The Lawletter Vol 40 No 2

Doug Plank, Senior Attorney, National Legal Research Group

      In a recent case from the U.S. Court of Appeals for the Second Circuit, the court held that a search warrant obtained to search the defendant's residence for evidence of child pornography was not supported by probable cause, because the information supplied by the affiant was stale. United States v. Raymonda, 780 F.3d 105 (2d Cir. 2015). In seeking the warrant, the affiant referenced a single incident when someone had accessed thumbnail images of child pornography on the Internet from the defendant's Internet protocol address, which had occurred nine months earlier. The affidavit also included boilerplate language about how persons who look at and collect images of child pornography generally hold on to such images indefinitely. The court concluded that the evidence was equally consistent with an innocent user inadvertently stumbling upon a child pornography website, being horrified at what he saw, and promptly closing the window, and it held that absent any facts to show that the defendant was a collector of child pornography likely to hoard pornographic files, a single incident of access did not create a fair probability that child pornography would still be found on the defendant's computer months later.

The Lawletter Vol 40 No 1

Anne Hemenway, Senior Attorney, National Legal Research Group

     The Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "Credit CARD Act of 2009"), Pub. L. No. 111-24, 123 Stat. 1734, H.R. 627 (2009), amended the Federal Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., by specifically requiring banks to make additional disclosures to consumers regarding their credit cards. These included disclosures prior to renewal of a credit card, 15 U.S.C. § 1637(d)(1), and disclosures when the creditor makes changes to the terms and notices, as well as advertising disclosures. Additional consumer regulations were later promulgated under the Credit CARD Act of 2009. In August 2010, regulations became effective that provided that if a card issuer prospectively changes the annual percentage rate ("APR") on the card based on certain factors, the card issuer must also apply the same factors to determine whether a reduction in the APR is proper. See 12 C.F.R. §§ 226.52(b), 226.59. Importantly, these regulations also require that a card issuer can assess penalty fees for late payments only in such a way as represents a "reasonable proportion of the total costs incurred by the card issuer." Id. § 226.52(b)(1)(i).

The Lawletter Vol 40 No 1

Jeremy Taylor, Senior Attorney, National Legal Research Group

     The Virginia Supreme Court recently addressed the issue of the admissibility of expert testimony in a products liability case and ruled such testimony inadmissible under the circumstances presented. See Hyundai Motor Co. v. Duncan, ___ Va. ___, 766 S.E.2d 893 (2015). In Duncan, a driver was severely injured when he lost control of his car and ultimately struck a tree. Although the vehicle was equipped with a side airbag system, the airbag did not deploy. The circuit court entered judgment on a jury verdict for the plaintiff guardian/conservator.

The Lawletter Vol 40 No 1

Suzanne Bailey, Senior Attorney, National Legal Research Group

     A recent en banc decision from the Supreme Court of Washington serves as a reminder of the bedrock upon which our criminal justice system stands, that is, that every defendant is entitled to a presumption of innocence, which is overcome only when the State proves guilt beyond a reasonable doubt as determined by an impartial jury based on evidence presented at a fair trial. In State v. Walker, 341 P.3d 976 (Wash. 2015) (en banc), the defendant was charged as an accomplice to aggravated first-degree premeditated murder, first-degree felony murder, first-degree assault, first-degree robbery, first-degree solicitation to commit robbery, and first-degree conspiracy to commit robbery in connection with an armored truck robbery at the Walmart where the defendant's live-in girlfriend was employed. The defendant was convicted of all charges, and he subsequently appealed, claiming, inter alia, that he had been denied a fair trial due to prosecutorial misconduct in closing argument.

The Lawletter Vol 40 No 1

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 Lawletter Vol 40 No 1

Steve Friedman, Senior Attorney, National Legal Research Group

     The federal Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601–1677, was enacted to ensure "a meaningful disclosure of credit terms" to give consumers the opportunity to make informed credit decisions. Id. § 1601(a). In relevant part, TILA grants consumers a right to rescission, no questions asked, under certain circumstances. See id. § 1635(a); 12 C.F.R. § 226.15(a)(3). Once a consumer validly exercises the right to rescind, the entire transaction is voided without any liability or encumbrances. See 15 U.S.C. § 1635(b); 12 C.F.R. § 226.15(d)(1).

     To effectively rescind, however, consumers must timely do so. Specifically, consumers must notify the lender prior to the later of "midnight of the third business day following the consummation of the transaction or the delivery of the [requisite disclosures under the Act]." 15 U.S.C. § 1635(a). Although the second alternative seems open-ended, the Act further states that in no event shall the right of rescission extend beyond "three years after the date of consummation of the transaction or upon the sale of the property, whichever comes first." Id. § 1635(f). But what exactly must be exercised no later than three years after the transaction—the notice of intent to rescind, or the lawsuit seeking rescission? Abrogating the law of the Eighth Circuit Court of Appeals and applying the plain language of TILA, the U.S. Supreme Court held that it was the former. See Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015), rev'g 729 F.3d 1092 (8th Cir. 2013).

The Lawletter Vol 39 No 12

Brett Turner, Senior Attorney, National Legal Research Group

     No field of family law is as diverse or controversial as that of support payments made by one spouse for the support of the other after a marriage has ended in divorce. The law in this area is so divided that the states cannot even agree on the name of the payment. Some states use the traditional name, "alimony." Other states follow the lead of the Uniform Marriage and Divorce Act and call the payment "maintenance." Still other states call the payment "spousal support."

     Disagreement over the label is matched by disagreement over the purpose of the payments. Most states recognize several different types of spousal support. Traditional support is awarded after a long-term marriage so that the less wealthy spouse does not suffer a drop in living standard. Rehabilitative support is awarded when it will help the less wealthy spouse to develop a higher earning capacity. It differs subtly from time-limited support, which is awarded when the marriage was not long enough to justify a traditional support award. Reimbursement support is awarded when one spouse made contributions during the marriage to the other's earning capacity, such as by supporting a spouse through graduate or professional school. Some states even recognize transitional support to bridge the gaps between other forms of support.

The Lawletter Vol 39 No 12

Jim Witt, Senior Attorney, National Legal Research Group

     A real property tax assessment dispute involving a large parcel of land in Ulster County, New York, 75 miles north of Manhattan in the Hudson Valley, has recently been settled. The case is of interest for two reasons: (1) It brings into focus the issue of assessed value as based on the uniqueness of the property versus assessed value based on comparable properties in the area; and (2) the property is owned by a Trust on behalf of the actor Robert De Niro and his family.

     The property, well over 50 acres, is located in the town of Gardiner, New York, and has frontage on the Wallkill River (a tributary of the Hudson). The property was acquired in 1997 for $1.5 million, when its main structure was an 18th-century farmhouse, supplemented later by barns. Under De Niro's ownership, the house was renovated to include six bedrooms and seven bathrooms; one barn was converted into a 14,000-square-foot recreation center, containing a game room, gym, basketball court, swimming pool, boxing ring, and small film studio. Another barn was converted into a workshop and another into an office. Also there were $1 million in landscaping expenses to block any view of the property from the road.

The Lawletter Vol 39 No 12

Mark Rieber, Senior Attorney, National Legal Research Group

      Typically, the courts find that the retroactive application of sex offender registration statutes does not violate the Ex Post Facto Clause, because such statutes are found to be nonpunitive. See, e.g., Smith v. Doe, 538 U.S. 84 (2003). Recently, however, the Supreme Judicial Court of Maine held that particular amended provisions of the Maine Sex Offender Registration and Notification Act ("SORNA"), as applied to Doe, the registrant in the case before it, Doe v. Anderson, 2015 ME 3, 2015 WL 149030 (not yet released for publication), were punitive and that their retroactive application to Doe violated the bill of attainder clause in the state constitution. The amended statutory provisions at issue in Doe were a retroactively added list of offenses to which SORNA applied, including the offense for which the registrant had been convicted, and an amendment that changed the triggering event for a duty to register: That duty no longer required a court determination but only a simple notification from the court or one of the named agencies.

The Lawletter Vol 39 No 12

Tim Snider, Senior Attorney, National Legal Research Group

     Typically, the circumstances under which a minority shareholder in a corporation may compel appraisal and purchase of his shares by the corporation is made explicit by statute. Occasionally, however, a case tests the outer boundaries of a shareholder's appraisal rights. In Fisher v. Tails, Inc., Record No. 140444, 2015 WL 103679 (Va. Jan. 8, 2015), Tails was organized as a Virginia corporation to operate as a regional franchisee of RE/MAX LLC, a Delaware limited liability company ("LLC"). On August 9, 2013, Buena Suerte Holdings, Inc., another affiliate of RE/MAX, and Tails signed a "Plan of Reorganization and Purchase Agreement" in which Tails would be sold to Buena Suerte in four steps. First, Tails would become a Delaware corporation, changing its state of incorporation from Virginia to Delaware pursuant to Virginia Code § 13.1-722.2 and Delaware Code title 8, § 265. Second, Tails would merge with and into a newly formed Delaware LLC, Tails, LLC. Tails, LLC, would be a subsidiary of a newly formed holding company, Tails Holdco, Inc. (Holdco), and Holdco would hold all of Tails, LLC's membership interests. Third, Holdco would cause Tails, LLC, to amend and restate its LLC agreement to remove certain LLC provisions. Finally, Holdco would sell Buena Suerte all of its membership interests in Tails, LLC.