BUSINESS LAW

PLAINTIFFS FAILED TO SHOW FRAUD IN CARLYLE COLLAPSE

WASHINGTON — A federal judge has dismissed a securities fraud lawsuit against an investment arm of The Carlyle Group L.P., ruling that the plaintiffs may have had concerns about how the company was being run but failed to prove fraud.

Former shareholders of Carlyle Capital Corp. Ltd. accused company officers of failing to disclose financial problems in advance of its initial public offering in 2007, and of concealing the company’s worsening condition before it collapsed the following year.

U.S. District Judge Amy Berman Jackson ruled on August 13 that Carlyle Capital’s disclosures did put shareholders on notice of how the company was being run and that the plaintiffs had failed to link any alleged fraud to their losses.

CIVIL PROCEDURE

PALTRY SETTLEMENT REJECTED IN CASE OF HOSPITALIZED BOY

NEW YORK — A federal magistrate has refused to approve a settlement in a case in which school administrators allegedly engineered the hospitalization of a seventh grader by falsely reporting that the 13-year-old boy had threatened suicide.

U.S. District Magistrate Judge Gary Brown recommended to the district court that the proposed “modest, if not trifling” settlement — amounting to less than half the retainer the parents paid to launch the lawsuit — “cannot be found to be fair, reasonable or adequate,” even though the boy’s parents had signed it.

According to court records, administrators felt the boy would benefit from psychiatric evaluation and suggested the local medical center would be more likely to accept him if they claimed he had threatened suicide. When the parents refused to go along, the administrators proceeded anyway. The boy was detained against his will and over his parents’ objections for two weeks.

FACEBOOK CLAIMANT, LAWYER SANCTIONED OVER DISCOVERY

ALBANY, N.Y. — A man who claims to own one-half of Facebook Inc. and his Ohio attorney have each been sanctioned $1,000 and ordered to turn over a letter from a New York City law firm that ostensibly concludes the plaintiff is a fraud.

U.S. District Magistrate Judge Leslie Foschio in Buffalo, N.Y., gave Paul Ceglia and attorney Dean Boland three days to reveal the so-called “Kasowitz letter.”

The letter from Kasowitz, Benson, Torres & Friedman, which previously represented Ceglia, advised two other firms that it was withdrawing because it had concluded that a purported contract between Ceglia and Facebook founder Mark Zuckerberg was a fraud.

CIVIL RIGHTS

GENETIC BIAS PROTECTIONS DON’T APPLY TO SHORT WOMAN

NEW YORK — A woman’s height is not a “predisposing genetic characteristic” protected against job discrimination, a state trial judge has ruled.

“The height of plaintiff is undisputably outside the scope of the plain meaning of the phrase ‘predisposing genetic characteristics’ as a prohibited basis for discrimination in the workplace,” Queens County, N.Y., Supreme Court Justice Kevin Kerrigan wrote.

Plaintiff Sandra Peterson filed suit after she was fired from a transitional jobs program, allegedly for being too short. Kerrigan concluded that the state law in question was intended to block employers and insurers from genetically screening potential employees or policyholders before making decisions on coverage or employment.

CRIMINAL LAW

PASTOR GUILTY OF HELPING MOTHER FLEE WITH GIRL

BURLINGTON, Vt. (AP) — A churchman was convicted on August 14 of helping a woman flee the United States three years ago, when she was on the brink of having to turn custody of her young daughter over to the woman who had been her partner in a Vermont civil union.

The jury issued its verdict against the Rev. Kenneth Miller after several hours of deliberations. The mother and daughter remained at large and were thought to be in Nicaragua, which has not signed the 1980 Hague convention on international child abductions.

Miller was charged with aiding in international kidnapping for helping Lisa Miller and her daughter leave the country one month after a judge indicated he would turn custody of the girl over to Janet Jenkins, of Vermont, if she continued to defy a series of visitation orders. The Millers are not related.

GOVERNMENT

NATIONAL SECURITY REQUIRES ‘SACRIFICE’ OF LIBERTIES

LOS ANGELES — A federal judge, citing the state-secrets privilege, has dismissed most of a proposed class action brought by the ACLU accusing the FBI of illegally monitoring Muslims in Orange County, Calif., during investigations into possible terrorists.

U.S. District Judge Cormac Carney of Santa Ana, Calif., ruled on August 14 that the government and seven FBI employees would have been forced to disclose confidential information to defend themselves against claims that they spied on individuals simply because they were Muslims.

Carney said he came to that conclusion reluctantly but that “the proper application of the state secrets privilege may unfortunately mean the sacrifice of individual liberties for the sake of national security.”

INTERNET LAW

FACEBOOK POSTS ABOUT CRIMES ARE AN OPEN BOOK

NEW YORK — A defendant who challenged the government’s use of one of his Facebook “friends” as a cooperating witness to access his Facebook profile has no recourse under the Fourth Amendment, a federal judge has ruled.

U.S. District Judge William Pauley found that defendant Melvin Colon had no reasonable expectation of privacy when his posts about his criminal activity on his Facebook page were passed on to federal agents by the cooperating “friend.”

“Generally, people have a reasonable expectation of privacy in the contents of their home computers,” Pauley wrote. “But this expectation is not absolute, and may be extinguished when a computer user transmits information over the Internet or by e-mail.”

LEGAL PROFESSION

JUDGE SANCTIONS LITTLER FOR ‘UNWARRANTED’ ARGUMENTS

LOS ANGELES — A federal judge has sanctioned Littler Mendelson and referred one of its shareholders to a court ethics commission for his conduct in defending an employee-overtime lawsuit against the 24 Hour Fitness health club chain.

U.S. District Judge John Kane in Denver on August 14 fined Littler Mendelson $3,150 for making “unwarranted” and “unsubstantiated” arguments related to a 2006 nationwide lawsuit brought by current and former employees against the chain.

He referred firm shareholder Joshua Kirkpatrick to the court’s Committee on Conduct, finding that his behavior was “egregious” in arguing whether nine employees had been properly served with court papers “unnecessarily diverted the limited resources of this court.” Kirkpatrick and the law firm both declined to comment.

PUBLIC DEFENDER DIDN’T ACT UNDER COLOR OF STATE LAW

NEW YORK — A public defender cannot be sued for violating the civil rights of a prison inmate who was his client, a federal judge has ruled.

U.S. District Judge Thomas McAvoy held that public defenders are protected from such claims under 42 U.S.C. 1983, which can only be sustained against people found to be acting under color of state law.

McAvoy noted that the U.S. Supreme Court has ruled that public defenders are not acting under color of state law when “performing a lawyer’s traditional functions as counsel to a defendant.” He added that Allen Morris’ guilty plea, which was sustained on appeal, negated the conclusion that “his counsel acted in a constitutionally deficient manner.”

LAWYER GETS 20 YEARS IN NURSING HOME, TAX FRAUD

ATLANTA — A Harvard-educated lawyer who operated a family nursing home business in Georgia has been sentenced to 20 years in prison for health care and tax fraud.

U.S. District Judge Harold Murphy ordered George Houser, 64, to pay restitution of $6.7 million to Medicaid and Medicare and $872,515 to the Internal Revenue Service. Houser maintained his innocence through a series of criminal and civil actions.

“This defendant stole millions of dollars in Medicare funds to fund his luxurious lifestyle, while the nursing home residents entrusted to his care went without food or medicine,” U.S. Attorney Sally Quillian Yates said in a statement released by her office.