The Lawletter Vol 38 No 2
Brad Pettit, Senior Attorney, National Legal Research Group
The Internal Revenue Code ("I.R.C.") provides that
[e]xcept in the case of a rollover contribution described in [§ 408](d)(3) . . . , no contribution [to a qualified individual retirement account or a retirement plan] will be accepted unless it is in cash, and contributions will not be accepted for the taxable year on behalf of any individual in excess of the amount in effect for such taxable year under section 219(b)(1)(A).
26 U.S.C. § 408(a)(1) (emphasis added). A key requirement for a "rollover contribution" is that "the entire amount received" by an individual upon a payment or distribution from a retirement account or plan must be "paid into" an individual retirement account, an individual retirement annuity, or an eligible retirement plan for the benefit of the individual "not later than the 60th day after the day on which" the payment or distribution is received. Id. § 408(d)(3)(A).
Since we live in an imperfect world, mistakes can be made when an individual seeks to achieve a timely tax-free rollover of money or securities from one tax-favored retirement account or plan into another. Accordingly, the I.R.C. provides that "[t]he Secretary [of the Treasury] may waive the 60‑day [rollover] requirement under subparagraphs (A) and (D) where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement." Id. § 408(d)(3)(I) (emphasis added). In an administrative ruling, the Internal Revenue Service ("IRS") stated that "a taxpayer must apply for a hardship exception to the 60‑day rollover requirement using the same procedure as that outlined in Rev. Proc. 2003‑4 for letter rulings, accompanied by the user fee set forth in Rev. Proc. 2003‑8." Rev. Proc. 2003‑16, § 3.01, 2003‑1 C.B. 359 [after clicking on this hyperlink, scroll down to page 359].
In determining whether to grant a waiver, the Service will consider all relevant facts and circumstances, including: (1) errors committed by a financial institution, other than as described in Section 3.03 below; (2) inability to complete a rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country or postal error; (3) the use of the amount distributed (for example, in the case of payment by check, whether the check was cashed); and (4) the time elapsed since the distribution occurred.
Id. § 3.02. According to the IRS, there is an automatic waiver of a defect in an attempt to carry out a tax-free rollover into an IRA, and no formal application for a discretionary waiver is necessary
if a financial institution receives funds on behalf of a taxpayer prior to the expiration of the 60‑day rollover period, the taxpayer follows all procedures required by the financial institution for depositing the funds into an eligible retirement plan within the 60‑day period (including giving instructions to deposit the funds into an eligible retirement plan) and, solely due to an error on the part of the financial institution, the funds are not deposited into an eligible retirement plan within the 60‑day rollover period.
Id. § 3.03. But the IRS cautions that "[a]utomatic approval is granted only: (1) if the funds are deposited into an eligible retirement plan within 1 year from the beginning of the 60‑day rollover period; and (2) if the financial institution had deposited the funds as instructed, it would have been a valid rollover." Id.
In a very recent Private Letter Ruling, the IRS denied a taxpayer's petition for a waiver of a defect in his attempt to roll over a retirement account distribution in the form of a check into an IRA, on the ground that the taxpayer could not establish that any of the factors that are listed in Revenue Procedure 2003-16 were present in his case. P.L.R. 2012-50-031 (Sept. 19, 2012). Thus, an individual who seeks to overcome a defect in his or her attempt to achieve a tax-free rollover of funds or securities from one retirement account or plan to another must make sure that the petition to the IRS sets forth facts and circumstances that indicate that a waiver by the IRS of the defect in completing the rollover contribution is justified.
The Lawletter Vol 38 No 2
John Stone, Senior Attorney, National Legal Research Group
In New Hampshire, text messaging while driving a vehicle is illegal, but simply talking on a cell phone while driving is not. In the right set of circumstances, however, the otherwise legal act of talking on a cell phone while driving can support a criminal conviction for negligent homicide when that conduct leads to a fatal accident. Such was the outcome in State v. Dion, No. 2011-786, 2013 WL 474884 (N.H. Feb. 8, 2013) (not yet released for publication).
At about dusk, the vehicle driven by Lynn Dion, traveling at about 30 miles per hour, struck and killed a pedestrian, who had nearly finished crossing a street and who was using a well-lit, brightly painted crosswalk marked with a yellow and black pedestrian crossing sign. Dion denied ever seeing that pedestrian, or her companion, who was also struck by the vehicle but with less serious effects. Dion admitted that intermittently during her fateful trip she had made and received some cell phone calls as she drove, but she denied that she had been on the phone at the time of the collision.
Reconstruction analysis of the collision by the police showed that the defendant had had fully 13.5 seconds in which to see the pair of pedestrians in the crosswalk as she drove across a bridge, that her view had been unobstructed, and that it would have taken her, at most, 1.5 seconds to react upon seeing the women. Nevertheless, at no time before striking the pedestrian who died did Dion slow down, apply her brakes, or turn to avoid the pedestrians, indicating that Dion, as she herself stated, had completely failed to see them. These facts further led the police to conclude that rather than experiencing a momentary distraction, such as could be caused by a sneeze or changing a station on her car radio, Dion had been inattentive for a longer period. But how could this conclusion be reconciled with the defendant's insistence that she had not been on the phone during the moments immediately leading up to the accident? The clinching evidence was Dion's cell phone records, which undercut that part of her story. The records showed that Dion had placed a call to a friend, hung up a few seconds later, and only about 90 seconds after that placed her call to police from the scene of the accident.
Dion sought to no avail to keep her cell phone records from being used as evidence against her at her trial. In upholding the use of such evidence, the court that rejected her appeal ruled that under New Hampshire Rule of Evidence 403, the probative value of the cell phone records was not outweighed by their prejudicial effect. Dion had admitted to a law enforcement officer that she "had made phone calls throughout her trip," and the records of her calls bore directly on the issue of her attentiveness in the minutes leading up to the collision. Such records were "inextricably intertwined" with evidence of the crime of negligent homicide. Id. at *4-5.
As for the conviction itself, which led to a prison sentence, Dion argued to no avail that the evidence against her was insufficient to support her conviction for negligent homicide, because merely using a cell phone while driving does not constitute the required wrongful or blameworthy conduct to establish the culpable mental state for criminal negligence. New Hampshire Revised Statutes section 630:3(I) makes it a felony to cause another person's death negligently.
Section 626:2 states as follows:
A person acts negligently with respect to a material element of an offense when he fails to become aware of a substantial and unjustifiable risk that the material element exists or will result from his conduct. The risk must be of such a nature and degree that his failure to become aware of it constitutes a gross deviation from the conduct that a reasonable person would observe in the situation.
N.H. Rev. Stat. Ann. § 626:2(II)(d) (Westlaw current through Ch. 4 of the 2013 Reg. Sess., not incl. changes by H.H. Office of Legis. Servs.).
In Dion's case, her inattention to the road in front of her, caused by cell phone use and resulting in the failure to avoid pedestrians in a crosswalk, demonstrated that she had failed to exercise that degree of care, diligence, and safety that an ordinarily prudent person would exercise under similar circumstances. Thus, the evidence was sufficient to support her conviction for negligent homicide.
The Lawletter Vol 38 No 2
Alistair Edwards, Senior Attorney, National Legal Research Group
Some states have statutes prohibiting a merchant from requiring its credit card customers to give or write certain "personal identification information" in a credit card transaction or on a credit card form. For example, pursuant to section 105 of chapter 93 of Massachusetts General Laws, the Massachusetts General Court has declared:
(a) No person, firm, partnership, corporation or other business entity that accepts a credit card for a business transaction shall write, cause to be written or require that a credit card holder write personal identification information, not required by the credit card issuer, on the credit card transaction form. Personal identification information shall include, but shall not be limited to, a credit card holder's address or telephone number. The provisions of this section shall apply to all credit card transactions; provided, however, that the provisions of this section shall not be construed to prevent a person, firm, partnership, corporation or other business entity from requesting information [that] is necessary for shipping, delivery or installation of purchased merchandise or services or for a warranty when such information is provided voluntarily by a credit card holder.
Mass. Gen. Laws Ann. ch. 93, § 105(a). Similarly, California's Song‑Beverly Credit Card Act ("Credit Card Act") provides:
(a) Except as provided in subdivision (c), no person, firm, partnership, association, or corporation that accepts credit cards for the transaction of business shall do any of the following:
(1) Request, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to write any personal identification information upon the credit card transaction form or otherwise.
(2) Request, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to provide personal identification information, which the person, firm, partnership, association, or corporation accepting the credit card writes, causes to be written, or otherwise records upon the credit card transaction form or otherwise.
Cal. Civ. Code § 1747.08(a)(1)-(2).
Several courts have recently considered whether a Zone Improvement Plan code ("ZIP code") constitutes personal identification information. For example, in Pineda v. Williams‑Sonoma Stores, 246 P.3d 612 (Cal. 2011), the California Supreme Court held that a business's act of requesting and recording a cardholder's ZIP code could violate the Credit Card Act and that the customer's ZIP code constituted personal identification information. There, the court explained:
Section 1747.08, subdivision (a) provides, in pertinent part, "[N]o person, firm, partnership, association, or corporation that accepts credit cards for the transaction of business shall . . . : [¶] . . . [¶] (2) Request, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to provide personal identification information, which the person, firm, partnership, association, or corporation accepting the credit card writes, causes to be written, or otherwise records upon the credit card transaction form or otherwise." (§ 1747.08, subd. (a)(2), italics added.) Subdivision (b) defines personal identification information as "information concerning the cardholder, other than information set forth on the credit card, and including, but not limited to, the cardholder's address and telephone number." (§ 1747.08, subd. (b).) Because we must accept as true plaintiff's allegation that defendant requested and then recorded her ZIP code, the outcome of this case hinges on whether a cardholder's ZIP code, without more, constitutes personal identification information within the meaning of section 1747.08. We hold that it does.
Id. at 616 (footnote omitted).
Likewise, in Tyler v. Michaels Stores, 840 F. Supp. 2d 438 (D. Mass. 2012), the U.S. District Court for the District of Massachusetts, applying the Massachusetts statute, recently held that the collection of ZIP codes by a retail chain violated the Massachusetts law prohibiting the writing of personal identification information on a credit card transaction form. In reaching this conclusion, the court held that a ZIP code constitutes "personal identification information." There, the court explained:
Therefore, this Court holds that ZIP code numbers are "personal identification information" under Section 105(a), because a ZIP code number may be necessary to the credit card issuer to identify the card holder in order to complete the transaction. This construction is more consistent with the Massachusetts legislative intent to prevent fraud than a statutory construction that simply views the ZIP code as a component of an address that later can be used to obtain a full address for marketing purposes.
Id. at 446; see also see also Tyler v. Michaels Stores, Civ. Act. No. 11‑10920‑WGY, 2012 WL 397916, at *4 (D. Mass. Feb. 6, 2012) (certifying to the Massachusetts Supreme Judicial Court the questions under Mass. Gen. Laws. Ann. ch. 93, § 105(a): "1. . . . [M]ay a ZIP code number be 'personal identification information' because a ZIP code number could be necessary to the credit card issuer to identify the card holder in order to complete the transaction? 2. . . . [M]ay a plaintiff bring an action for this privacy right violation absent identity fraud? [and] 3. . . . [M]ay the words 'credit card transaction form' refer equally to an electronic or a paper transaction form?").
Of course, the above discussion is relevant only to those states, like California and Massachusetts, that have statutes prohibiting a merchant from writing, collecting, causing to be written, or otherwise recording a credit card customer's personal identification information. Therefore, the first step for any attorney faced with this issue would be to research the statutory law of his or her state.
Interestingly, the California Supreme Court recently held that the Credit Card Act provision prohibiting merchants from requesting and recording personal identification information concerning the cardholder does not apply to online purchases in which the product is downloaded electronically, since the safeguards against fraud that are provided in the Credit Card Act, such as visually inspecting the credit card, are not available to online merchants selling downloadable products. Apple Inc. v. Superior Court, 292 P.3d 883 (Cal. 2013).
April 25, 2013
Fred Shackelford, Senior Attorney, National Legal Research Group
At a baseball stadium, what duty of care is owed to spectators with respect to errant balls? The Idaho Supreme Court recently addressed this issue in Rountree v. Boise Baseball, LLC, 296 P.3d 373 (Idaho 2013). The plaintiff in Rountree lost an eye as a result of being struck by a baseball while he was in Memorial Stadium's "Executive Club" section, which was located at the very end of the third-base line. This area was one of the stadium's only sections that was not covered by vertical netting.
The Rountree court noted that the precise duty owed by stadium owners and operators to spectators injured by foul balls was a matter of first impression in Idaho. The court recognized that other courts have addressed the issue, stating:
The majority of jurisdictions to consider the issue have limited this duty by adopting some variation of the Baseball Rule. See generally James L. Rigelhaupt, Jr., Liability to Spectator at Baseball Game Who Is Hit by Ball or Injured as Result of Other Hazards of Game, 91 A.L.R.3d 24 (1979 & Supp.2003); Quinn v. Recreation Park Ass'n, 3 Cal.2d 725, 46 P.2d 144 (1935); Turner v. Mandalay Sports Entm't, LLC, 124 Nev. 213, 180 P.3d 1172 (2008); Lawson, 901 P.2d 1013 (Utah 1995); Bellezzo v. State, 174 Ariz. 548, 851 P.2d 847 (Ariz.App.1992); Akins v. Glens Falls City Sch. Dist., 53 N.Y.2d 325, 441 N.Y.S.2d 644, 424 N.E.2d 531 (1981); Arnold v. City of Cedar Rapids, 443 N.W.2d 332 (Iowa 1989); Anderson v. Kansas City Baseball Club, 231 S.W.2d 170 (Mo.1950); Cincinnati Baseball Club Co. v. Eno, 112 Ohio St. 175, 147 N.E. 86 (1925).
Though many variations exist, the most common formulation of the Baseball Rule is that stadium owners and operators must provide "screened seats [ ] for as many [spectators] as may be reasonably expected to call for them on any ordinary occasion." Quinn, 46 P.2d at 146; see also Rigelhaupt, supra, 91 A.L.R.3d 24 § 3[a]. The rationale behind this is put bluntly by the Eno Court: "it is common knowledge that in baseball games hard balls are thrown and batted with great swiftness" and "they are liable to be thrown or batted outside the lines of the diamond." Eno, 147 N.E. at 87. The Eno Court therefore concluded that "due care on the part on the management does not require all of the spectators to be screened in; that the management performs its duty toward the spectators when it provides screened seats in the grand stand and gives spectators the opportunity of occupying them." Id.
Id. at 377-78 (footnote omitted).
The court acknowledged that it had the authority to establish or limit existing tort duties. However, it declined to do so in this case, concluding that Idaho's existing premises liability principles provide an adequate framework for analyzing a stadium owner's duty of care. Thus, a baseball fan at a stadium is an invitee, to whom the premises owner owes a duty to keep the premises in a reasonably safe condition or to warn of hidden or concealed dangers.
The court concluded that it was not necessary to establish a special rule for baseball stadiums or that if a special rule were necessary, then the legislature would be better equipped to do research and formulate one. The court reasoned as follows:
Boise Baseball admits that at least for "seven seasons[, Mr. Rountree's] accident is the only time a spectator has suffered a 'major' injury because of a foul ball" at Memorial Stadium. The rarity of these incidents weighs against crafting a special rule. There is no history of accidents that we can look to, and draw from, to sensibly create a rule. Furthermore, Boise Baseball has not provided any broader statistical evidence regarding the prevalence of foul ball injuries in general, and—assuming they are so prevalent—how varying stadium designs might prevent them. Without this information, drawing lines as to where a stadium owner's duty begins, where netting should be placed, and so on, becomes guesswork. These kinds of questions are appropriate for the Legislature because it "has the resources for the research, study and proper formulation of broad public policy." Anstine v. Hawkins, 92 Idaho 561, 563, 447 P.2d 677, 679 (1968). Declining to adopt the Baseball Rule leaves policy formulation to the deliberative body that is better positioned to consider the pros and cons of the issue.
Id. at 379.
After declining to adopt the Baseball Rule, the court turned to the issue of assumption of risk. Specifically, the court decided whether primary implied assumption of risk is a viable defense in Idaho. Answering in the negative, the court first distinguished between primary and secondary assumption of risk. "Secondary" implies that assumption of risk is an affirmative defense to an established breach of duty and is a phase of contributory negligence. Id. at 380. "'Primary . . . assumption of risk' essentially means that the defendant was not negligent, because there was no breach, or no duty." Id. (emphasis omitted). Elaborating on prior Idaho case law, the court ruled that assumption of risk is a defense in Idaho only when a plaintiff expressly assumes the risk, either in writing or orally. The court stated:
Allowing assumption of risk as an absolute bar is inconsistent with our comparative negligence system, whether the risks are inherent in an activity, or not. Moreover, cases involving primary implied assumption of the risk are "readily handled" by comparative negligence principles; as in any case, fault will be assessed, and liability apportioned, based on the actions of the parties. Whether a party participated in something inherently dangerous will simply inform the comparison, rather than wholly preclude it. Here, whether watching baseball is inherently dangerous, and the degrees of fault to be apportioned to Rountree and Boise Baseball, are questions for the jury. Because comparative negligence can adroitly resolve these questions, there is no need for this Court to disturb its holding in Salinas [v. Vierstra, 107 Idaho 984, 695 P.2d 369 (1985)]: assumption of the risk—whether primary or secondary—shall not act as a defense.
Id. at 381.
The Rountree decision clarifies Idaho law as to the duty of care that is owed to fans at baseball games. More importantly, the case confirms that assumption of risk is not a defense in Idaho except when a plaintiff expressly assumes risks. Thus, the court's decision has broad implications for negligence cases generally.
April 25, 2013
John Stone, Senior Attorney, National Legal Research Group
A tan Infinity hit an unoccupied car in a jewelry store parking lot. The Infinity was driven by a female and carried a male passenger. The driver inspected the car she had hit, spoke briefly with her male passenger, and then drove away without leaving any information. Someone witnessed the incident, took down the Infinity's license plate number, and reported these observations to the Colorado State Patrol.
Two troopers investigated the report, first by running a search on the license plate number of the Infinity and determining that it belonged to a Mr. Kaufman. They also checked the jewelry store's receipt records and found that Kaufman had made a purchase in the store a few minutes before the accident. When the troopers reached Kaufman by telephone, he agreed to allow them to speak with him at his residence later that day.
At the meeting, Kaufman asked the troopers to reveal what they had learned during their investigation. They declined to do so, except to tell Kaufman the name of the owner of the damaged car. Within the troopers' hearing, Kaufman then called the victim and offered to pay for the damage incurred by the victim. The troopers continued to question Kaufman, in particular asking him who had been driving his vehicle on the day of the accident. Citing "privilege," Kaufman declined to identify the driver of his vehicle.
Frustrated by Kaufman's silence, and after consulting a supervisor, one of the troopers presented Kaufman with a choice: reveal the driver's identity or be arrested for obstruction of a peace officer. Kaufman still declined to reveal the driver's identity and was arrested and taken to jail. The charges against him were eventually dropped by the local district attorney's office.
Kaufman filed suit pursuant to 42 U.S.C. § 1983, alleging violations of his Fourth and Fifth Amendment rights. The defendant troopers moved for summary judgment on the ground of qualified immunity. In opposition to the summary judgment motion, Kaufman argued that he had been subjected to a false arrest in violation of his Fourth Amendment rights, because Colorado's obstruction statute does not criminalize a refusal to answer police questions during a consensual encounter (as opposed to questions following a valid arrest). (Kaufman eventually dropped his argument that the defendants had infringed his Fifth Amendment rights by retaliating against him for having asserted his Fifth Amendment privilege.)
The district court granted the defendants' motion for summary judgment, concluding that there had been no false arrest, because the troopers had had probable cause to believe that Kaufman's silence, accompanied by an assertion of privilege, constituted a violation of the obstruction statute. Kaufman v. Higgs, Civ. Act. No. 10-cv-00632-LTB-MEH, 2011 WL 3268346 (D. Colo. July 29, 2011). In an appeal by Kaufman, the Tenth Circuit Court of Appeals reversed, holding that the shield afforded by the qualified immunity defense was not available to the troopers, because their arrest of Kaufman for obstruction of a peace officer was objectively unreasonable under the facts of the case and established case law. Kaufman v. Higgs, 697 F.3d 1297 (10th Cir. 2012).
The doctrine of qualified immunity protects government officials from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known. To defeat an assertion of qualified immunity in a summary judgment motion, a plaintiff must properly allege a deprivation of a constitutional right and must further show that the constitutional right was clearly established at the time of the violation. However, it weighs in a plaintiff's favor that in a summary judgment motion, courts construe the facts in the light most favorable to the plaintiff as the nonmoving party.
For false arrest claims in particular, in determining whether the law was clearly established at the time of the alleged violation—as is required to defeat an assertion of qualified immunity—courts require the § 1983 plaintiff to show that it would have been clear to a reasonable officer that probable cause was lacking under the circumstances. In Kaufman, the troopers lacked probable cause to make an arrest for obstructing a peace officer in violation of Colorado law after Kaufman had refused to disclose the identity of the person who was driving his vehicle when it was involved in the hit‑and‑run incident. The refusal to answer questions during a consensual encounter, expressed through silence and an assertion of privilege, was not an "obstacle" to the officers' investigative efforts.
The Colorado statute under which Kaufman was arrested provides, in pertinent part, that
[a] person commits obstructing a peace officer . . . when, by using or threatening to use violence, force, physical interference, or an obstacle, such person knowingly obstructs, impairs, or hinders the enforcement of the penal law or the preservation of the peace by a peace officer, acting under color of his or her official authority[.]
Colo. Rev. Stat. § 18-8-104(1)(a) (emphasis added). The troopers conceded that Kaufman's conduct did not amount to the use or threatened use of "violence," "force," or "physical interference," leaving only an argument, rejected by the appellate court, that there was probable cause to believe that Kaufman had used or threatened to use an "obstacle" that impeded them from carrying out their duties.
An "obstacle" is "a thing that blocks one's way or prevents or hinders progress." Oxford New English Dictionary 1211 (3d ed.). Silence accompanied by an explanation of the basis for that silence does not obstruct anything, and, in fact, it is hardly "a thing" at all. It is a null action that simply maintains the status quo. Kaufman's silence did nothing to the investigative efforts of the police, allowing them to continue unimpeded. They were able to continue putting questions to Kaufman, they could have sought out other members of his family for questioning, and they could have even sought to compel Kaufman to answer their inquiries with a grand jury subpoena.
Kaufman's cause of action under § 1983 was supported not only by the language in Colorado's statute on obstruction of peace officers but also by a precedent from the Supreme Court of Colorado interpreting that law. Dempsey v. People
, 117 P.3d 800 (Colo. 2005). That court's interpretation of the statute confirmed the proper understanding of the word "obstacle." The court defined the terms "obstacle" or "physical interference" in the obstruction statute, concluding that "[t]he obstacle or physical interference may not be merely verbal opposition." Id.
at 810. Furthermore, the court noted, "mere remonstration does not constitute obstruction." Id.
at 811. "Mere verbal opposition" to the police does not suffice; instead, "a combination of statements and acts by the defendant, including threats of physical interference or interposition of an obstacle," is required. Id.
The only relevant conduct in Kaufman
was Kaufman's refusal to answer questions and a very brief explanation for that refusal. Because words alone are not enough for obstruction, it followed a fortiori that silence is not enough. Kaufman
, 697 F.3d at 1302. Kaufman's § 1983 claim was reinstated and sent back to the district court for further proceedings.
April 10, 2013
Doug Plank, Senior Attorney, National Legal Research Group
Since the U.S. Supreme Court's ruling in Strickland v. Washington, 466 U.S. 668 (1984), it has been well settled that the Sixth Amendment guarantees to criminal defendants not simply the right to counsel but also the right to effective assistance of counsel. Under Strickland, a violation of the right to counsel may be shown if the defendant demonstrates that (1) counsel made errors so serious that counsel was not functioning as the "counsel" guaranteed by the Sixth Amendment, and (2) the deficient performance prejudiced the defense.
In Hill v. Lockhart, 474 U.S. 52 (1985), the Court concluded that the Sixth Amendment right to effective assistance of counsel extends to the plea-bargaining process and that the test established in Strickland should be applied to the situation in which a defendant enters a guilty plea following plea negotiations. Until recently, the Court had not found that Strickland should apply when plea negotiations resulted in a defendant's refusal to plead guilty. However, in early 2012, in Lafler v. Cooper, 132 S. Ct. 1376 (2012), the Court squarely held for the first time that the test from Strickland should be used to judge defense counsel's advice during the plea negotiations, whatever the outcome, and stated that in the context of a plea offer that was rejected on advice of counsel, a defendant could establish prejudice with evidence that
but for the ineffective advice of counsel there is a reasonable probability that the plea offer would have been presented to the court (i.e., that the defendant would have accepted the plea and the prosecution would not have withdrawn it in light of intervening circumstances), that the court would have accepted its terms, and that the conviction or sentence, or both, under the offer's terms would have been less severe than under the judgment and sentence that in fact were imposed.
Id. at 1385.
Such a multipart test obviously provides challenges with regard to the determination of prejudice, and the Court has recently indicated that it will revisit the issue of ineffective assistance of counsel in plea negotiations by agreeing to review the Sixth Circuit decision in Titlow v. Burt, 680 F.3d 577 (6th Cir. 2012). In Titlow, the Sixth Circuit granted the defendant's petition for a writ of habeas corpus under 28 U.S.C. § 2254 and thus reversed the rulings of both the U.S. District Court for the Eastern District of Michigan and the Michigan Court of Appeals, which each had found no constitutional violation of the defendant's right to counsel.
The facts in Titlow showed that the defendant, Vonlee Titlow, a transgender woman who had formerly been a man, was charged with the murder of her uncle, Donald Rogers. The evidence regarding the cause of death was unclear, as Rogers was found dead on the floor with a drinking glass in his hand. No autopsy was performed, and the medical examiner initially concluded that the cause of death was a heart attack. After Rogers's body had been cremated, however, the cause of death was amended on the basis of photographs of the body, which appeared to show that Rogers had been asphyxiated, based on the fact that there were small scrapes around his nose that were consistent with impressions made by a decorative woven pillow that was found in the house. Subsequently, police were informed by Titlow's paramour that Titlow had told him that Rogers's wife had asked Titlow to help kill Rogers and that when Titlow and Rogers's wife had found Rogers passed out on the floor, they poured vodka down his throat in hopes of bringing about his death. At some point, Titlow stopped and left the room, and Rogers's wife apparently then smothered Rogers. Later, through the use of a concealed recorder, police managed to obtain a recording of Titlow describing what had transpired.
Titlow and Rogers's wife were each charged with first-degree murder and were tried separately. Titlow's attorney immediately negotiated a plea agreement on her behalf, under which the State offered to reduce the charges to manslaughter, with a 7- to 15-year sentence, on the conditions that Titlow plead guilty, submit to a lie‑detector test, testify against Rogers's wife at trial, and not challenge the prosecutor's recommended sentencing range on appeal. At the following plea hearing, Titlow admitted the allegations against her, acknowledged her understanding of the penalty she faced, and entered her plea of guilt. The court accepted her plea and scheduled sentencing for a few months later.
While Titlow was in prison awaiting sentencing, she was told by a deputy sheriff that she should not plead guilty if she believed that she was innocent, and he referred her to an attorney who agreed to represent her in exchange for some jewelry and the media rights to her story. Based on the advice of the new attorney, Titlow filed a motion to withdraw her guilty plea, which was subsequently granted by the court in a plea‑withdrawal hearing. The conversations between Titlow and the deputy sheriff did not appear in the record of the hearing.
The record showed that Titlow's new attorney did not obtain Titlow's file, inspect the State's discovery materials, or speak with her former attorney about the case until approximately one and one-half months after the plea‑withdrawal hearing. Soon after viewing the file, the attorney moved to withdraw, citing a breakdown in communications and a lack of funds. The court granted that motion and appointed a new attorney for Titlow.
Because Titlow did not agree to testify against Rogers's wife, the State's prosecution against Rogers's wife was unsuccessful, and she was acquitted of the charges against her. Titlow was then tried, and the jury convicted her of second-degree murder, after which the court imposed a sentence of 20 to 40 years in prison. Titlow appealed, arguing that her counsel for the plea-withdrawal hearing had been ineffective by allowing her to withdraw her guilty plea, but the Michigan Court of Appeals rejected her appeal. People v. Titlow, No. 241285, 2003 WL 22928815 (Mich. Ct. App. Dec. 11, 2003) (unpublished). After the Michigan Supreme Court denied leave to appeal, Titlow filed a habeas corpus action in federal court. The district court denied Titlow's petition, No. 07-CV-13614, 2010 WL 4115410 (E.D. Mich. Oct. 19, 2010), but issued a certificate of appealability.
In ruling that Titlow had indeed been prejudiced by ineffective assistance of counsel during withdrawal of her guilty plea, the Sixth Circuit found that the evidence did not support the state court's conclusion that Titlow had been advised to withdraw her plea based on a claim of innocence but, rather, demonstrated that the decision to withdraw her plea was based on the fact that the State's plea offer was substantially higher than the Michigan guidelines for second‑degree murder. The court further concluded that the record contained no evidence that Titlow's attorney explained the elements necessary for the State to secure a conviction, discussed the evidence as it bore on those elements, or explained the sentencing exposure she would face as a consequence of exercising each of the options available. In fact, the court found, the evidence showed that the attorney had not even bothered to familiarize himself with the details of the case before counseling Titlow to withdraw her plea. The court therefore concluded that the attorney had failed to fulfill his clear obligation to provide sufficient advice to Titlow during the plea‑negotiation stage.
With regard to prejudice, the court found that the test in Lafler had been satisfied because (1) the plea offer was presented to, and accepted by, the state trial court at Titlow's initial plea hearing; (2) the sentence that Titlow ultimately received was nearly three times the punishment that she had been offered under the plea agreement; and (3) Titlow's position that she would have accepted the plea offer but for her attorney's intervening advice is bolstered by the fact that she had actually accepted the plea on the record at her initial plea hearing.
The court noted that the remedy to which Titlow was entitled was complicated by the fact that under the plea bargain, she entered a guilty plea to manslaughter, whereas she was found guilty at trial of second-degree murder. In such circumstances, the court found, Titlow did not simply suffer the injury of a higher sentence. Moreover, because Titlow did not plead guilty pursuant to the agreement, she did not testify against Rogers's wife, and thus the State lost its main benefit of the bargain. The court ultimately determined that because the initial plea offer to Titlow was to a lesser‑included offense instead of the offense of conviction, it would conditionally grant the petition for a writ of habeas corpus and give the State 90 days to reoffer Titlow the original plea agreement or, failing that, to release her. The court further directed that if the State in fact were to reoffer the plea agreement and Titlow were to accept, the state court could then exercise its discretion to fashion a sentence for Titlow that both remedied the violation of her constitutional right to the effective assistance of counsel and took into account any concerns that the State might have regarding the loss of Titlow's testimony against her aunt.
As noted above, the State sought review of the Sixth Circuit's decision, and the Supreme Court has agreed to consider three questions arising from the case: (1) whether the Sixth Circuit failed to give appropriate deference to the Michigan state court in holding that defense counsel was constitutionally ineffective for allowing Titlow to maintain a claim of innocence; (2) whether a convicted defendant's subjective testimony that he or she would have accepted a plea but for ineffective assistance is, standing alone, sufficient to demonstrate a reasonable probability that the defendant would have accepted the plea; and (3) whether Lafler always requires a state trial court to resentence a defendant who shows a reasonable probability that he or she would have accepted a plea offer but for ineffective assistance, and to do so in such a way as to "remedy" the violation of the defendant's constitutional right. The resolution of these issues by the Court should provide lower courts with more guidance as to how to remedy the prejudice suffered by a defendant who withdraws from a plea offer because of bad advice from counsel.
The Lawletter Vol 38 No 1
Anne Hemenway, Senior Attorney, National Legal Research Group
Many considerations come into play before an entity or individual files for bankruptcy relief. Included among them is the careful consideration the potential debtor must give to other nonbankruptcy claims or lawsuits to which it is, or may be in the future, a party. If it goes forward as a debtor, it must avoid the pitfall of having the doctrine of judicial estoppel preclude it from seeking future relief in a nonbankruptcy court.
Judicial estoppel is an equitable doctrine applied at the discretion of the court. New Hampshire v. Maine, 532 U.S. 742 (2001). The primary purpose of the doctrine of judicial estoppel is to protect the integrity of the judicial process and to guard the judicial process against improper use. Milton H. Greene Archives, Inc. v. Marilyn Monroe, LLC, 692 F.3d 983, 993 (9th Cir. 2012) (the doctrine is invoked because of "general considerations of the orderly administration of justice and regard for the dignity of judicial proceedings and to protect against a litigant playing fast and loose with the courts" (internal quotation marks omitted)). The fundamental requirement for the application of judicial estoppel is that the party against whom estoppel is asserted must be assuming a position of fact inconsistent with a stance that that party has taken in prior litigation. Bland v. Doubletree Hotel Downtown, Civ. No. 3:09CV272, 2010 WL 723805 (E.D. Va. Mar. 2, 2010). Judicial estoppel is most often applied where in its schedules the debtor has failed to disclose assets or contingent assets to the bankruptcy court but then later pursues a known claim in state court. In re Knight-Celotex, LLC, 695 F.3d 714 (7th Cir. 2012); Guay v. Burack, 677 F.3d 10 (1st Cir. 2012).
The specific elements of judicial estoppel are (1) the party to be estopped must be advancing an assertion that is inconsistent with a position taken during previous litigation; (2) the position must be one of fact instead of law; (3) the prior position must have been accepted by the court in the first proceeding; and (4) the party to be estopped must have acted intentionally and not inadvertently. Love v. Tyson Foods, Inc., 677 F.3d 258 (8th Cir. 2012). Importantly, judicial estoppel requires that the party adopting the inconsistent positions must have acted with some intent in doing so.
In Bland, the court held that judicial estoppel applied where the debtor had failed to properly disclose a claim in her bankruptcy proceedings. Even though the debtor had actually amended her petition to include the claim against the defendant hotel, she stated that the claim's value was only one dollar. The court stated:
While the Court would be receptive to the conclusion that Bland neglected to initially include the Doubletree claim in the bankruptcy proceeding as a result of inadvertence where she amended her petition upon supposedly learning for the first time of the necessity for doing so, the Court cannot ignore or discount the undisputed fact that she valued the claim at such a negligible amount while seeking a bounty in this litigation. The Court simply cannot tolerate such purposeful action.
2010 WL 723805, at *5. The court held that the debtor's later Title VII claim against her employer was barred under the doctrine of judicial estoppel because of her failure to disclose the contingent or unliquidated claim in her bankruptcy case and because her actions were not inadvertent.
Ultimately, how the court applies the doctrine of judicial estoppel is discretionary, and it is an equitable tool. The doctrine can lead to harsh results and, therefore, must be applied with caution. Lowery v. Stovall
, 92 F.3d 219 (4th Cir. 1996); John S. Clark Co. v. Faggert & Friedmen, P.C.
, 65 F.3d 26 (4th Cir. 1995).
The Lawletter Voll 38 No 1
Steve Friedman, Senior Attorney, National Legal Research Group
Truth be told, being pulled over by the police is not one of my favorite activities. When I am pulled over, however, I am respectful of the officer and his authority. Do I have a legal right to mouth off to the police? Certainly. See City of Houston v. Hill, 482 U.S. 451, 461-63 (1987) ("The First Amendment protects a significant amount of verbal criticism and challenge directed at police officers."; in fact, that "is one of the principal characteristics by which we distinguish a free nation from a police state"). Would talking back to the officer help my situation? No—just ask Eddie Ford. See Ford v. City of Yakima, 706 F.3d 1188 (9th Cir. 2013).
As Ford was driving to work late one night, listening to music, he noticed a police car approaching rapidly from behind him. After he tried and failed to get out of the way of the police car, Ford abruptly stepped out of his vehicle at a traffic light and asked Officer Urlacher, the driver of the police car, why Ford was being followed so closely. Officer Urlacher told Ford to get back in his car and go. As the parties drove through the intersection, Officer Urlacher turned on his cruiser's lights and pulled Ford over. During the traffic stop, Ford let it be known that he believed that the traffic stop had been racially motivated. A verbal exchange ensued, with Officer Urlacher essentially informing Ford that if he would stop talking and cooperate, he might just be issued a ticket for violating the municipal noise ordinance but that if he kept running his mouth and "copping" an attitude, he would be going to jail. Officer Urlacher was persuaded by a backup officer who had arrived on the scene to take Ford to jail.
While en route to the booking facility, Ford invoked his right to free speech, to which Officer Urlacher responded by asserting his right to arrest Ford. Significantly, however, Officer Urlacher elaborated on his motivation for the action, commenting to Ford, "You talked yourself—your mouth and your attitude talked you into jail." See id. at 1191. Although Ford was prosecuted for violating the municipal noise ordinance, he was ultimately acquitted of the charged offense.
Ford then commenced a civil lawsuit against Officer Urlacher and the City of Yakima, alleging First Amendment retaliation by their booking and jailing him following his verbal criticism of Officer Urlacher.
The Ninth Circuit reversed the district court's grant of summary judgment in favor of the defendants and remanded the case so that Ford's claims could proceed to trial. Initially, the appellate court observed that Ford's speech, criticizing the police for what he felt was a racially motivated traffic stop, fell "squarely within the protective umbrella of the First Amendment." Id. at 1193. Under Ninth Circuit law, even where probable cause existed for an arrest, the arrest is nevertheless categorically unconstitutional if retaliation was a but-for cause of the arrest and the officer's actions would chill a reasonable person's First Amendment activities. Viewing the evidence in the light most favorable to Ford, a rational jury could find that both such elements were satisfied in this case.
Finally, the court held that in 2007, when the events in question took place, the relevant law was clearly established such that Officer Urlacher was not entitled to qualified immunity. "Police officers have been on notice at least since 1990 that it is unlawful to use their authority to retaliate against individuals for their protected speech." Id. at 1195 (citing Duran v. City of Douglas, 904 F.2d 1372 (9th Cir. 1990)). In 2006, the Ninth Circuit had held "that an individual has a right to be free from retaliatory police action, even if probable cause existed for that action." Id. at 1195-96 (citing Skoog v. County of Clackamas, 469 F.3d 1221 (9th Cir. 2006)). Accordingly, "[a] reasonable officer would have understood that he did not automatically possess the authority to book and jail an individual upon conducting a lawful arrest supported by probable cause" simply because the individual mouthed off. See id. at 1196.
As a matter of law, you have the right to criticize the police, but as a matter of common sense, you should choose your battles wisely. And if you decide to exercise your constitutional rights . . . well, let's just say I would appreciate the business.
The Lawletter Vol 38 No 1
Suzanne Bailey, Senior Attorney, National Legal Research Group
A voluminous body of scientific knowledge on the subject of eyewitness identification has developed over the last 30 years, as well as extensive commentary and research by psychologists and jurists on the dangers of misidentification and the unreliability of eyewitness identification. Acknowledging and compiling this corpus, the Supreme Court of Oregon, in State v. Lawson, 291 P.3d 673 (Or. 2012), recently revised the methodology for determining the admissibility of eyewitness testimony in Oregon courts.
Until Lawson, challenges to eyewitness testimony involved the two-step analysis articulated in State v. Classen, 590 P.2d 1198 (Or. 1979). Under Classen, the defendant bore the burden of showing, under the first prong of the analysis, that "the process leading to the offered identification was suggestive or needlessly departed from procedures prescribed to avoid such suggestiveness." Lawson, 291 P.3d at 683 (quoting Classen, 590 P.2d at 1203). If the defendant showed that the process of identification was suggestive, the second prong required the prosecution to demonstrate to the court that "the proffered identification ha[d] a source independent of the suggestive confrontation . . . or that other aspects of the identification at the time it was made substantially exclude the risk that it resulted from the suggestive procedure." Id. at 683-84 (quoting Classen, 590 P.2d at 1203).
In determining whether an identification had been made independent of suggestive procedures, courts were directed to consider a nonexclusive list of factors, including
the opportunity that the witness had at the time to get a clear view of the persons involved in the crime and the attention he or she gave to their identifying features, the timing and completeness of the description given by the witness after the event, the certainty expressed by the witness in that description and in making the subsequent identification, and, of course, the lapse of time between the original observation and the subsequent identification.
Id. at 684 (quoting Classen, 590 P.2d at 1203).
The Oregon court in Lawson observed that although the intent in Classen had been to come up with an evidentiary standard, placing the burden on the defendant to prove that the eyewitness identification was suggestive was more appropriate to a due process analysis, in which the defendant bears the initial burden of proving a constitutional violation. Id. at 689; see, e.g., Perry v. New Hampshire, 132 S. Ct. 716, 730 (2012) ("[T]he Due Process Clause does not require a preliminary judicial inquiry into the reliability of an eyewitness identification when the identification was not procured under unnecessarily suggestive circumstances arranged by law enforcement."). In contrast, in evidentiary matters, it is the proponent of the evidence—in this case, the State—who bears the initial burden of establishing admissibility. Id. The problem with the second step of the Classen inquiry was that it allowed "trial courts applying the Classen factors to rely heavily on the eyewitnesses' self‑reports to establish the existence or nonexistence of suggestibility factors." Lawson, 291 P.3d at 689.
Finding that the rule in Classen was inadequate to ensure that unreliable eyewitness evidence will be excluded, the Oregon Supreme Court devised a process that closely mirrors the Rules of Evidence. Under the revised rule, "when a criminal defendant files a pretrial motion to exclude eyewitness identification evidence, the state as the proponent of the eyewitness identification must establish all preliminary facts necessary to establish admissibility of the eyewitness evidence." Id. at 696-97. If the testimony is challenged on the basis of lack of personal knowledge or that it is impermissible lay opinion, "those preliminary facts must include, at minimum, proof . . . that the proffered eyewitness has personal knowledge of the matters to which the witness will testify, and proof . . . that any identification is both rationally based on the witness's first‑hand perceptions and helpful to the trier of fact." Id. at 697.
If the State satisfies its burden of proving that the eyewitness testimony is relevant and, thus, generally admissible, "the burden shifts to the defendant to establish . . . that, although the eyewitness evidence is otherwise admissible, the probative value of the evidence is substantially outweighed by the danger of unfair prejudice, confusion of the issues, misleading the jury, or by considerations of undue delay or needless presentation of cumulative evidence." Id. In the event that the defendant successfully makes such a showing, "the trial court can either exclude the identification, or fashion an appropriate intermediate remedy short of exclusion to cure the unfair prejudice or other dangers attending the use of that evidence. . . . [within] the sound exercise of the trial court's discretion." Id.
While Lawson obviously applies only in Oregon, practitioners in all jurisdictions will want to review it for its compilation of the scientific research in the body of the opinion, as well as in an appendix. Moreover, at least one court has identified the Supreme Court of Oregon decision in Lawson, as well as a recent decision by the Supreme Court of New Jersey, State v. Henderson, 27 A.3d 872 (N.J. 2011), as signals of a growing awareness that the current standard for evaluating eyewitness testimony set forth in Manson v. Brathwaite, 432 U.S. 98 (1977), is inconsistent with scientific knowledge. See United States v. Greene, No. 11-4683, 2013 WL 28556, at *12 n.3 (4th Cir. Jan. 3, 2013); see also State v. Avery, 2013 WI 13, ¶ 114 n.4, 826 N.W.2d 60, 86 n.4 (Bradley, J., dissenting).
The Lawletter Vol 38 No 1
Charlene Hicks, Senior Attorney, National Legal Research Group
One of the legal arenas in which individual rights are pitted directly against business interests comes into play when an individual employee signs an employment contract containing a covenant not to compete. Not surprisingly, state courts are often called upon to referee disputes concerning the enforceability of such contracts. In a recent proemployer decision, a Florida appellate court ruled that an individual's change in status from an "employee" to an "independent contractor" did not affect the terms of the noncompete agreement that the individual had previously signed.
In Anarkali Boutique, Inc. v. Ortiz, 104 So. 3d 1202 (Fla. Dist. Ct. App. 2012), the Anarkali Boutique ("Boutique") sought a temporary injunction against Nahomi Ortiz for violating a noncompete agreement that Ortiz had signed when she began employment in 2008. This agreement stated, in relevant part:
In consideration for my at-will employment or continued at-will employment by [the company] and the compensation now and hereafter paid to me, I hereby agree as follows:
. . . .
I will not either during my employment with the Company or for a period of two (2) years after I am no longer employed by the Company, engage, as an employee, independent contractor, officer, director, or shareholder, in any employment, business, or activity that in any way competes with the business of the Company within a one-hundred (100) mile radius of any store, office, or facility of the Company. . . .
. . . .
Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement.
Id. at 1203.
In 2009, the Boutique began treating Ortiz as an independent contractor so that she would have the opportunity to earn more money through sales commissions. In 2011, Ortiz left the Boutique and began operating her own business, performing the same services, within the restricted area. In response, the Boutique filed a complaint for injunctive relief and a motion for temporary injunction against Ortiz.
As a defense against the motion, Ortiz argued that when the Boutique changed her status from employee to independent contractor in 2009, she ceased to be employed by the Boutique and the two-year restricted period set forth in the covenant not to compete began to run at that time. The trial court agreed with Ortiz and denied the Boutique's motion for temporary injunction.
On appeal, the appellate court reversed. In so doing, the appeals court relied upon the principle of contract construction that requires a court to examine the contract as a whole and to attempt to give effect to every provision. According to the appeals court, the trial court contravened this principle by failing to give effect to the final sentence of the noncompete agreement quoted above.
Under the circumstances, the Boutique's change of Ortiz's status from employee to independent contractor had the practical effect of changing her "duties, salary or compensation" in the manner contemplated by this final sentence. Id. at 1205. In order to give effect to this sentence of the contract, the appeals court ruled that the "mere changing of the worker's status from an employee to an independent contractor did not cause the two-year non-compete period to begin running. Instead, the two-year non-compete provision did not begin running until the worker left the company." Id.
Ultimately, the appeals court remanded the case back to the trial court to determine whether the Boutique had satisfied its burden of establishing the statutory requirements for the issuance of a temporary injunction. Even so, the decision represents a clear victory for the Boutique as an employer. Although the law carefully differentiates between an "employee" and an "independent contractor" in other contexts, the court did not allow such distinctions to subvert the contractually agreed-upon covenant not to compete. Because the covenant not to compete by nature favors the employer's business interests over the employee's right to pursue his or her livelihood, the decision indicates that Florida courts may tend to weigh the balance of interests in favor of the employer in any close case.