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• ADR Continued work signals assent to arbitration plan An employee who continues to work after receiving information on a new arbitration policy is deemed to have consented to that policy, the 6th U.S. Circuit Court of Appeals ruled on Nov. 13. Seawright v. American General Financial Services Inc., No. 07-5091. Lisa Seawright began working for American General Financial Services in 1978. In 1999, the company announced its intention to implement an employee dispute-resolution program. Seawright signed an attendance sheet indicating she attended an informational session on the program, and she received a letter explaining the new program, which required employees to resolve by arbitration any claims involving discrimination, retaliation and harassment. A letter and brochure explaining a change to the program was mailed to employees in June 2001. In April 2005, American General fired Seawright. Seawright sued the company in a Tennessee federal court for discrimination and violations of the Family and Medical Leave Act. The court denied the employer’s motion to compel arbitration, ruling that merely receiving information and acknowledging the dispute-resolution program was not tantamount to assenting to the policy. The 6th Circuit reversed. Though Seawright did not sign a specific waiver assenting to the program, she signaled her assent through her continued employment. Furthermore, the policy was not unconscionable because of the parties’ alleged unequal bargaining power. Seawright was an educated employee in a management position with more than 25 years’ experience. “In the absence of evidence that assent to the arbitration agreement was procured through unfair means or that the agreement itself was substantively unfair, courts should enforce mandatory arbitration agreements on the same basis as any other agreement that employers require as a condition of employment.” Full text of the decision • ATTORNEY FEES Hybrid fee deal penalizes claimant, hence it’s illegal An attorney fee agreement that uses a client’s decision to settle as a trigger to convert contingent-fee representation into an obligation to pay hourly fees impermissibly burdens the client’s exclusive right to settle a case, the Alaska Supreme Court held on Nov. 9. Compton v. Kittleson, No. sp-6197. Nicholas Kittleson, an attorney, filed a consumer protection action against a car dealership on behalf of Danilo and Angelita Nelvis. Kittleson represented them under a hybrid fee agreement that called for him to receive a contingent fee unless the Nelvises settled the case for an amount that will pay less than $175 per hour for the time he invested in the case. In that event, the Nelvises would be required to pay Kittleson a fee based on the $175 hourly rate. Before trial, the Nelvises rejected a $25,000 settlement offer. They lost at trial and the court entered judgment ordering them to pay costs and attorney fees totaling almost $100,000. They then petitioned for bankruptcy. The bankruptcy trustee sued Kittleson to recover their losses, alleging the attorney had committed malpractice because his fee agreement violated the Alaska Rules of Professional Conduct. A trial court ruled in Kittleson’s favor. Reversing, the Alaska Supreme Court said it would be anomalous to encourage the successful resolution of consumer rights claims by adopting a practice designed to penalize a claimant for accepting a reasonable offer to settle. A hybrid fee agreement like the one here is prohibited under the Alaska Rules of Professional Conduct and other provisions of Alaska law because of its potential to restrict a client’s exclusive right to accept or reject an offer of judgment. • CONSTITUTIONAL LAW GPS use on sex offenders isn’t ex post facto breach Tennessee’s Monitoring Act, which requires sex offenders to wear a global positioning system (GPS) device while on probation, does not violate the ex post facto clauses of the U.S. and Tennessee constitutions, the 6th U.S. Circuit Court of Appeals ruled on Nov. 16. Doe v. Bredesen, No. 06-6393. John Doe, an unidentified defendant in Tennessee, pleaded guilty to two counts of sexual battery by an authority figure. Soon after his plea, the state passed a sex offender registry law, which retroactively required sex offenders to register with the state sexual offender registry for the rest of their lives. The state probation and parole board also mandated that violent sex offenders like Doe wear GPS devices for the duration of their parole. Doe challenged the regulation in a Tennessee federal court, arguing that it violated the ex post facto clauses of the state and federal constitutions; he also argued that, because the GPS device cannot be concealed easily, it interfered with his freedom of movement and action. The court granted the government’s motion to dismiss the complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim on which relief could be granted. The 6th Circuit affirmed. The registration, reporting and surveillance components of the law and regulation are not considered punishment, as they do not increase the length of incarceration or interfere with attempts to move, change jobs or travel. The court said that the device looks like a walkie-talkie or some other monitoring system and would not alert a member of the public that Doe was a criminal, much less a sex offender. • CRIMINAL PRACTICE DNA test motion tolls limitations statute period A post-conviction motion for DNA testing under Texas law tolls the one-year statute of limitation for filing habeas corpus petitions under the federal Antiterrorism and Effective Death Penalty Act (AEDPA), the 5th U.S. Circuit Court of Appeals held on Nov. 14 in a first-impression ruling. Hutson v. Quarterman, No. 05-20559. In 2001, Wilbert Ray Hutson was convicted in a Texas state court of aggravated assault with a box cutter and sentenced to 10 years in prison. An intermediate appellate court affirmed, and the Texas Court of Criminal Appeals denied Hutson’s petition for discretionary review. In January 2003, while state appeals were pending, Hutson filed a motion in state trial court for DNA testing of the box cutter used in the assault. The motion was denied and the denial was affirmed on appeal. In March 2005, almost two years after the final review of his conviction, Hutson filed a habeas corpus petition in a Texas federal court arguing, among other things, insufficient evidence. He also sought an extension of time to file, acknowledging the filing was past the one-year deadline but arguing that the deadline was suspended because his DNA motion could be defined as “other collateral review.” The trial judge dismissed the petition as time-barred, finding that the deadline for filing a habeas petition was in July 2004. The trial judge did not specifically address Hutson’s argument that his DNA motion was “other collateral review” suspending the limitations period. Hutson appealed to the 5th Circuit, which granted a certificate of appealability on the issue of whether Hutson’s post-conviction motion for DNA testing is an application for “other collateral relief.” The 5th Circuit reversed. The court said that, even though the language of the federal habeas statute of limitations must be interpreted under federal law, some consideration of state law is “inevitable when analyzing the AEDPA’s limitations.” The court said, “If the federal courts deny tolling the AEDPA’s limitations, petitioners might forego state-law remedies to retain their right to federal review.” Texas passed a DNA law that may disrupt the finality of cases “in order to better protect the wrongfully accused,” the court said. “Comity therefore dictates that the federal courts give Texas courts the time to review these DNA claims and provide necessary relief without forcing convicted persons to choose between the two systems thereby undermining the remedy the Texas legislature has provided.” A motion to test DNA evidence under Texas Code Crim. P. 64 constitutes “other collateral review” and thus tolls the AEDPA’s one-year limitations period. • INTELLECTUAL PROPERTY Dog toy doesn’t infringe Louis Vuitton trademark Dog chew toys labeled and marketed as “Chewy Vuiton,” which were designed to mimic Louis Vuitton handbags, were parodies that did not infringe or dilute the Louis Vuitton trademarks or copyright, the 4th U.S. Circuit Court of Appeals held on Nov. 13. Louis Vuitton Malletiers S.A. v. Haute Diggity Dog LLC, No. 06-2267. Louis Vuitton Malletiers S.A. (LVM) owned federally registered trademarks for its Louis Vuitton handbags, luggage and related products when Haute Diggity Dog LLC began marketing “Chewy Vuiton” � dog chew toys mimicking the Louis Vuitton products. Louis Vuitton sued Haute Diggity Dog in a Virginia federal court, arguing that � in addition to infringing on the Louis Vuitton copyright for its design � Haute Diggity Dog was infringing on and diluting its trademarks in violation of the federal Lanham Act and state law. The court granted summary judgment to Haute Diggity Dog, holding that the chew toys were successful parodies that violated neither the Louis Vuitton trademarks nor its copyright. Affirming, the 4th Circuit agreed that the chew toys were successful parodies and held that there was no trademark or copyright violation. Applying the parody analysis it established in People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 366 (4th Cir. 2001), and holding that there was no likelihood of confusion, the court said, “It is a matter of common sense that the strength of a famous mark allows consumers immediately to perceive the target of the parody, while simultaneously allowing them to recognize the changes to the mark that make the parody funny or biting. In this case, precisely because LOUIS VUITTON is so strong a mark and so well recognized as a luxury handbag brand from LVM, consumers readily recognize that when they see a ‘Chewy Vuiton’ pet toy, they see a parody.” • LEGAL PROFESSION Mandatory service as arbitrator isn’t a taking Requiring attorneys to serve as arbitrators for minimal pay is not an illegal taking in violation of Fifth Amendment to the U.S. Constitution, the 9th U.S. Circuit Court of Appeals held on Nov. 15. Scheehle v. Supreme Court of Arizona, No. 05-17063. Arizona’s Maricopa Superior Court established the Arbitrator Appointment System, under which experienced attorneys are required to serve as arbitrators for at least two days a year at a rate of pay of $75 per day. Mark Scheehle, an Arizona attorney, filed a petition challenging the program with the Arizona Supreme Court. After the state’s high court refused to accept jurisdiction over his petition, Scheehle challenged the program in an Arizona federal court, arguing multiple constitutional violations, including unconstitutional taking of property rights under the 14th Amendment. The court granted summary judgment to the defendants, holding that “The limited service required of attorneys by the Maricopa system is too minimal to constitute a compensable taking of property.” Affirming, the 9th Circuit held that, while the required service was a taking, it was not a regulatory taking for which Scheehle was entitled to compensation under the U.S. Supreme Court’s Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978). The justices had held that only onerous regulation of private property, the effect of which is tantamount to a direct appropriation or ouster, requires compensation. The court said, “the ‘bundle of rights’ a person acquires with admission to a bar does not include a right to compensation under the Fifth Amendment for duties that he or she owes to the courts unless the particular duty imposed amounts to a taking under Fifth Amendment pursuant to the regulatory takings test. We note that the cost to an attorney of representing an indigent criminal defendant, which we have held does not necessarily constitute a taking, will usually far exceed the cost of serving as an arbitrator for two days a year.” • MEDIA LAW Invasion of privacy claim must be filed within year The single publication rule used in libel cases also applies to invasion of privacy cases, the New York Court of Appeals ruled on Nov. 15. Nussenzweig v. diCorcia, No. 155. Philip-Lorca diCorcia took candid photos of people walking through Times Square in New York City from 1999 to 2001. Some of the photos were exhibited in an art gallery in fall 2001; the exhibit included a catalogue and limited-edition prints of images on display. One of the images was of Erno Nussenzweig, who did not know about the photo until March 2005. Nussenzweig sued diCorcia in a New York state court for invasion of the statutory right of privacy, as set forth in N.Y. Civ. Rights Law �� 50 and 51. The court granted diCorcia’s summary judgment motion on the ground that any claim for a sections 50 or 51 violation must be filed within one year of the initial display of the photograph, not one year from plaintiff’s discovery of the display. The New York Court of Appeals, the state’s highest court, affirmed. According to the single-publication rule, a cause of action for defamation accrues on the date the offending material is first published. The court said that the rationale for the rule � avoidance of litigation of stale claims, faded memories and disappearing witnesses � applies to invasion of privacy claims too. Nussenzweig had one year from fall 2001 when diCorcia first published his photos to file his suit. • TORTS Failure-to-warn suit fails if bad effect is knowable A trial judge correctly dismissed a class action by lactose-intolerant plaintiffs against dairy processors and grocery-stores that sell milk in the District of Columbia, the U.S. Circuit Court of Appeals for the District of Columbia held on Nov. 16, noting that a “bout of gas or indigestion does not justify a race to the courthouse.” Mills v. Giant of Maryland LLC, No. 06-7148. A group of lactose-intolerant individuals filed a class action in a D.C. federal court, alleging that they consumed milk before they were aware of their lactose intolerance and, as a result, suffered temporary “flatulence, bloating, cramps, and diarrhea.” The plaintiffs alleged the milk sellers breached their duty of reasonable care because they were aware of the effects of milk on lactose-intolerant consumers but failed to warn about those effects. The plaintiffs sought damages as well as a permanent injunction requiring warnings on milk packages. A trial judge dismissed the suit, holding that it did not state a claim under D.C. tort law. Affirming, the D.C. Circuit said that tort law does not provide protection from obvious or widely known risks of consuming a particular food. The risk that some people will get gas after consuming certain foods, such as milk, is widely known, the court said. Tort-law principles foreclose failure-to-warn liability when the risk that some people might have an adverse reaction to the food is widely known, the court said, adding that courts have applied this principle to a host of other failure-to-warn suits involving fast food and alcohol. • WHISTLEBLOWER LAW Disclosure to government isn’t bar to qui tam action Prior self-disclosure by a defendant to governmental investigative agencies does not constitute “public disclosure” within the meaning of a federal False Claims Act jurisdictional bar, the 1st U.S. Circuit Court of Appeals held on Nov. 15. U.S. v. Pfizer Inc., No. 06-2627. Dr. Peter Rost filed a whistleblower action against Pfizer Inc., and its subsidiary, Pharmacia Corp., in a Massachusetts federal court under the False Claims Act (FCA), alleging that Pharmacia’s misconduct in marketing a human growth hormone, Genotropin, for uses not approved by the U.S. Food and Drug Administration led to claims for reimbursement to the United States for nonreimbursable, off-label drug prescriptions. The FCA prohibits the knowing submission of false or fraudulent claims for payment to the federal government. It allows a private “relator” to blow the whistle on such frauds by bringing qui tam actions. A qui tam action is barred by 31 U.S.C. 3730(e)(4) if it is “based upon the public disclosure” of allegations or transactions in a hearing or government report or investigation or from the news media, unless the person bringing the action is an original source. Pfizer claimed that it had initiated an internal investigation into Pharmacia’s marketing practices upon acquiring the company in 2003. It also informed the relevant federal authorities about potential problems. Pfizer claimed that this self-disclosure to investigative bodies constitutes “public disclosure of allegations” that bar a qui tam action. The court rejected Pfizer’s argument that the suit be dismissed for lack of jurisdiction under Section 3730(e)(4), but granted the motion to dismiss on the ground that Rost had failed to meet the pleading requirements for allegations of fraud under Fed. R. Civ. P. 9(b). The 1st Circuit affirmed that Section 3730(e)(4) does not bar Rost’s suit because Pfizer’s disclosure to the government was not “public disclosure.” The court and affirmed that the complaint failed to meet the heightened pleading standard for FCA claims, but remanded so that the district court may consider Rost’s request for leave to amend.

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