The Lawletter Vol 40 No 12

Mark Rieber, Senior Attorney,  National Legal Research Group

     Two recent opinions in Arizona have come to different conclusions about the significance of the smell of marijuana in the determination of probable cause in light of the passage of the Arizona Medical Marijuana Act ("AMMA"), albeit in very different factual situations. In State v. Sisco, 359 P.3d 1 (Ariz. Ct. App. 2015) the court held that with the passage of the AMMA, the mere scent of marijuana coming from a warehouse, standing alone, was insufficient to provide probable cause for the issuance of a search warrant to search the warehouse. The court observed that its holding accorded "with well-reasoned jurisprudence from several other jurisdictions." Id. at 8, ¶ 29 (citing cases).

The Lawletter Vol 40 No 11

Paul Ferrer—Senior Attorney, National Legal Research Group

     Courts often give voice to the black-letter principle that a so-called "agreement to agree, where [material] terms are left to future negotiations, is unenforceable." In re Estate of Wyman, 8 N.Y.S.3d 493, 494 (App. Div. 2015). Some courts have concluded that an agreement to negotiate at a later date is an unenforceable agreement to agree. See, e.g., 77 Constr. Co. v. UXB Int'l, Inc., No. 7:13-CV-340, 2015 WL 926036, at *4 (W.D. Va. Mar. 4, 2015). But other courts have distinguished unenforceable agreements to agree from valid agreements to negotiate in good faith. See, e.g., Copeland v. Baskin Robbins, U.S.A., 117 Cal. Rptr. 2d 875 (Ct. App. 2002).

     In that case, Copeland negotiated with Baskin Robbins to buy an ice cream manufacturing plant. The purchase transaction was contingent on Baskin Robbins's agreeing to a "copacking" arrangement, by which Baskin Robbins would agree to buy the ice cream that Copeland manufactured at the plant. After several months of negotiations, Baskin Robbins sent Copeland a letter indicating that it would (1) sell Copeland the plant for $1.3 million, and (2) buy the ice cream manufactured at the plant for three years, "subject to a separate co-packing agreement and negotiated pricing." Id. at 878. Copeland indicated his agreement, after which the parties continued negotiating over the terms of the copacking agreement. Two months later, Baskin Robbins broke off the negotiations because due to recent business decisions, the copacking arrangement was no longer in alignment with its strategy. Copeland sued for breach of contract, but the trial court granted summary judgment in favor of Baskin Robbins because the essential terms of the copacking deal were never agreed to.

The Lawletter Vol 40 No 11

Brad Pettit—Senior Attorney, National Legal Research Group

     The Supreme Court of Mississippi recently addressed the issue of the enforceability of a renewal provision in a land lease agreement that left for future negotiation matters such as the renewal period, the rental amount, and increases in rent. The court held that the provision was unenforceable. Intrepid, Inc. v. Bennett, No. 2014-CA-00999-SCT, 2015 WL 5158397 (Miss. Sept. 3, 2015) (not yet released for publication). In ruling that the renewal clause in the parties' lease was not enforceable, the Intrepid court reasoned that since "the rental amount in a lease contract is an essential and basic requirement," the parties' failure to set forth a "definite method to determine the rent upon renewal" was fatal to the enforceability of the renewal clause in their lease agreement. Id. at *3. The court noted that "[t]he [lease] option, by its very terms, required that rent 'shall be renegotiated,' and its uncertain formula for determining the amount of increase made this task impossible." Id.

The Lawletter Vol 40 No 11

John Stone—Senior Attorney, National Legal Research Group

     A state must release a person who is involuntarily committed if the grounds for his commitment no longer exist. See O'Connor v. Donaldson, 422 U.S. 563, 574-75 (1975); cf. Jackson v. Indiana, 406 U.S. 715, 738 (1972) ("[D]ue process requires that the nature and duration of commitment bear some reasonable relation to the purpose for which the individual is committed."). If the requirement to release the committed when they deserve to be let out is to have any meaning, a state must also periodically review whether the grounds for commitment are still met. Otherwise, a state could circumvent the timely release requirement by simply refusing to ever consider the continued propriety of commitment. To effectuate that requirement, then, the state must undertake some form of periodic review. See Parham v. J.R., 442 U.S. 584, 607 (1979).

     Periodic review of continuing involuntary commitments need not consist of an adversarial proceeding involving a judge or even an administrator. Nonetheless, the person charged with periodically reviewing continuing involuntary commitments must be required to consider the propriety of ongoing commitment. That person must also be authorized to order a release if the criteria for commitment are no longer met. See id. ("It is necessary that the decisionmaker have the authority to refuse to admit any child who does not satisfy the medical standards for admission.").

The Lawletter Vol 40 No 11

Alistair Edwards—Senior Attorney, National Legal Research Group

     Does a party buying mineral rights have to disclose to the vendor before the sale that it already has a deal in place to sell the mineral rights to a third party for a much higher price? In McCarthy v. Evolution Petroleum Corp., 2014-2607 (La. 10/14/15), 2015 WL 5972515, the court recently considered the novel issue of whether a mineral lessee who had purchased the lessor's mineral rights was liable to the lessor under a fraud-by-silence claim when the lessee failed to disclose to the lessor at the time of the purchase that it had already negotiated the resale of the rights to a third party for a significantly higher price.

     In considering this issue, the court pointed out the well-established rule (codified by Louisiana statute) that "[a] mineral lessee is not under a fiduciary obligation to his lessor, but he is bound to perform the contract in good faith and to develop and operate the property leased as a reasonably prudent operator for the mutual benefit of himself and his lessor." La. Rev. Stat. Ann. § 31:122. This language, which focuses on mineral development operations, not the selling of mineral rights, did not, according to the court, impose on the lessee/purchaser a duty to disclose to the lessor/vendor that the lessee already had a deal in place to resell the mineral rights to a third party for a much higher price.

The Lawletter Vol 40 No 11

Anne Hemenway—Senior Attorney, National Legal Research Group

     There are a variety of reasons why a federal bankruptcy case may be reopened after the debtor has been discharged and the case closed. A debtor may discover a claim, not known at the time the case was pending, and seek to reopen the case to discharge the claim. More typically, a Chapter 7 trustee may seek to reopen a case after discovering potential bankruptcy estate assets that the debtor failed to schedule. The party seeking to reopen may find intense challenges to the motion to reopen, because the reopening can result in a major redistribution of assets. Under the Bankruptcy Code, the bankruptcy court has broad discretionary authority to reopen a case "to administer assets, to accord relief to the debtor, or for other cause." 11 U.S.C. § 350(b).

     Recently, in In re Ludvigsen, BAP No. MB 14-039, Bankr. No. 13-12232-WCH, 2015 WL 3733193 (B.A.P. 1st Cir. Jan. 16, 2015) (not for publication), the First Circuit Appellate Panel stated that a bankruptcy court properly exercises its discretionary authority to reopen a closed bankruptcy case when it does so to determine a substantive dispute on its merits, but does not exercise proper discretionary authority when only technical defects with the closed case are at issue. Further, when determining whether to exercise its discretionary authority, the court should look at each § 350(b) motion on a fact-by-fact basis. Id. at *4 (citing In re Dalezios, 507 B.R. 54, 58 (Bankr. D. Mass. 2014).

The Lawletter Vol 40 No 10

Matt McDavitt, Senior Attorney, National Legal Research Group

     It is well settled under workers' compensation law nationally that, generally, worker injuries occurring coming to, or going from, work are not compensable in nature. However, an important exception to this rule exists regarding accidents in which workers are traveling in employer-supplied vehicles, where the worker is off duty but remains on call. For example, given that city police departments receive a benefit by having their police officers on call for duty at a moment's notice while driving their police cruisers, so long as the travel has some relation to employment, injuries received during such travel are compensable.

[W]e are satisfied that the City enjoyed sufficient benefits from Ms. Ross's participation in the take-a-car-home program to affirm the Commission's determination of eligibility. The City does not dispute the Commission's conclusion that the City benefitted from the program by having more officers available for immediate response, from better care of patrol cars, and from increased police visibility. Officers with take-home cars were prepared to respond to emergency calls at any time. These officers always had at hand those items required to be kept in the take-home patrol cars, including their service gun, police radio, identification, flashlight, ticket book, report forms, and flares.

The Lawletter Vol 40 No 10

Fred Shackelford, Senior Attorney, National Legal Research Group

     Can damages for emotional distress be recovered in a nuisance claim in the absence of physical injury? That was one of three issues of first impression that were recently addressed by the Nevada Supreme Court. In Land Baron Investments, Inc. v. Bonnie Springs Family LP, 356 P.3d 511 (Nev. 2015), a purchaser (Land Baron) contracted to buy land on the outskirts of Las Vegas. The land was largely undeveloped, and the buyer intended to construct a subdivision there. Land Baron conducted no due diligence to investigate the availability of water and access rights, and these issues were not addressed in the contract.

     Before the closing occurred, it became apparent that Land Baron would be unable to acquire sufficient water and access rights for the proposed project. Land Baron stopped making payments to extend the escrow period, thereby breaching the contract. Land Baron then filed a complaint with the Clark County Commissioner's office, alleging that there were multiple code violations on the property. The Commissioner and other state and local authorities conducted a large-scale investigation on the premises at a time when guests and children were present.

The Lawletter Vol 40 No 10

Dora Vivaz—Senior Attorney, National Legal Research Group

      The intracorporate conspiracy doctrine was created to shield corporations and their employees from liability for routine, collaborative business decisions that are later alleged to be discriminatory. E.g., Tabb v. District of Columbia, 477 F. Supp. 2d 185 (D.D.C. 2007). Although the doctrine was initially crafted in the context of the Sherman Act, the courts have extended its reach to many other contexts, including claims brought under civil rights and other antidiscrimination laws. See, e.g., Blades v. Countrywide Home Loans, Inc., No. CIVA1:06CV1000LG-JMR, 2007 WL 2746678 (S.D. Miss. Sept. 18, 2007) (available on WL and Pacer). The courts have not necessarily agreed on just how far the doctrine should be extended, however. See id. (and cases cited).

      In a recent case, for example, the federal district court noted that while the doctrine applies in the Sixth Circuit to conspiracy claims under 42 U.S.C. § 1985, it is unclear whether it also applies to claims under 42 U.S.C. § 1983. See Engle v. City of Cuyahoga Falls, No. 5:14-CV-1161, 2015 WL 3852143 (N.D. Ohio June 22, 2015). In fact, it appears that the district courts within the Sixth Circuit continue to disagree on whether the doctrine should apply to § 1983 cases. Id.

The Lawletter Vol 40 No 9

Suzanne Bailey, Senior Attorney, National Legal Research Group

     Whether you believe that quarterback Tom Brady was aware that the New England Patriots were using allegedly deflated footballs during the January 18, 2015 AFC Championship Game between the Patriots and the Indianapolis Colts or whether you are unsure what sport the Patriots and Colts play or whether they play the same sport, the recent decision by U.S. District Judge Richard M. Berman in National Football League Management Council v. National Football League Players Ass'n, Nos. 15 Civ. 5916 RMB JCF, 15 Civ. 5982 RMB JCF, 2015 WL 5148739 (S.D.N.Y. signed Sept. 3, 2015), appeal filed, No. 15-2805 (2d Cir. Sept. 3, 2105), vacating the arbitration award in favor of the National Football League ("NFL"), provides a valuable primer on basic notice and hearing requirements under the Federal Arbitration Act ("FAA").

     As has been well publicized, shortly after the conclusion of the January 18, 2015 game, the NFL retained Theodore V. Wells Jr. and the law firm of Paul, Weiss, Rifkin, Wharton & Garrison ("Paul, Weiss"), to conduct an independent investigation—along with NFL Vice President and General Counsel Jeff Pash—into the use of underinflated balls. The source of authority for the investigation was the NFL Policy on Integrity of the Game and Enforcement of Competitive Rules ("Competitive Integrity Policy").