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ATTORNEY FEES Fees are recoverable in ‘common benefit’ suit A plaintiff who prevails in a taxpayer suit is entitled to recover his attorney fees under the “common benefit” exception to the standard rule that each party bears its own attorney fees, the Delaware Supreme Court ruled on March 30. Korn v. New Castle County, No. 165, 2006. Richard Korn and another New Castle County, Del., resident challenged the county executive’s formation of 12 reserve accounts holding more than $200 million in surplus revenue. A trial court ruled for the taxpayers, finding that the accounts were improperly established without legislative approval. Korn also challenged the county’s “light tax fund,” which held a surplus revenue of $650,000. The court dismissed Korn’s complaint with prejudice. He nonetheless applied to recoup $500,000 in attorney fees, claiming that he had saved taxpayers millions of dollars by preventing various bond sales. The court denied his application. The Delaware Supreme Court reversed and remanded. Though disputing some of Korn’s calculations as to how much money he saved the county, the court agreed that he did more than “merely achieve the social benefit that invariably results when a government agency is required to do its job.” Korn’s lawsuits created a “substantial and quantifiable monetary benefit” to all taxpayers. This “common benefit” permits Korn to recover some of his attorney fees. Full text of the decision CIVIL PRACTICE Employer’s statement on NASD form is privileged Statements made by an employer on a National Association of Securities Dealers employee-termination notice are absolutely privileged and cannot be the basis of a defamation suit, the New York Court of Appeals ruled on March 29. Rosenberg v. Metlife Inc., No. 23. After firing Chaskie Rosenberg from his position as a financial service representative, Metlife Inc. filed a U-5 form, as required by National Association of Securities Dealers (NASD) rules, stating that the reason for Rosenberg’s termination was his violation of company policies and possible involvement in a money laundering scheme. Rosenberg filed a libel suit against Metlife in a New York federal court. The court dismissed his claim, ruling that the U-5 statements were absolutely privileged. The 2d U.S. Circuit Court of Appeals asked the New York Court of Appeals to decide whether statements made on the U-5 are absolutely or qualifiedly privileged under New York law. The New York Court of Appeals, the state’s highest court, ruled that the statements are absolutely privileged. There is an absolute privilege for statements made in judicial or quasi-judicial proceedings, and this privilege has been extended to the investigative stage of such proceedings. NASD is a quasi-governmental, self-regulatory organization, and one of its central responsibilities is investigation and adjudication of suspected violations. The U-5 form plays a significant role in this process, which ultimately serves the public interest. CIVIL RIGHTS Civil rights law applies to hospital staff privileges Michigan’s Civil Rights Act’s public accommodation provisions prohibit unlawful discrimination against a doctor by a hospital in which he has staff privileges, the Michigan Supreme Court ruled on March 28. Haynes v. Neshewat, No. 129206. Gregory Haynes was the only African-American staff physician who conducted the majority of his or her hospital practice at Michigan’s Oakwood Hospital. Haynes claimed that the hospital violated the public-accommodation terms of the state Civil Rights Act because he was denied full and equal use of Oakwood’s facilities. The state trial court rejected the hospital’s argument that a hospital was not a place of public accommodation with respect to its decisions concerning staff privileges. An intermediate appellate court reversed, holding that a hospital is a facility that provides privileges to a select few, not to the general public. The Michigan Supreme Court reversed, holding that the Civil Rights Act protects an individual’s right to the full and equal enjoyment of an entity’s goods, services, facilities or accommodations. Nowhere in the act’s statutory language is there a requirement that those goods, services, etc., have to be offered to the public at large, rather than to limited groups like doctors, before an entity is considered a public accommodation. CRIMINAL PRACTICE Mens rea not needed for Clean Water Act breach A defendant charged with knowingly dumping pollutants into U.S. waters in violation of the Clean Water Act does not have to know that the waters are U.S. waters to be convicted of the crime, the 4th U.S. Circuit Court of Appeals held on March 28. U.S. v. Cooper, No. 05-4956. A Virginia federal jury convicted D.J. Cooper of knowingly dumping pollutants into U.S. waters in violation of the Federal Water Pollution Control Act Amendments of 1972 � known commonly as the Clean Water Act. Cooper appealed, arguing that the government had failed to prove that he knew that the waters into which he discharged the pollutants “were a tributary of a navigable water, or adjacent to a navigable water, or had a significant nexus to a navigable water.” There was no proof that Cooper was aware of the facts that establish the federal government’s jurisdiction over the water for purposes of the Clean Water Act. Affirming, the 4th Circuit held that prosecutors did not need to establish a defendant’s knowledge of the jurisdictional issue of the water. The court said, “It is well settled that mens rea requirements typically do not extend to the jurisdictional elements of a crime,” adding, “Cooper’s deliberate discharge of human sewage into running waters is exhaustively recorded. He knew he was discharging sewage into them, he knew his treatment facilities were inadequate, and he knew he was acting without a permit. It seems unlikely that Congress intended for culpability in such an instance to turn upon whether the defendant was aware of the jurisdictional nexus of these acts, any more than . . . Congress intended conviction of a felon-in-possession offense to turn upon the defendant’s knowledge of the interstate travels of a firearm.” EVIDENCE No lien for subcontractor on public works project A subcontractor is not entitled to an equitable lien on public school funds owed to a contractor for work performed by the subcontractor, the Georgia Supreme Court held on March 26. McArthur Elec. Inc. v. Cobb County Sch. Dist., No. S07A0309. Manhattan Construction Co., the general contractor on a project for Georgia’s Cobb County School District, hired McArthur Electric Inc. to perform some of the electrical work. After Manhattan terminated McArthur’s services, McArthur sued, arguing it was entitled to an equitable lien on funds the school district owed Manhattan for work performed by McArthur. The court held that McArthur was not entitled to an equitable lien against the school district because other legal remedies were available. Affirming, the Georgia Supreme Court held that, unlike with subcontractors on private projects, an equitable lien was not an available remedy for subcontractors on public projects. The court said, “Unlike subcontractors and materialmen on private improvement projects, subcontractors and materialmen on public works projects have no viable lien claim as an alternative remedy to proceeding against the general contractor. They do, however, have a comparable alternative statutory remedy in the form of an action on the general contractor’s payment bond.” TORTS ‘Mode of operation’ rule applies at fast-food spots The state of Connecticut applies the “mode of operation” rule of tort liability, so that if a merchant’s mode of operation makes an injury foreseeable, the merchant is liable even without actual or constructive knowledge of the danger, the Connecticut Supreme Court held on April 3. Kelly v. Stop and Shop Inc., No. SC17404. Maureen Kelly was shopping at a store owned by Stop and Shop Inc. when, while visiting the salad bar, she slipped and fell, injuring her shoulder. She sued for damages. At trial, Kelly alleged that Shop and Shop had negligently allowed ”pieces of wet lettuce” to accumulate on the floor in the vicinity of the salad bar. She urged the court to apply the mode of operation rule and find that, in light of the way the salad bar was run, it was foreseeable that customers would spill or drop food to the floor, thereby creating a dangerous condition. Instead, the trial court held for Stop and Stop, finding that Kelly had failed to meet her burden of establishing that the defendant had actual or constructive notice of the piece of lettuce. Reversing and remanding, the Connecticut Supreme Court held that it would adopt the mode of operation rule for tort liability. The court said, “‘[M]odern-day supermarkets, self-service marts, cafeterias, fast-food restaurants and other business premises should be aware of the potentially hazardous conditions that arise from the way in which they conduct their business. Indeed, the very operation of many of these types of establishments requires that the customers select merchandise directly from the store’s displays, which are arranged to invite customers to focus on the displays and not on the floors . . . .In each of these cases, the nature of the defendant’s business gives rise to a substantial risk of injury to customers from slip-and-fall accidents.” Statements in affidavit enjoy absolute privilege A secretary’s statements in an affidavit regarding allegedly improper conduct by law firm employees are covered by absolute privilege, the Minnesota Supreme Court ruled on March 29. Mahoney & Hagberg v. Newgard, No. A05-1523. Stephanie Boldt and Margaret Burns formed a corporation to provide secretarial support for their fathers’ law firm, Mahoney & Hagberg. According to the terms of the contract, it would receive 25% of the firm’s revenues. After Mahoney won a $9 million verdict, Boldt sued Burns and the corporation for her share, claiming she had been improperly forced out. Tracy Newgard, a former secretary at the law firm, executed an affidavit that contained allegations of improper conduct by some of the firm’s attorneys and employees. The firm sued Newgard for breach of client and firm confidences. Newgard filed a motion to dismiss, claiming that she was immune from suit because her affidavit, made in the course of a judicial proceeding, was absolutely privileged The trial court denied the motion, but an intermediate appellate court reversed. The Minnesota Supreme Court affirmed. Absolute privilege applies to defamatory statements made by witnesses in judicial proceedings and protects witnesses from lawsuits based on statements made during the proceedings. Mahoney argues that absolute privilege only applies to defamation cases, not to breach of confidence cases like this one. However, given that the basis of its complaint is that Newgard made false statements when she knew that those statements would harm the firm, its complaint is in essence a defamation claim. Thus absolute privilege applies. Wrongful death law bars two recovery actions In a wrongful death action, the “one civil action rule” says the satisfaction of one defendant’s venue requirement properly establishes venue for other co-defendants, the Colorado Supreme Court held on March 27. In re Hernandez, No. 06SA211. Dr. Samuel Downing of the Prowers Medical Center in Prowers County, Colo., performed exploratory surgery on Vera Hernandez, which resulted in perforation of her intestines. Hernandez continued her treatment at Parkview Medical Center in Pueblo County, Colo., where she died after receiving inadequate medical care. Hernandez’s family filed in Prowers County a wrongful death suit against Downing and Parkview, based on two claims of negligence. Parkview moved to sever the negligence claims and to transfer the claim against Parkview to the jurisdiction of Pueblo County. The trial court granted Parkview’s motion. The Colorado Supreme Court issued a rule to show cause in order to consider whether the transfer violated Colorado’s wrongful death statute. The Colorado Supreme Court reversed, ruling that Prowers County was the proper venue to try both claims. The wrongful death statute provides that “[t]here shall be only one civil action . . . for recovery of damages for the wrongful death of any one decedent.” The high court said that by transferring venue and severing the claims, the trial court had created two separate wrongful death actions in violation of the statute. Though the venue rules as set out in Colo. R. Civ. P. 98 appear to support Parkview’s demand for a change of venue, Rule 81(a) says that the rules of civil procedure “do not govern procedure . . . in any special statutory proceeding insofar as they are inconsistent or in conflict with the procedure and practice provided by the applicable statute.” Thus, the statute takes precedence over the inconsistent rule.

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