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APPEALS Filing deadline starts when notice is sent out The 15-day time limit for filing an opening brief on appeal is triggered when the appeal is docketed and notice of that action is sent to the parties, the 2d U.S. Circuit Court of Appeals ruled Jan. 29. In re Enron Corp., No. 05-5599. During Enron’s bankruptcy proceeding, Bernard Glatzer sought to recover compensation from the company. The New York bankruptcy court did not allow Glatzer’s proofs of claims and Glatzer filed a notice of appeal in a timely fashion on April 19, 2004. Notice of Glatzer’s appeal was docketed on June 23, though Glatzer never received notice of the docketing. Glatzer filed a motion to adjourn his appeal on Dec. 27, asking that an automatic stay be lifted so he could join in another, similar Enron proceeding. Enron moved to dismiss Glatzer’s appeal for failure to file an opening brief within the time specified by Bankruptcy Rule 8009. Glatzer argued that the 15-day time period had not run because he had not received notice of the docketing. The bankruptcy court dismissed the appeal, saying that the docketing of Glatzer’s appeal triggered the start time. The 2d Circuit reversed, noting that the 3d Circuit relied on the “integral part” the notice requirements play throughout the Bankruptcy Code and should apply here as well. Without notice, an appellant cannot be certain of the exact date the appeal was docketed. Given the extremely short time involved here, notice to the parties is critical.   Full text of the decision BUSINESS LAW Investors can’t recover under Securities Act Sophisticated investors involved in an arm’s-length merger transaction may not recover under Section 11 of the Securities Act of 1933 if they make a legally binding investment commitment months before the issuance of a defective registration statement, the 11th U.S. Circuit Court of Appeals held on Feb. 2 in an issue of first impression. APA Exclesior III L.P. v. Premiere Technologies Inc., No. 05-15936. In 1997, the board of directors of Xpedite Systems Inc. entered into a merger agreement with Premiere Technologies Inc., a telecommunication services company, and unanimously voted to recommend merger to Xpedite’s shareholders. As a condition of the merger agreement, many of Xpedite’s shareholders were required to execute stockholder agreements granting irrevocable proxies to Premiere to vote their Xpedite stock in favor of the merger. More than two months later, Premiere’s registration statement for the merger became effective, with a majority of shareholders of both companies approving the merger a month after that. By June 1998, the price of Premiere stock had dropped. The plaintiffs, investment funds and individuals who together held about 30% of Xpedite stock, filed suit under the Securities Act of 1933, alleging breach of contract and negligent misrepresentation. The plaintiffs contended that the decline in stock price was the result of numerous material defects in the registration statement concerning Premiere’s financial condition. These misstatements violated Section 11 of the 1933 act. A Georgia federal court granted Premiere’s motion for summary judgment, concluding that the plaintiffs lacked standing because they acquired the securities through a private offering. The 11th Circuit reversed and remanded. The federal court again granted Premiere’s motion for summary judgment. The 11th Circuit affirmed. Section 11 of the Securities Act contains a presumption that any person acquiring a security within 12 months of the issuance of a defective registration statement was harmed. The court held that the Section 11 presumption of reliance does not apply in a case in which sophisticated investors participating in an arm’s-length corporate merger make a legally binding investment commitment months before the filing of a defective registration statement. CIVIL PRACTICE Carmack Amendment pre-empts state law The Carmack Amendment to the Federal Interstate Commerce Act pre-empts state law over a claim that a moving company and its agents fraudulently refused to release the household goods of a customer, the 9th U.S. Circuit Court of Appeals held on Jan. 29 in a case of first impression. Hall v. North American Van Lines, No. 16182. Eva Hall retained North American Van Lines Inc. and its agents to move her household belongings from California to Montana. Hall claimed that she and North American had agreed to a total charge of $6,144 for the move, but that, upon arrival, the movers demanded several thousand dollars more before they would release her goods. The mover kept them for 14 months. Hall sued North American in California state court, alleging breach of contract, fraud and the conversion of personal property. North American removed the case to a California federal court, claiming that Hall’s complaint constituted a cause of action under the 1906 Carmack Amendment to the federal Interstate Commerce Act of 1887, 49 U.S.C. 14706. The court agreed and denied Hall’s motion to remand. The court granted North American’s motion to dismiss, holding that her claims were time-barred because she had failed to file a claim within the nine-month claim period in the contract. Affirming, the 9th Circuit rejected Hall’s argument that, because her claim arose from North American’s refusal to deliver rather than from loss or damage to her property, the Carmack Amendment did not completely pre-empt her state law claim. The court said, “[The Fifth Circuit holds that the Carmack Amendment completely preempts a contract claim alleging the late delivery of goods, even without loss or property damage. We agree with that court's observation that making finer distinctions between types of contract damages would 'defeat the purpose of the statute, which was to create uniformity out of disparity.' " TILA rescission claims not open to class action Class certification is not available for federal Truth in Lending Act rescission claims, the 1st U.S. Circuit Court of Appeals held on Jan. 29 on an issue of first impression. McKenna v. First Horizon Home Loan Corp., No. 06-8018. Massachusetts homeowners filed a complaint in a Massachusetts federal court, alleging that First Horizon Home Loan Corp. had violated both the federal Truth in Lending Act (TILA) and the Massachusetts Consumer Credit Cost Disclosure Act, in the course of home-refinancing transactions. They alleged that First Horizon had disclosed inaccurate information pertaining to statutory rescission rights and failed to respond appropriately to requests for rescission. The plaintiffs sought rescission of their loans and statutory damages. They filed their suit as a class action, purporting to sue on behalf of other Massachusetts consumers who received similar loans. First Horizon opposed class certification. The district court referred the matter to a magistrate judge, who recommended that the class be certified. The court adopted the recommendation. First Horizon sought interlocutory review. The 1st Circuit reversed, holding that the district court lacked authority to certify a class of residential borrowers who might potentially be eligible for rescissionary relief. Although TILA expressly acknowledges the potential for damages class actions, the 1st Circuit agreed with First Horizon that, as a matter of law, class actions for rescission are unavailable under TILA and the Massachusetts statute. The court said that its decision is based on the "conclusion that Congress did not intend rescission to receive class-action treatment." CONSTITUTION LAW Verbal obscenity arrest is free speech right breach No reasonable police officer could find probable cause to arrest someone for saying "God damn" at a municipal board public meeting, the 6th U.S. Circuit Court of Appeals ruled on Feb. 2. Leonard v. Robinson, No. 05-1728. Sarah Leonard sued the Montrose township board and the town's sheriff, Charles Abraham, claiming that Abraham canceled her exclusive towing-services agreement with the town because she would not help him get board member support for his proposal to expand the police department's territorial jurisdiction. Before the federal suit settled, Abraham ordered an officer, Stephen Robinson, to attend a township board meeting. During the citizen comment period, Sarah Leonard's husband, Thomas, complained about the towing contract's cancellation. When a board member challenged his conclusions, Leonard said, "That's why you're in a God damn lawsuit." He sat down, though he and a board member exchanged a few more barbs. Robinson escorted Leonard out of the meeting room and arrested him for disorderly conduct. Police released him after one hour's detention and his citation was eventually dismissed, too. Leonard sued Robinson in a Michigan federal court, claiming that Robinson had violated his Fourth Amendment right to be free of unreasonable seizure. The court dismissed the claim, holding that Robinson did not violate the Fourth Amendment because he had probable cause to arrest Leonard, believing him to have violated Michigan laws criminalizing swearing and disturbing a meeting. The 6th Circuit reversed. An arrest for obscenity, vulgarity or disturbing the peace, when based on speech alone, is improper if the speech occurs in a democratic assembly and is not accompanied by some other disorderly conduct. Plus, based on Abraham's past with the Leonards and his order to Robinson to attend the meeting, there is some evidence Robinson acted with an improper motive in arresting Thomas. CRIMINAL PRACTICE GPS tracker on a car isn't search and seizure If police have reasonable suspicion that a suspect is engaged in crime, the placing of a global positioning system (GPS) device on his car doesn't violate the Fourth Amendment's ban on unreasonable search or seizure, the 7th U.S. Circuit Court of Appeals held on Jan. 10. USA v. Garcia, No. 06-2741. A store security video system recorded Bernardo Garcia, who had already served time for methamphetamine offenses, buying ingredients used in the making of the drug. The police installed a GPS "memory tracking unit" underneath Garcia's car. When they retrieved the device, the police learned that the car had traveled to a large tract of land. There the police discovered equipment and materials used in the manufacture of methamphetamine. Though the police had not obtained a warrant authorizing the placement of the GPS tracker on Garcia's car, a Wisconsin federal judge found that they had reasonable suspicion that he was engaged in criminal activity, and reasonable suspicion was all they needed for a lawful search. The police likely had probable cause as well, she said. Garcia argued that police needed not only probable cause to believe that a search would turn up evidence of crime, but also a warrant. The 7th Circuit affirmed, holding that the mere attachment of a memory tracking device isn't seizure within the meaning of the Fourth Amendment. The device, the court said, "did not affect the car's driving qualities [and] did not draw power from the car’s engine or battery.” Nor is attachment of a GPS device to a car a search under the Fourth Amendment. A listening device attached to a person’s phone, and the recording of his or her phone conversations, is a search under the Fourth Amendment, and a warrant is required. But if police follow a car around, or observe its route by means of cameras on lampposts or through satellite imaging as in Google Earth, there is no search. Garcia’s car was tracked by means of satellite. Instead of transmitting images, the satellite transmitted geophysical coordinates. GPS technology is a substitute for following a car on a public street, which is not a search within the meaning of the amendment. DAMAGES Noneconomic damages awards get no tax offsets Prevailing parties awarded noneconomic damages in an employment discrimination case are not entitled to offsets for federal income taxes, the Washington Supreme Court ruled on Feb. 1. Pham v. City of Seattle, No. 76595-2. Chuong Van Pham and Heliodoro Lara sued the city of Seattle, alleging employment discrimination. The jury awarded them $550,000, which included front pay, back pay and noneconomic damages. The trial court later awarded them an additional $297,532.77 in attorney fees. The trial court then granted Pham and Lara additional amounts to offset the federal income tax consequences of receiving front pay, back pay and attorney fees in one lump sum. However, the trial court denied the tax offsets for their noneconomic damages awards. An intermediate appellate court reversed, finding that they were entitled to tax offsets for noneconomic damages. The Washington Supreme Court reversed. Section 104(a)(2) of the Internal Revenue Code specifically states that noneconomic damages are taxable to the plaintiff when attributable to nonphysical injury. Tax offsets for front pay and back pay serve the purpose of placing the plaintiffs in the same position that they would have otherwise been in had they received their compensation in due course absent the discrimination. LEGAL PROFESSION Law firm filing eviction actions is ‘debt collector’ A law firm that regularly files “summary dispossess” actions in nonpayment of rent cases may be considered a “debt collector,” for purposes of the Federal Debt Collection Practices Act (FDCPA), the New Jersey Supreme Court ruled on Jan. 31. Hodges v. Feinstein, Raiss, Kelin & Booker, No. A-113-2005. Renita Hodges and Rochelle Hodges are sisters who reside in separate apartments in Newark, N.J., operated by Sasil Corp. Their rent is subsidized by the U.S. Department of Housing and Urban Development-commonly referred to as Section 8 rental assistance. The Hodges’ rental obligation is defined by federal law as 30% of their adjusted monthly household income. The Hodges were regularly in arrears on rent, and thus accrued late charges, attorney fees and court costs under their leases. Sasil’s attorneys, Feinstein, Raiss, Kelin & Booker of West Orange, N.J., filed actions seeking the Hodges’ eviction or, alternatively, payment of “rent.” However, in summary dispossess litigation, a landlord may not recover late charges or attorney fees from Section 8 tenants. Also, failure to pay those charges and fees cannot serve as a basis for eviction. The sisters filed an FDCPA claim against the law firm, alleging that summary dispossess complaints were filed against them to induce them to believe that they would be evicted unless they paid all outstanding charges, including amounts exceeding their statutory-defined rental obligation. The state trial court granted summary judgment to the firm on the ground that the FDCPA did not apply to it. An intermediate appellate court reversed. The New Jersey Supreme Court affirmed. The firm could be considered to a “debt collector” under the FDCPA because the filing of the summary dispossess action for nonpayment of rent is a direct attempt to collect on a debt; it is not an action to recover possession of the property. A firm must also “routinely” engage in these direct-collection actions, so on remand the trial court must assess the firm’s overall involvement in dispossess actions. Public defender working as attorney earns rebuke A 30-day suspension, a public reprimand and disgorgement of fees was an appropriate sanction for an assistant public defender who represented criminal defendants as a side job and failed to inform the clients that they might be entitled to a free public defender, the Georgia Supreme Court held on Jan. 22. In re Johnson, No. S07Y0382. Eric Johnson II, an assistant public defender in DeKalb County, Ga., represented two criminal defendants as a private attorney, and accepted attorney fees from both. However, Johnson failed to inform the clients that they might have been eligible for free representation by a public defender. He also failed to inform the trial judge in the two cases that he was appearing as a private attorney rather than as an assistant public defender, and failed to inform the public defender’s office of this defense work. The state bar filed a complaint seeking disbarment, but Johnson filed two petitions for voluntary discipline, one of which the state bar supported. The Georgia Supreme Court reviewed. Accepting the report of a special master, the Georgia Supreme Court held that a 30-day suspension, a public reprimand and return of the attorney fees he received was an appropriate sanction. Although the court held that Johnson’s actions violated Rule 8.4(a)(4) of the Georgia Rules of Professional Conduct, Johnson’s cooperation with disciplinary authorities and his lack of prior disciplinary record were mitigating factors. Dual advocacy added up to ineffective counsel A federal district court erred in holding that a criminal defense attorney did not have an actual conflict of interest in the sentencing proceeding of one his clients who had been threatened with death by another client, the 4th U.S. Circuit Court of Appeals held on Feb. 2. U.S. v. Nicholson, No. 04-6092. Jack Nicholson pleaded guilty to possession of a firearm and ammunition by a felon, in violation of 18 U.S.C. 922(g)(1) and 942(a)(2). Nicholson claimed he carried the gun because his life had been threatened by Lorenzo Butts and various associates, who had allegedly killed Nicholson’s stepfather and seriously wounded his brother. Nicholson retained attorney Jon Babineau to represent him in the criminal proceedings. Babineau also represented Butts on drug distribution and firearms charges. At Nicholson’s sentencing hearing, Babineau did not request a downward departure based on Nicholson’s having to carry a gun to protect himself from Butts. Nicholson moved for a writ of habeas corpus, arguing that Babineau had provided ineffective assistance due to his dual representation. A Virginia federal court denied the motion, holding that Babineau had no actual conflict of interest because the charges arose from different circumstances. Reversing and remanding, the 4th Circuit held that there was a conflict of interest, and said, “Contrary to the district court’s ruling, Babineau’s representation of Nicholson and Butts created an actual conflict of interest. Although Nicholson and Butts were not charged with offenses arising out of the same set of circumstances, Nicholson’s interests, on the one hand, and Butts’s interests, on the other, were in total opposition to each other during Babineau’s simultaneous representation of them.” WORKERS’ COMPENSATION Family of trooper who killed himself gets no pay THE FAMILY OF a state trooper who committed suicide following work-related errors is not entitled to death benefits because the trooper’s death was not the consequence of a physical stimulus, the Nebraska Supreme Court said on Feb. 1. Zach v. Nebraska State Patrol, No. S-05-449. Mark Zach, a Nebraska state trooper, stopped several people while on duty. One of them was armed with a pistol, but, for some reason, the weapon was not identified as stolen when he called the serial number in to a dispatcher. Later, two of the individuals stopped and the weapon were involved in a bank robbery that resulted in the deaths of several people. Two weeks later, Zach shot himself. His family brought an action for death benefits under the Nebraska Workers’ Compensation Act, alleging that Zach’s suicide was caused by his feelings of responsibility for the robbery. A workers’ compensation court judge granted the Nebraska State Patrol’s motion to dismiss. A review panel of the workers’ compensation court reversed. An appellate court affirmed. The Nebraska Supreme Court reversed and remanded. Neb. Rev. Stat. � 48-101 allows compensation for personal injury to an employee caused by an accident or occupational disease. Section 48-151(4) defines personal injury as “violence to the physical structure of the body.” The court said that Zach’s injury was noncompensable because it was allegedly caused by a mental stimulus, following his being advised of the consequences of his work-related error.

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