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Seventh Circuit holds that indigent plaintiff’s lawsuit should not have been dismissed solely because he was unable to pay a court-imposed sanction.

September 26, 2011 by Jodie L. Hill

After he was arrested and later released without charge, Illinois resident Bruce Williams filed suit against four officers, alleging Fourth Amendment violations. According to Williams, the officers arrested him without probable cause and proceeded to assault him, causing facial scars that made it impossible for him to follow his vocation of cosmetologist/educator. Williams was allowed to proceed in forma pauperis and later retained attorney Garry Alonzo Payton on a contingent-fee basis.

Six months after the trial court’s deadline for the filing of a final pretrial order, and after repeated attempts to elicit a response from a draft pretrial order, the officers moved for sanctions. The trial court declined to dismiss the case, but refused to schedule a pretrial conference. Instead he ordered Williams and Payton to reimburse the legal expenses incurred in order to obtain a response to the draft order, approximately $9,000, within 30 days.

Williams unsuccessfully tried to negotiate a payment plan at a rate of $25 per month, unable to afford more on his $1,050 monthly salary. The officers rejected the plan and the 30-day deadline passed without payment. Though he acknowledged Williams’ poverty, the trial court dismissed the case for failure to pay the sanction.

Williams also complained to the Illinois Attorney Registration and Disciplinary Commission, blaming Payton for the delay in responding to the pretrial order. The commission agreed and ordered Payton to pay the sanction and suspended him for 45 days.

On appeal, the Seventh Circuit Court of Appeals criticized the dismissal as a disproportionate response to the misdoing:

[Williams] was given 30 days; he sought 11,000. But the court was mistaken to term the plaintiff’s failure to pay ‘contumacious.’ No one doubts that he can’t afford to pay the monetary sanction. To ignore a party’s inability to pay a sanction could result in a disproportionate punishment–as this case illustrates.

Had the case been allowed to proceed to trial, the $10,000 settlement offered by the officers could have covered the sanction. The Seventh Circuit applauded the decision of the Illinois Attorney Registration and Disciplinary Commission, noting that "Payton got off lightly. Ignoring the need to prepare a pretrial order was inexcusable. Ignoring the order to pay sanctions was worse; it was contempt of court." The Seventh Circuit reinstated Williams’ case and remanded it back to the trial court.

For the full story, click here.

Posted in Constitutional Law, Fourth Amendment, Practice & Procedure | Tagged | Leave a Comment »

Ninth Circuit finds that government failed to properly consider the potential impact an increase in Medicare co-payments would have on economically vulnerable Arizonans.

August 24, 2011 by Jodie L. Hill

In 2003, Arizona requested a waiver from the Secretary of Health and Human Services (“the Secretary”) to expand its mandatory Medicare co-payments for (1) childless, nondisabled adults who earn up to 100% of the federal poverty level and (2) former recipients of state health care benefits in order to lower health care costs and close a $1 billion budget gap. The Secretary granted the waiver in 2004.

After the waiver was granted, a group of "economically vulnerable" Arizonans filed a class action against the Secretary and the director of Arizona’s Medicaid agency, alleging that (1) the increased and expanded mandatory co-payments violated the Medicaid Act’s cost-sharing restrictions, (2) the waiver was illegal, and (3) they had received inadequate notice of the changes. The trial court ruled that the plaintiffs, while vulnerable, were not defined as a "medically needy" population under the Medicaid Act. Because Arizona’s state health care plan does not cover them, the trial court found that the state was exempted from the law’s cost-sharing provisions as an "expansion population."

On appeal, the Ninth Circuit Court of Appeals agreed on this point, but remanded the case for a new look at the waiver and notice issues because of the following:

There is little, if any, evidence that the secretary considered the factors [federal statute] requires her to consider before granting Arizona’s waiver. . . . The record is not sufficient for this court to review the agency’s consideration of the impact Arizona’s demonstration project would have on the economically vulnerable.

For the full story, click here.

Posted in Constitutional Law, Health Law | Tagged | Leave a Comment »

Fifth Circuit holds that a school district can be held liable for allowing an unauthorized stranger to remove and then sexually abuse a student.

August 15, 2011 by Jodie L. Hill

According to a complaint, a nine-year-old known old known only as Jane Doe in the court documents was checked out of Covington County Elementary School at least six times by an unauthorized stranger during the 2007-08 school year. The stranger, Tommy Keyes, signed the child out as her father and at least once as her mother. The complaint alleges that Keyes raped, sodomized, and molested Jane during these sessions and then returned her to school. The complaint further alleges that school officials never asked Keyes for identification or checked the "permission to check-out form" that each parent or guardian submitted to the school with the names of adults authorized to pick up their children.

Jane’s father and grandmother, Daniel and Geneva Magee, filed the complaint against the Covington County School District, several educators, and Keyes. The trial court dismissed the case against the school and its officials, however, holding that they had no duty to protect the girl.

On appeal, the Fifth Circuit Court of Appeals agreed with the Magees that the school had a "special relationship" with Jane:

[She] was required to attend the school throughout the entire school day, out of the presence of her legal guardian and without any ability to leave; and Jane’s exclusive confinement by the school, entirely without the protection of her legal guardian, in combination with her young age, made Jane wholly dependent on the School for her safety.

After finding that a special relationship existed, the court then concluded that the school and its officials acted with deliberate indifference to Jane’s safety by checking her out to an unauthorized adult (whom they did not know) without verifying his identity to confirm that he was authorized by Jane’s legal guardian to check her out of school. The court then reversed the dismissal of the school district to allow the family to proceed in its case against the school district for possible violations of her substantive due-process rights. The court agreed, however, that qualified immunity protects the school officials from liability.

For the full story, click here.

Posted in Constitutional Law, Education Law | Tagged , | Leave a Comment »

Utah Court of Appeals holds that “religious” tattoo parlor not exempt from paying unemployment insurance.

August 12, 2011 by Jodie L. Hill

Gregory Lowrey, owner of the Happy Valley Tattoo parlor, challenged the Utah Department of Workforce Services Appeals Board’s decision that the wages of a former employee, Jacklyn Johnson, were subject to unemployment insurance. Lowry argued that the business was part of his church, UBU Ministries, which includes tattooing among its religious tenets.

On appeal to the Utah Court of Appeals, Lowrey contended that Johnson was an employee of UBU and was fired for just cause. The court found that Lowrey failed to prove any of his claims, including the point that UBU qualified as an exempt religious organization:

Lowrey does not identify anything in the record besides his testimony as to UBU’s religious nature that would establish UBU as an exempt organization under the statutory definition.

For the full story, click here.

Posted in Employment Law, First Amendment | Tagged | Leave a Comment »

Third Circuit holds that plaintiffs lack standing to challenge individual mandate provision of health care reform because they have no current injury.

August 4, 2011 by Jodie L. Hill

In March 2010, New Jersey physician Mario Criscito, one of his anonymous patients, and New Jersey Physicians Inc., a nonprofit health care organization, filed suit against the U.S. government, arguing that the individual mandate provision of the Patient Protection and Affordable Care Act was unconstitutional. The trial court dismissed their complaint for lack of standing.

On appeal, the Third Circuit Court of Appeals agreed, noting that the three plaintiffs lacked standing because they failed to allege any injury in fact:

These allegations are factually barren with respect to standing. The first apparently suggests that Roe pays for his own health care. The second reveals only that, before Roe pays, he chooses his doctor and his method of payment. It provides no specifics as to whom Roe chooses or how Roe pays.

The court affirmed the lower court ruling, holding that, because the mandate will not be enforced until 2014, the plaintiffs could not show they were currently experiencing any financial harm or pressure.

For the full story, click here.

Posted in Uncategorized | Leave a Comment »

Eighth Circuit holds that phone calls, e-mails and a wire transfer are insufficient to exercise personal jurisdiction over German corporation.

July 21, 2011 by Jodie L. Hill

Viasystems, Inc. v. EMB-Papst St. Georgen GmbH & Co., KG, No. 10-2460.

Facts

Viasystems, Inc. (“Viasystems”), is a Delaware corporation based principally in Saint Louis, Missouri, that manufactures telecommunications equipment. In 2007, Viasystems contracted with Ericsson A.B. (“Ericsson”), a Swedish company, to manufacture base units that would eventually be distributed in Japan. Each unit required a cooling fan, which Viasystems purchased from EMB-Papst St. Georgen GmbH & Co. (“St. Georgen”), a German corporation. At no point did the cooling fans or base units enter the United States.

Ericsson found that some of the cooling fans were malfunctioning and informed Viasystems. Viasystems traced the issue to a manufacturing defect. Ericsson paid over $5 million to replace the defective cooling fans and demanded reimbursement from Viasystems. Viasystems partially reimbursed Ericsson and made a demand upon St. Georgen to assume responsibility for the replacement costs. St. Georgen made a partial payment of almost $1.5 million to Viasystems and then refused to pay anything further.

Viasystems filed suit in federal court against St. Georgen, claiming diversity jurisdiction and asserting various contract and tort claims. St. Georgen filed a motion to dismiss based on lack of personal jurisdiction. The trial court granted the motion, and Viasystem appealed.

Decision

The Eighth Circuit Court of Appeals explained that personal jurisdiction over a defendant can be general or specific:

‘Specific jurisdiction refers to jurisdiction over causes of action arising from or related to a defendant’s actions within the forum state,’ while ‘[g]eneral jurisdiction . . . refers to the power of a state to adjudicate any cause of action involving a particular defendant, regardless of where the cause of action arose.’

Although Viasystems alleged both specific and general jurisdiction over St. Georgen, the court noted that the due-process threshold was not satisfied for either. As the Supreme Court of the United States has long held, a defendant must have had sufficient minimum contacts with the forum state so that the defendant should reasonably anticipate being taken to court in that state. The court found that St. Georgen’s calls, e-mails, and a money transfer to Missouri could not provide the substantial connection needed to confer jurisdiction.

Accordingly, the court upheld the trial court’s dismissal.

Posted in Constitutional Law | Tagged | 1 Comment »

Ninth Circuit explains that passive causation is insufficient to create liability under nuisance laws.

June 29, 2011 by Jodie L. Hill

In 1988, BNSF Railway and Union Pacific Railroad sold their interest in a parcel of land in Stockton, California, to the city’s redevelopment agency. That agency then sold a portion to a commercial developer who discovered that the soil and groundwater had long been contaminated. Officials determined that (1) a nearby petroleum facility was source of the pollutants and (2) several spills in the 1970s had sent petroleum onto the property through an underground drain. Under its agreement with the developer, Stockton’s redevelopment agency spent nearly $2 million cleaning the site.

In 2005, the agency sued the railroads for reimbursement, claiming they were liable for the contamination under common-nuisance law and California’s Polanco Redevelopment Act, which governs the rehabilitation of former industrial sites throughout the state. The trial court agreed and awarded the agency more than $800,000 in damages and an injunction, holding that the railroads were liable for the contamination because they installed the underground drain through which the contaminants migrated onto the property. The trial court found that, had the railroads not installed the drain, the land would not have been damaged.

On appeal, the Ninth Circuit Court of Appeals rejected the trial court’s decision, noting that no precedent allowed but-for causation to establish nuisance liability:

We cannot agree that such passive but-for causation is sufficient for nuisance liability to attach. Under California law, conduct cannot be said to “create” a nuisance unless it more actively or knowingly generates or permits the specific nuisance condition.

The court then remanded the case back to the trial court for entry of summary judgment for the railroads.

For the full story, click here.

Posted in Environmental Law, Torts | Tagged , | Leave a Comment »

Seventh Circuit applies First-Amendment protection to disingenuous lobbying tactics employed to prevent competition.

June 13, 2011 by Jodie L. Hill

In 2004, Mercatus Group partnered with Evanston Northwestern Healthcare to open a physician center in the village of Lake Bluff, a short distance away from the almost 70-year-old Lake Forest Hospital. Recognizing the threat a competing facility would pose, Lake Forest Hospital began a lobbying and public-relations campaign to prevent the center’s launch. The hospital directly lobbied the village board and community members and offered incentives to keep physician-practice groups from leaving the hospital to join the new center. After the village board refused to rezone the land for medical use, the physicians stayed at the hospital, killing the Mercatus center. Mercatus then sued the hospital, alleging anti-competitive practices under the Sherman Act. The trial court found that the hospital’s efforts were constitutionally protected speech and granted summary judgment to the hospital.

On appeal, Mercatus argued that the hospital made misrepresentations to the board, the public, and the physicians it pulled away from the center and that those misrepresentations negated constitutional protection. The Seventh Circuit Court of Appeals rejected the arguments, noting antitrust litigation "’cannot be used to chill [the] constitutional right’ to ‘petition without fear of sanctions.’" The court further stated the following:

To make such injuries from public relations campaigns actionable under the antitrust laws would ‘be tantamount to outlawing all such campaigns.

Finally, the court explained that, though the hospital allegedly lied to physicians that Mercatus had violated certain anti-kickback regulations, antitrust laws do not prohibit "conduct that is only unfair, impolite, or unethical.” Accordingly, the court affirmed the trial court’s decision.

For the full story, click here.

Posted in Business Law, First Amendment | Tagged | Leave a Comment »

New Mexico Supreme Court allows suit against pharmaceutical representatives under liquor liability law.

May 16, 2011 by Jodie L. Hill

In April 2005, Alicia Gonzales ended up with a blood alcohol content level that was twice the legal limit after drinking at an all-day business luncheon, which began at a Chili’s restaurant and concluded in a pair of bars eight hours later. Four pharmaceutical representatives—two from Schering Corp., one from Abbott Laboratories, and one from Merck & Co—had taken Gonzales and her colleagues out for food and drinks that day. After leaving a bar, Gonzales was speeding and crashed her car into another car driven by Gina Delfino, who was seriously hurt along with her passengers. Delfino’s son did not survive.

Delfino sued the bars and restaurant that had served Gonzales, as well as the pharmaceutical representatives and their employers. The trial court dismissed the pharmaceutical defendants from the case, however, finding that they did not owe Delfino any duty under New Mexico’s Liquor Liability Act. On appeal, the New Mexico Supreme Court reversed the trial court, noting that Delfino had “properly characterized [the] pharmaceutical defendants as social hosts under the Liquor Liability Act."

For the full story, click here.

Posted in Torts, Transportation Law | Tagged | Leave a Comment »

Eighth Circuit explains that child’s perspective is paramount in determining habitual residence under ICARA.

May 6, 2011 by Jodie L. Hill

Stern v. Stern, No. 10-2493.

Facts

Michelle Garland Stern, who has dual citizenship of the United States and Israel, first met Michael Stern, who has dual citizenship of Israel and Canada, in 2000 during a visit to Israel. Michelle later moved to Israel, and the two were married in a religious ceremony. Their son DJ was born in 2003.

In August 2005, Michelle moved to Iowa to complete a doctoral program at Iowa State University. Martin followed in October 2005, after closing his taxi business in Israel. They were married in a civil ceremony in 2006, but Michelle filed for divorce in October 2007. They attempted reconciliation, but Martin eventually moved back to Israel in February 2008. Michelle proceeded with the divorce and was granted temporary custody of DJ.

Martin then brought a separate suit in federal court, petitioning for DJ’s return under the International Child Abduction Remedies Act (“ICARA”). After a bench trial, the trial court denied Martin’s petition, noting that DJ’s habitual residence at the time of the alleged wrongful retention was the United States.

Appeal

On appeal, the Eighth Circuit Court of Appeals noted that the ICARA does not control substantive custody disputes. Instead, it governs selection of the forum where such a dispute should be brought. The court explained that the key question under the ICARA is “whether a child has been wrongfully removed from the country of its habitual residence or wrongfully retained in a country other than that of its habitual residence.” The court then listed factors to be considered in determining a child’s habitual residence:

  1. The settled purpose of the move from one country to another from the child’s perspective.
  2. Parental intent regarding the move.
  3. Change in geography.
  4. Passage of time.
  5. The child’s acclimation to the new country.

Martin argued that the trial court gave insufficient weight to the parties’ intent to return to Israel after Michelle finished her degree. The court, however, agreed with the trial court that the child’s perspective was paramount. From DJ’s perspective, the settled purpose of his relocation to Iowa was to reside there permanently, at least until Michelle finished her degree. Settled purpose does not require an intention to stay in the new location forever, but does focus on the perceptions and acclimations of the child.

Accordingly, the court affirmed the trial court’s decision.

Posted in Family Law, International Law | Tagged | Leave a Comment »

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