Public Law Legal Research Blog

CIVIL PROCEDURE: Simultaneous Involvement in Cobell Settlement Claim Bars Plaintiffs' Mineral Lease Complaint Against United States

Posted by Charlene J. Hicks on Thu, Mar 19, 2015 @ 12:03 PM

Charlene Hicks, Senior Attorney, National Legal Research Group

     A class action settlement may have far-reaching, unintended effects for particular class members who choose not to opt out of the settlement. This point is highlighted in a recent decision by the U.S. Court of Federal Claims in Two Shields v. United States, No. 13-90 L, 2015 WL 513315 (Fed. Cl. Feb. 6, 2015).

     In that case, two Native Americans filed claims against the United States, alleging that the Government had breached its fiduciary duty to prudently manage their mineral rights, which were held in trust by the United States. The plaintiffs were allottees of Indian lands on the Fort Berthold Indian Reservation who, in 2007 and 2008, had granted oil leases to a private party known as Dakota-3. The plaintiffs alleged that the United States had rubber-stamped its approval of the leases at below-market rates. In November 2010, Dakota-3 re-leased the plaintiffs' allotments for a bonus price roughly 20 times the original lease rate. The plaintiffs alleged that the United States had breached its duties under the Indian Long-Term Leasing Act, 25 U.S.C. § 396, which requires the Government to approve only those mineral leases that are in the best interests of the Indian owners.

     The Court of Federal Claims entered summary judgment on the plaintiffs' breach-of-fiduciary-duty claims, based on a prior release entered in a class action case known as the Cobell Settlement, Cobell v. Salazar, No. 1:96CV01285 (TFH), 2011 WL 10676927 (D.D.C. July 27, 2011), aff'd, 679 F.3d 909 (D.C. Cir.), cert. denied, 133 S. Ct. 543 (2012). Cobell involved claims for Government mismanagement of Individual Indian Money ("IIM") accounts. The United States entered into a comprehensive settlement that released the Government from all known and unknown Indian land administration claims that had been or could have been asserted through September 30, 2009.

     The Two Shields plaintiffs were members of the Cobell class because they held IIM accounts in their names and they had not opted out of the Settlement. The Court of Federal Claims ruled that the Two Shields plaintiffs' breach-of-fiduciary-duty claims against the United States were land administration claims within the meaning of the Cobell Settlement because they were known or unknown claims that accrued when the oil leases were originally executed in 2007 and 2008. As a result, the claims were barred by the Cobell Settlement. This was true despite the fact that the Settlement did not mention the Fort Berthold oil leases, and the underlying action in the Cobell case involved IIM accounts rather than mineral leases. If the plaintiffs had wanted to protect their claims, the court indicated that they should have exercised their right to timely opt out of the Cobell class.

     As Two Shields demonstrates, a class action settlement in one case may be broad enough to encompass seemingly unrelated causes of action that may exist in a wholly different context but that involve the same defendant. Accordingly, a class action member who potentially may have more than a single claim against the defendant should exercise great caution in choosing not to opt out of the class, lest his or her participation in the class have the effect of barring all other potential causes of action.

Topics: breach of fiduciary duty, civil procedure, class action

PUBLIC LAW UPDATE: Tort Liability for Third-Party Criminal Conduct

Posted by Gale Burns on Thu, Jun 12, 2014 @ 12:06 PM

John Stone, Senior Attorney, National Legal Research Group

     The mass murders committed on the campus of Virginia Tech in 2007 led to wrongful death claims on behalf of some of the victims against multiple defendants, including the Commonwealth of Virginia. Initially the perpetrator shot and killed two individuals in a dormitory and fled that scene. It was not until a little over two hours later, as police were investigating the initial murders and college officials were meeting to determine their responses, that the killer reappeared in another college classroom building and committed the rest of his crimes. About 20 minutes before those later attacks, the University had sent out a campus-wide "blast email" about the first "shooting incident" and the police investigation, and advising students to be alert for anything suspicious. The plaintiffs' theory of recovery was that the defendants owed a duty to the victims, which they had breached by not doing more, sooner, to warn students about the possibility of a shooter on campus.  A jury returned a multimillion dollar verdict for the plaintiffs (reduced to $100,000 by the trial court because of a damages cap in Virginia's Tort Claims Act).

     The Supreme Court of Virginia reversed the judgment for the plaintiffs. Commonwealth v. Peterson, 286 Va. 349, 749 S.E.2d 307 (2013). In Virginia, as in most jurisdictions, as a general rule a person does not have a duty to warn or protect another from the criminal acts of a third person, especially when the third person commits an assault or physical attack, because such acts cannot reasonably be foreseen. A narrow exception to this principle applies if the plaintiff establishes that there is a "special relationship," either between the plaintiff and the defendant or between the third-party criminal actor and the defendant. Examples include common carriers and their passengers, innkeepers and their guests, and employers and their employees. But, as the court in Peterson noted, these exceptions are very fact-specific, and are not conducive to drawing bright-line rules for all cases.

     The absence of such a special relationship often marks the quick end of claims based on a third party's criminal conduct. In Peterson, however, in a sense the plaintiffs crossed that first threshold in that the court was willing to assume, without deciding, that a special relationship existed between the university officials and the slain students. Even so, the court reversed the verdict for the plaintiffs, because the facts taken as a whole did not give rise to a duty to warn the students of the shooter on campus. It was not known, nor reasonably foreseeable, that students faced a risk of injury or death from a mass shooting on campus after officials began investigating the first shooting in the dormitory earlier that morning. Based on such limited information as they had at the time, neither the police officers nor university officials knew who the shooter was, but they initially believed with some cause that the first murder victim's boyfriend, whom they had already questioned, may have been the shooter. Again, based on such information as was available at the time, the officials reasonably believed that the shooter had fled the area and posed no danger to others on campus. That this belief was soon shown by events to be tragically mistaken was not a ground for holding the defendants liable.

     Peterson illustrates the difficulty of prevailing on a negligence claim arising from a third party's criminally violent conduct, even where a special relationship between the parties exists or is assumed to exist. The law as it has developed has built-in headwinds reflecting a deep-seated reluctance to hold anyone legally accountable for the injuries or deaths other than the perpetrators themselves.

Topics: legal research, public law, John Stone, tort liability, Virginia Tech murders, wrongful death claim, Commonwealth v. Peterson, Va. Supreme Court, reversed judgment for plaintiffs, reasonably unforeseeable that students faced risk, difficulty prevailing on negligence claim even if

TORTS: Economic Loss Doctrine as a Bar to Negligent Misrepresentation Claims

Posted by Gale Burns on Mon, Dec 30, 2013 @ 15:12 PM

The Lawletter Vol 38 No 10

Fred Shackelford, Senior Attorney, National Legal Research Group

     Does the economic loss doctrine preclude recovery for negligent misrepresentation? The supreme courts in Kansas and Nevada recently addressed this issue and reached opposite conclusions.

     In its original form, the economic loss doctrine prohibited a commercial buyer of defective goods from suing in negligence or strict liability when the only injury consisted of damage to the goods themselves. The doctrine reflected courts' concern that the rise of implied warranties and strict liability for dangerous products would allow tort law to consume contract law. Over the years, many courts extended the doctrine's application beyond the commercial product sphere as a means of preserving distinctions between contract and tort law.

     In the Kansas and Nevada Supreme Court cases, the issue was whether the doctrine applied in actions for negligent misrepresentation arising from construction contracts. In Rinehart v. Morton Buildings, Inc., 305 P.3d 622 (Kan. 2013), property owners who had contracted with a builder for a preengineered building sued the builder. They alleged claims for breach of contract and warranty, as well as a claim under the state's Consumer Protection Act. As part of their statutory claim, the owners alleged that the builder had negligently misrepresented that the building would be completed in a timely matter, accommodate the owners' need to relocate its operations, and meet or exceed all industry standards. After difficulties arose during construction over the structure's quality, the owners sued for damages to compensate for shop rent at an alternate facility, lost production, relocation costs, and interest expenses on a line of credit. The builder argued that the economic loss doctrine barred the negligent misrepresentation claim.

     The Rinehart court disagreed, concluding that the scope of a negligent misrepresentation claim is narrow enough that it is unnecessary to limit recovery by applying the economic loss doctrine. The court reasoned as follows:

     The elements of the negligence misrepresentation tort sets the bounds on the scope of liability by imposing the duty in the limited circumstances when a defendant supplies information to guide others in business transactions in the course of the defendant's business. The tort also limits the universe of those who may pursue such claims to those for whose benefit the defendant supplied the information and whom the defendant intends to influence or knows will be influenced in the transaction. Therefore, the doctrine's second purpose of restricting potential extensive liability to a commercial user "downstream" from the manufacturer does not apply here.

     . . . .

     We hold negligent misrepresentation claims are not subject to the economic loss doctrine because the duty at issue arises by operation of law and the doctrine's purposes are not furthered by its application under these circumstances. We leave for another day whether the doctrine should extend elsewhere.

Id. at 632-33 (citation omitted).

     Conversely, in Halcrow, Inc. v. Eighth Judicial District Court, 302 P.3d 1148 (Nev. 2013), the court ruled that the economic loss doctrine barred a claim for negligent misrepresentation brought by a general contractor against a developer. The case arose out of construction of the Harmon Tower, a mixed-use urban development that was owned by MGM Mirage Design Group ("MGM"). MGM retained an architectural firm and a general contractor ("Perini") to assist with the project. The architectural firm hired Halcrow to design the Harmon Tower and perform other services, while Perini hired Century Steel to install steel for the project. (Century Steel later assigned its contract to Pacific Coast Steel ("PCS").)

     Although Halcrow had no contract with PCS, Century Steel, or Perini, PCS and Century Steel were required to follow Halcrow's design and specifications for installing reinforcing steel in the Harmon Tower. Problems arose with the steel installation, which forced the tower to be limited to 26 floors instead of over 40 floors. After construction had been stopped and a flurry of complaints and counterclaims filed and dismissed, PCS and Century Steel sought leave to amend their complaints to include a cause of action for negligent misrepresentation against Halcrow, alleging that Halcrow had owed them a duty to act with reasonable care in communicating information to them about the steel installation. They alleged that Halcrow had failed to conduct timely inspections in accordance with its representations that inspections would take place and that it had erroneously stated that on‑site adjustments would alleviate errors in its plans. Century Steel and PCS therefore contended that as a result of their foreseeable reliance on Halcrow's false representations, Halcrow could be held liable for negligent misrepresentation.

     Clarifying the scope of its prior holding in Terracon Consultants Western, Inc. v. Mandalay Resort Group, 206 P.3d 81 (Nev. 2009), the Halcrow court concluded that the economic loss doctrine should be applied in order to protect parties from unlimited economic liability that could result from negligent actions taken in commercial settings. The court stated:

     Determining that design professionals have a separate and distinct duty to any subcontractor that must rely on their plans would essentially allow any party to recast their barred negligence claim into a negligent misrepresentation claim. In the context of commercial construction projects, the evidence that would need to be presented in order to prove a negligent misrepresentation claim is almost identical to that which would be necessary in proving a claim for negligence. Allowing one and not the other would create a loophole in Terracon's objective of foreclosing professional negligence claims against commercial construction design professionals and would, essentially, cause the economic loss doctrine to be nullified by negligent misrepresentation claims.

302 P.3d at 1154 (citation omitted).

     As the Rinehart and Halcrow cases illustrate, the proper scope of the economic loss doctrine is debatable, and courts may draw different conclusions as to its application to negligent misrepresentation claims. Courts in other states may continue to grapple with this issue as future cases arise.

Topics: legal research, Fred Shackelford, torts, construction contract, Halcrow, Inc. v. Eighth Judicial District Court, NV, Rinehart v. Morton Buildings, KS, economic loss doctrine, negligent misrepresentation

PUBLIC LAW: Lanham Act's Prohibition of Trademarking Governmental Insignia Applies Even to the Governmental Entity Itself

Posted by Gale Burns on Tue, Nov 19, 2013 @ 12:11 PM

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.

Topics: legal research, Lanham Act, distinguishable mark can be trademarked excepting, flag/insignia/coat of arms of US or a state, In re City of Houston, Fed. Cir., city argued that it was not an applicant, parallel case DC as local entity cannot obtain reg, The Lawletter Vol 38 No 9, public law

PUBLIC LAW UPDATE: Silence Is Not Obstruction of Police

Posted by Gale Burns on Thu, Apr 25, 2013 @ 10:04 AM

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.

BANKRUPTCY: Judicial Estoppel in Post-Bankruptcy Court State Court Actions

Posted by Gale Burns on Tue, Apr 2, 2013 @ 17:04 PM

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).

Topics: legal research, The Lawletter Vol 38 No 1, bankruptcy, Anne Hemenway, judicial estoppel is discretionary tool of the cou, protection of judicial integrity and process, invoked against party asserting inconsistent stanc, not disclosing assets or contingent assets, acted intentionally

CIVIL RIGHTS: Yackety-Yack, Don't Talk Back—Criticism of a Police Officer

Posted by Gale Burns on Tue, Apr 2, 2013 @ 16:04 PM

The Lawletter Vol 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.

Topics: legal research, The Lawletter Vol 38 No 1, free speech, First Amendment retaliation for verbal criticism o, officer not entitled to qualified immunity, Steve Friedman, civil rights

COPYRIGHT: Statutory Damages—Limit on Punitive Damages Award

Posted by Gale Burns on Thu, Feb 21, 2013 @ 12:02 PM

The Lawletter Vol 37 No 12 

Tim Snider, Senior Attorney, National Legal Research Group

It has been established that an excessive award of punitive damages may violate due process. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 417 (2003). To aid the lower courts in determining whether an award of punitive damages may be so excessive as to violate due process, the Supreme Court has announced punitive damages "guideposts." The Court, however, has never held that the punitive damages guideposts are applicable in the context of statutory damages. Among the statutes that authorize the recovery of statutory damages is the Copyright Act, 17 U.S.C. § 504(c). The recovery of statutory damages is authorized in cases of infringement, because proof of actual damages can be very difficult.

An illustrative case is Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899 (8th Cir. 2012). There, the defendant used a computer file-sharing program to download and share copyrighted musical performances without the consent of the copyright owners. Using a forensic service, the owners located and identified the defendant as the person who had initiated the unauthorized copying and file-sharing of the recordings. At trial, the plaintiffs were awarded substantial statutory damages in an amount that was well within the limits of damages authorized by the statute. A prevailing copyright-infringement plaintiff can elect to recover either actual damages or statutory damages. In Capitol Records, the plaintiff elected to recover statutory damages. The defendant argued that the district court should apply a standard of due process to the award of statutory damages analogous to awards of punitive damages.

The court of appeals was unpersuaded for several reasons. First, as noted earlier, the Supreme Court has never applied the due process limitation on punitive damages awards to the recovery of statutory damages. Second, due process prohibits excessive punitive damages because elementary notions of fairness require that a defendant be made aware of the penalties to which he or she might be subjected if he or she engages in the unlawful conduct at issue. This concern about fair notice does not apply to statutory damages, because those damages are identified and constrained by the authorizing statute.

Finally, the guideposts for the award of punitive damages announced by the Supreme Court would be nonsensical if applied to statutory damages. It makes no sense to consider the disparity between "actual harm" and an award of statutory damages when statutory damages are designed precisely for instances where actual harm is difficult or impossible to calculate. The availability of statutory damages is intended to have much the same deterrent effect on unlawful conduct as do punitive damages in other contexts. The amount of the award of statutory damages is up to the jury, so long as the amount does not exceed the amount authorized by statute (not less than $750 nor more than $30,000 per infringement, except in the case of willful infringement, when the court may increase the award to up to $150,000 per infringement).

The appellate court in Capitol Records found that an award of $9,250 per infringement was well within the statutory allowance and thus should be affirmed. The court probably was not well disposed to the defendant's arguments when it was determined during discovery that the defendant, after having received a cease-and-desist letter, had replaced the hard drive on her computer with a new hard drive that did not contain the copyrighted files. In many, perhaps most, copyright infringement cases, proving actual damages is so difficult that plaintiffs elect to claim statutory damages. If willful infringement is proven, courts are often favorably disposed to augment the jury's award of damages by a substantial amount.

Topics: legal research, Tim Snider, copyrights, The Lawletter Vol 37 No 12, statutory damages, punitive damages guideposts, State Farm Mut. Auto. Ins. Co. v. Campbell, Copyright Act authorizes statutory damages with no, 8th Cir., Capitol Records v. Thomas -Rasset, U.S. Supreme court

CIVIL RIGHTS: The EEOC's Presuit Conciliation Obligation—When Is It Satisfied?

Posted by Gale Burns on Wed, Feb 20, 2013 @ 17:02 PM

The Lawletter Vol 37 No 12

Dora Vivaz, Senior Attorney, National Legal Research Group

Initially, under the civil rights laws the Equal Employment Opportunity Commission ("EEOC") was not itself empowered to bring suit. In 1972, the law was amended to provide for suits brought directly by the EEOC, but only after an investigation; a determination of reasonable cause; and an attempt to resolve the matter by informal methods of conference, conciliation, and persuasion. 42 U.S.C. § 2000e(5)(b). Since that time, the courts have been in agreement that a conciliation attempt is at least a condition precedent to suit by the EEOC. See, e.g., EEOC v. Radiator Specialty Co., 610 F.2d 178, 183 (4th Cir. 1979). However, as the court noted in a recent case, the circuits appear to be split as to the standard that should govern the court's inquiry into whether the conciliation obligation has been satisfied. EEOC v. St. Alexius Med. Ctr., No. 12 C 7646, 2012 WL 6590625, at *1-3 (N.D. Ill. Dec. 18, 2012).

In an early decision, the Tenth Circuit noted that the statutory language is mandatory and concluded that it was inconceivable that anything less than good-faith efforts is required. EEOC v. Zia Co., 582 F.2d 527, 532-33 (10th Cir. 1978). By the same token, it found that the court need not examine the details of offers and counteroffers between the parties. Although the court quoted language from the Conference Report on the law, which indicated that it was contemplated that the EEOC would "continue to make every effort to conciliate" and that it would file suit only "if conciliation proves to be impossible," id. at 533 (quoting 118 Cong. Rec. H1861 (Mar. 8, 1972)), the standard the court seemed to impose was simply a showing of "some effort" to conciliate and of "notice of the breakdown" of the effort. Id. at 532-33. The Sixth Circuit put forth a similar standard, adding that the EEOC is under no duty to pursue further conciliation if an employer rejects its offer. EEOC v. Keco Indus., 748 F.2d 1097, 1101-02 (6th Cir. 1984).

Both the Eleventh and Fifth Circuits have imposed a somewhat more specific and more stringent standard, requiring the EEOC to (1) outline for the employer the reasonable cause for its belief that the law has been violated; (2) offer the employer an opportunity for voluntary compliance; and (3) respond to the employer in a reasonable and flexible manner. EEOC v. Asplundh Tree Expert Co., 340 F.3d 1256, 1259 (11th Cir. 2003); EEOC v. Klingler Elec. Corp., 636 F.2d 104, 107 (5th Cir. 1981). These courts have found that the underlying question is the reasonableness and responsiveness of the EEOC, considering all the circumstances. The Fifth Circuit, in contrast to the Tenth and Sixth Circuits, specifically concluded that the court is required to make a thorough inquiry into the facts of the conciliation efforts in order to properly evaluate whether the EEOC has satisfied its duty.

Although the Ninth Circuit has not yet weighed in on the question and the district courts have variously applied both the deferential standard and the three-part test, in a recent case one district court focused on the duty to respond to the concerns of the employer in a reasonable and flexible manner and to provide the employer with an opportunity to confront all the issues. EEOC v. High Speed Enter., No. CV-08-01789-PHX-ROS, 2010 WL 8367452, at *5 (D. Ariz. Sept. 30, 2010). In order to satisfy those duties, the EEOC must also provide sufficient information about the basis of any charge such that the employer will be able to fully participate in the conciliation process. After reviewing the cases and noting that the Seventh Circuit, like the Ninth, had not yet chosen sides on the issue, the district court in St. Alexius Medical Center determined that it need not choose between the two standards, because under either standard the pleadings did not indisputably establish that the EEOC had satisfied its obligation. Accordingly, the court held that the EEOC was not entitled to judgment on the pleadings, which was the sole issue before the court.

Topics: Dora Vivaz, legal research, The Lawletter Vol 37 No 12, conciliation is condition precedent to suit by EEO, conciliation standard split in circuits, 11th and 5th Circuits more stringent standard, civil rights

CIVIL PROCEDURE: Recovery of Costs in Federal Court by Prevailing Party

Posted by Gale Burns on Thu, Jan 3, 2013 @ 13:01 PM

The Lawletter Vol 37 No 10

Paul Ferrer, Senior Attorney, National Legal Research Group

Parties who secure a favorable judgment in federal court may be happy with the outcome but should not forgo seeking their recoverable costs as well.  The Federal Rules of Civil Procedure specifically provide that "[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party."  Fed. R. Civ. P. 54(d)(1).  The threshold question for any court prior to awarding costs under Rule 54(d) involves a determination of who the "prevailing party" is in the lawsuit.  In general, a party prevails for purposes of Rule 54(d) when a final judgment awards it "substantial relief."  Smart v. Local 702 Int'l Bhd. of Elec. Workers, 573 F.3d 523, 525 (7th Cir. 2009).  A party that gets substantial relief prevails "even if it doesn't win on every claim."  Slane v. Mariah Boats, Inc., 164 F.3d 1065, 1068 (7th Cir.), cert. denied, 527 U.S. 1005 (1999).

In Sommerfield v. City of Chicago, No. 06 C 3132, 2012 WL 5381255, at *2 (N.D. Ill. Oct. 31, 2012), for example, the plaintiff was determined to be the prevailing party because the jury had returned a verdict in his favor on two counts, awarding him $30,000, even though the jury had found against him on a third count and two other counts had been dismissed at the summary judgment stage.  Sommerfield also exemplifies the concept that "a determination of who is the prevailing party for purposes of awarding costs should not depend on the position of the parties at each stage of the litigation but should be made when the controversy is finally decided."  Repub. Tobacco Co. v. N. Atl. Trading Co., 481 F.3d 442, 446 (7th Cir. 2007) (quoting 10 Charles A. Wright et al., Federal Practice and Procedure § 2667 (3d ed. 2006)); see also Smart, 573 F.3d at 525 (a "final judgment" awarding substantial relief is "one that resolves all claims against all parties").  In Republic Tobacco, the court held that a party that had succeeded on a posttrial motion in having damages awarded against it reduced from $18.6 million to $7.44 million was not a prevailing party that could recover its costs in the district court under Rule 54(d).  481 F.3d at 446-47.

With regard to the nuts and bolts of recovering costs under Rule 54(d), the district court is generally vested with wide discretion to determine "whether and to what extent costs may be awarded to the prevailing party."  Sommerfield, 2012 WL 5381255, at *1.  But a district court may not tax costs under Rule 54(d) unless a federal statute authorizes an award of those costs.  See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437 (1987); Repub. Tobacco, 481 F.3d at 447.  Title 28 U.S.C. § 1920 specifically provides that costs may be taxed for (1) fees of the clerk and marshal; (2) fees for printed or electronically recorded transcripts; (3) fees and disbursements for printing and witnesses; (4) fees for exemplification and the costs of making copies; (5) docket fees; and (6) compensation of court-appointed experts and interpreters.  Section 1920 requires that for costs to be awarded, "[a] bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree."  28 U.S.C. § 1920.  The district court must review a prevailing party's proposed bill of costs in "scrupulous detail," and the claimed expenses must be "reasonable, both in amount and necessity to the litigation."  Sommerfield, 2012 WL 5381255, at *1 (internal quotation marks omitted).  While the prevailing party has the burden of demonstrating the amount of its recoverable costs, the losing party bears the burden of showing that the claimed costs are not appropriate.  Sommerfield provides a good recent example of the types of costs that may be recovered and the level of detail that should be included in a prevailing party's proposed bill of costs to document the claimed amounts.  See id. at *3-5 (listing claimed costs and refusing to award costs for certain items for which the plaintiff had failed to provide the court with an invoice or other supporting evidence).

Topics: legal research, Paul Ferrer, ND Illinois, The Lawletter Vol 37 No 10, civil procedure, recovering costs by party receiving substantial re, district court has wide discretion in awarding cos, Sommerfield v. City of Chicago

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