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Arbitration agreement can’t bind claims of heirs

A binding agreement to arbitrate does not pass to a person’s heirs and beneficiaries, the Ohio Supreme Court held on Sept. 20. Peters v. Columbus Steel Castings Co., No. 2006-0507.

When William Peters went to work for Columbus Steel Castings Co., he signed an agreement saying that mediation and arbitration were the “sole exclusive remedies” for any legal claim he may wish to pursue against the company regarding his employment. The agreement also applied to his “heirs, beneficiaries, successors, and assigns.” A week after he started, Peters fell at the work site and was killed. Alice Peters, his widow and estate administrator, filed two claims against the company: a survival action for injuries Peters sustained prior to his death and a wrongful death action on behalf of his beneficiaries. The company sought dismissal, arguing that the agreement Peters signed required arbitration of the claims. An Ohio trial judge held that the survival claim for Peters’ injuries could be resolved only under arbitration, but the wrongful death claim could be brought in court. The company appealed, and an intermediate appellate court affirmed.

The Ohio Supreme Court affirmed, holding that, unless Peters’ beneficiaries specifically agreed to arbitrate their wrongful death claims, they should not be bound to do so. Peters “could not restrict his beneficiaries to arbitration of their wrongful-death claims, because he held no right to those claims; they accrued independently to his beneficiaries for the injuries they personally suffered as a result of the death,” the court said.

Full text of the decision


No immunity for agency running its own business

The National Association of Securities Dealers Inc. and its Nasdaq stock market subsidiary enjoy absolute immunity for regulatory functions, but they enjoy no immunity against allegations of fraud in private commercial conduct, such as Nasdaq’s advertising campaign promoting the stock of WorldCom Inc., an en banc 11th U.S. Circuit Court of Appeals held on Sept. 18. Weissman v. National Association of Securities Dealers Inc., No. 04-13575.

Steven Weissman purchased 82,800 shares of WorldCom Inc. stock on behalf of his minor children. After WorldCom collapsed, Weissman filed a diversity suit against Nasdaq in a Florida federal court, claiming state-law fraud and negligent misrepresentation violations. The suit alleged that Nasdaq’s advertisements on television and in the Wall Street Journal fraudulently induced investors to purchase shares of WorldCom stock and failed to disclose that the stock market’s revenues were directly enhanced by increased trading in WorldCom stock. Nasdaq sought dismissal, claiming absolute immunity. A trial judge denied Nasdaq’s immunity claims. An 11th Circuit panel reversed.

The en banc 11th Circuit reversed the panel. Nasdaq has a dual role as a regulatory organization and as a private corporation seeking to make a profit. Self-regulatory organizations are protected by absolute immunity when they perform their statutorily delegated adjudicatory, regulatory and prosecutorial functions, the court wrote. “However, entities that enjoy absolute immunity when performing governmental functions cannot claim that immunity when they perform non-governmental functions.”

Advertisements are not a governmental function. “NASDAQ represents no one but itself when it entices investors to trade on its exchange and . . . when it suggests that particular companies are sound investments . . . .These advertisements . . . were in the service of NASDAQ’s own business, not the government’s, and such distinctly non-governmental conduct is not protected by absolute immunity.”


Solomon Amendment no First Amendment breach

The Solomon Amendment does not infringe upon the Yale Law School faculty’s right to academic freedom, the 2d U.S. Circuit Court of Appeals ruled on Sept. 17. Burt v. Rumsfeld, No. 05-1732.

A majority of the Yale Law School faculty sued the U.S. secretary of defense over the Solomon Amendment, which denies federal funding to a college or university if any part of the college or university refuses military recruiters equal access to its students and campuses. The faculty claimed that the military’s policy of not admitting open homosexuals violated the school’s anti-discrimination policy and that the Solomon Amendment violated their First Amendment rights to speech, disassociation and academic freedom.

A Connecticut federal court ruled for Yale. While the government’s appeal was pending, the U.S. Supreme Court ruled in Rumsfeld v. Forum for Academic and Institutional Rights, 126 S. Ct. 1297 (2006), that the Solomon Amendment does not violate the First Amendment.

The 2d Circuit reversed, saying: “The Solomon Amendment places no restriction on the content of teaching, the membership of teachers in organizations, the selection of students, or evaluation and retention of students.” In addition, the high court had “already has rejected the argument that the Solomon Amendment forces the plaintiffs to associate with the military . . . .Logically, then, the plaintiffs also remain free to disassociate themselves from the recruiters by words and deeds.”


Horse slaughter ban is no commerce clause breach

Illinois’ ban on the slaughter of horses for human consumption doesn’t violate the commerce clause of the U.S. Constitution, the 7th U.S. Circuit Court of Appeals held on Sept. 21. Cavel International Inc. v. Madigan, No. 07-2658.

Cavel International owns and operates the only facility in the United States for slaughtering horses. Its entire output of 40,000 to 60,000 horses per year is exported to foreign countries for human consumption. Illinois recently amended the Illinois Horse Meat Act, 225 Ill. Comp. Stat. 635, to make it unlawful to slaughter a horse or to “import into or export from this State, or to sell, buy, give away, hold, or accept any horse meat,” if it is known the horse meat will be used for human consumption.

Cavel brought suit in an Illinois federal court, claiming that Illinois’ amendment violates the federal Meat Inspection Act and the Constitution’s commerce clause. Cavel argued that the federal statute signifies Congress’ intent to sweep aside any state law banning the slaughter of horses that would render the federal requirements inapplicable to Cavel’s slaughterhouse. The 7th Circuit enjoined application of the amendment to Cavel pending a decision on the merits.

Dismissing Cavel’s suit with prejudice, the 7th Circuit said that, just because the federal Meat Inspection Act applied to the production of horse meat, it didn’t mean that Congress intended to prohibit states from outlawing the slaughter of horses for human consumption. The law is “concerned with inspecting premises at which meat is produced for human consumption, rather than with preserving the production of particular types of meat for people to eat.” A commerce clause violation takes place when a state law that discriminates in favor of local firm. The Illinois law does not do that. If a local firm wants to slaughter horses, it is barred from doing so. No local merchant or producer benefits from the ban on slaughter.

The court rejected Cavel’s argument that the ban serves no purpose at all. The court said “states have a legitimate interest in prolonging the lives of animals that their population happens to like” and “a state is permitted, within reason, to express disgust at what people do with the dead, whether dead human beings or dead animals.”


Existing warrant justifies police warrantless entry

A trial court properly refused to exclude drug evidence obtained in a forcible raid without a warrant because there was an outstanding warrant for the defendant and a reasonable belief that he was attempting to evade the police, the District of Columbia Court of Appeals held on Sept. 20. Brown v. U.S., No. 03-CF-777.

Three District of Columbia police officers were traveling in an unmarked car when they noticed a woman on a street corner and approached her about buying drugs. The woman took the officers to the residence of Edwina Powell. Bradford Brown, a guest in the home, sold some cocaine to the undercover officers. The officers returned to their car and reported the incident. They then returned, and knocked on the door. They overheard the occupants of the apartment say that the police were at the door, and officers in the back of the building reported that people were exiting the apartment through the rear. The police at the door, who already had an outstanding warrant for Brown from another case, broke down the door and arrested him. Brown moved to exclude the evidence from the search, contending that there was no warrant for the premises and that he had a reasonable expectation of privacy. A trial court denied the motion.

Affirming, the District of Columbia Court of Appeals, the district’s highest court, held that because of the outstanding warrant there was no error in the officer’s warrantless entry or the trial court’s refusal to exclude the evidence.

Rejecting Brown’s reliance on the U.S. Supreme Court’s decision, Steagald v. U.S., 451 U.S. 204 (1981), the court said, “Steagald would be controlling if Ms. Powell . . . were seeking suppression of the evidence, recovered from her home when police entered on an arrest warrant for appellant, that the government was seeking to use against her. But that is not the case before us. Rather, this case concerns the use of evidence against the person named in the arrest warrant, and the question at hand is whether officers may rely on a valid arrest warrant, and a reasonable belief that the subject of that warrant is in the residence of a third party, to enter the residence to execute the warrant.”


Advice on morning-after pill is not state coercion

A public health worker’s instruction to a minor on how to take emergency oral contraception the minor requested is not state coercion that violates the minor’s, or her parents’, constitutional rights, the 3d U.S. Circuit Court of Appeals ruled on Sept. 21. Anspach v. City of Philadelphia, No. 05-3632.

Fearing she might be pregnant, 16-year-old Melissa Anspach went to a Philadelphia public clinic and asked for the morning-after pill. After first consulting with a social worker, a registered nurse gave Melissa four pills and told her to take them right away. The nurse instructed Melissa to take four more pills 12 hours later, which she did. Melissa experienced severe stomach pains and was eventually treated for hemorrhaging in her eye caused by excessive vomiting. Melissa and her parents sued the city under 42 U.S.C. 1983. Melissa’s parents claimed that the city interfered with their parental rights by giving Melissa medication without their consent, while Melissa argued that the city violated her 14th Amendment right to bodily integrity and parental guidance. A Pennsylvania federal court dismissed their claims.

The 3d Circuit affirmed. The clinic’s policies are not aimed at preventing parents from learning of their daughter’s possible pregnancy, the court found, as Melissa was not prevented from calling her parents. Nor was she coerced into taking the pills that she had requested simply by being told when and how to take them. Melissa’s parents incorrectly characterize the clinic’s involvement as interference with their parental rights; what they are really complaining about is that the clinic’s workers did not assist them or affirmatively foster the parent/child relationship. The court added that allegations that minors seeking reproductive health services are particularly vulnerable cannot negate the fact that minors enjoy a measure of a constitutional right to privacy.


Asylum timeliness law is no breach of due process

The federal immigration statute’s bar on judicial review, 8 U.S.C. 1158(a)(3), does not violate the due process clause of the U.S. Constitution, the 1st U.S. Circuit Court of Appeals ruled on Sept. 17 on an issue of first impression. Hana v. Gonzales, No. 06-2137.

Fady Louis Hana, a citizen of Egypt, applied for asylum in the United States, claiming he was persecuted on account of his Coptic Christian religion. An immigration judge rejected his application as untimely, since it was not filed within one year of his arrival here, as required by 8 U.S.C. 1158(a)(3). To be eligible for asylum, an applicant must show that he filed his application within one year of arrival to the United States. Alternatively, he must demonstrate the existence of “extraordinary circumstances” sufficient to merit an exemption from the one-year deadline. Hana claimed he suffered “extreme mental distress” as a result of the threats made against him in Egypt, and that his mental condition constituted extraordinary circumstances.

The Board of Immigration Appeals (BIA) affirmed, finding the application was untimely and that no extraordinary circumstances excused the late filing.

Affirming, the 1st Circuit said that it does not have jurisdiction to review the BIA’s finding on the timeliness issue or on its application of the “extraordinary circumstances” exception, unless the alien identifies a legal or constitutional defect in its decision. Accordingly, the court only addressed Hana’s claim that Congress violated his right to due process by precluding review of asylum timeliness decisions under Section 1158(a)(3). The 1st Circuit joined the other circuits in holding that the section does not violate the due process clause. The court said “the removal of judicial review in the immigration context does not raise constitutional issues when some avenue for judicial relief remains available to address core legal and constitutional concerns.”


‘Regular use’ exclusion inapplicable to stolen car

A trial court erred in granting summary judgment to an insurer that refused to cover a sheriff’s detective when he was run over by his own stolen patrol car on the ground that the incident did not fall under the policy exemption, the Maine Supreme Judicial Court held on Sept. 20. Pease v. State Farm Mut. Ins. Co., No. 2007 ME 134.

Jason Pease was a detective sergeant with the Lincoln County, Maine, Sheriff’s Office. When Michael Montagna stole his patrol car and drove over his leg, Pease sustained severe injuries to his knee and suffered lacerations and contusions to other parts of his body. Because the county’s insurance policy did not cover the incident, Pease filed a claim with his personal carrier, State Farm Mutual Insurance Co., claiming coverage under his policy’s uninsured motorist provision. State Farm refused to pay the claim, based on a provision in Pease’s policy excluding coverage when it involved a vehicle provided for the insured’s regular use. A trial court granted State Farm’s motion for summary judgment.

Reversing, the Maine Supreme Judicial Court, the state’s highest court, held that Pease’s regular use of the patrol car ended the moment it was stolen. The court said, “At the moment Montagna stole the vehicle, it stopped being a vehicle furnished for the deputy’s use, and was simply a stolen vehicle . . . .We find that a construction of the policy that excludes vehicles stolen from the insured from the ‘regular use’ exclusion is consistent with the ‘legislative intent . . . to benefit all insured motorists by throwing the burden of compensating for injuries which would otherwise go without redress from the individual victim to the insurance industry for a premium.’ “


Mention of doctor in suit prior to review unlawful

The listing of a doctor’s name in a complaint before presentation of the issue before a medical review panel is actionable under Indiana law, the Indiana Supreme Court ruled on Sept. 17. Kho v. Pennington, No. 72S04-0609-CV-332.

Ruby Miller, representative of the estate of Tracy Merle Lee, sued Eusebio Kho, a physician, for medical malpractice. After Kho filed a motion for summary judgment, claiming he had never treated Lee, Miller dismissed Kho voluntarily from the suit. Kho then sued Miller’s lawyer, Deborah Pennington, her law firm, and Miller, alleging malicious prosecution because they had listed his name in a complaint before presenting the issue to a medical review panel, pursuant to Ind. Code §§ 34-18-8-4 and 34-18-10-1. A trial court granted summary judgment to Pennington, the law firm and Miller, and an intermediate state appellate court affirmed.

Reversing, the Indiana Supreme Court held that failure to submit the issue to the medical review panel before the filing of the suit was actionable under Indiana law. The court said, “Although the statutory requirement that the complaint not disclose the defendant’s identity during the preliminary period of consideration by the medical review panel may be less than foolproof protection for the health care provider’s good name and reputation, it serves a significant ameliorative function clearly intended by the legislature. We decline to countenance disregard of the provision.”

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