Joint Post II. Another Second Circuit special education case about which I am posting here and on The FAPE Page, Second Opinions's sister blog. (I am the father of both.) In J.S. v. Attica Central Schools, six students who attend school in the Attica Central School District brought an action against the school district, claiming that they had been denied a free appropriate public education and stating claims under the Individuals with Disabilities Education Act, section 504 of the Rehabilitation Act, section 1983 and New York State education law. The school district moved to dismiss the complaint for lack of subject matter jurisdiction and failure to state a claim upon which relief could be granted. The District Court denied the motion but certified the issue of subject matter jurisdiction for interlocutory appeal. The Second Circuit agreed to hear this appeal.

The jurisdictional issue was whether exhaustion of administrative remedies was required before a Federal District Court could hear the case. The District Court had held that the school district's alleged systemic violations of IDEA could not be remedied through administrative proceedings and that exhaustion would be futile.

The Second Circuit affirmed, holding that systemic violations of IDEA, as opposed to "textbook" cases presenting issues involving individual children, could not be remedied by administrative action and that the exhaustion requirement would be futile.

The systemic problems at issue included: (1) the school district's total failure to prepare and implement Individualized Education Programs, (2) the school district's failure to notify parents of meetings as required by law, (3) the school district's failure to provide parents with legally required progress reports, (4) the school district's failure to provide appropriate training to school staff, (5) the school district's failure to perform timely evaluations and reevaluations of disabled chilren, (6) the school district's failure to provide parents with required procedural safeguards regarding identification, evaluation and accommodation of otherwise disabled children and (7) the school district's failure to perform legally required responsibilities in a timely manner, including providing and implementing transition plans, transitional support services and declassification services for children with disabilities.

The decision can be found here.

Ineffective. The Second Circuit has held, in United States v. Morgan, that it generally will not decide ineffective assistance of counsel claims on direct appeal. Such claims should be raised in a habeas corpus petition. The decision can be found here.

Joint Post. This is my first joint post with Second Opinions's sister blog, The FAPE Page. That blog covers special education law, so this post is about a special education case that came down from the Second Circuit.

The question presented in Mackey v. Board of Education for the Arlington Central School District was whether the parents of a learning disabled child are entitled to equitable relief under the Individuals with Disabilities Education Act, reimbursing them for private school tuition, when the denial of reimbursement results solely from the untimely issuance of a state administrative decision. The parents, disagreeing with the IEP developed by the school district, placed their child in a private school for the 2000-01 school year, while a decision was pending with respect to reimbursement at the same private school for the prior school year.

Ultimately the state review officer held that the private school had become the student's pendency placement for the 2000-01 school year based on the finding that the parents were entitled to reimbursement for that school for the prior year.

The District Court, however, held that because the decision which found that the parents were entitled to reimbursement for the 1999-2000 school year was rendered after the 2000-01 school year, the parents could not be reimbursed for the tuition for that year.

The Second Circuit disagreed, holding that penalizing the parents because the state review officer was derelict was unfair. It remanded the case to the District Court for a finding as to when the student's pendency placement at the private school took place.

The decision can be found here.

Quattrone Should Go to Prison Now. At least that's what the United States government thinks. The government urged the Second Circuit to reject a request from former star investment banker Frank Quattrone that he be allowed to stay out of prison while he appeals his obstruction of justice conviction. Quattrone, convicted of hindering a federal probe into stock allocation, is scheduled to begin serving an 18-month sentence late this month. Last month he asked the appeals court to allow him to remain free pending appeal. But federal prosecutors, in a filing with the Court, said that Quattrone's request amounted to "little more than a series of complaints" that his trial judge treated him unfairly. For more information, click here.

Acceptable access. The Court, in Bourdon v. Loughren, held that a prisoner's right to access to the courts is satisfied by appointment of counsel and such right was not violated by the government's denial of materials that the prisoner requested from the jail's law library. The Court further held that the access to courts through appointed counsel is not measured by reference to the Sixth Circuit's guarantee of effective assistance of counsel. In order to bring such a claim, asserting denial of access to the courts by appointed counsel, a prisoner must show that the provision of counsel did not furnish him with the capability of bringing his challenges before the courts, not that he was denied effective representation in the court. The Court found that Bourdon's rights had not been violated under the facts of the case.

Judge Oakes concurred, agreeing that Bourdon's rights had not been violated, but disagreed with the majority's holding that a state's affrimative obligation to provide access to the courts can be measured without reference to the Sixth Amendment's guarantee of effective assistance of counsel.

The majority decision can be found here. Judge Oakes's concurrence can be found here.

Novel Question. The Second Circuit affirmed the conviction of Michael Griffith in a summary order, but it issued a full decision to explain a novel question implicated in the appeal: whether, under 18 U.S.C. 3153, information obtained from a defendant during a pretrial-services interview can be used against the defendant for impeachment purposes. The Court held that it could.

No (Re)argument here. At the request of a judge, the court, sua sponte, conducted a poll as to whether to rehear Muntaqim v. Coombe en banc. The case involved the issue of whether a provision of New York Election Law, which disenfranchises persons currently in prison or on parole can be challenged under the Voting Rights Act. The Court declined to rehear the case. The order with concurrences and dissents can be found here. The original panel decision, which affirmed the dismissal of the action, can be found here.

More on Martha Graham. For those of you who can't get enough of the Martha Graham case, you can read this article in today's New York Times.

RLUIPA Appeal. A Jewish day school in Westchester brought an action against the village in which it was located, attempting to force the village to grant its application for modification of its special permit to allow consturction of an additional school building, along with renovations and improvements to the existing facilities. The village had denied the application for a number of reasons, including (1) the potential for increased intensity of use due to increased enrollment at the school, (2) traffic concerns relating to increased volume and the effect on nearby intersections and (3) insufficient provision for parking. The district court granted summary judgment to the school, holding that it was entitled to an immediate and unconditional approval of its application under the Religious Land Use and Institutionalized Persons Act of 2000.

RLUIPA prohibts a governmental entitiy from apply a land use regulation "in a manner that imposes a substantial burden on the religious exercise of a person . . . or institution, unless the government demonstrates that imposition of the burden . . . is in furtherance of a compelling governmental interest; and . . . [the burden imposed] is the least restrictive means of furthering that compelling governmental interest." The use, building, or conversion of real property for the purpose of religious exercise is considered religious exercise under the Act.

The district court had based its decision on the finding that the village's act was a complete denial of the application. The Second Circuit disagreed, stated that it did not see how the resolution "supports, much less compels, the conclusion that the [village's] ruling was a 'complete' rejection -- one which foreclosed consideration of a modified plan." While the Second Circuit noted that the District Court's "assessment of the complete definitve nature of the [village's] ruling may well be correct," it held that "upon a grant of summary judgment, it makes no difference what the court believes the facts to ve. The judgment may not properly be granted (or upheld on appeal) unless the record compels each finding of a fact necessary to the judgment." The Court held that the district court had given no explanation why it believed the record, viewed in the light most favorable to the village, compelled the conclusion that the rejection of the school's plan was a "complete" rejection.

The Court also stated -- I hesitate to say held because this appears to be a dictum -- that it did not believe that "any program of a religious school to improve its facilities in a manner that would improve the students' overall educational experience would be protected by RLUIPA from the implementation of a land use regulation." If such were the case, then a religious school would be entitled to benefits not available to a secular school, implicating First Amendment concerns. While the Court did not definitively rule on that issue, it commended such considerations to the District Court's attention on remand.

Finally, the Court disagreed with the District Court that traffic concerns can never constitute a compelling governmental interest and found that the District Court had improperly made factual findings in rejecting the village's expert reports submitted on the summary judgment motion.

The case was remanded for further proceedings. The decision in Westchester Day School v. Village of Mamaroneck can be found here. The case was decided on September 27, 2004.

The HMOs win again. On remand from the Supreme Court, the Second Circuit vacated its decision in Cicio v. John Does 1-8, and affirmed the decision of the District Court, dismissing the complaint. The Court held that under Aetna Health Inc. v. Davila, a Supreme Court case decided last term, the plaintiff's malpractice claim against her HMO was preempted by ERISA. The decision in this case can be found here.

Quattrone Doesn't Want to Go to Prison. Imagine that. Frank P. Quattrone, the former Credit Suisse First Boston banker, asked a federal appeals court to reverse a judge's order requiring him to surrender to prison by Oct. 28 to begin serving an 18-month sentence for obstructing justice.

Mr. Quattrone filed court papers yesterday asking the United States Court of Appeals for the Second Circuit in Manhattan to allow him to remain free pending the appeal of his conviction. At his sentencing on Sept. 8, Judge Richard Owen of United States District Court rejected an agreement reached by defense lawyers and prosecutors that would have temporarily kept Mr. Quattrone out of prison.

For more information, click here.

Second Circuit puts Cayuga land claim on hold. The Supreme Court's decision to hear the city of Sherrill's tax dispute case against the Oneida Indian Nation of New York is triggering a ripple effect on the Cayuga Indian land claim appeal. The Second Circuit Court of Appeals has notified lawyers in the land claim case that it will not render a ruling until the Supreme Court decides the Sherrill dispute. The top court has said it will hear the case next year. For more information, click here.

Indian Dispute II. A couple of days ago, I posted about Seneca Nation of Indians v. State of New York. There was a companion case that I did not mention because, frankly, I didn't have the time. Now I do. The companion case involved an attempt by the Seneca Nation to invalidate an easement granted to New York State and the New York Thruway Authority on the ground that the conveyance violated the Indian Trade and Intercourse Act. The Court held that the case had been properly dismissed on the ground of sovereign immunity. The decision in the case can be found here.

Not appealable. The Second Circuit, in Cruz v. Ridge, has held that an order of a district court transferring a case to the Second Circuit was not appealable because the plaintiff can challenge jurisdiction before the Second Circuit. The case involves an attempt by an illegal alien to challenge an immigration order by bring a habeas corpus action. The government moved to transfer to the Second Circuit because the courts of appeal have sole jurisdiction over appeals of immigration orders, which motion was granted by the district court. Cruz sought to appeal from that order. The decision in the case can be found here.

Yippee! I'm not a flappy fish anymore. I'm a crawly amphibian.

Punitives for Tobacco Companies. According to today's New York Times, the Second Circuit is poised to decide a case which will determine once and for all if tobacco companies should be assessed punitive damages for concealing the health hazards of smoking. The Court heard argument back in November, so I'm wondering if the Times knows something that I don't know about the timing of the release of this impending decision, or if it was just a slow day. The article can be found here. Thanks to Second Circuit News for the pointer.

Mea Culpa. I've just become aware that some of the links on this site have not been working. I am rectifying the situation. Please, if you find any problems with my site, contact me. I want it to be helpful to all of my readers and visitors.

Indian Dispute. The Second Circuit held that the State of New York legally owned the Niagra River islands. The Seneca Nation claimed that the acquisition of the islands by New York in 1815 from the Seneca Nation of Indians for $1,000 and an annuity of $500 per year was illegal under the Non-Intercouse Act. The Court, however, held that New York had acquired title to the islands prior to the 1815 transaction. It agreed with the District Court's view that Senecas' aboriginal title had been extinguised either pursuant to the 1764 Treaties of Peace between Great Brittain, which transferred title from the Senecas to Great Brittain and the Senecas or by the 1784 Treaty of Fort Stanwix, which extinguished the Seneca's title and passed it to New York. Hence, the 1815 transaction was irrelevant. The decision in Seneca Nation of Indians v. State of New York can be found here.

New trial. A federal judge dealt a stinging setback to the city and the police yesterday by overturning a jury verdict that had cleared the city of liability in the 1999 police shooting of an emotionally disturbed man who was clutching a hammer. This case arose out of events that occurred in my neighborhood of Brooklyn. I've never been quite clear on how I come out -- with the family of Gidone Busch or with the officers of the 66th Precinct (which is right across the street from my apartment). Anyway, for more info, click here.

Strip Search. No, that's not a sleazy come-on. That's what N.G. v. State of Connecticut was about -- repeated strip searches of young women in a juvenile detention facility. The women contended that the searches violated their Fourth Amendment rights in that there was no reasonable cause to believe they were hiding contraband. The District Court had dismissed the case, but the Second Circuit reversed, finding that while the initial search, when the women first came to the facility was appropriate, the subsequent searches while the women were in custody violated the Fourth Amendemnet in the absence of reasonable suspicion that contraband was possessed. The Court vacated the judgment of the District Court and remanded the case to determine what relief, if any, should be awarded.

The decision in this case can be found here.

We Got the Power! The Second Circuit, in United States v. Ekanem, decided a question of first impression in the Circuit -- whether the government can be a victim under the Mandatory Victim's Restitution Act of 1996 ("MVRA"), which provides the Court with the power to order restitution to the victims of certain offenses, including offenses against property. In this case, the defendant had embezzled funds provided to a not-for-profit corporation by the United States. Ekanem argued that the statute was not applicable when the "victim" was the government. The basis for this position is that the statute defined victim as " a person directly and proximately harmed as a result of the commision of an offense for which restitution may be ordered." Under the Dictionary Act, the government is excluded from the term "person." However, the Second Circuit noted that the Dictionary Act's definition does not apply if the context of a particular statute indicates otherwise. The language of the MVRA indicated that the government could be a victim thereunder. The Court also noted that the term "victim" in the Victim and Witness Protection Act included the government. Finally, the Court held that inclusion of the government within the term "victim" is consistent with the intent and purpose of the MVRA. Hence, the Second Circuit held that courts have the power to order restitution to the government under the MVRA. The decision can be found here.

Waiting. While I'm waiting for the Second Circuit to do something (anything!), I thought my readers might be interested in this article on Judge Posner's stint as a guest blogger on the Lessig Blog.

Another Landmark for Second Opinions. Yesterday, we hit the 1,000 mark for visits. I'm breaking out the champagne.

SEC: Investors need more time to sue. The Securities and Exchange Commission, in an amicus brief filed last Tuesday, is urging the Second Circuit to give some investors more time to sue companies for fraud. The case in which the brief was filed is AIG Asian Infrastructure Fund LP vs. Chase Manhattan Asia Ltd. and J.P. Morgan Partners. For more info, click here.

No Get Out of Jail Free Card. William McMahon was on trial for kidnaping in the second degree, unlawful imprisonment in the first degree, attempted rape in the first degree and assault in the second degree. His brother-in-law had already been tried for participating in the same crimes. The judge at the first trial was to try McMahon's case as well. During plea negotiations, he told the defendant that the prosecutor's offer was very fair in light of the evidence he had heard at the first trial.

The defense counsel asked the judge to recuse himself. The judge refused. The judge offered to transfer the case if the defendant would waive his right to a jury trial. McMahon agreed, and the case was tried before a second judge, who convicted him.

On appeal, he argued, among other things, that his waiver of his right to a jury trial had been coerced. The Appellate Division affirmed his conviction, although it dismissed one of the charges. The New York State Court of Appeals declined to hear the case.

McMahon brought a habeas proceeding in federal court, arguing that the first judge had been biased (evidently arguing that the judge's refusal to recuse himself was error) and that he had been coerced to waive his right to a jury trial. The District Court held that the first judge was not required to recuse himself, but granted the petition because the offere to transfer the case to another judge on the condition that McMahon agree to a bench trial was coercive.

The Second Circuit agreed that the judge did not err in refusing to recuse himself, but held that the waiver of the right to a jury trial was not coerced. The Court noted that state court judges, unlike federal court judges, are permitted to participate in plea negotiations and may discuss the sentencing repercussions of a defendant's choice to go to trial rather than plead guilty. The fact that the judge had some opinion on the case based on evidence he heard in the prior case was not sufficient basis for a bias motion. Hence, McMahon had no right to have a trial that was not presided over by the first judge.

The Court noted that a criminal defendant may bargain away his or her right to a jury trial in exchange for other benefits that would not otherwise be available to him. McMahon did not want to be tried before the first judge. He made a reasoned decision to waive his right so that he could be tried before a different judge. The Court held that there was no coersion.

The decision in McMahon v. Hodges can be found here.

Roadblock. The investigation of John G. Rowland, the former governor of Connecticut, hit a roadblock this week when the Second Circuit Court of Appeals ruled that a state-appointed lawyer could not be compelled to appear before the grand jury that is investigating Mr. Rowland and people who were connected to his administration for corruption. See the article from today's New York Times here. No written decision is available. Thanks to Second Circuit News for the link.

We don't want no stinkin' pesos. A bondholder sued Argentina for payment on defaulted bonds. The acceleration clause provided that the bondholder could elect to be paid in American dollars at the ratio of one dollar to one Argentine peso regardless of the changes in foreign exchange rates. The bondholder, not surprisingly, elected to be paid in dollars, and the District Court held that it was entitled to do so. On appeal, the Second Circuit affirmed, rejecting the strained reading of the contract advanced by Argentina to avoid paying in dollars. The decision in EM Ltd. v. Republic of Argentina can be found at the Second Circuit website. It was decided on August 31, 2004.

Graham again. Intellectual property lawyer C. E. Petit has more to say about the Martha Graham case here.

Update. Back in June, the Second Circuit certified certain question in Capitol Records, Inc. v. Naxos of America, Inc. (See my post on that here.) Today, the New York State Court of Appeals accepted the questions. (They don't have to.) Thanks to Matt Lerner of New York Civil Law for the heads up.

POST 100! Not this one. This is 101. Nice to reach this milestone. The next milestone should be 100 hits in a day. I think it'll be a while before that happens.

Views on Martha. No, not Stewart, Martha Graham. As those of you who read this blog regularly (all 10 of you), the Second Circuit recently decided the case of Martha Graham School and Dance Foundation, Inc. v. Martha Graham Center of Contemporary Dance, Inc. I blogged about here. Well, intellectual property attorney C.E. Petit has some things to say about it as well.

WorldCom again! I normally do not report on summary opinions (life's only so long), but on August 25th, 1004, the Second Circuit vacated an injunction, barring an Alabama state court from proceeding with an investor suit against the underwriters and accountants for WorldCom Inc. The summary opinion, which is very uninformative (I found out what the injunction was about from reading the New York Law Journal), can be found here. A full decison will follow, at which time, I will report more fully.

Interesting article. Readers of this blog might be interested in "As Worldcom Turns, Cases Pile Up," an article appearing in the September issue of the ABA Jouranl. A copy on line can be found here. As regular readers of this blog know, the Worldcom case has been addressed here on a few occasions.

Article III Groupie of the Underneath Their Robes blog has advised me of a post spotlighting Guido Calabresi of the Second Circuit. It's pretty hilarious, as is much of the stuff on A3G's blog.
You may recall my post on Judge Katzmann's second-place finish in A3G's Super Hotties of the Federal Judiciary contest.

Blakely procedures. Chief Judge Walker has announced a set of procedural and administrative measures that the Second Circuit is adopting pending the decision of the Supreme Court in United States v. Booker and United States v. Fanfan, the cases that deal with the issue of whether the Blakely case invalidates the United States Sentencing Guidelines. The measures can be found here.

IRS Hell. Talk about bad record keeping. The Second Circuit found the records of the IRS so confusing that it remanded a case to the Tax Court for a determination of the following issues:

1. whether the tax payer's 1993 tax refund was sent to him by the IRS in 1994. (The taxpayer had requested that the refund be applied to his tax indebtedness. The IRS did not do so.)

2. if not, whether the tax payer received timely notice from the IRS that his refund had not been applied to his 1987 and 1989 tax deficiencies.

3. if not, whether his current tax liability should be consequently adjusted by, inter alia, an abatement of interest.

4. in any case, whether the current interest abatement that the tax payer had already received was correct in light of the IRS's failure to give the taxpayer appropriate withholding credits for 1987 and 1989 and the taxpayer's payment on June 21, 1994 of $6,681.22.

The Court cautioned the taxpayer, who had represented himself pro se, that the Tax Court would deal with these issues and no other issues that had already been adjudicated.

The decision in Wright v. CIR can be found here.

Dancing for Joy. That's what the Martha Graham Center of Contemporary Dance, Inc. and the Martha Graham School of Contemporary Dance, Inc. must be doing. The Second Circuit, in substantial part, upheld the finding of Judge Miriam Goldman Cederbaum that the bulk of Martha Graham's dances were either work for hire or assigned to the Center and, therefore, belonged to them, rather than to Graham's heir, Ronald Protas. The Court, however, did remand for a finding as to whether certain dances created from 1956 through 1964 that were unpublished were assigned to the Center or passed under Graham's will to Protas. The Court reversed the District Court as to one dance, the renewal term of which, the Court held, passed to Protas.

The decision in Martha Graham School and Dance Foundation, Inc. v. Martha Graham Center of Contemporary Dance, Inc. can be found here.

Banned. In D'Alessio v. Securities and Exchange Commission, the Second Circuit upheld the ban of a broker from the NYSE floor for making illegal trades. The petitioner claimed that the NYSE was biased against him because he had brought suit against it. The Second Circuit rejected that argument and noted that if it upheld such an argument, it would serve as an incentive for other brokers facing a similar sanction to sue the NYSE, so as to prevent any action by the NYSE against them. At any rate, the petitioner had not shown that interests of the hearing officer were adverse to him so as to render the NYSE's decision tainted by conflict of interest. The Court also rejected the petitioner's assertion that the SEC could not be impartial in reviewing the NYSE's decision and that the penalty was too severe.

The decision can be found here. An article from the New York Law Journal regarding the case can be found here.

The Short and Long of It. The short of it is that the Second Circuit has upheld Vermont's campaign reform law, which contains spending limits. The long of it is that the opinion is 150 pages long. The decision in Landell v. Sorrell can be found here. The dissent can be found here.

New blog. For those of you interested in special education law, I have started a new blog called The FAPE Page. (FAPE, for those of you not in the know, is an acronym for free appropriate public education to which all children are entitled under the Individuals with Disabilities Education Act.) Feel free to drop by.

Trademark case. At the end of the day, it doesn't appear to me that the the plaintiffs-appellants in Societe des Hotels Meridien v. LaSalle Hotel Operating Partnership, L.P., will end up with much in this litigation, but, hey, a win is a win. Meridien managed certain hotels owned by LaSalle pursuant to certain lease. The leases provided that if there was change of ownership of Meridien, LaSalle could buy out Meridien's leasehold interest in the properties at fair market value. There was such a change of ownership, and LaSalle tried to exercise its option. However, Meridien refused to cooperate, so LaSalle terminated the leases based on the default. Meridien then entered into an agreement with Starwood Hotels & Resorts Worldwide, Inc. to manage the hotels.

Of course, Meridien sued. In fact, there were multiple lawsuits in various jurisdictions between Meridien and LaSalle. While this was going on, Starwood sent out a directory, which included the LaSalle hotels as hotels managed by Starwood even though Meridien was still in possession and managing the hotels. This brochure was the basis for this lawsuit.

LaSalle brought claims against Starwood under the Lanham act for false advertising and reverse palming off. The district court dismissed the claims. It held that the false advertising claim could not stand because nothing in the directory disparaged the quality of Meridien's product. It dismissed the reverse palming off claim because it held that the directories would create only a small likelihood of confusion, which, in any event, would benefit Meridien because Meridien would benefit from any sales generated by the directory.

The Second Circuit reversed. It held that Starwood, in publishing the directory, had drawn a direct comparison between its product and that of Meridien. In doing so, it used Meridien's product to sell its own product. Hence, Meridien had standing to bring a false advertising claim. The Court also noted that a false advertising claim can be based not only on false disparagement of a competitor, but on a misrepresentation of the quality of the advertiser's own goods. Hence, the complaint has stated a proper claim for false advertising under the Lanham Act.

With regard to the reverse palming off claim, while the Court noted that Starwood, at a later juncture in the litigation midhg prove that consumer confusion was unlikely, the fact that Starwood did not indicate in the directory that Meridien was managing the hotels was the hallmark of a reverse palming off claim. Because Meridien alleged that Starwood's directory falsely designated the services being provided at the hotels as being provided by Starwood, the complaint stated a proper claim.

It should be noted that Meridien lost its litigation with LaSalle relating to its leasehold rights to the property, so it is unclear how much it was damaged. I suspect a quick settlement will ensue, and nothing more will be heard of this case.

The decision can be found here.

Flippery Fish. Well, in the TTLB Ecosystem, this blog is a flippery fish. While it's nice to be recognized at all, I think we can do better.

Futile. In Scalisi v. Fund Asset Management, L.P., the Second Circuit discussed the proper standard for determining whether a demand on a board to bring an action would be futile in the context of a shareholder's derivative action. Since the corporation at issue was Maryland, the Court applied Maryland law, and held that a demand is to be considered futile only when (1) a demand, or a delay in awaiting a response to a demand, would cause irreparable harm to the corporation, or (2) a majority of the directors are so personally and directly conflicted or committed to the decision in dispute that they cannot reasonably be expected to respond to a demand in good faith and within the ambit of the business judgment rule.

The plaintiff asserted that a director is independent only if he is not an "interested person" under the Investment Company Act. It claimed that since the directors were not independent under the ICA, demand on the board would have been futile. The Second Circuit noted that that view had no basis under Maryland law. As the plaintiff had not met the standard set out above, the Second Circuit affirmed the dismissal of the action by the District Court.

The decision can be found here.

No bail. The Second Circuit has declined to set bail for Rafil Dhafir, who has been indicted for sending money to terrorist groups in Iran. A prior post on this case can be found here. For more information on the Court's decision, see Newsday's article here.

Just the law, ma'am. Back in 1998, the Second Circuit, in Halligan v. Piper Jaffray, Inc., held that an arbitration award could be vacated if the arbitrator demonstrated manifest disregard of the law and the facts. However, in Wallace v. Buttar, the Court has reversed course and held that manifest disregard of the facts is not a basis for vacating an arbitration award. The Court stated: "To the extent that a federal court may look upon the evidentiary record of an arbitration proceeding at all, it may do so only for the purpose of discerning whether a colorable basis exists for the panel's award so as to assure that the award cannot be said to be the result of the panel's manifest disregard of the law."

The decision can be found here.

Meritless, but not frivolous. Metropolitan Life Insurance Company converted from an old-fashioned mutual insurance company to a modern stock insurance company in 2000. The conversion affected policyholders' interest in the company, converting them to cash, policy credits or stock in the new company, MetLife, Inc. The conversion was done in compliance with the pertinent law and was approved by the New York superintendent of Insurance after a hearing. Ninety-three percent of the voting policyholders supported the conversion.

Nevertheless, there were some disgruntled policyholders who sued, claiming that the conversion violated their constitutional rights under the Takings Clause, the Due Process Clause, the Commerce Clause and the Contracts Clause. The complaint, which sought relief under section 1983, claimed that MetLife acted under color of state law by receiving the sanction of the superintendent of Insurance and by reorganizing pursuant to New York Insurance Law 7312.

MetLife moved to dismiss. The District Court granted the motion, and the plaintiffs filed a notice of appeal.

MetLife, as the prevailing party, moved for attorneys' fees, pursuant to 42 U.S.C. 1988(b). Its motion was made seven days beyond the 14-day deadline set by Rule 54(d)(2)(B) of the Federal Rules of Civil Procedure. The Court denied the motion without prejudice to renewing it after the disposition of the appeal. While noting that the motion was untimely, the Court directed that any renewed motion should be filed no later than 14 days after the entry of the Second Circuit's mandate on the District Court's docket.

The Second Circuit affirmed and issued its mandate. MetLife made its renewed motion within 14 days of the entry of the mandate on the docket, seeking only attorneys' fees incurred in the District Court.

The plaintiffs argued that the Court did not have jurisdiction over the initial application because a notice of appeal had already been filed, the initial motion was untimely and the action was not frivolous and did not warrant an award of attorneys' fees.

The District Court, however, rejected the plaintiff's arguments and granted the motion. MetLife was awarded $30,000 in attorneys' fees. The plaintiffs appealed this award.

The Second Circuit agreed with the District Court with respect to that Court's power to entertain the motion, however, it agreed that a showing of excusable neglect was required to extend the deadline. It did not remand for a factual finding on this issue because it reversed the award on another ground.

The other ground was that the Second Circuit found that the plaintiffs' claims were not frivolous. The Court noted that there was case law that tended to support the plaintiffs' state action theory, albeit weak authority. In sum, the Court stated: "Hindsight proves that plaintiffs' allegation of state action was very weak, but it was not completely without foundation. Accordingly, the district court abused its discretion by awarding attorneys' fees to MetLife."

The decision can be found here.

Whether you want it or not. The Second Circuit, in United States v. Johnson, has held that, under the Mandatory Victims Restitution Act of 1996, restitution must be paid whether the victim wants it or not. The decision can be found here.

Notice in Spanish. Counsel in United States v. Leyba wanted to withdraw as appellate counsel because he felt there was no non-frivolous basis for appeal. Before the Court ruled on counsel's motion, it ordered the counsel to ensure that defendant, who speaks Spanish, but not English, received adequate notice in Spanish of the substance of the Anders brief, his right to proceed pro se or seek appointment of new counsel and the likely consequence of of failure to respond to the Anders motion. The decision can be found here.

Reserved Decision on Accused Terrorist Supporter. Yesterday, Judges Barrington Parker, Jr. and Dennis Jacobs heard argument on whether bail could be posted so that oncologistRafil Dhafir could be released from jail pending his trial on charges of sending money to terrorist groups in Iran. An article from the Syracuse Post-Standard on the argument can be found here.

Released time. I had thought the issue of whether "released time" policy under which a school district could allow students to leave school to participate in religious instruction violated the Establishment Clause had been resolved in 1952 when the Supreme Court decided Zorach v. Clauson. However, the plaintiffs in Pierce v. Sullivan West Central School District made an "as applied" challenge to the policy. They were no more successful that the plaintiff in Zorach. Although a New York regulation allowed school districts to allow students to leave for religious instruction, this regulation provided that "released time" could only be at the end of the morning or afternoon session for no more than an hour per week. The school district in Pierce, however, allowed the "released time" to take place in the middle of the morning session. During that period, the remaining students had no organized activities. They awaited the return of the students taking religious instruction.

The plaintiffs complained that the way the program was implement violated their Establishment Clause rights because it humiliated them, left non-participants in the program with nothing to do, conveyed a message of endoresement of religion, violated the regulation by allowing students to leave in the middle of the morning session and enabled the students receiving religious instruction to bring religious literature into the classrooms. The school district, while admitting that the policy did not comply with the regulation, argued that it did not violate the Establishment Clause. The District Court granted summary judgment to the school district.

The Second Circuit affirmed. It found that Zorach controlled the case. The Establishment Clause was not violated because no religious instruction took place in the school itself, no expenditure of public funds supported the program and the public school did not promote the instruction beyond collecting permission slips from the parents.

The decision can be found here.

Autoerotic Asphyxiation. Wow! Can you say that three times?

This case involved the issue of whether the survivor of a person who died while engaged in the practice of autoerotic asphyxiation, was entitled to life insurance benefits where there was an exclusion for intentionally self-inflicted injuries. As this is a family blog, for those of you not familiar with the practice, click here for an explanation. The district court granted summary judgment to the insurance company, holding that the practice constituted an intentional self-inflicted injury.

On August 12, 2003, the Second Circuit, by a 2 to 1 majority, voted to affirm. A judge of the Court requested a poll to have the appeal reheard en banc. While the poll was pending, one of the judges on the panel changed his mind, and a new opinion in Critchlow v. First Unum Life Insurance Co., which can be found here, was issued. The dissent can be found here. Henceforth in the Second Circuit, autoerotic asphyxiation is not an intentional self-inflicted injury for insurance purposes.

It's great to be back.

Emergency! Save this blog! Oh, don't worry. I'm not really going anywhere, but the number of hits this site is getting is amazingly low. It's down to an average of 11 per day. I know that weekends bring the average down, but really! Don't people care about the Second Circuit? Well, it's up to you my loyal readers (all 11 of you), to reverse this trend. Tell your friends about this blog. If you have a blog of your own, link to this blog. Visit more often. And if you know of any way to increase the visibility of this blog, don't keep it to yourself. Tell me.

Gone Fishin'! Well, not exactly fishing, but I will be in attendance at the American Bar Association Annual Meeting from August 5 through 10 and, in that I am not one of those laptop carrying, Wi-Fo using bloggers, I, most likely, will not be blogging (although anything is possible). I'll try to do another post or two on any cases that come out today, but if I don't, see you next week.

If any of you are going to be at the ABA Meeting and would like to meet me, I'll be staying at the Courtyard Marriott Hotel -- Downtown. Give a call.

Rook(er)ed! Stephen T. Mitchell is a criminal attorney who ahd been part of the panel of attorneys certified to serve as compensated, court-appointed counsel for indigent criminal defendants. The committee that certifies such counsel denied his recertification and terminated his appointment to the panel. Mitchell sued, claiming that the committee discriminated against him on the basis of his race and in retaliation of his complaints of racial discrimination.

The District Court dismissed the case. It held that the committee was an adjunct of the Court and was entitled to absolute immunity from damages. It also held that Mitchell was not entitled to injunctive relief because injunctive relief in a section 1983 action against a judicial officer for an act taken in that officer's judicial capacity unless a declaratory decree was violated or declaratory relief was unavailable. Finally, the Court dismised the claim for declaratory relief under the Rooker-Feldman doctrine. That doctrine prohibits federal courts from reviewing decisions of state courts. The Court noted that, in this case, there was no decision made by any court, but reasoned that the decision of a body acting as an arm of the state judiciary was the functional equivalent of a judgment of a state court, which could not be reviewed by a federal court.

The Second Circuit held that the Rooker-Feldman doctrine did not apply. Federal courts were not precluded from reviewing "executive action, including determinations made by a state administrative agency." The committee was acting as an administrative body and was not conducting judicial proceedings. The Court also held that the committee's "decision was, in its effect, legislative rather than judicial," and, thus, not protected by the doctrine.

The Second Circuit also held that the defendants were not entitled to absolute immunity because their acts were not judicial or integrally related to a judicial proceeding.

The decision in Mitchell v. Fishbein can be found here.

Court refuses to vacate arbitration award. Surprise! Tatung Co. lost an arbitration to Lucent Technologies Inc. to the tune of $12,551,613 plus interest. It decided its next step was to attack the arbitrators. First, it complained that it did not receive a disclosure form that revealed that one of the arbitrators had been a litigation consultant to Lucent in an unrelated case. Second, it argued that it had not been revealed that two of the arbitrators had owned an airplane together from 1974 to 1990. The district court confirmed the award, stating that Tatung's argument was "a classic example of a losing party seizing upon a pretext for invalidating the [arbitration award]." The District Court found that vacatur of the award would serve no public purpose in a case where the disclosure was made to the AAA, but not forwarded to the parties. Finally, the Court found that the disclosures were not such as would suggest partiality or warrant vacating the award.

The Second Circuit agreed. While the Court agreed that where an arbitrator hid a conflict, such action might suggest evident partiality so as to warrant vacatur. But that rule must be applied on a case by case basis. Where the arbitrator made the disclosure, even though the AAA did not follow through, no presumption of bias can be made. And requiring vacatur whenever a disclosure was accidently not made would run counter to the policy of encouraging and supporting arbitration. The Court also noted that Tatung knew of the policy of providing disclosures, yet it never asked about the missing disclosure until after it lost.

The Court further agreed with the District Court that the joint ownership of an airplane by two of the arbitrators, which ended over a decade ago, was too insubstantial to warrant vacatur of the award.

Finally, the Court agreed with the District Court that the fact that an arbitrator served as a litigation consultant for Lucent in an unrelated case did not warrant vacatur. The arbitrator's relationship had materially ended before Lucent appointed him an arbitrator.

Tatung had asked the Second Circuit for leave to take discovery regarding the conflict if it did not vacate the award. Becasue Tatung had not sought that relief from the District Court, the Second Circuit declined to do so.

The decision in Lucent Technologies Inc. v. Tatung Co. can be found here.

Oops. Virginia Gambale and Deutsche Bank AG settled a sexual harassment lawsuit and filed a stipulation dismissing the case. The settlement agreement provided that the terms thereof would be kept confidential. The District Court, however, disclosed certain provisions of the agreement in a sua sponte order which unsealed certain documents relating to the action. The Bank appealed from the order, claiming that once the action was dismissed, the Court no longer had jurisdiction, and, even if the Court had jurisdiction, the order was otherwise improper. The Second Circuit, however, disagreed and upheld the order. The Court, however, remanded the case to the District Court with an instruction to maintain under seal the transcript of a conference in whcih the parties revealed to the Court the confidential amount that the Bank was paying Gambale, unless all confidential information and direct and indirect references to confidential information are redacted from the transcript.

The Second Circuit held that while the filing of a stipulation dismissing the case divests a Court of all jurisdiction over the case, it does not follow that the filing of such a stipulation divests the Court of the authority to either dispose of material in its files as it thinks appropriate or to modify or vacate its own protective orders with respect to such documents. The Second Circuit stated: "The records and files are not in limbo. So long as they remain under aegis of the court, tehy are superintended by the judges who have dominion over the court." Given the public's common law right to access to judicial documents, a district court that decides that such access is appropriate in a case "acts within its jurisdiction when it modifies or vacates a protective order to allow that access, irrespective of whether it does so before or after a stipulation of dismissal has been filed."

The Second Circuit, however, noted that the amount paid by the Bank to Gambale to settle the lawsuit "stands on starkly different footing." The amount is set out in the settlement documents that are not part of the court record. Hence, there is no presumption of access with respect to this information. While not precluding the possibility that some case could require such disclosure, the Court held that this was not such a case. Indeed, the Court noted that an agreement to keep the terms of a settlement confidential could facilitate settlement, a salutory result. Although the amount of the settlement was disclosed on the record at a conference, the Court found that the Bank's interest in confidentiality outweighed the public interest in disclosure.

The Second Circuit held that it was a serious abuse of discretion for the District Court to have revealed the settlement amount in its unsealing order. That order is available on Westlaw and Lexis, and the Court noted that it was unable to put the genie back in the bottle.

The decision in Gambale v. Deutsche Bank AG can be found here.

Unusual Circumstances. In a prior post, I reported on the case of Hemstreet v. Greiner, in which the Second Circuit affirmed the District Court's grant of a writ of habeas corpus because of ineffective assistance of trial and appellate counsel. The Second Circuit has sua sponte vacated that opinion and remanded to the District Court for reconsideration. Since the decision came down, the witness who had claimed to have been intimidated by detectives, which alleged intimidation was the predicate for the relief granted, has recanted. Given the highly unusual circumstances, the Court reconsidered its prior decision and vacated and remanded to the District Court. The new decision can be found at the Second Circuit website. It was decided on August 2, 2004.

Ineffective Assistance. Isaac Jacob Sharvit was found guilty of engaging in a conspiracy to dstribute and possessing with intent to distribute pills containing ecstasy. He moved for a new trial on the ground of ineffective assistance of counsel, which was denied, based primarily on the affidavit of his trial counsel, who rebutted all of Sharvit's contentions. He appealed.

During the pendency of his appeal, Sharvit's trial counsel was indicted for conspiracy to defraud the United States by submitting fraudulent appplications for appointment of counsel under the Criminal Justice Act. The indictment also stated that she had made false statements to the United States District Court and to criminal investigators and that she attempted to dissuase another person from making certain communications to law enforcement personnel. According to a New York Times article, there were allegations that the attorney abused prescription drugs and laundered money on behalf of a client. Sharvit brought these facts to the attention of the Second Circuit in his reply brief. The Government did not deny any of the allegations.

The Second Circuit remanded the case to the District Court for further fact finding, although the Court noted that the usual procedure for bringing an ineffective assistance claim is on habeas review. The case, which was decided on July 30, 2004, can be found here.

Inducement of Agent to Travel Between States for a Fraudulent Purpose. In United States v. Thomas, the Second Circuit held that a conviction for inducing someone to travel between states for a fraudulent purpose, a violation of 18 U.S.C. 2314, can stand even if the person induced was an agent of the person cheated, and not the actual person. In so holding, the Court agreed with the Seventh and Ninth Circuits. The decision can be found here. An article on the case from the New York Law Journal can be found here.

Confrontation and Co-conspirators. Two cases came down from the Second Circuit on July 28, 2004 relating to whether a criminal defendant's Sixth Amendment confrontation right was violated by the admission into evidence of statements by co-conspirators. In United States v. McClain, the defendants were accused of money laundering, wire fraud and conspiracy to commit money laundering and wire fraud. At trial, the government was permitted to introduce three co-conspirators' guily plea allocutions to establish the existence of a conspiracy. The defendants were convicted and appealed. After the appeal was filed, but prior to oral arguement, the Supreme Court decided Crawford v. Washington, in which the Court established a per se bar on the admission of out-of-court statements made by unavailable declarants where there had been no prior opportunity for cross-examination. The Second Circuit held that the plea allocutions were testimonial in nature in that they are formally given in court, under oath, and in response to questions by the court or the prosecutor. The Court, however, noted that while the admission of these allocutions violated the Confrontation Clause, the violation was subject to harmless error review. Since the evidence against the defendants was overwhelming, the Second Circuit held that the violation of the defendants' confrontation rights was harmless error and affirmed the convictions.

In United States v. Saget, the defendant was accused of trafficking in firearms and conspiracy to traficking in fire arms. The trial court allowed the government to enter into evidence statements that the defendant's co-conspirator made to a confidential informant. The defendant was convicted and appealed. The Second held that Crawford did not place any limites on the admissibility of non-testimonial statements. And Crawford at least suggested "that the determinative factor in determing whether a declarant bears testimony is the declarant's awareness or expectation that his or her statements may later be used at trial." The Second Circuit held that the co-conspirator's statements were not testimonial in nature. However, if the statements do not fall within a firmly rooted hearsay exception or contain particularized guarantees of trustworthiness, their admission would still violate the Confrontation Clause. The Court found that, under its precedents, the statements "were made in circumstances that confer adequate indicia of reliability on [them]." Hence, the Confrontation Clause was not violated. The conviction was affirmed.

McClain can be found here. Saget can be found here.

The Competition.  I just discovered another blog covering the Second Circuit beat.  Check out Second Circuit News.

Tax Relief.  In Superintendent of Insurance for the State of New York v. Ochs (In re First Central Financial Corp., the Second Circuit decided whether a tax refund, to which an insurance company in rehabilitation was entitled pursuant to a written contract with its parent, was part of the bankruptcy estate of the parent.  The parent filed a consolidated tax return for itself, the insurance company and another subsidiary.  Because the insurance company was the only one of the three entities that had income, it paid the entire tax burden.  Pursuant the agreement with its parent, it would be entitled to any refund up to the amount it would have been entitled had it filed separately.  The past practice was that the refunds were paid to the insurance company.  But when the parent went into bankruptcy, things changed.  The trustee took the position that the $2.5 million refund it received was part of the bankruptcy estate.  The Superintendent of Insurance took the position that the parent was holding the refund in trust for the insurance company, and asked the bankruptcy court to impose a constructive trust on the funds.  The Bankruptcy Court declined to do so, and the District Court affirmed.

The Second Circuit held that the existence of a written contract relating to how tax refunds would be allocated was fatal to any claim of unjust enrichment, an essential element of a constructive trust claim.  Also, the Court noted that the remedy of a constructive trust was "fraud-rectifying" rather than "intent-enforcing."  As there was no allegation of fraud, the remedy was found not be appropriate.  Finally, while recognizing that bankruptcy law does not trump New York constructive trust,  courts are required to "act very cautiously" to minimize conflict with the Bankruptcy Code.  As a result, bankruptcy courts are reluctant to impose constructive trusts without a substantial reason for doing so.

The insurance company can, of course, file a claim as an unsecured creditor.  As the Second Circuit noted: "While [the insurance company] may understandably chafe at being required to accept less than it was entitled to receive under the Agreement, the short -- and conclusive -- answer is that this is not injustice, it is bankruptcy."

The decision can be found here.

Issue Preclusion and the Rooker-Feldman Doctrine.   No, that's not the title of one of a show on HBO this fall (although I'd watch such a show).  It's the issue in Vargas v. The City of New York.   Vargas was a police officer who was terminated for the use of excessive force.  He brought an Article 78 proceeding in state court seeking to overturn the NYPD's decision, but the court found substantial evidence supporting the charges. 

Vargas then brought a section 1983 action in federal court, alleging that his termination violated his equal protecti rights in that his punishment was racially discriminatory because it was allegedly the policy and practice of the NYPD to selectively prosecute Hispanic and minority officers more often and more severely than their white colleagues.  The District Court dismissed the case under the Rooker-Feldman doctrine.  Under that doctrine, inferior federal courts have no subject matter jurisdiction over suits that seek direct review of judgments of state courts or that seek to resolve issues that are "inextricably intertwined" with an earlier state court determination.  Vargas appealed.

The Second Circuit noted that the doctrine is generally applied coextensively with principles of res judicata and collateral estoppel.  In the case of an Article 78 proceeding, res judicata would not apply because a state court hearing such a proceeding does not have the power to award the full measure of relief available in a subsequent section 1983 litigation.  In order for Vargas's claim to be barred by the Rooker-Feldman doctrine, it had to be subject to New York's collateral estoppel rules.

The Court noted that the racial discrimination claim had never been presented to the state court.  Hence, it could not have been necessarily decided in the Article 78 proceeding.  Nor would a decision on the equal protection claim require the federal court to reconsider the precise issue decided in the Article 78 proceeding.  In other words, even if there was a rational basis for the dismissal, it still could have been based on a discriminatory motive.  Hence, the doctrine was held not to bar the equal protection claim.

Vargas had also asserted a due process claim based on the fact that the NYPD waited almost three years before prosecuting him for using excessive force, in violation of NYPD regulations requiring such action be taken within 18 months.  The District Court had dismissed this claim not on the grounds of the Rooker-Feldman doctrine, but because Vargas had not established that the procedural safeguards established by the state were insufficient to protect his rights.  The Second Circuit affirmed the dismissal of this claim.

The case can be found here.

Interesting Strategy.  I've been thinking about Martha Stewart these days.  I've read that she's considering serving her sentence pending appeal.  And she's not planning on dropping the appeal.  This is an interesting strategy.  If Stewart was out on bail pending appeal and won her appeal, the likely result would be that she would be retried.   But if she serves her sentence while awaiting appeal, would the government bother trying her again if she prevailed?  I'm not an expert on criminal law, but if they did try her again and convicted her again, could she be given a longer sentence?  I'm anxious to see how this plays out.

Looky what I found!  I just wanted to clue Second Opinions readers to a website that I've found.  (I'm not sure if it's technically a blog, but it sort of looks like one.)  It's called Humble Opinion.  It's chock full of interesting legal information.

Also, if anybody is interested in the INDUCE Act (and who isn't), check out the INDUCE Act Blog.  It's a group blog by Andrew Raff, Chris Rush Cohen and Kevin (no last name).

The Devil's in the details.  A general contractor was unable to collect on a performance bond where the subcontractor defaulted because it had failed to comply with certain terms of the bond.  In Elm Haven Construction Limited Partnership v. Neri Construction LLC, the general contractor failed to provide notice of the subcontractor's default to the bonding company prior to hiring a new subcontractor.  Such notice was required under the terms of the bond.   In failing to give the subcontractor time to cure the default, as provided under the terms of the bond, the general contractor had breached the agreement and was unable to collect under the bond. 

The general contractor also was not able to collect on a payment bond.  The contractor had directly paid certain sub-subcontractors, who had claimed that they were not paid.  The subcontract agreement, however, explicitly prohibited the general contractor from directly paying sub-subcontractors without the permission of the subcontractor and the bonding company.  By making the payments without permission, the general contractor was deemed an "intruder," not entitled to reimbursement.

The decision in the case can be found at the Second Circuit website.  It was decided on June 23, 2004.

Super hotties of the Second Circuit.  Sure, it's frivolous, but one of our own Second Circuit Judges, Robert Katzmann, was named runner up in the Judicial Superhottie Competition going on at the Underneath Their Robes blog.  And a District Court Judge from the Southern District of New York -- Kimba Wood -- won the title in the women's competition.  Congratulations to our Second Circuit super hotties -- and to Ninth Circuit JudgeAlex Kozinski, who won the male competition, edging out Judge Katzmann.   (To those looking for actual substance -- well, the Second Circuit appears not to have decided any cases yesterday.) 

Congratulations II.  No, Douglas Berman did not make Law Review (actually, he probably did, just not recently).  But the 35-year old law professor has had an article in the Wall Street Journal written about him and his Sentencing Law and Policy blog.  It's nice to see blawgs getting play in the press.

Congratulations!  Heidi Bond of Letters of Marque has made law review at the University of Michigan.  Since she gets a zillion more hits per day than I do, I don't know why I'm directing even more traffic her way, but I guess that's just the kind of guy I am.  

No discovery.  German litigants in a German action tried to get discovery in America via 28 U.S.C. 1782 in an action against Deutsche Telecom AG from the attorneys representing the parties in a similar class action pending in the Southern District of New York.   The German litigants wanted the discovery material that had been produced in the the class action and were willing to be subject to the same confidentiality order entered in the class action.  However, a criminal action against Deutsche Telecom AG relating to the same transactions that were the subject of the civil action was pending in Germany, and the Bonn Prosecutor asserted that discovery in this proceeding would interfere with the criminal investigation.  The District Court found that the German litigants met the requirements of 28 U.S.C. 1782, but that it was exercising its discretion, in light of the German prosecutor's view, not to order discovery.  In Schmitz v. Bernstein Liebhard & Lifshitz, the Second Circuit affirmed.  The decision in this case can be found at the Second Circuit website and was decided on July 20, 2004.

A Cautionary Tale.  Not that it has anything to do with the Second Circuit, but appellate lawyers should read this article before filing a motion for additional time in the Seventh Circuit.

Check this out!  Here's an interesting article from law.com (printed in the New York Law Journal yesterday) about the Second Circuit's decision to certify questions to the United States Supreme Court in United States v. Penaranda.

Contact Me!  No, I'm not desparate for attention (well, ok, maybe I am), but I just wanted to alert you to my nifty new Contact me link on the left hand side of this blog.  If you want to alert me to a case I've missed or tell me how boring (or fascinating) this blog is, you can now do so.

Martha's appeal.  Well, now that Martha Stewart has been sentenced, it's on to the Second Circuit.  Here is an article from law.com regarding her appeal.

FREE!  Off topic.  When I started this blog, I said that occassionally I would engage in off topic sallies, and this is one of them.  I have just found out that Mark Belnick, former Tyco general counsel, has been acquitted of all charges.  The Manhattan DA had accused Belnick of stealing more than $30 million in compensation and loans from Tyco.  I never believed it.  I was an associate at Paul, Weiss, Rifkind, Wharton & Garrison back in the late 1980s when Belnick was a partner there.  I did not know him well.  In fact, I don't recall ever working on a case with him.  But I knew him.  And I could never reconcile my impression of the man with that of a crook.  Was it possible that, tempted by huge sums of money, he gave into the dark side.  Sure, it's possible.  But I never thought it likely, and it appears that the jury agreed.  I'm very pleased for Mark.  It's a good thing he made all that money.  He's going to need it to pay his attorneys.  And the civil suits are still pending!

They haven't cited me, yet! Well, this is interesting. In its Penaranda case, which was the subject of this post, the Second Circuit actually cites to a blog. No, not to Second Opinions, drat the luck. It cites to the Sentencing Law and Policy blog. Well, I can only hope that someday it will happen to me. Thanks to the Falconred Goes to Law School blog for alerting me to this fact.

To the Supremes! The Second Circuit, in United States v. Penaranda, has certified three questions to the Supreme Court for resolution in light of its decision in Blakely v. Washington. In Blakely, the Supreme Court held that facts that warrant enhancing a sentence must be found by a jury. Since Blakely was decided last month, there has been much speculation whether the Federal Sentencing Guidelines were constitutional in that sentences under the Guidelines are based on factors that are not decided by the jury. That question arose in this case. The Second Circuit ordered the appeals in this case to be heard in banc, limited to the issue of the validity of the defendants' sentences under Blakely. The active judges of the Court unanimously agreed that they should certify the following questions to the United States Supreme Court:

1. Does the Sixth Amendment permit a federal district judge to find facts, not reflected in a jury's verdict or admitted by a defendant, that form the basis for determining the applicable adjusted offense level under the Federal Sentencing Guidelines and any upward departure from the offense level?

2. In a case where a jury has convicted a defendant of possessing with intent to distribute five kilograms or more of cocaine and one kilogram or more of heroin, does the Sixth Amendment permit a federal district judge to determine, under the Federal Sentencing Guidelines, the quantity of drugs for which the defendant is responsible and upon whihc his based offense level and corresponding sentencing range will be calculated under U.S.S.G. 2D1.1?

3. In a case where a defendant has pled guilty to conspiring to distribute five kilograms or more of cocaine, does the Sixth Amendment permit a federal district judge to determine, under the Federal Sentencing Guidelines, (a) the quantity of drugs for which the defendant is responsible and upon whihc his base offenses level and corresponding sentencing range will be calculated under U.S.S.G. 2D1.1, (b) the applicability of a two-level enhancement to the base offense level for carrying a fun in connection with the offense, under U.S.S.G. 2D1(b)(1), and (c) the applicability of a three-level managerial role enhancement under U.S.S.G. 3B1.1(b)?

The decision can be found here.

Rules? What rules? Regina Jacobs is a world-class track athlete, who may very well compete in the Olympics next month. However, the United States Anti-Doping Agency has accused her of using a prohibited substance and has threatened to sanction her, which may result in her not competing in Greece. She, not surprisingly, took issue with that and demanded arbitration before the American Arbitration Association. So here's the issue. Both parties have agreed to arbitrate -- but they can't agree on whether the AAA's Commercial Rules or Supplementary Rules apply. Both agree that an arbitrator can make that decision, but the rules differ in how an arbitrator is chosen. The AAA has decided that the Supplementary Rules apply and that an arbitrator should be chosen under those rules. Jacobs brought an action, seeking to compel arbitration under the Commercial Rules. The District Court held that it lacked jurisdiction and the Second Circuit agreed. An action to compel arbitration may only be brought if the other party refuses to arbitrate. Since the Agency was willing to arbitrate and the only dispute was the rules, the court had no jurisdiction. The decision in Jacobas v. USA Track and Field can be found here.

Man, oh, Mandamus. I'm sure you've all heard about Martha Stewart's criminal problems. Well, she also has civil problems in the form of a class action. When the criminal court hit, the parties to the civil case agreed to stay all discovery by and against Ms. Stewart. But the district judge had other ideas. He directed Ms. Stewart to conduct any discovery she decided. So, on October 21, 2003, Martha Stewart subpoenaed two attorneys for the SEC -- Helene Glotzer and Jill Slansky -- who had interviewed Stewart and her co-defendant in the criminal case, Peter Bacanovic.

Not surprisingly, the SEC was not so eager to allow its employees to appear for a deposition. It inquired of Stewart as to her reason for subpoenaing Glotzer and Slansky. Stewart's attorneys told the SEC that they wanted to question the lawyers regarding their recollection of interviews that they had conducted with Steward Bacanovic and his assistant, Douglas Faneuil.

The SEC declined to allow its attorneys to testify, claiming that such a deposition would violate the attorney work product privilege.

Stewart moved to compel compliance with teh subpoena. The SEC claimed that Stewart had not exhausted her administrative remedies, but the district judge granted the motion, asserting that he would deal with any privilege issues as they arose.

The SEC filed an emergency motion with the Second Circuit, seeking a stay of the district court's order and for a petition for mandamus. The Court heard argument on the motion and granted the petition for mandamus, dismissing the stay motion as moot.

The Court found that there was a novel and significant issue of law -- whether the Administrative Procedure Act's exhaustion requirement applies to a motion to compel a government agency to comply with a subpoena -- and that resolution of the issue would "lend structure to the procedural framework for adjudicating discovery disputes involving government agencies."

Second, the Court found that mandamus was proper because the district court's order was not appealable and, hence, mandamus was the only adequate means available to the SEC to protect its interests. While the SEC could just refuse to comply and deal with the issue on a contempt motion, the Court noted that the circumstances of the case were unusual and that such a procedure was not appropriate under the facts of the case. First, the SEC was not arguing that the district court had abused its discretion in granting the motion. It was asserting that the district court lacked jurisdiction to consider the motion. Second, the Court felt it inappropriate to force a government agency to submit to a contempt order.

Third, the Court held that resolution of the issue would aid in the administration of justice.

Having found, based on the above, that mandamus was a proper remedy, the Court turned to the merits of the petition. The Court held that in order to seek judicial review of an agency's non-compliance with a subpoena, a party must exhaust administrative remedies pursuant to section 704 of the Administrative Procedure Act. Stewart failed to do so. Hence, the district court lacked jurisdiction to hear the motion, and, on that basis, the petition for mandamus was granted.

In re SEC ex rel. Glotzer can be found at the Second Circuit website. It was decided on July 6, 2004.

Get it in writing. That's what Judge Newman says, speaking of plea agreements, in United States v. Graves. Graves was indicted for narcotics offenses. He agreed to plead guilty to one firearms violation count for which he would receive a sentence of 15 years. The plea agreement provided a cooperation section, which required that Graves cooperate with the Government by providing complete and truthful information about his criminal activity and testifying where necessary. The cooperation section did not say anything about acquiring new information about criminal activity by acting as an informant, nor did it require the Government to move or consider moving for a 5K1.1 departure for rendering substantial assistance.

The District Court approved the plea agreement. During the plea allocution, the prosecutor stated that there was a 5K aspect to the plea agreement because the Government might make a 5K motion. The Court explained the plea agreement to Graves, stating that if he provided substantial assistance to the Government, "then the government will move for a downward departure under Rule 5K of the sentencing guidelines and ask that I impose a lower sentence." The Court, however, warned Graves that "the government is not obligated under this agreement to do that, but will do so only if you have given substantial assistance and cooperation to the government."

Graves sought to withdraw his plea. He complained that, although he was cooperating with the Government, the Government claimed his assistance was not substantial. While the prosecutor admitted that the information provided by Graves was "good, fruitful information," it did not make a 5K motion. The Government decided that the evidence provided, in light of his criminal background, was not substantial enough to warrant making the motion and certainly not worth releasing him to act as an outside informant.

Graves' attorney claimed that despite the language of the plea agreement, there was an understanding with the prosecutor that the actual sentence would be substantially less than 15 years. The prosecutor did not deny that such had been discussed, but claimed that he had told Graves that it was a long shot that he would be released.

The District Court denied the motion to withdraw Graves's plea.

The Second Circuit remanded the case to the District Court. In light of the fact that there clearly had been discussions about a 5K motion, the Court held that there were issues of fact for a factual inquiry as to exactly what was said aobut proactive cooperation, what understanding was reasonably conveyed to Graves concerning the cooperation that would be required for him to have a chance for a reduced sentence and whether he would be released in order to render such cooperation.

Judge Newman noted: "Of course, all of the uncertainties surrounding this plea could have been avoided if the Government had heeded our prior admonition to include all representations in the written plea agreement."

The decision can be found here.

Reliance not required. I know. It's hornbook law that in order to prove a case for fraud, you have to show reliance. Well, according to the Second Circuit in Ideal Steel Supply Corp. v. Anza, reliance is not required to state a RICO claim based on mail or wire fraud. In that case, Ideal's competitior was gaining a competitive advantage by not charging tax to customers who paid in cash. The competitor sent fraudulent tax information to the government. This practice was put in place, according to Ideal, to give its competitor a competitive advantage over Ideal and to gain customers it would not be able to obtain absent the practice. The District Court dismissed the complaint, holding that because Ideal did not rely on the fraudulent tax information, it lacked standing. The Second Circuit held that reliance was not necessary. What was necessary was a showing that Ideal was an intended victim of the fraud and that its injury was proximately caused by the fraud. The decision can be found at the Second Circuit website. The decision came down on July 2, 2004.

Are you a debt collector? That question was raised in Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carrol & Bertolotti. There, a law firm was sued under the Fair Debt Collection Practices Act. The firm moved for summary judgment asserting that its actions -- sending out a three-day notice pursuant to the New York State Real Property Actions and Proceedings Law -- did not violate the Act and that it was not a debt collector within the meaning of the Act. The district court granted the motion on the second ground. The plaintiff appealed.

The district court's decision was grounded in the fact that the law firm had not derived significant revenue from debt collection over the past year, did not devote significant resources to that area of practice, did not market itself as a debt collector and had no regular client relationship with a debt collecting business. The Second Circuit, however, held that the determination of whether a law firm regularly engages in debt collection activity such as to make it a debt collector under the Act must be assessed on a case by case basis. In assessing "regularity," a court should consider a number of factors, including (1) the number of debt collection communications issued and/or debt collection litigations commenced over the relevant period, (2) the frequency of such communications or litigations, (3) whether the firm has personnel specifically assigned to work on debt collection matters, (4) whether the firm has systems or contractors in place to facilitate such activity and (5) whether the activity is undertaken in connection with ongoing client relationships with entites that have retained the frim to assist in the collection of outstanding debt collection activity.

Finding that, based on the facts before the district court, a rational fact finder could find that the law firm was a debt collector under the Act, the Second Circuit vacated the summary judgment and remanded the case for further proceedings.

The decision can be found here.

It's un-bear-able! The Vermont Teddy Bear Company sued Robert M. Schwimer upon finding that Schwimer was using its BEARGRAM mark in the marketing of his products, asserting various intellectual property and related state law tort claims. The Company moved for summary judgment, and, despite having received notice, Schwimmer failed to oppose the motion. The district court granted the summary judgment motion simply by endorsing the notice of motion and adopting, with slight modifications, the Company's proposed order as judgment. The order contained no reasoning. Schwimer appealed.

On July 1, 2004, the Second Circuit vacated and remanded. It wrote "to clarify the procedure to be followed when a motion for summary judgment is unopposed." The Court held that Rule 56 does not embrace default judgment principles and even if a summary judgment motion is unopposed, the district court still has to decide whether the movant is entitled to judgment as a matter of law. It took no position as to whether summary judgment was appropriate in this case, but remanded the case to the district court for a reasoned determination on that issue.

The decision in Vermont Teddy Bear Co. v. 1-200 Beargram Co. can be found here.

Effective July 6, 2004, certain policies of the Second Circuit will be modified. As of that date, conferences in counseled immigration appeals will no longer be automatic. Also, as of that date, absent any need for expedition, the Court will grant a party one 30-day extension of time to file a brief upon filing an appropriate motion. Such extensions will be granted administratively by the Clerk, unless opposed, in which case it will be referred to a judge. For more information, see this.

Was I wrong? When the Calabresi imbroglio came to light, I knew that Washington lawmakers would not let the Judge off easily. A group of legislators have asked a committee that studies the enforcement of judicial conduct rules to conduct an investigation into the remarks of Judge Calabresi in which he compared Bush to Hitler and Mussolini. For those of you who have had your head in the sand for the past couple of weeks, I have posted about this incident here, here and here. Justice Breyer, who chairs the committee has told the legislators that the committee is not the proper forum for such an investigation. An article on the legislators' request can be found here. I'm not sure that we've heard the end of this.

UPDATE: The New York Sun printed this article on the latest Calabresi news. Actually, that was the article I first read about the issue, but since I am not a subscriber to the electronic version of the Sun, I had no access to the on-line version of the article. Evidently, Howard Bashman of How Appealing doesn't have that problem, and I thank him for providing the link.

ANOTHER UPDATE: Here is the letter that was sent to Justice Breyer. Thanks to Eugene Volokh, who posted it, and Howard Bashman (again) who pointed me to it.