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NEW & NOTEWORTHY

  
  • Congratulations to our Super Lawyers for 2014! Richard W. Bryan, David H. Cox, William E. Davis, Christopher P. Ferragamo, Roy L. Kaufmann, Robert N. Kelly, , Nicholas S. McConnell, James P. Schaller and Our Super Lawyers Rising Stars: Nathan J. Bresee, Timothy P. Kilgore, Allyson C. Kitchel, and James N. Markels!


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  • In an important new opinion issued on April 24, 2014, the D.C. Court of Appeals held that a title insurance policy by itself did not create a fiduciary duty between the insurer and insured. In Fogg v. Fidelity National Title Insurance Company, Fogg purchased a parcel of commercial real property, along with title insurance. When a lender to the seller then sued to establish a lien on the property pursuant to an unrecorded deed of trust, Fogg raised the claim with his insurer. Fidelity denied coverage pursuant to exceptions in the policy for liens known by Fogg or unknown to Fidelity, on the basis that Fogg was alleged by the seller’s lender to have known about the unrecorded lien and Fidelity had no knowledge of the lien since it was never recorded. Although Fogg ultimately convinced a jury that he had no knowledge of the lien and was a bona fide purchaser for value, the Court, in a unanimous opinion by Judge Blackburne-Rigsby, held that Fidelity had no duty to defend or any fiduciary duty to Fogg based on the “eight corners” of the policy and original complaint, as set forth in Stevens v. United General Title Ins. Co., 801 A.2d 61 (D.C. 2002), and accordingly upheld the dismissal of his claims. The Court expressly declined to adopt New York’s “factual exception test” in place of the “eight corners rule” as proposed by Fogg. A link to the opinion is here: http://www.dccourts.gov/internet/documents/13-CV-0216.pdf



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  • Congratulations to our Super Lawyers for 2014! Richard W. Bryan, David H. Cox, William E. Davis, Christopher P. Ferragamo, Roy L. Kaufmann, Robert N. Kelly, , Nicholas S. McConnell, James P. Schaller and Our Super Lawyers Rising Stars: Nathan J. Bresee, Timothy P. Kilgore, Allyson C. Kitchel, and James N. Markels!


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  • The U.S. Supreme Court issued two new opinions today:

    Under 18 U.S.C. sec. 2259, a victim of child pornography sued a man who pled guilty to possession of two of her images for “the full amount” of her losses, which were determined to be $3.4 million. In a 5-4 opinion by Justice Kennedy in Paroline v. United States, the Court reversed, holding that restitution under Section 2259 was limited to those damages proximately caused by each individual defendant, and not by other defendants—in other words, each defendant’s liability was limited to their individual contribution to the victim’s harm. Chief Justice Roberts, joined by Justices Scalia and Thomas, dissented, arguing that the victim could not be awarded restitution under the statute’s language because the calculation of such restitution would inevitably be arbitrary. Justice Sotomayor filed a lone dissent arguing that the victim was entitled to judgment for the full amount against the individual defendant. A link to the opinion is here: http://www.supremecourt.gov/opinions/13pdf/12-8561_7758.pdf

    A criminal defendant is entitled to habeas relief under 28 U.S.C. sec. 2254(d) only where the result is “contrary to or involved an unreasonable application of, clearly established Federal law.” In White v. Woodall, the defendant sought habeas relief ten years after being sentenced to death on the basis that failure to instruct the jury to not draw any adverse inference against him during the penalty phase of trial violated his Fifth Amendment rights. Justice Scalia, for a six-member majority, held that such an instruction was not clearly required under current case law, and thus his claim failed. Justice Breyer, joined by Justices Ginsburg and Sotomayor, argued that current case law, taken together, did require such an instruction. A link to the opinion is here: http://www.supremecourt.gov/opinions/13pdf/12-794_87ad.pdf



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  • The United States Supreme Court issued two new opinions on April 22, 2014.

    In Schuette v. BAMN, the Court upheld Michigan’s Proposal 2, which enacted by public vote a state constitutional amendment that prohibited the use of race-based preferences as part of the admissions process for state universities. Justice Kennedy, joined by Chief Justice Roberts and Justice Alito, wrote that the issue of the case “is not about how the debate about racial preferences should be resolved . . . [but] about who may resolve it.” Justice Kennedy found no authority under the Constitution’s Equal Protection Clause prohibiting the use of a ballot proposal to address the use of such preferences. In a short concurrence, the Chief Justice scolded the dissenters for believing that the voters are unable to “take race seriously” in making such policy decisions. Justice Scalia, joined by Justice Thomas, concurred in the judgment, pointing out that the case involves “a frighteningly bizarre question: Does the Equal Protection Clause of the Fourteenth Amendment forbid what its text plainly requires?” He went on to state that he would require that anyone challenging a facially neutral political act like Proposal 2 “prove intent and causation and not merely the existence of racial disparity” in order to prevail on an Equal Protection challenge. Justice Breyer, in concurrence, reasoned that the amendment was consistent with the Equal Protection Clause because it simply gave the voters the same power that had previously been held by unelected faculty members and administrators. Justice Sotomayor, joined by Justice Ginsburg, dissented, arguing that Proposal 2 “changed the basic rules of the political process in that State in a manner that uniquely disadvantaged racial minorities.” Justice Kagan did not participate in the case.

    A link to the opinion is here.

    After an anonymous 911 caller claimed to have been run off the road by a truck, police pulled that truck over and, while approaching it on foot, smelled the 30 pounds of marijuana in the truck bed. The occupants of the truck moved to suppress the evidence under the Fourth Amendment for lack of reasonable suspicion of criminal activity. In Navarette v. California, Justice Thomas, joined by the Chief Justice and Justices Alito, Breyer, and Kennedy, held in this “close case” that the caller’s tip created a reasonable suspicion that the driver of the truck was intoxicated, thus justifying the search and seizure. Justice Scalia, joined by Justices Ginsburg, Sotomayor, and Kagan, argued that since the anonymous tip was not corroborated, as typically required, it was not sufficiently reliable in itself to provide reasonable suspicion for the truck to be pulled over. Justice Scalia also pointed out that the fact that the truck was not driven erratically during the five minutes the officers observed it before pulling it over weighed further against any suspicion that the driver was drunk or reckless.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • On April 17, 2014, the Virginia Supreme Court issued a number of new decisions.

    The case of Squire v. VHDA stands as another reminder that filing suit after your house has already been foreclosed on is, for all practical purposes, too late. In this case, a lender foreclosed on a residence despite having not fulfilled all the prerequisites set forth in the deed of trust, including arranging a face-to-face interview with the homeowner. Only after the home was sold to an investor for about half the assessed value did the homeowner finally file suit, seeking, among other things, rescission of the foreclosure sale. The trial court dismissed her suit for failure to state any viable claims. A narrow majority of the justices, in an opinion by Justice Powell, rule that the homeowner did state claims for breach of contract and breach of fiduciary duty for the failure to conduct the face-to-face interview prior to foreclosure, but upheld the remaining dismissals, including of the rescission claim. So the foreclosure sale stands. Chief Justice Kinser, joined by Justices Lemons and McClanahan, would have affirmed the trial court’s rulings in full. A link to the opinion is here: http://www.courts.state.va.us/opinions/opnscvwp/1130494.pdf

    A member of a cooperative argued that the cooperative had to pay for plumbing problems affecting her unit under a provision that required the cooperative to “provide and pay for property including the Member’s dwelling, except that the Member shall make minor interior repairs and provide all interior and decorating.” While on its face this language appeared promising to the member’s argument, the Court held in Robinson-Huntley v. George Washington Carver Mutual Homes Association, Inc., in a unanimous opinion by Justice Mims, that the cooperative had no such obligation because the cooperative’s contract with the member’s predecessor had different language; specifically, that the cooperative “shall . . . provide and pay for all necessary current repairs, maintenance, and replacements of Project property . . .” The removal of that language from the successor’s contract evidenced an intent to exclude it by the cooperative, and thus the member’s argument loses. The Court also clarified that claim for attorneys’ fees under Va. Code sec. 55-492(A) of the Coop Act is awarded based on appropriateness, not whether a claimant was “adversely affected.” A link to the opinion is here: http://www.courts.state.va.us/opinions/opnscvwp/1131065.pdf

    In Ferguson v. Stokes, the Court yet again reminded litigants that choosing what to appeal is as important as your argument for why you should win. In this case, a landowner sought to eject her neighbor’s oyster house from her riparian zone. The neighbor argued that he could not be ejected under Va. Code sec. 28.2-1200.1(B)(2), which granted him ownership over the land in question. The trial court stated three (3) distinct reasons why the neighbor’s reliance on the Code section must fail, and the neighbor appealed—but he only challenged two (2) of the trial court’s stated bases. Finding that the third, unchallenged basis was sufficient in itself to defeat the neighbor’s argument, the Court, in another unanimous opinion by Justice Mims, affirmed the trial court’s ruling. Justice McClanahan filed a concurrence on more narrow grounds. A link to the opinion is here: http://www.courts.state.va.us/opinions/opnscvwp/1131121.pdf



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  • A wireless service provider sought to erect two facilities—a silo tower and a church bell tower—in Loudoun County to cover dead areas in coverage, but both proposals were denied by the local Board of Supervisors. The district court overturned the Board’s determination on the silo tower because it relied on objections based on health concerns, which are not a permissible reason for denying a facility under the Telecommunications Act, but upheld the determination as to the church bell tower. Both sides appealed their respective losses, and on April 3, 2014, the U.S. Court of Appeals for the Fourth Circuit affirmed in T-Mobile Northeast, LLC v. The Loudoun County Board of Supervisors. Judges Niemeyer and Agee agreed that the Board as a whole based its denial of the silo tower application on impermissible health concerns when the Board voted 7-2 to include that as one of the reasons for the denial, even though the other reasons were otherwise permissible. Judge Wynn dissented from that portion of the opinion, concluding that while the health concerns may have tainted the Board’s denial of the special exemption permit, it did not so affect the denial of the commission permit that otherwise would have blocked the site. The panel then affirmed the Board’s denial of the church bell tower application on the basis that there was substantial evidence in the record to support its decision, and there were alternative sites available.

    A link to the opinion is here.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • The U.S. Supreme Court issued two new opinions on April 2, 2014.

    In one of the most highly awaited decisions of the term, the Court struck down one prong of the campaign finance laws that limited the aggregate amount of money that a donor could contribute is a single campaign season. Specifically, the law limited the aggregate amount that a donor to contribute to $48,600 to federal candidates and $74,600 to committees. In McCutcheon v. FEC, the five-justice majority, in an opinion by Chief Justice Roberts, held that this aggregate limit was unconstitutional under the First Amendment, and did not sufficiently serve the governmental interest of preventing corruption or the appearance of corruption to override the First Amendment interests —specifically quid pro quo corruption. Justice Thomas, in concurrence, stated that he would have gone farther and overruled Buckley v. Valeo (which held that base limits were constitutional) entirely. Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, dissented, arguing that the Court’s holding will create a loophole that will enable political corruption, which the dissenters defined more broadly as “privileged access” and “pernicious influence.”

    The opinion is here.

    After an airline cancelled a customer’s membership in its frequent flyer program for, as allowed in the airline’s sole discretion under the terms of that program, “abusing” the benefits, that customer sued under state law claiming a breach of the duty of good faith and fair dealing. The district court dismissed the claim on the basis that it was pre-empted under the Airline Deregulation Act of 1978, 49 U.S.C. sec. 41713. The Court, in Northwest, Inc. v. Ginsburg, affirmed that holding in a unanimous opinion authored by Justice Alito, since the customer’s good faith and fair dealing claim sought to enlarge the terms of the frequent flyer program agreement. Where State law does not allow for parties to contract out of the covenant of good faith and fair dealing, such a claim will always be pre-empted under the Act.

    A link to the opinion is here.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • The case of Citizens for Responsibility and Ethics in Washington v. Dept. of Justice involved a request under the Freedom of Information Act regarding the investigation of former Rep. Tom DeLay by DOJ, in which the agency declined to produce any of those documents under several bases, including that DeLay himself had a substantial privacy interest that weighed against disclosure. The district court ruled for DOJ, holding that it was categorically inappropriate for those documents to be released given DeLay’s privacy interest and the “minimal public interest” at stake. The U.S. Circuit Court of Appeals for the D.C. Circuit, in a unanimous decision authored by Judge Henderson released on April 1, 2014, reversed that judgment and held that no such categorical test was appropriate in this instance. Rather, the agency must make a particularized showing as to each withheld document whether it qualifies under an exemption. The panel also found DOJ’s support for other stated exemptions to be insufficient, and remanded for further proceedings.

    The opinion is here.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • In Pliler v. Stearns, the U.S. Court of Appeals for the Fourth Circuit joined the Sixth, Eighth, Ninth, and Eleventh Circuits in holding that above-median-income debtors with negative disposable income are obligated to maintain Chapter 13 bankruptcy plans for a full five years under the temporal requirement in 11 U.S.C. sec. 1325(b), where the plan does not pay unsecured creditors in full. Judge Wynn, for the unanimous panel, held that an above-median-income debtor could not request early termination of a Chapter 13 plan unless all unsecured creditors were paid in full irrespective of the debtor’s projected disposable income.

    The opinion is here.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • On March 26, 2014, the U.S. Supreme Court resolved a split between the Circuits and held that a man’s conviction for having “intentionally or knowingly cause[d] bodily injury to” the mother of his child constituted a “misdemeanor crime of domestic violence” that thereby prohibited him from possessing a firearm under 18 U.S.C. sec. 922(g)(9), even though one could cause bodily injury without using any force whatsoever. Justice Sotomayor, writing for a unanimous Court, rejected the argument that sec. 922(g)(9) required that the prior conviction involve “violent contact” or “physical force” in order to be properly qualified as “domestic violence.” Justice Scalia, in a concurrence, stated that he would read the statute more narrowly under Johnson v. United States, 559 U.S. 133 (2010), but otherwise joined in the judgment. Justice Alito, joined by Justice Thomas, concurred in the judgment only, and argued that Johnson’s reasoning should not be extended to this case for reasons stated in his dissent thereto.

    The opinion is here.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • The U.S. Supreme Court issued two opinions on March 25, 2014.

    In United States v. Quality Stores, Inc., a unanimous Court, in a decision by Justice Kennedy, held that severance payments made to employees terminated against their will are taxable wages under the Federal Insurance Contributions Act (FICA), 26 U.S.C. sec. 3101 et seq., resolving a circuit split. The Court relied on FICA’s broad definition of wages, and rejected the definition provided under 26 U.S.C. sec. 3402(o). Justice Kagan did not participate in the decision.

    The opinion is here.

    The Lanham Act allows civil suits for false association and false advertising, but the Circuits were split as to how to determine who had standing to file such a suit. In this case, a company that sells components necessary for the remanufacturing of Lexmark’s printer cartridges sued Lexmark for false advertising, and the Sixth Circuit found that the component-maker had standing under the Second Circuit’s “reasonable interest” approach. In a unanimous opinion by Justice Scalia, the Court, in Lexmark Intl., Inc. v. Static Control Components, Inc., held that courts should apply the “zone of interests” test, requiring that a plaintiff allege an injury to a commercial interest in reputation or sales that was proximately caused by a violation of the Act. In so holding, the Court rejected the “prudential standing” balancing test, the “reasonable interest” test, and the “categorical” test that the Circuits had developed. The Court then analyzed the claims brought by the component-maker and found that it had properly stated a claim under the Act, and so affirmed the Sixth Circuit’s holding (though not its reasoning).

    The opinion is here.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • VA Court of Appeals: Car Air Freshener Supplies Probable Cause to Stop

    If you have one of those pine-tree shaped air fresheners hanging from your rear-view mirror that is about three inches long and three inches wide at the base, that is enough to give any Virginia officer probable cause to stop your car for being in violation of Va. Code sec. 46.2-1054 (prohibiting items that obstruct the driver’s clear view of the road from being hung by the rear-view mirror). In Richardson v. Commonwealth, the officer pulled over the offending car, smelled marijuana smoke, and a bag of cocaine fell from the driver’s pants leg after the ensuing search. The Virginia Court of Appeals noted other jurisdictions (like the 8th Circuit) where hanging air fresheners were deemed to be probable cause for a stop, and thereby denied Richardson’s suppression motion.

    Take note of this ruling in case you have anything hanging from your rear-view mirror, fuzzy dice included.

    The opinion is here.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • The D.C. Court of Appeals issued two opinions of particular note on March 13, 2014.

    In Stancil v. First Mount Vernon Industrial Loan Association, the Court addressed whether a complaint by two homeowners against their lender properly stated a claim for fraudulent misrepresentation with regard to a forbearance agreement the parties had orally entered into. The forbearance agreement, which was to be reduced to writing but never was, required the homeowners to pay the lender, among other things, $100,000 to cover a liquidated attorneys’ fee, and $50,000 for actual forbearance. Despite making the payment, the lender foreclosed on the homeowners’ property soon thereafter. The homeowners filed suit alleging fraudulent misrepresentation, breach of the oral forbearance contract, and wrongful foreclosure. The Court held, in a 2-1 opinion by Judge McLeese, that the homeowners’ complaint failed to allege what the fraudulent misrepresentation was as to the attorneys’ fee payment, and so affirmed dismissal of that claim, but reversed the others. Of particular note: the Court observed that the homeowners had not argued the liquidated attorneys’ fee provision was unconscionable, and so did not address that argument, but set forth in dictum, in a lengthy footnote, “support for the suggestion that [the lender] was not entitled to receive payment in excess of the actual fees incurred.” Senior Judge Nebeker dissented in part, arguing that the claims should have all been dismissed because the homeowners could not plead facts to show detrimental reliance. A link to the opinion is here.

    In a case of first impression, the Court addressed how a tenant’s failure to pay rent is affected when the landlord augments its effort to mitigate damages by simultaneously offering the premises for sale and for rent. The Court, in a unanimous opinion by Senior Judge Ferren, held in BLT Burger DC, LLC v. Norvin 1301 CT, LLC that the sale of formerly leased property after reasonable diligence to re-let is an appropriate effort to mitigate damages, and thus does not cut off a landlord’s right to damages, effectively adopting New York’s rule over Maryland’s. That was the end of the good news for the landlord, however: the Court vacated the landlord’s $5.7 million award for the diminished value of the premises as sold because the landlord’s expert valuation was faulty in several respects, including that it used the premises’ actual income over a one-year period rather than its stabilized annual net income over a five-year period as required under case law, and effectively valued the premises as being worthless. The Court also vacated the damages award for unpaid rent pending a new diminution finding by the trial court. A link to the opinion is here.



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  • If you have one of those pine-tree shaped air fresheners hanging from your rear-view mirror that is about three inches long and three inches wide at the base, that is enough to give any Virginia officer probable cause to stop your car for being in violation of Va. Code sec. 46.2-1054 (prohibiting items that obstruct the driver’s clear view of the road from being hung by the rear-view mirror). In Richardson v. Commonwealth, the officer pulled over the offending car, smelled marijuana smoke, and a bag of cocaine fell from the driver’s pants leg after the ensuing search. The Virginia Court of Appeals noted other jurisdictions (like the 8th Circuit) where hanging air fresheners were deemed to be probable cause for a stop, and thereby denied Richardson’s suppression motion.

    The opinion is here.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • The U.S. Supreme Court issued two decisions on March 10, 2014.

    Back in the 19th Century, the federal government granted numerous right-of-way easements to railroads under the 1875 General Railroad Right-of-Way Act in order to encourage expansion to the West, but left unresolved was what happened if a railroad abandoned their easement: did the easement disappear, leaving the parcel unburdened, or revert back to the government? In Brandt v. United States, the Court ruled 8-1, in a decision by Chief Justice Roberts, that the easement did not revert back to the government, and thus was extinguished. The Court’s opinion turned on the 1942 case of Great Northern Railway Co. v. United States, 315 U.S. 262, in which the government argued that the Act only “granted an easement and nothing more,” and the Court agreed. Bound by its prior victory, the government loses today. Justice Sotomayor, in solo dissent, argued that two rulings of the Court prior to Great Northern compelled a different result.

    The opinion is here.

    Also, the SCOTUS declined to hear an appeal of the Virginia Supreme Court’s ruling in the Falls Church/Episcopal Church matter in which the Virginia court held that the Episcopal Church owned the historic Falls Church, instead of the conservative congregation that left the denomination. Here is the Virginia Supreme Court’s original decision.



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  • On March 6, 2014, the D.C. Court of Appeals issued an opinion applying the doctrine of res judicata to a quiet title action. In U.S. Bank, N.A. v. 1905 2nd Street NE, LLC, a debtor signed a foreclosure rescue deed for his property, which was to be recorded if he could not locate financing to pay off some debts. That deed was recorded shortly before he obtained that financing from US Bank’s predecessor in interest, pursuant to which he gave a deed of trust to secure the new loan against the same property. The debtor filed suit against the beneficiary of the foreclosure rescue deed in federal and Superior Court to challenge the deed’s enforceability—losing in both cases. Then, U.S. Bank filed suit against the beneficiary and the debtor challenging the foreclosure rescue deed. The Superior Court held that certain of the Bank’s claims were precluded by res judicata based on the debtor’s prior litigation. The Court of Appeals, in a unanimous opinion by Judge Beckwith, reversed, holding that the Bank was not in privity with the debtor, and thus the doctrine of res judicata did not apply, and the Bank’s claims survived. The opinion is here.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • The U.S. Supreme Court issued three opinions on March 5, 2014.

    In Lozano v. Montoya Alvarez, the Court, in a unanimous opinion by Justice Thomas, held that the Hague Convention’s one-year period to file a petition for the return of an abducted child was not subject to equitable tolling, as it was not a statute of limitations, and principles of equitable tolling are not generally applied to treaties. Justice Alito, joined by Justices Breyer and Sotomayor, concurred, noting that an American court could still, depending on the factual circumstances, award relief under the Hague Convention as though the petition had been filed within the one-year period, thus minimizing any potential abuse. The opinion is here.

    Another opinion addressing a treaty—this one an investment treaty between the U.K. and Argentina—examined whether an arbitration panel’s interpretation of the treaty’s arbitration clause was entitled to deference, or could be reviewed by the courts de novo. The treaty permits parties to arbitrate disputes provided that litigation in a local court of competent jurisdiction had taken place. In a dispute between a UK company and Argentina, the UK company demanded arbitration prior to engaging in any litigation. The parties agreed on arbitration in D.C., where the panel decided, over Argentina’s objection, that it had jurisdiction to rule because Argentina’s laws and policies had made the local litigation requirement untenable. Justice Breyer, for a seven-Justice majority, held in BG Group v. Republic of Argentina that the issue of jurisdiction was to be answered by the arbitrators, and their determination was entitled to deference, thus upholding the arbitration panel’s ruling and award. Chief Justice Roberts, joined by Justice Kennedy, argued that the local litigation clause was a condition precedent to arbitration, and thus should have been a matter for the courts to decide de novo. The opinion is here.

    The final opinion resolved a Circuit split over what proof is necessary to convict a defendant of aiding and abetting the crime of using or carrying a firearm during a crime of violence or a drug trafficking crime. The Court held, in Rosemond v. United States, that proof the defendant actively participated in the underlying drug trafficking or violent crime with advance knowledge that a confederate would use or carry a gun during the crime’s commission is sufficient to find the defendant aided and abetted the crime. Justice Kagan, for a seven-Justice majority, vacated the defendant’s conviction because the jury instructions were erroneous, as they did not require the jury to find that the defendant knew in advance one of his confederates would be armed. Justice Alito, joined by Justice Thomas, concurred with the first 12 pages of the majority opinion, but disagreed as to the remainder, arguing that the Court’s discussion about the defendant having the chance to alter or withdraw his involvement in the crime was inconsistent with case law regarding aiding and abetting a crime. The opinion is here.

    For more information, please contact James N. Markels at 202-457-1610 or by email at jmarkels@jackscamp.com.



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  • The U.S. Supreme Court issued two new opinions today, March 4, 2014:

    In Lawson v. FMR LLC, the Court examined the limits of whistleblower protection offered under the Sarbanes-Oxley Act of 2002, 18 U.S.C. sec. 1514A(a). The Act states: “No [public] company . . ., or any . . . contractor [or] subcontractor . . . of such company, may discharge, demote, suspend, threaten, harass, or . . . discriminate against an employee in the terms and conditions of employment because of [whistleblowing activity].” The question raised by the case was whether the statute’s protection only covered those employed by the public company itself, or whether it extend to employees of privately-held companies that worked for the public company. The Supreme Court held, 6-3, in an opinion by Justice Ginsburg, that the whistleblower protections did extend to those private company employees. Justices Scalia and Thomas concurred solely on the basis that the text of the Act called for that conclusion. Justice Sotomayor, joined by Justices Kennedy and Alito, argued in dissent that the Court’s holding gave the protections too broad a scope, potentially allowing the babysitter of a Wal-Mart employee to have a claim under the Act. The decision is here.

    As a result of a Chapter 7 debtor’s misconduct, a bankruptcy court ruled that the $75,000 he claimed as a homestead exemption be used to pay the trustee’s attorneys’ fees incurred as a result of that misconduct, even though the Bankruptcy Code states that such funds may not be used to pay any administrative expenses, including attorneys’ fees. 11 U.S.C. sec. 522(k) and sec. 503(b)(2). In Law v. Siegel, the Court, in a unanimous opinion authored by Justice Scalia, reversed the bankruptcy court’s ruling, holding that the court’s authority to sanction abusive litigation practices did not extend to overcome the homestead exemption, and that the courts had numerous other options for punishing debtor misconduct. The decision is here.



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