The Lawletter Vol 38 No 11

Alistair Edwards, Senior Attorney, National Legal Research Group

     Oil and gas leases often contain an antiassignment clause prohibiting the lessee from assigning the lease to a third party without the written consent of the lessor (or the lessor's heirs, executors, or assigns). For example, in Harding v. Viking International Resources Co., 2013‑Ohio‑5236, 2013 WL 6211985 (Ct. App.), the court examined an antiassignment clause in an oil and gas lease providing in pertinent part that "[t]he rights and responsibilities of the Lessee may not be assigned without the mutual agreement of the parties in writing." Id. at *4, ¶ 14.

     In the above case, the court held that the antiassignment clause was enforceable, and it affirmed the decision of the trial court voiding the assignments of the lease by the original lessee. The court reached this decision despite the uncontradicted fact that the plaintiffs/lessors (who were the successors to the original lessors) had accepted and cashed monthly royalty checks for approximately eight months before even objecting to the purported assignments. The court explained:

The Lawletter Vol 38 No 11

John Stone, Senior Attorney, National Legal Research Group

     A 17-year-old high school senior at a public high school in New York state was injured while participating in a "Competition Night" activity at the high school gymnasium. She was in a relay race known as the "human railroad," in which student teams line up at a starting point, the first member of each team lies down on the gym floor and stretches his or her hands overhead, and the second team member then straddles the first one and lies down in front of the prone participant, who then grabs and holds on to the feet of the second team member. This linking is
then continuously repeated by all of the members of the team until they eventually return to the starting point. The winner is the team that first returns all of its members back to the starting point.

     The plaintiff alleged that the student who was behind her "dove down too early" at one point in the race and made contact with the plaintiff's head, which then hit the floor. As a result, the plaintiff sustained a deviated septum. The defendant school district moved for summary judgment dismissing the complaint, contending, among other things, that under the doctrine of primary assumption of risk, the plaintiff had assumed the risk of her injury by voluntarily participating in a recreational activity. The trial court denied the motion, but the intermediate appellate court reversed. Shivers v. Elwood Union Free Sch. Dist., 971 N.Y.S.2d 568 (App. Div. 2013).

     To preserve some beneficial pursuits as against the prohibitive liability to which they would otherwise give rise, risks of athletic and recreational activities may be voluntarily assumed, thereby foreclosing negligence claims for injuries arising from the activities. Thus, the doctrine of primary assumption of risk provides that a voluntary participant in a sporting or recreational activity consents to those commonly appreciated risks that are inherent in, and arise out of, the nature of the sport generally and that flow from such participation. By voluntarily participating in the recreational human-railroad relay race activity during a school function, the student in Shivers was found to have assumed the risk of her injury, and her negligence claim against the school district was thus barred. The student had previously participated in the same relay race, and given the mechanics of the race, it was clear that a reasonable person who had observed or previously participated in such activity would have realized that it was, in the court's words, "fraught with risk for injury." Id. at 570.

     It was not necessary to the application of assumption of risk that the injured plaintiff have foreseen the exact manner in which her injury occurred, so long as she was aware of the otential for injury of the "mechanism" from which the injury resulted. Moreover, contrary to her contention, the plaintiff could not avoid the assumption-of-risk defense, because she did not raise a triable issue of fact as to the existence of a dangerous condition over and above the risks inherent in the human-railroad relay race.

The Lawletter Vol 39 No 10

Matt McDavitt, Senior Attorney, National Legal Research Group

     Nowadays, divorce and remarriage being not uncommon, the circumstance arises where people who remarry have children from the prior marriage. Sometimes the new spouse will formally adopt his or her partner's children, but sometimes, by design or neglect, no formal adoption is ever initiated. One question that can arise in such a situation is whether the nonadopted stepchildren qualify as legal "heirs" under the laws of intestacy: Consider the scenario in which the biological parent has predeceased the stepparent, who, having raised the nonadopted stepchildren in his or her home until majority, then dies without leaving a will.

     Currently, most states' intestacy statutes do not appear to grant nonadopted stepchildren the right to inherit as legal heirs, absent "equitable" adoption, wherein the adoption process was started but never finished for reasons outside the control of the adopting parent. The child of a spouse's former husband or wife (a stepchild) is not related by blood to the decedent, and so such children are generally not deemed to be intestate heirs of the stepparent, unless that stepparent actually adopted the stepchild during life.

[I]t is generally held that, if such children are taken into the family as constituent members thereof, and treated and fostered as children of the whole blood, they will be considered members of the family and entitled to such support. In such case, however, the rule is not to be interpreted as extending the right of inheritance to those entitled to such
support.

The Lawletter Vol 38 No 10

John Buckley, Senior Attorney, National Legal Research Group

     A bill (S. 815) that would provide employment discrimination protections to individuals based on their sexual orientation and gender identity passed the U.S. Senate on November 7, 2013 by a 64-32 vote. Called the Employment Non-Discrimination Act of 2013 ("ENDA"), the bill would extend federal employment laws, which currently prevent employment discrimination on the basis of race, religion, gender, national origin, age, and disability, to cover sexual orientation and gender identity as well. The House introduced an inclusive version of ENDA (H.R. 1755) on April 25, 2013 and referred it to the Subcommittee on Workforce Protections. The bill has 200 cosponsors, but it is unlikely to be taken up by the full House in the foreseeable future. Boehner Sees 'No Basis or Need' for ENDA. ENDA would prohibit employers, employment agencies, labor organizations, and joint labor-management committees from firing, refusing to hire, or discriminating against those employed or seeking employment on the basis of their actual or perceived sexual orientation or gender identity. "Sexual orientation" is defined as homosexuality, heterosexuality, or bisexuality, and "gender identity" is defined as the gender-related identity, appearance, or mannerisms or other gender-related characteristics of an individual, with or without regard to the individual's designated sex at birth.

     Regardless of the ultimate outcome of ENDA, counsel should be aware that 21 states have already amended their civil rights and fair employment practices statutes to prohibit discrimination on the basis of sexual orientation. Seventeen of these states include gender identity within the prohibition, with a few states adding civil union or domestic partnership satus to the protected class.

     Oregon's legislation is representative. Adopted in 2008, it prohibits discrimination based on sexual orientation and/or gender identity and provides legal recognition of domestic partnerships between same-sex couples. More specifically, it bans lesbian, gay, bisexual, and transgender discrimination in the workplace, housing, and public accommodations. Employers, employment agencies, and labor organizations are prohibited from discriminating in terms of employment, compensation, membership, and job referrals, unless in the employment or job referrals there is a bona fide occupational qualification reasonably necessary to the normal operation of an employer's business. The law makes exceptions regarding churches and other religious institutions in certain situations, such as employment actions based on a bona fide religious belief about sexual orientation; or employment positions closely connected to the primary purpose of the church or religious institution and where there is no connection to a nonreligious/nonchurch commercial or business activity; or employment directly related to the operation of the church or religious institution, such as clergy, religious instructors, and support staff. The law does not prohibit an employer from enforcing an otherwise valid dress code or policy, as long as the employer provides, on a case-by-case basis, reasonable accommodation of an individual based on the health and safety needs of the individual.

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).

The Lawletter Vol 38 No 9

Suzanne Bailey, Senior Attorney, National Legal Research Group

     The U.S. Supreme Court's recent denial of the Commonwealth of Virginia's petition for writ of certiorari in MacDonald v. Moose, 710 F.3d 154 (4th Cir.), cert. denied, 82 U.S.L.W. 3029 (U.S. Oct. 7, 2013), reminds us that 10 years after the landmark decision in Lawrence v. Texas, 539 U.S. 558 (2003), holding that it is a violation of the Due Process Clause to prohibit two individuals of the same sex from engaging in consensual sexual conduct, courts are still grappling with the nature of what consensual sexual activity is protected from criminal prosecution.  While Lawrence specifically addressed consensual homosexual sexual conduct, the Court's adoption of language from Justice Stevens's dissent in Bowers v. Hardwick, 478 U.S. 186 (1986), clarified the sweeping nature of the Court's ruling:

Our prior cases make two propositions abundantly clear. First, the fact that the governing majority in a State has traditionally viewed a particular practice as immoral is not a sufficient reason for upholding a law prohibiting the practice; neither history nor tradition could save a law prohibiting miscegenation from constitutional attack. Second, individual decisions by married persons, concerning the intimacies of their physical relationship, even when not intended to produce offspring, are a form of "liberty" protected by the Due Process Clause of the Fourteenth Amendment. Moreover, this protection extends to intimate choices by unmarried as well as married persons.

Lawrence, 539 U.S. at 577-78 (quoting Bowers, 478 U.S. at 216 (Stevens, J., dissenting)).

     The above-quoted excerpt from Lawrence paved the way for decisions invalidating state statutes criminalizing sexual intercourse between unmarried adult heterosexuals.  See, e.g., Martin v. Ziherl, 607 S.E.2d 367 (Va. 2005) (because Virginia fornication statute was an unconstitutional due process violation of an unmarried individual's liberty interest in engaging in private intimate conduct and maintaining personal relationships without governmental interference, the rule precluding a party consenting to, and participating in, an illegal act from recovering damages from another participant did not apply to bar the plaintiff's claims against the defendant for injuries arising from herpes allegedly contracted as a result of sexual intercourse).  Likewise, Lawrence has been relied upon to invalidate statutes prohibiting consensual acts of sodomy between heterosexual adults.  See MacDonald, 710 F.3d 154.

     However, the Lawrence decision was not without its limits.  The Court observed:  "The present case does not involve minors. It does not involve persons who might be injured or coerced or who are situated in relationships where consent might not easily be refused. It does not involve public conduct or prostitution."  539 U.S. at 578.  Accordingly, courts have refused to find that Lawrence forbids prosecution for incest, see, e.g., People v. McEvoy, 154 Cal. Rptr. 3d 914 (Ct. App. 2013), even if the alleged victim is a consenting adult, see, e.g., Lowe v. Swanson, 663 F.3d 258 (6th Cir. 2011).  Similarly, courts have not found Lawrence to be a bar to prosecutions for solicitation to commit sexual acts in a public place, see, e.g., Singson v. Commonwealth, 621 S.E.2d 682 (Va. Ct. App. 2005), or for prostitution, see, e.g., State v. Romano, 155 P.3d 1102 (Haw. 2007). Lawrence did not render unconstitutional a Kansas statute making sexual relations between a teacher and a student a crime, even though the
student, who was still in school, was 18 years old at the time and had consented to the sexual conduct. State v. Edwards, 288 P.3d 494 (Kan. Ct. App. 2012); see also State v. Fischer, 199 P.3d 663 (Ariz. Ct. App. 2008) (affirming conviction of defendant for sexual conduct with a minor and conspiracy to commit sexual conduct with a minor and rejecting defense argument that defendant had fundamental right under Lawrence to engage in sexual relations with his "celestial wife" or one of his plural wives).

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.