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BANKRUPTCY Bankruptcy filing may mean cable service ends cable service does not constitute a utility under 11 U.S.C. 366, which provides that a utility may not discontinue service based on the filing of a bankruptcy case, the 5th U.S. Circuit Court of Appeals held on Nov. 14 in an issue of first impression. In the Matter of Darby, No. 05-20931. After receiving notice that customer Damon Darby filed for Chapter 13 bankruptcy, Time Warner Cable Inc. ended his cable service. Even after Darby offered a deposit to reinstate his service, the cable company refused to do so. Darby filed a motion to compel Time Warner to reinstate his service upon his offering adequate assurances of future payment under 11 U.S.C. 366. The bankruptcy court ordered Time Warner to reinstate Darby’s service, granting Time Warner a $250 special priority claim in the event of Darby’s defaulting on his payments. Time Warner complied with the order but filed an emergency motion to reconsider. The bankruptcy court reconsidered the order and found that Time Warner did not have to reinstate Darby’s service. A Texas federal court affirmed. Affirming, the 5th Circuit concluded that cable service is not a necessity and that Darby would not be faced with an inconvenience in obtaining an alternative service, such as satellite service or network access.   Full text of the decision Bankruptcy trustee has to file debtors’ lawsuit Debtors lacked standing to assert a medical malpractice claim in state court because the cause of action had existed at the time the bankruptcy petition was filed, the Mississippi Supreme Court ruled on Nov. 16. Pruitt v. Hancock Medical Center, No. 2005-CA-00132-SCT. Charles Pruitt suffered third-degree burns during knee surgery at Hancock Medical Center. On Aug. 21, 2002, Charles and Catherine Pruitt filed for Chapter 7 bankruptcy with no mention of a medical malpractice claim in their schedules of assets. The bankruptcy estate was closed on Dec. 19, 2002. The Pruitts sent a notice of claim letter to Hancock 33 days later, alleging that the injury occurred on April 11, 2002, which was denied. They then sued Hancock for medical malpractice, alleging that the injury had occurred on April 9, 2002. The bankruptcy court ordered the reopening of the Pruitts’ bankruptcy estate on March 11, 2004, to allow an amendment that added their lawsuit to their list of personal property. A state court granted Hancock’s motion to dismiss on July 19, 2004, stating that the Pruitts did not have standing to assert the claim and that the bankruptcy trustee, who had not made an appearance, was time-barred from prosecuting the claim. Affirming, the Mississippi Supreme Court declared that the cause of action belonged to the bankruptcy estate since it was in existence at the time of the filing of the bankruptcy petition. As such, the bankruptcy trustee had exclusive standing to bring the Pruitts’ lawsuit because failure to disclose the cause of action in the original bankruptcy petition did not take it out of the bankruptcy estate. CIVIL PRACTICE Firm’s chief can’t assert attorney-client privilege A corporation’s president cannot intervene in his individual capacity to assert the corporation’s attorney-client privilege as to a subpoena of the corporation’s attorney, the 1st U.S. Circuit Court of Appeals held on Nov. 17. In re Grand Jury Proceedings, No. 06-2125. A corporation as well as its president and chief executive officer were under investigation by a grand jury. A Massachusetts federal court had ordered an attorney who represented the corporation at the relevant times to answer questions before the grand jury about conversations between counsel and the president in his corporate capacity. The court denied the president’s motion to intervene as of right to assert the corporation’s attorney-client privilege. The president, represented by the federal defender’s office, appealed. To preserve the secrecy of the investigation, the court only disclosed the relevant facts at a very general level. The 1st Circuit affirmed, denying the motion to intervene. The court said that the issue of the company president’s intervention rests on the capacity in which he attempted to assert the corporation’s privilege. In his individual capacity, the president lacks standing to assert the corporation’s interest. CONSTITUTIONAL LAW No limit on bypasses of parental consent rule A limit on the number of petitions a minor may file to bypass the parental consent rule in Ohio’s abortion law is invalid, the 6th U.S. Circuit Court of Appeals ruled on Nov. 13. Cincinnati Women’s Services Inc. v. Taft, No. 05-4174. Under Ohio’s abortion law, minors must have parental consent before getting an abortion, though they can petition a court to bypass this requirement. According to one 1998 amendment to this law, minors are limited to one petition per pregnancy. Another amendment requires all women to attend an in-person meeting with a physician to give informed consent 24 hours before getting an abortion. Before the amendments went into effect, Cincinnati Women’s Services Inc. sued in federal court for both injunctive and declaratory relief. The court upheld the validity of both provisions, holding that neither rule imposed an undue burden on abortion-seekers. The 6th Circuit reversed on the first amendment, but affirmed on the second. Applying the “large fraction” test from the U.S. Supreme Court’s 1992 opinion, Planned Parenthood of Southeastern Pennsylvania v. Casey, the 6th Circuit ruled that the women who would be deterred from getting an abortion under the single-petition rule are those whose circumstances change throughout their pregnancy, a large fraction of the total number of abortion cases. On the other hand, the in-person rule would hamper only a small number of women. “Although a challenged restriction need not operate as a de facto ban for all or even most of the women actually affected, the term ‘large fraction,’ which, in a way, is more conceptual than mathematical, envisions something more than the 12 out of 100 women identified here.” CONSUMER PROTECTION Loan’s chief aim decides disclosure requirements Under the Truth In Lending Act, a loan with dual purposes is not subject to disclosure requirements if its proceeds are allocated primarily for exempt purposes, the Washington Supreme Court decided on Nov. 16. Cashmere Valley Bank v. Brender, No. 77708-0. In 1993, Cashmere Valley Bank sued Terry Brender to collect on four unsecured business loans. In a new loan agreement, Brender consolidated $203,000 of the defaulted business loans with a new $105,000 loan he had used to settle his divorce. Brender signed paperwork stating that the new loan was for business purposes, and Cashmere Valley Bank dismissed its collection action. In 1996, Brender renewed the loan at maturity. In 1999, he took out another loan from Cashmere Valley Bank, and the two loans were consolidated in 2001 into one loan. When Brender defaulted, Cashmere Valley filed another collection action. Brender counterclaimed, alleging violations of the Truth in Lending Act (TLA). The state trial court summarily dismissed his request to rescind the loans, holding that the loans were obtained primarily for commercial rather than consumer purposes and were therefore exempt from the TLA’s disclosure requirements. An intermediate appellate court affirmed. The Washington Supreme Court affirmed. The TLA exempts from disclosure requirements “credit transactions involving extensions of credit primarily for business, commercial, or agricultural purposes.” If a loan has exempt and nonexempt purposes, the loan is exempt if a majority of the proceeds are allocated to business, commercial or agricultural purposes. Applying the quantitative method to this case, the high court found that, even assuming that the $105,000 was for personal purposes, the majority of the 2001 loan, or $203,000, was for business purposes. EMPLOYMENT Police promotion policy in Chicago wasn’t racist Chicago’s selection process for promoting police to the rank of sergeant in 1997 was not racially discriminatory, because minorities cannot show a better available alternative, the 7th U.S. Circuit Court of Appeals held on Nov. 16. Adams v. City of Chicago, No. 05-4145. In 1994, the city of Chicago implemented a written exam for promotion to the rank of sergeant in the police department, and stipulated that promotions would be based on the test scores. The city mayor then appointed a task force which, in January 1997, recommended that, in future, 30% of promotions to sergeant be based on “merit” (on-the-job performance), with the promotional test used to assure a minimum level of competence. But the city did not follow that recommendation in the next round of promotions in February 1997. Several minority police officers sued, claiming that the promotion process was having a racially disparate impact. An Illinois federal court granted summary judgment to the city, finding that the officers had not demonstrated the availability of an alternative method of promotion that was equally valid and less discriminatory than the one used. The 7th Circuit affirmed. For a disparate-impact claim to prevail, the court said, the plaintiffs need to show that there exists a viable alternative method of promotion that an employer had failed to adopt. In this case, the minority officers had failed to demonstrate that Chicago had an opportunity to adopt and implement the 30% merit-based promotional method in a valid, viable manner before the February 1997 round of promotions. There was no evidence that by 1997 Chicago had developed a satisfactory method for examining the merit of officers for promotion to sergeant. Thus, the disparate impact claim fails. Employer’s exculpatory agreement was invalid An employer’s exculpatory agreement with an employee releasing the employer from liability for negligent acts that injure an employee are void as a violation of public policy, the Connecticut Supreme Court held on Nov. 14 in a case of first impression in Connecticut. Brown v. Soh, No. 05-16750. Robert Brown, a Skip Barber Racing School Inc. employee, was a driving instructor assigned to wave the checkered flag on a race course when he was struck by a car operated by a student and injured. Prior to the incident, Brown had executed an agreement with the racing school in which Brown acknowledged the dangerous nature of the activity and agreed not to seek recovery in the event of any injuries. Nevertheless, Brown sued the racing school and others for negligence, arguing that the exculpatory agreement was void. A trial court held that the claim was precluded as a matter of law based on the agreement, and granted summary judgment to the racing school. The Connecticut Supreme Court transferred the case from an intermediate appellate court. Reversing, the Connecticut Supreme Court rejected the racing school’s argument that prior Connecticut precedent holding that exculpatory agreements violated state public policy did not apply to instances where trained professional were hired based on their expertise. Holding that the agreements violated public policy in the employment context and citing an Illinois decision, the court said, “[a]n employer, in this case the racing school, possesses a decisive advantage of bargaining strength against the plaintiff employee. Considering the ‘economic compulsion facing those in search of employment . . . [t]o suppose that [a] plaintiff . . . had any bargaining power whatsoever defies reality.’ ” LABOR LAW Fee on workers’ wages violates N.Y. labor law A processing fee tacked onto cash vouchers issued by a temporary employee company violates New York law on providing cash wages, the New York Court of Appeals ruled on Nov. 16. In the Matter of Angello, No. 149. Labor Ready Inc., a national temporary employment firm, pays its employees the same day or the day after they work. Employees can opt for a check, which can be cashed at many banks for free, or they can opt to receive a cash voucher. The voucher can be redeemed at Labor Ready branches and includes a dollar-plus-change fee (i.e., if an employee’s wages are $44.85, the fee will be for $1.85 and the employee receives $43 in cash). Though Labor Ready lets employees know about the fee, the New York state labor department investigated the company for possible violations of state law. The department and Labor Ready reached an agreement on other issues, but could not agree on the propriety of the fees. The Industrial Board of Appeals (IBA) criticized the fees for being “excessive,” but upheld their use. The department initiated an action in state trial court, which transferred the case to an intermediate appellate court. The court reversed IBA’s decision, holding that the fee violated N.Y. Lab. Law � 193. The New York Court of Appeals affirmed. Section 193 allows employers to take deductions from employee wages, but those deductions are limited. Labor Ready’s direct deduction from workers’ pay at the same time they are paid is a service fee that does not benefit the workers, as do prepayment deductions for labor dues or health insurance. “While Labor Ready’s decision to pay the temporary laborers daily is laudable, subtracting from wages a fee that goes directly to the employer . . . violates both the letter of the statute and the protective policy underlying it.” LEGAL PROFESSION Depression a mitigating factor in disbarment Staying the disbarment of an attorney who had admitted intentional misappropriation of funds was appropriate in a case in which a lawyer suffered major depression and his conduct would not have occurred but for that condition, the District of Columbia Court of Appeals held on Nov. 16. In re Mooers, No. 06-BG-551. Thomas Mooers, an attorney licensed in the District of Columbia, admitted that he allowed the balance of his trust account to fall below the amount owed to his client’s medical providers. The District of Columbia’s Board on Professional Responsibility ruled that Mooers had violated the D.C. Rules of Professional Conduct by intentionally misappropriating client funds and recommended disbarment. However, the board determined that he was entitled to mitigation because had been diagnosed with major depression and his conduct would not have occurred but for that condition. Accepting the board’s findings and recommendation, the D.C. Court of Appeals disbarred Mooers, but stayed the disbarment and placed him on three years’ probation with the stipulation that he undergo psychiatric evaluations and that his physicians report on his condition to the board and the bar’s counsel every 90 days. “To his credit, respondent candidly admitted and took full responsibility for his actions, he cooperated with Bar Counsel, and is continuing to obtain treatment for his depression, which is considerably improved, and does not [currently] impair his ability to practice law. Moreover, the checks presented to respondent’s client’s medical providers were honored and his client was not harmed and is satisfied with respondent’s representation,” the court said. TORTS No federal tort action on prison release date error A Federal Tort Claims Act (FTCA) action for negligent miscalculation of a prisoner’s release date was, in essence, a claim for false imprisonment, which was barred by the act, the 9th U.S. Circuit Court of Appeals held on Nov. 14 in an apparent case of first impression. Snow-Erlin v. U.S., No. 05-16790. After a successful challenge to his prison sentence in a federal habeas corpus proceeding, Darrow Erlin sued the federal government, seeking monetary damages under the FTCA, arguing that he was incarcerated for 311 days due to the government’s negligence. Erlin’s estate continued the suit after his death, and the 9th Circuit reinstated it after a federal court had dismissed it because the statute of limitations had expired. On remand, the district court dismissed the suit again, holding that, despite arguing negligence under FTCA, the claim was, in essence, one of false imprisonment, which was barred under the act. Affirming, the 9th Circuit agreed that Erlin’s claim was one of false imprisonment, which was barred under the FTCA, 28 U.S.C. 2680(h). Rejecting the estate’s attempt to recast the claim as one for negligence, the court said, “The only harm alleged is that the United States kept Erlin imprisoned for 311 days too long. Independent of that alleged false imprisonment, Plaintiff has no claim . . . .Plaintiff cannot sidestep the FTCA’s exclusion of false imprisonment claims by suing for the damage of false imprisonment under the label of negligence.”

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