Which Laws Apply to Broker-Dealers? Federal Laws? State Laws? Both? General Principles Leading to an Answer

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel explains the law of preemption as it pertains to broker-dealers and their investor clients. She predicts, among other things, that either the clients will demand that broker-dealers adhere to a fiduciary duty, or else that states will impose that duty on them.

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United States v. Berry

Court: US Court of Appeals for the Fifth Circuit

Docket: 19-20050

Opinion Date: February 28, 2020

Judge: Edith H. Jones

Areas of Law: Criminal Law, Family Law, Real Estate & Property Law

The Fifth Circuit affirmed the district court's final order of garnishment under the Mandatory Victims Restitution Act. Defendant pleaded guilty and was convicted of wire fraud, mail fraud, and falsifying a tax return, all in connection with the ongoing theft of funds from her employers. Defendant was then ordered to pay restitution of more than $2 million. In order to enforce the judgment, five investment retirement accounts (IRAs), held under defendant and her husband's names, were garnished. After defendant agreed to release the funds, the government reapplied to garnish two accounts in the husband's name and the district court granted the writ. The court first rejected defendant's claim under federal law that any non-defendant spouse's IRA an be part of a defendant spouse's property or rights to property under 18 U.S.C. 3613. The court has previously held that notwithstanding its anti-alienation provision, 29 U.S.C. 1056(d)(1), Employee Retirement Income Security Act retirement accounts are subject to MVRA restitution awards. Furthermore, under United States v. Loftis, 607 F.3d 173 (5th Cir. 2010), the court held that defendant's one-half interest in her husband's solely managed IRA is part of all property and rights to property of the spouse fined under section 3613. Under Texas law, the court held that the husband's IRAs are solely managed community property, and that a wife has only a one-half interest in her husband's solely managed community property. Finally, the court held that the Consumer Credit Protection Act was inapplicable in this case. Therefore, the court held that half the funds—around $1 million—may be garnished now.

In re Justin O.

Court: California Courts of Appeal

Docket: B287406(Second Appellate District)

Opinion Date: March 2, 2020

Judge: Bendix

Areas of Law: Family Law

The Court of Appeal held that the juvenile court erred in denying grandmother de facto parent status, and compounded the error by refusing to allow grandmother an opportunity to present evidence or argument at the purported "hearing" on the Welfare and Institutions Code section 387 petition. The court rejected respondent's argument that the appeal was moot, because a decision in this appeal could affect grandmother's visitation with the children, as well as her ability to effectively parent the adopted son still in her custody. Accordingly, the court reversed the juvenile court's order sustaining the section 387 petition.

In re Child of Amber D.

Court: Maine Supreme Judicial Court

Citation: 2020 ME 30

Opinion Date: March 5, 2020

Judge: Per Curiam

Areas of Law: Family Law

The Supreme Judicial Court affirmed the judgment of the district court terminating Mother's parental rights to her child pursuant to Me. Rev. Stat. 22, 4055(1)(B)(2)(a), (b)(i), (ii), holding that there was sufficient record evidence to support the court's findings of parental unfitness and best interest by clear and convincing evidence. The court terminated Mother's parental rights to the child on the grounds that Mother was unable to protect the child from jeopardy and unable to take responsibility for the child and that these circumstances were unlikely to change in a time reasonably calculated to meet the child's needs. The court further found that termination of Mother's rights was in the child's best interest. The Supreme Judicial Court affirmed, holding that there was no abuse of discretion in the court's determination that the termination of Mother's parental rights was in the child's best interest.

In re Child of Amelia C.

Court: Maine Supreme Judicial Court

Citation: 2020 ME 28

Opinion Date: March 5, 2020

Judge: Per Curiam

Areas of Law: Family Law

The Supreme Judicial Court affirmed the judgment of the district court terminating Mother's parental rights to her child, holding that competent evidence in the record supported the court's finding that Mother was parentally unfit and that the court did not err in finding that the Department of Health and Human Services had made reasonable efforts to reunify and rehabilitate Mother's family. Based on the evidence before it, the district court found by clear and convincing evidence that Mother met two of the four definitions of parental unfitness. The Supreme Judicial Court affirmed, holding (1) there was sufficient evidence to support the court's judgment terminating Mother's parental rights; and (2) the court did not err in finding that the Department had made reasonable efforts to reunify and rehabilitate the family.

In re Child of Whitney M.

Court: Maine Supreme Judicial Court

Citation: 2020 ME 29

Opinion Date: March 5, 2020

Judge: Per Curiam

Areas of Law: Family Law

The Supreme Judicial Court affirmed the judgment entered by the district court finding that Mother's child was in circumstances of jeopardy pursuant to Me. Rev. Stat. 22, 4002(6), 4035(2), and ordering the child remain in the custody of the Department of Health and Human Services, holding that the evidence was sufficient to support the court's determination that the child was in jeopardy. On appeal, Mother challenged the sufficiency of the evidence to support the court's finding, by a preponderance of the evidence, that the child was in circumstances of jeopardy. The Supreme Judicial Court affirmed, holding that, taken together, the court's supported factual findings were sufficient to support its determination that the child would be "subject to a threat of serious harm" if he were returned to the custody of Mother.

In re D.W.P

Court: North Carolina Supreme Court

Docket: 140A19

Opinion Date: February 28, 2020

Judge: Cheri Beasley

Areas of Law: Family Law

The Supreme Court affirmed the decision of the trial court terminating Mother's parental rights, holding that the trial court made and relied upon findings of fact that were supported by clear, cogent, and convincing evidence in analyzing Mother's reasonable progress to remedy the conditions that led to the removal of her children. On appeal, Mother argued that the trial court made and relied upon finding of fact that were unsupported by clear, cogent, and convincing evidence in assessing her reasonable progress to remedy the conditions that led to the removal of her children. The Supreme Court affirmed, holding that the trial court's findings supported its conclusion that Mother had not made reasonable progress in correcting the conditions that led to the children's removal and that the children were likely to suffer neglect in the future.

In re J.M.

Court: North Carolina Supreme Court

Docket: 220A19

Opinion Date: February 28, 2020

Judge: Earls

Areas of Law: Family Law, Government & Administrative Law

The Supreme Court affirmed the order of the trial court terminating Mother's parental rights to her five minor children, holding that the trial court's findings supported its conclusion that grounds existed to terminate Mother's parental rights to the children pursuant to N.C. Gen. Stat. 7B-1111(a)(3). The trial court concluded that grounds existed to terminate Mother's parental rights based on neglect, failure to make reasonable progress toward correcting the conditions that led to the children's removal from her care, failure to pay a reasonable portion of the cost of the children's care while they were in the custody of the Department of Social Services (DSS), and dependency. The court further concluded that terminating Mother's parental rights was in the best interests of the children. The Supreme Court affirmed, holding that the record supported the trial court's conclusion that grounds existed to terminate Mother's parental rights for failure to pay a reasonable portion of the cost of the children's care while they were in DSS custody.

In re S.E.

Court: North Carolina Supreme Court

Docket: 197A19

Opinion Date: February 28, 2020

Judge: Robin E. Hudson

Areas of Law: Family Law

The Supreme Court affirmed the order of the trial court terminating Mother's parental rights to her four children, holding that the evidence supported the trial court's conclusion that grounds existed to terminate Mother's parental rights based upon her willful failure to pay a reasonable amount of the cost of care for the children during their placement in the custody of the Department of Health and Human Services pursuant to N.C. Gen. Stat. 7B-1111(a)(3). The court concluded that grounds existed to terminate Mother's parental rights on the bases of neglect, willfully leaving the children in foster care for more than twelve months without making reasonable progress to correct the conditions that led to their removal, and willfully failing to pay a reasonable portion of the cost of care for the children during their placement in the custody of the Department of Social Services. The court also concluded that termination of Mother's parental rights was in the children's best interests. The Supreme Court affirmed, holding that the findings fully supported the trial court's conclusion that one ground existed to terminate parental rights, and therefore, this Court need not address Mother's arguments challenging the remaining grounds.

York v. Longlands Plantation

Court: South Carolina Supreme Court

Docket: 27950

Opinion Date: March 4, 2020

Judge: Kaye Gorenflo Hearn

Areas of Law: Family Law, Labor & Employment Law

In August 2013, Timothy York drowned when his boat capsized on a pond at Longlands Plantation in Greeleyville, South Carolina. The deceased's brother and personal representative of the estate filed a claim for death benefits under the Workers’ Compensation Act. Although there were initially several individuals who were potential dependents, only York's mother and his girlfriend, Yvonne Burns, claimed death benefits. Burns noted she began seeing the deceased in the late 1990s, but the parties separated before reuniting sometime in 2004-2005. She worked approximately fifty hours per week as a nurse's aide, and filed as head of the household on her tax returns, indicating no one else could claim her as a dependent. Her house was in her name, and she only used "York" on a furniture contract, purportedly because she planned to marry him. Although several witnesses testified she planned to marry while others were unaware of this fact, no one testified that they were in fact married. Burns claimed she was the deceased's common-law wife or alternatively, that she was a dependent under the Act. Whether Burns could qualify as a dependent was the issue this case presented for the South Carolina Supreme Court’s review. The commission found that because Burns was engaged in an illicit relationship in violation of South Carolina’s fornication statute, she could not recover the death benefits as a matter of public policy. The court of appeals reversed, finding, notwithstanding the fact the girlfriend’s initial claim was based on being the deceased's common-law wife, there was no evidence of fornication in the record. Because the relevant facts were not in dispute, the Supreme Court reversed and awarded benefits to the deceased’s mother.