The Lawletter Vol 41 No 6

Fred Shackelford, Senior Attorney, National Legal Research Group

      Can a court or a jury award punitive damages against a tortfeasor's estate? The Ohio Supreme Court addressed this issue of first impression in Whetstone v. Binner, 2016-Ohio-1006, 2016 WL 1061742. The case arose when a mother left her daughters with a babysitter, who was a relative. When the mother returned to pick up the children, she discovered the relative with one hand on one child and the other hand holding a pillow over the child's head. The mother struggled with the relative before escaping with her daughters. The mother and both daughters were later diagnosed with posttraumatic stress disorder, and they sued the relative for assault, false imprisonment, emotional distress, and loss of consortium. They sought both compensatory and punitive damages.

     After a default judgment was entered, the relative moved for relief from the judgment and requested postponement of an evidentiary hearing to determine damages. The trial court rescheduled the hearing but refused to grant relief from the judgment, and the relative died before the hearing took place. After the administrator of the relative's estate was substituted as the defendant, the trial court awarded compensatory damages but declined to award punitive damages. The court believed that punitive damages cannot be awarded against a tortfeasor's estate.

The Lawletter Vol 41 No 5

Suzanne Bailey, Senior Attorney, National Legal Research Group

     A recent case from the Second Circuit Court of Appeals sets forth new Second Circuit standards for addressing certain issues under the Family and Medical Leave Act ("FMLA"), 29 U.S.C. §§ 2601–2654, and the employment discrimination provisions of the Americans with Disabilities Act ("ADA"), 42 U.S.C. §§ 12111–12117, and provides a set of facts on how not to respond to an employee's request for FMLA leave. Graziadio v. Culinary Inst. of Am., No. 15-888-CV, 2016 WL 1055742 (2d Cir. Mar. 17, 2016).

     The plaintiff, Cathleen Graziadio, had been employed at the Culinary Institute of America ("CIA") as a Payroll Administrator for five years on June 6, 2012, when she notified her direct supervisor that she needed to take FMLA leave to care for her 17-year-old son, who had been hospitalized as a result of previously undiagnosed Type I diabetes. At Graziadio's request, the necessary FMLA paperwork was forwarded to her by the appropriate employee. Graziadio returned to work on June 18, 2012, and on or about June 27, 2012, she submitted a medical certification supporting her need for leave to care for the 17-year-old son. That same day, June 27, Graziadio's 12-year-old son underwent surgery after having fractured his leg playing basketball, and Graziadio promptly notified her supervisor that she would need immediate leave to care for her son and that she expected to return the week of July 9 at least part-time.

The Lawletter Vol 41 No 5

Nicole Prysby, Senior Attorney, National Legal Research Group

     "Judges are not like pigs, hunting for truffles buried in briefs." United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991). The frustration evident in this quote is shared by many appellate judges. The appellate process is already an uphill battle, and presenting the court with a brief that is not compelling or, even worse, is noncompliant with court rules makes it even harder. The vast majority of appeals are resolved without oral argument, which means that the brief is likely the only chance an attorney will have to present a client's case on appeal.

     The consequences of an inadequate or noncompliant brief range from frustrating the court to having the appeal dismissed. In egregious cases, sanctions may even be imposed. For example, sanctions were imposed against counsel in one case involving the failure to observe line spacing, font, and footnote rules. Kano v. Nat'l Consumer Co-op. Bank, 22 F.3d 899 (9th Cir. 1994). In another case, the court suggested that counsel should be liable for malpractice for a brief that was egregiously noncompliant with court rules. Kushner v. Winterthur Swiss Ins. Co., 620 F.2d 404 (3d Cir. 1980). In Kushner, failure to comply with federal rules for the brief and appendix not only led to dismissal of the appeal but also prompted the court to suggest that a client facing this situation "may wish to proceed against his or her counsel in an action for malpractice." Id. at 408. The court also stated that "[w]e note with extreme melancholy that this case is not an isolated example." Id.

The Lawletter Vol 41 No 5

Anne Hemenway, Senior Attorney, National Legal Research Group

     Under the Equal Pay Act, 29 U.S.C. § 206(d), no covered employer shall discriminate on the basis of sex by paying wages to employees at a rate less than the rate paid to employees of the opposite sex for equal work. In Hesterberg v. Tyson Foods, Inc., Case No. 5:14-CV-05382, 2016 WL 483017 (W.D. Ark. signed Feb. 5, 2016), the court held that to establish a prima facie claim for damages under the Equal Pay Act, the complaining party must show by a preponderance of the evidence that "(1) she was paid less than a male employed in the same establishment, (2) for work on jobs requiring skill, effort and responsibility, (3) which were performed under similar working conditions." Id. at *5. The employer will be entitled to summary judgment and dismissal of the equal pay suit if it can show that any pay differential between the plaintiff and her male counterpart is explained by a statutory defense such as a merit system or some excuse other than sex.

     The plaintiff in the case alleged that her immediate supervisor, who was male, had total discretionary authority over the amount of bonuses paid and percentage raises given to her and her male counterparts and that his decisions regarding these forms of compensation were largely subjective. She argued that her comparatively lower bonuses and percentage raises in the years in question were the result of the males' being treated more favorably. Recognizing that employers can "easily circumvent the Equal Pay Act by relying substantially on bonuses to compensate employees," id. at *6, the court denied the employer's motion for summary judgment. Genuine issues of material fact existed as to whether the employer's merit system, on which the employer relied to justify the pay differential in this case, had been implemented at the company in a truly nondiscriminatory way.

The Lawletter Vol 41 No 4

Lee Dunham, Senior Attorney, National Legal Research Group

     In general, an attorney's duty of care extends only to his or her clients, not to third parties. This rule makes intuitive sense in most areas of the law, where the client is typically the party who is injured directly by attorney malpractice. However, in the estate planning context, where the client is often long dead by the time the malpractice is discovered, the true victims of malpractice may be the beneficiaries, or would-be beneficiaries, of the client's estate.

     Recognizing this problem, courts of several states have relaxed the "strict privity rule" in malpractice suits against estate planning attorneys. Most notably, in Biakanja v. Irving, 320 P.2d 16 (Cal. 1958), and Lucas v. Hamm, 364 P.2d 685 (Cal. 1961), cert. denied, 368 U.S. 987 (1962), California adopted what has come to be known as the "California Test," a multifactor balancing test designed to determine whether a beneficiary can maintain a malpractice claim against an estate planning attorney despite a lack of privity. The factors include "the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury, and the policy of preventing future harm." Lucas, 364 P.2d at 687 (citing Biakanja, 320 P.2d at 19).

     Courts of several other states have adopted a narrower cause of action, referred to as the "Florida-Iowa Rule," under which a beneficiary may maintain a cause of action against the estate planning attorney only if the client's intent, as expressed in the will (or other document), is frustrated. See Espinosa v. Sparber, Shevin, Rosen & Heilbronner, 612 So. 2d 1378, 1380 (Fla. 1993); Schreiner v. Scoville, 410 N.W.2d 679, 683 (Iowa 1987).

The Lawletter Vol 41 No 4

Jim Witt, Senior Attorney, National Legal Research Group

     The most straightforward tactic taken by large American corporations since the 1980s to avoid the full brunt of U.S. federal corporate income tax is known as "tax inversion" (or "corporate inversion"). This strategy has drawn considerable attention lately, with President Obama last summer calling on Congress to pass tax legislation to end the practice. In November 2015, the U.S. drug giant Pfizer announced its merger with Irish-headquartered Allergan, which, in the largest tax inversion to date, would give the merged company a situs in Ireland.

     Inversion transactions usually involve the transfer of stock of a corporation by one or more shareholders to a wholly owned or controlled foreign subsidiary of that corporation in exchange for newly issued shares of the subsidiary's stock. Internal Revenue Code § 7874 (rules relating to expatriated entities and their foreign parents) contains the tax rules related to inversions.

     Apple Inc., based in Cupertino, California, has gone well beyond the standard tax inversion maneuver. According to a study by Citizens for Tax Justice and the U.S. Public Interest Research Group Education Fund, Apple holds $181 billion in profit offshore that has escaped U.S. income tax. A May 20, 2013 report issued by the Senate Homeland Security Permanent Subcommittee on Investigations concluded that Apple's tax arrangements have nothing to do with the U.S. location of all the intellectual property that supports Apple's products. Non-U.S. sales account for 60% of Apple's profits, and these profits are routed through Irish subsidiaries that Apple established four years after its founding and are not taxed by any jurisdiction. The following discussion broadly outlines the rules that Apple, through its web of subsidiaries, takes advantage of to minimize its corporate income tax liability, eliminating U.S. corporate tax liability as long as foreign earnings are not repatriated.

The Lawletter Vol 41 No 4

Dora Vivaz, Senior Attorney, National Legal Research Group

     It has long been settled law that plaintiffs who seek redress for employment discrimination under Title VII must exhaust the administrative remedies provided under that law before bringing their claims in court. Title VII, of course, not only prohibits the initial unlawful status/class discrimination, but also prohibits retaliation for complaining about such discrimination. The interplay of those two prohibitions has seemingly muddied the waters on the exhaustion issue.

     In a recent case, a federal district court within the Fifth Circuit was faced with the question of that interplay. Mitchell v. Univ. of La. Sys., Civ. Act. No. 13-820-JWD-RLB, 2015 WL 9581823 (M.D. La. signed Dec. 30, 2015). In the case before it, the plaintiff had filed an Equal Employment Opportunity Commission ("EEOC") charge in June 2013, claiming discrimination. She was transferred in July 2013. Although she never filed a second EEOC charge, she included both a claim for unlawful discrimination and a claim for retaliation in her action in the federal court. The defendant argued that the retaliation claim was barred for failure to exhaust administrative remedies, but the court disagreed.

The Lawletter Vol 41 No 4

Mark Rieber, Senior Attorney, National Legal Research Group

     In Rodriguez v. United States, 135 S. Ct. 1609 (2015), the U.S. Supreme Court recently stressed that a seizure justified only by a police-observed traffic violation becomes unlawful if it is prolonged beyond the time reasonably required to complete the mission of issuing a ticket for the violation. The stop may not exceed the time needed to handle the matter for which the stop was made. In Rodriguez, the issue was raised in the context of whether the police unnecessarily extended the traffic-violation stop to conduct a dog sniff of the exterior of the vehicle for drugs.

     Lower courts applying Rodriguez have had the difficult task of determining whether a vehicle stop for a traffic violation was unnecessarily and unlawfully prolonged by police so that they could pursue unrelated suspicions, usually related to illegal drugs. While the courts often observe that there is no rigid time limit for determining when a detention has lasted longer than necessary to effectuate the purposes of the stop, they nevertheless often look to the total time of the stop and the length of what is deemed the unnecessary delay in determining whether the police conduct was lawful. In State v. Linze, No. 42321, 2016 WL 90669 (Idaho Ct. App. Jan. 8, 2016), the court held that where the police extended a routine traffic stop (that lasted 19 minutes) by only approximately another two and a half minutes to conduct a dog sniff (or canine sweep) of the vehicle, such delay was unlawful and violated the driver's Fourth Amendment rights. The court therefore ruled that the illegal drugs subsequently seized from the vehicle after the drug dog alerted on the vehicle during the canine sweep had to be suppressed.

The Lawletter Vol 41 No 4

Brett Turner, Senior Attorney, National Legal Research Group

     A perennial problem in family law practice is arbitrary judges who dislike family law cases and impose strict time limits upon trials. Appellate courts are aware of this problem, and in extreme cases they have granted relief.

     In Kilnapp v. Kilnapp, 140 So. 3d 1051 (Fla. Dist. Ct. App. 2014), the trial judge set a three-hour limit on the hearing. After only an hour had passed, the trial court abruptly ended the hearing. The wife had presented only one witness, and the husband's counsel had not even finished with direct examination of the husband. The appellate court summarily reversed. "The trial court erred when it denied the husband his basic and fundamental right to due process, specifically the right to be heard." Id. at 1054.

     The husband did not have, of course, a right to be heard at unlimited length. For example, even if the husband honestly wanted an entire week of testimony, the trial court had discretion to impose a reasonable time limit.

     But the time limit imposed in Kilnapp was unreasonable, in two different ways. First, a reasonable time limit should apply equally to both parties. In Kilnapp, the wife was able to present all of her evidence, while the husband was able to present only some of his.

The Lawletter Vol 41, No 3

John Stone, Senior Attorney, National Legal Research Group

     A federal civil rights statute, 42 U.S.C. § 1983, is most closely associated with providing a remedy for individuals whose federal constitutional rights have been violated by persons acting under color of state law. However, although they comprise a relatively small subset of § 1983 cases, claims under § 1983 can, under certain circumstances, be based upon violations of federal rights derived from federal statutes, not from the U.S. Constitution.

     In a recent example of such a claim, a voter in Puerto Rico brought an action challenging a Puerto Rico statute that struck her and more than 300,000 other voters from a voter-registration roll because they did not vote in the prior general election. The U.S. District Court for the District of Puerto Rico issued injunctive and declaratory relief barring the Puerto Rico State Elections Commission ("SEC") from removing otherwise eligible voters from an active election registry unless the requirements of the federal Help America Vote Act ("HAVA") were met. Colón-Marrero v. Conty-Perez, No. CIV. 12-1749CCC, 2015 WL 3508142 (D.P.R. signed June 4, 2015). The President of the SEC appealed, and the First Circuit Court of Appeals affirmed the lower court. Colón-Marrero v. Velez, No. 15-1356, 2016 WL 386428 (1st Cir. Feb. 1, 2016).