December 4, 2012

John Stone, Senior Attorney, National Legal Research Group

Severe psychological disorders that plagued Josephine led to a stormy relationship between her and her employer, the California Department of Transportation ("Caltrans").  Caltrans wanted to terminate Josephine, and, according to her, it passed her over in promotions and harassed her because of her mental disability. These matters were resolved by a settlement that put her on disability retirement status, with the option of seeking reinstatement to active employment. When Josephine took that step, litigation ensued in which Caltrans contended that despite her "praiseworthy" attempts to get well, her disorders left her unable to perform duties as an accounting officer.

After her state court challenge to an administrative decision in favor of Caltrans failed, Josephine sued the responsible state officials in federal court. These claims failed as well, and in ways that suggest that state employees may sometimes need to resort to state law remedies, where they are available, to get full relief for alleged disability discrimination. Okwu v. McKim, 682 F.3d 841 (9th Cir. 2012). The reasons for dismissal of Josephine's federal claims were mostly legal rather than stemming from the facts of her particular case.

Josephine's claim under Title I of the Americans with Disabilities Act ("ADA"), which covers employment discrimination, was properly dismissed because the U.S. Supreme Court has ruled that when Congress enacted that provision, it did not intend to abrogate the States' Eleventh Amendment immunity. See Univ. of Ala. Bd. of Trs. v. Garrett, 531 U.S. 356, 360 (2001). The Court in Garrett stated that the legislative record of the ADA failed to show that Congress had identified a pattern of irrational state discrimination in employment against the disabled and that the record thus did not support abrogation of the States' Eleventh Amendment immunity from suits for money damages under Title I of the ADA; in any event, said the Court, the rights and remedies created by the ADA against the States raised concerns as to "congruence and proportionality," supporting the determination that Congress did not validly abrogate the States' immunity.

With no claim directly available to her under Title I of the ADA, Josephine's next theory was based on asserting the substantive rights provided by that statute in a claim brought under the broad civil rights statute, 42 U.S.C. § 1983. Section 1983 is more commonly used to obtain redress for violation of federal constitutional rights, but in some cases it can be the remedial vehicle for violation of federal statutory rights. Not so here. This claim collapsed under the principle that Congress's inclusion of a comprehensive remedial scheme, such as is set forth in Title I of the ADA, precludes any attempt to bootstrap a claim under that provision in a separate § 1983 cause of action. This is the required result, even though the State's immunity foreclosed a direct action under Title I of the ADA to get the benefits of that "comprehensive remedial scheme."  The Supreme Court's decision in Garrett, which "defanged" the Title I scheme for state employees, did nothing to change the legislative intent to preclude asserting Title I rights by means of § 1983. As the Okwu court put it, "We are not free to interpret § 1983 in a way that provides a substitute remedy that Congress never provided." 682 F.3d at 846.

The Lawletter Vol 37 No 9

Suzanne Bailey, Senior Attorney, National Legal Research Group

As any plaintiff's attorney will tell you, even the best case can meet an early demise if service of process is not properly effected on the defendant.  A recent unpublished decision from the U.S. Court of Appeals for the First Circuit—of some interest because it was authored by Retired U.S. Supreme Court Associate Justice David H. Souter—illustrates the need to do one's homework on proper service, particularly when the defendant resides outside the country.  The case also demonstrates the power of the court to dismiss for dilatory practices, even when there is no deadline for service of process.

In Feliz v. MacNeill, Nos. 10-1549, 11-1308, 2012 WL 3590807 (1st Cir. Aug. 22, 2012) (not selected for publication), the plaintiff estate commenced a medical malpractice and wrongful death suit against three physicians, including Dr. Brian MacNeill, by filing the complaint in a Massachusetts trial court on January 29, 2009.  Under the Massachusetts rules, the plaintiff had 90 days to obtain service.  On the 90th day, April 30, 2009, the plaintiff both successfully moved for a 90-day extension of time to serve the complaint and improperly attempted to serve the complaint by leaving it with an assistant to the general counsel of the medical center where Dr. MacNeill formerly worked.  While under no obligation to do so, Dr. MacNeill's lawyers informed the plaintiff in early June that Dr. MacNeill was a permanent resident of Ireland.  Ten days later, the plaintiff improperly attempted to serve Dr. MacNeill in Ireland by certified mail.  The extended period for service expired on July 29, 2009, and on August 10, 2009, Dr. MacNeill moved to dismiss for lack of service.  Only after Dr. MacNeill had moved to dismiss did the plaintiff hire the services of an international process service company, APS, to make service on Dr. MacNeill in Ireland.  Shortly after hiring APS and one month after the expiration of the extended time to obtain service, the plaintiff moved for a second 90-day extension, which the court granted.  Two months later, the United States, as codefendant, removed the case to the U.S. District Court for the District of Massachusetts.  One month after removal, the second 90-day extension granted by the Massachusetts trial court expired.  One month after expiration of the second extension, Dr. MacNeill again moved to dismiss for lack of service.  The plaintiff, who had not sought a third extension from the federal court, opposed the motion, citing difficulties with establishing APS's agency to the satisfaction of Irish authorities.  The federal district court denied Dr. MacNeill's motion without prejudice and gave the plaintiff an additional 45 days (in addition to the 47 days that had already passed after the expiration of the second extension) to make service.  At the end of the 45-day extension, the plaintiff moved for another 90-day extension, and Dr. MacNeill renewed his motion to dismiss.  The district court denied the motion for an extension and granted the motion to dismiss with prejudice.  The district court denied a subsequently filed motion to vacate the order of dismissal and entered final judgment for Dr. MacNeill.  Two months later, the plaintiff filed another motion to vacate on the basis that APS, through a local Irish authority, had served Dr. MacNeill on May 5, 2010.  The district court denied the motion for lack of jurisdiction, since the matter was already pending in the First Circuit Court of Appeals.

The Lawletter Vol 37 No 9

Charlene Hicks, Senior Attorney, National Legal Research Group

As judgment creditors throughout the nation have experienced firsthand, it is often more difficult to enforce a judgment against a financially strapped debtor than it is to obtain the judgment in the first place.  To further complicate matters, state and federal laws protect certain assets, such as retirement pensions, from garnishment.  In an effort to circumvent such measures, creditors may attempt to garnish the debtor's bank account into which protected monies have been deposited.  On a nationwide basis, these efforts have met with mixed success.  Some courts have held that protected funds cannot be garnished even after they have been deposited in the debtor's account, whereas other courts have ruled that the monies lose their protected status once they have been deposited.

This split of authority was highlighted in the recent case of Anthis v. Copland, 270 P.3d 574 (Wash. 2012).  There, Bonnie Anthis won a wrongful death lawsuit against Walter Copland, a retired police officer.  To enforce the judgment, Anthis attempted to garnish Copland's only known asset, his retirement pension, which had been deposited in Copland's personal bank account.  Copland, in turn, claimed that the funds were exempt from garnishment or attachment.  The relevant Washington state statute states that a person's right to a retirement allowance "shall not be subject to execution, garnishment, attachment, . . . or any other process of law whatsoever."  Wash. Rev. Code § 41.26.053(1).

In analyzing the merits of Copland's claim, the Washington Supreme Court conducted a detailed exploration of how other state and federal courts have dealt with benefits-exemption statutes.  As a general rule, these courts have held that "some unambiguous reference to money actually paid to or in the possession of the pensioner is necessary in order to find that pension funds retain their exempt status postdistribution."  Anthis, 270 P.3d at 578 (¶ 14).  Federal courts, for example, have ruled that the language of the Social Security Act prohibiting garnishment of "the moneys paid or payable" to a beneficiary mandates the continued protection of such funds "even after deposit" in the beneficiary's personal bank account.  Id. (citing Philpott v. Essex County Welfare Bd., 409 U.S. 413, 415-17 (1973)).

In contrast, the language of the ERISA statutes simply requires that employee benefits plans prohibit the assignment or alienation of benefits.  The First, Second, Third, Ninth, and Tenth Circuits have held that this language is not an antialienation provision and, therefore, does not prohibit garnishment after funds are deposited into pensioners' personal bank accounts.  Id. at 578-79 (¶ 15).  The Fourth Circuit, however, has ruled that a pensioner cannot be required to turn over ERISA benefits that have been paid to him.  Id.; see United States v. Smith, 47 F.3d 681, 684 (4th Cir. 1995).

Cases decided under state law "have tended to follow the federal holdings requiring explicit language to exempt benefit payments deposited into a personal bank account or otherwise placed into the personal possession of the debtor."  Anthis, 270 P.3d at 579 (¶ 16).  A Michigan court of appeals, for example, had held that its state exemption statute protected only a retiree's right to a benefit and, therefore, did not prohibit garnishment of monies paid as a retirement benefit.  Id. (discussing Whitwood, Inc. v. S. Blvd. Prop. Mgmt. Co., 701 N.W.2d 747 (Mich. Ct. App. 2005)).

The Lawletter Vol 37 No 9

Steve Friedman, Senior Attorney, National Legal Research Group

The Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. §§ 1400-1482, is a federal law designed to ensure that children with disabilities have the same opportunity to receive a free appropriate public education ("FAPE") as nondisabled children do.  See id. § 1400(d).  Once a child has been identified as being disabled within the meaning of the IDEA, see id. § 1401(3), a school district must create an individualized education program ("IEP") for the child in order to provide the requisite FAPE, see id. § 1414(d).  If the school district fails to supply a FAPE, the child's parents may seek tuition reimbursement for the child's placement in a private school.  See id. § 1412(a)(10)(C).

An IEP is "a written statement that sets out the child's present educational performance, establishes annual and short-term objectives for improvements in that performance, and describes the specially designed instruction and services that will enable the child to meet those objectives."  D.D. ex rel. V.D. v. N.Y.C. Bd. of Educ., 465 F.3d 503, 507-08 (2d Cir. 2006) (internal quotation marks omitted). If a parent does not believe that the school district's proposed IEP meets this standard, the parent may file a due process complaint with the appropriate state agency and ultimately may seek judicial review of the administrative decision.  See 20 U.S.C. § 1415(b)(6).

Given the nature of the IDEA and its review process, IDEA cases tend to be quite fact-intensive.  See Haw. Dep't of Educ. v. M.F. ex rel. R.F., 840 F. Supp. 2d 1214, 1225 (D. Haw. 2011).  Accordingly, the evidence presented in the administrative hearings is crucial to the outcome of a disputed IDEA matter.  See J.L. v. Mercer Is. Sch. Dist., 592 F.3d 938, 949 (9th Cir. 2010) (judicial review under the IDEA is less deferential than in most administrative cases).

In a recent IDEA case, the U.S. Court of Appeals for the Second Circuit was faced with the question of whether what it termed "retrospective testimony"—testimony that certain services not expressly listed in the IEP would have been provided to the child if he or she had attended the school district's proposed placement in the public school system—could be used to rehabilitate an allegedly deficient IEP.  See R.E. v. N.Y.C. Dep't of Educ., 694 F.3d 167 (2d Cir. 2012).

Although this case was a matter of first impression in the Second Circuit, the court noted that three other circuit courts of appeals had addressed similar issues in the IDEA context and that all three had expressed a distaste for retrospective evidence.  See id. at 185 (citing Adams v. Oregon, 195 F.3d 1141, 1149 (9th Cir. 1999) ("[W]e examine the adequacy of [the IEPs] at the time the plans were drafted."); Carlisle Area Sch. v. Scott P., 62 F.3d 520, 530 (3d Cir. 1995) (holding that an IEP must be judged prospectively from the time of its drafting); Roland M. v. Concord Sch. Comm., 910 F.2d 983, 992 (1st Cir. 1990) ("[A]ctions of school systems cannot . . . be judged exclusively in hindsight.  An IEP is a snapshot, not a retrospective.")).

Ultimately, the Second Circuit agreed with the majority view on the issue. [W]e hold that testimony regarding state-offered services may only explain or justify what is listed in the written IEP.  Testimony may not support a modification that is materially different from the IEP, and thus a deficient IEP may not be effectively rehabilitated or amended after the fact through testimony regarding services that do not appear in the IEP.

. . . .

November 20, 2012

Doug Plank, Senior Attorney, National Legal Research Group

The use of narcotics-detecting dogs is a well-established practice in American law enforcement operations.  Trained dogs are routinely used in an attempt to discover the presence of drugs in a variety of settings, including motor vehicle stops, investigative detentions of individuals in public places, and scans of luggage at airports, train stations, or bus terminals.  For the most part, the courts have sanctioned the use of trained dogs in the belief that their ability to detect drugs is so well developed and reliable that when they alert on a location, drugs will be discovered there.  However, some recent studies have placed that confidence in the performance of trained dogs into question.  Now, in a case that will be sure to have widespread repercussions for law enforcement, the U.S. Supreme Court has agreed to revisit the issue of the use of trained narcotics dogs in law enforcement.

In its first decision addressing searches by dogs, United States v. Place, 462 U.S. 696, 707 (1983), the Supreme Court held that the use of a "well-trained narcotics detection dog" to detect the odor of narcotics in luggage at an airport was not a search for purposes of the Fourth Amendment, and the Court strongly implied that the subsequent alert by the dog on the luggage—indicating that the dog did indeed smell narcotics—was by itself a sufficient basis to determine that there was probable cause to justify a search warrant to search the luggage.  In reaching that conclusion, the Court determined that the dog sniff was "sui generis" in investigative procedures, meaning that the sniff was "much less intrusive than a typical search," while at the same time reliably informative regarding the contents of the luggage.  Id. The Court ultimately held in Place, however, that despite being supported by reasonable suspicion, the detention of the luggage for 90 minutes while awaiting the arrival of the detection dog was too unreasonable to be justified as an investigative detention under Terry v. Ohio, 392 U.S 1 (1968), and therefore invalidated all that followed.  The Court thus found that the evidence discovered in the luggage had to be suppressed.

Subsequently, in Illinois v. Caballes, 543 U.S. 405 (2005), the Court held that the use of a narcotics-detection dog to sniff around the exterior of a motorist's vehicle during an investigative stop was not a search, again because of the lack of a cognizable infringement on the motorist's Fourth Amendment rights.  After the dog had alerted on the trunk of the vehicle, the police searched the trunk and discovered narcotics.  In reinstating the ruling of the trial court that the search of the trunk was supported by probable cause, the Supreme Court necessarily concluded that the alert by the dog was itself enough to provide probable cause to search.

Justice Souter wrote a dissenting opinion in Caballes that questioned the reliability of narcotics dogs and thus questioned the underlying justification for the Place rule.   Souter argued that there was little reason to believe that a special rule should be applied to dog sniffs, as the unique reliability of trained dogs was simply not shown by empirical findings:

At the heart both of Place and the Court's opinion today is the proposition that sniffs by a trained dog are sui generis because a reaction by the dog in going alert is a response to nothing but the presence of contraband. . . .

The Lawletter Vol 37 No 8

Tim Snider, Senior Attorney, National Legal Research Group

The litigation involving liability resulting from damage caused by Hurricane Katrina to New Orleans and its environs in 2005 has taken an unexpected turn.  More than 400 plaintiffs sued in federal court to recover for Katrina‑related damages, many naming the federal Government as a defendant.  Seven plaintiffs from that number went to trial.  The court found that neither the Flood Control Act of 1928 ("FCA"), 33 U.S.C. § 702, nor the discretionary‑function exception ("DFE") to the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 2680(a), immunized the Government from suit.  In re Katrina Canal Breaches Consol. Litig., 533 F. Supp. 2d 615 (E.D. La. 2008).  After 19 days of trial, the court found that three plaintiffs had proven the Government's full liability and four had not. Another group of plaintiffs had their cases dismissed on the Government's motion, the court having found both immunities applicable.  Still a different group are now preparing for trial of their own case against the Government.

The Lawletter Vol 37 No 8

Brett Turner, Senior Attorney, National Legal Research Group

In a divorce case, can the court divide property that is titled in the name of a third person, not in the name of the husband or the wife?  In some situations, the answer is clearly yes.

At a minimum, when marital property is conveyed into the name of a third party for purposes of avoiding division, the court can charge that property against the conveying spouse's share of the marital estate.  It may also be possible to set the transfer aside as a fraudulent conveyance.  See, e.g., Howard v. Howard, 2010 ME 83, 2 A.3d 318; Myers v. Myers, 741 So. 2d 274 (Miss. Ct. App. 1998).  See generally 2 Brett R. Turner, Equitable Distribution of Property '' 6:103–:108 (3d ed. 2005 & Supp. 2012).

In addition, situations exist in which a third party holds title in constructive or resulting trust for the benefit of one or both spouses.  Many of these cases involve homes that are titled in the names of parents or other third parties for purposes of financing, where all mortgage and maintenance expenses are paid by the spouses.  See, e.g., Gore v. Gore, 638 A.2d 672 (D.C. 1994); Ravenscroft v. Ravenscroft, 585 S.W.2d 270 (Mo. Ct. App. 1979), overruled on other grounds by Hoffmann v. Hoffmann, 676 S.W.2d 817 (Mo. 1984).  See generally 1 Turner, supra, § 5:18.

The Lawletter Vol 37 No 8

Dora Vivaz, Senior Attorney, National Legal Research Group

A hot topic in politics as well as in the courts these days is the extent to which same-sex couples may be treated differently from heterosexual couples.  While much of the focus has been on the right to marry, there have been other questions, distinct from the marriage issue, such as rights to government, employment, or other benefits offered to otherwise similarly situated couples but withheld from same-sex couples.  Not surprisingly, the decisions have not been uniform, even within the same circuit.

The Lawletter Vol 37 No 8

Jim Witt, Senior Attorney, National Legal Research Group

Perhaps the most obvious legal question that arises when a couple break their engagement is whether the formerly prospective bride, assuming that she has received an engagement ring, is obligated to return it to the formerly prospective groom.  A recent South Carolina appellate case, Campbell v. Robinson, 726 S.E.2d 221 (S.C. Ct. App. 2012), arose out of the broken engagement of Matthew Campbell and Ashley Robinson.  Campbell shows that depending upon the couple's level of rancor, the broken engagement and the question as to ownership of the ring can lead to additional legal issues.

In the Campbell case, Campbell proposed and presented a ring to Robinson in December 2005.  In a spring 2006 phone conversation, they agreed to postpone the wedding. The engagement was later canceled, and a dispute ensued over ownership of the ring.  Campbell filed suit against Robinson, demanding a jury trial and seeking (1) declaratory judgment that he owned the ring and was entitled to the ring's return or its equivalent value; (2) damages for the ring's wrongful retention; and (3) monetary restitution for the benefit Robinson had received while possessing the ring.  Robinson counterclaimed, based on Campbell's breach of promise to marry, arguing that she was entitled to damages for her prenuptial expenditures, mental anguish, and injury to health.

Robinson testified that the engagement had been terminated solely by Campbell's action and that after the engagement was canceled, she asked Campbell twice whether she should return the ring.  She asserted that Campbell had told her that she could keep it.  Campbell, in his testimony, denied ending the engagement by himself and contended that the cancellation had been mutual.  He also denied telling Robinson that she could keep the ring.  He further contended that Robinson had refused to give him the ring after he asked for its return.

The trial court held that (1) South Carolina has not abolished actions for breach of promise to marry, and (2) South Carolina courts hinge postengagement entitlement to the engagement ring upon who was "at fault" for the engagement's cancellation.  Therefore, the trial court ruled that Campbell would be entitled to the return of the ring if Robinson was at fault in terminating the engagement.  If Campbell was at fault, however, Robinson would be entitled to keep the ring, and if Campbell breached the promise to marry, Robinson could recover damages.  The trial court rejected Campbell's argument that he could recover damages on his claims.  The jury found that Campbell was responsible for the termination of the engagement and therefore could not regain possession of the ring.  The jury also found that Robinson was not entitled to any damages for Campbell's breach of promise to marry.

The court of appeals first dealt with the question of whether South Carolina courts recognize a cause of action for breach of promise to marry.  The court acknowledged that certain heart-balm actions had been abolished in South Carolina, Russo v. Sutton, 422 S.E.2d 750 (S.C. 1992) (the Supreme Court of South Carolina abolished the heart-balm action for alienation of affection), but observed that promise-to-marry actions have not been expressly abolished.  Therefore, the court concluded that Robinson had set forth a valid cause of action for breach of contract to marry.

The court agreed with Campbell's contention that the trial court had erred in ruling that the ownership of the ring depended upon the assignment of fault in the termination of the engagement.  Rather, the court held, the question of the right to the ring depended on the determination of whether there had been a completed gift of the ring.  The court reasoned that the gift of an engagement ring is impliedly conditioned upon the marriage's taking place. Thus, until the condition of marriage is fulfilled, the attempted gift is unenforceable, and the ring must be returned to the donor upon the donor's request.  The court held that the party challenging the conditional nature of the transfer of possession of the ring has the burden of presenting evidence to establish either that the ring had not been intended as an engagement ring, that it was an engagement ring but had not been transferred subject to the condition of marriage or any other condition, or that the condition attached to the transfer of the ring had been canceled.

November 6, 2012

Brad Pettit, Senior Attorney, National Legal Research Group

The volatility of stock, bond, and real estate markets, as evidenced by the technology stock and real estate "bubbles" during the last two decades, makes it incumbent upon trust professionals to make sure that they comply with current legal standards for managing and investing trust assets.  The Uniform Trust Code provides generally that a trustee must act "prudently" when administering a trust:

§ 804. Prudent Administration.

A trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distributional requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.

Unif. Trust Code § 804 (U.L.A. 2000 & Westlaw current through 2011 annual meetings of the Nat'l Conference of Comm'rs on Uniform State Laws and A.L.I.).

The Uniform Prudent Investor Act expressly states that "[a] trustee shall diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying."  Unif. Prudent Investor Act § 3 (U.L.A. 1994 & Westlaw current through 2011 annual meetings of the Nat'l Conference of Comm'rs on Uniform State Laws and A.L.I.) (emphasis added); see also P.G. Guthrie, Annotation, Duty of Trustee to Diversify Investments, and Liability for Failure to Do So, 24 A.L.R.3d 730 (1969 & Westlaw databases updated weekly).  The Restatement of Trusts similarly provides that "[i]n making and implementing investment decisions, the trustee has a duty to diversify the investments of the trust unless, under the circumstances, it is prudent not to do so."  Restatement (Third) of Trusts ["Restatement"] § 90(b) (2007 & Westlaw current through Apr. 2012).

The Comment to § 3 of the Uniform Prudent Investor Act provides two examples of situations in which a trustee's general duty to diversify investments may be less than absolute: