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Few would dispute that the most intriguing legal story of 2000 involved the courtroom battles over Florida’s contested presidential election. But while the public and legal community debated dimpled chads and butterfly ballots, the 9th U.S. Circuit Court of Appeals quietly concluded a stabilizing year. Last year marked the end of Procter Hug’s tenure as chief judge, the beginning of Mary Schroeder’s term as chief judge and saw the court continue what may be described as a gradual move toward the center. Among the 9th Circuit’s decisions last year were a number of significant and controversial rulings in many substantive areas of law. For starters, the 9th Circuit heard argument in perhaps the most celebrated non-election case of 2000, A&M Records Inc. v. Napster Inc. Technology has evolved to the point where one can share and download digital music files via the Internet. The court was asked to interpret the intersection of copyright law and new technology, and its long-awaited decision finally came down on Feb. 12, Nos. 00-16401, 00-16403 (9th Cir. Feb. 12, 2001). The court affirmed the district court’s ruling in favor of the plaintiffs on the issue of Napster’s contributory and vicarious copyright infringement, but found that the district court’s order was overbroad. The 9th Circuit sent the injunction back to the district court so it could be modified by Chief Judge Marilyn H. Patel of the Northern District of California. Writing for a unanimous panel, Judge Robert R. Beezer concluded that the record companies had met their burden in district court. The court found that individual Napster users who download shared digital music files directly infringe the plaintiffs’ exclusive rights of reproduction and distribution in the copyrighted works under 17 U.S.C. 106(1) and (3). The court rejected Napster’s claim that its members’ use of the copyrighted works constitutes fair use under 17 U.S.C. 107, and concluded that the plaintiffs likely would succeed in proving at trial that Napster is liable for its users’ infringing acts. Napster has indicated it plans to request an en banc rehearing and likely will file a cert. petition with the U.S. Supreme Court. The decision may well doom Napster’s free music file-sharing service as it exists today. Nonetheless, digital music and other technological advances are here to stay, despite the 9th Circuit’s ruling. In Sony v. Connectix, 203 F.3d 596 (9th Cir. 2000), a panel of the court determined that it was fair use for a competitor to make intermediate copies of the plaintiff’s software for the purposes of reverse engineering. The court reasoned that such use was permitted under 17 U.S.C. 107, so long as the copies were used by the competitor only to make its own non-infringing computer function with the plaintiff’s video games. The panel’s opinion stated that “when disassembly is the only way to gain access to the ideas and functional elements embodied in a copyrighted computer program and where there is a legitimate reason for seeking such access, disassembly is a fair use of the copyrighted work, as a matter of law.” That ruling may have broad implications for an economy driven by computers. EMPLOYMENT LAW DECISIONS In the realm of employment law, the 9th Circuit penned several “pro-employee” decisions that undoubtedly will have an impact beyond that circuit. In Frank v. United Airlines Inc., 216 F.3d 845 (9th Cir. 2000), female flight attendants appealed summary judgment for the airline in an action under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act (ADA). The flight attendants filed a class action challenging the airline’s weight requirements based on sex, height and age. The 9th Circuit ruled that the airline’s policy was facially discriminatory because it applied less favorably to women and because the airline provided no evidence that its weight standard was a bona fide occupational qualification. The 9th Circuit ruled that the plaintiffs were entitled to summary judgment on their Title VII disparate-treatment claim and also ruled that the plaintiffs could go forward with their ADEA claim under a disparate-impact theory. In Barnett v. U.S. Air, 228 F.3d 1105 (9th Cir. 2000), an en banc decision, the court imposed a heightened duty on employers to accommodate workers under the ADA. Robert Barnett injured his back while working for the airline in a cargo position in 1990. He took a mailroom job due to the injury, but was displaced in 1993 when two workers with seniority transferred to the mailroom. Barnett sought to keep the mailroom job as an accommodation, but the airline refused and placed him on injury leave. The court reversed summary judgment for U.S. Air because the airline had not engaged in good faith in the interactive process to find a reasonable accommodation. U.S. Air would be liable under the ADA if such accommodation was possible without undue hardship to the airline, and the court ruled that the airline’s seniority system could not operate as a per se bar to Barnett’s reassignment and was merely a factor in the analysis of undue hardship. The 9th Circuit also expanded the scope of employees’ claims under Title VII for retaliatory actions by employers. In Ray v. Henderson, 217 F.3d 1234 (9th Cir. 2000), the court adopted the EEOC’s standard that retaliation is actionable if it was reasonably likely to deter employees from engaging in protected activities. After William Ray complained about the U.S. Postal Service’s treatment of his female co-workers, management eliminated employee meetings and its flexible starting-time policy, and cut Ray’s salary. The court ruled that the Postal Service’s actions were “adverse employment actions” under Title VII and were reasonably likely to deter Ray from complaining in the future about discrimination. The 9th Circuit also joined the 2nd, 7th and 10th Circuits in holding that a hostile work environment could form the basis for a retaliation claim under Title VII. The court reasoned that if harassment on the basis of race and gender was actionable, harassment as retaliation for engaging in a protected activity should also be. Meanwhile, in Fielder v. UAL Corp., 218 F.3d 973, 985 (9th Cir. 2000), the 9th Circuit for the first time held that a hostile work environment can be created by low-level employees rather than supervisors. The court ruled that “Title VII’s protection against retaliatory discrimination extends to employer liability for co-worker retaliation that rises to the level of an adverse employment action.” CLASS ACTIONS, SECURITIES LAW The year 2000 did produce its share of controversial decisions from the 9th Circuit, as with the en banc decision in Catholic Social Services v. INS,232 F.3d 1139 (9th Cir. 2000). In a sharply divided 6-5 ruling, the court ruled that, under American Pipe, 414 U.S. 538 (1974), the statute of limitations for members and putative members of the class (challenging advance parole and front-desking policies of the Immigration and Naturalization Service) had been tolled during the pendency of an immediately preceding class action. In a pointed dissent, Judge Alex Kozinski stated that the majority’s ruling “raises a conflict with the law of every circuit that has decided” the question, and he noted that every circuit “has held that the rationale of Crown, Cork[462 U.S. 345 (1983)] does not permit the filing of a second or subsequent class action once the statute of limitations has run.” In the area of securities law, the court in Howard v. Everex Systems Inc.,228 F.3d 1057 (9th Cir. 2000), determined that a corporate officer who, acting with scienter, signs a Securities and Exchange Commission filing containing misrepresentations “makes a statement” and can be held liable as a primary violator under � 10(b) of the Securities Exchange Act of 1934. The court rejected the defendant chief executive officer’s argument that he could not be liable as a primary violator under � 10(b) because he had not participated in the preparation of the documents, but merely had signed them. The court concluded that recognizing such a defense would weaken securities laws because corporate officers would “stay out of the loop” to insulate themselves from individual liability to investors. The flip side, of course, is that this decision may unduly expose corporate officers to tremendous exposure arising from disclosure documents they did not prepare or control. In Z-Seven Fund Inc. v. Motorcar Parts & Accessories, 231 F.3d 1215 (9th Cir. 2000), a unanimous panel of the court held that an order from the district court appointing a lead plaintiff in a securities fraud class action case is not a collateral order from which an interlocutory appeal can be taken. The panel held that an order appointing a lead plaintiff was not appealable because it did not meet any of the three requirements under the collateral-order doctrine. Writing for the panel, Judge Barry G. Silverman concluded that appointment of a lead plaintiff is not a conclusive, immutable determination of the issue, it does not resolve an important issue that is completely separate from the merits and it is not effectively unreviewable on appeal. In Howard v. America Online Inc., 208 F.3d 741 (9th Cir. 2000), a class action, the panel held that the plaintiffs were barred from using mail and wire-fraud claims to show predicate acts under RICO (Racketeer Influenced and Corrupt Organizations Act) when those claims had been resolved in settlement of a previous state court class action. The 9th Circuit determined that the plaintiffs clearly fell within the settlement class from the prior state court action and therefore could not assert the old claims as the basis of a RICO claim. The court also held that claim preclusion in federal court could be based on a court-approved settlement in a state action, when the law of that state recognizes the preclusive effect of settlements. The panel concluded that the plaintiffs not only were precluded from using the previously settled claims as predicate acts for their RICO claims, but they also were precluded from using the claims as evidence of a racketeering “pattern.” CONSTITUTIONAL LAW As usual, the 9th Circuit had its say on a number of cases involving highly charged issues of constitutional law and public policy. Among the most-watched cases at the U.S. Supreme Court this year will be arguments related to the 9th Circuit’s decision regarding the medical use of cannabis in U.S. v. Oakland Cannabis Buyers’ Cooperative, 2000 U.S. App. Lexis 24584 (9th Cir. May 10, 2000); U.S. v. Oakland Cannabis Buyers’ Coop., 190 F.3d 1109 (9th Cir. 2000). The question for the court to decide is whether, in injunctive proceedings, a district court has the equitable discretion to allow for distribution of cannabis to individuals who can establish “medical necessity.” Last year, the 9th Circuit directed the district court to modify its previous order shutting down medical marijuana clubs to allow distribution of cannabis to people who demonstrate a “medical necessity.” The Supreme Court issued an emergency order suspending the district court’s action pending full Supreme Court review, effectively suspending distribution of marijuana for medicinal purposes. In Montana Chamber of Commerce v. Argenbright, 226 F.3d 1049 (9th Cir. 2000), the panel struck down Montana’s Initiative 125 because it violated corporations’ core First Amendment rights of political speech and association. Initiative 125 prohibited direct corporate spending in connection with state ballot initiatives. The 9th Circuit held that the First Amendment does not permit restricting corporate speech on public issues. The court found that Montana’s stated interest in preventing corporate wealth from “distorting the political process” in connection with ballot initiatives was not obvious or compelling. Absent a showing by Montana of a greater or more imminent danger to the public interest, Initiative 125′s restraint on speech was declared unconstitutional. RELIANCE ON ‘BAKKE’ In Smith v. University of Washington, 233 F.3d 1188 (9th Cir. 2000), a panel of the 9th Circuit held that a public law school could implement admissions programs that consider race as a basis for other than remedial purposes. A class of white plaintiffs who had been denied admission to the University of Washington Law School sued on the basis that they had been denied admission to the school due to racially discriminatory admissions policies. The court stated that, notwithstanding subsequent opinions from the Supreme Court, Justice Powell’s opinion in University of California v. Bakke, 438 U.S. 265 (1978), remained the law. The 9th Circuit agreed with the district court that, under Bakke, a properly designed and operated race-conscious admissions program did not violate Title VI of the Civil Rights Act of 1964 or the 14th Amendment. Finally, in Cole v. Oroville Union High School District, 228 F.3d 1092 (9th Cir. 2000), a panel of the court dismissed a free speech complaint by former high school students. The school district prevented the plaintiffs from speaking at their graduation because the students would not remove sectarian references from their draft speeches. After dismissing the plaintiffs’ claims for equitable relief as moot, the court affirmed dismissal of their damages claims. The court held that the school district officials did not violate the students’ free speech rights on the basis that, even if the graduation was a public or a limited public forum, the refusal to allow sectarian speech or prayer was “necessary to avoid violating the Establishment Clause” under principles applied in Santa Fe Independent School District v. Doe, 530 U.S. 290 (2000). The year 2000 was pretty typical for the 9th Circuit. The breadth and diversity of the circuit, which spans much of the western United States, was reflected in its fascinating caseload and decisions. Paul T. Friedman is a senior partner at San Francisco’s Morrison & Foerster, where he specializes in securities, antitrust, class action and other complex civil litigation. He practices extensively before the 9th Circuit and has served as a lawyer representative to the 9th Circuit Judicial Conference. Mark Andrew Woodmansee is an associate in the firm’s San Diego office, where he practices intellectual property litigation. He also is adjunct professor of law at the Thomas Jefferson School of Law. The firm serves or has served as counsel in two cases discussed in this article. InU.S. v. Oakland Cannabis Buyers’ Cooperative, the firm represents pro bono the Cannabis Buyers’ Cooperative in the appeal before the U.S. Supreme Court. InCole v. Oroville Union High School District, the firm represented pro bono the Anti-Defamation League of B’nai B’rith of Los Angeles as amicus curiae.

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