Latest 6 Cases This Week: Schlafly v. Eagle Forum (8th Cir.), Judd v. Weinstein (9th Cir.), United States v. Doe Co. (9th Cir.)

Dear House Judiciary Committee: In Questioning William Barr, Employ the Ethics Complaint That 27 Distinguished DC Lawyers Filed Wednesday

FREDERICK BARON, DENNIS AFTERGUT, AUSTIN SARAT

Frederick Baron, former associate deputy attorney general and director of the Executive Office for National Security in the Department of Justice, Dennis Aftergut, a former federal prosecutor, and Austin Sarat, Associate Provost and Associate Dean of the Faculty and William Nelson Cromwell Professor of Jurisprudence & Political Science at Amherst College, call upon the House Judiciary Committee to carefully read the ethics complaint by 27 distinguished DC lawyers against William Barr before questioning him today, July 28, 2020.

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Schlafly v. Eagle Forum

Court: US Court of Appeals for the Eighth Circuit

Docket: 19-2174

Opinion Date: July 29, 2020

Judge: Lavenski R. Smith

Areas of Law: Business Law, Corporate Compliance

Plaintiff, a member of the Board of Directors of Eagle Forum, filed suit against Eagle Forum and others, alleging violations of the organization's bylaws and breach of fiduciary duties in connection with the organization's attempt to remove plaintiff and others from the Board. The Eighth Circuit held that plaintiff waived the Bylaws claim set forth in his original complaint; the district court did not err in dismissing plaintiff's claim that Eagle Forum violated Illinois law by not permitting proxy voting; the district court acted within the scope of its "informed discretion" by awarding attorneys' fees by relying on its inherent power, because Federal Rule of Civil Procedure 11 was not "up to the task" in this situation; the district court did not abuse its discretion in awarding attorney's fees to Eagle Forum under its inherent power as a sanction against plaintiff for acting in bad faith; the district court provided a reasoned basis for its award of $9,851.25 in attorneys' fees to Eagle Forum by relying on and analyzing the invoice submitted by Eagle Forum.

Judd v. Weinstein

Court: US Court of Appeals for the Ninth Circuit

Docket: 19-55499

Opinion Date: July 29, 2020

Judge: Mary H. Murguia

Areas of Law: Business Law, Entertainment & Sports Law, Labor & Employment Law

The Ninth Circuit reversed the district court's dismissal of actor Ashley Judd's sexual harassment claim under California Civil Code section 51.9 against producer Harvey Weinstein. Judd alleged that, in the late 1990s, Weinstein sexually harassed her during a general business meeting and derailed her potential involvement in the film adaptation of "The Lord of the Rings" book trilogy. The panel held that, as alleged, section 51.9 plainly encompasses Judd and Weinstein's relationship, which was "substantially similar" to the "business, service, or professional relationship[s]" enumerated in the statute. The panel explained that the relationship between Judd and Weinstein was characterized by a considerable imbalance of power substantially similar to the imbalances that characterize the enumerated relationships in section 51.9. The panel stated that, by virtue of his professional position and influence as a top producer in Hollywood, Weinstein was uniquely situated to exercise coercive power or leverage over Judd, who was a young actor at the beginning of her career at the time of the alleged harassment. Furthermore, given Weinstein's highly influential and "unavoidable" presence in the film industry, the relationship was one that would have been difficult to terminate "without tangible hardship" to Judd, whose livelihood as an actor depended on being cast for roles. The panel rejected Weinstein's arguments to the contrary and held that Judd sufficiently alleged a claim under section 51.9. Accordingly, the panel remanded for further proceedings.

United States v. Doe Co.

Court: US Court of Appeals for the Ninth Circuit

Dockets: 19-10187, 19-10261

Opinion Date: July 27, 2020

Judge: William A. Fletcher

Areas of Law: Business Law, Civil Procedure

This case arose from a federal grand jury investigation of the acquisition of one company by another company. The grand jury issued two indictments and subpoenas to a third company, Doe Company ("the Company"), and to Pat Roe, a former officer at the acquired company and a current partner at the Company. The Company appealed the district court's denial of the Company's motion to quash and order of compliance by both the Company and by Pat Roe. After the Company declined to produce the documents, the district court held the Company in contempt. The Ninth Circuit held that it lacked appellate jurisdiction to review the district court's enforcement order directed to Roe. The panel clarified under Perlman v. United States, 247 U.S. 7 (1918), that in seeking interlocutory review of a court order enforcing a grand jury subpoena, an appellant must assert a claim of evidentiary privilege or some other legal claim specifically protecting against disclosure to the grand jury. Because the Company makes no such claim, the panel held that it did not have jurisdiction under Perlman and dismissed in part. After determining that it had jurisdiction to review the district court's enforcement orders directed to the Company and holding the Company in contempt, the panel held that, taken together, the district court's findings adequately support its determination that it had in personam jurisdiction over the Company. Furthermore, service of process on the Company was proper where it was fair, reasonable, and just to imply the authority of the General Counsel to receive service on behalf of the Company. Accordingly, the panel affirmed in part.

Alston v. Dawe

Court: California Courts of Appeal

Docket: G057157(Fourth Appellate District)

Opinion Date: July 28, 2020

Judge: Goethals

Areas of Law: Business Law, Legal Ethics

Paul Copenbarger and Kent McNaughton formed Newport Harbor Offices & Marina, LLC (NHOM) in 2003 to acquire an office building in Newport Beach. McNaughton and Copenbarger were equal owners and the sole members of NHOM. Copenbarger delegated to McNaughton “management of the day-to-day operations of the commercial real property owned by the Company,” and McNaughton delegated to Copenbarger “management and handling of all legal affairs of the Company.” These delegations were “[s]ubject to revocation” by the delegating members. McNaughton later leased several office suites in NHOM’s building for his separate real estate business. McNaughton signed the rental agreement on behalf of both himself and NHOM. In early 2008, after learning McNaughton had unilaterally increased his monthly NHOM management payments to himself, Copenbarger revoked McNaughton’s delegated authority to manage NHOM’s day-to-day operations. In response, McNaughton stopped paying rent to NHOM. NHOM hired attorney Elaine Alston and her firm, Alston, Alston & Diebold (collectively, Alston), to file unlawful detainer actions against McNaughton. In June 2008, while the unlawful detainer actions and arbitration were pending, McNaughton formally revoked Copenbarger’s delegated right to manage NHOM’s legal affairs. He also filed a motion to compel arbitration of the lease dispute. The arbitrator issued an interim award in 2011, finding largely in Copenbarger’s favor. He further found McNaughton had breached his leases with NHOM by improperly withholding rent. Copenbarger petitioned to confirm the arbitration award with the trial court, and McNaughton filed a motion to disqualify Alston. The court denied McNaughton’s disqualification motion, granted Copenbarger’s petition to confirm the arbitration award, and confirmed the award in all respects. McNaughton filed an action seeking declaratory relief against Alston, "vaguely alleging" Alston was impermissibly representing NHOM in litigation matters now adverse to McNaughton. The trial court sustained Alston's demurrer without leave and granted her anti-SLAPP motion, citing the collateral estoppel effect of the first case. Alston then filed the underlying malicious prosecution action against McNaughton and his attorneys, who each filed anti-SLAPP motions. The Court of Appeal affirmed that portion of the trial court's order granting McNaughton's anti-SLAPP motion as to Alston's fraud claim; the portion of the order granting McNaughton’s and his attorney's anti-SLAPP motions as to Alston’s malicious prosecution claim was reversed. The matter was remanded for further proceedings.

B&S MS Holdings, LLC v. Landrum

Court: Supreme Court of Mississippi

Citation: 2018-CA-01734-SCT

Opinion Date: July 30, 2020

Judge: Leslie D. King

Areas of Law: Arbitration & Mediation, Business Law

David and Jill Landrum began developing land in Livingston, Madison County, Mississippi, in approximately 2006. David sought financial assistance from Michael Sharpe. Michael invested substantial sums in the business, and his wife, Marna Sharpe, gained a membership interest in the business. In 2010, Livingston Holdings, LLC (Livingston), a Mississippi limited-liability company, was formed. The original members of the company were Jill, Marna, and Sara Williams. Livingston acquired Williams’s ownership interests, and Marna later assigned her membership interest to B&S Holdings, LLC (B&S). The development became the Town of Livingston. The members of Livingston consisted of B&S and Jill. In this dispute between the members of the limited-liability company, the question presented for the Mississippi Supreme Court's review was whether statutory provisions prevented the enforcement of an arbitration provision and waiver contained in the operating agreement of the company. Because the Court determined the statutory provisions did not control over the terms of the operating agreement, it affirmed the trial court’s decision to compel arbitration.

7222 Ambassador Road, LLC v. National Center on Institutions & Alternatives, Inc.

Court: Maryland Court of Appeals

Docket: 66/19

Opinion Date: July 27, 2020

Judge: Robert N. McDonald

Areas of Law: Business Law

The Court of Appeals dismissed this appeal concerning compliance with the law governing Maryland LLCs, holding that this appeal was not properly before the Court. Petitioner 7222 Ambassador Road, LLC initiated this action against Respondent National Center for Institutions and Alternatives, Inc. Respondent prevailed in the circuit court and the court of special appeals. Before Petitioner filed a petition for certiorari with the Court of Appeals it forfeited its right to do business in Maryland and failed to reverse that forfeiture. Respondent filed a motion to dismiss the appeal based on the forfeiture. The Court of Appeals granted the motion to dismiss, holding that, as a result of Petitioner's forfeiture of its right to do business in Maryland, it lost the ability to prosecute this action during the period of forfeiture, including the filing of a timely petition for a writ of certiorari.