url stringlengths 53 59 | text stringlengths 0 2.76M | downloaded_timestamp stringclasses 1 value | created_timestamp stringlengths 10 10 |
|---|---|---|---|
https://www.courtlistener.com/api/rest/v3/opinions/870173/ | ***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
Electronically Filed
Supreme Court
SCAP-30686
15-MAR-2013
08:36 AM
IN THE SUPREME COURT OF THE STATE OF HAWAI#I
--—o0o---
________________________________________________________________
EASTERN SAVINGS BANK, FSB,
Respondent/Plaintiff-Appellee,
vs.
EDUARDSON ESTEBAN and EMALYN P. GABRIEL-ESTEBAN,
Petitioners/Defendants-Appellants.
________________________________________________________________
SCAP-30686
APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT
(ICA NO. 30686; CIV. NO. 09-1-0022)
March 15, 2013
RECKTENWALD, C.J., NAKAYAMA, ACOBA, AND MCKENNA, JJ.,
AND CIRCUIT JUDGE LEE, IN PLACE OF DUFFY, J., RECUSED
OPINION OF THE COURT BY MCKENNA, J.
I. Introduction
Defendants-Appellants Eduardson Esteban and Emalyn P.
Gabriel-Esteban (“the Estebans”), borrowers and mortgagors under
a residential mortgage loan, appeal the Circuit Court of the
Fifth Circuit’s (“circuit court”) judgment confirming the
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
foreclosure sale of real property to Plaintiff-Appellee Eastern
Savings Bank, FSB (“Eastern”).1 This court accepted a
discretionary transfer of the case.
The issue presented is whether Hawai#i res judicata
principles prohibit a debtor from asserting federal Truth in
Lending Act (“TILA”) rescission rights after a foreclosure
judgment has become final, even if TILA’s three-year time limit
for rescission has not expired.
For the reasons discussed below, we answer in the
affirmative. Therefore, we affirm the judgment of the circuit
court confirming sale of the foreclosed property to Eastern,
granting a writ of possession, and entering a deficiency judgment
against the Estebans.
II. Background
This case arises out of a foreclosure2 on a mortgage on
property located on Kaua#i (“the Property”), granted by the
Estebans to Eastern as security for a $489,000 loan obtained on
August 15, 2007. The Estebans defaulted on the loan and, on
1
The Honorable Randal Valenciano presided.
2
“The term ‘foreclosure’ is defined as a legal proceeding to
terminate a mortgagor’s interest in property, instituted by the mortgagee
either to gain title or to force a sale in order to satisfy the unpaid debt
secured by the property.” 55 Am. Jur. 2d Mortgages § 573.
2
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
January 27, 2009, Eastern filed a state court action to foreclose
the mortgage.
Although properly served, the Estebans failed to appear
before the court and the clerk of the court entered their
default. Eastern, thereafter, moved for summary judgment,
interlocutory decree of foreclosure, and order of sale.
On April 24, 2009, the court entered judgment in favor
of Eastern and against the Estebans, foreclosing on the mortgage
(“Foreclosure Judgment”). The Estebans did not appeal the
Foreclosure Judgment. On November 17, 2009, the foreclosure
commissioner held a public auction to sell the Property. Eastern
submitted the only bid, for $420,000. On December 14, 2009,
Eastern filed a Motion for Confirmation of Sale, Writ of
Possession, and Deficiency Judgment (“Motion for Confirmation of
Sale”). The motion was scheduled for hearing on April 22, 2010.
On April 22, 2010, the Estebans mailed Eastern a letter
stating they were exercising their alleged right to rescind the
residential mortgage transaction “based on numerous federal
Truth-in-Lending Act violations, including in part (1) the
failure to deliver to each of them at closing any copies of
notices of their right to cancel, [] (2) instead funding their
loan based upon an unlawfully inadequate and contrived so-called
hardship waiver of their right to cancel, and (3) the failure to
3
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
provide them with accurate good faith disclosures.” Four hours
before the confirmation hearing, the Estebans filed a complaint
against Eastern in the United States District Court for the
District of Hawai#i (Civ. No. 10-00234-HG-LEK), seeking a
declaratory judgment that the promissory note and mortgage had
been timely cancelled pursuant to TILA prior to any sale or
dispositive state court judgment.
On May 3, 2010, the Estebans submitted a brief opposing
the Motion for Confirmation of Sale and urging the circuit court
to await disposition of the federal case before confirming the
sale. They argued that their federal TILA case against Eastern
was not barred by res judicata principles and that they had
timely exercised their rescission rights by filing their federal
claim prior to the expiration of TILA’s three-year deadline and
before entry of the state court’s final confirmation of sale.3
The circuit court took judicial notice of the Estebans’
pending federal case, but declined to stay confirmation of the
foreclosure sale in the meantime. On May 20, 2010, the circuit
court held a hearing on the Motion for Confirmation of Sale.
3
In opposing confirmation of sale, the Estebans argued that “[t]he
question before this court . . . is . . . to determine whether in fact the
Estebans’ exercise of such consumer rights has been timely to the point where
this Court must await the judgment thereon of the United States District Court
before confirming the pending self-sale to [Eastern].”
4
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
Citing Albano v. Norwest Financial Hawai#i, Inc., 24
F.3d 1061, 1064 (9th Cir. 2001), Eastern argued that a judgment
of foreclosure had been entered on April 24, 2009, the Estebans
had not appealed that judgment and, therefore, the Estebans’ TILA
claim was barred by res judicata. The Estebans, on the other
hand, argued that the state court was not bound by the Ninth
Circuit’s interpretation of Hawai#i law in Albano and maintained
that a borrower retains the right to rescind a mortgage prior to
confirmation of sale despite a judgment of foreclosure. They
contended that Albano was unpersuasive because the Ninth
Circuit’s interpretation of Hawai#i res judicata law erroneously
relied on Pacific Concrete Federal Credit Union v. Kauanoe, 62
Haw. 334, 614 P.3d 936 (1980), a case that did not involve a
foreclosure action. In addition, they claimed that Albano
conflicted with federal decisions from other states. Finally,
they suggested that Albano should not be followed because it
misread Hawai#i res judicata law.
The circuit court acknowledged that Albano was not
binding on state courts but agreed with the Ninth Circuit’s
analysis of Hawai#i law and concluded that the Estebans’ pending
TILA case did not bar confirmation of the sale of the Property.
On July 15, 2010, the court entered a judgment confirming sale of
5
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
the Property to Eastern, granting a writ of possession, and
entering a deficiency judgment against the Estebans.4
The Estebans filed a notice of appeal on August 16,
2010. They posed the following question on appeal:
As a matter of Hawaii res judicata law, during judicial
foreclosures pending sale confirmation, does a Hawaii
borrower lose his or her federal Truth-in-Lending Act right
to rescind a mortgage loan refinancing transaction within
three years of loan consummation where there otherwise may
exist TILA violations and a timely notice of cancellation is
sent to lenders up to and until final judicial confirmation,
simply because of a prior entry of a decree of foreclosure,
whether appealed or not, and simply because of the
occurrence of a prior nonbinding auction sale?
This court accepted a discretionary transfer of the
appeal pursuant to HRS § 602-58(b)(1).
4
One week later, on July 22, 2010, the federal district court
granted Eastern’s motion to dismiss the Estebans’ TILA case and denied the
Estebans’ countermotion to certify a legal question to the Hawai #i Supreme
Court. Citing Pacific Concrete, 62 Haw. at 341, 614 P.2d at 940, and Albano,
244 F.3d at 1064, the district court held that there was clear, controlling
precedent as to Hawai#i law. The court concluded that the Estebans’ TILA
rescission claim arose out of the same transaction as the state foreclosure
action, the validity of the mortgage was decided in the prior foreclosure
proceeding, and the TILA claim was therefore barred by the state court’s final
judgment of foreclosure. The court explained, “As was true in Albano, the
[Estebans] here could have raised their TILA claim in the state foreclosure
proceedings. Doing so would have provided [them] with an affirmative defense
and precluded foreclosure if [their] claims were found to be meritorious.
Plaintiffs failed to raise the TILA claim.”
In addressing an alternative argument by Eastern, the court noted
that the Estebans were essentially appealing the state Foreclosure Judgment
through their TILA rescission claim. Because the Rooker-Feldman doctrine,
enunciated in Rooker v. Fid. Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed.
362 (1923), and D.C. Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct.
1303, 75 L.Ed.2d 206 (1983), deprives federal district courts of jurisdiction
to hear appeals from state court judgments, the court concluded that the TILA
claim was barred.
The district court denied the Estebans’ counter-motion to certify
a legal question to this court and held that the case did not present a novel
issue for which there was no clear, controlling precedent.
The Estebans did not contest or otherwise appeal the district
court’s order granting Eastern’s motion to dismiss and denying their counter-
motion to certify a legal question to this court.
6
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
III. Standard of Review
Application of res judicata is a question of law. See
Exotics Hawai#i-Kona, Inc. v. E.I. Dupont De Nemours & Co., 104
Hawai#i 358, 364, 90 P.3d 250, 256 (2004). Questions of law are
reviewed de novo under the right/wrong standard. Best Place,
Inc. v. Penn Am. Ins. Co., 82 Hawai#i 120, 123, 920 P.2d 334, 337
(1996).
IV. Discussion
The issue presented is whether Hawai#i res judicata
principles prohibit a debtor from asserting federal TILA
rescission rights5 after a Foreclosure Judgment has become final,
even if TILA’s three-year time limit for rescission has not
expired.
5
Rescission developed as an equitable remedy and has the effect of
cancelling, abrogating, or disaffirming a contract; it restores all parties to
their status quo positions prior to the agreement. Leslie v. Estate of
Tavares, 93 Hawai#i 1, 994 P.2d 1047 (2000). Over time, the term “rescission”
has been used to refer to a variety of remedies with different consequences:
Plainly stated, the remedy of rescission is an avoidance of
a transaction, the extinguishment of an agreement such that
in contemplation of law it never existed, even for the
purpose of being broken. In application, however, the term
rescission carries with it a confusion of vocabulary. The
meaning of rescission varies depending on what caused the
contract to end. For instance, if a contract ends because
of a party’s breach, damages are still owed. However, if a
contract is ended because of mistake, duress, or incapacity,
then only a right of restitution exists. If a contract ends
by mutual agreement, then the remedies available are shaped
by the terms of the agreement.
Bischoff v. Cook, 118 Hawai#i 154, 160, 185 P.3d 902, 908 (App. 2008)
(internal citations and quotation marks omitted). TILA rescission rights are
statutorily prescribed.
7
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
A. TILA Rescission Rights
TILA, as contained in Title I of the Consumer Credit
Protection Act, provides consumers with various protections “to
assure a meaningful disclosure of credit terms so that the
consumer will be able to compare more readily the various credit
terms available to him and avoid the uninformed use of credit,
and to protect the consumer against inaccurate and unfair credit
billing and credit card practices.” 15 U.S.C. § 1601(a).
One protection available to consumers under TILA is a
right of rescission in any consumer credit transaction in which a
security interest is acquired in property used as the principal
dwelling of the person to whom credit is extended; this “buyer’s
remorse” provision extends for three business days following
consummation of the transaction or delivery of the relevant
disclosures to the consumer.6 15 U.S.C. § 1635(a).
TILA requires that creditors clearly and conspicuously
disclose information regarding the right to rescind and provide
borrowers with appropriate forms to exercise this right. 15
U.S.C. § 1635(a). Where a creditor fails to make the required
6
Eastern also argued before the federal district court that the
Estebans had failed to state a TILA claim because the Property at issue was
not their principal dwelling. While the Estebans’ complaint in the federal
case stated that the Property was their principal dwelling, the attached loan
application stated the Property would be used for investment purposes and
their primary residence was on O#ahu. The federal district court found it
unnecessary to decide whether the Property was in fact the Estebans’ principal
dwelling. Based on our holding that res judicata prohibits the assertion of
TILA rescission rights, we likewise do not find it necessary to address this
issue.
8
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
disclosures under TILA, the act extends the borrower’s right to
rescind for three years after consummation of the subject
transaction.7 15 U.S.C. § 1635(f).
The Estebans’ attempt to rescind occurred within this
three-year time limit, but after a state court judgment
foreclosing on the subject Property. In order to determine
7
Regulation Z, issued by the Federal Reserve Board, implements
TILA’s requirements and describes the right of rescission as follows:
The consumer may exercise the right to rescind until
midnight of the third business day following the occurrence
described in paragraph (a)(1) of this section that gave rise
to the right of rescission, delivery of the notice required
by paragraph (b) of this section, or delivery of all
material disclosures, whichever occurs last. If the
required notice and material disclosures are not delivered,
the right to rescind shall expire 3 years after the
occurrence giving rise to the right of rescission, or upon
transfer of all of the consumer’s interest in the property,
or upon sale of the property, whichever occurs first. . . .
12 C.F.R. § 226.15(a)(3) (emphasis added).
This court previously described the contours of TILA’s
requirements and remedies in Hawaii Community Federal Credit Union v. Keka, 94
Hawai#i 213, 11 P.3d 1 (2000), where we explained:
[] TILA requires creditors to provide borrowers with
clear and accurate disclosures of terms dealing with things
like finance charges, annual percentage rates of interest,
and the borrower’s rights. Failure to satisfy TILA subjects
a lender to criminal penalties for noncompliance, . . . as
well as to statutory and actual damages traceable to a
lender’s failure to make the requisite disclosures . . . .
Going beyond these rights to damages, TILA also
authorizes a borrower whose loan is secured with his
principal dwelling, and who has been denied the requisite
disclosures, to rescind the loan transaction entirely, until
midnight of the third day following the consummation of the
transaction or the delivery of the information and
rescission forms required under this section together with a
statement containing the material disclosures required under
this subchapter, whichever is later. TILA provides,
however, that the borrower’s right of rescission shall
expire three years after the date of consummation of the
transaction or upon the sale of the property, whichever
occurs first, even if the required disclosures have never
been made. TILA gives a borrower no express permission to
assert the right of rescission as an affirmative defense
after the expiration of the 3-year period.
94 Hawai#i at 223, 11 P.3d at 11 (internal citations, quotation marks,
and brackets omitted).
9
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
whether the circuit court erred in confirming sale of the
Property, this court must determine whether Hawai#i res judicata
law barred the Estebans from asserting a rescission claim after
the circuit court’s Foreclosure Judgment became final.
B. Res Judicata Principles
Res judicata, or claim preclusion, and collateral
estoppel, or issue preclusion, are doctrines that limit a
litigant to one opportunity to litigate aspects of the case to
prevent inconsistent results and multiplicity of suits and to
promote finality and judicial economy. Dorrance v. Lee, 90
Hawai#i 143, 148-49, 976 P.2d 904, 909-10 (1999).8 Claim
preclusion and issue preclusion are, however, separate doctrines
that involve distinct questions of law. Claim preclusion
prohibits the parties or their privies from relitigating a
previously adjudicated cause of action; issue preclusion, by
contrast, prevents the parties or their privies from relitigating
any issue that was actually litigated and finally decided in the
earlier action. Bremer v. Weeks, 104 Hawai#i 43, 54, 85 P.3d
150, 161 (2004) (internal brackets, citations, emphases, and
quotation marks omitted).
This court explained the purposes of the res judicata
doctrine in Kauhane v. Acutron Co., Inc.:
8
At times, Hawai#i appellate cases may have conflated the two
doctrines. See R. Endo, Res Judicata and Collateral Estoppel in Hawaii: One
of These Things is Not Like The Other, 3 H AW . B.J. No. 13, 1 (1999).
10
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
According to the doctrine of res judicata, the judgment of
a court of competent jurisdiction is a bar to a new action in any
court between the same parties or their privies concerning the
same subject matter, and precludes the relitigation, not only of
the claims which were actually litigated in the first action, but
also of all grounds of claim . . . which might have been properly
litigated in the first action but were not litigated or decided.
The purpose of the doctrine of res judicata is to prevent a
multiplicity of suits and to provide a limit to litigation. It
serves to relieve parties of the cost and vexation of multiple
lawsuits, conserve judicial resources, and, by preventing
inconsistent decisions, encourage reliance on adjudication. The
res judicata doctrine thus furthers the interests of litigants,
the judicial system and society by bringing an end to litigation
where matters have already been tried and decided on the merits.
It is a rule of fundamental and substantial justice, of public
policy and private peace.
The doctrine therefore permits every litigant to have an
opportunity to try his case on the merits; but it also requires
that he be limited to one such opportunity. Unsatisfied litigants
have a remedy: they can appeal through available channels. But
they cannot, even if the first suit may appear to have been
decided wrongly, file new suits.
71 Haw. 458, 463-64, 795 P.2d 276, 278-79 (1990) (internal
brackets, citations, and quotation marks omitted).
We further explained in Bremer:
Claim preclusion . . . prohibits a party from relitigating a
previously adjudicated cause of action. Moreover, the judgment of
a court of competent jurisdiction is a bar to a new action in any
court between the same parties or their privies concerning the
same subject matter, and precludes the relitigation, not only of
the issues which were actually litigated in the first action, but
also of all grounds of claim and defense which might have been
properly litigated in the first action but were not litigated or
decided. The party asserting claim preclusion has the burden of
establishing that (1) there was a final judgment on the merits,
(2) both parties are the same or in privity with the parties in
the original suit, and (3) the claim decided in the original suit
is identical with the one presented in the action in question.
104 Hawai#i at 54, 85 P.3d at 161 (emphasis added).
It is important to note that res judicata precludes not
only the relitigation of claims or defenses that were litigated
in a previous lawsuit, but also of all claims and defenses that
11
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
might have been properly litigated, but were not litigated or
decided. This part of the res judicata doctrine is reflected in
the Restatement (Second) of Judgments, Sections 18 and 22:
§ 18. Judgment For Plaintiff -- The General Rule Of Merger
When a valid and final personal judgment is rendered in favor of
the plaintiff:
(1) The plaintiff cannot thereafter maintain an action on the
original claim or any part thereof, although he may be able to
maintain an action upon the judgment; and
(2) In an action upon the judgment, the defendant cannot avail
himself of defenses he might have interposed, or did interpose, in
the first action.
§ 22. Effect Of Failure To Interpose Counterclaim
(1) Where the defendant may interpose a claim as a counterclaim
but he fails to do so, he is not thereby precluded from
subsequently maintaining an action on that claim, except as stated
in Subsection (2).
(2) A defendant who may interpose a claim as a counterclaim in an
action but fails to do so is precluded, after the rendition of
judgment in that action, from maintaining an action on the claim
if:
(a) The counterclaim is required to be interposed by a
compulsory counterclaim statute or rule of court, or
(b) The relationship between the counterclaim and the
plaintiff’s claim is such that successful prosecution of the
second action would nullify the initial judgment or would
impair rights established in the initial action.
C. The Estebans’ TILA Rescission Rights are Barred by Res
Judicata Principles
Eastern asserts that the Estebans’ TILA rescission
claim is barred by res judicata.9
9
This court previously addressed the effect of a foreclosure
judgment on a subsequent suit for common law rescission applying principles of
collateral estoppel, or issue preclusion, in Ellis v. Crockett, 51 Haw. 45,
451 P.2d 814 (1969). In Ellis, sellers of real property obtained summary
judgment in a mortgage foreclosure lawsuit. 51 Haw. at 48, 451 P.2d at 818.
In a subsequent suit, purchasers sued various parties for allegedly failing to
(continued...)
12
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
To reiterate, the party asserting claim preclusion has
the burden of establishing that (1) there was a final judgment on
the merits, (2) both parties are the same or in privity with the
parties in the original suit, and (3) the claim presented in the
action in question is identical to the one decided in the
original suit, or to a claim or defense that might have been
properly litigated in the first action but was not litigated or
decided. Bremer, 104 Hawai#i at 54, 85 P.3d at 161.
Applying these requirements to the facts at hand, we
conclude that the Estebans’ TILA rescission claims are barred by
res judicata principles.
(...continued)
disclose certain information when they demanded full payment of the principal
amount pursuant to an acceleration clause in the agreement. 51 Haw. at 47-48,
451 P.2d at 818. The trial court dismissed the suit for failure to state a
claim, and purchasers appealed. 51 Haw. at 49, 451 P.2d at 819.
This court affirmed the dismissal, holding, inter alia, that
various claims brought by purchasers, including a claim for rescission of the
underlying agreement, were barred by the doctrine of collateral estoppel. 51
Haw. at 56-58, 451 P.2d at 822-24. We noted that the subsequent claim for
fraud was clearly distinct from the claim raised in the foreclosure case, the
parties were cast in different roles as plaintiff and defendant, and the legal
consequence of each case was different. 51 Haw. at 56, 451 P.2d at 822.
Nonetheless, we held that collateral estoppel applied because all issues
regarding the validity of the mortgage instrument had been decided when the
court granted foreclosure in the prior case. 51 Haw. at 57, 451 P.2d at 823.
We concluded, “The rescission action is barred because the court granted the
foreclosure in the prior suit, thereby deciding all issues relating to the
mortgage instrument in favor of [the defendants-vendors]. The issue
underlying that judgment may not be collaterally attacked.” 51 Haw. at 57,
451 P.2d at 823 (emphasis added).
Although it could be argued that the Estebans’ claims may also be
precluded by issue preclusion based on Ellis and Section 27 of the Restatement
(Second) of Judgments (“When an issue of fact . . . is actually litigated and
determined by a valid and final judgment, and the determination is essential
to the judgment, the determination is conclusive in a subsequent action
between the parties, whether on the same or a different claim[]”), because the
parties have argued this case based on res judicata principles, we decide this
case on res judicata grounds.
13
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
First, under Hawai#i law, there was a final judgment on
the merits when the time to appeal the Foreclosure Judgment
expired. See Glover, Ltd. v. Fong, 42 Haw. 560, 574 (1958).10
Moreover, under Hawai#i law, res judicata principles apply to
default judgments. Fuller v. Pac. Med. Collections, Inc., 78
Hawai#i 213, 219, 891 P.2d 300, 306 (App. 1995).
Second, both the Estebans and Eastern were parties to
the prior foreclosure proceeding.
Third, a TILA rescission claim would have been properly
litigated in the foreclosure action, whether as a counterclaim or
as an affirmative defense.
In Pacific Concrete, 62 Haw. at 342, 614 P.2d at 941,
we recognized that TILA violations may be raised in a
counterclaim. In that case, a creditor sued a debtor for the
outstanding balance owed on two loans, and the debtor
counterclaimed, alleging that the creditor failed to satisfy
TILA’s disclosure requirements. 62 Haw. at 335, 614 P.2d at 934.
The lender asserted that the counterclaim was barred because it
10
It is well established that under Hawai#i law, “foreclosure cases
are bifurcated into two separately appealable parts: (1) the decree of
foreclosure and the order of sale, if the order of sale is incorporated within
the decree; and (2) all other orders.” Sec. Pac. Mortg. Corp. v. Miller, 71
Haw. 65, 70, 783 P.2d 855, 857 (1989) (holding that a judgment of foreclosure
and order of sale is final even though matters incident to its administration
remain, and a party seeking to challenge a foreclosure judgment must do so
within the thirty-day period following entry of the decree). The Estebans
contend that they may exercise their right to rescind up to and until the
court’s confirmation of sale. However, foreclosure has the legal effect of
terminating a mortgagor’s interest in the subject property, and therefore, a
foreclosure judgment constitutes a final judgment. See Ellis, 51 Haw. at 57,
451 P.2d at 823.
14
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
was not brought within one year, as allegedly required by
15.U.S.C. § 1640(e).11 Id.
This court reasoned that the debtor’s claims were “in
the nature of a recoupment defense,” which would diminish the
creditor’s recovery, and the alleged TILA violations “arose out
of the same loan transaction as [the creditor’s] suit[.]” 62
Haw. at 341, 614 P.2d at 940 (emphasis added). We noted that
“TILA seeks to protect the consumer by ensuring full disclosure
of credit cost” and concluded that “[d]enying debtors their
counterclaims in this situation could work an injustice and
undercut the aim of the TILA.”12 62 Haw. at 342, 614 P.2d at 941
(noting that consumers are typically unaware of their rights
under TILA until a creditor files suit to collect on the
outstanding loan). We recognized that a claim alleging
11
Section 1640 of TILA governs “Civil liability.” At the time of
our decision in Pacific Concrete, subsection (e) provided:
(e) Any action under this section may be brought . . .
within one year from the date of the occurrence of the
violation.
15 U.S.C. §1640(e) has since been amended, and it now specifically
contains the following sentence: “This subsection does not bar a person from
asserting a violation of this subchapter in an action to collect the debt
which was brought more than one year from the date of the occurrence of the
violation as a matter of defense by recoupment or set-off in such action,
except as otherwise provided by State law.”
12
In allowing the debtor to allege a TILA counterclaim, we
explained:
Section 1640(e), the statute of limitations provision of the
TILA serves to further enforcement of the Act’s civil
liability provisions by ensuring the prompt bringing of
suits. Deterrence of lenders’ violations rather than
compensation of borrowers is the goal. Thus, allowing a
borrower’s claim under the Act as a defense to the lender’s
original suit is in keeping with this overall scheme.
62 Haw. at 343, 614 P.2d at 942.
15
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
violations of TILA’s disclosure requirements arose out of the
same transaction as a suit seeking enforcement of the underlying
loan agreement. Id. Accordingly, we acknowledged that the
debtor’s TILA claim could be asserted as a counterclaim against
the lender. Id.
In Beach v. Ocwen Federal Bank, 523 U.S. 410, 118 S.Ct.
1408, 140 L.Ed.2d 566 (1998), the United States Supreme Court
alluded to the possibility of asserting the TILA rescission right
under 15 U.S.C. § 1635 as an affirmative or other defense. The
question presented in the case was “whether a borrower may assert
this right to rescind as an affirmative defense in a collection
action brought by the lender more than three years after the
consummation of the transaction.” 523 U.S. at 411, 118 S.Ct. at
1409.13 The Court held that TILA rescission rights could not be
asserted more than three years after consummation of the
13
Eastern asserts that a TILA rescission claim is a compulsory
counterclaim, which the Estebans failed to raise in the foreclosure
proceeding. The Estebans contend that it is a permissive counterclaim and
that the Albano court, discussed further in Section IV(D), infra, misread
Hawai#i law regarding compulsory counterclaims. However, the Ninth Circuit in
Albano did not characterize a TILA rescission claim as a compulsory
counterclaim; instead, it deemed it a “defense that would have ineluctably
precluded foreclosure if the Albanos’ claims are meritorious.” 244 F.3d at
1064.
Under Hawai#i law, a counterclaim is compulsory if there is a
logical relation between the original claim and the counterclaim—i.e., it
arises out of the same aggregate of operative facts as the original claim.
See Hawai#i Rules of Civil Procedure Rule 13(a). If a defendant fails to
assert a compulsory counterclaim, he is precluded from asserting it against
the plaintiff in a subsequent action. Booth v. Lewis, 8 Haw. App. 249, 252,
798 P.2d 447, 449 (1990).
We decide this case on res judicata grounds, and do not decide
whether a TILA rescission claim is a compulsory counterclaim, a permissive
counterclaim, an affirmative defense, or some other type of defense.
16
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
transaction, but did not question the propriety of defensively
asserting such rights, stating: “We respect Congress’s manifest
intent by concluding that the Act permits no federal right to
rescind, defensively or otherwise, after the 3-year period of §
1635(f) has run.” 523 U.S. at 415, 118 S.Ct. at 1413. After
Beach, Hawai#i appellate decisions have also referred to the TILA
rescission right as an affirmative defense. Hawaii Cmty. Fed.
Credit Union v. Keka, 94 Hawai#i 213, 223, 11 P.3d 1, 11 (2000)
(“[TILA] gives a borrower no express permission to assert the
right of rescission as an affirmative defense after the
expiration of the 3-year period.”); accord, Ocwen Fed. Bank, FSB
v. Russell, 99 Hawai#i 173, 188, 53 P.3d 312, 326 (2002).
Accordingly, TILA rescission rights could have been
raised by the Estebans in the foreclosure case, whether as a
counterclaim or as an affirmative or other defense.
We hold that under Hawai#i res judicata principles, a
debtor is prohibited from asserting alleged TILA violations in an
attempt to rescind a residential mortgage transaction after a
foreclosure judgment has become final, despite the rescission
attempt being within the three-year time limit provided by
TILA.14
14
In any event, as Eastern correctly asserts, the Estebans failed to
appeal the July 22, 2010 Judgment of the U.S. District Court in their federal
TILA case (Civ. No. 10-00234-HG-LEK). That decision is final and preclusive
of the claim that the Estebans now contend warrants reversal of the circuit
court’s judgment confirming sale of the Property. See Robi v. Five Platters,
Inc., 838 F.2d 318, 327 (9th Cir. 1988) (holding that a final judgment of a
(continued...)
17
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
D. The Ninth Circuit Correctly Construed the Effect of
Controlling Hawai#i Law, and Other Cases Cited by the
Estebans Are Distinguishable
The circuit court relied on the Ninth Circuit’s
decision in Albano, which it deemed persuasive. Based on our
reasoning above, Albano properly concluded that under Hawai#i
law, a final foreclosure judgment precludes a mortgagor from
subsequently bringing a TILA rescission claim. 244 F.3d at 1064.
In addition, cases from other jurisdictions are not controlling;
and the cases cited by the Estebans are distinguishable.
For example, the first two cases cited by the Estebans,
Smith v. Wells Fargo Credit Corp., 713 F. Supp. 354 (D. Ariz.
1989), and Laubach v. Fidelity Consumer Discount Co., 77 B.R. 483
(E.D. Pa. 1987), did not involve foreclosure proceedings; the
courts simply held that a debtor’s right of rescission under TILA
was not barred by an earlier action in which the borrower
asserted a claim based on TILA disclosure violations. In re
Apaydin, 201 B.R. 716 (E.D. Pa. 1996), is also distinguishable
because it held that, under Pennsylvania law, a TILA claim could
not be raised as a counterclaim in a mortgage foreclosure action;
as discussed above, this contrasts with the import of our
decisions in Pacific Concrete, 62 Haw. at 342, 614 P.2d at 941,
and Ellis, 51 Haw. at 57, 451 P.2d at 823. Finally, In re
(...continued)
federal district court is final for purposes of res judicata even if an appeal
is pending), cited in Wong v. Cayetano, 111 Hawai#i 462, 477, 143 P.3d 1, 16
(2006).
18
***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***
Walker, 232 B.R. 725 (N.D. Ill. 1999), is factually
distinguishable because the debtor retained an equitable
redemption right after the state court entered its foreclosure
judgment.
The Estebans provide no other support for their
contention that “nearly every federal District Court and every
Bankruptcy Court that has examined that issue has held, contrary
to the Albano panel, that the federal TILA rescission right
survives a foreclosure judgment.” Therefore, we conclude that
their argument is without merit.
V. Conclusion
For the reasons stated above, the circuit court’s
judgment confirming sale of the Property to Eastern, granting a
writ of possession, and entering a deficiency judgment against
the Estebans is affirmed.
Gary Victor Dubin and /s/ Mark E. Recktenwald
Frederick J. Arensmeyer
for petitioners /s/ Paula A. Nakayama
Francis P. Hogan and /s/ Simeon R. Acoba, Jr.
Gary P. Quiming
for respondent /s/ Sabrina S. McKenna
/s/ Randal K.O. Lee
19 | 01-03-2023 | 05-24-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/220149/ | RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 11a0174p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
X
-
Nos. 08-1387/1534
-
COALITION TO DEFEND AFFIRMATIVE
ACTION, INTEGRATION AND IMMIGRANT -
-
Nos. 08-1387/1389/1534;
RIGHTS AND FIGHT FOR EQUALITY BY ANY
,
09-1111
>
Plaintiffs-Appellants (08-1387)/ -
MEANS NECESSARY (BAMN), et al.,
Cross-Appellees, -
-
-
v.
REGENTS OF THE UNIVERSITY OF MICHIGAN, -
-
-
BOARD OF TRUSTEES OF MICHIGAN STATE
-
UNIVERSITY; BOARD OF GOVERNORS OF
-
WAYNE STATE UNIVERSITY; MARY SUE
COLEMAN; IRVIN D. REID; LOU ANNA K. -
-
Defendants-Appellees/Cross-Appellants -
SIMON,
(08-1534), -
-
MICHAEL COX, Michigan Attorney General, -
Intervenor-Defendant-Appellee. -
-
-
-
No. 08-1389
COALITION TO DEFEND AFFIRMATION -
-
-
ACTION, INTEGRATION AND IMMIGRANT
-
RIGHTS AND FIGHT FOR EQUALITY BY ANY
Plaintiffs, --
MEANS NECESSARY (BAMN), et al.,
-
Plaintiffs-Appellees, -
CHASE CANTRELL, et al.,
-
-
v.
-
REGENTS OF THE UNIVERSITY OF MICHIGAN,
BOARD OF TRUSTEES OF MICHIGAN STATE -
-
-
UNIVERSITY; BOARD OF GOVERNORS OF
-
WAYNE STATE UNIVERSITY; MARY SUE
-
COLEMAN; IRVIN D. REID; LOU ANNA K.
SIMON, -
Defendants, -
-
Intervenor-Defendant-Appellant, -
ERIC RUSSELL,
-
JENNIFER GRATZ, -
Proposed Intervenor-Appellant. -
-
1
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 2
1534; 09-1111 Regents of the Univ. of Mich., et al.
-
-
No. 09-1111
-
COALITION TO DEFEND AFFIRMATION
ACTION, INTEGRATION AND IMMIGRANT -
-
-
RIGHTS AND FIGHT FOR EQUALITY BY ANY
-
MEANS NECESSARY (BAMN), et al.,
-
Plaintiffs,
-
CHASE CANTRELL, et al.,
-
-
Plaintiffs-Appellants,
-
v.
-
REGENTS OF THE UNIVERSITY OF MICHIGAN,
-
BOARD OF TRUSTEES OF MICHIGAN STATE
UNIVERSITY; BOARD OF GOVERNORS OF -
-
-
WAYNE STATE UNIVERSITY; MARY SUE
-
COLEMAN; IRVIN D. REID; LOU ANNA K.
-
SIMON,
Defendants, -
-
-
MICHAEL COX, Michigan Attorney General,
-
Intervenor-Defendant-Appellee.
N
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 06-15024—David M. Lawson, District Judge.
Argued: November 17, 2009
Decided and Filed: July 1, 2011
Before: DAUGHTREY, COLE, and GIBBONS, Circuit Judges.
_________________
COUNSEL
ARGUED: George Boyer Washington, Shanta Driver, SCHEFF, WASHINGTON &
DRIVER, P.C., Detroit, Michigan, Karin A. DeMasi, CRAVATH, SWAINE & MOORE
LLP, New York, New York, Mark D. Rosenbaum, ACLU FOUNDATION OF
SOUTHERN CALIFORNIA, Los Angeles, California, for Plaintiffs. Margaret A.
Nelson, OFFICE OF THE MICHIGAN ATTORNEY GENERAL, Lansing, Michigan,
Leonard M. Niehoff, LEN NIEHOFF & ASSOCIATES, Chelsea, Michigan, Jesse
Panuccio, COOPER & KIRK, PLLC, Washington, D.C., for Defendants. ON BRIEF:
George Boyer Washington, Shanta Driver, SCHEFF, WASHINGTON & DRIVER, P.C.,
Detroit, Michigan, Karin A. DeMasi, CRAVATH, SWAINE & MOORE LLP, New
York, New York, Mark D. Rosenbaum, ACLU FOUNDATION OF SOUTHERN
CALIFORNIA, Los Angeles, California, Kary L. Moss, Michael J. Steinberg, Mark P.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 3
1534; 09-1111 Regents of the Univ. of Mich., et al.
Fancher, ACLU FUND OF MICHIGAN, Detroit, Michigan, Joshua I. Civin, NAACP
LEGAL DEFENSE & EDUCATIONAL FUND, INC., Washington, D.C., for Plaintiffs.
Margaret A. Nelson, Heather S. Meingast, OFFICE OF THE MICHIGAN ATTORNEY
GENERAL, Lansing, Michigan, Leonard M. Niehoff, LEN NIEHOFF & ASSOCIATES,
Chelsea, Michigan, Jesse Panuccio, Charles J. Cooper, David H. Thompson, COOPER
& KIRK, PLLC, Washington, D.C., Kerry L. Morgan, PENTIUK, COUVEREUR &
KOBILJAK, Wyandotte, Michigan, Michael E. Rosman, CENTER FOR INDIVIDUAL
RIGHTS, Washington, D.C., for Defendants. Daniel M. Levy, MICHIGAN
DEPARTMENT OF CIVIL RIGHTS, Detroit, Michigan, for Amicus Curiae. Sharon
L. Browne, PACIFIC LEGAL FOUNDATION, Sacramento, California, for Amicus
Curiae.
COLE, J., delivered the opinion of the court, in which DAUGHTREY, J., joined.
GIBBONS, J. (pp. 41–59), delivered a separate opinion concurring in part and dissenting
in part.
_________________
OPINION
_________________
COLE, Circuit Judge. Proposal 2 is a successful voter-initiated amendment to
the Michigan Constitution. In relevant part, it prohibits Michigan’s public colleges and
universities from granting “preferential treatment to[] any individual or group on the
basis of race, sex, color, ethnicity, or national origin.” Mich. Const. art. I, § 26. Our task
is to determine whether Proposal 2 is constitutional under the Equal Protection Clause
of the Fourteenth Amendment to the United States Constitution. Fortunately, the slate
is not blank. The Supreme Court has twice held that equal protection does not permit
the kind of political restructuring that Proposal 2 effected. See Washington v. Seattle
Sch. Dist. No. 1, 458 U.S. 457 (1982); Hunter v. Erickson, 393 U.S. 385 (1969).
Applying Hunter and Seattle, we find that Proposal 2 unconstitutionally alters
Michigan’s political structure by impermissibly burdening racial minorities.
Accordingly, we REVERSE the district court’s grant of summary judgment for the
Defendants-Appellees and order the court to enter summary judgment in favor of the
Plaintiffs-Appellants. Also, we AFFIRM the district court’s decision granting the
Cantrell Plaintiffs’ motion for summary judgment as to Eric Russell, and AFFIRM the
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 4
1534; 09-1111 Regents of the Univ. of Mich., et al.
district court’s decision denying the University Defendants’ motion to be dismissed as
parties.
I. BACKGROUND
A. Factual Background
These appeals are the latest chapter in the battle over the use of race-conscious
admissions policies at Michigan’s public colleges and universities. This saga began
during the 1960s and 1970s, when African-American and other minority students and
citizens first successfully lobbied for the adoption of these policies. The policies
remained largely in place until challenges to them in the late 1990s, culminating in the
Supreme Court’s decisions in Gratz v. Bollinger, 539 U.S. 244 (2003), and Grutter v.
Bollinger, 539 U.S. 306 (2003), which held that “universities cannot establish quotas for
members of certain racial groups” or treat their applications uniquely. Grutter, 539 U.S.
at 334. But the universities may “consider race or ethnicity more flexibly as a ‘plus’
factor in the context of individualized consideration,” along with other relevant factors.
Id.
Following these decisions, Ward Connerly, a former University of California
Regent who had championed a proposition in California similar to the one at issue here,
and Jennifer Gratz, the lead plaintiff in Gratz, mobilized to place on Michigan’s
November 2006 statewide ballot a proposal to amend the Michigan Constitution “to
prohibit all sex- and race-based preferences in public education, public employment, and
public contracting.” Operation King’s Dream v. Connerly, 501 F.3d 584, 586 (6th Cir.
2007). The initiative—officially designated Proposal 06-2 but commonly known as
“Proposal 2”—was characterized as a proposal “to amend the State Constitution to ban
affirmative action programs.” See Notice of State Proposals for November 7, 2006
General Election, http://www.michigan.gov/documents/sos/ED-138_State_Prop_11-
06_174276_7.pdf, at 5 (last visited June 24, 2011). Though Proposal 2 “found its way
on the ballot through methods that undermine[d] the integrity and fairness of our
democratic processes,” Operation King’s Dream, 501 F.3d at 591, once there it garnered
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 5
1534; 09-1111 Regents of the Univ. of Mich., et al.
enough support among Michigan voters to pass, on November 7, 2006, by a margin of
58% to 42%, see Mich. Dep’t of State, 2006 Official Michigan General Election Results,
http://miboecfr.nicusa.com/election/results/06GEN/90000002.html (last visited June 24,
2011).
Proposal 2 amended the Michigan Constitution by adding the following pertinent
provisions to Article I—titled “Affirmative action”:
(1) The University of Michigan, Michigan State University, Wayne State
University, and any other public college or university, community
college, or school district shall not discriminate against, or grant
preferential treatment to, any individual or group on the basis of race,
sex, color, ethnicity, or national origin in the operation of public
employment, public education or public contracting.
(2) The state shall not discriminate against, or grant preferential
treatment to, any individual or group on the basis of race, sex, color,
ethnicity, or national origin in the operation of public employment,
public education, or public contracting.
(3) For the purposes of this section “state” includes, but is not necessarily
limited to, the state itself, any city, county, any public college, university,
or community college, school district, or other political subdivision or
governmental instrumentality of or within the State of Michigan not
included in sub-section 1.
Mich. Const. art. I, § 26. It took effect in December 2006 and wrought two significant
changes to the admissions policies at Michigan’s public colleges and universities. First,
it forced them to modify the policies they had in place for nearly a half-century to
remove consideration of “race, sex, color, ethnicity, or national origin” in admissions
decisions. No other admissions criteria—for example, grades, athletic ability, or family
alumni connections—suffered the same fate. Second, Proposal 2 entrenched this
prohibition at the state constitutional level, thus preventing the public colleges and
universities or their boards from revisiting this issue without repeal or modification of
Proposal 2. We review these changes later in greater detail, and there discuss their
significance.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 6
1534; 09-1111 Regents of the Univ. of Mich., et al.
B. Procedural Background
The litigation surrounding Proposal 2 has been lengthy and complicated. On
November 8, 2006, the day after Proposal 2’s approval, a collection of interest groups
and individuals, including the Coalition to Defend Affirmative Action, Integration and
Immigration Rights and Fight for Equality By Any Means Necessary (“Coalition
Plaintiffs”), filed suit in the United States District Court for the Eastern District of
Michigan. They named as defendants then-Governor Jennifer Granholm, the Regents
of the University of Michigan, the Board of Trustees of Michigan State University, and
the Board of Governors of Wayne State University (“University Defendants”) and
alleged that the provisions of Proposal 2 affecting public colleges and universities
violated the United States Constitution and federal statutory law. About one month later,
the Michigan Attorney General (“Attorney General”) filed a motion to intervene as a
defendant; the court granted his motion the same day.
On December 19, 2006, a group of faculty members and prospective and current
students at the University of Michigan (“the Cantrell Plaintiffs”) filed a similar suit in
the United States District Court for the Eastern District of Michigan against then
Governor Granholm. Eric Russell, then an applicant to the University of Michigan Law
School, and Toward A Fair Michigan (“TAFM”), a non-profit corporation formed to
ensure implementation of Proposal 2, intervened in the litigation as defendants soon
thereafter. The district court consolidated the two cases on January 5, 2007, and the
Attorney General was permitted to intervene in the Cantrell lawsuit as part of the
consolidation order. Because the Attorney General effectively replaced then-Governor
Granholm as the representative of Michigan in this litigation, both Plaintiffs’ groups
later stipulated to her dismissal as a party.
On December 19, 2006, the district court issued what was, in effect, a
preliminary injunction, postponing application of Proposal 2 to the universities’
admissions and financial-aid policies until July 1, 2007, the conclusion of the 2006-2007
admissions and financial-aid cycle. The district court’s order stemmed from a stipulation
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 7
1534; 09-1111 Regents of the Univ. of Mich., et al.
among the University Defendants, Coalition Plaintiffs, Granholm, and the Attorney
General consenting to the injunction. (Amended Order Granting Temporary Injunction
and Dismissing Cross-Claim, Dist. Ct. Docket No. 39 (“Coal. I”).) Russell and TAFM,
while awaiting approval as intervenors, opposed the Attorney General’s stipulation and
sought a stay of the injunction from the district court. When two days had passed
without a ruling on their motions, Russell and TAFM filed with us an “Emergency
Motion for a Stay Pending Appeal.” We granted their motion. Coal. to Defend
Affirmative Action v. Granholm (Coal. II), 473 F.3d 237, 252 (6th Cir. 2006),
application to vacate stay denied, 549 U.S. 1176 (2007). Meanwhile, we approved the
district court’s decision to allow solely Russell and TAFM to intervene in the Proposal
2 litigation. Coal. to Defend Affirmative Action v. Granholm (Coal. III), 501 F.3d 775
(6th Cir. 2007).
On October 5, 2007, the Cantrell Plaintiffs filed a motion for summary judgment
as to intervening defendant Russell, arguing that he should be dismissed from the
litigation because he no longer represented an interest distinct from that of the Attorney
General. On October 17, 2007, the University Defendants filed a motion asking to be
dismissed as parties. On November 30, 2007, the Attorney General filed a motion to
dismiss for lack of standing or, in the alternative, a motion for summary judgment on the
merits as to all Plaintiffs. Russell and the Cantrell Plaintiffs likewise filed motions for
summary judgment the same day. On March 18, 2008, the district court issued two
orders addressing these motions.
In the first order, the court denied the University Defendants’ request to be
dismissed as parties and the Cantrell Plaintiffs’ motion for summary judgment and
granted the Attorney General’s motion for summary judgment, rejecting the Plaintiffs’
arguments that Proposal 2 violated the Equal Protection Clause of the Fourteenth
Amendment to the United States Constitution. Coal. to Defend Affirmative Action v.
Regents of the Univ. of Mich. (Coal. IV), 539 F. Supp. 2d 924, 950-58 (E.D. Mich.
2008). In the second order, the court granted the Cantrell Plaintiffs’ motion for summary
judgment, dismissing Russell as an intervenor. Coal. to Defend Affirmative Action v.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 8
1534; 09-1111 Regents of the Univ. of Mich., et al.
Regents of the Univ. of Mich. (Coal. V), 539 F. Supp. 2d 960 (E.D. Mich. 2008). The
Cantrell Plaintiffs subsequently moved the court to reconsider the first order, but the
court denied the motion. Coal. to Defend Affirmative Action v. Regents of the Univ. of
Mich. (Coal. VI), 592 F. Supp. 2d 948 (E.D. Mich. 2008).
These appeals followed. The University Defendants appeal the court’s denial of
their motion to be dismissed as parties. Russell appeals the court’s grant of the Cantrell
Plaintiffs’ motion for summary judgment dismissing him as a party to the action. The
Cantrell Plaintiffs appeal the court’s grant of the Attorney General’s motion for
summary judgment and its denial of their motion for reconsideration. Similarly, the
Coalition Plaintiffs appeal the court’s grant of the Attorney General’s motion for
summary judgment.
II. ANALYSIS
A. Proposal 2’s Constitutionality
The Equal Protection Clause provides that no state shall “deny to any person . . .
the equal protection of the laws.” U.S. Const. amend. XIV. The Plaintiffs argue that
Proposal 2 violates this provision in two distinct ways. Both Plaintiffs groups argue that
Proposal 2 violates the Equal Protection Clause by impermissibly restructuring the
political process along racial lines (the “political process” argument), and the Coalition
Plaintiffs contend that Proposal 2 violates the Equal Protection Clause also by
impermissibly classifying individuals on the basis of race (the “traditional” argument).
We review de novo a district court’s grant of summary judgment and denial of
a motion for reconsideration of that decision. Chen v. Dow Chem. Co., 580 F.3d 394,
400 (6th Cir. 2009); Cockrel v. Shelby Cnty. Sch. Dist., 270 F.3d 1036, 1047 (6th Cir.
2001). Whether a state’s constitution violates the federal constitution is a question of
law, which we also review de novo. Cherry Hill Vineyards, LLC v. Lilly, 553 F.3d 423,
431 (6th Cir. 2008).
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 9
1534; 09-1111 Regents of the Univ. of Mich., et al.
1. “Political Process” Equal Protection Analysis
The Equal Protection Clause “guarantees racial minorities the right to full
participation in the political life of the community. It is beyond dispute . . . that given
racial or ethnic groups may not be denied the franchise, or precluded from entering into
the political process in a reliable and meaningful manner.”1 Seattle, 458 U.S. at 467.
But the Equal Protection Clause reaches even further, and prohibits “a political structure
that treats all individuals as equals, yet more subtly distorts governmental processes in
such a way as to place special burdens on the ability of minority groups to achieve
beneficial legislation.” Id. (internal quotation marks and citation omitted). “[T]he State
may no more disadvantage any particular group by making it more difficult to enact
legislation in its behalf than it may dilute any person’s vote or give any group a smaller
representation than another of comparable size.” Hunter, 393 U.S. at 393.
The Supreme Court’s statements in Hunter and Seattle clarify that equal
protection of the laws is more than a guarantee of equal treatment under the law
substantively. It is also an assurance that the majority may not manipulate the channels
of change in a manner that places unique burdens on issues of importance to racial
minorities. In effect, the political process theory hews to the unremarkable belief that,
when two competitors are running a race, one may not require the other to run twice as
far, or to scale obstacles not present in the first runner’s course. Ensuring the fairness
1
For this reason, the Supreme Court has repeatedly held that legislative enactments that burden
racial minorities’ ability to participate in the political process may violate the Constitution. See, e.g., White
v. Regester, 412 U.S. 755 (1973) (invalidating “multimember” electoral districts that minimized the voting
strength of resident Mexican-Americans); Harman v. Forssenius, 380 U.S. 528 (1965) (holding
unconstitutional a statute that required voters either to file an annual certificate of residence or pay a poll
tax “born of a desire to disenfranchise the Negro”); Gomillion v. Lightfoot, 364 U.S. 339 (1960) (holding
that political redistricting that redefined municipal borders to exclude black residents would violate the
Equal Protection Clause); Smith v. Allwright, 321 U.S. 649 (1944) (requiring the state Democratic party
to admit black members in order that they be allowed to vote in the party primary election); Lane v. Wilson,
307 U.S. 268 (1939) (holding unconstitutional a statute having the effect of requiring all black citizens to
apply for voting registration within a ten-day period or be forever barred from registering, but subjecting
virtually no white citizens to the same requirement); Nixon v. Herendon, 273 U.S. 536 (1927) (holding
unconstitutional a statute prohibiting black citizens from participating in primary elections for the state
Democratic Party); Guinn v. United States, 238 U.S. 347 (1915) (holding unconstitutional a statute having
the effect of subjecting all black citizens, but virtually no white citizens, to a literacy test in order to vote
in state elections). In all these cases, the Court invalidated procedural hurdles that impeded racial
minorities’ political participation by either making it more difficult for these minorities to vote or diluting
their voting power.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 10
1534; 09-1111 Regents of the Univ. of Mich., et al.
of political processes, in particular, is essential, because an electoral minority is by
definition disadvantaged in its attempts to pass legislation; and “discrete and insular
minorities” are especially so given the unique hurdles they face. Cf. United States v.
Carolene Prods. Co., 304 U.S. 144, 152 n.4 (1938).
Ensuring a fair political process is nowhere more important than in education.
Education is the bedrock of equal opportunity and “the very foundation of good
citizenship.” Brown v. Bd. of Educ., 347 U.S. 483, 493 (1954). Safeguarding the
guarantee “that public institutions are open and available to all segments of American
society, including people of all races and ethnicities, represents a paramount government
objective.” Grutter, 539 U.S. at 331-32 (quoting Br. for United States as Amicus Curiae
13). “Moreover, universities, and in particular, law schools, represent the training
ground for a large number of our Nation’s leaders. . . . [T]o cultivate a set of leaders with
legitimacy in the eyes of the citizenry, it is necessary that the path to leadership be
visibly open to talented and qualified individuals of every race and ethnicity.” Id. at 332
(citation omitted). Therefore, in the context of education, we must apply the “political
process” protection with the utmost rigor given the high stakes.
Of course, the Constitution does not protect minorities from political defeat:
Politics necessarily produces winners and losers. We must therefore have some way to
differentiate between the constitutional and the impermissible. And Hunter and Seattle
do just that. They provide the benchmark for when the majority has not only won, but
also rigged the game to reproduce its success indefinitely.
i. Hunter and Seattle
a. Hunter
The Supreme Court in Hunter addressed a situation where the citizens of Akron,
Ohio overturned a fair housing ordinance enacted by the City Council. 393 U.S. at 386.
The citizenry did more than merely repeal the ordinance, however. It amended the city
charter through a referendum to require the approval of a majority of the electorate
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 11
1534; 09-1111 Regents of the Univ. of Mich., et al.
before any ordinance regulating real estate “on the basis of race, color, religion, national
origin or ancestry”—past or future—could become effective. Id. at 387, 390 n.6. In
other words, only ordinances based on the identified factors required approval of the
majority; ordinances based on any other factor required only a vote by the City Council:
In essence, the amendment changed the requirements for the adoption of
one type of local legislation: to enact an ordinance barring housing
discrimination on the basis of race or religion, proponents had to obtain
the approval of the City Council and of a majority of the voters citywide.
To enact an ordinance preventing housing discrimination on other
grounds, or to enact any other type of housing ordinance, proponents
needed the support of only the City Council.
Seattle, 458 U.S. at 468 (describing Hunter). The effect was not only to halt operation
of the existing fair housing ordinance, but also to erect a barrier to any similar ordinance
in the future. Hunter, 393 U.S. at 389.
The Court found that the disparity between the process for enacting a future fair
housing ordinance and that for enacting any other housing ordinance “place[d] special
burden[s] on racial minorities within the governmental process” by making it
“substantially more difficult to secure enactment” only of legislation that would be to
their benefit. Id. at 390-91. While the enactment treated “Negro and white, Jew and
gentile” in an identical manner, the Court found that “the reality is that the law’s impact
falls on the minority.” Id. at 391. That the law had been enacted via a popular
referendum did not save it from implementing “a real, substantial, and invidious denial
of the equal protection of the laws.” Id. at 392-93.
b. Seattle
In Seattle, a case identical in many respects to the one we confront here, the
Supreme Court applied Hunter to strike down a state statute, also enacted via a
referendum, that prohibited racially integrative busing. Seattle, 458 U.S. at 487. Prior
to the referendum, Seattle School District No. 1 (“District”) had implemented a school
desegregation plan—making extensive use of mandatory reassignments—to accelerate
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 12
1534; 09-1111 Regents of the Univ. of Mich., et al.
its program of desegregation. Id. at 460-61. The District was under no obligation to
adopt this plan: Following Brown v. Board of Education, 347 U.S. 483 (1954), and 349
U.S. 294 (1955), school boards had been “charged with the affirmative duty to take
whatever steps might be necessary” to integrate schools that were unconstitutionally
segregated because of racial discrimination, Green v. Cnty. Sch. Bd., 391 U.S. 430, 437-
38 (1968), but there had been no finding that the de facto segregation in Seattle’s schools
was the product of discrimination. Nonetheless, the school board implemented the plan
to accelerate its existing program of voluntary busing, which some constituencies saw
as insufficiently alleviating racial imbalances. Seattle, 458 U.S. at 460.
In response, Seattle residents drafted a statewide measure, Initiative 350,
providing in relevant part that “no school board . . . shall directly or indirectly require
any student to attend a school other than the school which is geographically nearest or
next nearest the student’s place of residence.” Id. at 462 (alteration in original) (internal
quotation mark omitted). Though the initiative was worded as a general ban on all forms
of mandatory busing, its myriad exceptions made its real effect to eliminate school
reassignments for racial purposes only, except where a court ordered such reassignments
to remedy unconstitutional segregation. Id. at 462-63 (noting that Initiative 350 was
phrased so as not to “prevent any court of competent jurisdiction from adjudicating
constitutional issues relating to the public schools”). Initiative 350 made it on the
Washington ballot and passed by a substantial margin, attracting over 65% of the
statewide vote. Id. at 463.
The Court found that Initiative 350, like the Akron city charter amendment,
violated the Equal Protection Clause. Id. at 487. Relying on Hunter and the Court’s
summary affirmance of Lee v. Nyquist, 318 F. Supp. 710 (W.D.N.Y. 1970) (three-judge
panel), aff’d, 402 U.S. 935 (1971), the Court stated that these two cases yielded a
“simple but central principle”: While “laws structuring political institutions or allocating
political power according to neutral principles” are not subject to challenges under the
Fourteenth Amendment, “a different analysis is required when the State allocates
governmental power nonneutrally, by explicitly using the racial nature of a decision to
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 13
1534; 09-1111 Regents of the Univ. of Mich., et al.
determine the decisionmaking process.” Seattle, 458 U.S. at 469-70 (internal quotation
marks omitted). Echoing Hunter, the Court explained that this distinct analysis is
necessary because such non-neutral allocations of power “place[] special burdens on
racial minorities within the governmental process, thereby making it more difficult for
certain racial and religious minorities than for other members of the community to
achieve legislation that is in their interest.” Id. at 470 (internal quotation marks, citations,
and brackets omitted).
The Court dismissed the argument that Initiative 350 was not intended to prevent
busing for racially-integrative purposes, and explained why Initiative 350 violated the
“simple but central” principle animating Hunter and Nyquist. Seattle, 458 U.S. at 471.
First, as a threshold matter, the Court concluded that desegregation of the public
schools, like the fair housing ordinance in Hunter, “at bottom inures primarily to the
benefit of the minority, and is designed for that purpose.” Id. at 472. The Court
reasoned that, while “white as well as Negro children benefit from exposure to ethnic
and racial diversity in the classroom,” desegregation is of primary benefit to minority
children because these children “can achieve their full measure of success only if they
learn to function in—and are fully accepted by—the larger community. Attending an
ethnically diverse school may help accomplish this goal by preparing minority children
for citizenship in our pluralistic society.” Id. at 472-73 (internal quotation marks
omitted). Because racial minorities therefore had reason to “consider busing for
integration to be ‘legislation that is in their interest,’” the “racial focus of Initiative 350
. . . suffices to trigger application of the Hunter doctrine.” Id. at 474 (quoting Hunter,
393 U.S. at 395 (Harlan, J., concurring)).
Second, having concluded that Initiative 350 targeted a busing program that
“inures primarily to the benefit of the minority,” the Court held that “the practical effect
of Initiative 350 is to work a reallocation of power of the kind condemned in Hunter.”
Id. As the Court explained, Initiative 350, like the amendment to the city charter in
Hunter, did more than repeal the school board’s busing program:
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 14
1534; 09-1111 Regents of the Univ. of Mich., et al.
The initiative removes the authority to address a racial problem—and
only a racial problem—from the existing decisionmaking body, in such
a way as to burden minority interests. Those favoring the elimination of
de facto school segregation now must seek relief from the state
legislature, or from the statewide electorate. Yet authority over all other
student assignment decisions, as well as over most other areas of
educational policy, remains vested in the local school board. . . . As in
Hunter, then, the community’s political mechanisms are modified to
place effective decisionmaking authority over a racial issue at a different
level of government.
Id. By removing authority over busing for racial purposes from the school board and
placing this authority at a more remote level of government, Initiative 350 required
“those championing school integration to surmount a considerably higher hurdle than
persons seeking comparable legislative action,” and disadvantaged “those who would
benefit from laws barring de facto desegregation.” Id. at 474-75 (internal quotation mark
omitted). Accordingly, the Court held that Initiative 350, in placing “special burdens on
racial minorities,” violated the Equal Protection Clause. Id. at 470.
In sum, Hunter and Seattle require us to apply strict scrutiny to enactments that
change the governmental decisionmaking process for determinations with a racial focus.
Seattle, 458 U.S. at 470; Hunter, 393 U.S. at 391; cf. Carolene Prods., 304 U.S. at 153
n.4 (arguing that more exacting judicial scrutiny is required when the majority curtails
“the operation of those political processes ordinarily to be relied upon to protect
minorities”).
ii. Application of the Hunter/Seattle Test
Hunter and Seattle thus expounded the rule that an enactment deprives minority
groups of equal protection of the laws when it: (1) has a racial focus, targeting a goal or
program that “inures primarily to the benefit of the minority”; and (2) works a
reallocation of political power or reordering of the decisionmaking process that places
“special burdens” on a minority group’s ability to achieve its goals through that process.
Seattle, 458 U.S. at 470; Hunter, 393 U.S. at 391.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 15
1534; 09-1111 Regents of the Univ. of Mich., et al.
Applying this rule here, we conclude that Proposal 2 targets a program that
“inures primarily to the benefit of the minority” and reorders the political process in
Michigan in such a way as to place “special burdens” on racial minorities.
a. Racial Focus
The first prong of the Hunter/Seattle test requires us to determine whether
Proposal 2 has a “racial focus.” See Seattle, 458 U.S. at 473. The Court explained that
the question is not whether “members of the racial majority both favored and benefited
from” the program or policy at issue, but whether the policy targeted by the law “at
bottom inures primarily to the benefit of the minority, and is designed for that purpose.”
Id. at 472.
In Seattle, the Court observed that programs—in that context, the busing of
children to increase the number of integrated schools—furthering the education of
minority children enable them “to function in—and . . . [be] fully accepted by—the
larger community.” Id. at 473. Such programs do so, the Court explained, through
“preparing minority children for citizenship in our pluralistic society, while . . . teaching
members of the racial majority to live in harmony and mutual respect with children of
minority heritage.” Id. (internal quotation marks and citation omitted); see also Grutter,
539 U.S. at 330-32 (“[T]he [University of Michigan] Law School’s [race-conscious]
admissions policy promotes cross-racial understanding, helps to break down racial
stereotypes, and enables [students] to better understand persons of different races. . . .
[T]he diffusion of knowledge and opportunity through public institutions of higher
education must be accessible to all individuals regardless of race or ethnicity.” (fourth
alteration in original) (internal quotation marks omitted)). The Seattle Court then
concluded that Initiative 350 had a racial focus, because “it is enough that minorities
may consider busing for integration to be ‘legislation that is in their interest.’” Seattle,
458 U.S. at 474 (quoting Hunter, 393 U.S. at 395 (Harlan, J., concurring)).
Proposal 2, like Initiative 350, has a “racial focus,” because the Michigan
universities’ affirmative-action programs “inure[] primarily to the benefit of the
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 16
1534; 09-1111 Regents of the Univ. of Mich., et al.
minority, and [are] designed for that purpose,” for the reasons articulated by the Court
in Seattle. See id. at 472. Just as the desegregative busing programs at issue in Seattle
were designed to improve racial minorities’ representation at many public schools, see
id. at 460, race-conscious admissions policies increase racial minorities’ representation
at institutions of higher education, see, e.g., Grutter, 539 U.S. at 316, 328-33 (describing
the University of Michigan Law School’s minority-student-enrollment aims); Gratz, 539
U.S. at 253-56 (describing admissions policies at the University of Michigan regarding
underrepresented minority groups). Indeed, underrepresented minorities lobbied for the
adoption of such policies at Michigan’s universities in the first place for this reason, (see
Anderson Report, Dist. Ct. Docket No. 222 Ex. L, at 16-23), and, further, the unrebutted
evidence in the record indicates that Proposal 2 will likely negatively impact minority
representation at Michigan’s institutions of higher education, (see Connerly Dep., Dist.
Ct. Docket No. 222 Ex. A, at 119-21; Spencer Dep., Dist. Ct. Docket No. 203 Ex. D, at
100-01; Wu Dep., Dist. Ct. Docket No. 203 Ex. F, at 78; Zearfoss Dep., Dist. Ct. Docket
No. 205 Ex. 3, at 56-57). Ample evidence thus grounds our conclusion that race-
conscious admissions policies “inure[] primarily to the benefit of the minority.” See
Seattle, 458 U.S. at 472.
Yet the Attorney General argues, and we previously suggested, that the now-
defunct Michigan admissions policies benefitted women as well, and that saves them.
See Coal. II, 473 F.3d at 250-51. Our prior suggestion does not bind us, see Certified
Restoration Dry Cleaning Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 542 (6th Cir.
2007), and we now reject it. The Supreme Court made it clear that even policies
benefitting the majority—let alone another minority—may have a “racial focus,” so that
lens does not clarify anything. See Seattle, 458 U.S. at 472. In fact, it serves only to blur
what is in reality a clear test: The question is not whether the challenged law “burdens
minority interests and minority interests alone,” Coal. II, 473 F.3d at 250, but whether
the law targets policies that minorities may consider in their interest, Seattle, 458 U.S.
at 472. Even a cursory examination of the cases confirms this understanding. In Hunter,
the ordinance likewise burdened non-racial minorities, including Catholics, Hispanics
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 17
1534; 09-1111 Regents of the Univ. of Mich., et al.
and numerous other groups (which, grouped together, would constitute a majority of the
electorate), but the Court held that the law had a racial focus. 393 U.S. at 387. The same
was true of the policy at issue in Nyquist, and the Court again agreed that it had a racial
focus. 318 F. Supp. at 716-17. Likewise, as explained above, the race-conscious
admissions policies stymied by Proposal 2 are in the interest of racial minorities and
inure primarily to their benefit, so the polices have a racial focus as well.
This conclusion is not impacted by the fact that increased representation of racial
minorities in higher education also benefits students of other groups and our nation as
a whole. Cf. Grutter, 539 U.S. at 327-33 (describing the varied benefits supporting
Michigan’s compelling interest in increasing racial diversity at public institutions of
higher education). Similar benefits accrued to children at integrated public schools
under Seattle’s desegregative busing plan, which the Supreme Court explicitly
recognized: “[I]t should be . . . clear that white as well as Negro children benefit from
exposure to ethnic and racial diversity in the classroom . . . [by] teaching members of the
racial majority to live in harmony and mutual respect with children of minority heritage.”
Seattle, 458 U.S. at 472-73. Nonetheless, the Seattle Court found that the wider benefits
of the busing plan did not serve to distinguish Hunter, “for we may fairly assume that
members of the racial majority both favored and benefited from Akron’s fair housing
ordinance.” Id. at 472. By the same token, race-conscious admissions policies’ wider
benefits do not undermine the conclusion that their primary beneficiaries are racial
minorities.
We therefore find that the race-conscious admissions policies now barred by
Proposal 2 inure primarily to the benefit of racial minorities and that Proposal 2, insofar
as it prohibits consideration of applicants’ race in admissions decisions, has a “racial
focus.”
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 18
1534; 09-1111 Regents of the Univ. of Mich., et al.
b. Reordering the Political Process to Place Special
Burdens on Racial Minorities
The second prong of the Hunter/Seattle test asks us to determine whether
Proposal 2 works a reallocation of political power or reordering of the political process
that places “special burdens” on racial minorities. See Seattle, 458 U.S. at 470; Hunter,
393 U.S. at 391.
1. Does Proposal 2 Reorder a “Political” Process?
The first issue within this prong is whether the Michigan admissions committees
are “political,” as that term is used in the Hunter/Seattle test. We begin by examining
the word itself. “Political” has two possible meanings relevant to our discussion: “of or
relating to government,” Merriam-Webster, Webster’s Third New International
Dictionary: Unabridged 1755 (1993) (first definition), or “of, relating to, or involved in
party politics,” id. (third definition). Examining the Court’s language, we conclude that
the “political” requirement seeks to ensure that the process at issue relates to
government.
The political processes relevant in Hunter and Seattle were the Akron public-
housing structure and the Washington public schools’ student-assignment system,
respectively. See Seattle, 458 U.S. at 474; Hunter, 393 U.S. at 390, 393. Clarifying the
“political” nature of the latter, the Court referred to the “political process”
interchangeably as a “decisionmaking process” and a “governmental process,” and
explained that the political power allocation in question is of “governmental power.”
Seattle, 458 U.S. at 470. The Court elsewhere identified the relevant characteristics that
made the school boards “political”: They were “creatures of the State” and had to “give
effect to policies announced by the state legislature.” Id. at 476. In other words, the
boards were “political” because they were governmental entities, not necessarily
electoral or partisan ones. Id. Even more explicitly, the Court found that Initiative 350’s
flaw was “us[ing] the racial nature of an issue to define the governmental
decisionmaking structure.” Id. at 470 (emphasis added); see also id. at 474 (“As in
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 19
1534; 09-1111 Regents of the Univ. of Mich., et al.
Hunter, then, the community’s political mechanisms are modified to place effective
decisionmaking authority over a racial issue at a different level of government.”
(emphasis added)). Indeed, the Court noted that the political “reallocation of power of
the kind condemned in Hunter” is the removal of “authority . . . from the existing
decisionmaking body.” Id. (emphasis added); see also id. at 477 (“[I]t is irrelevant that
the State might have vested all decisionmaking authority in itself, so long as the political
structure it in fact erected imposes comparative burdens on minority interests . . . .”
(emphasis added)). Thus, a process is “political” under Hunter and Seattle if it involves
governmental decisionmaking.
The dissent disagrees. It defines a “political process” narrowly, as one “through
which the people exercise their right to govern themselves,” Slip Op. at 13, or one that
is “electoral,”2 id. at 18-19 & n.6, and suggests that a process is political only if it
involves direct elections. In so doing, the dissent misapprehends the “political” nexus
required in the Hunter/Seattle test. The electoral nature of a state system is relevant not
to the political nature of a process, but to the reordering at issue. The Court’s point in
requiring that there be reordering of a “political process” was merely to ensure that the
process was state-directed (“governmental”) and mattered (“decisionmaking”), the same
way Title VII cases require the alleged discriminatory act to relate to a company agent
with relevant authority. No link to the electoral process is required to find a given
process “political.”
The dissent latches on to a lone mention of an “electorate” in Seattle to argue that
the Hunter/Seattle political process must be an electoral, or voting-centered, political
process. The statement at issue, however, was simply the Court’s quotation of the
language setting forth the school board’s authority under Washington law. See Seattle,
458 U.S. at 478 (quoting Wash. Rev. Code § 28A.58.758(1)). And that quotation sits in
2
By “electoral,” the dissent must mean “of or relating to election.” See Merriam-Webster,
Webster’s Third New International Dictionary: Unabridged 731 (1993). Nothing in either definition of
“political,” however, relates more than tangentially to an election or voting: Yes, in a democracy,
government exists because of elections, but the Court did not require there to be a “political process” for
the purpose of elucidating first principles. The second meaning of government—in effect, “partisan”—is
more related to elections, but the cases do not support (and the dissent does not advocate) such a reading.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 20
1534; 09-1111 Regents of the Univ. of Mich., et al.
a section explaining the structure of Washington’s educational system generally and the
power of the school boards specifically. See id. To argue that the key insight to the
entire Hunter/Seattle test lies in this solitary quotation is unsupportable, especially given
the abundance of language to the contrary in those cases. Moreover, there is no language
in this section of Seattle suggesting that the Court was defining what it meant by a
“political process.” A process thus is “political” if it involves governmental
decisionmaking. Nothing more is required.
This point is hammered home by the Court’s affirmance of, and subsequent
reliance (in Seattle) on, Nyquist. In Nyquist, the Court agreed with the three-judge panel
that an enactment to New York’s laws unconstitutionally reordered the political process
when the enactment “prohibit[ed] state education officials and appointed school boards”
from performing various education-related functions “for the purpose of achieving racial
equality in attendance.” 318 F. Supp. at 712 (emphasis added). The fact that the school
boards at issue were not elected did not affect the Court’s decision.3 The Hunter/Seattle
test therefore requires simply that the process at issue involve governmental
decisionmaking.
Yet even using the dissent’s erroneous definition of “political” as “electoral,” the
admissions committees here still qualify as “political.” For in addition to possessing the
same character as the school boards in Seattle and Nyquist and the Akron housing
institutions in Hunter, they fall squarely within Michigan’s electoral system.
The Michigan Constitution, the foundation of Michigan’s government,
establishes three public universities—the University of Michigan, Michigan State
University, and Wayne State University—and grants the governing board of each
university control of its respective institution. Mich. Const. art. VIII, § 5; see also id.
art. VIII, § 6 (allowing the establishment of other institutions of higher learning, such as
3
Likewise, the dissent’s dwelling on the term “legislation,” see Slip Op. at 13-14, misapprehends
that term’s usage in the Hunter/Seattle test, for the Court considered the school board policies in Seattle
and Nyquist to constitute such “legislation,” see Seattle, 458 U.S. at 470, 474-75 & n.17; Nyquist, 318 F.
Supp. at 718-19, and the admissions policies at Michigan’s colleges and universities are of an identical
character.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 21
1534; 09-1111 Regents of the Univ. of Mich., et al.
Michigan’s other public colleges and universities, and according their governing boards
similar control). At each institution, these boards and their members have slightly
differing names—“Board of Trustees,” “Board of Governors,” “Board of Regents,” and
so on—but the same role: to run, with plenary authority, their respective institution. Id.
art. VIII, §§ 5-6; Glass v. Dudley Paper Co., 112 N.W.2d 489, 490 (Mich. 1961).
Michigan law has confirmed this absolute authority again and again. See, e.g., Glass,
112 N.W.2d at 490; Attorney Gen. ex rel. Cook v. Burhans, 7 N.W.2d 370, 371 (Mich.
1942); Bd. of Regents of Univ. of Mich. v. Attorney Gen., 132 N.W. 1037, 1040 (Mich.
1911); 1979-80 Mich. Op. Atty Gen. 578, 1980 WL 114008, at *1-2 (Mich. A.G. Jan.
31, 1980).
Eight elected individuals populate each of these boards, and they hold office for
eight years. Mich. Const. art. VIII, § 5; see also id. art. VIII, § 6. The boards govern the
universities, including enacting the regulations that direct the university’s government
and determining when to retain or remove the president or faculty. See Mich. Comp.
Laws §§ 390.3-.6 (University of Michigan).4 The meetings at which the board takes
such action are generally public. See id. § 390.20. Meanwhile, the bylaws, over which
the boards have complete authority, detail the admissions procedures.5 See Univ. of
Mich., Bylaws of the Bd. of Regents § 8.01, available at
4
Though the statutes and bylaws cited in this paragraph govern only the University of Michigan,
the boards of the other public colleges and universities in Michigan are similarly empowered. See, e.g.,
Mich. Comp. Laws §§ 390.102-.107 (Michigan State University), 390.641-.645 (Wayne State University).
5
At Michigan State University, the Provost of the University “shall be appointed by the Board
[of Trustees],” “shall serve at the pleasure of the Board,” and “[s]hall be responsible for supervising
procedures and policies relating to the admission of students.” Mich. State Univ., Bd. of Trs. Bylaws, art.
4, available at http://www.trustees.msu.edu/bylaws (last visited June 24, 2011). The Board retains the
authority to “determine and establish the qualifications of students for admission at any level” upon the
recommendation of the President, whom the Board elects and who also serves at its pleasure, id. arts. 1,
4, as well as the more general authority to reallocate responsibility for admissions to other officers or to
itself, see id. art. 17.
At Wayne State University, the President, elected by the Board, is authorized to establish specific
admissions standards for undergraduate and graduate degree programs after (s)he has consulted with the
relevant college or school and the Graduate Council, see Mich. Const. art. VIII § 5; Wayne State Univ.
Statutes §§ 2.34.09.090, 2.34.12.350, available at http://www.bog.wayne.edu/code (last visited June 24,
2011), and the Board may amend its regulations to alter, remove, or shift this authority as it sees fit, see
Wayne State Univ., Bd. of Governor Bylaws 10, available at http://www.bog.wayne.edu/files/bylaws.pdf
(last visited June 24, 2011) (describing the Board’s authority to enact bylaws and regulations for the
governance of the University).
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 22
1534; 09-1111 Regents of the Univ. of Mich., et al.
http://www.regents.umich.edu/bylaws (last visited June 24, 2011). Nothing prevents the
boards from altering this framework for admissions decisions if they are so inclined. See
Mich. Const. art. VIII, § 5; Mich. Comp. Laws §§ 390.3-.6; Univ. of Mich., Bylaws of
the Bd. of Regents § 8.01, available at http://www.regents.umich.edu/bylaws (last
visited June 24, 2011).
Attempting to argue to the contrary, the dissent claims that the admissions
committees are not connected to Michigan’s electoral political system because the
governing boards of the universities “have fully delegated the responsibility for
establishing admissions standards.” Slip Op. at 11 (emphasis added). The dissent rests
this argument on “the testimony of the law school deans in this case.” Id. at 14. But the
dissent’s argument fails for two reasons. First, the testimony the dissent references does
not support the dissent’s claim of “full delegation” or the idea that the boards could not
theoretically change the policies; it merely describes the current admissions structures.
There is one exception to this observation, however: former-Dean Wu’s personal opinion
that modification of the admissions structure might “precipitate a constitutional crisis.”
(Wu Dep., Dist. Ct. Docket No. 203 Ex. F, at 191-92). But this opinion is inadmissible
as both speculation and a legal conclusion (notably, with no basis in Michigan law). See
Torres v. Cnty. of Oakland, 758 F.2d 147, 149-51 (6th Cir. 1985).
Second, and much more to the point, the structure of Michigan’s colleges and
universities is a question of law, for it is set by constitution, statutes and regulations. See
United States v. Dedman, 527 F.3d 577, 584-85 (6th Cir. 2008). And we would be
remiss to rely on witness testimony to decide such questions, see Fed. R. Evid. 701;
Torres v. Cnty. of Oakland, 758 F.2d 147, 149-51 (6th Cir. 1985); cf. Becht v. Owens
Corning Fiberglas Corp., 196 F.3d 650, 654 (6th Cir. 1999), particularly where as here
a clear statutory structure is weighed against unfounded supposition. Still, the dissent
protests: “As they currently stand, the faculty admissions committees are islands unto
themselves, vested with the full and unreviewed authority to set admissions policy for
their respective university programs.” Slip Op. at 14. The current boards’ policies,
however, are besides the point. The key question is whether the boards’ current
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 23
1534; 09-1111 Regents of the Univ. of Mich., et al.
policies—in the form of bylaws and regulations—could be altered, for example if the
people of Michigan elected different boards dedicated to changing the universities’
admissions policies. Michigan law provides a resounding “yes,” see Mich. Const. art.
VIII, §§ 5-6; cf. Mich. State Univ., Bd. of Trs. Bylaws, art. 5 (stipulating that “[t]he
delegation of any authority by the Board to any committee shall not operate to relieve
the Board or any member thereof of any responsibility imposed by law or the State
Constitution”), and the dissent points us to no law indicating otherwise.
Moreover, because the dissent does not question the boards’ electoral nature, the
dissent’s argument implies another untenable proposition: that delegation of admittedly
electoral power to an unelected body renders the power ultimately exercised non-
electoral. As an initial matter, the appointed boards in Nyquist soundly rebuff this
argument. Yet the argument cannot hold water even aside from Nyquist. Let us begin
by dissecting the dissent’s contention in a more familiar electoral framework: the federal
system. In parallel to Michigan’s university structure, the members of the National
Security Council (“NSC”) are likewise unelected individuals receiving delegated
electoral political power, though from the President of the United States. Do we
consider the power they wield to be electoral? Of course. That they are a step removed
from the electoral process does not mean that they are not exercising electoral political
power. See Carter v. Carter Coal Co., 298 U.S. 238, 296 (1936) (“And the Constitution
itself is in every real sense a law—the lawmakers being the people themselves, in whom
under our system all political power and sovereignty primarily resides . . . . It is by that
law, and not otherwise, that the legislative, executive, and judiciary agencies which it
created exercise such political authority as they have been permitted to possess.”
(emphasis added)); see also Mistretta v. United States, 488 U.S. 361, 393 (1989)
(referring to the United States Sentencing Commission’s work as of a “significantly
political nature”); cf. Walsh v. Heilmann, 472 F.3d 504, 506 (7th Cir. 2006) (“Many
units of government delegate important decisions to middle management, and when they
do this they may insist that the holders of the delegated power be reliable implementers
of the elected officials’ platforms.” (emphasis added)). If American voters do not like
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 24
1534; 09-1111 Regents of the Univ. of Mich., et al.
what the NSC does, they may exact an electoral price against the person from whom the
NSC receives its power: the President.6 The same is true of the admissions committees
here, which wield the electoral power bestowed on them—through the
boards—ultimately by the Michigan Constitution. See Part II.A.1.ii.b.2, infra.
In sum, we find apt the Court’s rejoinder to claims similar to those the Attorney
General and the dissent make: “[T]hat a State may distribute legislative power as it
desires . . . furnish[es] no justification for a legislative structure which otherwise would
violate the Fourteenth Amendment.” Seattle, 458 U.S. at 476 (quoting Hunter, 393 U.S.
at 392) (first alteration added). Michigan, like “Washington[,] . . . has chosen to make
use of a more complex governmental structure” than direct administration by the
legislature, or even the university boards, of admissions decisions in university and
college affairs. See id. at 476-77. However, as we have explained, the fact that the
admissions committees received the political power they exercise through delegation
rather than direct election is irrelevant to the nature of that power and thus the
applicability of the Hunter/Seattle test.
Therefore, the admissions committees are “political” because they are
governmental decisionmaking bodies. And even if they had to be tied to the electoral
system, they are, because the individuals delegated with principal responsibility for
admissions policies at Michigan’s public colleges and universities are appointed by the
institutions’ governing boards—which are either elected by the citizens of Michigan or
appointed by elected officials—and the boards are free to reassign this responsibility as
6
Put more pointedly, it is the electoral structure that renders the power wielded electoral, not the
nature of the person’s position. No matter how many times this power is delegated, or to whom, an elected
official is ultimately responsible for it. For example, though two State Department employees may reach
their posts by different paths, one hired and one appointed, both individuals’ power stems from the
President, and they perform the same function: the work of the President. And a building manager working
for the General Services Administration (“GSA”), like a faculty member on a public university’s
admissions committee, is hired and performs a function existing equally in the private sector. The building
manager’s private counterpart does not exercise electoral power, yet the GSA employee and Michigan
faculty member do. The difference lies in the ultimate source of these latter two individuals’ authority:
the government. The fact remains that an elected official—be it the President of the United States, the
Governor of Michigan, or a member of one of the university boards—is accountable to the electorate for
the power that he delegated to the GSA, State Department, or university admissions committees, and he
could equally choose to delegate that power to someone else or exercise it himself. This is what it means
for power to be electoral.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 25
1534; 09-1111 Regents of the Univ. of Mich., et al.
they see fit. Thus, there is little doubt that Proposal 2 affects a “political process” under
Hunter and Seattle.
2. Does Proposal 2 Effect a “Reordering” of the
Political Process so as to Place Special Burdens
on Racial Minorities?
The next issue is whether Proposal 2 reordered the political process to place
special burdens on racial minorities. We find that Proposal 2 burdens racial minorities
for the reasons articulated in Part II.A.1.ii.a, supra. As to whether there was a
reordering, the Court has found that both implicit and explicit reordering violates the
Fourteenth Amendment. See Seattle, 458 U.S. at 474; Hunter, 393 U.S. at 387, 390. In
Hunter, the express language of the charter amendment required any ordinance
regulating real estate “on the basis of race, color, religion, national origin or ancestry”
to be approved by a majority of the electorate and the City Council, as opposed to solely
the City Council for other real-estate ordinances. 393 U.S. 387, 390.
In Seattle, however, the reordering was implicit: On its face, Initiative 350
simply prohibited school boards from using mandatory busing, but its practical effect
was that “[t]hose favoring the elimination of de facto school segregation now must seek
relief from the state legislature, or from the statewide electorate” through overturning
Initiative 350. 458 U.S. at 474. Nonetheless, “authority over all other student
assignment decisions . . . remains vested in the local school board.” Id. The Seattle
Court then clarified what sort of reordering contravenes the “political process” theory:
“The evil condemned by the Hunter Court was not the particular political obstacle of
mandatory referenda imposed by the Akron charter amendment; it was, rather, the
comparative structural burden placed on the achievement of minority interests.”7 Id. at
474 n.17 (emphasis added). Thus, any “comparative structural burden,” be it local or
state-wide or national, satisfies the reallocation prong of the Hunter/Seattle test. Id.
7
The Court’s statement here rebuffs the dissent’s attempt to argue that the “relevant lawmaking
authority” also must be reallocated from a “local legislative body” to a “more complex government
structure” with a broader constituency. See Slip Op. at 7.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 26
1534; 09-1111 Regents of the Univ. of Mich., et al.
We face here an enactment even more troubling than those at issue in Hunter and
Seattle, as the hurdle Proposal 2 creates is of the highest possible order. An interested
Michigan citizen may use any number of avenues to change the admissions policies on
an issue unrelated to race. He may lobby the admissions committees directly, through
written or in-person communication if the latter is available, or petition higher
administrative authorities at the university: the dean of admissions, the president or dean
of the university, or the university’s board. See Part II.A.1.ii.b.1, supra; see also, e.g.,
Univ. Defs. Admis., Dist. Ct. Docket No. 172 Ex. I, at 11, 14-15, 17-20; Wu Dep., Dist.
Ct. Docket No. 203 Ex. F, at 190; Zearfoss Dep., Dist. Ct. Docket No. 205 Ex. 3, at 209-
10. And there is no question that the admissions committees are very much accountable
to the universities’ boards, which retain ultimate—and politically accountable—
responsibility over admissions policies. See Mich. Const. art. VIII, §§ 5-6.
The individual seeking this non-race-related change may also seek to affect the
election—through voting, campaigning, or otherwise—of any one of the eight board
members whom the individual believes will champion his cause and revise the review
of admissions determinations accordingly. These elections, though state-wide in scope,
would likely be much more manageable than those surrounding constitutional
amendments, which can be expensive, lengthy, and complex, (see Wilfore Decl., Dist.
Ct. Docket No. 203 Ex. C ¶¶ 10, 29-30). Only as a last resort would the effort and
expense of campaigning for an amendment to the Michigan Constitution be
required—the only option that remains open for proponents of race-based admissions
criteria.
Meanwhile, a Michigan citizen seeking that Michigan universities adopt race-
based admissions policies must now begin by convincing the Michigan electorate to
amend the Michigan Constitution. Placing a proposed constitutional amendment
abrogating Proposal 2 on the ballot would require either the support of two-thirds of both
the Michigan House of Representatives and Senate, see Mich. Const. art. XII, § 1, or the
signatures of a number of voters equivalent to at least ten percent of the number of votes
cast for all candidates for governor in the preceding general election, see id. art XII, § 2.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 27
1534; 09-1111 Regents of the Univ. of Mich., et al.
A majority of the voting electorate would then have to approve the amendment. See id.
art. XII, §§ 1-2.
Only after traversing this difficult and costly process, (see Wilfore Decl., Dist.
Ct. Docket No. 203 Ex. C ¶¶ 10, 29-30), would the now-exhausted Michigan citizen
reach the starting point of his opponent who sought a non-race-related admissions policy
change. By amending Michigan’s Constitution to prohibit university admissions units
from utilizing race-conscious admissions policies, proponents of Proposal 2 thus
removed the authority to institute racially-focused policies from Michigan’s universities
and lodged it at the most remote level of Michigan’s government, the state constitution.
In other words, as with the unconstitutional enactment in Hunter, proponents of
race-conscious admissions policies now have to obtain the approval of the Michigan
electorate and (if they are successful) the admissions units or other university powers,
whereas proponents of other admissions policies need only the support of the latter. See
Seattle, 458 U.S. at 468, 474 (describing Hunter).
The stark contrast between the avenues for political change available to different
admissions proponents following Proposal 2 illustrates why the amendment cannot be
construed as a mere repeal of an existing race-related policy. Had those favoring
abolition of race-conscious admissions successfully lobbied the universities’ admissions
units, just as underrepresented minorities did to have these policies adopted in the first
place, there would be no equal protection problem. As the Supreme Court has made
clear, “‘the simple repeal or modification of desegregation or antidiscrimination laws,
without more, never has been viewed as embodying a presumptively invalid racial
classification.’” Seattle, 458 U.S. at 483 (quoting Crawford v. Bd. of Educ., 458 U.S.
527, 539 (1982)); accord Hunter, 393 U.S. at 390 n.5. Crawford brings this distinction
into focus, because the Court-approved political action in that case (amendment of the
California constitution) occurred at the same level of government as the original
enactment (a prior amendment of the California constitution), thus leaving the rules of
the political game unchanged. 458 U.S. at 532, 540.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 28
1534; 09-1111 Regents of the Univ. of Mich., et al.
As illustrated above, however, Proposal 2 “works something more than the ‘mere
repeal’ of a desegregation law by the political entity that created it.” Seattle, 458 U.S.
at 483. Rather, like Initiative 350 did for any future attempt to implement race-based
busing (and the Akron city charter amendment did for any future attempt to enact a fair
housing ordinance), “by lodging decisionmaking authority over the question at a new
and remote level of government,” Proposal 2 “burdens all future attempts” to implement
race-conscious admissions policies. Id.
By the same token, precisely because Proposal 2 places special burdens on a
political program of particular importance to racial minorities, it is not a sufficient
response to point out that these minorities remain free to repeal it. The “simple but
central principle” of Hunter and Seattle is that the Equal Protection Clause prohibits
requiring racial minorities to surmount more formidable obstacles to achieve their
political objectives than other groups face. See id. at 469-70. As the Supreme Court has
recognized, such special procedural barriers to minority interests discriminate against
racial minorities just as surely as—and more insidiously than—substantive legal barriers
challenged under the traditional equal protection rubric. See id. at 467 (“[T]he
Fourteenth Amendment also reaches a political structure that treats all individuals as
equals, yet more subtly distorts governmental processes in such a way as to place special
burdens on the ability of minority groups to achieve beneficial legislation.” (internal
quotation marks and citation omitted)). Because less onerous avenues to effect political
change remain open to those advocating consideration of non-racial factors in
admissions decisions, Michigan cannot force those advocating for consideration of racial
factors to go down a more arduous road than others without violating the Fourteenth
Amendment.
We thus conclude that Proposal 2 reorders the political process in Michigan to
place special burdens on minority interests.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 29
1534; 09-1111 Regents of the Univ. of Mich., et al.
iii. Proposed Permutations of the Hunter/Seattle Test
a. Is Prohibiting “Preferential Treatment” Different From
Prohibiting “Discrimination”?
The Attorney General asserts that Hunter and Seattle are inapplicable to Proposal
2 because the cases govern only enactments that burden racial minorities’ ability to
obtain protection from discrimination through the political process, whereas Proposal
2 burdens racial minorities’ ability to obtain preferential treatment. In support of this
distinction, the Attorney General points to our preliminary injunction ruling, and
decisions of the Ninth Circuit and the district court. See Coal. II, 473 F.3d at 251; Coal.
for Econ. Equity, 122 F.3d at 708; Coal. IV, 539 F. Supp. 2d at 956-57. None of these
decisions is binding on us. See Tenke Corp., 511 F.3d at 542 (“[C]onclusions of law
made by a court granting [a] preliminary injunction are not binding at trial on the
merits.” (internal quotation mark omitted)); Cross Mountain Coal. v. Ward, 93 F.3d 211,
217 (6th Cir. 1996) (“[T]he decisions of other circuits are entitled to our respect, [but]
they are not binding upon us.”). And we do not find them persuasive.
We turn first to the distinction at issue and its true meaning. Differentiation
between “discrimination” and “preference” in this context finds its origin in the Ninth
Circuit. See Coal. for Econ. Equity, 122 F.3d at 707-09. The Coalition for Economic
Equity court began by stating that “[e]ven a state law that does restructure the political
process can only deny equal protection if it burden’s an individual’s right to equal
treatment.” Id. at 707 (emphasis added). The court then continued: “It is one thing to
say that individuals have equal protection rights against political obstructions to equal
treatment; it is quite another to say that individuals have equal protection rights against
political obstructions to preferential treatment.” Id. at 708. In so positing, the Ninth
Circuit added another element to the Hunter/Seattle test. That element, stripped of the
controversial and obfuscating distinction between “discrimination” and “preference,”
boils down to a belief that an enactment violates the Equal Protection Clause under
Hunter and Seattle only if it undermines state action that is constitutionally mandated
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 30
1534; 09-1111 Regents of the Univ. of Mich., et al.
(“discrimination”), as opposed to constitutionally permissible (“preference”).8 Put
differently: An enactment is unconstitutional if it transgresses a constitutionally-
mandated action, i.e., an enactment is unconstitutional under the “political process”
framework only if the enactment is already unconstitutional under the “traditional”
rubric. But this reasoning defies logic. Using this rationale, the political process theory
would be superfluous, for an aggrieved citizen could sue to enjoin the unconstitutional
law under the traditional equal protection analysis. For that very reason, the Court
created the “political process” theory in the context of cases addressing state action that
is constitutionally permissible (or “preferential” to use the Attorney General and Ninth
Circuit’s terminology). The facts of those very cases thus prohibit this distinction.
The Court in Hunter rejected the argument that the Akron amendment’s effect
was moot because the amendment was invalid under the 1968 Civil Rights Act, see
Hunter, 393 U.S. at 388-89, or that traditional equal protection resolved the case, id. at
389. Seattle even more clearly involved constitutionally-permissible state action, as
Initiative 350 responded to a voluntary school board effort to reduce the impact of de
facto segregation. 458 U.S. at 460-61. The school board was under no obligation to
undertake this effort because there had been no finding that the segregation was
motivated by racial discrimination—a fact that the Seattle dissent repeatedly pointed out.
See, e.g., id. at 491-92 (Powell, J., dissenting) (“The Court has never held that there is
an affirmative duty to integrate the schools in the absence of a finding of unconstitutional
segregation. . . . Certainly there is no constitutional duty to adopt mandatory busing in
the absence of such a violation.”). Rather, the Board’s plan was an ameliorative measure
designed to combat the effects of Seattle’s segregated housing patterns and “alleviate the
isolation of minority students.” Id. at 460. It is inaccurate, therefore, to suggest that
Initiative 350 made it “more difficult for minorities to obtain protection from
8
This must be so because there is no free-floating “right” to be free of discrimination. That right
must therefore find its basis in either the United States Constitution—primarily through the Equal
Protection Clause—or a federal statute. The latter was not at issue in Coalition for Economic Equity, so
the Equal Protection Clause must ground the right discussed by the Ninth Circuit. Therefore, the only
possible reading of the Ninth Circuit’s decision is that the Equal Protection Clause, through the “political
process” theory, only protects action which the Equal Protection Clause, through the “traditional” theory,
already protects.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 31
1534; 09-1111 Regents of the Univ. of Mich., et al.
discrimination through the political process.” Coal. II, 473 F.3d at 251. Quite the
contrary: As the district court recognized, “[b]ecause prohibiting integration (when it is
not constitutionally mandated) is not tantamount to discrimination, . . . the Court in
Seattle did not (and could not) rely on the notion that the restructuring at issue impeded
efforts to secure equal treatment.”9 Coal. VI, 592 F. Supp. 2d at 951.
Similarly, in Nyquist, the New York Legislature responded to attempts to remedy
de facto segregation “generated in large part by local housing patterns and economic
conditions,” 318 F. Supp. at 717, by passing a law prohibiting “state education officials
and appointed school boards from assigning students, or establishing, reorganizing or
maintaining school districts . . . for the purpose of achieving racial equality in
attendance,” id. at 712. Applying Hunter, the court concluded that “by prohibiting the
implementation of plans designed to alleviate racial imbalance in the schools,” the
statute “creates a clearly racial classification, treating educational matters involving
racial criteria differently from other educational matters and making it more difficult to
deal with racial imbalance in the public schools.” Id. at 718-19. In reaching this
conclusion, the court rejected the defendants’ argument that this classification did not
violate the Equal Protection Clause because “in the absence of de jure segregation, the
state is under no obligation to take affirmative action to reduce de facto segregation.”
Id. at 719. The court reasoned that the process-based nature of the Hunter inquiry
precluded this distinction:
9
In holding that Proposal 2 nonetheless does not violate the Equal Protection Clause, the district
court asserted that the race-conscious admissions policies at issue here should be distinguished from the
voluntary desegregative busing program at issue in Seattle because, unlike race-conscious admissions
policies, “school desegregation programs are not inherently invidious, do not work wholly to the benefit
of certain members of one group and correspondingly to the harm of certain members of another group,
and do not deprive citizens of rights.” Coal. VI, 592 F. Supp. 2d at 951 (quoting Coal. for Econ. Equity,
122 F.3d at 708 n.16).
This purported distinction is erroneous and flies in the face of the Supreme Court’s decisions in
Grutter and Parents Involved in Community Schools v. Seattle School District No. 1, 551 U.S. 701 (2007).
In Grutter, the Supreme Court showed how narrowly-tailored race-conscious admissions programs are not
“inherently invidious,” see 539 U.S. at 334-44, and do not work “wholly to the benefit of members of one
group,” see id. at 330. The Court explained: “[T]he skills needed in today’s increasingly global
marketplace can only be developed through exposure to widely diverse people, cultures, ideas, and
viewpoints.” Id. In Parents Involved, the Court held that voluntary school desegregation programs can
impose injury, depriving citizens of rights. 551 U.S. at 719.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 32
1534; 09-1111 Regents of the Univ. of Mich., et al.
[T]he argument that the state has not discriminated because it has no
constitutional obligation to end de facto racial imbalance fails to meet the
issue under Hunter v. Erickson. The statute places burdens on the
implementation of educational policies designed to deal with race on the
local level. . . . The discrimination is clearly based on race alone, and the
distinction created in the political process, based on racial considerations,
operates in practice as a racial classification.
Id. Accordingly, the court held the law unconstitutional, a decision that the Supreme
Court summarily affirmed, 402 U.S. 935 (1971), and then subsequently relied on in
Seattle.
It should be unsurprising, then, that the language of these decisions encompasses
any legislation in the racial minorities’ interest, and thus is broader than it would be
were the Attorney General’s distinction valid. See, e.g., Seattle, 458 U.S. at 467 (noting
the Fourteenth Amendment protects against distortions of the political process that
“place special burdens on the ability of minority groups to achieve beneficial legislation”
(emphasis added)); id. at 470 (requiring searching judicial scrutiny where state action
makes it more difficult for racial minorities “to achieve legislation that is in their
interest” (emphasis added) (internal quotation mark omitted)); id. at 474 (finding it
“enough that minorities may consider busing for integration to be legislation that is in
their interest” (emphasis added) (internal quotation mark omitted)); Hunter, 393 U.S.
at 393 (“[T]he State may no more disadvantage any particular group by making it more
difficult to enact legislation in its behalf than it may dilute any person’s vote . . . .”
(emphasis added)); cf. Nyquist, 318 F. Supp. at 720 (holding that the state “has acted to
make it more difficult for racial minorities to achieve goals that are in their interest”
(emphasis added)).
The cases’ context and reasoning, discussed above, crystallize the point of the
Hunter/Seattle doctrine. The political process theory does not serve as a duplicative
backstop against already unconstitutional action. Instead, it prevents the placement of
special procedural obstacles on minority objectives, whatever those objectives may be.
The distinction urged by the Attorney General thus erroneously imposes an outcome-
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 33
1534; 09-1111 Regents of the Univ. of Mich., et al.
based limitation on a process-based right. Again, what matters is if racial minorities are
forced to surmount procedural hurdles in reaching this goal over which other groups do
not have to leap. If racial minorities do, the disparate procedural treatment violates the
Equal Protection Clause, regardless of the goal sought. Accordingly, whether “all
governmental use of race must have a logical end point,” as the dissent asserts, Slip Op.
at 21 (quoting Grutter, 539 U.S. at 342), is irrelevant to the constitutionality of Proposal
2 under Hunter and Seattle. The equal protection injury imposed by Proposal 2 is not
the Michigan electorate’s attempt to end affirmative action, but the method by which it
sought to do so.
b. Does a Law Place Special Burdens on Minorities Even
When Multiple Minorities Affected by the Enactment,
Cobbled-Together, Would Constitute a Numerical
Majority?
As to the issue of burdening minorities, the Attorney General argues that
Proposal 2 places no special burden on racial minorities because they, together with
women, constitute a numerical majority of voters and thus could theoretically repeal
Proposal 2.10 In so arguing, he points to the Hunter Court’s statement in dicta that “[t]he
majority needs no protection against discrimination and if it did, a referendum might be
bothersome but no more than that.” 393 U.S. at 391.
The Attorney General’s argument is without merit. Examination of the context
of that statement from Hunter reveals that the quotation referred to the racial majority
at issue in that case, not the ad-hoc and theoretical numerical majority posited by the
Attorney General. See id. And as the district court cogently stated:
The argument that racial minorities plus women constitute a majority of
the population, and therefore Proposal 2 does not discriminate against
minorities . . . borders on nonsense. The attempt to cobble together an
artificial coalition of women and racial minorities in an effort to construct
a numerical majority of citizens ignores the fact that affirmative action
programs generally are targeted to benefit insular groups that separately
10
We address this argument separately because our “racial focus” analysis does not encompass
it fully. See Part II.A.1.ii.a, supra.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 34
1534; 09-1111 Regents of the Univ. of Mich., et al.
have suffered from discriminatory practices in the past because of
perceived traits unique to that group alone. Lumping minority groups
into a contrived category does not allow any greater political influence
over the process of advocating for affirmative action programs to achieve
racial parity or otherwise render the process of changing the state
constitution “bothersome but no more than that.”
Coal. IV, 539 F. Supp. 2d at 956 (quoting Hunter, 393 U.S. at 391); cf. Growe v. Emison,
507 U.S. 25, 41 (1989) (noting that, under the Voting Rights Act, “a court may not
presume bloc voting within even a single minority group,” and so “it ma[kes] no sense
for . . . [a court to] indulge that presumption as to bloc voting within an agglomeration
of distinct minority groups”).
Finally, as the Supreme Court has long recognized, minority groups may face
political disadvantages independent of their numerical strength. See San Antonio Indep.
Sch. Dist. v. Rodriguez, 411 U.S. 1, 28 (1973) (noting that minority groups may be
“saddled with such disabilities, or subjected to such a history of purposeful unequal
treatment, or relegated to such a position of political powerlessness as to command
extraordinary protection from the majoritarian political process”); cf. Frontiero v.
Richardson, 411 U.S. 677, 686 n.17 (1973) (observing that women are underrepresented
politically even though “[i]t is true, of course, that when viewed in the abstract, women
do not constitute a small and powerless minority”). Therefore, it is a considerable
oversimplification—and simply inaccurate—to conflate a simple numerical majority
comprised of members of different minority groups with a political majority for which
“a referendum might be bothersome but no more than that.” Hunter, 393 U.S. at 391.
c. Does the Hunter/Seattle Test Contain an Intent
Requirement?
Drawing on the language from Seattle that Initiative 350 “was effectively drawn
for racial purposes,” and “enacted because of, not merely in spite of, its adverse effects
upon busing for integration,” 458 U.S. at 471 (internal quotation marks omitted), the
Attorney General also argues that a reallocation of political decisionmaking violates the
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 35
1534; 09-1111 Regents of the Univ. of Mich., et al.
Equal Protection Clause only if the Plaintiffs can demonstrate it was motivated by
purposeful racial discrimination.
However, “the idea that a political restructuring claim must be based on [a
finding of] purposeful discrimination finds no support in the [Supreme Court’s] cases.”
Coal. IV, 539 F. Supp. 2d at 956. Indeed, in Seattle, the Court expressly rejected this
argument. Acknowledging that “‘purposeful discrimination is the condition that offends
the Constitution,’” 458 U.S. at 484 (quoting Pers. Adm’r v. Feeney, 442 U.S. 256, 274
(1979)), the Court nonetheless emphasized that “[w]e have not insisted on a
particularized inquiry into motivation in all equal protection cases.” Id. at 485. Rather,
“‘[a] racial classification, regardless of purported motivation, is presumptively invalid
and can be upheld only upon an extraordinary justification.’” Id. (quoting Feeney, 442
U.S. at 272). Legislation like that in Hunter, Seattle, and here, which restructures the
political process along racial lines and places special burdens on racial minorities, thus
“falls into an inherently suspect category,” regardless of whether purposeful racial
discrimination is its demonstrated motivation. Id.
iv. “Political Process” Conclusion
Proposal 2 thus modifies Michigan’s political process “to place special burdens
on the ability of minority groups to achieve beneficial legislation.” See Seattle, 458 U.S.
at 467.
v. Strict Scrutiny
Because Proposal 2 fails the Hunter/Seattle test, it must survive strict scrutiny to
stand. See Seattle, 458 U.S. at 485. Under strict scrutiny, the Attorney General must
prove that Proposal 2 is “necessary to further a compelling state interest.” Crawford,
458 U.S. at 536. In Seattle, the Court did not consider whether a compelling state
interest might justify a state’s enactment of a racially-focused law that restructures the
political process, because the government did not make the argument. Seattle, 458 U.S.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 36
1534; 09-1111 Regents of the Univ. of Mich., et al.
at 485 n.28. Because the Attorney General likewise does not assert that Proposal 2
satisfies a compelling state interest, we need not consider this argument either.11
We therefore hold that those portions of Proposal 2 that affect Michigan’s public
institutions of higher education violate the Equal Protection Clause.12
2. “Traditional” Equal Protection Analysis
Having found that Proposal 2 deprives the Plaintiffs of equal protection of the
law under a “political process” theory, we do not reach the question of whether it also
violates the Equal Protection Clause when assessed under the traditional framework.
B. Ancillary Matters
We now turn briefly to the ancillary questions of whether the district court
properly dismissed Russell and refused to dismiss the University Defendants.
1. The University Defendants’ Non-Dismissal
The University Defendants appeal the district court’s denial of their motion to
be dismissed as misjoined parties under Rule 21 of the Federal Rules of Civil Procedure.
We review the district court’s decision for abuse of discretion and must affirm unless we
are “left with a definite and firm conviction that the trial court committed a clear error
of judgment.” Letherer v. Alger Group, 328 F.3d 262, 266 (6th Cir. 2003) (internal
quotation marks omitted), overruled on other grounds by Powerex Corp. v. Reliant
Energy Servs., 551 U.S. 224 (2007).
11
Further, the two “compelling interests” advanced by amicus Russell are not actually compelling
interests, as their rationale presumes that Proposal 2 does not suffer from any constitutional infirmity.
Moreover, Russell does not show that Proposal 2 is necessary to further these “compelling” state interests.
12
The dissent also makes much ado of the Seattle majority’s response to Justice Powell’s
dissenting argument that the majority’s decision would require finding unconstitutional a situation in which
a higher authority within a university attempted to alter an admissions committee’s decision to develop an
affirmative-action plan. See Seattle, 458 U.S. at 480 n.23 (responding to id. at 498 n.14 (Powell, J.,
dissenting)). However, the hypothetical situation Justice Powell described is entirely distinguishable from
that at issue here, in which decisonmaking authority has been removed to the highest level of state
government, not to a higher level of authority within the university. The fact that some reorderings of
political processes may be de minimis does not mean that all are. Accordingly, Justice Powell’s argument
and the Seattle majority’s Delphic response—made in dicta in a footnote with no supporting
explanation—are inapposite.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 37
1534; 09-1111 Regents of the Univ. of Mich., et al.
The district court concluded that the University Defendants were properly joined
parties under Federal Rule of Civil Procedure 20(a) because “[i]f this Court were to find
Proposal 2 unconstitutional, affirmative action would not automatically be reinstated into
the admissions process. Rather, the universities would have to choose to do so on their
own.” Coal. IV, 539 F. Supp. 2d at 941. The court therefore found that dismissal under
Rule 21 was inappropriate. The University Defendants contend, however, that they lack
the authority to provide Plaintiffs with the requested relief, an injunction against
Proposal 2’s enforcement, and therefore should be dismissed. In support of their
argument, the University Defendants point us to an unpublished district court opinion.
See Brooks v. Glenn Cnty., No. CV288-146, 1989 U.S. Dist. LEXIS 4776 (S.D. Ga. Apr.
25, 1989). We are not persuaded.
Rule 21 states in relevant part: “On motion or on its own, the court may at any
time, on just terms, add or drop a party.” Fed. R. Civ. P. 21. “The Federal Rules of Civil
Procedure do not define misjoinder, but the cases make clear that misjoinder of parties
occurs when [parties] fail to satisfy the conditions for permissive joinder under Fed. R.
Civ. P. 20(a).” Glendora v. Malone, 917 F. Supp. 224, 227 (S.D.N.Y. 1996). Rule 20(a)
requires that a right to relief be asserted against joined defendants. Therefore, “[a]
misjoinder of parties . . . frequently is declared because no relief is demanded from one
or more of the parties joined as defendants.” Letherer, 328 F.3d at 267 (quoting 7
Charles Alan Wright et al., Federal Practice and Procedure § 1683, at 475-76 (3d ed.
2001)).
The discretionary language of Rule 21, coupled with our deferential standard of
review, presents a high hurdle for reversal of the district court’s determination. Here,
because Proposal 2 is unconstitutional and university action is necessary to re-implement
affirmative-action policies, we AFFIRM the district court’s denial of the University
Defendants’ motion.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 38
1534; 09-1111 Regents of the Univ. of Mich., et al.
2. Russell’s Dismissal
Intervening defendant Russell, a law student at Wayne State University at the
time of oral argument, challenges the district court’s decision to dismiss him from the
case because he no longer satisfied the requirements for intervention. We review de
novo a district court’s grant of summary judgment. Chen, 580 F.3d at 400. “Summary
judgment should be granted when the moving party can ‘show that there is no genuine
issue as to any material fact and that the movant is entitled to judgment as a matter of
law.’” Geiger v. Tower Auto., 579 F.3d 614, 620 (6th Cir. 2009) (quoting Fed. R. Civ.
P. 56(c)). We also review de novo district court decisions on motions to intervene as of
right, except for the element of timeliness, which is reviewed for abuse of discretion.
Northland Family Planning Clinic v. Cox, 487 F.3d 323, 344 (6th Cir. 2007).
Under Federal Rule of Civil Procedure 24(a), an interested party must meet
several requirements before being permitted to intervene as of right: (1) his motion to
intervene must be timely; (2) he must have a substantial legal interest in the subject
matter of the case; (3) he must demonstrate that his ability to protect that interest will be
impaired in the absence of intervention; and (4) he must demonstrate that the parties
already before the court do not adequately represent his interest. See Coal. III, 501 F.3d
at 779. An intervenor also must continue to meet these requirements throughout the
duration of the litigation, as courts must be able to ensure that parties maintain a live
interest in a case. Accord Morgan v. McDonough, 726 F.2d 11, 14-15 (1st Cir. 1984)
(affirming the dismissal of an intervening party whose legal interest had lapsed because
“even if [the party’s original] intervention . . . were of right, . . . it would have gained no
absolute entitlement to continue as a party until the termination of the suit”); Rosado v.
Bridgeport Roman Catholic Diocesan Corp., 758 A.2d 916, 927 n.15 (Conn. App. Ct.
2000) (“A court also has the authority to dismiss intervenors once their interest in the
matter has expired. Federal cases illustrate that intervention as of right does not grant
absolute entitlement to continue as a party until termination of the suit.”); see also Fed.
R. Civ. P. 24 advisory committee’s note (“An intervention of right . . . may be subject
to appropriate conditions or restrictions responsive among other things to the
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 39
1534; 09-1111 Regents of the Univ. of Mich., et al.
requirements of efficient conduct of the proceedings.”); cf. Friends of Tims Ford v. Tenn.
Valley Auth., 585 F.3d 955, 963 n.1 (6th Cir. 2009) (declining to consider the defendant-
intervenors’ arguments regarding plaintiff’s standing because the intervenors’ ability to
protect their interests was impaired only at later stages of litigation).
Here, there is no genuine issue of material fact as to whether the Attorney
General adequately represents Russell’s interests. While Russell’s burden in showing
that “representation of his interest ‘may be’ inadequate” is “minimal,” Trbovich v.
United Mine Workers of Am., 404 U.S. 528, 538 n.10 (1972), he still must overcome “the
presumption of adequate representation” that arises if he shares “the same ultimate
objective as a party to the suit,” United States v. Michigan, 424 F.3d 438, 443-44 (6th
Cir. 2005). Although the Attorney General’s and Russell’s interests initially
diverged—the Attorney General agreed to a stipulation to delay the application of
Proposal 2, whereas Russell had an interest in Proposal 2’s immediate
enforcement—their interests are now aligned. Both now share the same ultimate
objective: the validation of Proposal 2. The Attorney General has mounted a firm
defense of Proposal 2 and succeeded in convincing the district court to grant summary
judgment in his favor. See Coal. IV, 539 F. Supp. 2d at 924. As the district court noted,
the Attorney General’s and Russell’s summary judgment motions “duplicate each other.”
Coal. V, 539 F. Supp. 2d at 971. Thus, we agree with the district court’s conclusion that
“Russell’s presence in the litigation is a mere makeweight that adds nothing of substance
to the debate over Proposal 2’s constitutionality.” Id. Russell’s intervention in this
litigation is therefore no longer proper.
Accordingly, we AFFIRM the district court’s grant of the Cantrell Plaintiffs’
motion for summary judgment regarding Russell. While Russell is hereby dismissed as
a party to this case, we nonetheless have considered his filings as we would those of
amicus curiae.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 40
1534; 09-1111 Regents of the Univ. of Mich., et al.
III. CONCLUSION
For the reasons above, we AFFIRM the district court’s decision granting the
Cantrell Plaintiffs’ motion for summary judgment as to Eric Russell, AFFIRM the
district court’s decision denying the University Defendants’ motion to be dismissed as
parties, and, because those provisions of Proposal 2 affecting Michigan’s public colleges
and universities are unconstitutional as a matter of law, REVERSE the district court’s
decision granting the Defendants-Appellees’ motion for summary judgment and order
the court to enter summary judgment in favor of the Plaintiffs-Appellants.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 41
1534; 09-1111 Regents of the Univ. of Mich., et al.
__________________________________________________________
CONCURRING IN PART AND DISSENTING IN PART
__________________________________________________________
JULIA SMITH GIBBONS, Circuit Judge, concurring in part and dissenting in
part. I join the majority’s opinion with respect to the procedural issues discussed in part
II.B. I disagree, however, with the majority’s conclusion that Proposal 2 is
unconstitutional under a political restructuring theory of the Equal Protection Clause.
In my view, Proposal 2 does not impermissibly restructure the political process in the
state of Michigan to burden the ability of minorities to enact beneficial legislation.
Moreover, Proposal 2 is not unconstitutional under traditional equal protection analysis.
I therefore respectfully dissent.
I.
In November 2006, the people of Michigan amended the Michigan Constitution
to prohibit the state, including its public colleges and universities, from discriminating
against or granting preferential treatment to any individual or group on the basis of race,
sex, color, ethnicity, or national origin in the operation of public employment, public
education, and public contracting. Mich. Const. art. I, § 26. A primary purpose and
effect of this amendment was to remove the ability of state colleges and universities to
employ then-existing race- and gender-preference admissions policies. Accordingly, the
plaintiffs challenge the amendment as it relates to the state’s colleges and universities.
Because “[c]ontext matters when reviewing race-based governmental action
under the Equal Protection Clause,” Grutter v. Bollinger, 539 U.S. 306, 327 (2003), it
is important to consider the legal backdrop from which the effort to amend the Michigan
Constitution unfolded. See Hunter v. Erickson, 393 U.S. 385, 391–92 (1969) (assessing
the challenged referendum provision against the relevant legislative and legal
background). The race-based admissions polices used by state universities in Michigan
are familiar to the courts and the people of Michigan. See Coal. to Defend Affirmative
Action v. Granholm, 473 F.3d 237, 240 (6th Cir. 2006). The policies employed by the
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 42
1534; 09-1111 Regents of the Univ. of Mich., et al.
University of Michigan formed the basis of the significant and highly publicized Equal
Protection challenges in Grutter and Gratz v. Bollinger, 539 U.S. 244 (2003). And, as
noted by the majority, the effort by Ward Connerly and Jennifer Gratz to mobilize for
a statewide ballot initiative occurred in direct response to the result in Grutter.
Granholm, 473 F.3d at 240.
In Grutter, the Supreme Court concluded that diversity is a compelling state
interest that can justify the narrowly tailored use of race in selecting applicants for
admission to public universities. 539 U.S. at 325, 328. Analyzing the highly
individualized, holistic approach taken by the University of Michigan Law School,
which considered “all pertinent elements of diversity,” id. at 341 (quoting Regents of
Univ. of Cal. v. Bakke, 438 U.S. 265, 317 (1978) (opinion of Powell, J.)), the Court
found that the university had narrowly tailored its approach to the purpose of diversity
in higher education. Id. at 333–41. In Grutter’s companion case the Court, however,
reaffirmed that the use of racial classifications are a “highly suspect tool,” id. at 326
(quoting Richmond v. J.A. Croson Co., 488 U.S. 469, 493 (1989) (plurality opinion)),
subject to strict scrutiny because “‘[r]acial classifications are simply too pernicious to
permit any but the most exact connection between justification and classification.’”
Gratz, 539 U.S. at 270 (quoting Fullilove v. Klutznick, 448 U.S. 448, 537 (1980)
(Stevens, J., dissenting)). The Court reiterated that “remedial race-based governmental
action generally ‘remains subject to continuing oversight to assure that it will work the
least harm possible to other innocent persons competing for the benefit.’” Grutter, 539
U.S. at 341 (quoting Bakke, 438 U.S. at 308 (opinion of Powell, J.)). Finally, the Court
was mindful that because “‘[a] core purpose of the Fourteenth Amendment was to do
away with all governmentally imposed discrimination based on race’ . . . race-conscious
admissions policies must be limited in time.” Id. at 341–42 (quoting Palmore v. Sidoti,
466 U.S. 429, 432 (1984)).
The Court also indicated that the ability to fashion a time limit on the use of race-
conscious admissions policies is not a tool placed primarily in the hands of the courts.
Rather, it is first and foremost in the hands of states and their public universities. See
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 43
1534; 09-1111 Regents of the Univ. of Mich., et al.
Grutter, 539 U.S. at 342 (“[T]he durational requirement can be met by sunset provisions
in race-conscious academic polices and periodic reviews to determine whether racial
preferences are still necessary to achieve student body diversity.”); see also id.
(describing state-law prohibitions on the use of racial preferences in admissions in
California, Florida, and Washington). Indeed, the Court has repeatedly confirmed that
the repeal or modification of race-related polices does not necessarily run afoul of the
Equal Protection Clause. See Hunter, 393 U.S. at 390 n.5; Washington v. Seattle Sch.
Dist. No. 1, 458 U.S. 457, 483 (1982) (“[T]he simple repeal or modification of
desegregation or antidiscrimination laws, without more, has never been viewed as
embodying a presumptively invalid racial classification.” (quoting Crawford v. Bd. of
Educ., 458 U.S. 527, 539 (1982))). A state or university may conclude, for example, that
the use of racial preferences may no longer be necessary to further the interest in
diversity, that the burdens associated with those preferences are too heavy, or that the
means employed no longer enjoy legitimacy in the eyes of the people. And, as was the
case with the California prohibition mentioned by the Court, it follows that a state or its
electorate may act to impose a time limit, or end the use of racial preferences outright,
when its public universities have not. See Coal. for Econ. Equity v. Wilson, 122 F.3d
692 (9th Cir. 1997).
It is from this legal backdrop that the popular effort to amend the Michigan
Constitution to prevent the use of affirmative action in admissions developed. Taking
it into account, we must turn to whether Michigan’s repeal of this type of racial
classification by constitutional amendment violates the Equal Protection Clause.
II.
As an initial matter, a broad view of plaintiff’s contentions provides context and
a bit of common sense about the requirements of the Constitution. Plaintiffs’ argument
is that the Equal Protection Clause prohibits Michigan from prohibiting discrimination
in admissions to public colleges and universities through the passage of Proposal 2.
Calling an admissions practice a preference does not transform the practice into a
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 44
1534; 09-1111 Regents of the Univ. of Mich., et al.
nondiscriminatory one; preferences do indeed permit discrimination. Yet, we know that
the Equal Protection Clause prevents “official conduct discriminating on the basis of
race.” Washington v. Davis, 426 U.S. 229 (1976).
Grutter and Gratz represent the Supreme Court’s response to a university’s use
of racial preferences in admissions and together develop the circumstances under which
policies that take race into account may be used. The burden on the university is a
difficult one; it may use race as a factor only when there is a compelling interest in doing
so and when the use is narrowly tailored. Racial preferences are not favored under the
law but must be exactingly justified. No constitutional jurisprudence exists that requires
their use. And, as the Supreme Court has told us, “the Equal Protection Clause is not
violated by the mere repeal of race-related legislation or policies that were not required
by the Federal Constitution in the first place.” Crawford, 458 U.S. at 538–39.
Within this broad constitutional landscape, plaintiffs contend that passage of
Proposal 2 violated the Equal Protection Clause. They base their argument on Hunter
and Seattle. These cases, without a doubt, secure racial minorities the right to equal
process within the political arena. Seattle, 458 U.S. at 467; Hunter, 393 U.S. at 391.
They prohibit a “distortion of the political process,” Crawford, 458 U.S. at 538 n.14, by
which a state “disadvantage[s] [a] particular group by making it more difficult to enact
legislation in its behalf,” Seattle, 458 U.S. at 476 (quotation marks and citation omitted),
by “mak[ing] use of a more complex governmental structure,” id. at 477, or “lodging
decisionmaking authority over the question at a new and remote level of government,”
id. at 483. But they do not guarantee that racial minorities will win every political battle.
Id. at 484 (“If a governmental institution is to be fair, one group cannot always be
expected to win . . . .” (quoting Hunter, 393 U.S. at 394 (Harlan, J., concurring))). Nor
do they hold that the repeal of those policies is impermissible, although they may be
preferred by significant numbers of racial minorities. Rather, Hunter, Seattle, and
Crawford outline the constitutional limits on a particular type of political restructuring:
the enactment of comparative structural burdens on “the ability of minority groups to
achieve beneficial legislation.” Seattle, 458 U.S. at 467. Because these cases do not
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 45
1534; 09-1111 Regents of the Univ. of Mich., et al.
prohibit “every attempt to address a racial issue, ” id. at 485, it is important to consider
the limiting bounds of this type of political restructuring challenge.
A.
In reviewing a Hunter political process challenge, we must, of course, consider
whether the particular legislation or popular referendum at issue serves to impermissibly
“distort” the state’s political processes. Crawford, 458 U.S. at 541. Seattle makes clear
that “the voters of the polity may express their displeasure through an established
legislative or referendum procedure when particular legislation arouses passionate
opposition.” 458 U.S. at 483 (internal quotation marks and citation omitted). The state
or its voters, however, may not “make[] the enactment of racially beneficial legislation
difficult” by “lodging decisionmaking authority over the question at a new and remote
level of government.” Id. And they may “no more disadvantage any particular group
by making it more difficult to enact legislation in its behalf than [they] may dilute any
person’s vote.” Id. at 476 (quoting Hunter, 393 U.S. at 392–93). Seattle and Hunter
therefore protect “the ability of minorities to participate in the process of self-
government.” Id. at 480 n.23.
In Hunter, the impermissible political restructuring took the form of a more
burdensome extra step in the City of Akron’s legislative process. The people of Akron
had amended their city charter by popular referendum to require that any city ordinance
regulating real property “on the basis of race, color, religion, national origin, or ancestry”
be subject to approval by a mandatory popular referendum, while all other ordinances
regulating real estate only required the approval of the City Council. Hunter, 393 U.S.
at 387, 390. The Hunter Court concluded that this amounted to an unconstitutional
political restructuring because the charter amendment “obviously made it substantially
more difficult to secure enactment of ordinances” barring discrimination in real estate.
Id. at 390. Indeed, those minority voters supporting property-related anti-discrimination
ordinances would not only have to win a legislative battle in the Akron City Council, but
they would then have to win a public-referendum battle as well. Id. The default political
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 46
1534; 09-1111 Regents of the Univ. of Mich., et al.
structure entrenched in the mechanisms of a city council, which may allow for
particularized and localized electoral pressure on individual council members, was
therefore supplemented with the far more diffuse, and potentially onerous, political
structure inherent in winning popular approval of a law with a discrete set of immediate
beneficiaries.
In Seattle, the voters of the state effectuated a more implicit restructuring of the
legislative process. In the 1970s, the locally elected Seattle school board passed and
implemented a series of school desegregation programs aimed at alleviating the isolation
of minority students caused by segregated housing patterns. Seattle, 458 U.S. at 459–60.
In 1977, local opponents of these measures, having previously failed in their attempt to
recall School Board members who had voted for desegregation programs, id. at 460 n.1,
organized to end Seattle’s use of the programs at the statewide level, id. at 461–62.
Their statewide initiative provided that local school boards could not employ mandatory
desegregative busing except possibly when required as part of a judicial decree. Id. at
462–63. In enacting this initiative, the people of Washington thus moved the locus of
political authority over this particular issue from the local to the statewide level,
“requir[ing] those championing school integration to surmount a considerably higher
hurdle than persons seeking comparable legislative action.” Id. at 474.
In both cases where the Court found an impermissible political restructuring, the
relevant lawmaking authority was reallocated from a local legislative body to the “more
complex government structure,” id. at 477, of the city- or state-wide general electorate,1
thereby placing a “comparative structural burden . . . on the political achievement of
minority interests,” id. at 475 n.17. A key consideration in analyzing a Hunter political
structure challenge, therefore, is whether the challenged law impacts the ability of
minorities to secure “legislation that is their interest” as minorities. Id. at 474; see also
id. at 475 n.17 (“Thus, in Hunter, the procedures for enacting racial legislation were
modified in a such a way as to place effective control in the hands of the citywide
1
In Seattle, Initiative 350 could also have been repealed by the state legislature after a period of
two years. See 458 U.S. at 463 n.4.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 47
1534; 09-1111 Regents of the Univ. of Mich., et al.
electorate. Similarly here [in Seattle], the power to enact racial legislation has been
reallocated.”). Given the structural considerations inherent in this type of Equal
Protection challenge, it is important to fully examine the particular political structures
at work in this case to determine whether the people of Michigan have restructured the
state’s lawmaking process in the manner prohibited by Hunter and Seattle.
i.
“The Michigan Constitution confers a unique constitutional status on [its] public
universities and their governing boards.” Federated Publ’ns, Inc. v. Bd. of Trustees of
Mich. State Univ., 594 N.W.2d 491, 495–96 (Mich. 1999) (citing Mich. Const. art. VIII,
§§ 5 and 6). The status of these boards has been described by the Michigan Supreme
Court as “the highest form of juristic person known to the law, a constitutional
corporation of independent authority, which, within the scope of its functions, is co-
ordinate with and equal to that of the legislature.” Id. at 496 n.8 (quoting Bd. of Regents
of the Univ. of Mich. v. Auditor Gen., 132 N.W. 1037, 1039 (Mich. 1911)). Each
governing board is vested with the power of “general supervision of its institutions and
the control and direction of all expenditures from the institution’s funds.”2 Mich. Const.
art. VIII, § 5. With this power comes significant independence, as the state constitution
“limit[s] the Legislature’s power” over the universities such that it “may not interfere
with the management and control of” the universities. Federated Publ’ns, 594 N.W.2d
at 497 (quotation marks and citation omitted). Therefore, the “constitutional autonomy
of these institutions is plenary as to its educational programs, but does not insulate them
from the health and safety laws of the state.” 1979-1980 Mich. Op. Att’y Gen. 578,
1980 WL 114008 (1980); see also Federated Publ’ns, 594 N.W.2d at 497.
2
The Michigan Constitution divides its state public universities into two categories. The first
category, detailed in Mich. Const. art. VIII, § 5, consists of the University of Michigan, Michigan State
University, and Wayne State University. The second category includes “other institutions of higher
education established by law having authority to grant baccalaureate degrees.” Mich. Const. art. VIII, § 6.
This category includes, for example, Eastern Michigan University, Central Michigan University, and
Grand Valley State University. See Mich. Const. art. VIII, § 4 (listing universities for which the state
legislature shall appropriate moneys). Because the Plaintiffs focus on the universities described in section
five, and because it is unclear from the record whether the universities described in section six employ
race-conscious admissions policies, the following discussion will primarily pertain to the University of
Michigan, Michigan State University, and Wayne State University.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 48
1534; 09-1111 Regents of the Univ. of Mich., et al.
The constitution provides for eight-member governing boards, elected to
statewide office for eight-year terms.3 Mich. Const. art. VIII, § 5. Elections are
typically staggered, with, for example, an election every two years for regents of the
University of Michigan. See About the Board of Regents,
http://www.regents.umich.edu/about/ (last visited May 4, 2011); MSU Board of
Trustees, http://www.trustees.msu.edu/about/establishment.html (last visited May 4,
2011); About the Board of Governors, http://bog.wayne.edu/about.php (last visited May
4, 2011).
As a preliminary matter, the majority suggests that our examination of the
pertinent political structures must end with the Michigan Constitution. The majority
opinion concludes that we may not rely on the testimony of university officials because
the structure of the colleges and universities is a “question of law, for it is set by
constitution, statutes and regulations.” (Maj. Op. at 22.) Here, the nature of the
decision-making process for admissions is one of both law and fact, and the witnesses
gave instructive testimony that was within their personal knowledge.4 Examination of
the record is appropriate to ascertain how the decisions at issue are in fact made.
Although these universities and their respective boards are created by the
Michigan Constitution, the admissions policies are placed within the control of the
boards or school authorities only within each board’s bylaws. See University of
Michigan Board of Regents, Bylaws Chapter VIII: Admission and Registration of
Students, http://www.regents.umich.edu/bylaws/bylaws08.html (last visited May 4,
2011) (vesting responsibility for the admission of students in the associate vice provost
and executive director of undergraduate admissions at the Ann Arbor campus, in the
director of admissions and orientation at the Dearborn campus, and in the director of
3
By contrast, the governing boards of the other state universities are appointed by the governor
by and with the advice and consent of the state senate. Mich. Const. art. VIII, § 6.
4
Oddly, the majority characterizes this testimony as opinion testimony inadmissible under Federal
Rule of Evidence 701. To the extent the witnesses offered opinions, which were hardly the thrust of their
testimony, their lay opinions were perfectly admissible. Any opinions were rationally based on the
witnesses’ perceptions, helpful to an understanding of the testimony or a fact in issue, and not based on
the specialized knowledge of experts.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 49
1534; 09-1111 Regents of the Univ. of Mich., et al.
undergraduate admissions at the Flint campus); Michigan State University Board of
Trustees, Bylaws, http://www.trustees.msu.edu/bylaws/#article8 (last visited May 4,
2011) (“The [MSU] Board encourages and supports the faculty in the development of
educational and other programs . . . . Upon the recommendation of the President the
Board may determine and establish the qualifications of students for admission at any
level . . . .”); Wayne State University Board of Governors, Statutes,
http://bog.wayne.edu/code/2_34_09.php (last visited May 4, 2011) (“After consultation
with the College or School, the [Board-elected] President or his/her designee is
authorized to establish specific admissions standards for degree programs.”). Thus, the
admissions policies are not set forth by the state constitution, and it is necessary to look
to testimony to determine where the power to set admissions policy lies.
The governing boards have fully delegated the responsibility for establishing
admissions standards to several program-specific administrative units within each
institution, which set admissions criteria through informal processes that can include a
faculty vote. (DE 172, Pls.’ Russ. Mot., Ex. I (Univ. Defs.’ Resp.) Nos. 4, 7; DE 203,
Pls.’ SJ Mot., Ex. E. (Zearfoss Dep.) at 64, 213–14, Ex. F. (Wu Dep.) at 190–91.) For
example, as noted by the majority, the University of Michigan Law School admissions
policy is set exclusively by the law school faculty admissions committee, with major
substantive changes occasionally voted upon by the entire law school faculty. (Maj. Op.
at 25 (referring to the admissions committees as “the individuals delegated with principle
responsibility for admissions policy”); Zearfoss Dep. at 213.) Similarly, as described by
its former dean, at the Wayne State University Law School the ultimate decision whether
to change admissions standards rests with the faculty alone. (Wu Dep. at 190–91.)
Thus, as the Cantrell Plaintiffs readily admit, the “faculty are the primary architects of
all the admissions criteria and protocols.” (Reply Br. at 20 n.11.)
At neither university, however, is there a system in place to review or alter
admissions policies at a level above a vote of the faculty. Sarah Zearfoss, the dean of
admissions at the University of Michigan Law School, testified that no one could change
the school’s admissions policy other than the faculty admissions committee or the faculty
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 50
1534; 09-1111 Regents of the Univ. of Mich., et al.
itself, because “there’s no higher body” to which someone unhappy with an admissions
policy could advocate change. (Zearfoss Dep. at 214.) And Frank Wu, then the dean at
Wayne State University Law School, agreed that “only the faculty at the law school has
the authority to create and approve the admissions policy” at the school. (Wu Dep. at
191.) Indeed, Wu testified that the admissions policy is not subject to the approval of
the Wayne State University Board of Governors, and, in his view, if the Board of
Governors attempted to alter the decision of the law school’s faculty with respect to
criteria for admission, “it would precipitate a constitutional crisis.” (Wu Dep. at 192.)
Each institution’s board may superficially have “plenary authority” over its respective
institution (see Maj. Op. at 21), but the ultimate authority to set admissions policy rests
exclusively with each program-specific faculty within the universities.
ii.
The majority characterizes the dissent as reading Hunter and Seattle too narrowly
by defining the political processes with which they deal as “electoral” processes. While
the political processes in Hunter and Seattle are electoral in the sense that they relate to
what electoral methods are employed to make policy, the majority opinion, not the
dissent, draws the line between political and electoral. The point is simply that the
situation here differs greatly from that of Hunter and Seattle in the ways described in this
opinion; these program-specific faculty admissions committees are far afield from the
legislative bodies from which lawmaking authority was removed in Hunter and Seattle.
The most crucial and overarching difference, of course, is that the faculty admissions
committees and individual faculty members are not politically accountable to the people
of Michigan.
In Seattle, the court emphasized that the type of action it found objectionable was
the creation of comparative burdens “on minority participation in the political process.”
458 U.S. at 480 n.23; see id. at 486 (“[M]inorities are no less powerless with the vote
than without it when a racial criterion is used to assign governmental power in such a
way as to exclude particular racial groups ‘from effective participation in the political
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 51
1534; 09-1111 Regents of the Univ. of Mich., et al.
proces[s].’” (quoting Mobile v. Bolden, 446 U.S. 55, 94 (1980) (White, J., dissenting))).
The Seattle majority, however, did not view state university admissions committees as
a part of the “political process” in the manner of an elected school board or city council.
A dialogue between the majority and dissent in Seattle is particularly instructive on this
point. In dissent, Justice Powell, critiquing the potential breadth of the majority’s
holding, argued:
Thus, if the admissions committee of a state law school developed an
affirmative-action plan that came under fire, the Court apparently would
find it unconstitutional for any higher authority to intervene unless that
authority traditionally dictated admissions policies. As a constitutional
matter, the dean of the law school, the faculty of the university as a
whole, the university president, the chancellor of the university, and the
board of regents might be powerless to intervene despite their greater
authority under state law.
Id. at 498 n.14 (Powell, J., dissenting). The majority, however, flatly dismissed this
concern as a misunderstanding of the court’s decision: “It is evident, then, that the
horribles paraded by the dissent, post, at [footnote 14 of the dissent]—which have
nothing to do with the ability of minorities to participate in the process of self-
government—are entirely unrelated to this case.” Id. at 480 n.23 (emphasis added).
For the Seattle majority, then, an impermissible reordering of the political
process meant a reordering of the processes through which the people exercise their right
to govern themselves. See id. at 486 (“And when the State’s allocation of power places
unusual burdens on the ability of racial groups to enact legislation specifically designed
to overcome the ‘special condition’ of prejudice, the governmental action seriously
‘curtail[s] the operation of those political processes ordinarily to be relied upon to protect
minorities’ . . . from the ‘majoritarian political process.’” (emphasis added) (citing
United States v. Carolene Prods. Co. 304 U.S. 144, 153 n.4 (1938) and San Antonio
Indep. Sch. Dist. v. Rodriquez, 411 U.S. 1, 28 (1973))); id. at 467 (“But the Fourteenth
Amendment also reaches a “political structure that treats all individuals as equals . . . yet
more subtly distorts governmental processes in such a way as to place special burdens
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 52
1534; 09-1111 Regents of the Univ. of Mich., et al.
on the ability of minority groups to achieve beneficial legislation.” (emphasis added)
(quoting Bolden, 446 U.S. at 84)).
The evidence reveals that the academic processes at work in state university
admissions in Michigan are not “political processes” in the manner contemplated in
Seattle. Unlike the Seattle School Board and the Akron City Council, the various
university admissions committees in Michigan and their faculty members are unelected.
As at most public universities, tenured faculty members have significant vested rights
associated with their employment in order to preserve academic freedom and
independence. The faculty members who are permitted to vote on policy matters are
therefore significantly insulated from political pressure by virtue of their tenure. Such
faculty are beholden to no constituency—student, local, or otherwise. And, as
demonstrated by the testimony of the law school deans in this case, the people of
Michigan have no ability to exert electoral pressure on the university decision makers
to change their admissions polices. As they currently stand, the faculty admissions
committees are islands unto themselves, vested with the full and unreviewed authority
to set admissions policy for their respective university programs.
The majority opinion discounts the differences between facts here and those of
Hunter and Seattle by arguing that processes are considered “political” as long as there
is “governmental decisionmaking.” In this argument it relies on Nyquist v. Lee, 318 F.
Supp. 710 (W.D.N.Y. 1970), aff’d Nyquist v. Lee, 402 U.S. 935 (1971), a case from the
Western District of New York that was summarily affirmed by the Supreme Court and
cited in Seattle. In Nyquist, the court found that a New York statute that “prohibit[ed]
state education officials and appointed school boards from assigning students, or
establishing, reorganizing or maintaining school districts, school zones or attendance
units for the purpose of achieving racial equality in attendance” unconstitutionally
reordered the political process in violation of the Equal Protection Clause. Nyquist, 318
F. Supp. at 712, 720. The majority suggests that because appointed school boards were
part of the political process at issue in Nyquist, the university faculty admissions
committees are similarly part of the political process. (Maj. Op. at 20.) The decision in
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 53
1534; 09-1111 Regents of the Univ. of Mich., et al.
Nyquist, however, made note of how the local boards were accountable to the
community: “Parties considering themselves aggrieved by local board actions may seek
to have the Commissioner enforce those policies. [The New York statute], however,
singles out for different treatment all plans which have as their purpose the assignment
of students in order to alleviate racial imbalance.” Id. at 719 (internal citations omitted).
Thus, even the appointed school boards were accountable to the community in a way in
which the faculty admissions committees certainly are not. Again, the point is not
selecting a label for the processes, but examining the factual similarities or dissimilarities
of the situations.
There is no “local” university constituency as there is a local constituency for a
city council or city school board, i.e., the city’s voters. Rather, despite there being a
broad student, faculty, and staff community associated with each university, Michigan’s
state universities were established as state-wide institutions with a state-wide
constituency.5 The faculty admissions committees therefore do not “represent” any local
constituency at all. This is particularly important because the Seattle majority looked
closely at the fact that Washington’s lodging of political decisionmaking authority over
the busing question at the statewide level directly burdened minority interests by
“making the enactment of racially beneficial legislation difficult, [because] the particular
program might not have inspired opposition had it been promulgated through the usual
[local] legislative processes used for comparable legislation.” 458 U.S. at 483–84. The
court continued:
That phenomenon is graphically demonstrated by the circumstances of
this litigation. The longstanding desegregation programs in Pasco and
Tacoma, as well as the Seattle middle school integration plan, have
functioned for years without creating undue controversy. Yet they have
been swept away, along with the Seattle Plan, by Initiative 350. As a
practical matter, it seems most unlikely that proponents of desegregative
busing in small communities such as Tacoma or Pasco will be able to
5
Indeed, some students, prospective students, alumni, and faculty members at each university are
not members of that state-wide constituency, comprised of citizens and voters of the state of Michigan.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 54
1534; 09-1111 Regents of the Univ. of Mich., et al.
obtain the statewide support now needed to permit them to desegregate
the schools in their communities.
Id. at 484 n.27. The availability of “local” decisionmaking is therefore important when
the political power of groups who could succeed at the local level is “diluted” in the
statewide decisionmaking process. The universities here, however, are statewide
institutions with a statewide constituency. There is nothing local about them.
The committees are also hardly the model of accessibility and locus of effective
lobbying assumed by the majority. While members of the public may attend faculty
meetings at which admissions standards are reviewed, there is no mechanism by which
a member of the public—student or not—can move the committees to amend the
admissions standards. (Wu Dep. at 190; Zearfoss Dep. at 209.) And, while interested
students and members of the public are, with advance notice, permitted to speak at
faculty meetings to comment on the admissions policies, the committees are not required
to consider these comments seriously, issue written findings addressing these concerns,
or do more than provide a forum for interested individuals to speak. (Zearfoss Dep. at
209–10; Wu Dep. at 190.) Rather, it appears that the main source of divergent views on
admissions policies is the faculty members themselves. (Zearfoss Dep. at 210.)
While the majority appears to see no reason to distinguish between these
unelected and unresponsive program-specific faculty admissions committees and the
legislative bodies from which lawmaking authority was removed in Hunter and Seattle,
a consideration of political accountability in the political process is squarely grounded
in the Seattle opinion. In Seattle, the Court undertook a close examination of
Washington’s system of “establish[ing] the local school board, rather than the State, as
the entity charged with making decisions of the type at issue,” 458 U.S. at 477:
But Washington has chosen to meet its educational responsibilities
primarily through “state and local officials, boards, and committees,” and
the responsibility to devise and tailor educational programs to suit local
needs has emphatically been vested in the local school boards. . . . Thus
“each common school district board of directors” is made “accountable
for the proper operation of [its] district to the local community and its
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 55
1534; 09-1111 Regents of the Univ. of Mich., et al.
electorate.” To this end, each school board is “vested with the final
responsibility for the setting of policies ensuring quality in the content
and the extent of its educational program.”
Id. at 478 (citations omitted) (emphasis added); see also id. (noting the “disclosure and
reporting provisions specifically designed to ensure the board’s ‘accountability’ to the
people of the community” (emphasis added)). It was only upon its consideration of the
state statutory structure’s vesting of decisionmaking in local and politically accountable
school boards that the Court could conclude that “placing power over desgregative
busing at the state level . . . restructured the Washington political process.” Id. at 480.
Taking this into account, it is difficult to conclude that, in amending their state
constitution to prohibit the use of racial preferences in university admissions, the people
of Michigan modified “the community’s political mechanisms . . . to place effective
decisionmaking authority over a racial issue at another level of government.” Id. at 474
(emphasis added). Michigan has not “‘burden[d] all future attempts’ to implement race-
conscious admissions policies” “‘by lodging decisionmaking authority over the question
at a new and remote level of government.’” (Maj. Op. at 28 (quoting Seattle, 458 U.S.
at 483).) Having no direct or indirect influence on the bodies vested with authority to
set admissions standards—the faculty committees—the people of Michigan made a
political change at the only level of government actually available to them as voters. The
Michigan electorate, therefore, as opposed to choosing a more complex structure for
lawmaking, employed the one method available to exert electoral pressure on the
mechanisms of government.
The lack of a viable electoral mechanism to change university admissions
policies at a sub-constitutional level also means that the voters’ use of a constitutional
amendment in this instance also does not serve to create “comparative structural
burden[s] on the political achievement of minority interests.” Seattle, 458 U.S. at 474
n.17. If, as is the evidence before this court, the voters cannot exert electoral pressure
on the fully independent faculty committees, then all voters regardless of racial identity
compete on the same level for the political achievement of their higher-education
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 56
1534; 09-1111 Regents of the Univ. of Mich., et al.
interests: the constitutional level. That some academic decisionmaking remains at the
faculty-committee level after the implementation of Proposal 2 is of no moment, because
that decisionmaking is affirmatively not part of the state’s electoral political process.
The same policies that fully insulate faculty members from political opprobrium in their
academic pursuits also protect them from political influence on their admissions
policymaking. Michigan has chosen to structure its university system such that politics
plays no part in university admissions at all levels within its constitutionally created
universities. The Michigan voters have therefore not restructured the political process
in their state by amending their state constitution; they have merely employed it.6
III.
If Proposal 2 does not effectuate an invalid restructuring of Michigan’s political
process, it is not necessary to reach broader questions relating to the substantive reach
of the political restructuring doctrine. But again returning to the broader context, it is
useful to highlight the tension between the doctrine and recent decisional law on the
constitutionality of racial preferences.
Several courts have grappled with the question of whether racial preferences,
those policies “potentially so dangerous” that they must be subject to strict scrutiny and
“limited in time,” Grutter, 539 U.S. at 342, may be eliminated when the people of a state
amend their constitution to do away with all classifications based on race. The core
6
Even if—contrary to the evidence before the court—the people of Michigan could exercise
effective electoral control over the board of governors at each respective state institution such that they
could repeal the use of racial preferences, it is not clear that a choice to make use of a constitutional
amendment in that instance would amount to the creation of a comparative political burden on the
achievement of minority interests. Indeed, it would make use of neither a more complex or onerous
structure of government nor remove the locus of political power from the local to statewide level. Seattle,
458 U.S. at 477, 480. Given the eight-year terms and staggered elections for board members, and the fact
that electoral change must happen at the governing board of each individual state university, the process
of effectuating political change through the board of governors appears to be arguably a more complex
process than the comparative burden of a statewide referendum. And both types of elections—the board
member elections and the constitutional referendum—occur at the statewide level with an electorate
composed of the at-large statewide voting pool. There are therefore no inherent structural benefits or
protections for minority voters in one system over the other. As opposed to the multi-district Akron city
council in Hunter, for example, there is no mechanism by which minority voters could exercise bloc or
regional voting in the board of governors system in a way that they could not in the state’s constitutional
referendum process. The use of the constitutional amendment mechanism, therefore, would not work to
create a comparative political burden of the kind found in Hunter and Seattle.
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 57
1534; 09-1111 Regents of the Univ. of Mich., et al.
constitutional question in each of these decisions is clear: should a race-based
classification that is presumptively invalid, but permissible under limited circumstances
and for a finite period of time, receive the same structural protections against statewide
popular repeal as other laws that inure to the interest of minorities?
The Ninth Circuit in Wilson answered in the negative, concluding that
California’s Proposition 209 did not violate equal protection because “[i]mpediments to
preferential treatment do not deny equal protection.” 122 F.3d at 708. The court relied
on an essential constitutional principle: “While the Constitution protects against
obstructions to equal treatment, it erects obstructions to preferential treatment by its own
terms. . . . The Equal Protection Clause, parked at our most ‘distant and remote’ level
of government, singles out racial preferences for severe political burdens—it prohibits
them in all but the most compelling circumstances.” Id. The California Supreme Court
recently agreed with this conclusion, holding that “Seattle cannot fairly be read as
holding that the political structure doctrine protects presumptively unconstitutional racial
preferences, as opposed to programs intended to bring about immediate equal treatment.”
Coral Constr., Inc. v. San Francisco, 235 P.3d 947, 960 (Cal. 2010). This logic has been
further cemented by the Northern District of California, reinforcing the holding in
Wilson in light of Grutter. In Coalition to Defend Affirmative Action, Integration and
Immigrant Rights v. Schwarzenneger, No. 10-641 SC, 2010 WL 5094278 (N.D. Cal.
Dec. 8, 2010), the federal district court stated, “Grutter does not hold that the
Constitution requires the use of race in student admission decision; rather, it holds that
the Constitution tolerates the use of race as one of many admission factors.” Id. at *6.
The court went on to note, “Grutter held that racial preferences, while not presumptively
unconstitutional, must be limited in time. In so holding, the Supreme Court cited the
‘race neutral alternatives’ to racial preferences used by ‘[universities], where racial
preferences are prohibited by state law.’” Id. (citing Grutter, 539 U.S. at 342) (internal
citations omitted).
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 58
1534; 09-1111 Regents of the Univ. of Mich., et al.
These cases take the same approach as the district court in this case,7 and their
teaching is that equal treatment is the baseline rule embodied in the Equal Protection
Clause, from which racial-preference programs are a departure. We therefore must
review them with utmost care. Governing precedent is clear on this point: “‘A core
purpose of the Fourteenth Amendment was to do away with all governmentally imposed
discrimination based on race,’” Grutter, 539 U.S. at 341–42 (quoting Palmore, 466 U.S.
at 432), and “all governmental use of race must have a logical end point,” id. at 342.
Because racial preference programs are exceptional, it is not altogether clear that the
political structure doctrine would invalidate Proposal 2 even if it worked a restructuring
of the political process in Michigan. See Coral, 235 P.3d at 966 (Corrigan, J.,
concurring) (noting that the United States Supreme Court has “approvingly referred to
[California’s Proposition 209] as a step in [the] direction” of ending the “governmental
use of race” (citing Grutter, 538 U.S. at 342)). However, because Proposal 2 itself
works no improper political restructuring under the circumstances before us, we need not
address that issue today.
IV.
It should also be noted that Proposal 2 is constitutional under a traditional equal
protection analysis. Because the majority’s holding turns on the political restructuring
analysis, it declines to address this issue.
“The central purpose of the Equal Protection Clause of the Fourteenth
Amendment is the prevention of official conduct discriminating on the basis of race.”
Washington v. Davis, 426 U.S. 229, 239 (1976). We apply strict scrutiny to those laws
that racially classify individuals, Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 216
(1995), and intermediate scrutiny to those laws that classify individuals based on gender,
United States v. Virginia, 518 U.S. 515, 531 (1996). Racial classifications are subject
to strict scrutiny if (1) the law classifies on its face or (2) the law has a discriminatory
7
“[A]ffirmative action programs not mandated by the obligation to cure past discrimination are
fundamentally different than laws intended to protect against discrimination.” Coal. to Defend Affirmative
Action v. Regents of the Univ. of Mich., 539 F. Supp. 2d 924, 957 (E.D. Mich. 2008).
Nos. 08-1387/1389/ Coalition to Defend Affirmative Action, et al. v. Page 59
1534; 09-1111 Regents of the Univ. of Mich., et al.
impact and a discriminatory purpose. See Davis, 426 U.S. at 241. The district court
concluded that Proposal 2, which prohibits racial classifications, a fortiori does not
classify facially on the basis of race. Coal. to Defend Affirmative Action, 539 F. Supp.
2d at 951. Although the district court did find “sufficient evidence to establish a fact
question on the disparate impact part of the test,” it did not find a discriminatory
purpose. Id. Indeed, it stated that “the demonstration of a discriminatory purpose . . .
dooms [the] conventional equal protection argument.” Id. Furthermore, the district
court found the equal protection argument based on gender “even less compelling” due
to the less exacting level of scrutiny. Id. at 952. I agree with the conclusions of the
district court.
Proposal 2 does not establish a facial racial classification because its text does
not draw distinctions on the basis of race; in fact, it prohibits them. Additionally,
Proposal 2 does not classify racially on an impact theory because it lacks a
discriminatory purpose. “[A]bsent a referendum that facially discriminates racially, or
one where although facially neutral, the only possible rationale is racially motivated, a
district court cannot inquire into the electorate’s motivations in an equal protection
clause context.” Arthur v. Toledo, 782 F.2d 565, 574 (6th Cir. 1986). Thus, no
heightened level of scrutiny need be applied to Proposal 2, and under rational basis
review, Proposal 2 is easily justifiable. Proposal 2 does not violate the Equal Protection
Clause under the conventional analysis.
V.
For the foregoing reasons, I would conclude that Proposal 2 does not violate the
Equal Protection Clause of the United States Constitution under either a political
restructuring theory or traditional theory of Equal Protection. Accordingly, I would
affirm the judgment of the district court. | 01-03-2023 | 07-01-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/413844/ | 698 F.2d 1229
Contrerasv.Raines
80-5783
UNITED STATES COURT OF APPEALS Ninth Circuit
1/10/83
1
D.Ariz.
REMANDED | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2513968/ | 71 P.3d 93 (2003)
187 Or. App. 717
STATE of Oregon, Respondent,
v.
Marcie Marie DELANEY, aka Marcie Delaney, Appellant.
0006-34554, A112949.
Court of Appeals of Oregon.
Argued and Submitted March 31, 2003.
Decided May 15, 2003.
Rebecca Duncan, Deputy Public Defender, argued the cause for appellant. With her on the brief was David E. Groom, Acting Executive Director, Office of Public Defense Services.
Janet A. Metcalf, Assistant Attorney General, argued the cause for respondent. With her on the brief were Hardy Myers, Attorney General, and Mary H. Williams, Solicitor General.
Before EDMONDS, Presiding Judge, and KISTLER and SCHUMAN, Judges.
PER CURIAM.
Defendant was convicted of theft of lost or mislaid property, ORS 164.065, possession of a controlled substance, ORS 475.992, and supplying contraband by introducing it into a correctional facility, ORS 162.185. She appeals only her convictions for supplying contraband. We reverse.
After defendant's arrest on the theft charges, she was taken to the Multnomah County Detention Center. Later, she said that she needed medical attention, and she was taken to a hospital. While at those places, searches of her clothes and her person resulted in the discovery of tar heroin and crack cocaine. At a stipulated facts trial, the trial court rejected her arguments that she did not voluntarily introduce the drugs into the Detention Center. That was error. State v. Tippetts, 180 Or.App. 350, 43 P.3d 455 (2002). That conclusion does not change even if we assume, as the state appears to argue, that defendant's actions were so inept that her arrest and the discovery of the contraband were readily foreseeable consequences.
Because defendant did not move for a judgment of acquittal, we reverse and remand for a new trial rather than reversing outright.
Convictions for supplying contraband reversed and remanded for new trial; otherwise affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2513978/ | 71 P.3d 750 (2003)
2003 WY 78
ESTATE OF Thelma E. McLEAN, by and through its Personal Representative, David A. HALL, Appellant (Plaintiff/Respondent),
v.
Eugene H. BENSON and Heather L. Benson, Appellees (Defendants/Petitioners).
No. 02-88.
Supreme Court of Wyoming.
June 26, 2003.
*751 Janet L. Tyler, Laramie, Wyoming, Representing Appellant.
Philip A. Nicholas and Julie M. Yates of Anthony, Nicholas, Tangeman & Yates, LLC, Laramie, Wyoming, Representing Appellees.
Before HILL, C.J., and GOLDEN, LEHMAN, and VOIGT, JJ., and BURKE, D.J.
VOIGT, Justice.
[¶ 1] This is an appeal from an order admitting a will to probate. We dismiss the appeal because the order was not a final appealable order as contemplated by W.R.A.P. 1.04 and 1.05.
FACTS
[¶ 2] In 1992, Thelma McLean (McLean) was "befriended" by EuGene Benson (Benson) and his daughter, Heather. Both Bensons were stockbrokers. From 1992 until her death in 1998, McLean transferred practically all of her financial dealings, not to mention most of her assets, to the Bensons. *752 In 1994, McLean signed a Last Will and Testament that had been prepared by Benson's brother-in-law, an attorney, and typed by Heather. The Bensons were the beneficiaries under the will.
[¶ 3] In 1999, McLean's nephew, David Hall (Hall), petitioned the district court for appointment as personal representative of McLean's intestate estate. Hall then immediately filed, on behalf of the estate, a civil action against the Bensons, alleging breach of fiduciary duties, undue influence, constructive fraud, constructive trust, breach of contract, breach of the duty of good faith and fair dealing, fraud, negligent misrepresentation, intentional interference with expected inheritance, civil conspiracy, negligence, and fraudulent transfers. Several months later, Benson filed the purported Last Will and Testament of McLean, and eventually sought appointment as personal representative of McLean's testate estate.
[¶ 4] On December 7, 2001, the district court ordered the two probate actions and the civil suit consolidated. Three months later, after summary judgment motions left most of the issues extant, the district court signed an Order Admitting Will to Probate and Appointing Personal Representative, and a separate Order on Motion for Summary Judgment. Hall became personal representative in both probates. All proceedings in the civil action were stayed pending resolution of any will contest in the combined probate. This appeal followed.
ISSUES
[¶ 5] Hall and the McLean Estate raise the following issues:
I. Whether it was error to enter an order admitting a will, about which the Court had serious reservations, to probate nearly two and one-half years after the will was filed, and three years after an intestate probate was opened?
II. Whether it was error not to hold the order admitting the will to probate in abeyance until the conclusion of the civil action instituted by the Personal Representative appointed in the intestate proceeding, when that civil action is against the devisees under the purported will?
III. Whether the civil action instituted by the Personal Representative of the intestate estate, which action was consolidated into the combined intestate and testate probates, acts as a will contest for purposes of W.S. § 2-6-301?
[¶ 6] The Bensons raise the following issues:
A. Does appellant lack standing to object to the probate court admitting the will into probate and to bring this appeal?
B. Did the probate court, in accordance with the Wyoming Probate Code, properly admit the will into probate after letters of administration had been issued to appellant at appellant's request and a petition to probate the will had been filed?
C. [Are appellees] entitled to recover against appellant for costs and reasonable attorney's fees incurred by appellee[s] in defending a baseless appeal by appellant, in accordance with Wyoming Rules of Appellate Procedure Rule [10.05]?
DISCUSSION
[¶ 7] We will not address most of the issues raised by the parties because this appeal must be dismissed for want of a final appealable order.[1] W.R.A.P. 1.04 reads, in pertinent part:
(a) A judgment rendered, or appealable order made, by a district court may be: reversed, vacated, remanded, or modified by the supreme court for errors appearing on the record.
In turn, W.R.A.P. 1.05 defines "appealable order" as follows:
(a) An order affecting a substantial right in an action, when such order, in effect, determines the action and prevents a judgment; or
(b) An order affecting a substantial right made in a special proceeding; or
(c) An order made upon a summary application in an action after judgment; or
*753 (d) An order, including a conditional order, granting a new trial on the grounds stated in Rule 59(a)(4) and (5), Wyo. R. Civ. P.; if an appeal is taken from such an order, the judgment shall remain final and in effect for the purposes of appeal by another party; or
(e) Interlocutory orders and decrees of the district courts which:
(1) Grant, continue, or modify injunctions, or dissolve injunctions, or refuse to dissolve or modify injunctions; or
(2) Appoint receivers, or issue orders to wind up receiverships, or to take steps to accomplish the purposes thereof, such as directing sales or other disposition of property.
[¶ 8] This Court has had numerous occasions to apply this definition to particular circumstances. We have stated, for instance, that an order is not final if it does not affect a substantial right of either party. Stone v. Stone, 842 P.2d 545, 549 (Wyo.1992). To be final, the order must determine all liabilities of all parties and leave nothing for future consideration. Id. at 548 (quoting In re General Adjudication of All Rights to Use Water in the Big Horn River System, 803 P.2d 61, 66 (Wyo.1990)). It must determine the merits of the controversy. Public Service Commission v. Lower Valley Power and Light, Inc., 608 P.2d 660, 661 (Wyo.1980). The purpose of this general rule is to avoid fragmentary appeals and decisions made in a piecemeal fashion. In re General Adjudication of All Rights to Use Water in the Big Horn River System, 803 P.2d at 66. An order that merely determines a procedural issue, such as jurisdiction, and leaves the merits for further hearing, is not a final order. Steele v. Neeman, 6 P.3d 649, 653 (Wyo.2000). The denial of a motion for summary judgment is not appealable unless it is coupled with the grant of summary judgment to the other party, thereby completely resolving the case. McLean v. Hyland Enterprises, Inc., 2001 WY 111, ¶ 17, 34 P.3d 1262, 1267 (Wyo.2001).
[¶ 9] The McLean Estate contends that the Order Admitting Will to Probate and Appointing Personal Representative is a final appealable order under either W.R.A.P. 1.05(a) or (b). First, the McLean Estate cites First Wyoming Bank, N.A.Cheyenne v. First Nat. Bank and Trust Co. of Wyoming, 628 P.2d 1355, 1362 (Wyo.1981), for the proposition that probate jurisdiction is limited and special. Next, the McLean Estate points out Rice v. Tilton, 13 Wyo. 420, 80 P. 828 (1905), where this Court considered an appeal from an order admitting a will to probate and appointing a personal representative, and State ex rel. Murphy v. District Court of Second Judicial Dist. within and for Sweetwater County, 38 Wyo. 382, 267 P. 424 (1928), where we considered an appeal from an order staying disposition of the assets of a probate estate. Finally, the McLean Estate cites Taylor v. Estate of Taylor, 719 P.2d 234, 235 (Wyo.1986), for the "implication" therein that the "time for appealing an order admitting a will to probate is different than the time to appeal an order of final distribution."
[¶ 10] In response, the Bensons rely on several cases that define a final order as one that reaches the merits of the controversy. See, for example, Woods v. Woods, 2001 WY 131, ¶¶ 8-10, 36 P.3d 1142, 1144-45 (Wyo. 2001) (order denying immediate distribution of trust assets not a final appealable order) and Dexter v. O'Neal, 649 P.2d 680, 681 (Wyo.1982) (order of default leaving question of damages for further adjudication not a final appealable order). The Bensons also contend that, pursuant to Wyo. Stat. Ann. §§ 2-6-121, 2-6-122, and 2-6-204 (LexisNexis 2003), the filing and admission of a will, with or without probate, is merely a clerical act mandated by statute. Such a clerical act is not a final appealable order because it does not determine the final merits of the case. Lee v. Sage Creek Refining Co., Inc., 876 P.2d 997, 998 (Wyo.1994); Spitzer v. Spitzer, 777 P.2d 587, 592 (Wyo.1989).
[¶ 11] This appeal must be dismissed because it falls squarely into that category of cases to which W.R.A.P. 1.04 and 1.05 do not apply. Deciding whether the probate court was correct in admitting the will to probate will not resolve any of the substantive issues and will not affect substantial rights of the parties. Whether administration of the estate is testate or intestate, the allegations of *754 the civil suit will determine what assets belong to the estate. Where administration of the estate remains to be accomplished, an appeal is premature. Matter of Estate of Campbell, 673 P.2d 645, 648 (Wyo.1983). Neither Rice nor State ex rel. Murphy nor Taylor, cited by the McLean Estate, conflict with this resolution. In none of those cases was the question of the finality or appealability of an order raised. The issue in Rice, 13 Wyo. 420, 80 P. 828, was the appointment of the administrator, not admission of the will to probate. Since the contest in that case was between two people, each of whom wanted to be the administrator, the order appointing one affected the other's substantial rights. In State ex rel. Murphy, 38 Wyo. 382, 267 P. 424, this Court declined to issue a writ of mandamus directing the probate court to distribute the estate's assets where those assets were contested in a civil action. That is not precedent for us now to hear an appeal from a non-final order. And in Taylor, 719 P.2d 234, the issue was the application of the statute of limitations to a claim of fraud based upon the forgery of a will. Our statement therein, that the time had expired for appealing from the order admitting the will to probate, was obiter dictum, in that we were not directly addressing the issue of the appealability of such an order. Taylor, 719 P.2d at 235.
[¶ 12] Although we dismiss this appeal because the order from which the appeal was taken was not a final order, we decline to impose sanctions under W.R.A.P. 10.05. The McLean Estate's brief was not so lacking in cogent argument or pertinent authority that it constituted that rare circumstance where sanctions are appropriate. See Amen, Inc. v. Barnard, 938 P.2d 855, 858 (Wyo.1997) and Mayflower Restaurant Co. v. Griego, 741 P.2d 1106, 1116 (Wyo.1987).
NOTES
[1] The Bensons raised this contention as a subpart of their "standing" argument. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3040982/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 05-2382
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* District of Nebraska.
Orin Fredrick Johnson, *
* [UNPUBLISHED]
Appellant. *
___________
Submitted: August 7, 2006
Filed: August 14, 2006
___________
Before RILEY, COLLOTON, and GRUENDER, Circuit Judges.
___________
PER CURIAM.
Orin Johnson appeals the 46-month prison sentence the district court1 imposed
after he pleaded guilty to one count of conspiring to distribute and possess with intent
to distribute methamphetamine, in violation of 21 U.S.C. § 846. His counsel has filed
a brief under Anders v. California, 386 U.S. 738 (1967), arguing that the district court
erred in finding that Johnson’s post-arrest rehabilitation was not sufficiently
extraordinary to warrant a downward departure.
1
The Honorable Richard G. Kopf, United States District Judge for the District
of Nebraska.
While atypical post-offense rehabilitation can by itself be the basis for a
discretionary departure under U.S.S.G. § 5K2.0, see United States v. Chapman, 356
F.3d 843, 849 (8th Cir. 2004), the denial of such a motion is unreviewable where the
district court recognized its authority to depart downward and declined to do so, see
United States v. Vasquez, 433 F.3d 666, 670 (8th Cir. 2006).
Having reviewed the record under Penson v. Ohio, 488 U.S. 75, 80 (1988), we
conclude there are no nonfrivolous issues. Accordingly, we affirm the district court’s
judgment, and we grant counsel leave to withdraw.
______________________________
-2- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/544459/ | 907 F.2d 1140
30 Fed. R. Evid. Serv. 786
Unpublished DispositionNOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.UNITED STATES of America, Plaintiff-Appellee,v.William F. BURBANK, IV, d/b/a Sure Fire Distributing, Inc.,Defendant-Appellant.
No. 88-5634.
United States Court of Appeals, Fourth Circuit.
Argued May 12, 1989.Decided June 12, 1990.
Appeal from the United States District Court for the Western District of North Carolina, at Asheville. Robert D. Potter, Chief District Judge. (CR-88-10-A)
Joseph Blount Cheshire, V, Purser, Cheshire, Parker, Hughes & Manning, Raleigh, N.C., argued for appellant; George B. Currin, Purser, Cheshire, Parker, Hughes & Manning, Raleigh, N.C., on brief.
Thomas Ernest Booth, United States Department of Justice, Washington, D.C. (argued), for appellee; Thomas J. Ashcraft, United States Attorney, Jerry Miller, Assistant United States Attorney, Asheville, N.C., on brief.
W.D.N.C.
VACATED AND REMANDED.
Before WILKINSON and WILKINS, Circuit Judges, and CHARLES H. HADEN, II, Chief United States District Judge for the Southern District of West Virginia, sitting by designation.
PER CURIAM:
1
William F. Burbank, IV, was convicted by a jury on five counts of mail fraud and five counts of wire fraud in violation of 18 U.S.C. Secs. 1341 and 1343. Burbank challenges the convictions claiming that the admission into evidence of the written deposition of Daniel Cammaert De Vos violated his Sixth Amendment right to confront the witness and also violated the Federal Rules of Evidence.
2
After a thorough review of the evidence and the law, we find the deposition testimony did not possess circumstantial guarantees of trustworthiness or adequate indicia of reliability. We conclude that its admission under the Federal Rules of Evidence was prejudicially erroneous and in violation of Burbank's Sixth Amendment right to confrontation. Accordingly, the judgment of conviction is vacated and the case remanded for a new trial.
3
* Burbank served as Vice President of Sure Fire Distributing, Inc., a corporation engaged in the distribution and sales of motorcycle parts and accessories. Sure Fire was owned by Burbank's father, William F. Burbank, III, and the corporation maintained its office and warehouse in Asheville, North Carolina. Sure Fire was a party to an accounts receivable financing agreement with Chase Commercial Corporation, wherein Chase agreed to advance working capital to Sure Fire in amounts commensurate with Sure Fire's level of inventory and accounts receivable. All advances made by Chase were secured by this collateral.
4
The indictment charged that during 1984 Burbank devised a scheme or artifice to defraud Chase by creating false invoices and accounts receivable reflecting fictitious sales to Commercial Interamericana, an entity located in Colombia, South America. It charged that during December 1984 Burbank reported $213,000 of accounts receivable from Commercial and R.W. Smith and Company, an exporter and the purported middleman in the transactions. Based upon the alleged sales, Chase advanced Sure Fire amounts exceeding $166,000.
5
In late December 1984, a fire destroyed Sure Fire's business property. Burbank's father instituted a civil action on behalf of Sure Fire to recover proceeds under the company's fire policy. Burbank was not a party in the civil action. The alleged sales from Sure Fire to Commercial were at issue in the civil litigation. During the course of discovery, the insurer notified Sure Fire of its intention to depose on written examination Daniel Cammaert De Vos, a Colombian citizen and executive of Commercial. On October 24, 1986, De Vos appeared before the Twenty-Ninth Civil Municipal Court of Bogota, Colombia, and gave sworn testimony in response to propounded direct and cross-examination questions. De Vos testified that Commercial did not transact business with Burbank, Burbank's father, Sure Fire, or R.W. Smith in 1984. He specifically denied that Commercial placed any orders with Sure Fire during the relevant period. He explained that Commercial did not import goods from the United States in 1984 due to import restrictions imposed by the Colombian government.
6
At trial, the United States relied heavily upon the De Vos deposition to establish Burbank's deceptive scheme to obtain money from Chase fraudulently. The government, however, did not attempt to have De Vos present at trial to testify regarding these matters. Instead, eight days prior to trial, it notified Burbank of its intention to introduce a translated version of De Vos's civil deposition as evidence. The deposition was read into evidence, the Court concluding that it was admissible under the residual hearsay exceptions provided in Rules 803(24) and 804(b)(5) of the Federal Rules of Evidence. The court ruled, inter alia, that the deposition was trustworthy and that De Vos was adequately cross-examined in the matter.
II
7
Burbank claims that the admission of the deposition testimony violated his Sixth Amendment right to confront his accuser and also violated the Federal Rules of Evidence.
8
It should be noted that the traditional hearsay exception governing former testimony of unavailable witnesses, Rule 804(b)(1), was not available to the government under the factual situation at hand. Under 804(b)(1), former testimony is admissible in criminal cases only when the party against whom the testimony is offered had an opportunity to cross-examine or otherwise develop the witness's testimony. Obviously, in the present case, the 804(b)(1) exception does not apply to De Vos's deposition because Burbank was not a party in the civil action and, therefore, was not afforded an opportunity to challenge or expand the deposition testimony at the time it was taken.
9
In admitting the deposition, the court relied upon the residual hearsay exceptions provided in Rules 803(24) and 804(b)(5). The language of these rules is identical with one difference: the unavailability of the declarant is not a necessary prerequisite for admissibility under 803(24). In United States v. Mandel, 591 F.2d 1347, 1368 (4th Cir.1979), conviction affirmed en banc, 602 F.2d 653 (4th Cir.1979), further rehearing en banc denied, 609 F.2d 1076 (4th Cir.1979), cert. denied, 445 U.S. 961 (1980), Judge Widener stated that the residual rules were "designed to fill in omissions of other exceptions and to allow for the development of new general exceptions to the rule." (Citations omitted.) He warned, however, that the residual rules were not to be interpreted as broad exceptions which "give the trial judge unfettered discretion to admit otherwise inadmissible hearsay." Id. See also United States v. Bailey, 581 F.2d 341 (3d Cir.1978); Huff v. White Motor Corp., 609 F.2d 286 (7th Cir.1979). Mandel thus instructs that the residual rules are to be construed in light of the limited purposes intended by Congress.
10
For hearsay evidence to be admissible under the residual exceptions, it must satisfy five requirements. The proponent must establish: (1) that the proffered evidence has "circumstantial guarantees of trustworthiness" equivalent to evidence admitted under established hearsay exceptions; (2) that the statement is "offered as evidence of a material fact;" (3) that "the statement is more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts;" (4) that "the general purposes of [the] rules and the interest of justice will best be served by admission of the statements into evidence;" and (5) that the opposing party was given adequate notice of the proponent's intention to invoke the exception, "including the name and address of the declarant." Fed.R.Evid. 803(24) and 804(b)(3).
11
Burbank claims that De Vos's testimony was not trustworthy and that the government did not make reasonable efforts to obtain evidence more probative than the deposition. We address these two contentions in resolving the issue.
A. Trustworthiness
12
Our review of the trial court's finding that the deposition possessed guarantees of trustworthiness is governed by the "clearly erroneous" standard. United States v. Workman, 860 F.2d 140, 144 (4th Cir.1988); United States v. Smith, 792 F.2d 441, 443-44 (4th Cir.1986), cert. denied, 479 U.S. 1037 (1987). The government claims that the trial court was justified in its finding of trustworthiness because the deposition was taken before a judicial officer, under oath, and subject to cross-examination. Although these characteristics generally militate strongly in favor of trustworthiness, the circumstances under which De Vos testified decreased the propensity for truthfulness. As recognized in United States v. Bailey, supra, "the trustworthiness of a statement should be analyzed by evaluating not only the facts corroborating the veracity of the statement, but also the circumstances in which the declarant made the statement and the incentive he had to speak truthfully or falsely."
13
The facts in the instant case are unlike those in United States v. Workman, supra, where we held circumstantial degrees of trustworthiness justified admission of a deceased co-defendant's tape-recorded statement. In the tape the declarant confessed his role in the crimes charged and inculpated the defendant. In assessing the trustworthiness of the hearsay, we considered that the statement was given voluntarily and in the presence of declarant's counsel; that the declarant cooperated with authorities subsequent to the statement; and that the declarant's statement qualified as a statement against interest under Rule 804(b)(3). Under those circumstances, we held the statement to have satisfied the trustworthiness requirement of Rule 804(b)(5).
14
A primary factor which reduces our confidence in the trustworthiness of De Vos's testimony is the effect of the Colombian embargo on United States imports for the period relevant to the indictment. Under the embargo, Colombians were prohibited from importing luxury items, including motorcycle parts and accessories, from United States entities. Consequently, for Commercial to have purchased and imported the merchandise in question, it must have acted through illegal channels, i.e., the black market, and under pain of criminal sanctions if such activities later were discovered.
15
We thus believe that the Colombian import restrictions may have provided De Vos with incentive to be less than forthright when confronted with written questions on the subject of "luxury" purchases from foreigners. Certainly an admission by De Vos before a member of the Colombian judiciary of his involvement in the relevant business transactions would be tantamount to a direct admission of guilt for violations of the Colombian embargo. We conclude that the potentially self-serving denials made under these circumstances were not of an equivalent nature to evidence admissible under established hearsay exceptions, such as statements against interest. See Fed.R.Evid. 804(b)(3). Indeed, De Vos's testimony favored his penal interest.
16
The government claims that cross-examination in the civil action was sufficient to protect the trustworthiness of the deposition testimony. The government urges that Burbank's interest in cross-examining De Vos was similar to that pursued by Sure Fire in the civil action. The government argues that criminal defendant Burbank and the civil litigant Sure Fire had a common interest either to establish the existence of the relevant business transactions or to discredit De Vos's testimony in the event he denied involvement. We reject this contention for reasons which follow.
17
The government's argument fails to take into account the purpose and role of the deposition in the respective actions. In the litigation concerning fire insurance proceeds, the insurance company apparently used the deposition to develop information regarding Sure Fire's preparation and/or motive to destroy its business. The deposition thus concerned a collateral issue in the litigation and played a relatively minor role. On the other hand, the significance of the deposition in this criminal case was paramount. Its content supported the allegations of the indictment and provided vital evidence at trial. Indeed the government acknowledged at argument the importance of the written deposition to the ultimate convictions.
18
Depositions upon written questions are one of the least effective means of challenging a declarant's credibility. The predictable and cumbersome nature of interrogatories makes it difficult for one to conduct searching examination of a hostile or reluctant witness. Wright & Miller, Federal Practice & Procedure, Civil, Sec. 2131. Likewise, this method is ineffective for the party attempting to put credibility in issue because the jury is unable to observe the declarant's demeanor.
19
The shortcomings inherent with this method are illustrated by the fact that Burbank was not afforded an opportunity to cross-examine or otherwise elicit relevant information regarding De Vos's credibility. Instead, Burbank was forced to rely upon questions propounded prior to his indictment, in an action to which he was not a party, and taken at a time when his reputation and liberty were not in jeopardy. Considering the significance of De Vos's credibility to the issues at hand, and his potential motive to be less than forthright when confronted with the relevant business transactions, we conclude that the written cross-examination questions were insufficient to provide the deposition testimony with circumstantial guarantees of trustworthiness.
20
Accordingly, we hold that the trial court's finding that De Vos's testimony possessed "circumstantial guarantees of trustworthiness" was clearly erroneous.
21
B. Reasonable Efforts to Obtain Other Evidence
22
An additional requirement of Rules 803(24) and 804(b)(5) is that the hearsay statement be "more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts." Obviously, the most probative evidence the government could have offered on the issue of whether Sure Fire or Burbank engaged in sales with Commercial would have been the live testimony of De Vos. De Vos, however, was unavailable to testify because he was beyond the court's compulsory process. Mancusi v. Stubbs, 408 U.S. 204, 212-13 (1972); United States v. Rivera, 859 F.2d 1204, 1206-07 (4th Cir.1988). Burbank nevertheless contends that the government could have employed reasonable efforts to procure evidence more probative than the existing deposition. The government made no showing that it attempted to produce any evidence, other than the civil deposition, concerning the alleged dealings between Sure Fire and Commercial.
23
Burbank claims that the government could have arranged for a subsequent written deposition, thus providing Burbank and his counsel an opportunity to cross-examine De Vos. Burbank urges that the opportunity to cross-examine and inquire into matters relevant to the trustworthiness and credibility issues would have resulted in evidence more probative than the existing statement. Had Burbank been afforded this opportunity, the statement likely would have qualified for admission under the former testimony exception, Rule 804(b)(1), and would have obviated any potential confrontation clause issues. We, therefore, agree that a subsequent written deposition would have been more probative than the existing statement and that the government failed to establish that it made reasonable efforts to obtain the more probative evidence.
III
24
Having concluded that De Vos's deposition does not possess circumstantial guarantees of trustworthiness equivalent to evidence admitted under established hearsay exceptions, it logically follows that the government failed to establish that the deposition possessed adequate "indicia of reliability" to satisfy the requirements of the confrontation clause. Ohio v. Roberts, 448 U.S. 56 (1980); United States v. Workman, supra, at 144.
25
The final judgment of the district court is vacated and the case remanded for a new trial.
26
VACATED AND REMANDED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/4224064/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-6985
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
KEVIN LEON MORMON,
Defendant - Appellant.
Appeal from the United States District Court for the District of Maryland, at Greenbelt.
Paul W. Grimm, District Judge. (8:12-cr-00592-PWG-1; 8:16-cv-01146-PWG)
Submitted: November 21, 2017 Decided: November 28, 2017
Before WYNN and THACKER, Circuit Judges, and HAMILTON, Senior Circuit Judge.
Dismissed by unpublished per curiam opinion.
Kevin Leon Mormon, Appellant Pro Se. Adam Kenneth Ake, Kelly O. Hayes, OFFICE
OF THE UNITED STATES ATTORNEY, Greenbelt, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Kevin Leon Mormon seeks to appeal the district court’s order denying relief on his
28 U.S.C. § 2255 (2012) motion. The order is not appealable unless a circuit justice or
judge issues a certificate of appealability. 28 U.S.C. § 2253(c)(1)(B) (2012). A
certificate of appealability will not issue absent “a substantial showing of the denial of a
constitutional right.” 28 U.S.C. § 2253(c)(2) (2012). When the district court denies
relief on the merits, a prisoner satisfies this standard by demonstrating that reasonable
jurists would find that the district court’s assessment of the constitutional claims is
debatable or wrong. Slack v. McDaniel, 529 U.S. 473, 484 (2000); see Miller-El v.
Cockrell, 537 U.S. 322, 336-38 (2003). When the district court denies relief on
procedural grounds, the prisoner must demonstrate both that the dispositive procedural
ruling is debatable, and that the motion states a debatable claim of the denial of a
constitutional right. Slack, 529 U.S. at 484-85.
We have independently reviewed the record and conclude that Mormon has not
made the requisite showing. Accordingly, we deny a certificate of appealability and
dismiss the appeal. We dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before this court and argument
would not aid the decisional process.
DISMISSED
2 | 01-03-2023 | 11-28-2017 |
https://www.courtlistener.com/api/rest/v3/opinions/2500543/ | 85 F. Supp. 2d 89 (2000)
The SAN JUAN STAR, Plaintiff,
v.
CASIANO COMMUNICATIONS, INC., Defendant.
No. Civ.98-1372 PG.
United States District Court, D. Puerto Rico.
January 7, 2000.
*90 Ignacio Rivera-Cordero, Rivera & Montalvo, San Juan, PR, for The San Juan Star Company, plaintiff.
Edna Hernandez-Arroyo, Hector Reichard-Jr., Reichard & Escalera, San Juan, PR, for Casiano Communications Inc., defendant.
OPINION & ORDER
PEREZ-GIMENEZ, District Judge.
Defendant Casiano Communications, Inc. ("Casiano") moves for the dismissal of Plaintiff The San Juan Star's ("TSJS") complaint for failure to state a claim on the grounds that the speech at issue is not commercial and is thus subject to heightened First Amendment protection. (Dkt.7) Defendant also contends that the publications at issue do not constitute false advertisements, libel, and that TSJS lacks standing to exercise a claim under Puerto Rico's antitrust laws. Plaintiff opposes Defendant's motion. (Dkt.28)
FACTS
Casiano published the results of an audit ("Circulation Ad # 1") declaring that Casiano's circulation for its publication, Caribbean Business, was "the largest circulation English-language newspaper in Puerto Rico." (Dkt.7, exh. 2) Casiano listed CB's circulation at 44,851 including all paid and non-paid circulation, in Circulation Ad # 1. See id. Circulation Ad # 1 also listed TSJS's circulation to be 36,674, including all paid and non-paid circulation. See id.
Casiano also allegedly published two other advertisements (Ads # 2 & # 3) soliciting advertisement money from businesses for its special-interest supplement. (Dkt.28, exh. A) These advertisements, allegedly run on May 28, 1998 and June 11, 1998 in CB, listed CB's audience at 228,700 readers. See id. Additionally, a July 15, 1998 letter from Angel Luis Mercado and Miguel A. Vega of Radisson Normandie Hotel addressed to Geraldo Angulo of TSJS, cited the same figure (228, 700 readers) as CB's audience (Ad # 4). See id. at exh. B
DISCUSSION
A. Lanham Act Claim
Congress enacted the Lanham Act "to protect persons engaged in such commerce against unfair competition." 15 U.S.C. § 1127. Section 43(a) of the Lanham Act provides in relevant part that:
Any person who ... uses in commerce any ... false or misleading description of fact, or false or misleading representation of fact, which
...
*91 (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is likely to be damaged by such act.
15 U.S.C. § 1125 (a)(1)(B). "This section provides protection against a `myriad of deceptive commercial practices,' including false advertising or promotion. Resource Developers v. Statue of Liberty-Ellis Island Found., 926 F.2d 134, 139 (2d Cir. 1991). Section 43(a) of the Lanham Act has been characterized as a remedial statute that should be broadly construed. See Gordon & Breach Science Publ's v. American Inst. of Physics, 859 F. Supp. 1521, 1532 (S.D.N.Y.1994) [, aff'd by 166 F.3d 438 (2d Cir.1999)] (citing cases)." Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1382-83 (5th Cir.1996).
To sustain an action under § 43(a) a plaintiff must allege:
(1) that the defendant has made false or misleading statements as to his own product or another's; (2) that there is actual deception or at least a tendency to deceive a substantial portion of the intended audience; (3) that the deception is material in that it is likely to influence purchasing decisions; (4) that the advertised goods traveled [sic] in interstate commerce; and (5) that there is likelihood of injury to the plaintiff in terms of declining sales, loss of goodwill, etc. Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 872 (3d Cir.1992) [, reh'g denied, 954 F.2d 869 (3d Cir.1992) ] (internal brackets and citation omitted).
Seven-Up Co., 86 F.3d at 1383 n. 3.
The Lanham Act does not define either "advertising" or "promotion." Nor is the Act's legislative history helpful regarding this issue; it addresses only the requirement that the advertising or promotion be "commercial" in nature. The "commercial" requirement was inserted to ensure that § 43(a) does not infringe on free speech protected by the First Amendment.[1] Despite Defendant's erroneous argument to the contrary, the advertisement is clearly commercial in nature.
In order for representations to constitute "commercial advertising or promotion" under Section 43(a)(1)(B), they must be: (1) commercial speech; (2) by a defendant who is in commercial competition with plaintiff; (3) for the purpose of influencing consumers to buy defendant's goods or services. While the representations need not be made in a "classical advertising campaign," but may consist instead of more informal types of "promotion," the representations (4) must be disseminated sufficiently to the relevant purchasing public to constitute "advertising" or "promotion" within that industry.
Seven-Up Co., 86 F.3d at 1384. Defendant's advertisements fall squarely within this definition.
Courts have generally given the terms advertising and promotion their plain and ordinary meanings. As stated above, "[t]he courts are also in agreement, however, that `the Act's reach is broader than merely the "classic advertising campaign."' Gordon & Breach, 859 F.Supp. *92 at 1534 (citing cases)." Seven-Up Co., 86 F.3d at 1384. Both the required level of circulation and the relevant "consuming" or "purchasing" public addressed by the dissemination of false information will vary according to the specifics of the industry.
"The Court is [also] well-aware that prior restraints on speech are strongly disfavored. Nebraska Press Assoc. v. Stuart, 427 U.S. 539, 556, 96 S. Ct. 2791, 49 L. Ed. 2d 683 ... (1976)." Towers Fin. Corp. v. Dun & Bradstreet, Inc., 803 F. Supp. 820, 824 (S.D.N.Y.1992). As with other speech, commercial speech is entitled to First Amendment protection, although the exact amount of protection varies case-by-case. See id. If commercial speech is false or misleading, it is no more protected by the First Amendment than a business information report, and may be restrained under the Lanham Act. See id.
Section 43(a) of the Lanham Act is a broad remedial statute:
Finally, § 43(a) covers a publisher of a controlled circulation magazine who falsely inflates the size of his audience and thereby causes reduced advertising revenues to a competing publisher, even though the misrepresentations did not refer in any way to plaintiff's magazine or otherwise expressly take aim at an identifiable competitor. Ames Publishing Co. v. Walker-Davis Publications, Inc., 372 F. Supp. 1 (E.D.Pa.1974).
In re Uranium Antitrust Lit., 473 F. Supp. 393, 408 (N.D.Ill.1979). By alleging that Casiano has misrepresented TSJS's circulation figures, CB's circulation figures, or both, TSJS "has framed an actionable misrepresentation within the scope of § 43(a) of the Lanham Act." Id. at 409.
However, "[e]ven if the misrepresentations covered by the Lanham Act are broader than those involved in a deceptive comparative advertising case, a plaintiff must at least show that the allegedly false or deceptive statements are of a type that are likely to have a direct impact upon sales of its own product. See In Re Uranium Antitrust Litigation, 473 F.Supp. at 407-409." Gimix, Inc. v. JS & A Group, Inc., et al., 699 F.2d 901, 908 (7th Cir. 1983). Plaintiff may submit affidavits, depositions, or other material to introduce any issue of fact as to likelihood of impact on sales of advertisements or of confusion of customers by the advertisements in question. See id. Here, Plaintiff introduced a letter written by representatives of the Radisson Normandie Hotel addressed to Geraldo Angulo of TSJS which quoted the alleged erroneous readership figure of CB. See Ad # 4.
A grant of summary judgment to Defendant for all ads at this point in time would be premature. The Court must make the inquiry "does the advertisement have a tendency to mislead, confuse, or deceive?" See R.J. Reynolds Tobacco Co. v. Loew's Theatres, Inc., 511 F. Supp. 867, 876 (S.D.N.Y.1980). While the Court is convinced that reliance on ABC's report for TSJS's circulation number satisfies the "literal truth" requirement under the Lanham Act, issues remain concerning the potential impact of the "weekly vs. daily distribution" question as well as the accuracy of CB's subscription and readership numbers.[2] The Court sees value in both sides of this issue; it is "unfair" to misrepresent that product A and product B are the same without giving all the necessary relevant information. See Rhone-Poulenc Rorer Pharms, Inc. v. Marion Merrell Dow, Inc., 93 F.3d 511 (8th Cir.1996). On the other hand, "[t]he Lanham Act does not prohibit false statements generally. It prohibits only false or misleading descriptions or false or misleading representations of fact made about one's own or another's goods or services." Groden v. Random House, Inc., 61 F.3d 1045, 1052 (2nd Cir.1995). Advertising buyers are *93 likely sophisticated, and it remains to be seen just how confused they were by this alleged misrepresentation. See Arrow Fastener Co. Inc. v. Stanley Works, 59 F.3d 384 (2d Cir.1995); Homeowners Group, Inc. v. Home Marketing Specialists, Inc., 931 F.2d 1100 (6th Cir.1991); Mylan Labs., Inc. v. Pharmaceutical Basics, Inc., 808 F. Supp. 446 (D.Md.1992), rev'd 7 F.3d 1130 (4th Cir.1993), cert. denied, 510 U.S. 1197, 114 S. Ct. 1307, 127 L. Ed. 2d 658 (1994); Walker-Davis Publs., Inc. v. Penton/Ipc, Inc., 509 F. Supp. 430 (E.D.Pa.1981).
Defendants summary judgment motion is therefore GRANTED as to TSJS's circulation for Circulation Ad # 1, DENIED as to CB's circulation as to Circulation Ad # 1, and Ads, # 2, # 3, and # 4, and Plaintiff's claim under § 43(a) of the Lanham Act for Circulation Ad # 1 for TSJS's circulation figure is GRANTED. However, it is still at issue whether Defendant's omission of the weekly/daily distinction may warrant a claim.
B. Antitrust Claim under 10 L.P.R.A. § 251, et seq.
Defendant also seeks to dispose of Plaintiffs antitrust claim, alleging that Plaintiff lacks standing to assert such a claim. (Dkt.7) Plaintiff has alleged that Defendant violated § 259(a) of the Laws of Puerto Rico, entitled "Fair Competition" which forbids "[u]nfair methods of competition, and unfair or deceptive acts or practices in trade or commerce." 10 L.P.R.A. § 259(a). Section 268(a) of the Laws of Puerto Rico permits "[a]ny person who shall be injured in his business or property by another person, by reason of acts or intended acts, forbidden or declared to be unlawful by the provisions of this chapter, except section 259 and 261 of this title, may sue therefor in the Superior Court, and shall recover threefold the damages by him sustained, plus costs, including a reasonable amount of attorney's fees."[3] (Emphasis added).
While the Court may disagree with the logic of such a result, § 268(a) does not provide a cause of action to Plaintiff under §§ 259 or 261. Wise or unwise, this is the plain meaning of the statute. Therefore, Defendant's motion is granted as to Plaintiff's § 259(a) cause of action and that claim is DISMISSED WITH PREJUDICE.
C. Claim under 31 L.P.R.A. § 5141
Section 5141, better known as article 1802, is the torts statute under Puerto Rican law. 31 L.P.R.A. § 5141. This article states that any "person who by an act or omission causes damage to another through fault or negligence shall be obliged to repair the damage so done." Id. To recover under article 1802, three elements must be met: (1) a real injury occurred; (2) there is a causal nexus between the injury and the act or omission; and (3) the act or omission was culpable or negligent. See Pérez Escolar v. Ramon Collado Y Fed. Inc. Co., 90 P.R.R. 785, 90 D.P.R. 806, 1964 WL 14267 (1964); Hernández v. Fournier, 80 P.R.R. 94, 80 D.P.R. 93, 1957 WL 13027 (1957).
At this stage, the Court need not decide more than this: Defendant has not moved for summary judgment on the article 1802 claim. The Court therefore does not make any ruling, aside from acknowledging that said claim still breaths.
D. Libel Claim under 32 L.P.R.A. § 3142
Defendant has also moved for summary judgment on Plaintiff's libel claim. Courts tend to favor granting summary judgment more frequently when a party's First Amendment rights are at issue, "`since prolonged litigation might have a "[chilling] effect" on the exercise of those rights.' García-Cruz v. El Mundo, Inc., [108 *94 D.P.R. 174], 182, 1978 WL 48790 [ (1978) ]." Villaneuva v. Hernández Class, et al., 128 P.R.Off.Trans. 1, 19 (1991). Plaintiff has failed to oppose Defendant's motion for summary judgment on the libel claim.
"`Under Puerto Rico law, a defamation claim requires that the plaintiff prove: (1) that the information is false, (2) that plaintiff suffered real damages, and (3) in the case of a private figure plaintiff, that the publication was negligent.' Mojica Escobar v. Roca, 926 F. Supp. 30, 33 (D.P.R.1996) (citations omitted)." Ayala-Gerena, et al., v. Bristol Myers-Squibb Co., et al., 95 F.3d 86, 98 (1st Cir.1996). See also González-Martínez v. Lopéz, 118 P.R.Off.Trans. 229, 233 (1987); Villaneuva v. Hernández Class, et al., 128 P.R.Off. Trans. 1, 17-18 (1991). In the case of a public figure, a plaintiff may prevail only if the plaintiff shows actual malice. See id.
The prevailing [libel] doctrine in Puerto Rico stems from New York Times Co. v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964), which states that publication of a false report or unjustified statements relating to the official conduct of a public officer is not libelous, unless the information was maliciously published, that is, with knowledge of its falsity or with reckless disregard for whether it was true or false. Torres Silva v. El Mundo, Inc., 106 D.P.R. 415, 1977 WL 50788 (1977) [106 P.R.Off. Trans. 581].
Marital Community v. Lopéz-Cintrón, 116 P.R.Off.Trans. 142, 145 (1985). See also Villaneuva v. Hernández Class, et al., 128 P.R.Off.Trans. at 17-18. Actual malice is never presumed, but rather must be established through "clear and convincing evidence." See id. See also Villaneuva v. Hernández Class, et al., 128 P.R.Off.Trans. at 17-18. The issue of sufficiency of evidence to prove actual malice is strictly a question of law. See Villaneuva v. Hernández Class, et al., 128 P.R.Off.Trans. at 20. However, the fact that the information published was true is a valid defense available in libel cases. See id. at 17 n. 14.
The Court must determine on the basis of the affidavits, depositions, or other documentary evidence whether Plaintiff can prove actual malice. See id. at 19-20. "In other words, at the summary judgment stage, the plaintiff must produce evidence of the uncontroverted material facts that if proved true in a trial on the merits would establish that the newspaper acted with actual malice by publishing the libelous reports." Id. at 20.
In the present case, the Court finds that both parties are public figures and that, therefore, Plaintiff must plead and prove actual malice. The Court further determines that the information relied on by Defendant was not false. See Defendant's Statement of Uncontested Material Facts Nos. 5-10. Plaintiff's response is inadequate: "[Casiano] utilizes a report of the Audit Bureau of Circulations (ABC) dated 31 December 1996. This is done [de]spite [sic] the fact that there is a more current report issued by the Certified Audit of Circulations (CAC) dated 30 September 1997." (Dkt.28, pp. 12-13) This is no argument, for the Court need not decide if one report is "more true" than the other. It is enough that Defendant relied on a report that Plaintiff does not argue is false. This is a valid defense and ends Plaintiff's libel on libel. Defendant's motion is therefore granted, and Plaintiff's libel claim is DISMISSED WITH PREJUDICE.
CONCLUSION
In light of the above findings, the Court GRANTS Defendant's summary judgment motion as to TSJS's circulation for Circulation Ad # 1, DENIES as to CB's circulation as to Circulation Ad # 1, as well as Ads # 2, # 3, and # 4. Plaintiff's claim as to TSJS's circulation figures as used in Circulation Ad # 1 is DISMISSED WITH PREJUDICE. The Court also GRANTS Defendant's motion for summary judgment and DISMISSES WITH PREJUDICE *95 Plaintiff's antitrust claim under Puerto Rican law. Because Defendant has not moved for summary judgment on Plaintiff's article 1802 tort claim, the Court does not rule on that claim, and said claim continues. Plaintiff's libel claim is DISMISSED WITH PREJUDICE, as Defendant's summary judgment motion on that issue is GRANTED.
IT IS SO ORDERED.
NOTES
[1] For instance, see 135 Cong.Rec. H1216-17 (daily ed. April 13, 1989) (statement of Rep. Kastenmeier), "[t]he proposed change in section 43(a) should not be read in any way to limit political speech, consumer or editorial comment, parodies, satires, or other constitutionally protected material.... The section is narrowly drafted to encompass only clearly false and misleading commercial speech." Also see 134 Cong.Rec 31,851 (Oct. 19, 1988), statement of Rep. Kastenmeier, commenting that the reach of Section 43(a) "specifically extends only to false and misleading speech that is encompassed within the "commercial speech" doctrine developed by the United States Supreme Court." The Court in Gordon & Breach, 859 F.Supp. at 1533-34 discusses the legislative history of the Lanham Act, as does the Court in Seven-Up Co., 86 F.3d at 1383-84 n. 6.
[2] CB has not offered any substantiation for claiming 228,700 readers. CB also has not sufficiently substantiated its claim of 44,851 subscriptions. A self-filed, self-serving statement cannot end the inquiry at the summary judgment stage.
[3] Section 269a, which allows for injunctions, also excludes §§ 259 and 261, as well as 263(f). The inescapable conclusion is that these sections do not provide a private right of action. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2543733/ | 363 S.W.3d 435 (2012)
John SUMMERS, Appellant,
v.
CITY OF KANSAS CITY, et al., Respondent.
No. WD 73440.
Missouri Court of Appeals, Western District.
April 17, 2012.
David A. Lunceford, Lee's Summit, MO, for appellant.
Saskia C.M. Jacobse, Kansas City, MO, for respondent.
Before: ALOK AHUJA, P.J., and THOMAS H. NEWTON and JAMES E. WELSH, JJ.
ORDER
PER CURIAM:
John Summers sued the City of Kansas City for wrongful discharge from employment, and for alleged violations of the Missouri Human Rights Act, §§ 213.010 to 213.137, RSMo. The circuit court dismissed the statutory counts as time-barred, and granted summary judgment on the common-law wrongful discharge claim on the basis of sovereign immunity. We affirm. Because a published opinion would have no precedential value, an unpublished memorandum setting forth the reasons for this order has been provided to the parties. Rule 84.16(b). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/413959/ | 698 F.2d 1234
U. S.v.Page
82-3057
UNITED STATES COURT OF APPEALS Ninth Circuit
11/12/82
1
D.Or.
AFFIRMED | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/560749/ | 932 F.2d 960
Peninsula Realty, Inc.v.Hart (Robert Lamb), Patkus (Gregory B.)
NO. 90-3617
United States Court of Appeals,Third Circuit.
APR 18, 1991
1
Appeal From: W.D.Pa.
2
VACATED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/3975438/ | Under an indictment charging, in the first count rape, and in the second count assault to rape, appellant was convicted of aggravated assault.
The record is very voluminous, containing a great many facts detailed at great length both for the State and the appellant. There are numerous bills of exception raising many questions. The prosecutrix, Ellen Godsey, testified to a condition of things surrounding her life, that, to say the least of it, reflected seriously upon her good name. It would serve no useful purpose to commit this testimony to the jurisprudence of our country. It is unnecessary to take up these bills seriatim, therefore the case will be treated more from a general than a special standpoint. Among other things the State elicited from her that she was little over sixteen years of age at the time of the occurrence involved in this prosecution. She testified that her birthday was in April, 1897. The depositions of her father and mother, who lived at Los Angeles, California, were taken by the defendant, among other things, showing her age to be eighteen instead of sixteen; in other words, that she was *Page 129
born in April, 1895. Upon motion of the State this testimony was not permitted to go before the jury. This was error. The State having introduced the age as being little over sixteen years, the defendant had a right to combat this evidence by showing that she was two years older than she herself testified. It is a universal rule that wherever one side puts in evidence thought necessary or having a bearing upon the case favorable to the party introducing it, the other side has the right to meet such testimony and disprove it in order to get away from any injurious effects that might be produced upon the minds of the jury by the introduction of the original testimony. It may have been that this was critical testimony and doubtless was important. Appellant was a young man about grown, and the jury would doubtless look more unfavorably upon his side of the case if the prosecutrix was only sixteen years of age than they would if she was a more mature woman. The prosecutrix came from California to El Paso in connection with a theatrical company and was well versed in the ways of the world, even for a chorus girl as she testified she was. The evidence shows, among other things, in this connection, that she drank heavily, exhibited her person in many unbecoming and lascivious ways. A woman in this line of life would likely be regarded by the jury as less experienced at sixteen than she would with the added experience of two years, and where the depravity shown as in this case it would be more intensified at the age of eighteen than at sixteen.
The theory of the State was that appellant made a violent assault upon the prosecutrix and thereby accomplished the purpose of rape, and her testimony goes to the extent of showing that while he did not fully accomplish his purpose so far as she knew, but that he did in fact penetrate her person. This was denied by appellant. His testimony was to the effect that he and prosecutrix and some other girls who belonged to the "show company" and a gentleman friend of his had been on a general carouse that night drinking in El Paso, then crossing the river and going to Juarez and drinking a great deal there; and after they returned from Juarez to El Paso he and prosecutrix took a ride clown the El Paso valley, and after reaching a certain point stopped and drank ten bottles of beer, five each; that while this was going on they were sitting on the fender of the automobile, and that prosecutrix was very drunk, and he not in a much better condition, if any, and she placed her arm around his neck and thus drank the beer; that he fondled her person with full liberty and consent, and after ascertaining the fact that her menstrual period was on her he desisted. She testified that when he made the proposition to her she declined, and that this resulted in a struggle in which he struck her. Upon their return that night to town she left him and went to her room. He says at that time she had no bruises about her person or face. There is testimony also of one of the roomers at the hotel that he heard a woman whoop; that he got up, looked out to see what was the matter; that she was drunk and fell, and also after getting *Page 130
up she undertook to get into one of the rooms and struck her head against the door. This evidence was introduced to account for the bruises about the face. It is further in evidence that in driving down the valley prosecutrix wanted to handle the car, which was resisted by appellant on account of her drunken condition; that she finally got hold of the steering wheel, that she was handling it indiscreetly, that he was afraid the car would be ditched or turned over and he pushed her away. The court submitted the theory of pushing the girl away under the circumstances as not being sufficient to justify a conviction for aggravated assault. He also instructed the jury, in substance, if he did not perform the acts testified by prosecutrix it would not be rape. Among other things, in this connection, it is shown that the prosecutrix left the State and went to Deming, New Mexico, in company with two men. The State's theory was that this was done to get rid of her as a witness in the case against appellant. Quite a lot of evidence was introduced showing the fact that she went to Deming, New Mexico, and was there arrested by the officers and returned to El Paso. The court did not charge the jury with reference to this matter. Appellant asked a special charge to withdraw it from the consideration of the jury if they should find it was done without the consent, procurement or suggestion of appellant. The court refused to withdraw it from the consideration of the jury, or to instruct the jury not to consider it unless they should find that appellant was instrumental in having her carried out of the State. We are of the opinion that as presented lay the record it is more than doubtful if testimony was admissible, but if upon another trial the facts should be sufficient to show that probably it was done at his suggestion, then the charge should be submitted to the jury that if he did not induce her to leave the State and it was not done by his connivance or instigation, then it should not be considered against him. He denies any connection with the matter. In the introduction of his testimony, with reference to the flight of the girl from the State, it would not be evidence against the defendant unless the State could in some way show he was instrumental in or connived at her flight or instigated her being carried out of the State. This character of testimony was evidently damaging, and as it was most strenuously denied he had anything to do with it, and in fact was absent from the State when the matter occurred, the court should either have excluded the testimony altogether, or if he thought there was enough evidence to probably show he was connected with it, then he should have instructed the jury that before they could consider it against him they must find that he procured her flight or in some way instigated it. The special charges asked by appellant along this line were improperly and incorrectly refused.
The defendant left the State and went to Las Cruces, New Mexico, with a view of going from there to St. Louis or some point to attend school, and this was done at the request of his mother, perhaps at her command. It is also in evidence that appellant was not aware at the time he left Texas and when in New Mexico that an indictment had *Page 131
been returned against him, or there was any process against him. The court charged the jury in this wise in this connection: "You are instructed that if you should find and believe from the evidence that the defendant left his home in El Paso, Texas, and went away out of the jurisdiction of this court at the suggestion of his mother, and in compliance with her request, for the purpose of going to school, and not for the purpose of avoiding process of this court, and his arrest, then such evidence can not be considered by you as any evidence tending to show his guilt." The appellant asked this instruction: "You are instructed that if you should find and believe from the evidence in this case that the defendant, just shortly after the alleged offense, left his home in El Paso, Texas, and went away, but that at the time he left that he did not know that the grand jury had returned an indictment against him and that a warrant had been issued for his arrest, but had reason to believe and did believe that no such indictment had been returned and that he went away at the suggestion of his mother and in compliance with her request, for the purpose of going to school and not for the purpose of avoiding process of the court and his arrest, then such evidence can not be and will not be considered by you as any evidence tending to show his guilt." The court in a way submitted this question, but not as fully as it should have been, and the charge upon another trial should go further and tell the jury that it should not only not be considered as evidence of his guilt but should not be considered against him at all.
There was evidence introduced before the jury that Dave Marshall and Harry Davis had been arrested as accessories to appellant in taking the girl out of Texas into New Mexico. It seems they had an examining trial, and were held for the action of the grand jury. The grand jury failed to indict and they were discharged. All this evidence went before the jury for the purpose of impairing their credit as witnesses. They were important witnesses, especially Davis. The court did not limit the effect of this testimony to the credibility of the witnesses, and in fact gave no charge in reference to the matter. Appellant requested a special instruction, which was refused by the court. This charge is as follows: "You are further instructed that the evidence before you in reference to the prosecution of the witnesses, Dave Marshall and Harry Davis, was introduced before you, and only to be considered by you, for the purpose of affecting their credibility as witnesses, and for no other purpose, and the court therefore charges you that you will not consider the said evidence for any other purpose in said cause." This was refused, and erroneously so.
The court submitted generally the issue of aggravated assault, but did not instruct the jury with reference to the contention of appellant that he did not strike or bruise the prosecutrix as testified by her, but that she obtained her bruises and hurts in a hotel after they returned from their ride. To meet this phase of the case appellant asked a special instruction, as follows: "You are further instructed that if you find *Page 132
from the evidence that the face of the said Ellen Godsey, or any portion thereof, was bruised, or in some manner injured, and that such bruises and injuries, if any, were caused by the said Ellen Godsey falling upon the steps of the Hollenbeck hotel, if you believe that she did so fall, or if you find from the evidence that the said injuries, if any, were caused by the said Ellen Godsey running against the door-facing at room No. 5, in the said Hollenbeck hotel, if you believe that she did run against the door-facing of said room, or if you find from the evidence that the said Ellen Godsey received such injuries, if any, in any other manner than by an assault and battery or some character of force used by the defendant, William Caples, then and in that event, the court charges you that you can not consider the said injuries, if any, in determining whether the said defendant is guilty of any offense submitted to you in the general charge of the court." This was refused. This charge should have been given. There was evidence introduced covering these identical matters, and the jury should have been instructed that if she received these injuries on the face, which she says was caused by appellant striking her, from the fall in the hotel, or from running against the door as shown by some of the testimony, then appellant would not be guilty of an assault from that viewpoint. It may be stated in a general way, in this connection, that it would seem from this record that the evidence upon which this conviction was had was the bruises on prosecutrix's face. The jury discredited her testimony to the effect that appellant had carnal intercourse with her or penetrated her person, for they acquitted him of rape and assault to rape, and only found him guilty of aggravated assault. The bruises on the face of the prosecutrix was the most important and critical testimony introduced to show assault and battery. If he placed the bruises upon her face, it was very damaging testimony against appellant. If she did not have those bruises upon her face at the time she separated from him and went into the hotel, and she received them from a fall or by running against a door, appellant would not be responsible, for he was not present but had driven away in his car. This charge was directed to one of the most critical issues in the case and should have been given, and in failing to do so the court committed material error.
There are other questions in the case of more or less moment, but we deem it unnecessary to discuss them inasmuch as what we have said will determine how the case should be tried, if it should be tried again. The issues of rape and assault to rape pass out of the case by the verdict of the jury. Upon another trial the State now can only rely upon the fact of an assault upon the girl, if it in fact occurred, and the testimony and issues will be directed to that issue alone.
For the errors indicated the judgment is reversed and the cause remanded.
Reversed and remanded. *Page 133 | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2543724/ | 53 So. 3d 393 (2011)
Jose ESCOBAR-GUILLEN, Appellant,
v.
STATE of Florida, Appellee.
No. 5D10-2454.
District Court of Appeal of Florida, Fifth District.
February 4, 2011.
Jose Escobar-Guillen, Florida City, pro se.
Pamela Jo Bondi, Attorney General, Tallahassee and Robin A. Compton, Assistant Attorney General, Daytona Beach, for Respondent.
SAWAYA, J.
Jose Escobar-Guillen appeals the trial court's order that summarily denied his Florida Rule of Criminal Procedure 3.850 motion for postconviction relief in which he alleged a Miranda[1] violation and coerced confession. Pursuant to Spera v. State, 971 So. 2d 754, 755 (Fla.2007), we reverse. We do so because we are unable to conclude that the facial deficiencies of these claims, referenced by the trial court, cannot be remedied by amendment. See Oliver v. State, 10 So. 3d 704 (Fla. 5th DCA 2009).
Accordingly, the order is reversed and this case remanded with instructions that the trial court strike the motion with leave to amend in a specified time consistent with the parameters identified in Spera. See Oliver; Parsons v. State, 981 So. 2d 1249, 1250 (Fla. 5th DCA 2008).
REVERSED and REMANDED.
PALMER and JACOBUS, JJ., concur.
NOTES
[1] Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1232592/ | 718 N.W.2d 723 (2006)
STATE v. MITCHELL.
No. 2004AP1083-CR.
Supreme Court of Wisconsin.
June 14, 2006.
Petition for review denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2488235/ | 73 So.3d 760 (2011)
JACKSON
v.
TUCKER.
No. SC11-1419.
Supreme Court of Florida.
August 18, 2011.
DECISION WITHOUT PUBLISHED OPINION
Habeas Corpus dismissed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/765451/ | 185 F.3d 1075 (9th Cir. 1999)
Gregoria Grijalva, Carol Knox, Mary Lea, Beatrice Bennett, and Mildred Morrell, individuals and representatives of a class of persons similarly situated, Plaintiffs-Appellees,v.Donna E. Shalala, Secretary, Health and Human Services, Defendant-Appellant,v.Josephine Balistreri; Fred S. Scherz; Kevin A. Driscoll; Mina Ames; Edmundo B. Cardenas; Arline T. Donoho; Patricia Sloan; Beth Robley; Goldie M. Powell; Richard Baxter, Plaintiffs-Intervenors.
No. 97-15877
United States Court of Appeals, Ninth Circuit.
September 1, 1999
On Remand from the United States Supreme Court.
Before: Schroeder, Wiggins, and Tashima, Circuit Judges.
ORDER
1
We remand this case to the district court for further consideration in light of American Mfrs. Mut. Ins. Co. v. Sullivan, ___U.S.___, 119, S.Ct. 977, 143 L.Ed.2d 130 (1999), the Balanced Budget Act, and those regulations implementing the Balanced Budget Act.
2
The pending injunction is dismissed as moot.
3
So Ordered. | 01-03-2023 | 04-18-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/3124759/ | MEMORANDUM OPINION
No. 04-12-00293-CR
Reynaldo Solis GONZALEZ,
Appellant
v.
The STATE of Texas,
Appellee
From the 175th Judicial District Court, Bexar County, Texas
Trial Court No. 2011CR10914
Honorable Mary D. Roman, Judge Presiding
PER CURIAM
Sitting: Catherine Stone, Chief Justice
Karen Angelini, Justice
Sandee Bryan Marion, Justice
Delivered and Filed: June 27, 2012
DISMISSED
The trial court’s certification in this appeal states that “this criminal case is a plea-bargain
case, and the defendant has NO right of appeal.” The clerk’s record contains a written plea
bargain, and the punishment assessed did not exceed the punishment recommended by the
prosecutor and agreed to by the defendant; therefore, the trial court’s certification accurately
reflects that the underlying case is a plea-bargain case. See TEX. R. APP. P. 25.2(a)(2).
04-12-00293-CR
Rule 25.2(d) of the Texas Rules of Appellate Procedure provides, “The appeal must be
dismissed if a certification that shows the defendant has a right of appeal has not been made part
of the record under these rules.” TEX. R. APP. P. 25.2(d). On May 22, 2012, we ordered that this
appeal would be dismissed pursuant to rule 25.2(d) unless an amended trial court certification
showing that the appellant has the right of appeal was made part of the appellate record by June
15, 2012. See TEX. R. APP. P. 25.2(d); 37.1; see also Dears v. State, 154 S.W.3d 610 (Tex. Crim.
App. 2005); Daniels v. State, 110 S.W.3d 174 (Tex. App.—San Antonio 2003, no pet.). No
response was filed. In the absence of an amended trial court certification showing that the
appellant has the right of appeal, rule 25.2(d) requires this court to dismiss this appeal.
Accordingly, the appeal is dismissed.
PER CURIAM
DO NOT PUBLISH
-2- | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2509195/ | 107 P.3d 84 (2005)
197 Or. App. 203
TINDALL v. EMPLOYMENT DEPT.
Court of Appeals of Oregon.
January 26, 2005
Affirmed without opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/7023675/ | JUSTICE REINHARD delivered the opinion of the court: Modine Manufacturing Company (Modine) petitions for review of an order of the Pollution Control Board (PCB) in an action instituted by the Environmental Protection Agency (EPA), in which the PCB imposed a $10,000 civil penalty against Modine for operating a facility without a permit in violation of section 9(b) of the Environmental Protection Act (Act) (Ill. Rev. Stat. 1987, ch. lllVa, par. 1009(b)). The only issue presented for review is whether the $10,000 penalty was necessary to aid in the enforcement of the Act. The record of the proceedings below establishes the following facts. Modine is engaged in the manufacture of aluminum air-conditioning condensers and evaporators for use in motor vehicles and operates a plant near Ringwood, Illinois, in McHenry County. Prior to January 24, 1986, Modine used a process known as “Alfuse” in the production of evaporators to bond fins to unassembled evaporator cores. The process involves applying a bonding slurry to the parts and curing the bond in an evaporator oven. The oven is a source of particulate emissions which pass through a venturi scrubber before being emitted out of a stack. On December 15, 1981, a test of emissions from the evaporator production line revealed emissions in excess of the limit provided for by applicable regulations. On March 22, 1982, Sudhir Desai, an employee of the EPA, mailed a letter to Modine requesting it to submit a plan for compliance with emissions regulations. On April 15, 1982, Modine responded that it had retained a consultant to evaluate the problem and would implement his recommendations. The consultant, David Rimberg, of North American Perneo, Inc., prepared a report making specific recommendations including adjustment of the liquid-to-gas ratio in the scrubber system. Modine made the suggested adjustments. On August 2, 1982, Modine applied for renewal of its permit to operate the condenser and evaporator production lines. On September 21, 1982, the EPA issued a renewal permit scheduled to expire on October 31, 1983. A condition of this permit was that a stack test be conducted within 180 days of its issuance. Modine performed a stack test on January 11, 1983, which indicated emissions below the limit. Modine reported this result to the EPA and indicated that it would conduct additional tests for verification. These tests, conducted in February and April 1983, showed particulate emissions in excess of the limit. Modine informed the EPA of the results of those tests. On June 23, 1983, the EPA notified Modine that it was in violation of emission regulations and could be subject to an enforcement action. A preenforcement conference was held on July 21, 1983, at which Modine outlined specific steps to decrease emissions, including installation of a new fan in the scrubber. Prior to the preenforcement conference, Modine applied to the EPA for renewal of its operating permit. On August 3, 1983, the application was denied. Modine then submitted another permit application for the evaporator production line only. This application was also denied. Throughout the period following the preenforcement conference, Modine informed the EPA of its progress in installing the new fan. Due to weather delays, the fan was not installed until January 1984. The total cost of installing the fan was $22,000. Despite the installation of the fan, a stack test conducted in March 1984 showed excess emissions. Modine again consulted with Perneo, which suggested certain adjustments. A second preenforcement conference was held on June 25, 1985. At this conference, Modine submitted a compliance plan which incorporated Pemco’s recommendations. Modine attempted to implement the recommendations, although a suggested adjustment of the scrubber’s liquid-to-gas ratio caused the system to shake severely. Modine kept the EPA apprised of its progress. Stack tests conducted in March 1985 still showed noncompliance. During this time, Modine was considering several options for achieving compliance and ultimately decided to replace the Alfuse process with the Nocolok process. In February 1985, Modine purchased a technology transfer and licensing agreement from Nocolok for $310,000. On June 26, 1985, a conference was attended by representatives of Modine and the EPA. Modine discussed its plans to replace the Al-fuse process. The EPA agreed to accept this as a compliance plan and refrain from bringing an enforcement action against Modine for particulate air emission violations. Modine discontinued use of the Alfuse process in late January 1986. On February 25, 1986, the EPA filed a two-count complaint with the PCB. Count I alleged operation of the evaporator production line without a permit from October 31, 1983. Count II alleged violation of particulate emission limitations. The PCB found both violations to have occurred and imposed a $10,000 penalty on Modine. Modine petitioned for review of the PCB order directly to this court, asserting that the EPA’s agreement not to institute enforcement proceedings barred the instant action. Modine also asserted that the PCB erred in imposing a $10,000 penalty because no penalty was necessary to enforce the Act. This court held in Modine Manufacturing Co. v. Pollution Control Board (1988), 176 Ill. App. 3d 1172 (unpublished order under Supreme Court Rule 23), that the EPA had agreed not to pursue enforcement based on emissions violations but that no such agreement existed with respect to permit violations. This court remanded to the PCB for determination of an appropriate penalty based solely on the permit violation. This court declined to address the propriety of the penalty imposed. On remand, the PCB imposed a $10,000 fine based on the permit violation. Modine again seeks direct review of this order in this court pursuant to section 41 of the Act (Ill. Rev. Stat. 1987, ch. lllVa, par. 1041). Modine contends that the PCB erred in imposing a $10,000 penalty because the penalty was not necessary to aid in the enforcement of the Act, but rather was imposed solely for punitive reasons. Respondents maintain that the penalty imposed reflects proper consideration of applicable statutory factors and was not an abuse of discretion. Section 33(b) of the Act provides that in enforcement actions the final order of the PCB “may include a direction to cease and desist from violations of the Act or of the Board’s rules and regulations or of any permit or term or condition thereof, and/or the imposition by the Board of civil penalties in accord with Section 42 of this Act.” (Ill. Rev. Stat. 1987, ch. 1111/2, par. 1033(b).) Section 42 provides for a civil penalty not to exceed $10,000 for each violation and an additional penalty not to exceed $1,000 for each day during which the violation continues. (Ill. Rev. Stat. 1987, ch. 1111/2, par. 1042.) The legislature has vested the PCB with broad discretionary powers in the imposition of civil penalties, and its order will not be disturbed upon review unless it is clearly arbitrary, capricious or unreasonable. City of Freeport v. Pollution Control Board (1989), 187 Ill. App. 3d 745, 750, 544 N.E.2d 1. Nonetheless, it is well established that the Act does not confer upon the PCB the authority to impose a civil penalty in every case of a violation of the Act or regulations. (Metropolitan Sanitary District v. Pollution Control Board (1975), 62 Ill. 2d 38, 45, 338 N.E.2d 392; Southern Illinois Asphalt Co. v. Pollution Control Board (1975), 60 Ill. 2d 204, 208, 326 N.E.2d 406.) The principal reason for the imposition of civil penalties under the Act is to provide a method to aid in its enforcement; punitive considerations are secondary. Metropolitan Sanitary District, 62 Ill. 2d at 45, 338 N.E.2d at 397; Trilla Steel Drum Corp. v. Pollution Control Board (1989), 180 Ill. App. 3d 1010,1013, 536 N.E.2d 788. Initially, Modine contends that imposition of a penalty here would not aid in the enforcement of the Act because it was no longer in violation of the Act at the time the complaint was filed. While there is arguably some support for this view (see City of Moline v. Pollution Control Board (1985), 133 Ill. App. 3d 431, 434, 478 N.E.2d 906; Chicago Magnesium Casting Co. v. Pollution Control Board (1974) , 22 Ill. App. 3d 489, 495, 317 N.E.2d 689), we believe all the relevant facts and circumstances must be examined to determine if a civil penalty is to be imposed as a method to aid in the enforcement of the Act. Thus, we decline to hold categorically that penalties may not be imposed for wholly past violations. (See City of East Moline v. Pollution Control Board (1985), 136 Ill. App. 3d 687, 693, 483 N.E.2d 642.)1 Nonetheless, as we explain below, we do not believe the record supports the penalty imposed here. In making its determination as to whether a penalty is warranted and, if so, the amount of the penalty, the PCB must consider all facts and circumstances bearing upon the reasonableness of the complained-of conduct, including, but not limited to, certain factors specified in section 33(c) of the Act. (Ill. Rev. Stat. 1985, ch. lllVa, par. 1033(c); Southern Illinois Asphalt Co. v. Pollution Control Board (1975) , 60 Ill. 2d 204, 208-09, 326 N.E.2d 406.) The statutory factors in effect at the time the complaint was filed were: (iv) the technical practicability and economic reasonableness of reducing or eliminating the emissions, discharges or deposits resulting from such pollution source.” (Ill. Rev. Stat. 1985, ch. IIIV2, par. 1033(c).) “(i) the character and degree of injury to, or interference with the protection of the health, general welfare and physical property of the people; (ii) the social and economic value of the pollution source; (iii) the suitability or unsuitability of the pollution source to the area in which it is located, including the question of priority of location in the area involved; and Moreover, the severity of the penalty should bear some relationship to the seriousness of the infraction or conduct. (Southern Illinois Asphalt Co., 60 Ill. 2d at 208, 326 N.E.2d at 408.) Additionally, good faith or lack thereof is pertinent to the issue of whether a penalty should be imposed and, if so, the amount of the penalty. Archer Daniels Midland v. Pollution Control Board (1986), 149 Ill. App. 3d 301, 305, 500 N.E.2d 580; Standard Scrap Metal Co. v. Pollution Control Board (1986), 142 Ill. App. 3d 655, 662, 491 N.E.2d 1251; see also City of Chicago v. Pollution Control Board (1978), 57 Ill. App. 3d 517, 521, 373 N.E.2d 512. Applying these principles to the instant case, we note that with respect to the first statutory factor, the PCB found that “[t]he Board does consider that the degree of interference with the public health, welfare or property is considerable for operating without a permit. *** When a permit program is established, each permit and its contents become a first line mechanism by which the requirements of the Act and related Board regulations are effectuated, facility by facility.” Application of this rationale to the facts of the instant case is undercut by the recent decision of the Appellate Court for the First District in Trilla Steel Drum Corp. v. Pollution Control Board (1989), 180 Ill. App. 3d 1010, 536 N.E.2d 788. In that case, the court stated: “The record reveals that the penalty was imposed due to TrilIa’s failure to obtain an operating permit for a period of 15 months. During that time, however, Trilla was not entirely beyond the regulatory awareness of the Agency since prior to the end of 1984 Trilla had applied for and received an operating permit. Further, in January 1986, Trilla had applied for and received a variance from the Agency. By Trilla’s permit and variance applications, the company became a part of the regulatory program of the Agency and the Agency had data concerning the company’s existence, the products it manufactured and the contaminants which were emitted by the operation. The Board has not shown that Trilla’s omission has harmed in a serious manner either the information gathering or oversight roles of the Agency.” 180 Ill. App. 3d at 1013, 536 N.E.2d at 790. Similarly, in the instant case, Modine was not beyond the regulatory awareness of the EPA. Modine had initially operated with a permit, applied for a renewal permit, and conducted tests of its facilities and apprised the EPA of the results. The EPA and the PCB note that in Trilla the petitioner had applied for and received a variance, whereas Modine never sought a variance. We find this distinction to be of no consequence. Modine became part of the regulatory program, the EPA had information about its operations, and the EPA voluntarily withheld enforcement procedures while working with Modine to achieve compliance. As to the remaining statutory factors, the PCB found that, aside from its operation without a permit, Modine’s operations were of significant social and economic value. This finding is amply supported by the record. The PCB found that the third factor, suitability of the pollution source to its location, was of little relevance to a case involving a permit violation. As to the final factor, the technical practicability and economic reasonableness of reducing or eliminating emissions, the PCB found that even though time may have been a limiting factor in implementing a reduction mechanism, the PCB would not consider the factor in a light favorable to Modine because Modine never applied for a variance. We fail to see how this procedural consideration is relevant to the question of technical practicability and economic reasonableness. In any event, it appears from the record that Modine did not anticipate the difficulty it would encounter in achieving compliance. Modine’s decision to concentrate its efforts and resources on achieving compliance, rather than obtaining a variance, is largely excusable in these circumstances. Moreover, it is apparent from the record that Modine acted in good faith throughout the relevant time period. Modine was candid and cooperative with the EPA. Additionally, Modine made a sincere effort and expended substantial sums of money to remedy the problem. Under all these circumstances, we find that imposition of the maximum penalty of $10,000 for this violation is not supported by the record, even considering the PCB’s argument that the statute allows for an additional penalty not to exceed $1,000 for each day the violation continues. Imposition of the maximum penalty is not commensurate with the severity of the violation and would not aid in the enforcement of the Act. We note that we are empowered to determine an appropriate penalty and need not remand to the PCB for a new determination. (Archer Daniels Midland v. Pollution Control Board (1986), 149 Ill. App. 3d 301, 306, 500 N.E.2d 580.) We have reviewed the record and determine that a penalty of $1,000 is warranted, and the order of the PCB is so modified. For the foregoing reasons the order of the PCB is affirmed as modified. Affirmed as modified. UNVERZAGT, P.J., and McLAREN, J., concur. As the EPA and the PCB note, since this action was instituted, section 33(a) has been amended and now expressly provides that “It shall not be a defense to findings of violations *** or a bar to the assessment of civil penalties that the person has come into compliance subsequent to the violation.” Ill. Rev. Stat., 1988 Supp., ch. 11P/2, par. 1033(a). | 01-03-2023 | 07-24-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2503037/ | 718 S.E.2d 736 (2011)
LOMAX CONST., INC.
v.
TRIAD SHEET METAL & MECHANICAL, INC.
No. COA10-869.
Court of Appeals of North Carolina.
Filed June 21, 2011.
Case Reported Without Published Opinion Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/6189/ | 11 F.3d 1316
29 U.S.P.Q.2d 1665
OMNITECH INTERNATIONAL, INC., Plaintiff-Counter Defendant-Appellant,v.The CLOROX COMPANY, Defendant-Counter Claimant-Appellee.
Nos. 92-3381, 92-3911.
United States Court of Appeals,Fifth Circuit.
Jan. 26, 1994.
D. Michael Dendy, Jacob J. Amato, Jr., Amato & Creely, David T. Pick, Greenberg & Dallam, Gretna, LA, Walter C. Thompson, Jr., Mark P. Seyler, Barkley & Thompson, New Orleans, LA, for plaintiff-counter defendant-appellant.
Roy J. Rodney, Jr., Colvin G. Norwood, Jr., Stephen W. Rider, Kim M. Boyle, McGlinchey, Stafford, Lang, New Orleans, LA, for defendant-counter claimant-appellee.
Appeals from the United States District Court for the Eastern District of Louisiana.
Before KING and JOLLY, Circuit Judges, and PARKER*, District Judge.
KING, Circuit Judge:
1
Plaintiff-Appellant Omnitech International, Inc. ("Omnitech") appeals from the district court's grant of judgment as a matter of law in favor of the Defendant-Appellee The Clorox Company ("Clorox") on Omnitech's misappropriation of trade secrets, breach of contract, detrimental reliance, and breach of fiduciary duty claims. Omnitech also challenges the trial court's exclusion of expert testimony as to one of its theories of damages and seeks review of the jury's actual award of damages. Omnitech additionally requests this court to recalculate the district court's award of attorneys' fees. Clorox cross-appeals from the district court's denial of its motion for judgment as a matter of law on Omnitech's claim under the Louisiana Unfair Trade Practices Act and from the final judgment. Since we agree with Clorox that the district court improperly denied its motion for judgment as a matter of law on the unfair trade practices claim, we reverse that part of the judgment (and the associated attorneys' fees award) and render for Clorox. Finding no error with the trial court's other findings, we affirm the remainder of the judgment.
I. Background
2
Omnitech was in the business of manufacturing, packaging, and distributing insecticides in the southern United States during the late 1980s. Until 1988, Omnitech manufactured and packaged a roach spray which it sold through a marketing agent under the label "Bengal Roach Spray." At that time, Omnitech and Bengal mutually agreed to terminate the distribution contract. During the course of the Bengal contract, Omnitech had developed other, related insecticidal products, including an indoor fogger. Until after the Bengal contract expired, however, Omnitech had never manufactured, distributed, or marketed its own roach spray.
3
Omnitech was able to duplicate successfully the Bengal formula to market as its own "Dr. X" brand after the Bengal contract was terminated.1 Because the Dr. X product was proving to be moderately successful in the local markets, Omnitech decided to recruit an investor or marketing partner to expand the distribution of Dr. X and retained a business broker, Chaffe & Associates ("Chaffe"), to assist with this endeavor.
A. Commencement of the Relationship
4
Chaffe first contacted Clorox in January of 1989 about a potential venture with Omnitech. At that time, Clorox did not manufacture, sell, or distribute any insecticides, but had been researching and evaluating the insecticide industry since around 1987. According to Clorox, however, it had first become enamored with the insecticide industry in view of the enormous success of the Combat roach bait stations, first introduced by American Cyanamid in the early 1980s. Clorox' evaluation of the opportunities in this industry included investigation of, and negotiations with, Consep Membrane, Inc. ("Consep") and the Seabright Company ("Seabright"). In 1987, Clorox retained Consep to conduct technical "biorational"2 research on cockroaches, ants, and flies for the purpose of developing a non-toxic consumer insecticide product that would be as effective as the Combat bait traps. Clorox also began evaluating a bait trap manufactured by Seabright in late 1988. In addition, Clorox investigated a bait technology developed by Dr. Phil Koehler ("Koehler") at the University of Florida. Finally, Clorox conducted its own in-house research on the insecticide category. These relationships and investigations apparently gave Clorox a variety of informational materials relating to the pest-management industry or category.
B. Preliminary Negotiations
5
In March 1989, Clorox sent several representatives to visit Omnitech's plant in Thibodaux, Louisiana. After the visit, Clorox decided to conduct a blind test comparison between Omnitech's Dr. X product and Raid Max, an industry leader. To facilitate the blind test, the parties executed a letter of understanding dated June 16, 1989 (the "letter of understanding") in which Omnitech agreed that, for a period of thirty days after the results of the blind tests were received, Omnitech would not enter into any contracts which could interfere with Omnitech's ability to grant Clorox a fifteen-year license for the distribution of Dr. X. Pursuant to the letter of understanding, Clorox conducted the blind tests, and the Dr. X product measured favorably against Raid Max.
6
Clorox and Omnitech continued negotiations with respect to Omnitech's business and assets, including its rights in Dr. X. However, on July 31, 1989, unbeknownst to Clorox, Omnitech sold to Ogden Laboratories, Inc. ("Ogden") "all the rights and actions of warranty ... [to] [t]he entire Dr. X product line, including, but not limited to, all roach sprays and other insecticides, whether such product line is presently existing or is developed in the future," in consideration of the sum of $539,000. The agreement further provided that Omnitech would "retain the exclusive rights to be the sole manufacturer and distributor of the entire Dr. X product line, including, but not limited to, all roach sprays and other insecticides, whether such product line is presently existing or is developed in the future...."
C. The Parties' Agreements
7
Clorox and Omnitech continued to negotiate a potential purchase of Omnitech's assets, which led to the execution of a non-disclosure agreement between the parties, the final version of which was dated November 30, 1989 (the "non-disclosure agreement"). The non-disclosure agreement was originally intended to be executed by Omnitech, Clorox, Peachtree Creek Business Group ("Peachtree"), an insecticide consultant, PSL Marketing Resources, Inc. ("PSL"), a marketing firm,3 and Seabright.4
8
The non-disclosure agreement stated its purpose as being "to share non-public information defined below as 'Confidential Information' relating to the evaluation of the 'Doctor X' insecticide product and other products in the insecticide product category for the purposes of development and marketing of such products." Clorox representatives testified that they wanted the agreement to protect the confidentiality of Clorox' interest in the insecticide category. Omnitech also wanted the agreement to protect its proprietary information regarding Dr. X. The non-disclosure agreement thus provided, in pertinent part, that:
9
Each [non-disclosing party] agrees to treat all Confidential Information provided by a [disclosing party] as trade secrets which shall not be disclosed to any one other than a non-disclosing party's employees or agents who have a need to know in order to complete assigned responsibilities. Each non-disclosing party also agrees to take all reasonable measures to guard against the unwarranted use or disclosure of any information ("Confidential Information") received by a non-disclosing party during all discussions and negotiations relating to the evaluation of the "Doctor X" insecticide product and other products in the insecticide product category for the purposes of development and marketing of such products.
10
The non-disclosure agreement also provided Clorox with an opportunity to terminate its relationship with Omnitech as follows:
11
In the event that Clorox, based upon the evaluation by the parties hereto of the "Doctor X" insecticide product and other products in the insecticide product category, decides in writing not to continue to participate in the development and marketing of such products, then each party to this Agreement agrees to maintain the confidentiality of any Confidential Information disclosed by a party pursuant to this Agreement....
12
At the same time, Clorox and Omnitech executed a letter of intent (the "letter of intent"), which, among other things, gave Clorox a right of first refusal to purchase the assets of Omnitech. Pursuant to the letter of intent, from the November 30, 1989, date of execution through August 31, 1990, Clorox was to license all trademarks relating to Dr. X on a non-exclusive basis "in order to conduct laboratory and/or mini-market test marketing of the Doctor X product in certain stores and geographic areas selected by Clorox." During this same period, Omnitech was restricted from expanding its marketing areas in grocery stores and its marketing accounts in mass merchandise stores. However, Omnitech was allowed to continue marketing Dr. X to grocery stores in the same geographic areas in which the product was already being marketed and could continue to service the mass merchandise store accounts to which it had previously marketed its wares. Omnitech could also expand its marketing efforts in hardware stores "in any geographic area of the United States and its territories."
13
The letter of intent further granted Clorox "an exclusive option and the right of first refusal to purchase all trademarks relating to the Doctor X product and/or to purchase the business and all of the assets of Omnitech on terms mutually agreed to by the parties...." This option was to expire on December 31, 1990.
14
Clorox paid Omnitech $100,000 in cash for the non-exclusive license and test marketing. As further consideration for the letter of intent agreement, Clorox was to "guarantee a secured line of credit with a mutually-agreed to financial institution of up to two million five-hundred thousand dollars ($2,500,000) to fund working capital necessary to Omnitech's continuing operations." The letter of intent also required Omnitech to secure this line of credit with its current receivables.5 In accordance with these terms, Omnitech executed a $2.5 million note with First Wachovia ("Wachovia"), for which Clorox gave a corporate guaranty, on February 14, 1990.6
15
Under both the non-disclosure agreement and the letter of intent, Clorox was obligated to give Omnitech all "mutually agreed to" marketing information that it generated in connection with the investigation and evaluation of Omnitech. One of the anticipated studies was a marketing test in a simulated test market, which was referred to at trial as a "STM." Although extensive preparations were made--and in fact the product was packaged by, and purchased from, Omnitech for the test--Clorox never completed the study.
D. Combat Enters the Picture
16
Soon after Omnitech executed the $2.5 million note with Wachovia, American Cyanamid announced the sale of its Shulton Division in the Wall Street Journal via public auction. The Shulton Division marketed and distributed, among other products, Pine-Sol cleaners and Combat insecticides. Clorox was apparently quite interested in both products. On February 23, 1990, Clorox requested an offering memorandum and confirmation agreement from American Cyanamid, and subsequently made a non-binding bid to purchase the Shulton Division on April 14, 1990. Omnitech learned of Clorox' interest in bidding for the Shulton Division in February 1990, but claims that Clorox repeatedly assured Omnitech that the potential acquisition would not have any negative impact upon Clorox' evaluation and/or production of the Dr. X product. According to Omnitech's president, Fred Cortes ("Cortes"), when he contacted Clorox' manager of business development, Mike Scisco ("Scisco"), after the sale, Scisco assured him that Omnitech and its personnel "were the luckiest people around because now [Clorox was] in the insecticide business." According to Cortes' account, Scisco represented that Clorox felt that it now had the best aerosol on the market in Dr. X Roach Spray, and the best roach trap on the market in Combat.
17
Meanwhile, however, Clorox continued to postpone the Omnitech STM. On June 20, 1990, Clorox announced that it had won the bid to purchase the Shulton Group from American Cyanamid. Clorox claimed that, in acquiring the Shulton Division, it accomplished its "longstanding goal to acquire Pine-Sol, the number-one brand of household cleaners in the United States and to enter the insecticide category with an effective and marketable bait trap technology." Omnitech, reading the handwriting on the wall, pushed for commitments from Clorox, including, alternatively, a bid for packaging the Combat products. Clorox informed Omnitech that the Dr. X evaluation, including the STM, had been put on indefinite hold due to the Shulton acquisition.
E. The Breakdown of Negotiations
18
On July 18, 1990, Scisco met with Cortes, John Gohres, Sr., one of Omnitech's principal shareholders, and Steve Hill ("Hill") of Hill and Associates, an independent marketing consultant retained by Omnitech, to inform them that Clorox would not be in a position to make any commitments to Omnitech until it had time to assess the impact of the Combat acquisition. The next day, Tony Biebl ("Biebl") of Clorox informed the Omnitech representatives that Clorox would not be going forward with any purchase, claiming that Omnitech did not fit into Clorox' plan. Biebl apparently represented that this decision resulted from its investigation of Dr. X and Omnitech. Clorox claims that the following findings and determinations were the basis for the decision: (1) a manufacturing run of Dr. X resulted in the cans substantially leaking; (2) Omnitech did not have the in-house capability to provide the necessary stability data, quality control, and efficacy tests required by Clorox' due diligence investigation; (3) Omnitech did not have the technological expertise to create an insecticide that would not be easily duplicated by competitors; and (4) Dr. X was a weak product with no track record.
19
Clorox offered to continue its guaranty of the Wachovia line of credit in accordance with the letter of intent and to assist Omnitech in completing the STM, which would require approximately $100,000 to $150,000 to complete. Omnitech rejected both offers and filed the instant action against Clorox on August 13, 1990, less than one month after Clorox announced that it would not go forward.
20
After communications broke down, Clorox contacted Wachovia to inform the banking officers of the deterioration of the parties' relationship. By then, Omnitech had drawn down the line of credit almost $800,000. At that time, Clorox learned that Omnitech had had difficulties in payment of the amounts due under the note. On September 19, 1990, Clorox purchased the Omnitech note from Wachovia and subsequently made demand upon Omnitech for repayment.
F. The Instant Litigation
21
Based upon the parties' dealings as described above, Omnitech asserted claims against Clorox for (i) breach of contract, (ii) detrimental reliance, (iii) violations of the Louisiana Trade Secrets Act, LA.REV.STAT.ANN. Sec. 51:1431 et seq. (the "Trade Secrets Act"), (iv) wrongful taking pursuant to Articles 526, 2301, and 2312 of the Louisiana Civil Code, (v) breach of fiduciary duty, and (vi) violations of the Louisiana Unfair Trade Practices and Consumer Protection Law, LA.REV.STAT.ANN. Sec. 51:1401 et seq. ("LUTPA"). Clorox counterclaimed for repayment of the note assigned to it by Wachovia, and for other damages, alleging that Omnitech (i) had failed to perform several of its obligations under the parties' contracts, (ii) had breached the non-disclosure agreement by disclosing Clorox' interest in the insecticide category to its creditors and banks, (iii) had made fraudulent and negligent misrepresentations to Clorox, and (iv) had generally violated the LUTPA in its business dealings with Clorox. Clorox also defended the claims against it, asserting, inter alia, that Omnitech did not own the rights that were the subject of and consideration for Clorox' execution of the non-disclosure agreement and the letter of intent and had already received almost $1 million from Clorox.
22
At trial, the court determined that Omnitech failed to present evidence to support its claims for misappropriation of trade secrets, wrongful taking, breach of contract, detrimental reliance, and breach of fiduciary duty. Accordingly, the district court granted Clorox a directed verdict on all of Omnitech's claims except the claim that Clorox violated the LUTPA.7 The court also entered a directed verdict in favor of Clorox on its counterclaim for the sum due under the promissory note, but dismissed its other claims against Omnitech. Omnitech's LUTPA claim went to the jury, which found Clorox liable and awarded Omnitech $3.5 million in damages. Consequently, the district court entered judgment in favor of Omnitech for that amount, together with interest, attorneys' fees, and costs. The court also entered judgment awarding Clorox $782,480 on its counterclaim, together with interest and attorneys' fees, and granted Clorox' motion to set off the awards. The determination of the amount of attorneys' fees and related costs to be recovered by Omnitech on its LUTPA claim was referred to the court's magistrate, and the district court adopted the magistrate's report and recommendation assessing Omnitech's attorneys' fees at $361,653.46.
II. Analysis
23
Omnitech appeals from the district court's grant of Clorox' motion under Federal Rule of Civil Procedure 50 for judgment as a matter of law ("Rule 50") on its claims for misappropriation of trade secrets, breach of contract, detrimental reliance, and breach of fiduciary duty, as well as from the trial court's calculation of the attorneys' fees awarded. Omnitech also appeals the district court's ruling which excluded certain expert testimony as to one of Omnitech's theories of damages, as well as its denial of Omnitech's motion for new trial on that issue. Finally, Omnitech requests a new trial based upon its view that the jury's award of $3.5 million in actual damages was so low under the circumstances as to warrant a new trial.
24
Clorox cross-appeals from the district court's judgment in favor of Omnitech and from the court's order denying its Rule 50 motion for judgment as a matter of law on the LUTPA claim. Clorox contends that the trial evidence was insufficient to support the jury's verdict and that the verdict was sufficiently excessive to warrant a remittitur. We first address the propriety of the district court's grant of Clorox' motion under Rule 50 on the misappropriation of trade secrets, breach of contract, detrimental reliance, and breach of fiduciary duty counts.
25
A. Judgment as a Matter of Law on the Majority of Omnitech's Claims
1. Standard of review
26
A motion for judgment as a matter of law is reviewed de novo by this court, applying the same legal standard as did the trial court. Roberts v. Wal-Mart Stores, Inc., 7 F.3d 1256, 1259 (5th Cir.1993). In evaluating such a motion, formerly referred to as a motion for directed verdict, the court is to view the entire trial record in the light most favorable to the non-movant and draw all inferences in its favor. Becker v. PaineWebber, Inc., 962 F.2d 524, 526 (5th Cir.1992). If the evidence at trial points so strongly and overwhelmingly in the movant's favor that reasonable jurors could not reach a contrary conclusion, this court will conclude that the motion should have been granted. See FED.R.CIV.P. 50(a); Resolution Trust Corp. v. Cramer, 6 F.3d 1102, 1109 (5th Cir.1993). The "decision to grant a directed verdict ... is not a matter of discretion, but a conclusion of law based upon a finding that there is insufficient evidence to create a fact question for the jury." In re Letterman Bros. Energy Sec. Litig., 799 F.2d 967, 972 (5th Cir.1986), cert. denied, 480 U.S. 918, 107 S. Ct. 1373, 94 L. Ed. 2d 689 (1987) (citing Lubbock Feed Lots, Inc. v. Iowa Beef Processors, Inc., 630 F.2d 250, 269 n. 22 (5th Cir.1980)). Keeping these standards in mind, we review the district court's treatment of Omnitech's claims.
2. Misappropriation of Trade Secrets
27
The trial court granted Clorox' Rule 50 motion on Omnitech's trade secrets claim, finding that "clearly Omnitech did not own any trade secrets, did not own Dr. X at the time they signed the agreement.... Omnitech had transferred [any trade secrets] to Ogden and they did not own them and under the law you must have an interest to enforce a right."8 The district court was correct in resolving this claim as a matter of law. However, we affirm its resolution of this issue on different grounds. Even if we assume (without deciding) that Omnitech has standing to assert claims for all of the "trade secrets"9 in this case, we hold that the record does not contain legally sufficient evidence of misappropriation by Clorox of the information provided by Omnitech.10
28
"Misappropriation," under the circumstances presented, is statutorily defined as the "disclosure or use of a trade secret of another without express or implied consent by a person who ... at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was ... acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use...." LA.REV.STAT.ANN. Sec. 51:1431(2)(b)(ii)(bb) (emphasis added). All of Omnitech's witnesses conceded that they had no evidence of Clorox having "disclosed" any of Omnitech's confidential information to outside parties. Although some of Omnitech's witnesses made conclusory allegations that they believed Clorox would have had to have "used" Omnitech's proprietary information in evaluating the Combat purchase, these intuitions were not borne out by legitimate facts. The record shows that Omnitech conveyed its trade secrets to Clorox so that Clorox could "evaluat[e] the 'Doctor X' insecticide product and other products in the insecticide product category for the purposes of development and marketing of such products." There is no evidence in the record that Clorox used the information for any other purpose. In fact, the only records that reflect information about both Combat and Omnitech clearly relate to Clorox' decision as to whether to integrate the two products. Omnitech's president, Cortes, conceded he was told that Clorox was investigating such a combination, and each of the witnesses confirmed that this was Clorox' intention in evaluating the two projects in tandem. In light of the fact that Clorox was not prohibited from evaluating and/or purchasing other insecticides while evaluating Dr. X--as will be further discussed below--Omnitech has simply failed to demonstrate that Clorox misused the information it transferred pursuant to the non-disclosure agreement. See, e.g., Wright Chem. Corp. v. Johnson, 563 F. Supp. 501, 505 (M.D.La.1983) (holding that plaintiff's failure to show that former employees actually disseminated or used confidential information rendered trade secrets claim fatally defective).
29
Moreover, Omnitech demonstrated that the trade secrets disclosed to Clorox included the Dr. X formulas, possible improvements and second and third generation products, Omnitech's plant configurations, production methods (including "line" and flow diagrams), packaging, quality control data and protection records (e.g., weights of propellants, leakage, concentrate levels, etc.), and cost of goods produced.11 Clorox' witnesses expressly testified that the Omnitech information was not used in assessing the Combat acquisition--specifically demonstrating that (i) Combat was predominately a "bait trap" business, (ii) the Combat aerosols were manufactured and packaged by outside companies, (iii) American Cyanamid conveyed so much of its own information about the Combat product line that it was "like drinking from a fire hose," (iv) Clorox already had in its possession extensive knowledge about aerosol production-line technology since it manufactured aerosols in its cleaning products divisions, and (v) Omnitech's information as to the manufacture and packaging of aerosols was therefore irrelevant to Clorox' decision. This evidence was not refuted. Although there are some documents with references both to Combat and to Dr. X or Omnitech, these documents clearly reflect an attempt by Clorox to determine whether the Dr. X products would fit in with the Combat line.
30
Further, there is absolutely no evidence that Clorox took the information received from Omnitech and tried to implement it in the recently-acquired Combat product line. Conspicuously absent from the record is any evidence that Clorox used the information to obtain any trade advantage. Even Omnitech concedes--as it must--that the only "misuse" by Clorox was in attempting to evaluate Combat and Dr. X together. Clorox' representatives, on the other hand, testified they had no plans to change the Combat aerosol formulas--which are decidedly different from Dr. X--and that they had been seriously considering eliminating the aerosol line altogether since those products were fast becoming obsolete.
31
Finally, the timing of the transactions belies Omnitech's protest of late that Clorox "misused" its trade secrets in analyzing a potential integration of Dr. X with Combat. It is undisputed that Omnitech continued to share some of its trade secrets with Clorox after Clorox' interest in the purchase of Combat became known to Omnitech.12 The parties also agree that Clorox told Omnitech that it was hoping to integrate the Omnitech aerosol and the Combat bait traps.13 Omnitech made no protest to Clorox' efforts and continued to provide information for Clorox' evaluation of Dr. X. In short, Clorox made full disclosure to Omnitech that it was contemplating a purchase of Combat and that an acquisition of Combat would not affect Clorox' interest in Omnitech since the two companies specialized in different, but complementary, insecticide products. Omnitech continued to go forward with Clorox. Thus, Omnitech cannot be heard to claim that Clorox "misused" its proprietary information to evaluate a possible purchase of both companies.
32
At best, and as Omnitech conceded at oral argument, Omnitech claims that its trade secrets made Clorox "smarter" about the market in investigating the potential Combat purchase. Certainly "misappropriation" of a trade secret means more than simply using knowledge gained through a variety of experiences, including analyses of possible target companies, to evaluate a potential purchase. To hold otherwise would lead to one of two unacceptable results: (i) every time a company entered into preliminary negotiations for a possible purchase of another company's assets in which the acquiring company was given limited access to the target's trade secrets, the acquiring party would effectively be precluded from evaluating other potential targets; or (ii) the acquiring company would, as a practical matter, be forced to make a purchase decision without the benefit of examination of the target company's most important assets--its trade secrets.
33
We believe that Louisiana's trade secrets laws were not designed to go this far. Rather, the Louisiana Trade Secret Act is an outgrowth of, and has its basis in, Louisiana's unfair trade practices law. See, e.g., Engineered Mechanical Services, Inc. v. Langlois, 464 So. 2d 329, 333 (La.Ct.App.1984), writ denied, 467 So. 2d 531 (La.1985) (noting that, prior to the adoption of the Trade Secrets Act, trade secrecy protection was provided for in the LUTPA). The fundamental basis of trade secret law is to protect the "[o]ne who has a trade secret [who] may be harmed merely by the disclosure of his secret to others as well as by the use of his secret in competition with him." RESTATEMENT OF TORTS Sec. 757, comment c (1939). The purpose of the Trade Secrets Act is "to prevent one [person] or business from profiting from a trade secret developed by another, because it would thus be acquiring a free competitive advantage." Stork-Werkspoor Diesel V.V. v. Koek, 534 So. 2d 983, 985 (La.Ct.App.1988) (holding that the Louisiana Trade Secrets Act was "[not] intended to apply to discovery [requests]" in a tort action for negligent design). Thus, we hold that to sustain a trade secrets action under the "use" prong of the statutory definition of "misappropriation," a plaintiff must necessarily demonstrate that the defendant received some sort of unfair trade advantage. As will be discussed in greater detail in section II-B of this opinion, Omnitech has wholly failed to demonstrate that Clorox gained any competitive edge in the insecticide marketplace as a result of any trade secret of Omnitech. Cf. Sikes v. McGraw Edison Co., 665 F.2d 731, 735 (5th Cir.), cert. denied, 458 U.S. 1108, 102 S. Ct. 3488, 73 L. Ed. 2d 1369 (1982) (Where plaintiff demonstrated a device to defendant pursuant to a similar non-disclosure agreement and defendant subsequently began marketing a remarkably similar product after negotiations fell through, evidence was sufficient to support a claim under Texas trade secrets law). Consequently, Omnitech's trade secrets claim fails for the reason that there was insufficient evidence as a matter of law that Clorox improperly disclosed or used any of Omnitech's confidential or proprietary information.14 4]
3. Breach of Contract
34
At trial, Omnitech claimed that Clorox breached express terms of the parties' written agreements and additionally breached certain oral agreements and/or oral modifications to the letter of intent and non-disclosure agreement. We review each of these classes of claims separately.
35
a. Obligations under the written agreements
36
Omnitech introduced testimony that its principals believed the letter of intent and non-disclosure agreement bestowed upon Clorox the following duties, all of which were allegedly breached: (i) to negotiate in good faith for the purchase either of Omnitech or of the Dr. X product line; (ii) to complete the STM and other marketing analyses for the Dr. X product as contemplated in the attachment to the parties' non-disclosure agreement; and (iii) not to enter the insecticide category if the joint venture with Omnitech failed to be consummated. The district court directed a verdict on each of these theories, finding that the unambiguous terms of the written contracts did not convey any such duties upon Clorox:
37
[i] A reading of the letter of intent makes it clear that Clorox was purchasing an option to the right of first refusal to purchase Omnitech's business on mutually acceptable terms to be agreed upon in the future. There was no contract for the purchase of the business in any way ...[;]
38
[ii] [T]he contracts provided, when read in their entirety, ... that Clorox was to furnish the results of all testing of the Dr. X product to Omnitech, but assumed no obligation to do the specific testing, and that includes the STM ...[;] and
39
[iii] [T]here is absolutely nothing in either the letter of intent or the non-disclosure agreement that could be construed as a non-compete agreement by Clorox....
40
The district court necessarily determined that the written contracts were not ambiguous, and, under Louisiana law, "when the words of the contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." LA.CIV.CODE ANN. art. 2046; see also Fontenot v. Waste Management of Lake Charles, Inc., 493 So. 2d 904, 907 (La.Ct.App.1986). This established rule of strict construction does not allow the parties to create an ambiguity where none exists and does not authorize courts to create new contractual obligations where the language of the written document clearly expresses the intent of the parties. Kennedy v. Sanco Louisiana, Inc., 573 So. 2d 505, 507 (La.Ct.App.1990), writ denied, 578 So. 2d 138 (La.1991). Where, as here, the contract can be interpreted from the four corners of the document, without resort to extrinsic evidence, the interpretation of the contract is a matter of law, reviewed by this court de novo. Rutgers v. Martin Woodlands Gas Co., 974 F.2d 659, 661 (5th Cir.1992) (applying Louisiana law). With these principles in mind, we turn to the language of the contracts in the instant case.
41
As noted above, the letter of intent expressly grants Clorox "an exclusive option and the right of first refusal to purchase all trademarks relating to the Doctor X product and/or to purchase the business and all of the assets of Omnitech...." It additionally provides that "Omnitech further agrees that it shall begin to negotiate in good faith within sixty (60) days of the execution of this Agreement to come to mutually-agreed to terms and conditions of this option." (emphasis added). We find these terms to be unambiguous and cannot read them to create any contractual obligation on Clorox' part to negotiate further for the purchase either of Dr. X or of Omnitech.
42
With respect to the STM, we also agree with the district court that Clorox was under no obligation to perform the test. The letter of intent's reference to "mutually-agreed-to marketing information" merely defines this term as constituting the information "more fully described in Addendum # 1 to the Non-Disclosure Agreement" and states that Omnitech "shall receive" this information. The non-disclosure agreement similarly provides that Omnitech will be allowed "to use all mutually agreed to marketing information as defined and described in Addendum 1" in the event that Clorox decides "not to continue to participate in the development and marketing of [the Dr. X and/or Seabright] products." Addendum # 1 lists "data that may be generated from [the] Market Test." (emphasis added). To read the agreements as does Omnitech--i.e., requiring Clorox to perform the STM--would violate Louisiana's rule that contracts are to be interpreted in light of all of their provisions, "so that each provision is given the meaning suggested by the contract as a whole." Fontenot, 493 So. 2d at 907. If we read the written agreements between Omnitech and Clorox as a whole, we come to the inescapable conclusion that Clorox was not obligated to generate any marketing data, but that, if the information described in Addendum # 1 were developed, Clorox would be duty-bound to give it to Omnitech.15 "Certainly nothing absurd results from reading the contract as if the parties intended the plain meaning of the words they used." Rutgers, 974 F.2d at 662.
43
Concerning the third alleged duty, we find that the unambiguous terms of the written contracts do not evidence any agreement between the parties not to compete. Omnitech's president conceded as much when he agreed at trial that there was "no agreement between Omnitech and Clorox which prevented Clorox from investigating the purchase of another brand of insecticide" and that he was "not aware of any agreements that prevented Clorox from actually purchasing another brand of insecticide." Since the district court was correct in concluding that none of the duties described above was created by the executed contracts, it properly granted judgment as a matter of law with respect to these claims.
44
Omnitech additionally contends that Clorox breached its express contractual agreement not to disclose or make any "unwarranted use" of its confidential information. For the reasons discussed above in section II-A-2, we agree with the district court's disposal of this claim, holding that Clorox did not make "unwarranted use" of any of Omnitech's proprietary information as a matter of law.
45
Finally, Omnitech argues that Clorox is liable under the written agreements for its failure to return all of Omnitech's confidential information "without retaining any copies or extracts thereof" and to destroy all of its own documents prepared by its own employees or agents "in whole or in part from any Confidential Information" of Omnitech. This claim is also wholly without merit in light of the fact that this lawsuit was filed almost immediately after Clorox notified Omnitech in writing--as required by the non-disclosure agreement--that it would not pursue Dr. X or Omnitech further. Moreover, Omnitech concedes that it received all of the information at issue during the course of this litigation and cannot show that it suffered any damages as a result of failing to receive the materials earlier.
46
b. Parol evidence as to alleged oral agreements and/or modifications
47
Omnitech also put forth breach of contract theories based upon alleged oral representations and subsequent oral modifications to the parties' agreements, contending that the district court, in dismissing Omnitech's breach of contract claim, "overlooked substantial evidence before the jury that the Letter of Intent was not the only contract between the parties, and that it did not encompass all of the contractual commitments between Clorox and Omnitech." Specifically, Omnitech alleges that Clorox executives Biebl and Scisco made oral promises that Clorox would not enter the insecticide category without Omnitech and that such promises were contractually binding. In the district court's view, any oral agreement of this type was precluded by the merger clause because the provision (i) accurately reflected the entire spectrum of the parties' agreement as of the date of execution, and (ii) defined the agreed-upon means by which the parties' contractual obligations could be modified.16
48
The written agreements between the parties include an express integration clause, reflecting that the entire agreement between the parties had been reduced to writing in those instruments and that it can be modified only "by written agreement executed by authorized representatives of the parties hereto."17 While we by no means interpret the merger clause, per se, to preclude any parol evidence as to other possible agreements and/or representations between the parties, the facts of the instant case compel a conclusion that the merger clause correctly reflected the parties' intentions and should thus be enforced as written. See, e.g., Johnson v. Orkin Exterminating Co., Inc., 746 F. Supp. 627, 633 (E.D.La.1990). First, Omnitech was represented by its own counsel, who apparently negotiated quite vigorously on its behalf. In fact, the negotiations between Omnitech and Clorox had been on-going since February of 1989, at which time Omnitech, presumably on advice of counsel, rejected Clorox' original proposed non-disclosure agreement, since it did not adequately protect Omnitech's proprietary information. Subsequent drafts of the agreement were hotly disputed, and Omnitech's input was quite apparent in the final agreement. For example, Omnitech demanded, and was given, a concession that it be able to retain its current market shares of the Dr. X product by limiting the license granted to Clorox both categorically and geographically. Omnitech was both capable and successful in protecting its position.
49
Further, the record demonstrates that Omnitech was quite aware that Clorox was investigating an array of options with respect to the insecticide industry. By the time of the parties' first contact, Clorox had already investigated several other companies and had conducted its own in-house research to determine the best way for it to enter the market. Indeed, one of its prospects, Seabright, was intended to be included as a signatory to the non-disclosure agreement subsequently executed by the parties. Clorox' interest in other products in the insecticide category therefore was known to Omnitech at the time the contracts were executed.
50
Finally, although Cortes himself testified that his purpose for the non-disclosure agreement was that Clorox "would not compete against us," it hardly seems possible that his "understanding" would not have been so recorded when other, more minor agreements were carefully included. In light of these circumstances, it is difficult to believe that Omnitech somehow "overlooked" or "presumed" an understanding it now professes to be a critical part of the parties' agreement--i.e., that Clorox promised not to enter the insecticide category or market without Omnitech.
51
With respect to subsequent oral modifications to the agreements, the only evidence of record is testimony that Scisco repeatedly assured Omnitech representatives that Clorox was committed to make Omnitech a part of any venture into the insecticide market. We agree with the trial court that Omnitech could not have reasonably believed Scisco had the authority to amend the parties' agreements when it was clear to Omnitech, as conceded by its president at trial, that Scisco did not have the authority to bind Clorox.18 See, e.g., Tedesco v. Gentry Dev. Corp., Inc., 540 So. 2d 960, 963 (La.1989) ("[A]pparent authority operates only when it is reasonable for the third person to believe the agent is authorized and the third person actually believes the agent is authorized."). Therefore, the trial court properly removed this claim from the jury.
4. Detrimental Reliance
52
In a related part of its order, the district court granted judgment as a matter of law on Omnitech's detrimental reliance claim. In doing so, the court noted that the agreement between the parties had been reduced to writing and held that it was unreasonable for Omnitech to contend "that [Scisco could orally] change the terms or add to or make an additional agreement," since "the agreement provided that changes can only be made in writing."
53
The elements of a cause of action for detrimental reliance are (i) a promise made (ii) by one who knows or has reason to know (iii) that the promise will induce the other party to rely, (iv) to his detriment, (v) provided the reliance is reasonable. LA.CIV.CODE ANN. art. 1967; see also Morris v. Peoples Bank & Trust Co., 580 So. 2d 1029, 1033-34 (La.Ct.App.), writs denied, 588 So. 2d 101-02 (La.1991). In its brief, Omnitech states that it relied upon Clorox' "repeated assurances that it would include Omnitech in any venture into the insecticide market." The focus of this inquiry in the case presented is upon the reasonableness of Omnitech's professed reliance19 upon alleged representations that Clorox was binding itself to include Omnitech in any venture into the insecticide category that Clorox might endeavor. We again note that such promises, if made, were outside the scope of the fully-integrated, written agreements between Omnitech and Clorox. For the reasons described above, we refuse to look past the written terms of the agreements, and hold that the trial court did not err in finding that any reliance by Omnitech upon these representations was unreasonable as a matter of law. Thus, we overrule this point of error.
5. Fiduciary Duty
54
To sustain a cause of action for breach of fiduciary duty under Louisiana law, Omnitech must first prove the existence of a fiduciary duty on the part of Clorox. Texasgulf, Inc. v. United Gas Pipe Line Co., 471 F. Supp. 594, 598 (D.D.C.1979) (applying Louisiana law).20 The trial court granted Clorox judgment as a matter of law on this claim, finding that Omnitech had "introduced absolutely no evidence ... that could possibly be construed as imposing a fiduciary duty on Clorox. These were two companies making contracts that seem mutually accepted and providing objectives. It couldn't possibly be construed in my view as having created a fiduciary relationship." We agree.
55
To support its claim that Clorox owed it a fiduciary duty, Omnitech merely restates the misuse of information and/or trade secrets allegations that it used in support of its misappropriation of trade secrets and breach of contract causes of action. Neither of these grounds is sufficient to create such a stringent duty. As a matter of Louisiana law, a contract, standing alone, does not impose any fiduciary duties upon the parties; rather, a party to a contract is required merely to make a good faith performance of that contract. See Tahoe Corp. v. P & G Gathering Sys., 506 So. 2d 1336, 1345 (La.Ct.App.1987). Moreover, the Trade Secrets Act claim cannot serve as the basis for a fiduciary duty claim since the Act itself supplants "conflicting tort, restitutionary, and other laws of this state pertaining to civil liability for misappropriation of a trade secret." LA.REV.STAT.ANN. Sec. 51:1437; see also McPhearson v. Shell Oil Co., 584 So. 2d 373, 376 (La.Ct.App.1991). Thus, to the extent Omnitech's fiduciary duty claim is grounded in contract or trade secret allegations, it must fail as a matter of law.
56
Moreover, Louisiana courts have confined fiduciary duties to special relationships of trust and confidence, such as the following:
57
[B]esides agency, there are other legal relationships that impose fiduciary duties on parties. A director or officer of a corporation owes a fiduciary duty to his corporation. LSA-R.S. 12:91.... Similarly, a partner owes a fiduciary duty to the partnership and to his partners.
58
Tahoe, 506 So. 2d at 1344-45; see also State v. Hagerty, 251 La. 477, 205 So. 2d 369, 374 (1967) (recognizing that one acts in a fiduciary capacity when he or she transacts business or handles money which is not his or her own or for his or her benefit), cert. denied, 391 U.S. 935, 88 S. Ct. 1848, 20 L. Ed. 2d 855 (1968). A fiduciary relationship is also recognized between the following: attorney-client, insured-insurer, majority shareholder-minority shareholder, and outside salesman-employer. See Cason v. Texaco, Inc., 621 F. Supp. 1518, 1526 n. 21 (M.D.La.1985). Omnitech recognizes that its relationship to Clorox does not fall into any of the recognized categories; however, it argues that a special relationship of trust and confidence was created by virtue of the confidential information it conveyed to Clorox. See, e.g., Cloud v. Standard Packaging Corp., 376 F.2d 384, 388-89 (7th Cir.1967) (Where disclosure is made to further a relationship, a relationship of confidence may be implied, "e.g., disclosure to a prospective purchaser to enable him to appraise the value of a secret...."). The only "trust and confidence" Omnitech reposed in Clorox, however, were its trade secrets, which, as discussed above, are actionable only under the Trade Secrets Act. Omnitech's reasoning in this regard is therefore circular.
59
Moreover, and in contrast to the confidential relationship necessary to create a fiduciary duty, the record in this case is replete with evidence that Omnitech and Clorox had only an arms-length business relationship,21 including undisputed testimony that (i) the parties vigorously negotiated the agreements ultimately executed, (ii) both sides were represented by competent counsel in the drafting and consummation of the agreements, and (iii) Omnitech took measures to keep its financial information concealed from Clorox.22 For all of these reasons, Omnitech failed to make out a colorable claim for breach of fiduciary duty, and the trial court properly adjudicated this claim as a matter of law.
60
B. The District Court's Denial of Judgment as a Matter of Law on the LUTPA Claim
61
The only cause of action submitted to the jury was Omnitech's claim for unfair trade practices under the LUTPA. As Omnitech's counsel conceded at oral argument, the unfair trade practices claim was based upon the same facts undergirding its claims for misappropriation of trade secrets, breach of contract, detrimental reliance, and breach of fiduciary duty. Since each of those attempted causes of action was found wanting under Louisiana law, Clorox maintains that the trial court should have granted judgment as a matter of law on the LUTPA claim. See American Waste and Pollution Co. v. Browning-Ferris, 949 F.2d 1384, 1392 (5th Cir.1991) (The LUTPA "cannot apply to activity which is not actionable under Louisiana law."). Omnitech counters that any requirement that a LUTPA claim be predicated on another recognized cause of action under Louisiana law would render the statute superfluous. We need not resolve this issue, however, in the instant case because it does not appear that the "facts" proven by Omnitech at trial support a claim for unfair trade practices as a matter of law. The statute provides redress for "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." LA.REV.STAT.ANN. Sec. 51:1405(A). The real thrust of the LUTPA, modeled after the Federal Trade Commission Act, 15 U.S.C. Sec. 45, is to deter injury to competition. See, e.g., Federal Trade Comm'n v. Raladam Co., 283 U.S. 643, 51 S. Ct. 587, 75 L. Ed. 1324 (1931) (construing the Federal Trade Commission Act).23 In Raladam, the Supreme Court affirmed the reversal of a Federal Trade Commission cease and desist order because "there [was] neither finding nor evidence from which the conclusion legitimately can be drawn that these advertisements substantially injured or tended thus to injure the business of any competitor." Similarly, in the instant case, there is no evidence that Omnitech's ability to compete was injured by Clorox' actions. We find it difficult to say that Clorox' purchase of Combat put Omnitech in a different position in the market than it would have been if Clorox had merely decided not to purchase Omnitech. There is no evidence to suggest that Combat would not have been purchased by another bidder and thereby stayed in the market. Absent any showing that Clorox used Omnitech's trade secrets to better Combat's position in the marketplace or worsen Omnitech's, thus infringing upon competition, we cannot find a violation of the LUTPA.
62
We recognize that the Louisiana statute is deliberately broad and does not specify particular violations, since
63
the definition of what may constitute an unfair act or practice is broad and subjective. Thus it is best that the determination of what may amount to an unfair act or practice remain province of the courts applied on a case by case basis.
64
Roustabouts, Inc. v. Hamer, 447 So. 2d 543, 548 (La.Ct.App.1984). The Louisiana courts have, however, offered some limiting guidelines. Specifically, to establish that a defendant's business actions were "unfair," the plaintiff must demonstrate that they offended "established" public policy and were "immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers." Monroe Medical Clinic, Inc. v. Hospital Corp. of America, 522 So. 2d 1362, 1365 (La.Ct.App.1988). Thus, to recover under the LUTPA, Omnitech would have to "prove some element of fraud, misrepresentation, deception or other unethical conduct." Dufau v. Creole Engineering, Inc., 465 So. 2d 752, 758 (La.Ct.App.), writ denied, 468 So. 2d 1207 (La.1985). The courts interpreting the LUTPA have been hesitant to impose liability where the evidence reveals merely a normal business relationship. E.g., Monroe Medical, 522 So. 2d at 1365; Turner v. Purina Mills, Inc., 989 F.2d 1419, 1422 (5th Cir.1993) (The LUTPA does not provide an alternative remedy for simple breaches of contract.). Conversely, where there exists evidence of fraud or specific intent to injure a competitor, the courts have been more willing to embrace the LUTPA. See, e.g., Chemical Distrib., Inc. v. Exxon Corp., 1 F.3d 1478, 1485-86 (5th Cir.1993), (noting evidence of deception and specific jury finding of bad faith); Roustabouts, 447 So. 2d at 549 (finding that the defendants exhibited "a clear intent to decimate the plaintiff's business for their own gain"); Head v. Waggoner, 552 So. 2d 599, 604 (La.Ct.App.1989) (Although the trial court did not make a specific finding of fraud, court of appeals noted that the plaintiffs presented "ample evidence of fraud" by the defendant.); Dufau, 465 So. 2d at 758 (finding that the defendant solicited and diverted business from former employer while still employed). As this court stated in Turner, the "LUTPA does not prohibit sound business practices, the exercise of permissible business judgment, or appropriate free enterprise transactions." 989 F.2d at 1422 (citing Monroe Medical, 522 So. 2d at 1365).
65
In the instant case, there is neither allegation nor evidence of fraud. The testimony and documentary evidence does not present a picture of deceptive activity but simply a case where Clorox entered into preliminary agreements to purchase Dr. X, subsequently deciding not to go further in the absence of any obligation to do so. Although Clorox eventually purchased a competitor of Omnitech's, the parties had never agreed that Clorox was forbidden from doing so. Moreover, the undisputed evidence reflects that the Combat purchase did not preclude purchase of the Omnitech products as well. Clorox' investigation of the possibilities of integrating the Combat and Dr. X products was neither precluded by the parties' agreements nor by ethical business practices.24
66
Further, and pursuant to the agreements between the parties, Omnitech voluntarily made itself available for purchase by Clorox under an option and right of first refusal, for which it was paid a valuable consideration--Clorox' corporate guaranty of a $2.5 million line of credit which, evidently, Omnitech needed desperately and which it was unlikely to obtain on the basis of its own credit. Although it chose to forego other suitors for a one-year period, Omnitech elected, in its business judgment, to take its chances with Clorox since Clorox had advantages over the other possible contenders, including immediate cash and the letter of credit guaranty.
67
Further the "restrictions" upon Omnitech of marketing only to the geographic and categoric areas in which it was already participating were quite reasonable, especially in light of the fact that Omnitech did not have the financial means to expand those markets without an investing partner. Finally, the charge that Clorox merely "used" Omnitech to educate itself about the insecticide category makes little sense in light of the fact that neither party knew Combat, or any other major competitor, would become available at the time the preliminary agreements were executed. Instead, the objective evidence reflects that Clorox' pursuit of Omnitech was genuine. In this regard, we note the undisputed testimony that it was "unusual" for Clorox to provide corporate guaranties on behalf of potential acquisition targets, even though Clorox enters into dozens of non-disclosure agreements of this type per year.
68
In sum, Omnitech is the disappointed potential target of a white knight, protesting a deal that fell apart before it was complete--a possibility that was anticipated by the express terms of the parties' interim agreements--but it is simply not the victim of any unfair trade practice as a matter of Louisiana law. Accordingly, we sustain Clorox' point of error in this regard.
III. Conclusion
69
In light of the foregoing, we affirm that part of the district court's judgment granting Clorox' motion for judgment as a matter of law on Omnitech's trade secrets, breach of contract, detrimental reliance, and breach of fiduciary duty causes of action. We reverse the court's judgment denying Clorox' motion for judgment as a matter of law on Omnitech's LUTPA claim, vacate the award of damages, attorneys' fees, interest, and costs in favor of Omnitech, and render judgment in favor of Clorox on this claim.
70
In light of our treatment of the foregoing points of error, we need not address the additional issues raised by the parties regarding (i) the reasonableness of, and sufficiency of evidence to support, the jury's verdict, (ii) the reasonableness of Omnitech's award of attorneys' fees, (iii) the exclusion of a portion of expert testimony with respect to one of Omnitech's theories of damages, and (iv) the denial of the parties' motions for new trial. Omnitech shall bear the costs of this appeal.
71
AFFIRMED in part, REVERSED and RENDERED in part.
*
Chief District Judge of the Eastern District of Texas, sitting by designation
1
The formula was originally developed by the military, and the parties agree that the military's formula is virtually identical to both Dr. X and Bengal
2
"Biorational" technology is part of the emerging non-toxic pest-management business
3
Peachtree and PSL were independent consultants, which were retained and paid by Clorox under separate agreements. Omnitech had no relationship with either of these consultants
4
By the time the non-disclosure agreement was executed, however, Clorox had determined that Seabright's product was not commercially viable, and Seabright was thus excluded from the final agreement
5
For some reason--which is hotly contested by the parties and not critical to the resolution of the issues presented--the security agreements to pledge the Omnitech receivables to the lender were never finalized or executed
6
At closing argument, Omnitech vigorously contended, in support of its trade practices claim, that Clorox unfairly forced Omnitech to use Wachovia--a national bank which had extensive relations with Clorox--rather than certain local banks with whom Omnitech had previously dealt. Clorox counters that it wanted to avoid "buddy" banks which might not deal with Omnitech on an arms-length basis. Moreover, Clorox argues, Wachovia gave more lenient terms to Omnitech than did the local banks and did not require Omnitech's shareholders to give personal guaranties
7
Omnitech appeared to have abandoned the wrongful taking claims, and the issue is not preserved for appeal
8
Although there was testimony that Omnitech would have been able to deliver the trade secrets and other Dr. X-related assets in order to consummate a deal with Clorox, there was no evidence that Omnitech owned these secrets at the time of their disclosure. The undisputed evidence proves that Omnitech sold all of its Dr. X assets to Ogden in exchange for a sizeable sum of cash prior to its execution of the non-disclosure agreement and letter of intent. (The record also reflects that none of the Omnitech principals disclosed this fact to Clorox.) Thus, there is some question (which we do not decide) as to whether Omnitech had standing, as a non-owner, to make out a misappropriation claim
9
For purposes of this analysis, we will also assume, without deciding, that the information conveyed to Clorox did in fact constitute "trade secrets."
10
To sustain an action for misappropriation of trade secrets under Louisiana law, a plaintiff must show (i) the existence of a legally protectable trade secret, (ii) misappropriation of the trade secret, and (iii) damages resulting therefrom. LA.REV.STAT.ANN. Sec. 51:1431 et seq.; Engineered Mechanical Services, Inc. v. Langlois, 464 So. 2d 329, 333 (La.Ct.App.1984), writ denied, 467 So. 2d 531 (La.1985). As noted above, we assume, without deciding, that the information conveyed to Clorox constituted legally protectable trade secrets for purposes of this discussion. Thus, we turn our focus to the sufficiency of evidence supporting the other elements of Omnitech's trade secrets claim, noting that Omnitech bears the ultimate burden of establishing a legal basis upon which to predicate relief. Langlois, 464 So. 2d at 333
11
Most of this information was conveyed to Clorox prior to American Cyanamid's announcement of the Shulton sale. There is no evidence in the record that Clorox had knowledge of the impending sale of the Shulton Division before the Wall Street Journal announcement in February of 1990, approximately three months after the non-disclosure agreement was executed. Omnitech gave Clorox the majority of the proprietary information at issue before or shortly after the non-disclosure agreement was signed. Thus, it is simply implausible for Omnitech to assert that Clorox purchased the right to view Omnitech's trade secrets purely for its education so that it could assess a future purchase of Combat
12
Specifically, George Capiton ("Capiton"), Omnitech's Director of Manufacturing, testified that he continued to give Clorox information after February of 1990, when the parties stipulated that Clorox began pursuing Combat. Omnitech's president, Cortes, learned of Clorox' interest in purchasing the Shulton Division in February 1990, at the time the article in the Wall Street Journal was run. In a telephone conference with Cortes, Scisco confirmed that Clorox was "of course, ... going to look at" a potential purchase of Combat, although both parties understood the speculative nature of bidding for a company at public auction
13
Indeed, one of Omnitech's theories of detrimental reliance, as discussed infra, is that Clorox told Omnitech it would bring Omnitech into the national market with Combat, if Clorox were in fact able to purchase the Shulton Division
14
We do not mean to preclude, however, a trade secrets action in every situation where an acquiring company gains access to a potential target's trade secrets and subsequently acquires a competitor since there very well may be situations which could constitute actionable misappropriation under Louisiana law. We hold only that, in the instant case, there is no evidence that Clorox misappropriated any trade secrets of Omnitech, since there is no evidence that Clorox gained an unfair trade advantage over Omnitech by virtue of the information Clorox received
15
Omnitech claims that the contract was ambiguous on this obligation and that its parol evidence established that Clorox had a duty to conduct the STM. Consequently, it concludes, the interpretation of this agreement was for the jury to decide. Omnitech argues that "once a trial court has admitted parol evidence on the terms of the contract, the question of interpretation becomes a factual one for the jury." This position has no merit. First, the parol evidence to which Omnitech alludes does not establish that Clorox had an affirmative duty to conduct the STM. Rather, the cited testimony of Biebl and Scisco relates to the respective obligations of the parties if the test were undertaken. In other parts of the transcript, Biebl and Scisco both specifically testified that there was no agreement to conduct the STM. Further, and as discussed above, the unequivocal terms of the contract in this respect preclude any need for the jury to interpret the contract. Finally, and most importantly, we do not read the cases cited by Omnitech to support a rule that the trial court's decision to admit parol evidence conclusively determines whether the issue of interpretation must go to the jury. In Agfa-Gevaert, A.G. v. A.B. Dick Co., 879 F.2d 1518, 1521-22 (7th Cir.1989), Judge Posner enunciated an evolving interpretation of the parol evidence rule that the jury should decide "the meaning of the contract in all cases in which that meaning has for any reason been fairly drawn into doubt." The other two cases, Dime Box Petroleum Corp. v. Louisiana Land and Exploration Corp., 717 F. Supp. 717, 720 (D.Colo.1989), aff'd, 938 F.2d 1144 (10th Cir.1991), and Eastline Corp. v. Marion Apartments, Ltd., 524 So. 2d 582, 584 (Miss.1988), involve, respectively, Colorado's and Mississippi's treatment of oral modifications to written contracts. In both of those cases, the circumstances required that the oral modification claim be decided by the jury. Here, the contracts were found to be unambiguous as a matter of law and thus there was no issue for the jury to decide. Rutgers v. Martin Woodlands Gas Co., 974 F.2d 659, 661 (5th Cir.1992)
16
As the district court noted, although all of the preliminary negotiations were conducted by Scisco:
when the time came to put down an agreement, pass money, consideration, and things of that type, I don't know who, but a vice president signed it, not Seisco [sic]. And then I don't see how any reasonable person under the circumstances could be heard to say, and the agreement provided that changes can only be made in writing, ... that Seisco [sic] can now change the terms or add to or make an additional agreement.... But [Omnitech could not] overcome the prohibition in the contract itself.... If [Omnitech] relied upon [Scisco's representations], they had no right to do that as such because there was no agreement, in the view of the Court.
17
That provision, contained in the letter of intent, reads as follows:
This Letter of Intent contains the entire agreement of the parties, hereto, and supersedes all prior agreements and understandings, written and oral, with respect to the subject matter hereof, with the exception of the Non-Disclosure Agreement, as described herein and incorporated herein by reference. It may only be modified by written agreement executed by authorized representatives of the parties hereto.
18
Although Omnitech points to the testimony of its consultant, R. Patrick Hill, to support its contention that Biebl orally modified the parties' written contracts, the transcript reflects that the statements attributed to Biebl were made at the time the parties executed the non-disclosure agreement. Thus, they must be analyzed in terms of the integration clause discussed above
19
There is some question as to whether Omnitech truly relied upon any alleged promise by Clorox not to enter the insecticide category without Omnitech. Omnitech lists five actions that it took in reliance upon Clorox' promise: (i) restricting its markets, (ii) giving Clorox confidential information, (iii) keeping several employees on the payroll solely to provide marketing and technical data to Clorox, (iv) delaying its promotional work for the Dr. X product, and (v) passing up several opportunities with other companies. However, Omnitech was under a contractual duty to undertake the first two deeds by virtue of the letter of intent and non-disclosure agreements it voluntarily executed. It cannot now claim that the performance of its contractual duties somehow evidences detrimental reliance upon promises outside the scope of those agreements
Moreover, there is significant evidence that Omnitech acted as it did with respect to the remaining three actions or inactions because it had determined in its own business judgment that a potential contract with Clorox was its best financial bet at that point in time. At trial, Omnitech representatives testified that the company explored possible ventures with Dr. Tichenor and Colgate-Palmolive. However, Cortes also acknowledged that he viewed an agreement with Dr. Tichenor to be inferior to one with Clorox since Clorox' marketing expertise was much more significant. Further, Omnitech's representatives testified that any contract with Colgate would have taken much longer to confect because of Colgate's evaluation process and that Omnitech needed an investor or partner as quickly as possible. Finally, the parties' agreements provided that Omnitech was to receive the benefit of any marketing data generated by Clorox with respect to the Dr. X products; thus, as a practical matter, the longer Omnitech held on with Clorox, the more marketing data it would receive at Clorox' expense even if Clorox did not go through with a final purchase. Indeed, Omnitech's second scenario of damages is premised upon Omnitech acquiring another partner after having the benefit of all of the marketing data contemplated to be generated by Clorox in the non-disclosure agreement. In sum, the actions or inactions taken by Omnitech do not appear to demonstrate reliance upon a promise that Clorox would not enter the insecticide category without Omnitech.
20
The other elements of a breach of fiduciary duty claim are (ii) an action taken by Clorox in violation of that duty, and (iii) damages to Omnitech as a result of that action. Federal Sav. & Loan Ins. Corp. v. Shelton, 789 F. Supp. 1360, 1366 (M.D.La.1992). A claim for breach of fiduciary duty requires "proof of fraud, breach of trust or an action outside the limits of the fiduciary's authority." Gerdes v. Estate of Cush, 953 F.2d 201, 205 (5th Cir.1992)
21
Although there is some testimony that Clorox personnel referred to the relationship as a partnership, there is no evidence that Omnitech and Clorox entered into a partnership relationship or joint venture
22
For example, Cortes testified that he was very careful about what financial information was given to Clorox because of his concern that the information would adversely affect Omnitech's bargaining abilities in negotiations with Clorox
23
The Louisiana courts have recognized the appropriateness of referring to federal interpretations when deciding unfair trade practices cases. Roustabouts, Inc. v. Hamer, 447 So. 2d 543, 548 (La.Ct.App.1984) (quoting Guste v. Demars, 330 So. 2d 123, 125 (La.Ct.App.1976)); see also State ex rel. Guste v. Orkin Exterminating Co., 528 So. 2d 198, 202 n. 3 (La.Ct.App.1988) ("Louisiana courts give great deference to determinations of unfair trade practices by the Federal Trade Commission.")
24
Moreover, in light of the likelihood that Clorox would have purchased the Shulton Division for its Pine-Sol products, irrespective of the Combat line, it was not commercially unreasonable for Clorox to investigate the possibility of consolidating Combat--which would necessarily be acquired in the Shulton purchase--and Dr. X | 01-03-2023 | 04-25-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/1661426/ | 650 F. Supp. 933 (1987)
Spencer J. CARPENTER, Plaintiff,
v.
AMERICAN EXCELSIOR COMPANY, a foreign corporation, Defendant.
No. 85-CV-40567-FL.
United States District Court, E.D. Michigan, S.D.
January 8, 1987.
*934 Max Dean, Flint, Mich., for plaintiff.
Russell J. Thomas, Jr., Detroit, Mich., for defendant.
MEMORANDUM OPINION AND ORDER
NEWBLATT, District Judge.
Plaintiff brought this action in the Circuit Court for the County of Genesee, alleging that defendant wrongfully discharged him from its employ. Pursuant to 28 U.S.C. §§ 1332 and 1441(a), defendant removed the action based on diversity of citizenship. Plaintiff's contention of wrongful discharge is based on two theories. First, plaintiff claims that defendant breached an implied oral contract that he could be terminated only for just cause. Then, plaintiff alleges that his discharge resulted from age discrimination in violation of the Elliott-Larsen Civil Rights Act, MICH.COMP.LAWS ANN. §§ 37.2101, et seq. (West 1985). Defendant filed this Motion for Summary Judgment under Fed.R. Civ.P. 56, claiming that plaintiff's action can be decided on the evidence currently in the record, since there is no issue of material fact. Also pending is plaintiff's Motion to Compel answers to certain interrogatories. For the reasons set forth below, defendant's motion for summary judgment will be granted as to both counts, and plaintiff's motion to compel will be denied.
The pertinent facts of this case are as follows: On July 18, 1981 when plaintiff was 59, he was hired as a "floor covering specialist" for the Westland branch office of American Excelsior Company, where he was employed until June 15, 1984, when his employment was terminated. (Plaintiff's Dep. 34, 111).
Fred Kelly, one of defendant's customers, initially put plaintiff in contact with Loren Dahlberg, the manager of the Westland branch office. Mr. Kelly was aware that a major company for whom plaintiff sold carpeting had gone bankrupt. (Plaintiff's Dep. 9-12). Plaintiff interviewed *935 with Mr. Dahlberg on July 8, 1981, at which time plaintiff alleges that Mr. Dahlberg told him that he would be able to work for the company as long as he performed properly, and that his age was no barrier to his employment. (Plaintiff's Dep. 167, 234); See also, plaintiff's Affidavit in response to Defendant's Motion for Summary Judgment ¶ 2(j). Mr. Dahlberg offered the available position with the company to plaintiff during this interview, choosing plaintiff over forty other applicants who were not as experienced as plaintiff. (Plaintiff's Dep. 7, 26, 261). After these alleged representations by Mr. Dahlberg, he requested that plaintiff complete an employment application which expressly set forth the following acknowledgement:
Further, I understand and agree that my employment is for no definite period and may regardless of the date of payment of my wages and salary be terminated at any time without any previous notice.
(Plaintiff's Employment Application p. 2, attached as Exhibit B to defendant's Motion for Summary Judgment). Plaintiff alleges that he and Mr. Dahlberg never discussed this provision. Further, plaintiff claims that he did not ever read the "fine print" containing this language, nor did he sign the application. (Plaintiff's Affidavit, ¶ 2(k)).[1]
In its motion, defendant contends that the general rule of law in Michigan is that employment for an indefinite time is terminable at the will of either party. Lynas v. Maxwell Farms, 279 Mich. 684, 687, 293 N.W. 315 (1937). The Michigan Supreme Court carved out a narrow exception to this rule, however, in the seminal decision of Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980). In Toussaint, the Court recognized that:
(1) A provision of an employment contract providing that an employee shall not be discharged except for cause is legally enforceable although the contract is not for a definite term the term is "indefinite," and
(2) such a provision may become part of the contract either by express agreement, oral or written, or as a result of an employee's legitimate expectations grounded in an employer's policy statements.
Id. at 598, 292 N.W.2d 880.
In order to defeat defendant's motion for summary judgment, plaintiff must show that more than a mere subjective expectancy existed that he would be terminated only for just cause. Reid v. Sears, Roebuck & Co., 790 F.2d 453 (6th Cir.1986). While this subjective expectancy of continued employment standing alone is an insufficient basis for a Toussaint claim, Schwartz v. Michigan Sugar Company, 106 Mich.App. 471, 308 N.W.2d 459, 462, appeal denied, 414 Mich. 870 (1982), it is a prerequisite for establishing that an implied contract arose for just cause termination. Longley v. Blue Cross & Blue Shield of Michigan, 136 Mich.App. 336, 356 N.W.2d 20 (1984).
In Reid, the Sixth Circuit examined three cases consolidated on appeal, that originated in the Eastern District of Michigan.[2] All three suits were brought against Sears. Sears successfully argued for summary judgment in the district court by relying on language found in the employment applications which acknowledged that employment was terminable at will.[3] This provision in the application was found to be outside the coverage of the Toussaint exception, as indicated by that court when it wrote:
*936 Employers are most assuredly free to enter into employment contracts terminable at will without assigning cause. We hold only that an employer's express agreement to terminate only for cause or statements of company policy and procedure to that effect, can give rise to rights enforceable in contract.
Reid, 790 F.2d at 455, quoting Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 610; 292 N.W.2d 880 (1980). Accord, Valentine v. General American Credit, Inc., 420 Mich. 256, 258-259, 362 N.W.2d 628 (1984) ("[a]bsent a contractual provision for job security, either the employer or the employee may ordinarily terminate an employment contract at any time for any, or no, reason"). The Reid court found that all three plaintiffs were bound by the language contained in their employment applications, and that they did not create an issue of fact by relying on Sears' Employee handbook to show that they indeed should be terminated only for just cause.[4] The court readily distinguished Toussaint, in which case the employer provided literature containing language that promised "to treat employees leaving Blue Cross in a fair and consistent manner and to release employees for just cause only."[5]Toussaint, 408 Mich. at 617, 292 N.W.2d 880, quoted in Reid, 790 F.2d at 460.
Here, plaintiff contends that there is a genuine issue of fact as to whether an implied contract for just cause employment arises, based on Mr. Dahlberg's statement that he would be employed as long as he performed properly. Plaintiff also argues that he is not bound by the language contained in the employment application because he neither discussed it with Mr. Dahlberg, nor did he notice the fine print on the employment application. (Plaintiff's Aff. ¶ 2(k)).
As to plaintiff's first contention, it does not appear that plaintiff has shown more than a "mere subjective expectancy" that he would only be terminated for just cause.[6] Although plaintiff has stated that Mr. Dahlberg, at their initial interview, assured him of continued employment, (Plaintiff's Aff. ¶ 2(j)), nevertheless, plaintiff, according to defendant, then indicated his willingness to agree to "terminable at will" employment subsequent to this assurance when he filled out his employment application. Id. ¶ 2(k). This employment application simply is irrelevant if no durational basis is initially established by plaintiff. Further, plaintiff has not provided any other evidence such as employee handbooks, policy statements or other literature to buttress his argument that an implied contract arose for just cause termination. Therefore, *937 plaintiff was not reasonable in his subjective assumption that he could not be terminated except for just cause.
Plaintiff's second contention that he is not bound by the language of the application must also fail for two reasons: first, the Michigan Supreme Court has stated that the failure to read or understand an agreement is not cause for avoiding the same. See Sponseller v. Kimball, 246 Mich. 255, 260, 224 N.W. 359 (1929); accord, Vandendries v. General Motors Corporation, 130 Mich.App. 195, 343 N.W.2d 4 (1983). Plaintiff was probably asked to complete the employment application for a purpose; to memoralize the most significant term of the employment that is, that he was subject to termination at will. Therefore, he should be bound by that concession, and his count for breach of contract should be dismissed. But secondly and more importantly, as noted before, he has not established any basis for a specific durational contract.
The second count of plaintiff's complaint charges that defendant's discharge of plaintiff was an act of age discrimination. The pertinent statute reads as follows:
Section 202. (1) An employer shall not:
(a) Fail or refuse to hire, or recruit, or discharge, or otherwise discriminate against an individual with respect to employment, compensation, or a term, condition, or privilege of employment, because of religion, race, color, national origin, age, sex, height, weight, or marital status.
(b) Limit, segregate, or classify an employee or applicant for employment in a way which deprives or tends to deprive the employee or applicant of an employment opportunity, or otherwise adversely affects the status of an employee or applicant because of religion, race, color, national origin, age, sex, height, weight, or marital status.
(c) Segregate, classify, or otherwise discriminate against a person on the basis of sex with respect to a term, condition, or privilege of employment, including a benefit plan or system.
Specifically, plaintiff claims that defendant deprived him of "sales training, information, pricing, and samples of other products sold by the company seriously compromising his ability to reach a high sales volume including a repeated refusal to send him to the company's school in Arlington, Texas." (Plaintiff's Brief in Opposition to Defendant's Motion for Summary Judgment p. 2). In his deposition, plaintiff stated that evidence of defendant's disposition against older employees could also be found in several statements made by Mr. Dahlberg. Plaintiff contends that on several occasions, he overheard Mr. Dahlberg state that he liked his salesmen "young, lean and mean." (Plaintiff's Dep. at 258-59). Then, plaintiff claims that in a casual conversation with Dahlberg where plaintiff remarked that "he wished he were younger, because he was not feeling well," Dahlberg responded that it was probably because "he was not as young as he used to be." (Plaintiff's Dep. at 253-55).
In Grubb v. W.A. Foote Memorial Hospital, 741 F.2d 1486, 1498 (6th Cir.1984), the Court of Appeals recognized that a plaintiff must present a prima facie case of unlawful discrimination in order to support a claim under the Elliott-Larsen Act, citing Gallaway v. Chrysler Corp., 105 Mich. App. 1, 5, 306 N.W.2d 368, 370-71 (1981). Plaintiff can make a prima facie case for age discrimination by a showing of either disparate treatment or intentional discrimination. Schipani, supra, 102 Mich.App. at 617, 302 N.W.2d 307.
To establish disparate treatment, plaintiff must show that he was treated differently than younger employees. Cf. Pompey v. General Motors Corp., 385 Mich. 537, 189 N.W.2d 243 (1971), cited in Schipani, 102 Mich.App. at 617, 302 N.W.2d 307. Plaintiff has not offered any direct, credible, evidence to support a finding of disparate treatment. To the contrary, plaintiff stated that "[t]here was quite a parade" of salesmen through the Westland sales office during the period of his employment. (Plaintiff's Dep. at 242). *938 Plaintiff also remarked that of all the salesmen, he was the person who was employed in the Michigan region for the longest period of time. (Plaintiff's Aff. ¶ 8). Plaintiff further recalled that "[t]here were two fellas ... both let go, but I don't recall what for ... [they were] I'd say [in their] early thirties." (Plaintiff's Dep. at 240).
Similarly, plaintiff fails to offer sufficient evidence to show intentional discrimination. Plaintiff admitted that no one ever told him that he was being fired because of his age. (Plaintiff's Dep. at 264-65). Plaintiff bases his entire claim of age discrimination on the company's refusal to send him to training school and the two statements made by Loren Dahlberg. Plaintiff claims that Dahlberg told him that since he was not of a promotable age, he would not be sent to the school in Arlington, Texas for product training. (Plaintiff's Dep. at 137). Defendant counters that the referenced school is generally for sales training of young, inexperienced sales personnel and that the majority of the training consisted of sales techniques, rather than product line information. (Defendant's Answers to Plaintiff's First Set of Interrogatories No. 12). This is uncontroverted by the plaintiff. Defendant's contention is also buttressed by plaintiff's admission that he knew of no experienced sales people who attended the school.
Next, plaintiff argues that evidence of intentional discrimination could be found in Mr. Dahlberg's statement that he liked his salespeople "young, mean and lean." (Plaintiff's Dep. at 258). Plaintiff stated that Dahlberg made this statement to a table of people at a Christmas party. Plaintiff also stated in connection with this statement, however, that Dahlberg probably meant that he "wanted people who could go out and charge hard." (Plaintiff's Dep. at 261). The effect of this statement, which is extremely weak, if any evidence at all, of intentional discrimination, is undercut further by the fact that when Mr. Dahlberg hired him, plaintiff was 59 years old and that plaintiff remained in the Michigan region longer than any other salesperson.
Finally, plaintiff points to Mr. Dahlberg's statement that plaintiff was not as young as he used to be. Plaintiff admits, however, that this statement was made during a casual conversation, it was not made in connection with his performance and it was in response to a comment made by plaintiff that he wished he were younger because he was not feeling well. (Plaintiff's Dep. 253-55). Considering the surrounding circumstances, this statement by Mr. Dahlberg seems to be more of a cliche than a discriminatory slur.
Viewed individually or as a whole, these statements do not give rise to an inference of intentional discrimination as a matter of law, and hence plaintiff has failed to make a prima facie showing of age-based discrimination; thus, summary judgment is proper as to Count II of the complaint.
Plaintiff moved to compel the answers to interrogatories number 8, 18, 20, 28 and 29, to which defendant had objected as being overbroad and burdensome. Plaintiff's interrogatory number eight was contingent upon an affirmative response to the previous interrogatory. Since defendant responded negatively to the previous interrogatory, it was proper not to respond to number eight. Further, plaintiff made an identical inquiry in its second set of interrogatories, number 31, without the condition of an affirmative response. Defendant responded to this interrogatory (number 31), on July 3, 1986.
Defendant also submitted supplemental responses to the other four interrogatories that plaintiff sought to have answered. These responses provided plaintiff with data that would permit evaluation of plaintiff's age discrimination claim on a regional level. In the previous discussion of plaintiff's discrimination claim, it was noted that plaintiff based his entire discrimination claim on defendant's promise to send him to the company school in Arlington and the two statements made by Mr. Dahlberg. Further, plaintiff had before him the supplemental responses the defendant had submitted. Thus, it is reasonable to conclude that plaintiff had sufficient information *939 with which he could defend defendant's summary judgment motion and this appeared to be plaintiff's position at the argument on the motion.
For the foregoing reasons, defendant's Motion for Summary Judgment is hereby GRANTED on both Counts, and plaintiff's Motion to Compel Answers to Certain Interrogatories is hereby DENIED. Judgment shall be entered accordingly.
IT IS SO ORDERED.
NOTES
[1] Defendant claims, in the alternative, that assuming arguendo an implied contract to be discharged only for just cause, plaintiff in fact did not meet his sales quotas in 1984, nor did he make the expected number of sales calls per day. Therefore, just cause existed.
[2] The named case was before this writer. Reid v. Sears, Roebuck & Co., 588 F. Supp. 558. (E.D. Mich.1984), aff'd 790 F.2d 453 (6th Cir.1980).
[3] This language was as follows:
In consideration of my employment, I agree to conform to the rules and regulations of Sears Roebuck and Co., and my employment and compensation can be terminated with or without cause, and with or without notice, at any time, at the option of either the Company or myself.
Reid, 790 F.2d at 456.
[4] This handbook outlined the conduct for which an employee could be terminated. The employees argued that this led them to believe that these were the sole grounds for termination.
[5] The court also distinguished the situation in Schipani v. Ford Motor Co., 102 Mich.App. 606, 302 N.W.2d 307 (1981), where the employee made a substantial case to defeat Ford's "terminable at will" language, by pointing to Ford's literature, practice and policy, which all strongly indicated a contrary posture.
[6] Since Toussaint, the Court has been faced with a number of cases where the plaintiff has claimed a Toussaint contractual obligation arising out of the employer's hiring agent telling plaintiff at the time of employment that plaintiff could be employed "as long as he did the job" or similar expressions such as "as long as there is work to do," "as long as your work is satisfactory," "as long as you want," etc. When you examine these statements, each, standing alone, simply does not constitute a contract or agreement with any specific duration. Each was clearly within the policy of the Lynas case where an employment agreement for an indefinite term such as each of these was held to be an employment at will. After all Lynas as well as reality compels recognition of the fact that neither party to the beginning of an employment relationship expects it to be unsatisfactory, and both hope it will have a significant duration. This hope and noncontractual wish is expressed in terms of language such as "as long as you do the job." Hence, the Toussaint exception to Lynas must mean more than merely this language. While it is true that as the economy and society change, we can expect employment durational rules will be altered. That was probably the basis for the specific recognition in Toussaint that the employer will be held accountable for allowing a hiree to reasonably believe that there was a specific durational term to the employment; but it must be based on more than the expression of an optimistic hope of a long relationship. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/414024/ | 698 F.2d 1238
U. S.v.Gaultney
82-8145
UNITED STATES COURT OF APPEALS Eleventh Circuit
1/24/83
N.D.Ga., 694 F.2d 725 | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/560736/ | 932 F.2d 959
FMC Corporationv.Holliday (Cynthia Ann)
NO. 89-3226
United States Court of Appeals,Third Circuit.
APR 25, 1991
1
Appeal From: W.D.Pa.;
Appealing after remand 111 S.Ct. 403
2
REVERSED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/560744/ | 932 F.2d 960
Radwan (Moses)v.Beecham Laboratories, Beecham, Inc.
NO. 90-5950
United States Court of Appeals,Third Circuit.
APR 19, 1991
1
Appeal From: D.N.J.;
Appealing after remand 850 F.2d 147
2
AFFIRMED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/3021441/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 97-3584
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* District of Nebraska.
Robert Norman, also known as Bubba, *
* [UNPUBLISHED]
Appellant. *
___________
Submitted: July 24, 1998
Filed: August 5, 1998
___________
Before BOWMAN, Chief Judge, BRIGHT, and MURPHY, Circuit Judges.
___________
PER CURIAM.
Robert Norman pleaded guilty to conspiring to distribute methamphetamine in
violation of 21 U.S.C. §§ 841(a)(1) and 846 (1994). Although Norman was initially
granted release pending sentencing, the magistrate judge1 later revoked release after
finding that Norman had violated various release conditions. At sentencing, the District
1
The Honorable Thomas D. Thalken, United States Magistrate Judge for the
District of Nebraska.
Court2 determined Norman had a Guidelines imprisonment range of 57 to 71 months,
and the government moved for a downward departure pursuant to 18 U.S.C. § 3553(e)
(1994) and U.S. Sentencing Guidelines Manual § 5K1.1, p.s. (1995) based on
Norman&s substantial assistance, recommending a sentence “somewhere around a three
year range.” The Court granted the government&s motion, but sentenced Norman to 48
months imprisonment and five years supervised release because of his pretrial release
conduct. On appeal, counsel moved to withdraw and filed a brief pursuant to Anders
v. California, 386 U.S. 738 (1967), arguing that the extent of the departure was
insufficient, given the government&s sentencing recommendation. We affirm.
Because counsel is merely objecting to the extent of the District Court&s
downward departure, this challenge is unreviewable. See United States v. Goodwin,
72 F.3d 88, 89, 91 (8th Cir. 1995) (extent of district court&s downward departure under
§ 3553(e) and § 5K1.1 is unreviewable on appeal). Counsel also suggests that the
Court improperly punished Norman by considering his pretrial release conduct in
fashioning its sentence. This argument is merely a variation of counsel&s unreviewable
challenge to the extent of the departure, and we also note the District Court stated at
sentencing that Norman would be given credit for the time he was incarcerated pending
sentencing.
We have reviewed the record in accordance with Penson v. Ohio, 488 U.S. 75,
80 (1988), for any nonfrivolous issues for appeal, and have found none.
Accordingly, we affirm the judgment of the District Court. Counsel&s motion to
withdraw is hereby granted.
2
The Honorable Lyle E. Strom, United States District Judge for the District of
Nebraska.
-2-
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
-3- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/78022/ | 527 F.3d 1144 (2008)
Drago K. FERGUSON, Jr., Petitioner-Appellant,
v.
Grant CULLIVER, Attorney General of Alabama, Respondents-Appellees.
No. 07-13030 Non-Argument Calendar.
United States Court of Appeals, Eleventh Circuit.
May 13, 2008.
*1145 Drago K. Ferguson, Jr., Atmore, AL, pro se.
Madeline Hinson Lewis, Montgomery, AL, for Culliver.
Before TJOFLAT, BLACK and FAY, Circuit Judges.
PER CURIAM:
Drago K. Ferguson, an Alabama prisoner proceeding pro se, appeals the district court's denial of his 28 U.S.C. § 2254 habeas corpus petition. We granted a certificate of appealability ("COA") on the following two issues: (1) whether the district court erred when it denied appellant's self-representation claims in the absence of the trial transcript; and (2) whether the district court erred when it found that appellant's claim concerning the withdrawal of his waiver of the right-to-counsel had been adjudicated on the merits in state court. Ferguson argues that the district court erred when it denied his claim that the state court violated his right to due process by (1) failing to insure that he had knowingly and voluntarily waived his right to counsel and had elected to represent himself at trial, and (2) failing to conduct a Faretta[1] hearing. Ferguson concedes that he told the state court that he wanted to represent himself, but alleges that the state trial court failed to apprise him of the dangers and disadvantages of self-representation. Ferguson also alleges that standby counsel was appointed to assist him, but that counsel interfered with his right to self-representation by refusing to *1146 assist him in subpoenaing three witnesses and refusing to allow him to cross-examine a state witness.
Second, Ferguson argues that the district court erred when it found that the state court of appeals had adjudicated on the merits his claim concerning the withdrawal of his waiver of the right-to-counsel. He asserts that the state court of appeals never addressed this issue and contends that, for this reason, the district court should have reviewed the claim de novo. Ferguson further argues that the state trial court did not inform him of his ability to withdraw his waiver of counsel at any time during the proceeding, as it was required to do.
For the reasons set forth more fully below, we vacate and remand to the district court for further proceedings.
I.
We review the district court's denial of a § 2254 petition de novo but are "highly deferential" to the state court's decision. Davis v. Jones, 506 F.3d 1325, 1331 (11th Cir.2007). As amended by the AEDPA, 28 U.S.C. § 2254(d) forbids federal courts from granting habeas relief on claims that were previously adjudicated in state court, unless the adjudication
(1) resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court of the United States; or
(2) resulted in a decision based on an unreasonable determination of the facts in light of the evidence presented in the State court proceeding.
28 U.S.C. § 2254(d). We have held that a state court's summary rejection of a claim qualifies as an adjudication on the merits under § 2254(d) so as to warrant deference. Wright v. Moore, 278 F.3d 1245, 1253-54 (11th Cir.2002). In Wright, the defendant argued, as does Ferguson, that the district court erroneously gave deference under § 2254(d)(1) to the state court's rejection of his constitutional claim where the state court issued a two-sentence opinion affirming the defendant's convictions and sentences.[2]Id. at 1252-54. We concluded, however, that the defendant's federal claim was "raised on direct appeal and rejected on the merits without discussion" by the state appellate court and the state appellate court's summary rejection of the claim was thus an adjudication on the merits. Id. at 1253-54. We reasoned that the plain language of the statute only required "a rejection of the claim on the merits, not an explanation." Id. at 1254-55.
Ferguson raised his Sixth Amendment claim in a Rule 32 petition for postconviction relief. The state appellate court summarized the claim in a memorandum order before expressly rejecting all of Ferguson's claims. Under Wright, Ferguson's argument that the claim was never directly addressed on the merits is foreclosed.
II.
In reviewing the district court's denial of a 28 U.S.C. § 2254 petition, we "review questions of law and mixed questions of law and fact de novo, and findings of fact for clear error." Nyland v. Moore, 216 F.3d 1264, 1266 (11th Cir.2000). "A district court's conclusion that a defendant's waiver [of assistance of counsel] is *1147 valid that it is knowing, voluntary, and intelligent is a mixed question of law and fact that we review de novo." United State v. Kimball, 291 F.3d 726, 730 (11th Cir.2002) (per curiam). In a habeas proceeding challenging a conviction, the petitioner has the burden of proving that the waiver did not meet constitutional standards. Strozier v. Newsome, 926 F.2d 1100, 1104 (11th Cir.1991).
The Supreme Court has held that a defendant has a right to represent himself but, in order to represent himself, he must "knowingly and intelligently" waive his right to counsel. Faretta, 422 U.S. at 835, 95 S.Ct. at 2541. We have held that:
To invoke his Sixth Amendment right under Faretta a defendant does not need to recite some talismanic formula hoping to open the eyes and ears of the court to his request. Insofar as the desire to proceed pro se is concerned, petitioner must do no more than state his request, either orally or in writing, unambiguously to the court so that no reasonable person can say that the request was not made. In this Circuit, the court must then conduct a hearing on the waiver of the right to counsel to determine whether the accused understands the risks of proceeding pro se.
Stano v. Dugger, 921 F.2d 1125, 1143 (11th Cir.1991) (citations omitted). The purpose of the Faretta inquiry is to allow the trial court to determine whether the defendant understands the risks of self-representation, and the trial court should inform the defendant of the nature of the charges against him, possible punishments, basic trial procedure and the hazards of representing himself. United States v. Kimball, 291 F.3d 726, 730 (11th Cir.2002). The Supreme Court also has held that "the pro se defendant is entitled to preserve actual control over the case he chooses to present to the jury .... If standby counsel's participation over the defendant's objection effectively allows counsel to make or substantially interfere with any significant tactical decisions, or to control the questioning of witnesses, or to speak instead of the defendant on any matter of importance, the Faretta right is eroded." McKaskle v. Wiggins, 465 U.S. 168, 178, 104 S.Ct. 944, 951, 79 L.Ed.2d 122 (1984).
Pursuant to 28 U.S.C. § 2254(f), where the petitioner challenges the sufficiency of the evidence used to support the state court's factual determinations, the petitioner has the burden to provide the district court with the relevant portions of the state trial court record. Nevertheless, if the petitioner "because of indigency or other reason is unable to produce such part of the record, then the State shall produce such part of the record and the Federal court shall direct the State to do so." (Id.).
Here, the district court ordered the state to provide those portions of the state trial court record, including transcripts, relevant to the issues addressed in its answer. Although the state provided several exhibits from the state court record, it failed to provide any transcripts of the trial proceedings. Nevertheless, the state did provide the district court with a copy of the state court of appeals' opinion affirming the denial of Ferguson's Rule 32 petition for post-conviction relief, which extensively references the state trial court transcript. Although the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA") requires that district court's review factual determinations by "a State court" with deference, see 28 U.S.C. § 2254(d), (e)(1),[3] the question of whether *1148 a defendant's waiver of assistance of counsel is knowing, voluntary, and intelligent is a mixed question of law and fact, see Kimball, 291 F.3d at 730. This raises the question: is it sufficient in a habeas case for the district court to review and defer to a state appellate court record in lieu of the state trial court record?
We have declined to address on appeal the merits in a habeas case where the district court was without the benefit of the state court record. See Wyzykowski v. Dep't of Corrs., 226 F.3d 1213, 1219 (11th Cir.2000) (remanding to the district court for a factual determination of actual innocence where the state court record was not included in the record on appeal and the district court did not address the issue). Other circuits have held that a district court must consider relevant portions of the state court record in habeas cases in order to conduct a meaningful review. See Beck v. Bowersox, 257 F.3d 900, 901-02 (8th Cir.2001) (holding that the district court erred in reaching the merits of petitioner's Fifth and Sixth Amendment claims without reviewing the state court suppression hearing transcript); Magouirk v. Phillips, 144 F.3d 348, 362-63 (5th Cir. 1998) (finding that the absence of relevant portions of the state court record, specifically, trial transcripts, prevented meaningful review of a § 2254 petition).
In Stewart v. Erwin, 503 F.3d 488 (6th Cir.2007), the Sixth Circuit remanded a § 2254 petition to the district court after determining that the state failed to provide portions of the state trial court record that were essential for meaningful federal review of Stewart's due process claim. Id. at 498-504. In that case, Stewart claimed that his due process rights were violated because he was not granted an opportunity to rebut any of the evidence the state trial court relied upon in sentencing him, specifically, the victim impact statements. Id. at 491. On direct appeal, the Ohio Court of Appeals stated that it had reviewed the state court record and determined that, while the trial court had considered the victim impact statements, it ultimately based Stewart's sentence on the facts contained in the presentence investigation report ("PSI") and Stewart's psychological evaluations. Id. at 492 (citation omitted). The record on appeal, however, did not contain either the victim impact statements or the psychological evaluations and the PSI. Id. at 499-500. Instead, in denying Stewart's § 2254 petition, the district court relied extensively on the state court of appeals' decision and found that any due process violation that occurred was harmless. Id. at 492, 500. However, the district court ordered the state to supplement the record with copies of the victim impact statements and the PSI. Id. at 491-92.
The Sixth Circuit held that, although the state court of appeals stated that it had reviewed the state court record and the state court's factual findings were "cloaked with a presumption of correctness," the district court was unable to conduct a meaningful review of Stewart's claim because the record on appeal "[did] not contain any of the pertinent materials reviewed by the Ohio Court of Appeals in making its findings." Id. at 500, 502. Accordingly, the court determined that the state was responsible for supplementing the record with the previously requested documents and directed the district court to grant Stewart's petition on remand if *1149 the state did not comply within 45 days. Id. at 501, 503-04.
Waiver of assistance of counsel is an issue with constitutional implications. In light of Ferguson's self-representation claims, which (1) were fact intensive; (2) required the state court to ensure that Ferguson had knowingly and voluntarily waived his right to counsel; and (3) required the state court to determine whether standby counsel substantially interfered with tactical decisions or the questioning of witnesses, the absence of the trial record precluded the district court from conducting a meaningful review of the state court decision, even under the deferential standard imposed by the AEDPA. To review the actions of a state trial court with respect to self-representation claims, federal habeas courts must examine the state trial record, rather than rely solely on the state appellate court's findings as to what the trial record contains. Therefore, we remand Ferguson's Sixth Amendment claim to the district court for reconsideration in light of the state trial transcript.[4]
In light of the foregoing, we VACATE the district court's denial of Ferguson's 28 U.S.C. § 2254 petition and REMAND to the district court for further proceedings.
NOTES
[1] Faretta v. California, 422 U.S. 806, 835, 95 S.Ct. 2525, 2541, 45 L.Ed.2d 562 (1975).
[2] In Wright v. State, 536 So.2d 1072 (Fla. 4th Dist.Ct.App.1998), the state appellate court's two-sentence opinion stated "We affirm the convictions and life sentences imposed thereon for count I and count II." The court remanded for clarification of whether the sentence would run consecutively or concurrently to the other sentences.
[3] Specifically, § 2254(d)(2) provides, in pertinent part, that a district court may provide habeas relief if a state court's decision was "based on an unreasonable determination of the facts." 28 U.S.C. § 2254(d)(1). Section 2254(e)(1) provides, in pertinent part, that "[a] determination of a factual issue made by a State court shall be presumed to be correct." 28 U.S.C. § 2254(e)(1).
[4] We are making no comment on the merits of Ferguson's claims nor weakening in any way the deferential standard set forth in the AEDPA. We are simply holding that in order to conduct a meaningful review of the state court rulings, federal courts must have the opportunity of reviewing the trial transcripts and state court records underlying those rulings. | 01-03-2023 | 04-27-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/78449/ | 579 F.3d 1268 (2009)
AIG BAKER STERLING HEIGHTS, LLC, A.B. Olathe II Limited Partnership, Plaintiffs-Counter-Defendants-Appellants,
v.
AMERICAN MULTI-CINEMA, INC., Defendant-Counter-Claimant-Appellee.
No. 08-14600.
United States Court of Appeals, Eleventh Circuit.
August 18, 2009.
*1269 Clyde O'Neal Westbrook, III, James A. Harris, Jr., Harris & Harris, LLP, Birmingham, AL, for Plaintiffs.
Scott Burnett Smith, Bradley, Arant, Rose & White, LLP, Huntsville, AL, Bernard J. Rhodes, Lathrop & Gage, LC, Kansas City, MO, for Defendant.
Before DUBINA, Chief Judge, and EDMONDSON and KRAVITCH, Circuit Judges.
EDMONDSON, Circuit Judge:
This appeal is about a district court's power to grant some relief from its judgment.
Several years ago American Multi-Cinema, Inc. (American) arbitrated a tax dispute with AIG Baker Sterling Heights, LLC and A.B. Olathe II LP (collectively, Baker), from whom American leased space in shopping centers. The arbitration panel concluded that American owed Baker under the terms of their lease agreements almost a million dollars to cover a portion of the taxes on those properties. But after the panel issued the award, American learned that it had already paid some of the taxes directly to the taxing authority. Then, in the district court, American, claiming a mistake in the award, sought modification of it to reflect the tax actually already paid. The district court accepted American's argument and revised the award, but this Court reversed on appeal in AIG Baker Sterling Heights, LLC v. Am. Multi-Cinema, Inc., 508 F.3d 995 (11th Cir. 2007) (Baker I).
On remand, the district court, per Baker I, entered a judgment confirming entirely the arbitration award. But the case did not stop there: the district court later granted American some reliefunder Fed. R.Civ.P. 60(b)(5)from the judgment to account for the taxes American had paid to the taxing authority.[1] Baker appeals this latter decision. Baker says that the district court violated the mandate in Baker I and went beyond the exclusive grounds for modifying an arbitration award under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16. Seeing no error, we affirm the district court order.
Background
American leased space from Baker in shopping centers located in Michigan and Kansas. The lease agreements required American to pay to Baker money to cover some of the taxes on those properties, and Baker was to pay the taxing authority all money due. A dispute arose over the amount of money that American owed Baker. The parties agreed to arbitrate the dispute in Kansas City, Missouri, and the arbitration panel awarded $866,425.18 to Baker.
*1270 A portion of the award$226,771.76 represents money American owed Baker for taxes on the Kansas property in 2002. Ownership of the Kansas property changed in the middle of 2002, and the new landlord that replaced Baker then asked American to pay tax money that American owed Baker for the first half of 2002 directly to the taxing authority. American made the payment but has since realized that it should have paid Baker and that Baker should have paid the taxing authority. At the time of the arbitration, American, however, presented none of this "taxes-paid" information; instead, American stipulated that it paid to Baker no money for taxes on the Kansas property in 2002.
After arbitration, Baker filed an action in the Northern District of Alabama to confirm the arbitration award. American filed an answer and counterclaim in the Alabama district court and filed a separate action in the Western District of Missouri to modify the arbitration award to reflect the taxes American had paid to the taxing authority. The Missouri district court transferred its action to the Alabama district court, which consolidated the two cases. The Alabama district court then granted American's motion for modification of the arbitration award on the basis of an "evident material mistake" and reduced the award to account for the tax payment. Baker appealed.
This Court reversed on appeal in Baker I. We said, among other things, that American's failure to identify the taxes it paid to the taxing authority in the facts stipulated at arbitration was no "evident material mistake" within the meaning of the FAA. Baker I, 508 F.3d at 999-1000. We, therefore, concluded that the district court erred in modifying the arbitration award and remanded the case for further proceedings. Id. at 1003.
On remand, the district court held a status conference. The district court informed the parties that it wanted to credit American for the actual payment to the taxing authority and asked the parties to brief how the district court could legitimately accomplish that goal. In response, American suggested that the district court take two steps: first, enter a judgment confirming the arbitration award; and, second, grant American relief from the judgment under Rule 60(b)(5) on the ground that the earlier tax payment had satisfied some of the judgment. The district court adopted this approach over Baker's objections. Baker now appeals the decision to grant American some relief from the district court's judgment.
Standard of Review
We review the grant of relief under Rule 60(b) for an abuse of discretion. High v. Zant, 916 F.2d 1507, 1509 (11th Cir.1990). We review legal conclusions de novo and factual findings for clear error. Young v. New Process Steel, LP, 419 F.3d 1201, 1203 (11th Cir.2005); Reynolds v. McInnes, 338 F.3d 1221, 1226 (11th Cir.2003).
Discussion
Baker claims that the district court abused its discretion in several ways by granting American relief from the judgment in this case. But we see only two that deserve much attention. First, Baker contends that the district court ignored the law of the case and the mandate established by Baker I. Second, Baker asserts that the district court violated the FAA by modifying the arbitration award for a reason not authorized by that statute.
1. The Law of the Case Doctrine & the Mandate Rule
The law of the case doctrine and the mandate rule ban courts from revisiting matters decided expressly or by necessary implication in an earlier appeal of the *1271 same case. Barber v. Int'l Bhd. of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers, & Helpers, Dist. Lodge No. 57, 841 F.2d 1067, 1070-73 (11th Cir.1988). But neither principle applies "when the issue in question was outside the scope of the prior appeal." Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326, 1332 (11th Cir.2005); see also Barber, 841 F.2d at 1070 ("The lower court may consider anew issues not within [the mandate's] compass.") (internal quotation marks omitted). Here, Baker claims that the district court violated both principles on remand. We disagree.
In Baker I, we spoke in pertinent part about the power of courts to correct an "evident material mistake" in an arbitration award. Baker I, 508 F.3d at 999-1001. We said that the FAA "embraces only an evident material mistake that appears in a description in the award," and noted that a mistake occurs when an arbitrator understands "wrongly" or identifies "incorrectly." Id. at 999. We, however, saw no "evident material mistake" in the award before us because American sought modification of the award to remedy its own failure to inform the panel of the payment to the taxing authority. Id. at 999-1000. We vacated the modified award and sent the case back to the district court. Id. at 1003.
On remand, the district court entered a judgment entirely confirming the award. Then the district court granted American relief from the district court's judgment (not the award) to reflect the earlier payment to the taxing authority. Baker argues that this latter decision violated the law of the case and the mandate from the earlier appeal. But as we have pointed out, we discussed in Baker I only modification of the award; we decided nothing expressly or by necessary implication about the district court's power to grant American relief from a district court judgment or to consider evidence of the payment to the taxing authority. Baker I, therefore, has no decisive role to play here.[2] The district court did not violate the law of the case doctrine or the mandate rule on remand.
2. The FAA
The FAA severely limits judicial vacatur and modification of an arbitration award. As the Supreme Court recently confirmed, sections 10 and 11 of the FAA offer the exclusive grounds for expedited vacatur or modification of an award under the statute. Hall Street Assocs. v. Mattel, Inc., 552 U.S. 576, 128 S. Ct. 1396, 1403, 170 L. Ed. 2d 254 (2008). Baker claims that the district court ignored this restriction when itfor reasons not listed in sections 10 or 11 gave American credit against the district court's judgment for the payment to the taxing authority. We do not see, though, how those FAA sections control in the circumstances of this appeal: the district court neither vacated nor modified the arbitration award. Instead, the district court entered a judgment confirming the award and about two months after that granted American some relief from the judgment under Rule 60(b)(5).[3] Sections *1272 10 and 11 say nothing about court judgments and do not control this appeal.
We instead turn our attention to section 13 of the FAA. That provision says that a judgment confirming an arbitration award, once entered, has the same force and effect as a judgment in a standard civil action and is subject to all the provisions of law relating to those judgments. 9 U.S.C. § 13; see also Parsons & Whittemore Ala. Mach. & Servs. Corp. v. Yeargin Constr. Co., 744 F.2d 1482, 1484 (11th Cir. 1984). The provisions of law include Rule 60(b).[4]See, e.g., Fid. Fed. Bank, FSB v. Durga Ma Corp., 387 F.3d 1021, 1023-24 (9th Cir.2004) (stating that "judgment confirming an arbitration award is treated similarly to any other federal judgment" and concluding that district court did not abuse its discretion when it corrected judgment confirming arbitration award under Rule 60(b)); Baltia Air Lines, Inc. v. Transaction Mgmt., Inc., 98 F.3d 640, 642 (D.C.Cir.1996) (stating that "Rule 60(b) is an appropriate vehicle by which to challenge a judgment confirming an arbitration award"); Clarendon Nat'l Ins. Co. v. TIG Reinsurance Co., 183 F.R.D. 112, 117 (S.D.N.Y.1998) (section 13 of FAA provides that judgments confirming arbitration awards are subject to Rule 60(b)).
Under Rule 60(b), a court may relieve a party from a judgment if "the judgment has been satisfied, released, or discharged...." Fed.R.Civ.P. 60(b)(5). This authority encompasses the power to declare a judgment satisfied "when damages are paid before trial or a tortfeasor or obligor has paid the judgment debt." Gibbs v. Maxwell House, A Div. of Gen. Foods Corp., 738 F.2d 1153, 1155 (11th Cir.1984).
Two old cases involving Rule 60(b) seem particularly pertinent here. In Ferrell v. Trailmobile, Inc., 223 F.2d 697 (5th Cir. 1955), a defendant allegedly failed to pay one of eighteen installments on a truck trailer. Id. at 698. Although the defendant claimed that he had made the payment, the district court entered a judgment in favor of the plaintiff. Id. The defendant later secured copies of documents that conclusively proved that he made the disputed payment; so, he moved the district court for relief from the judgment under Rule 60(b). Id. The district court denied the request. Id. This Court reversed on appeal and said "[i]f, in fact, practically conclusive evidence shows that the [defendant] had actually paid all eighteen installments for the purchase of the trailer, it is obvious that the judgment should be set aside to prevent a manifest miscarriage of justice." Id. We remanded the case for a hearing on the Rule 60(b) motion. Id. at 699.
This Court later reached a similar result in Johnson Waste Materials v. Marshall, 611 F.2d 593 (5th Cir.1980). In Marshall, the government sued several defendants for violating the Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201-19. Id. at 595. At trial, the government introduced employee-testimony on the number of hours worked and the wages paid; the defendants offered no documentary evidence to rebut the testimony and were found liable. Id. at 595-96. More than a year later, the *1273 defendants moved to set aside or reform the judgment under Rule 60(b) after locating cancelled payroll checks and other evidence that established that the plaintiffs were due less than awarded to them at trial. Id. at 596. The district court concluded, however, that the evidence was neither newly discovered nor secured through due diligence and denied the defendants any relief. Id. at 597.
We reversed on appeal. Id. at 601. We said that the defendants, to receive relief from the judgment under Rule 60(b)(5), were not obligated to produce newly discovered evidence or to demonstrate due diligence in securing that evidence. Id. at 599. Instead, we said that the defendants needed only to produce conclusive evidence that they partially satisfied the judgment. Id. at 599-600. To rule otherwise, we stressed, would effectively grant the plaintiffs a windfall: "Reducing the judgment... by the amount that defendants have already paid will not deprive the employees of the wages that they properly earned. When defendants pay the remainder of the judgment, the employees will have received the full amount to which the trial court determined they were entitled. They will only be denied a windfall recovery." Id. at 600-01 (emphasis added).
The district court found the reasoning in Ferrell and Marshall applicable here. The district court stated that American presented "unrefuted evidence" of the payment to the taxing authority, including copies of the pertinent checks and affidavits showing that Baker paid no portion of the pertinent taxes.[5] Based on that evidence, the district court concluded that American had already satisfied some of the judgment against it and, therefore, was entitled to some relief under Rule 60(b)(5). The district court declared that its decision avoided Baker's "knowing receipt of a quarter-of-a-million dollar windfall." We see no abuse of discretion in this decision.
We begin with Ferrell and Marshall. We accept that those decisions do not fit perfectly here: they involved judgments entered after civil trials and not after arbitration. But section 13 of the FAA provides that a judgment which has confirmed an award is to be treated no better or worse than any other civil judgment: "The judgment so entered shall have the same force and effect, in all respects, as, and be subject to all the provisions of law relating to, a judgment in an action; and it may be enforced as if it had been rendered in an action in the court in which it is entered." 9 U.S.C. § 13. So, the district court did not err by extending our precedents dealing with judgments in civil actions to the case before it.
Considering the law, we turn to the facts found by the district court in this case. Like the defendants in Ferrell and Marshall, American submitted conclusive evidence to the district court that American paid the taxes on the Kansas property directly to the taxing authority and thereby had satisfied some of the judgment against American.[6] Baker, although given *1274 every opportunity to do so, never contradicted the evidence of payment or denied that the tax payment satisfied the obligation Baker would have otherwise had to pay to the taxing authority. Baker directly benefitted concretely from American's payment to the taxing authority. In the light of the facts as well as the precedents, we cannot say that the district court abused its discretion by granting American some relief from the judgment under Rule 60(b)(5).
Conclusion
We affirm the order of the district court.
AFFIRMED.
APPENDIX
IN THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN
DISTRICT OF ALABAMA SOUTHERN
DIVISION
AIG BAKER STERLING HEIGHTS,
LLC, A.B. OLATHE II LIMITED PARTNERSHIP,
Plaintiffs,
v.
AMERICAN MULTI-CINEMA, INC.
Defendant.
CONSOLIDATED LEAD CASE: CV-03-BE-1930-S
MEMBER CASE:
CV-03-BE-2901-S
FINAL ORDER
This case is before the court on remand from the Eleventh Circuit Court of Appeals. See AIG Baker Sterling Heights, L.L.C. v. American Multi-Cinema, Inc., 508 F.3d 995 (11th Cir. 2007). For the reasons stated in the memorandum opinion entered contemporaneously, the court CONFIRMS the arbitrators' award of $866,425.18, and ENTERS JUDGMENT in favor of Plaintiff AIG Baker Sterling Heights, LLC in the amount of $1,151,523.31 ($866,425.18 plus $285,098.13 in prejudgment interest, consistent with the Plaintiff's calculation in doc. 49). AMC has already paid $539,375.75, with a balance of $612,147.56 remaining to be paid on the judgment. This judgment shall not be duplicative of the arbitration award itself, and Plaintiff may not seek to recover double this amount by enforcing both the arbitration award and this judgment.
This case is hereby DISMISSED WITH PREJUDICE,[1] costs taxed as paid.
DONE and ORDERED this 1st day of May, 2008.
/s/ Karon O. Bowdre
KARON OWEN BOWDRE UNITED
STATES DISTRICT JUDGE
IN THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN
DISTRICT OF ALABAMA SOUTHERN
DIVISION
AIG BAKER STERLING HEIGHTS,
LLC, A.B. OLATHE II LIMITED PARTNERSHIP,
Plaintiffs,
v.
*1275
AMERICAN MULTI-CINEMA, INC.
Defendant.
CONSOLIDATED LEAD CASE:
CV-03-BE-1930-S MEMBER
CASE: CV-03-2901-S
AMENDED FINAL ORDER
For the reasons stated in the memorandum opinion entered contemporaneously, the court hereby GRANTS "Defendant American Multi-Cinema's Motion for Partial Relief For Judgment Pursuant to Rule 60(b)(5)" (doc. 59) and Plaintiffs' "Motion to Amend or Modify Final Order" (doc. 61). Accordingly, the court amends and restates its judgment of May 1, 2008 as follows:
This case is before the court on remand from the Eleventh Circuit Court of Appeals. See AIG Baker Sterling Heights, L.L.C. v. American Multi-Cinema, Inc., 508 F.3d 995 (11th Cir. 2007). For the reasons stated in the memorandum opinion entered on May 1, 2008, the court CONFIRMS the arbitrators' award of $866,425.18 and ENTERS JUDGMENT in favor of Plaintiffs AIG Baker Sterling Heights, L.L.C. and A.B. Olathe II Limited Partnership, jointly, in the amount of $1,151,523.31 ($866,425.18 plus $285,098.13 in prejudgment interest, consistent with the Plaintiffs' calculation in doc. 49).
Pursuant to Rule 60(b)(5), the court grants Defendant American Multi-Cinema, Inc. ("AMC") partial relief from this court's judgment in the amount of $326,197.52, representing $226,771.76 in taxes previously paid to the taxing authority plus $99,425.76 in prejudgment interest on that amount, with a net balance of $825,325.79 due directly to Plaintiffs. AMC has already paid Plaintiffs $539,375.75, and deposited with the court $285,950.44, which the Clerk of Court disbursed to Plaintiffs' counsel on June 16, 2008. Therefore, nothing remains to be paid on the judgment.[1] This judgment shall not be duplicative of the arbitration award itself, and Plaintiffs may not seek to recover double this amount by enforcing both the arbitration award and this judgment.[2]
The costs incurred in this proceeding are taxed as paid.
DONE and ORDERED this 17th day of July, 2008.
/s/ Karon O. Bowdre
KARON OWEN BOWDRE UNITED
STATES DISTRICT JUDGE
KRAVITCH, Circuit Judge, concurring in part and dissenting in part:
I concur in Part 1 of the majority's opinion, holding that the district court did not violate the mandate of AIG Baker Sterling Heights, LLC v. American Multi-Cinema, Inc., 508 F.3d 995 (11th Cir.2007) ("Baker I") by modifying the arbitration award under Federal Rule of Civil Procedure 60(b)(5).
In Part 2, the majority affirms the district court's application of Federal Rule of Civil Procedure 60(b)(5) to amend the judgment confirming the arbitration award. Because, however, I believe that the Federal Arbitration Act (the "FAA") does not allow modification of arbitration awards in the manner used by the district court, I respectfully dissent from Part 2 of the majority's decision.
*1276 It is well-established that judicial review of arbitration awards is "narrowly limited." Baker I, 508 F.3d at 999 (quoting Rosensweig v. Morgan Stanley & Co., 494 F.3d 1328, 1333 (11th Cir.2007)). An arbitration decision may be reversed only rarely, and "the fact that a court is convinced [the arbitrator] committed serious error does not suffice to overturn his decision." Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509, 121 S. Ct. 1724, 149 L. Ed. 2d 740 (2001); see also O.R. Sec., Inc. v. Prof'l Planning Assocs., Inc., 857 F.2d 742, 747 (11th Cir.1988) (holding that allowing relitigation of the merits of a claim would violate the basic purpose of the FAA to create a fast, inexpensive resolution of disputes). The FAA itself provides limited grounds upon which a court may undo an arbitration award. See 9 U.S.C. §§ 10, 11. This court already determined in Baker I that the arbitration award in this case, however, could not lawfully be modified under those provisions.
The majority holds that Rule 60(b)(5) may be used to modify a judgment confirming an arbitration award even though the same arbitration award may not be modified under the FAA. Although the Federal Rules apply to court proceedings involving arbitration awards, see Fed. R.Civ.P. 81(a)(6)(B), they apply "only to the extent that matters of procedure are not provided for in those statutes." O.R. Sec., Inc., 857 F.2d at 745. Because the FAA provides for methods to correct an arbitration award, see 9 U.S.C. §§ 10, 11, the Federal Rules should not be read to provide alternative ways to modify arbitration awards. Furthermore, Rule 60(b) should not be used to circumvent other requirements of the law. Pitchess v. Davis, 421 U.S. 482, 489-90, 95 S. Ct. 1748, 44 L. Ed. 2d 317 (1975) (holding that Rule 60(b) cannot be used to alter a conviction which was barred from review under habeas rules). It is obvious from the procedural history in this case that Rule 60(b) was used as an end run around the FAA after §§ 10 and 11 were found to be inapplicable. The district court unsuccessfully attempted to modify the award under the FAA, sought advice from the litigants about how to get around the frustration of that attempt, and then relied on Rule 60(b) to do exactly what it had been told was impossible under the FAA. The FAA prevents courts from using Rule 60(b) in this manner to avoid the strict limitations on judicial review set forth in the FAA. See Lafarge Conseils et Etudes, S.A. v. Kaiser Cement & Gypsum Corp., 791 F.2d 1334, 1338-39 (9th Cir.1986) (holding that FAA modification provisions provide the exclusive means by which an arbitration award may be modified and, therefore, Rule 60(b) may not be used to modify a judgment confirming such an award); Corey v. New York Stock Exch., 691 F.2d 1205, 1212-13 (6th Cir.1982) (finding that "[t]he [FAA] provides the exclusive remedy for challenging an award"). In Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 128 S. Ct. 1396, 170 L. Ed. 2d 254 (2008), the Supreme Court recently emphasized the narrow nature of the judicial review permitted under the FAA. The Court held that parties could not contractually agree in an arbitration agreement to expand judicial review of arbitration proceedings. Id. at 1400-01. The Court explained that such arbitration agreement provisions are void because §§ 10 and 11 of the FAA "provide the FAA's exclusive grounds for expedited vacatur and modification" of arbitration awards. Id. at 1403. The Court further stated that the modification and vacatur provisions should be read as the exclusive means for modifying an arbitration award because "[a]ny other reading opens the door to the full-bore legal and evidentiary appeals that can `rende[r] informal arbitration merely a prelude to a more cumbersome and time-consuming judicial *1277 review process,' and bring arbitration theory to grief in post-arbitration process." Id. at 1405 (quoting Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 998 (9th Cir.2003)) (alteration in original). Just as the parties may not use contract law to avoid the exclusive nature of the FAA modification provisions, the courts cannot use the Federal Rules of Civil Procedure to re-open arbitrated issues.[1]
American and the majority rely on two cases for the proposition that American's own failure to uncover the evidence of its payment of the 2002 taxes through due diligence should not prevent the court from using Rule 60(b)(5): Ferrell v. Trailmobile, 223 F.2d 697 (5th Cir.1955) and Johnson Waste Materials v. Marshall, 611 F.2d 593 (5th Cir.1980). These cases show that Rule 60(b) may be used to reform judgments based upon post-judgment-discovered evidence that the judgment had been paid, even if that evidence could have been discovered at the time of trial. Although Ferrell and Johnson Waste would excuse American's failure to discover the payments before trial, these cases do not involve arbitration awards and therefore do not support the conclusion that Rule 60(b)(5) may be applied to actions confirming arbitration awards.[2]
Because I believe that Rule 60(b) may not be lawfully applied to modify an arbitration award, I would reverse. See Wexler v. Lepore, 385 F.3d 1336, 1338 (11th Cir.2004) ("An error of law constitutes an abuse of discretion.").
Moreover, it is unclear to me that Rule 60(b)(5) would apply to the facts of this case, even if it were generally applicable to judgments confirming arbitration awards.
First, Rule 60(b) cannot be used to provide post-judgment relief to which that party would not have been entitled in the original judgment. See Bear Valley Mutual Water Co. v. Riddell, 493 F.2d 948, 950 (9th Cir.1974). Here, American was not entitled to modification of the arbitration *1278 award based on its tax payment in the enforcement proceedings because it had no right to have the award modified under the FAA. Baker I, 508 F.3d at 1001. It is not, therefore, entitled to seek this relief under Rule 60(b)(5).
Second, this case differs in important ways from Ferrell and Johnson Waste, and, in my opinion, these distinctions render application of Rule 60(b)(5) inappropriate in this case, even if applicable to judgments confirming arbitration awards generally. In Ferrell, the dispute centered around the appellant's failure to make installment payments on a truck he purchased from the appellee. 223 F.2d at 698. At trial, the appellant asserted that he had made three payments, but the appellee denied it. Id. After judgment was entered against the appellant, he was able to obtain copies of the money orders showing that he had in fact made the payments. Id. This court held that, in light of such "practically conclusive evidence" that the payments had been made, "the judgment should be set aside to prevent a manifest miscarriage of justice." Id. In Johnson Waste, this court built upon Ferrell and concluded that a judgment may be reformed based upon evidence that a portion of the obligation from which the judgment arose had been paid, even if the payor could have discovered that evidence at trial through the exercise of due diligence. 611 F.2d at 595. This court noted that this holding was appropriate in "the exceptional circumstance where the evidence of payment is virtually conclusive." Both Ferrell and Johnson Waste involved "practically conclusive evidence" that the judgments rendered by the district court had actually been satisfied by payments made by the losing party to the judgment-holding party prior to trial. Here, however, the evidence is not "practically conclusive" that the judgment was satisfied. First, the amount of American's previously-undiscovered payment to the taxing authority does not match the amount that the arbitrators determined American was obliged to pay for 2002 for the Kansas property. The arbitration decision states that American was liable for $226,770 whereas the evidence produced by American indicates that American paid the tax authority $248,624.57. This unexplained difference in liability calls into question the reliability of American's evidence. Accordingly, it was improper for the district court to offset the arbitration award by the full amount of American's payment to the county when it was greater than the amount of liability for that period found by the arbitration panel. Second, the payments made by American were not made to the party to whom it is obligated to pay the judgment. Thus, the court had to reopen questions resolved in the arbitration proceedings in order to determine whether the payment satisfied the obligation upon which the award was based.
The fact that American's evidence is not "practically conclusive" is crucial to the availability of relief under Rule 60(b). See Ferrell, 223 F.2d at 698; see also Fleming v. New York Univ., 865 F.2d 478, 484 (2d Cir.1989) (refusing to allow relief under Rule 60(b)(3) where the evidence presented was "a mixed bag" rather than the requisite "clear and convincing evidence," and noting that granting relief on such questionable evidence would allow relitigation of the merits on a 60(b) motion); Niedland v. United States, 338 F.2d 254, 260 (3d Cir.1964) (refusing to apply Ferrell where the post-judgment evidence merely raised doubtsalbeit "grave doubts"as to the correctness of the judgment rather than offering conclusive proof that the judgment had been satisfied). Thus, even if I agreed that Rule 60(b)(5) could be applied to judgments confirming arbitration awards, I would limit such relief to cases involving uncontroverted, "practically conclusive" evidence that payments *1279 were made to the party that secured the judgment. Those circumstances are not present here.
For the foregoing reasons, I respectfully dissent from Part 2.
NOTES
[1] We include the pertinent orders in an appendix to our opinion.
[2] We stress that the final order and judgment before us in Baker I is materially different from the final order and judgment before us today.
[3] Nor did the district court, as Baker contends, revisit the merits of a matter decided at arbitration. The panel addressed three specific questions: (1) How much money must American pay Baker for taxes under the terms of their lease agreements? (2) How much money has American already paid Baker for taxes under the terms of their lease agreements? and (3) How much money does American, therefore, owe Baker for taxes under the terms of their lease agreements? The district court in no way disturbed the panel's answers to those questions; the district court focused solely on the taxes American had paid to the taxing authoritynot to Bakerand how the money paid for the taxes satisfied some of the tax money obligation the panel concluded that American owed Baker under the terms of their lease agreements.
[4] Fed.R.Civ.P. 81(a)(6)(B) says that the Federal Rules of Civil Procedure apply in actions related to arbitration "to the extent applicable" and except as otherwise provided for in the FAA. We accept that this language may mean that courts cannot use Rule 60(b) to modify or vacate an arbitration award or, perhaps, to grant relief from a judgment confirming an award for reasons covered in sections 10 or 11 of the FAA. This appeal is different, however; it is about partial payment of a judgment debt.
[5] American submitted to the district court copies of the cancelled checks that American sent to the taxing authority and the payment receipts from the taxing authority. American also submitted affidavits that said that American paid the 2002 taxes directly to the taxing authority, Baker paid no portion of the 2002 taxes to the taxing authority, and Baker owes no taxes to the taxing authority for 2002. Baker introduced nothing to rebut this evidence.
[6] Baker asserts that the district court erred in finding that American partially satisfied the judgment. Baker says that the many years between the payment to the taxing authority and the entry of judgment, as well as that Baker did not physically receive the payment, precludes the payment from satisfying the judgment. But Baker cites no authority for this position, and we are not persuaded by it. See Torres-Troche v. Municipality of Yauco, 873 F.2d 499, 501 n. 7 (1st Cir.1989) ("Rule 60(b)(5) should serve as the basis for a motion to correct, regardless of the time at which a judgment is satisfied. The Rule should not be interpreted so strictly that it forecloses a litigant from alerting a court to the prior satisfaction of a final judgment.").
Nor did the district court give American credit for an amount greater than the $226,771.76 the arbitration panel concluded that American owed Baker for the 2002 taxes. The amended final order explicitly states that the district court granted American "partial relief from [the] judgment in the amount of $326,197.52, representing $226,771.76 in taxes previously paid to the taxing authority plus $99,425.76 in prejudgment interest on that amount ...." (emphasis added).
[1] As noted previously, this court did not decide AMC's counterclaims for CAM fee offsets on the merits, see doc. 31; therefore, that part of the court's decision is without prejudice.
[1] AMC deposited forty cents too much with the court, but did not oppose Plaintiffs' withdrawal of the forty-cent coverage. See doc. 69.
[2] This court previously dismissed AMC's counterclaims for CAM fees without prejudice. See doc. 31.
[1] American cites to language from Hall Street stating that §§ 10 and 11 do not exclude review "based on authority outside the statute," 128 S. Ct. at 1406, in support of its argument that the Federal Rules may be used to modify judgments. The above language in Hall Street, however, was followed with the statement that "[t]he FAA is not the only way into court for parties wanting review of arbitration awards: they may contemplate enforcement under state statutory or common law ...." Id. The Court then discussed cases involving enforcement of arbitration awards through statutes other than the FAA. Thus, I read the above language to refer only to alternatives for enforcing an arbitration award, and not to suggest that parties enforcing an award under the FAA may replace certain provisions of the FAA with other legal authorities. Here, Baker sought enforcement through the FAA, and American has never contested the applicability of the FAA.
[2] Ferrell and Johnson Waste demonstrate that Rule 60(b) should be used to avoid an inequitable result. Courts, however, frequently allow inequitable or erroneous arbitration decisions to stand in order to effectuate the national policy favoring quick resolution of disputes through binding arbitration. See e.g., Hall Street, 128 S.Ct. at 1409 (upholding an arbitration decision despite the presence of what the dissent called "a rather glaring error of law"). Furthermore, I do not agree with the majority that the equities so one-sidedly favor American. American was the one who failed to review its own accounting records and discover the paid taxes. And American stipulated before the arbitration panel that it had paid $0 taxes on the property in question for 2002. Although Ferrell and Johnson Waste might excuse this lack of diligence, I still believe that American's fault in this case weighs against the use of Rule 60(b)(5) here. Also, there is an equitable interest in respecting the finality of the arbitrator's decision. See Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 108 S. Ct. 2194, 100 L. Ed. 2d 855 (1988) (Rehnquist, J. dissenting) ("[A] very strict interpretation of Rule 60(b) is essential if the finality of judgments is to be preserved."). | 01-03-2023 | 04-27-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/3021174/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 97-3883
___________
In re: John A. Scott; In re: Marilyn *
V. Scott, *
*
Debtors. *
*
*
U.S. Department of Education, *
*
Objector/Appellant, * Appeal from the United States
* District Court for the District
v. * of Nebraska.
*
John A. Scott; Marilyn V. Scott, *
*
Debtors/Appellees. *
*
Patricia Dugan, *
*
Trustee. *
___________
Submitted: May 11, 1998
Filed: July 7, 1998
___________
Before BEAM and MURPHY, Circuit Judges, and MELLOY,1 District Judge.
___________
1
The Honorable Michael J. Melloy, Chief United States District Judge for the
Northern District of Iowa, sitting by designation.
BEAM, Circuit Judge.
John A. Scott took out a student loan on January 30, 1982, which was insured
by the Department of Education under the Federal Family Education Loan program
(FFEL), 20 U.S.C. §§ 1071 et seq. (34 C.F.R. §§ 682.100 et seq.). On May 28, 1984,
Scott ended his academic career. At the end of the six-month grace period, the holder
of the note sought repayment from Scott. When no payments were forthcoming, the
note was assigned to the guaranty agency, Higher Education Assistance Foundation
(HEAF), who, in turn, on October 28, 1991, assigned the note to the Department of
Education. The Department received no voluntary payments from Scott after
assignment of the note.
On December 21, 1989, Scott and his spouse filed for relief under Chapter 7 of
the Bankruptcy Code. At that time, the student loan was nondischargeable in
bankruptcy unless the loan first became due more than five years before the filing date
of the bankruptcy petition. See 11 U.S.C. § 523(a)(8)(A) (1988) (amended 1990).
Thus, the crucial issue is the date upon which the loan first became due. If more than
five years before December 21, 1989, Scott is entitled to discharge; otherwise, the
obligation survives the completion of the bankruptcy proceeding.
The bankruptcy court and the district court embraced the longer period of time
and discharged the debt. The government disagrees with this conclusion and so do we.
Thus, we reverse.
At the time the Scotts filed their bankruptcy petition, the applicable statute
provided for discharge of an educational loan if:
such loan first became due before five years (exclusive of any applicable
suspension of the repayment period) before the date of the filing of the
petition.
-2-
11 U.S.C. § 523(a)(8)(A) (1988) (amended 1990). As noted by the bankruptcy court,
the student loan promissory note, signed by Scott on January 30, 1982, provides as
follows:
I will begin repayment of this loan, in periodic installments, after the
completion of the grace period. The grace period begins when I leave
school or cease to be at least a half-time student. The payments may begin
at an earlier time if I agree.
Jt. App. at 36 (emphasis added).
The bankruptcy and district courts concluded that the loan "became due" at the
end of the grace period, a date more than five years prior to December 21, 1989.
However, the note also provided:
I [Scott] must contact the lender prior to expiration of my grace period to
negotiate the terms of repayment. If I neglect to do so, I hereby authorize
the lender to establish repayment terms within the guidelines as set forth
in Paragraph 2 of this section, without my further approval. However, the
lender must inform me of these terms in writing.
Id.
In full compliance with Paragraph 2 and all other terms of the note, the first
installment due date was set for December 28, 1984, a point in time less than five years
prior to the filing of the bankruptcy petition. To recapitulate, Scott last attended school
on May 28, 1984. The grace period ended on November 27, 1984. The payment due
date established by the government as authorized by Scott was December 28, 1984, and
the bankruptcy petition was filed on December 21, 1989. This created an intervening
period between the first payment date and the bankruptcy filing date of four
-3-
years, eleven months, and twenty-three days. The first payment due date therefore falls
eight days short of meeting the statutory requirement for discharge.
There is no case precedent directly on point. The bankruptcy court cites Brinzer
v. Pennsylvania State Univ. (In re Brinzer), 45 B.R. 831 (S.D. W. Va. 1984), as being
"almost directly on point." However, in Brinzer, unlike here, the lender, Pennsylvania
State University, had no contractual right to establish a repayment schedule. The
Brinzer district court noted that "it is undisputed that the promissory note specified that
the repayment period was to commence nine months after the borrower ceased studies."
Id. at 833. Pennsylvania State University had no authority to modify unilaterally the
specified repayment date.
Here, of course, Scott was to begin his repayment through "periodic
installments," either agreed upon through negotiations or as set by the lender under the
terms of the note if Scott neglected to "contact the lender." Scott admittedly made no
contact with the lender.
We believe that, if at all applicable, Brinzer supports the government's position
in this appeal. Under the undisputed terms of the Scott note, the lender was authorized
to establish unilaterally the periodic installment date for the commencement of
repayment of the loan. Such was done and in an expeditious manner, the initial
installment being due one month and one day after the end of the grace period. Given
these circumstances, we believe the debt is not dischargeable under the statute.
Accordingly, we reverse the judgment of the district court and remand with
directions to remand to the bankruptcy court for further proceedings in compliance with
this opinion.
-4-
Melloy, Chief District Judge, dissenting.
The Court holds that John A. Scott’s loan became due for purposes of
determining eligibility for bankruptcy discharge on the date that Scott’s first installment
payment was due. Because I disagree with this interpretation of Scott’s student loan
promissory note and would find that Scott’s loan became due on the date his grace
period expired, I respectfully dissent.
When interpreting the promissory note, the Court highlights that Scott promised
to “begin repayment of this loan, in periodic installments, after the completion of the
grace period.” The Court then emphasizes that Scott promised to contact the lender
before his grace period expired in order to negotiate the terms of repayment, and that
if he failed to do so, he authorized “the lender to establish repayment terms . . . without
my further approval.” Because Scott agreed to repay his loan in periodic installments,
and because he did not contact the lender before his grace period expired, the Court
concludes that Scott’s loan became due on the date that the lender established that his
first installment payment was due: December 28, 1984.
I respectfully disagree with this interpretation of the terms of the promissory note.
Even though Scott agreed to begin repayment of his loan “in periodic installments,” that
phrase does not mean that his loan became due on the date that the first installment was
due. Rather than establishing the date that the loan first became due, the phrase “in
periodic installments” simply specified the method by which Scott was to repay his
loan: instead of repaying his loan in one lump sum, he could repay it in installments.
Scott’s ability to repay his loan in installments did not alter the fact that his loan
became due “after the completion of the grace period.” Similarly, Scott’s failure to
contact the lender prior to the expiration of the grace period did not alter the fact that
his loan became due when the grace period expired. Just as Scott had a right to repay
-5-
his loan in installments, so the lender had a right to establish a repayment schedule after
Scott failed to contact the lender before the grace period had expired. The lender’s
unilateral right to establish a repayment schedule did not alter the fact that Scott’s loan
became due when the grace period expired.
In Brinzer, neither party in that case disputed that “the promissory note specified
that the repayment period was to commence nine months after the borrower ceased
studies.” 45 B.R. at 832. The Brinzer court also stated that the “note by its terms
established when repayment obligations would start and there is no evidence or
indication that [the lender] had the contractual right to unilaterally suspend the
repayment for a period of time.” Id. This Court interprets Brinzer to mean that when
a promissory note gives a lender a unilateral contractual right to establish a repayment
schedule, the date that the lender decides the first installment is due is the date that the
loan first becomes due for purposes of bankruptcy discharge eligibility. I disagree with
this interpretation and would find that Brinzer simply stands for the proposition that if
a promissory note establishes when repayment obligations are to begin, that is the date
when the loan first becomes due. In Brinzer’s case, the note established that repayment
obligations would start nine months after the borrower ceased studies. 45 B.R. at 832.
In Scott’s case, the note specified that Scott must begin repayment of his loan “after the
completion of the grace period.” Scott’s loan therefore became due on the date his
grace period expired.
I would therefore affirm the judgment of the bankruptcy court and the district
court.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
-6- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2154413/ | 963 A.2d 571 (2008)
COM.
v.
RICHARDS.
No. 2176 EDA 2007.
Superior Court of Pennsylvania.
September 16, 2008.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/564730/ | 938 F.2d 189
U.S.v.Hartle (Thomas Raymond)
NO. 90-5579
United States Court of Appeals,Eighth Circuit.
MAY 22, 1991
1
Appeal From: D.N.D.
2
AFFIRMED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/414202/ | 699 F.2d 965
1982-83 Trade Cases 65,177
GENERAL BUSINESS SYSTEMS, a California corporation,Plaintiff-Appellant,v.NORTH AMERICAN PHILIPS CORPORATION, a Delaware corporation;Philips Business Systems, Inc., a Delaware corporation, andN.V. Philips Gloeilampenfabrieken, a Nederland corporation,Defendants-Appellees.NORTH AMERICAN PHILIPS CORPORATION, a Delaware corporation,et al., Counterclaim Plaintiffs-Appellants,v.GENERAL BUSINESS SYSTEMS, a California corporation; ShastaGeneral Systems, a California corporation,Counterclaim Defendants-Appellees.
Nos. 80-4566, 81-4386 and 81-4391.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted July 12, 1982.Decided Jan. 28, 1983.
Jon Michaelson, Hopkins, Mitchell & Carley, Palo Alto, Cal., for General Business.
Forrest Hainline, Cooper, Kirkham, Hainline & McKinney, San Francisco, Cal., argued, Paul M. Rose, Brobeck, Phleger & Harrison, San Francisco, Cal., on brief, for defendants-appellees.
Appeal from the United States District Court for the Northern District of California.
Before SNEED, FARRIS, and NORRIS, Circuit Judges.
SNEED, Circuit Judge:
1
In 1977, General Business Systems (GBS) initiated a federal antitrust suit against N.V. Philips Gloeilampenfabrieken (NVP), a Netherlands corporation, and its American subsidiaries, North American Philips Corporation (NAP) and Philips Business Systems, Inc. (PBSI). The defendants cross-claimed against GBS and its sister corporation, Shasta General Systems (Shasta), alleging both federal antitrust and state law causes of action. GBS later sought sanctions against the Philips companies for alleged abuse of discovery. The district court refused to impose such sanctions and granted summary judgment against all parties. Both sides now appeal the denial of their respective complaints. We affirm the district court.
I.
FACTS
2
This case arises out of the Philips companies' attempt to penetrate the small business computer market in the United States. Between 1969 and 1978 NVP marketed its computers in this country through PBSI, its marketing agent, MLC, Inc., or independent distributors. During this period, Philips' share of the small business computer market never exceeded five percent. GBS became the Philips distributor for Northern California in 1972. In return, GBS agreed that it would concentrate its "primary marketing efforts" on Philips computers and would not market "directly competitive hardware." In 1974 PBSI added St. Louis, Missouri, to GBS's market area. The agreement was renewed in 1977 to extend through August 1, 1980. In 1978, however, Philips exercised a buy-out option, terminating the agency relationship.
3
Philips' initial computer lines, the P300 and P350 series, stored memory on magnetic ledger cards (mlcs). Although a number of small business computers used mlcs at the time, mlcs generally were compatible with only one manufacturer's brand of computers. The mlcs for Philips computers were produced primarily by two German companies, Jollenbeck-Kasten (JK) and Magnetdruck (MD). Philips provided design specifications and production assistance to JK and MD in order to assure maximum card-machine reliability. In return, JK and MD signed supply contracts restricting their sales of Philips mlcs to distributors "recognized as [members of Philips distribution network] pursuant to a written communication given by Philips to the Vendor." Although it is disputed whether a binding exclusive dealing relationship was created by this language, JK and MD generally sold mlcs exclusively to Philips affiliates or designees. PBSI was the designated Philips distributor for the United States at all times relevant to this suit.1 PBSI, in turn, would sell the mlcs to GBS and other Philips computer distributors.
4
In 1974 GBS contacted JK and MD in an attempt to purchase mlcs directly. MD refused because of its exclusive dealing relationship with Philips. JK, however, had experienced negotiating difficulties with PBSI, and in 1975 inquired whether GBS would become an exclusive dealer of the JK-produced Philips mlcs. Although no exclusive dealing agreement was established, GBS did order and receive mlcs from JK during the latter half of 1976.
5
Philips did not ignore this interference with its distribution network. It repaired its relationship with JK by agreeing to split its orders for mlcs between JK and MD. JK reciprocated by ceasing to deal directly with GBS.
6
In the mid-1970's the P300 and P350 faced increasing competition from more sophisticated computers using disk memories and cathode ray tube (CRT) displays. These computers threatened the Philips computers with obsolescence. Both Philips and GBS were concerned with the problem. Philips' solution was to develop the P330, a disk/CRT unit. GBS, however, feared that the P330 represented too little, too late. GBS's interest focused on a more viable product, the Diablo disk/CRT computer. In 1976 Diablo's manufacturers inquired whether GBS would be interested in marketing the Diablo computer. GBS referred the opportunity to PBSI, which was uninterested. On September 3, 1976, GBS agreed to become Diablo's exclusive U.S. distributor. Pursuant to this agreement, GBS's two top management officials incorporated a sister corporation, Shasta, which shared office space and staff with GBS. A separate president, however, was designated to run Shasta. GBS assigned its exclusive Diablo dealership to Shasta, remaining liable should Shasta fail to perform.
7
Meanwhile, Philips continued to develop the P330. However, it was never able to market the new disk/CRT model successfully. GBS argues that Philips never made a production model available to U.S. distributors. Philips claims that GBS's devotion of time and resources to the Diablo doomed the P330 from the start. In any event, Philips became dissatisfied with its import sales and, in November, 1978, withdrew from the computer import market. Philips sold its residual supply and service functions to Pertec Computer Corporation, which marketed its own small business computers.
II.
PROCEEDINGS BELOW
8
GBS alleged the following antitrust violations by the Philips companies:
9
(1) monopolization or attempted monopolization of a market or submarket for Philips-compatible mlcs, in violation of section 2 of the Sherman Act, 15 U.S.C. Sec. 2;
10
(2) conspiracy to fix prices and allocate markets and concerted refusal to deal, in violation of section 1 of the Sherman Act, 15 U.S.C. Sec. 1;
11
(3) product tying, in violation of section 3 of the Clayton Act, 15 U.S.C. Sec. 14.
12
GBS also sought to suppress the deposition testimony of certain witnesses because opposing counsel's misconduct allegedly prevented it from adequately cross-examining those witnesses.
13
In their counter-claim against GBS and Shasta, the Philips companies alleged the following:
14
(1) conspiracy to eliminate Philips computers from the domestic computer market, in violation of section 1 of the Sherman Act;(2) attempt to monopolize, in violation of section 2 of the Sherman act;
15
(3) breach of GBS's distributorship contract with PBSI;
16
(4) tortious interference by Shasta with GBS's obligations under the distributorship contract;
17
(5) tortious interference with the Philips companies' business relationships with JK, MD, and others;
18
(6) abuse of process.
19
The district court, following the recommendation of a magistrate, denied GBS's abuse of discovery motion. The court rejected GBS's monopolization claim, primarily for failure to substantiate GBS's market definition. From this it followed that evidence supporting the charges of attempted monopoly, conspiracy, and product tying was lacking, and the district court so held.
20
As to the Philips companies' counter-claims, the district court concluded that GBS and Shasta were a single entity and were thus incapable of conspiring together in violation of the antitrust laws. The court dismissed the attempted monopolization claim because the Philips companies had failed to establish the requisite intent to monopolize or facts from which such intent could be inferred. The breach of contract claim fell in the absence of credible evidence of "direct competition" between the Philips and Diablo computers. Since GBS had not breached its contract with PBSI, the contractual interference claim against Shasta was rejected. The court also found no substantial evidence of improper interference with Philips' business relationships. Finally, it rejected the abuse of process claim because no causal connection between the alleged antitrust conspiracy and GBS's filing of this suit was shown, nor was any evidence introduced of improper use of trade secrets acquired through discovery. Summary judgment was accordingly granted against all claims.
III.
STANDARD OF REVIEW
21
Summary judgment should be granted only when, in light of the evidence and pleadings, a court is convinced that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment is disfavored in complex antitrust cases involving elusive issues of intent or motive. Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). Nevertheless, this general reluctance does not preclude the use of summary judgment in antitrust litigation. Continental T.V., Inc. v. GTE Sylvania Inc., 694 F.2d 1132, 1135 & n. 5 (9th Cir.1982). A party opposing summary judgment must present some "significant probative evidence tending to support the complaint." First National Bank v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968); see, e.g., Betaseed, Inc. v. U & I Inc., 681 F.2d 1203, 1207 (9th Cir.1982); Thomsen v. Western Electric Co., 680 F.2d 1263, 1265 (9th Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 348, 74 L.Ed.2d 387 (1982); Ron Tonkin Gran Turismo, Inc. v. Fiat Distributors, Inc., 637 F.2d 1376, 1381 (9th Cir.), cert. denied, 454 U.S. 831, 102 S.Ct. 128, 70 L.Ed.2d 109 (1981). Such evidence must be relevant to disputed factual issues that are truly material to the litigation. Id. A lawfully displaced competitor cannot construct a justiciable controversy from artful pleading alone. The courts should not serve as a refuge from the give and take of a properly functioning marketplace. With these principles in mind, we turn first to the district court's disposal of GBS's claims.
IV.
GBS'S ANTITRUST COMPLAINT
A. Monopolization
22
The offense of monopolization rests upon the willful acquisition or maintenance of monopoly power in the relevant market, United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1703-04, 16 L.Ed.2d 778 (1966); Greyhound Computer Corp. v. IBM, 559 F.2d 488, 492 (9th Cir.1977), cert. denied, 434 U.S. 1040, 98 S.Ct. 782, 54 L.Ed.2d 790 (1978), and the existence of actual injury to competition in that market. See Betaseed, 681 F.2d at 1231-32; California Computer Products v. IBM, 613 F.2d 727, 735 (9th Cir.1979). The threshold consideration in establishing market power is the relevant market. See Grinnell, 384 U.S. at 571, 86 S.Ct. at 1704. A firm cannot impose monopoly prices if buyers are free to purchase a competitor's goods. Thus, all products that are "reasonably interchangeable," and so can be said to compete with each other for the same buyers' dollars, are included in the market definition. United States v. E.I. du Pont & Co., 351 U.S. 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). For purposes of antitrust analysis, the relevant market may also be a submarket delineated by:
23
industry or public recognition of the submarket as a separate economic entity, the product's peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized vendors.
24
Brown Shoe Co. v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502, 1523, 8 L.Ed.2d 510 (1962); see, e.g., M.A.P. Oil Co. v. Texaco Inc., 691 F.2d 1303, 1307-08 (9th Cir.1982).
25
Nonetheless, the designation of the relevant market requires considerable judgment. Its dimensions include the product involved, the geographical limits within which it functions, and the appropriate time frame. The latter two pose no difficulty in this case. We can assume that the United States fixes the geographical limits and the years 1969 to 1978 the appropriate time frame.
26
The choice of the appropriate product is another matter. According to GBS, the appropriate product in this case is the Philips-compatible mlc when sold at wholesale. Its entire case is dependent on this choice of appropriate product. Only in this narrowly defined market did Philips possess a significant share. GBS relies on several factors to establish its market definition. It asserts that owners of Philips computers were "locked-in" to Philips-compatible mlcs. These owners could find few, if any, adequate substitutes for the JK and MD cards. As a result, GBS argues, Philips was able to raise its prices without facing competition from other mlc manufacturers. GBS also claims that the industry recognized a distinct Philips-compatible mlc market. The cards produced by JK and MD met Philips' stringent specifications and were not sold for use in other manufacturers' computers. The majority of these cards were handled by dealers who dealt only in Philips products. The foregoing allegedly gave Philips the ability to maintain "premium" prices in this distinct market.
27
The district court rejected as a matter of law GBS's market definition. It is this interpretation of the law that we must review. If the district court erred, we must reverse its judgment with respect to GBS's claims and remand for further proceedings. The primary source of the failure of GBS to establish its position is the district court's conclusion that the market for Philips-compatible mlcs was not insulated from the competitive struggle between computer systems. That is, in its view Philips had little or no power to raise the price of its mlcs without reducing its profits because any such increase would diminish sales of its computer system and very likely adversely affect aggregate profits. Were mlc prices significantly increased, computer system buyers quickly could shift to other sellers who, in turn, could profitably expand their output to meet the new demand. We agree with the district court that the undisputed facts permit only one conclusion, viz., that the market for mlcs cannot be separated from the general market for small business computer systems.
1. The Undisputed Facts
28
The performance of mlcs was a major concern for businesses contemplating purchase of a P300 or P350. At first this worked to Philips' advantage. The reliability of its mlcs, which reputedly worked better than those of its competitors, played an important role in the campaign to sell Philips computers. Businesses unwilling to risk processing delays or loss of information would find the Philips computers and their mlcs an attractive package. As other companies developed more modern disk computers, however, Philips' early advantage became a serious disadvantage. Its failure in the American market is attributable to its attempt to cling to mlc computers even after the newer disk computers had proven their greater productivity. Philips' sales of computers dropped as purchasers turned away from systems based on the outmoded mlc technology.
29
In spite of contrary allegations in GBS's brief, the facts before the district court demonstrate that prospective purchasers also viewed the cost of mlcs as a major barrier to purchase of a Philips computer. While Philips sold fewer than 3000 computers in the American market between 1974 and 1978, it sold more than 19 million mlcs in the same market in the shorter period from 1975 to October 1978. At between twenty and twenty-eight cents a card, the mlcs' cost was a substantial part of total cost for many users. It is hardly surprising, then, that Shasta included the high price of mlcs among the factors it used to convince customers to buy the more modern, disk-based Diablo. Even Philip Parise, GBS's vice-president, who maintained that he didn't know of any particular computer sale lost because of the cost of Philips mlcs, conceded that it could have been easier to sell Philips computers had mlc prices been lower. As we view the record, there is no genuine dispute concerning the fact that the high price of these mlcs, which cost as much as two or three times those of other manufacturers, reduced the competitiveness of the Philips computers.
30
GBS asserts that the viability of a separate market for mlcs is placed at issue by the price insensitivity of the market for Philips mlcs after Philips withdrew from the computer market. This is not the case. Philips adhered to high prices after its withdrawal because, as GBS's president, Lawrence Finch, stated in his Declaration in Opposition to Defendant's Summary Judgment Motion, it had higher overhead costs than its competitors. The period during which GBS alleges that these prices were successfully foisted on the market is the same period during which competitors forced Philips, laden with its expensive mlcs, out of the American small business computer market. In due course Philips abandoned its mlc operation as well. It would not have done so had that market been the separate, profitable market alleged by GBS. Philips was the victim, not the beneficiary, of its high prices in the mlc market.
31
The other factors cited in support of GBS's market definition merit little discussion. Mlcs were sold separately from computers because of the dynamics of use, not market differentiation. Users could hardly be expected to buy a supply of mlcs good for the product life of the computer when they made their initial purchase of a P300 or P350. The physical division of consumer behavior does not alone establish that it is directed at separate markets. Industry recognition is, of course, a valid indicator of relevant market. See, e.g., Greyhound Computer, 559 F.2d at 495. GBS, however, has failed to direct us to any significant probative evidence of such recognition. The only evidence to which it alludes is the unsupported statement of one witness that Philips-compatible mlcs constituted a market. This does not amount to substantial evidence of industry recognition, particularly when contrasted with the persuasive evidence already discussed of the interdependence of Philips computers and mlcs.
2. The Cases
32
GBS relies on two cases, Heatransfer Corp. v. Volkswagenwerk, A.G., 553 F.2d 964 (5th Cir.1977), cert. denied, 434 U.S. 1087, 98 S.Ct. 1282, 55 L.Ed.2d 792 (1978), and Greyhound Computer Corp. v. IBM, 559 F.2d 488 (9th Cir.1977), cert. denied, 434 U.S. 1040, 98 S.Ct. 782, 54 L.Ed.2d 790 (1978), to refute the district court's determination of the relevant market. The confidence of GBS is misplaced. In Heatransfer the jury recognized a separate market in air-conditioning units for Volkswagen automobiles. These units, designed to accommodate Volkswagens' air-cooled, rear-mounted engines, were not suitable for other types of engines. Several manufacturers competed in this special market, which was not quickly responsive to price changes in air conditioners suitable for other engine types. Thus, a jury could easily find a market limited to Volkswagen air conditioners. See 553 F.2d at 980-81.
33
The market for mlcs is quite different. Unlike an air conditioner, which is not an integral part of an automobile "system," mlcs are an essential component of the Philips computer system. Not only is an mlc computer useless without cards, but also the quality of the mlcs determines the overall performance of the system. As already pointed out, the rational purchaser of a computer system must consider the cost, availability, and reliability of mlcs when deciding which system to purchase. Conversely, changes in the price, whether direct or indirect, of competing computer systems will quickly affect demand for the Philips computer systems and their mlcs.
34
GBS's reliance on Greyhound Computer is similarly misplaced. In that case the evidence sustained, "though by no great margin," the jury's finding of a market consisting of leased computers. 559 F.2d at 494-95. Contrary to GBS's contention, we expressly declined to rule on the lock-in theory asserted by Greyhound. Id. at 495-96. Rather, we placed heavy reliance on industry recognition of the distinction between leases and sales. See id. at 495.
35
Standing against GBS's "lock-in" theory is a line of cases rejecting attempts to establish a relevant market with respect to a "locked-in" component. Telex Corp. v. IBM, 510 F.2d 894 (10th Cir.), cert. dismissed, 423 U.S. 802, 96 S.Ct. 8, 46 L.Ed.2d 244 (1975), and ILC Peripherals Leasing Corp. v. IBM, 458 F.Supp. 423 (N.D.Cal.1978), aff'd sub nom. Memorex Corp. v. IBM, 636 F.2d 1188 (9th Cir.1980), cert. denied, 452 U.S. 972, 101 S.Ct. 3126, 69 L.Ed.2d 983 (1981), both rejected claims that the relevant market was IBM-compatible peripheral equipment. In Telex, the Tenth Circuit reversed a district court's definition of the relevant market for peripherals as being that for devices compatible with IBM central processing units. The circuit court expanded the market definition to include non-IBM plug-compatible peripherals. The ease with which the incompatible could be made compatible established the reasonable substitutability of these peripheral products. 510 F.2d at 919.
36
We adopted a similar approach in ILC Peripherals, in which the district court's directed verdict rested in part on the plaintiff's failure to establish a submarket for IBM peripherals. The district court emphasized the "potential competition" from non-IBM plug-compatible manufacturers who could have converted to production of IBM-compatible equipment.2 IBM had demonstrated that the costs and engineering barriers to conversion were not excessive. 458 F.Supp. at 429. It also relied heavily on competition between computer systems. Because peripherals formed a large part of total system cost, an increase in peripheral prices would increase the demand for competitive systems. Systems competition was therefore an important restraint on peripheral pricing. Id.
37
It is true that in Telex and ILC Peripherals the peripheral equipment represented a more substantial portion of the total system cost than do the mlcs. The same, however, cannot be said about Advance Business Systems & Supply Co. v. SCM, 287 F.Supp. 143 (D.Md.1968), modified on other grounds, 415 F.2d 55 (4th Cir.1969), cert. denied, 397 U.S. 920, 90 S.Ct. 928, 25 L.Ed.2d 101 (1970). In Advance Business Systems the plaintiff, a distributor of copying machine supplies, contended that the relevant market was paper that could be used in SCM copiers. SCM controlled this market, although a number of manufacturers produced paper that could be used with SCM's direct electrostatic process. Copying paper constituted a small portion of overall system cost. The court found the plaintiff's market definition to be unrealistically narrow after citing the competition among both paper suppliers and copier manufacturers. Id. at 153-54. It opted instead for a definition that included paper compatible with any copier operating on the direct electrostatic process used by SCM.
38
Advance Business Systems is consistent with the relevant market cases decided in this circuit. In Kaplan v. Burroughs Corp., 611 F.2d 286 (9th Cir.1979), cert. denied, 447 U.S. 924, 100 S.Ct. 3016, 65 L.Ed.2d 1116 (1980), the plaintiff alleged that the initial cost of programming equipment locked-in customers to bulk processing centers using Burroughs equipment and, thus, that such centers composed the relevant market. Similarly, in In re Data General Corp. Antitrust Litigation, 529 F.Supp. 801 (N.D.Cal.1981), commitment to certain software programs had allegedly locked-in customers to the central processing units that executed the programs. In both cases, definitions of the relevant market that were limited to a single company's systems were rejected. Such definitions did not describe "economically significant" markets. In Kaplan we stressed the high cross-elasticity of demand as between data processing systems. 611 F.2d at 295. Data General also turned on the widespread competition in the market for computer services. See 529 F.Supp. at 813-14.
39
GBS's lock-in theory must also be rejected. Philips has amply established that intense systems competition drove it from the market for small business computers and for mlcs. Had there been a demand for substitute mlcs, other manufacturers would have experienced no technological or financial barriers in responding to it. Taken to its logical conclusion, GBS's approach would dictate that a manufacturer, facing competition against which it cannot prevail in the sale of its end product, could be found to monopolize the market for each unique component that goes into the product. This is surely to lose sight of the forest because of fascination with the trees.
40
We conclude, therefore, that the district court did not err in rejecting a market definition limited to Philips-compatible mlcs.
B. Attempted Monopolization
41
Three elements are necessary to prove an attempted monopolization claim in this circuit: "(1) specific intent to control prices or destroy competition in some part of commerce; (2) predatory or anticompetitive conduct directed to accomplishing the unlawful purpose; and (3) a dangerous probability of success." William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 F.2d 1014, 1027 (9th Cir.1981), cert. denied, --- U.S. ----, 103 S.Ct. 57, 74 L.Ed.2d 61 (1982). In establishing the presence of these elements we permit a dangerous probability of success to be inferred from proof of specific intent which, in turn, can be inferred from conduct that forms the basis of a substantial claim of restraint of trade, or conduct that is exclusionary or threatening to competition. Id. at 1029 & n. 11.
42
GBS's attempt at direct proof of probability of success is unavailing because of its failure to establish a relevant market limited to Philips-compatible mlcs. See generally M.A.P. Oil Co. v. Texaco Inc., 691 F.2d 1303, 1308-10 (9th Cir.1982) (explaining role of relevant market in attempt to monopolize claims). Philips' diminishing share of the market for small business computers cannot support a finding of probable success in that market. Nor can we infer specific intent because, as the district court found, GBS has failed to show anticompetitive conduct sufficient to survive the grant of summary judgment. It is true, as GBS argues, that direct evidence of specific intent may lessen the burden of the conduct requirement if it clarifies the purpose of otherwise ambiguous conduct. See Inglis, 668 F.2d at 1030. However, here GBS has made no showing of predatory conduct whatsoever. Philips competed ineffectually in the market for small business computers and their accessory products. To hold that such conduct supports a charge of attempted monopolization is to suggest that the antitrust law punishes losers in the competitive struggle rather than protecting them from the avarice of winners. The district court properly rejected this claim.
C. Price Fixing
43
GBS's price fixing claim rests on the complex arrangement Philips created to market its products in the United States. JK and MD manufactured mlcs for the American market under contract with NVP. American suppliers could not deal directly with either manufacturer; NVP designated distributors for the mlcs and renegotiated prices annually with JK and MD. NVP set up a two-tier distribution system for its American market. Mlcs were first funneled through PBSI, its wholly owned subsidiary. In some areas PBSI then sold these mlcs directly to retail customers; in other markets designated agents like GBS distributed the mlcs.
44
GBS, in support of its price fixing claim, points out that between 1975 and 1978 the prices charged for JK and MD mlcs were nearly identical. Although GBS is ambiguous on this point, it apparently is complaining about the prices JK and MD negotiated with NVP, not the prices charged by PBSI. GBS relies on the rather vague testimony of a GBS officer who fails to differentiate between sales by PBSI and sales by JK and MD. In addition, it relies on a series of letters from NVP to PBSI which detail NVP's price agreements with JK and MD. GBS argues that negotiations with NVP provided the opportunity for JK and MD to set prices.
45
We hold that GBS, as an indirect purchaser, lacks standing to complain about prices JK and MD charged PBSI. See Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977). The cases cited by GBS, United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940), and Ambook Enterprises v. Time Inc., 612 F.2d 604 (2d Cir.1979), cert. dismissed, 448 U.S. 914, 101 S.Ct. 35, 65 L.Ed.2d 1179 (1980), do not involve similar indirect purchasing arrangements. Even were GBS to have standing our result very likely would not be different because we find no evidence of any illicit agreement between JK and MD. Price parallelism alone generally will not establish price fixing. Other circumstantial evidence is required. Id. at 615; see, e.g., Zoslaw v. MCA Distributing Corp., 693 F.2d 870, 885 (9th Cir.1982). No such evidence has been shown to exist here. Thus, summary judgment on the price fixing claim was proper.
D. Market Allocation
46
GBS's per se attack on Philips' agreement to divide purchases evenly between JK and MD is also without merit. GBS asserts that this constitutes an illegal horizontal restraint. Numerous cases have condemned such restraints. In United States v. Topco Association, 405 U.S. 596, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972), for instance, potential competitors in the grocery industry combined to allocate markets and compete with larger retailers. Timken Roller Bearing Co. v. United States, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951), involved a horizontal restraint among manufacturers of antifriction bearings. Here JK and MD did not combine or agree to allocate markets. The Third Circuit in American Motor Inns, Inc. v. Holiday Inns, Inc., 521 F.2d 1230 (3d Cir.1975), it is true, did treat a vertical allocative scheme as a horizontal agreement where Holiday Inns, in response to pressure from its franchisees, distributed new franchises in a manner that achieved the same ends as would have a horizontal agreement between the franchisees. Pitchford v. PEPI, Inc., 531 F.2d 92 (3d Cir.1975), cert. denied, 426 U.S. 935, 96 S.Ct. 2649, 49 L.Ed.2d 387 (1976), also cited by GBS, presented an analogous arrangement between an electronics manufacturer and its dealers. No such joint pressure was exerted here and Philips was responding to none such in dividing purchases between JK and MD. In fact, it was responding to the unilateral pressure of JK which GBS was assisting to some extent.
47
A direct challenge to PBSI's contract as an illegal vertical restraint would be no more successful. In Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977), the Supreme Court perhaps left open the possibility that per se standards would apply to vertical restraints where a plaintiff could show "pernicious economic effect or lack of any redeeming virtue." First Beverages, Inc. v. Royal Crown Cola Co., 612 F.2d 1164, 1170 (9th Cir.), cert. denied, 447 U.S. 924, 100 S.Ct. 3016, 65 L.Ed.2d 1116 (1980). GBS, however, has not attempted to provide the factual evidence necessary to meet its burden even under the rule of reason. See Continental T.V., Inc. v. G.T.E. Sylvania Inc., 694 F.2d 1132, 1136 (9th Cir.1982); see also Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 243, 62 L.Ed. 683 (1918); cf. First Beverages, 612 F.2d at 1168 n. 3 (reproducing district court's jury instruction, drawn from Chicago Board of Trade, on reasonableness of territorial restraint). Accordingly, its market allocation claim must fail.
E. Tying
48
GBS rests its tying claim on an alleged attempt by Philips to expand sales of JK and MD mlcs, the tied product, by denying service and warranty protection, the tying service, to computer owners who did not use these mlcs. The elements necessary to establish such a claim are: "(1) Two distinct products or services are in fact tied such that the products are offered as a single package; (2) The defendant has sufficient economic power in the tying market to impose restrictions in the tied product market; (3) The amount of commerce in the tied product is not insubstantial." Portland Retail Druggists Association v. Kaiser Foundation Health Plan, 662 F.2d 641, 648 (9th Cir.1981); Moore v. Jas. H. Matthews & Co., 550 F.2d 1207, 1212 (9th Cir.1977). GBS has not presented facts from which the second element could be inferred. To possess substantial power in the tying market, a firm must be able to "raise prices or to require purchasers to accept burdensome terms that could not be enacted in a completely competitive market." U.S. Steel Corp. v. Fortner Enterprises, 429 U.S. 610, 620, 97 S.Ct. 861, 867, 51 L.Ed.2d 80 (1977) (Fortner II ). Under the facts before the district court, Philips possessed no such power with respect to the tying service. To have attempted to impose significant pressure to buy JK and MD mlcs by use of the tying service only would have hastened the date on which Philips surrendered to its competitors in the small business computer market.
49
It is true that Philips mlcs had a higher price than other similar cards. This could be under proper circumstances the result of being tied. See Fortner Enterprises v. U.S. Steel Corp., 394 U.S. 495, 504-05, 89 S.Ct. 1252, 1259, 22 L.Ed.2d 495 (1969) (Fortner I ); Moore, 550 F.2d at 1216 & n. 8. That, however, is not the case here. The higher prices of Philips mlcs were incident to their greater reliability. Their prices did not depend on Philips' involvement in the tying service. The cost of Philips-compatible mlcs did not drop after Philips withdrew from the market for small business computers in 1978 and sold its interest in the tied product to a third party. GBS itself sought to sell more expensive mlcs from another manufacturer in this period. The Philips mlc was hardly a product whose prices were inflated by the vigor of its producer's strength in a tying market. The tying claim also fails.
F. Refusal to Deal
50
GBS, in pressing its section 1 claims, argues that the Philips companies' exclusive dealing arrangements with JK and MD constituted violations under either a per se or rule of reason analysis.
51
To establish a per se violation of section 1, a plaintiff generally must show that the defendant engaged in concerted anticompetitive activity with others at the same level of market organization. Exclusive dealerships usually escape the proscriptions of section 1 because, as already indicated, they establish a vertical relationship among firms that do not compete with each other. See A.H. Cox & Co. v. Star Machinery Co., 653 F.2d 1302, 1306 (9th Cir.1981); Gough v. Rossmoor Corp., 585 F.2d 381, 387 (9th Cir.1978), cert. denied, 440 U.S. 936, 99 S.Ct. 1280, 59 L.Ed.2d 494 (1979).
52
Restraints solicited by a distributor but implemented by a manufacturer are not automatically per se violations. A.H. Cox, 653 F.2d at 1306. Restraints of this type come within the per se rule only if they "clearly had, or [were] likely to have, a pernicious effect on competition and lacked any redeeming virtue." Ron Tonkin Gran Turismo, Inc. v. Fiat Distributors, 637 F.2d 1376, 1386-87 (9th Cir.), cert. denied, 454 U.S. 831, 102 S.Ct. 128, 70 L.Ed.2d 109 (1981); see, e.g., Betaseed, Inc. v. U & I Inc., 681 F.2d 1201, 1235 (9th Cir.1982).
53
GBS invokes Ron Tonkin's per se standard as applied in Cernuto, Inc. v. United Cabinet Corp., 595 F.2d 164 (3d Cir.1979). In Cernuto, the Third Circuit implied an anticompetitive effect to reverse a grant of summary judgment where a distributor allegedly had convinced its supplier, a cabinet manufacturer, to cease dealing with a competing distributor. Id. at 170. GBS appears to read Cernuto to hold that all a plaintiff need show to establish a per se violation is that a purchaser requested a common supplier to cut off a price-cutting competitor and that the request was honored. The Third Circuit, however, placed equal reliance on evidence of the defendants' concerted activity to restrain price movement. See id. at 168-70; Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 115 (3d Cir.1980), cert. denied, 451 U.S. 911, 101 S.Ct. 1981, 68 L.Ed.2d 300 (1981). This GBS has not shown.
54
GBS would use Philips' allegedly premium prices to prove its price maintenance motivation. We have already rejected GBS's claim that it demonstrated an artificial price premium. According to GBS's own testimony, the Philips companies had high overhead costs which explain, at least partially, their high prices. Moreover, Philips mlcs were more reliable than the competition's; this explains the market's acceptance of higher prices. GBS's only direct evidence of price motivation is the testimony of a Philips employee that Philips "was aware" of GBS's lower prices during the period it bought mlcs directly from JK. The employee denied any concern about those prices apart from his general concern about GBS's interference with the Philips companies' exclusive relations with JK and MD. Equally damaging to GBS's Cernuto theory is the absence of evidence that Philips communicated its price concerns to JK or MD. Ron Tonkin and Cernuto each revealed much stronger evidence of complicity between manufacturer and distributor than exists in this case.
55
GBS claims that even if the Philips companies' exclusive dealerships were not invalid under Cernuto, the use of pressure against JK and MD to maintain the exclusive distributorship constituted an unreasonable restraint of trade. For support GBS cites a PBSI employee's testimony that JK was threatening its business relations with Philips by dealing with GBS. The "threat" here, however, is little different than the one in Determined Productions, Inc. v. R. Dakin & Co., 514 F.Supp. 645 (N.D.Cal.1979), aff'd mem., 649 F.2d 866 (9th Cir.1981). In Determined Productions, the defendant contracted with a third party to produce stuffed toy animals, which the defendant, in turn, supplied to the plaintiff. The third party was the largest but by no means the only such manufacturer in Korea. As in this case, the plaintiff tried to sidestep the middle man and deal directly with the Korean toy producer. The defendant responded with a threat to break relations with the Korean toy producer unless it returned to an exclusive dealing relationship. The Korean acquiesced. The district court, having first rejected the plaintiff's per se claim, discarded the rule of reason challenge because of the plaintiff's failure to give evidence of a relevant market and because of the ready availability of alternative sources of supply. Id. at 648.
56
GBS attempts to distinguish Determined Productions on the ground that GBS did not have alternative sources of mlcs. This is not so. Alternatives did exist. It is true that substitute mlcs might not have been available on the same terms from other suppliers; this, however, does not indicate economic injustice. As the court noted in Determined Productions, a defendant, having succeeded in legitimately controlling "the best, most efficient and cheapest source of supply in Korea," does not have to share "the fruits of its superior acumen and industry." Id. In trying to secure direct access to mlcs jointly developed by Philips and JK, GBS was attempting to accomplish just that.
57
Finally, GBS condemns the refusal to deal as a section 2 violation. Our rejection of GBS's notions of the relevant market foreshadows our response. The relevant market was small business computers. The Philips mlcs were not such unique resources as the railroad terminals in United States v. Terminal Railroad Association, 224 U.S. 383, 32 S.Ct. 507, 56 L.Ed. 810 (1912), or the power grid in Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973). Nor does the evidence support allegations that Philips used its worldwide market position to coerce JK to refuse to deal with GBS. The only passage GBS cites when referring to Philips' pressure on JK deals explicitly with the United States market. In sum, GBS's section 2 claim is no more supported than its various claims under section 1. We affirm the district court's decision.
V.
THE ABUSE OF DISCOVERY CLAIM
58
GBS moved to have the deposition testimony of two witnesses, Mr. Weniger and Mr. Ockenfels, suppressed unless they were produced for cross-examination along with a third witness, Mr. Sievers, who was never deposed. The district court refused. Our inquiry on appeal is limited to examining the district court's ruling for an abuse of discretion. See generally Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n. 24 (9th Cir.1977) (dictum) (decision to grant discovery to determine jurisdiction lies in trial court's discretion); e.g., Data Disc, Inc. v. Systems Technology Association, 557 F.2d 1280, 1285 n. 1 (9th Cir.1977); cf. Liew v. Breen, 640 F.2d 1046, 1049 (9th Cir.1981) (same standard to determine relevancy in discovery).
59
As to Mr. Weniger, the court found that GBS terminated discovery and therefore could not complain. This finding is clearly supported by the record and did not amount to an abuse of discretion.
60
GBS's claim with respect to the Ockenfels' deposition is stronger. Again, however, the district court's refusal to suppress did not amount to an abuse of discretion. The magistrate recommended denial of the plaintiff's suppression request based upon the following facts: (1) GBS had an equal opportunity to cross-examine the witness and filled more transcript space with its deposition than did Philips' counsel; (2) GBS went beyond the scope of direct examination on cross-examination; and (3) GBS improperly delved into areas that may have involved trade secrets and were certain to cause objections. The district court's acceptance of his recommendation was not an abuse of discretion.VI.
THE COUNTER-CLAIMS
A. Exclusionary Conspiracy
61
Philips asserts that GBS and Shasta joined co-conspirators Paradata (a trade organization of Philips distributors) and its lawyer, and Xerox Corporation, its subsidiary Diablo Systems, and their officers, to eliminate Philips from the domestic market. Our review of the record reveals no significant probative evidence to support Philips' charge of conspiracy.
62
Xerox and Diablo Systems are guilty only of anticipating a shift in demand toward more efficient computers. These companies did not solicit GBS to drop the Philips line or otherwise restrict its existing relationship with Philips. Nor do we find them guilty of any other conspiratorial acts that would violate section 1. The crux of the claim against Paradata and its lawyer is that they sought to prevent Philips from marketing the P330 in Northern California without using GBS, its exclusive distributor in that area. This attempt by Philips dealers to maintain their distributing network indicates a desire to keep Philips in the American market, not to drive it out. They sought to exclude other distributors, not Philips.
63
The claim against GBS and Shasta is not as easily resolved. The district court's finding that they operated as a single business entity, and thus could not conspire in violation of the antitrust laws, concerns a frequently litigated issue. A section 1 violation requires, at the outset, concerted activity. Harvey v. Fearless Farris Wholesale, Inc., 589 F.2d 451 (9th Cir.1979). This requirement precludes liability for coordinated activity among multiple corporations operated as a single entity. Thomsen v. Western Electric Co., 680 F.2d 1263, 1266 (9th Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 348, 74 L.Ed.2d 387 (1982); William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 F.2d 1014, 1055 (9th Cir.1981), cert. denied, --- U.S. ----, 103 S.Ct. 57, 74 L.Ed.2d 61 (1982); Murray v. Toyota Motor Distributors, Inc., 664 F.2d 1377, 1378-79 (9th Cir.), cert. denied, --- U.S. ----, 102 S.Ct. 2905, 73 L.Ed.2d 1314 (1982); Las Vegas Sun, Inc. v. Summa Corp., 610 F.2d 614, 617 (9th Cir.1979), cert. denied, 447 U.S. 906, 100 S.Ct. 2988, 64 L.Ed.2d 855 (1980); Harvey, 589 F.2d at 455. The single entity test is easily satisfied when corporate policies are set by one individual or by a parent corporation. See, e.g., Las Vegas Sun, 610 F.2d at 618; Harvey, 589 F.2d at 454, 457. At the other extreme, jointly owned corporations that compete in the marketplace, hold themselves out to the public as competing organizations, and set policy independently are as capable of conspiring to restrain trade as unrelated corporations. See Murphy Tugboat Co. v. Shipowners & Merchants Towboat Co., 467 F.Supp. 841, 859 (N.D.Cal.1979), aff'd, 658 F.2d 1256 (9th Cir.1981), cert. denied, 455 U.S. 1018, 102 S.Ct. 1713, 72 L.Ed.2d 135 (1982).
64
The relationship between GBS and Shasta does not fall clearly at either of these extremes. Finch and Parise, GBS's principal officers and its sole directors, held 90% of Shasta's stock and two out of three positions on its board of directors. Shasta and GBS shared offices and personnel. Finch and Parise participated, as directors, in general policy formulation for Shasta. On the other hand, they left much of the day-to-day operation to Shasta's president, Joseph Walsh. Philips claims that Finch and Parise "swore they had little awareness of Walsh's management decisions." The cited portions of the record indicate that neither was much involved with policy decisions during the period in which the alleged conspiracy was to have been formed. Walsh was apparently given general control over Shasta's sales policies. In sum, the degree of control exercised by GBS is unclear.
65
On this record, the district court should not have decided the legal status of GBS's relationship with Shasta. We have found the single entity issue unsuited for resolution as a matter of law when faced with similar factual uncertainty. See Murray, 664 F.2d at 1379; Inglis, 668 F.2d at 1055; Hunt-Wesson Foods, Inc. v. Ragu Foods, Inc., 627 F.2d 919, 927 n. 5 (9th Cir.1980), cert. denied, 450 U.S. 921, 101 S.Ct. 1369, 67 L.Ed.2d 348 (1981); compare Thomsen, 680 F.2d at 1266-67. GBS has raised a genuine issue of material fact that cannot be resolved conclusively on the basis of the evidence before us.
66
We need not reverse the district court's disposal of Philips' section 1 claim, however. On so clear a record, we are free to affirm the district court on any ground supported by the evidence before us. Turf Paradise, Inc. v. Arizona Downs, 670 F.2d 813, 821 (9th Cir.), cert. denied, --- U.S. ----, 102 S.Ct. 2308, 73 L.Ed.2d 1308 (1982); United States v. County of Humboldt, 628 F.2d 549, 551 (9th Cir.1980). Even if GBS and Shasta operated independently and could be guilty of conspiring, Philips has not pointed us to any probative evidence of either specific intent or conduct to eliminate it from the small business computer market.
67
Philips claims that GBS and Shasta "formulated and undertook a plan to take Philips' marketing position in the United States and eliminate Philips as a competitor in the small business competitor [sic] market." The evidence, even when interpreted most favorably to Philips, does not support this claim. Philips lost the American market; it was not taken from it. GBS, far from seeking to eliminate Philips, urged Philips early on to add the Diablo to its product line. Only after Philips declined did GBS set up its marketing arrangement with Shasta. Philips points to GBS's plan to form "NUCO systems" to market Diablo's Ranger computer. This plan, however, which GBS claims was never pursued, did not itself drive Philips from the American market. Although the Diablo was clearly more attractive than the old Philips computers, GBS continued to maintain the infrastructure of its Philips distributorship. There is no evidence that either GBS or Shasta ever sabotaged Philips' sales. GBS sold 67 Philips computers in 1976, the year it began marketing the Diablo, up from 49 the year before. GBS's later declining sales of Philips computers was part of a nationwide decline from 832 computers in 1976 to 250 in 1978. In this same period the total annual sales of small business computers jumped from 27,000 to 38,000. GBS's poor sales were the result of an impersonal shift in demand that Philips did not anticipate, or at least did not respond to effectively. Philips cannot retrieve its lost market share by blaming GBS, which was merely the messenger with the bad news.
68
In view of these conclusions, the district court could properly have granted summary judgment against Philips had it reached beyond the intracorporate defense. We therefore affirm the district court's disposition of Philips' section 1 claim.
B. Attempted Monopoly
69
The Philips companies allege that GBS and Shasta attempted to monopolize Philips' American trade.3 We find that this claim easily fails, for we agree with the district court that Philips provides no credible evidence of either specific intent to monopolize or predatory conduct.
70
C. Breach of Contract and Tortious Interference
71
The district court rejected the breach of contract claim for want of evidence that GBS, contrary to the terms of the contract, marketed "directly competitive" equipment.4 Philips claims that disk/CRT and mlc computers were "directly competitive" from statements by GBS officers that these computers, although vastly different in performance and cost, fulfilled the "same basic tasks" and competed for the same "profile" of customers. Philips attempts to buttress this claim by citing testimony that some of its customers did turn to disk/CRT computers such as the Diablo.
72
This evidence, while showing that disk/CRT computers replaced some mlc computers, does not show "direct competition" within the meaning of the contract. As Louis Fuchs, Philips' manager for new products when the Diablo came out, testified, mlc computers were no longer competitive with newer CRT models. The computer industry has experienced the rapid obsolescence characteristic of high technology markets. In such technologically sensitive markets, where every advance brings a major increase in productivity or decrease in price, old products do not remain in "fierce, direct competition" with the new, as Philips claims. The group of customers may remain the same, but their demand shifts from one product group to another as technology redefines their needs and expectations. "Direct competition," within the meaning of the contract, appropriately should embrace only computers of approximately the same technological generation.
73
Philips mentions competition between old and new products in the markets for flexible wrappings, United States v. E.I. du Pont & Co., 351 U.S. 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956); energy, United States v. General Dynamics Corp., 415 U.S. 486, 94 S.Ct. 1186, 39 L.Ed.2d 530 (1974); fire protection, United States v. Grinnell Corp., 384 U.S. 563, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966); and automobiles, Sherman v. British Leyland Motors, Ltd., 601 F.2d 429 (9th Cir.1979); but in none of these markets have new products vanquished the old as completely as in the functionally sensitive market for small business computers. In this market yesterday's technology is simply not competitive. Philips' departure from the American market demonstrates this even with respect to only marginally obsolescent computer products.
74
Philips relies on certain portions of the record to prove that GBS breached its contractual duty to focus its "primary marketing effort" on the P330 when it became available. Philips claims that its computer was "operational and ready for market" in mid-1977. The cited portions of the record do not support the claim, however. These portions refer only to dates in 1978 and give no detailed information about what "operational" means. Philips does not answer GBS's claim that workable software and peripheral equipment, which are crucial to successful marketing efforts, were unavailable in 1978. Indeed its evidence boils down to an assertion that a P330 computer demonstrated at a computer show in March, 1978, the same year it abandoned the American market, was a production rather than prototype model.
75
Be that as it may, GBS did not shirk its duty to Philips. To the contrary, GBS rejected PBSI's offer to release it from its agency agreement and expressed continued interest in the P330. Philips, on the other hand, withdrew from the American market rather than pressing forward to develop a fully operational P330. Thus, we need not decide whether such a P330 would have been in direct competition with the Diablo.
76
Philips' claims of tortious interference with its contracts with GBS and other dealers have no substance. Shasta did not tortiously interfere with Philips' contracts with GBS; nor did GBS and Shasta interfere with other dealers' contracts. Philips refers us to no breached contracts, no direct evidence of intent on the part of GBS or Shasta to induce a breach, and no damages connected to any contracts they had with Philips' dealers.
77
Similarly, inasmuch as customers were offered a new and better computer, no claim of tortious interference with Philips' customer relations is made out. Shasta sold the Diablo to a wide range of customers to whom Philips no longer offered competitive equipment. Neither the deposition of Shasta salesperson Shirley nor the "NUCO" document shows that the Diablo computer was particularly targeted at Philips' customers, as Philips asserts. Shasta sought to sell the Diablo to whomever it could.
78
Finally, with respect to Philips' relationship with JK and MD, we find no evidence that GBS, whose direct dealing with JK in 1976 was immediately terminated by PBSI, sought improperly to tie up the mlc market or to use its distribution of mlcs to identify Philips' customers. In short, Philips has adduced no evidence to support its many claims of tortious interference.
D. Abuse of Process
79
Philips claims that GBS brought its suit hoping to procure trade secrets and then to manufacture mlcs itself. There is no evidence that GBS was interested in manufacturing mlcs after the period in 1976 when it was able to obtain them from JK. The cited portions of the record, contrary to Philips' assertions, reveal that GBS later lost interest in manufacturing mlcs. No evidence supports the charge that GBS improperly misused trade secrets, or had an improper motive at the time this suit was filed. Philips' allegations rest on pure speculation.
VII.
CONCLUSION
80
There is no support for any of the claims asserted in this case. The judgment of the district court is affirmed.
81
AFFIRMED.
1
The Philips designee until mid-1975 was MLC, Inc., which operated as a subsidiary corporation. PBSI took over as designated distributor in 1975 after complaints about MLC's effectiveness in handling mlc distribution. MLC is not involved in this litigation
2
Fontana Aviation, Inc. v. Cessna Aircraft Co., 460 F.Supp. 1151 (N.D.Ill.1978), rev'd on other grounds, 617 F.2d 478 (7th Cir.1980), although cited heavily by GBS, is not good law in this circuit to the extent that it disregards the role of supply substitutability in the product market definition, see id. at 1156. Whether real or only potential, reasonable interchangeability of supply is significant because the existence of possible competitors constrains prices even where there is no direct competition. See ILC Peripherals, 458 F.Supp. at 427-29. Fontana 's identification of a market for Cessna avionics seems internally inconsistent as well. The court noted that customers bought airplanes without paying any attention to avionics. Had the court adhered to its own admonition that real-world consumer conduct should dictate the product market definition, 460 F.Supp. at 1157 n. 20, it would have been forced to conclude that the relevant market was for aircraft. Fontana 's strategy in approaching the avionic market by buying unequipped planes and then selling packaged planes with avionics in competition with Cessna acknowledged the inseparability of the two markets
GBS also criticizes the district court's reliance on Bushie v. Stenocord Corp., 460 F.2d 116 (9th Cir.1972), and Spectrofuge Corp. v. Beckman Instruments, Inc., 575 F.2d 256 (5th Cir.1978), cert. denied, 440 U.S. 939, 99 S.Ct. 1289, 59 L.Ed.2d 499 (1979). We find its criticism marred by its failure to distinguish existing and potential competition, and its unwillingness to follow the court in ILC Peripherals and impute proper significance to the latter.
3
Although the counterclaim also appears to state a claim of monopolization, Philips concedes in its reply brief that it raised only an attempt claim. Were Philips to raise a straight monopolization claim, it could be disposed of quickly. Our rejection of GBS's market definition would be equally fatal to any counterclaim predicated on Philips mlcs as a relevant market. GBS had no significant power in other markets. It played no significant role in the general mlc market. Charges of monopoly in the small business computer market would be equally insupportable, given GBS's de minimis portion of the growing and increasingly competitive market already shared, as Philips admits, by nearly seventy firms. There is no evidence of its power in this market, as required by United States v. Grinnell Corp., 384 U.S. 563, 570, 86 S.Ct. 1698, 1703, 16 L.Ed.2d 778 (1966)
4
The court also noted that the withdrawal of the Philips computer from the domestic market motivated GBS's defection. Philips correctly urges that the district court erred if it believed Philips withdrew before GBS agreed to market the Diablo. GBS incorporated Shasta in 1976, two years before Philips pulled out of its American computer operations. The district court may have been referring to Philips' effective withdrawal from the market by its failure to provide an operational CRT computer in time to compete with the Diablo, not to its final departure in 1978. In any event, Philips' failure to provide substantial evidence that its computers were "directly competitive" with the Diablo makes the district court's additional reliance on the timing of Philips' retreat harmless error at worst. Thus, although we agree that the court's second finding may well be either misleading or incorrect, we need only address the first finding, as it is dispositive | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/565416/ | 940 F.2d 649
Walshv.Goldman, Sachs & Co.
NO. 91-7032
United States Court of Appeals,Second Circuit.
JUN 24, 1991
1
Appeal From: S.D.N.Y.
2
VACATED AND REMANDED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1212746/ | 231 Ga. 164 (1973)
200 S.E.2d 759
LORD
v.
LORD.
28126.
Supreme Court of Georgia.
Submitted July 27, 1973.
Decided September 5, 1973.
Rehearing Denied October 4, 1973.
Glyndon C. Pruitt, for appellant.
Joseph E. Cheeley, for appellee.
UNDERCOFLER, Justice.
Dick Lord was held in contempt of court for failure to pay alimony and child support. The appeal is from this judgment. Held:
1. The appellant was ordered by the divorce decree to pay as alimony and child support the sum of $40 per week. He contends that since his child is now of the age of majority he should only be required to pay $20 per week as alimony. There is no merit in this contention. In Adams v. Adams, 225 Ga. 375 (169 SE2d 160) this court said: "Such a decree `cannot be prorated among the wife and children so as to separate the amount awarded to the wife and to the children,' and it does not authorize the pro rata reduction in the amount to be paid to the wife when one of the children marries, becomes self-supporting, or reaches the age of majority. Blalock v. Blalock, 214 Ga. 586 (4) (105 SE2d 721)."
2. The court properly found the appellant in contempt for wilfully failing to make payments on the alimony award.
Judgment affirmed. All the Justices concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2247837/ | 43 Cal.App.4th 311 (1996)
50 Cal. Rptr.2d 332
STANLEY KALMANOVITZ et al., Plaintiffs and Respondents,
v.
WILLIAM BITTING, as Temporary Special Administrator, etc., et al., Defendants and Appellants. RONALD WEIBELT, Plaintiff and Respondent,
v.
WILLIAM BITTING, as Temporary Special Administrator, etc., et al., Defendants and Appellants.
Docket No. A068503.
Court of Appeals of California, First District, Division Three.
February 6, 1996.
*312 COUNSEL
Hill, Farrer & Burrill, Dean E. Dennis and Thomas F. Reed for Defendants and Appellants.
Daniel E. Lungren, Attorney General, and Yeoryios C. Apallas, Deputy Attorney General, as Amici Curiae on behalf of Defendants and Appellants.
Driver, Driver & Hunt and Thomas M. Hunt, Jr., for Plaintiffs and Respondents.
*313 OPINION
CORRIGAN, J.
William Bitting, acting as temporary special administrator and proposed executor of the estate of Lydia Kalmanovitz, appeals from the trial court's orders granting summary judgment for plaintiffs (hereafter claimants) as third party beneficiaries of a will agreement between Lydia Kalmanovitz and her predeceased husband. Bitting contends: (1) the trial court misinterpreted the meaning of the will agreement, and (2) claimants may not enforce the will agreement because they were not intended third party beneficiaries of that agreement. Our resolution of the second claim obviates the need to consider the first. We reverse and remand.
Factual and Procedural Background
Lydia and Paul Kalmanovitz were the sole owners of S & P Company. In October 1986, when they asked their attorney to prepare their wills, their combined assets were worth approximately $480 million. They had no children and wished to leave everything to each other and then to charity upon the death of the survivor. Addressing their concern about estate taxes, their attorney, Bitting, suggested they use a will agreement binding the survivor to leave everything to a charitable foundation. They also discussed specific bequests to several S & P Company officers and three of Lydia's[1] nephews. Paul initially said he did not wish to leave anything to his relatives. There was no discussion of whether the will agreement would have any binding effect on the specific bequests.
On November 14, 1986, Paul and Lydia executed a will agreement and identical wills. While the wills themselves included several specific bequests to individuals and a trust to care for their pets, the will agreement referred only to Paul and Lydia's intention to leave their estate to a charitable trust. None of the claimants, who are three of Paul's relatives and one former employee, was named in either the agreement or the wills.
On December 22, 1986, Paul and Lydia executed identical first codicils to their wills, in each other's presence. These codicils added specific bequests of $100,000 each to claimants Alma, "Karl [sic]" and Stanley Kalmanovitz, three of Paul's relatives,[2] and to claimant Ronald Weibelt, Paul and Lydia's *314 boat captain/chauffeur.[3] There was no discussion regarding changes to the separate will agreement at the time the first codicils were signed. Paul died a month later. Claimants each received their $100,000 bequests under his will.
In December 1987, Lydia executed a second codicil deleting the bequests to Alma, "Karl [sic]," and Stanley Kalmanovitz. In July 1988, she executed a third codicil, deleting the bequest to Weibelt after he left her employment without notice. Lydia later executed additional codicils and a new 1992 will, all leaving the bulk of the estate to charity with a number of bequests to individuals.
After Lydia's death, Alma, Karol, and Stanley Kalmanovitz brought a complaint for breach of the will agreement seeking $100,000 each as third party beneficiaries. A short time later, Weibelt filed a complaint on the same theory. The two actions were consolidated. Summary judgment was granted for claimants on separate motions, and the cases were reconsolidated by stipulation on appeal.[4]
Third Party Beneficiary Issue
(1a) Claimants cannot recover directly under Lydia's will, since she changed it to delete the bequests to them. Claimants instead argue that Lydia's deletion of their bequests violated the previous will agreement between Lydia and Paul. (2a) However, in order to recover as third party beneficiaries of Paul and Lydia's will agreement, claimants must show the agreement was made expressly for their benefit. (Civ. Code, § 1559.) While it is not necessary that a third party be specifically named, the contracting parties must clearly manifest their intent to benefit the third party. (City & County of San Francisco v. Western Air Lines, Inc. (1962) 204 Cal. App.2d 105, 120-121 [22 Cal. Rptr. 216].) "The fact that [a third party] is incidentally named in the contract, or that the contract, if carried out according to its terms, would inure to his benefit, is not sufficient to entitle him to demand its fulfillment. It must appear to have been the intention of the parties to secure to him personally the benefit of its provisions." (Walters v. Calderon (1972) 25 Cal. App.3d 863, 871 [102 Cal. Rptr. 89], italics in original.)
The question is whether claimants were intended, and not merely incidental, beneficiaries of the contract they seek to enforce. In answering, we read the will agreement as a whole in the light of the circumstances under which *315 it was created. The test is whether an intent to benefit claimants appears from the terms of the agreement. (Walters v. Calderon, supra, 25 Cal. App.3d at p. 870.) We make an independent interpretation of the will agreement, since the trial court's construction of this contract was not based on the credibility of conflicting extrinsic evidence. (Milazo v. Gulf Ins. Co. (1990) 224 Cal. App.3d 1528, 1534 [274 Cal. Rptr. 632].)
In other cases where disinherited claimants have invoked their rights as third party beneficiaries of a will agreement, the claimants have been clearly specified beneficiaries of the agreement at the time it was made. (See, e.g., Brewer v. Simpson (1960) 53 Cal.2d 567, 587-588 [2 Cal. Rptr. 609, 349 P.2d 289]; Sonnicksen v. Sonnicksen (1941) 45 Cal. App.2d 46, 52 [113 P.2d 495].) (1b) The will agreement here, however, makes no mention of bequests to any specific individuals. Read as a whole, the will agreement clearly reveals Paul and Lydia's intent to leave their substantial estate to charity and to minimize estate taxes in the process. Paul and Lydia entered into the agreement to assure that the survivor would not depart from this basic plan. The agreement was not intended to benefit any specific individuals, much less claimants, who were not even named as beneficiaries in the original wills executed pursuant to the will agreement.
Having protected their charitable testamentary intentions through the will agreement, Paul and Lydia executed wills comporting with that agreement and leaving the vast bulk of their estate to charity. They did also leave cash bequests to specific individuals in these wills. However, claimants here were not mentioned.
Approximately five weeks later, Paul and Lydia executed identical first codicils, naming claimants for the first time as recipients of $100,000 bequests. Although claimants thus became potential beneficiaries of Paul's and Lydia's wills, they were never intended beneficiaries of the will agreement, which was not amended at the time the first codicils were signed.[5] Indeed, the fact that Paul and Lydia felt free to add the first codicils, making specific bequests to claimants, without any reference to or amendment of the will agreement, confirms our interpretation of that agreement as intended to preserve Paul and Lydia's charitable testamentary intentions and not to *316 create unalterable entitlements in specific individuals.[6] The parties' practical construction of a contract, as shown by their actions, is important evidence of their intent. (See Crestview Cemetery Assn. v. Dieden (1960) 54 Cal.2d 744, 752 [8 Cal. Rptr. 427, 356 P.2d 171]; Hernandez v. Badger Construction Equipment Co. (1994) 28 Cal. App.4th 1791, 1814 [34 Cal. Rptr.2d 732].)
Thus, claimants may not sue to enforce their interpretation of the will agreement, because the agreement was not made for their benefit. (2b) "`"A third party should not be permitted to enforce covenants made not for his benefit, but rather for others. He is not a contracting party; his right to performance is predicated on the contracting parties' intent to benefit him...."' [Citations.]" (Jones v. Aetna Casualty & Surety Co. (1994) 26 Cal. App.4th 1717, 1724 [33 Cal. Rptr.2d 291].)[7]
Disposition
The summary judgments in favor of claimants are reversed. The matter is remanded for further proceedings consistent with the views expressed in this opinion. Costs to appellants.
Chin, P.J., and Parrilli, J., concurred.
Respondents' petition for review by the Supreme Court was denied April 18, 1996. Chin, J., did not participate therein.
NOTES
[1] To assist the reader in distinguishing among the family members, we refer to Mr. and Mrs. Kalmanovitz by their first names.
[2] It was at Lydia's suggestion that Paul agreed to leave something to these relatives, whose names Lydia had found in old letters. An assistant who worked closely with Paul for nine years reported that Paul had repeatedly denied he had any relatives other than Lydia.
[3] Another employee was also included, but she predeceased Lydia.
[4] The Attorney General has filed a brief in support of appellants, based on his statutory responsibility to protect testamentary charitable gifts from legal challenges.
[5] Their status as beneficiaries of Lydia's will was, of course, only temporary, since she later deleted them in her second and third codicils, thus giving rise to this lawsuit. Under the third paragraph of the will agreement, Lydia and Paul promised not to revoke or modify any term of "the Will" which they executed pursuant to the agreement. As noted above, claimants were not mentioned in the wills executed on the same day as the agreement; they were added by a codicil five weeks later. There is no evidence to support claimants' assertion that Lydia could not make changes to subsequent codicils without violating the agreement.
[6] Claimants assert that it makes no difference whether they were to receive the bulk of the estate or only a small portion thereof. While it is true that a third party beneficiary need not be the only or the primary beneficiary in order to recover, he must be an intended beneficiary of the contract in question. Claimants were not intended beneficiaries of the will agreement, as discussed above.
[7] Because we conclude claimants were not intended third party beneficiaries of the will agreement and therefore may not invoke its protection, we need not address the issue of whether Lydia's execution of the second and third codicils to her will was in conflict with that agreement. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/560753/ | 932 F.2d 960
Mayercheck (Joseph A., Ronald W., John E.)v.Stout (Gary E.), Wettick (R. Stanton, Honorable), Kaplen(Lawrence, Honorable), Irwin (Robert), Court ofCommon Pleas of Allegheny County,Pennsylvania Superior Court,Woods (Ellen), Heller (Elly)
NO. 90-3657
United States Court of Appeals,Third Circuit.
APR 23, 1991
Appeal From: W.D.Pa.,
Smith, J.
1
AFFIRMED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1054449/ | IN THE COURT OF CRIMINAL APPEALS OF TENNESSEE
AT JACKSON
Assigned on Briefs March 7, 2006
STATE OF TENNESSEE v. CASSANDRA ROBINSON
Direct Appeal from the Criminal Court for Shelby County
No. 03-08406 W. Mark Ward, Judge
No. W2005-01500-CCA-R3-CD - Filed June 2, 2006
The defendant, Cassandra Robinson, was convicted of conspiracy to commit aggravated robbery,
aggravated robbery, and aggravated assault. The trial court imposed Range I, concurrent sentences
of four years, nine years, and four years, respectively. In this appeal, the defendant asserts that the
evidence was insufficient to support her convictions. The judgments of the trial court are affirmed.
Tenn. R. App. P. 3; Judgments of the Trial Court Affirmed
GARY R. WADE, P.J., delivered the opinion of the court, in which JOSEPH M. TIPTON and NORMA
MCGEE OGLE, JJ., joined.
Garland Ergüden (on appeal) and Timothy J. Albers (at trial), Assistant Public Defenders, for the
appellant, Cassandra Robinson.
Paul G. Summers, Attorney General & Reporter; Brian Clay Johnson, Assistant Attorney General;
William L. Gibbons, District Attorney General; and Stephanie Johnson, Assistant District Attorney
General, for the appellee, State of Tennessee.
OPINION
At 9:00 p.m. on July 10, 2003, two African-American men, one of whom was armed with
a long-barreled handgun, entered a McDonald's Restaurant in Memphis and required the employees
to open the cash registers and the safe. After taking cash, coins, and gift certificates, the two men
fled the scene. Arlisha Walton, the manager on duty, described the armed robber as having a red
complexion and the other as having a dark complexion. She recalled that the man with the red
complexion jumped on top of the counter and ordered the employees to the floor. According to Ms.
Walton, who had opened the safe, the armed robber re-entered the store in an effort to take the
videotape from the security camera. When she informed him that she did not have access to the
videotape, he again fled the restaurant. Later, Ms. Walton was able to identify the dark complected
man from a photographic line-up, but she had no knowledge of whether the defendant had any
participation in the robbery.
Jessica King, also a McDonald's employee, was working the drive-through window when a
"red dude" suddenly appeared, pointed a gun at her, and demanded that she open her register. After
he took the money in her drawer, he went into the manager's office before running from the store and
entering a white truck. According to Ms. King, the defendant had followed the "red dude" into the
parking lot, parked her separate car, and then got into the white truck where she stayed for about
fifteen minutes before the robbery took place. Ms. King recalled that the white truck was parked in
the lane next to the drive-through lane, blocking two other vehicles.
Michael Heard, the manager of the previous shift at the restaurant, also saw the defendant
drive into the parking lot. Heard's girlfriend and children were waiting for him in his car in the lot
when a truck he identified as a silver Dodge Ram entered the lot, temporarily blocking not only his
car but that of the defendant. As he started to leave in his car, Heard noticed two men on the
employee-side of the counter and then saw them accompany Ms. Walton into the office. As the two
men left the restaurant, a man pointed a gun at him and ordered him to get away from the door. As
Heard searched for a police officer, he saw the silver truck at a traffic light, flagged down an officer,
and informed the officer that the truck had been involved in a robbery. According to Heard, the
windows of the truck had a reflective tint, preventing him from seeing inside. He never saw the
defendant talk to anyone in the truck prior to the robbery.
Sherline Felix, Heard's girlfriend, saw the defendant park two spaces from her about three
or four minutes before the Dodge Ram truck arrived at the restaurant. She remembered that the
defendant got out of her car and entered the truck, which was occupied by a man in the driver's seat.
She recalled seeing more than one man near the driver's side of the truck and saw a total of three men
enter the McDonald's, one of whom walked through one door and out another door on the opposite
side of the restaurant. According to Ms. Felix, the truck "sped off" when the robbers entered the
restaurant. When she noticed a man "jump the counter," she tried to call the police on her cell phone
but got no signal. She confirmed that one of the robbers pointed a gun at her and her boyfriend as
he left the restaurant. Ms. Felix was also unable to see inside the truck because of the tint on the
windows and was unaware of whether the driver of the truck was one of the two men she saw rob
the McDonald's.
Memphis Police Department Sergeant Marlin Tabor, who interviewed the defendant the day
after her arrest, learned that the defendant claimed to have met a man named "Larry" at the
McDonald's on the night of the robbery. According to the officer, the defendant claimed that when
she entered "Larry's" truck, two African-American men, who had just left the McDonald's, also got
inside. Sergeant Tabor stated that the defendant told him that the two men admitted robbing the
restaurant and that they divided the money before dropping her off. In her statement to the officer,
the defendant claimed to have known "Larry" for only about two hours prior to the robbery. She
described his truck as a silver or white Dodge Ram with tinted windows, capable of seating four
people. She denied any prior knowledge of the robbery but was aware that the cash, coins, and light
pink and light green envelopes had been stolen from the restaurant. When taken by the defendant
to "Larry's" apartment, the location where she claimed the money from the robbery was divided,
Sergeant Tabor questioned the individual who lived there but lodged no charges.
-2-
Memphis Police Officer Brad Newsom, who assisted in the investigation, described the
defendant as "very anxious to talk" about her role in the incident. In a second statement, the
defendant admitted to him that she participated in the robbery with "Kevin," "John," and "Larry."
The officer determined that "John" was actually Anthony Edwards and that "Kevin" was a Justin or
Jason Brewer.1 According to the officer, when the defendant was asked whose idea it was to rob the
restaurant, she answered, "I talked on it so I talked to Kevin and John about it." She claimed to the
officer that a black .32 caliber handgun was used in the robbery and that their vehicle was a white
Dodge truck with an extended cab. The defendant provided descriptions of "Kevin," "John," and
"Larry" and identified "Kevin" and "John" in photographic line-ups. In her statement, the defendant
recalled that she and "Larry" met "John" and "Kevin" in a Wal-Mart parking lot at approximately
8:15 p.m. and then drove to McDonald's, where she got into "Larry's" truck as "John," wearing a
bandana over his face, and "Kevin" went into the McDonald’s. She stated that "John" and "Kevin"
returned to the truck and, after riding with the defendant and "Larry" to the Wal-Mart, left in a
separate car. The defendant informed the officer that she and "Larry" returned to McDonald's and
discovered that her car was being towed away. She recalled that she was then dropped off at an
apartment complex and never received her share of the robbery proceeds. When asked why she
participated in the robbery, the defendant stated as follows:
I was upset because of my pay. I was supposed to be making $7 an hour, and
she only paid me $6.75, an hour. I was supposed to be making that much because I
had [taken] the manager test, . . . but . . . the store manager[] did not want to give it
to me.
I was in a financial bind because I was not making enough money. I had to
pay child support for my three kids, and that was coming out of my check. We had
talked about it, and she never told me that I was not going to get it. I went to her and
asked her about it, and she told me I wasn't going to get it.
Sergeant Shirley Woods, the lead investigator in this case, transported the defendant from
jail to the police station for an interview. During that time, the defendant claimed that she could not
remember the name of the apartment complex where she and others went after the robbery but could
show Sergeant Woods where it was located. Upon their arrival at the apartments, the defendant
directed Sergeant Woods to a unit occupied by a man named Eric Isom. Isom was taken to the police
station for questioning but was released without being charged with any crime. Mr. Isom’s cousin,
Darron Savage, who was in Birmingham, Alabama, returned to Memphis for an interview when the
defendant identified him as "Larry," the driver of the Dodge truck. He was also released without
being charged in the robbery. According to Sergeant Woods, the defendant was "anxious to talk"
about the robbery and at no point received any leading information from the police about the details.
Sergeant Woods was aware that Sergeant Tabor and another officer had previously interviewed the
defendant. She explained that she conducted a separate interview only because that particular
McDonald's Restaurant had been robbed twice in one week. The officer recalled that when she
confronted the defendant with some evidence that contradicted her statement, the defendant became
1
As the result of the investigation, it was determined that "Larry" was Darron Savage.
-3-
upset and began to implicate "John" and "Kevin" in the robbery. According to the sergeant, the
defendant explained that although she was working as a manager at the McDonald's, she was not
being paid at that level and admitted meeting with "John" and "Kevin" to discuss robbing the
restaurant.
On cross-examination at trial, Sergeant Woods acknowledged that none of the information
the defendant provided during the initial ride from the jail to the police station proved to be accurate.
She testified that the people she identified as "Larry," "John," and "Kevin" were really Darron
Savage, Anthony Edwards, and Justin Brewer, respectively. She confirmed that the driver, Savage,
corroborated portions of the defendant's story and cited as an example her claim that he was with the
defendant in his truck at the time of the robbery. According to the sergeant, no other witness
described either of the robbers as having worn a bandana or any type of disguise. She recalled that
the defendant did not describe either of the men as having a "red" complexion.
Darron Savage, whom the defendant had identified as "Larry," testified as a defense witness
at the trial. He claimed that he met the defendant on the day of the robbery, that he arranged to meet
her at the McDonald's, and that when she arrived, he drove her away in his truck. He described his
truck as a white and gray Dodge Ram with tinted windows and he claimed that no one else was in
his truck. Savage denied any involvement in the robbery and contended that the defendant was with
him for at least a couple of hours. He denied discussing the robbery and denied that there were
robbery proceeds taken to his cousin's apartment. He also claimed that he did not receive any money
from a robbery. Savage recalled that he and the defendant did consume alcohol together and that she
later performed oral sex for twenty dollars. He testified that they returned to McDonald's, saw the
police in the lot, and then saw her car being towed. According to Savage, the defendant informed
him that her car was being repossessed and he then dropped her off at an apartment complex.
Savage, who spent seventy-two hours in jail while being investigated for the robbery, believed that
the defendant had something to do with the robbery because she had lied to the police about his
involvement. He stated that there was "something spooky about that night." Savage inferred that
the McDonald's may have already been robbed by the time he arrived at the restaurant on the first
occasion because there were a lot of people outside.
The defendant claimed that she met Savage on the day of the robbery, seeing him at a traffic
light and exchanging telephone numbers. She testified that she parked in the McDonald's parking
lot and that Savage drove her to his cousin's house where they drank alcohol for an hour or two. She
stated that they drove to a park, where she performed oral sex on him, before returning to the
McDonald's. According to the defendant, they saw that her car was being towed and then proceeded
to an apartment complex, where she got out of the truck. She claimed a man named Bolden then
drove her to her residence, where she was arrested. The defendant contended that before she gave
the taped statement, she told the officers three or four times that she was not involved in the robbery.
She testified that "John" and "Kevin" were not real people, and that she "just made . . . up" what she
told the police. She claimed that she lied when she informed them that four men were involved in
the robbery and that different colored envelopes were taken during the robbery. She explained that
she was scared, wanted to go home, and thought that if she just made up a story, they would release
-4-
her: "[W]hen I made up the tale to tell them, that's when they really seem[ed] like they were listening
when I started just making up stuff, telling them. That's when they seem[ed] like they really were
listening to me."
The defendant further testified that in her statement to Sergeant Woods, she confessed to
participating in the robbery only because the sergeant had promised to let her go home if she
admitted her involvement. She claimed that Sergeant Woods had said, "You got to make it look
good before we can really just actually let you go home so you got to say you was involved . . . so
we can let you go." She explained that Sergeant Newsom "threw a napkin and nodded at me and
said, like, pick him, you know" when she saw "John" in the photographic line-up. The defendant
contended that Sergeant Woods suggested that she admit that a black .32 caliber handgun was used
in the robbery and that money was taken during the robbery. She admitted to saying that Savage's
truck was the one used in the robbery but insisted that he was not actually involved in the crime. She
also claimed that she lied, at Sergeant Woods' direction, when she described "John" as wearing a
bandana over his face during the robbery. She contended that any admissions she made as
implicating her in the robbery were false. She basically insisted that because the officers were not
listening to her, she "just made up something to tell them. I just told them what they wanted to hear."
The defendant, for the most part, attributed to Sergeant Woods the information she had provided in
her statement.
In this appeal, the defendant asserts that the evidence was insufficient to support the
convictions for conspiracy to commit aggravated robbery, aggravated robbery, and aggravated
assault. She contends that because her convictions are based "primarily" upon her confession to
police and because the remainder of the evidence was "quite inconsistent," the evidence was
insufficient to support the convictions.
On appeal, of course, the state is entitled to the strongest legitimate view of the evidence and
all reasonable inferences which might be drawn therefrom. State v. Cabbage, 571 S.W.2d 832, 835
(Tenn. 1978). The credibility of the witnesses, the weight to be given their testimony, and the
reconciliation of conflicts in the proof are matters entrusted to the jury as the trier of fact. Byrge v.
State, 575 S.W.2d 292, 295 (Tenn. Crim. App. 1978). When the sufficiency of the evidence is
challenged, the relevant question is whether, after reviewing the evidence in the light most favorable
to the state, any rational trier of fact could have found the essential elements of the crime beyond a
reasonable doubt. Tenn. R. App. P. 13(e); State v. Williams, 657 S.W.2d 405, 410 (Tenn. 1983).
Because a verdict of guilt against a defendant removes the presumption of innocence and raises a
presumption of guilt, the convicted criminal defendant bears the burden of showing that the evidence
was legally insufficient to sustain a guilty verdict. State v. Evans, 838 S.W.2d 185, 191 (Tenn.
1992).
The inchoate offense of conspiracy is defined in Tennessee Code Annotated section
39-12-103 as follows:
-5-
(a) The offense of conspiracy is committed if two (2) or more people, each
having the culpable mental state required for the offense which is the object of the
conspiracy and each acting for the purpose of promoting or facilitating commission
of an offense, agree that one (1) or more of them will engage in conduct which
constitutes such offense.
Tenn. Code Ann. § 39-12-103(a) (2003).
To obtain a conviction for aggravated robbery, the state must prove that the defendant
committed a robbery "with a deadly weapon or by display of any article used or fashioned to lead
the victim to reasonably believe it to be a deadly weapon." Tenn. Code Ann. § 39-13-402(a)(1)
(2003). Robbery is defined as "the intentional or knowing theft of property from the person of
another by violence or putting the person in fear." Tenn. Code Ann. § 39-13-401(a) (2003). One
commits an aggravated assault by intentionally or knowingly causing another reasonable fear of
imminent bodily injury by the use or display of a deadly weapon. Tenn. Code Ann. §
39-13-102(a)(1)(B) (2003).
The defendant was convicted of aggravated robbery and aggravated assault under a theory
of criminal responsibility. In State v. Maxey, 898 S.W.2d 756, 757 (Tenn. Crim. App. 1994), this
court held that the statute attaching criminal liability for the conduct of another requires the culpable
mental state of intent. Knowing, reckless, and negligent mental states are insufficient. Id. For the
evidence to be sufficient to sustain a conviction under the criminal responsibility for the conduct of
another statute, there must be proof that the defendant intended, as defined in Tennessee Code
Annotated section 39-11-302(a), to promote or assist the commission of the offense, or to benefit
in the proceeds or results of the offense. Tenn. Code Ann. § 39-11-402(2). In addition, there must
be proof that the defendant solicited, directed, aided, or attempted to aid another to commit the
offense. Id.
In our view, the defendant's confession established all of the elements of the offenses. A
defendant, however, cannot be convicted solely upon the evidence of his inculpatory statement. See
Ashby v. State, 139 S.W. 872, 875 (1911). Under our law, the "corpus delicti [of the crime] cannot
be established by a confession alone." Taylor v. State, 479 S.W.2d 659, 662 (Tenn. Crim. App.
1982). A confession may sustain a conviction when "there is other evidence to show the commission
of the crime by someone." State v. Stapleton, 638 S.W.2d 850, 854 (Tenn. Crim. App. 1982). The
slightest corroborating evidence of the confession is sufficient, however. See State v. Ervin, 731
S.W.2d 70, 72 (Tenn. Crim. App. 1986). Furthermore, while a confession may be corroborated by
independent proof, the corroborating evidence need not connect the defendant with the crime.
Buckingham v. State, 540 S.W.2d 660, 663 (Tenn. Crim. App. 1976). Similarly, the corroborating
evidence necessary to support the corpus delicti need not be sufficient, in and of itself, to support the
conviction, but need only provide "the essential facts . . . to justify a jury inference of their truth."
Opper v. United States, 348 U.S. 84, 93 (1954).
-6-
Here, the defendant told police that she planned the robbery with "John" and "Kevin," met
them and "Larry" at a nearby Wal-Mart, and drove to the McDonald's. She stated that on the night
of the robbery, she was in "Larry's" white Dodge truck when "John" and "Kevin" got out of the truck,
went into the restaurant, and committed the robbery. She admitted that she was to receive some of
the robbery proceeds and explained that her participation in the robbery was motivated by her
displeasure with her hourly wage. There is direct evidence to support the defendant's confession.
Ms. Walton testified that two men entered the restaurant around 9:00 p.m. and took money from the
cash registers and safe. She identified "John" from a photographic line-up as the man who jumped
onto the front counter and ordered her to the floor. The man she identified was the same man that
the defendant identified as "John" from a separate photographic line-up. Ms. King saw the defendant
enter into the parking lot just before the driver of the white truck did and then saw the defendant get
into the truck. According to Ms. King, the man who pointed a gun at her and took money from her
register returned to the white truck occupied by the defendant. Ms. Felix observed a woman get into
a Dodge truck, saw three men enter the McDonald's, and recalled that one man jumped on the
counter.
In our view, this corroboration of the confession is sufficient to sustain convictions for
conspiracy to commit aggravated robbery, aggravated robbery, and aggravated assault. It is also our
view that the evidence, independent of the defendant's confession, was sufficient to support the
convictions. With regard to the conspiracy charge, this court has previously noted that an "unlawful
confederation may be established by circumstantial evidence and the conduct of the parties in the
execution of the criminal enterprise." Randolph v. State, 570 S.W.2d 869, 871 (Tenn. Crim. App.
1978); see State v. Carter, 121 S.W.3d 579, 589-90 (Tenn. 2003). The verdict resolved the conflicts
in the testimony in favor of the state. See State v. Summerall, 926 S.W.2d 272, 275 (Tenn. Crim.
App. 1995).
Accordingly, the judgments of the trial court are affirmed.
___________________________________
GARY R. WADE, PRESIDING JUDGE
-7- | 01-03-2023 | 10-08-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1395814/ | 6 Wash. App. 18 (1971)
491 P.2d 1301
RALPH BOWEN, as Guardian, Appellant,
v.
EMELIA BAUMGARDNER, Defendant, JOE DOE HOBART et al., Respondents.
No. 740-1.
The Court of Appeals of Washington, Division One Panel 1.
December 13, 1971.
*19 Clodfelter, Lindell & Carr and Jerome R. Cronk, for appellant.
Miracle & Pruzan, for respondents.
HOROWITZ, C.J.
The minor plaintiff appeals from the summary judgment dismissing her claim for negligence against the defendants Hobart. The claim for negligence is based on the Hobarts' alleged illegal parking of their car in an unmarked intersection at N.E. 65th Street and 34th Avenue N.E. in Seattle, Washington. Plaintiff contends that defendants Hobart were either guilty of negligence per se, or the issue of their negligence raises questions of fact precluding the entry of summary judgment under CR 56.
N.E. 65th Street in Seattle is a 36-foot-wide street running in an easterly-westerly direction. A 6-foot sidewalk adjoins and runs parallel to that street to the south. Thirty-fourth Avenue N.E. is a street 26 feet wide, running in a northerly-southerly direction. A 3-foot sidewalk adjoins and runs parallel to that street on its easterly side. Thirty-fourth Avenue N.E. runs south into N.E. 65th Street at right angles, but the former does not run beyond the southerly boundary of N.E. 65th Street. It thus forms a T-intersection at that point. A pedestrian on the 6-foot sidewalk who seeks to cross over to the 3-foot sidewalk in plain view on 34th Avenue N.E. could proceed in the path of an unmarked crosswalk a prolongation of the 3-foot sidewalk into N.E. 65th Street. A telephone pole is located on the 6-foot sidewalk approximately opposite the southerly edge of the 3-foot sidewalk on 34th Avenue N.E., across the street. A "No Parking 4-6 PM" sign is on the telephone pole, placed there by the City of Seattle.
Defendants Hobart had lived in a nearby apartment for approximately 1 year. During that period it was customary practice for motorists, including defendants Hobart, in the belief that it was legal so to do, to park cars where the *20 Hobart car was parked at all hours except during the 4 to 6 p.m. no parking period specified by the sign affixed to the telephone pole. The Hobarts had never been given a traffic ticket for illegal parking, and they had seen police cars, conducting radar traffic checks, parked at the same place where their car in the instant case was parked.
On the morning of March 2, 1968, the Hobarts' car, facing east, was parked on the south side of N.E. 65th Street, the front end of the car being approximately 5 feet west of the telephone pole. At about 10:20 a.m., plaintiff 6-year-old child was walking on the 6-foot sidewalk, then left it to cross to the other side of the street. In crossing, she passed between the front of the defendant Hobarts' car and the telephone pole. When she reached a point near the left front of the Hobart car, she looked east down N.E. 65th Street and then, without looking to the west, she started to run across the street. As she did so, she was struck by defendant Mrs. Baumgardner's car, then traveling in an easterly direction. Mrs. Baumgardner's view of the minor plaintiff was blocked by the Hobart car and she did not see her in time to avoid striking her.
The controlling question presented is whether the negligence claimed by the party plaintiff raises possible issues of fact precluding the entry of summary judgment.
RCW 46.61.570(1) (b) (iii) in substance provides that, with certain exceptions, no persons may park a vehicle within 20 feet of a crosswalk. See RCW 46.04.160.[1] It is conceded that the Hobart car was parked within 20 feet of the unmarked crosswalk formed by the prolongation of the 3-foot sidewalk into and across N.E. 65th Street.
[1-3] The purpose of statutes such as RCW 46.61.570(1) (b) (iii) is "to prevent motor vehicles from blocking the view of other motorists entering the intersection, and to keep the way clear for pedestrians." 7 Am. *21 Jur. 2d Automobiles and Highway Traffic § 232 (1963, Supp. 1971). Accord, D. Blashfield, Automobile Law and Practice § 116.30 (3d ed. 1965, Supp. 1971). The unexcused parking of an automobile in a place forbidden by legislative enactment is what amounts to negligence per se. Tierney v. Riggs, 141 Wash. 437, 252 P. 163 (1926). See Greisen v. Robbins, 36 Wash. 2d 64, 216 P.2d 210 (1950); D. Blashfield, Automobile Law and Practice § 116.14 (3d ed. 1965, Supp. 1971). However, when the issue is one of reasonable care under the circumstances, the existence of lawful excuse or justification may prevent a violation of statute from being negligence per se. As stated by our Supreme Court in White v. Peters, 52 Wash. 2d 824, 329 P.2d 471 (1958), quoting with approval from Prosser on Torts:
"Where the statute is interpreted as intended to protect the class of persons in which the plaintiff is included [plaintiff White is included in this class], against the risk of the type of harm which has in fact occurred, the weight of authority holds that an unexcused violation is negligence in itself, and that the court must so direct the jury."
52 Wn.2d at 828. In Burlie v. Stephens, 113 Wash. 182, 189, 193 P. 684 (1920), our Supreme Court said:
Circumstances may arise where it is entirely proper, in the exercise of reasonable care, to violate the ordinance ...
The principle that the violation of an ordinance or statute may be excused or justified so as not to constitute negligence per se has also been recognized or applied in a number of Washington cases cited in the margin,[2] as well as considered or recognized in legal writings in the tort field. See generally, Restatement (Second) of Torts §§ 288 A, 288 *22 B (1965); D. Blashfield, Automobile Law and Practice § 416.2 at 43, and § 116.15 (3d ed. 1965 and 1968, Supp. (1971)); F. Harper and F. James, The Law of Torts § 17.6 at 1007 to 1011 (1956, Supp. 1968). The burden of going forward with evidence of excuse or justification as a defense to a charge of negligence per se is upon the party who has violated the statute. Goldfarb v. Wright, 1 Wash. App. 759, 463 P.2d 669 (1970). See Leach v. Weiss, 2 Wash. App. 437, 467 P.2d 894 (1970).
[4] We cannot say from the summary judgment affidavit that the defendants Hobart sustained the burden of negativing possible fact issues predicated upon excuse or justification for violating RCW 46.61.570(1) (b) (iii). It is true the excuse or justification here is not based upon some unavoidable emergency or physical disability leaving defendants Hobart with no choice but to park where they did so that it could be said that the violation was "due to some cause beyond the violator's control ... and a violation against which reasonable prudence could not have guarded." Jess v. McNamer, 42 Wash. 2d 466, 255 P.2d 902 (1953). Were these the basis of claimed excuse or justification for violating RCW 46.61.570(1) (b) (iii), no fact issue would exist under the facts stated by the sole summary judgment affidavit. Excuse or justification may be based on other grounds as well, e.g., Restatement (Second) of Torts §§ 288 A, 288 B (1965). In the instant case, defendants rely upon the "No Parking 4-6 PM" sign as excuse or justification for parking where they did during the morning of the accident. Plaintiff disputes the validity of the justification claimed. The guardian ad litem argues that if the sign constitutes an "official traffic-control device" within the meaning of RCW 46.61.570 so as to permit an exception to the statutory prohibition of parking, it is unauthorized because it is one "inconsistent with Title 46 RCW placed or erected by authority of a public body or official having jurisdiction, for the purpose of regulating, warning or guiding traffic." RCW 46.04.611. See Krogh v. Pemble, 50 Wash. 2d 250, 310 P.2d 1069 (1957).
*23 [5] Whether or not the sign was authorized, however, it could not be ignored. If unauthorized by law, a motorist could treat the sign as presumptively a lawful one (see Lyle v. Fiorito, 187 Wash. 537, 60 P.2d 709 (1936)). In any case, it was a de facto sign. A motorist, in the exercise of reasonable care, was required to respect it. As stated in Comfort v. Penner, 166 Wash. 177, 6 P.2d 604 (1932):
Travelers upon public highways are not expected to first ascertain and determine whether such signs are established in strict compliance with law, before respecting them.
166 Wash. at 183. Fothergill v. Kaija, 183 Wash. 112, 48 P.2d 643 (1935); Clinkscales v. Carver, 22 Cal. 2d 72, 136 P.2d 777 (1943). See also, Radosevich v. County Comm'rs, 3 Wash. App. 602, 476 P.2d 705 (1970). Cf., McCandless v. Inland Northwest Film Serv., Inc., 64 Wash. 2d 523, 392 P.2d 613 (1964).
[6] In respecting the sign, whether de jure or de facto, it would be apparent that it permitted, but did not mandatorily require, parking at the particular spot chosen by the Hobarts. The sign in effect and at best left it optional with the Hobarts whether, during the nonprohibited hours, they would or would not park where they did. In exercising this optional choice, the Hobarts were required to act reasonably, taking into account other users of the street. Thus it can scarcely be claimed that had the Hobarts known that it was dangerous to park at the particular spot, even if it was customary practice so to do, that they would have been free of negligence in doing so in face of such known danger. See D. Blashfield, Automobile Law and Practice §§ 51.8, 102.41 (3d ed. 1965, Supp. 1971); 57 Am.Jur.2d Negligence § 78 (1971). Similarly, if, instead of actual knowledge, they were charged with knowledge of the dangerous character of parking where they did, the same rule should apply. There is a common-law duty upon motorists to "exercise reasonable and ordinary care" to select a place of parking "so that [the car's] presence will not constitute a source of danger to other users of the highway." Gelling v. Golden *24 Arrow Farms, 39 Wash. 2d 87, 92, 234 P.2d 539 (1951). See also McGovern v. Greyhound Corp., 53 Wash. 2d 773, 337 P.2d 290 (1959); Swanson v. Gilpin, 25 Wash. 2d 147, 169 P.2d 356 (1946). See generally, Annot., 4 A.L.R. 3d 324 (1965, Supp. 1970). This rule is consistent with the statutory rules of the road dealing with stopping, standing and parking, as well as pedestrian rights and duties. RCW 46.61.560-.580; RCW 46.61.230-.260. See also RCW 46.08.020-.030.
Whether the defendants Hobart, on the issue of excuse or justification, exercised reasonable and ordinary care in parking where they did in reliance upon the sign as customarily interpreted, taking into account the vision-blocking effects in so parking as to pedestrians, including the minor plaintiff, raises a question of fact. Swanson v. Gilpin, supra. For the reasons stated, therefore, the summary judgment was premature.
The judgment is reversed.
JAMES and SWANSON, JJ., concur.
NOTES
[1] We do not consider the claimed application of Seattle Traffic Code §§ 21.32.000 and .230 because the Seattle Traffic Code was not pleaded in the complaint, nor referred to in the affidavit before the trial court. See RCW 4.36.110; Kataisto v. Low, 73 Wash. 2d 341, 438 P.2d 623 (1968); Shoberg v. Kelly, 1 Wash. App. 673, 463 P.2d 280 (1969).
[2] These include Jess v. McNamer, 42 Wash. 2d 466, 255 P.2d 902 (1953); Discargar v. Seattle, 25 Wash. 2d 306, 171 P.2d 205 (1946); Bissell v. Seattle Vancouver Motor Freight, Ltd., 25 Wash. 2d 68, 168 P.2d 390 (1946); Burget v. Saginaw Logging Co., 197 Wash. 318, 85 P.2d 271 (1938); Brotherton v. Day & Night Fuel Co., 192 Wash. 362, 73 P.2d 788 (1937); Metcalf v. Mud Bay Logging Co., 170 Wash. 59, 15 P.2d 278 (1932); Gilbert v. Solberg, 157 Wash. 490, 289 P. 1003 (1930). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1661556/ | 650 F. Supp. 2d 900 (2009)
SPECTRALYTICS, INC., Plaintiff,
v.
CORDIS CORPORATION and Norman Noble, Inc., Defendants.
Case No. 05-CV-1464 (PJS/RLE).
United States District Court, D. Minnesota.
September 4, 2009.
*903 J. Derek Vandenburgh, Alan G. Carlson, Matthew J. Goggin, Dennis C. Bremer, and Russell J. Rigby, Carlson Caspers Vandenburgh & Lindquist, P.A., for plaintiff Spectralytics, Inc.
Gregory L. Diskant, Robert W. Lehrburger, and Michael J. Timmons, Patterson, Belknap, Webb & Tyler LLP; Joseph W. Anthony and Courtland C. Merrill, Anthony Ostlund Baer & Louwagie, P.A., for defendant Cordis Corporation.
James B. Niehaus, Christopher C. Koehler, and Julie R. Fenstermaker, Frantz Ward LLP; John Edward Connelly and Lee M. Pulju, Faegre & Benson LLP, for defendant Norman Noble, Inc.
ORDER ON POST-TRIAL MOTIONS
PATRICK J. SCHILTZ, District Judge.
This matter was tried to a jury, which found that defendants Cordis Corporation ("Cordis") and Norman Noble, Inc. ("Noble")[1] willfully infringed United States Patent No. 5,852,277 (the '277 patent). The '277 patent is owned by plaintiff Spectralytics, Inc. and covers an apparatus for cutting a piece of metal tubing with a laser to make a stent. The jury further found that the '277 patent was not invalid for obviousness. The jury awarded Spectralytics $22.35 million in compensatory damages for Cordis's infringement, an award that the jury arrived at by assessing a five-percent *904 royalty on sales by Noble to Cordis of stents cut with infringing devices. Verdict Form at 2 [Docket No. 368]. The Court entered judgment on the jury's verdict on February 3, 2009. Judgment [Docket No. 370].
This matter is before the Court on the post-trial motions of Cordis and Spectralytics. Cordis seeks judgment as a matter of law or, in the alternative, a new trial with respect to four issues: infringement, invalidity, willfulness, and damages.[2] Def. Mem. Supp. Post-trial Mot.Corrected ("Cordis PT Mem.") at 2 [Docket No. 395]. Spectralytics seeks the following: pre-and post-judgment interest, costs, and an accounting of, and damages for, additional infringing sales; a permanent injunction; enhanced damages for willfulness; and attorney's fees. Pl. Mem. Supp. Post-trial Mot. ("Spect. PT Mem.") at 1 [Docket No. 388]. For the reasons that follow, the Court denies Cordis's motion and grants Spectralytics's motion in part.
I. STANDARD OF REVIEW
Cordis moves for judgment as a matter of law or, in the alternative, for a new trial. Motions for judgment as a matter of law must meet standards that are more stringent than the standards applied to motions for a new trial.
Judgment as a matter of law is appropriate when a party has been fully heard on an issue and "the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue . . . ." Fed.R.Civ.P. 50(a)(1). In considering whether a legally sufficient evidentiary basis for the jury's verdict exists, the Court must review the record as a whole, but must view the facts in a light most favorable to the nonmoving party and must grant the nonmoving party the benefit of all reasonable inferences. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150-51, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000); Salitros v. Chrysler Corp., 306 F.3d 562, 568-69 (8th Cir. 2002) (citing Reeves). Specifically, the Court must "give credence to the evidence favoring the nonmovant" and must "disregard all evidence favorable to the moving party that the jury is not required to believe." Reeves, 530 U.S. at 151, 120 S. Ct. 2097.
Put another way, in this case, the Court must accept all of the evidence favoring Spectralytics, but the Court must accept evidence favoring Cordis only if the evidence is uncontradicted and unimpeached and comes from disinterested witnesses. See id.; Salitros, 306 F.3d at 569. The Court should grant judgment as a matter of law to Cordis only if the evidence, viewed according to these standards, is susceptible of no reasonable inference sustaining the jury's verdict. See Children's Broad. Corp. v. Walt Disney Co., 357 F.3d 860, 863 (8th Cir.2004); Kinserlow v. CMI Corp., 217 F.3d 1021, 1025 (8th Cir.2000).
In considering a motion for a new trial, however, the Court must consider all of the evidence, including evidence favoring the movant that the jury was not required to believe (such as the testimony of interested witnesses). See, e.g., Dace v. ACF Indus., Inc., 722 F.2d 374, 377 n. 5 (8th Cir.1983), supplemented and adhered to, 728 F.2d 976 (8th Cir.1984). The Court should grant a motion for a new trial only if, based on its review of all of the evidence, the Court is "firmly convinced that the jury's verdict will produce a miscarriage of justice." Dace, 722 F.2d at 377 n. 5; see also Belk v. City of Eldon, 228 F.3d 872, 878 (8th Cir.2000).
*905 II. CORDIS'S MOTION
A. Infringement
Cordis asks the Court to set aside the jury's finding that the accused device infringed the '277 patent. Cordis argues chiefly that, based on the Machinery Handbook's definition of a running-and-sliding fit, the jury should have found noninfringement. Cordis PT Mem. at 31-36. But Cordis made this very argument to the jury, and the jury rejected it. This Court cannot substitute its judgment for that of the jury.
Spectralytics presented ample evidence for a reasonable jury to find that the accused device infringed the '277 patent. Only one claim limitation was in dispute. That limitation, as construed by the Court, was met if, after a piece of stock tubing was inserted through the bushing in the accused device, the inner diameter of the bushing was greater than the outer diameter of the tubing at a scale that would matter to a person of ordinary skill in the art. See Final Jury Instrs. at 5-6 [Docket No. 361]; Tr. at 3033-36.[3]
Patrick Madsen, Spectralytics's technical expert and a person of ordinary skill in the art, testified that the accused device met this limitation. Specifically, he testified that "the bore of the Teflon bushing will be larger than the stock tubing that's passing through it." Tr. at 930. Further, Madsen testifiedbased on documentation from Noblethat on many occasions, the inner diameter of the bushing in the accused device was measured to be up to 3/10,000 of an inch larger than the nominal outer diameter of the stock tubing even before that tubing was inserted in the bushing. Tr. at 956-59. And Madsen testified that 1/10,000 of an inch was a dimension that would have mattered to a person of ordinary skill in the art. Tr. at 948-49. Other witnesses testified similarly. Tr. at 651-52 (testimony of the inventor, Gary Gustafson); Tr. at 543 (testimony of Spectralytics's founder, Gary Oberg, that "[w]hen it comes to making stents, . . . even a 10th of a thousandth makes a difference.").
Cordis disparages Madsen's testimony by saying that it was contrary to the Court's claim construction. Cordis PT Mem. at 38-41. It is true that some of Madsen's testimony, viewed in isolation, could be read as reflecting a different claim constructione.g., a construction under which the bushing's inner diameter would exceed the tubing's outer diameter whenever the tubing could slide through the bushing. See Tr. at 1111. But other portions of Madsen's testimony were consistent with the Court's claim construction, and, in that testimony, Madsen testified that the disputed limitation was met. The jury was entitled to credit that testimony.
Infringement is a question of fact. ACCO Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1311 (Fed.Cir.2007). The jury in this case was properly instructed on the law with respect to infringement and on the Court's claim construction, and it acted reasonably in finding infringement based on the evidence favoring Spectralytics. Further, the jury's infringement verdict does not reflect a miscarriage of justice in light of all of the evidence.
B. Obviousness
The jury found that Cordis failed to prove by clear and convincing evidence that the '277 patent was invalid for obviousness. As the Court has said in the past, if this case had been tried to the Court, the Court likely would have found the '277 patent invalid. But the Court cannot, on a post-trial motion, substitute its view of the evidence for the jury's. *906 And although the Court must review the conclusion of obviousness de novo, that conclusion depends on underlying factual findings that were the jury's to make. See LNP Eng'g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1353 (Fed.Cir. 2001) ("This court reviews a jury's conclusions on obviousness, a question of law, without deference, and the underlying findings of fact, whether explicit or implicit within the verdict, for substantial evidence.").
At trial, Cordis's obviousness argument focused mainly on one feature of the patented invention: the mounting of the "workpiece fixture," which supports tubing as it is cut, on the laser-cutting head. Cordis likewise emphasizes this feature in support of its post-trial motion, arguing that "the only difference between the patented invention and the prior art that was alleged was that the patent teaches carrying the workpiece fixture on the cutting tool rather than attaching it to another nearby fixed object, such as the work table or the shelf on which the laser sits." Cordis PT Mem. at 3 (emphasis in original). Cordis then contends that Madsen "conceded that connecting the fixture to the laser was an obvious way to achieve the fixed spatial relationship taught by the Swiss art," and that therefore Cordis is entitled to judgment as a matter of law that the '277 patent was obvious. Id. (emphasis in original).
Cordis distorts Madsen's testimony. Cordis's counsel asked Madsen a series of questions about whether it would have been obvious to attach a workpiece fixture to a laser cutting tool if the only goal was to maintain a fixed spatial relationship between the fixture and the cutting tool. See, e.g., Tr. at 2731 ("Q: . . . [If] the problem you are trying to solve is simply how to find a place to keep the bushing in a fixed spatial relationship with the laser, it's just as obvious to attach it to the laser as it is to the shelf; isn't that right?"). Madsen eventually agreed that "if you are just wanting to attach [the workpiece fixture], if that's your only concern, your only thought, you can attach it anywhere you want." Id.
But Madsen never agreed that the only purpose of the '277 patent was to keep a fixed spatial relationship between a workpiece fixture and a laser-cutting tool. Moreover, the Court rejected this specious characterization of the '277 patent's purpose in ruling on Cordis's motion for summary judgment:
Th[e] purpose [of the '277 patent] is not, as Spectralytics puts it, "to have the workpiece fixture (and bushing) carried on the laser head so that they were maintained in `a fixed spatial relationship' and movement of one would also move the other." If that was the invention's purpose, the device would have been reduced to practice even if it never cut a single stent.
Spectralytics, Inc. v. Cordis Corp., 576 F. Supp. 2d 1030, 1051 (D.Minn.2008) (citations omitted).
Further, Cordis's own expert on Swiss-style machines, Peter Huber, agreed at his deposition that the invention of the '277 patent was "contrary to the accepted teachings of Swiss automatic screw machines," and the jury saw a videotape of that deposition testimony. Tr. at 2105. When asked at trial whether the '277 patent was contrary to the teachings of Swiss-style machines, Huber replied:
Basically, I think, I just say this: The tool on a Swiss automatic is rigidly attached to the bushing via the cast iron base or frame. It's the tool which slides to make the contours of the parts. That's the only reason why the tool slides, but it's rigidly attached to the tool frame.
Id. In light of Huber's testimony, a reasonable jury could have found that the Swiss *907 art taught away from attaching the work-piece fixture to the laser-cutting head as is done in the '277 patent.
Considering the evidence in the light most favorable to Spectralytics, as the Court must, the Court agrees with the jury that Cordis failed to carry its burden of showing by clear and convincing evidence that the '277 patent was obvious. And considering all of the evidence on both sides, the Court further finds that allowing the jury's verdict to stand would not work a miscarriage of justice.
C. Damages
The Court was initially troubled by the jury's verdict on damages and thus was inclined to grant Cordis's post-trial motion with respect to damages. After much reflection, howeverand after having read and re-read much of the trial transcriptthe Court is persuaded that the jury's verdict should stand. The reasonable-royalty damages awarded by the jury are certainly generous, but they have a sufficient basis in the evidence at trial and do not reflect a miscarriage of justice.
In attacking the jury's damages verdict, Cordis contends that the verdict is grossly excessive in light of two kinds of evidence: evidence about noninfringing alternatives, and evidence about the value of Spectralytics as a company. Cordis also contends that there was insufficient evidence to support the jury's award of a running royalty. The Court addresses Cordis's contentions in turn.
1. Noninfringing Alternatives
Cordis contends that "on the facts of this case," the jury's damages award should not have exceeded the cost of one or both of two noninfringing alternatives: a modified version of the accused device completed in October 2008, and a modified version of a Comtal machine that was available in 1997 or 1998. Cordis PT Mem. at 53-55. But the jury was not required to believe the testimony of Cordis's witnesses about these alternatives, particularly in light of the Federal Circuit's admonition that a fact finder "must proceed with caution in assessing proof of the availability of substitutes not actually sold during the period of infringement." Grain Processing Corp. v. Am. Maize-Prods. Co., 185 F.3d 1341, 1353 (Fed.Cir.1999); see also Micro Chem., Inc. v. Lextron, Inc., 318 F.3d 1119, 1123 (Fed.Cir.2003) ("[T]he finding that an infringer had to design or invent around the patented technology to develop an alleged substitute weighs against a finding of availability.").
With respect to the October 2008 redesign of the accused device, Cordis says that it was "undisputed" at trial that Noble could have made this redesign in 1998, and that the redesign "worked just as well" as the original design. Cordis PT Mem. at 54. Cordis overstates its case.
It is true that Madsen, Spectralytics's technical expert, testified about the redesign: "You probably could have done that in 1998." Tr. at 1024. But when Cordis's counsel asked Madsen whether he "would disagree with me that Norman Noble gets the same high yields with this design as it got with the others," Madsen expressed no opinion, because he had seen no evidence about the assertion implicit in the question. Id. And it is not surprising that Madsen had little to say about this particular alternative design given that it was not fabricated until October 2008.
The only evidence of the redesign's effectiveness came from Jeff Miller of Noble, an interested witness whose testimony the jury was not required to believe.[4] Miller *908 testified that he made the redesign in about a week in October 2008, that it cost $3,800, and that he could have built the same design in 1998. Tr. at 1804-07. Miller testified that there was no advantage to mounting the bushing holder on the lens of the laser (as in the infringing design) as opposed to on a shelf (as in the redesign). Tr. at 1807. Miller testified that he had cut stents with this redesigned device, that those stents were just as good as the stents cut with the infringing device, and that the redesigned device would have been an acceptable alternative for Cordis in 1998. Tr. at 1886-87.
But Miller also testified that only "prototype stents" were cut with the redesigned device. Tr. at 1877. And he testified that machines with the redesign were not actually being used to cut stents. Tr. at 1879. Miller testified that for "production purposes," the redesigned machines cut "tubular products." Tr. at 1876-77. When asked to describe these "tubular products," Miller said: "I wouldn't say they were stentlike, but they were just tubular products that had general patterns throughout the piece. . . . These are considerably larger [than stents] in most cases." Tr. at 1878-79.[5]
A reasonable jury, based on this evidence, could have disregarded this proposed noninfringing alternative. Even if the jury found that the device could have been fabricated in 1998, the jury was not required to believe that the device would have been an acceptable alternative to the accused device. By Miller's own admission, the alternative device had been used to cut only prototype stents, not production stents. The fact that some unspecified number of prototype stents were cut accurately does not mean that a jury would have been required to conclude that the redesigned device would have been satisfactory for production purposes.
A reasonable jury likewise could have disbelieved that a modified Comtal machine would have been an acceptable and available noninfringing alternative in 1998. According to Cordis, it could have used ten modified Comtal machines in 1998 at a cost of $1.688 million, and "the adequacy of the modified Comtal design was likewise undisputed as a non-infringing alternative." Cordis PT Mem. at 64. Again, Cordis overstates its case.
Bill Dobbins, a Cordis employee who worked at NDC before Cordis acquired it in 1997, testified about the modified Comtal machines. Tr. at 2223, 2235. Some time after the 1997 acquisition, NDC took delivery of some Comtal laser-cutting machines. Tr. at 2236. As delivered, the machines could cut stents, but some vibration became apparent when Dobbins ran the machines at high speeds. Tr. at 2243. Dobbins needed to modify the Comtal machines "to make acceptable quality stents fast . . . ." Tr. at 2269.
To reduce the vibration at high speeds, Dobbins designed a bracket that he attached to the laser nozzle and the bushing-support structure. Tr. at 2244. When asked how long he used such a bracket, he did not respond directly, saying: "Well, it *909 worked. It was simple, but it worked. It worked well enough. I used it to validate this system and four more systems after that." Tr. at 2247. At some point, Dobbins replaced the bracket he had designed with a combination of "precision positioning stages" that he bought and brackets that he made in-house. Tr. at 2248, 2250-51 (describing later design), 2254.
Dobbins made salable nitinol stents for Cordis with this design. Tr. at 2254-55, 2284. He validated the first machine for Cordis in the middle of 1998 and had validated four more by the end of 1998. Tr. at 2255. Dobbins testified that with this machine, NDC "cut to specification and the yields were always in the 90 percent range." Tr. at 2258. Dobbins designed and validated a different machine in 2001. Tr. at 2257. He finally phased out the modified Comtal machines in 2004. Tr. at 2257-58.
Using the modified Comtal machines, NDC made production quantities of nitinol stents only. Tr. at 2284. As for stainless-steel stentsthe kind cut by Noble with the infringing deviceNDC made only prototype stents; NDC never validated any machines for producing stainless-steel stents. Tr. at 2284. Dobbins did testify at one point that "[o]f course" the modified Comtal machines could have been modified to cut stainless-steel stents. Tr. at 2295. Dobbins said that for $15,000 to $20,000, it would have been "a simple matter" to fit a modified Comtal machine with the water-delivery system necessary for cutting stainless-steel stents. Tr. at 2295-96. Dobbins answered "[n]ot necessarily" when Spectralytics's counsel asked, "So because something might work with stainless steel, it might not work for the nickel titanium stents?" Tr. at 2288.
Dobbins's testimony thus provided some, but not overwhelming, support for the proposition that a modified Comtal machine could have been used to cut stainless-steel stents in 1998 in place of the infringing device. Madsen's testimony, however, pointed the other way.
Madsen testified that he used an un modified Comtal machine at SciMed for producing roughly 1,000 Radius model stents a week. Tr. at 1011. But Madsen also testified that he "wasn't happy with the Comtal performance in general." Tr. at 1011. Madsen conceded that a Comtal machine was used by RMS to cut thousands of stents for Cordis. Tr. at 1013. And Madsen agreed that sample stents provided to SciMed by Noble and Spectralytics in 1997 were comparable to the stents SciMed made in-house with the Comtal machine (though Madsen did not know Noble's or Spectralytics's scrap rates). Tr. at 971-72.
Despite SciMed's commercial use of the unmodified Comtal machine, Madsen denied that it was an acceptable alternative to the patented machine. He said that the Comtal machine "had unacceptable yields and had unacceptable machine downtime. . . . You would have issues in dealing with the defects that it creates, and you have issues with doing your verification and validation for FDA approval." Tr. at 1013; Tr. at 1114 ("In my opinion in working with the Comtal machines that I am familiar with, they were not an acceptable alternative."). In fact, Madsen testified that based on his review of the evidence, Cordis was "unhappy with the performance" of the unmodified Comtal machines at RMS. Tr. at 1115.
Madsen was also asked about the Comtal machine as modified by Dobbins. He agreed that the design was noninfringing but had no opinion on whether it would have been an acceptable alternative to the accused device. Tr. at 1017-18. Madsen testified that he had seen no evidence that the modified Comtal could acceptably cut stents. Tr. at 1115. Madsen also confirmed that, as far as he could tell, if *910 Cordis had wanted to in 1998, Cordis could have used modified Comtal machines, which were being used by its subsidiary, NDC. Id.
Julie Davis, Spectralytics's damages expert, also testified, based on her review of the documents, that neither Cordis nor Noble considered the unmodified Comtal machine to be an acceptable alternative in 1998. Tr. at 1242. Davis is an economist, and thus she was not qualified to express her own opinion about whether the Comtal machines were an acceptable noninfringing alternative. But, as an expert witness, she was allowed to testify about the evidence that she relied upon in forming her opinion about damages. Fed.R.Evid. 703. Davis testified that she did not see any evidence that the Comtal machines were acceptable to Noble or Cordis. To the contrary, she testified that Cordis sent five existing Comtal machines to Noble and Noble "didn't want to use those machines because they didn't think they were adequate." Tr. at 1288. According to Davis, "Cordis had already, in essence, fired RMS for using Comtal machines because those machines weren't making acceptable stents." Tr. at 1288.
In sum, to support its argument that the modified Comtal machine was an acceptable noninfringing alternative, Cordis has only the testimony of Dobbinsa Cordis employee and thus an interested witness whose testimony the jury was not required to believe. Dobbins admittedly never cut a single stainless-steel stent with such a machine. For its part, Spectralytics has evidence that the un modified Comtal machine was unacceptable to Cordis and Noble. And it is undisputed that in 1998, instead of choosing to use the modified Comtal machine that NDC (a Cordis subsidiary) was then using to cut nitinol stents for Cordis, Noble instead chose to use the accused device to cut stainless-steel stents for Cordis. On this record, a reasonable jury could have concluded that the modified Comtal machine was an available and acceptable noninfringing alternative in December 1998, but a reasonable jury was not required to do so.
Finally, even if the jury believed that a modified Comtal machine, or a modified follower assembly, was an available noninfringing alternative in December 1998, the jury was not required to treat the cost of either such alternative as a cap on the damages in this case. The Federal Circuit squarely held in Mars, Inc. v. Coin Acceptors, Inc. that "an infringer may be liable for damages, including reasonable royalty damages, that exceed the amount that the infringer could have paid to avoid infringement." 527 F.3d 1359, 1373 (Fed. Cir.2008). Mars emphatically rejected the argument that reasonable-royalty damages cannot exceed the cost of a noninfringing alternative, holding that
even if Coinco [the infringer] had shown that it had an acceptable noninfringing alternative at the time of the hypothetical negotiation, Coinco is wrong as a matter of law to claim that reasonable royalty damages are capped at the cost of implementing the cheapest available, acceptable, noninfringing alternative. We have previously considered and rejected such an argument.
Id.[6]
Cordis tries to sidestep Mars by arguing that the cost of noninfringing alternatives *911 should cap damages in this case because "Spectralytics' expert agreed their cost should serve as a cap." Cordis PT Mem. at 54. It is true that Spectralytics's damages expert, Julie Davis, agreed that the cost of a noninfringing alternative would place some limit on damages. Specifically, Davis agreed that if the jury found that Noble could have implemented a noninfringing alternative in 1998 for $1.5 million, Noble would not have agreed to pay "substantially more" than that amount for a license. Tr. at 1377.
But for two reasons, the jury was not precluded by Davis's testimony from awarding damages in an amount greater than the cost of the noninfringing alternatives available in 1998. First, Davis was not the judge (or even a lawyer). She was a fact witness. Although she testified that the cost of available noninfringing alternatives would have affected a license negotiation in 1998a banal factual proposition on which she was qualified to offer an opinionDavis's testimony did not, and could not, establish the legal proposition that Cordis now advancesnamely, that Spectralytics's damages should, as a matter of law, be capped at the cost of an available noninfringing alternative.[7] The testimony of a fact witness cannot somehow overrule Federal Circuit precedent.
Second, when Cordis's counsel elicited Davis's testimony about how the cost of a noninfringing alternative would have affected license negotiations in 1998, Cordis's counsel was asking Davis about a lump-sum royalty, Tr. at 1376,[8] whereas Davis testified that the parties would have agreed to a percentage royalty. Because the lifetime cost of a percentage royalty cannot be known with certainty at the time of the license negotiation, there is no logical reason why the amount of royalties that are in fact paid out in the years following the negotiation could not exceed the cost of a noninfringing alternative available at time of the negotiation. To the extent that Cordis argued at trial that under the "book of wisdom" doctrine, the parties would in fact have known, with certainty, the lifetime cost of a percentage royalty, Cordis mischaracterized the law.
The lifetime cost of a percentage royalty on sales depends on two things: the royalty rate and the total number of sales to which that rate will be applied. Cordis's counsel asked misleading questions, and Davis gave confusing answers, about how to apply the "book of wisdom" doctrine *912 when considering future sales in the context of the December 1998 hypothetical license negotiation. Davis and Cordis's counsel had the following exchange on the subject:
Q: In any event, your opinion is that in December of 1998, Norman Noble would have agreed to pay royalties that over time would have amounted to 89 million dollars, right?
A: They wouldn't have known that over time it would amount to 89 million, but they would have known that they had just agreed to pay royalties on a per sale basis, per stent.
Q: Wait a minute. You're making your determination on the number of sales that have taken place for the past decade, right?
A. Right.
Q. And the parties in 1998 wouldn't know what those sales are, right?
A. They would not know the amount. That's correct.
Q. But through something called the doctrine of the book of wisdom, you have heard of that, the book of wisdom?
A. I have.
Q. The book of wisdom is a doctrine, legal doctrine that permits you to... look ahead in time so that the parties to a reasonable negotiation can take in the facts that have happened after the negotiation, is that right?
A: That's right.
Q: Okay. So you're taking into account all of the sales that Norman Noble has made to Cordis for the last ten years, right?
A: Right.
Q: And you're telling us that we can't know that is going to amount to 89 million dollars back in 1998?
A: Well, if you want to assume that at the hypothetical negotiation they do know the 447 million dollar number of sales, of course they can do the math and get to the 89 million dollar number.
Q: Okay. That's what I thought. Your opinion is that in December of 1998, Norman Noble would have agreed to pay 20 percent of every stent sale with the right to attach its bushing holder to the head of the laser, is that right?
A: They would pay 20 percent of the sales associated with product that was manufactured using the '277 patented technology.
Tr. at 1269-70 (emphasis added).
In the sentences italicized above, Davis said that the parties at the December 1998 hypothetical negotiation would have known only that they were agreeing to a royalty rate, not that they were agreeing to a lifetime royalty of $89 million. Davis later seemed to concede that the parties could figure out the lump-sum cost of the rate but only "if you want to assume that at the hypothetical negotiation they do know the 447 million dollar number of sales...." Tr. at 1270 (emphasis added). It is not at all clear that Davis was agreeing with the description given by Cordis's counsel of the book-of-wisdom doctrinea description that is not, in fact, correct.
The book-of-wisdom doctrine takes its name from this passage in Justice Cardozo's opinion for the Supreme Court in Sinclair Refining Co. v. Jenkins Petroleum Process Co.:
A patent is a thing unique. There can be no contemporaneous sales to express the market value of an invention that derives from its novelty its patentable quality. But the absence of market value does not mean that the offender shall go quit of liability altogether. The law *913 will make the best appraisal that it can, summoning to its service whatever aids it can command. At times the only evidence available may be that supplied by testimony of experts as to the state of the art, the character of the improvement, and the probable increase of efficiency or saving of expense. This will generally be the case if the trial follows quickly after the issue of the patent. But a different situation is presented if years have gone by before the evidence is offered. Experience is then available to correct uncertain prophecy. Here is a book of wisdom that courts may not neglect. We find no rule of law that sets a clasp upon its pages, and forbids us to look within....
To correct uncertain prophecies in such circumstances is not to charge the offender with elements of value non-existent at the time of his offense. It is to bring out and expose to light the elements of value that were there from the beginning....
An imaginary bid by an imaginary buyer, acting upon the information available at the moment of the breach, is not the limit of recovery where the subject of the bargain is an undeveloped patent. Information at such a time might be so scanty and imperfect that the offer would be nominal. The promisee of the patent has less than fair compensation if the criterion of value is the price that he would have received if he had disposed of it at once, irrespective of the value that would have been uncovered if he had kept it as his own.
289 U.S. 689, 697-99, 53 S. Ct. 736, 77 L. Ed. 1449 (1933) (citations omitted).
Two aspects of this passage are noteworthy. First, in it Justice Cardozo advocates looking to future events to avoid undercompensating patentees, not to limit their compensation (as Cordis advocates here). Second, Justice Cardozo does not suggest that all future events are known with certainty at a hypothetical negotiation; to the contrary, he says that the purpose of looking at future events is "to bring out and expose to light the elements of value that were there from the beginning." Id. at 698, 53 S. Ct. 736.
Cordis's rigid interpretation of the book-of-wisdom doctrine is thus inaccurate. A fact finder is permitted to consider post-negotiation eventsalong with all other relevant evidencewhen the fact finder tries to figure out the outcome of a hypothetical license negotiation, but the parties at that negotiation are not presumed to know exactly what the future holds. See Harris Corp. v. Ericsson, Inc., 417 F.3d 1241, 1257 (Fed.Cir.2005) (holding that a district court "correctly understood Wang [Laboratories, Inc. v. Toshiba Corp., 993 F.2d 858 (Fed.Cir.1993)] as mandating consideration of a hypothetical negotiation on the date of first infringement but not automatically excluding evidence of subsequent events.") (emphasis added); W.L. Gore & Assocs., Inc. v. Tetratec Corp., 15 U.S.P.Q.2d 1048, 1052 (E.D.Pa.1989) ("Evidence of the infringer's actual profits generally is admissible as probative of the alleged infringer's anticipated profits.") (emphasis added).
Indeed, if the book-of-wisdom doctrine operated as Cordis proposes, every hypothetical negotiation in a patent case over a percentage royaltywithout exception would in fact be a negotiation over a lumpsum royalty, since the lifetime cost of the percentage royalty would (on Cordis's reading of the book-of-wisdom doctrine) be known to the parties at the time of the hypothetical negotiation. This would be a radical shift in how royalty damages are assessed in patent cases.
2. Value of Spectralytics
Cordis argues that the jury's damages award should be set aside or reduced *914 because it "amount[ed] to more than the entire value of Spectralytics, which ranged from $2.81 million in 1996 to $4 million in 2003." Cordis PT Mem. at 55. To support this argument, Cordis cites only one case: Integra Lifesciences I, Ltd. v. Merck KGaA, 331 F.3d 860 (Fed.Cir.2003), vacated and remanded on other grounds, 545 U.S. 193, 125 S. Ct. 2372, 162 L. Ed. 2d 160 (2005), on remand, 496 F.3d 1334 (Fed.Cir. 2007). And the passage on which Cordis relies on is pure dictum.
In Integra Lifesciences I, the Federal Circuit vacated a reasonable-royalty damages award for various reasons. One reasonseemingly the most important one was that the court could not tell from the evidence when the hypothetical negotiation was supposed to have taken place. 331 F.3d at 870 ("[T]he record does not clearly indicate whether 1994 or 1995 is the proper date for the first infringement.... On remand, the trial court will have the opportunity to clarify the proper timing of the reasonable royalty calculus."). An additional reason was that:
The $15,000,000 royalty [i.e., the vacated award] also does not appear to take into account numerous factors that would considerably reduce the value of a hypothetical license. For example, Integra [the plaintiff] purchased Telios (together with all of its products, patents and know-how) for $20,000,000 in 1996. A $15,000,000 award figure to compensate for infringement of only some of Telios' patents before Integra's acquisition seems unbalanced in view of the overall acquisition price.
Id. at 871 (emphasis added).
The hypothetical negotiation in Integra Lifesciences I would have taken place in 1994 or 1995. The Federal Circuit thus said, in effect, that an actual sale in 1996 of the patent rights at issue in the hypothetical negotiation was relevant to calculating a reasonable royalty in that hypothetical negotiation.[9] But the Federal Circuit has never held that, as a matter of law, a reasonable-royalty award cannot exceed what someone paid to acquire a patent portfolio that includes the patent-in-suit. And, for reasons that will be described in a moment, such a rule would make no sense.
It follows from Integra Lifesciences I that, in this case, the Court did not err in allowing the jury to hear evidence related to the proposed sale of Spectralytics in 1996 and the actual sale of the company in 2003. That evidence was unquestionably relevant. But it does not follow that the jury acted unreasonably in awarding more in damages than the proposed sale price of Spectralytics in 1996 or the actual sale price of Spectralytics in 2003.
The proposed sale in 1996 provides weak evidence of how the parties would have valued the '277 patent in December 1998 in the course of a hypothetical negotiation. In early 1996, Gary Oberg, Spectralytics's founder, offered to sell a 65-percent interest *915 in Spectralytics to Noble for about $1.8 million. Tr. at 581-82. This reflects an overall value of about $2.8 million for the entire company. Tr. at 583-84. At the time, Spectralytics was using the tooling that would eventually be covered by the '277 patent, but Spectralytics had not even filed a patent application on the tooling, much less received a patent. Tr. at 584. Gustafson did not apply for what became the '277 patent until October 1996, and the patent did not issue until over two years later, in December 1998.
The price of acquiring a company with unpatented technology bears little relationship to what royalty should be paid for licensing a patent that later issues on that technology. The value of technology before a patent has been applied for (let alone granted) is likely to be significantly different from the value of that technology when (as in the hypothetical negotiation) the patent covering it is known to be valid and infringed, and the infringer is seeking a license. The jury heard the evidence about the proposed 1996 sale and obviously discounted it. In doing so, the jury acted reasonably.
The jury also heard evidence about Preco's acquisition of Spectralytics in 2003. Preco began negotiating with Oberg to acquire Spectralytics in early 2003. See D-554. At the time, Spectralytics suspected that Cordis might be infringing the '277 patent. Tr. at 607; D-554 at PRECO00461; D-598 at SP00730. But Spectralytics did not file this suit until July 2005, about two years later.
Preco paid $4 million to buy Spectralytics, and the sale was completed in October 2003. Tr. at 1311; D-558. Of that $4 million, roughly $1.7 million was allocated to goodwill, which included Spectralytics's patents. Tr. at 1313-14. But as part of the acquisition, Preco agreed to pay to Oberg 25 percent of any "net proceeds realized from any patent litigation involving" Cordis. D-598 at SP00730. Thus, in acquiring Spectralytics, Preco received the rights to all of Spectralytics's patents, less one-fourth of any recovery against Cordis in a patent-infringement suit.
Cordis contends that Preco gave no value to the patent in the acquisition. Cordis PT Mem. at 56. This is an exaggeration. When Cordis's counsel asserted that Preco's owner gave "no monetary value" to the '277 patent, Davis responded, "They didn't know how to value it at the time. They didn't know if anybody was infringing." Tr. at 1315. Davis said that Preco "didn't know how to value the patent so they handled that differently"that is, they gave Oberg 25 percent of any recovery from Cordis in a patent-infringement suit. Tr. at 1319. To say, as Davis did, that the '277 patent's value was unknown and not individually specified in 2003 is not to say, as Cordis would have it, that the patent was worthless. If someone buys a box that might (or might not) contain cash, and if the box in fact contains cash, then that cash has a valueeven if the box was sold as part of a package deal for various possessions rather than as an individually priced item, and even if the buyer and seller could not put a specific value on the box because they did not know how much cash, if any, it contained.
In this case, the significance of the price paid by Preco to acquire Spectralytics in 2003 depends on what that price suggests about the outcome of the hypothetical license negotiation in 1998. The jury could reasonably have concluded that the former had little to do with the latter. At the time of the 2003 sale, Spectralytics knew that the value of the '277 patent ranged from nothing to possibly tens of millions of dollars, depending on (among other things) whether Noble and Cordis were infringing and whether, if sued for infringement, Noble and Cordis could successfully challenge *916 the patent's validity. Spectralytics suspected that Noble and Cordis might be infringing the '277 patent and hoped that the patent would survive any challenge to its validity, but Spectralytics did not really know for certain, and it could not really know for certain without paying millions of dollars in legal fees to launch lengthy and risky litigation. Thus, the value assigned to the '277 patent in 2003 would have reflected a very deep discount.
To illustrate: Suppose that Spectralytics reasonably calculated in 2003 that the '277 patent would have no value unless Spectralytics could prove that Noble and Cordis had infringed and could turn back any challenge to the patent's validity. Suppose further that Spectralytics also reasonably calculated that it would take six years of litigation and $3 million in legal fees to win a lawsuit against Noble and Cordis. Finally, suppose that Spectralytics reasonably calculated that its best-case-scenario recoverya recovery that would depend on Spectralytics being able to use discovery to uncover strong evidence in its favor, a judge ruling Spectralytics's way on many uncertain legal issues, and a jury being persuaded to return a verdict for Spectralyticswas about $50 million, but that its chances of receiving a best-case-scenario recovery were only about one in ten. In such circumstances, the fact that Preco paid only $4 million to buy Spectralytics in 2003and nothing specifically for the '277 patentwould not in any way undermine a jury's finding that a hypothetical license negotiation in 1998 would have resulted in Spectralytics receiving over $22 million in royalties.
This is true because, at the hypothetical negotiation in 1998, Noble would have agreed both that the '277 patent was valid and that Noble infringed it, and Noble and Spectralytics would have wanted to strike a deal to license the patent. In other words, the hypothetical negotiation in 1998 would not have been influenced by the contingencies that dramatically reduced the value of the '277 patent at the time of the Preco sale in 2003. The bottom line is that weighing the evidence about Preco's 2003 acquisition of Spectralytics was a task for the jury, and a reasonable jury could have chosen to give very little weight to this evidence.
3. Running Royalty
Cordis argues that, for two reasons, the Court should set aside the jury's award of a running royaltythat is, a royalty based on the value of stents produced with infringing machines. First, Cordis argues that the form of the royalty was improper because Spectralytics presented no evidence of similar running royalties in the industry. Second, Cordis argues that the rate of the running royalty was not supported by the evidence. The Court disagrees on both points.
According to Cordis, as a matter of law, a jury cannot award patent-infringement damages in the form of a running royalty in the absence of evidence of similar running royalties in the relevant industry. Cordis PT Mem. at 45. Although Federal Circuit case law in this area is not entirely clear, the Court disagrees with Cordis's reading of that case law.
The two most-relevant Federal Circuit cases are Stickle v. Heublein, Inc., 716 F.2d 1550 (Fed.Cir.1983), a case about taco fryers, and Minco, Inc. v. Combustion Engineering, Inc., 95 F.3d 1109 (Fed.Cir. 1996), a case about ovens for fused silica. Stickle supports Cordis's argument against a running royalty, but Minco undermines that argument and instead supports the running-royalty award in this case. Because this case is more like Minco than like Stickle, the jury was not foreclosed, as a matter of law, from awarding damages in the form of a running royalty.
*917 In Minco, a district judge found Combustion Engineering ("CE") liable after a bench trial for infringing Minco's patent on an oven for making fused silica. 95 F.3d at 1112. The judge awarded lost profits of $3.5 million plus $7.4 million in royalties. Id. The Federal Circuit expressly upheld the district court's use of fused-silica sales as the basis for the award of royalties, despite the fact that the patent-in-suit covered only a machine for making fused silica, not fused silica itself. The court held:
In awarding both lost profits and a reasonable royalty, the trial court used the sale of fused silica as the baseline for measuring damages. The assessment of adequate damages under section 284 does not limit the patent holder to the amount of diverted sales of a commercial embodiment of the patented product. Rather, the patent holder may recover for an injury caused by the infringement if it was or should have been reasonably foreseeable by an infringing competitor in the relevant market, broadly defined. In this case, the invention produced marketable fused minerals. Both CE and Minco used the invention to compete in that market. Therefore, CE should have reasonably foreseen that infringement of the '462 patent would harm Minco's sales in the fused silica market. This court accordingly upholds the trial court's determination to use that measure of damages.
Id. at 1118 (internal quotation marks and citation omitted; emphasis added).
In Minco, neither the Federal Circuit nor the district court discussed any evidence about industry practices with respect to running royalties. See id. at 1118-20; Minco, Inc. v. Combustion Eng'g, Inc., 903 F. Supp. 1204, 1222-24 (E.D.Tenn.1995). Rather, the district court's awardwhich the Federal Circuit approvedwas based on the fact that Minco and CE were competitors in the market for fused silica. See Minco, 95 F.3d at 1118. Because Minco was entitled to lost profits on a certain portion of its sales in that market, it is not surprising that Minco was also awarded royalties on fused-silica sales by CE that Minco lacked the capacity to make. Patentees routinely get such mixed awards of lost profits and reasonable royalties. See generally 7 Donald S. Chisum, Chisum on Patents § 20.03[1][e] (1999 & Supp.2005).
In this case, Spectralytics and Noble were not competitors in the market for stent-cutting machines. Rather, at the time of the hypothetical negotiation, they were competitors in the market for stents. Cordis seeks to avoid this uncomfortable fact, and thus distinguish Minco, by arguing that Spectralytics and Noble were not actually competitors because Noble had an exclusive arrangement with Cordis. Cordis PT Mem. at 46. But exclusive-supply arrangements do not change the fundamental nature of a market; they merely allocate certain portions of the market to certain competitors for certain periods of time.
Cordis has offered no support, other than its say-so, for the proposition that Noble's exclusive arrangement with Cordis meant that Spectralytics and Noble were not competitors for purposes of patent damages. Given that under Minco the market must be "broadly defined," 95 F.3d at 1118, Cordis's position is not supportable. Based on Minco, the only requirement for recovering a running royalty on a patented machine's output is a showing that the patentee and the infringer competed in the output market and that the infringer could have anticipated that its infringement would have hurt the sales of the patentee (its competitor in that output market). The jury could have found that Spectralytics made such a showing.
*918 Stickle is not to the contrary. In that case, Stickle (the patentee) was in the business of selling taco fryers, not tacos. Heublein (the accused infringer) was in the business of selling tacos, not taco fryers. Heublein commissioned the manufacture of infringing taco fryers by an outside company. 716 F.2d at 1553-56. Thus, by using an infringing taco fryer, Heublein deprived Stickle of the sale of a fryer; he did not deprive Stickle of the sale of any tacos. Further, there was evidence that Stickle had offered to license his patents to Heublein for a lump-sum royalty rather than a per-taco running royalty, and there was no evidence that users of taco fryers paid per-taco running royalties. Id. at 1561-63. The Federal Circuit therefore held:
Since there is no evidence that users in the food industry upon purchase of food processing equipment also expect to pay a use royalty (whether based on a separate method patent or on the right to control use of patented machines), a willing licensor could not have reasonably expected to secure a use royalty from either the maker or user. We find this conclusion confirmed, indeed inescapable, from the actual negotiations between the parties. Martinez at no time suggested a use royalty, despite knowledge of Heublein's intended use, even after Heublein had the infringing fryers in operation. Accordingly, we conclude that the trial court was clearly in error in basing a royalty on Heublein's production rather than on a lump-sum for each machine.
Id. at 1562-63 (emphasis added).
Both Stickle and Minco proceed from a shared premise: A running-royalty award is supportable only if it would have been reasonably foreseeable to the patentee. In Minco, a running royalty was deemed to be foreseeable when the patentee and the infringer competed in the market for the patented machine's output. In Stickle, a running royalty was deemed to be unforeseeable when, consistent with industry practice, the patentee had previously offered paid-up licenses rather than running-royalty licenses and when the patentee was in the business of selling machines of a type that the infringer was in the habit of buying.
Given that Spectralytics and Noble were direct competitors in the market for stents, Noble could reasonably have anticipated being charged a stent-based royalty for use of the '277 patent. And Noble could also have reasonably anticipated that by using the infringing device, Noble would have injured Spectralytics in the market for stents, broadly defined. Further, Davis testified that Spectralytics and Noble would have agreed to a running royalty as a way of sharing risk. Noble's royalty costs would have been low if it did not sell many stents and would have been high only if it made a lot of money selling stents made with the patented machine. Tr. at 1251-53.
Cordis attacks Davis's testimony on three grounds: lack of evidence of comparable running royalties, evidence that Spectralytics sold some stent-cutting machines for a fixed price, and an absence of any actual risk to be shared. Cordis PT Mem. at 47-48. But given that the stent industry was in its relative infancy in 1998, it is not surprising that Spectralytics was unable to provide evidence that competitors in the stent-cutting business demanded use-based royalties for stent-cutting machines. In every new industry, someone has to be the first to demand a use-based royalty. Further, although Spectralytics did sell a few stent-cutting machines, Davis testified that Spectralytics was not in the business of selling such machines but rather did so on only a handful of occasions and under somewhat unusual circumstances. Tr. at 1325 ("Spectralytics *919 wasn't in the business of selling machines."); id. at 1329-32. The fact that a grocery store occasionally sells off its used shelves or freezers does not mean that the grocery store is in the business of selling shelves or freezers.
Finally, Cordis's argument that the parties would not have agreed to a running royalty in December 1998 as a means of sharing risk because no such risk existed is based on Cordis's erroneous interpretation of the book-of-wisdom doctrine. Cordis contends that the parties would not have faced any risk during a hypothetical negotiation because they would have known the exact number of Cordis's future sales. Cordis PT Mem. at 48. Although Cordis's counsel got Davis to concede that the parties "would be presumed to have knowledge of the future," Tr. at 1373, this concession is contradicted by other testimony from Davis, Tr. at 1269, and it is simply not an accurate description of the law (as discussed above). If it were correct, then (as also discussed above) the distinction between running royalties and lump-sum royalties would evaporate in patent cases: Every running royalty would be a lump-sum royalty, because the parties would be presumed to know, during their hypothetical negotiations, both the royalty rate and the exact number of future sales to which the royalty rate would be applied.
In short, Davis's testimony provided evidence that Spectralytics and Noble would have agreed to a running royalty. And there was no evidenceas there was in Sticklethat Spectralytics and Noble would have agreed to a lump-sum royalty. Under the circumstances, and in light of Minco, the jury was entitled to credit Davis's testimony that Spectralytics and Noble would have negotiated a license in the form of a running royalty.
Apart from challenging the form of the jury's royalty award, Cordis also challenges the royalty rate of five percent. Cordis makes only one argument: that the royalty rate equals the amount of a commission offered to salesman Jack Lundeen and thus was "improperly based on" that commission. Cordis PT Mem. at 50-52.
One problem with Cordis's argument is that Cordis does not really know if the jury based its award on Lundeen's commission. The fact that Lundeen's commission was five percent did not somehow put the number five off limits to the jury. It is possible that the jury based its award on Lundeen's commission, but it is also possible that it did not. We will never know.
Moreover, the rate used by the jury is substantially less than the 20-percent rate that Davis testified to. See Tr. at 1229. In advocating a 20-percent royalty rate, Davis used a method that is common in patent cases: the rule of thumb "that a quarter to a third of the profits attributable to the invention should be set aside as a royalty for that invention." Tr. at 1246. The authors of the treatise Calculating Intellectual Property Damages criticize this rule of thumb but "note that regardless of [the] theoretical quality of its intellectual underpinnings ... the approach has found its way into common usage among licensing professionals and experts." William O. Kerr and Richard B. Troxel, Calculating Intellectual Property Damages § 5:24 (2009).
Perhaps because expert testimony about the rule-of-thumb approach is common in patent cases, Cordis does not contend that Davis's testimony does not support the jury's royalty award. Instead, Cordis says that a five-percent royalty is unsupportable because it equals Lundeen's sales commission. Cordis PT Mem. at 52 ("[T]here is no support for running-royalty damages premised on the 5% sales commission paid to Jack Lundeen."). But on this theory, a higher royalty ratesay, 7 percent, or the 20 percent that Spectralytics *920 asked forwould not be open to challenge. A rule that would cause the Court to uphold a higher damages award but require that a lower damages award be vacated would be an odd rule indeed.
Given that Davis testified in support of a 20-percent royalty rate, a reasonable jury could have decided to award damages based on a lower royalty rate. The fact that the jury decided on a royalty rate that happens to equal Lundeen's commission does not make the jury's award improper. Under Federal Circuit case law, a jury may pick a damages number somewhere between the numbers offered by the parties. Fuji Photo Film Co. v. Jazz Photo Corp., 394 F.3d 1368, 1378 (Fed.Cir.2005) ("[T]he jury is not bound to accept a rate proffered by one party's expert but rather may choose an intermediate royalty rate."); Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 512, 519 (Fed. Cir.1995) ("[A] jury's [royalty] choice simply must be within the range encompassed by the record as a whole."). The jury in this case picked a royalty rate below the rate Spectralytics asked for, and awarded damages greater than what Cordis proposed. The jury did not act unreasonably.
D. Willfulness
Cordis asks the Court to set aside the jury's verdict that Cordis willfully infringed the '277 patent. The Court finds that Cordis did not move for judgment as a matter of law under Rule 50(a) on this issue before it was submitted to the jury, as required by Rule 50(a)(2). Accordingly, Cordis's post-trial motion for judgment as a matter of law on willfulness is not a "renewed motion" under Rule 50(b). See Hinz v. Neuroscience, Inc., No. 04-CV-0142, 2007 WL 1576116, at *2, 2007 U.S. Dist. LEXIS 39888, at *5 ("A Rule 50(b) motion is, by definition, a renewal of a Rule 50(a) motion.") (D.Minn. May 31, 2007).
The Court rejects Cordis's argument that by moving for judgment as a matter of law on infringement and obviousness, Cordis effectively raised the issue of willfulness. Def. Reply Supp. Def. Post-trial Mot. at 7 [Docket No. 405]. To find willful infringement, the jury had to find that Cordis and Noble were subjectively aware of the '277 patent. See Final Jury Instrs. at 15; Tr. at 3054. But such subjective awareness is irrelevant to infringement and invalidity. Accordingly, Cordis's Rule 50(a) motions during trial on infringement and invalidity did not adequately challenge willfulness, and Cordis therefore did not preserve the issue for purposes of Rule 50(b).
III. SPECTRALYTICS'S MOTION
A. Interest, Costs, and an Accounting
Spectralytics seeks pre- and post-judgment interest, costs, and "an accounting of, and damages for, all sales of stents made with the infringing follower assembly that defendants did not identify prior to trial...." Spect. PT Mem. at 1. Apart from disputing Spectralytics's entitlement to damages as discussed above, Cordis does not oppose these requests. Def. Opp. Pl. Post-trial Mot. at 1 [Docket No. 397]. The Court therefore grants Spectralytics's motion with respect to pre- and post-judgment interest, costs, and an accounting for infringing sales by Noble to Cordis that were not disclosed before trial. The Court also awards damages on those infringing sales at the rate of five percent, in accordance with the jury's verdict. Once the accounting is complete, the parties should submit a stipulation identifying the additional damages to be awarded and specifying the total amount of prejudgment interest to be awarded. Spectralytics should then move to amend the judgment on the basis of that stipulation.
*921 B. Injunction
Spectralytics seeks an injunction forbidding Cordis and Noble from infringing the '277 patent in the future. Cordis and Noble contend that they "have ceased all infringing activities" and therefore should not be subject to an injunction. Def. Opp. Pl. Post-trial Mot. at 1.
Under eBay, Inc. v. MercExchange, L.L.C., injunctions in patent cases are subject to the same four-factor test that applies in other cases. 547 U.S. 388, 391, 126 S. Ct. 1837, 164 L. Ed. 2d 641 (2006). To receive an injunction, a plaintiff must show:
(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
Id. The Court finds that Spectralytics has satisfied this test with respect to any possible future use by Cordis and Noble of the '277 patent. In particular, the balance of hardships and the public interest tip decidedly in Spectralytics's favor. From Cordis and Noble's assertion that they no longer use the '277 patent, it follows that an injunction will impose no great hardship on them and will not disserve the public interest. The Court therefore grants Spectralytics's request for injunctive relief.
C. Enhanced Damages and Attorney's Fees for Willfulness
The jury found that Cordis willfully infringed the '277 patent. Although this finding authorizes the Court to enhance damages and award attorney's fees, it does not require the Court to do so.[10] Under the circumstances, the Court declines to award enhanced damages or attorney's fees.
First, to the extent that Spectralytics argues that Cordis should pay enhanced damages or attorney's fees because of Cordis's litigation conduct, the Court disagrees. This was a very hard-fought case with much at stake, and counsel on both sides behaved, at times, less than admirably. The Court will not reward the pot for the kettle's misbehavior.
Second, to the extent that Spectralytics argues that the damages award should be enhanced to penalize Cordis for its willful infringement, the Court disagrees. The degree to which damages should be enhanced for willfulness depends in large part on the reprehensibleness of the infringementthat is, it depends on how willful the willful infringement was.
The fact of willfulness is, under In re Seagate Technology, LLC, essentially an objective question: "[P]roof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness." 497 F.3d 1360, 1371 (Fed. Cir.2007) (emphasis added). In particular, to prove willfulness, a plaintiff must show that "the infringer acted despite an objectively high likelihood that its actions constituted *922 infringement of a valid patent" and that this high likelihood of infringement "was either known or so obvious that it should have been known to the accused infringer." Id.
The Court believes that, after Seagate, greater emphasis must be placed on objective factors in assessing the degree of a defendant's willfulness. Seagate expressly "abandon[ed] the affirmative duty of due care" that had existed under the Federal Circuit's earlier case law. Id. If a defendant who failed to exercise "due care" to avoid infringement can altogether avoid a finding of willfulness because the objective likelihood of infringement was low (or the objective likelihood of invalidity was high), then logically a defendant's exposure for enhanced damages should likewise be related to the objective likelihood of invalidity or infringement.
Indeed, even under the pre-Seagate guidelines for enhancing damages, courts must consider the closeness of the case in deciding how much (if at all) to enhance damages for willfulness. In Read Corp. v. Portec, Inc., the Federal Circuit identified the following nine factors for courts to consider in connection with enhancing damages for willfulness:
(1) whether the infringer deliberately copied the ideas or design of another;
(2) whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed ...
(3) the infringer's behavior as a party to the litigation[;] ...
(4) [the d]efendant's size and financial condition[;] ...
(5) [the c]loseness of the case[;] ...
(6) [the d]uration of defendant's misconduct[;] ...
(7) [r]emedial action by the defendant[;]...
(8) [the d]efendant's motivation for harm[; and] ...
(9) [w]hether defendant attempted to conceal its misconduct.
970 F.2d 816, 827 (Fed.Cir.1992).
Most of these factors weigh against, or are neutral toward, a finding of enhanced damages in this case. Significantly, this was a close case, as evidenced in part by the fact that, had the Court been sitting as the fact finder, it likely would have found the '277 patent invalid for obviousness. With respect to copying, the Court found the evidence of deliberate copying underwhelming.[11] With respect to defendants' investigation, the Court finds that Cordis did not carefully investigate the '277 patent until trial, but the Court discounts this factor in light of Seagate's abrogation of the duty of due care. With respect to litigation conduct, the Court finds (as noted above) that both sides behaved similarly. The Court does not find that Cordis was motivated to harm Spectralytics, or that Cordis attempted to conceal its infringement, or that the duration of the infringement was excessive. It is true that Cordis could afford to pay substantial enhanced damages (the fourth Read factor), but this fact alone cannot justify an enhanced award. In short, although the jury found that Cordis's infringement was willfuland Cordis's procedural error precludes the Court from reviewing that findingthe Court does not find Cordis to have acted culpably enough to merit an award of enhanced damages.
*923 ORDER
Based on the foregoing, and on all of the files, records, and proceedings herein, IT IS HEREBY ORDERED THAT:
1. The post-trial motion of defendants Cordis Corporation and Norman Noble, Inc. for judgment as a matter of law or for a new trial [Docket No. 376] is DENIED.
2. The post-trial motion of plaintiff Spectralytics, Inc. [Docket No. 379] is GRANTED in part and DENIED in part as follows:
a. To the extent that Spectralytics seeks a permanent injunction, the motion is GRANTED. Defendants Cordis Corporation and Norman Noble, Inc. are PERMANENTLY ENJOINED from making, using, selling, or offering for sale any device that infringes United States Patent No. 5,852,277, including (for example) the system in which the so-called follower assembly is carried on the laser-cutting tooli.e., the system that the jury found to infringe in this caseand any laser-cutting system not colorably different from that system. This injunction binds Cordis Corporation and Norman Noble, Inc., as well as the parties specified in Fed.R.Civ.P. 65(d)(2).
b. To the extent that Spectralytics seeks an accounting of, and damages for, certain sales of stents made with an infringing laser-cutting system, the motion is GRANTED. Defendants Cordis Corporation and Norman Noble Inc. must, no later than 28 days from the date of this order, provide Spectralytics an accounting of all stent sales that (1) were not reported to Spectralytics before trial, and (2) were of stents made with an infringing laser-cutting system. The Court will award damages on the gross sales shown in the accounting at a rate of five percent.
c. To the extent that Spectralytics seeks an award of pre- and post-judgment interest, the motion is GRANTED. After Cordis and Norman Noble provide the accounting called for above, the parties must submit a stipulation within 14 days identifying the additional damages to be awarded and specifying the total amount of prejudgment interest to be awarded. Prejudgment interest must be calculated as set forth in paragraph 4 of the Declaration of Julie Davis [Docket No. 386]. Spectralytics may then move to amend the judgment on the basis of the parties' stipulation. The Court will award post-judgment interest from February 3, 2009 forward in accordance with 28 U.S.C. § 1961.
d. To the extent that Spectralytics seeks an award of costs other than attorney's fees, the motion is GRANTED. Spectralytics should follow the ordinary procedures in this District for recovering its taxable costs.
e. The motion is DENIED in all other respects.
NOTES
[1] The Court will generally refer to defendants collectively as "Cordis," unless there is some reason to refer to Noble separately. Cordis agreed to indemnify Noble for any liability established in this action.
[2] With respect to damages, Cordis also asks, in the alternative, for remittiturthat is, for an order directing plaintiffs to choose between either accepting a reduced amount of damages, as set by the Court, or retrying the case (or at least retrying damages).
[3] The trial transcript, cited as "Tr." in this order, is found at Docket Nos. 408 to 420.
[4] See Kinserlow v. CMI Corp., 217 F.3d 1021, 1027 (8th Cir.2000) (identifying one of defendant's employees as an "interested witness"); Glover v. McDonnell Douglas Corp., 981 F.2d 388, 391-92 (8th Cir.1992) ("[A]ll of McDonnell Douglas' testimony came from its employees, all of whom have an interest (even if not pecuniary) in this case. Therefore, we cannot fairly characterize their testimony as `completely disinterested.'"), vacated on other grounds, 510 U.S. 802, 114 S. Ct. 42, 126 L. Ed. 2d 13 (1993), readopted on remand, 12 F.3d 845 (8th Cir. 1994).
[5] Miller's testimony about what Noble was producing with the redesigned assembly was somewhat unclear. But it is clear that when Miller was asked whether that redesigned assembly was being used to produce stents, he answered "prototype stents." Tr. at 1877 ("Q: Are they stents? A: There is some prototype stents."); id. at 1878 ("Q: So these are ones where the follower is attached to the shelf? A: Correct.").
[6] Indeed, the Federal Circuit has held that a reasonable-royalty award can exceed the infringer's anticipated profits from the infringing activity. Monsanto Co. v. Ralph, 382 F.3d 1374, 1384 (Fed.Cir.2004) ("[A]lthough an infringer's anticipated profit from use of the patented invention is `among the factors to be considered in determining' a reasonable royalty, the law does not require that an infringer be permitted to make a profit.") (citation omitted).
[7] Further, a party who can easily and at low cost switch to a noninfringing alternative could rationally agree to pay almost any royalty rate to license, on a percentage-royalty basis, a patent that it is accused of infringing. Because the accused infringer could simply switch to the noninfringing alternative and thereby avoid paying any royaltieseven 100 percent of $0 in infringing sales is $0the accused infringer might decide to save on negotiation costs by agreeing to whatever royalty rate the patentee demands, safe in the knowledge that it would not have to pay anything because it was not infringing or would stop infringing.
Of course, an accused infringer who agreed to such a license would face steep costs if it used an infringing process or machine that it wrongly believed was a noninfringing alternative. But businesses take risks all the time, and there is nothing inherently unfair in forcing a business to bear the costs of guessing wrong about whether it is infringing. In this case, Cordis bet that it would not be found liable for infringing Spectralytics's patent if Noble continued to use the follower assembly. According to the jury in this case, Cordis bet wrong.
[8] Cordis's counsel asked: "[I]f the jury concludes that Nobles [sic] could have replaced all of their infringing machines with modified Comtal machines which are noninfringing and that could be done for a million and a half dollars, that also would cap the amount of the license at a million and a half dollars, correct?" Tr. at 1376.
[9] Further, in Integra Lifesciences I, it appears that the Federal Circuit believed that the patent-in-suit became more valuable over time, which would mean that the price of acquiring the patent in 1996 (the date of Integra's acquisition of the patent-in-suit as part of acquiring a company) would be expected to exceed the price of a license to the patent-in-suit in 1994 or 1995 (when the hypothetical negotiation would have taken place). Id. at 870 ("The value of a hypothetical license negotiated in 1994 could be drastically different from one undertaken in 1995 due to the more nascent state of the RGD peptide research in 1994."). Under such circumstancesthat is, when the actual sale of a patent portfolio including a patent-in-suit postdates a hypothetical license negotiation, and when the value of the patent seemed higher at the time of that sale than it would have at the time of the hypothetical negotiationevidence about the later sale is particularly relevant to assessing the likely result of an earlier hypothetical negotiation.
[10] Modine Mfg. Co. v. Allen Group, Inc., 917 F.2d 538, 543 (Fed.Cir.1990) ("[A] finding of willful infringement merely authorizes, but does not mandate, an award of increased damages."); Avia Group Int'l, Inc. v. L.A. Gear Cal., Inc., 853 F.2d 1557, 1567 (Fed.Cir. 1988) ("Although an award of attorney fees, because discretionary, does not automatically follow from the willfulness of an infringement, our cases uniformly indicate that the willfulness of the infringement by the accused infringer may be a sufficient basis in a particular case for finding the case `exceptional' for purposes of awarding attorney fees to the prevailing patent owner.") (citations omitted).
[11] It is conceivable that the jury believed that Noble copied the patented design. But the jury was not asked an interrogatory on this question, and a finding of copying was not essential to any of its decisions. The Court is therefore free to assess the evidence of copying on its own. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2482866/ | 940 N.E.2d 304 (2007)
372 Ill. App.3d 1093
346 Ill.Dec. 304
DOCKERY
v.
TARGET CORP.
No. 1-06-0984.
Appellate Court of Illinois, First District.
April 9, 2007.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2482879/ | 938 N.E.2d 524 (2010)
237 Ill. 2d 568
PEOPLE
v.
DIGBY.
No. 110291.
Supreme Court of Illinois.
September 1, 2010.
Disposition of petition for leave to appeal denied.[*]
NOTES
[*] For Cumulative Leave to Appeal Tables see preliminary pages of advance sheets and Annual Illinois Cumulative Leave to Appeal Table. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/7023676/ | JUSTICE McLAREN delivered the opinion of the court: Plaintiff appeals from several court orders dismissing with prejudice two counts of her complaint seeking damages for personal injury. We affirm. On September 25, 1986, Mary Lou Glaves (plaintiff) was cut by an electrical circular saw operated by her husband Ronald Glaves (defendant). Plaintiff received over 200 stitches in her right arm, wrist and hand. At the time of the injury, spouses in Illinois were prevented from suing each other for other than intentional torts committed during coverture. Ill. Rev. Stat. 1985, ch. 40, par. 1001. On January 1, 1988, Public Act 85 — 625 became law. This Act provided in pertinent part that spouses could sue for any kind of tort committed during the marriage. On March 21, 1988, plaintiff brought suit against defendant. Count I alleged that plaintiff’s injuries were caused by defendant’s negligence. Count II alleged willful and wanton misconduct on defendant’s part. Defendant moved to dismiss the complaint, averring that plaintiff’s actions were barred by the law in effect at the time of the injury. The trial court denied the motion to dismiss and found that Public Act 85 — 625 should be applied retroactively. Defendant’s appeal of this order was dismissed. On January 30, 1989, a hearing was held on defendant’s amended motion for rehearing on the issue of retroactive application of Public Act 85 — 625. The court vacated that portion of its order finding that the Act should be applied retroactively and found that the Act should only be applied prospectively. The court subsequently dismissed counts I and II of the complaint and granted leave to plaintiff to amend her complaint to allege the commission of an intentional tort. As the orders dismissing counts I and II contained Supreme Court Rule 304(a) ((November 30, 1988), Official Reports Advance Sheet No. 23 (eff. Jan. 1, 1989)) language regarding enforcement and appealability, plaintiff appeals the orders to this court. Plaintiff contends that Public Act 85 — 625 should be given retroactive application and that this court should reverse the trial court’s dismissal of counts I and II of her complaint. We note initially that a presumption exists that an amendatory act is intended to apply only prospectively. (Rivard v. Chicago Fire Fighters Union, Local No. 2 (1988), 122 Ill. 2d 303, 309; Levy v. McKiel (1989), 185 Ill. App. 3d 240, 242.) This presumption is rebuttable only if the act, by express language or necessary implication, indicates that the legislature intended a retroactive application. (Rivard, 122 Ill. 2d at 309.) However, this presumption does not apply to changes in procedures or remedies; when an amendment changes procedures alone, it will be construed as retroactive so long as that is what the legislature intended. Rivard, 122 Ill. 2d at 310. We must first determine, then, whether Public Act 85 — 625 amended a substantive right or merely a procedural right. The statutory language conferring interspousal tort immunity in Illinois was promulgated by the General Assembly in a 1953 amendment to the Married Women’s Act of 1874. This amendment provided that “neither husband nor wife may sue the other for a tort to the person committed during coverture.” (See Ill. Rev. Stat. 1979, ch. 40, par. 1001.) Our supreme court, in a series of decisions, construed the amendment, which reestablished the common-law rule of interspousal tort immunity, as a substantive bar to personal injury litigation between spouses. (See Wartell v. Formusa (1966), 34 Ill. 2d 57, 60; Heckendorn v. First National Bank (1960), 19 Ill. 2d 190, 193.) However, the court in Allstate Insurance Co. v. Elkins (1979), 77 Ill. 2d 384, concluded that the effect of the 1953 amendment “was not to destroy the cause of action of the injured spouse, but to confer immunity on the tortfeasor spouse, which like a defense based upon the statute of limitations can be waived by the defendant spouse.” (Allstate, 77 Ill. 2d at 390.) Since the Allstate decision, Illinois courts, including this court, have interpreted interspousal tort immunity as a procedural, rather than a substantive, bar to actions between spouses. See State Farm Mutual Automobile Insurance Co. v. Palmer (1984), 123 Ill. App. 3d 674, 680; Farmers Insurance Group v. Nudi (1982), 108 Ill. App. 3d 151, 153; Wirth v. City of Highland Park (1981), 102 Ill. App. 3d 1074, 1077. Having concluded that the immunity is procedural, we must determine whether the legislature intended Public Act 85 — 625 to be applied retroactively. Legislative intent may be divined through any of the ordinary devices of statutory interpretation, including: (1) the evil to be remedied and the object to be obtained; (2) the reason and necessity for the statute; and (3) the history of the legislation, particularly the record of legislative debates and statements by the sponsors of the legislation. Rivard, 122 Ill. 2d at 310. Our review of the relevant materials leads us to conclude that the General Assembly did not intend Public Act 85 — 625 to be applied retroactively. Looking to the history of the Act, we find that the Act was approved on September 20, 1987, but did not become effective until January 1, 1988. From this we conclude that the legislature intended a later, rather than an earlier, effective date. Plaintiff cites as precedential State Farm Mutual Automobile Insurance Co. v. Palmer (1984), 123 Ill. App. 3d 674, in which the Appellate Court for the Third District retroactively applied Public Act 82 — 569 (“An Act relating to interspousal torts”), which eliminated interspousal tort immunity for intentional torts. In Palmer, the act in issue recited that “ ‘[tjhis amendatory Act shall take effect upon becoming law.’ ” (Palmer, 123 Ill. App. 3d at 681, quoting Pub. Act 82 — 569, §3.) The court concluded that the legislature intended immediate, early application of that act. The court, therefore, found no error in the trial court’s retroactive application of the law. The language of the Act before us, however, does not provide such a sense of urgency. Had the legislature intended retroactive application here, it surely would not have provided for an effective date more than three months after approval of the Act. Nothing in the statements by supporters of the bill, supplied by plaintiff, direct us toward an opposite result. Without any evidence of a contrary intent by the legislature, we do not find error in the trial court’s prospective application of the Act. We, therefore, determine that counts I and II of plaintiff’s complaint were properly dismissed by the trial court. For these reasons, we affirm the orders of the circuit court of Lake County. Affirmed. DUNN and WOODWARD, JJ., concur. | 01-03-2023 | 07-24-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2490859/ | 78 So.3d 58 (2012)
George BROWN, Appellant,
v.
STATE of Florida, Appellee.
No. 4D10-4824.
District Court of Appeal of Florida, Fourth District.
January 18, 2012.
George Brown, Arcadia, pro se.
No appearance required for appellee.
PER CURIAM.
Affirmed. See Arce v. State, 762 So.2d 1003 (Fla. 4th DCA 2000).
WARNER, POLEN and CIKLIN, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/414740/ | 701 F.2d 168
U. S.v.Adler
81-5192
UNITED STATES COURT OF APPEALS Fourth Circuit
2/2/83
1
D.Md.
AFFIRMED | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2490864/ | 72 So.3d 727 (2009)
DWIGHT LONG
v.
PSYCHEMEDICS CORP. AND MICHAEL TURNER, D.O.
No. 1080620.
Supreme Court of Alabama.
November 13, 2009.
DECISION WITHOUT PUBLISHED OPINION
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/565415/ | 940 F.2d 649
Jonesv.Sullivan
NO. 90-2575
United States Court of Appeals,Second Circuit.
JUN 14, 1991
1
Appeal From: S.D.N.Y.
2
AFFIRMED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/765519/ | 186 F.3d 544 (4th Cir. 1999)
ANNETTE GRECO LITMAN, Plaintiff-Appellee, UNITED STATES OF AMERICA, Intervenor-Appellee,v.GEORGE MASON UNIVERSITY, Defendant-Appellant, and EUGENE M. NORRIS; GEOFFREY ORSAK; GIRARD MULHERIN, Defendants. AMERICAN CIVIL LIBERTIES UNION OF VIRGINIA; TRIAL LAWYERS FOR PUBLIC JUSTICE; AMERICAN ASSOCIATION OF UNIVERSITY WOMEN; AMERICAN ASSOCIATION OF UNIVERSITY WOMEN LEGAL ADVOCACY FUND; AMERICAN CIVIL LIBERTIES UNION WOMEN'S RIGHTS PROJECT; NATIONAL WOMEN'S LAW CENTER, Amici Curiae.
No. 98-1742 (CA-97-1755-A)
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
Argued: May 5, 1999Decided: July 28, 1999
Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. James C. Cacheris, Senior District Judge.[Copyrighted Material Omitted]
COUNSEL ARGUED: William Eugene Thro, Assistant Attorney General, OFFICE OF THE ATTORNEY GENERAL, Richmond, Virginia, for Appellant. Alan Banov, Washington, D.C.; Seth Michael Galanter, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees. ON BRIEF: Mark L. Earley, Attorney General of Virginia, Ronald C. Forehand, Senior Assistant Attorney General, OFFICE OF THE ATTORNEY GENERAL, Richmond, Virginia, for Appellant. Bill Lann Lee, Acting Assistant Attorney General, Jessica Dunsay Silver, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee United States. Mary Bauer, AMERICAN CIVIL LIBERTIES UNION OF VIRGINIA FOUNDATION, Richmond, Virginia; Sarah Posner, TRIAL LAWYERS FOR PUBLIC JUSTICE, P.C., Washington, D.C., for Amici Curiae.
Before NIEMEYER, MICHAEL, and TRAXLER, Circuit Judges. Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Judge Michael and Judge Traxler joined.
OPINION
NIEMEYER, Circuit Judge:
1
Annette Litman, a student at George Mason University in Fairfax, Virginia, filed this action against the University and some of its employees, alleging sex discrimination in violation of Title IX of the Education Amendments of 1972, 20 U.S.C. § 1681 et seq. To justify her suit against a state instrumentality in federal court, Litman relied on 42 U.S.C. § 2000d-7(a)(1), which provides that "[a] State shall not be immune under the Eleventh Amendment of the Constitution of the United States from suit in Federal court for a violation of . . . title IX of the Education Amendments of 1972."
2
George Mason University claims with respect to § 2000d-7(a)(1) that (1) Congress lacked the requisite constitutional authority to abrogate its Eleventh Amendment immunity and (2) the provision does not unequivocally effect a voluntary waiver of its Eleventh Amendment immunity. While the district court agreed with the University that Title IX exceeded Congress' remedial authority under § 5 of the Fourteenth Amendment to abrogate its Eleventh Amendment immunity, the district court upheld 42 U.S.C. § 2000d-7(a)(1) under the Spending Clause of Article I of the Constitution as a lawful condition of the University's voluntary acceptance of federal education funding under Title IX. For the reasons that follow, we affirm.
3
* George Mason University ("GMU") is a state-created university "subject at all times to the control of the [Virginia] General Assembly." Va. Code Ann. § 23-91.24. Moreover, the parties agree that GMU is a recipient of federal education funding within the meaning of Title IX, 20 U.S.C. § 1681(a). See 20 U.S.C. § 1687.
4
In her complaint, which supplies us with the facts in this case at the motion to dismiss stage, Annette Litman alleges that in 1995, as a student in GMU's "extended studies" program, she enrolled in a computer science course with Professor Eugene Norris, for whom she also worked as a research assistant. Over the course of the fall semester, Norris became infatuated with Litman, telling her routinely that he loved her and asking questions about her marriage and specifically about her sex life. Norris also stalked Litman, waiting for her after her speech class, on one occasion, to tell her that he"missed her" and that, despite her efforts to avoid him, he "had his ways" of locating her. After Litman terminated her research position with Norris, she received an e-mail from him stating, "Don't marry someone you can live with, Marry someone you can't live without."
5
In February 1996, Litman filed a sexual harassment complaint against Norris with GMU's Equity Office, requesting that Norris be reprimanded for his conduct and ordered to stay away from her. The Equity Office ordered Norris to avoid contact with Litman, but it refused to investigate the complaint further, characterizing Litman's allegations of sexual harassment as a "fishing expedition" grounded in conjecture. Finding this response inadequate, Litman sought the intervention of GMU's president. She also circulated a petition urging GMU to investigate Norris' alleged wrongdoings, but GMU failed to undertake the requested investigation.
6
Unable to locate a professor to supervise her senior research project, Litman maintained that GMU's faculty refused to interact with her once it became known that she had filed a sexual harassment complaint against one of its members. She thereafter sent suggestive and hostile e-mail messages to certain faculty members, resulting in two professors instituting sexual harassment charges of their own against her pursuant to GMU's Student Judicial Code. Following a trial before GMU's University Judicial Board in May 1996, the Board found Litman guilty of these charges and both imposed academic sanctions against her and expelled her from GMU. Litman asserts that the Board's process was so irregular that GMU effectively precluded her from preparing an adequate defense. Litman's complaint against Norris was tried in October 1996 and resulted in a finding that Norris had not violated GMU's sexual harassment policy.
7
In October 1997, Litman filed this action alleging that GMU and some of its employees discriminated and retaliated against her on the basis of her sex in violation of Title IX of the Education Amendments Act of 1972, 20 U.S.C. § 1681 et seq. Invoking Eleventh Amendment immunity, GMU moved to dismiss the complaint for lack of jurisdiction. Litman responded, maintaining that Congress, through its enactment of the Civil Rights Remedies Equalization Act, 42 U.S.C. § 2000d-7(a)(1), abrogated GMU's Eleventh Amendment immunity, or, alternatively, that GMU waived its immunity as a condition to receiving federal funding under Title IX. When GMU contended that Congress' effort to abrogate GMU's Eleventh Amendment immunity was unconstitutional, the United States intervened, pursuant to 28 U.S.C. § 2403(a), to defend the constitutionality of 42 U.S.C. § 2000d-7(a)(1).
8
The district court denied GMU's motion to dismiss. Relying on City of Boerne v. Flores, 521 U.S. 507 (1997), the court determined that the protections afforded by Title IX differed from those afforded by the Equal Protection Clause of the Fourteenth Amendment in important ways. It concluded first that Title IX regulated both private and state-sponsored conduct, whereas the Equal Protection Clause, by its terms, regulated only state action. Second, it concluded that Title IX reached beyond the Fourteenth Amendment's prohibitions against gender discrimination by imposing liability on funding recipients for "non-intentional (i.e. disparate impact) discrimination." Litman v. George Mason Univ., 5 F. Supp.2d 366, 374 (E.D. Va. 1998). The district court accordingly concluded that § 5 of the Fourteenth Amendment did not provide Congress with the authority to abrogate GMU's Eleventh Amendment immunity. The court went on to hold, however, that GMU waived its Eleventh Amendment immunity by accepting Title IX funding, which was conditioned on the unambiguous waiver of immunity codified in 42 U.S.C. § 2000d-7(a)(1). The court reasoned that while Congress does not have"the authority pursuant to its Article I powers to simply abrogate the States' Eleventh Amendment immunity, Congress does have the power to require the States to waive their immunity pursuant to a valid exercise of its spending power." Id. at 375. Relying on language in South Dakota v. Dole, 483 U.S. 203 (1987), and New York v. United States, 505 U.S. 144 (1992), the district court also emphasized that the Eleventh Amendment presented no "independent constitutional bar" to Congress' employing its spending power in this manner. Id. at 376 (internal quotation marks omitted).
9
From the district court's denial of GMU's motion asserting Eleventh Amendment immunity, GMU noticed this interlocutory appeal. See Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 147 (1993) (holding that "States and state entities that claim to be `arms of the State' may take advantage of the collateral order doctrine to appeal a district court order denying a claim of Eleventh Amendment immunity").
II
10
On appeal, GMU contends that notwithstanding the provisions of the Civil Rights Remedies Equalization Act, 42 U.S.C. § 2000d7(a)(1), which amended Title IX to make explicit that "[a] State shall not be immune under the Eleventh Amendment of the Constitution of the United States from suit in Federal court for a violation of . . . title IX of the Education Amendments of 1972," it may not be sued in federal court. It argues that in enacting § 2000d-7(a)(1), Congress lacked the power to abrogate Eleventh Amendment immunity through § 5 of the Fourteenth Amendment and also that GMU did not consent to a waiver because "there is nothing in Title IX or in Congress' attempt to abrogate the Eleventh Amendment which states that waiver of the Eleventh Amendment is a condition of receiving federal funds."
11
Before determining whether Congress' effort to abrogate GMU's Eleventh Amendment immunity is justified by § 5 of the Fourteenth Amendment, we first consider whether GMU consented to waive its Eleventh Amendment immunity as a condition of receiving federal education funds.
12
The Eleventh Amendment provides in pertinent part that "[t]he judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State." It is well established that this amendment, despite its express terms, also precludes citizens from bringing suits in federal court against their own states. See Hans v. Louisiana, 134 U.S. 1 (1890); see also Alden v. Maine, --U.S.--, at --, 119 S.Ct. 2240, -- L.Ed.2d --(1999) (emphasizing that the Eleventh Amendment confirms rather than establishes a state's sovereign immunity as a constitutional principle and that its sovereign immunity is not limited by the text of the Eleventh Amendment).
13
By limiting the federal judicial power over the states, the Eleventh Amendment preserves a federal balance and confirms the constitutional design in which each state remains a sovereign entity generally immune from suit. See Seminole Tribe of Florida v. Florida, 517 U.S. 44, 58, 72 (1996); see also Alden,--U.S.--,119 S.Ct. 2240 (stating that "[t]he principle of sovereign immunity preserved by constitutional design thus accords the States the respect owed them as members of the federation" (internal quotation marks and citation omitted)). Inherent in this federal structure is the mutual, reciprocating respect for the state and federal sovereigns, and forcing one sovereign to appear against its will in the courts of another violates this respect. See Seminole Tribe, 517 U.S. at 54; see also Alden, --U.S.-- at--, 119 S.Ct. 2240 (stating that because the "States retain a `residuary and inviolable sovereignty,' [t]hey are not relegated to the role of mere provinces or political corporations, but retain the dignity, though not the full authority of sovereignty" (quoting The Federalist No. 39)). Accordingly,
14
[t]he Eleventh Amendment does not exist solely in order to prevent federal-court judgments that must be paid out of a State's treasury; it also serves to avoid the indignity of subjecting a State to the coercive process of judicial tribunals at the instance of private parties.
15
Seminole Tribe, 517 U.S. at 58 (internal quotation marks, brackets, and citations omitted).
16
The immunity guaranteed by the Eleventh Amendment, however, has well-established exceptions also inherent in the federal structure. First, Congress can abrogate the immunity without state consent if it acts pursuant to a valid exercise of constitutional power sufficient to abrogate the immunity and it unequivocally expresses its intent to do so. See Seminole Tribe, 517 U.S. at 55. Because the Fourteenth Amendment was adopted well after both the Eleventh Amendment and the ratification of the Constitution, and was designed to "expand[ ] federal power at the expense of state autonomy," the power granted to Congress by § 5 of the Fourteenth Amendment is recognized to "intrude upon the province of the Eleventh Amendment." Id. at 59. Accordingly, Congress may act under the authority of § 5 of the Fourteenth Amendment to abrogate a state's Eleventh Amendment immunity. See College Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., --U.S.--, 119 S.Ct. 2219, --L.Ed-- (1999)(citing Fitzpatrick v. Bitzer, 427 U.S. 445 (1976)).
17
In addition, the Eleventh Amendment does not preclude the federal government from bringing suit against states in federal court to ensure compliance with federal law. See Seminole Tribe , 517 U.S. at 71 n.14; United States v. Texas, 143 U.S. 621, 644-45 (1892). Nor does the Eleventh Amendment preclude a private citizen from suing a state officer in federal court "to ensure that the officer's conduct is in compliance with federal law." Seminole Tribe, 517 U.S. at 71 n.14 (citing Ex Parte Young, 209 U.S. 123 (1908)).
18
Finally, a state may waive its Eleventh Amendment immunity by consenting to be sued in federal court. See College Savings Bank, --U.S.--, 119 S.Ct. 2219; Idaho v. Coeur d'Alene Tribe of Idaho, 521 U.S. 261, 267 (1997); Seminole Tribe, 517 U.S. at 63 (acknowledging the "unremarkable . . . proposition that the States may waive their sovereign immunity" (citations omitted)); Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 238 (1985). Permitting such waivers reflects the fact that sovereign immunity is an element of state sovereignty, not a categorical limitation on the federal judicial power. See Coeur d'Alene Tribe of Idaho, 521 U.S. at 267 (stating that, because "a State can waive its Eleventh Amendment protection and allow a federal court to hear and decide a case commenced or prosecuted against it," the Eleventh Amendment "enacts a sovereign immunity from suit, rather than a nonwaivable limit on the Federal Judiciary's subjectmatter jurisdiction" (emphasis added)); see also Erwin Chemerinsky, Federal Jurisdiction 406 (2d ed. 1994) (linking the Eleventh Amendment with principles of sovereign immunity and observing that "[t]raditionally, sovereign immunity could be waived and that principle has carried over to Eleventh Amendment jurisprudence").
19
A state may waive its immunity in two ways. See Booth v. Maryland, 112 F.3d 139, 145 (4th Cir. 1997). It may "directly and affirmatively waive its Eleventh Amendment immunity in a state statute or constitutional provision, as long as the provision explicitly `specif[ies] the state's intention to subject itself to suit in federal court.'" Id. (quoting Atascadero State Hosp., 473 U.S. at 241 (brackets in original)). Alternatively, it may "waive its immunity by voluntarily participating in federal spending programs when Congress expresses `a clear intent to condition participation in the programs . . . on a State's consent to waive its constitutional immunity.'" Id. (quoting Atascadero State Hosp., 473 U.S. at 247 (ellipses in original)).
20
But because of the Eleventh Amendment's vital role in preserving the federal balance, determinations of whether a State has waived its immunity are subjected to "stringent," exacting standards. College Savings Bank, --U.S. at--, 119 S.Ct. 2219(quoting Atascadero State Hosp., 473 U.S. at 241). Thus, a court may not find a waiver absent an "unequivocal indication that the State intends to consent to federal jurisdiction that otherwise would be barred by the Eleventh Amendment." Atascadero State Hosp., 473 U.S. at 238 n.1; see also Pennhurst State School v. Halderman ("Pennhurst I"), 451 U.S. 1, 17, 101 S.Ct. 1531, 67 L.Ed.2d 694 (1981) (citations omitted); Edelman v. Jordan , 415 U.S. 651, 673 (1974). "The whole point of requiring a `clear declaration' by the State of its waiver is to be certain that the State in fact consents to suit." College Savings Bank, --U.S. at--, 119 S.ct. 2219. Accordingly, a State cannot be deemed to have waived its Eleventh Amendment immunity constructively even by engaging in activities after Congress has "made clear that such activity would subject[the State] to suit [in federal court]." Id. at *4, *9 (overruling Parden v. Terminal R. Co. of Ala. Docks Dep't, 377 U.S. 184 (1964)). Similarly, the "mere receipt of federal funds cannot establish that a State has consented to suit in federal court." Atascadero State Hosp., 473 U.S. at 246-47 (citations omitted).
21
Litman contends in this case that GMU, by accepting federal education funds under Title IX, has, as a condition of receiving those funds, unambiguously waived its Eleventh Amendment immunity. The district court agreed. GMU, on the other hand, contends that while 42 U.S.C. § 2000d-7(a)(1) indicates, albeit unconstitutionally, that it is subject to suit in federal court, "there is nothing in the text that even remotely suggests that Virginia's public universities must waive the Eleventh Amendment as a condition of receiving federal funds. Indeed, the statute does not even contain the word `waiver.'" It argues that a statute "must say something like`as a condition of receiving federal funds under this Act, the States agree to waive their Eleventh Amendment immunity'" and that absent such explicit language, the mere receipt of Title IX funds cannot effect a waiver.
22
To resolve this dispute, we turn to the applicable statutory provisions to determine whether they provide unambiguously that GMU, by agreeing to receive federal education funds under Title IX, has waived its Eleventh Amendment immunity.
III
23
The statutory framework applicable to this case is straightforward. Title IX provides that in connection with any education program or activity receiving federal financial assistance, stipulated here to include GMU's program, "[n]o person . . . shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination." 20 U.S.C. § 1681(a). The Supreme Court has held that this provision gives a student an implied right of action for sexual harassment by a teacher in such a program, provided the program's officials have "actual notice of, and[have been] deliberately indifferent to, the teacher's misconduct." Gebser v. Lago Vista Indep. School Dist., 118 S. Ct. 1989, 1993 (1998). Finally, 42 U.S.C. § 2000d-7(a)(1) provides that for a violation of the antidiscrimination edict in § 1681(a), a state "shall not be immune under the Eleventh Amendment . . . from suit in Federal court."
24
Section 1681(a), which precludes the use of Title IX federal education funds for discriminatory purposes, was enacted under the Spending Clause of the Constitution, U.S. Const. art. I,§ 8, cl. 1 ("The Congress shall have Power To lay and collect Taxes .. . to . . . provide for the . . . general Welfare of the United States"). As a federal spending program, it operates "much in the nature of a contract: in return for federal funds, the States agree to comply with federally imposed conditions." Pennhurst I, 451 U.S. at 17; see also Davis v. Monroe County Bd. of Educ., 119 S. Ct. 1661, 1669 (1999) (characterizing Title IX as Spending Clause legislation); Gebser, 118 S. Ct. at 1997 (same). In other words, in exercising its spending power, the federal government "condition[s] an offer of federal funding on a promise by the recipient not to discriminate, in what amounts essentially to a contract between the Government and the recipient of funds." Gebser, 118 S. Ct. at 1997 (citations omitted); see also Davis, 119 S. Ct. at 1670. And it also conditions these funds on the recipient state's consent to be sued in federal court for an alleged breach of the promise not to discriminate. See 42 U.S.C.§ 2000d-7(a)(1).
25
Because of the mutuality required in a contractual relationship of this type -the federal grant in exchange for state agreement to attached conditions -the legitimacy of the attached conditions rests "on whether the State voluntarily and knowingly accepts the terms of the `contract.'" Pennhurst I, 451 U.S. at 17 (citations omitted). Thus, Spending Clause legislation, in contrast to other Article I legislation or § 5 legislation, presents a state with a choice: the state can either comply with certain congressionally mandated conditions in exchange for federal funds or not comply and decline the funds. Similarly, "Congress has no obligation to use its Spending Clause power to disburse funds to the States; such funds are gifts." College Savings Bank, --U.S. at--, 119 S.Ct. 2219. As the Supreme Court has observed, the attachment of conditions to grants made under the Spending Clause is a "permissible method of encouraging a State to conform to federal policy choices." New York v. United States , 505 U.S. 144, 168 (1992). The Court explained,
26
If a State's citizens view federal policy as sufficiently contrary to local interests, they may elect to decline a federal grant. If state residents would prefer their government to devote its attention and resources to problems other than those deemed important by Congress, they may choose to have the Federal Government rather than the State bear the expense of a federally mandated regulatory program, and they may continue to supplement that program to the extent state law is not pre-empted. Where Congress encourages state regulation rather than compelling it, state governments remain responsive to the local electorate's preferences; state officials remain accountable to the people.
27
Id. As a general proposition, therefore, when Congress acts pursuant to its spending power, there is no categorical prohibition against its attaching conditions to grants made to the states. See College Savings Bank, --U.S. at--,119 S.Ct. 2219; New York, 505 U.S. at 167; South Dakota v. Dole, 483 U.S. 203, 206 (1987).
28
This mechanism for exercising power under the Spending Clause, however, must have limits. Otherwise, Congress "could render academic the Constitution's other grants and limits of federal authority." New York, 505 U.S. at 167. Indeed, an unlimited Spending Clause power could circumvent the entire constitutional structure. As Justice O'Connor observed,
29
[i]f the spending power is to be limited only by Congress' notion of the general welfare, the reality, given the vast financial resources of the Federal Government, is that the Spending Clause gives "power to the Congress to tear down the barriers, to invade the states' jurisdiction, and to become a parliament of the whole people, subject to no restrictions save such as are self-imposed."
30
South Dakota, 483 U.S. at 217 (O'Connor, J., dissenting) (quoting United States v. Butler, 297 U.S. 1, 78 (1936)).
31
The Supreme Court has recognized at least five such limitations. First, the exercise of the spending power must be for the general welfare. See U.S. Const. art. I, § 8, cl. 1; South Dakota, 483 U.S. at 207. Second, if the grant or expenditure is, when made to the states, accompanied by conditions, the conditions must be stated "unambiguously." South Dakota, 483 U.S. at 207. Third, any conditions imposed must "bear some relationship to the purpose of the federal spending" so that a reasonable nexus exists between the two. New York, 505 U.S. at 167; South Dakota, 483 U.S. at 207-08; Massachusetts v. United States, 435 U.S. 444, 461 (1978) (plurality opinion). Fourth, the grant or expenditure and the conditions attached to it may not violate any independent constitutional prohibition. See South Dakota, 483 U.S. at 208. And fifth, the financial inducement offered by Congress must not be "so coercive as to pass the point at which pressure turns into compulsion." Id. at 211 (internal quotation marks and citations omitted); see also Virginia Dep't of Educ. v. Riley, 106 F.3d 559, 570 (4th Cir. 1997) (en banc) (plurality opinion of Luttig, J.) (finding coercive Congress' withholding of "the entirety of a substantial federal grant on the ground that the States refuse to fulfill their federal obligation in some insubstantial respect rather than submit to the policy dictates of Washington in a matter peculiarly within their powers as sovereign States").
32
In the context of Title IX as applicable to the case before us, Congress has attached at least two conditions to GMU's receipt of Title IX funding: (1) GMU cannot discriminate on the basis of sex, see 20 U.S.C. § 1681(a), and (2) when responding to alleged acts of discrimination, GMU waives its Eleventh Amendment immunity, see 42 U.S.C. § 2000d-7(a)(1). This appeal requires us to determine whether these conditions, considered together, fall within the limitations imposed on Congress' Spending Clause power under current Supreme Court jurisprudence.
33
GMU does not contend that Title IX funds are not spent for the general welfare; that the prohibition of discrimination and the accompanying waiver of Eleventh Amendment immunity are not reasonably related to grants of education funds; or that the attachment of conditions to the funding arrangement is coercive. Rather, it maintains that it did not knowingly waive its Eleventh Amendment immunity because that condition of waiver was not made unambiguously clear in the text of § 2000d-7(a)(1). That provision, GMU observes, uses neither the term "condition" nor the term"waiver." GMU also contends that Congress may not impose a waiver of Eleventh Amendment immunity as a condition of funding: "it is constitutionally impossible for Congress to require the States to waive the Eleventh Amendment as a condition of receiving federal funds." We address these two points in order.
34
* GMU acknowledges that it voluntarily accepts Title IX funding. Indeed, it must apply for federal funds. And in connection with any application, it must assure the Federal Government of its intent to comply with 20 U.S.C. § 1681(a). Implementing regulations provide that each recipient of Title IX funding must enter into a contract of assurance with the Department of Education and thereby manifest its intent to adhere to the conditions imposed by Title IX. See 34 C.F.R. § 106.4(a) (providing, in pertinent part, that"[e]very application for Federal financial assistance for any education program or activity shall as condition of its approval contain or be accompanied by an assurance from the applicant or recipient, satisfactory to the Assistant Secretary, that each education program or activity operated by the applicant or recipient and to which this part applies will be operated in compliance with this part"). Thus, in voluntarily accepting federal education funds, GMU is unequivocally put on notice of three conditions: (1) that it may not discriminate in its programs on the basis of sex, see 20 U.S.C. § 1681(a); (2) that if it does discriminate on the basis of sex, it may be sued by a private individual, see Gebser, 118 S. Ct. at 1996, 1999; and (3) that in any such suit, it may not assert its Eleventh Amendment immunity, see 42 U.S.C. § 2000d-7(a)(1). There can be no doubt that GMU is able "to ascertain what is expected of it" in return for federal education funds. Pennhurst I, 451 U.S. at 17.
35
The Supreme Court appears to have acquiesced in this same construction, characterizing the waiver language of§ 2000d-7(a)(1) as unequivocal. In the context of evaluating whether, under § 2000d7(a)(1), federal agencies, like private entities, would be subject to monetary damages for Rehabilitation Act violations, the Court observed:
36
By enacting [42 U.S.C. § 2000d-7(a)(1)], Congress sought to provide the sort of unequivocal waiver that our prece dents demanded. * * * Given the care with which Congress responded to our decision in Atascadero by crafting an unambiguous waiver of the States' Eleventh Amendment immunity in [42 U.S.C. § 2000d-7(a)(1)], it would be ironic indeed to conclude that the same provision "unequivocally" establishes a waiver of the Federal Government's sovereign immunity against monetary damages awards . . . in the remedies provision attached to the unambiguous waiver of the States' sovereign immunity.
37
Lane v. Pena, 518 U.S. 187, 198, 200 (1996) (emphasis added).
38
Thus, we conclude that Congress succeeded in its effort to codify a clear, unambiguous, and unequivocal condition of waiver of Eleventh Amendment immunity in 42 U.S.C. § 2000d-7(a)(1). In enacting that section, Congress responded with "care" to "[the Supreme Court's] decision in Atascadero by crafting an unambiguous waiver of the state's Eleventh Amendment immunity." Id. at 200; accord Clark v. California, 123 F.3d 1267, 1271 (9th Cir. 1997) (relying on 42 U.S.C. § 2000d-7(a) in the context of holding that California, by accepting federal funds under the Rehabilitation Act, waived its Eleventh Amendment immunity), cert. denied sub nom. Wilson v. Armstrong, 118 S. Ct. 2340 (1998). Moreover, any state reading § 2000d-7(a)(1) in conjunction with 20 U.S.C.§ 1681(a) would clearly understand the following consequences of accepting Title IX funding: (1) the state must comply with Title IX's antidiscrimination provisions, and (2) it consents to resolve disputes regarding alleged violations of those provisions in federal court.
39
In reaching this conclusion, we reject GMU's assertion that a statute "must say something like `as a condition of receiving federal funds under this Act, the States agree to waive their Eleventh Amendment immunity.'" The only difference between GMU's proffered language and that employed in § 2000d-7(a)(1) is that the former is cast in the affirmative (i.e., "the States agree to waive") and the latter in the negative (i.e., "a State shall not be immune"). But this difference in phrasing is of no constitutional import. Using negative rather than affirmative language does not alter the plain meaning of § 2000d7(a)(1) -that is, by accepting Title IX funding, a state agrees to waive its Eleventh Amendment immunity.
B
40
GMU's second argument, that Congress cannot employ its spending power in a manner that conditions a state's receipt of funding upon a waiver of Eleventh Amendment immunity, is also without merit under current Supreme Court jurisprudence. While the Supreme Court in South Dakota noted that the spending power "may not be used to induce the States to engage in activities that would themselves be unconstitutional," 483 U.S. at 210, such as conditioning a grant of federal funds "on invidiously discriminatory state action or the infliction of cruel and unusual punishment," id. , it stated that the range of permissible conditions extended beyond the original enumerations of congressional power granted by the Constitution, see id. Thus, while abrogating Eleventh Amendment immunity would be impossible unless exercised under the Fourteenth Amendment, see Seminole Tribe, 517 U.S. at 59, conditioning federal funds on an unambiguous waiver of a state's Eleventh Amendment immunity is as permissible as a state's direct waiver of such immunity. See Alden, --U.S. at-- U.S. at--, 119 S.Ct. 2240,("Nor, subject to constitutional limitations, does the Federal Government lack the authority or means to seek the States' voluntary consent to private suits" (citing South Dakota)); see also College Savings Bank, --U.S.--,at --& n.2, 119 S.Ct.2219, L.Ed.2d--(suggesting that Congress, in legislating under the Spending Clause, can condition a waiver of sovereign immunity upon the states' acceptance of a federal grant). Thus, when a condition under the Spending Clause includes an unambiguous waiver of Eleventh Amendment immunity, the condition is constitutionally permissible as long as it rests on the state's voluntary and knowing acceptance of it. See Atascadero State Hosp., 473 U.S. at 238-40; Pennhurst I, 451 U.S. at 17.
41
Accordingly, we conclude that Congress, in enacting 42 U.S.C. § 2000d-7(a)(1), permissibly conditioned GMU's receipt of Title IX funds on an unambiguous waiver of GMU's Eleventh Amendment immunity, and that, in accepting such funding, GMU has consented to litigate Litman's suit in federal court.
IV
42
The important role that the Eleventh Amendment plays in our federal structure demands that we pause to consider the larger implications of concluding that a state waives its immunity from suit in federal court by accepting Title IX funding. This inquiry is especially important given the recent intensity with which the Supreme Court and this circuit have focused on issues of federalism, separation of powers, and a limited federal government. See , e.g., Alden v. Maine, --U.S.--, 119 S.Ct. 2240, --L.Ed.2d--(U.S. June 23, 1999); College Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., --U.S.--, 119 S.Ct. 2219, -- L.Ed. 2d --(1999); Florida Prepaid Postsecondary Educ. Expense Bd. v. College Savings Bank , -- U.S.--, 119 S.Ct. 2199, -- L.Ed.2d--(1999); Printz v. United States, 521 U.S. 898 (1997); City of Boerne v. Flores, 521 U.S. 507 (1997); Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996); United States v. Lopez, 514 U.S. 549 (1995); New York v. United States, 505 U.S. 144 (1992); Gregory v. Ashcroft, 501 U.S. 452, 457-59 (1991); Brzonkala v. Virginia Polytechnic Inst., 169 F.3d 820 (4th Cir. 1999) (en banc); Brown v. North Carolina Div. of Motor Vehicles, 166 F.3d 698 (4th Cir. 1999); Condon v. Reno, 155 F.3d 453 (4th Cir. 1998), cert. granted, 119 S. Ct. 1753 (1999); In re Creative Goldsmiths of Washington, D.C., Inc., 119 F.3d 1140, 1145 (4th Cir. 1997), cert. denied sub nom. Schlossburg v. Maryland Comptroller of Treasury, 118 S. Ct. 1517 (1998).
43
These decisions collectively counsel that we not lightly conclude that principles of federalism and state sovereign immunity permit Congress to employ its spending power in a manner that ultimately effects a waiver of a state's Eleventh Amendment immunity. See generally Lopez, 514 U.S. at 578 (Kennedy, J., concurring) ("[T]he federal balance is too essential a part of our constitutional structure and plays too vital a role in securing freedom for us to admit inability to intervene when one or the other level of Government has tipped the scales too far"). Specifically, any conclusion we reach today must respect the Supreme Court's admonition in Seminole Tribe that the "Eleventh Amendment restricts the judicial power under Article III, and Article I cannot be used to circumvent limitations placed upon federal jurisdiction." 517 U.S. at 72-73. 116 S.Ct. 1114. Further, we must acknowledge that "[r]ecognizing a congressional power to exact constructive waivers of sovereign immunity through the exercise of Article I powers would also, as a practical matter, permit Congress to circumvent the antiabrogation holding of Seminole Tribe." College Savings Bank, --US.--, at --, 119 S.Ct. 2219.
44
We do not intend to question these propositions. However, we do not read Seminole Tribe and its progeny, including the Supreme Court's recent Eleventh Amendment decisions, to preclude Congress from conditioning federal grants on a state's consent to be sued in federal court to enforce the substantive conditions of the federal spending program. Indeed, to do so would affront the Court's acknowledgment in Seminole Tribe of "the unremarkable . . . proposition that States may waive their sovereign immunity." 517 U.S. at 65. Furthermore, in New York the Court emphasized that principles of federalism do not pose an independent constitutional bar to Congress' powers under the Spending Clause:
45
By [employing the spending power to attach conditions on the States' receipt of federal funding], as by any other permissible method of encouraging a State to conform to federal policy choices, the residents of the State retain the ultimate decision as to whether or not the State will comply. If a State's citizens view federal policy as sufficiently contrary to local interests, they may elect to decline a federal grant.
46
New York, 505 U.S. at 168. If the Supreme Court were one day to adopt a Madisonian construction of the Spending Clause,* perhaps Congress would be inhibited from implementing a spending program that both intruded upon a state's general police powers and conditioned the outlay of funding on a state's waiving its sovereign immunity. In deciding this case, however, we are bound by the Court's existing constructions of the scope of Congress' spending power.
47
Because we hold that GMU, through its acceptance of Title IX funding, waived its Eleventh Amendment immunity, we need not reach the question of whether Congress can constitutionally abrogate that immunity through § 5 of the Fourteenth Amendment. Accordingly, the judgment of the district court is
48
AFFIRMED.
49
* * *
50
The Constitution is a limited one, possessing no power not actually given, and carrying on the face of it a distrust of power beyond the distrust indicated by the ordinary forms of free Government. Id. at 455, 457.
51
In United States v. Butler, 297 U.S. 1 (1936), albeit in dictum, the Supreme Court appears to have acquiesced in the Hamiltonian position: While, therefore, the power to tax is not unlimited, its confines are set in the clause which confers it, and not in those of § 8 which bestow and define the legislative powers of the Congress. It results that the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution.
52
Id. at 66. The Court confirmed its adoption of the Hamiltonian view one year later in Steward Machine Co. v. Davis, 301 U.S. 548, 586-87 (1937) (Cardozo, J.) (upholding New Deal legislation and observing that "[i]t is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose narrower than the promotion of the general welfare" (citing Butler , 297 U.S. at 65-66)).
Notes:
*
As an original matter, Alexander Hamilton and James Madison appear to have taken different positions regarding the scope and purposes of the Spending Clause. Hamilton contended that"[t]he terms `general Welfare' [as used in the Spending Clause] were doubtless intended to signify more than was expressed or imported in those which Preceded; otherwise numerous exigencies incident to the affairs of a Nation would have been left without a provision." Alexander Hamilton, Report on Manufacturers (Dec. 5, 1791), reprinted in 2 The Founders' Constitution 446, 446 (Philip B. Kurland & Ralph Lerner eds., 1987). He reasoned: The phrase is as comprehensive as any that could have been used; because it was not fit that the constitutional authority of the Union to appropriate its revenues shou'd have been restricted within narrower limits than the "General Welfare" and because this necessarily embraces a vast variety of particulars, which are susceptible neither of specification nor of definition. Id. at 446-47.
Madison, on the other hand, believed that the history underlying the insertion of the "general Welfare" language into the Spending Clause proved Hamilton's construction to be error. He contended that the Framers never "understood [that phrase to] invest Congress with powers not otherwise bestowed by the constitutional charter." Letter from James Madison to Andrew Stevenson (Nov. 27, 1830), reprinted in 2 The Founders' Constitution, supra, 453, 456. Madison grounded his construction of the Spending Clause in principles underlying our federal order: [F]or it exceeds the possibility of belief, that the known advocates in the Convention for a jealous grant and cautious definition of Federal powers should have silently permitted the introduction of words or phrases in a sense rendering fruitless the restrictions and definitions elaborated by them.
Consider for a moment the immeasurable difference between the Constitution limited in its powers to the enumerated objects, and expounded as it would be by the import claimed for the phraseology in question. The difference is equivalent to two Constitutions, of characters essentially contrasted with each other -the one possessing powers confined to certain specified cases, the other extended to all cases whatsoever; for what is the case that would not be embraced by a general power to raise money, a power to provide for the general welfare, and a power to pass all laws necessary and proper to carry these powers into execution; all such provisions and laws superseding, at the same time, all local laws and constitutions at variance with them? Can less be said, with the evidence before us furnished by the journal of the Convention itself, then that it is impossible that such a Constitution as the latter would have been recommended to the States by all the members of that body whose names were subscribed to the instrument? | 01-03-2023 | 04-18-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/78356/ | 568 F.3d 1315 (2009)
Jeffrey R. SWATERS, Petitioner,
v.
Lynne A. OSMUS, Acting Administrator, Federal Aviation Administration, Respondent.
No. 08-15409.
United States Court of Appeals, Eleventh Circuit.
May 26, 2009.
*1316 Michael J. Ferrin, Law Office of Michael J. Ferrin, West Palm Beach, FL, for Swaters.
Agnes M. Rodriguez, FAA, Office of Chief Counsel, Washington, DC, for Osmus.
Before MARCUS and PRYOR, Circuit Judges, and SCHLESINGER,[*] District Judge.
MARCUS, Circuit Judge:
Appellant Jeffrey Swaters, a pilot formerly employed by Spirit Airlines, had his pilot and medical certificates revoked by the Federal Aviation Administration ("FAA") after failing a random drug test. The FAA's decision was upheld by an administrative law judge ("ALJ"), whose ruling was in turn affirmed by the National Transportation Safety Board ("NTSB" or "the Board"). Swaters petitions for review of the NTSB's decision in this Court. After thorough review, we affirm the NTSB's decision and deny Swaters's petition.
I. FACTUAL BACKGROUND
The essential facts in the case are these. Swaters had been employed as a pilot by Spirit Airlines since 1999. On the evening of February 25, 2007, he arrived in San Juan, Puerto Rico during the course of a four-day trip. He spent the evening alone and met the rest of his crew his first officer and three flight attendants the following morning, February 26, 2007, at 4:55 a.m. On that day, Swaters and his first officer made flights from San Juan to Orlando, Florida; from Orlando to Fort Lauderdale, Florida; from Fort Lauderdale to Kingston, Jamaica; and from Kingston back to Fort Lauderdale. The last flight landed in Fort Lauderdale at 2:52 p.m.
*1317 Swaters was met at the gate by Susan Wagner, Spirit Airlines' Manager for Pilot Base Operations in Fort Lauderdale, who told Swaters that he had been randomly selected to take a drug test that afternoon. Swaters apparently spent some time chatting amiably with Wagner and with Paul Olechowski, Spirit Airlines' Chief Pilot. It was 3:40 p.m. before Swaters was given the necessary paperwork to take to the testing facility. He was told to report to a collection site called Global MRO.
At around 4:20 p.m., Swaters phoned Olechowski to inform him that he had encountered car trouble and had been unable to reach the testing facility. Swaters then spoke with Toni Benson, Spirit Airlines' Drug and Alcohol Program Manager. Swaters told Benson that he was at a gas station and that his car had broken down. Because Global MRO closed at 4:30 p.m., Benson instructed Swaters to go to another facility, Concentra, which was open until midnight. She asked Swaters to get to the facility as soon as possible, and suggested that he take a cab. Swaters expressed unease at the idea of leaving his car in an unfamiliar part of town, and instead decided to replace and recharge his car battery.
Swaters subsequently arrived at Concentra between 6:30 p.m. and 7:10 p.m.[1] His sample was collected at 8:47 p.m. While at the facility, he signed and dated the following statement on the Federal Custody and Control Form ("CCF" or "custody form") used to keep track of his specimen: "I certify that I provided my urine specimen to the collector; that I have not adulterated it in any manner; each specimen bottle used was sealed with a tamper-evident seal in my presence; and that the information provided on this form and on the label affixed to each specimen bottle is correct." He also initialed the sealed specimen bottles.
The sample was then sent to Quest Diagnostics, Inc., a laboratory approved by the Department of Health and Human Services ("DHHS") to perform federally-mandated drug tests. On March 8, 2007, Quest reported to Spirit Airlines that Swaters's sample contained metabolites associated with three prohibited controlled substances: benzoylecgonine (a metabolite of cocaine); morphine; and 6-monoacetylmorphine ("6-AM" or "6-MAM"), a metabolite associated specifically with heroin. The concentration of each substance was detected at levels far above the "cut-off points" allowed under federal regulations.[2]
Dr. Dale Plapp, one of Spirit's Medical Review Officers ("MROs"), verified the results and reported them to Swaters. Swaters denied taking the drugs, and indeed denied having taken drugs at any time during his career as a pilot. However, he offered no explanation as to how the drugs could have shown up in his sample. Swaters requested that a so-called "split sample" of his urine specimen be submitted for testing at another facility. Accordingly, the specimen was sent by Quest to Diagnostic Sciences, Inc. ("DSI"), another DHHS-approved testing facility. DSI reported the same results as those reported *1318 by Quest. The results were again confirmed by a Medical Review Officer.
Based on the finding of prohibited drugs in his system, Swaters was found to be in violation of Federal Aviation Regulations § 91.17(a)(3) and § 121.455(b).[3] On August 27, 2007, the FAA issued an emergency order revoking Swaters's Airline Transport Pilot and First Class Airman Medical certifications.[4]
II. PROCEDURAL HISTORY
A. Proceedings Before the ALJ
Swaters appealed the FAA's emergency order to the NTSB. Pursuant to the NTSB's rules of practice, the FAA filed the order of revocation as the complaint in the case, and a hearing was held before an NTSB administrative law judge on March 3 and 4, 2008. Since the evidence presented at the hearing is central to our resolution of this dispute, we pause here to recount important portions of various witnesses' testimony.
One key witness was Arthur Stachurski, the medical technologist at Concentra who collected Swaters's urine sample on February 26, 2007. Stachurski said that he had no specific recollection of having taken Swaters's urine specimen. However, he explained that he follows a standard set of procedures in collecting each sample. He described the procedures in this way:
What I do is, I fill up two vials, one 30 milliliters and one 15 milliliters, and then I put the labels that are on the CCF [on the vials], seal the bottles in front of the patient, and I have him initial them off, first and last initial. He does so. And then I put the specimen bottles in the bag in front of the employee, *1319 and I ask him to sign the CCF form stating that he has given me the urine, signed off on it, initialed them in his presence, and then I seal the bag in his presence as well.
R. at 306. The custody form is placed in the bag with the specimen bottles, and the bag is sent to a laboratory, such as Quest or DSI, for analysis.
Swaters also testified at the hearing. He claimed that he had not been allowed to witness certain of the steps described by Stachurski in the handling of his sample. In particular, he claimed that after his urine sample was poured into the two specimen bottles, Stachurski told him to dispose of the excess urine. According to Swaters, this allowed Stachurski to seal the bottles when Swaters was not present. Swaters also testified that he left the collection site after Stachurski told him he was "good to go," and that, as a result, Swaters never saw Stachurski place the specimen bottles in the plastic bag and seal it.
Finally, two expert witnesses testified at the hearing: the FAA called Dr. Robert White, DSI's Director of Clinical Chemistry, and Swaters presented Dr. Vina Spiehler, a pharmacologist certified in forensic toxicology. Each expert testified about the properties of the drugs in question; the extent to which the effects of the drugs might be observable in the behavior of a person under their influence; and about how long after ingestion the metabolites associated with the various drugs could be detected in urine.
Dr. White was asked whether it would be unusual for no physical symptoms to appear in a person who had taken these drugs within ten to twelve hours of having ingested them. He responded:
It depends on who's doing the observing, whether you've got a trained observer or not, first of all. Second of all, it depends on how much they took and it's the same thing after time and time again, you can go as low as a few molecules up to an overdose where somebody can't even move. It depends on how much they took.
R. at 355.
As for how long the metabolites associated with the various drugs remain present in urine, Dr. White testified that 6-AM metabolites stay in the system between two and ten hours. "It ought to be around for a couple of hours, may be out, depending on an individual's metabolism and their state of hydration, may be out to eight, ten hours." R. at 353. He was asked whether, given the level of 6-AM found in the sample at issue here, Swaters ingested the heroin within eight to ten hours of the test. Dr. White responded "I think so. And yes, this is a pretty substantial level in this case, so I would say well within that area." R. at 354.
Dr. Spiehler's testimony was largely consistent with Dr. White's. When asked about the observable symptoms associated with the different drugs, Dr. Spiehler said she "couldn't really extrapolate behavior or symptoms from urine levels." R. at 451. She said that cocaine was a stimulant and that heroin had a sedating effect. R. at 453. While she described the behavior of people under the influence of each drug individually, she stated that she had never personally observed a person on both drugs simultaneously. She explained that, taken together, the effects of the drugs
might be somewhat different. I've not actually seen a person go through conversion [from the effects of one drug to the other], but I've reviewed police reports of people who took both of them together. And initially, they show the cocaine stimulation and then after a few minutes, maybe 15 or 20 minutes ... *1320 they switch over and go on the nod and begin to show the effects of the heroin.
R. at 453-54.
Dr. Spiehler also explained that the effects of the drugs "depend[] on the person's experience with the drug. If they've been using it chronically and have built up a tolerance, they'll show less effect and the effect will go away sooner. .... So it depends not only on how much they take, but what their own personal tolerance is to the drug." R. at 455. Finally, she said that whether an observer would notice anything would "[d]epend[] on the level of closeness and observation of that person." R. at 462.
Dr. Spiehler was also asked how long the various drugs in question remain present in urine. She testified that based on the level of 6-AM metabolites in Swaters's sample, "I think it would have to have been more than two hours before the urine was donated, but less than 12 hours." R. at 451. She explained: "The longest window of detection in urine I've seen in the literature is 12 hours, but it does take some time for it to get into the urine, especially to get into the urine in peak levels, and I think that's about two hours from my review of the literature." R. at 451-52. Furthermore, she opined that if the heroin had been ingested more than 12 hours prior to the urine collection, "[i]t's unlikely that [6-AM] would have been detected at all in the urine at a 10 nanograms per mil [l]evel." R. at 456-57. When asked whether 6-AM would have shown up in the urine if it had been taken fewer than two hours before, she said: "It's unlikely that it would be that high. It might be greater than 10 [ng/ml], but I don't think it would be as high as the 499 [ng/ml], or the higher numbers that were found by the second laboratory if it had been that soon." R. at 457.
At the conclusion of the proceedings on March 4, 2008, the ALJ announced his ruling orally upholding the FAA's revocation of Swaters's certificates. In addressing the procedures used in collecting Swaters's specimen, the ALJ said that he found Stachurski to be credible and found Swaters's testimony not to be credible. Specifically, the law judge said:
I ... find that Arthur Stachurski, the urine collector, is a completely credible witness with no reason to testify falsely. He did not remember the Respondent specifically, but testified to his usual procedures in collecting urine for DOT [Department of Transportation] random drug tests. He testified credibly that he always pours the urine from the collection cup into the two specimen bottles in the presence of the donor, has the donor sign the tamper evident seals, and places them on the specimen bottles in the donor's presence.
....
I do not find the Respondent to be a credible witness in this regard. I observed his testimony and, while he was polite, I do not consider his demeanor to be convincing or forthcoming.
Adm'r v. Swaters, NTSB Order No. EA-5400, at 8, 2008 WL 3272390, at *8 (Aug. 1, 2008) ("Order").[5]
The ALJ also addressed Swaters's claim that he could not have taken the prohibited drugs after the start of his shift at 4:55 a.m. on February 26, 2007. The judge reasoned that, since no one who worked with Swaters during the time period in question saw anything unusual about his behavior, and since Swaters had hardly *1321 ever been alone while on duty, Swaters had probably not taken the drugs during working hours. The ALJ, however, made no finding of fact as to when Swaters had taken the drugs. The judge opined only that Swaters could have taken the drugs during the previous evening, when Swaters admitted to having been alone. As the ALJ stated:
I agree that it appears indeed unlikely that [Mr. Swaters] could have ingested prohibited drugs in the quantities found in urine after he reported for work at 4:55 a.m. on February 26, 2007. However, that does not preclude that he could have ingested the drugs during the evening of February 25th, 2007 when he was, by his own account, alone.
Id. at *10.
Although the experts had testified that 6-AM would not likely be present in a person's urine after twelve hours, the ALJ explained: "[t]he amount of time that 6-monoacetylmorphine is detectable in urine is an estimate, and from the testimony of Dr. White and Dr. Spiehler, could be influenced by the tolerance of the drug in the user, and by the quantity ingested." Id. Accordingly, on March 4, 2008, the administrative law judge upheld the FAA's revocation of Swaters's certificates.
B. Proceedings Before the Full Board
Swaters next appealed the ALJ's decision to the full National Transportation Safety Board, advancing essentially the same arguments as those he presented before the ALJ. On August 4, 2008, the NTSB entered a final order stating that it "agree[d] with the law judge's analysis and discern[ed] no basis to overturn his decision." Order at *3.[6]
First, the Board agreed with the ALJ's determination that the FAA had made a prima facie showing that Swaters's urine had tested positive for prohibited drugs. Indeed, the Board found "more than enough evidence to establish the Administrator's prima facie case." Id. at *5. Like the ALJ, the Board concluded that Swaters had "demonstrate[d] no legitimate issue with the chain of custody of his urine specimen, or any other grounds for concluding that the Quest Diagnostics and DSI Laboratory findings were not based on tests of the urine specimen respondent provided after his duty day on February 26, 2007." Id. at *3. The Board emphasized that the "law judge made a clear, adverse credibility finding against respondent's claim as to any errors in the collection procedure or chain of custody of the specimen sample." Id. at *4. The Board further explained that "credibility determinations are generally within the exclusive province of the law judge," and that it saw no reason to overturn the ALJ's assessment. Id.
The Board also rejected Swaters's objection to the ALJ's finding that Swaters could have ingested the drugs on the evening before the drug test. Citing portions of Dr. White's and Dr. Spiehler's testimony, the Board found that there was "a basis in the record for the law judge's conclusions regarding metabolism." Id. This was so, the Board concluded, even if Swaters's "point that there is no link between tolerance and metabolism may [have been] well taken." Id.
In light of these determinations, the Board was unpersuaded by Swaters's affirmative defense. Specifically, the Board explained that "[r]espondent's uncredited *1322 testimony and the testimony of his witnesses as to their observations regarding the absence of any visible signs of drug intoxication, along with respondent's arguments regarding that evidence, are insufficient to carry his burden to rebut the [FAA's] prima facie case." Id. at *5 (emphasis omitted). Accordingly, the Board affirmed the FAA's revocation order and denied Swaters's appeal.
Swaters filed the instant petition for review in this Court.
III. DISCUSSION
A. Standard of Review
We have jurisdiction to review final orders issued by the National Transportation Safety Board. 49 U.S.C. § 1153(a) ("The appropriate court of appeals of the United States or the United States Court of Appeals for the District of Columbia Circuit may review a final order of the National Transportation Safety Board under this chapter."); see also 49 U.S.C. § 1153(b)(3) (giving the Courts of Appeals "exclusive jurisdiction to affirm, amend, modify, or set aside any part of the order and [to] order the Board to conduct further proceedings"). Our review of Board decisions, however, is narrow and deferential: we may disturb a decision by the NTSB only if it is arbitrary and capricious. Coghlan v. Nat'l Transp. Safety Bd., 470 F.3d 1300, 1304 (11th Cir.2006) ("We uphold a decision by the NTSB unless it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, or the challenged decision is contrary to constitutional right, power, privilege, or immunity.") (quotation marks omitted). "In other words, when reviewing an agency decision under the `arbitrary and capricious' standard, we must defer to the wisdom of the agency provided their decision is reasoned and rational." McHenry v. Bond, 668 F.2d 1185, 1190 (11th Cir.1982).
"Findings of fact by the Board, if supported by substantial evidence, are conclusive." 49 U.S.C. 1153(b)(3); see also Coghlan, 470 F.3d at 1304. "Substantial evidence," we have explained, "is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." McHenry, 668 F.2d at 1190 (citation and quotation marks omitted). "It is something more than a scintilla of evidence, but something less than the weight of the evidence; the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's findings from being supported by substantial evidence." Id. (citation and quotation marks omitted).
Swaters advances two interrelated contentions on appeal: first, he argues that the NTSB erred in concluding that the FAA made a prima facie showing that his urine sample tested positive for prohibited substances; and second, he claims that the NTSB erred in concluding that he failed to establish his affirmative defense namely, that the urine specimen could not have belonged to him. We do not believe that it was arbitrary and capricious for the Board to have reached either of these conclusions.
B. The FAA's Prima Facie Case
Swaters first suggests that the Board erred in concluding that the FAA succeeded in making a prima facie showing that his urine sample tested positive for prohibited drugs. There is no dispute that the sample in question contained prohibited drugs. Rather, Swaters's claim is that the sample was not his. In particular, he contends that the collection and handling of his sample was somehow flawed. On this record, however, we can find nothing arbitrary and capricious in the Board's determination that the FAA had established a prima facie case.
*1323 First, Arthur Stachurski's testimony clearly supports the Board's determination that proper safeguards and procedures were followed during the collection of Swaters's sample. As we've noted, Stachurski recounted the steps he regularly takes in order to ensure the integrity of the samples he collects, and the record convincingly shows that these steps were observed in collecting Swaters's sample. Moreover, Swaters himself initialed the sealed bottles and signed a certification expressly stating that the samples were sealed in his presence. Swaters testified unequivocally that he understood that in initialing the seals, he was "certif[ying] that it's my urine and that it has been sealed." R. at 439. Dr. Brunelli, Quest Diagnostic's Laboratory Director, also testified that when Quest received the specimen bottles from Concentra, they showed no sign of any tampering. We are hard-pressed to see how Swaters's sample could have become corrupted while in Concentra's or Stachurski's custody.
Likewise, there is substantial evidence to show that the integrity of Swaters's sample was maintained after it was sent to Quest for analysis.[7] Dr. Brunelli gave a detailed explanation of the procedures Quest uses to track samples after they are received: the sealed bag is opened and the bottles containing the samples are checked for signs of tampering; the specimen identification numbers on the seals are checked against the identification numbers on the custody form included with the samples; the sample is then assigned an internal tracking number, which is affixed to the custody form and to the specimen bottles; that number is then used to track the handling of the sample throughout the rest of the testing process. At the hearing, Dr. Brunelli reviewed the documents used to track Swaters's sample and verified that each of these steps was followed. R. at 337-39. He also testified that he observed nothing inappropriate or out of the ordinary in the testing of the sample, and that he had no doubt as to the accuracy of the testing of the sample. R. at 336.
In addition to evidence demonstrating the soundness of the chain of custody, the ALJ's determination regarding Swaters's lack of credibility represents a second, independent source of support for the Board's conclusion. Importantly, the ALJ did not simply believe Stachurski's testimony over Swaters's; rather, the judge made an explicit finding that Swaters was not a credible witness. That determination itself can be regarded as substantive evidence in favor of the ALJ's ultimate conclusion. Cf. United States v. Woodard, 459 F.3d 1078, 1087 (11th Cir.2006) ("[A] defendant's testimony if disbelieved by the jury may be considered substantive evidence of guilt."); United States v. Brown, 53 F.3d 312, 314 (11th Cir.1995) (same).
In short, on this record, we cannot say that it was arbitrary and capricious for the Board to conclude that the FAA made a prima facie showing that Swaters's urine sample had tested positive for prohibited substances.
C. Swaters's Affirmative Defense
Once the FAA has made out a prima facie case, the burden shifts to the respondent to advance an affirmative defense. See, e.g., Adm'r v. Gibbs, NTSB Order No. EA-5291, 2007 WL 1726666, at *2 (June 5, 2007); see also Miranda v. Nat'l Transp. Safety Bd., 866 F.2d 805, 809 (5th Cir.1989) ("Once the FAA has established a prima facie case the burden shifts to [the pilot] to prove the validity of any affirmative defense he may have.") (quotation marks removed). The defense *1324 must be established by a preponderance of the evidence. Adm'r v. Tsegaye, NTSB Order No. EA-4205, 1994 WL 324279, at n. 7 (June 23, 1994) ("We agree with the Administrator that respondent must do more than present a prima facie case for an affirmative defense. Respondent must prove his affirmative defense by a preponderance of the evidence.").
Swaters first purports to identify irregularities in the collection and subsequent handling of his sample. Specifically, he notes that when Stachurski was interviewed, he could not recall any specific details concerning the collection of Swaters's sample. As a result, Swaters complains, "[t]he only evidence which caused the revocation of his certificates was the chain of custody, which is not ... based on actual knowledge, but `usual and customary' practice." Gray Br. at 9. But there is nothing remarkable about Stachurski's inability to recall the particulars associated with each individual donor weeks or months after the fact. Indeed, if anything, the fact that Stachurski had no special recollection regarding the taking of Swaters's sample suggests that the sample was collected without incident. In any event, Swaters must do more than point to Stachurski's inability to recall specifically that nothing untoward occurred in the collection of his sample. Rather, it is incumbent upon Swaters to affirmatively cite evidence suggesting that something went awry. This he has failed to do.
To be sure, Swaters claims that he was unable to witness the sealing of the bottles containing his sample and the sealing of the plastic bag in which the bottles were ultimately sent to Quest. Once again, however, the ALJ specifically found that Swaters's testimony lacked credibility on this point, Order at *8, and the NTSB found no reason to question the ALJ's finding. As the Board explained:
In this regard, the law judge made a clear, adverse credibility finding against respondent's claim as to any errors in the collection procedure or chain of custody of the specimen sample and credited the testimony of the Administrator's witnesses. Board precedent is clear that credibility determinations are generally within the exclusive province of the law judge and will not be disturbed in the absence of arbitrariness, capriciousness, or some other compelling reason. Respondent demonstrates no compelling reason, nor do we discern one, to overturn the law judge's negative assessment of respondent's testimony.
Order at *4.
Substantial evidence supports the ALJ's adverse assessment of Swaters's credibility (and the Board's acceptance of that assessment). Among other things, the ALJ's determination is supported by the fact that, although Swaters claims not to have witnessed the sealing of the specimen bottles, he initialed the sealed bottles and signed the certification on the chain of custody form specifically stating that he had witnessed the sealing. Because it is supported by substantial evidence, the ALJ's determination regarding Swaters's lack of credibility is conclusive. We also reiterate that the ALJ's credibility determination does not simply fail to support Swaters's case; it constitutes positive evidence against Swaters and in support of the FAA's case. Cf. Woodard, 459 F.3d at 1087; Brown, 53 F.3d at 314.
Furthermore, even assuming that the bag was not sealed in Swaters's presence, the Board still could reasonably have concluded that the sample belonged to Swaters. As we have noted, under the protocol followed by Stachurksi, by the time that samples are enclosed and sealed in the plastic bag, the bottles containing the samples have themselves already been *1325 signed and sealed. Hence, so long as the seal on the bottles showed no signs of tampering and Dr. Brunelli testified unequivocally that they did not the integrity of the sample could not have been compromised. FAA Guidelines address precisely this issue and make clear that failure to seal the bag in the donor's presence does not constitute a "fatal error." Specifically, 49 C.F.R. § 40.199 provides:
(a) As the MRO, when the laboratory discovers a "fatal flaw" during its processing of incoming specimens, the laboratory will report to you that the specimen has been "Rejected for Testing" (with the reason stated). You must always cancel such a test.
(b) The following are "fatal flaws":
(1) There is no printed collector's name and no collector's signature;
(2) The specimen ID numbers on the specimen bottle and the CCF do not match;
(3) The specimen bottle seal is broken or shows evidence of tampering (and a split specimen cannot be redesignated); and
(4) Because of leakage or other causes, there is an insufficient amount of urine in the primary specimen bottle for analysis and the specimens cannot be redesignated.
49 C.F.R. § 40.199 (citations omitted).
The only actual error to which Swaters points is the notation on a form generated by Quest in processing Swaters's sample that indicated that the specimen had been collected at 8:47 a.m. instead of 8:47 p.m. Yet Swaters fails to offer any suggestion as to how this might have affected the results of his urine test. Pointing to this single error and a very minor one at that simply affords no ground for casting doubt on the entire sample-collecting process.
In short, the Board concluded that Swaters had "demonstrate[d] no legitimate issue with the chain of custody of his urine specimen, or any other grounds for concluding that the Quest Diagnostics and DSI Laboratory findings were not based on tests of the urine specimen [Swaters] provided after his duty day on February 26, 2007." Order at *3. That determination was not arbitrary and capricious or in any other way contrary to law.
In addition, Swaters argues that the Board's determination was arbitrary and capricious because expert testimony presented at the hearing establishes that it is impossible for the sample to have been his. Swaters first claims that, based on the pharmacological evidence in the record, he could not have ingested heroin prior to 4:55 a.m. on February 26. Given 6-AM's short half-life, Swaters argues that the substance could not possibly have remained in his urine until his sample was taken at 8:47 p.m. Nothing in the record, however, warrants so sweeping a conclusion. Neither Dr. White nor Dr. Spiehler was ever asked whether the level of 6-AM found in the urine sample would have been impossible if Swaters had ingested the heroin before 4:55 a.m.; nor did either expert volunteer any specific statement to that effect.
To be sure, the testimony of both experts suggests that the 6-AM level found in the urine sample would have been unlikely if the heroin had been taken on the day before the test (or at any rate, prior to 4:55 a.m. on February 26). Dr. White surmised that, based on the 6-AM levels found in the sample, the substance would most likely have been taken within ten hours of taking the test. Similarly, Dr. Spiehler testified that in the relevant medical literature, twelve hours after ingestion was the longest time 6-AM was found to have remained in urine. To say that the result obtained here is unlikely, however, *1326 is not the same thing as saying that it would have been impossible.
Indeed, our review of the record indicates that Dr. White and Dr. Spiehler were decidedly tentative in their testimony regarding the time period over which 6-AM could be detected in urine. Thus, for example, Dr. White stated that 6-AM metabolites "ought to be around for a couple of hours," and "may be out" in eight to ten hours. R. at 353 (emphasis added). Asked again how long it might take for 6-AM to no longer show up in urine, he responded: "I'd say within ten hours, probably a little less, simply because it does have a very short half-life." R. at 354 (emphasis added). These remarks are estimates, not categorical pronouncements. In addition, Dr. White opined that how long 6-AM may remain in a person's urine can be affected by factors such as the person's metabolism and his degree of hydration. Nothing in the record indicates that these factors could not account for the presence of 6-AM metabolites in Swaters's urine beyond the substance's typical half-life.
Dr. Spiehler's testimony was similarly tentative regarding how long after ingestion 6-AM might be detected in a person's urine. She stated, for example, "I think it would have to have been more than two hours before the urine was donated, but less than 12 hours." R. at 451 (emphasis added). She also opined that "[i]f the heroin had been ingested more than 12 hours prior to the urine collection... it's unlikely that [6-AM] would have been detected at all in the urine at a 10 [ng/ml] level." R. at 456-57 (emphasis added). Again, like Dr. White's testimony, these statements express generalities and probabilities, not definitive limits or medical certainties. On this record, the NTSB could reasonably reject Swaters's claim that it was impossible for him to have ingested the drugs during the evening of February 25, or at some time prior to 4:55 a.m.
Moreover, even if Swaters were correct in maintaining that he could not possibly have ingested the heroin prior to 4:55 a.m., it still would not have been arbitrary and capricious for the Board to conclude that the sample belonged to Swaters. On the contrary, the Board could reasonably have reached an even more disquieting conclusion on this record: namely, that Swaters took the drug within ten to twelve hours of submitting his sample. Such a conclusion would constitute even more formidable evidence that Swaters was indeed under the influence of the prohibited substances during any or all of the February 26, 2007 flights to Orlando, to Kingston, Jamaica, and Fort Lauderdale.
Swaters claims that he could not have taken any drugs after 4:55 a.m. because after that time he was constantly in the presence of crew members. As a result, he argues, he had no opportunity to take any drugs; he also points to the fact that none of the people who interacted with him during this period observed any sign that he was under the influence of the drugs.
It is simply untrue, however, that Swaters was never alone after 4:55 a.m. on February 26. At a minimum, Swaters was alone when using the restroom during the time period in question. Swaters acknowledged that he used the restroom between the legs of the various flights on that day, and he admitted that when he used the airplane's restroom, he was unaccompanied. R. at 440-41. The exact number and duration of his bathroom breaks is unclear from the record. Swaters was also unclear as to whether he might have used restrooms other than the one on the airplane. At all events, Swaters's testimony indicates that there was a period of roughly thirty to forty minutes between his *1327 flights that day.[8] There is substantial evidence in the record suggesting that Swaters had the opportunity to take the drugs during this period. To be sure, the ALJ said that "it appear[ed] indeed unlikely that the Respondent could have ingested prohibited drugs in the quantities found in his urine after he reported for work at 4:55 a.m. on February 26, 2007." Order at *10. Notably, however, we have neither a finding of fact nor a square holding from either the ALJ or the Board about when Swaters had taken the drugs. What they did find categorically was that the sample containing the offending metabolites belonged to him.
As for the lack of symptoms, both Dr. White and Dr. Spiehler[9] testified that the observable effects resulting from this combination of substances could be affected by a variety of factors. For example, when asked whether an observer would notice anything unusual in the behavior of a person who had taken the drugs found in Swaters's sample, Dr. White replied that it would "depend[] on who's doing the observing, whether you've got a trained observer or not." R. at 355. Additionally, Dr. White opined that the symptoms exhibited would "depend[] on how much they took." R. at 355. Dr. Spiehler, too, stated that the size of the dose, as well as the user's tolerance to the drug, could affect the symptoms exhibited by a user, and conceded that she "couldn't really extrapolate behavior or symptoms from urine levels." R. at 451. Hence, the fact that no one observed anything unusual in Swaters's behavior does not compel the conclusion that he could not have taken the drugs after 4:55 a.m. In short, there was nothing arbitrary and capricious about the Board's conclusion that Swaters's "uncredited testimony and the testimony of his witnesses as to their observations regarding the absence of any visible signs of drug intoxication ... [were] insufficient to carry his burden to rebut the prima facie case." Order at *5.
We, therefore, hold that it was not arbitrary and capricious for the Board to conclude that the FAA had made a prima facie showing that Swaters's urine sample had tested positive for prohibited substances. Likewise, it was not arbitrary and capricious for the Board to conclude that Swaters failed to rebut the FAA's prima facie case. The most that can be said in petitioner's favor is that he succeeded in raising the possibility that the sample may not have been his. As we have noted, however, "the possibility of drawing two inconsistent conclusions from *1328 the evidence does not prevent an administrative agency's findings from being supported by substantial evidence." McHenry, 668 F.2d at 1190 (quotation marks omitted). Even if the Board could have accepted Swaters's position, it did not act arbitrarily and capriciously in declining to do so. Because we cannot say that the Board's decision was an arbitrary or capricious one, we affirm its decision upholding the revocation of Swaters's certificates and we deny his petition for review.
AFFIRMED, PETITION DENIED.
NOTES
[*] Honorable Harvey E. Schlesinger, United States District Judge for the Middle District of Florida, sitting by designation.
[1] The record appears unclear as to precisely when Swaters arrived at the facility. Swaters signed in at 7:10 p.m.; however, he claims that he arrived at 6:30 p.m., and did not sign in until 7:10 p.m. because he was first required to complete paperwork. R. at 278. All citations are to the official agency record. Hence, the citation "R. at X" designates page X of the official agency record.
[2] Specifically, the cut-off point for benzoylecgonine is 150 nanograms per milliliter (ng/ml); the sample contained 9,455.91 ng/ ml. The cut-off for morphine is 2,000 ng/ml; the sample contained 16,023.4 ng/ml. The cut-off for 6-monoacetylmorphine is 10 ng/ ml; the sample contained 499.27 ng/ml. See Adm'r v. Swaters, NTSB Order No. EA-5400, 2008 WL 3272390, at *9 (Aug. 1, 2008).
[3] Regulation 91.17(a)(3) provides that "[n]o person may act or attempt to act as a crewmember of a civil aircraft ... [w]hile using any drug that affects the person's faculties in any way contrary to safety." 14 C.F.R. § 91.17(a)(3).
Regulation 121.455(b) provides: "[n]o certificate holder or operator may knowingly use any person to perform, nor may any person perform for a certificate holder or operator, either directly or by contract, any function listed in Appendix I to this part while that person has a prohibited drug, as defined in that appendix, in his or her system." 14 C.F.R. § 121.455(b).
The ALJ ultimately decided not to impose any sanctions for the § 91.17(a)(3) violation. The judge observed that "heroin, morphine and 6-monoacetylmorphine and cocaine were in [Swaters's] urine" while he was flying the plane and that, as a result, "there [wa]s no certainty that these drugs that he ingested did not affect his faculties in the prohibited fashion during the day of February 26, 2007." Order at *12. However, the judge stated that there "was no clear evidence from any observer that the Respondent showed any symptoms of drug use while flying." Id. As a result, he limited the imposition of sanctions to the § 121.455(b) offense to avoid "any possible prejudice" to Swaters. Id.
It should also be noted that different prohibited substances are subject to different reporting and verification requirements. As the Board's decision notes, "DOT drug testing requirements specify that the MRO must verify a confirmed positive cocaine test result unless the employee presents a legitimate medical explanation for the presence of drugs found in his system. However, the MRO must verify the test result as positive, with no conditions, if the laboratory detects the presence of 6-AM (which indicates heroin use)." Order at *5 (citing 49 C.F.R. §§ 40.137(a), 40.139(a)).
[4] The FAA issues various kinds of pilot certificates e.g., an airline transport pilot certificate (for passenger airline pilots), a commercial pilot certificate (for pilots of non-passenger commercial aircraft), and a private, recreational or student pilot certificate. See, e.g., 14 C.F.R. §§ 61.1-61.167. Each type of pilot certificate requires a corresponding type of medical certificate. See 14 C.F.R. §§ 67.101-67.415. In addition to revoking his Airline Transport Pilot certificate, the ALJ affirmed the revocation of Swaters's medical certificates. As the FAA points out, Swaters does not challenge the revocation of his medical certificates in this appeal. Red Br. at 3 n.4.
[5] Our citations to the initial decision are to the copy attached to the NTSB's Opinion and Order.
[6] The Board's review of ALJ decisions is plenary. Singer v. Garvey, 208 F.3d 555, 558 (6th Cir.2000) ("The NTSB has plenary review authority with respect to ALJ decision making."); see also 5 U.S.C. § 557(b) ("On appeal from or review of the initial decision, the agency has all the powers which it would have in making the initial decision[.]").
[7] Swaters makes no challenge to DSI's handling of the split sample.
[8] Swaters referred to the stops between his flights on February 26 as "quick turn[s]," as opposed to lengthy stops. R. at 417. The first flight arrived at Orlando from San Juan at 8:06 a.m. and embarked on the second flight leg to Fort Lauderdale at 8:42 a.m. R. at 417. Swaters's testimony is unclear as to the length of time between the plane's arrival at Fort Lauderdale and its departure for the next flight to Kingston, Jamaica. However, there was a period of thirty-three minutes on the ground between arriving from Fort Lauderdale and departing for Kingston, Jamaica. R. at 419.
[9] We note that it is unclear whether Dr. Spiehler was qualified to opine on questions of symptomology. At the hearing before the ALJ, there was some confusion as to what Dr. Spiehler was being offered as an expert for. At first, she was offered as an expert "for the purposes of offering an opinion as to the symptomology of the drugs that [Swaters] is alleged to have ingested here." R. at 449. However, on questioning from the ALJ, Swaters's counsel stated that he was offering Dr. Spiehler "as an expert in the pharmacology of the drugs that [Swaters] is alleged to have ingested." R. at 450. It was under the latter description that Dr. Spiehler was accepted. Dr. Spiehler's testimony regarding symptoms is of limited value in any event, given her admission that she "couldn't really extrapolate behavior or symptoms from urine levels." R. at 451. | 01-03-2023 | 04-27-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/2247835/ | 116 Ill. App.3d 24 (1983)
451 N.E.2d 985
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
DAVID McCRAY, Defendant-Appellant.
No. 82-78.
Illinois Appellate Court Second District.
Opinion filed July 12, 1983.
G. Joseph Weller and Michael F. Braun, both of State Appellate Defender's Office, of Elgin, for appellant.
*25 Daniel Doyle, State's Attorney, of Rockford (Phyllis J. Perko and Marshall Stevens, both of State's Attorneys Appellate Service Commission, of counsel), for the People.
Judgment affirmed.
PRESIDING JUSTICE SEIDENFELD delivered the opinion of the court:
Conviction was entered on defendant's plea of guilty to a charge of burglary and he was sentenced to an extended 10-year prison term. He appeals, contending that (1) the trial court erred in finding him ineligible for treatment under the Dangerous Drug Abuse Act (Ill. Rev. Stat. 1981, ch. 91 1/2, par. 120.1 et seq.) because his two previous convictions for a "crime of violence" arose from the same incident; (2) erred in considering a hypothetical situation as an aggravating factor; and (3) erroneously sentenced him to the extended term following a guilty plea rather than a trial.
I
Section 8 of the Dangerous Drug Abuse Act (Ill. Rev. Stat. 1981, ch. 91 1/2, par. 120.8) provides as pertinent:
"An addict charged with or convicted of a crime is eligible to elect treatment under the supervision of a licensed program designated by the Commission instead of prosecution or probation, as the case may be, unless (a) the crime is a crime of violence * * * (c) the addict has a record of 2 or more convictions of a crime of violence * * *."
It is agreed that the present crime is not one of violence under section 8(a). Defendant contends, however, that section 8(c) of the Act should be interpreted to exclude, as a factor disqualifying an addict from treatment, a record of two or more convictions of a crime of violence where they arise from the same incident. We can find no such legislative intention.
Defendant argues that the legislative purpose in enacting the Dangerous Drug Abuse Act indicates a strong policy favoring the prevention of drug abuse and encouragement of the treatment and rehabilitation of drug addicts through placements alternative to the usual sentencing procedures. He argues that where more than one violent act arises from the same incident it does not show a greater proclivity towards violence than if the defendant had been convicted of only one of the two offenses.
1 We do not disagree with the defendant's statement of the legislative policy. (See People v. Teschner (1980), 81 Ill.2d 187, 192.) The legislature, however, listed "disqualifying crimes" to which the remedial *26 alternative sentencing provisions were not intended to apply. (People v. McCoy (1976), 63 Ill.2d 40, 43-45.) By setting forth disqualifying factors for eligibility the legislature clearly did not intend to provide treatment for all drug addicts. (People v. Perine (1980), 82 Ill. App.3d 610, 615.) In this well-defined legislative scheme we see no validity to defendant's argument that the disqualifying words "a record of 2 or more convictions of a crime of violence" (Ill. Rev. Stat. 1981, ch. 91 1/2, par. 120.8(c)) should be read to mean unrelated courses of conduct from which crimes of violence arise. Specific words in a statute, not defined by the legislature, will be assumed to have their ordinary and popularly understood meaning. (People v. Fink (1982), 91 Ill.2d 237, 240.) The word "conviction" as used throughout the Criminal Code of 1961 results from a judgment or sentence upon the finding of guilty to "an offense." (Emphasis added.) (Ill. Rev. Stat. 1981, ch. 38, par. 2-5.) Even though the 1971 convictions resulted from closely related acts, each was for a separate offense based on a different physical act. In any event, we cannot restrict or enlarge the plain meaning of an unambiguous statute. (Bovinette v. City of Mascoutah (1973), 55 Ill.2d 129, 133.) The statute before us unambiguously means convictions without regard to whether they arise from the same conduct. The declaration of policy (Ill. Rev. Stat. 1981, ch. 91 1/2, par. 120.2) does not indicate a contrary intent. In any event, such declaration cannot be used to create an ambiguity in the specific enactments of the statute. Brown v. Kirk (1976), 64 Ill.2d 144, 152-53.
II
Defendant had previously been convicted of armed robbery and attempt to commit murder in 1971. In that instance defendant had fired six shots at his robbery victim after the victim found a gun and shot defendant. The court here determined that although these two convictions arose from the same incident, the plain language of the eligibility section of the Act disqualified for treatment addicts who have "a record of 2 or more convictions of a crime of violence" (Ill. Rev. Stat. 1981, ch. 91 1/2, par. 120.8(c)) irrespective of whether they arose from the same conduct, and thus held defendant ineligible for treatment. The facts underlying the guilty plea in this case were that the police unsuccessfully chased an unidentified man on May 28, 1981, shortly after midnight, after seeing the man pull a large welder. The officer later returned to the area and saw a car with a large tool box filled with tools later identified as stolen property and traced the car's ownership. The car owner told police that he had lent his car to defendant and another man on that day who later returned and told him that they had *27 to leave the car and that the police had it. The police then arrested defendant, who gave a statement that he helped remove the tool box from the victim's garage and helped place it in the car.
2 Defendant argues that the court's expressed concern about what would have happened had defendant been discovered while committing the burglary, in light of the presentence report's summary of defendant's prior conviction for attempt to commit murder, indicates that the court considered defendant's conduct to have threatened serious harm although no evidence supported such a conclusion. As we have previously indicated there is no dispute that the present crime was not one of violence. There was no evidence of a gun, the burglary occurred in a garage, and at night when no one would likely be in the garage. But the trial court's comment should not be read out of context. Prior to making the comment the judge stated that the mitigation factor that defendant's conduct neither caused nor threatened serious physical harm to another (Ill. Rev. Stat. 1981, ch. 38, par. 1005-5-3.1(a)(1)) was "somewhat true," and that defendant might not necessarily have contemplated that his conduct would cause or threaten serious physical harm. But the gist of the trial court's comment was that he could not determine this positively since defendant had not been caught while committing the burglary, unlike the circumstances involved in the previous incident. No conclusion was expressed, and the court was merely weighing various factors in aggravation and mitigation. We cannot conclude from the entire record of the judge's comments that the trial court relied on improper considerations or drew conclusions not supported by the record. We find no reversible error. The cases relied upon by defendant are distinguishable as affirmatively indicating that the trial court did rely on improper considerations. See, e.g., People v. Gant (1974), 18 Ill. App.3d 61, 66-67; People v. Maldonado (1980), 80 Ill. App.3d 1046, 1050-51.
III
3 We have previously held, contrary to defendant's final contention, that an extended-term sentence may be imposed on a defendant who pleads guilty to the charged offense. People v. Baker (1983), 114 Ill. App.3d 803, 810, 448 N.E.2d 631, 636.
The judgment of the circuit court of Winnebago County is therefore affirmed.
Affirmed.
VAN DEUSEN and HOPF, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2247836/ | 97 F.Supp. 733 (1951)
UNITED STATES
v.
WHITMORE et al.
No. 21684.
United States District Court S. D. California, Central Division.
May 21, 1951.
Ernest A. Tolin, U. S. Atty., Ray H. Kinnison and Herschel E. Champlin, Asst. *734 U. S. Attys., all of Los Angeles, Cal., for plaintiff.
Charles H. Carr, Los Angeles, Cal., for defendant.
YANKWICH, District Judge.
The indictment in seventeen counts is under the mail fraud statute, 18 U.S.C.A. § 1341, and charges the defendants Ralph Whitmore and Harold Cowan with devising a scheme to defraud and using the mails to perpetrate it.
In substance, the indictment states that the defendants advertised over the network of certain radio stations throughout the United States and local radio stations and newspapers in Los Angeles County, California, Christmas tree decorations and ornaments for sale. The prospective customers were requested to send one dollar by mail to the radio station to which they were listening or mail directly to the defendants, who were doing business under the name of "Christmas Ornaments" and the firm name of "Cowan & Whitmore", in exchange for which they would receive, through the mail, Christmas tree decorations and ornaments of superlative quality.
The fraudulent character of the scheme is stated in this language: "Prior to November 21, 1950, and continuing to on or about December 25, 1950, the defendants Ralph Whitmore and Harold Cowan devised and intended to devise a scheme and artifice to defraud purchasers and prospective purchasers of certain Christmas tree decorations, which said persons, the defendants, under their own names and under the fictitious name of `Christmas Ornaments' and under the firm name of `Cowan and Whitmore', and other names and styles to the grand jury unknown, would induce to purchase one or more sets of certain Christmas tree decorations, and to obtain money and property by means of the following false and fraudulent representations, pretenses, and promises, well knowing at the time that the representations, pretenses, and promises would be false when made; that said product would be `the most sensational Christmas tree ornament package of all time', also, `the most beautiful Christmas tree ornaments you have ever seen', also, `85 out-of-this-world colorful, glittering ornaments that will make your tree the talk of your neighborhood'."
Seventeen separate mailings to seventeen different persons within the County of Los Angeles are recited, each constituting a separate count in the indictment.
The defendants have moved to dismiss the indictment on the ground that none of the counts in the indictment states an offense. Rule 12(b)(2), Federal Rules of Criminal Procedure, 18 U.S.C.A. More particularly, it is argued that the indictment does not, in any of its counts, charge a scheme to defraud, because the "glowing" characterizations of the ornaments are "purely puffing, matters of opinion, and are representations for which there is no standard or norm to determine their truth or false statement."
So, while the offense charged involves false advertising by means of radio and newspapers, we are confronted, as in all cases of this character, with the fundamental problem of the type of schemes denounced by the statute.
I
"The Scheme to Defraud" Under the Mail Fraud Statute
A scheme to defraud is an essential element of the offense, without which the use of the mails cannot be illegal. United States v. Young, 1914, 232 U.S. 155, 161, 34 S.Ct. 303, 58 L.Ed. 548; Havener v. United States, 10 Cir., 1931, 49 F.2d 196, 198; Mazurosky v. United States, 9 Cir., 1939, 100 F.2d 958, 961; United States v. Crummer, 10 Cir., 1945, 151 F.2d 958, 962-963. And see writer's opinion in United States v. Corlin, D.C.Cal.1942, 44 F. Supp. 940, 942.
In interpreting the statute, the Courts have made it reach the greatest variety of stratagems aimed at obtaining money or property fraudulently through the use of the mails, which the cunning of tricksters has devised. Typical of some of the recent ones are United States v. Buckner, 2 Cir., *735 1940, 108 F.2d 921; Hart v. United States, 5 Cir., 1940, 112 F.2d 128; Shushan v. United States, 5 Cir., 1941, 117 F.2d 110, 115, 133 A.L.R. 1040; United States v. Crummer, 10 Cir., 1945, 151 F.2d 958; United States v. Grayson, 2 Cir., 1948, 166 F.2d 863.
Judge Learned Hand, in a leading case, has indicated the means for recognizing the badge of fraud, the most essential of which being what he calls "the divergence between the promised performance and the promisor's belief that he could perform". Knickerbocker Merchandising Co. v. United States, 2 Cir., 1926, 13 F.2d 544, 545. In the same case he has stated: "* * * that although a man might not be charged for his honest beliefs, however imbecile they might be, it was not necessary to show that he disbelieved what he said. Some utterances are in such form as to imply knowledge at first hand, and the utterer may be liable, even though he believes them, if he has no knowledge on the subject. And all unconditional utterances, intended to be taken seriously, imply at least a belief, and, if the utterer does not believe them, they are false, though his mind be quite indeterminate as to their truth." 13 F.2d at page 546. (Emphasis added.)
Or, as Judge William Healy has put it, speaking for the Court of Appeals for the Ninth Circuit: "The person devising the fraudulent scheme must intend in some manner to delude the person upon whom the scheme is to be practiced." Norton v. United States, 9 Cir., 1937, 92 F.2d 753, 755.
These declarations stem from the accepted premise that a purchaser is entitled to receive what he has been led to believe he would receive. He is defrauded if the promised expectations do not materialize. As said in one of the older cases, Harris v. Rosenberger, 8 Cir., 1906, 145 F. 449, 458, 13 L.R.A., N.S., 762: "Our conclusion is that when a business, even if otherwise legitimate, is systematically and designedly conducted upon the plan of inducing its patrons, by means of false representations, to part with their money in the belief that they are purchasing something different from, superior to, and worth more than, what is actually being sold, it becomes an objectionable scheme or device within the intendment of sections 3929 and 4041, although what is being sold may approximate in commercial value the price asked and received. The difference between such a scheme or device and those where nothing whatever or nothing at all equivalent in value is intended to be returned for the money obtained is one of degree only, but not of principle. Both are grounded in deceit, operate injuriously upon the public, and constitute the obtaining of money by means of false pretenses. A purchaser is entitled to receive what he is induced by the vendor's representations to believe he is ordering and paying for, and not something which he does not order and may not want at any price." (Emphasis added.) See, Deaver v. United States, 1946, 81 U.S.App.D.C., 148, 155 F.2d 740, 744.
II
The "Scheme to Defraud" and Civil Fraud
In the application of these principles, it may be said generally, that courts consider that whatever would be fraudulent by common-law principles is a scheme to defraud under the statute. Foshay v. United States, 8 Cir., 1933, 68 F.2d 205, 210-211; United States v. Buckner, 2 Cir., 1940, 108 F.2d 921, 926.
The converse, however, is not necessarily true. For "the scheme to defraud" punished by the statute is more inclusive than common law "fraud". Durland v. United States, 1896, 161 U.S. 306, 313, 16 S.Ct. 508, 40 L.Ed. 709. At common law, for instance, mere expressions of opinion as to matters which are not the subject of definite verification, such as value, are considered harmless. Restatement, Torts, Secs. 541-542; 37 C.J.S., Fraud, § 57; Southern Development Company v. Silva, 1888, 125 U.S. 247, 255-256, 8 S.Ct. 881, 31 L.Ed. 678; Vulcan Metals Co., Inc., v. Simmons Mfg. Co., 2 Cir., 1918, 248 F. 853, 856-857; Sacramento Suburban Fruit *736 Lands Co. v. Melin, 9 Cir., 1929, 36 F.2d 907, 910, 917; Kohler v. Jacobs, 5 Cir., 1943, 138 F.2d 440, 443; Cox v. Westling, 1950, 96 Cal.App.2d 225, 228, 215 P.2d 52. However, this principle does not obtain in cases arising under this statute. As said in United States v. Rowe, 2 Cir., 1932, 56 F.2d 747, 749: "True, the law still recognizes that in bargaining parties will puff their wares in terms which neither side means seriously, and which either so takes at his peril (Vulcan [Metals] Co. v. Simmons, [2 Cir.,] 248 F. 843); but it is no longer law that declarations of value can never be a fraud. Like other words, they get their color from their setting, and mean one thing when exchanged between traders, and another when uttered by a broker to his customer. Values are facts as much as anything else; they forecast the present opinions of possible buyers and sellers, and concern existing, though inaccessible facts. Such latitude as the law accords utterances about them, depends upon the hearer's knowledge that the utterer expects him to use his own wits; and while it may once have been true that one might safely use them to stuff any gull one brought to hand, liability has expanded as the law has become more tender towards credulity." (Emphasis added.) And see, United States v. Grayson, 2 Cir., 1948, 166 F.2d 863, 866.
Again, damage or loss must flow from fraud before it become civilly actionable. Deaver v. United States, 1946, 81 U.S.App.D.C. 148, 155 F.2d 740, 743. But this principle does not apply to prosecutions under the present statute. The reason is stated in one of the cases already cited: "A man is none the less cheated out of his property, when he is induced to part with it by fraud, because he gets a quid pro quo of equal value. It may be impossible to measure his loss by the gross scales available to a court, but he has suffered a wrong; he has lost his chance to bargain with the facts before him. That is the evil against which the statute is directed." United States v. Rowe, supra, 56 F.2d at page 749.
III
"Trader's Talk" or "Puffing" as Fraud
And, because the Courts insist that, regardless of the value of what the victim received, fraud lies in the disparity between what he was promised and what he actually received, see, Rude v. United States, 10 Cir. 1935, 74 F.2d 673, 676,they will find fraud in the type of exaggeration of the worth of goods, "trader's talk" or "puffing", as it is called, which is tolerated in the law of civil liability.
Earlier decisions of the type on which the defendants rely, such as United States v. Staples, D.C.Mich. 1890, 45 F. 195, 198; Harrison v. United States, 6 Cir., 1912, 200 F. 662, 665, stand repudiated by the cases already cited. And they were given the coup de grâce by the Supreme Court in United States v. New South Farm & Home Company, 1946, 241 U. S. 64, 71, 36 S.Ct. 505, 507, 60 L.Ed. 890, when the Court said, in construing this statute: "Mere puffing, indeed, might not be within its meaning (of this, however, no opinion need be expressed); that is, the mere exaggeration of the qualities which the article has; but when a proposed seller goes beyond that, assigns to the article qualities which it does not possess, does not simply magnify in opinion the advantages which it has, but invents advantages and falsely asserts their existence, he transcends the limits of `puffing' and engages in false representations and pretenses. An article alone is not necessarily the inducement and compensation for its purchase. It is in the use to which it may be put, the purpose it may serve; and there is deception and fraud when the article is not of the character or kind represented and hence does not serve the purpose. And when the pretenses or representations or promises which execute the deception and fraud are false, they become the scheme or artifice which the statute denounces." (Emphasis added.)
In the light of what has just been said, the representations set forth in the indictment that the package would be "the most sensational Christmas tree ornament package of all time", and the statement *737 that the package consisted of "85 out-of-this-world colorful glittering ornaments that will make your tree the talk of your neighborhood", go beyond the exaggeration of "the most beautiful Christmas tree ornaments you have ever seen". Together, they are of the type which Judge Learned Hand, in colorful language, has characterized as "* * * the usual obbligato of dishonest and lurid puffing, the common tactic which has so often proved successful with guileless investors of small means". United States v. Cotter, 2 Cir., 1932, 60 F.2d 689, 690.
The indictment, in setting forth the scheme, does not, as did the older forms, allege specifically wherein the representations are false. It alleges merely that they were made, the defendants "well knowing at the time that the pretenses, representations, and promises would be false when made". This conforms to the standard form recommended by the Federal Rules of Criminal Procedure, Form 3, Federal Rules of Criminal Procedure, 18 U.S.C.A. and is legally adequate. Any complaint that the lack of particularity places the defendants at a disadvantage would be dispelled by the fact that the Court, on May 7, 1951, as requested by the defendants, ordered the Government to furnish the defendants a written Bill of Particulars requiring them to "Specify by what acts or conduct and in what way the defendants defrauded, attempted to defraud or devised a scheme to defraud the persons who would purchase or purchased Christmas tree decorations from the defendants." Federal Criminal Rules, Rule 7(f), 18 U.S.C.A.
With the particulars so furnished, the defendants have all the facts they need to prepare their defense. And that is all that the defendants in any criminal case are entitled to before trial. See, Glasser v. United States, 1942, 315 U.S. 60, 66, 62 S.Ct. 457, 86 L.Ed. 680; Chew v. United States, 8 Cir., 1925, 9 F.2d 348; United States v. Berg, 3 Cir., 1944, 144 F.2d 173, 176; United States v. Crummer, 10 Cir., 1945, 151 F.2d 958, 963.
The motion to dismiss is, therefore, denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2504977/ | 726 S.E.2d 180 (2012)
STATE of North Carolina
v.
William Raymond MILLER.
No. 25P12.
Supreme Court of North Carolina.
June 13, 2012.
Andrew DeSimone, Assistant Appellate Defender, for Miller, William Raymond.
*181 David J. Adinolfi, II, Special Deputy Attorney General, for State of North Carolina.
Ronald L. Moore, District Attorney, for State of North Carolina.
ORDER
Upon consideration of the petition filed on the 19th of January 2012 by Defendant in this matter for discretionary review of the decision of the North Carolina Court of Appeals pursuant to G.S. 7A-31, the following order was entered and is hereby certified to the North Carolina Court of Appeals:
"Denied by order of the Court in conference, this the 13th of June 2012." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/500433/ | 837 F.2d 1081
56 USLW 2452, 5 U.S.P.Q.2d 1600
ADVANCE TRANSFORMER CO., Plaintiff-Appellee,v.Melvin L. LEVINSON, Defendant-Appellant.
No. 87-1011.
United States Court of Appeals,Federal Circuit.
Jan. 28, 1988.
James T. Williams, Neuman, Williams, Anderson & Olson, Chicago, Ill., argued, for plaintiff-appellee. With him on the brief were Theodore W. Anderson and Todd P. Blakely.
Harry B. Keck, Pittsburgh, Pa., argued, for defendant-appellant. With him on the brief was Thomas H. Murray.
Before NEWMAN and BISSELL, Circuit Judges, and RE, Chief Judge.*
PAULINE NEWMAN, Circuit Judge.
1
Melvin L. Levinson appeals the judgment of the United States District Court for the Northern District of Illinois, which held invalid and not infringed his United States Patents Nos. 3,876,956 and 3,792,369, refused to declare an interference under 35 U.S.C. Sec. 291, and awarded attorney fees to the declaratory plaintiff Advance Transformer Co.1
2
We affirm the judgments of noninfringement of United States Patents No. 3,876, 956 and No. 3,792,369, and vacate the judgments of invalidity with respect to both patents. The refusal to declare an interference is affirmed. The award of attorney fees is reversed.
OPINION2
Infringement of U.S. Patent No. 3,876,956
3
The district court analyzed infringement by the accused microwave power supplies in terms of the circuitry shown in Feinberg United States Patent No. 3,396,342. Mr. Levinson disputes the extent to which the circuits in the Feinberg patent and those in the accused devices are the same. He also argues that the claims of the '956 patent are infringed by the accused devices even if they embody the Feinberg circuitry.
4
The district court found that the '956 patent did not disclose and claim a high leakage reactance transformer, which is required by the Feinberg circuitry and is used in the accused devices. The circuit of the '956 patent requires a fixed reactance that is non-saturating. Levinson argues that Feinberg does use a non-saturating fixed reactance. The district court relied on Levinson's statement to the Patent and Trademark Office ("PTO"), in the course of distinguishing his pending patent application from the issued Feinberg patent that had been cited as prior art, that Levinson's claim limitation to "a non-saturating, fixed reactance in series" is not shown by Feinberg. The court also relied on other representations by Levinson to the PTO during prosecution of the continuation-in-part applications that led to the issuance of the '956 patent.
5
Positions taken in order to obtain allowance of an applicant's claims are pertinent to an understanding and interpretation of the claims that are granted by the PTO, Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 870-71, 228 USPQ 90, 96 (Fed.Cir.1985), and may work an estoppel as against a subsequent different or broader interpretation, Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1362, 219 USPQ 473, 481 (Fed.Cir.1983). In the case at bar the distinctions that were drawn by Levinson before the PTO, emphasizing that Levinson and Feinberg had not described the same, or overlapping, inventions, were critical to the question of infringement by the Feinberg circuitry. The district court did not err in placing controlling reliance on Levinson's interpretation to the PTO of his and Feinberg's inventions.
6
We have been shown no clear error in the district court's finding that devices containing the circuitry of the Feinberg patent do not infringe the claims of Levinson's '956 patent. Nor has it been shown that the accused devices do not contain the Feinberg circuitry. The judgment of noninfringement is affirmed.
The Requested Interference
7
The district court denied Mr. Levinson's request for a declaration that his '956 patent and Feinberg's patent are interfering patents in terms of 35 U.S.C. Sec. 291.
8
Although Mr. Levinson correctly observes that section 291 uses the words "interfering patents", not "interfering claims", he is incorrect in stating that the claims are not controlling. Levinson also incorrectly states the law: interfering patents are not patents that are or may be infringed by the same device; interfering patents are patents that claim the same subject matter. Albert v. Kevex Corp., 729 F.2d 757, 758 n. 1, 221 USPQ 202, 204 n. 1 (Fed.Cir.), reh'g denied, 741 F.2d 396, 223 USPQ 1 (1984).
9
It is thus correct, and necessary, to compare claims, not disclosures, when comparing issued patents under section 291. The district court's findings 130-132, pointing out differences between the Levinson and the Feinberg claims, have not been shown to be clearly erroneous.
10
The district court found, and apparently gave weight to, the fact that Levinson had made no attempt to provoke an interference during the pendency of his several applications, and that the PTO had not declared an interference. Although these factors are not controlling, they may be considered as evidence of an absence of identity of the claimed inventions.
11
It was not the district court's responsibility to determine, from the respective specifications, whether interfering claims could have been granted in each patent. The threshold issue under section 291 is whether the patents contain claims to the same subject matter. As a guide to determining whether the claimed subject matter is the same, the district court did not err in determining whether the claims "cross-read" on the disclosure of the other's patent, and thus whether each patentee could have made, based on his own disclosure, the claims that were granted to the other. The court's conclusion that the claimed inventions are not the same has not been shown to be in error.
12
The judgment that these patents are not interfering under section 291 is affirmed.
Validity of the '956 Patent
13
Our affirmance of the district court's determination that the '956 patent is not infringed by devices embodying the Feinberg circuitry, and that there is no basis for declaring an interference, resolves the controversy as to the '956 patent. On appeal we do not review the determination of invalidity, when our affirmance of the holding of noninfringement resolves the dispute. Vieau v. Japax, Inc., 823 F.2d 1510, 1517, 3 USPQ2d 1094, 1100 (Fed.Cir.1987). There is no issue between the parties as to any devices other than those that use the Feinberg circuitry, and no continuing dispute dependent on the issue of patent validity. See Altvater v. Freeman, 319 U.S. 359, 364-65, 63 S.Ct. 1115, 1118-19, 87 L.Ed. 1450, 57 USPQ 285, 288-89 (1943). The determination that the '956 patent is invalid is vacated.
14
Validity and Infringement of U.S. Patent No. 3,792,369
15
Based on Mr. Levinson's assertion of the '369 patent against Advance Transformer and its customers, Advance Transformer included the '369 patent in its declaratory judgment complaint of invalidity and noninfringement. Well before the start of trial Levinson withdrew his compulsory counterclaim of infringement of the '369 patent, and the court stated in its Order of November 9, 1981 that "the memoranda of both parties indicate that any claims with regard to this patent have been abandoned." Although these actions appear to have removed all case and controversy as to the '369 patent, subsequently there was inconclusive correspondence between the parties, and Levinson at the start of trial moved the court to rule that Advance Transformer would be barred from any future assertion that its devices did not infringe the '369 patent.
16
Neither party presented evidence on the question of infringement of the '369 patent. The district court held that the '369 patent remained in the case and that Levinson had not met his burden of proving infringement. Findings 134-139, Advance Transformer, 231 USPQ at 15. On appeal, Levinson does not argue that the finding of noninfringement is in error. On this tangled procedural posture, we conclude that the district court did not clearly err in treating infringement as at issue, and in finding noninfringement.
17
Although some evidence as to invalidity was adduced, the issue of validity of the '369 claims is mooted by the holding of noninfringement. Thus we need not discuss Levinson's arguments such as the sufficiency of the admittedly scanty findings and conclusions, or the absence of claim by claim analysis, or the invalidation of claims that were never placed at issue. The holding that the '369 patent is invalid is vacated.
Attorney Fees
18
The district court stated that "Levinson's pursuit of this unwarranted action as manifested by his lack of proof at trial, makes this case exceptional", Advance Transformer, 231 USPQ at 19, and assessed attorney fees in favor of Advance Transformer.3 Levinson argues that he didn't start the action, that he defended adequately and appropriately, and that as a declaratory judgment defendant he was required to do no more than defend his position or, indeed, rely on the presumption of patent validity in his favor.
19
An exceptional case must be established by clear and convincing evidence. Reactive Metals and Alloys Corp. v. ESM Inc., 769 F.2d 1578, 1582, 226 USPQ 821, 824 (Fed.Cir.1985). "There must be some finding of unfairness, bad faith or inequitable conduct on the part of the unsuccessful patentee." Stevenson v. Sears, Roebuck & Co., 713 F.2d 705, 713, 218 USPQ 969, 976 (Fed.Cir.1983). In Machinery Corporation of America v. Gullfiber AB, 774 F.2d 467, 227 USPQ 368 (Fed.Cir.1985), this court considered the additional factor whereby a declaratory judgment action is brought against a patentee by an erroneously accused infringer. We concluded that the court could consider whether the patentee acted in good faith in making the threats of infringement that led to the filing of the declaratory judgment action. The court also affirmed that a finding of "exceptional circumstances" under section 285 requires "proof of actual wrongful intent ... or gross negligence". Id. at 473, 227 USPQ at 373 (quoting Reactive Metals, 769 F.2d at 1583, 226 USPQ at 825.) In the case at bar there were no findings of bad faith or of fraudulent or inequitable conduct. On the last day of the trial the court commended the parties on their conduct of the trial.
20
The record shows that Levinson litigated all issues except those connected with the '369 patent, which in turn received almost no attention from Advance Transformer at trial. Advance Transformer has not referred to support in the record for the type of conduct required for a finding of "exceptional case." Levinson's position on the merits was not totally without substance, and the presumption of validity accompanying the issuance of his patents can not be ignored.
21
The district court's finding that this is an "exceptional case" is clear error. The award of attorney fees is reversed.
22
Each party shall bear its costs on appeal.
23
AFFIRMED IN PART, VACATED-IN-PART, REVERSED IN PART
*
The Honorable Edward D. Re, Chief Judge, United States Court of International Trade, sitting by designation pursuant to 28 U.S.C. Sec. 293(a)
1
Advance Transformer Co. v. Levinson, 231 USPQ 1 (N.D.Ill.1986)
2
A detailed exposition of the background of this action, the circuitry of the accused systems, the content of the patents at issue, the prior art, and other aspects of the dispute, are contained in the district court's thorough opinion and will not be repeated
3
35 U.S.C. Sec. 285: The court in exceptional cases may award reasonable attorney fees to the prevailing party | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/500335/ | 837 F.2d 483
Weiss (Sanford B.)v.Feder (James J.)
NO. 86-6055
United States Court of Appeals,Ninth Circuit.
JAN 14, 1988
Appeal From: .D.Ohio
1
N.D.Ohio. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2543759/ | 52 So.3d 672 (2011)
JACOBY
v.
KREPEL.
No. 4D09-5241.
District Court of Appeal of Florida, Fourth District.
February 9, 2011.
DECISION WITHOUT PUBLISHED OPINION
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/7023677/ | JUSTICE WOODWARD delivered the opinion of the court: The petitioner, attorney Fred M. Morelli, Jr., represented the defendant, Armando Barraza, at his trial conducted in absentia. After the defendant was convicted, the trial court disposed of the defendant’s bond, which had been forfeited, by allocating approximately one-third each to the petitioner’s attorney fees, the City of Aurora, and the County of Kane. The petitioner now appeals, claiming that he was entitled to have the full amount of his attorney fees paid from the defendant’s forfeited bond before any amount was allocated to the State. We reverse and remand for further proceedings. The record reveals that the defendant was charged in connection with a drug-related offense and that he retained the petitioner to represent him. The defendant agreed to pay a fee of $15,000 for the petitioner’s services, and $2,000 was paid to the petitioner in advance. Sometime before the case went to trial, the defendant fled the jurisdiction, and his $20,000 bond deposit was forfeited (see Ill. Rev. Stat. 1987, ch. 38, par. 110 — 7). The defendant was subsequently tried in absentia pursuant to section 115 — 4.1 of the Code of Criminal Procedure of 1963 (Code) (Ill. Rev. Stat. 1987, ch. 38, par. 115 — 4.1). At some point, the petitioner sought to withdraw from the case because of an alleged death threat against his life by the defendant. The petitioner did not, however, withdraw. The defendant was convicted, and the trial court imposed a sentence of 18 years’ imprisonment and a fine of $100,000. This “street value” fine was assessed against the defendant as provided in section 5 — 9—1.1 of the Unified Code of Corrections (Ill. Rev. Stat. 1987, ch. 38, par. 1005 — 9—1.1). Before sentence was imposed, the petitioner filed a petition seeking to have his attorney fees paid out of the defendant’s forfeited bond deposit pursuant to section 115 — 4.1(a). The petition stated that the petitioner had spent 44 hours on the defendant’s behalf in court, and 70.7 hours on the defendant’s case while not in court. The petitioner asserted that his normal rates were $125 per hour while in court and $110 per hour for all other work. These requested fees, combined with costs incurred of $250.25, brought the petitioner’s total fee request to $13,527.50. The State also requested that the defendant’s drug fine be partially paid out of the forfeited bond money. After imposing sentence on the still-absent defendant, the trial court heard argument regarding the disposition of the forfeited bond deposit. After listening to argument, the trial court stated: “THE COURT: With reference to the attorney’s fees, I find that the defendant is — Mr. Morelli is entitled to a fee for representing the defendant. I have no real quarrel with the bill or the hours that were submitted. On the other hand, I think taking into consideration the amount of funds that are [sic] available, I don’t feel that it would be fair and equitable to all parties involved to just flat out pay that, even though Mr. Morelli may very well have earned that amount or may be entitled to that amount. I think it is discretionary with the court.” The trial court then awarded the petitioner a fee of $7,500, from which was subtracted the $2,000 the defendant already had paid to the petitioner, plus $250 for expenses, for a total of $5,750. A further $2,000 (10% of the $20,000 bond) was allocated as the clerk’s fee. Also, $78 in felony costs was subtracted, leaving $12,172, which the trial court divided in equal shares between the Aurora Drug Fund and the general fund of Kane County. It is unclear whether the trial court disbursed these remaining funds in satisfaction of the judgment arising from the defendant’s drug fine (Ill. Rev. Stat. 1987, ch. 38, par. 1005 — 9—1.2) or merely allocated the money to satisfy the judgment arising out of the statutory bond forfeiture provisions (Ill. Rev. Stat. 1987, ch. 38, par. 110-7(g)). The petitioner now appeals from the trial court’s order allocating the defendant’s forfeited bond funds. Though the petitioner also filed a notice of appeal on behalf of the defendant regarding his conviction, that appeal is currently pending before the court (No. 2—89—0277) and is not relevant here. On appeal, the petitioner argues that the trial court, having suggested that the petitioner was entitled to the full amount of his fee request, should have paid him the full amount out of the bond funds before allotting any amount to the State. The State argues that the fee awarded to the petitioner was reasonable and that it was within the discretion of the trial court to divide the bond money as it did. Neither party takes issue with the manner in which the forfeited bond deposit was distributed as between the two governmental units. At issue on appeal is whether section 115 — 4.1(a) of the Code permits a trial court to award attorney fees in an amount less than the fees actually and reasonably earned by the attorney when the bond money is sufficient to pay the full amount. Section 110 — 7 of the Code (Ill. Rev. Stat. 1987, ch. 38, par. 110 — 7) requires criminal defendants to deposit a sum equal to 10% of the amount of bail in order to insure attendance at trial. This provision allows for the forfeiture of the bond deposit if the defendant fails to comply with the provisions of his bail bond. When a defendant fails to appear before the court within 30 days of forfeiture, the trial court is empowered to enter judgment in favor of the State in the amount of bail plus costs. The defendant’s bond deposit is applied to the payment of costs and, if any amount remains, to the payment of the judgment. Ill. Rev. Stat. 1987, ch. 38, par. 110 — 7(g). The legislature, however, “has made bond deposits the subject of more than one enactment.” (People v. Maya (1985), 105 Ill. 2d 281, 288.) Section 115 — 4.1 of the Code (Ill. Rev. Stat. 1987, ch. 38, par. 115 — 4.1) provides a mechanism for the trial of defendants who attempt to evade trial by fleeing the jurisdiction. The statute also provides that, at the conclusion of the in absentia proceedings, the trial court “may order the clerk of the circuit court to pay counsel such sum as the court deems reasonable, from any bond monies which were posted by the defendant with the clerk, after the clerk has first deducted all court costs.” Ill. Rev. Stat. 1987, ch. 38, par. 115 — 4.1(a). The primary legislative intent in enacting section 115 — 4.1(a) was not to provide for payment of attorney fees, but to prevent criminal defendants from evading trial by absenting themselves from court proceedings. (People v. Rivera (1985), 134 Ill. App. 3d 927, 929.) In providing for the trial of absent defendants, however, the legislature endeavored to insure that such trials would be conducted with due regard for the defendant’s “procedural rights guaranteed by the United States Constitution, Constitution of the State of Illinois, statutes of the State of Illinois, and rules of court.” (Ill. Rev. Stat. 1987, ch. 40, par. 115 — 4.1(a).) Since a defendant would require effective representation to protect these rights in his absence, section 115 — 4.1(a) gives the trial court authority to award reasonable attorney fees from defendant’s bond deposit. (Maya, 105 Ill. 2d at 285-86.) Without such a provision, there would be little incentive for an attorney to represent, or to continue to represent, a client who has fled the jurisdiction. The petitioner argues that the trial court determined that his original fee request of some $13,000 was reasonable and justified and that this, therefore, is the amount he should have been awarded. We do not believe that the trial court’s statement that it had “no real quarrel” with the petitioner’s fee request can be equated with a finding that the fees were “reasonable” under the terms of section 115— 4.1(a). It is also just as clear, however, that the amount awarded to the petitioner does not represent a simple determination of the reasonable amount of fees the petitioner actually earned. This amount was arrived at by the trial court in an attempt to be “fair and equitable to all parties involved” in determining the proper allocation of the limited amount of bond money. The trial court left no doubt that the amount of fees awarded to the petitioner was something less than what he reasonably earned in these proceedings. The question now is whether the trial court should have determined the amount of reasonable attorney fees due the petitioner, and paid them in full to the extent possible, before distributing funds to the State for the drug fine imposed on the defendant. As we noted above, it is not clear whether the trial court allotted part of the bond-deposit money to the Aurora drug fund and the Kane County general fund to satisfy the judgment arising from the defendant’s drug fine or instead to satisfy the judgment arising from the forfeiture of the defendant’s bond. If the money was allocated to these entities in satisfaction of the judgment arising from the bond forfeiture, then the supreme court’s decision in People v. Maya (1985), 105 Ill. 2d 281, is directly controlling in this appeal. In that case, the supreme court held that, in such circumstances, the legislature intended the trial court “to first award in its discretion reasonable fees from a bond deposit and for the court thereafter to grant, under section 110 — 7(h), judgment for the State in the amount of the bond-deposit balance, if any, remaining.” (Emphasis added.) (Maya, 105 Ill. 2d at 287.) This means that the trial court should have first determined what constituted reasonable attorney fees for the petitioner and awarded him this amount out of the bond deposit; the entities designated by the State should then have received a distribution from “the bond deposit balance remaining.” People v. Maya did not address the question of whether the attorney-fees provision of section 115 — 4.1(a) should be given priority over the payment of drug fines that may be incurred after a defendant is tried and convicted in absentia. The logic of Maya still applies to such a situation, though, because “[t]o hold that the court is required to first enter judgment in favor of the State in the amount of the bond deposit would, of course, exhaust the deposit and leave nothing to permit giving effect to the provisions of section 115 — 4.1(a).” (Maya, 105 Ill. 2d at 287.) Even if the trial court’s distribution of the bond deposit represents an attempt to allocate money toward the defendant’s drug fine, this function should have been served only after the payment of reasonable attorney fees to the petitioner. Another good reason for giving attorney fees priority over the payment of the defendant’s drug fine is found in the realization that, but for the ability to try the defendant in absentia, the drug fine resulting from the conviction would never have been imposed. The role of the defendant’s attorney in the in absentia proceedings is crucial to insure that they are conducted with due regard for the defendant’s rights. In fact, the presence of counsel for the defendant is essential to make such proceedings constitutional. (See People v. Davis (1968), 39 Ill. 2d 325, 329-31.) By enacting section 115 — 4.1(a), the legislature gave “the court discretion to award reasonable fees to insure that an accused’s right to the assistance of counsel is honored.” (Maya, 105 Ill. 2d at 288.) To give priority to the payment of the drug fine out of the forfeited bond deposit would effectively eliminate the incentive for trial attorneys to represent defendants in absentia; we do not believe the legislature intended such a result. We also reject the State’s contention that we should evaluate this issue differently when the attorney involved is privately retained, rather than court appointed. As the supreme court stated in Maya: “[TJhere is no reasonable ground to distinguish between appointed and privately retained counsel as the State urges us to do. It is generally known that often attorneys in making fee arrangements will look to the defendant’s bond deposit for full or partial compensation. Section 115 — 4.1(a) itself makes no distinction between retained or appointed counsel in authorizing the allowance of fees.” 105 Ill. 2d at 286. Finally, although we have held that the trial court should have awarded the petitioner the reasonable amount of fees earned in representing the defendant, the trial court has not actually addressed the reasonableness of the fee schedule submitted on behalf of the petitioner. Therefore, we remand the cause to the trial court for a determination of what amount would constitute reasonable attorney fees for the petitioner’s efforts on behalf of the defendant. (See People v. Johnson (1981), 87 Ill. 2d 98, 105-06.) This amount should be awarded to the petitioner out of the forfeited bond deposit first. Any money remaining should be applied to payment of the defendant’s fine; the division of the proceeds from the fine between the various governmental entities involved in this cause should be made pursuant to the statutory provision for the allocation of drug-fine proceeds set out in section 5 — 9—1.2 of the Unified Code of Corrections (Ill. Rev. Stat. 1987, ch. 38, par. 1005-9-1.2). The judgment of the circuit court is reversed, and the cause is remanded for further proceedings. Reversed and remanded. DUNN and GEIGER, JJ., concur. | 01-03-2023 | 07-24-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/474464/ | 797 F.2d 980
*Richardsonv.Bowen
85-7243
United States Court of Appeals,Eleventh Circuit.
7/28/86
1
M.D.Ala.
REVERSED
2
---------------
* Fed.R.App.P. 34(a); 11th Cir.R. 23. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/3042427/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 06-2983
___________
Duzgun Atsiz, *
*
Petitioner, *
* Petition for Review of a Final
v. * Decision of the Board of
* Immigration Appeals.
Alberto Gonzales, Attorney General *
of the United States, * [UNPUBLISHED]
*
Respondent. *
___________
Submitted: May 16, 2007
Filed: May 22, 2007
___________
Before BYE, BEAM, and SMITH, Circuit Judges.
___________
PER CURIAM.
Duzgun Atsiz, a native and citizen of Turkey, was found removable as an
aggravated felon, and the Board of Immigration Appeals (BIA) denied his petition for
deferral of removal under the Convention Against Torture (CAT). We dismiss in part
and deny in part his petition for review of the BIA's decision.
Atsiz first contends the BIA's seven-sentence affirmance of the Immigration
Judge (IJ) decision violates his constitutional rights to due process, including
meaningful review and an individualized determination. "To demonstrate a violation
of due process, an alien must demonstrate both a fundamental procedural error and
that the error resulted in prejudice." Lopez v. Heinauer, 332 F.3d 507, 512 (8th Cir.
2003). "An alien has no constitutional or statutory right to an administrative appeal.
Any rights to an administrative appeal are created by regulations issued by the
Attorney General, and under the regulations, aliens have no right to a full opinion by
the BIA." Loulou v. Ashcroft, 354 F.3d 706, 708 (8th Cir. 2003); see also Ngure v.
Ashcroft, 367 F.3d 975, 981 (8th Cir. 2004) ("As a matter of constitutional law, the
alien is entitled only to a reasoned decision from the agency, not from a particular
component of the agency."). Atsiz's due process claim fails because Atsiz does not
contend the IJ decision deprived him of due process, and we find the BIA effectively
adopted the IJ's findings, which we review as part of the final agency decision. See
Gemechu v. Ashcroft, 387 F.3d 944, 947 (8th Cir. 2004) ("To the extent that the BIA
adopted the IJ's findings, we review those IJ findings as part of the final agency
decision.").
Atsiz next contends the IJ improperly required him to prove he would be
tortured because of his ethnicity or religion, something not required for deferral of
removal under CAT. See Matter of S-V-, 22 I. & N. Dec. 1306, 1311 (B.I.A. 2000)
(en banc) (noting the respondent in a CAT proceeding "is not required to demonstrate
that he or she would be tortured on account of a particular belief or immutable
characteristic.") Atsiz raised this challenge in his first appeal to the BIA. The BIA
remanded the matter after finding the IJ improperly discredited Atsiz's testimony,
stating, "In light of our clear error finding, we find it appropriate to remand this case
for further consideration of whether the respondent proved it more likely than not he
will be tortured if returned to Turkey." J.A. at 81. When the IJ again denied deferral
of removal under CAT on remand, Atsiz appealed to the BIA but did not challenge the
legal standard applied by the IJ on remand in either the two-page explication of the
issues challenged in the notice of appeal, id. at 34-35, or in his fifteen-page brief. Id.
at 5-19. As a consequence, we are without jurisdiction to review this challenge.
Sultani v. Gonzales, 455 F.3d 878, 884 (8th Cir. 2006) ("Failure to raise an issue
-2-
before the [BIA] constitutes a failure to exhaust administrative remedies and deprives
this court of jurisdiction to hear the matter.").
Finally, Atsiz argues the IJ failed to consider all the evidence presented and
failed to consider the cumulative probability of torture in violation of applicable
regulations and case law. We lack jurisdiction to review these challenges because "we
do not have jurisdiction to review a final order against an alien who was found
removable for having committed an 'aggravated felony,' with the exception of
'constitutional claims or questions of law.'" Xiong v. Gonzales, No. 06-2007, 2007
WL 1077217, at *4 (8th Cir. April 12, 2007) (citing 8 U.S.C. § 1252(a)(2)). Atsiz
contends Ramadan v. Gonzales, 479 F.3d 646 (9th Cir. 2007) (per curiam), supports
his view we have jurisdiction over these challenges. The Ramadan court determined
"questions of law" include "the application of statutes and regulations to undisputed
historical facts." Id. at 654. While not controlling law, Atsiz urges we adopt the
reasoning in Ramadan and reach the merits of his attacks on the IJ's decision. But
Atsiz "cannot . . . secure review by using the rhetoric of a 'constitutional claim' or
'question of law' to disguise what is essentially a quarrel about fact-finding." Xiao Ji
Chen v. U.S. Dep't of Justice, 471 F.3d 315, 330 (2d Cir. 2006). At bottom, Atsiz
disagrees with the IJ's interpretation and use of and weight given his testimony, his
expert's testimony, and condition reports for similarly situated persons in Turkey.
These are factual determinations over which we have no jurisdiction. See Hanan v.
Gonzales, 449 F.3d 834, 836-37 (8th Cir. 2006) (holding court lacked jurisdiction
over habeas claim brought by alien, inasmuch as claim came down to challenges to
IJ's factual determination that it was not likely the current government of the removal
country would seek to torture alien if he was returned and, thus, did not depend upon
any constitutional issue or question of law).
Accordingly, we grant the motion to dismiss the petition for review for lack
of jurisdiction except as to the due process challenge, which we deny.
______________________________
-3- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2102657/ | 723 A.2d 943 (1999)
157 N.J. 187
Edmund T. KARAM and Barbara Karam, husband and wife, Plaintiffs-Appellants,
and
Peter Dibiagio and Laura Dibiagio, husband and wife, Intervenors-Appellants,
v.
STATE of New Jersey, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Robert C. Shinn, Commissioner of the Department of Environmental Protection, Defendants-Respondents,
and
Chicago Title Insurance Company, a Corporation, Defendant.
Supreme Court of New Jersey.
Argued February 1, 1999.
Decided February 24, 1999.
*944 Richard M. Hluchan, Voorhees, for plaintiffs-appellants (Levin & Hluchan, attorneys; Richard S. Morrison, on the briefs).
Alyssa Pearlman Wolfe, Deputy Attorney General, for defendants-respondents (Peter Verniero, Attorney General of New Jersey, attorney; Mary C. Jacobson, Assistant Attorney General, of counsel).
Michael J. Gross, Middletown, submitted a brief on behalf of amicus curiae, National Association of Home Builders (Giordano, Halleran & Ciesla, attorneys).
PER CURIAM.
The judgment is affirmed, substantially for the reasons expressed in Judge Baime's opinion of the Appellate Division, reported at 308 N.J.Super. 225, 705 A.2d 1221 (1998).
For affirmanceChief Justice PORITZ and Justices HANDLER, POLLOCK, O'HERN, GARIBALDI, STEIN, and COLEMAN7.
OpposedNone. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/414924/ | 701 F.2d 178
Howell-Viggers Corp.v.Robintech Inc.
80-3602
UNITED STATES COURT OF APPEALS Sixth Circuit
3/4/82
N.D.Ohio
AFFIRMED | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2509193/ | 720 S.E.2d 646 (2012)
290 Ga. 373
In the Matter of Parmesh N. DIXIT.
No. S12Y0379.
Supreme Court of Georgia.
January 9, 2012.
Arora & LaScala, Manubir S. Arora, for Dixit.
Paula J. Frederick, General Counsel State Bar, A.M. Christina Petrig, Asst. Gen. Counsel State Bar, for State Bar of Georgia.
PER CURIAM.
This disciplinary matter is before the Court on the petition for voluntary surrender of license filed by Respondent Parmesh N. Dixit (State Bar No. 223241) pursuant to Bar Rule 4-227(b)(2) of the Georgia Rules of Professional Conduct prior to the issuance of a Formal Complaint. In his petition Dixit admits that on May 6, 2011, he pled guilty to one felony count of violating 8 USC. § 1324(a)(1)(A)(v)(I) in the United States District Court for the Northern District of Georgia. He further admits that his felony conviction constitutes a violation of Rule 8.4(a)(2) of Bar Rule 4-102(d), the maximum penalty for which is disbarment. Dixit submits that the appropriate discipline is the voluntary surrender of his license to practice law, which is tantamount to disbarment. The State Bar responds that it is in the best interests of the Bar and the public for the Court to accept Dixit's petition.
After reviewing the record, we accept Dixit's petition for voluntary surrender of his license. Accordingly, the name of Parmesh N. Dixit is hereby removed from the roll of persons entitled to practice law in the State of Georgia. He is reminded of his duties under Bar Rule 4-219(c).
Voluntary surrender of license accepted.
All the Justices concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/477013/ | 802 F.2d 443
Kalserv.Waldock & Co.
86-7329
United States Court of Appeals,Second Circuit.
9/26/86
1
E.D.N.Y.
AFFIRMED | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/3040328/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 04-1319
___________
Eswin Marco Lopez-De Leon, *
*
Petitioner, *
* Petition for Review of
v. * an Order of the
* Board of Immigration Appeals.
Alberto Gonzales, Attorney General *
of the United States; Michael Chertoff, * UNPUBLISHED
Secretary of Homeland Security, *
*
1
Respondents. *
___________
Submitted: March 28, 2006
Filed: April 4, 2006
___________
Before ARNOLD, BYE, and SMITH, Circuit Judges.
___________
PER CURIAM.
Guatemalan citizen Eswin Marco Lopez-De Leon (Leon) petitions for review
of an order of the Board of Immigration Appeals, which summarily affirmed an
1
Alberto Gonzales, who has been appointed to serve as Attorney General of the
United States, and Michael Chertoff, who has been appointed to serve as Secretary of
the Department of Homeland Security, are substituted as respondents pursuant to
Federal Rule of Appellate Procedure 43(c).
Immigration Judge’s (IJ’s) denial of asylum, withholding of removal, and relief under
the Convention Against Torture (CAT).2
After careful review of the record, we conclude the IJ’s decision, that Leon
failed to establish either past persecution or a well-founded fear of persecution on
account of a protected ground, is supported by substantial evidence on the record as a
whole. See Menendez-Donis v. Ashcroft, 360 F.3d 915, 917-19 (8th Cir. 2004)
(standard of review). Further, because Leon failed to meet the burden of proof on his
asylum claim, his application for withholding of removal necessarily fails as well, see
Turay v. Ashcroft, 405 F.3d 663, 667 (8th Cir. 2005) (withholding-of-removal standard
is more rigorous than asylum standard), and we see no basis in the record for CAT
relief, see Habtemicael v. Ashcroft, 370 F.3d 774, 780-82 (8th Cir. 2004) (discussing
considerations relevant to relief under CAT).
Accordingly, we deny the petition.
______________________________
2
The IJ’s decision, therefore, constitutes the final agency determination for
purposes of judicial review. See Dominguez v. Ashcroft, 336 F.3d 678, 679 n.1 (8th
Cir. 2003).
-2- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2543755/ | 52 So. 3d 664 (2010)
CLARENDON NAT. INS. CO.
v.
AFO IMAGING, INC.
No. 2D09-4470.
District Court of Appeal of Florida, Second District.
September 8, 2010.
DECISION WITHOUT PUBLISHED OPINION
Certiorari denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2481381/ | 942 N.E.2d 462 (2010)
238 Ill.2d 675
SHELBY COUNTY STATE BANK
v.
HARRIS.
No. 111187.
Supreme Court of Illinois.
November 1, 2010.
Disposition of Petition for Leave to Appeal[*] Denied.
NOTES
[*] For Cumulative Leave to Appeal Tables see preliminary pages of advance sheets and Annual Illinois Cumulative Leave to Appeal Table. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2779377/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
UNITED STATES OF AMERICA, )
)
)
v. ) Criminal No. 14-78 (ESH)
)
JAMES NELSON, )
)
Defendant. )
ORDER
In a hearing before Magistrate Judge Robinson on January 29, 2015, defendant James
Nelson entered a plea of guilty. On that date, the magistrate judge issued a Report and
Recommendation advising the Court to accept defendant's plea. The Court has received no
objection to the Report and Recommendation. See Local Crim. R. 59.2(b) ("Any party may file
for consideration by the district judge written objections to the magistrate judge's proposed
findings and recommendations ... within fourteen (14) days after being served with a copy
thereof."). Accordingly, the Court hereby adopts the recommendation of the magistrate judge
and accepts defendant's guilty plea.
SO ORDERED. c-, -- ~
C I\ ) \ i )~1
c<., WI\~ - nU-'t~
ELLEN SEGAL HUVELLE
United States District Judge
Date: February 13, 2015 | 01-03-2023 | 02-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1054408/ | 175 S.W.3d 226 (2005)
Gladys BOLES, et al.
v.
NATIONAL DEVELOPMENT COMPANY, INC., et al.
Court of Appeals of Tennessee, at Nashville.
Assigned on Briefs September 9, 2004.
April 26, 2005.
Permission to Appeal Denied October 17, 2005.
*230 John C. Hayworth, Charles Ingram Malone, Kathryn Hays Sasser, Gerald M. Tierney, Jr., and Joseph F. Welborn, Nashville, Tennessee, for the appellants, National Development Company, Inc., *231 Sunstates Corporation and Clyde W. Engle.
Douglas Thompson Bates, III, Centerville, Tennessee, for the appellee, Gladys Boles, et al.
Permission to Appeal Denied by Supreme Court October 17, 2005.
OPINION
FRANK G. CLEMENT, JR., J., delivered the opinion of the court, in which WILLIAM C. KOCH, JR., P.J., M.S., and PATRICIA J. COTTRELL, J., joined.
This is a class action on behalf of purchasers of 3,876 lots at Hidden Valley Lakes Development, a residential development in Hickman County. Plaintiffs seek to recover compensatory damages resulting from a breach of contract by the developer, National Development Company, Inc., and its alleged alter ego, Clyde W. Engle. Plaintiffs allege that National breached its contract by failing to provide the centerpiece of the development, a thirty-acre lake. The lake failed to hold water and thus became a thirty-acre hole in the ground. It was stipulated that the failure of National to provide the thirty-acre lake was a breach of contract. The trial was bifurcated into two phases. The first was limited to the plaintiffs' claim for damages against National, following which the plaintiffs were awarded compensatory damages in the amount of $2,540,867 against National. The second phase of the trial was limited to the plaintiffs' claim that Clyde Engle was the alter ego of National and thus liable for the damages assessed against National. Following an evidentiary hearing, the trial court pierced the corporate veil and held Engle personally liable for the judgment against National. The defendants appeal contending that the plaintiffs' proof of damages was neither competent nor sufficient, that the wrong legal standard was applied to pierce the corporate veil and that the proof was insufficient to pierce the corporate veil. Engle also appeals contending that the court did not have personal jurisdiction over him and thus the judgment against him is void. Finding no error, we affirm.
Twenty-nine owners of property in the Hidden Valley Lakes Development in Hickman County, Tennessee, filed a civil action against National Development Company, Inc., a Texas corporation, seeking damages resulting from breach of contract and negligent and fraudulent misrepresentations. The principal complaint pertained to the centerpiece of the development, a thirty-acre lake, named Crystal Lake. The lake failed to hold water and it was subsequently determined that it would never hold water. Thus, instead of having a thirty-acre lake as the centerpiece of the development, the plaintiffs have a thirty-acre hole in the ground.
Plaintiffs amended their complaint in September 1995 to allege that their causes of action were being asserted on behalf of "all persons signing contracts with National prior to 1994 and specifically providing: `THE SELLER is responsible for construction of roads, lakes, and related facilities'" and all successors to any persons who signed such contracts with National. The plaintiffs sought to represent a class of persons who purchased some 3,876 lots from National for a total consideration paid for the lots of $9,239,517.
In December of 1995, the trial court certified the plaintiffs' breach of contract claims as a class action on behalf of "persons who prior to the end of 1994, purchased or contracted to purchase property in the Hidden Valley Lakes subdivision from National Development Company, Inc., pursuant to contracts containing language to the effect that defendant would be responsible for construction of roads, lakes and related facilities." Plaintiffs' misrepresentation claims, however, were not certified for class action treatment. *232 Thereafter, on February 20, 1996, the plaintiffs filed a notice of dismissal of their misrepresentation claims. Thus, the plaintiffs proceeded with their claim against National on the singular issue of whether National was liable for breach of contract based upon its failure to develop the centerpiece of the subdivision, Crystal Lake.
Later on, the plaintiffs again amended their complaint, adding Sunstates Corporation, National's parent, as an additional defendant. The thrust of the complaint against Sunstates was that it operated National as its "alter-ego, and as its agent." Plaintiffs alleged that Sunstates caused National to become under-capitalized as a result of a transfer on December 31, 1994 of an excess of $5 million in contracts to affiliates of Sunstates and National. Plaintiffs therefore alleged that Sunstates was liable for any judgment that may be rendered against National.
Two years later, in December of 1998, the plaintiffs amended their pleadings once again, this time adding Clyde W. Engle, the principal behind the corporate defendants, as an additional party defendant. Plaintiffs asserted that Engle exercised complete dominion and control over Sunstates, National and other affiliated entities and that he was the "alter-ego" of the entities which justified piercing the corporate veils of National and Sunstates in order to hold Engle individually liable for any judgments that may be rendered against the corporate defendants.
Due to the complexity of issues, the trial was bifurcated into two hearings. The first trial pertained to the issue of damages only. The second focused solely on the question of whether Engle was the alter ego of the corporate defendants and, thus, whether the corporate veils should be pierced so that the plaintiffs could recover their damages against Clyde Engle, individually.
The damages portion of the plaintiffs' breach of contract action against National was tried before the Honorable Donald P. Harris on January 19, 2000. The plaintiffs were awarded damages against the developer, National, in the amount of $2,540,867. The second phase of the trial, to determine whether to hold Engle personally liable for the judgment against National, was tried before the Honorable R.E. Lee Davies on June 17 and 18, 2002. The trial court applied Tennessee law, rather than the law of the states of incorporation of National and Sunstates, and found Engle to be the alter ego of the corporate entities. It, therefore, pierced the corporate veils and held Engle personally liable for the $2,540,867 judgment rendered against National.
STANDARD OF REVIEW
The issues raised constitute a challenge of the trial court's judgment following a bench trial. We review findings of fact by a trial court de novo and presume that the findings of fact are correct unless the preponderance of the evidence is otherwise. We also give great weight to a trial court's determinations of credibility. Estate of Walton v. Young, 950 S.W.2d 956, 959 (Tenn.1997); B & G Constr., Inc. v. Polk, 37 S.W.3d 462, 465 (Tenn.Ct.App.2000). However, if the trial judge has not made a specific finding of fact on a particular matter, we will review the record to determine where the preponderance of the evidence lies without employing a presumption of correctness. Ganzevoort v. Russell, 949 S.W.2d 293, 296 (Tenn.1997).
Tenn. R.App. P. 13(d)'s presumption of correctness requires appellate courts to defer to a trial court's findings of fact. Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 296 (Tenn.Ct.App. 2001). Because of the presumption, an appellate court is bound to leave a trial *233 court's finding of fact undisturbed unless it determines that the aggregate weight of the evidence demonstrates that a finding of fact other than the one found by the trial court is more probably true. Parks Properties v. Maury County, 70 S.W.3d 735, 742 (Tenn.Ct.App.2001). For the evidence to preponderate against a trial court's finding of fact, it must support another finding of fact with greater convincing effect. Walker v. Sidney Gilreath & Assocs., 40 S.W.3d 66, 71 (Tenn.Ct.App. 2000).
DAMAGES
Following a bench trial, the plaintiffs were awarded damages against National Development Company, Inc., the developer, in the amount of $2,540,867. Defendants appeal that decision, contending that the judgment against National should be reversed because the record does not contain competent or sufficient proof of damages. Our analysis of this issue begins with an assessment of the trial court's reasoning, which is set forth in detail in an excellent Memorandum Opinion:
This action for breach of contract was tried by the court on January 19, 2000. Plaintiffs are a class of purchasers of real property located in the Hidden Valley Lakes Subdivision, a recreational development, developed and marketed by the defendant, National Development Company, Inc. All members of the class purchased lots in the development incident to a contract of sale that contained the following language:
"The SELLER is responsible for construction of roads, lakes and related facilities such as the bathhouse, beach and boat ramps, ..."
The primary lake, Crystal Lake, intended to cover some 45 acres, was dug by the defendant but did not hold water and the effort to build the lake was finally abandoned. The plaintiffs brought a class action to recover for the diminution in value of their properties caused by the failure of the defendant to complete the lake. Five other small lakes were constructed by the defendant as well as a swimming pool, bathhouse and other facilities. Crystal Lake was, however, to be the preeminent recreational facility on the property and would have, if constructed, accommodated boating, skiing and fishing.
The concept of marketing the property was that anyone who purchased a lot in the development was entitled to use any of the common recreational facilities. Each landowner was obligated, by contract, to pay an assessment amounting to $72.00 per year to the homeowner's association for maintaining the property, to include the roads, sewers and sewage disposal facility, recreational facilities and common areas. By the end of 1994, some 3,876 lots had been sold by the defendants and these lot owners are members of the class of plaintiffs. The total consideration paid by plaintiffs for their lots was $9,239,517.42.
The difficult question presented to the court is the amount of diminution in value of the lots sold caused by the defendant's failure to complete Crystal Lake. The defendant did not deny that it was obligated to construct the lake, that it failed to perform that obligation or that it was responsible for any diminution in value of the lots sold as a result. Some of the lots involved were larger lots suitable for construction of permanent dwellings. Some of the lots were very small lots suitable only for parking a camper. Some lots fronted directly on what was supposed to be Crystal Lake. Other lots were located in remote areas of the development nearer the small lakes.
*234 By the time of the trial, it is clear that some of the lots had little, if any, value. Some 146 of them were sold by Hickman County for back taxes, evidencing abandonment by the persons who had purchased them. The vast majority of these lots were retained by the county because no one offered any amount in excess of the taxes owed. The defendant itself had some lots for as little as $65.00.
When lots are abandoned in this development, the amount of maintenance fees that will be paid are proportionately reduced. Because many of the lots have little or no value, the ability of the homeowners' association to collect the maintenance fees has been eroded. Logically, this erosion would cause further uncertainty and diminution in value of the property.
Mrs. Polly Dyer, a real estate appraiser, testified as an expert for the plaintiffs. According to her testimony, the lots in the Hidden Valley Lakes Subdivision have diminished in value an average of ninety (90%) percent for those lots fronting on the proposed Crystal Lake and sixty (60%) for those not fronting on the proposed lake. She opined that ninety (90%) of the diminution in value was caused by the failure of defendant to complete Crystal Lake.
On cross-examination, Mrs. Dyer listed the resales of lots in Hidden Valley Lakes Subdivision as derived from records maintained by the Assessor of Properties Office for Hickman County. Based upon the resales, one-half of the lots resold had diminished in value sixty (60%) or less. One-half of the lots resold had diminished greater than sixty (60%) percent. These figures would indicate half the lots resold lost an average of thirty (30%) percent in value and half lost an average of eighty (80%) percent in value. As a whole, the value received for the lots upon resale decreased an average of fifty-five (55%) percent.
Certainly, the failure of the defendant to complete Crystal Lake and the fallout from that failure diminished the value of the lots in the subdivision. While failure to complete the lake was the only circumstance shown to have had an effect on the devaluation of the lots, other factors such as a loss of interest, lack of marketing expertise and unwillingness to incur expenses involved in marketing the lots may also have had some effect. Recognizing the burden is on the plaintiffs to prove the amount of their damages caused by the breach, the court finds, by a preponderance of the evidence, that fifty (50%) percent of the diminution in value was caused by the failure of the defendant, National Development Company, Inc., to complete the construction of Crystal Lake.
Accordingly, plaintiffs shall have a judgment against National Development Company, Inc., for twenty-seven and one-half (27½%) percent of $9,239,517.42, the total consideration paid by the plaintiffs for their properties. The total amount of the judgment shall be $2,540,867.29.
The court further finds there is no rational basis for finding some lots in the development were damaged more than others. It is noted that the lots fronting on the proposed Crystal Lake were larger lots suitable for construction of permanent dwellings. As such, they had value separate from their proximity of Crystal Lake. The small camper lots had value only because of their location in the development and their proximity to the recreational facilities located there, including Crystal Lake. As a consequence, the court finds the damages awarded should be apportioned to *235 each lot owner on the basis of the amount of consideration paid.
One of the defendants' contentions is that the plaintiffs' expert witness, Polly Dyer, was not qualified to render an opinion concerning the value of the real estate at Hidden Valley Lakes or the diminution in the value of the property. The record reveals that Ms. Dyer had been a resident of Hickman County for many years, that she had been actively involved in the real estate business in Hickman County for over twenty years, since 1978, and that she had appraised real estate in the county on a continuous basis since 1991. She had served on the State Board of Appraisers for seven years at the time of the first trial. Moreover, on multiple occasions she had been recognized as an expert witness, qualified to render opinions as to the value of real property, by the Circuit and Chancery Courts for Hickman County.
The rules of evidence that govern the issue of admissibility of expert testimony are Tenn. R. Evid. 702 and 703. The trial court has the initial responsibility to find whether the purported expert evidence will substantially assist the finder of fact to understand the evidence and to determine a fact at issue. McDaniel v. CSX Transportation, Inc., 955 S.W.2d 257, 265 (Tenn.1997). On appeal, questions regarding the admissibility, qualifications, relevancy and competency of expert testimony are generally left to the discretion of the trial court. McDaniel, 955 S.W.2d at 263 (citing State v. Ballard, 855 S.W.2d 557, 562 (Tenn.1993)). The trial court's ruling in this regard may only be overturned if the discretion is arbitrarily exercised or abused. McDaniel, 955 S.W.2d at 264.
Considering the foregoing, we find no error with the trial court's decision to qualify Ms. Dyer as an expert witness competent to render opinions concerning the value of real estate and the diminution of the value of the real estate at issue.
We now turn our attention to the evidence that was introduced concerning the plaintiffs' damages. It was undisputed that Crystal Lake, the centerpiece of the development, did not hold water and would never hold water, thus there was nothing more than a massive, thirty-acre hole in the ground in the center of the development.
The evidence Ms. Dyer introduced can be summed up as follows: the lots in Hidden Valley Lakes were purchased for recreational purposes, as second homes as distinguished from primary residences; the center piece of the development was the proposed thirty-acre Crystal Lake; the lots at Hidden Valley Lakes dramatically diminished in value once the public became aware that Crystal Lake would never hold water; that 90% of the overall diminution in value of the lots was due to the failed Crystal Lake; and that the lots diminished in value from their original value within a range from 60% to 90%, with the diminution in value increasing with the proximity to the failed Crystal Lake.
The plaintiffs introduced additional evidence of the diminution of value to the lots through the testimony and records of the Clerk and Master of the Chancery Court for Hickman County, Sue Smith. Ms. Smith introduced evidence establishing that 179 of the lots at Hidden Valley Lakes had been sold by the county at tax sales between 1994 and 1997 due to the failure of property owners to pay their property taxes. Of these, 133 lots had been purchased by the county for the amount of the taxes and another 46 lots had been purchased by individuals, also for the amount of the taxes.
While the defendants take exception with the sufficiency of the plaintiffs' evidence, *236 they did not introduce any evidence concerning the value of the lots. Thus, the plaintiffs' evidence of the diminution of value of the lots at Hidden Valley Lakes was uncontroverted.
Considering the foregoing, we find no error with the trial court's decision to recognize Ms. Dyer as an expert witness. Furthermore, we find that the evidence does not preponderate against the trial court's findings as to damages. Therefore, we affirm the judgment of $2,540,867 against National Development Company, Inc.
PIERCING THE CORPORATE VEIL
The second hearing was limited to the issue of whether Clyde Engle was the alter ego of National Development Company, Inc. and Sunstates Corporation. Following an evidentiary hearing, the trial court found Clyde Engle to be the alter ego of the corporate entities and held him liable for the $2,540,867 judgment.
The defendants appeal this ruling asserting that the trial court committed two primary errors. First, the defendants contend that the trial court erred by applying the law of Tennessee to determine whether to pierce the corporate veils of National and Sunstates. They contend the court should have applied the law of the states of incorporation of National and Sunstates, being Texas and Delaware, respectively, instead of Tennessee law, and that this alleged error was significant because the plaintiffs provided no proof of actual fraud, which Texas and Delaware require.[1] Second, the defendants contend that the evidence was insufficient, even under Tennessee law, to justify piercing the corporate veil.
CHOICE OF LAW ARGUMENT
The contention that the trial court erred by applying Tennessee law, instead of the law of Texas and Delaware, to determine whether to pierce the corporate veil is without merit. This court previously applied Tennessee law to pierce the corporate veil of a foreign corporation and to hold its principal liable for the debts of the corporation in Oceanics Schools, Inc. v. Barbour, 112 S.W.3d 135 (Tenn.Ct.App. 2003).
Oceanics arose out of a prior civil action wherein Oceanics Schools, Inc. (hereinafter "plaintiff") obtained a judgment ("the OSC judgment") against Operation Sea Cruise, Inc. (OSC).[2] Upon discovering that Operation Sea Cruise, Inc. was insolvent, the plaintiff filed a second action to enforce the OSC judgment against Clifford E. Barbour, Jr., whom the plaintiff alleged was the alter ego of OSC. The trial court, applying Tennessee law, found that Barbour was the alter ego of OSC and pierced the corporate veil to enforce the OSC judgment against Barbour.
Not unlike the case at bar, Oceanics comprised two trials. The first was limited to damages, and the plaintiff was awarded a judgment for damages against the corporate defendant. The second trial was limited to the issue of whether Clifford Barbour, the principal behind OSC, was the judgment debtor's alter ego. The second trial was tried against the backdrop of a long and unusual history, the pertinent parts of which are as follows.
[Barbour] formed [OSC], under the laws of Panama in 1965 for the purpose of acquiring ownership of, repairing, and *237 operating the sailing vessel "Antarna." Barbour owned 100 percent of the shares of OSC, which purchased the sailing ship in 1967 and extensively repaired and restored it. In 1971, [the plaintiff] chartered the Antarna from [OSC] for use as a school ship in exchange for [the plaintiff's] providing repairs and supplies to make the vessel operational.
[The plaintiff] invested approximately $630,000 in repairs and supplies for the Antarna and began using the vessel in its school program. In March 1972[OSC] reclaimed possession of the vessel in the Panama Canal Zone and subsequently sold the Antarna to a third party, [footnote omitted] who sailed the ship out of Panamanian waters to the Azores, Portugal. The proceeds of that sale were paid by [OSC] to Barbour in repayment of "a portion of the loans to the corporation by [Barbour]."
[The plaintiff] filed suit against [OSC] and the vessel by Writ of Attachment in the District Court of Ponta Delgada, Azores, Portugal, for breach of contract and obtained a judgment against [OSC] for $929,815.55 plus interest. [footnote omitted] That Court then issued a Rogatory Letter to the Circuit Court for Knox County, Tennessee for seizure of properties of [OSC] or any other persons as may be liable for the obligations of [OSC], and apparently identifying [Barbour], Dorothy Drake Barbour and David Barbour as directors and managers of [OSC].
Oceanics, 112 S.W.3d at 137.
The second action was commenced in the Knox County Circuit Court to domesticate the Portuguese Judgment. The Portuguese Judgment against OSC was domesticated by the Knox County Circuit Court. After discovering that the corporate defendant had no assets, the plaintiff amended the complaint to add Clifford Barbour individually as a party-defendant, alleging that Barbour, the principal shareholder of OSC, failed to adequately capitalize the corporation, made personal loans to the corporation to gain an unlawful preference as a purported creditor over future creditors, and failed to observe corporate formalities. In short, the plaintiff claimed that OSC was the alter ego of Barbour, that the corporate veil should be pierced, and that Barbour was liable for the judgment against OSC.
Like the case at bar, the individual defendant Clifford Barbour argued, inter alia, that the plaintiff's action to pierce the corporate veil of OSC should be governed by the laws of the country of Panama, the jurisdiction where the corporation was chartered. The trial court disagreed, applied the law of Tennessee and held that Clifford Barbour was the alter ego of OSC and "should be personally bound on the judgment in favor of the Plaintiff against OSC." Barbour appealed. This court affirmed, finding that Tennessee law was properly applied and sustained the finding that Barbour was the alter ego of the defendant corporation. As for the choice of law argument, the Oceanics court opined,
We find no merit in Barbour's assertion that Panamanian law is relevant on the question of whether the corporate veil can be pierced in this case. We are dealing now with a Tennessee judgment. The law of Tennessee is applicable in determining the efficacy and parameters of the piercing of the corporate veil theory.
Oceanics, 112 S.W.3d at 146.
Like Oceanics, we too are dealing with a Tennessee judgment against a foreign corporation and the question of whether to pierce the veil of a foreign corporation to hold its principal liable. Therefore, we find the defendants' contention that the *238 trial court erred by not applying the law of Texas and Delaware, the states of incorporation of the corporate defendants, to be without merit.
SUFFICIENCY OF THE EVIDENCE
The defendants contend that the evidence was insufficient to justify piercing the corporate veil. The evidence in the record was greatly impacted by sanctions imposed against Clyde Engle and the corporate defendants for obstructing discovery. Thus, we begin our analysis of the sufficiency of the evidence with an analysis of the propriety of the sanctions imposed by the trial court. The sanctions imposed and the trial court's justification for imposing the sanctions are set forth in an order, which reads as follows:
This cause is before the court upon a motion for sanctions filed by the plaintiffs and a motion to dismiss filed by the defendant, Clyde Engle. The court earlier denied a motion to dismiss the case against Mr. Engle for lack of personal jurisdiction on the ground the amended complaint alleged a sufficient factual basis for this court to exercise its jurisdiction. During that hearing, the court indicated that after the defendant had submitted to discovery, defendant could renew his motion. The court also has, on two occasions, ordered Mr. Engle to respond, in discovery, to all queries relating to all corporations in which he has or has had an interest and to all corporations in which those corporations has or has had [sic] an interest.
The gravaman of the complaint, as the court understands it, is that the defendant, Clyde Engle, caused the National Development Company, Inc. and Sunstates Corporation to make a fraudulent transfer of assets, totaling $5,116,720.00, in order to defraud creditors of those corporations relating to transactions that occurred in Tennessee. According to the amended complaint, this transfer was made to an affiliate corporation controlled by Mr. Engle for his personal benefit.
Queries relating to Mr. Engle's corporate affiliations relate not only to the accuracy of plaintiff's claims but also to whether there is a sufficient connection between him, corporations in which he has a direct or indirect interest and the defendants, National Development Company, Inc., and Sunstates Corporation, for this court to exercise personal jurisdiction. Absent his personal response to questions relevant to this subject matter, the court must, as previously, rely upon the allegations of the amended complaint.
Despite being twice ordered to do so, the defendant, Clyde Engle, has continued to refuse to answer questions related to his corporate affiliations and, moreover, has renewed his motion to dismiss the amended complaint for lack of personal jurisdiction. The motion to dismiss is denied. The motion for sanctions is granted.
It is, therefore, ORDERED as follows:
1. Defendant, Clyde Engle, is estopped from asserting this court lacks personal jurisdiction of him.
2. The corporate chart plaintiffs aver was presented by Rick Leonard, Operations Officer of National Development Company, Inc., shall be admissible during the trial of this case as evidence of the affiliation of corporations in which the defendant, Cyde Engle, has an interest. The defendant, Clyde Engle, will be prohibited from presenting contrary evidence.
3. During the trial of this case, transactions and dealings between the defendant, Clyde Engle, RDIS Corporation, *239 Telco Capital Corporation, Hickory Furniture Company, Wisconsin Real Estate Investment Trust, Indiana Financial Investors, Inc., Sunstates Corporation and National Development Company, Inc., shall be considered typical of Clyde Engle's transactions and dealings with other affiliated corporations as identified by the chart referred to herein.
4. Plaintiffs are awarded an attorney's fee of Two Thousand Five Hundred ($2500.00) Dollars for the prior motions to compel and for obtaining this order. They shall have judgment against Clyde Engle in that amount.
Tenn. R. Civ. P. 37.02 empowers a court to impose sanctions when "a deponent; a party; an officer, director, or managing agent of a party ... fails to obey an order to provide or permit discovery, including an order made under Rule 37.01 or Rule 35, or if a party fails to obey an order entered under Rule 26.06, the court in which the action is pending may make such orders in regard to the failure as are just, ..." The sanctions available to the court include the following:
(A) An order that the matters regarding which the order was made or any other designated facts shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order;
(B) An order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting that party from introducing designated matters in evidence;
(C) An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, or rendering a judgment by default against the disobedient party;
(D) In lieu of any of the foregoing orders or in addition thereto, an order treating as a contempt of court the failure to obey any orders ...;
. . . .
In lieu of any of the foregoing orders or in addition thereto, the court shall require the party failing to obey the order or the attorney advising the party or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust.
Tenn. R. Civ. P. 37.02 (emphasis added).
While the plaintiffs' discovery efforts were not Herculean, they were substantial and were met with numerous and significant hurdles strategically placed by Engle. Though the following is not a complete history of the plaintiffs' efforts to obtain discovery, it is a fair representation of the pertinent facts. More importantly, it is the primary basis for the trial court's decision to impose sanctions. It is the affidavit of the plaintiffs' counsel which was attached to the plaintiffs' memorandum in support of their motion for sanctions. The affidavit reads as follows:
AFFIDAVIT
Douglas Thompson Bates, III, does state the following upon his oath:
For two and one-half years, the Class has been attempting to use the lawful discovery procedures to discover evidence to present to the Court concerning the elaborate family of corporations of Clyde Engle. What follows is a chronology of our efforts.
1. During the settlement negotiations, which resulted in a settlement disapproved by the Court, Rick Leonard, *240 an officer of National Development Company (hereinafter referred to as NDC) and active in the negotiations of settlement (he had flown from Raleigh, North Carolina, for the trial), showed me a chart which looked very similar (it might have been exactly like) the one below. Moreover, I had been furnished a series of charts from Coronet Insurance, an Engle subsidiary. Here is what the chart looked like:
[chart see Addendum]
2. After the Court disapproved the settlement, we embarked upon the two and one-half year journey of attempting to get a focus of the corporate schedule headed by Clyde Engle owner of 80% of RDIS, the head of the scheme.
3. Noting that Sunstates owned 100% of NDC, that Sunstates was a defendant, and that Sunstates seemed to be at a vortex of the scheme, on June 10, 1998, we took the deposition of Lee Mortensen, whose business card proclaimed as follows: [card omitted; it identified Lee N. Mortenson as President and Chief Operating Officer of "Sunstates"]. In the deposition, Mr. Mortensen conceded that, "I don't know what Sunstates owns and what it does not own" (p. 12). And when I attempted to inquire about what other corporations he had knowledge of, Mr. Alexis, who had been relieved as counsel, objected.
4. Then, on that same day, Mr. Engle's deposition was taken. Rick Leonard, chief operating officer of NDC was present and was also acting as Mr. Engle's counsel. Leonard said he did not recall the chart (p. 34). Throughout the remainder of the deposition, Mr. Alexis and Mr. Engle protested as I asked about other corporations owned by Engle directly or indirectly.
5. On Dec. 18, 1998, I filed interrogatories inquiring of all corporations as to all corporations which Clyde Engle had an interest in.
6. In August 1998, Neal Lovlace asked for a protective order.
7. On May 18, 1999, Engle was ordered to "respond fully to the interrogatories and request to produce documents filed by the plaintiffs no later than June 28, 1999."
8. On July 23, 1999, Engle filed a response mentioning seven corporations, submitting SEC 10-Q's for two of them, and disavowing any knowledge of charts of ownership.
9. On August 24, 1999 acting on my motion, the Court ordered Mr. Engle to answer the interrogatories and request to produce as, "as to all corporation Engle has an interest in or corporations those corporations had an interest in." If complied with, the discovery would have been complete.
10. But, on Sept. 7, 1999, Engle filed his second response and furnished information on 12 companies.
11. Now, in the meantime, I was trying to get Mr. Engle's deposition done.
(a) In its order of May 18, 1999, the Court had ordered that Engle would submit to a deposition in Centerville when Judge Harris was present to [sic] his evasion could be tended to immediately.
(b) The depositions were continued twice; once because of the surgery of my secretary's daughter; and another time because of the surgery of Mr. Lovlace's wife.
(c) In the meantime, I addressed to Mr. Lovlace the inadequacies of Engle's *241 response by letter of August 18, 2000. In the letter I stated:
"I believe if Mr. Lovlace will review the last order from Aug. 24, 1999, he will see Mr. Engle's requirement is to answer fully insofar as corporations he has an interest in or corporations that his corporation has an interest in. Although he has failed to do that, before asking for sanctions, I am going to give him and Mr. Tierney an opportunity to answer these questions in a depositions. If they continue to fail to do so, after this process, I shall apply for the ultimate sanction of holding Mr. Engle liable for NDC debt judgment."
(d) Then, Mr. Lovlace informed me that Engle could not fly for doctor's reasons. I responded by a letter dated Oct. 10, 2000, which said:
October 10, 2000
Hon. Neal Lovlace Attorney at Law 820 Hwy. 100 Centerville, TN 37033
RE: BAILET et al vs. N.D.C., et al
HICKMAN CIRCUIT NO. 94-5027C
Dear Neal:
. . . .
Insofar as where we are going to take the depositions: If I receive a letter from a doctor telling me that it would be dangerous to Clyde Engle's health for him to fly; and in addition to that, a signed authorization from Mr. Engle that I can receive medical information from that doctor and I receive those on or before Oct. 25, 2000, I will go to Chicago and take those depositions so long as the plane trip and hotel accommodations are in place ten days before the trip. If I have not received the letter of authorization by Oct. 25, we will do both depositions in Centerville. Please tell your client that I am not giving on these deadlines for anything except a personal concern of yours.
. . . .
(e) I received no such letter or authorization and so I assumed the deposition would take place in Centerville on Dec. 11. However, in early December, Mr. Lovlace informed me that he had made arrangements for us to fly to Chicago and stay there for the depositions. I decided I would at least try to take them; and as we went to Nashville that Sunday, Dec. 10, Mr. Lovlace presented me with a letter dated Dec. 5, 2000, (my deadline was Oct. 25), which reads as follows:
RHEUMATOLOGY ASSOCIATES, S.C.
. . . .
December 5, 2000
PERSONAL AND CONFIDENTIAL
To Whom It May Concern:
Mr. Clyde Wm. Engle has been a patient of this office for approximately ten years.
He was diagnosed with a condition in September, following an episode for which he was hospitalized. Tests are being conducted to determine appropriate treatment and the extent of any related problems.
As a result of the condition, he is prohibited from operating motor vehicles and is strongly urged not to involve himself in stressful situations nor to fly except with full precautions and accompaniment by knowledgeable personnel.
*242 Sincerely,
Robert S. Katz, M.D.
In the deposition, I inquired of Engle's health and the following question and answer took place:
Q: What is your health condition that you would not be able to travel?
A: That's clearly not relevant to this deposition, and not something I'm going to answer on the record.
Q: I will ask you to instruct your client to answer.
A: (Mr. Tierney) No, I will not.
Later:
Mr. Bates: Will you tell him to authorize me to talk to the doctor?
Mr. Tierney: No.
Back home in Centerville, I asked by interrogatory whether Engle had flown in an airplane from Dec. 1, 2000 to Jan. 31, 2001. (Interrogatory Two filed on Feb. 2, 2001.) He refused to answer. (Answer Two filed on April 7, 2001.)
So, Engle had avoided the Court for his deposition.
12. Now, remember my letter to Mr. Lovlace concerning the inadequacies of Engle's responses and that I would give him a chance to correct them at the deposition. But, please consider his responses in Chicago away from the Court's scrutiny. Attached at the end of this Affidavit are three pages of copies of the condensed depositions.
13. Thus, Engle has been ordered twice to fully disclose his corporate scheme, was warned by Counsel that if he did not in his deposition, we would ask for the ultimate sanction, and although he has avoided facing this judge in person, he has not complied with the orders of this Court.
14. Insofar as the charts, Engle has now presented charts which Mr. Leonard, officer of Sunstates and NDC "to which he referred." Engle says he has never seen them. A copy of one of the charts they have furnished is on the next page of this Affidavit.
[see Addendum]
15. Although counsel has been unable to discover the true picture of Engle's vast net worth of corporations, still, some things have been established.
(a) We know that Sunstates purchased 1.8 million dollars worth of jewelry and art, which are maintained at the home of Clyde Engle. (Notice of Annual Stockholder meeting. Sunstates 1998.)
(b) We know that a subsidiary of a subsidiary of an indirect subsidiary of Sunstates purchased a Rolls Royce for "corporate use." (Interrogatories answered April 7, 2001.)
(c) From financial data furnished us from answers to interrogatories, we can show the ownership from Engle to Sunstates in 1995 as follows:
[chart omitted]
(d) And we can see the massive losses each corporation up to RDIS, the corporation through which Engle controls the family.
THE FINANCIAL STRENGTH OF THE CHAIN FROM CLYDE ENGLE TO NDC
1. Clyde Engle (refuses to answer any questions concerning this)
2. RDIS We have no financial statement since 1989.
3. Telco We have a 1992 statement which reveals: $13,224,000 invested in affiliates; $23,404,000 *243 received from affiliates; and a stockholder deficit of $21,652,000.
4. Hickory Furniture We have a 1994 statement which reveals: $3,032,000 invested in affiliates; $2,942,000 receivables from affiliates; and $42,644,000 receivables from parent. In other words: 42 million dollars has been funneled up the stream to Engle.
5. Wisconsin REIT We have a 1995 statement which shows stockholders equity at $22,803,000 LOSS and $8,668,000 in receivables from affiliate.
6. NRG We have a 1999 statement showing retained earnings of $2,590,837 LOSS and $1,979,320 in receivable from sole stockholder (Clyde Engle).
7. Indiana Financial Investors We have a report 1999 showing receivables from affiliates of $12,623,237.
8. NDC We have a report from 1997 showing due from affiliates $9,544,790.
9. Sunstates We have a 1997 report showing Accumulated Deficit $48,304,274; receivable from affiliates $2,681,315; and investments in affiliates $10,771,318.
(e) We have been furnished credit advices showing intercompany transfers from 1994 to 1999. Kristi Tinin has spent many hours compiling these; and although she has the figures, she would rather check them more carefully before stating them under oath. But she can confidently say that Engle has been advanced approximately $4 million dollars from Libco (former name of RDIS); approximately $2 million dollars from Telco; and approximately $5 million dollars from Hickory Furniture.
(f) We have many dates showing money "laundering" between these corporations, such as:
1. On 12/22/95 Sunstates transferred $100,000.00 to Hickory Furniture, which on that same day transferred $100,000.00 to Clyde Engle.
2. On 5/1/95, Sunstates transferred $357,750.00 to Hickory Furniture, which transferred $325,000.00 to Clyde Engle.
3. On 4/19/94, Sunstates transferred $396,250.00 to Hickory Furniture, which on that same day transferred $400,000.00 to Clyde Engle.
(Credit advices in box held at Clerk's Office.)
(g) We know from NDC's Financial Statements that from 1990 to 1996, $6,422,338.00 flowed to its parent. This does not count the transfer of over $2,000,000.00 of receivables while this case has been pending.
16. The undersigned does not believe that any order by this Court will be effective to have Engle complete the picture of his vast network of corporations.
17. I am sure I have spent 100 hours on the discovery in the last two and one-half years. I cannot say it has all been fruitless, but one-half of it has been caused by Engle's obstructions.
/S/
DOUGLAS THOMPSON BATES, III
ATTORNEY FOR PLAINTIFFS
[jurat omitted]
Though Engle and the corporate defendants contradicted some of the facts represented in the foregoing affidavit, the plaintiffs' discovery efforts were repeatedly and *244 materially obstructed by Engle. Moreover, the court ordered Engle on two occasions to submit to discovery, yet Engle did not comply. Tenn. R. Civ. P. 37.02 primarily applies to sanctions for non-compliance with a court order. Lyle v. Exxon Corp., 746 S.W.2d 694, 698-99 (Tenn.1988); see also Mercer v. Vanderbilt University Inc., 134 S.W.3d 121, 133 (Tenn.2004). Wide discretion is afforded to the trial courts to determine the appropriate sanction. Id. at 133. Although "reasonable judicial minds can differ concerning [its] soundness," the trial court's determination of the appropriate sanction will be set aside only where the court "has misconstrued or misapplied the controlling legal principles or has acted inconsistently with the substantial weight of the evidence." Alexander v. Jackson Radiology Associates, P.A., 156 S.W.3d 11, 15 (Tenn.Ct.App.2004) (quoting White v. Vanderbilt Univ., 21 S.W.3d 215, 223 (Tenn.Ct.App.1999)). The sanction, i.e., punishment, must fit the offense. Id. at 15.
Considering the foregoing, we find no error with the sanctions imposed by the trial court.
IS NATIONAL THE ALTER EGO OF CLYDE ENGLE?
An excellent discussion of the relevant factors to consider is found in VP Buildings, Inc. v. Polygon Group, No. M2001-00613-COA-R3-CV, 2002 WL 15634, *4-5 (Tenn.Ct.App. January 8, 2002).
Conditions under which the corporate entity will be disregarded vary according to the circumstances present in the case, and the matter is particularly within the province of the trial court. Muroll Gesellschaft M.B.H. v. Tennessee Tape, Inc., 908 S.W.2d 211, 213 (Tenn. Ct.App.1995) (citing Electric Power Bd. of Chattanooga v. St. Joseph Valley Structural Steel Corp., 691 S.W.2d 522 (Tenn.1985)); Piper v. Andrews, No. 01A01-9612-CV-00570, 1997 WL 772127, at *3 (Tenn.Ct.App. Dec. 17, 1997) (Perm. app. denied June 8, 1998). Thus, the question of when an individual should be held liable for corporate obligations is largely a factual one. "Each case involving disregard of the corporate entity must rest upon its special facts." Muroll Gesellschaft, 908 S.W.2d at 213; Schlater v. Haynie, 833 S.W.2d 919, 925 (Tenn.Ct.App.1991).
. . . .
There is a presumption that a corporation is a distinct legal entity, wholly separate and apart from its shareholders, officers, directors, or affiliated corporations. In an appropriate case and in furtherance of the ends of justice, the separate identity of a corporation may be discarded and the individual or individuals owning all its stock and assets will be treated as identical to the corporation. Muroll Gesellschaft, 908 S.W.2d at 213; Schlater, 833 S.W.2d at 925; see also Fidelity Trust Co. v. Service Laundry Co., 160 Tenn. 57, 61, 22 S.W.2d 6, 7-8 (1929); see generally E.O. Bailey & Co. v. Union Planters Title Guar. Co., 33 Tenn.App. 439, 232 S.W.2d 309 (1950). Discarding the fiction of the corporate entity, or piercing the corporate veil, is appropriate when the corporation is liable for a debt but is without funds to pay the debt, and the lack of funds is due to some misconduct on the part of the officers and directors. Muroll Gesellschaft, 908 S.W.2d at 213; S.E.A., Inc. v. Southside Leasing Co., et al., No. E2000-00631-COA-R3-CV, 2000 WL 1449852, at *9 (Tenn.Ct.App. Sept. 29, 2000) (no Tenn. R.App. P. 11 filed); Emergicare Consultants, Inc. v. Woolbright, No. W1998-00659-COA-R3-CV, 2000 WL 1897350, at *2 (Tenn.Ct.App. Dec. 29, 2000) (Perm. app. denied May 14, 2001).
In those circumstances, courts may pierce the corporate veil to find the *245 "true owners of the entity" liable, Murroll [Muroll] Gesellschaft, 908 S.W.2d at 213, or "to impose liability against a controlling shareholder who has used the corporate entity to avoid his legal obligations." Manufacturers Consolidation Serv., Inc. v. Rodell, 42 S.W.3d 846, 866 (Tenn.Ct.App.2000). Our courts will disregard the corporation as a separate entity upon a showing that the corporation is a sham or dummy or such action is necessary to accomplish justice. [footnote omitted] Muroll Gesellschaft, 908 S.W.2d at 213; Tennessee Racquetball Investors, Ltd. v. Bell, 709 S.W.2d 617, 619 (Tenn.Ct.App.1986); Oak Ridge Auto Repair Serv. v. City Fin. Co., 57 Tenn.App. 707, 711, 425 S.W.2d 620, 622 (1967); Fidelity Trust Co., 160 Tenn. at 61, 22 S.W.2d at 7-8; Emergicare Consultants, Inc., 2000 WL 1897350, at *2; Piper, 1997 WL 772127, at *3.
. . . .
Some factors the court considers in determining whether to pierce the corporate veil are whether the corporation was grossly undercapitalized, the nonissuance of stock certificates, the sole ownership of stock by one individual, the use of the corporation as an instrumentality or business conduit for an individual or another corporation, the diversion of corporate assets by or to a stockholder or other entity to the detriment of creditors, the use of the corporation as a subterfuge in illegal transactions, the formation and use of the corporation to transfer to it the existing liability of another person or entity, and the failure to maintain arms length relationships among entities. Emergicare Consultants, Inc., 2000 WL 1897350, at *2 (citing Federal Deposit Ins. Corp. v. Allen, 584 F. Supp. 386 (E.D.Tenn.1984)).
VP Buildings, 2002 WL 15634, at *4-5.
The Oceanics opinion, discussed in detail earlier, also provides a blueprint of factors that may be considered when determining whether to pierce the corporate veil. As we learn from Oceanics, one starts with the premise that "[a] corporation is presumptively treated as a distinct entity, separate from its shareholders, officers, and directors." Oceanics, 112 S.W.3d at 140 (quoting Schlater v. Haynie, 833 S.W.2d at 925). However, a corporation's separate identity may be disregarded or pierced "upon a showing that it is a sham or a dummy or where necessary to accomplish justice." Oceanics, 112 S.W.3d at 140 (citing Schlater, 833 S.W.2d at 925). A corporation's identity should be disregarded "with great caution and not precipitately." Schlater, 833 S.W.2d at 925. Whether to disregard the corporate fiction depends on the special circumstances of each case, Oceanics, 112 S.W.3d at 140, and "the matter is particularly within the province of the trial court." Electric Power Bd. of Chattanooga v. St. Joseph Valley Structural Steel Corp., 691 S.W.2d 522, 526 (Tenn.1985). No one factor is conclusive in determining whether or not to disregard a corporate entity; rather, courts should rely upon a combination of factors in deciding such an issue. Schlater, 833 S.W.2d at 925 (citing 18 Am. Jur.2d Corporations § 48, p. 847, n. 41-42 (1985)).
This court has also relied upon the so-called Allen factors stated in Federal Deposit Ins. Corp. v. Allen, 584 F. Supp. 386 (E.D.Tenn.1984):
Factors to be considered in determining whether to disregard the corporate veil include not only whether the entity has been used to work a fraud or injustice in contravention of public policy, but also: (1) whether there was a failure to collect paid in capital; (2) whether the corporation was grossly undercapitalized; *246 (3) the nonissuance of stock certificates; (4) the sole ownership of stock by one individual; (5) the use of the same office or business location; (6) the employment of the same employees or attorneys; (7) the use of the corporation as an instrumentality or business conduit for an individual or another corporation; (8) the diversion of corporate assets by or to a stockholder or other entity to the detriment of creditors, or the manipulation of assets and liabilities in another; (9) the use of the corporation as a subterfuge in illegal transactions; (10) the formation and use of the corporation to transfer to it the existing liability of another person or entity; and (11) the failure to maintain arms length relationships among related entities.
Id. at 397 (citations omitted), also cited in Greene v. Hill Home Dev. Inc., CA No. 03A01-9210-CH-00369, 1993 WL 17115, at *2 (Tenn.Ct.App. Jan. 28, 1993).
It is most important to note that it is not necessary that all of the Allen factors weigh in a plaintiff's favor in order to justify the piercing of the corporate veil. Oceanics, 112 S.W.3d at 140-141 (citing In re B & L Laboratories, Inc., 62 B.R. 494, 504 (Bankr.M.D.Tenn.1986) (holding that "all of these factors need not be present to justify disregard of the corporate boundaries; however, it is necessary that substantial equities favor the aggressor party.").
We now look to the findings by the trial court. Following the second evidentiary hearing, the trial court entered a second Memorandum Opinion which provides an extensive recitation of the court's findings:
MEMORANDUM OPINION
This is the second phase of a two part trial involving these parties. In the first phase, the Court entered a judgment in favor of the plaintiffs for $2,540,867.29 against defendant National Development Corporation. The second phase concerns the doctrine of piercing the corporate veil in order to reach the parent corporation, Sunstates and/or Clyde Engle, who was added as a party defendant in January of 1999.
As the plaintiffs proceeded with their discovery during the second phase, Mr. Engle responded by engaging in a pattern of obstruction and delay. Judge Donald Harris, who presided over the initial phase, ultimately entered an order estopping Mr. Engle from denying this Court's jurisdiction over his person. In particular Judge Harris made the following findings:
Queries relating to Mr. Engle's corporate affiliations relate not only to the accuracy of plaintiffs' claims but also to whether there is a sufficient connection between him, corporations in which he has a direct or indirect interest and the defendants National Development Company, Inc. and Sunstates Corporation, for this Court to exercise personal jurisdiction. Absent his personal response to questions relevant to this subject matter, the Court must, as previously, rely upon the allegations of the amended complaint.
Despite being twice ordered to do so, the defendant, Clyde Engle, has continued to refuse to answer questions related to his corporate affiliations and, moreover, has renewed his motion to dismiss the amended complaint for lack of personal jurisdiction....
The corporate chart plaintiffs aver was presented by Rick Leonard, operations officer of National Development Company, Inc. shall be admissible during the trial of this case as evidence of the affiliation of corporations in which the defendant, Clyde Engle, *247 has an interest. The defendant, Clyde Engle, will be prohibited from presenting contrary evidence.
During the trial of this case, transactions and dealings between the defendant, Clyde Engle, or DIS Corporation, Telco Capital Corporation, Hickory Furniture Company, Wisconsin Real Estate Investment Trust, Indiana Financial Investors, Inc., Sunstates Corporation and National Development Company, Inc., shall be considered typical of Clyde Engle's transactions and dealings with other affiliated corporations as identified by the chart referred to herein (See order of August 28, 2001).
. . . .
The issue before this Court is whether plaintiff has made out a case for piercing the corporate veil as to (1) Sunstates Corporation and/or (2) Clyde Engle.
. . . .
PIERCING THE CORPORATE VEIL
Conditions under which the corporate entity will be disregarded vary according to the circumstances present in the case, and is an issue which the courts have recognized is particularly within the province of the trial court. Muroll Gesellschaft M.B.H. v. Tennessee Tape, Inc., 908 S.W.2d 211, 213 (Tenn.App. 1995).
.... [discussion of Muroll Gesellschaft, 908 S.W.2d at 213, and VP Buildings, 2002 WL 15634, and factors to consider omitted]
With these factors in mind, the Court makes the following findings of fact. Sunstates owns one hundred percent of the National Development Corporation. Sunstates and NDC shared the same president, vice president, and chief financial officer. Sunstates and NDC share the same business office location and phone line. It is impossible to contact NDC as it is not listed in the phone book. If one does call the phone number listed on the NDC letterhead, the receptionist states one has reached Sunstates Corporation. Significant amounts of cash were transferred from NDC to Sunstates as a result of "professional fees" and no invoices were produced explaining these transfers.
On Saturday December 31, 1994, while this controversy was pending, NDC transferred the majority of its assets out of the corporation. According to its financial statement, all of the remaining land contract receivables totaling $5,116,720 were transferred to two other entities. $2.7 million went for the full repayment of a loan to an affiliate company. However, the remaining $2.4 million was transferred to Sunstates in exchange for a note payable which was unsecured.
Lee Mortenson was the president and chief operating officer of Sunstates. He had also been president of NDC since 1990. Mr. Mortenson had no knowledge of the chain of subsidiaries in the various holding companies. He along with Rick Leonard and Glen Kennedy were directors of NDC. Although Leonard was the chief financial officer of NDC, he had no explanation as to why the $2.4 million note from Sunstates to NDC was unsecured, and he had no knowledge of either the business in which NDC was engaged or its sources of income.
Clyde Engle is an individual residing in the state of Illinois. All of the numerous corporations set forth in the above chart are controlled either directly or indirectly by Engle. Engle was neither an officer or director of NDC. The genesis for the transfer of $2.4 million of land contracts from NDC sprang from Engle. As chief executive officer of *248 Sunstates, Engle made a "proposal" to the chief executive officer of NDC that NDC ought to transfer these receivables to Sunstates. Engle's claim that his proposal was an attractive transaction from NDC's point of view begs the question. What Mr. Engle never explained was why he would be concerned with making a proposal regarding a company in which he was neither an officer nor a director and why this proposal was apparently accepted by the directors and officers of NDC without question; and why NDC failed to request security for this $2.4 million note.
Mr. Engle declined to appear in court at either the first or second trial of this bifurcated case. Where the evidence tends to fix liability on a party, who has it in his power to offer evidence to rebut the unfavorable inferences which the proof tends to establish, and that party refuses to offer such proof, it may be inferred from the facts shown that the fully developed evidence would establish liability on his part. This rule applies only when the plaintiffs' proof and the legal deduction therefrom make out a prima facie case against the defendant. Runnels [Runnells] v. Rogers, 596 S.W.2d 87, 90 (Tenn.1980). This Court believes that this is such a case. As is evident from Judge Harris' previous order, Engle refused to answer questions regarding his finances and the corporate structure of the scores of companies which he controlled. Mr. Engle has never explained to the Court's satisfaction how and why he was able to cause NDC to accept an unsecured note for $2.4 million of receivables.
In 1994 Mr. Engle received $2,975,090 from Sunstates or its affiliates; in 1995 he received $524,236; in 1996 he received $293,826; and in 1997 Sunstates paid Mr. Engle $71,916. The business operations of Sunstates has for all practical purposes come to a halt. The note which NDC holds from Sunstates is worthless since there are no assets to pay the note. Neither Indiana Financial, Wisconsin Reit, Hickory Furniture, Telco Capital, or RDIS have the ability to pay the note owed by Sunstates to NDC since the corporations from RDIS down the chain of companies are insolvent. Most of the funds transferred to Engle were funneled through the Bank of Lincolnwood, located in Chicago, Illinois. Engle has an indirect interest in the Bank of Lincolnwood through a holding company for which he refused to provide the name nor indicate whether he was a director. Many of the transfers of funds to Engle from Sunstates Corporation are documented by Bank of Lincolnwood memoranda indicating "per the request of Clyde Engle". There was no evidence of any transfers of funds from Engle back to any corporation. All of the transfers were to Engle. While the defendants attempted to argue that it was possible that the transfers could have come from other entities, defendants put on no proof to support that position and the best person to respond to those allegations, Mr. Engle, elected not to attend the trial.
Sunstates purchased approximately $1.9 million dollars of oriental art, antique jewelry, rare books and other collectibles which were maintained in Clyde Engle's home in Illinois. Likewise Sunstates purchased a Rolls Royce from Libco, a corporation in which Engle was the majority shareholder. This automobile also appears to be in the possession or control of Mr. Engle. Again, Mr. Engle elected not to offer any reasonable explanation to this proof.
It is evident to this Court that Mr. Engle exercised complete dominion over Sunstates, National Development Corporation, *249 and all of the other scores of companies set forth in the chart above. There was evidence of Mr. Engle's dominion not only over the transfers of funds which were funneled to him up the corporate chain through the Bank of Lincolnwood, but also over the particular business decision in this case i.e. the transfer of N.D.C.'s assets to Sunstates Corporation. All of the corporations under Engle's control are now insolvent, and it would be an injustice to allow Mr. Engle to use the corporate entity as a shield to thwart the satisfaction of the judgment obtained in this case. The evidence supports the conclusion that NDC, Sunstates and the other companies were mere instrumentalities for Mr. Engle and therefore the corporate entity will be disregarded in order to accomplish justice in this case. V.P. [VP] Buildings, Inc. v. Polygon Group, Inc., supra.
Therefore, the Court finds plaintiffs prior judgment against National Development Corporation, Inc. shall likewise be a judgment against Sunstates Corporation and Clyde Engle, individually.
Since this issue was tried by the court sitting without a jury, we review it de novo upon the record and presume the findings of fact are correct unless the preponderance of the evidence is otherwise. Tenn. R.App. P. 13(d). The decision of the trial court turns, in part, on the trial court's perception of the witnesses' candor and truthfulness. Therefore, we give great weight to the credibility accorded each witness by the trial judge. Weaver v. Nelms, 750 S.W.2d 158, 160 (Tenn.Ct.App.1987). Our review of the record not only leads us to the conclusion that the evidence does not preponderate against the specific findings of the trial court, the record fully supports those findings. Accordingly, we see no benefit to further analyze the evidence or the trial court's findings. Thus, the issue is whether the facts as found by the trial court are sufficient to sustain, as a matter of law, the trial court's conclusion that Clyde Engle was the alter ego of National. This analysis takes us back to the Oceanics v. Barbour matter we discussed earlier. The Oceanics trial court made several findings of fact relative to the Allen factors. The trial court found "that, (1) at all relevant times, OSC's corporate office was Barbour's private residence; (2) the Antarna was OSC's principal asset; (3) its sale effectively liquidated the corporation; and (4) the `transfer of the proceeds from the sale of Antarna to Barbour's personal account rendered OSC without assets.'" Oceanics, 112 S.W.3d at 145. The trial court further found "that `[a]t all material times, OSC was undercapitalized.' While a mere $2,000 was paid into the corporation as capital, the alleged debt OSC owed to Barbour was in excess of $800,000. Essentially all of OSC's funds came through `loans' from Barbour. (footnote omitted) In addition, the court noted that OSC `failed to completely observe corporate formalities.'" Id. at 145. On appeal, this court opined as follows:
[A]fter reviewing all of the evidence in the context of the Allen factors we cannot say that the evidence preponderates against the trial court's dual determinations (1) that Barbour is the alter ego of OSC and, as a consequence of this finding, (2) that the plaintiff is entitled to pierce the corporate veil of OSC and cast Barbour in judgment based upon the OSC judgment. Since the piercing of the corporate veil is a "matter particularly within the province of the trial court," Electric Power Bd., 691 S.W.2d at 526, we conclude that there is no basis for disagreeing with the trial court's explicit finding that the piercing of the corporate veil was "necessary to accomplish justice." Schlater, 833 S.W.2d at *250 925. Giving due consideration to the trial court's credibility determinations, [footnote omitted] we conclude that this evidentiary issue must be resolved against Barbour.
Id. at 142-43. This court further concluded that the plaintiff had successfully established that Clifford Barbour and OSC were one and the same, stating that Clifford Barbour was simply OSC's "other self." Id. at 145 (quoting Matthews, 796 S.W.2d at 694.)
Applying the trial court's findings of fact to the factors to be considered, we find no error with the trial court's conclusion that National Development Company, Inc. is the alter ego of Clyde Engle, and that such a finding justifies piercing the corporate veil and holding Engle liable for the judgment rendered against National.
PERSONAL JURISDICTION OVER CLYDE ENGLE
Clyde Engle contends that the judgment against him is void because the trial court did not have personal jurisdiction over him. This contention is based on the fact that Engle is a resident of the state of Illinois and his contention that he never conducted business in Tennessee and, thus, did not subject himself to the jurisdiction of the courts of Tennessee.
The issue for this court to determine is whether the trial court's exercise of personal jurisdiction over Clyde Engle meets due process requirements. Manufacturers Consolidation Service, Inc. v. Rodell, 42 S.W.3d 846 (Tenn.Ct.App. 2000). The jurisdictional reach of the courts of Tennessee is determined by the long-arm statute of Tennessee. Four Seasons Gardening & Landscaping, Inc. v. Crouch, 688 S.W.2d 439 (Tenn.Ct.App. 1984); see also Warren v. Dynamics Health Equipment Mfg. Co., Inc., 483 F. Supp. 788, 790 (D.C.Tenn.1980) (citing King v. Hailey Chevrolet Co., 462 F.2d 63 (6th Cir.1972)). Tennessee's long-arm statute, Tenn.Code Ann. § 20-2-214, has been interpreted to extend to the limits of personal jurisdiction imposed by the Due Process Clause of the United States Constitution. Bridgeport Music, Inc. v. Agarita Music, Inc., 182 F. Supp. 2d 653 (M.D.Tenn.2002). The pertinent subsections of Tennessee's long-arm statute provide:
(a) Persons who are nonresidents of Tennessee and residents of Tennessee who are outside the state and cannot be personally served with process within the state are subject to the jurisdiction of the courts of this state as to any action or claim for relief arising from:
(1) The transaction of any business within the state;
(2) Any tortious act or omission within this state;
. . . .
(6) Any basis not inconsistent with the constitution of this state or of the United States;
Long-arm jurisdiction can be invoked over a non-resident individual because of that individual's role with respect to a corporation that is within the range of the long-arm statute and who uses that corporation as his agent. Warren, 483 F.Supp. at 790. The theory of invoking jurisdiction over individuals who use corporations as their agents is as follows:
If the person's control over the corporation is such that the corporation is really acting as his agent in doing the acts giving rise to the suit, then he can be reached through the long-arm statute even though he personally had no contact with the forum state. The courts speak in terms of "piercing the corporate veil" or the "alter ego" doctrine in discussing the susceptibility of individuals to long-arm jurisdiction. Not all *251 cases treat the question in terms of those doctrines drawn from corporation law, however. (footnotes omitted.)
Wilcox v. Precision Parachute Co., 685 F. Supp. 821, 823 (D.Kan.1988) (quoting Robert Casad, JURISDICTION IN CIVIL ACTIONS, ¶ 4.03[4] (1983)).
The fiduciary-shield doctrine precludes jurisdiction over an individual acting exclusively as a corporate officer on behalf of a bona fide corporation. Stuart v. Spademan, 772 F.2d 1185, 1197 (5th Cir.1985). However, the obverse of that rule can be applied to warrant a finding of personal jurisdiction over the person by attributing the corporate contacts with the forum to the individual. Stuart, 772 F.2d at 1197. Thus, if the corporation is not a viable one and the individual is conducting personal activities and using the corporate form as a shield, a court may pierce the corporate veil and assert personal jurisdiction over the individual based on the corporation's activities within that state. See 4A Charles A. Wright and Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE, § 1069.4, p. 186 (3rd ed. 2002).
It should also be understood that a suit against an alter ego, in which the plaintiff seeks to pierce the corporate veil in connection with a previously-obtained judgment against a corporation, is not "a separate and independent cause of action." Oceanics, 112 S.W.3d at 145 (quoting Matthews Const. Co., Inc. v. Rosen, 796 S.W.2d 692, 693, n. 1 (Tex.1990)).[3] When a plaintiff obtains a judgment against the corporate entity, it also obtains a judgment as to any of its alter egos. Oceanics, 112 S.W.3d at 145 (citing Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., 608 F. Supp. 1261, 1264 (S.D.N.Y.1985)). Once a trial court has determined that an individual is a corporate entity's other self and a judgment against the corporate entity is in place, then there is also in place a judgment against the individual who is the corporate entity's other self. This is because the individual is no longer a legally separate entity from the corporate debtor.[4]Oceanics, 112 S.W.3d at 146 (citing Matthews, 796 S.W.2d at 694); see also Passalacqua, 608 F.Supp. at 1264 (holding that the corporation and those who have controlled the corporation are treated as one entity).
It is undisputed that National conducted business in Hickman County, Tennessee with the plaintiffs, which gives the courts of Tennessee jurisdiction over National, and we have concluded that Engle is the alter ego of National. Therefore, the activities National conducted in Tennessee are attributable to its "other self" Clyde Engle. Accordingly, Clyde Engle not only conducted business in Tennessee, he conducted business in Hickman County, Tennessee with the plaintiffs and is, therefore, subject to the jurisdiction of the Circuit Court of Hickman County, Tennessee. We, therefore, affirm the determination by the trial court that it had personal jurisdiction over Clyde Engle.
IN CONCLUSION
The judgment of the trial court is affirmed in all respects, and this matter is remanded to the trial court with costs of appeal being assessed against the appellants, National Development Company, *252 Inc., Sunstates Corporation and Clyde W. Engle, jointly and severally, for which execution may issue.
Addendum
NOTES
[1] Tennessee's burden of proof, though substantial, does not require proof of actual fraud.
[2] Oceanics Schs., Inc. v. Operation Sea Cruise, Inc., No. 03A01-9904-CV-00153, 1999 WL 1059678 (Tenn.Ct.App. Nov. 19, 1999).
[3] Thus, Texas, the state of incorporation of National, recognizes that an action to pierce the corporate veil in connection with an action to obtain a personal judgment against the alleged alter ego corporation is not "a separate and independent cause of action." Matthews Const. Co., Inc. v. Rosen, 796 S.W.2d 692, at 693, n. 1 (Tex.1990).
[4] Provided the alter ego is a party to the action. | 01-03-2023 | 10-08-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2247838/ | 451 N.E.2d 72 (1983)
TUTHILL CORPORATION, Fill-Rite Division, Appellant (Defendant below),
v.
Norman L. WOLFE, Appellee (Plaintiff below).
No. 3-1182A313.
Court of Appeals of Indiana, Third District.
July 12, 1983.
Rehearing Denied August 24, 1983.
*74 Edward L. Murphy, Jr., Grant F. Shipley, Livingston, Dildine, Haynie & Yoder, Fort Wayne, for appellant.
David A. Lundy, Lundy and Associates, Fort Wayne, for appellee.
HOFFMAN, Presiding Judge.
Norman Wolfe was employed as a purchasing agent for appellant Tuthill Corporation, Fill-Rite Division. As a key employee, Wolfe participated in an Incentive Compensation Plan (ICP) administered by the Corporation. Terms of the plan were embodied in a writing recorded in the corporate minute book.
Wolfe was never fully apprised of the written terms of the ICP but rather was informed of its terms orally by his supervisor, Bernard Kapp. Kapp told Wolfe that he would receive a year-end bonus in an amount equal to one quarter of one percent of profits in excess of a specified level. A bonus check would be drafted for each member of the plan near the close of the year once the profits were determined.
Wolfe participated in the plan for several years until December 19, 1979, when he announced he would be leaving the Corporation in two weeks to enter into competition against it. Once notified the president of the Corporation fired Wolfe and withheld his bonus check which had already been drafted. Wolfe brought suit against the company seeking payment of his year-end bonus. A verdict was returned in Wolfe's favor in the amount of $8,202 compensatory damages, the amount of his bonus, and $4,500 punitive damages. This appeal results.
The issues raised by appellant have been consolidated and restated below:
(1) whether the trial court erred in failing to grant appellant's motion for judgment on the evidence;
(2) whether the trial court erred in reading certain instructions to the jury which had been tendered by Wolfe;
(3) whether the trial court erred in refusing to read certain instructions tendered by appellant; and
(4) whether the trial court erred in awarding Wolfe punitive damages.
Appellant first argues the trial court erred in refusing to grant its motion for judgment on the evidence. Several theories are forwarded in support of this claim. The first of these theories involves a determination of the effect of the written ICP.
According to appellant the written ICP could have been accepted by Wolfe once he was notified of its existence even though he lacked knowledge of the exact terms. Appellant directs us to Alfaro et al. v. Stauffer Chemical Co. (1977), 173 Ind. App. 89, 362 N.E.2d 500, and Orton & Steinbrenner Co. v. Miltonberger (1920), 74 Ind. App. 462, 129 N.E. 47, which it contends support its position. However, these cases present factual situations unlike that which exists in the present case.
In Alfaro employees were not permitted to see or know of the existence of a severance pay plan administered by the company. When employees were laid off and attempted to enforce their rights under the *75 severance pay plan, their claims were denied. The Court held the employees had no enforceable rights since they could not have accepted an offer and entered into a contract of which they had no knowledge.
Orton & Steinbrenner Co. presented a different situation. A new worker was informed of a bonus plan when he started work but had no notice of the entire terms of the bonus as they had been posted prior to his beginning employment. When the employee attempted to enforce his rights under the bonus plan, the Court found for him, determining he had accepted the offer even though he lacked knowledge of all the contract terms.
The present case involves a factual situation which falls between the gaps of these two decisions. Wolfe was told of the ICP as was the employee in Orton & Steinbrenner. However, as in the Alfaro case the specific terms of the ICP were hidden from Wolfe's knowledge. The written plan in the case at bar was recorded only in the corporate minute book which only shareholders and directors are entitled to see. Thus, unless Wolfe was a shareholder, he lacked the ability to see the terms of the ICP as did the employees of Stauffer Chemical Company in Alfaro.
Thus, in the case at bar Wolfe could not have entered into an agreement based on the written ICP since that written plan was hidden from him. Yet he is not prevented from entering into any bonus plan as there was an oral offer by his supervisor, unlike the situation in Alfaro. Therefore, if any ICP exists in this case, it must be based on the oral representations between Kapp and Wolfe as the written ICP never became an enforceable contract between the parties.
Appellant then switches course and argues that no enforceable contract exists upon which to base the jury's award of damages. In support of this contention appellant alleges there was no consideration to support a bonus contract. Two theories are forwarded by appellant in support of this allegation.
First, appellant claims that Wolfe failed to give his employer anything of benefit or suffer any detriment in return for the ICP. Col. Mtg. Co. of Ind. v. Windmiller (1978), 176 Ind. App. 535, 376 N.E.2d 529, cited by appellant, provides some most useful language for this decision where the court states: "The amount and terms for the bonus were sufficiently specific and clearly provision for bonus payments was in contemplation of services yet to be performed by Windmiller." (Emphasis added.) 176 Ind. App. at 538, 376 N.E.2d at 531. The consideration for the contract was the employee's future services. Likewise, in the case at bar Wolfe was offered inclusion in the ICP in the early part of the year, several years ago. His bonus would be based upon his performance from that point on into the future part of that year and future years.
The very purpose of the ICP was to motivate key employees to increase productivity which would increase corporate profits thereby insuring those key employees a higher salary based on those improved profits. The plan worked; the profits improved. Certainly the improved profits were a benefit to Wolfe's employer and therefore adequate consideration.
Appellant also contends there was no consideration for the reason that appellant failed to work a full year. In support of this proposition appellant places great reliance on Montgomery Ward & Co., Inc. v. Guignet (1942), 112 Ind. App. 661, 45 N.E.2d 337, which held a discharged employee had no right to his bonus since he had failed to complete a full year of employment. However, in Montgomery Ward, unlike the case at bar, the bonus plan specifically provided that a full year's employment was a prerequisite to receiving a bonus. As the written plan never became effective between the parties and no mention of a required length of service was mentioned in the oral presentation of the plan, no such service requirement will be read into the plan.
Further, at the time Wolfe was terminated the excess profits of the Corporation had already been verified and the bonuses computed. *76 An ICP bonus check had been drafted payable to Wolfe and was then withdrawn. By the admission of the Corporation's president the required service had been performed at the time the check was drafted; thus Wolfe satisfied the service requirement and his bonus check was withdrawn for other illegitimate reasons.
Next appellant presents a similar argument wherein it alleges the ICP was a mere "gratuitous promise" by Wolfe's employer and therefore unenforceable. As support for this proposition appellant cites Spickelmier Industries v. Passander (1977), 172 Ind. App. 49, at 52-53, 359 N.E.2d 563, at 565, which states: "`... A promise to pay an employee a bonus at the end of the year is a mere gratuity and not enforceable where the employee is not shown to have done or foregone something which otherwise he was not obliged to do or forego[.]'"
Appellant's position on this issue is virtually identical to its stance on the issue wherein it contends that Wolfe gave no consideration for the bonus. However, in Spickelmeir the employee was promised his bonus at the end of the year after he had finished performing his obligations. The ICP at issue in this case became effective several years before this dispute over a particular bonus. Since the corporate profits increased for the year, it may be presumed that the ICP had the desired effect of motivating key employees to improve company profits. Wolfe had received excellent employment reviews up until his termination. Thus, Wolfe engaged in conduct, induced by this offer of a bonus, in addition to his normal employment services and was entitled to his bonus.
Finally, appellant contends there was some notion of employee loyalty as a prerequisite to the ICP bonus at year end. Since Wolfe was disloyal by allegedly stealing plans for a company pump design to be used in competition against appellant, he had forfeited his right to his bonus. This argument suffers several flaws.
Initially it is noted that appellant cites no authority in support of its position which results in a waiver of any issue in this regard. Ind.Rules of Procedure, Appellate Rule 8.3(A)(7).
Even had appellant preserved this error its argument is unavailing. The ICP written or otherwise makes no mention of employee loyalty. The purpose of the plan is to motivate key employees who are in positions which can most influence corporate profits to perform in a manner which improves those profits. In return those key employees are paid a proportionate share of the increased profits which presumably resulted from their performance. Thus while loyalty may implicitly enter into the scheme the bottom line of the plan is motivation which produces increased profits, and not loyalty.
Further, when Wolfe was terminated his ICP bonus check was withdrawn. As stated above according to the president of the company this bonus had already vested in Wolfe at the time the check was drafted. Also, at the time Wolfe was terminated and his bonus withdrawn, the company president had no knowledge of the alleged stolen plans and thus could not have based the withdrawal of the bonus on this fact.
In summation, withholding of Wolfe's ICP bonus payment is not a proper avenue for penalizing Wolfe for going into competition with his employer, leaving his employment, or stealing company plans. Other vehicles exist for prosecuting Wolfe for this behavior, if he is in fact guilty of it. Wolfe performed as required under the terms of the oral bonus plan. The written ICP never became effective between the parties. For these resons appellant was correctly denied its motion for judgment on the evidence.
Next, appellant contends the giving of several final instructions was error by the court. These instructions had been tendered by Wolfe and were adopted by the court as final instructions. Generally, these instructions covered various theories of contract law which could be resorted to by the jury to support a finding of a contractual relationship between the parties.
*77 Throughout this section of its brief appellant repeatedly singles out a complained of jury instruction and attacks it. The more preferred analysis of jury instructions requires that a complained of instruction be viewed as a whole with all the instructions. Indianapolis Newspapers, Inc. v. Fields et al. (1970), 254 Ind. 219, 259 N.E.2d 651. When reviewing jury instructions this Court must determine that the particular instruction complained of is supported by the evidence and correctly states the law. Dahlberg, Admx. v. Ogle et al. (1978), 268 Ind. 30, 373 N.E.2d 159.
Appellant's first argument concerns the court's final Instruction No. 1 which charged the jury with the duty of interpreting the terms of the contract between the parties. First, appellant contends the instruction misstates the law since the only contract between the parties was the written ICP which is unambiguous and therefore not subject to a jury's interpretation. Then appellant shifts position and attacks the instruction on the ground that it does not instruct the jury in enough detail as to its duty to construe specific terms of a contract.
As to appellant's first contention: there is no written ICP contract between the parties for the reasons discussed above. Since there is no written contract between the parties, any contract which does exist between the parties pertaining to the bonus must be based on the oral representations of Wolfe's supervisor. The terms of an oral contract are a matter to be interpreted by the jury. Annadall v. Union Cement etc. Co. (1905), 165 Ind. 110, 74 N.E. 893.
Appellant's second contention that the instruction was inadequate also fails. Appellant argues that even though terms of an oral contract are determined by a jury the legal effect of the contract is still a matter for the court. It is appellant's contention that this oral agreement had no legal effect because it was nothing more than an unenforceable promise of a gratuity. The instruction complained of, according to appellant, allows the jury to determine the effect of the agreement. As stated above whether the ICP agreed upon by the parties in this case is oral or written it is more than a promise of a gratuity and therefore enforceable. The instruction when read along with the other instructions adequately presents the jury with its duties and sufficiently informs it as to how to properly perform those duties.
Next appellant attacks the trial court's giving of final Instruction No. 7. This instruction dealt with unilateral contract formation. The jury was instructed that it should find for Wolfe if it determined that he performed his services as required with his supervisor's oral offer of a bonus in mind. According to appellant this instruction is not applicable to the facts of the case. Appellant argues that since there is a written ICP it is not a reward case and whether appellee had his supervisor's oral offer in mind at the time he performed his services is of no consequence.
However, it has been stated already in this opinion that the written ICP never became effective between the parties. Since this is the case any contract between the parties must be based on Wolfe's supervisor's oral offer. That being the case the jury is charged with the duty of interpreting the terms, and the facts would support a determination that a unilateral contract was formed. Therefore, the complained of instruction was not in error.
Appellant then argues the court erred in reading the jury final Instruction No. 5. This instruction informed the jury about implied contracts. It is appellant's contention that this instruction is not applicable to the case at bar. Appellant fails to cite any authority in support of its position which results in a waiver of any error in that regard. A.R. 8.3(A)(7).[1]
*78 Even had appellant cited authority its argument is unnavailing for the same reasons its arguments regarding Instruction No. 7 failed. There are sufficient facts to support an instruction on implied contracts because there is no written contract between the parties. Thus the giving of such instruction was not error.
Finally, appellant attacks the trial court's giving of Instruction No. 6 to the jury. This instruction informed the jury regarding requisite elements of contract formation. According to appellant the instruction misstated the law because it failed to inform the jury that it must find consideration by Wolfe to support the bonus contract.
The instruction informed the jury that if Wolfe "performed as required by the terms of the [bonus] offer" it should hold for him. Certainly if Wolfe performed as required by the terms of the offer thereby increasing corporate profits, he has given his employer something of benefit. Consideration sufficient to support a contract need only be some benefit which accrues to the promisor or some detriment suffered by the promisee. Urbanational Develprs., Inc. et al. v. Shamrock (1978), 175 Ind. App. 416, 372 N.E.2d 742. The jury was instructed that if Wolfe performed as required by the offer it should find for him. This is sufficient to cover the concept of consideration. Other instructions also refer to the concept of consideration as a necessary contract element.
Throughout this section of its brief appellant makes much of the allegedly confusing and contradictory instructions read to the jury by the court. In summation appellant contends that instructing the jury in such a confusing manner was error. While this Court readily admits the jury was instructed regarding many theories of recovery, nothing indicates the jury was confused by these instructions.
The case at bar presented a complex set of issues. Consequently, the instructions that were given in the case at bar covered several theories of recovery. Appellant need only blame itself for this as it is the party who drafted the ICP which includes no clear method of dealing with the type of problem raised in the case at bar. The ICP was then secreted from the inspection of participating employees while they were given minimal information regarding its terms. As a result there were several contractual theories which would support Wolfe's claim. The jury was presented these theories and reached its conclusion. There is sufficient evidence to support that conclusion. Thus it does not appear the jury was helplessly confused by the complexity of the litigation or the instructions.
Appellant next attacks the trial court's refusal to give certain of its tendered instructions. First, appellant alleges the court erred in refusing to read its tendered Instruction No. 2. This instruction dealt with contracts of employment and informed the jury that an employment contract of indefinite duration is unenforceable.
Appellant seems to rest its entire case on the written ICP. It never became effective between the parties; thus its correlation to Wolfe's employment contract is not relevant to the case at bar. Therefore, whether or not Wolfe had an enforceable employment contract is irrelevant since this case is precisely concerned with the bonus agreement.
Further, the instruction is a misstatement of the law regarding contracts of indefinite duration. Such employment agreements are regarded as "employment at will" contracts. While these contracts generally lack mutuality, once a party has begun performance in reliance upon the promise of another he has an enforceable right, though limited. Marksill Specialties, Inc. v. Barger (1981), Ind. App., 428 N.E.2d 65. Thus, the instruction tendered by appellant was refused for good reason as it misstated the law and was inapplicable to the case.
Appellant also argues the trial court erred in refusing to read to the jury its tendered Instructions Nos. 5, 6, 8, and 10. According to appellant the trial court effectively removed from the jury the issue of *79 consideration. Appellant's argument is not supported by the record.
As stated above the trial court's final Instruction No. 6, as well as other instructions, presented the issue of consideration to the jury. It is no error to refuse to give an instruction which was substantially covered by another instruction. Thornton v. Pender (1978), 268 Ind. 540, 377 N.E.2d 613; Ashton v. Anderson (1972), 258 Ind. 51, 279 N.E.2d 210.
Next appellant raises two interrelated issues regarding the jury's award of punitive damages to Wolfe in addition to its award of compensatory damages. Appellant argues that: 1) the jury should not have been instructed on the issue of punitive damages as there was no evidence to support such instruction; and, 2) the evidence was insufficient to support an award of punitive damages.
The standard of proof requiring clear and convincing evidence in support of punitive damages was recently adopted by our Supreme Court in Travelers Indemn. Co. v. Armstrong (1982), Ind., 442 N.E.2d 349. This standard was not applied by the trial court in the case at bar. However, as the Travelers case was on direct appeal at the time of trial in the present case, we reverse and remand this case for retrial on the issue of punitive damages for the reasons stated in Farm Bureau Mutual Ins. Co. v. Dercach (1983), Ind. App., 450 N.E.2d 537.
For the reasons stated above the decision of the trial court is affirmed in part and reversed in part.
Affirmed in part and reversed in part.
STATON and GARRARD, JJ., concur.
NOTES
[1] Both parties would be better served if counsel spent more time attacking the legal issues and citing legal authority for their argument rather than attacking each other's work product and citing what they consider "blackletter" principles of law without benefit of supporting authority. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2247840/ | 451 N.E.2d 302 (1983)
Bruce KIMBLE, Appellant,
v.
STATE of Indiana, Appellee.
No. PS 493.
Supreme Court of Indiana.
July 21, 1983.
*303 Bruce Allen Kimble, in pro. per.
Linley E. Pearson, Atty. Gen. of Indiana, Stephan E. Wolter, Deputy Atty. Gen., Indianapolis, for appellee.
PIVARNIK, Justice.
Appellant Bruce Allen Kimble was convicted of first-degree murder and first-degree burglary at the conclusion of a jury trial in Marion Superior Court on September 1, 1977. He was sentenced to life imprisonment. Upon appeal to this Court, his conviction was affirmed. Kimble v. State, (1979) 270 Ind. 539, 387 N.E.2d 64. A hearing was held on appellant's motion for post-conviction relief under Ind.R.P.C. 1 in January and February, 1981. This motion was denied in December, 1981, and the appellant instituted a pro se appeal.
Seven errors are asserted in the denial of post-conviction relief but we find only the following five to be properly before us:
1) whether the trial court erred when it found that no fundamental error occurred when the final instructions were not read to the jury;
2) whether the trial court erred when it found no fundamental error occurred when final instruction 20, dealing with the ways a sentence may be reduced, was given to the jury;
3) whether the trial court erred when it found that appellant was not denied effective assistance of counsel;
4) whether the trial court erred when it would not allow appellant to represent himself with the aid of a legal assistant; and,
5) whether the accumulation of the four errors amounts to a denial of a fair trial.
We find that two of the asserted errors, dealing with prosecutorial misconduct, should have been raised on direct appeal of appellant's 1977 conviction for murder and burglary. The post-conviction relief process is not a substitute for a direct appeal, but is a process for raising issues not known at the time of the original trial and appeal or for some reason not available *304 to the defendant at that time. Riner v. State, (1979) 271 Ind. 578, 582, 394 N.E.2d 140, 144; Bradberry v. State, (1977) 266 Ind. 530, 539, 364 N.E.2d 1183, 1188. The record reveals that after the appellant was convicted of murder and burglary, his attorney cited prosecutorial misconduct in the motion to correct errors. However, upon direct appeal, appellant did not pursue this claim. Therefore, we find that the issues dealing with the alleged prosecutorial misconduct have been waived.
As with all post-conviction hearings, the burden of proof is on the petitioner by a preponderance of the evidence. Lenoir v. State, (1977) 267 Ind. 212, 213-14, 368 N.E.2d 1356, 1357; Perkins v. State, (1975) 263 Ind. 270, 271, 329 N.E.2d 572, 573. The trial court is the trier of fact and sole judge of the weight of the evidence and credibility of the witnesses. A judgment of the trial court will not be disturbed unless the evidence is without conflict and leads inescapably to a conclusion which is contrary to that reached by the trial court. Perkins v. State, supra; Hoskins v. State, (1973) 261 Ind. 291, 295, 302 N.E.2d 499, 501. See Turner v. State, (1972) 259 Ind. 344, 346, 287 N.E.2d 339, 341.
I
At the conclusion of the trial, the following exchange took place concerning the reading of the final instructions:
[Prosecutor Hill]: Are you going to read the instructions?
Court: If you want me to. Mr. Mayer?
[Defense counsel Mayer]: Oh, Judge, I don't care if you read them or not, we have all been here a long time, I'm going to comment on them in my argument, so I don't care if the Court reads them or not.
Mr. Hill: Me too, Judge, I'm going to comment on the instructions.
Court: So both parties would waive rereading of the preliminary instructions and waive reading of the final instructions?
Mr. Hill: Sure, Judge.
Mr. Mayer: I think so.
Appellant claims that it was fundamental error to waive the reading of the final instructions and cites Purdy v. State, (1977) 267 Ind. 282, 369 N.E.2d 633, for support. Purdy held that the defendant has the clear right to have the final instructions read aloud to the jury. In addition, appellant claims that he did not knowingly waive the reading of the final instructions. Defense counsel Mayer usually discussed waiving the reading of the final instructions with his clients. However, appellant states that Mayer testified at the hearing that he never discussed such a matter with appellant. Appellant misstates the record. The statement Mayer made, and which appellant repeats in the brief, was in response to a different question and did not deal with appellant Kimble at all. What Mayer said was while he could not remember specifically discussing the matter, appellant must have agreed with his decision to waive the reading. Mayer reached this conclusion because he always discussed these matters with his clients before making such a decision. Regardless, we find Rice v. State, (1981) Ind., 426 N.E.2d 680, to be controlling. As found here, the defense counsel in Rice waived the reading of the final instructions. This Court held that since the decision was made before the clear right in Purdy was made known, defense counsel had done nothing wrong and the waiver did not amount to fundamental error. Id. 426 N.E.2d at 682. The same rationale applies here. Purdy was handed down in December, 1977, and appellant was convicted in September, 1977. There is no error on this issue.
II
Appellant argues that fundamental error occurred when the following instruction was given to the jury:
INSTRUCTION NUMBER 20
A person who is convicted of a crime by a jury is sentenced by the judge. In many cases the judge has certain sentencing alternatives which may include probation, *305 restitution, short sentences, rehabilitation programs, etc. In other cases the law requires the judge to sentence to a term of imprisonment that is either fixed by the law, or set by the jury.
A person who is sentenced to imprisonment for less than life is entitled by law to a reduction of his time based upon a certain schedule and upon his behavior in the institution. Also he is given credit toward his sentence for time spent in jail on this charge. For these reasons it is possible that a person could serve considerably less than the stated sentence. On the other hand, it is also possible that a person could serve the full maximum. In either case it is determined by future events beyond our present knowledge or control.
A person who is sentenced to imprisonment for life will remain in prison for life, unless the governor of this state commutes the sentence upon recommendation of the clemency commission. If this occurs, a person serving life may be paroled. On the other hand, there is no certainty that it will happen, or if it does, when it may happen. This also is determined by future events which are beyond our present knowledge or control.
Therefore, in any case when arriving at your verdict, you should not consider or speculate as to the actual amount of time a person will serve.
Appellant Kimble argues that instruction 20 improperly informed the jury about the possible ways a sentence may be reduced, thus exposing the jury to extraneous material which may have clouded the determination of guilt or innocence. Because the trial court sua sponte gave this instruction, appellant feels the error rises to the level of fundamental error.
We disagree. In a recent case, Bailey v. State, (1980) Ind., 412 N.E.2d 56, we held that the trial court, in its considered discretion, could give an almost identical instruction. We felt that an instruction of this sort aids the jury in forgetting any concerns over potential punishments. Id. 412 N.E.2d at 61. See also Cooper v. State, (1977) 265 Ind. 700, 359 N.E.2d 532; Feggins v. State, (1977) 265 Ind. 674, 359 N.E.2d 517. The trial court here specifically informed the jury that during its determination of guilt or innocence it was not to consider the actual time Appellant would spend in prison. We find nothing wrong with the giving of this instruction.
III
In his third argument, appellant Kimble claims that he was denied effective assistance of counsel. Appellant lists seven examples to illustrate his claim. The first two deal with the final instructions. Having already held that the instructions were properly given (see Issues I and II, supra), we fail to see how they represent ineffective representation of counsel. Therefore, the first two examples will not be considered any further in this issue.
Our consideration of the representation by counsel was well-stated in Nelson v. State, (1980) Ind., 401 N.E.2d 666, as follows:
"An attorney is presumed to have rendered competent representation, and only a strong showing to the contrary will rebut that presumption. E.g., Robertson v. State, (1974) 262 Ind. 562, 319 N.E.2d 833. We must look to the facts of each case in order to determine whether counsel has provided his client with effective representation. E.g., Roberts v. State, (1977) 266 Ind. 72, 360 N.E.2d 825. We will not second-guess counsel's trial tactics or strategy. E.g., Loman v. State, (1976) 265 Ind. 255, 354 N.E.2d 205. An isolated mistake or instance of poor strategy does not render representation ineffective or inadequate; and representation is deemed to be adequate, unless the record reflects that the trial was reduced to a mockery of justice. E.g., Merida v. State, (1979) [270 Ind. 218], 383 N.E.2d 1043."
401 N.E.2d at 669
A.
First, appellant claims that counsel did not effectively assist him at trial because he *306 failed to object to the following colloquy between Deputy Prosecutor Hill and State's witness James Coleman:
Hill: Now haven't you discussed with your attorney and the Prosecutor's Office a reason why you don't want to be at Pendleton and Michigan City [prison]?
Coleman: Well, there's a whole lot of reasons.
Hill: Well why are you holding back, young man?
Coleman: I'm not holding back.
Hill: Well then let's have the reason.
Coleman: Well one of the reasons, which I just said, and the other one, because I have been threatened up in Pendleton by Eric Tyson and Bruce Kimble's friends and those are the two main reasons, need any more reasons?
Hill: I certainly do not, and I don't think the jury does either. Now you answer the questions fully and without holding anything back.
Appellant Kimble contends that the testimony regarding the threats was inadmissible evidence which was intentionally elicited from the witness by the State. Appellant also feels that this testimony was highly prejudicial and obviously inflammatory. Since threats tend to show guilt on the part of the defendant, a proper foundation must be laid to show that the threats were made by the defendant or by some third party with the defendant's knowledge or authorization. Barnes v. State, (1980) Ind., 403 N.E.2d 331.
Before trial counsel's failure to enter an objection may be regarded as ineffective representation, the petitioner must show that had a proper objection been made, the trial court would have had no choice but to sustain it. Beard v. State, (1981) Ind., 428 N.E.2d 772, 774. It appears that defense counsel opened the door for the above questioning on re-direct examination. At the close of cross-examination, defense counsel questioned Coleman about a plea agreement wherein the prosecutor would recommend that Coleman not be incarcerated at Pendleton or Michigan City. Defense counsel tried to imply that Coleman would not go to those prisons simply because he did not "like" them. Trying to correct this impression, the prosecutor was surprised when Coleman testified on re-direct that he wanted incarceration elsewhere simply because of the minimum security available outside of Pendleton and Michigan City. The prosecutor moved to impeach Coleman on this answer and the trial court granted the motion. The testimony about the threats then followed. The scope of re-direct examination is to be directed to answering any new matter drawn out during cross-examination; once a defendant inquires into a subject on cross-examination, the State is entitled to prove the matter further on re-direct examination to avoid a false or misleading impression. Woodford v. State, (1980) Ind., 405 N.E.2d 522, 524. We find no ineffective representation just because counsel failed to object to the above testimony.
B.
Next, the appellant contends that he was denied effective representation because his counsel failed to object to prosecutorial misconduct. This purported misconduct occurred during the State's examination of a witness who used the words "mug shot." Appellant claims error because the words "mug shot" informed the jury that he had been previously arrested. However, the appellant must show prejudice in this alleged error. Johnson v. State, (1982) Ind., 432 N.E.2d 403, 405. This appellant cannot do because he testified on the stand that he had previously been arrested and convicted. Thus, he directly informed the jury of his prior arrests. We fail to find ineffective representation in this issue.
C.
Appellant next complains because defense counsel failed to object when the arresting officer testified that appellant did not make a statement after being arrested. The following testimony was one of the instances appellant complains about:
*307 Officer Parnell: I immediately confronted Bruce Alan Kimble, identified myself as a police officer in the City of Indianapolis, advised him of what case I was investigating, and advised him of what charges he was under arrest for at this time, also read him his Constitutional rights, [asked] him if he would sign this waiver, also asked him if he wished to give me a statement, which he answered to as no, I don't have anything to say.
The other two instances complained of were in a similar vein.
Appellant cites Doyle v. Ohio, (1976) 426 U.S. 610, 96 S.Ct. 2240, 49 L.Ed.2d 91, for the proposition that using a defendant's post-arrest silence to impeach a subsequent story violates the Due Process Clause of the Fourteenth Amendment. While this is true, appellant's post-arrest silence was not used in any manner to impeach him or implicate him in any manner. The police officer merely stated that the appellant had no statement to give upon being arrested.
Assuming, arguendo, that defense counsel should have objected to the above testimony, we still fail to see how this reflects ineffective representation. As was stated above, an isolated mistake or instance of poor strategy does not render representation ineffective or inadequate. Merida v. State, (1979) 270 Ind. 218, 383 N.E.2d 1043. Besides, defense counsel skillfully cross-examined Officer Parnell, whereupon Parnell testified that it is not unusual for any person, guilty or innocent, to refuse to give a statement. No ineffective representation has been shown.
D.
Finally appellant argues that defense counsel's failure to raise the issues of prosecutorial misconduct in the motion to correct errors shows ineffective representation of counsel. We note that counsel did cite prosecutorial misconduct in the motion to correct errors, and that a different attorney handled the appeal. However, we will not second-guess the tactics of counsel. Loman v. State, (1976) 265 Ind. 255, 354 N.E.2d 205. It appears that the allegations of misconduct were without merit, and counsel, either one or both, decided not to pursue the issues on appeal. Regardless, appellant has failed to make a strong showing rebutting the presumption of competent representation. This Court fails to find that the trial was reduced to a mockery of justice.
In addition, it appears that appellant has decided to use the post-conviction relief rules as a means to have this Court review alleged errors that were not raised on direct appeal. He does this by using such labels as fundamental error or ineffective representation of counsel. We take a dim view of such practices. We strongly repeat that the post-conviction relief process is not a substitute for a direct appeal, but is a process for raising issues not known at the time of the original trial and appeal or for some reason not available to the defendant at that time. Riner, supra; Bradberry, supra.
IV
Prior to the post-conviction hearing, the appellant filed a motion requesting that he be allowed to proceed pro se. He also requested that Richard Lee Owen serve as his legal assistant. The motion acknowledged that Owen was not an attorney. The trial court denied the motion for a legal assistant. It is well settled that there is no constitutional right to lay assistance or lay counsel at either trial or appeal. Owen v. State, (1978) 269 Ind. 513, 518, 381 N.E.2d 1235, 1238. There is no error here.
V
Finally, appellant claims that the cumulative effect of the alleged errors raised here shows that he was denied a fair trial. In view of our having found no error in any of the above issues, we find no merit in this argument. Napier v. State, (1983) Ind., 445 N.E.2d 1361.
The trial court is affirmed.
GIVAN, C.J., and HUNTER, DeBRULER and PRENTICE, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2543811/ | 53 So.3d 238 (2011)
TUCKER
v.
STATE.
No. 5D10-3481.
District Court of Appeal of Florida, Fifth District.
January 18, 2011.
DECISION WITHOUT PUBLISHED OPINION
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2481911/ | 15 N.Y.3d 797 (2010)
934 N.E.2d 877
908 N.Y.S.2d 144
SAPPHIRE SIMMONS, an Infant, by Her Mother and Natural Guardian, ROSEMARY SIMMONS, et al., Appellants,
v.
VITO SACCHETTI et al., Respondents, et al., Defendant.
Court of Appeals of New York.
Decided August 31, 2010.
*798 Law Offices of Arnold E. DiJoseph, P.C., New York City (Arnold E. DiJoseph, III, of counsel), for appellants.
Law Office of Max W. Gershweir, New York City (Max W. Gershweir of counsel), for Vito Sacchetti and another, respondents.
Molod Spitz & DeSantis, P.C., New York City (Marcy Sonneborn of counsel), for Ambassador Fuel and Oil Burner Corp., respondent.
Wilson, Elser, Moskowitz, Edelman & Dicker LLP, White Plains (Debra A. Adler of counsel), for F&B Fuel Oil Co., Inc., respondent.
Stuart W. Lawrence, New York City, for Met Council, Inc. and another, amici curiae.
Chief Judge LIPPMAN and Judges CIPARICK, GRAFFEO, READ, SMITH, PIGOTT and JONES concur in memorandum.
OPINION OF THE COURT
MEMORANDUM.
The order of the Appellate Division should be modified, without costs, by denying the motion of defendants Vito Sacchetti and TMS Management Company for summary judgment in the entirety and the motion of defendant Ambassador Fuel and Oil Burner Corp. insofar as it sought to dismiss the cross claims against it and, as so modified, affirmed.
Triable issues of fact exist as to whether defendants Sacchetti and TMS negligently failed to maintain the apartment building's boiler and domestic hot water system in a reasonably safe condition and whether the negligence of those defendants proximately caused the infant plaintiff's injuries. Issues of fact also exist as to whether the conduct of the infant plaintiff's mother and brother constituted a superseding cause of her injuries. However, the record establishes as a matter of law that defendant Ambassador did not violate any duty owed to plaintiffs.
On review of submissions pursuant to section 500.11 of the Rules of the Court of Appeals (22 NYCRR 500.11), order modified, etc. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1317941/ | 554 P.2d 227 (1976)
Mrs. Lois E. WILSON, Plaintiff and Appellant,
v.
FAMILY SERVICES DIVISION, REGION TWO, State of Utah, Defendant and Respondent.
No. 14317.
Supreme Court of Utah.
August 24, 1976.
*228 Lyle J. Barnes of Barnes & Wilson, Kaysville, for plaintiff and appellant.
Vernon B. Romney, Atty. Gen., Paul M. Tinker, Asst. Atty. Gen., Salt Lake City, for defendant and respondent.
CROCKETT, Justice:
Plaintiff instituted this proceeding in the district court to restrain defendant Family Services from placing her grandchild out for adoption until she could have a hearing on her own fitness as custodian and/or adoptive parent. A temporary restraining order, and an order to show cause why it should not be made permanent, were issued. Upon the hearing thereon, the court vacated the restraining order and refused to grant the plaintiff a hearing on her petition. Its order includes the recital that "... grandparents have no enforceable legal rights to the custody of a grandchild, and have no more standing than a third-party stranger to contest the placement of the subject child."
The subject of controversy here is Stephen Lacey whose mother (plaintiff's daughter) had been charged in the Juvenile Court of Weber County with neglect and abuse of the child; and in connection with that proceeding, had agreed to surrender and disclaim rights to his custody. Pursuant thereto, the juvenile court ordered that Stephen be placed with the defendant Family Services for the purpose of placing him for adoption. The further facts asserted by petitioner are that she immediately contacted the defendant Family Services about getting the custody of Stephen, but her request was rejected. She thereupon had her attorney file the instant proceeding with the district court, alleging that she "is informed and believes that within a very few days ... said child will be placed with unknown persons" for adoption. She *229 also requested to have him in her custody so that at the time of hearing on the adoption she will qualify as an adoptive parent by having had him in her custody for the required six-months; and asked that the defendant agency be restrained from so placing the child until she had an opportunity to be heard on her contentions with respect to her grandchild and her application to adopt him. It was upon the basis of these allegations that the court issued the temporary restraining order above referred to, which it later vacated.
Plaintiff protests the unfairness of thus permitting the defendant agency to make a unilateral decision to so place her grandchild with persons unknown to her, without giving her any information about them, thus depriving her of any knowledge, contact or grandparent relationship with her grandchild, without any possibility of review or testing the reasonableness of its decision, and without according her a hearing upon the merits of her petition.
The problem here confronted, which is of such vital concern to the whole future life of a little child, is certainly one of the most delicate and perplexing that courts are required to deal with. On the one hand, it is highly desirable that there be practical procedures which will facilitate the placement of such children in suitable adoptive homes with the numerous benefits therefrom. These include the always paramount objective of providing for the best possible home environment and adjustment in life for the child; and the incidental but nevertheless important objective, of relieving the public of the expense and responsibility for his welfare. This is especially true when it is realized that maladjustments and antisocial behavior patterns tend to be continually recurring cycles, generation after generation, until that cycle is interrupted, and hopefully terminated, by placing the child in a proper environment where a wholesome adjustment to the problems of life can be achieved. The other side of the coin is the desirability of attempting to achieve that same objective by recognizing the natural love and affection which exists within families in order to encourage and preserve their unity and stability, which is so essential to the good order of society.
In pursuance of the objective stated above, we appreciate the fact that when a child is without parents and is placed with a social agency, there are enough difficulties involved in making a proper placement that those burdens should not be added to unnecessarily. Nor should there be any unnecessary hazards which will cause fear, and therefore reluctance, on the part of adoptive parents. If the law recognized any right of custody beyond the parents, the number of potential protestants, such as grandparents, brothers and sisters of the parents (aunts and uncles of the child), or immediate relatives, would create a situation so fraught with possibilities for trouble as to make the placement of children difficult if not entirely impractical, a result which we agree should be avoided.
Because of the considerations just stated, we agree with certain basic propositions advocated by the defendant: That the only persons having any actually vested interest in the custody of a child cognizable by the law are the parents; and that consequently, they are the only ones who have a right to notice and a hearing in court proceedings to determine custody;[1] that once there has been a proper proceeding and adjudication depriving them of custody, and the child is placed with a proper agency such as the defendant Family Services, the latter then has the responsibility and authority to safeguard the welfare of the child, including the placement in a home for that purpose; and that the agency is ordinarily not required *230 to obtain a court order to make such placement.
In considering the contentions of the petitioner in the light of the foregoing, it is also well to have in mind that this proceeding is one in equity for dual reasons: First, because it seeks a restraining order upon the defendant. Second, and much more important, because it involves the custody and welfare of a child. It is sometimes said that such a proceeding is equitable in the highest degree.[2] For this reason we are concerned both with the applicable law and with the facts and circumstances of the particular case,[3] including the important one that the petitioner is the grandmother of the child in question.
Even though it be true that relatives other than the parents have no such rights in a child as to require service of process in such a proceeding, nor to have an adjudication of the severance of any asserted right, under some circumstances, the matter of family relationship may be a factor which should be given due and serious consideration. It is according to the laws of nature and human experience that such immediate relatives, often referred to as next of kin, have some legitimate concern for children of the family and interest in their welfare. The imminent authority Tiffany, in speaking of natural guardians, states in his text:
On the death of the father, guardianship by nature passes to the mother, and, on her death, to the grandfather or grandmother or any other person who is next of kin. [Citing a number of cases][4]
To this same import is the case of Lamar v. Micou[5] wherein Mr. Justice Gray, speaking for the United States Supreme Court on the question whether orphaned children acquired a domicile in Georgia by going there to live with their grandmother, stated:
Although some books speak only of the father, or, in case of his death, the mother, as guardian by nature; 1 B1. Com. 461; 2 Kent Com. 219; it is clear that the grandfather or grandmother, when the next of kin, is such a guardian.
Another case dealing with the right of a grandparent is Commonwealth ex rel. Stevens v. Shannon[6] wherein the court said:
The affection of a grandparent can safely be said to be no less in depth than parental affection.
This idea is supported generally by the texts and authorities.[7] Though not decisive of the issue involved, in the case of In re Cooper[8] this court took occasion to observe that in "custody matters, all things else being equal, near relatives should generally be given preference over nonrelatives; ... ."
From what has been said above it should be apparent that although the parents of a child are the only ones who have a direct and vested right to his custody, further recognition of family relationships and reciprocal interests and responsibilities is so interwoven in the fabric of the law[9]*231 that the logical consequence thereof is that next of kin, such as this grandmother, do have some dormant or inchoate right or interest in the custody and welfare of children who become parentless, so that they may come forward and assert their claim; and that even though this does not rise to the dignity of an absolute legal right, it is a legitimate interest of such a nature that it should strongly commend itself to serious consideration by the administrative agency; and that failing, by the court, concerned with the welfare of the child, at least to the extent of according her a hearing and determination on the merits of her petition. This is especially so, and consistent with the purposes we have discussed herein, where this grandmother came forward promptly to express her love and concern for her grandchild and offered to provide him with a home and support.
The result of refusing the requested hearing is that the defendant agency through its staff makes a decision of the greatest importance to this child on the basis of its own investigation, evaluation and determination, which, vis-a-vis this petitioner, is final and unassailable because it is not subject to attack or review. It therefore could be ever so unreasonable and arbitrary, or inimical to the interests of the child and society, without any means of review or redress. This is contrary to the whole structure of our legal system based on due process of law, one of whose most fundamental purposes is to curb and control despotic and arbitrary power.[10] It is firmly established that when it is charged that the actions of an administrative agency are capricious and arbitrary there should be access to the courts to test that charge.[11]
Under the particular facts shown herein, considered in the light of the principles of law we have discussed, it is our conclusion that it was an abuse of discretion to refuse to continue the restraining order in effect until the petitioner was accorded a hearing on her petition. The restraining order should be reinstated until that is done. No costs awarded.
HENRIOD, C.J., and ELLETT, TUCKETT and MAUGHAN, JJ., concur.
NOTES
[1] See Sec. 78-30-4, which provides "Consent to adoption a legitimate child cannot be adopted without the consent of its parents, if living, nor an illegitimate child without the consent of its mother, if living ..."; and Sec. 78-30-8 provides for the execution of such consent.
[2] Walton v. Coffman, 110 Utah 1, 169 P.2d 97; In re Adoption of D----, 122 Utah 1525, 252 P.2d 223.
[3] See Art. VIII, Sec. 9, Utah Const.; Wiese v. Wiese, 24 Utah 2d 236, 469 P.2d 504.
[4] Tiffany on Domestic Relations (3d ed.) 395, § 148.
[5] 115 U.S. 218, 5 S. Ct. 857, 29 L. Ed. 94.
[6] 107 Pa.Super. 557, 164 A. 352, 354. That where both mother and father are found to be unfit to have custody of a child it may properly be awarded to grandparent see also Overstreet v. Overstreet (La. App.), 244 So. 2d 313; as to grandparent's right of visitation being recognized, see Weichman v. Weichman, 50 Wis. 2d 731, 184 N.W.2d 882.
[7] 39 C.J.S. Guardian and Ward § 3 p. 10; 39 Am.Jur.2d, Guardian and Ward § 8, p. 15.
[8] 17 Utah 2d 296, 410 P.2d 475.
[9] Cf. e.g., Sec. 74-4-5(6) which provides for succession, where no immediate family, to next of kin, and Sec. 75-13-13 which deals with preferred rights to letters of guardianship of minors, including relatives.
[10] 16 Am.Jur.2d Constitutional Law, § 550.
[11] See Kent Club v. Toronto, 6 Utah 2d 67, 305 P.2d 870; Gianforte v. Board of License, 190 Md. 492, 58 A.2d 902; City of Wewoka v. Rose Lawn Dairy, 202 Okl. 286, 212 P.2d 1056. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/414629/ | 701 F.2d 164
12 Fed. R. Evid. Serv. 757
Fieldsv.Ford Motor Co.
82-1380
UNITED STATES COURT OF APPEALS Fourth Circuit
1/20/83
1
E.D.N.C.
AFFIRMED | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/3079872/ | IN THE NINTH COURT OF APPEALS
_____________________ _____
09-11-00584-CR
__________________________
Chidozie Robert Obialor
v.
The State of Texas
_________________________________________________________________
On Appeal from the
252nd District Court of Jefferson County, Texas
Trial Cause No. 10-09814
_________________________________________________________________
JUDGMENT
THE NINTH COURT OF APPEALS, having considered this cause on
appeal, concludes that the judgment of the trial court should be affirmed. IT IS
THEREFORE ORDERED, in accordance with the Court’s opinion, that the
judgment of the trial court is affirmed.
Opinion of the Court delivered by Justice Hollis Horton
October 24, 2012
AFFIRMED
**********
Copies of this judgment and the Court’s opinion are certified for
observance.
Carol Anne Harley
Clerk of the Court | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2625668/ | 209 P.3d 214 (2009)
IN RE ESTATE OF GAMBLE
No. 100174.
Court of Appeals of Kansas.
June 19, 2009.
Decision without published opinion. Affirmed. | 01-03-2023 | 11-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/500453/ | 837 F.2d 1086
Fromerv.Scully
NO. 86-2463(R)
United States Court of Appeals,Second Circuit.
NOV 24, 1987
Appeal From: S.D.N.Y., 649 F.Supp. 512
1
REMANDED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1054465/ | IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
September 8, 2004 Session
CLIFFORD WILSON v. GAY LYNN WILSON
Appeal from the Circuit Court for Davidson County
No. 99D-3470 Muriel Robinson, Judge
No. M2003-02261-COA-R3-CV - Filed April 13, 2005
This case involves a dispute over the proper amount of child support to be paid for the parties’ two
minor children. Father requested a child support adjustment due to the emancipation of the parties’
oldest child. He additionally requested a downward deviation of his child support payments due to
significant additional parenting time in excess of that contemplated by the Tennessee Child Support
Guidelines, as well as, significant additional monies paid for private school and other expenses for
the children. The previous court order required Husband to pay $4,100 per month for their three
minor children based on an income of $10,000 per month. The trial court determined that Husband’s
new child support amount for the remaining two minor children would be $3,700 per month. Father
argued that the proper amount after the emancipation of their oldest child should reduce his child
support to $3,200 per month. Father also argued that he should be entitled to a downward deviation
reducing his child support to $1,000 per month for his two minor children. We agree with Father
that the trial court incorrectly modified his child support following the emancipation of the parties’
oldest child. Although Husband’s current income is in excess of $10,000 per month, Wife did not
carry her burden of proving that additional child support based on an amount over $10,000 per
month is reasonably necessary. Child support should be set at 32% of $10,000, $3,200 per month.
With regard to Father’s request for a downward deviation of his child support obligation, we find
that there has been no change of circumstances since the last court order and that this issue could
have and should have been litigated at the time of the previous Order, so the matter is barred by res
judicata. Child support is set at $3,200 per month for the remaining two minor children.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court is affirmed in part
and modified in part
WILLIAM B. CAIN , J., delivered the opinion of the court, in which PATRICIA J. COTTRELL, and FRANK
G. CLEMENT , JR., JJ., joined.
John J. Hollings, Jr., Nashville, Tennessee, for the appellant, Clifford Wilson.
Warren Jasper, Nashville, Tennessee, for the appellee, Gay Lynn Wilson.
OPINION
The parties in this matter were divorced by Final Decree entered on September 13, 2000. At
the time of the divorce, the parties had three minor children. Mother was designated as primary
caretaker with the parties having joint custody. Father was ordered to pay child support in the
amount of $4,100 per month based on a finding of net monthly income of $10,000 per month.
In September of 2001, Father filed a Petition to Reallocate Residential Time. A new
Permanent Parenting Plan was approved by the court in an Agreed Order dated September 6, 2002.
This Parenting Plan gave Father significantly more parenting time but left the child support
unchanged at $4,100 per month. Father made no request for a downward deviation from the Child
Support Guidelines and signed the Agreed Order and new Parenting Plan changing his parenting
time but leaving his child support unchanged. This Agreed Order became a final order.
On May 16, 2003, Father filed a Motion to Modify Child Support based on his oldest
daughter turning 18 on May 28, 2003 and graduating from high school on May 26, 2003. Father
later filed an Amended Motion to Modify Child Support requesting a further downward deviation
in his child support obligation based on the significantly increased parenting time and additional
funds expended for private school and other expenses of the children.
Pursuant to the September 2002 Parenting Plan and Agreed Order, Father alleged that he
exercised 186 days of parenting time in the last year, more than 154 of those for overnight visits.
This parenting time was 106 days above the presumptive guideline of 80 days per year. In addition
to the $4,100 per month in child support, Father also voluntarily paid approximately $30,000 per
year for his children to attend private school.
At the hearing of this matter, the trial court heard the testimony of both Mother and Father
and reviewed Father’s tax returns for the years 2000, 2001, and 2002. At the close of all testimony,
the court stated:
It’s unfortunate that this deviation was not addressed by this
parenting plan. I tend to agree with the child support contractor here
but we do have the fact that one child is emancipated.
I commend Mr. Wilson for paying all these expenses but he
does that voluntarily. I’m going to average his income and this
resulting Order will result in the child support payment for the two
remaining children to be 3700 per month.
They’ll be no deviation for more visitation because I don’t
even know why they signed that parenting plan anyway. So he’s
under no obligation for any of these schools. If you want your
-2-
children to have a good education, you’ll do it but he’s under no
Order to do that so that will be my Order.
On September 8, 2003, the trial court issued her Order providing:
It is hereby ORDERED, ADJUDGED and DECREED that the
Father shall pay child support in the amount of $3,700 for the parties’
two minor children until further orders of this Court. The Father’s
modified child support obligation shall be retroactive to May 28,
2003, the date the parties’ oldest child, Whitney Wilson, graduated
from high school.
The facts in this case are not in dispute. The questions at issue only involve proper
application of the law to the facts. These issues of law are reviewed de novo, without any
presumption of correctness. See Campbell v. Florida Steel Corp., 919 S.W.2d 26, 28-29 (Tenn.
1996); Lacey v. Lacey, No. W2002-02813-COA-R3-CV, 2003 WL 23206069 at *2 (Tenn. Ct. App.
Oct. 21, 2003); Hoback v. Hoback, No. M2001-01913-COA-R3-CV, 2004 WL 746440 at *1 (Tenn.
Ct. App. April 5, 2004).
I. Child Support Based on Income in Excess of $10,000
In determining the amount of Father’s net monthly income, the trial judge stated that she
averaged Father’s federal income tax for the years 2000, 2001, and 2002. This would provide for
a net monthly income of $11,607. Thirty-two percent of that income would be $3,714.24. The trial
court ordered child support for Father’s two children set at $3,700 per month. This amount is
incorrect.
In order to base child support on an income in excess of $10,000 per month, the custodial
parent must show, by a preponderance of the evidence, that the additional money is reasonably
necessary to provide for the needs of the minor children pursuant to Tennessee Code Annotated
section 36-5-101(e)(1)(B).
Notwithstanding any provision of this section
or any other law or rule to the contrary, if the net
income of the obligor exceeds ten thousand dollars
($10,000) per month, then the custodial parent must
prove by a preponderance of the evidence that child
support in excess of the amount, [calculated by
multiplying the appropriate percentage set forth in the
child support guidelines by a net income of ten
thousand dollars ($10,000) per month], is reasonably
necessary to provide for the needs of the minor child
or children of the parties. In making its
-3-
determination, the court shall consider all available
income of the obligor, as required by this chapter, and
shall make a written finding that child support in
excess of the amount so calculated is or is not
reasonably necessary to provide for the needs of the
minor child or children of the parties.
Tenn. Code Ann. § 36-5-101(e)(1)(B) (Supp. 2004); see also Kreuser v. Smith, No. M2001-
03135-COA-R3-CV, 2003 WL 132456 (Tenn. Ct. App. Jan. 16, 2003), perm. app. denied (Tenn.
June 9, 2003); Zabaski v. Zabaski, No. M2001-02013-COA-R3-CV, 2002 WL 31769116 at *6
(Tenn. Ct. App. Dec. 11, 2002); Tenn. Comp. R. Regs. 1240-2-4-.04(3) (Dec. 2003).
Not only did the court fail to make the required written determination that this amount was
reasonably necessary to provide for the needs of the children, Mother did not request this additional
child support and failed to make any showing of need. “[C]hild support cannot be based on an
amount greater than that [$10,000] without proof that a greater amount of support is reasonably
necessary for the child’s needs.” Zabaski, 2002 WL 31769116 at *6.
The only showing made by Mother of any expenses was for pre-kindergarten and child care
for the parties’ five-year-old child. The cost of pre-kindergarten was $4,650 per year plus aftercare
expenses of $1,800 per year. Additional child care costs were $450 per month. In addition to the
$4,100 Mother had been receiving per month in child support, she received $1,750 per month in
alimony, earned a net income of $2,950 per month through her employment and received $1,500 per
year in rental income. We cannot say that the information provided by Mother comes anywhere
close to proving by a preponderance of the evidence that child support calculated on Father’s income
in excess of $10,000 per month is reasonably necessary to provide for the needs of the minor
children.
Based on Father’s income calculated at $10,000 per month and the emancipation of the
parties’ oldest daughter, we calculate the proper child support amount at $3,200 per month ($10,000
x 32%) for the parties’ two remaining minor children. However, from this $3,200 per month, Father
further requests a downward deviation based on his substantial additional parenting time and other
costs paid on top of his regular child support.
II. Request for Downward Deviation
The Tennessee legislature and courts have addressed the issue of how child support is
determined and how and when a nonresidential parent’s child support obligation may be modified.
Although these statutes provide for a downward deviation in child support based on significant
additional parenting time by the nonresidential parent, Casteel v. Casteel, No. 03A01-9703-CV-
00073, 1997 WL 414401 (Tenn.Ct.App. July 24, 1997); Burke v. Burke, No. M2000-01111-COA-
R3-CV, 2001 WL 921770 (Tenn.Ct.App. Aug. 7, 2001); Hobak v. Hobak, No. M2001-01913-COA-
R3-CV, 2004 WL 746440 (Tenn.Ct.App. April 5, 2004), in the case at bar, we never reach the issues
-4-
of whether the deviation should be allowed and how this modification is determined. Father
negotiated a new parenting plan, significantly increasing parenting time for him but leaving his child
support obligation unchanged at $4,100 per month, enticing Mother to agree to the additional
parenting time. This parenting plan became incorporated into the trial court’s Agreed Order, which
is now a final order in this case, and res judicata bars redetermination of child support based on the
facts and circumstances in existence at the time of the court’s Order.
In determining that res judicata applies to this situation, we will examine its application in
other cases involving child support and child custody, as well as, Tennessee’s law of res judicata.
Generally, res judicata bars a second suit between the same parties on the same cause of
action with regard to all issues that were or could have litigated in the prior suit.
“The term “res judicata” is defined as a “[r]ule that a final judgment
rendered by a court of competent jurisdiction on the merits is
conclusive as to the rights of the parties and their privies, and, as to
them, constitutes an absolute bar to a subsequent action involving the
same claim, demand or cause of action. . . . [T]o be applicable, it
requires identity of cause of action, or person and parties to action,
and of quality in persons for or against whom claim is made.”
Black’s Law Dictionary 1172 (5th ed. 1979) (citations omitted). We
have recently discussed the doctrine and its related counterpart,
collateral estoppel, as follows:
The doctrine of res judicata bars a second suit
between the same parties or their privies on the same
cause of action with respect to all issues which were
or could have been litigated in the former suit.
Collateral estoppel operates to bar a second suit
between the same parties and their privies on a
different cause of action only as to issues which were
actually litigated and determined in the former suit.
Goeke v. Woods, 777 S.W.2d 347,349 (Tenn. 1989) (quoting from
Massengill v. Scott, 738 S.W.2d 629, 631 (Tenn. 1987)). Res judicata
and collateral estoppel apply only if the prior judgment concludes the
rights of the parties on the merits. A.L. Kornman Co. v. Metopolitan
Gov’t of Nashville & Davidson County, 216 Tenn. 205, 391 S.W.2d
633, 636 (1965). One defending on the basis of res judicata or
collateral estoppel must demonstrate that 1) the judgment in the prior
case was final and concluded the rights of the party against whom the
defense is asserted, and 2) both cases involve the same parties, the
-5-
same cause of action, or identical issues. Scales v. Scales, 564 S.W.
2d 667, 670 (Tenn.App. 1977), cert denied, (Tenn. 1978).
Richardson v. Tenn. Bd. of Dentistry, 913 S.W.2d 446, 459 (Tenn. 1995).
In matters of child custody and support, res judicata has been applied in numerous
circumstances. Our courts have repeatedly applied res judicata in issues of paternity. See State ex
rel. Russell v. West, 115 S.W.3d 886 (Tenn.Ct.App. 2003); Godwin v. Sanders, No. W2003-02239-
COA-R3-JV, 2005 WL 65540 (Tenn.Ct.App. Jan. 10, 2005). The Tennessee courts have also
applied res judicata to issues of child custody. It has long been the law that once a custody decision
is made, that decision is considered res judicata as to all facts in existence or reasonably foreseeable
at the time of the decision. “In fact, a custody decision, once made and implemented, is considered
res judicata upon the facts in existence or reasonably foreseeable when the decision was made.”
Davis v. Davis, No. M2003-02316-COA-R3-CV, 2004 WL 2296507 at *2(Tenn.Ct.App. Oct. 12,
2004).
In child custody cases, the law is well established that when
a decree awarding custody of children has been entered, that decree
is res judicata and is conclusive in a subsequent application to change
custody unless some new fact has occurred which has altered the
circumstances in a material way so that the welfare of the child
requires a change of custody. Long v. Long, 488 S.W.2d 729
(Tenn.Ct.App. 1972). In short, once the trial court has made an initial
determination with respect to custody, it cannot entertain a
subsequent petition to modify custody absent a material change in
circumstances such that the welfare of the child demands a
redetermination.
In re B.A.L. and A.E.L., No. W2004-00826-COA-R3-JV, 2004 WL 3008810 at *4(Tenn.Ct.App. Dec
23, 2004).
Tennessee courts have also applied res judicata to requests for an increase in child support.
A trial court’s final decree fixing alimony and child support
is res judicata as to all circumstances in existence at the time of the
entry of said decree. Hicks v. Hicks, 26 Tenn.App. 641, 176 S.W.2d
371 (1943). In order to obtain an increase in child support thereafter,
the petitioner has the burden of showing there has been a material
change of circumstances justifying an increase in child support, and
that the change has taken place from and after the entry of the
previous decree. Jones v. Jones, 659 S.W.2d 23 (Tenn.App. 1983).
Watts v. Watts, No. 01-A01-9011CH00406, 1991 WL 93780 at *2 (Tenn.Ct.App. June 5, 1991).
-6-
In the case at bar, Father is requesting a downward deviation based on circumstances which
were placed in a final order almost a year prior to his request for the deviation. We believe res
judicata applies to bar Father from bringing his action for modification, as under principles of res
judicata there has been no change in circumstances and his request involves a matter that should
have and could have been litigated in the earlier action. See Hawkins v. Burton, No. W2003-02617-
COA-R3-CV, 2004 WL 2607548 (Tenn.Ct.App. Nov. 16, 2004).
In the case at bar, the factors were known to all the parties, and the new Parenting Plan was
a negotiated resolution of the parties’ dispute, which became an Order of the court. Although
Father’s parenting time changed significantly, he allowed child support to remain unchanged and
these elements of the Parenting Plan became a part of the Final Order, not appealed by either party.
As such, the issue is res judicata as to all future litigation regarding the same facts.
Father negotiated his new parenting arrangement with Mother and then waited almost a year
to request a downward deviation in his child support payments. Under principles of res judicata,
there must be some change in circumstances that allow for re-litigation of the issue. However, other
than the emancipation of one child, a change provided for by statute and occurring since the last
Order, all circumstances are the same as the last time the parties appeared before the court and
obtained a court order. Father’s income for the purpose of determination of child support is still
$10,000 per month, Father’s visitation time has been set by court Order for over a year, and Father
has been paying school tuition and other necessities for his children since the time of the divorce.
Father cannot now ask the court to recalculate his child support based on these previously existing
factors. They have already been litigated. The only modification available was the reduction of the
amount of child support paid from 41% to 32% of his income due to the emancipation of the oldest
child.
One other type of child support case wherein this Court has applied res judicata is child
support arrearages. However, in such circumstances, the Court has stated that re judicata does not
apply in barring a claim that “might have been brought in the former proceeding”. In the case of
Ostheimer v. Ostheimer, No. W2002-02676-COA-R3-CV, 2004 WL 689881(Tenn.Ct.App. Mar. 29,
2004), the mother received child support calculated in two different ways. She received a lump sum
amount based on the father’s regular salary and received an additional, variable amount based on the
father’s commissions and bonuses. The father had not paid any child support in some time, and the
mother sued for payment of back child support. The initial court award for the child support
arrearage involved only the set amount of child support without any calculation of the variable
component. The mother then returned to court requesting the additional child support based on the
father’s commissions and bonuses. Following an exhaustive discussion of the application of res
judicata to similar cases in Tennessee, the trial court stated:
From these cases, it appears that, in cases involving child
support arrearages, res judicata in the form of issue preclusion has
been permitted as a defense, requiring the party asserting the defense
to show that the issue was actually resolved in the former proceeding.
-7-
Father has cited no child support arrearage case in which res judicata
in the form of claim preclusion has been applied, barring claims that
“might have been brought” in the former proceeding. Thus, in order
to assert a res judicata defense in a child support case, the defendant
must “prove with certainty” that the former proceeding actually
addressed and resolved the issue. See id. at 245.
Applying this principle in the instant case, Father must submit
sufficient evidence to show that the parties intended for the June 1998
Consent Order to resolve the issue of Father’s commission-based
child support obligation prior to June 1998. The trial court below did
not expressly address whether the commission-based component of
Father’s child support obligation was actually litigated or resolved by
the Consent Order.
Ostheimer, 2004 WL 689881 at *8.
In applying these principles to an agreed order, the court went on to state:
Ordinarily, application of issue preclusion principles require
inquiry into what was actually litigated. In this case, however, the
parties agreed to provisions in a consent order, and nothing was
litigated. In such a case, the relevant inquiry is whether the parties
intended for the order to resolve the issue at hand. See McPherson,
1993 WL 516255, at *3.
Id at *8 n.7.
The issue of the child support arrearage can be distinguished from the case at bar in that an
arrearage deals with the right to collect the amount of child support already owed pursuant to a prior
court order. There is no question that an amount is owed, the issue is merely what amount, if any,
has not already been paid. In such a circumstance, there may be many different elements of child
support owed, and a calculation resulting in an order determining that an amount is owed for a
particular time period or event, such as medical bills or school tuition, does not bar a determination
later that other amounts could still be owed pursuant to that original court order of support. This is
in contrast to the case at bar, wherein Father is asking for a recalculation of the amount of support
owed in the future without a showing of any change since the last calculation of support was made.
As in the cases of child custody, we believe that res judicata, in the form of claim preclusion, applies
unless such a change can be shown. Further, as the parties agreed to the Order and negotiated the
terms of the Parenting Plan, including the amount of child support paid by Father, it can only be
determined that the parties intended to resolve the issue of child support at the time visitation was
changed.
-8-
The circumstances were known to Father at the time of the previous court Order. The parties
entered into the Parenting Plan knowing that Father was paying more child support than was required
by statute, and indeed Mother may not have agreed to the change in visitation time if it had involved
a change in child support. As such, the parties entered into an Agreed Order and Parenting Plan
agreeing to the additional days of visitation and the same child support without requesting a
downward deviation now sought by Father. This Order was entered as of record by the trial court.
Once the court makes a ruling, that ruling becomes res judicata as to the circumstances existing at
the time.
We affirm the trial court’s decision to deny Father’s request for a downward deviation based
on his additional parenting time and additional monies paid for school tuition. However, we modify
the trial court’s determination of Father’s monthly child support obligation after emancipation of the
oldest child. Child support is set at $3,200 per month.
Costs are assessed equally to the parties.
____________________________________
WILLIAM B. CAIN, JUDGE
-9- | 01-03-2023 | 10-08-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/500457/ | 837 F.2d 1086
In re Seaman (Catherine)
NO. 87-3041
United States Court of Appeals,Second Circuit.
NOV 16, 1987
1
DENIED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/414762/ | 701 F.2d 169
U. S.v.Jackson
82-6041
UNITED STATES COURT OF APPEALS Fourth Circuit
12/30/82
1
D.Md.
AFFIRMED | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/560757/ | 932 F.2d 961
Shramko (Maryann)v.U.S., U.S. Department of Navy, Armed Forces Institute ofPathology, Norwicky (M.R.), Geiger (D.N.), Smith (J.),Hartman (Kenton S., D.D.S.), Karnei (Robert F., Jr., M.D.),Seifert (J.A.), McKenney (T.), John Doe
NO. 90-1883
United States Court of Appeals,Third Circuit.
APR 12, 1991
Appeal From: E.D.Pa.,
Troutman, J.
1
AFFIRMED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2154458/ | 963 A.2d 841 (2009)
197 N.J. 469
In the Matter of John Scott ANGELUCCI, an Attorney at Law (Attorney No. XXXXXXXXX).
D-21 September Term 2008
Supreme Court of New Jersey.
January 30, 2009.
ORDER
The Disciplinary Review Board having filed with the Court its decision in DRB 08-188, concluding on the record certified to the Board pursuant to Rule 1:20-4(f) (default by respondent), that JOHN SCOTT ANGELUCCI of DEPTFORD, who was admitted to the bar of this State in 1991, and who has been suspended from the practice of law since March 5, 2007, should be suspended from practice for a period of one year for violating RPC 8.1(b) (failure to cooperate with disciplinary authorities), and RPC 8.4(d) (conduct prejudicial to the administration of justice);
And the Disciplinary Review Board having determined that the one-year term of suspension should be consecutive to the six-month suspension effective on November 8, 2008, ordered by the Court on October 6, 2008;
And JOHN SCOTT ANGELUCCI having been ordered to show cause why he should not be disbarred or otherwise disciplined;
And the Court having determined that a three-year suspension from practice is the appropriate quantum of discipline for respondent's unethical conduct;
And good cause appearing;
It is ORDERED that JOHN SCOTT ANGELUCCI is suspended from the practice of law for a period of three years and until the further Order of the Court, effective May 9, 2009; and it is further
ORDERED that respondent shall not be reinstated to the practice of law until he complies with the fee arbitration determination in District Docket No. IV-06-0017F, and pays the sanction in the amount of $250 to the Disciplinary Oversight Committee as ordered by the Court on March 5, 2007; and it is further
ORDERED that prior to reinstatement to practice, respondent shall submit proof of his fitness to practice law as attested to by a mental health professional approved by the Office of Attorney Ethics; and it is further
ORDERED that respondent continue to comply with Rule 1:20-20 dealing with suspended attorneys; and it is further
ORDERED that pursuant to Rule 1:20-20(c), respondent's failure to comply with the Affidavit of Compliance requirement of Rule 1:20-20(b)(15) may (1) preclude the Disciplinary Review Board from considering respondent's petition for reinstatement for a period of up to six months from the date respondent files proof of compliance; (2) be found to constitute a violation of RPC 8.1(b) and RPC 8.4(c); and (3) provide a basis for an action for contempt pursuant to Rule 1:10-2; and it is further
ORDERED that the entire record of this matter be made a permanent part of respondent's file as an attorney at law of this State; and it is further
ORDERED that respondent reimburse the Disciplinary Oversight Committee for appropriate administrative costs and actual expenses incurred in the prosecution of this matter, as provided in Rule 1:20-17. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2788695/ | IN THE SUPREME COURT, STATE OF WYOMING
2015 WY 43
OCTOBER TERM, A.D. 2014
March 24, 2015
MARY L. WISE,
Appellant
(Plaintiff),
v. S-14-0147
STEVEN F. LUDLOW,
Appellee
(Defendant).
STEVEN F. LUDLOW,
Appellant
(Defendant),
v. S-14-0148
MARY L. WISE,
Appellee
(Plaintiff).
Appeal from the District Court of Natrona County
The Honorable Daniel L. Forgey, Judge
Representing Appellant, Mary L. Wise, S-14-0147:
Stephen R. Winship, Winship & Winship, P.C., Casper, Wyoming.
Representing Appellee, Steven F. Ludlow, S-14-0147 :
Sean W. Scoggin, McKellar, Tiedeken & Scoggin, LLC, Cheyenne, Wyoming.
Before BURKE, C.J., and HILL, KITE, DAVIS, and FOX, JJ.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers
are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming
82002, of any typographical or other formal errors so that correction may be made before final publication in
the permanent volume.
BURKE, Chief Justice.
[¶1] Mary L. Wise appeals from a judgment following a jury verdict in a personal
injury trial arising from a single car collision in which she was the passenger and Steven
F. Ludlow was the driver. She contends the district court made erroneous decisions
relating to comparative fault and to the admission and exclusion of certain evidence.
Mr. Ludlow filed a cross-appeal, asserting that the district court incorrectly ruled that he
had been properly served with the Summons and Complaint. We will affirm the district
court in both Ms. Wise’s appeal and Mr. Ludlow’s cross-appeal.
ISSUES
[¶2] Ms. Wise lists a number of issues in her appeal. We reword and reorganize them
as follows:
1. Did the district court err by instructing the jury on
comparative fault?
2. Did the district court err in excluding evidence of
Ms. Wise’s lack of financial resources to explain delays in
seeking treatment for her injuries?
3. Did the district court err by admitting the testimony of
Mr. Ludlow’s expert witness?
4. Did the district court err in denying Ms. Wise’s
attempt to impeach Mr. Ludlow’s testimony with
Mr. Ludlow’s Answer to the Complaint?
[¶3] Mr. Ludlow raises a single issue:
1. Did the district court err in determining it had personal
jurisdiction over Mr. Ludlow?
FACTS
[¶4] The accident at issue occurred in Casper, Wyoming, on Sunday, October 28, 2007.
On that date, Mr. Ludlow consumed a significant amount of alcohol. He began drinking
at his home around 9:00 a.m. He went to the Sandbar Lounge at 11:00 a.m. where he
drank beers and shots of whiskey, and later rum and coke drinks. Ms. Wise arrived at the
Sandbar early that afternoon, coming from a different bar where she had lunch and a
couple of beers, followed by some vodka drinks. Mr. Ludlow and Ms. Wise had known
each other for about two years, and had dated on occasion. They talked for a while at the
1
Sandbar, and she asked for a ride in his Corvette. They left at about 5:00 p.m.
[¶5] After driving a short distance, Mr. Ludlow lost control of the car while driving 40
to 50 miles per hour in a 30 mile per hour zone. The vehicle struck a fence and a
concrete stairway and was totaled. Mr. Ludlow admitted to the investigating officer that
he was too drunk to drive and, approximately two hours after the accident, his blood
alcohol level was measured at 0.14%. He later pled guilty to a charge of driving while
under the influence of alcohol.
[¶6] Mr. Ludlow and Ms. Wise were taken to the hospital, examined, and discharged.
Ms. Wise was diagnosed with a chest contusion, bruises, and abrasions. She followed up
with her regular doctor with concerns about various pains and soreness. Approximately
six months after the accident, she began experiencing pain in her back, neck, and legs,
and eventually was diagnosed with abnormalities in the discs of her cervical and lumbar
spine.
[¶7] Ms. Wise filed suit on October 19, 2011. Mr. Ludlow was living in New Jersey at
the time. Ms. Wise attempted to serve process on him at the New Jersey address listed on
his driver’s license. The affidavit of service indicates that the Summons and Complaint
were served at that address on “Christine Ludlow (Mother).”
[¶8] Mr. Ludlow responded with a motion to dismiss pursuant to W.R.C.P. 12(b)(5),
claiming insufficiency of service of process. The district court denied the motion.
Mr. Ludlow then filed his Answer, preserving his claim of improper service as an
affirmative defense. In a subsequent scheduling order, the district court set a deadline for
Mr. Ludlow to file “a motion regarding the issues of service and jurisdiction.”
Mr. Ludlow filed the motion on the deadline, styling it as a motion for summary
judgment. The district court denied the motion, ruling that the Summons and Complaint
had been properly served.
[¶9] A four day trial began on February 3, 2014. The jury returned a verdict finding
Mr. Ludlow negligent, that his negligence was a cause of Ms. Wise’s injuries or damages,
and that he was 55% at fault. The jury also found that Ms. Wise was 45% at fault. The
jury found her total damages to be $15,000. Ms. Wise’s damages were reduced by her
percentage of fault, and the district court entered a judgment of $8,250 in her favor. She
filed this appeal. Mr. Ludlow responded with his cross-appeal.
DISCUSSION
[¶10] “Proper service of process is necessary to acquire personal jurisdiction over a
defendant under the due process provisions of both the federal and state constitutions.”
Lundahl v. Gregg, 2014 WY 110, ¶ 7, 334 P.3d 558, 561 (Wyo. 2014) (citing Gookin v.
State Farm Fire and Casualty Ins. Co., 826 P.2d 229, 232 (Wyo. 1992)). Due to the
2
jurisdictional nature of service of process, Mr. Ludlow’s issue is potentially
dispositive. We will address it first.
[¶11] W.R.C.P. 4(d)(1) provides that service can be made “by delivering a copy of the
summons and of the complaint to the individual personally, or by leaving copies thereof
at the individual’s dwelling house or usual place of abode with some person over the age
of 14 years then residing therein.” The affidavit of service indicates that process was
served at an address on Ravine Road in Verona, New Jersey. In his motion to dismiss,
Mr. Ludlow claimed that this address was not his “dwelling house or usual place of
abode.” To support the motion, he presented the affidavit of his mother stating that the
Ravine Road address was her residence, and that Mr. Ludlow did not reside there.
[¶12] In opposition to the motion, Ms. Wise presented the affidavit of Detective Brian
Marczewski stating that when he took the Summons and Complaint to the designated
address, “The person who answered the door was Christine Ludlow. I verified that she
was over the age of 14 and that she resided at [the Ravine Road address]. . . . I then
inquired if Steven Ludlow also resided in the home with her, which she answered by
saying ‘yes.’” The district court denied the motion explaining that the return of service
provided a prima facie case as to the facts of service, and that Mr. Ludlow had not met
his burden of countering that prima facie case.
[¶13] Mr. Ludlow subsequently raised the issue again, this time in a motion for
summary judgment. In addition to the affidavit of his mother presented with his earlier
motion to dismiss, Mr. Ludlow included an excerpt from the transcript of his mother’s
deposition, in which she stated that Mr. Ludlow had lived at her home for two months
during 2009, but had moved to another address by the time process was served. She also
testified that, when the detective came to her home and asked if Mr. Ludlow lived there,
she “responded by saying no.” He also added his affidavit stating that at the time of
service, he was not living at Ravine Road, but rather at an address on Grove Avenue in
Verona, New Jersey. He attached several tax forms listing the Grove Avenue address.
[¶14] Ms. Wise opposed the motion. She again relied on the affidavit of the detective
who had left the Summons and Complaint with Mr. Ludlow’s mother. She also attached
an excerpt from Mr. Ludlow’s deposition in which he stated that his driver’s license still
listed the Ravine Road address, and that he stored a tool box at his mother’s home.
Ms. Wise also pointed to portions of the deposition of Mr. Ludlow’s mother in which she
stated that Mr. Ludlow sometimes received advertisements in the mail at her address.
[¶15] The district court denied Mr. Ludlow’s motion for summary judgment. Summary
judgment is granted only when there are no genuine issues of material fact. Jacobs
Ranch Coal Co. v. Thunder Basin Coal Co., LLC, 2008 WY 101, ¶ 8, 191 P.3d 125, 128
(Wyo. 2008). Because there was conflicting evidence on the question of Mr. Ludlow’s
usual place of abode, summary judgment was precluded. However, in the usual course of
3
events, the denial of a motion for summary judgment results in a determination of the
issue at trial. That did not happen in this case. In denying Mr. Ludlow’s motion for
summary judgment, the district court decided the service of process issue and ruled in
Ms. Wise’s favor.
[¶16] A decision in Ms. Wise’s favor would have been appropriate if the issue had come
before the court on a motion to dismiss. W.R.C.P. 12(d) provides that defenses of lack of
subject matter or personal jurisdiction, improper venue, insufficiency of process or
service of process, failure to state a claim, and failure to join a party “shall be heard and
determined before trial on application of any party, unless the court orders that the
hearing and determination thereof be deferred until the trial.” When a defendant files a
motion contesting the court’s personal jurisdiction, “[t]he court may consider any
allegations set forth in the complaint and any evidence which may be introduced in a
hearing on the issue.” Amoco Production Co. v. EM Nominee Partnership Co., 886 P.2d
265, 267 (Wyo. 1994) (citing McAvoy v. District Court of Denver, 757 P.2d 633, 634-35
(Colo. 1988)).
Previously, we have ruled that federal authority
interpreting FED.R.C IV.P. 12 is highly persuasive because of
the virtual identity of the two rules. In the federal courts, the
practice is to consider affidavits and any other relevant matter
that may assist the court in determining jurisdictional facts
when confronted with a motion to dismiss under Rule
12(b)(2). This practice is summarized in C HARLES A.
WRIGHT & ARTHUR R. M ILLER, F EDERAL P RACTICE AND
PROCEDURE C IVIL 2D § 1351, at 253 (1990):
When a court is considering a challenge to its
jurisdiction over defendant or over a res, it may
receive and weigh affidavits and any other relevant
matter to assist it in determining the jurisdictional
facts; * * *.
In making its decision on the issue, the trial court has
considerable leeway. It may determine the matter on the
basis of pleadings and other materials called to its attention; it
may require discovery; and it may even conduct an
evidentiary hearing.
PanAmerican Mineral Servs. v. KLS Enviro Resources, Inc., 916 P.2d 986, 989 (Wyo.
4
1996) (some citations omitted).1
[¶17] In this case, the parties and the district court referred to Mr. Ludlow’s motion as
one for summary judgment. What the district court actually did, however, was to make a
pretrial decision, resolving the issue of service of process. This was entirely consistent
with our rules of procedure and our previous decisions relating to motions to dismiss.
We will review the district court’s decision as if made on a motion to dismiss. As
another court explained:
The defense [of improper service of process], having been
properly and reasonably raised, was ripe for an application to
have it determined pursuant to Rule 12(d). We should note
that since the defense of improper service involves a matter in
abatement and does not go to the merits of the action, the
present application is improperly brought by a motion for
summary judgment under Rule 56 F.R.Civ.Pro. See Moore’s
Federal Practice (2d Ed.) Vol. 6, Sec. 56.03. However, since
this defense was timely raised in defendant’s answer pursuant
to Rule 12(b) and is properly before us, we shall deem
defendants’ Motion as an application for dismissal under Rule
12(d) F.R.Civ.Pro. and consider it now.
United States v. Marple Community Record, Inc., 335 F. Supp. 95, 101 (E.D. Pa. 1971).
[¶18] Treating Mr. Ludlow’s motion as a motion to dismiss, we apply this standard of
review:
We review factual determinations relating to service of
process by accepting the evidence of the prevailing party as
true and giving that party the benefit of all favorable
inferences that can fairly be drawn from the evidence while
disregarding conflicting evidence. Rosty v. Skaj, 2012 WY
28, ¶ 22, 272 P.3d 947, 955 (Wyo. 2012). Where the facts of
service are not in dispute, the issue of adequate service of
process is a matter of law and is reviewed de novo. Id. We
likewise review a district court’s application of court rules de
1
PanAmerican dealt with a motion to dismiss under Rule 12(b)(2), lack of personal jurisdiction.
Mr. Ludlow’s claim of insufficiency of service of process is a defense listed in W.R.C.P. 12(b)(5).
Because the two defenses are closely related, PanAmerican also applies here. As noted at the start of our
discussion, proper service of process is necessary to acquire personal jurisdiction over a defendant.
Rule 12(d) also indicates that these defenses are raised and considered in the same way.
5
novo. Tafoya v. Tafoya, 2013 WY 121, ¶ 7, 309 P.3d 1236,
1238 (Wyo. 2013).
Lundahl, ¶ 7, 334 P.3d at 561. Where the facts of service are in dispute, as they are here,
we review the district court’s factual findings under the clearly erroneous standard.
Blittersdorf v. Eikenberry, 964 P.2d 413, 415 (Wyo. 1998). “A finding is clearly
erroneous when, although there is evidence to support it, the reviewing court on the entire
evidence is left with the definite and firm conviction that a mistake has been committed.”
Henry v. Borushko, 2012 WY 104, ¶ 6, 281 P.3d 729, 731 (Wyo. 2012) (quoting Springer
v. Blue Cross & Blue Shield, 944 P.2d 1173, 1176 (Wyo. 1997)).
[¶19] Before we address the district court’s factual findings, however, we must first
grapple with a legal issue involving the burden of proof, a question of law that we review
de novo. In its decision letter, the district court explained the legal framework used in
reaching its decision:
The burden of proof to establish the validity of the
service is on the party on whose behalf the service is
accomplished; and the process server’s return will provide a
prima facie case as to the facts of service, and the burden
shifts to the defendant to rebut the proof. Rosty v Skaj, 2012
WY 28, ¶ 25, 272 P.3d 947, 956 (Wyo. 2012); Crotteau v.
Irvine, 656 P.2d 1166, 1168 (Wyo. 1983) . . . . The defendant
has to overcome the proof by strong and convincing evidence.
Id.
[¶20] In Crotteau, we reviewed how other jurisdictions have allocated burdens of proof
applicable to motions to dismiss for insufficiency of service of process. We described the
federal approach this way:
Under the federal cases, the burden of proof to establish the
validity of the service is on the party on whose behalf the
service is accomplished. Normally, however, the process
server’s return will provide a prima facie case as to the facts
of service, and the burden shifts to the defendant to rebut the
proof. The defendant has to overcome the proof by strong
and convincing evidence.
Crotteau, 656 P.2d at 1168 (citations omitted). We observed that we had not yet ruled on
such presumptions and burdens, but noted that in Bryant v. Wybro Federal Credit Union,
544 P.2d 1010 (Wyo. 1976), we implicitly held that “the party asserting the validity of
the service had the burden of proof, and that no presumption of validity attached to the
sheriff’s certificate.” Crotteau, 656 P.2d at 1168. We then concluded “that the party
6
asserting the validity of the service bears the burden of proof, and that no presumption
attaches, in the case of substituted service, to shift the burden.” Id., 656 P.2d at 1169.
[¶21] We took a different approach in Rosty, and explained why we were departing from
the holding in Crotteau:
[W]e find that the burden was on [Defendant] to demonstrate
that his mother was incompetent, and that he failed to satisfy
that burden. In Crotteau, 656 P.2d at 1169, a case in which
the defendant claimed that substituted service of process was
not effected at her “usual place of abode,” we held that “the
party asserting the validity of the service bears the burden of
proof, and that no presumption attaches, in the case of
substituted service, to shift the burden.” This case, however,
is distinguishable from Crotteau. In contrast to Crotteau,
[Defendant] contends that substituted service was invalid
because his mother was incompetent. Under these
circumstances, where a party asserts that substituted service is
invalid due to acceptance of service by an incompetent
person, we find that the burden is on the party asserting that
service was invalid to prove incompetence. This is consistent
with the approach followed in federal courts and in most
states, as recognized in Crotteau.
Rosty, ¶ 25, 272 P.3d at 956.
[¶22] Mr. Ludlow’s case does not involve the competency question at issue in Rosty.
His contention that process was not served at his usual place of abode is the same as in
Crotteau. It would therefore seem that the district court in Mr. Ludlow’s case should
have followed Crotteau rather than Rosty. For several reasons, however, we conclude
that the correct burdens and presumptions are those stated in Rosty and used by the
district court in this case.
[¶23] Crotteau and Rosty are consistent in recognizing that the plaintiff bears the initial
burden to establish that service of process was proper. In Crotteau, 656 P.2d at 1168, we
noted that in most federal courts, “the process server’s return will provide a prima facie
case as to the facts of service.” We declined to follow that precedent, however, and
instead held that “no presumption attaches, in the case of substituted service, to shift the
burden.” Id. at 1169.
[¶24] Since that time, several federal courts have reconfirmed that the return of service
provides a prima facie case of sufficient service of process. E.g., Udoinyion v. Guardian
Sec., 440 Fed. Appx. 731, 735 (11th Cir. 2011); SEC v. Internet Solutions for Bus., Inc.,
7
509 F.3d 1161, 1163 (9th Cir. 2007); Northrup King Co. v. Compania Productora
Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1390 (8th Cir. 1995). Many states
also treat a return of service as establishing a prima facie case of proper service of
process. E.g., Warbington v. First Cmty. Bank, 383 S.W.3d 384, 387 (Ark. 2011); Pickett
v. Sears, Roebuck & Co., 775 A.2d 1218, 1227 (Md. 2001); Scanlan v. Townsend, 336
P.3d 1155, 1159-60 (Wash. 2014).
[¶25] The rule that a return of service establishes a prima facie case has deep historical
roots. At common law, the “verity rule” provided that a sheriff’s return of process was
conclusive proof of proper service and, absent a showing of fraud, could not be
impeached by parol evidence. Hoffman v. Quality Chrysler Plymouth Sales, Inc., 706
S.W.2d 576, 579 (Mo. Ct. App. 1986). The verity rule was superseded by legislation in
Missouri, id., and due to its strictness, has been relaxed in all but a handful of states. See
Vaughn v. Love, 188 A. 299, 301 (Pa. 1936). But while the verity rule has been softened,
its substance is still reflected in the presumption of truth in matters asserted in a return of
service, New Haven Bd. of Educ. v. Giordano Constr. Co., 2014 Conn. Super. LEXIS
1913, 7-9 (Conn. Super. Ct. Aug. 6, 2014), or in a presumption that a return of service is
valid, Slomowitz v. Walker, 429 So. 2d 797, 798 (Fla. Dist. Ct. App. 1983). These
presumptions, in turn, explain why so many jurisdictions recognize a return of service as
establishing the plaintiff’s prima facie case as to the sufficiency of service of process.
[¶26] Our holding in Crotteau is contrary to the weight of precedent from other
jurisdictions. Although we have said that federal authority interpreting F.R.C.P. 12 is
highly persuasive in interpreting W.R.C.P. 12 “because of the virtual identity of the two
rules,” PanAmerican, 916 P.2d at 989, our opinion in Crotteau provided little explanation
for our departure from the federal precedent. Rosty, in contrast, is consistent with the
weight of authority from federal and other state courts. The question in Rosty was
whether the defendant’s mother was competent to receive service of process. The burden
appropriately shifted to the defendant because he had better access to the facts about his
mother’s competency. Similarly, in this case, Mr. Ludlow has better access to the facts
relating to his usual place of abode, and it is appropriate to shift the burden to him to
prove that service was not effected at his usual place of abode. See Hardig & Parsons v.
Franklin, 1996 Mich. App. LEXIS 1462, 2 (Mich. Ct. App. Aug. 16, 1996) (After the
plaintiff “established a prima facie showing of jurisdiction by attaching the return receipt
. . . the burden of going forward shifted to defendant because he had the superior
knowledge as to whether his purported agent was his agent and whether he received
actual notice.”).
[¶27] We distinguished Rosty from Crotteau because the underlying question, the
competency of the person who received service, was different from that in Crotteau. The
case before us now presents the same underlying question as Crotteau, the defendant’s
usual place of abode. Because we cannot distinguish this case from Crotteau, we must
directly address our holding in that case. For the reasons discussed above, we now hold,
8
consistent with our decision in Rosty, ¶ 25, 272 P.3d at 956, that when a return of service
provides a prima facie showing of the sufficiency of service, the burden shifts to the
defendant to rebut the plaintiff’s showing. We overrule Crotteau, 656 P.2d 1166, to the
extent it conflicts with our holding in this case.
[¶28] When the burden shifts to the defendant, the next question becomes what quality
of evidence is required to carry that burden. In Crotteau, 656 P.2d at 1168, we took note
of the rule in federal cases that the defendant has to overcome the plaintiff’s prima facie
case with “strong and convincing evidence.” We did not adopt that standard, however,
because we said that the burden never shifted to the defendant. In Rosty, where we
distinguished Crotteau, we said that “[t]he defendant has to overcome the proof by strong
and convincing evidence.” Rosty, ¶ 25, 272 P.3d at 956 (citing Hicklin v. Edwards, 226
F.2d 410 (8th Cir. 1955)). We find this formulation, or something very similar, to be
widely used in other jurisdictions. E.g., Harvey v. Slacum, 29 A.2d 276, 278 (Md. 1942)
(“clear and satisfactory”); Hoffman, 706 S.W.2d at 579 (“clear and convincing”). The
Oklahoma Supreme Court provided this explanation:
At common law such a return [of service] by an officer
was conclusive. Such rule, however, is not in force in this
state, but a more liberal rule to the effect that, while not
conclusive, yet it is prima facie evidence of its truthfulness
and it requires strong and convincing proof to overcome it.
Ray v. Harrison, 32 Okla. 17, 121 P. 633. In Jones v. Jones,
57 Okla. 442, 154 P. 1136, this court, in discussing this
question, said:
“This is a just and a wholesome rule, for under it, an
officer, by his return, cannot make that which is false
true. Where a judgment, regular upon its face, based
upon an officer’s return showing personal service, is
sought to be vacated and set aside, public policy
demands that it should not be overcome, except upon
clear and convincing proof that the return is false.”
Mayhue v. Clapp, 261 P. 144, 145 (Okla. 1927). Persuaded by this authority, and
consistent with our decision in Rosty, we hold that when the burden shifts to the
defendant to demonstrate insufficiency of service of process, that demonstration must be
made with clear and convincing evidence.2
2
The term “strong and convincing,” which we used in Rosty, ¶ 25, 272 P.3d at 956, is synonymous with
the more familiar standard of “clear and convincing” evidence. We agree with this observation from the
9
[¶29] With that prologue, we can now review the district court’s decision. The district
court determined that Ms. Wise had made her prima facie showing with the return of
service. The district court correctly shifted the burden of proof to Mr. Ludlow to
overcome Ms. Wise’s prima facie case with strong or clear and convincing evidence. It
denied the motion, concluding that Mr. Ludlow failed to meet that burden.
[¶30] As stated above, “We review factual determinations relating to service of process
by accepting the evidence of the prevailing party as true and giving that party the benefit
of all favorable inferences that can fairly be drawn from the evidence while disregarding
conflicting evidence.” Lundahl, ¶ 7, 334 P.3d at 561. In addition to the return of service
that established a prima facie showing, Ms. Wise submitted evidence that Mr. Ludlow’s
driver’s license listed the Ravine Road address, and that he stored a tool box at that
address. She also presented the detective’s affidavit stating that Mr. Ludlow’s mother
had said “yes” when asked if Mr. Ludlow lived at that address. Applying our standard of
review, we cannot say that the district court erred when it assessed the opposing evidence
and determined that Mr. Ludlow had not met his burden of proving his claim with clear
and convincing evidence.
[¶31] We turn now to the issues raised in Ms. Wise’s appeal. She first contends that the
district court should not have allowed the jury to consider comparative fault. She points
out that Mr. Ludlow admitted fault in his testimony, and asserts that he presented “little
to no evidence” of negligence on the part of Ms. Wise. Accordingly, she argues that the
district court should have granted her motion for judgment as a matter of law as to his
liability, and should not have given a comparative fault instruction to the jury.
[¶32] Wyo. Stat. Ann. § 1-1-109(c)(i)(A) (LexisNexis 2013) provides that a jury should
determine “the percentage of fault attributable to each actor.” The term “actor” is defined
as “a person or other entity, including the [plaintiff], whose fault is determined to be a
proximate cause of the death, injury or damage, whether or not the actor is a party to the
litigation.” Wyo. Stat. Ann. § 1-1-109(a)(i). The term “fault” is defined to include “acts
or omissions, determined to be a proximate cause of death or injury to person or property,
district court’s decision letter:
The Court was unable to locate a definition from case law of “strong and
convincing evidence”; however, the Court finds that the strong and
convincing standard is likely similar to a clear and convincing standard,
which has been defined as “that kind of proof which would persuade a
trier of fact that the truth of the contention is highly probable.” Ohio
Casualty Insurance Co. v. W.N. McMurry Construction Co., 2010 WY
57, ¶ 15, 230 P.3d 312, 320 (Wyo. 2010).
10
that are in any measure negligent.” Wyo. Stat. Ann. § 1-1-109(a)(iv). The damages a
plaintiff receives are “diminished in proportion to the amount of fault” attributed to that
plaintiff by the jury. Wyo. Stat. Ann. § 1-1-109(b). This system is commonly referred to
as comparative fault.
[¶33] Ms. Wise claims there was no evidence suggesting that she was at fault, and that
the district court should have granted her motion for judgment as a matter of law. “We
review denial of the motion for judgment as a matter of law taking as true all of the non-
moving party’s evidence with its reasonable inferences,” and we “inquire whether a
reasonable jury could reach but one verdict.” Board of County Comm’rs v. Bassett,
8 P.3d 1079, 1082-83 (Wyo. 2000) (citing Anderson v. Duncan, 968 P.2d 440, 442 (Wyo.
1998)). We have also stated that the granting of a motion for judgment as a matter of law
“deprives the opposing party of the opportunity to have the jury determine the facts, and
the court should, therefore, use caution in granting such a judgment.” Anderson, 968
P.2d at 442.
[¶34] In support of her contention, Ms. Wise points out that Mr. Ludlow was driving,
while she was only a passenger. She asserts that she, as the passenger, could not be
found at fault for Mr. Ludlow’s negligent driving. She relies on a decision from the
intermediate appellate court of Washington affirming the trial court’s decision not to
instruct the jury on the passenger’s contributory negligence.
The rule holding a passenger contributorially negligent in
willingly continuing to ride with an intoxicated driver has no
application unless something in the driver’s conduct betrays
his being under the influence. It is error for a court to submit
to a jury the issue of a driver’s intoxication when there is no
evidence to support such a finding. Mere evidence of
consumption of small amounts of alcohol without other
evidence of intoxication is insufficient to present a jury
question on intoxication.
Murray v. Amrine, 626 P.2d 24, 29 (Wash. Ct. App. 1981) (internal citations omitted).
[¶35] Ms. Wise’s reliance is misplaced. The facts in Murray are significantly different
from the ones presented here. In Murray, the plaintiff never alleged that alcohol
consumption by the driver was a cause of the accident. Although there was evidence of
some drinking, there was no evidence that alcohol consumption contributed to the
accident. The Washington court summed it up this way:
Defendant testified that he drank one shot of whiskey before
meeting plaintiff the evening of the accident. Defendant had
not finished a second drink of whiskey when the accident
11
occurred. He testified that his driving was unaffected by the
alcohol, and no evidence was introduced by either party to
contradict this testimony. Plaintiff neither alleged in his
complaint that defendant’s driving contributed to the
accident, nor was the jury instructed on intoxication as a
possible basis for finding defendant negligent. Under these
circumstances no reasonable jury could find plaintiff
contributorially negligent for failing to protest defendant’s
drinking.
Id. In the case before us now, there is no question that alcohol was a contributing factor
to the accident. In her Complaint, Ms. Wise asserted that Mr. Ludlow was negligent
because he drove while intoxicated. In his testimony, Mr. Ludlow admitted that he was
under the influence and should not have been driving. He had been drinking for
approximately eight hours that day, and his blood alcohol level was measured at 0.14%
approximately two hours after the accident. The legal limit for driving in Wyoming is
0.08%. Wyo. Stat. Ann. § 31-5-233(b)(i). More significantly, in terms of comparative
fault, our review of the record reveals evidence from which the jury could reasonably
find Ms. Wise at fault because she was aware or should have been aware of Mr. Ludlow’s
condition prior to going for a ride with him.
[¶36] Ms. Wise was the one who asked Mr. Ludlow to take her for a ride in his
Corvette. At the time she asked him for the ride, both had consumed significant amounts
of alcohol. Earlier that day, Ms. Wise got a ride to the Sandbar Lounge from someone
identified as “Mike.” Ms. Wise testified that she did not know how long Mike had been
at the other bar, or how much he had to drink before he gave her a ride. Similarly, before
asking Mr. Ludlow for a ride, Ms. Wise made no effort to ascertain how long he had been
at the bar, or how much he had drunk. She testified that she was “under the impression
he was drinking soda,” but also said she was unsure why she had that impression, and
admitted that it was probably unusual for him to be drinking soda in a bar. In addition, a
friend of Ms. Wise’s testified that Ms. Wise told her after the accident that Ms. Wise and
Mr. Ludlow “were out and had had drinks,” suggesting that Ms. Wise was aware that
Mr. Ludlow had been drinking.
[¶37] When we evaluate this evidence under the applicable standard of review, we credit
it as true. Given this evidence, a jury could reasonably conclude that Ms. Wise’s
judgment was impaired by her alcohol consumption that afternoon and that she asked
Mr. Ludlow for a ride without making a reasonable effort to ascertain whether he had
been drinking or how much he had drunk that day. Based on her admission that
Mr. Ludlow was unlikely to be drinking soda at a bar, along with Mr. Ludlow’s high
blood alcohol level and Ms. Wise’s statement to a friend that they had been out and had
had drinks, the jury could reasonably reject her testimony that she “wouldn’t have
guessed that [Mr. Ludlow] was drunk.” From this evidence, a jury could reasonably find
12
that Ms. Wise had not exercised that degree of care expected of an ordinary person under
the circumstances. It could reasonably find that she was partially at fault.
[¶38] We further note that counsel for Ms. Wise acknowledged in his closing argument
rebuttal that Ms. Wise may share some fault:
You know, [Ms. Wise] could have done more. She could
have, I guess, made sure that Mr. Ludlow actually hadn’t
been drinking. She could have asked other people. There are
some things here she could have done. And so she’s agreed
that, yeah, she’s partially at fault. And I would suggest that
that is like 5 percent.
This admission is a recognition that, contrary to Ms. Wise’s assertion on appeal, there
was some evidence from which a jury could reasonably decide that Ms. Wise shared in
the fault. The district court did not err in denying her motion for judgment as a matter of
law.
[¶39] Ms. Wise also contends the district court erred by instructing the jury on
comparative fault because there was no evidence to support the instruction. We have
already concluded that the evidence of Ms. Wise’s fault was sufficient to justify the
district court’s denial of her motion for judgment as a matter of law. It is also sufficient
to support the district court’s decision to instruct the jury on comparative fault.
[¶40] She further asserts that it was improper to instruct the jury on comparative fault
because Mr. Ludlow admitted being at fault. There is no merit in this claim. Mr. Ludlow
did admit fault during the trial. During direct examination, he was asked, “So, sir, do you
accept your fault and responsibility for this accident?” His answer was, “Absolutely.”
During cross examination by Ms. Wise’s counsel, he was asked, “Mr. Ludlow, why is it
that it took you up until just two minutes ago to say that you accepted the fault and
responsibility for – for Mary’s injuries?” He replied, “I never denied responsibility.” He
was also asked on cross examination, “Do you agree that your – by accepting fault, does
that mean that you agree that you were acting in reckless disregard of Mary Wise and her
health?” He answered, “I don’t know about reckless disregard; but I was – I was
careless. I think we both made some bad decisions that day.”
[¶41] In her appeal, Ms. Wise seeks to portray Mr. Ludlow’s testimony as an unqualified
admission of 100% of the fault. She asserts that this admission made it unnecessary and
improper for the district court to instruct the jury on comparative fault. However, while
Mr. Ludlow did accept fault and responsibility, he also testified that he and Ms. Wise
13
both made bad decisions. This was not an unequivocal admission of 100% of the fault
that eliminated comparative fault as an issue to be determined by the jury. The district
court properly instructed the jury on comparative fault.3
[¶42] Ms. Wise’s final three issues raise evidentiary questions.
A trial court’s rulings on the admissibility of evidence
are entitled to considerable deference, and, as long as
there exists a legitimate basis for the trial court’s
ruling, that ruling will not be disturbed on appeal. The
appellant bears the burden of showing an abuse of
discretion. Even when a trial court errs in an
evidentiary ruling, we reverse only if the error was
prejudicial. The appellant must show a reasonable
probability that, without the error, the verdict might
have been different.
Glenn v. Union Pacific R.R. Co., 2011 WY 126, ¶ 12, 262 P.3d 177, 182 (Wyo. 2011)
(quoting Schmid v. Schmid, 2007 WY 148, ¶ 10, 166 P.3d 1285, 1288 (Wyo. 2007)).
[¶43] Ms. Wise first asserts that the district court erred in not allowing evidence of her
financial condition to explain gaps and delays in her medical treatment. Mr. Ludlow
presented evidence that Ms. Wise sought treatment for a chest contusion and bruises and
abrasions immediately after the accident. She did not seek treatment for her back
problems until several months later and at the time of trial had not undergone the surgery
her doctor had recommended. Mr. Ludlow contended that the delays were relevant to his
assertion that the accident had not caused the back problems, and to his claim of failure to
mitigate damages.
[¶44] Ms. Wise sought to counter this evidence with testimony that the delays were due
to her lack of financial resources. Her counsel referred to this evidence in his opening
statement. Mr. Ludlow objected, and made a motion in limine to exclude this evidence.
He argued that the evidence was not relevant and that, in order to impeach Ms. Wise’s
testimony on this topic, it would be necessary to introduce evidence that his automobile
insurance had paid for her medical treatment and would have paid for additional
treatment, and that Ms. Wise had medical insurance that would have provided benefits if
she had obtained treatment.
3
Ms. Wise also asserts that the district court improperly allowed the jury to impute the driver’s
negligence to her. It did not. Ms. Wise has failed to identify any jury instruction which would have
permitted the jury to impute Mr. Ludlow’s negligence to her.
14
[¶45] The district court heard brief arguments on the motion at the end of the first day of
trial, and considerably longer arguments at the beginning of the second day. Counsel for
Ms. Wise noted that there was some dispute as to the extent to which Mr. Ludlow’s
insurance had paid Ms. Wise’s medical bills, and acknowledged that resolving the dispute
would require “sort of a trial unto itself,” which had “the potential of a Pandora’s box.”
Counsel for Mr. Ludlow further emphasized the “Pandora’s box” problem, indicating that
there were also disputes over whether and why Mr. Ludlow’s insurance had denied some
of Ms. Wise’s claims, the length of time the coverage lasted, the policy limits, whether
and why Ms. Wise’s insurance had denied some of her claims, and the amount of her
deductible. He argued that these disputes had the potential to confuse and mislead the
jurors. Although the rule was never explicitly mentioned, the arguments were plainly
based on W.R.E. 403, which provides that, “Although relevant, evidence may be
excluded if its probative value is substantially outweighed by the danger of unfair
prejudice, confusion of the issues, or misleading the jury, or by considerations of undue
delay, waste of time, or needless presentation of cumulative evidence.”
[¶46] The district court’s analysis was consistent with W.R.E. 403:
[I]f we go down that road, I don’t see how the Court could
possibly even find a place to draw a line in that process. It
lends itself to a myriad of issues as both parties acknowledge
and that I’ve summarized here. And while I recognize that
there’s some, certainly, probative value to the plaintiff
seeking to go down that road, both as to – primarily
mitigation, but also as to causation, a little bit overlapping, I
think the probative value under these circumstances, based on
the record I have, under the circumstances . . . is such that that
probative value would be substantially outweighed by the
danger of unfair prejudice, which I’ve touched upon;
confusion of the issues particularly by the jury; misleading
the jury; and by the time considerations that are involved to a
limited degree. . . . And so I think it’s best to, under Rule
403, take that approach at this time.
[¶47] Ms. Wise contends that a trial court should not exclude evidence under Rule 403
“when the balance between the probative worth and the countervailing factors is
debatable; there must be a significant tipping of the scales against the evidentiary worth
of the proffered evidence. 22 Wright, [Miller & Kane, Federal Practice and Procedures:
Evidence] § 5221 [(2014)].” (Emphasis omitted.) She argues that the district court’s
ruling provides “little to no” indication that the required balancing was performed. We
disagree. The district court’s comments, quoted above, clearly demonstrate that it
engaged in the appropriate analysis. The district court did not abuse its discretion in
15
excluding evidence of Ms. Wise’s financial condition.
[¶48] In her second evidentiary issue, Ms. Wise claims the district court erred in
allowing the testimony of Dr. Gretchen Brunworth, a medical expert called on behalf of
Mr. Ludlow. Dr. Brunworth testified that Ms. Wise’s back problems were not caused by
the accident. Ms. Wise contends that this testimony should have been excluded under the
standard set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113
S.Ct. 2786; 125 L.Ed.2d 469 (1993). We have adopted the Daubert standard for
determining the admissibility of expert testimony, and explained it as follows:
A qualified expert witness may testify about scientific,
technical, or specialized knowledge if such testimony will
help the jury understand the case. W.R.E. 702. When
determining the admissibility of expert testimony, the district
court’s gatekeeping function requires it to determine whether
the methodology or technique used by the expert to reach his
conclusions is reliable and, if so, the court must then
determine whether the proposed testimony “fits” the facts of
the particular case. Bunting v. Jamieson, 984 P.2d 467, 471-
72 (Wyo. 1999) (citing Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579, 591-93, 113 S.Ct. 2786,
2796, 125 L.Ed.2d 469 (1993)).
Easum v. Miller, 2004 WY 73, ¶ 16, 92 P.3d 794, 799 (Wyo. 2004). In cases dealing
with the admissibility of an expert opinion under the Daubert standard,
We review de novo the question whether the district court
performed its gatekeeper role and applied the proper legal
standard in admitting or excluding an expert’s testimony. We
then review for an abuse of discretion a district court’s
decision to admit or reject expert testimony. Seivewright v.
State, 7 P.3d 24, 29 (Wyo. 2000); Springfield v. State, 860
P.2d 435, 438-39 (Wyo. 1993); Betzle v. State, 847 P.2d
1010, 1022 (Wyo. 1993).
Easum, ¶ 21, 92 P.3d at 800.
[¶49] Ms. Wise filed a motion in limine to exclude Dr. Brunworth’s testimony. The
district court considered the motion during trial when, out of the jury’s hearing, it heard
testimony from Dr. Brunworth and evaluated that testimony in accordance with the
Daubert standard. The district court ruled that the testimony was admissible. Ms. Wise
challenges that decision, contending that the methodology Dr. Brunworth used to form
her opinions is not sufficiently reliable to render her testimony admissible.
16
[¶50] Dr. Brunworth testified that she reached her opinion using the methodology of
differential diagnosis. We have explained this methodology as follows:
“‘Differential diagnosis’ refers to the process by which a
physician ‘rules in’ all scientifically plausible causes of the
plaintiff’s injury. The physician then ‘rules out’ the least
plausible causes of injury until the most likely cause remains.
The remaining cause is the expert’s conclusion.” Hollander
v. Sandoz Pharmaceuticals, 289 F.3d 1193, 1209 (10th Cir.
2002) (citation omitted).
Easum, ¶ 29, 92 P.3d at 802 (footnote omitted). There is no question that differential
diagnosis is a sufficiently reliable methodology to satisfy the Daubert test. As we have
said,
In general terms, the reliability of differential diagnos[i]s is
easily resolved. “Most circuits have held that a reliable
differential diagnosis satisfies Daubert and provides a valid
foundation for admitting an expert opinion. The circuits
reason that a differential diagnosis is a tested methodology,
has been subjected to peer review/publication, does not
frequently lead to incorrect results, and is generally accepted
in the medical community.” Turner v. Iowa Fire Equip. Co.,
229 F.3d 1202, 1208 (8th Cir. 2000); see Westberry [v.
Gislaved Gummi AB], 178 F.3d [257,] 262-63 [(4th Cir.
1999)]. Physicians routinely determine medical causation by
this technique, and we have previously determined that the
technique of differential diagnosis for establishing causation
can be reliable under Daubert. See Reichert v. Phipps, 2004
WY 7, ¶ 18, 84 P.3d 353, ¶ 18 (Wyo. 2004).
Easum, ¶ 30, 92 P.3d at 802.
[¶51] Ms. Wise asserts, however, that Dr. Brunworth did not follow the differential
diagnosis methodology. The record demonstrates otherwise. Dr. Brunworth’s opinion
that Ms. Wise’s injuries were not caused by the accident was based in large part on the
fact that she did not report the problems with her back and neck until several months after
the accident. In cross examination, Dr. Brunworth was asked if it was possible that the
pain from Ms. Wise’s chest contusion could “mask” the symptoms of a spinal injury, thus
explaining Ms. Wise’s delay in reporting spinal injuries. The doctor agreed that was
possible, and in follow-up cross examination testified as follows:
17
Q. I didn’t see in your report any reference to
masking. . . ; but you didn’t consider that, in fact, the more
painful symptoms could have dominated over the disk
injuries; correct?
A. I considered that. I may not have documented it in
there. . . .
Q. So, Doctor, if it was a possibility, why wouldn’t you
have put it in there if you actually performed a differential
diagnosis?
A. I thought about all of those processes. I just did not
document it. Nobody asked me that. It was in my thought
process when I determined that I felt that the cervical and
lumbar problems were not related to the accident.
Similarly, Dr. Brunworth testified that Ms. Wise’s age and family history should be
addressed in the process of a differential diagnosis and, while she considered those
factors, that is not reflected in her written report. This testimony shows that
Dr. Brunworth did follow the differential diagnosis methodology, although she did not
document every step of the process in her written report.
[¶52] Moreover, Ms. Wise’s claim that Dr. Brunworth’s opinion is invalid because she
did not properly employ that methodology reflects a basic misunderstanding of the
Daubert standard. The question in applying Daubert is “whether the methodology or
technique used by the expert to reach his conclusions is reliable.” Easum, ¶ 16, 92 P.3d
at 799 (emphasis added). Ms. Wise does not contend that differential diagnosis is an
unreliable methodology.
[¶53] The validity of an expert opinion is for the jury to decide, not a matter for the court
to decide when applying the Daubert standard.
It cannot be overemphasized that methodology should be
distinguished from the conclusion of the expert. A trial judge
need not and should not determine the scientific validity of
the conclusions offered by an expert witness. Rather, to
decide admissibility, the trial judge should only consider the
soundness of the general scientific principles or reasoning on
which the expert relies.
Easum, ¶ 18, 92 P.3d at 799. An expert’s “conclusions may indeed be wrong,” but if his
“methodology is reliable,” then “the accuracy of his conclusions presents a jury question
18
that must be presented at trial.” Id., ¶ 38, 92 P.3d at 804. Differential diagnosis is a
reliable methodology. If Dr. Brunworth did not correctly follow the methodology of
differential diagnosis, that could affect the weight and persuasiveness of her opinions, but
does not render that evidence inadmissible under Daubert.
[¶54] Ms. Wise further claims that Dr. Brunworth’s testimony did not meet the
reliability criterion of Daubert because she relied solely on a review of medical records,
and did not conduct a physical examination or take a medical history from Ms. Wise.
Like the previous argument, however, this is a challenge to the weight to be accorded
Dr. Brunworth’s opinion. The failure to conduct a physical examination or obtain a
medical history may affect the credibility or persuasiveness of the expert’s testimony, but
does not make the testimony inadmissible. The district court did not err in allowing
Dr. Brunworth to testify.
[¶55] In her final evidentiary issue, Ms. Wise claims the district court erred in denying
the admission into evidence of Mr. Ludlow’s Answer to the Complaint. At the end of his
direct examination, Mr. Ludlow admitted fault and responsibility. On cross examination,
Ms. Wise’s counsel questioned him about that admission:
Q. Mr. Ludlow, why is it that it took you up until just two
minutes ago to say that you accepted the fault and
responsibility for – for [Ms. Wise’s] injuries?
A. I never denied responsibility.
Q. You’ve looked at the Complaint in this case where –
that’s the document that was used to start this lawsuit –
correct?
A. Yes.
Q. And one of the allegations in that Complaint says,
[t]he aforesaid collision was caused by defendant being too
impaired by his alcohol consumption to safely operate his
vehicle. Do you remember in your Answer you denied that
allegation?
Counsel for Mr. Ludlow objected to the question. In argument held out of the jury’s
hearing, he asserted that introducing the Answer raised “an area of attorney-client
privilege.” Counsel said he was the one who prepared the Answer, on the basis of his
discussions with Mr. Ludlow. Counsel for Ms. Wise countered that the Answer was a
public document, and a document “we can let the jury look at.”
19
[¶56] The district court sustained the objection, explaining:
I’ll sustain the objection under Rule 403. I think any
probative value is outweighed substantially by unfair
prejudice and confusion of the issues by the jury, particularly
as it relates to how legal documents are generated in
consultation with an attorney as opposed to Mr. Ludlow’s
personal views of the situation.
[¶57] Following the district court’s ruling, counsel for Ms. Wise made another attempt
to introduce the Answer. He asked Mr. Ludlow:
Q. Can you tell us why it is that you chose today, five
minutes ago, to get up here and accept fault?
A. I don’t think I ever denied that this was my fault.
Counsel for Ms. Wise then addressed the district court: “Your Honor, I would introduce
[the Answer] now as an impeaching document.” Counsel for Mr. Ludlow made the
“same objection,” and asserted that the question of admitting the Answer into evidence
had just been addressed. The district court sustained the objection.
[¶58] We find no abuse of discretion in the district court’s decision to deny admission of
the Answer. The Answer, by itself, has marginal probative value and was likely to do
little more than confuse the jury. It can only be understood by referencing the allegations
in the Complaint. The specific paragraph of the Answer referenced by counsel stated
only that Mr. Ludlow “denies each and every allegation contained in ¶ 5 of the
Complaint.” Paragraph 5 of the Complaint alleged that the collision “was caused by
[Mr. Ludlow] being too impaired by his alcohol consumption to safely operate his
vehicle.” This allegation can reasonably be interpreted as alleging that Mr. Ludlow’s
alcohol consumption was the sole or only cause of the accident. The denial of that
allegation was consistent with Mr. Ludlow’s trial testimony. The Answer also raised
comparative fault as an affirmative defense. In short, the line of questioning which
counsel sought to pursue had marginal probative value. Additionally, the district court
was concerned that inquiry into the contents of the Answer would lead to time-
consuming questions about the drafting of the Answer, potentially soliciting testimony
otherwise inadmissible because of the attorney-client privilege. Finally, in order to
prevail on this claim of error, Ms. Wise must establish prejudice. She has failed to do so.
There is no reasonable probability that if the Answer had been admitted, the verdict
might have been different.
[¶59] We therefore affirm the district court’s decisions in both Ms. Wise’s appeal and
Mr. Ludlow’s cross-appeal.
20 | 01-03-2023 | 03-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/208986/ | NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-1421
(Re-examination No. 90/006,696)
IN RE PENG TAN
David Fink, Fink & Johnson, of Houston, Texas, argued for appellant.
William LaMarca, Associate Solicitor, Office of the Solicitor, United States Patent
and Trademark Office, of Alexandria, Virginia, argued for the Director of the United
States Patent and Trademark Office. With him on the brief were Raymond T. Chen,
Solicitor, and Nathan K. Kelley, Associate Solicitor.
Appealed from: United States Patent and Trademark Office
Board of Patent Appeals and Interferences
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-1421
(Re-examination No. 90/006, 696)
.
IN RE PENG TAN
Judgment
ON APPEAL from the UNITED STATES PATENT AND TRADEMARK OFFICE,
BOARD OF PATENT APPEALS AND INTERFERENCES
This CAUSE having been heard and considered, it is
ORDERED and ADJUDGED:
Per Curiam (LOURIE, RADER, and DYK, Circuit Judges).
AFFIRMED. See Fed. Cir. R. 36.
ENTERED BY ORDER OF THE COURT
DATED April 3, 2009 /s/ Jan Horbaly____________________
Jan Horbaly, Clerk | 01-03-2023 | 03-13-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/3042665/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 06-3219
___________
United States of America, *
*
Plaintiff - Appellee, * Appeal from the United States
* District Court for the
v. * Eastern District of Arkansas.
*
J. C. Collins, * [UNPUBLISHED]
*
Defendant - Appellant. *
___________
Submitted: May 17, 2007
Filed: June 14, 2007
___________
Before WOLLMAN, BRIGHT, and JOHN R. GIBSON, Circuit Judges.
___________
PER CURIAM.
A grand jury indicted J.C. Collins for conspiracy to distribute more than 500
grams of methamphetamine in violation of 21 U.S.C. § 846, money laundering in
violation of 18 U.S.C. § 1956(a)(1)(A)(i), and conspiracy to launder drug proceeds in
violation of 18 U.S.C. § 1956(h). Prior to his trial, Collins filed a motion to suppress
the currency seized both from his person and a Federal Express package addressed to
him. The district court1 denied the motion to suppress and the jury returned a guilty
1
The Honorable James M. Moody, United States District Judge for the Eastern
District of Arkansas.
verdict against Collins on all counts. The district judge imposed a sentence on Collins
of life imprisonment. Collins now appeals from the conviction, raising the sole issue
of the trial court’s denial of his motion to suppress. For the following reasons, we
affirm.
Collins argues that police unlawfully seized from a Mail Boxes Etc. store a
Federal Express package addressed to him by removing it to the loading dock and
performing a canine sniff. He also contends that police lacked reasonable suspicion
to seize the package after the dog alerted to the presence of contraband. These
arguments lack merit. We assume, without deciding, that removal of the package
constituted a seizure for Fourth Amendment purposes, but conclude reasonable
suspicion supported the removal. Reasonable suspicion exists when there is sufficient
evidence at the time of the seizure for a reasonable officer to suspect that the package
contained contraband. United States v. Zacher, 465 F.3d 336, 338 (8th Cir. 2006).
In the instant case, prior to arriving at the store, police (a) understood that a
known drug supplier (the sender) was sending cash, for at least the second time in
consecutive weeks, via Federal Express, (b) knew this was a common method of
exchanging drug sale proceeds, and (c) possessed reliable information that Collins,
also a known drug supplier, had previously used Western Union for such purpose.
This information created reasonable suspicion to justify the brief seizure, if any, of the
package on the loading dock and the canine’s subsequent alert served to permit seizing
the package while the officers obtained a warrant for its search. See id. at 339
(finding dog’s alert created reasonable suspicion to permit seizure).
Collins also argues that on October 13, 2003, police unlawfully seized
approximately $11,000 in cash from his person at the Little Rock airport. Collins
maintains that although he consented to a pat-down search, the incriminating nature
of the money found during the pat-down was not immediately apparent. We disagree.
-2-
Police had ample information that Collins had been traveling in central
Arkansas collecting money from drug debts and would be flying from Little Rock to
California with the proceeds on his person. Considering the information police knew
at the time of the search, it became immediately apparent that the approximately
$11,000 in cash on Collins’s person was incriminating. See United States v. Bustos-
Torres, 396 F.3d 935, 945 (8th Cir. 2005) (concluding wad of paper money felt during
pat-down search immediately apparent as incriminating considering circumstances
leading to stop).
For these reasons, the district court properly rejected the motion to suppress.
______________________________
-3- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2543765/ | 51 So.3d 721 (2010)
Shannon BROWN
v.
Burl CAIN, Warden, Louisiana State Penitentiary.
No. 2010-KP-0751.
Supreme Court of Louisiana.
December 10, 2010.
Denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/7023679/ | JUSTICE DUNN, dissenting: I respectfully disagree with the majority’s conclusion that defendant had a duty to warn motorists, bicyclists, and pedestrians of the existence of his driveway, or to remove foliage blocking their view of the driveway. As a preliminary matter, while I share the majority’s respect for section 368 of the Restatement (Second) of Torts, it is not applicable to this case. By its own terms, section 368 subjects a landowner to liability if he or she creates or allows to remain thereon an excavation or other artificial condition so close to a highway that he or she “realizes or should realize that it involves an unreasonable risk to others accidentally brought into contact with such conditions while traveling with reasonable care upon the highway.” (Emphasis added.) Restatement (Second) of Torts §368, at 268 (1965). In light of the above language, it is not surprising that each Illinois case applying section 368 cited by the majority involved a situation in which the plaintiff accidentally came into contact with the complained-of condition on the defendant’s property, such as a utility pole (Boylan v. Martindale (1982), 103 Ill. App. 3d 335; Hoffman v. Vernon Township (1981), 97 Ill. App. 3d 721), cement pillars (Battisfore v. Moraites (1989), 186 Ill. App. 3d 180), a retention pond (Kavanaugh v. Midwest Club, Inc. (1987), 164 Ill. App. 3d 213), a concrete block (West v. Faurbo (1978), 66 Ill. App. 3d 815), and concrete abutments (Kubala v. Dudlow (1958), 17 Ill. App. 2d 463). In the case at bar, plaintiff complains of the hidden driveway and the foliage which allegedly prevented him from seeing the driveway. Plaintiff did not come into contact with either of these conditions; he collided with a truck pulling out of the driveway. Section 368 is therefore inapplicable, and the majority’s reliance upon this provision is clearly misplaced. Furthermore, in my opinion, the majority’s attempt to distinguish Pyne v. Witmer (1987), 159 Ill. App. 3d 254, is not persuasive. In Pyne, this court stated as follows: “Based on the foregoing, we conclude, in the absence of a statutory directive to the contrary, that there is no duty in Illinois on a landowner to remove foliage on his property so that motorists approaching an intersection can see other intersecting motorists. Considering the burden such a duty would impose on private property owners, we leave the imposition of such duty to the legislature.” (Pyne, 159 Ill. App. 3d at 262.) Similarly, in McLaughlin v. Alton R.R. (1935), 278 Ill. App. 551, the court concluded defendant had no duty to users of an adjoining road to clear its land of weeds and brush allegedly obstructing their view of an intersecting road. McLaughlin, 278 Ill. App. at 557. The majority, in imposing a duty under the circumstances of this case, relies largely upon the danger of serious injury when vehicles pulling out of driveways are involved in collisions. The majority apparently feels that the danger under these circumstances is more serious than in Pyne because the intersection was visible in Pyne, although the hedges obstructed the motorist’s view of cars coming through the intersection. In the instant case, according to the allegations of the complaint, the foliage blocked plaintiff’s view of the driveway itself. I believe, however, that the danger of collisions in intersections is a more serious danger because vehicles generally proceed through intersections at much greater speeds than vehicles pulling out of driveways. Therefore, I do not feel the factual distinctions between this case and Pyne justify the imposition of a duty upon defendant in this case, when no such duty was imposed in Pyne. The courts in Pyne and McLaughlin concluded that the duty to use due care to prevent accidents at intersections rests with the motorists passing through the intersections, not with adjoining landowners. Similarly, in the present case, the duty to use due care to prevent accidents should rest with the driver pulling out of the driveway, not with the owner of the land containing the driveway. The majority believes “there is a policy against allowing private landowners to create and/or maintain hidden hazards along the roadway so as to transform the road into an obstacle path for persons lawfully using it.” (193 Ill. App. 3d at 668.) Under circumstances such as those present in this case, however, I believe that drivers who carelessly pull out of driveways create the hazards, not landowners who merely allow foliage to grow near their driveways. Since I believe the trial court correctly determined that defendant had no duty to warn plaintiff of the existence of his driveway or to remove the foliage allegedly obstructing plaintiff’s view of the driveway, I respectfully dissent from the majority’s conclusion to the contrary. | 01-03-2023 | 07-24-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/3131414/ | In the Supreme Court of Georgia
Decided: October 5, 2015
S15Y1812, S15Y1813, S15Y1814. IN THE MATTER OF JIN CHOI.
PER CURIAM.
These disciplinary matters are before the Court on the Report and
Recommendation of the special master, Thomas Scott Clegg, recommending
that the Court accept the petition for voluntary surrender of license filed by Jin
Choi (State Bar No. 124972).
Choi, who became a member of the Bar in 1984, admits that he failed to
properly manage substantial funds entrusted to him in a fiduciary capacity in
three different matters, two of which involved business ventures and one of
which involved his law practice. He acknowledges that by his actions he has
violated Bar Rule 1.15 (I, II), of the Georgia Rules of Professional Conduct
found in Bar Rule 4-102 (d), the maximum sanction for which is disbarment.
The State Bar recommends that the Court accept the petition, noting that Choi
previously received an Investigative Panel reprimand on May 21, 2010 for his
violations of Rules 1.4, 1.16, 5.4, and 7.3, in connection with the representation
of a client.
Prior to the filing of the petition for voluntary surrender, the special
master had conducted a hearing and issued a detailed report and
recommendation, urging that Choi be disbarred in connection with two of the
matters. Following submission of the petition for voluntary surrender
addressing all three matters, the special master recommends that the Court
accept the petition.
We have reviewed the records and agree to accept Choi’s petition for
voluntary surrender of his license, which is tantamount to disbarment. See Bar
Rule 4-110 (f). It is hereby ordered that the name of Jin Choi be removed from
the rolls of persons authorized to practice law in the State of Georgia. Choi is
reminded of his duties pursuant to Bar Rule 4-219 (c).
Voluntary surrender of license accepted. All the Justices concur.
2 | 01-03-2023 | 10-17-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3131416/ | In the Supreme Court of Georgia
Decided: October 5, 2015
S15Y1540. IN THE MATTER OF DENNIS S. CHILDERS.
PER CURIAM.
This disciplinary matter is before the Court on the Report and
Recommendation of the special master, Herman Maddox Kilgore, who
recommends that Dennis S. Childers (State Bar No. 124408) be disbarred
following the entry of his guilty plea in the State Court of Cherokee County to
one count of theft by receiving stolen property, OCGA § 16-8-7. Childers was
sentenced under the First Offender Act, OCGA § 42-8-60, to 12 months
probation. The State Bar initiated this proceeding under Bar Rule 4-106.
In a conference call with the special master, the State Bar and Childers
agreed to a hearing at 9:30 a.m. on May 12, 2015. On the morning of May 11,
Childers sent an email to the special master requesting a continuance. The
special master replied in an email shortly thereafter denying the request and
reiterating that the hearing would commence at 9:30 the next morning. Childers
called the special master’s office at 4:07 p.m. on May 11 asking for an update
on his continuance request. At the special master’s request, a staff member
called Childers at the number he provided and left a message that his request had
been denied and that he was directed to appear the next morning. Childers did
not appear, however, and after waiting over 20 minutes, the special master
commenced the hearing, at which the State Bar alleged that Childers violated
Rule 8.4 (a) (3) of the Georgia Rules of Professional Conduct, see Bar Rule 4-
102 (d). According to the Accusation to which Childers pled guilty, he received
a vehicle tag that he knew was stolen and he received it without the intention of
restoring it to its owner.
In determining whether Childers’ conviction constituted a misdemeanor
involving moral turpitude, the special master looked to Comment 3 to Rule 8.4
(a) (3), which provides in part that lawyers are “professionally answerable only
for offenses that indicate a lack of those characteristics relevant to law practice.
Offenses involving violence, dishonesty, breach of trust, or serious interference
with the administration of justice are in that category.” The special master
found that Childers’ criminal offense specifically involved an act of dishonesty
and, although he did not commit it in the context of his law practice, his conduct
nevertheless demonstrated an indifference to legal obligations and implicated
2
his trustworthiness, thus relating to his fitness to practice law, see In the Matter
of Levin, 289 Ga. 170 (709 SE2d 808) (2011), as the only conceivable purpose
for possessing and retaining a stolen vehicle tag is to mislead law enforcement
and/or the tax commissioner. Finding that Childers violated Rule 8.4 (a) (3),
the maximum sanction for which is disbarment, the special master considered
the following factors in aggravation of discipline: Childers’ prior disciplinary
history, which includes a six-month suspension, see In the Matter of Childers,
273 Ga. 337 (540 SE2d 606) (2001), and 2013 Formal Letter of Admonition; the
commission of a crime involving dishonesty; and a failure to comply with
disciplinary proceedings, which includes Childers’ failure to appear at the
hearing in this matter, after which he did not contact the special master until
Childers faxed a letter over a month later. The special master declined to
consider Childers’ letter as he waived his opportunity to present evidence of
mitigation by his failure to appear at the hearing. Therefore, the only mitigating
evidence the special master was able to glean from the record is that Childers
presumably accepted some responsibility for his actions by entering the guilty
plea. The special master found that Childers’ conduct reflects selfish motives,
lack of judgment and an indifference to the rule of law in Georgia, and
3
concluded that the appropriate sanction for his violation of Rule 8.4 (a) (3) is
disbarment. Childers did not file an exception to the special master’s report.
Considering the record as a whole, we agree with the special master and
conclude that the appropriate sanction in this matter is disbarment, see In the
Matter of Hall, 295 Ga. 452 (761 SE2d 51) (2014); In the Matter of Porges-
Dodson, 280 Ga. 433 (627 SE2d 545) (2006); In the Matter of Jackel, 275 Ga.
568 (569 SE2d 835) (2002); and In the Matter of Threlkeld, 273 Ga. 331 (539
SE2d 823) (2001) (all disbarring lawyers for violating Rule 8.4 (a) (3)).
Accordingly, it hereby is ordered that the name of Dennis S. Childers be
removed from the rolls of persons authorized to practice law in the State of
Georgia. Childers is reminded of his duties pursuant to Bar Rule 4–219 (c).
Disbarred. All the Justices concur.
4 | 01-03-2023 | 10-17-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2500578/ | 274 P.3d 45 (2012)
STATE
v.
VEGA.
No. 106001.
Court of Appeals of Kansas.
March 30, 2012.
Decision Without Published Opinion
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2788674/ | COURT OF APPEALS OF VIRGINIA
UNPUBLISHED
Present: Judges Humphreys, Petty and Decker
Argued at Richmond, Virginia
JOYCE VICK
MEMORANDUM OPINION BY
v. Record No. 1467-14-1 JUDGE MARLA GRAFF DECKER
MARCH 24, 2015
HAMPTON ROADS TRANSIT
FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION
Gregory E. Camden (Montagna, Klein, Camden LLP, on brief), for
appellant.
Robert L. Samuel, Jr. (Williams Mullen, on brief), for appellee.
Joyce Vick (the claimant) appeals a decision of the Virginia Workers’ Compensation
Commission (the commission) denying her claim for medical benefits and compensation for
temporary total disability. The claimant contends that the commission erred in finding that she
suffered no compensable injury by accident, as her injuries did not arise out of conditions of her
employment. For the following reasons, we affirm the decision of the commission.
I. BACKGROUND1
On July 5, 2013, the claimant was employed as a bus operator by Hampton Roads Transit
(the employer). Her duties in this role were to drive the bus on the route assigned to her and pick
up and drop off passengers at designated stops. At 8:00 p.m. on that date, the claimant had been
driving for the prior eight hours when her supervisor asked her to drive an additional three hours
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
1
On appeals from the commission, this Court “review[s] the evidence in the light most
favorable to the prevailing party.” R.G. Moore Bldg. Corp. v. Mullins, 10 Va. App. 211, 212,
390 S.E.2d 788, 788 (1990).
in order to accommodate an event that evening. While the claimant was leaving the office to get
back on the bus, she was talking to this supervisor and another supervisor. As she left the office,
she turned toward her right to leave. Her shoe “got caught on the bottom of the threshold piece
that was down there, and there was nothing in the hallway to grab . . . to keep [her] from falling
so [she] [] stumble[ed] until [she] fell on [her] right side.” According to the claimant, she
thought that she had raised her foot up high enough to cross the threshold.
The claimant testified that a marble piece in the threshold was lifted up higher off of the
floor, about one-half inch or one inch above the surface of the floor on which she had been
walking. She stated that “when you’re coming in the door, it seems to be level, it’s level with the
floor when you’re coming in the door. But when you’re going out the door, it has this little kink
on it.” The claimant also noted that the rise had some “little chucks out of it, like broken off, like
a broken tooth.”
The claimant had walked through that particular door prior to her fall. She was “kind of”
familiar with the building, as it had been recently built. The floor became level again after the
piece of marble in the middle. She testified that there were no other doorways like this one in the
building. She also noted that after her fall, employees were not allowed to walk through that
door anymore. Pictures of the threshold, taken a month after the claimant’s fall, were entered
into evidence at a hearing before the deputy commissioner.
According to the claimant, she felt a “little sting[ing][,] burning sensation” in her right
hip when she fell. She continued with her work that day, completing the extra three-hour shift.
The claimant first sought medical attention several days later on July 12, 2013, at the hospital
emergency room, where she was diagnosed with sciatica with lower back pain. On July 15, 2013
the claimant went to an urgent care clinic, where she was diagnosed with lower extremity
-2-
contusions, back pain, and a sprained ankle. She was taken out of work through July 20, 2013,
and placed on light-duty work through July 22, 2013.
On November 19, 2013, the claimant filed a claim for benefits alleging an injury by
accident to her right hip, right leg, and lower back that occurred on July 5, 2013. She sought an
award of medical benefits and compensation for temporary total disability beginning July 11,
2013 through July 30, 2013. The employer defended on the ground that the claimant did not
suffer a compensable injury by accident because her injury did not arise out of her employment.
The deputy commissioner found that the claimant’s injury was compensable and awarded
medical benefits and temporary total disability.
On review, the full commission, with one commissioner dissenting, found that the
“claimant here has failed to prove that she was at a heightened risk because of her employment
or that the threshold she tripped over was defective or sufficiently unusual. . . . There is . . . no
connection between the claimant’s employment and her trip and fall over the ordinary threshold
in this case.” Additionally, the commission found “no evidence that the claimant was engaged in
some employment related task which made it more likely that she would trip over the threshold
or that a conversation with her supervisors contributed to her fall.” Thus, the commission found
that the claimant’s injury did not arise out of her employment and reversed the deputy
commissioner’s decision, vacating the award. This appeal followed.
II. ANALYSIS
The claimant contends that the commission erred by holding that she did not sustain an
injury by accident arising out of her employment. Specifically, she argues that the commission
misinterpreted the findings in Dominion Virginia Power v. Pulley, No. 0866-10-1, 2011
Va. App. LEXIS 191 (Va. Ct. App. June 7, 2011), and erred in concluding that the threshold she
tripped over was not an actual risk of employment. She also contends that distraction from her
-3-
conversation with her supervisors contributed to her injury, proving that she suffered an injury
by accident arising out of her employment.
Whether a claimant has suffered an injury by accident is a mixed question of law and
fact. Goodyear Tire & Rubber Co. v. Harris, 35 Va. App. 162, 167, 543 S.E.2d 619, 621 (2001).
In its role as the finder of fact, “the [c]ommission resolves all conflicts in the evidence and
determines the weight to be accorded the various evidentiary submissions.” Bass v. City of
Richmond Police Dep’t, 258 Va. 103, 114, 515 S.E.2d 557, 563 (1999). “On appellate review,
the factual findings of the commission are binding if they are supported by credible evidence.”
Wagner Enter., Inc. v. Brooks, 12 Va. App. 890, 894, 407 S.E.2d 32, 35 (1991). This Court
“does not retry facts, reweigh . . . the evidence, or make its own determination of the credibility
of the witnesses.” Id. However, “whether those [factual findings of the commission] prove the
claimant suffered an ‘injury by accident’ is a question of law” which the Court reviews de novo.
Goodyear Tire, 35 Va. App. at 168, 543 S.E.2d at 621.
An injury, to be compensable under the Workers’ Compensation Act, must “arise out of”
and “in the course of” the injured employee’s employment. Code § 65.2-101; see Simms v.
Ruby Tuesday, Inc., 281 Va. 114, 120, 704 S.E.2d 359, 362 (2011). Here, it is undisputed that
the claimant’s injury resulted from an accident “in the course of” her employment. The only
challenge is to the “arising out of” requirement necessary for the compensability of the
claimant’s injury.
“Arising out of” refers to the origin or cause of an employee’s injury. Richmond Mem’l
Hosp. v. Crane, 222 Va. 283, 285, 278 S.E.2d 877, 878 (1981). Virginia has adopted an “actual
risk” test to determine whether an accident arises out of an employee’s employment. See Hill
City Trucking, Inc. v. Christian, 238 Va. 735, 739, 385 S.E.2d 377, 379 (1989). “An ‘actual risk
of employment’ is ‘not merely the risk of being injured while at work.’” Bernardo v. Carlson
-4-
Cos. — TGIF, 60 Va. App. 400, 405, 728 S.E.2d 508, 511 (2012) (quoting Taylor v. Mobil
Corp., 248 Va. 101, 107, 444 S.E.2d 705, 708 (1994)). Rather, “[u]nder the actual risk test, an
injury comes within the Act ‘only if there is a causal connection between the employee’s injury
and the conditions under which the employer requires the work to be done.’” Simms, 281 Va. at
122, 704 S.E.2d at 363 (quoting Hilton v. Martin, 275 Va. 176, 180, 654 S.E.2d 572, 574
(2008)).
“Under this test, if the injury can be seen to have followed
as a natural incident of the work and to have been contemplated by
a reasonable person familiar with the whole situation as a result of
the exposure occasioned by the nature of the employment, then it
arises ‘out of’ the employment. But it excludes an injury which
cannot fairly be traced to the employment as a contributing
proximate cause and which comes from a hazard to which the
workmen would have been equally exposed apart from the
employment. The causative danger must be peculiar to the work
and not common to the neighborhood. It must be incidental to the
character of the business and not independent of the relation of
master and servant. It need not have been foreseen or expected,
but after the event it must appear to have had its origin in a risk
connected with the employment, and to have flowed from that
source as a rational consequence.”
Hill City Trucking, 238 Va. at 739, 385 S.E.2d at 379 (citation omitted) (quoting Baggett &
Meador Cos. v. Dillon, 219 Va. 633, 638, 248 S.E.2d 819, 822 (1978)). Therefore, the “actual
risk doctrine requires a ‘hazard’ or ‘danger’ not equally present ‘apart from the employment’ but
rather one ‘peculiar to the work.’” Bernardo, 60 Va. App. at 405, 728 S.E.2d at 511.
Additionally, distractions that cause the injury may be compensable if they are not “‘unrelated to
any hazard common to the workplace.’” Marion Corr. Treatment Ctr. v. Henderson, 20 Va. App.
477, 480, 458 S.E.2d 301, 303 (1995) (quoting UPS v. Fetterman, 230 Va. 257, 259, 336 S.E.2d
892, 893 (1985)).
Here, the commission made several factual findings regarding the claimant’s workplace
incident. It found that “the photographs in evidence show that the threshold, over which the
-5-
claimant tripped, is an ordinary, non-defective threshold common to many businesses and public
buildings.” Further, it found that the one-half inch to one inch “slight rise” in the threshold was
“not sufficiently significant to be considered a defect or a risk of employment.” Therefore, the
commission found “no connection” between the claimant’s employment and her fall over the rise
in the threshold. Additionally, the fact that this was the only threshold in the building with a
raised portion was not sufficient to show that the claimant was at a heightened risk as a result of
her employment, and the commission noted that the claimant had walked through this particular
threshold on prior occasions.
Further, the commission found that there was not sufficient evidence to reasonably infer
that claimant suffered a distraction from speaking with her supervisors. It found that the
claimant merely testified that she was speaking with two supervisors prior to her fall. She did
not testify that her attention was diverted by this conversation or that the conversation in any way
contributed to her fall.
We are bound by the factual findings made by the commission as long as there is credible
evidence in support of these findings. Wagner Enters., 12 Va. App. at 894, 407 S.E.2d at 35.
Additionally, “[t]he commission is authorized to draw reasonable inferences from the evidence,
and on appeal, we will not disturb reasonable inferences drawn by the commission from the facts
proven by the evidence presented.” Turf Care, Inc. v. Henson, 51 Va. App. 318, 324, 657 S.E.2d
787, 789-90 (2008) (citation omitted). While the evidence in this case is rather sparse, there is
credible evidence in the record to support the commission’s findings. The photographs, entered
into evidence, show a slight rise in the particular threshold at issue, but the rise does not appear
uneven or irregular. The claimant testified that she had crossed the threshold on prior occasions.
She also stated that she believed she had raised her foot sufficiently high to have cleared the
threshold in this instance. These evidentiary facts support the commission’s findings that the
-6-
threshold was not defective and that appellant was not at a heightened risk because of her
employment.
Similarly, there is credible evidence to support the commission’s finding that the
claimant was not distracted at the time of her fall. She testified that she was having a discussion
with her supervisors while crossing the threshold, but she did not specifically testify that this
conversation in any way contributed to her fall. The commission is permitted to draw reasonable
inferences from the evidence. Turf Care, 51 Va. App. at 324, 657 S.E.2d at 789-90. Here, we
deem the commission’s inference—that the claimant was not distracted at the time of her fall
because she had the ability to explain to the commission that she was in fact distracted at the
time of her fall, but failed to do so—reasonable under the facts that are in the record.
The claimant contends that the commission misinterpreted the findings in an unpublished
decision of our Court, Dominion Virginia Power v. Pulley, No. 0866-10-1, 2011 Va. App.
LEXIS 191 (Va. Ct. App. June 7, 2011). In that case, we held that the commission did not
properly apply the actual risk test to determine whether the employee’s injury arose out of her
employment. Id. at *9-10. Therefore, we reversed and remanded to the commission to
determine, based on the actual risk test, whether the employee’s injury arose out of employment.
Id. at *13-14. On remand, the commission found that “a newly installed raised threshold over
which claimant tripped required a greater degree of attentiveness to negotiate and was an actual
risk of [the employee’s] employment.” Pulley v. Dominion Va. Power, JCN 2359880 (Va.
Workers’ Comp. Comm’n Nov. 16, 2011). Here, the claimant suggests that the commission’s
decision on remand in that case supports her argument now before the Court that this raised
threshold was an actual risk of her employment.
We find the claimant’s contention of error regarding the commission’s use of Pulley
unconvincing, although we recognize that the commission misinterpreted the ultimate holding in
-7-
that case.2 Although the commission did find the facts in Pulley “similar” to the present case,
unlike the situation in Pulley, here it applied the actual risk test. Therefore, the commission’s
comparison of the two cases did not affect the commission’s decision, since it properly applied
the actual risk test to the facts at hand.
In this case, as required under the actual risk test, the commission made findings as to
whether the claimant’s risk of injury was peculiar to her employment and not one to which the
general public was equally exposed. Bernardo, 60 Va. App. at 405, 728 S.E.2d at 511.
Specifically, the commission found that there was no heightened risk due to the claimant’s
employment and that the threshold was not defective. These factual findings are supported by
credible evidence. Therefore, they are binding on our Court on appeal, and the commission did
not err in denying the claimant’s claim.
III. CONCLUSION
Credible evidence supports the commission’s factual findings that the claimant’s risk of
injury was not peculiar to her employment. Therefore, the commission did not err by
determining that the claimant’s fall did not arise out of her employment. Accordingly, we affirm
the commission’s decision.
Affirmed.
2
The commission correctly recited Pulley as reversing and remanding for proper
application of the actual risk test. The commission, however, incorrectly interpreted the opinion
as holding that the employee failed to prove a heightened risk arising from employment. This
Court expressly remanded the case to the commission to make that factual determination.
Pulley, 2011 Va. App. LEXIS 191, at *13-14.
-8- | 01-03-2023 | 03-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/233281/ | 209 F.2d 959
UNITED STATES of America ex rel. Sebastiano CEFALU, Relator-appellant,v.Edward J. SHAUGHNESSY, District Director of Immigration andNaturalization for the District of New York,Respondent-Appellee.
No. 196, Docket 22985.
United States Court of AppealsSecond Circuit.
Argued Feb. 3, 1954.Decided Feb. 15, 1954.
Relator, Sebastiano Cefalu, appeals from a dismissal of his writ of habeas corpus.
Lionel Golub, New York City (Benjamin Kronenberg, New York city, on the brief), for relator-appellant.
Harold J. Raby, Asst. U.S. Atty., New York City (J. Edward Lumbard, U.S. Atty., New York City, and Lester Friedman, Atty., Immigration and Naturalization Service, on the brief), for respondent-appellee.
Before CLARK, FRANK and HINCKS, Circuit Judges.
PER CURIAM.
1
Affirmed on the opinion of District Judge Kauman below, 117 F.Supp. 473. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2543791/ | 53 So.3d 1035 (2011)
GRANT
v.
STATE.
No. 2D10-1474.
District Court of Appeal of Florida, Second District.
February 4, 2011.
DECISION WITHOUT PUBLISHED OPINION
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2525090/ | 80 Mass. App. Ct. 728 (2011)
BOARD OF MANAGERS OF OLD COLONY VILLAGE CONDOMINIUM
v.
STEVEN PREU.
No. 10-P-875.
Appeals Court of Massachusetts, Barnstable.
February 14, 2011.
October 31, 2011.
Present: RAPOZA, C.J., MEADE, & RUBIN, JJ.
Thomas O. Moriarty for the plaintiff.
Jennifer S.D. Roberts for the defendant.
RUBIN, J.
This case involves a question about the applicability of the First Amendment to the United States Constitution to a claim that a condominium unit owner's speech and expressive conduct constitute a violation of "the requirements of the master deed, trust, by-laws, restrictions, rules or regulations [of the condominium], or ... misconduct" within the meaning of G. L. c. 183A, § 6. We hold that the First Amendment does *729 apply to such a claim. We also conclude that the limited arguments put forward by the plaintiff are insufficient to demonstrate that the expenses it incurred as a result of the defendant's posting of two signs critical of management in the trash room of the condominium may in the circumstances of this case, consistent with the First Amendment, be imposed upon the defendant under the statute.
Background. This suit was brought by the elected board of managers of the Old Colony Village Association (board), the organization of unit owners of the Old Colony Village Condominium (condominium), a residential condominium complex established by master deed on May 27, 1970, and located in Orleans. Primarily at issue is a claim for a declaration that the defendant Steven Preu, a unit owner at the condominium, had, by violating the master deed, by-laws, and rules of the condominium, engaged in conduct for which the plaintiffs were entitled to collect expenses from him under G. L. c. 183A, § 6(a)(ii). The statute provides that "[i]f any expense is incurred by the organization of unit owners as a result of the unit owner's failure to abide by the requirements of this chapter or the requirements of the master deed, trust, by-laws, restrictions, rules or regulations, or by the misconduct of any unit owner ... the organization of unit owners may assess that expense exclusively against the unit owner." G. L. c. 183A, § 6(a)(ii), inserted by St. 1992, c. 400, § 7. After a four-day bench trial, a judge of the Superior Court concluded that Preu had engaged in a wide range of misconduct in violation of G. L. c. 183A, § 6(a)(ii).
In Noble v. Murphy, 34 Mass. App. Ct. 452, 456 (1993), we held that in determining whether condominium rules were enforceable they were to be reviewed for "equitable reasonableness." We held that
"General Laws c. 183A, § 11(e), permits restrictions on the use of residential units which are `designed to prevent' unreasonable interference by individual unit owners with the other owners' use of their respective units and the common areas and facilities. There is no prohibition against restrictions that, although patently designed to prevent such interference, also incidentally preclude generically similar uses that may not be as likely to encroach on the *730 other owners' use of their units and the common areas and facilities."
Ibid. We stated, however, that such regulations are subject to invalidation if they violate a right guaranteed by "any fundamental public policy or constitutional provision." Id. at 460. We added that the deference due condominium restrictions might be less where they were adopted after a unit owner's acquisition of his or her unit. See id. at 457.
There was evidence at trial of a history of erratic and disruptive behavior by Preu at the condominium, and of a growing strain in relations between Preu on the one hand and the board and condominium manager on the other. The judge did not assign blame for the strained relations.
The judge found that (a) Preu placed in the common area of the condominium on two separate occasions bags containing dog feces and labeled with the name of board president Gerard Ritzinger, apparently in response to Preu's belief that Ritzinger had allowed his dog to defecate in an area in which it was forbidden; (b) Preu placed a fan within the common area; (c) Preu wedged open fire doors that were required to be closed; and (d) Preu closed and obstructed the fire doors within the common area that were designed to be left open.
The judge concluded that Preu's conduct with regard to the fans and the dog feces violated article V, § 13, of the condominium by-laws, entitled "Use of Common Areas and Facilities," which provides in pertinent part that "[a] unit owner shall not place or cause to be placed in the stairways or other common areas or facilities, other than the areas designated as storage areas, any furniture, packages, or objects of any kind." The judge also held that Preu's tampering with the fire doors violated rule 3 of the condominium rules and regulations, which governs common areas and states that "[f]ire doors within buildings shall remain closed at all times." The judge also found that this conduct fell within the definition of "misconduct" under G. L. c. 183A, § 6(a)(ii) she equated rules violations with "misconduct" a determination from which Preu has not appealed.[1]
*731 The judge, however, ruled that Preu's "posting hand-made signs in the trash area ... regarding the cleanliness of the Condominium common areas, as well as leaving a note on a neighbor's door," about which the board complained, were not "misconduct" within the meaning of G. L. c. 183A, § 6(a)(ii). The judge assumed without deciding that the signs were "objects" within the meaning of the condominium by-law. But the judge concluded that "communication by signs and posters is pure speech," Nyer v. Munoz-Mendoza, 385 Mass. 184, 188 (1982), and that Preu's conduct was protected by the First Amendment. The judge held that if the by-law were read to prohibit this conduct, it was not "equitably reasonable," and, in reliance on Noble v. Murphy, 34 Mass. App. Ct. at 457, 459, declined to rule that the conduct violated the condominium documents or amounted to misconduct. The board now appeals.[2]
Discussion. The board's sole contention, with respect to the judge's conclusions described above, is that in this action the First Amendment is inapplicable to Preu's conduct in posting signs in the trash room. We address only that contention. The board's brief indicates that it has dropped its challenge to the posting of notes on the door of another unit owner.
We may assume without deciding, as the judge below did, that the by-law prohibits Preu's posting of signs. The board raises three distinct, but narrow, contentions.
First, the board contends that there is no State action, and that the First Amendment thus cannot be implicated in this lawsuit. The First Amendment, made applicable to the States through the Fourteenth Amendment to the United States Constitution, of course restricts only State action. New York Times Co. v. Sullivan, 376 U.S. 254, 265 (1964). In this case, a State statute provides that the expenses the plaintiff has incurred "as a result of" Preu's "failure to abide by ... the requirements of the master deed, trust, by-laws, restrictions, rules or regulations, or by [his] misconduct" must be borne by Preu. G. L. c. 183A, § 6(a)(ii). The United States Supreme Court has made clear in *732 the context of civil actions involving private parties and common-law claims that "the application of state rules of law in state courts in a manner alleged to restrict First Amendment freedoms constitutes `state action' under the Fourteenth Amendment." Cohen v. Cowles Media Co., 501 U.S. 663, 668 (1991) (addressing enforcement of a confidentiality agreement by way of a private cause of action for promissory estoppel). There is thus in this case State action sufficient "to constitute `state action' for purposes of the Fourteenth Amendment." Ibid.
Second, the board contends that the First Amendment does not prevent a property owner from restricting the exercise of free speech on private property. Even if the proposition put forward by the board is true as a general matter, the relationship between a unit owner and the common area of a condominium is not the same as that between a member of the public and some third party's private property. "Ownership of a condominium unit is a hybrid form of interest in real estate, entitling the owner to both `exclusive ownership and possession of his unit, G. L. c. 183A, § 4, and . . . an undivided interest [as tenant in common together with all the other unit owners] in the common areas. . . .'" Noble v. Murphy, 34 Mass. App. Ct. at 455-456, quoting from Kaplan v. Boudreaux, 410 Mass. 435, 438 (1991). Thus, as Noble indicates, a condominium association does not have as free a hand in restricting the speech of unit owners in the common areas in which those owners share an undivided property interest as another property owner might in dealing with a stranger on his or her property.
Finally, the board argues that Preu's speech via the signs he posted comes within one of the well-defined and narrowly limited classes of speech that is unprotected. In its brief, however, it simply provides an undifferentiated list of all the historically unprotected categories recited in Chaplinsky v. New Hampshire, 315 U.S. 568, 571-572 (1942). In this, the board appears to be referring at least primarily to other expressive conduct it challenged, see infra, although in a letter to Preu, counsel for the board described at least some of the signs as "defamatory." Nonetheless, the board makes no substantial argument that the signs posted in the trash room are unprotected, and we do not think it has shown that they fall into any such category.
*733 Because these are the only arguments made by the board with respect to the signs posted by Preu, our conclusions suffice to address the board's contention that the by-law's blanket prohibition on the posting of signs in the common area and its application to Preu's posting of signs in the trash room are not subject in this action to scrutiny under the First Amendment. The board has raised no argument that the by-law would survive First Amendment scrutiny, and we therefore do not address that question.
Because we recognize the delicacy and importance of the balance between, on the one hand, the needs of condominium owners to act collectively through rulemaking to create a desirable living environment and, on the other, the rights of individual unit owners, we emphasize the narrowness of our holding. We do not hold condominium restrictions on speech and expressive conduct may never be enforceable, nor that expenses incurred in addressing their violation may never be shifted to the unit owner under the statute. We hold only that when an action is brought claiming that the breach of such restrictions amounted to conduct entitling a plaintiff to shift its costs under G. L. c. 183A, § 6(a)(ii), the restrictions are subject to scrutiny under the First Amendment. While we do not reach the question, there is no reason to think that G. L. c. 183A, § 6(a)(ii), cannot be applied, for example, to enforce such regulations as would comply with the First Amendment if enacted by a governmental entity.[3]
We also note that there was no claim here that in buying his unit at the condominium, Preu waived his First Amendment rights. We therefore need not determine either the proper standard for evaluating contractual provisions that restrict speech, see, e.g., Perricone v. Perricone, 292 Conn. 187, 202 (2009) (concluding after Cohen v. Cowles Media Co., supra, that such provisions are not subject to strict scrutiny and will be upheld if they amount to a voluntary and knowing waiver of First Amendment rights), or whether under that standard provisions like those at *734 issue here would be enforceable in a properly pleaded action making such a claim. Those questions are for another day.
The board also argues that the judge erred in determining that other conduct was protected by the First Amendment namely Preu's writing "insulting messages" within the memo sections of the checks with which he pays his monthly condominium fees and his giving a well-known and insulting hand gesture to Ritzinger and Ralph DiMonte, the condominium manager, when he passed them in the common areas, as well as to security cameras around the premises. Preu responds that "the lower court did not reach the First Amendment issue with respect to the messages on the checks or the hand gestures to the surveillance cameras." Although the judge's opinion does draw some conclusions about that conduct, in the present circumstances some additional First Amendment assessment of and findings about it and Preu's gestures to Ritzinger and DiMonte, about which the judge concluded only that in the circumstances here they were not unprotected "fighting words," is necessary in light of our analysis to determine whether expenses accrued as a result of such conduct may be imposed on Preu. Consequently, we remand the case for further proceedings consistent with this opinion with respect to this alleged conduct.[4]
The board further claims that it is entitled to more in attorney's fees under G. L. c. 183A, § 6(a)(ii), than were awarded by the judge. Because the judgment, and thus perhaps the amount of attorney's fees, may be revised after remand, we will not address the claim for attorney's fees at this time.
Finally, the board also challenges that portion of the judgment declining to issue a permanent injunction enjoining and restraining Preu from having any contact, other than in writing, with condominium staff or board members, except in case of an emergency.[5] The judge concluded that such an injunction would *735 amount to an unconstitutional prior restraint. Given the breadth of the injunctive relief the board requests, and the amount of speech it would prohibit, we agree. "Assuming a right to restrict speech on the basis of legitimate State or private interest, the means used must be precisely and narrowly drawn so as to avoid unnecessary restriction of constitutionally protected liberty." Nyer v. Munoz-Mendoza, 385 Mass. at 188.[6]
The judgment is vacated in part and affirmed in part, and the matter is remanded for further proceedings consistent with this opinion.[7]
So ordered.
NOTES
[1] Since by its terms the statute allows the collection of expenses arising from rules violations, we need not, and do not, address the correctness of the judge's definition of "misconduct."
[2] Although Preu paid a filing fee in connection with a cross appeal, he has failed to argue a cross appeal in his brief and thus it is waived. See Mass. R.A.P. 16(a)(4), as amended, 367 Mass. 921 (1975).
[3] In particular, we do not address the question whether condominium by-laws or rules that, if enacted by a municipality, would pass muster as content-neutral time, place, or manner restrictions are enforceable under the statute. Nor do we express any opinion whether the First Amendment permits judicial enforcement under the statute of condominium restrictions on speech broader than those that might constitutionally be enacted by a municipality.
[4] In its brief, the board also refers to Preu "shouting obscenities at members of the Board," as well as unspecified "comments" and "statements" made to "other Unit Owners, residents, the Board of Managers, the Condominium staff and Board of Managers' counsel." The judge below did not address any such conduct. While Preu hypothesizes that this was because of "limited evidence on the issue," the judge will be free on remand to provide clarification, or to address this conduct if its lawfulness is properly before her.
[5] Although the injunctive relief sought below was broader, this is all the board requests on appeal.
[6] The trial judge also ruled that the board had not met its burden of demonstrating a private nuisance, a ruling from which the board does not appeal.
[7] The parties' requests for appellate attorney's fees are denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1054616/ | IN THE COURT OF CRIMINAL APPEALS OF TENNESSEE
AT KNOXVILLE
Assigned on Briefs November 29, 2005
STATE OF TENNESSEE v. TONY ALLAN PHIPPS
Direct Appeal from the Criminal Court for Sullivan County
No. S45,670 Phyllis H. Miller, Judge
No. E2005-00647-CCA-R3-CD Filed April 5, 2006
On May 31, 2002, following a jury trial, Defendant, Tony Allan Phipps, was convicted of voluntary
manslaughter. Defendant was sentenced to serve eleven (11) years in the Department of Correction
and ordered to pay a fine in the amount of five thousand ($5000.00) dollars. Defendant filed a
motion for new trial which the trial court granted on October 14, 2002. On August 11, 2004,
following another jury trial, Defendant was convicted of reckless homicide, ordered to pay a five
thousand ($5000.00) dollar fine and sentenced to ten (10) years in the Department of Correction.
Defendant appeals his conviction for reckless homicide. In his appeal, Defendant argues (1) the
evidence in the record is insufficient to sustain a conviction for reckless homicide; (2) the evidence
in the record does not support the jury verdict; (3) the jury verdict is contrary to law and evidence;
and (4) the State did not prove beyond a reasonable doubt that Defendant did not act in self-defense
as required by Tennessee Code Annotated section 39-11-611(b) (2003). The judgment of the trial
court is affirmed.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Criminal Court Affirmed
THOMAS T. WOODALL, J., delivered the opinion of the court, in which GARY R. WADE, P.J., and
JOSEPH M. TIPTON , J., joined.
Larry R. Dillow, Kingsport, Tennessee, attorney for the appellant, Tony Allan Phipps.
Paul G. Summers, Attorney General and Reporter; Leslie Price, Assistant Attorney General; H.
Greeley Wells, Jr., District Attorney General; Barry P. Staubus, Assistant District Attorney General;
Joseph Eugene Perrin, Assistant District Attorney General; and Brian Todd Martin, Assistant District
Attorney General, for the appellee, State of Tennessee.
OPINION
I. Factual Background
Linda Williams Miller testified that her son, the victim, Wallace Ray Williams, was thirty-
five years old at the time of his death. Defendant and the victim were childhood friends. Defendant
and the victim later lived together in a house on Newborn Road in Kingsport, Tennessee. Ms. Miller
went to visit her son at his house on Newborn, approximately two weeks prior to his death.
During this visit, Defendant asked to speak to Ms. Miller privately. Defendant told Ms.
Miller that the victim claimed Defendant owed him money. Defendant claimed to have already paid
his debt to the victim. The victim claimed that Defendant had not given him the entire amount.
Defendant showed Ms. Miller a piece of paper the victim had given him. The paper had numbers
on it, indicating Defendant still owed the victim two hundred dollars. Defendant denied owing the
victim any money. Defendant never told Ms. Miller that the victim threatened him over the money
or that they had any other problems related to the money. As the conversation ended, the victim
returned home. Ms. Miller did not notice any significance about the disposition of either the victim
or Defendant.
After his arrival, Ms. Miller visited with her son for approximately five minutes. He did not
say anything about Defendant owing him money. As she was leaving, she spoke to Defendant again.
He was preparing to take an insulin shot and told her that he was taking three or four shots a day.
She instructed the victim, “Ray you'll have to help take care of Tony,” and Defendant said, “Ray's
okay,” and then the victim said, “Tony and I are buddies aren't we Tony?” and Defendant responded,
“Yeah.” Ms. Miller did not detect any animosity or hatred between the men during this conversation.
As far as Ms. Miller was aware, Defendant and the victim were on friendly terms right up until the
time of the victim's death. She said she was aware that Defendant had a cell phone.
Amanda Kristen Bortz testified that she was twenty-four years old. She attended and
graduated from Dobbyns-Bennett high school in 1998. At the time of trial, Ms. Bortz was
incarcerated at the Johnson City jail for women prisoners. She was serving a two-year sentence after
pleading guilty on January 10, 2003, to facilitating the commission of a burglary, theft over five
hundred dollars, and two counts of forgery. In September 2001, Ms. Bortz was living at 1656
Newborn Road, Kingsport, Sullivan County, Tennessee. The home belonged to her boyfriend's
mother, Sylvia Darnell Lyons, who lived in the home. Her boyfriend, Josh Darnell, also lived in the
home, along with his brother, Jason Sean Christian. Both the victim and Defendant lived in the
house as well. The victim was also dating one of Ms. Lyons's children, Sabrina Christian. At the
time of the victim's death, Ms. Christian was incarcerated at the Johnson City jail.
The house had four bedrooms and one and a half bathrooms. The kitchen, bathrooms, living
room, and laundry room were shared by the occupants. The living room is the first room entered
from the front door. Beyond the living room, there is a hallway leading to bedrooms, the bathroom,
and the kitchen. Defendant occupied the front right bedroom. The door to his room was constructed
of metal and had slats that looked like vertical blinds but did not move. The door was flimsy and
it was missing the handle. Defendant kept the door closed by using an old coat hanger and wire.
The door did not stay closed without the coat hangar and wire. Ms. Bortz knew that it was easy to
hear through the door because she had conducted conversations with Defendant while she was in the
living room and he was inside his bedroom with the door closed.
-2-
At the time of the incident, Ms. Bortz had been living at the residence for about three or four
months. She was aware of the fact that the victim had given Defendant some money. This fact was
common knowledge within the house. Ms. Bortz never heard Defendant and the victim argue over
the money. She was not aware of any problems between the men, nor was she aware of fights or
heated arguments that had occurred prior to the incident.
On the evening of September 9, 2001, Ms. Bortz and the victim dropped off her boyfriend
at the Johnson City jail to serve a weekend in jail. Ms. Bortz and the victim then went riding around,
and when they returned to the house, they picked up Mr. Christian and went to a sports bar for some
drinks. The sports bar was three or four hundred feet from the residence. Ms. Bortz had two beers.
Mr. Christian and the victim ordered a pitcher. Mr. Christian had been drinking all day, but the
victim had not and was not intoxicated at that time. Ms. Bortz decided to leave first, but she
intended to return to the bar. She was spending the night with a friend and needed to go home first.
She had no intentions of staying at the Newborn residence that night because her boyfriend was not
there. Mr. Christian decided to go with her and the two of them left in the car. The victim walked
back to the house shortly thereafter.
Ms. Bortz heard the victim return to the house around 2:00 a.m. She heard a knock on the
door, and she heard Ms. Lyons respond that she didn't feel like company. She did not realize it was
the victim knocking until he entered the house. Ms. Bortz said it was common for company to come
and go at the house during such hours. Ms. Bortz had known the victim for years and did not think
he appeared drunk when he entered the house. He went into the kitchen and began talking to Ms.
Lyons. She was complaining about money and saying that everyone stayed there and took advantage
of the house, but no one paid her any money. They argued for several minutes over money. Ms.
Bortz observed the argument from the hallway looking into the kitchen. She said it was common
for arguments over money to take place in the house. She said that Ms. Lyons always wanted money
and that she had a serious drug problem. Ms. Lyons was always picking fights with people over
money and she, in essence, had a similar fight with just about everyone in the house. During these
fights, it was common for people to get very upset and curse each other.
As this particular fight progressed, the victim got very upset and loud and the argument
escalated. During the argument, the victim said that Defendant owed him money and he would get
Defendant to give him the money that he owed him. The victim then left the kitchen, charged past
Ms. Bortz, and said “I'm going to get my money.” The victim started yelling Defendant's name. He
yelled out Defendant's name two or three times in a voice loud enough for Defendant to hear. Ms.
Bortz did not hear Defendant respond to the victim, but she heard the noise from the television in
Defendant's room. At this point, the victim was mad and irate and the argument had been going on
for six or seven minutes. According to Ms. Bortz, Defendant would have been able to hear the
victim yelling and hear everything that was said during the argument. The victim grabbed something
and started shaking Defendant's bedroom door. The victim then yelled, “Bring your punk ass out
here. We need to talk.” The victim shook the door again, and the door opened towards him. As the
victim started into the bedroom, Defendant shot him. According to Ms. Bortz, the victim never said
“I'm going to come in and beat you,”or “I'm going to come in and take my money,” or anything else
to that effect.
-3-
Ms. Bortz was standing in the doorway of the living room when the victim was shot. She
could see most of the inside of Defendant's bedroom, and she could see Defendant. Defendant was
standing next to his bed and aiming the gun toward the bedroom door. The victim did not have any
weapons or other objects in his hands. Ms. Bortz said that after the shot was fired, the victim
stumbled into Defendant's room “doubled over in pain.” The victim turned toward the door to leave
the room, and Defendant shot him again in his side. “Maybe a second” passed between each shot.
The victim never struck, grabbed, or choked Defendant. Ms. Bortz was unaware that Defendant
owned a gun, and she did not hear him announce that he had a gun that night.
After the victim was shot, Defendant came out of the bedroom and told Ms. Bortz to call 9-1-
1. She went to find the cordless phone so that she could make the call. At this point, Mr. Christian
came inside from behind the house because he heard the gunshots. He tried to help the victim until
the emergency medical people arrived to take over. Ms. Bortz said that Defendant had a cell phone,
and she knew it to be an operational cell phone which he kept with him.
On cross-examination, Ms. Bortz admitted that there was always a lot of arguing at the house,
but Defendant was almost never involved in it. She said that Defendant primarily stayed in his room
while he was home. If Defendant was sleeping, the door to his room was generally closed and
secured with a coat hangar. He came out of his room occasionally, and she felt free to go into his
room, but she never went into his room angry. She had also seen the victim in Defendant’s room
at times when they were not angry or fighting. She acknowledged that on the night of the incident,
the victim was loud, he was furious, he had drank approximately a pitcher and a half of beer, and he
was on “dope” when he charged toward Defendant’s room to get his money. She said that when
Defendant came out of the bedroom he said, “I did what I had to do.” She said she was not scared
of the victim’s anger during the incident because she knew him well enough not to be frightened.
Officer Mark Mason, an investigator with the Kingsport Police Department, was called to
the scene at the Newborn Road residence on September 10, 2001. Officer Mason arrived at the
scene at approximately 2:45 a.m. When he arrived, there were already officers at the scene who were
securing the premises by ensuring that the crime scene was not disturbed. Officer Mason took
photographs and collected evidence at the scene. He identified these photographs at trial, and they
were introduced into evidence. He also identified the revolver used by Defendant to shoot the
victim, as well as the two bullets the hospital removed from the victim’s body. He likewise
described the layout of the home, and the manner in which Defendant’s door opened and closed. He
confirmed that the door opened into the hallway and that it was kept closed by wire and a coat
hanger. The bedroom itself measured eleven feet by seven and a half feet. He could not testify as
to whether the victim had been shot as he was moving forward into the room because the body was
removed from the scene before he arrived.
Detective David Cole of the Kingsport Police Department, Criminal Investigations Division,
arrived at approximately 3:00 a.m. The scene was secure when he arrived, and Detective Mason was
already working to collect evidence and take photographs. Detective Cole familiarized himself with
the scene and conducted interviews with the witnesses. He later reviewed and analyzed the evidence
-4-
collected by Detective Mason. He testified regarding several receipts that had been taken from a
notebook belonging to Defendant. The first receipt was written on notebook paper. It was signed
by the victim and referred to a debt between Defendant and the victim. The next receipt was from
Toy Trains Antiques at 214 East Market Street in Kingsport. This undated receipt was for the
purchase of a Traditions, 1851 Colt 44 “copy” revolver, serial number 456568. There was also a
receipt from Eagle Arms and Ammunition, also located at 214 East Market Street in Kingsport. This
receipt was dated August 16, 2001, and was for an “1851 44" steel frame revolver with the serial
number 461568. The serial number of the revolver used in the homicide was not identified at trial.
Finally, there was an entry in the notebook concerning money paid and owed to Ms. Lyons.
Detective Cole attended a course on basic blood stain analysis in Miami, Florida, in March
2001, and in May 2004, he attended an advanced forty-hour school for further training. The schools
train on the identification of blood, blood staining, and blood spattering. Detective Cole analyzed
the bed covering that was on Defendant’s bed the night of the incident. The bed covering revealed
stains from human blood on the end of the cover located closest to Defendant’s bedroom door. The
flooring surrounding Defendant’s bed also contained stains consistent with human blood.
Photographs introduced into evidence illustrated both the blood on the bed covering and on the floor.
On cross-examination, Detective Cole said that no photographs were taken of the victim at
the crime scene. The victim was still alive when medical personnel arrived, and they had already
removed the victim prior to the detective’s arrival. Thus, he could not view the body to determine
whether the victim had been charging into the room. He explained that life saving takes priority over
everything else. He acknowledged that he arrived an hour after the shooting and did not know
whether the bed covering had been moved since the shooting occurred. However, there was no
indication that its position had been changed since the time of the shooting. There was a plastic chair
placed on Defendant’s bed, and Detective Cole initially testified that he did not know how it got
there.
Detective Cole said that according to the witnesses, immediately preceding the shooting,
Defendant did not come out of his bedroom, nor did they hear anything coming from inside his
bedroom. He verified Ms. Bortz’ statement that the victim charged past her and jerked open
Defendant’s bedroom door which was secured by a coat hanger. The victim weighed about one
hundred and eighty pounds, and Defendant weight approximately one hundred pounds. Detective
Cole agreed that the victim was blocking the only exit from the room. Detective Cole was aware that
Defendant was a diabetic because the notebook taken from the scene contained a record of his blood
sugar level. He also knew that Defendant wore glasses.
On re-direct examination, Detective Cole said that the emergency medical technicians were
allowed to remove the body prior to the investigation in case there was a chance the victim could be
revived or resuscitated. The victim actually died at the hospital some time later. He explained that
the Kingsport Police Department does not bring bodies back to crime scenes for the purpose of
taking photographs. Nor do they stage dummy bodies for that purpose. Detective Cole explained
that “securing the scene” means that officers arrive and make sure that no one goes in and out of the
-5-
crime scene unless it is a member of the police department. All officers are trained in this procedure,
and the purpose is to preserve evidence and maintain the condition of the crime scene. The scene
remains secure until the officers have concluded their investigation. The officers follow certain
protocol when a crime is committed and each investigating officer has a specific duty. One specific
person is usually responsible for photographs and the collection of evidence, and in this case it was
Detective Mason.
When Detective Cole arrived at the scene he found the scene to be secure. Defendant had
been taken into custody, and Detective Cole was unaware of any time that Defendant was allowed
back into the room for the purpose of making up his bed. Neither the detective, sergeant, nor
emergency medical technicians had any responsibility for making up Defendant’s bed. There were
no stains on the top or side of the bedspread consistent with the victim having fallen on top of the
bed. There was no blood spatter in the area where the firearm was found. No civilians or non-law
enforcement officers were allowed to come into Defendant’s bedroom during the officers’
investigation. On re-cross examination, Detective Cole clarified his earlier testimony and stated that
the emergency medical technicians had placed the plastic chair on the bed. He admitted that he did
not ask any of the witnesses or technicians if they made up the bed.
Robert Royse testified that he has been employed at the Tennessee Bureau of Investigation
Crime Laboratory in Nashville, Tennessee, since 1982. He is a special agent forensic scientist
specializing in the area of firearms identification. He graduated from David Lipscomb College in
Nashville, Tennessee, with a B.S. in biochemistry. He went through formal on the job training
pursuant to the guidelines set forth by the Association of Firearm and Tool Mark Examiners. He has
been qualified as an expert in the field of firearms identification in the State of Tennessee.
Firearms identification deals with the “examination of fired bullets, fired cartridge cases,
fired shot shell cases and other ammunition components.” The purpose of the examination is to
determine which specific firearm fired the ammunition to the exclusion of all other firearms. Mr.
Royse also performs muzzle to garment distance determinations, tool mark examinations, serial
number restorations, and examines weapons and their safety features to determine if they are
functional. If a weapon is not functional, he determines why not.
Mr. Royse examined a .44 caliber percussion revolver taken from Defendant’s possession
and submitted to him by the Kingsport Police Department. He also examined two spherical lead
projectiles and a blue t-shirt taken from the victim. He explained that the revolver was an Italian
reproduction of a Colt Model 1851 Percussion 44 caliber revolver. The weapon submitted by the
police for examination had two empty chambers and four loaded chambers. It was a single action
revolver commonly known as a “black powder weapon” or “handgun.” Single action means that the
hammer of the gun must be pulled back prior to each time the gun is fired. Because the gun is a
“black powder” weapon, a lot of smoke is released each time the gun is fired.
“Percussion” revolvers differ from most modern firearms in that the ammunition is loaded
into the front of the chambers of the cylinder and most modern firearms are loaded from the rear.
-6-
The weapon has six chambers in the cylinder in which to load ammunition. The bullets are loaded
into the weapon by pouring black powder or pyrodex into the front chambers and then placing the
bullets in the chamber. The bullet must be pushed down into the chamber using the loading lever
because the diameter of the bullet exceeds that of the chamber. The bullet must also be lubricated
to prevent chain fire. Chain fire occurs when the gun is fired a single time and more than one
chamber discharges at the same time. Once the bullet is loaded, a percussion cap, the source of the
ignition, is placed on the rear of each chamber of the cylinder to cause firing of the revolver.
Dr. Royse test fired the weapon and made a comparison to the two spherical projectiles taken
from the victim’s body. Dr. Royse determined that the bullets taken from the victim’s body had the
same class characteristics and similar individual characteristics as the test bullets fired from the
revolver. Because of the nature of the projectile and the revolver, however, Dr. Royse could not
conclusively determine that the bullets taken from the victim’s body were fired from the revolver.
Dr. Royse also conducted a muzzle to garment distance determination on the blue t-shirt.
The purpose of this test was to determine how far the weapon was from the victim wearing the
garment at the time the weapon was fired. Because of the type of weapon used, the results of this
test were inconclusive. There was nothing the police could have done in the handling of the t-shirt
which could have resulted in conclusive results.
Dr. Gretel Harlan Stephens testified that she is a forensic pathologist employed by the State
of Tennessee at East Tennessee State University’s Quillen College of Medicine. She graduated from
the University of Tennessee, Knoxville, Memphis State University and the University of Tennessee
Medical School. She did an anatomic and clinical pathology residency at the University of
Tennessee and City of Memphis Hospitals and is board certified in anatomic and clinical pathology.
She worked primarily as a hospital pathologist for a number of years before practicing forensic
pathology full-time. She was qualified by experience and passed her boards to become a forensic
pathologist in 1994. While practicing in Johnson City, Dr. Stephens has conducted over one
thousand and fifty autopsies. Prior to that she conducted over three thousand autopsies while serving
as assistant to both the Shelby County and the Davidson County medical examiners. Dr. Stephens
was qualified as an expert witness in forensic pathology.
Dr. Stephens conducted the autopsy on the victim on September 12, 2001. She determined
that the victim had been shot two times, once in the chest and once in the abdomen. The victim died
as a result of these gun shot wounds. The first wound examined, wound A, was found in the right
side back of the chest, and followed a bullet path ending in the left side of the body. Dr. Stephens
described the path of the bullet in detail, indicating all bones and internal organs struck by the bullet.
In her opinion, the victim’s chances of surviving wound A were less then fifty percent even had the
victim been in the emergency room and subject to immediate emergency care.
Wound B indicated that the bullet entered the body in the middle of the upper torso, a little
to the right of the midline of the body, and lodged against the back body. Again, Dr. Stephens
described the path of the bullet and the resulting damage to the internal organs. She said that wound
-7-
B would also have been fatal “without immediate excellent medical care.” Each of the wounds could
have been fatal by itself. The victim did not die immediately from the wounds. He was resuscitated
and kept alive on the way to the emergency room, but he was beyond resuscitation by the time he
arrived there.
Dr. Stephens also did a test to determine the distance of the victim from the weapon at the
time the wounds were sustained. She explained that when handguns or rifles are fired there are small
particles of burning gunpowder and filler material from the charge which propel the bullet out of the
gun. These particles will deposit in and on the skin’s surface if the weapon is within two feet from
the muzzle to the skin. The closer an individual is to the weapon, the more particles will be
deposited on skin or clothing.
Dr. Stephens found a few widely scattered particles on the palm and back of the victim’s
right hand. She found no gunpowder residue on the victim’s shirt or around his wounds. Based on
this information, Dr. Stephens concluded that the distance between the end of the weapon and the
victim’s torso was “slightly beyond two feet or further.” The residue on the victim’s hand was
spaciously deposited. There was no evidence indicating that the victim’s hand was extended toward
the weapon. Dr. Stephens opined that the victim’s right hand was likely at the periphery of the black
cloud emitted with the firing of the gun, indicating the victim was at least two feet from the gun. She
also indicated the victim may have acquired the residue from an environmental surface.
Dr. Stephens stated that if the bullet was fired parallel to the ground, the bullet path indicated
that the victim was leaning slightly toward the gun both times he was struck. The bullet would not
have moved the body on impact. She said it is possible that the victim was turning to leave when
the second shot was fired. In such a scenario, wound B, which entered the victim’s front right torso,
would be the result of the first shot fired, and wound A would reflect the second shot. The victim’s
blood alcohol content was .088 percent, and the lining of the fluid on the inside of his eye was .077
percent. The portion inside the eye is a more accurate reflection of what the brain was experiencing.
The portion in the blood is slightly above the mark at which someone can be prosecuted for drinking
and driving. She acknowledged that if the victim consistently drank this much, he might have
appeared less intoxicated than he was in actuality.
The victim also had diazepam, or Valium, and its breakdown product in his blood stream.
The breakdown product in his blood stream indicated that his body had already absorbed part of the
Valium and had begun clearing the drug from his system. The quantity of Valium in his system was
in a “therapeutic range” and would have made the victim “more mellow” and “less likely to be
panicky or nervous.” The Valium and alcohol combined might have made the victim less
coordinated but would not have rendered him unconscious.
On cross-examination, Dr. Stephens said that it is possible the victim could have gotten the
residue on his hand while reaching for Defendant’s throat. However, she indicated that if this
scenario had taken place there would have been some residue on the victim’s body. She said that
alcohol would have made the victim more likely to act on impulse and without thought. She agreed
-8-
that if the victim was “furious” and “charging” down the hall, he was acting on his feelings and
would likely follow through with his intentions unless something stopped him. She said that alcohol
affects one’s self-control and an individual may be inclined to start a fight in a situation where he
or she otherwise would not do so.
II. Sufficiency of the Evidence
On appeal, Defendant combines his first three assignments of error into one argument that
the evidence was insufficient to support a finding that he was guilty of reckless homicide. Defendant
contends that the State failed to prove each element of the offense of reckless homicide beyond a
reasonable doubt. Specifically, he argues that the State failed to prove Defendant acted “recklessly”
in killing the victim. He argues that this element is lacking because the State did not prove
Defendant acted with a conscious disregard for the victim’s life, or that Defendant’s behavior was
a gross deviation from the actions an ordinary person would take under the circumstances.
In examining whether the evidence is sufficient to support Defendant's conviction of reckless
homicide, we must review the evidence in a light most favorable to the prosecution in determining
whether a rational trier of fact could have found all the essential elements of the crime beyond a
reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 319, 99 S. Ct. 2781, 2789, 61 L. Ed. 2d 560,
573 (1979). Once a jury finds a defendant guilty, his or her presumption of innocence is removed
and replaced with a presumption of guilt. State v. Black, 815 S.W.2d 166, 175 (Tenn. 1991). The
defendant has the burden of overcoming this presumption, and the State is entitled to the strongest
legitimate view of the evidence along with all reasonable inferences which may be drawn from that
evidence. Id.; State v. Tuggle, 639 S.W.2d 913, 914 (Tenn. 1982). The jury is presumed to have
resolved all conflicts and drawn any reasonable inferences in favor of the State. State v. Sheffield,
676 S.W.2d 542, 547 (Tenn. 1984). Questions concerning the credibility of witnesses, the weight
and value to be given the evidence, and all factual issues raised by the evidence are resolved by the
trier of fact and not this court. State v. Bland, 958 S.W.2d 651, 659 (Tenn. 1997). These rules are
applicable to findings of guilt predicated upon direct evidence, circumstantial evidence, or a
combination of both direct and circumstantial evidence. State v. Matthews, 805 S.W.2d 776, 779
(Tenn. Crim. App. 1990).
While there was proof that the victim and Ms. Lyons had an escalated argument, and the
victim was yelling and upset, there was no proof that the victim directed any threats toward
Defendant, or that Defendant said anything to the victim before shooting him twice. The evidence
showed that Defendant and the victim had been friends since childhood. There was no animosity
between Defendant and the victim, nor any history of violence. In fact, testimony established that
on other occasions the victim had been welcome in Defendant’s room. On the night of the killing,
the victim was not carrying a weapon when he went to Defendant’s room. He did not threaten to kill
or harm Defendant in any way. He told Defendant, “Get your punk ass out here. We need to talk.”
The jury could infer from the proof that Defendant disputed that he owed money to the victim, and
that Defendant knew the victim wanted the money on the night of the homicide. Defendant did not
verbally respond to the victim or ask him to calm down. When the victim opened the door to
-9-
Defendant’s room, Defendant calmly shot the victim twice and came out of the room and stated, “I
did what I had to do.”
Reckless homicide, as relevant here, is “a reckless killing of another.” T.C.A. § 39-13-215(a)
(2003). “‘Reckless’ refers to a person who acts recklessly with respect to circumstances surrounding
the conduct or the result of the conduct when the person is aware of but consciously disregards a
substantial and unjustifiable risk that the circumstances exist or the result will occur. The risk must
be of such a nature and degree that its disregard constitutes a gross deviation from the standard of
care that an ordinary person would exercise under all the circumstances as viewed from the accused
person’s standpoint.” T.C.A. § 39-11-302(c) (2003).
“‘Knowing’ refers to a person who acts knowingly with respect to the conduct or to
circumstances surrounding the conduct when the person is aware of the nature of the conduct or that
the circumstances exist. A person acts knowingly with respect to a result of the person’s conduct
when the person is aware that the conduct is reasonably certain to cause the result.” T.C.A. § 39-11-
302(b) (2003).
Although Defendant argues that the evidence was insufficient to show he acted “recklessly,”
we conclude that there was sufficient evidence that Defendant acted “knowingly” when he shot the
victim two times. When Defendant acted “knowingly,” he also acted “recklessly.” T.C.A. § 39-11-
301(a)(2) (“When recklessness suffices to establish an element [of a crime], that element is also
established if a person acts intentionally or knowingly.”). Defendant is not entitled to relief on this
issue.
III. Self-Defense
Next, Defendant contends the evidence shows that he had a reasonable belief that he was in
imminent danger of death or serious bodily injury so as to justify his shooting in self-defense. He
argues that the State did not meet its burden of proving beyond a reasonable doubt that Defendant
did not act in self-defense. We note that whether Defendant’s conduct was justified is essentially
a question of fact for the jury. See State v. Williams, 784 S.W.2d 660, 663 (Tenn. Crim. App. 1989).
Thus, when reviewing a jury verdict rejecting a claim of self-defense, “in order to prevail, the
defendant must show that the evidence relative to justification, such as self-defense, raises, as a
matter of law, a reasonable doubt as to his conduct being criminal.” State v. Clifton, 880 S.W.2d
737, 743 (Tenn. Crim. App. 1994).
With regard to a claim of self-defense, Tennessee Code Annotated section 39-11-611(a)-(b)
(2003) provides in part as follows:
(a) A person is justified in threatening or using force against another person when
and to the degree the person reasonably believes the force is immediately necessary
to protect against the other's use or attempted use of unlawful force. The person must
have a reasonable belief that there is an imminent danger of death or serious bodily
-10-
injury. The danger creating the belief of imminent death or serious bodily injury
must be real, or honestly believed to be real at the time, and must be founded upon
reasonable grounds. There is no duty to retreat before a person threatens or uses
force.
(b) Any person using force intended or likely to cause death or serious bodily injury
within the person’s own residence is presumed to have held a reasonable fear of
imminent peril of death or serious bodily injury to self, family or a member of the
household when that force is used against another person, not a member of the family
or household, who unlawfully and forcibly enters or has unlawfully and forcibly
entered the residence, and the person using the force knew or had reason to believe
that an unlawful and forcible entry occurred.
Defendant asserts that he weighed eighty pounds less than the victim, that he was diabetic,
that the victim was angry and yelling, and that under these circumstances, he feared for his life. He
argues that he was trapped by the victim in an eleven by seven-foot room, and that he had nowhere
to go to retreat other than to go past his aggressor. Defendant argues that any reasonable person in
his position would have felt there was an imminent danger of death or serious bodily injury.
We conclude that the jury properly found that it was unreasonable for Defendant to believe
that deadly force was immediately necessary to protect himself against the victim. Although the
victim was “furious” and “shaking” Defendant’s bedroom door, he did not verbally threaten force
or violence, he did not have a weapon, and he did not indicate an intent to harm Defendant.
Defendant remained silent while the victim was yelling from the hallway. Then, when the bedroom
door opened, Defendant shot the victim two times. Testimony established that one of the shots may
have occurred while the victim was retreating and either one of the shots alone could have been fatal.
The gun powder residue found on the victim was confined to the victim’s right hand. The fact that
no other gunpowder was found on his body or around the wounds reveals that he was well over two
feet away from Defendant and had barely entered the bedroom. The jury was justified in finding that
Defendant’s use of deadly force was not warranted under the circumstances. Defendant is not
entitled to relief on this issue.
CONCLUSION
For the foregoing reasons, the judgment of the trial court is affirmed.
____________________________________
THOMAS T. WOODALL, JUDGE
-11- | 01-03-2023 | 10-08-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/590477/ | 974 F.2d 1333
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.UNITED STATES of AMERICA, Plaintiff-Appellee,v.Joey Randolph ROACH, Defendant-Appellant.
No. 91-5617.
United States Court of Appeals,Fourth Circuit.
Submitted: June 30, 1992Decided: August 31, 1992
Appeal from the United States District Court for the District of South Carolina, at Anderson. Solomon Blatt, Jr., Senior District Judge. (CR-90-489-8)
Lester L. Bates, Jr., Columbia, South Carolina, for Appellant.
William Corley Lucius, Assistant United States Attorney, Greenville, South Carolina, for Appellee.
D.S.C.
Affirmed.
Before SPROUSE, HAMILTON, and LUTTIG, Circuit Judges.
OPINION
PER CURIAM:
1
Joey Randolph Roach pled guilty, pursuant to a plea agreement, to knowing possession of a firearm by a convicted felon, in violation of 18 U.S.C.A. §§ 922(g)(1) & 924(a)(2) (West 1981 & Supp. 1992). Roach was sentenced to imprisonment of twenty months. That sentence was to be served consecutively to any term of imprisonment he currently was serving. At the time, Roach was serving a three-year sentence for burglary imposed on October 24, 1989.
2
Roach appeals his conviction. His attorney has filed a brief in accordance with Anders v. California, 386 U.S. 738 (1967), raising several issues but stating that, in his view, there are no meritorious issues for appeal. Although advised of his right to file a supplemental brief, Roach has not filed a brief.
3
The first argument raised on appeal is that the district court lacked authority to order that Roach's sentence run consecutively to the state sentence he was serving at the time. Roach relies on 18 U.S.C. § 3584(a) (1988), which provides:
4
[I]f a term of imprisonment is imposed on a defendant who is already subject to an undischarged term of imprisonment, the terms may run concurrently or consecutively, except that the terms may not run consecutively for an attempt and for another offense that was the sole objective of the attempt.
5
Roach contends that the exception applies in his case because the rifle stolen in the burglary was the same rifle he was later charged with possessing.
6
Roach's position clearly is without merit. Burglary does not constitute attempted felony possession of a firearm. Further, the presentence report states that the rifle Roach was charged with possessing was stolen in a burglary on August 20, 1989. The federal sentence for possession of the firearm runs consecutively to a state sentence for a separate, unrelated burglary that occurred on June 30, 1989.
7
Roach also contends that he was entitled to have applied to his federal sentence time served while incarcerated on state charges. He argues that, once a federal detainer was lodged with state officials, 18 U.S.C. § 3568 (1988) (repealed effective November 1, 1987), requires such credit.
8
We decline to consider this contention. Authority for calculating sentence credit rests with the Attorney General, not with the sentencing court or with the court of appeals. See United States v. Wilson, 60 U.S.L.W. 4244, 4247 (U.S. 1992). Judicial review is available only after exhaustion of administrative remedies. Id. This rule applies both under former § 3568 and under its successor, 18 U.S.C. § 3585(b) (1988), which is the provision applicable to Roach.
9
Roach's third contention on appeal is that he was so impaired by drug use that he lacked the mental capacity to enter a guilty plea. The record belies this argument. We note especially that Roach denied in court that he was taking any medication that might have interfered with his thought processes and that the court specifically determined that Roach's plea was knowingly and voluntarily made.
10
Roach's contention that he was denied the effective assistance of counsel is not properly raised on direct appeal because no such ineffectiveness is apparent on the face of the record. See United States v. Fisher, 477 F.2d 300, 302 (4th Cir. 1973).
11
In accordance with the requirements of Anders, we have examined the entire record in this case and find no other meritorious issues for appeal. Pursuant to the plan adopted by the Fourth Circuit Judicial Council in implementation of the Criminal Justice Act of 1964 (18 U.S.C. § 3006A (1988)), this Court requires that counsel inform his client, in writing, of his right to petition the United States Supreme Court for further review. If requested by Roach to do so, counsel should prepare a timely petition for a writ of certiorari.
12
As our review of the record and other materials before us reveals that it would not significantly aid the decisional process, we dispense with oral argument.
AFFIRMED | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/228392/ | 193 F.2d 279
NATIONAL LABOR RELATIONS BOARDv.LANDIS TOOL CO.
No. 10563.
United States Court of Appeals, Third Circuit.
Argued December 4, 1951.
Decided January 3, 1952.
Willis S. Ryza, Washington, D. C. (George J. Bott, General Counsel, David P. Findling, Associate General Counsel, A. Norman Somers, Asst. General Counsel and Frederick U. Reel, National Labor Relations Board, all of Washington, D. C., on the Brief), for petitioner.
Lacy I. Rice, Martinsburg, W. Va., and Earle K. Shawe, Baltimore, Md. (Rice, Hannis & Rodgers, Martinsburg, W. Va., counsel on the Brief), for respondent.
Before BIGGS, Chief Judge, and MARIS and GOODRICH, Circuit Judges.
MARIS, Circuit Judge.
1
The National Labor Relations Board on April 18, 1950 found that Landis Tool Company, the respondent, had refused to engage in good faith in collective bargaining with the Pattern Makers League of North America, the certified bargaining representative of an appropriate unit of its employees in violation of the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., and entered an order requiring the respondent to cease from such refusal. 89 N.L.R.B. 503. On September 11, 1951 the Board filed the present petition in this court for the enforcement of the order. The respondent strongly urges that the Board's crucial findings are not supported by substantial evidence on the record considered as a whole. Our consideration of the case compels the conclusion that the respondent is right and that the Board's order must be set aside.
2
The Board found "that by refusing to submit a counterproposal, by refusing to recognize the separate identity of the patternmakers as an appropriate unit for the purpose of negotiating a wage increase, by unilaterally granting a wage increase on June 7, 1948, and by dilatory tactics in delaying meeting with the Union, the Respondent evidenced an intention to avoid its duty to bargain in good faith." Each of the four subsidiary findings upon which the Board thus relied must be examined in the light of the previous relations between the respondent and the League as shown by the record. When so examined they lose all substance.
3
At an election held on March 12, 1946, the Pattern Makers League of North America was chosen as their bargaining representative by the patternmakers and patternmaker apprentices employed by respondent. On the same day approximately 900 production and maintenance employees of the respondent chose the International Union of United Automobile, Aircraft and Agricultural Implement Workers of America as their bargaining representative. Thereafter the respondent commenced negotiations with both unions, its first bargaining conference with the Pattern Makers League being held on May 1, 1946, at which time the League presented a proposed contract and demanded a substantial increase in wages. The next conference was on May 23, 1946 at which time the respondent presented a written counterproposal. Subsequent conferences were held on June 25, 1946, April 10, 1947, May 15, 1947 and February 27, 1948. No other meetings were requested by the League during this period.
4
At these meetings the League's proposal and the respondent's counterproposal were fully discussed. The respondent informed the League that it was negotiating with the union which represented its 900 production and maintenance employees and that the League's demands for large wage increases, union security, plantwide seniority and other changes must be considered in relation to the entire plant picture. It was recognized by the League's representatives that there was merit in this position and for this reason they did not press the negotiations any more vigorously during 1946 and 1947. There was evidence that the League's representatives sought and obtained from the respondent an oral understanding that if, during their negotiations, the respondent granted a general plantwide wage increase, such increase would be put into effect for the patternmakers as a partial payment of and without prejudice to their wage demands. The Board thought that the record failed to support the existence of such an agreement but our review of the whole record satisfies us beyond doubt that such an agreement was made. The great weight of the evidence establishes the fact and the subsequent conduct of both parties confirms it. Thus a general increase in wages in the plant was put into effect by the respondent on November 4, 1946 and again on June 23, 1947. In each case the respondent informed a representative of the League of its intention to apply the increase to the patternmakers as well as to its other employees and the representative acquiesced.
5
The Board found no unfair labor practice on the part of the respondent until May 4, 1948, when the next meeting took place. At this meeting the parties discussed a short memorandum contract which the League's representative had submitted. Oral proposals and counterproposals were made and discussed as well as a written substitute for the League's proposed discrimination clause. The League's representative asked the respondent to submit a counterproposal but the latter declined to do so until the League had itself submitted a complete new proposal. It was this attitude on the part of the respondent which the Board took as one of the bases for its finding against the respondent. The Board was here clearly in error, however, since it ignored the fact that the respondent at the second meeting on May 23, 1946 had laid on the bargaining table a full written counterproposal to the contract offered by the League at the first conference. Both proposals were before the parties and were discussed at every meeting. The area of agreement obviously lay between them. Since the Act, as amended, does not require the making of a concession1 the respondent had no legal duty to offer a second counterproposal.
6
After the adjournment of the bargaining session held on May 4, 1948 respondent's counsel had dinner with the League's representative and informed him that the respondent was considering a general wage increase in its plant of between 5 and 8 cents per hour sometime after May 14, 1948, the date which had been set for their next meeting. Shortly thereafter respondent's counsel asked that the May 14th meeting be postponed, and the representative of the League acquiesced under date of May 12, 1948. On June 7, 1948 the respondent granted the contemplated general wage increase in the amount of 7 cents per hour, the amount being fixed to conform to the wage pattern in the area and to compensate for the increase in the cost of living. The increase was applied to the patternmakers as well as to the other 900 employees of respondent and no specific notice of it was given to the League in advance, other than the dinner conversation to which we have already referred. It is this "unilateral" wage increase which the Board relies upon as another basis for its finding against the respondent.
7
Here again we are satisfied that the Board's finding is not supported by substantial evidence in the light of the entire record. On the contrary it is perfectly clear that in granting this plantwide wage increase the respondent was merely following the pattern set by the two prior wage increases, which the Board found to be unobjectionable, and was carrying out its understanding with the League that any wage increases which it might grant to its 900 other employees should be applied to the 15 patternmakers as a payment on account of their wage demands. That it was so regarded and that the objection to it came as an afterthought is established by the fact that the League registered no objection to the increase until September 27, 1948, when the parties again met and then did not seriously object but merely stated that its representatives should have been consulted. All three of the wage increases granted by the respondent, added together, did not equal the wage demands which the League made at the first meeting.
8
We do not have here the situation where an employer refuses the demand of a union for a wage increase and thereafter unilaterally grants the increase or a greater one to the employees represented by the union without giving the union credit for it. Here the respondent was faced with a practical situation in its plant which the League fully recognized throughout the negotiations. The respondent's principal concern obviously had to be for its 900 production and maintenance employees with regard to which it was negotiating with the United Automobile Workers. Its negotiations with respect to the 15 patternmakers in its plant obviously had to be carried on in the light of the larger problem. During this period, as we all know, the cost of living was rising and the respondent was alert to its responsibility to recognize this fact in its wage scales. We do not think that the respondent's action in giving the patternmakers the benefit of the wage increases which it was willing to give to its other employees can under the circumstances of this case fairly be construed to be an unfair labor practice.2 On the contrary we think that the whole record demonstrates that these increases were given pursuant to an obligation which the respondent had assumed in the course of its bargaining negotiations with the League.
9
The two remaining bases of the Board for its finding against the respondent require but little discussion. One of these was that the respondent was guilty of dilatory tactics in delaying meeting with the League between May 4 and September 27, 1948. There is simply no basis in the record for such a finding. It is true that there was delay in arranging a meeting subsequent to the one held on May 4, 1948, but this delay was just as much attributable to the League as it was to the respondent. As already stated counsel for the respondent had written to the representative of the League suggesting the postponement until sometime in July of a further meeting which had been scheduled for May 14th. This was agreed to by the League on May 12th. Then in July it appeared that both of the principal officers of the company who were empowered to conduct the negotiations on its behalf were away on other business so that a conference was suggested first for August 10th and then because of a conflicting meeting for August 13th. The League representative wrote that August 13th would not be convenient but suggested no alternative date. Finally after an exchange of correspondence September 27th was agreed upon and a meeting was held on that date. We think that the facts demonstrate that just as much of the delay was attributable to the League as to the respondent and that they do not show any dilatory tactics on the part of respondent.
10
The fourth and final basis for the Board's order is its finding that the respondent refused to recognize the separate identity of the patternmakers as an appropriate unit for the purpose of negotiating a wage increase. Here again we find no warrant in the record for such a conclusion. It is perfectly true that the respondent insisted that it must consider any wage increase to be granted to the patternmakers in connection with wage increases which might be granted to its 900 other employees. Under the circumstances existing in the plant we have no doubt of the respondent's right to take this position so long as it did not refuse to negotiate with the patternmakers' representative with respect to their wages. The record is replete with evidence that the respondent continuously carried on such negotiations with the League. That these negotiations were carried on in good faith is illustrated by the fact that in connection with the wage increase of June 23, 1947 the respondent actually adjusted the wage rates of certain of the patternmakers in order that they might reflect differentials which the League had requested and which the respondent had agreed to put into effect pursuant to that request.
11
The order of the National Labor Relations Board will be set aside.
Notes:
1
National Labor Relations Act, § 8(d), as amended by the Labor Management Relations Act, 1947, § 101, 29 U.S.C.A. § 158 (d)
2
Compare National Labor Relations Board v. Crompton-Highland Mills, 1949, 337 U.S. 217, 69 S.Ct. 960, 93 L.Ed. 1320, with National Labor Relations Board v. Bradley Washfountain Company, 7 Cir., 1951, 192 F.2d 144; In the Matter of Southern Prison Company, 1943, 46 N.L. R.B. 1268; In the Matter of Exposition Cotton Mills Company, 1948, 76 N.L.R.B. 1289, 1292; In the Matter of W. W. Cross & Company, 1948, 77 N.L.R.B. 1162, 1165-1166 | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/7023680/ | PRESIDING JUSTICE UNVERZAGT delivered the opinion of the court: Defendant, Michael Medina, was charged by indictment with unlawful possession of a controlled substance with intent to deliver (Ill. Rev. Stat. 1987, ch. SG1^, par. 1401(a)(2)), unlawful possession of a controlled substance (Ill. Rev. Stat. 1987, ch. 56V2, par. 1402(a)(2)), armed violence (Ill. Rev. Stat. 1987, ch. 38, par. 33A — 2), and unlawful possession of a hypodermic syringe and needle (Ill. Rev. Stat. 1987, ch. 38, par. 22 — 50). The indictments were based on evidence obtained during a search of defendant’s apartment pursuant to a search warrant. The complaint for the search warrant was supported by the affidavit of a detective of the Lake County sheriff’s department. Prior to trial, defendant moved to quash the search warrant and suppress the evidence seized in the search on the ground that the police officer/affiant deliberately omitted material facts from the affidavit in support of the search warrant. The trial court denied defendant’s request for an evidentiary hearing pursuant to Franks v. Delaware (1978), 438 U.S. 154, 57 L. Ed. 2d 667, 98 S. Ct. 2674, and denied the motion to quash. The cause proceeded to a stipulated bench trial, and defendant was convicted of unlawful possession of a controlled substance with intent to deliver and was sentenced to 18 years’ imprisonment. On appeal, defendant contends that he was improperly denied a Franks hearing. On August 17, 1987, Detective Martin Grum of the Lake County sheriff’s department executed a complaint for a search warrant. In support of the complaint, Grum submitted his own affidavit. The affidavit stated that Grum had a reliable informant who had informed him that, within the last 12 hours, he was in defendant’s residence; that he witnessed a white female come to the apartment and ask for a “six-pack,” which is the common street term for one-sixteenth ounce of cocaine; that defendant went into his bedroom and came back with a large clear plastic bag; and that defendant took out a quantity of white powdery substance believed to be cocaine, placed the white powdery substance into a clear plastic bag and gave it to the woman, after which she gave him $100. The affidavit further stated that the informant is familiar with the effects, taste and texture of cocaine, having used it approximately 75 times, that he had a sample of the substance which was in the large clear plastic bag and that he believed the substance was cocaine. The affidavit also stated that Officer Gram had known the informant for six months, that the informant had given him information approximately 20 times, and that the information had led to ongoing investigations and two arrests. Further, the informant had known defendant for approximately three months, had purchased cocaine from defendant approximately 10 times, and had witnessed approximately 20 other cocaine purchases from defendant. Based on these averments, the search warrant was issued. Officer Gram and other police officers executed the search warrant. A large quantity of cocaine was discovered in defendant’s apartment, and defendant was arrested. Defendant filed several motions to quash the search warrant and the arrest and to suppress the evidence. The third motion to quash alleged that the unnamed informant referred to in Officer Gram’s affidavit was John Mira, a convicted felon who is currently on probation. The motion further stated that Officer Grum knew of Mira’s record and knew, therefore, that Mira was unreliable; and that Officer Gram omitted the informant’s criminal record from the affidavit in an attempt to mislead the issuing judge. At the hearing on defendant’s motion, the trial court determined that defendant had not made an adequate preliminary showing entitling him to an evidentiary hearing pursuant to Franks v. Delaware. Defendant appeals this ruling. There is a presumption of validity with respect to an affidavit supporting a search warrant (People v. Stewart (1984), 105 Ill. 2d 22, 39); however, a party may challenge the truthfulness of an affidavit. To overcome the presumption of validity, defendant must make a substantial preliminary showing that false statements were deliberately included in the affidavit, or included with a reckless disregard for the truth, and that the statements were necessary to a finding of probable cause; if these conditions are met, defendant is entitled to an evidentiary hearing on the issue. Franks, 438 U.S. at 155-56, 57 L. Ed. 2d at 672, 98 S. Ct. at 2676; Stewart, 105 Ill. 2d at 39. The linchpin of the Franks procedure is the “substantial preliminary showing” requirement. (People v. Lucente (1987), 116 Ill. 2d 133, 147.) To mandate an evidentiary hearing, the defendant’s attack must be more than conclusory; there must be allegations of deliberate falsehood or reckless disregard for the truth, and these allegations must be accompanied by an offer of proof; these allegations should point out specifically the portion of the warrant affidavit that is claimed to be false, and they should be accompanied by a statement of supporting reasons; affidavits or sworn or otherwise reliable statements of witnesses should be furnished, or their absence satisfactorily explained. (Franks, 438 U.S. at 171, 57 L. Ed. 2d at 682, 98 S. Ct. at 2684.) If these requirements are met, and if, when material that is the subject of the alleged falsity or reckless disregard is set to one side, there remains sufficient content in the warrant affidavit to support a finding of probable cause, no hearing is required. Franks, 438 U.S. at 171-72, 57 L. Ed. 2d at 682, 98 S. Ct. at 2684. The reasoning of Franks logically extends to cases where the challenge to the affidavit is based on material omissions. (Stewart, 105 Ill. 2d at 43; 2 W. LaFave, Search & Seizure §4.4(b), at 194 (2d ed. 1987).) A deliberate omission of a material fact can be a reckless disregard for the truth. People v. Hothersall (1981), 103 Ill. App. 3d 183,187. To establish a right to an evidentiary hearing based on an omission, defendant must show that the omitted information was material to the probable cause determination and that it was omitted for the purpose of misleading the magistrate. (Stewart, 105 Ill. 2d at 44.) Facts are material and, hence, must be disclosed if their omission would make the affidavit substantially misleading; facts must be deemed material for this purpose if, because of their inherent probative force, there is a substantial possibility that they would have altered a reasonable magistrate’s probable cause determination. People v. Kurland (1980), 28 Cal. 3d 376, 385, 618 P.2d 213, 218, 168 Cal. Rptr. 667, 672. The alleged, deliberate, material omission in this case is that the police informant is a convicted felon currently on probation. Defendant contends that this fact reflected on the informant’s credibility and would have affected the issuing magistrate’s probable cause determination, especially in light of the informant’s poor track record as a tipster. In this case, defendant filed three motions to quash the search warrant. The first motion, which was later withdrawn, alleges only that there was an alteration made in the warrant as to the address to be searched. There was a hearing on that motion, and Officer Gram and the issuing magistrate testified to the circumstances surrounding the alteration of the address on the search warrant. The second motion to quash alleged that defendant knew of two persons who would testify that they were in the searched premises with defendant during the period alleged in the complaint; that they saw an unknown female enter and ask for a “six-pack”; that she was told to leave, and she left without purchasing anything; and that they did not see a white powdery substance while they were with defendant. The trial court ruled that the second motion had not presented a sufficient basis for a Franks hearing. Defendant filed a third motion to quash which alleged that the informant was John Mira, a convicted felon currently on probation, and that the officer/affiant knew these facts and failed to relate them to the issuing magistrate for the purpose of misleading him. The denial of the third motion to quash is the subject of this appeal. Pursuant to Franks, we must first determine whether defendant has made a showing that there was an omission and the omission was made for the purpose of misleading the magistrate about the informant’s credibility. As defendant points out, it is difficult for an accused to prove that an officer/affiant acted intentionally or with reckless disregard, rather than negligently, in omitting information from an affidavit. We agree that, where facts are clearly critical to the finding of probable cause, recklessness may be inferred from the proof of the omission itself. See United States v. Martin (5th Cir. 1980), 615 F.2d 318, 329. The problem with defendant’s motion is that he has utterly failed to support his contention that an omission was made. In the third motion to quash, defendant makes the bald allegations that the informant is John Mira and that John Mira is a convicted felon. No affidavits or statements or supporting reasons were offered with the motion. The State never admitted those facts, and defendant made no showing as to how he arrived at those conclusions and offered no evidence in support of his conclusions. Franks dictates that allegations should be accompanied by a statement of supporting reasons and affidavits or sworn statements should be furnished or their absence satisfactorily explained. Defendant has presented no evidence to support his conclusions concerning the identity of the informant and his alleged criminal record. Defendant asserts that he did make an offer of proof to support his allegations. The offer of proof he refers to, however, is his statement in the second motion that he had two witnesses who would deny that drug deals had occurred in defendant’s apartment during the relevant period. Defendant asserts that this information would attack the credibility of the informant. Although these witnesses might be valuable witnesses for the defense, their offer of proof concerning what occurred in defendant’s apartment is irrelevant to the issues of the informant’s identity or criminal record, the officer/affiant’s knowledge of the informant’s identity and record, and the officer/affiant’s motive in omitting these facts from the affidavit, which are the issues raised in defendant’s motion. Furthermore, a search warrant must be tested on the basis of what the police and the issuing magistrate knew at the time the search warrant was applied for. (People v. Free (1983), 94 Ill. 2d 378, 401.) There are no allegations that the police officer knew that these two witnesses existed or what their stories might be. It would be reasonable to assume that Officer Grum knew the identity and record, if any, of an informant he had worked with for six months. The problem with defendant’s motion is that he has given us no reason, beyond an unsupported allegation, to believe that the informant is actually a convicted felon. Although, under certain circumstances, an officer/affiant’s reckless disregard for the truth can be inferred from proof of the omission itself, in this case defendant has made no showing that there was, in fact, an omission. Even if we were to assume that defendant’s allegations were supported in some way, the question would still remain whether this omission was material, that is, whether it affected the probable cause determination. Defendant asserts that the search warrant rests solely on the informant’s story and the issue of his credibility is crucial. Defendant argues that the informant’s police record is strong evidence of his unreliability, especially in light of his poor record as an informant. We do not consider, however, that the informant’s record as a tipster is deficient. Officer Gram’s affidavit states that he had known the informant for six months and that the informant gave him 20 tips which led to ongoing investigations and two arrests. Defendant assumes that, because only two arrests have resulted from the informant’s tips so far, the remaining 90% of the tips were incorrect. He concludes, therefore, that the informant is unreliable. We disagree. In the first place, the affidavit indicates that tips have led to ongoing investigations. These investigations may lead to further arrests. Furthermore, the fact that there were no more arrests does not in any way indicate that the other tips were incorrect. They may just as easily have been cumulative, or the police may have decided against acting upon them for any number of reasons, or the police may have been unsuccessful in acting on the tips, again for any number of reasons unrelated to the correctness of the tips. Contrary to defendant’s suggestion, the fact that a tip itself does not establish probable cause to arrest does not render the tip incorrect. Further, the informant’s track record as a tipster was fully set forth for the issuing magistrate’s consideration. Additionally, given the affidavit as a whole, we believe that the issue of the possible unreliability of the informant was adequately presented. The affidavit sets out that the informant has been a police tipster for six months, that he has used cocaine on approximately 75 occasions, that he has purchased cocaine on approximately 10 occasions, and that he has witnessed numerous drug transactions. Given these facts, the issuing magistrate was not likely to be misled about the informant’s character. (See Kurland, 28 Cal. 3d at 393, 618 P.2d at 223-24, 168 Cal. Rptr. at 677-78.) We consider that even if the omitted information had been included in the affidavit, it would not have affected the issuing magistrate’s probable cause determination. Therefore, defendant has also failed to establish that the alleged omission was material. In summary, defendant failed to provide any support for his bald allegation that the officer/affiant deliberately omitted from the affidavit the criminal record of the informant, and he failed to establish that, even if there had been a deliberate omission, it would have affected the issuing magistrate’s probable cause determination. Therefore, defendant failed to make a substantial preliminary showing that the search warrant was not properly issued. For the aforementioned reasons, the judgment of the circuit court of Lake County is affirmed. Affirmed. McLAREN and REINHARD, JJ., concur. | 01-03-2023 | 07-24-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/3788598/ | OPINION — AG — ** RAW MILK — SCHOOL LUNCH — PASTEURIZED ** UNDER 2 O.S. 400 [2-400], ALL MILK PURCHASED FOR RE SALE (RESALE) TO CHILDREN (JUVENILE, MINORS) PARTICIPATING IN A SCHOOL LUNCH PROGRAM OR FOR RESALE " IN MIXED DRINKS AT SODA FOUNTAINS (DRUG STORES) " MUST BE PASTEURIZED. (STUDENTS) CITE: 63 O.S. 295.1 [63-295.1], 75 O.S. 144 [75-144], 63 O.S. 295.11 [63-295.11], OPINION NO. FEBRUARY 10, 1925 — WHITEHURST (J. H. JOHNSON) | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1318009/ | 554 P.2d 872 (1976)
In the Matter of Tauras MEEKINS and Kevin Meekins, children under 18 years of age.
Delores MEEKINS, Appellant,
v.
The DEPARTMENT OF INSTITUTIONS, SOCIAL AND REHABILITATIVE SERVICES, Appellee.
No. 48659.
Court of Appeals of Oklahoma, Division No. 2.
June 1, 1976.
Released for Publication June 24, 1976.
James H. Hiatt, Oklahoma City, for appellant.
Donald L. Ritter, Oklahoma City, for appellee.
Released for Publication by Order of Court of Appeals June 24, 1976.
*873 NEPTUNE, Judge.
Pursuant to 10 Ohio St. 1971 § 1101 and following sections, the two children of appellant, Delores Meekins, were declared dependent and neglected and made wards of the court. That adjudication is not here contested.
Subsequently, however, a supplemental petition was filed by the Department of Institutions, Social and Rehabilitative Services, seeking to terminate the parental rights of appellant mother. A copy of the petition with "summons and notice" was personally served on appellant, directing her to appear with the children on May 27, 1975, at 3:00 p.m. before the District Court of Oklahoma County at the County Courthouse at Oklahoma City.[1]
*874 Appellant failed to appear and in her absence the trial court terminated her parental rights. On June 19, 1975, within the time allowed by law, she filed a Petition to Vacate Judgment pursuant to 12 Ohio St. 1971 § 1031 et seq.
The trial court issued an Order Denying Hearing on Petition to Vacate Judgment and overruled the petition to vacate, therein making the following findings of fact and conclusions of law:
"I.
"That the allegations of the petition to vacate judgment are true, and that the mother of the above-named children was prevented by unavoidable casualty and misfortune from appearing in Court and contesting the termination of her parental rights on the 27th of May, 1975.
"II.
"That in accordance with the terms and provisions of Title 12, Oklahoma Statutes, Section 1031 and following sections, and the cases construing same, the order terminating the parental rights of Delores Meekins should be vacated.
"III.
"That the Court in this case is without authority to vacate the order terminating the parental rights of Delores Meekins, due to the express command of Title 10, Oklahoma Statutes, Section 1118, providing in part that an order terminating parental rights may not be modified. The Court is of the opinion that vacation of an order is a form of modification, and therefore this Court may not vacate its previous order terminating the parental rights."
From the order denying hearing and overruling the petition to vacate, the mother appeals.
Since the filing of the appeal, the Oklahoma Supreme Court issued an Order staying the portion of the trial court order which authorized the Department to consent to adoption of the children.
Section 1118 of the juvenile code states:
"Any decree or order made under the provisions of this Act may be modified by the court at any time; provided, however, that an order terminating parental rights, and an order committing a child adjudicated to be delinquent to the Department, may not be modified."
Appellant first urges that the trial court misconstrued and misapplied § 1118. Because we agree with appellant's primary premise, it is not necessary that we consider her alternative assignment of error that the statute violates the state and federal constitutions.
Preliminarily, it is appropriate that we recognize that the clear purpose of § 1118 is to accord to orders terminating parental rights some significant stability and finality. This will serve the best interests of everyone involved, particularly of the children, who would be adversely affected if continuing litigation were permitted with the result that they might be bounced back and forth between different sets of parents.
We also recognize that the general tenor and intent of the juvenile code, as expressed in § 1129, is to serve the best interests of the children. A presumption exists that the best interests of children ordinarily are served by leaving them in the custody of the natural parents, the persons who are usually expected to have the strongest bond of love and affection and to be best able to provide them these needed qualities. York v. Halley, Okl., 534 P.2d 363 (1975). The presumption can be and often is rebutted, but a meaningful hearing should be a prerequisite to such rebuttal; and certainly, children should not be permanently removed from their parents by an order terminating parental rights without such a meaningful hearing. In re Wright, Okl., 524 P.2d 790 (1974).
*875 We think that the interpretation which the trial court put upon § 1118 is inconsistent with the general purposes of the juvenile code and with the tenor of the language of the high court cases above cited. The trial court's interpretation of § 1118 would prevent new trials or vacations of orders in all cases concerning all children and would interfere with the rights of parents prevented by accident, misfortune, fraud, or any other statutorily appropriate reason to obtain a new trial. We think the construction put upon the statute is erroneous, and we are unable to discover anything in its terms compelling the result reached by the trial court.
The text of the section is that "an order terminating parental rights ... may not be modified." The trial court held that the word "modified" necessarily included the "vacation" of an order. There is a substantial difference in the meaning of the two terms. The legislature confirms the difference in the text of 12 Ohio St. 1971 § 1031, where it is stated that "The district court shall have power to vacate or modify its own judgments or orders ... ." (emphasis ours) "Vacate" means "To annul; to set aside; to cancel or rescind; to render an act void"; while "modification" is defined as "A change; an alteration which introduces new elements into the details, or cancels some of them, but leaves the general purpose and effect of the subject-matter intact." "Modify" is similarly described as "To alter; to change in incidental or subordinate features; enlarge, extend; limit, reduce." Black's Law Dictionary 1155, 1717 (4th ed. rev. 1968).
To vacate something is to destroy it, to eliminate it, to render it a nullity. Modification, on the other hand, could be described as a small change, adjusting of details, rather than dealing with the heart of the matter and eliminating it, as is done by vacating an order. The relief sought in court actions follows the meanings above stated. Modification is sought when a change of condition requires revision of an order. Vacation, however, is a remedy usually employed when some error or accident makes the continued existence of that order undesirable. When § 1118 says, "may not be modified," it means that and no more; it seeks to eliminate changes in the details of an order based upon changes of condition but does not purport to prevent a court from vacating an order should the appropriate grounds as specified by law be found to exist.
The section in question is silent as to the rights of persons whose parental interests are terminated to have a new trial in accordance with the provisions of the code of civil procedure, to appeal, and otherwise to avail themselves of the remedies provided those aggrieved by an erroneous order. These rights and remedies, we think, were not intended to be stricken down.[2]
*876 Appellee seeks to sustain the trial court's interpretation by asserting the applicability of the principle stated in Reubin v. Thompson, Okl., 406 P.2d 263 (1965) as follows:
"Where there are two provisions of the statutes, one of which is special and particular and clearly includes the matter in controversy, and ... prescribes different rules and procedure from those in the general statute ... the special statute applies ... and [not] the general [one]."
Title 12 Ohio St. 1971 § 1031, the general statute, refers to acts of vacating and of modifying. The special statute deals only with modifications. Though the special statute may have in some way attempted to limit the authority of courts concerning modifications of certain orders, it did nothing to affect the general law as it involved vacation of judgments. The principle quoted is inapplicable.
The judgment is reversed, and the trial court is instructed, in view of its findings as to the validity of the allegations of the petition, to sustain the petition to vacate.
BACON, P.J., concurs.
BRIGHTMIRE, Judge (concurring specially).
In general I agree with the majority opinion. However, I think the circumstances raise a more fundamental question one about the constitutionality of § 1118, namely, its potential for depriving a parent of procedural due process[1] and perhaps for encroaching on inherent judicial power of the court.[2]
Two essentials of due process are: (a) notice of a hearing and (b) an opportunity to be heard. Dodds v. Ward, Okl., 418 P.2d 629 (1966); Greco v. Foster, Okl., 268 P.2d 215 (1954).
Here the petitioning mother was given notice of the hearing albeit a questionable one but the court found the fact to be that she was "prevented by unavoidable casualty and misfortune from appearing in Court and contesting the termination of her parental rights." This being true, can it be said the mother had an opportunity to be heard? Suppose an accused in a criminal case is involved in a wreck on the way to court the morning of trial and is rendered unconscious for several hours. Does anyone suppose that if the court proceeds with a trial, the defendant will not have a valid complaint that he was deprived of a constitutional right to be heard and defend? The chance that chance may operate to destroy one's chance to be heard is not a mystery to be solved, but a reality to be recognized by the court in shielding the constitutional rights of individuals from statutory-interpretational abridgment.
In my opinion § 1118 cannot constitutionally be construed as depriving the court of the power to vacate a parental-rights-termination judgment when a timely showing is made that the affected parent was unavoidably prevented from being heard a showing that was made by petitioner here. Indeed, in my opinion the judge has no discretion under such circumstances he must vacate the judgment.
NOTES
[1] Curiously, the "summons and notice" does not state that there will be a trial or hearing upon the allegations of the petition, which she may defend against.
[2] Appellant's brief aptly summarizes the apparent intent of the restrictive statute:
"The general effect of the Juvenile Code is to give large discretionary powers to the Judge, the person who might be expected to be in possession of all the evidence and best able to arrive at a decision as to what is in the best interest of the children brought before him. In some circumstances, it appears that this discretionary power given to the Judge to change custody, modify his orders, and otherwise exercise continuing jurisdiction over a case so as to continually serve the changing best interest of the child, is intended by the authors of the statute to be limited. One such situation, embraced by Section 1118, is that in the event a child is placed with the Department of Institutions, Social and Rehabilitative Services, a policy decision that the Department subsequently will be best able to decide where the child should be placed comes into effect. That is, a court committing a child to the Department may not dictate to the Department that the child be placed at Taft, subsequently transferred to some other location, and then subsequently placed on trial leave in the home. These decisions belong to the Department. Accordingly Section 1116[(a)] (3) provides that a commitment of a child to the custody of the Department shall be for an indeterminate length of time, and to further implement this policy Section 1118 states that committing a child adjudicated to be delinquent to the Department may not be modified.
"It is suggested that that part of Section 1118 concerning terminations similarly is designed to introduce an element of stability into termination cases by preventing the trial Court subsequent to its order from changing that order in small details, such as subsequently reserving the right to the court to consent to adoption, or setting a deadline in which the parents must perform certain acts or have their rights terminated."
[1] U.S.Const. amend XIV, § 1; Okla.Const. art. 2, § 7.
[2] Okla.Const. art. 7, § 1. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2505963/ | 718 S.E.2d 737 (2011)
WILLIAMS
v.
CHANEY.
No. COA10-1278.
Court of Appeals of North Carolina.
Filed June 21, 2011.
Case Reported Without Published Opinion Dismissed. | 01-03-2023 | 10-30-2013 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.