The Investors’ Control of Their Investment Advisers. Who Has the Final Word?

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel discusses an emerging issue affecting financial advisers—when a client may exercise control over the actions of the adviser. Frankel relates the story of an investment adviser that did not follow the client’s orders to cease certain investments, at a cost of almost $5 million to the client. As Frankel explains, the Securities and Exchange Commission (SEC) got involved, resulting in the investment adviser’s settlement for a significant payment to the client and other conditions.

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Lin v. Shanghai City Corp.

Court: US Court of Appeals for the Second Circuit

Docket: 18-3580

Opinion Date: February 11, 2020

Judge: Per Curiam

Areas of Law: Civil Procedure, Labor & Employment Law

The Second Circuit affirmed the district court's grant of summary judgment for defendants in a wage-and-hour practices and policies action under the Fair Labor Standards Act, the New York Labor Law, the New York Business General Business Law, and 26 U.S.C. 7434. The district court treated defendants' opposition to plaintiffs' motion for conditional collective certification as a cross‐motion for summary judgment as to plaintiffs, and as a motion to dismiss without prejudice as to putative opt-in plaintiffs. The court held that plaintiffs had reason to recognize the motion could be converted into one for summary judgment and that the district court appropriately applied Federal Rule of Civil Procedure 41(a)(1)(B), dismissing the complaint based on plaintiffs' two prior voluntary dismissals in New York State court and in the Eastern District of New York. The court considered plaintiffs' remaining arguments and found them to be without merit.

E.O.H.C. v. Secretary United States Department of Homeland Security

Court: US Court of Appeals for the Third Circuit

Docket: 19-2927

Opinion Date: February 13, 2020

Judge: Bibas

Areas of Law: Civil Procedure, Immigration Law

E.O.H.C. and his daughter fled Mixco, Guatemala, a city plagued by violence, crossed into the U.S. and presented themselves to Border Patrol officers. The government began removal proceedings, scheduling a hearing in San Diego. Under a new DHS policy, the Migrant Protection Protocols, the government returned the two to Mexico to await their hearing. They were left to fend for themselves in Tijuana. E.O.H.C. told the IJ that he did not fear going back to Guatemala. He later alleged that a Border Protection officer advised him to say this. He was not then represented by counsel. The IJ ordered removal. E.O.H.C. waived the right to appeal, allegedly because he feared being returned to Mexico. They were transferred to a Pennsylvania detention facility, where they argued that E.O.H.C.’s appeal waiver was invalid. The BIA granted an emergency stay of removal. The government flew them to San Diego for return to Mexico. They filed an emergency mandamus petition. The government returned them to Pennsylvania. They challenged the validity and applicability of the Protocols and argued that returning them to Mexico would interfere with their relationship with their lawyer and would violate several treaties. The district court dismissed for lack of subject-matter jurisdiction. The Third Circuit reversed in part. When a detained alien seeks relief that a court of appeals cannot meaningfully provide on a petition for review of a final order of removal, 8 U.S.C.1252(b)(9) and 1252(a)(4) do not bar consideration by a district court. One claim, involving the right to counsel, arises from the proceedings to remove them to Guatemala and can await a petition for review. The other claims challenge the plan to return the petitioners to Mexico in the meantime. For these claims, review is now or never.

UGI Sunbury LLC v. Permanent Easement for 1.7575 Acres

Court: US Court of Appeals for the Third Circuit

Docket: 18-3126

Opinion Date: February 11, 2020

Judge: Matey

Areas of Law: Civil Procedure, Energy, Oil & Gas Law, Real Estate & Property Law

UGI builds natural gas pipelines. It obtained authorization to construct and operate an underground pipeline along 34.4 miles of land in Pennsylvania under the Natural Gas Act, 15 U.S.C. 717, The Landowners rejected UGI’s offers of compensation for rights of way, so UGI sought orders of condemnation. UGI prevailed; only the amount of compensation remained. The Landowners’ expert set the before-taking value of the land by comparing properties in the area and estimating what each is worth relative to the market but, in estimating the post-taking property values, the expert relied on his own “damaged goods theory,” drawing on his experience working in his grandfather’s appliance shop. The expert cited the impact on real estate values from the Three Mile Island nuclear incident in 1979, the Exxon Valdez Alaskan oil spill in 1989, and assorted leaking underground storage tanks. The expert’s reports contain no data relating to those incidents. The district court agreed “that some form of 'stigma’ attaches to the property as a whole” and adjusted the awards accordingly. The Third Circuit vacated. Rule 702 requires reliable expert testimony that fits the proceedings. The expert testimony presented by the Landowners bound only to speculation and conjecture, not good science or other “good grounds.”

Miller v. Bruenger

Court: US Court of Appeals for the Sixth Circuit

Docket: 19-5763

Opinion Date: February 13, 2020

Judge: Readler

Areas of Law: Civil Procedure, Government & Administrative Law, Insurance Law

The Office of Personnel Management (OPM), manages the Federal Employees’ Group Life Insurance Act (FEGLIA), 5 U.S.C. 8705(a). Absent a valid beneficiary selection, FEGLIA provides an order of precedence for the proceeds, starting with the policyholder's surviving spouse, followed by the policyholder's descendants. FEGLIA will not follow that order if a “court decree of divorce, annulment, or legal separation, or . . . any court order or court-approved property settlement agreement” “expressly provides” for payment to someone else. The decree, order, or agreement must be “received” by the policyholder’s “employing agency” or OPM before the policyholder’s death. At the time of his death, Miller worked at Tinker Air Force Base and maintained a MetLife policy. Coleman's 27-year marriage to Donna ended in divorce in 2011. Their property settlement agreement states that “[Donna] shall remain the beneficiary of the life insurance policy.” The court ordered Coleman to assign his FEGLI benefits to Donna. Upon Coleman’s death, his only child, Courtenay, was appointed administratrix of his estate. The Air Force informed Courtenay that the court order had not been filed with Coleman’s employing office. Courtenay was paid $172,000 in proceeds and sought a declaration that she is the rightful owner. Citing lack of subject-matter jurisdiction, the district court dismissed the suit. The Sixth Circuit affirmed, noting the lack of a substantial federal question. FEGLIA does not contain an express cause of action for Donna. There is no federal agency involved.

Quality Associates., Inc v. Procter & Gamble Distributing Center, LLC

Court: US Court of Appeals for the Sixth Circuit

Docket: 19-3137

Opinion Date: February 10, 2020

Judge: Karen Nelson Moore

Areas of Law: Civil Procedure

QAI sued P&G in federal court for breaking a contract with it in a racially discriminatory manner, 42 U.S.C. 1981. P&G had already sued QAI in Ohio state court over the same contractual dispute underlying QAI’s section 1981 claim; that litigation was still ongoing. P&G moved to dismiss QAI’s federal suit, arguing that its section 1981 claim was a compulsory counterclaim to the state litigation, Ohio Civ. R. 13(A). The district court dismissed QAI’s suit. The Sixth Circuit reversed. A federal court cannot enforce a state compulsory-counterclaim rule against a federal litigant outside the preclusion context, and because QAI’s claim is not yet precluded here (because the state court has not yet entered a final judgment), the district court lacked authority to base its judgment of dismissal on this ground. That this case implicates compulsory counterclaims does not alter the basic federalist principle that litigants are free to split their claims between state and federal court and “race to the first judgment,” even if that stratagem is ill-advised and inefficient.

Bria Health Services, LLC v. Eagleson

Court: US Court of Appeals for the Seventh Circuit

Docket: 18-3076

Opinion Date: February 11, 2020

Judge: HAMILTON

Areas of Law: Civil Procedure, Public Benefits

Under the Medicaid program, 42 U.S.C. 1396, states must ensure that certain medical assistance is available to all eligible beneficiaries. Illinois administers its Medicaid program through HFS. For managed care programs, HFS contracts with Medicaid managed care organizations (MCOs), which a flat monthly fee per patient. The MCOs pay providers for services rendered to Medicaid beneficiaries. Plaintiffs, consultants who offer business services to Illinois nursing homes and supportive living facilities, sued on behalf of a class of nursing home residents entitled to Medicaid benefits, alleging violations of Title XIX of the Social Security Act, the Americans with Disabilities Act, the Rehabilitation Act, and the Due Process and Equal Protection Clauses. They alleged that the MCOs failed to process timely payments for claims submitted by nursing homes—the plaintiff‐consultants’ clients—to the MCOs, putting the resident‐beneficiaries at risk of being discharged from the facilities. The Seventh Circuit affirmed the dismissal of the case for lack of subject matter jurisdiction. The regulation cited by plaintiffs does not permit authorized representatives to bring civil lawsuits on behalf of Medicaid beneficiaries so the plaintiffs lacked standing. The residents would be unlikely to benefit if the plaintiffs won; they apparently filed suit in an effort to push the state to pay outstanding bills owed to the consultants’ clients.

Curry v. Revolution Laboratories, LLC

Court: US Court of Appeals for the Seventh Circuit

Docket: 17-2900

Opinion Date: February 10, 2020

Judge: Kenneth Francis Ripple

Areas of Law: Civil Procedure, Intellectual Property, Internet Law, Trademark

Curry, the founder of “Get Diesel Nutrition,” has paid for advertising for his products, including "Diesel Test," in national fitness magazines since 2002. In 2016, the defendants began selling a sports nutritional supplement, "Diesel Test Red Series." Like Curry’s product, the defendants’ product comes in red and white packaging with right-slanted all-caps typeface bearing the words “Diesel Test.” Curry alleges that he received messages indicating that customers were confused. The defendants concocted a fake ESPN webpage touting their product and conducted all their marketing online. In about seven months, they received more than $1.6 million in gross sales. At least 767 sales were to consumers in Illinois. After Curry demanded that the defendants cease and desist, both parties filed trademark applications for "Diesel Test." The Patent Office suspended both applications. Curry filed suit, alleging violation of the Illinois Consumer Fraud and Deceptive Practices Act, violations of the Lanham Act, 15 U.S.C. 1125, violation of the Anti-Cybersquatting Consumer Protection Act, filing a fraudulent trademark application, and violation of common law trademark protections. The district court dismissed for lack of personal jurisdiction. The Seventh Circuit reversed. Revolution’s activity can be characterized as purposefully directed at Illinois, the forum state, and related to Curry's claims. Physical presence is not necessary for a defendant to have sufficient minimum contacts with a forum state. Illinois has a strong interest in providing a forum for its residents to seek redress for harms suffered within the state by an out-of-state actor.

Henry Law Firm v. Atalla

Court: US Court of Appeals for the Eighth Circuit

Docket: 19-1391

Opinion Date: February 12, 2020

Judge: Erickson

Areas of Law: Civil Procedure, Contracts

The Eighth Circuit affirmed the district court's denial of defendant's motions for dismissal and for summary judgment, granting summary judgment to the law firm. The court applied a five-factor test to determine the sufficiency of defendant's contacts and held that, when all of the circumstances are viewed in the aggregate, defendant had fair warning that he could be subject to jurisdiction in Arkansas. In this case, defendant's contacts with Arkansas involved more than just his guaranty; the language of the contract provided for Cuker to perform its obligations in the Western District of Arkansas; and, as personal guarantor of Cuker's performance, it was reasonable and foreseeable for defendant to anticipate being haled into that same court if Cuker failed to perform. The court rejected defendant's claim that his personal guaranty is unenforceable as a matter of law because his obligations are not adequately specified. The court held that the express terms of the legal services agreement evidence an intent to hold defendant liable to the same extent as Cuker's liability. Finally, the court applied state, not federal elements of estoppel in diversity cases, and held that the district's reasoning and the record supported equitable estoppel.

Johnson v. Spencer

Court: US Court of Appeals for the Tenth Circuit

Docket: 17-8089

Opinion Date: February 13, 2020

Judge: Jerome A. Holmes

Areas of Law: Civil Procedure, Civil Rights, Criminal Law

In 2013, a Wyoming court declared Andrew Johnson actually innocent of crimes for which he was then incarcerated. In 2017, after his release, Johnson brought suit under 42 U.S.C. 1983 against the City of Cheyenne, Wyoming, the Estate of Detective George Stanford (“the Estate”), and Officer Alan Spencer, alleging they were responsible for violations of his constitutional rights that contributed to his conviction. While incarcerated, however, Johnson had unsuccessfully brought similar suits against Cheyenne and Detective Stanford in 1991 (“1991 Action”) and against Officer Spencer in 1992 (“1992 Action”). The central question before the Tenth Circuit Court of Appeals was what effect the judgments against Johnson in his 1991 and 1992 Actions had on his 2017 Action. Answering this question required the Court to resolve two primary issues: (1) in addition to filing the 2017 Action, Johnson moved the district court under Federal Rule of Civil Procedure 60(b) for relief from the judgments in the 1991 and 1992 Actions, which Johnson contended the district court erred in denying; and (2) Cheyenne, the Estate and Officer Spencer each successfully moved to dismiss the 2017 Action because its claims were precluded by judgments in the 1991 and 1992 Actions, and Johnson likewise contended the court’s decision was made in error. The Tenth Circuit concluded the district court erred by denying Rule 60(b)(6) relief, and so those orders were vacated for reconsideration under the correct legal rubric. Because of the Court’s remand of Johnson’s Rule 60(b)(6) motions did not actually grant such relief (Rule 60(b)(6) relief is discretionary), the Tenth Circuit affirmed in part and reversed in part the district court’s dismissal of the 2017 Action. Specifically, the Tenth Circuit affirmed dismissal of claims against Cheyenne and the Estate because the judgment in the 1991 action was entitled to claim--reclusive effect. The Court reversed, however, dismissal of the claims against Officer Spencer because the judgment in 1992 was not on the merits, and thus, was not entitled to claim--reclusive effect.

United States ex rel. Janssen v. Lawrence Memorial Hospital

Court: US Court of Appeals for the Tenth Circuit

Docket: 19-3011

Opinion Date: February 7, 2020

Judge: Timothy M. Tymkovich

Areas of Law: Civil Procedure, Health Law, Public Benefits

Stacey Janssen alleged Lawrence Memorial Hospital ("LMH") engaged in two healthcare schemes to fraudulently receive money from the United States. Janssen first contended LMH falsified patients’ arrival times in order to increase its Medicare reimbursement under certain pay-for-reporting and pay-for-performance programs the Government used to study and improve hospitals’ quality of care. Second, Janssen contended LMH falsely certified compliance with the Deficit Reduction Act in order to receive Medicare reimbursements to which it was otherwise not entitled. LMH moved for summary judgment below, arguing Janssen failed to show her allegations satisfied the Act’s materiality requirement - that the alleged falsehoods influenced the Government’s payment decision as required under the FCA. The district court granted LMH summary judgment on all of Janssen’s claims on this basis, and finding no reversible error, the Tenth Circuit affirmed.

In Re: Google LLC

Court: US Court of Appeals for the Federal Circuit

Docket: 19-126

Opinion Date: February 13, 2020

Judge: Timothy B. Dyk

Areas of Law: Civil Procedure, Patents

SIT sued Google for patent infringement in the Eastern District of Texas. Under 28 U.S.C. 1400(b), “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Under Supreme Court precedent, “a domestic corporation 'resides’ only in its state of incorporation for purposes of the patent venue statute; the Federal Circuit has held that a “regular and established place of business” must be: “a physical place in the district”; “regular and established”; and “the place of the defendant.” Google provides video and advertising services to residents of the Eastern District of Texas through the Internet. Google Global Cache (GGC) servers function as local caches for Google’s data. Google contracts with internet service providers within the district to host Google’s GGC servers. The GGC servers cache only a small portion of content that is popular with nearby users but can serve that content with shorter wait times than Google’s central server infrastructure due to their physical proximity to the ISP’s users. No Google employee installed, performed maintenance on, or physically accessed any of the GGC servers. The district court denied Google’s motion to dismiss. The Federal Circuit ordered that the case be dismissed or transferred. A “regular and established place of business” requires the regular, physical presence of an employee or other agent of the defendant conducting the defendant’s business at the alleged “place of business.”

Serta Simmons Bedding, LLC v. Casper Sleep Inc.

Court: US Court of Appeals for the Federal Circuit

Docket: 19-1098

Opinion Date: February 13, 2020

Judge: Timothy B. Dyk

Areas of Law: Civil Procedure, Intellectual Property, Patents

Serta filed a patent infringement action against Casper, citing the 173, 763, and 935 patents. Those patents cover mattresses that include a channel and methods for forming it. These mattresses can have varying areas of firmness by inserting reinforcement of various types into their channels that can be located at regions where additional support is desired. Casper filed three motions for summary judgment directed to non-infringement of Casper’s accused mattresses, accused methods of manufacturing, and redesigned mattresses. While Casper’s summary judgment motions were pending, the parties executed a settlement agreement and advised the district court of the settlement. The district court nevertheless granted Casper’s summary judgment motions of non-infringement. It later denied Serta’s motions to vacate the summary judgment order and to enforce the settlement agreement. The Federal Circuit vacated and remanded with instructions to enforce the settlement agreement. There is no contention that the settlement or the relief sought by Serta is unlawful or contrary to public policy. There is also no dispute that the parties executed the agreement before the district court issued the summary judgment order; Casper has admitted that the agreement was binding. The settlement agreement mooted the case even though it included terms that required future performance.

Ex parte Cowgill

Court: Supreme Court of Alabama

Docket: 1180936

Opinion Date: February 7, 2020

Judge: Greg Shaw

Areas of Law: Civil Procedure, Personal Injury

Petitioners George Cowgill and Elise Yarbrough, petitioned the Alabama Supreme Court for a writ of mandamus to direct the circuit court to grant their motion for partial summary judgment on the ground that plaintiff's substitution of them for fictitiously named defendants was made after the expiration of the applicable two-year statute of limitations. Petitioners owned Black Mark 2, LLC, a Birmingham bar. On New Year's Eve 2012, plaintiff Paul Thomas was with his friend Brian Pallante. Pallante and another patron, Dalton Teal, got into an altercation. Staff from Black Market removed Teal. An unidentified female patron returned a handgun Teal had dropped inside Black Market. Teal waited outside for Thomas, Pallante and another to leave. Within five minutes, a second altercation ensued, ending with shots fired, and leaving Thomas injured. The Supreme Court that although Thomas disputed knowledge of petitioners' precise duties, it was undisputed he possessed sufficient information from which he should have known or was at least placed on notice of a factual basis for his eventual claims against them. "Because [he] knew of [petitioners'] involvement in [training and supervision of Black Market employees], it was incumbent upon [Thomas], before the statute of limitations on [his] claim expired, to investigate and evaluate the claim to determine who was responsible for [his injuries]." Therefore, the Court concluded the undisputed evidence demonstrated Thomas failed to exercise due diligence in identifying petitioners as proper party defendants; the trial court thus erred in denying petitioners' motion for partial summary judgment. The Court issued the writ and remanded for further proceedings.

George v. Shams-Shirazi

Court: California Courts of Appeal

Docket: A155158(First Appellate District)

Opinion Date: February 11, 2020

Judge: Sanchez

Areas of Law: Civil Procedure, Family Law, Legal Ethics

Following a child custody hearing in January 2017, the trial court entered an order giving Mother sole custody. In June 2017, Father filed an unsuccessful request to set aside that order. Weeks later, he filed a second unsuccessful request to modify the order. The trial court denied Mother’s request for section 271 sanctions. Months later, she again sought sanctions relating to the June 2017 motion. Father filed an objection but did not challenge the motion on the basis of timeliness. The court ordered Father to pay $10,000 in section 271 sanctions. Father sought reconsideration, arguing for the first time that the sanction request was untimely under California Rules of Court, rule 3.1702(b). The trial court denied the motion and awarded Mother $3,000 in attorney fee sanctions for having to defend the ex parte motion for reconsideration. The court of appeal affirmed. Rule 3.1702(b) states: “A notice of motion to claim attorney’s fees for services up to and including the rendition of judgment in the trial court—including attorney’s fees on an appeal before the rendition of judgment in the trial court—must be served and filed within the time for filing a notice of appeal.” The timing of a notice of appeal is based on the entry of judgment. The sanctions at issue were awarded for attorney fees incurred after entry of the January 2017 judgment; rule 3.1702 does not apply.

Grande v. Eisenhower Medical Center

Court: California Courts of Appeal

Docket: E068730(Fourth Appellate District)

Opinion Date: February 6, 2020

Judge: Slough

Areas of Law: Civil Procedure, Class Action, Labor & Employment Law

Temporary staffing agency FlexCare, LLC assigned Lynn Grande to work as a nurse at Eisenhower Medical Center (Eisenhower). According to Grande, during her employment at Eisenhower, FlexCare and Eisenhower failed to ensure she received her required meal and rest breaks, wages for certain periods she worked, and overtime wages. Grande was a named plaintiff in a class action lawsuit against FlexCare brought on behalf of FlexCare employees assigned to hospitals throughout California. Her own claims were based solely on her work on assignment at Eisenhower. FlexCare settled with the class, including Grande, and Grande received $162.13 for her injuries, plus a class representative incentive bonus of $20,000. Grande executed a release of claims, and the trial court entered a judgment incorporating the settlement agreement. About a year later, Grande brought a second class action alleging the same labor law violations, this time against Eisenhower, who was not a party to the previous lawsuit. FlexCare intervened in the action asserting Grande could not bring the separate lawsuit against Eisenhower because she had settled her claims against them in the prior class action. The trial court held a trial narrowed to questions as to the propriety of the lawsuit, and ruled Eisenhower was not a released party under the settlement agreement and could not avail itself of the doctrine of res judicata because the hospital was neither a party to the prior litigation nor in privity with FlexCare. Eisenhower petitioned for a petition for a writ of mandate and FlexCare appealed the trial court’s interlocutory order. The Court of appeal concurred with the trial court on grounds that Eisenhower and FlexCare were not in privity, preventing Eisenhower from blocking Grande’s claims under the doctrine of res judicata, and Eisenhower was not a released party under the settlement agreement. Therefore the appellate court denied mandamus relief.

Soto v. Union Pacific Railroad Co.

Court: California Courts of Appeal

Docket: B289712(Second Appellate District)

Opinion Date: February 13, 2020

Judge: Dennis M. Perluss

Areas of Law: Civil Procedure, Personal Injury, Real Estate & Property Law, Transportation Law

Irma Yolanda Munoz Soto sued Union Pacific Railroad Company and two of its employees, Scott King and Robert Finch (collectively, Union Pacific), for wrongful death (premises liability and general negligence) after Soto’s 16-year-old daughter was struck and killed by a freight train on an at-grade railroad crossing in Santa Clarita. The court granted Union Pacific’s motion for summary judgment, concluding as to Soto’s premises liability claim Union Pacific had no duty to remedy a dangerous condition because it did not own or control the railroad crossing. As to Soto’s negligence claim, the court ruled Soto could not establish that Union Pacific employees had negligently operated the train. On appeal, Soto argued she raised triable issues of material fact sufficient to defeat summary judgment. After review, of the evidence and governing law applicable to Soto’s claim, the Court of Appeal concurred there were no triable issues of fact, and summary judgment was appropriate.

State Water Resources Control Bd. v. Baldwin & Sons, Inc.

Court: California Courts of Appeal

Docket: D075617(Fourth Appellate District)

Opinion Date: February 10, 2020

Judge: Guerrero

Areas of Law: Civil Procedure, Environmental Law, Government & Administrative Law, Zoning, Planning & Land Use

Appellants Baldwin & Sons, Inc.; Baldwin & Sons, LLC; Sunranch Capital Partners, LLC; USA Portola Properties, LLC; Sunrise Pacific Construction; USA Portola East, LLC; USA Portola West, LLC; and SRC-PH Investments, LLC, all appealed an order compelling compliance with administrative subpoenas issued by the State Water Resources Control Board. Appellants were involved (or believed to be involved) in the construction of a large-scale development in the Portola Hills Community in Lake Forest, California. The State Board initiated an investigation into alleged violations of the federal Clean Water Act and California's Porter-Cologne Water Quality Control Act occurring during construction activities. In connection with its investigation, the State Board issued subpoenas seeking Appellants' financial records. When Appellants refused to produce the requested financial records, the State Board sought a court order compelling compliance with the subpoenas. With the exception of tax returns, the trial court concluded that the information sought was relevant to the State Board's investigation and subject to disclosure pursuant to the investigative subpoenas. Appellants argued on appeal: (1) their financial records were not reasonably relevant to the State Board's investigation; (2) compelling production of their financial records violated their right to privacy; and (3) the protective order did not adequately protect against disclosure of their private financial information to third parties. The Court of Appeal rejected these claims and affirmed the challenged order compelling production of the Appellants' financial records subject to a protective order.

Torres v. Design Group Facility Soultions, Inc.

Court: California Courts of Appeal

Docket: B294220(Second Appellate District)

Opinion Date: February 13, 2020

Judge: Dhanidina

Areas of Law: Civil Procedure, Construction Law, Personal Injury

Ismael Torres, Jr. sued Design Group Facility Solutions, Inc. (Design) for personal injuries after he fell through a skylight at a construction site. Design moved for summary judgment. The trial court initially denied the motion. Design moved for reconsideration based on new evidence under Code of Civil Procedure section 1008(a). At the hearing on the motion, the trial court granted reconsideration and, at the same time, granted the motion for summary judgment without giving Torres an opportunity to respond to the new evidence. After review, the Court of Appeal found the trial court abused its discretion: “a party unsuccessfully moving for summary judgment cannot circumvent the requirements of section 437c by subsequently moving for reconsideration under section 1008(a).”

Coen v. Aptean, Inc. et al.

Court: Supreme Court of Georgia

Docket: S18G1638

Opinion Date: February 10, 2020

Judge: David E. Nahmias

Areas of Law: Civil Procedure, Contracts, Labor & Employment Law

The issue this case presented for the Georgia Supreme Court’s review centered on a claim of abusive litigation that Timothy Coen filed based on a previous contract lawsuit against his former employer that was resolved in his favor. In his abusive litigation case, Coen sought punitive damages. The Court of Appeals upheld the trial court’s ruling that punitive damages were not available for a statutory abusive litigation claim, relying on its prior decisions that in turn relied on dicta in footnote 3 of the Supreme Court’s opinion in Yost v. Torok, 344 SE2d 414 (1986), which was decided three years before the current abusive litigation statutes, OCGA sections 51-7-80 to 51-7-85, were enacted in 1989. The Supreme Court granted Coen’s petition for certiorari to decide whether that statute authorized the recovery of punitive damages. The Court concluded punitive damages generally may be recovered in an abusive litigation lawsuit (as long as the lawsuit is not solely to recover damages for injury to peace, happiness, or feelings), because the text of OCGA 51-7-83 (a) indicated that punitive damages were included, the statute did not change the common law generally allowing punitive damages in abusive litigation cases, and punitive damages in abusive litigation cases did not always constitute an impermissible double recovery. Accordingly, the Supreme Court reversed the Court of Appeals’ judgment and remanded the case for further proceedings.

Lee v. Smith, II

Court: Supreme Court of Georgia

Docket: S18G1549

Opinion Date: February 10, 2020

Judge: Harold D. Melton

Areas of Law: Civil Procedure, Personal Injury

In a personal injury case, the trial court excluded the testimony of an expert defense witness, reasoning that the expert had “not [been] properly identified within the parameters of the scheduling order.” The Court of Appeals affirmed, and the Georgia Supreme Court granted the defendant’s petition for a writ of certiorari to answer whether: (1) a trial court could exclude an expert witness solely because the witness was identified after the deadline set in a scheduling, discovery, and/or case management order; and (2) If not, what factors should a trial court consider when exercising its discretion whether to exclude an expert witness who was identified after the deadline set in a scheduling, discovery, and/or case management order? The Court concluded the answer to (1) was “no,” and with respect to (2), the Court concluded that when a trial court exercises its discretion in a civil case to determine whether to exclude a late-identified witness, it should consider: (1) the explanation for the failure to disclose the witness; (2) the importance of the testimony; (3) the prejudice to the opposing party if the witness is allowed to testify; and (4) whether a less harsh remedy than the exclusion of the witness would be sufficient to ameliorate the prejudice and vindicate the trial court’s authority. Based on these answers, the Court reversed the Court of Appeals in part and remanded this case with direction that the Court of Appeals vacate the trial court’s ruling and remand to the trial court for reconsideration.

Gomez v. Crookham

Court: Idaho Supreme Court - Civil

Docket: 45542

Opinion Date: February 10, 2020

Judge: Moeller

Areas of Law: Civil Procedure, Labor & Employment Law, Personal Injury, Products Liability

Francisca Gomez died as the result of a horrific industrial accident that occurred while she was cleaning a seed sorting machine as part of her employment with the Crookham Company (“Crookham”). Her family (the Gomezes) received worker’s compensation benefits and also brought a wrongful death action. The Gomezes appealed a district court’s grant of summary judgment to Crookham on all claims relating to Mrs. Gomez’s death. The district court held that Mrs. Gomez was working within the scope of her employment at the time of the accident, that all of the Gomezes’ claims were barred by the exclusive remedy rule of Idaho worker’s compensation law, that the exception to the exclusive remedy rule provided by Idaho Code section 72-209(3) did not apply, and that the Gomezes’ product liability claims fail as a matter of law because Crookham is not a “manufacturer.” The Idaho Supreme Court determined that given the totality of the evidence in this case, which included prior OSHA violations for similar safety issues, the district court erred by failing to consider whether Crookham consciously disregarded information suggesting a significant risk to its employees working at or under the picking tables, which were neither locked nor tagged out, as they existed on the date of the accident. On this basis, the decision of the district court granting summary judgment to Crookham was reversed and the matter remanded for the trial court to apply the proper standard for proving an act of unprovoked physical aggression, and to determine whether there was a genuine issue of material fact as to whether Crookham consciously disregarded knowledge of a serious risk to Mrs. Gomez.

Shubert v. Ada County

Court: Idaho Supreme Court - Civil

Docket: 46403

Opinion Date: February 12, 2020

Judge: Brody

Areas of Law: Civil Procedure, Government & Administrative Law, Legal Ethics, Personal Injury, Professional Malpractice & Ethics

Natalie Shubert filed a negligence claim against her former public defender, Michael Lojek, former Ada County chief public defender Alan Trimming, and Ada County (collectively, “Ada County Defendants”). In 2008, Shubert was charged with two felonies and pleaded guilty to both charges. Her sentences were suspended in each case, and she was placed on probation. After a probation violation in 2011, the Ada County district court entered an order extending Shubert’s probation beyond the time period allowed by law, and the mistake was not caught. After Shubert’s probation should have ended in both cases, she was charged and incarcerated for a subsequent probation violation in 2014. Thereafter, in 2016, Shubert was charged with a new probation violation. Shubert was assigned a new public defender, who discovered the error that unlawfully kept Shubert on probation. Shubert’s new public defender filed a motion to correct the illegal sentence, raising the error that had improperly extended her probation. The district court granted Shubert’s motion to correct the illegal sentence and released Shubert from custody. Shubert then sued her original public defender, the Ada County Public Defender’s Officer, and other unknown Ada County employees alleging false imprisonment, intentional infliction of emotional distress, negligence per se, negligence, and state and federal constitutional violations. The district court dismissed all of Shubert’s claims except for negligence. In denying the Ada County Defendants’ motion for summary judgment on Shubert’s negligence claim, the district court held that public defenders were not entitled to common law quasi-judicial immunity from civil malpractice liability, and two provisions of the Idaho Tort Claims Act (ITCA) did not exempt public defenders from civil malpractice liability. The Ada County Defendants petitioned the Idaho Supreme Court, but the Supreme Court affirmed, finding the district court did not err in its finding that the public defenders and the County were not entitled to immunity. The case was remanded for further proceedings.

Biegel v. Gilmer

Court: Supreme Court of Mississippi

Citation: 2018-IA-01172-SCT

Opinion Date: February 13, 2020

Judge: Ishee

Areas of Law: Civil Procedure, Legal Ethics

The issue presented for the Mississippi Supreme Court’s review involved the first-to-file rule. Most of the claims were properly transferred, but all parties to this appeal agreed it was error to transfer the claims against two of the defendants, Michele Biegel and Bettie Johnson. The underlying controversy was a fee dispute between attorneys Seth Little, Barry Wade Gilmer, and Chuck McRae. McRae sued Gilmer in the Hinds County Chancery Court, claiming unjust enrichment and seeking an accounting. Gilmer later filed this suit in the Madison County Circuit Court against McRae’s attorneys in the fee dispute, Michele Biegel and Bettie Ruth Johnson. Biegel and Johnson filed a special entry of appearance and a motion to dismiss the complaint against them. McRae requested that the claims against him be transferred to Hinds Chancery Court, in which McRae previously filed suit against Gilmer. The Madison County Circuit Court ordered the entire suit, including claims against Biegel and Johnson, transferred, and denied Biegel and Johnson’s motion to reconsider. The Supreme Court concurred the transfer of the entire case was made in error, and therefore reversed transfer of claims from the Madison County Circuit Court to the Hinds County court.

Central Mississippi Medical Center v. Mississippi Division of Medicaid

Court: Supreme Court of Mississippi

Citation: 2018-SA-01410-SCT

Opinion Date: February 13, 2020

Judge: Michael K. Randolph

Areas of Law: Civil Procedure, Government & Administrative Law, Health Law, Public Benefits

Central Mississippi Medical Center (CMMC) appealed a Chancery Court decision denying its appeal of a Division of Medicaid (DOM) hearing. The DOM had determined that CMMC owed it $1.226 million due to overpayment. The Mississippi Supreme Court recently decided a reimbursement dispute involving the DOM, Crossgates River Oaks Hosp. v. Miss. Div. of Medicaid, 240 So. 3d 385 (Miss. 2018). In Crossgates, the hospitals prevailed because the DOM had failed to adhere to the Medicare State Plan Agreement. Applying the same legal principles to this case, the Supreme Court ruled the DOM prevailed because the DOM adhered to the Plan. The chancellor found sufficient evidence to support the DOM’s decision, decreed that it was neither arbitrary nor capricious, and decreed that it did not exceed the DOM’s authority or violate any of CMMC’s statutory or constitutional rights.

In Re D.O.

Court: New Hampshire Supreme Court

Docket: 2019-0369

Opinion Date: February 13, 2020

Judge: Anna Barbara Hantz Marconi

Areas of Law: Civil Procedure, Family Law

Respondent, the father of the juvenile (Father), appealed a superior court order denying his motion for permission to file a late appeal of an adverse ruling issued by the Circuit Court on an abuse and neglect petition brought by petitioner, the New Hampshire Division for Children, Youth and Families (DCYF). The superior court found that Father failed to demonstrate “good cause” for filing a late appeal. After review, the New Hampshire Supreme Court held as a matter of law, that it was “reasonable and just” to grant Father’s motion to file his appeal late. Father filed his partially-assented-to motion to file a late appeal on April 17, 2019, before the parties had ever appeared in the superior court. Father did not file his appeal earlier because his attorney was on maternity leave when the dispositional order was entered, and “[t]here was a misunderstanding between father and [his] counsel’s office regarding the filing of the appeal.” The attorney for the child and the attorney for Mother assented to Father’s motion. According to the superior court, the parties preferred that Father’s and Mother’s cases “be tried together.” Under these circumstances, the Court concluded there was good cause, as a matter of law, to grant Father’s motion to file a late appeal. Judgment was reversed and the matter remanded for further proceedings.

Hustle Proof, et al. v. Matthews, et al.

Court: North Dakota Supreme Court

Citation: 2020 ND 32

Opinion Date: February 12, 2020

Judge: Jon J. Jensen

Areas of Law: Civil Procedure, Contracts

Zachary Beck appealed the denial of his request for relief from a judgment awarding damages to Hustle Proof Corporation and Chinedu Ilogu (Hustle Proof). Hustle Proof sued Beck and his manager, Ryan Matthews, alleging a breach of the parties’ contract for a joint concert tour. Beck and Matthews were personally served with the summons and complaint. According to Beck, he was told by Matthews that Matthews would handle the lawsuit. Matthews apparently initiated email contact with Hustle Proof’s attorney regarding the lawsuit, but neither Beck nor Matthews answered the complaint. Hustle Proof moved for the entry of a default judgment. Notice of the default proceedings was sent by registered mail to Beck and Matthews at the address of Matthews’ limited liability company in Florida. Neither Matthews nor Beck appeared at the hearing on the motion for default judgment. Hustle Proof sought the entry of a judgment in the amount of $252,740 consisting primarily of the profit Hustle Proof claimed it would have made had Matthews and Beck not breached the parties’ contract. The district court refused to enter a default judgment for a sum greater than the $3,000 guaranteed payment included in the parties’ contract and offered Hustle Proof the option of the entry of a default judgment in the amount of $3,000 or proceeding to trial. Hustle Proof elected to proceed to trial. A jury trial was held on January 30, 2018. Neither Matthews nor Beck appeared at the jury trial. Hustle Proof presented its evidence to the jury and the jury returned a verdict in favor of Hustle Proof in the amount of $192,500 plus interest. A judgment, including costs and interest, was entered in the amount of $227,790. Beck argued to the North Dakota Supreme Court that the district court abused its discretion in denying his request for relief from the judgment pursuant to N.D.R.Civ.P. 60(b)(6) because he was not properly served with notice of the default judgment proceedings and the facts and circumstances of this case compelled relief from the judgment. Finding no reversible error, the Supreme Court affirmed.

Reese v. Reese-Young

Court: North Dakota Supreme Court

Citation: 2020 ND 35

Opinion Date: February 12, 2020

Judge: Gerald W. VandeWalle

Areas of Law: Civil Procedure, Energy, Oil & Gas Law, Real Estate & Property Law

Cheryl Reese appealed an amended judgment entered after the district court granted summary judgment deciding ownership of certain mineral interests and the right to receive the mineral royalties and bonus payments. In 2005, Dennis Reese and Tia Reese-Young, who both owned an interest in the minerals at the time, entered into an oil and gas lease for the property. After several conveyances, Dennis and Cheryl Reese owned a 12.5% interest in the minerals as joint tenants, and Reese-Young owned a 12.5% interest in the minerals as a tenant in common with Dennis and Cheryl. In July 2008, Dennis and Cheryl conveyed their 12.5% interest to Reese-Young by quit claim deed and reserved a life estate interest in the minerals. Dennis died in September 2008. In 2017, Cheryl sued Tia Reese-Young to quiet title and for declaratory judgment determining that Cheryl was the sole remaining life tenant in the property and that she was entitled to all of the proceeds to be derived from the minerals during her lifetime. Reese-Young argued the deed creating the life estate in Cheryl Reese did not explicitly reserve to Cheryl Reese an interest in the royalties, the deed was unambiguous, there were no disputed issues of material fact, and Tia Reese-Young is entitled to all of the income derived from the oil and gas production as a matter of law. Cheryl argued the unambiguous language of the deed established she reserved a life estate in the minerals and she was entitled to receive the royalty payments under the open mines doctrine because an oil and gas lease had been executed and oil and gas were being produced before the life estate was created. When the district court ruled in favor of Reese-Young, Cheryl appealed. After review, the North Dakota Supreme Court concluded as a matter of law, Cheryl was entitled to the proceeds from the oil and gas production, including the royalties and bonus payments, and she was not required to hold the proceeds in trust for Reese-Young. Judgment was reversed.

State ex rel. Kerr v. Collier

Court: Supreme Court of Ohio

Citation: 2020-Ohio-457

Opinion Date: February 13, 2020

Judge: Per Curiam

Areas of Law: Business Law, Civil Procedure

The Supreme Court affirmed the judgment of the court of appeals dismissing Appellant's complaint for a writ of prohibition and dismissed as moot the motions Appellant filed in connection with the complaint, holding that the court of appeals correctly dismissed the complaint. In his complaint, Appellant sought to vacate charging orders and receivership orders concerning his membership interests in two limited liability companies, asserting that the orders exceeded the authority of Henry County Court of Common Pleas Judge John Collier. The court of appeals dismissed the complaint, concluding that Judge Collier did not patently and unambiguously lack jurisdiction to enter a charging order or to appoint a receiver. The Supreme Court affirmed, holding that because Judge Collier had subject matter jurisdiction to enter a charging order and to appoint a receiver, Appellant did not show that the judge patently and unambiguously lacked jurisdiction.

Aiken v. So. Carolina Dept. of Rev.

Court: South Carolina Supreme Court

Docket: 27944

Opinion Date: February 12, 2020

Judge: James

Areas of Law: Civil Procedure, Class Action, Government & Administrative Law

Respondents, individually and as members of a putative class, brought a declaratory judgment action against the South Carolina Department of Revenue seeking refunds of amounts garnished from their wages by the Department to satisfy delinquent debts they allegedly owed to other governmental entities. The sole issue on appeal centered on the circuit court's grant of Respondents' motion to strike one defense from the Department's answer to Respondents' second amended complaint: that South Carolina Revenue Procedures Act (RPA) subsection 12-60-80(C) prohibited this action from proceeding as a class action against the Department. The Department appealed the circuit court's order to the court of appeals, and the Supreme Court certified the Department's appeal pursuant to Rule 204(b) of the South Carolina Appellate Court Rules. After review, the Supreme Court reversed the circuit court and held this case could not proceed as a class action against the Department.

St. John Missionary Baptist Church v. Flakes

Court: Supreme Court of Texas

Docket: 18-0513

Opinion Date: February 7, 2020

Judge: Per Curiam

Areas of Law: Civil Procedure, Real Estate & Property Law

The Supreme Court reversed the judgment of the court of appeals ruling that, where the trial court granted a motion to dismiss without specifying the ground for its decision, the court of appeals did not have authority to order supplemental briefing but was instead required to affirm because of Appellants' failure to brief all possible grounds for the trial court's decision, holding that the court of appeals had the authority to order supplemental briefing. In this dispute over church assets, Appellees filed a motion to dismiss and a plea to the jurisdiction based on both standing and the ecclesiastical abstention doctrine. The trial court granted the motion but did not specify the grounds for its decision. Appellants appealed, but the appellate brief only addressed the standing issue. The court of appeals affirmed, holding that it lacked the authority to order supplemental briefing on the ecclesiastical abstention issue and was bound to affirm the trial court because Appellants failed to challenge all possible bases for the decision. The Supreme Court reversed, holding that because Appellants effectively raised the ecclesiastical abstention issue in their appellate briefing, the court of appeals had the authority to order additional briefing under Tex. R. App. P. 38.9.