The Lawletter Vol 38 No 9
Jeremy Taylor, Senior Attorney, National Legal Research Group
The Court of Appeals of South Carolina recently considered whether a worker who was seriously burned when the chemical sodium bromate caught fire at his workplace could recover against the suppliers of the chemical even though the plaintiff was not "doing anything" with the product at the time of the incident. See Lawing v. Trinity Mfg., No. 5166, 2013 WL 4451075 (S.C. Ct. App. Aug. 21, 2013). The trial court granted summary judgment to the defendants on the plaintiff's strict liability cause of action and entered judgment for the defendants on the plaintiff's remaining claims. The trial court ruled that the worker could not recover, because he was not "using" the product at the time it caught fire. The court of appeals reversed.
The appellate court examined several of the official comments to the Restatement (Second) of Torts § 402A (1965), which is the genesis of strict products liability in numerous states, including South Carolina. Considering the comments together, the court concluded that the legislature intended that the term "user" include persons who foreseeably could come into contact with the dangerous nature of a product. Therefore, a person who examines a product for warnings and other safety information is one whom the seller intends to use that information to avoid the dangers associated with the product and is therefore a person who foreseeably could come into contact with such dangers. A person who reads a warning for this purpose is not a casual bystander. Rather, the person "uses" the product by reading the warning.
At the time he was injured, the plaintiff was examining bags of sodium bromate for information warning him that it would not be safe for him to work near them. The court held that in this respect, he used the product exactly as the suppliers intended. Because he was a "user" of the product, he was entitled to recover under the theory of strict liability, and the trial court erred in entering judgment for the suppliers.
Lawing provides yet another example of why it is unwise to make assumptions regarding the possible scope of relief under products liability theories. Although perhaps surprising, it turns out that a person can use a product merely by looking at it.
The Lawletter Vol 38 No 9
Suzanne Bailey, Senior Attorney, National Legal Research Group
The U.S. Supreme Court's recent denial of the Commonwealth of Virginia's petition for writ of certiorari in MacDonald v. Moose, 710 F.3d 154 (4th Cir.), cert. denied, 82 U.S.L.W. 3029 (U.S. Oct. 7, 2013), reminds us that 10 years after the landmark decision in Lawrence v. Texas, 539 U.S. 558 (2003), holding that it is a violation of the Due Process Clause to prohibit two individuals of the same sex from engaging in consensual sexual conduct, courts are still grappling with the nature of what consensual sexual activity is protected from criminal prosecution. While Lawrence specifically addressed consensual homosexual sexual conduct, the Court's adoption of language from Justice Stevens's dissent in Bowers v. Hardwick, 478 U.S. 186 (1986), clarified the sweeping nature of the Court's ruling:
Our prior cases make two propositions abundantly clear. First, the fact that the governing majority in a State has traditionally viewed a particular practice as immoral is not a sufficient reason for upholding a law prohibiting the practice; neither history nor tradition could save a law prohibiting miscegenation from constitutional attack. Second, individual decisions by married persons, concerning the intimacies of their physical relationship, even when not intended to produce offspring, are a form of "liberty" protected by the Due Process Clause of the Fourteenth Amendment. Moreover, this protection extends to intimate choices by unmarried as well as married persons.
Lawrence, 539 U.S. at 577-78 (quoting Bowers, 478 U.S. at 216 (Stevens, J., dissenting)).
The above-quoted excerpt from Lawrence paved the way for decisions invalidating state statutes criminalizing sexual intercourse between unmarried adult heterosexuals. See, e.g., Martin v. Ziherl, 607 S.E.2d 367 (Va. 2005) (because Virginia fornication statute was an unconstitutional due process violation of an unmarried individual's liberty interest in engaging in private intimate conduct and maintaining personal relationships without governmental interference, the rule precluding a party consenting to, and participating in, an illegal act from recovering damages from another participant did not apply to bar the plaintiff's claims against the defendant for injuries arising from herpes allegedly contracted as a result of sexual intercourse). Likewise, Lawrence has been relied upon to invalidate statutes prohibiting consensual acts of sodomy between heterosexual adults. See MacDonald, 710 F.3d 154.
However, the Lawrence decision was not without its limits. The Court observed: "The present case does not involve minors. It does not involve persons who might be injured or coerced or who are situated in relationships where consent might not easily be refused. It does not involve public conduct or prostitution." 539 U.S. at 578. Accordingly, courts have refused to find that Lawrence forbids prosecution for incest, see, e.g., People v. McEvoy, 154 Cal. Rptr. 3d 914 (Ct. App. 2013), even if the alleged victim is a consenting adult, see, e.g., Lowe v. Swanson, 663 F.3d 258 (6th Cir. 2011). Similarly, courts have not found Lawrence to be a bar to prosecutions for solicitation to commit sexual acts in a public place, see, e.g., Singson v. Commonwealth, 621 S.E.2d 682 (Va. Ct. App. 2005), or for prostitution, see, e.g., State v. Romano, 155 P.3d 1102 (Haw. 2007). Lawrence did not render unconstitutional a Kansas statute making sexual relations between a teacher and a student a crime, even though the
student, who was still in school, was 18 years old at the time and had consented to the sexual conduct. State v. Edwards, 288 P.3d 494 (Kan. Ct. App. 2012); see also State v. Fischer, 199 P.3d 663 (Ariz. Ct. App. 2008) (affirming conviction of defendant for sexual conduct with a minor and conspiracy to commit sexual conduct with a minor and rejecting defense argument that defendant had fundamental right under Lawrence to engage in sexual relations with his "celestial wife" or one of his plural wives).
As the prosecution learned in MacDonald, however, the mere fact that the alleged victim is a minor does not take the act out of the protective sphere of Lawrence if the offense charged is not based on the victim's age. In that case, which came before the Fourth Circuit Court of Appeals on appeal of the denial of a petition for writ of habeas corpus, the petitioner was convicted after a bench trial of the misdemeanor of contributing to the delinquency of a minor and of felony criminal solicitation. The criminal solicitation conviction was treated as a felony by virtue of the commission of a predicate felony, in this case, sodomy, resulting in the petitioner's obligation to register as a sex offender. Although the Virginia Code creates sexual offenses based on the age of the victim, in this case, the "anti-sodomy [predicate offense] provision [did] not mention the word 'minor,' nor [did] it remotely suggest that the regulation of sexual relations between adults and children had anything to do with its enactment." 710 F.3d at 165. "[A]lthough the Virginia General Assembly might be entitled to enact a statute specifically outlawing sodomy between an adult and an older minor, it has not seen fit to do so." Id. It was not for the trial court to revise the statute to limit its applications in cases in which the victim was a minor. Because the statute was facially unconstitutional under Lawrence, the Fourth Circuit reversed and remanded for an award of habeas corpus relief.
Lawrence makes it clear that the State cannot criminalize private consensual sexual relations between adults. While it may be appropriate for a state legislature to protect a certain class of victim, even in the case of consensual acts, MacDonald demonstrates that the legislature must do so explicitly in order for the prosecution to fall outside of the rule in Lawrence. At a time when states are increasing the offenses requiring sex offender registration and some states are making it more difficult, if not impossible, to be removed from the sex offender registry, it is well worth considering whether Lawrence applies to bar prosecution or reduce the charges.
The Lawletter Vol 38 No 9
Steve Friedman, Senior Attorney, National Legal Research Group
The Trademark Act of 1946, 15 U.S.C. §§ 1051-1141n, commonly known as the "Lanham Act," is intended "to prevent individuals from misleading the public by placing their competitors' work forward as their own." Summit Mach. Tool Mfg. Corp. v. Victor CNC Sys., Inc., 7 F.3d 1434, 1439 (9th Cir. 1993) (internal quotation marks omitted). The purpose of the Act is twofold.
First, it serves the general interest of the public by protecting consumers from false and misleading representations concerning the source, identity, or quality of a product or service. Secondly, the law protects the right of the owner of a trade or service mark to have his or her product or service identified by a distinct name or label. See Industrial Rayon Corp. v. Dutchess Underwear Corp., 92 F.2d 33, 35 (2d Cir. 1937), cert. denied, 303 U.S. 640, 58 S. Ct. 610, 82 L. Ed. 1100 (1938).
Birthright v. Birthright Inc., 827 F. Supp. 1114, 1133 (D.N.J. 1993).
Accordingly, the Lanham Act permits persons to apply to the U.S. Patent and Trademark Office ("PTO") for federal trademark registration of their commercial mark(s), provided that certain parameters set forth therein are satisfied. The general rule is that a distinguishable mark on commercial goods can be trademarked unless the mark falls within one of five specified categories of marks. See 15 U.S.C. § 1052(a)-(e).
One such exception is for a mark that "consists of or comprises the flag or coat of arms or other insignia of the United States, or of any State or municipality, or of any foreign nation, or any simulation thereof." Id. § 1052(b). Despite the seemingly straightforward exception, the City of Houston, Texas, and the District of Columbia ("District") each sought to register its official seal. See In re City of Houston, Nos. 2012-1356, 2012-1418, 2013 WL 5433432 (Fed. Cir. Oct. 1, 2013). Whereas Houston sought to trademark its city seal in connection with various municipal services, including commerce, tourism, business administration, and public utility services, the District sought to trademark its official seal to cover various items such as shirts, pens, cups, and hats.
The PTO had denied both applications, citing § 1052(b), and both decisions were affirmed by the Trademark Trial and Appeal Board. Both municipalities appealed their respective adverse decisions to the U.S. Court of Appeals for the Federal Circuit. The appellate court decided to address the two appeals together because they raised the same question of first impression in
the courts: Can a local government entity obtain a federal trademark registration for its official insignia? Notably, although both municipalities conceded that their subject marks were insignias and argued that § 1052(b) did not preclude their registration, each municipality presented distinct theories to reach the same conclusion. As detailed below, however, the court affirmed the PTO's rejection of both theories.
Houston argued that as a governmental entity, it was not an "applicant" within the meaning of § 1052(b). Although the Lanham Act defines "applicant" to include a "juristic person," which includes any "organization capable of suing and being sued in a court of law," Houston focused on the introductory sentence providing that the Act's definitions apply "unless the contrary is plainly apparent from the context." 15 U.S.C. § 1127. Specifically, Houston argued that the context of § 1052(b) suggests that Congress intended the term "applicant" to mean something other than a governmental entity seeking to register its own seal. Rejecting Houston's argument, the court reasoned that it need not consider the "context" of § 1052(b), given that nothing in the plain and unambiguous language of § 1052(b) suggested that Houston should be exempt from the statutory prohibition. Further, the court refused to add a "silent exemption" to the statute, especially where, as here, Congress has demonstrated that it knew how to express exceptions when it intended to do so. If Houston insisted on trademarking its seal, then it would have to take up its cause with Congress rather than the courts.
The District took a different tack, relying instead on the treaty obligations of the United States, negotiated in the Paris Convention for the Protection of Industrial Property of 1883 ("Paris Convention"), as subsequently modified at Stockholm, T.I.A.S. No. 6923, 21 U.S.T. 1583, 828 U.N.T.S. 303 (July 14, 1967). In relevant part, the Paris Convention provides that "[e]very trademark duly registered in the country of origin shall be accepted for filing and protected as is in the other countries of the Union," Paris Convention art. 6 quinquies (A)(1), but specifically exempts "armorial bearings, flags, and other State emblems, of countries of the Union," id. art. 6 ter (1)(a). Rejecting the District's argument, the court reasoned that even assuming that the Lanham Act was intended to implement the obligations of the Paris Convention, the Paris Convention did not give the District any right relating to its official insignia. The "Union" referred to in the Paris Convention means "the countries that have joined in the treaty" and not "local public bodies such as municipalities." City of Houston, 2013 WL 5433432, at *7. Undisputedly, the District was not a "country of the Union," id., and thus was not entitled to the exemption. Furthermore, the treaty exemption "by its own terms applies only to trademarks that are 'duly registered in the country of origin.'" Id. (quoting art. 6 quinquies (A)(1)). Since the question presented was whether the trademark could be registered in the United States, i.e., the country of origin, invoking the Paris Convention for the answer was circular logic. Moreover, the District's argument that such an interpretation would have the effect of preventing a foreign municipality from obtaining a registered mark in the United States, in violation of the Paris Convention, failed for two reasons. Not only was the question before the court limited to whether the District, a domestic entity, was entitled to register its mark, but the court refused to decide the rights of hypothetical third parties.
Therefore, despite the creative arguments in favor of registration, the Federal Circuit affirmed the PTO's decisions denying both municipal trademark applications. Accordingly, the question of first impression has been answered: A local government entity cannot obtain a federal trademark registration for the entity's official insignia.
The Lawletter Vol 38 No 9
Charlene Hicks, Senior Attorney, National Legal Research Group
Emails and other electronic communications are changing certain time-honored precepts of contract formation. Attorneys should be aware that what used to be considered standard negotiating procedures may now result in a contract binding upon their clients.
This trend is illuminated in Forcelli v. Gelco Corp., 109 A.D.3d 244, ___ N.Y.S.2d ___ (2013), a recent decision issued by the New York Appellate Division. There, an insurance claims agent negotiated with opposing counsel the terms of the settlement of a personal injury suit. These negotiations were conducted almost exclusively by email. The claims agent sent an email to opposing counsel that confirmed that the parties had reached an agreement as to the terms and the amount of the settlement and asked opposing counsel to prepare a release and dismissal for the agent's review. The email was signed "Thanks Brenda Green." Id. at 246, ___ N.Y.S.2d at ___. In accordance with this email, the claimants signed a release.
In the meantime, the court entered summary judgment in favor of the insurance carrier and dismissed the complaint. The insurance carrier then attempted to rescind its offer of settlement. Toward this end, the carrier claimed that no binding settlement contract had been consummated between the parties. In response, the claimants moved the court to vacate its summary judgment order and to enforce the settlement between the parties on the ground that the agent's signed email message constituted a binding written settlement agreement.
The trial court granted the claimants' motion and ordered the insurance carrier to pay the amount of the settlement to the claimants. On appeal, the appellate division affirmed. In so doing, the court found that the agent's email message set forth the material terms of the agreement and, significantly, that the "settlement was not conditioned on any further occurrence, such as the outcome of the motion for summary judgment or the formal execution of the release and stipulation of dismissal" by the carrier. Id. at 248, ___ N.Y.S.2d at ___. In addition, the court found that the agent's typed name at the end of the email message was sufficient to constitute a signature that rendered the agreement binding. The signature line in question showed that the agent "purposefully added her name to this particular email message" and thereby manifested the intent that the name be treated as a signature. Id. at 251, ___ N.Y.S.2d at ___. Thus, the court concluded that the email message was a subscribed writing that constituted an enforceable contract.
Forcelli serves as a strong caution to attorneys against the practice of treating emails as merely inconsequential or too casual a form of communication to create a contract binding upon their clients. The days when courts required ink signatures to formal paper documents are over. Thus, it may be advisable for counsel to consider adopting some type of disclaimer in their emails in order to prevent a transmission from giving rise to a binding legal agreement.
The Lawletter Vol 38 No 8
Brett Turner, Senior Attorney, National Legal Research Group
The controlling federal statute on same-sex marriage is the Defense of Marriage Act ("DOMA"). DOMA has two operative provisions. Section 3, codified at 1 U.S.C. § 7, provides that no same-sex marriage can ever be treated as a valid marriage under federal law. This section was held unconstitutional in United States v. Windsor, 133 S. Ct. 2675 (2013).
DOMA § 2, codified at 28 U.S.C. § 1738C, provides that "[n]o State . . . shall be required to give effect to any public act, record, or judicial proceeding of any other State . . . respecting a relationship between persons of the same sex." In other words, no state shall ever be required to recognize a same-sex marriage from another state.
Case law before Windsor upheld the constitutionality of § 2. E.g., Wilson v. Ake, 354 F. Supp. 2d 1298 (M.D. Fla. 2005). In light of Windsor, however, that position is being revisited. The next big issue in federal constitutional law involving same-sex marriage may well be the constitutionality of § 2 of DOMA.
The first post-Windsor case to address the issue is Obergefell v. Kasich, No. 1:13-CV-501, 2013 WL 3814262 (S.D. Ohio July 22, 2013). The plaintiffs in that case were two men who ived together in a committed relationship. One of the plaintiffs was terminally ill with amyotrophic lateral sclerosis, more commonly known as Lou Gehrig's disease. Both plaintiffs lived in Ohio, which does not recognize same-sex marriage.
On July 11, 2013, a specially equipped airplane flew the plaintiffs to Maryland, which allows same-sex marriage. While the airplane sat on the tarmac, the plaintiffs were married. They then immediately returned to Ohio. Neither plaintiff was ever domiciled in Maryland.
On the face of Ohio law, the Maryland marriage was not entitled to recognition in Ohio, which has both a statute and a constitutional provision barring recognition of same-sex marriage. Ohio Rev. Code Ann. § 3101.01(C)(2)-(3); Ohio Const. art. XV, § 11.
Upon their return to Ohio, the plaintiffs filed an action against the State of Ohio and various state officials, asking the court to order them to recognize the Maryland marriage.
The plaintiffs then sought a preliminary injunction.
The court granted the injunction, finding a substantial likelihood that the plaintiffs would prevail at trial. Ohio state law has traditionally held that the validity of a marriage depends upon the law of the jurisdiction in which it was created. The rule has been applied to underage marriage, Hardin v. Davis, 16 Ohio Supp. 19, 1945 WL 5519 (C.P. 1945), and to marriage between relatives (e.g., first cousins), Mazzolini v. Mazzolini, 155 N.E.2d 206, 208 (Ohio 1958). The court also cited a passage in 45 Ohio Jur. 3d Family Law § 11, stating that the rule applies to common-law marriage.
The question then became whether Ohio could apply a different rule only to same-sex marriage. For two reasons, the court held not. First, the core reasoning of Windsor is that a rule violates equal protection if it was adopted out of prejudice against a minority group. Windsor held that DOMA § 3 was enacted out of prejudice against gay people, and that it was therefore
unconstitutional. The court saw no valid reason for the Ohio statute and constitutional provision at issue, other than similar prejudice against gay people.
Second, a rule violates equal protection if it does not have a rational basis. "Even if the
classification of same‑sex couples legally married in other states is reviewed under the least demanding rational basis test, this Court on this record cannot find a rational basis for the Ohio provisions discriminating against lawful, out‑of-state same sex marriages that is not related to the impermissible expression of disapproval of same‑sex married couples." Obergefell, 2013 WL 3814262, at *6.
Because the plaintiffs were likely to succeed on the merits, the court granted a preliminary injunction.
Obergefell did not expressly consider the constitutionality of DOMA § 2. But that provision is merely a federal version of the provisions that Obergefell held are likely unconstitutional. If equal protection requires that the courts apply to same-sex marriage the exact same choice-of-law rules applied to opposite-sex marriages, then DOMA § 2 is unconstitutional and out-of-state same-sex marriages must generally be recognized.
There is reasonable support in the majority opinion in Windsor for the result reached in Obergefell. Windsor stressed heavily a series of comments made by legislators enacting DOMA, suggesting prejudice against gay people. Those comments cannot be limited to only one
section of DOMA. If the prejudice shown by those statements is the controlling reason for invalidating DOMA § 3, it is likewise a strong reason for invalidating the rest of DOMA, including § 2.
But there is also reason to hold otherwise. At a practical level, Obergefell comes extremely close to forcing nationwide recognition of same-sex marriage. Any same-sex couple wishing to be married can travel to a state recognizing same-sex marriage, get married, return to their
home state, and have a marriage that their home state must recognize for all purposes as a matter of federal law.
It is highly significant that the facts of Obergefell show absolutely no Maryland domicile. The airplane landed, the marriage was conducted, and the airplane took off. If that is a permissible procedure, then federal law is essentially forcing state recognition of all same-sex marriages, because it is very easy to obtain an out-of-state same-sex marriage.
In addition, there are arguably valid reasons for imposing requirements upon recognition of out-of-state same-sex marriages that do not apply to other types of marriages. States have different rules on underage marriages and marriages among relatives, but none of these rules are matters of public policy. People are not marching in the streets, demanding that the state not recognize underage marriages or common-law marriages or marriages between close relatives. These are matters on which the states agree that reasonable people can differ.
But same-sex marriage is a fundamental public policy issue. The presence of statutory and
constitutional provisions in many states shows that recognition of same-sex marriage is viewed by many as a fundamental public policy issue. Obergefell held that one of the most serious and divisive disputes in modern American family law can be resolved by court action, because the judge believes that one side of the dispute is adopting an irrational position. That is certainly not an example of judicial restraint.
The argument against Obergefell is that the high level of public opposition to same-sex marriage, in those states that have not yet adopted it, is itself strong evidence the restrictions against recognition of out-of-state same-sex marriage—DOMA § 2 and its state equivalents—have a rational basis. They are not based upon prejudice alone, but upon a desire to maintain the traditional rule that marriage is for persons of the opposite sex only. Windsor spoke at length of how rules regarding marriage are traditionally a subject for state law and not federal law. Obergefell holds to the contrary, suggesting that federal law can dictate the content of state law rules on recognizing out-of-state marriages.
Finally, it is worth noting that Obergefell does not necessarily require recognition of all out-of-state same-sex marriages. A state could, in theory, adopt a rule that it would not ever recognize any out-of-state marriages that could not occur under local law. Such a measure would apply the same rule across the board to underage marriages, common-law marriages, and marriages between close relatives, thus avoiding one of the main reasons for the Obergefell decision. Such a provision might still be questioned, however, on the ground that it was motivated primarily by prejudice.
Overall, Obergefell is not a position that is likely to last in its current form over a long period of time. If the courts have the power to force recognition of same-sex marriage because the opposition is irrational and motivated by prejudice, then the wiser long-term move is simply to hold that same-sex marriage is a fundamental right—that is, to extend the principles of Loving
v. Virginia, 388 U.S. 1 (1967), to same-sex marriages.
If it is not yet time to declare that same-sex marriage is a fundamental right—and same-sex marriage remains a minority rule, although a growing one, among American states—then it is likewise arguably too early to declare that all opposition to recognition of same-sex marriage is irrational and a result of prejudice. In a world in which some states are free to recognize same-sex marriage and other states are free not to recognize same-sex marriage, there must be a better series of choice-of-law rules than simply assuming that all opposition to recognition is
irrational. Such an assumption fundamentally conflicts with the notion that states are free to refuse to recognize same-sex marriage in the first place.
The Lawletter Vol 38 No 8
Mark Rieber, Senior Attorney, National Legal Research Group
In Padilla v. Kentucky, 559 U.S. 356 (2010), the Supreme Court held that the Sixth Amendment right to effective assistance of counsel requires an attorney for a criminal defendant to provide advice about the risk of deportation arising from a guilty plea. In Chaidez v. United States, 133 S. Ct. 1103 (2013), the Supreme Court held that Padilla announced a "new" rule under Teague v. Lane, 489 U.S. 288 (1989), and thus does not apply retroactively to collateral challenges under federal law. Despite Chaidez, the Supreme Judicial Court of Massachusetts held that under Massachusetts law, the Sixth Amendment right enunciated in Padilla was not a "new" rule and, consequently, that defendants may attack their convictions collaterally on Padilla grounds. Commonwealth v. Sylvain, 466 Mass. 422, ___ N.E.2d ___ (2013).
Sylvain decided that under Massachusetts law, the court may give broader retroactive effect to Padilla as a matter of state law than Padilla would otherwise enjoy under federal law. The Massachusetts court explained that although in an earlier decision it had adopted the Teague retroactivity framework, including Teague's original construction of what constitutes a "new" rule, the Supreme Court's post-Teague expansion of what qualifies as a "new" rule has become so broad that decisions defining a constitutional safeguard rarely merit application of collateral review. Sylvain concluded that it would continue to adhere to the Supreme Court's original construction that a case announces a "new" rule only when the result is "not dictated by precedent." Under this narrower interpretation, Sylvain determined that Padilla did not announce a "new" rule, because "it applied a general standard—designed to change according to the evolution of existing professional norms—to a specific factual situation." Id. at 435, ___ N.E.2d at ___. Accordingly, Sylvain held that the defendant in the case before it, whose conviction was final at the time Padilla was decided, was entitled to seek relief under the Sixth Amendment right recognized in Padilla.
The Lawletter Vol 38 No 8
Dora Vivaz, Senior Attorney, National Legal Research Group
It appears to be well settled—in fact, there appears to be uniform consensus in the circuits—that Title VII can be applied to impose liability only on "employers," not on individuals, supervisory or otherwise, who are not themselves employers. What appears to remain unsettled, however, is whether Title VII claims may be brought against individual supervisory employees "in their official capacities" when the employer is a governmental entity, as is generally possible under 42 U.S.C. § 1983. In general, suing a public official or employee in his or her "official" capacity is tantamount to suing the governmental entity itself.
The court addressed this exact question in a very recent case. Stallone v. Camden County Tech. Schs. Bd. of Educ., Civ. No. 12-7356 (RBK/JS), 2013 WL 5178728 (D.N.J. Sept. 13, 2013) (not for publication). The court started with the language of Title VII, which imposes on employers, as defined, and on any agent of an employer the prohibition against discrimination. The court noted that it is settled that Title VII does not subject individual supervisory employees to personal liability but that the issue of whether Title VII permits claims against such employees in their official capacities remains unsettled. Not only are the circuits split on the issue, but the courts within the Third Circuit are also split.
The court noted that the Third Circuit has stated, in dicta and in the context of qualified immunity, that the doctrine of qualified immunity is inapplicable under Title VII—even though there was no Title VII claim before it—since public officials may be held liable only in their official capacities. After reviewing cases that had involved Title VII claims, the Stallone court found the reasoning of those cases holding that official capacity claims against individuals are not permitted was the more persuasive.
The court explained that Title VII provides for the liability of employers, not supervisors. It further explained that, therefore, naming a supervisor in his or her official capacity would be redundant, particularly where the employer has already been named as a defendant.
Finally, the court explained that disallowing an official capacity claim in such a circumstance does not in any way prejudice the plaintiff. The question left unanswered is whether a claim brought against a public official in his or her official capacity should be dismissed even when the governmental employer is not named as a defendant. Clearly, the better practice would appear to be to name only the governmental employer as a defendant.
The Lawletter Vol 38 No 8
Tim Snider, Senior Attorney, National Legal Research Group
Washington, D.C. (the "District"), Mayor Vincent C. Gray's controversial veto of a "living wage" ordinance, passed by the District Council, illustrates the controversy surrounding efforts by local governments to increase the minimum wage and support collective bargaining.
Under the Fair Labor Standards Act ("FLSA"), the federal minimum wage is set at $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). States and localities are authorized by the FLSA to adopt higher minimum wages, and the District currently has a minimum wage of $8.25.
Against this backdrop and the arrival of WalMart in the District, the District Council enacted the Large Retailer Accountability Act ("the Act"), requiring retailers with corporate sales of $1 billion or more and operating stores in the District of at least 75,000 square feet to pay their employees a "living wage" of not less than $12.50 an hour in combined wages and benefits. The proposal included an exception for employers who collectively bargain with their workers. Existing employers would have had four years to come into compliance. The bill would have raised the annual earnings of a full‑time employee making the lowest legal wage from about $17,000 to $26,000.
The Act was obviously aimed at Wal-Mart, which, in response, threatened to suspend construction on, and the opening of, at least three of the six stores that the world's largest retailer had announced it planned to open in the District. Wal-Mart is one of the largest employers, if not the largest, of workers making the minimum wage, and the cost of compliance with the "living wage" Act in the District was seen by its management as being unacceptably high. Mayor Gray announced that he was choosing jobs over higher pay, and it is unlikely that Mayor Gray's veto will be overturned by the District Council. Many other cities that have become the focus of expansion by lower-wage employers like Wal-Mart face the same dilemma as Mayor Gray faces.
With Congress showing no enthusiasm for increasing the federal minimum wage and state legislatures wary of scaring off potential employers during a period of stubbornly high unemployment, municipalities are likely to become the focus of lobbying and agitation by labor unions and workers' rights advocates for a "living wage" that exceeds the local minimum wage. For the most part, living wage statutes and ordinances have survived court challenge by affected employers, even where many of those laws target large retail employers like Wal-Mart. See Amaral v. Cintas Corp. No. 2, 78 Cal. Rptr. 3d 572 (Ct. App. 2008). Whether these and similar living wage statutes and ordinances can be enacted despite stiff opposition by large,
well-funded lobbying groups remains to be seen. In the meantime, the FLSA is the principal vehicle for preserving the right of workers to be paid a wage that Congress considers livable.
]See Mike DeBonis, D.C. Mayor Gray Vetoes "Living Wage" Bill Aimed at Wal-Mart, Setting Up Decisive Council Vote, Wash. Post, Sept. 12, 2013, available at http://www.washingtonpost.com/local/dc-politics/mayor-gray-vetoes-living-wage-bill-aimed-at-wal-mart-setting-up-decisive-council-vote/2013/09/12/664d7310-077d-11e3-a07f-49ddc7417125_story.htmlhttp://www.washingtonpost.com/local/dc-politics/mayor-gray-vetoes-living-wage-bill-aimed-at-wal-mart-setting-up-decisive-council-vote/2013/09/12/664d7310-077d-11e3-a07f-49ddc7417125_story.html.
The Lawletter Vol 38 No 8
Jim Witt, Senior Attorney, National Legal Research Group
When Sopranos actor James Gandolfini died on June 19 of this year from a heart attack while he was on a vacation trip with his family in Italy, the media reported trivial facts surrounding his death, such as the details of his last meal and drinks. After a month or so had passed, however, attention turned to the details of Gandolfini's estate plan, with the focus on criticism of the plan. The plan became open to comment because Gandolfini had left a 17-page will, which, like every will, had to be filed in probate court, thereby making it public.
A general point of the criticism was that Gandolfini had left a $70 million probate estate, with only 20% of the bulk of the estate's value passing to his widow tax-free under the Internal Revenue Code's unlimited marital deduction and 80% passing to his sisters and his infant daughter. This plan resulted in a federal estate tax liability of approximately $30 million.
Criticism of the plan can itself be questioned: (1) The belief that the estate is worth $70 million is speculative; (2) it may well be that Gandolfini had other substantial assets that he placed in estate planning devices such as trusts and corporations (which might serve as a receptacle for future royalties received by the estate from the Sopranos); it is believed that there is a $7 million life insurance trust fund for Gandolfini's 13-year-old son from a prior marriage; and (3) it is unfair to criticize the disposition of an estate solely on the basis that the estate tax liability is not minimized: A decedent should not necessarily allow the objective of tax savings to have precedence over the disposition that he or she desires.
Yet some of the points of criticism made in regard to Gandolfini's estate plan are valid. First, there is the matter of privacy. If Gandolfini's assets had been placed in a revocable trust, with the trust spelling out the disposition of the assets at Gandolfini's death, the trust would not have been filed with the probate court and could have been kept private. A simple pour-over will could have been used to transfer assets not subject to the trust to the revocable trust.
Additionally, a tax calculation problem is created by the fact that the will, after bequeathing $1.6 million worth of assets to friends, used percentages to divide the estate among Gandolfini's widow, two sisters, and daughter. The problem is that because the 20% passing to the widow is not subject to federal estate tax, the calculation of the tax on the remaining 80% becomes complicated.
Also, the will does not include a trust to govern the disposition of the share of the estate that Gandolfini's daughter will receive. She is not to receive her share until age 21, but the prospect of having her receive a multimillion dollar sum outright at that age raises questions. A trust under the will could have protected her share by setting ages (such as 30, 35, and 40) at which she would receive percentages of the principal, with the trustee having discretion over the distribution of principal and income to her for her current needs.
Gandolfini also owned a home in Italy, and the will directed the ownership to be divided equally between his son and his daughter when the daughter turns 25. The will further expressed Gandolfini's wish that his children hold on to the home. According to an estate planning authority who deals with foreign properties, despite the devise in the will, Italian law
requires that the disposition of the property be one-half to the children and one-quarter to the surviving spouse, leaving Gandolfini the freedom to have disposed of only one-quarter of the property as he desired. The expert observed that an Italian lawyer should have been consulted, with the possibility that a separate Italian will might have been executed to cover the Italian property. Moreover, the will contained no provision establishing a fund for the upkeep of the Italian property. There is the possibility of friction as to the payment of the maintenance of property where it has been left to more than one party.
Gandolfini also owned a co-op in Manhattan, said to be worth $3.5 million. He put his son in a difficult position by giving him a right of first refusal to purchase the property at fair market value. Here is a 13-year-old boy, with a beneficial interest in $7 million in insurance proceeds, under pressure to have one-half of the value of the insurance trust fund spent in order to comply with his late father's wishes.
While the media may have become overexcited about the shortcomings of James Gandolfini's estate plan, there is clearly room for criticizing it.
The Lawletter Vol 38 No 7
Paul Ferrer, Senior Attorney, National Legal Research Group
Plaintiffs looking to survive an early motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) must file a complaint that contains "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim has "facial plausibility" when the plaintiff pleads "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. This "plausibility" standard is "not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id.
The Supreme Court has specifically indicated that determining whether a complaint states a plausible claim for relief under this standard is "a context‑specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. Nevertheless, there are boundaries to the reviewing court's discretion, though it may not always seem so in reviewing the post-Iqbal case law. For example, the Second Circuit has decided that it is not the district court's task in reviewing a motion to dismiss to decide between two plausible inferences that may be drawn from the factual allegations in the complaint: "A court ruling on such a motion may not properly dismiss a complaint that states a plausible version of the events merely because the court finds a different version more plausible." Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012), cert. denied, 133 S. Ct. 846 (2013). Thus, "[t]he question at the pleading stage is not whether there is a plausible alternative to the plaintiff's theory; the question is whether there are sufficient factual allegations to make the complaint's claim plausible." Id. at 189. The Second Circuit's formulation of the appropriate question recognizes that because the plausibility standard is lower than a probability standard, "there may therefore be more than one plausible interpretation of a defendant's words, gestures, or conduct. Consequently, although an innocuous interpretation of the defendants' conduct may be plausible, that does not mean that the plaintiff's allegation that that conduct was culpable is not also plausible." Id. at 189-90. Even after Twombly and Iqbal, "in determining whether a complaint states a claim that is plausible, the court is required to proceed 'on the assumption that all the [factual] allegations in the complaint are true[,'] [e]ven if their truth seems doubtful." Id. at 185 (court's emphasis) (quoting Twombly, 550 U.S. at 556). Because the plaintiff is entitled to the benefit of the doubt, "it is not the province of the court to dismiss the complaint on the basis of the court's choice among plausible alternatives"; rather, "the choice between or among plausible interpretations of the evidence will be a task for the factfinder," assuming that the plaintiff "can adduce sufficient evidence to support its factual allegations." Id. at 190.
There is no doubt that the plaintiff's job in pleading a sufficient claim in federal court is more difficult in the wake of Twombly and Iqbal. But cases like Anderson News give the pleader some ammunition in seeking to fend off an early Rule 12(b)(6) motion to dismiss. Under the reasoning of the Second Circuit, the plaintiff's job is to provide sufficient facts to create a plausible scenario for holding the defendant liable for the conduct alleged, not necessarily the most plausible scenario.