-Cola Co. v. Harmar Bottling Co., No. 03-0737. Five franchise-distributors of Royal Crown Cola in the Texas, Louisiana and Arkansas region sued The Coca-Cola Co. in Texas state court, saying the company used so-called “calendar marketing agreements” unreasonably to restrain trade and monopolize 77% of the soft-drink market in the area. CMAs are widely used agreements, according to which retailers promise to promote a particular product, even if it requires pricing a competitor’s product for more than it normally sells. A jury ruled for the franchisees, for a total of $14.6 million, though the verdict did not specify which damages had occurred in Texas and which ones occurred in either Louisiana or Arkansas. An intermediate appellate court affirmed. The Texas Supreme Court reversed, ruling that Texas’ Free Enterprise and Antitrust Act of 1983 generally does not allow damages to be awarded for out-of-state injuries. “Competition in Texas markets is not maintained or promoted, nor are Texas consumers benefitted, by enjoining Coke . . . or by awarding the . . . franchisees damages incurred in their operations outside Texas.” Furthermore, Texas courts will not interpret other states’ antitrust laws in order to speculate as to how they would fashion a remedy for injuries in their states. The court also reversed the ruling on the in-state injuries, because the franchisees did not show how Coke’s practices substantially harmed competition.   Full text of the decision APPEALS ‘Not less than 7 days’ limit in CAFA is a typo An appellate court may accept an appeal if application is made not more than seven days after a lower court’s order, the 3d U.S. Circuit Court of Appeals ruled on Oct. 16 in a matter of first impression. Morgan v. Gay, No. 06-8045. Sarah Morgan was the named plaintiff in a class action against the makers of StriVectin-SD skin cream. The defendants removed the case from a New Jersey state court to a New Jersey federal court. On Aug. 7 of this year, the district court remanded the case to state court. On Aug. 16, seven days later (not including weekends or holidays), the defendants filed for leave to appeal to the 3d U.S. Circuit Court of Appeals. The defendants cited Section 1453(c) of the Class Action Fairness Act, according to which courts of appeals may accept appeals of district court orders, such as remands after removals, if made “not less than 7 days after entry of the order.” The 3d Circuit held that “Because the uncontested legislative intent behind �1453(c) was to impose a seven-day deadline for appeals, we conclude that the statute as written contains a typographical error and should be read to mean ‘not more than 7 days.’ ” If applied as written, the court said, parties could manipulate litigation by bringing appeals any time before trial, whereas it is undisputed that Congress intended to impose a time limit on class action appeals. ATTORNEY FEES Attorneys may not sue co-counsel over fees loss An attorney may not sue his co-counsel for loss of prospective attorney fees, the Washington Supreme Court held on Oct. 19 in an issue of first impression. Mazon v. Krafchick, No. 77398-0. Attorneys Michael Mazon and Steven Krafchick jointly represented Tahar Layouni in a personal injury case, agreeing to split fees and responsibilities. Krafchick had agreed to file and serve the complaint, but his paralegal failed to do so until after the statute of limitations had run. Layouni brought a legal malpractice action against both attorneys, which was settled by their insurance carrier for $1.3 million. Mazon then brought suit against Krafchick for claims that included loss of the $325,000 he had expected to earn as his contingency fee. The state trial court denied Mazon’s claim for the loss of his prospective fee. An intermediate appellate court affirmed and denied both parties’ motions for reconsideration. Affirming, the Washington Supreme Court found that imposing a duty to protect prospective attorney fees creates a potential conflict of interest with the duty of loyalty attorneys owe to their clients. The existence of a duty to protect fees might cause an attorney’s self-interest impermissibly to override the client’s interests. CIVIL PRACTICE No suit dismissal before ruling on amendment A trial court erred in dismissing a civil action against an attorney and his law firm without first ruling on a motion that had been filed to amend the complaint, the Maine Supreme Judicial Court held on Oct. 1. Sherbert v. Remmel, No. 2006 ME 116. Attorney Charles Remmel represented a former employee of Ronald Sherbert’s business. Sherbert sued Remmel and his law firm, arguing that Remmel made misrepresentations to the police that resulted in a restraining order against Remmel’s client being vacated, allegedly allowing the client to take Sherbert’s property. Sherbert, appearing pro se, moved to amend his complaint. Without ruling on Sherbert’s motion to amend, the trial court dismissed the action, holding that the specific fraud Sherbert alleged required Sherbert, rather than the police, to have relied detrimentally on the alleged fraud. Vacating and remanding, the Maine Supreme Judicial Court, Maine’s highest court, held that the trial court erred in dismissing the action without ruling on the amended complaint. The court said, “[A]lthough denial may be appropriate for late, dilatory, or ineffective filings, a trial court should ordinarily rule on a motion to amend before acting on a motion that could be dispositive of the original complaint.” CONSTITUTIONAL LAW Photo ID rule violates equal protection clause The requirement that a voter present photo ID in order to be permitted to vote violates Missouri’s Constitution, the Missouri Supreme Court held on Oct. 16. Weinschenk v. State of Missouri, No. SC88039. Missouri passed a bill that requires qualified, registered voters to present a photo ID, such as a Missouri driver’s license, Missouri nondriver’s license or a U.S. passport, in order to be permitted to vote. A group of taxpayers brought a suit against the state and its secretary of state. They presented evidence that 3% to 4% of Missourians lack the requisite photo ID and would thus need to obtain it, expending effort and money, in order to vote. A Missouri trial court held that the requirement violates the state constitution. The Missouri Supreme Court affirmed that the photo ID requirement violates the state’s equal protection clause as well as the state constitution’s guarantee of the right to vote, which is “more expansive and concrete” than that provided by the U.S. Constitution. The court applied a strict-scrutiny analysis, whereby any limitation on a fundamental right must be narrowly tailored to serve compelling state interests. The high court said that the trial court was correct to hold that the photo ID requirement is not narrowly tailored. The court found that for Missourians who lack the photo ID but are otherwise eligible to vote, the requirement that they get the ID is more than a de minimis burden on their constitutional right of suffrage. A license is not free because some Missourians must expend money to get the documentation needed to obtain it. N.Y. contraception law is neutral, so constitutional A 2000 New York state law requiring employer health insurance policies to include coverage for contraceptives is constitutional, even as applied to religious employers who disavow the use of contraceptives, the New York Court of Appeals ruled on Oct. 19. Catholic Charities of the Diocese of Albany v. Serio, No. 110. In response to concerns about women’s health and the need to reduce the number of unwanted pregnancies, the New York Legislature passed the Women’s Health and Wellness Act. Under the act, employers who provide health insurance for their employees must include coverage for contraceptives. Religious employers, for whom the use of contraceptives is a violation of their beliefs, can invoke an exemption to the law, at which point the insurer must offer individual employees the right to purchase their own insurance at their own expense. Ten faith-based social service organizations sued the state in state trial court for a declaration that they are constitutionally entitled to be altogether exempt from the act’s contraceptive-coverage provisions. The trial court ruled against the organizations, and an intermediate appellate court affirmed. The New York Court of Appeals, New York’s highest court, affirmed. The U.S. Supreme Court’s 1990 holding in Employment Division v. Smith, that the free exercise clause does not relieve individuals of the obligation to comply with neutral laws, applies to the federal constitutional issues here. Though the law may offend the plaintiffs’ religious mores, the law itself, which seeks to make contraception more broadly available, is neutral. The state constitution has not been interpreted to prohibit anyone from complaining of a neutral law. The law in this case is still constitutional as applied to these organizations because they are not being compelled to buy insurance for their individual employees; the individual employees purchase the insurance at their own expense. EMPLOYMENT Employees must be paid for unused vacation time A provision in an employee handbook disallowing payment to employees for unused vacation time upon termination is in conflict with state law, the Nebraska Supreme Court ruled on Oct. 20. Roseland v. Strategic Staff Management Inc., No. S-04-627. When four former employees of Strategic Staff Management Inc. voluntarily resigned, each had accrued vacation time that was unused. After Strategic refused to pay them for their unused time, they sued under the Nebraska Wage Payment and Collection Act. According to Strategic’s employee handbook, “[u]pon termination, employees will not be paid for unused vacation time.” However, the state trial court awarded the employees payment for their unused time, finding that the handbook conflicted with state law. An intermediate appellate court reversed. The Nebraska Supreme Court reversed. The Nebraska wage act provides that “[w]ages shall mean compensation for labor or services rendered by an employee, including fringe benefits.” Finding that paid vacation was part of the fringe benefits in the employment agreement between Strategic and its employees, the high court held that unused vacation time constituted wages that must be paid to employees under the statute. FAMILY LAW Only child’s biological or legal father gets custody Despite being listed on a birth certificate as the child’s father, a man who was neither the biological nor the legal father of the child should not have been awarded custody in a divorce action, the Georgia Supreme Court held on Oct. 16. Veal v. Veal, No. S06F1460. “Mr. and Ms.” Veal married the month after Ms. Veal gave birth to “H.” Although the Veals acknowledged that Mr. Veal was not H’s biological father, he was present at the child’s birth and was listed as the father on the birth certificate. Six years later, the Veals divorced and, while the divorce decree was silent on the issue of custody of H, Mr. Veal moved to set aside the divorce decree so that he could gain custody of H. A trial court awarded him custody. Reversing, the Georgia Supreme Court held that Mr. Veal was not entitled to custody because he was not married to Ms. Veal at the time of birth, nor had he legitimized the child. Citing Georgia law providing that only the mother of a child born out of wedlock was entitled to custody unless the father legitimized the child, the court rejected Mr. Veal’s argument that, as the reputed father of the child, he legitimized her by marrying Ms. Veal. Although it acknowledged the “unfortunate outcome” of the case, the court held, “[T]he legitimation process is not applicable under the circumstances presented here because both parties acknowledge that they knew all along that husband was not H.’s biological father. The legitimation process is meant to establish legal ties between a biological father and child where the parents were not married at the time of the child’s birth. The legitimation process is not meant to establish legal ties between a step-parent and child.” HEALTH LAW Drug plan participants can’t sue plan fiduciary Because it was the drug plan itself, rather than the plan’s participants, that allegedly sustained damages as the result of the actions of a pharmacy benefits management company, the participants have no standing to sue under the Employee Retirement Income Security Act (ERISA), the 9th U.S. Circuit Court of Appeals held on Oct. 17. Glanton v. AdvancePCS Inc., No. 04-15328. AdvancePCS Inc., a pharmacy benefits management company, managed the prescription drug programs for the employee benefit plans of Alcoa Inc. and Kmart Corp. Tommie Glanton, a participant in the Alcoa plan, and Tara Mackner, a participant in the Kmart plan, sued AdvancePCS for breach of fiduciary duty under ERISA, alleging that AdvancePCS had secretly kept profits it made from negotiated prices with drug supplies. An Arizona federal district court held for AdvancePCS, holding that Glanton and Mackner lacked standing. The plaintiffs appealed to the 9th Circuit. Affirming, the 9th Circuit acknowledged that plan participants had standing to sue plan fiduciaries for breaches of fiduciary duty. However, in addition to holding that the participants did not have associational standing to sue on behalf of their plans, the court held that to have standing to sue for themselves, the participants had to demonstrate that any injury they sustained would likely be redressed by prevailing in the litigation. Ruling that such was not the case, the court said, “Plaintiffs don’t claim they were denied benefits or received inferior drugs. Rather, they claim that AdvancePCS charged the plans too much for drugs, and that this caused the plans to demand higher co-payments and contributions from participants. Plaintiffs claim that, if their suit is successful, the plans’ drug costs will decrease, and that the plans might then reduce contributions or co-payments. But nothing would force ALCOA or [Kmart] to do this, nor would any one-time award to the plans for past overpayments inure to the benefit of participants.” REAL PROPERTY Realtor’s untruth with no intent to deceive is fraud A realtor who tells an untruth about a home’s availability, expecting reliance by the buyer, is responsible for fraudulent misrepresentation, even without specific “intent to deceive,” the Alaska Supreme Court held on Oct. 20. Lightle v. State, No. S-11719. Arlene Seeley made an offer on an Alaska home. The listing agent, Craig Lightle, said her offer was accepted and the home was hers. But when Seeley canceled her existing lease, rented a U-Haul truck and began switching her utilities over, she learned that, in fact, the seller considered Seeley’s offer a backup that would be accepted only if a previously accepted offer fell through. Lightle knew about the other offer, but had assumed that since the original purchasers’ financing had fallen through they would rescind. So he prematurely assured Seeley’s agent that the house was available. When Seeley learned of this, she withdrew her offer and filed a claim with the Alaska Real Estate Commission, alleging that Lightle had fraudulently misrepresented the home’s status by leading her to believe it was immediately and unconditionally available. The commission ruled for Seeley and sanctioned Lightle. An Alaska trial court affirmed. The Alaska Supreme Court affirmed, saying that there was substantial evidence that Lightle knew his representations to be untrue or unfounded when he made them and intended or expected that Seeley would rely on them. Lightle had argued that the Alaska statute required a specific intent to deceive, but the court said the statute merely requires the maker to have reason to expect that others’ conduct will be influenced by the untrue representations-a lesser standard than specific intent to deceive. TORTS Vicarious liability doesn’t extend to nonlicensees Vicarious liability may not be extended to a nonlicensee under a statute that specifically provides for such liability only to licensees, the Minnesota Supreme Court ruled on Oct. 19. Urban v. The American Legion Dep’t of Minnesota, No. A04-1409. Orvin Rolland, a drunken driver, struck a car carrying the Urban family, killing mother Barbara Urban and seriously injuring sons Marcus and Brett Urban. The Urbans claimed that Rolland had been illegally served alcohol by Post 184, a local chapter of the American Legion Department of Minnesota. They sued the department and the American Legion National for claims under the Civil Damages Act including respondeat superior, the common law doctrine according to which an employer is liable for an employee’s actions if committed during course of employment. The federal government created National as a mutual aid and community service organization for veterans. Groups of members can create posts, or local chapters of the organization, which are expected to collect dues from its members and forward it to National. If members fail to pay such dues, the post makes up the missing funds by raising money through such activities as running a bar or restaurant. The state trial court granted the defendants’ motions for summary judgment. An appellate court affirmed. The Minnesota Supreme Court affirmed. Minn. Stat. � 340A.501 of the Civil Damages Act specifically imposes liability on licensees for sales of alcoholic beverages made by their employees. Applying the principle that the “expression of one thing indicates the exclusion of another,” the court determined that the statute necessarily excludes the doctrine of vicarious liability in all other cases. In this case, the defendants here were not licensees.

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