Case Summaries 2013
May 2, 2013
Reversing the District Court for the Eastern District of Virginia, the Fourth Circuit held that administrative remedies had been constructively exhausted under the Freedom of Information Act (FOIA) when the Drug Enforcement Administration (DEA) did not respond to Coleman’s FOIA request for over four months.
Coleman, a researcher and author, sent a FOIA request to the DEA seeking documents about carisoprodol on February 29, 2008. Coleman offered to reimburse the government up to $1,000 for searching and reproducing the requested documents. The DEA received this request on March 4, 2008. Without communicating with Coleman since his request, on July 14, 2009, the DEA denied the FOIA request because the $1,000 promise was insufficient to cover the costs, and the DEA required $1,640 to begin the search. On July 31, 2009, Coleman appealed the fee assessment to the Office of Information Policy (OIP), and he raised, for the first time, an argument that he was not a commercial requester and requested that his fees be waived because of the excessive delay. The OIP received the appeal on August 18, 2009. On March 29, 2010, the OIP ruled for Coleman, stating that the DEA’s action was not consistent with its own regulations, and the OIP sent its opinion to the DEA. To ensure that the DEA met his request, Coleman resubmitted his FOIA request on April 22, 2010. In this resubmitted FOIA request, Coleman reiterated that he was not a commercial requester. After four more months of waiting, Coleman filed this suit against the DEA. A day before answering the complaint, the DEA denied his FOIA request.
The District Court granted summary judgment to the DEA because Coleman had not exhausted his administrative remedies and because he did not pay the necessary processing fees. Coleman appealed to the Fourth Circuit. The Fourth Circuit addressed two issues.
The first issue was whether Coleman had exhausted his administrative remedies. The Fourth Circuit held that when an agency does not act within the timeframe provided by the FOIA (20 days), the requester has constructively exhausted administrative remedies. Because the DEA waited over four months on the last request, Coleman constructively exhausted his administrative remedies. The Court further held that the DEA could not prevent constructive exhaustion by denying his request after the suit was filed, rather an agency can only defeat a potential suit by ruling on the FOIA request prior to the suit is initiated.
The second issue was whether judicial review is inappropriate because Coleman failed to pay the $1,640 partial search fee assessed by the DEA. The Fourth Circuit distinguished this case from Pollack v. Department of Justice, 49 F.3d 115 (4th Cir. 1995) because Coleman had not refused to pay any fee at all, which is what Pollack had done. Since Coleman is challenging the substance of the agency’s fee and requesting a bona fide fee waiver, judicial review is appropriate in this case. The Fourth Circuit remanded the case to the District Court to determine what fee category applies and whether Coleman is eligible for a fee waiver.
- Jeffrey K. Gurney
Decided: May 1, 2013
Reversing and remanding the decision of the United States District Court for the District of Maryland, the Fourth Circuit Court of Appeals held that the district court erred in failing to apply the heightened deference owed to a citizen plaintiff seeking suit in her home forum, as is necessary in a proper forum non conveniens inquiry. The Fourth Circuit also ruled that when conducting the private and public factor analysis relevant to forum non conveniens, the fear and emotional trauma of the plaintiff may be considered in certain situations.
On the evening of September 20th, 2008, Albert DiFederico was serving as a civilian contractor for the State Department in Pakistan. A large dump truck containing explosives tried unsuccessfully to ram through the gate barrier of the Marriott Islamabad Hotel. Though initially ineffective, the truck’s driver proceeded to detonate an explosion inside the cab of the vehicle that eventually ignited the explosives in the back of the truck. A large blast ensued and a fire engulfed the Marriott, killing 56 and wounding over 250, including DiFrederico. His widow and their three sons brought a wrongful death action and survivorship claim alleging that Marriott International (“Marriott”) was liable for its failure to adequately secure its franchise hotel. The DiFedericos brought their suit in the forum of Marriott’s principal place of business, the District of Maryland. The district court granted Marriott’s motion to dismiss on the basis of forum non conveniens, finding that Pakistan was an available, adequate, and far more convenient forum to hear the case.
At the time of the suit, Pakistan’s one year statute of limitations on the claim had run. An expired statute of limitations is usually dispositive in a forum non conveniens analysis; however, an exception exists where it can be shown the plaintiff made a deliberate and tactical decision to run the statute of limitations for the purpose of avoiding dismissal in her preferred forum. (Compania Naviera, 569 F.3d at 202-03). Because the district court failed to point to any evidence substantiating its determination that the DiFedericos made a deliberate and tactical decision to let the statute of limitations run in Pakistan to avoid dismissal, the Fourth Circuit held it was error to conclude the Pakistani forum was available. The Fourth Circuit then reviewed the district court’s analysis of the public and private factors relevant to a forum non conveniens analysis, noting that a citizen plaintiff’s choice of forum is entitled to even greater deference when the plaintiff chooses her “home forum.” The court found that the district court’s failure to consider this heightened standard when conducting its analysis was an abuse of discretion. The appellants’ main argument for convenience and justice was the avoidance of fear and emotional trauma associated with pursuing their case in Pakistan. The Fourth Circuit adopted the Second Circuit’s reasoning in Guidi, finding that the fear and emotional trauma involved in travel for a trial concerning such a politically charged event would give rise to myriad logistical complexities and expenses. The court noted that fear and emotional trauma should be given less consideration if a plaintiff’s fear has no relationship to the events giving rise to the claim, if the level of security threat present is low, and if an alternate, third forum is available. The Fourth Circuit additionally found that the district court mistakenly analyzed several other public and private factors, including the location of the sources of proof, the availability of compulsory process for attendance of unwilling witnesses, and the difficulty in applying foreign law.
-Kara S. Grevey
Decided: April 29, 2013
Affirming the United States District Court for the Eastern District of North Carolina, the Fourth Circuit held that the federal taxation-of-costs statute, 28 U.S.C. § 1920, allowed E. & J. Gallo Winery (“Gallo”) to recover discovery expenses for the limited purposes of converting electronically stored information (“ESI”) to non-editable formats and burning the ESI onto discs, thus prohibiting a more extensive recovery for ESI processing expenses. The Fourth Circuit also ruled that these processing charges did not constitute taxable “fees for exemplification” under this statute.
In 2005, the winery Bodegas Esmeralda designated The Country Vintner of North Carolina, LLC (“Country Vintner”) the exclusive North Carolina wholesaler of a certain Argentinian wine. In 2009, however, Gallo began supplying this wine to North Carolina wholesalers, not including Country Vintner. Country Vintner sued Gallo under the North Carolina Wine Distribution Agreements Act and the North Carolina Unfair and Deceptive Trade Practices Act. Gallo prevailed on these claims and subsequently filed a bill of costs in the district court, aiming to recover $111,047.75 from Country Vintner for expenses involving the processing and production of ESI. Gallo’s expenses included the cost of decompressing container files, extracting metadata, converting documents to a TIFF or PDF format, burning images onto a CD or DVD, and various other ESI-related expenses. The district court determined that § 1920(4), under which a prevailing party may recover “[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case[,]” allowed Gallo to recover expenses for copying or duplicating the ESI, but not for the underlying ESI processing. Gallo appealed, arguing that some of its ESI processing expenses could be considered “costs of making copies” and “fees for exemplification” under § 1920(4).
The Fourth Circuit first discussed the history of § 1920, noting that, in 2002, a committee of the Judicial Conference of the United States rejected a proposal to extend this statute’s reach to ESI processing expenses. After rejecting Country Vintner’s assertion that § 1920(4) only covers the costs of materials in dispositive motions or materials produced at trial, the Fourth Circuit considered Gallo’s contention that its ESI processing constitutes “making copies” under this provision. The court construed “making copies” to mean “producing imitations or reproductions of original works.” The court also noted that, according to the Supreme Court, the provisions of § 1920 are “modest in scope” and “limited to relatively minor, incidental expenses.” The court then adopted the Third Circuit’s reasoning in Race Tires America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158, concluding that while the act of actually copying ESI is taxable, the underlying process leading up to such copying is not. Thus, Gallo could recover the costs of converting files to TIFF and PDF formats, and for burning these files onto CDs—but not the costs of the underlying ESI processing. The Fourth Circuit also found that Gallo’s ESI processing expenses were not “[f]ees for exemplification” under § 1920(4), as these expenses did not involve authentication of public records or demonstrative aids.
- Stephen Sutherland
Decided: April 29, 2013
The Fourth Circuit affirmed the United States District Court for the Eastern District of Virginia on all issues arising out of a dispute over an interconnection agreement entered into by nineteen incumbent local exchange carriers (collectively “CenturyLink”) and Sprint Communications Company of Virginia, Inc., and Sprint Company L.P. (collectively “Sprint”) under the Telecommunications Act of 1996 (the “1996 Act”).
In April 2004, when the interconnection agreements (“ICAs”) at issue in this case were entered into, both the CenturyLink Plaintiffs and Sprint were wholly owned subsidiaries of Sprint Corporation. In 2006, Sprint Corporation spun off the CenturyLink Plaintiffs, which then formed a separate company that was ultimately acquired by CenturyTel, Inc. in July 2009. The resulting entity began doing business as “CenturyLink.” The parties did business together for several years in accordance with the terms of the ICA’s. However, beginning in June 2009, Sprint began filing written disputes with CenturyLink, ultimately leading to their unilaterally reducing rates and demanding that CenturyLink remit previous payments made by Sprint, which Sprint deemed to be in excess of what it should have paid. In November 2009, CenturyLink filed a breach of contract claim against Sprint. Sprint moved to dismiss and counterclaimed alleging that CenturyLink breached the North Carolina ICA (the “NC ICA”) by billing Sprint for local traffic not subject to access charges. In two separate bench trials, the district court found in favor of the CenturyLink Plaintiffs for both the breach of contract claim and Sprint’s counterclaim. Following the completion of both bench trials, while preparing his financial disclosure for the financial year of 2010, the presiding judge discovered that he had owned eighty shares of CenturyLink in a managed IRA during the time he presided over the trials. After alerting the parties and considering a briefing between the parties, the judge determined that the circumstances did not require recusal or vacatur. Sprint appealed.
On appeal, Sprint argued that the district court should not have gotten to the merits of the case because its role is limited to reviewing a State commission’s determination and no such determination occurred here. However, the Fourth Circuit, supported by the FCC’s amicus brief, held that neither the text nor structure of the 1996 Act supported Sprint’s position that the Act contains a statutory exhaustion requirement. In so holding, the Fourth Circuit reasoned that, although other circuits have interpreted the 1996 Act to confer authority upon State commissions to interpret and enforce an ICA, nothing in the text grants State commissions such authority; thus it follows that, likewise, nothing grants State commissions the exclusive authority to do so in the first instance. Similarly, the court did not find it necessary to impose such a requirement as a prudential matter. Sprint further contended that the district court should not have gotten to the merits of the case because the district judge should have recused himself and vacated all orders and judgments issued in the case. The Fourth Circuit did not agree, citing to the judicial recusal statute’s definition of “financial interest,” which specifically carves out an exemption for ownership of securities in a common investment fund over which a judge exercises no management responsibilities.
Having concluded that the district court properly reached the merits of the case, the Fourth Circuit addressed Sprint’s alternative arguments on the merits. First, Sprint maintained that the district court misconstrued the ICAs as applying to long distance calls that are transmitted via the Internet or a private IP network, known as VoIP traffic. Because the court found that the ICAs were ambiguous as to whether it applied to VoIP traffic, it looked to the previous course of dealings between the parties and noted that Sprint drafted the ICAs at issue. Therefore, the court was compelled to reject this argument. Second, Sprint contended that CenturyLink improperly billed Sprint for local calls under the NC ICA. Sprint alleged that CenturyLink improperly identified calls as intrastate long distance, in violation of the terms of the NC ICA, using an impermissible method—the Billing Telephone Number (“BTN”) method, rather than the Calling Party Number (“CPN”) method. However, the Fourth Circuit found that the NC ICA did not specifically establish a method for identifying local traffic. Therefore, because the BPN method is an acceptable identification method used in the industry, Sprint’s counterclaim was rejected.
- W. Ryan Nichols
Decided: April 29, 2013
Adley H. Abdulwahab appealed his conviction and sentence for several crimes related to a fraudulent investment scheme. The Fourth Circuit reversed Abdulwahab’s conviction for money laundering, but affirmed the conviction on all other counts.
Abdulwahab’s conviction stemmed from a fraudulent investment scheme where Abdulwahab and two co-conspirators sold interests in life insurance polices through their company A&O. Abdulwahab joined A&O in 2005 as the main salesperson for the fraudulent securities, and with his co-conspirators, misrepresented numerous critical facts about the company and misappropriated in excess of one-hundred million dollars, personally receiving in excess of eight million dollars. In addition, Abdulwahab misrepresented several important facts about his past on documents relating to the sale of securities, including falsely stating that he held an economics degree from Louisiana State University and failing to disclose a 2004 guilty plea for the felony forgery of a commercial instrument. In late 2006, state regulators began to investigate A&O under suspicion that it was selling unregistered securities. To shield the company from investigation, A&O undertook a sham sale to a company partially owned by Abdulwahab. In 2010, Abdulwahab was convicted of: (1) money laundering, (2) conspiracy to commit money laundering, (3) mail fraud, (4) conspiracy to commit mail fraud, and (5) securities fraud. The court sentenced Abdulwahab to 720 months imprisonment. Abdulwahab appealed all convictions and the length of the sentence.
On appeal, Abdulwahab first argued that the district court erred in denying his motion for acquittal relating to the money laundering conviction. The Fourth Circuit agreed, finding that certain counts of money laundering were barred by the “merger problem” identified by the Supreme Court in United States v. Santos. A conviction for money laundering may be based only on the “proceeds” of the illegal activity, which the Fourth Circuit defined as the “net profits” of the fraudulent scheme. Thus, certain expenses and payments made to carry out the fraud, while serving as evidence of the fraud, do not constitute money laundering because they are not “net profits.” In particular, the Fourth Circuit held that district court erred in determining that commission payments to sales agents were “proceeds,” finding instead that they were part of the “essential expenses” of the illegal activity. Since the Fourth Circuit reversed the money laundering conviction, and the error was not harmless, the court remanded Abdulwahab’s case for resentencing.
Second, Abdulwahab argued that his conviction for conspiracy to commit money laundering also suffers from the same “merger problem” as the substantive money laundering conviction. The Fourth Circuit, reviewing for plain error, rejected his argument. The court found that Abdulwahab’s sham sale of A&O provided sufficient evidence for a rational jury to conclude that the transactions were intended to promote the continuation of the fraudulent investment scheme. Furthermore, there was no “merger problem” because the payments Abdulwahab received from the sham sale were not included in the “essential expenses” of the scheme, but rather were part of the general plan of deception to defraud investors.
Third, Abdulwahab argued that the district court erred in denying his motion for acquittal regarding the convictions for mail fraud, conspiracy to commit mail fraud, and securities fraud because the evidence was insufficient for a jury to conclude that he knew of and intended to participate in a scheme to defraud. The Fourth circuit disagreed, citing the numerous misrepresentations Abdulwahab made to investors personally. In addition, Abdulwahab’s extensive participation in the sham sale provided evidence that was “well beyond what was necessary to support his convictions.”
Finally, Abdulwahab argued that the district court erred in holding him responsible at sentencing for losses of funds that were invested with A&O before he became an equity partner. The Fourth Circuit disagreed, finding that the Abdulwahab became a part of the conspiracy when he joined the company as a salesperson and agreed to make false representations to induce investors to invest their money with A&O. The court emphasized that as a salesperson, Abdulwahab knew that investor funds were being procured by fraud and in concert with his co-conspirators to continue the scheme.
- Wesley B. Lambert
Decided: April 26, 2013
In this federal suit for forfeiture in rem against certain properties the government believed to be derived from health care fraud and involved in money laundering, the Fourth Circuit held that the United States District Court for the Eastern District of Virginia properly denied various motions by the claimants in interest, properly granted an evidentiary motion by the government, and properly rejected certain jury instructions proposed by the claimants. The Fourth Circuit thus upheld a jury finding that the properties were subject to civil forfeiture.
In April 2005, the Federal Bureau of Investigation (“FBI”) began investigating Dr. Mert Kivanc, a physician, for overprescribing controlled substances. In October 2006, the FBI uncovered evidence that Dr. Kivanc had conducted a health care fraud scheme involving the drug Remicade. An FBI forensic accountant traced $701,507 in fraudulent payments to Dr. Kivanc’s business account at Wachovia Bank. Dr. Kivanc fled the country for Turkey in November 2007. He was indicted for distributing and conspiring to distribute controlled substances in October 2010. Meanwhile, Dr. Kivanc’s parents, the claimants, bought a residential property in Fairfax, Virginia in 1993. In September 2005, Kivanc’s parents transferred the property to Dr. Kivanc. Dr. Kivanc began renovating the property in February 2007, but transferred the property back his parents in May 2007. However, Dr. Kivanc continued to pay for renovations until late October 2007: After the deed transferring the property to back to his parents was recorded, Dr. Kivanc paid about $430,000 for renovations from his Wachovia business account. Dr. Kivanc also wrote four checks to his dad between November 2006 and May 2007; one of these checks was traced to his bank account at PNC Bank, which was seized by the government in July 2011. On June 15, 2011, the government filed a complaint for forfeiture in rem against the residential property, claiming it was subject to forfeiture as property derived from health care fraud and involved in money laundering. Kivanc’s parents then filed a claim of interest for both properties. The jury issued a verdict in favor of the government, and claimants appealed.
On appeal, the parents argued that the district court erred on the following matters: Denying the claimants’ motion to dismiss based on the relevant statute of limitations; denying their motion to allow Turan Kivanc and Dr. Kivanc to testify remotely from Turkey, due to Turan’s health and Dr. Kivanc’s unwillingness to return to the United States; admitting certain hearsay statements against interest made by Dr. Kivanc but refusing to admit, under Federal Rule of Evidence 106, an affidavit filed by Dr. Kivanc and a letter he wrote to his attorney; rejecting the claimants’ proportionality instruction with regard to the money laundering issue, and rejecting the claimants’ theory of the case instruction; and denying claimants’ motion for judgment as a matter of law, on the grounds that the government failed to offer enough evidence that Dr. Kivanc committed health care fraud and money laundering. The Fourth Circuit rejected all of these arguments.
First, the court noted that the government had five years from the discovery of the alleged offense to initiate a suit. Though the FBI began investigating Dr. Kivanc for overprescribing controlled substances in April 2005—which fell outside the five-year statute—the government did not discover the Remicade fraud until October 18, 2006. Second, the court concluded that, due to conflicting expert analyses of Turan Kivanc’s ability to travel, the district court did not err in denying his parent’s motion for remote testimony; furthermore, to allow Dr. Kivanc to testify remotely would “make a mockery of our system of justice.” Third, the court ruled that the challenged statements against interest were properly admitted. Some of them were not actually hearsay, and the rest were corroborated by certain circumstances indicating trustworthiness: Dr. Kivanc made the statements while at his office discussing work-related matters with his employees, some of the statements involved Dr. Kivanc’s then-existing plans, and the statements exposed him to criminal liability. The court also ruled Federal Rule of Evidence 106 inapplicable to Dr. Kivanc’s affidavit and letter: While this Rule covers partially-produced writings or recorded statements, Dr. Kivanc’s documents involved witness testimony and conversations. Fourth, the court found the parents’ proportionality instruction a misstatement of the law as to money laundering, as legitimate funds commingled with funds involved with laundering money are also subject to forfeiture. Furthermore, the parents’ theory of the case also included an incorrect proportionality instruction, as well as the prejudicial assertion that “the [g]overnment has not met is burden on tracing the [PNC Bank] funds.” Lastly, the court concluded that the government proved, by a preponderance of the evidence, that “Dr. Kivanc knowingly and willfully committed or conspired to commit health care fraud,” and that he had the specific intent to conceal illegal acts through money laundering. Thus, the district court properly denied the parents’ motion for a judgment as a matter of law.
- Stephen Sutherland
Decided April 26, 2013
The Fourth Circuit Court of Appeals affirmed the plaintiff’s conviction of conspiracy to possess crack cocaine with the intent to distribute, finding substantial supporting evidence and no error in its pretrial evidentiary rules. However, the Court of Appeals vacated the plaintiff’s sentence and remanded for resentencing in accordance with the Fair Sentencing Act, which applies to all sentences imposed after its enactment, regardless of the fact that plaintiff’s underlying crime was committed before its enactment.
In June 2010, the defendant, Raymond Allen (“Allen”), was convicted of conspiring to possess fifty grams or more of cocaine base with intent to distribute and sentenced to ten years’ imprisonment. Allen was one of eleven defendants named in a fifteen-count indictment. Evidence at trial showed that street dealers bought from three suppliers, who bought from Chrissawn Folston, who would then buy in bulk from another supplier or from Allen. On May 17-18, 2010, Folston drove twice to Ashville in order to make a purchase from Allen. Folston was driven both times by his girlfriend, who was a government informant, and had first-hand knowledge of both transactions. As such, Allen does not dispute the fact that these two buy-sell transactions occurred; he only disputes the evidence regarding his knowledge of the conspiracy. To this the government responded with evidence indicating Allen’s awareness of the drug distribution network. While Allen was detained awaiting trial, he had a conversation with a street dealer wherein he admitted they would all “be partying” if the others had kept their mouths shut and had not told on everyone.
On appeal, Allen challenged his conviction on the basis that (1) there was insufficient evidence to support his knowledge of the drug rink, (2) the court erred in denying his pretrial motions, and (3) the court erred in imposing the ten-year mandatory minimum sentence given that Congress passed the Fair Sentencing Act of 2010 prior to his sentencing. First, the court analyzed the factors for finding a defendant guilty of conspiracy. The court recognized that a conspiracy may be proven wholly by circumstantial evidence and even a defendant’s minimal involvement is sufficient. Although the court agreed with Allen that evidence of a single sale is insufficient on its own to infer knowledge of a conspiracy, it did recognize that it was relevant on the conspiracy issue. Therefore, considering that the sale and the fact that it involved 3.5 ounces of crack cocaine, which is enough to produce over 1,000 “crack rocks”, the court held that a reasonable juror could infer that when Allen sold Folston such a substantial quantity of crack cocaine over the course of two days he knew the drug was going to be further distributed. This inference is further buttressed by Allen’s jailhouse conversation where he indicated at least some awareness of “others” in the scheme. On the second issue, the court reviewed the district court’s denial of Allen’s two pretrial motions. In the first, Allen moved to see his codefendants’ Presence Reports (PSR) and sealed sentencing memorandum. The court recognized that PSR’s have always been jealously guarded by the federal courts and customarily requires the court to first perform an in camera review before granting a defendant’s request to view it. However, the court need only perform the review once the defendant plainly articulates how the information contained in the PSR will be both material and favorable to his defense. When Allen requested the PSR’s, he referenced the fact that one codefendant was responsible for 361.1 grams of crack cocaine but was only sentenced in the memorandum for at least 1.4 grams of crack cocaine but less than 2.8 grams, which led to a reduction in his sentence. However, the court affirmed the district court’s reasons for denying the request. Although evidence of a “sweetheart deal” is relevant to a witness’s credibility, it does not mean that a defendant can go on a fishing expedition every time a codefendant pleads guilty. In the second motion, Allen moved to call a criminal defense expert to help explain the potential significance of all of the indicted codefendants reaching plea agreements with the government. However, the court again affirmed the district court’s denial of the motion on the basis that expert testimony introduced solely for the purpose of undermining the credibility of the codefendant witnesses is not the function of an expert. This is not the type of expert testimony required under Rule 702 of the Federal Rules of Evidence of scientific or technical expertise. Finally, the court vacated the district court’s application of the ten-year mandatory minimum sentence for offenses involving fifty or more grams of crack cocaine. Although the district court was correct in recognizing the fact that the Fair Sentencing Act does not apply retroactively, it failed to incorporate the reasoning of the recent Supreme Court decision in Dorsey v. United States. In that case the Supreme Court held that the Fair Sentencing Act applies to all sentences imposed after its enactment, regardless of when the underlying crime was committed. Therefore, because the Act was passed before Allen was sentenced and he did not possess 280 grams of crack cocaine necessary for the ten-year mandatory minimum sentence to apply under the Fair Sentencing Act, the district court erred by sentencing Allen to the mandatory minimum.
- Sarah Bishop
Decided: April 26, 2013
The Fourth Circuit granted South Carolina’s petition for review and remanded the case to allow the Secretary of the U.S. Department of Education (“USDOE”) to provide South Carolina with notice and an opportunity for a hearing before making a final decision on South Carolina’s waiver for reducing its financial support for special education below the preceding fiscal year in order to receive federal funding under the Individuals with Disabilities Education Act (“IDEA”).
IDEA provides for grants of federal funding to States for the education of disabled children. In order to be eligible, States cannot reduce the amount of its own funding for special education below the amount that was provided by the State the previous year. If a State fails to meet this “maintenance-of-effort” condition, as it has been defined, then the Secretary of USDOE has to reduce the level of federal funding for subsequent years by the amount of the shortfall. In 2011, South Carolina requested a wavier of its “maintenance-of-effort condition” under the IDEA for approximately $67.4 million for the fiscal year ending in 2010. The Secretary of USDOE granted a partial waiver and denied it “to the extent of $36.2 million.” South Carolina then sought a hearing on the decision, but was advised by the USDOE that IDEA does not provide for such a hearing because such a hearing was only limited to situations where the USDOE rejected eligibility of a State for funding or the withholding of funds – neither of which occurred here. South Carolina then filed a petition for review to the Fourth Circuit challenging the denial of the request for a full waiver and requesting a full hearing. The USDOE filed a motion to dismiss and asserted that the Fourth Circuit did not have jurisdiction to consider the petition because the waiver determination was “a final agency action” and “subject to review only in the district court” pursuant to the Administrative Procedure Act (APA).
The Fourth Circuit first addressed the issue of whether it had jurisdiction to consider the petition. South Carolina argued that IDEA’s provisions allows a State to file a petition for review in the court of appeals when the State is arguing an issue with respect to eligibility of the State to receive funding under IDEA. The USDOE asserted that South Carolina was challenging was a USDOE action that did not involve an issue of “eligibility,” but rather death with an issue regarding South Carolina’s “compliance” under the statute. The court held that the language of the statute indicates that conditions on eligibility deal with forward-looking consequences of fund reductions, whereas a condition of non-compliance requires an evaluation of past performance. In this case, the court held that South Carolina’s petition for review of a full waiver of the “maintenance-of-effort” is an “action with respect to eligibility” because it results in the loss of future funding. The court further asserted that a State does not have to be found “completely” ineligible for funding for the court to have jurisdiction. It is enough that the action was based on a partial reduction of funding based on a failure to satisfy an eligibility condition like the “maintenance-of-effort” condition. The court next turned to whether South Carolina was entitled to notice and an opportunity for a hearing. On this second issue, the USDOE again argued that South Carolina’s waiver request was not an eligibility determination and did not involve a withholding and, as such, the statute did not require notice and a hearing. Based largely on its prior reasoning, the court held that the partial denial of the maintenance-of-effort waiver does constitute an eligibility action and, therefore, South Carolina is entitled to notice and a hearing. The court’s logic focused on the fact that “[w]hen the USDOE decided that South Carolina was only entitled to partial wavier . . . it made a determination that the ‘State was not eligible’ for the funding it otherwise would have received.” Therefore, South Carolina was entitled to notice and a hearing.
- John G. Tamasitis
Decided: April 25, 2013
Affirming the United States District Court for the Eastern District of Virginia, the Fourth Circuit held that it did not have subject-matter jurisdiction to review the National Geospatial-Intelligence Agency’s (“NGA”) security clearance decision.
In January of 2010, after obtaining the necessary top-secret security clearance, Hegab began working for the NGA—a member of the U.S. Intelligence Community and a Department of Defense Combat Support Agency—as a financial/budget analyst. Soon thereafter, Hegab notified the NGA that, following his security clearance investigation, he married Nusairat. Thus prompting the NGA to reinvestigate their initial decision. On November 2, 2010, Hegab was notified that a preliminary decision had been made to revoke his security clearance effective November 18, 2010. On January 7, 2011, he was placed on unpaid administrative leave. The proposed revocation was based on information about Nusairat, as well as earlier information provided during Hegab’s initial investigation. Specifically, the NGA provided Hegab with a Statement of Reasons listing seven facts on which their decision was based. In a detailed response to the NGA’s file supporting their decision, Hegab attempted to explain the evidence. Nonetheless, on March 4, 2011 a final decision was issued revoking his security clearance. The decision informed Hegab that, while his response had mitigated some of the NGA’s concerns, it failed to mitigate his wife’s current affiliation with one or more groups organized largely around their non-United States origin and/or their advocacy of or involvement in foreign political issues; thus raising the potential for conflicts of interest. Subsequently, Hegab unsuccessfully appealed the decision to the NGA Personnel Security Appeals Board. Seeking review of the Board’s decision, this action was commenced against the NGA and its Director, Letitia Long, in her official capacity. In six counts, Hegab alleged that his constitutional rights were violated. However, the District Court found that, though framed as constitutional violations, Hegab’s claims went to the merits of the NGA’s decision to revoke his security clearance. Therefore, the District court dismissed for lack of subject-matter jurisdiction.
On appeal, the Fourth Circuit was faced with the issue of where to draw the line between the political question of reviewing the merits of a security clearance decision and the judicial question of whether an Executive Branch agency violated an individual’s constitutional rights when revoking or denying said individuals security clearance. Harkening to separation of powers concerns, the court noted that federal courts are generally without subject-matter jurisdiction to review an agency’s security clearance decision. However, the court went on to say that, where an individual presents a colorable claim that his constitutional rights have been violated by an agency’s security clearance decision, judicial review might be available although the courts have not yet resolved this question. Nonetheless, in affirming the District Court, the Fourth Circuit concluded that it was unnecessary to decide where to draw the line in this case because Hegab’s conclusory constitutional claims were merely unsuccessful attempts to challenge the merits of the NGA’s decision. In so holding, the court emphasized the fact that Hegab did not allege any facts to support a claim that anyone at the NGA held the hypothesized bias; rather, the alleged bias was the speculative product of an ambivalent allegation in the complaint that the NGA security staff either failed to take the time or effort to review the available information or were biased against Islam.
- W. Ryan Nichols
Decided: April 24, 2013
The Fourth Circuit affirmed the Board of Immigration Appeals’ (BIA) denial of Suarez-Valenzuela’s application for withholding of removal under the Convention Against Torture (CAT). The Fourth Circuit held that the BIA applied the appropriate standard when evaluating Suarez-Valenzuela’s case, and that the BIA’s conclusions were supported by substantial evidence.
Suarez-Valenzuela is a Peruvian citizen that illegally entered the United States in January of 1999. Suarez-Valenzuela left Peru following a series of altercations and threats stemming from a talk show appearance in 1997. Suarez-Valenzuela and the show’s investigator threatened to report the show’s host to a rival television network when Suarez-Valenzuela did not receive items that he was promised in exchange for his appearance. Shortly thereafter, uniformed police officers approached Suarez-Valenzuela and the show’s investigator and threatened them. One of the officers, who Suarez-Valenzuela recognized as working for the talk show host, shot him in the foot and hit the show’s investigator with a gun, killing the investigator instantly. Although the officer was convicted for the killing, he only served three months of a fifteen-year sentence. Subsequently, the officer retained his job with the police and continued intimidating Suarez-Valenzuela and his family. Fearing for his safety, Suarez-Valenzuela fled to the United States in January of 1999. In February 2010, Suarez-Valenzuela was convicted of misdemeanor petit larceny. Based on the conviction and his immigration status, the Department of Homeland Security (DHS) issued an Administrative Order of Removal. DHS referred Suarez-Valenzuela’s case to an immigration judge who found that, under CAT, it was not feasible for Suarez-Valenzuela to relocate to Peru because Suarez-Valenzuela reasonably feared that he would be subjected to torture. DHS appealed the immigration judge’s order to the Board of Immigration Appeals (BIA), who reversed the immigration judge. Suarez-Valenzuela filed a petition for review of the BIA Order.
On appeal, Suarez-Valenzuela first argued that the BIA wrongfully applied the “willful acceptance” rather than the “willful blindness” standard to satisfy the CAT requirement that torture is committed with the “acquiescence of a public official.” Under the “willful acceptance” standard, the applicant must demonstrate that government officials had actual knowledge of his or her torture to satisfy CAT. On the other hand, under the “willful blindness” standard the applicant satisfies the acquiescence requirement by showing actual knowledge or that government officials “turn a blind eye to torture.” The Fourth Circuit agreed with Suarez-Valenzuela that “willful blindness” could satisfy CAT’s acquiescence requirement, but held that the BIA did not impose the actual knowledge requirement of the “willful acceptance” standard as argued by Suarez-Valenzuela.
Suarez-Valenzuela’s next argued that the BIA’s denial of CAT protection was not supported by substantial evidence. The Fourth Circuit disagreed. The Fourth Circuit first concluded that the BIA reasonably relied on State Department reports showing that country conditions and human rights violations have improved in Peru. Next, the Court found that BIA was justified in finding that the Peruvian government did not acquiesce to any torture committed by the officer. The Court determined that based on the officer’s considerable efforts to prevent Suarez-Valenzuela from testifying and the officer’s ultimate conviction, the BIA could reasonably conclude that the government did not acquiesce in Suarez-Valenzuela’s past torture. Finally, the Fourth Circuit concluded that Suarez-Valenzuela failed to appeal the final determination that he could safely relocate within Peru, waiving his right to challenge the BIA’s determination on that ground. Therefore, the Fourth Circuit affirmed the BIA’s denial of Suarez-Valenzuela’s petition for review.
- Wesley B. Lambert
Decided April 23, 2013
The Fourth Circuit Court of Appeals affirms the district court’s convictions of an interventional cardiologist for health care fraud and making false statements in connection with the delivery of or payment for health services.
This case involved an interventional cardiologist, John McLean (“McLean”), practiced privately at Peninsula Regional Medical Center (“PRMC”), where he performed cardiac catheterizations and coronary stent procedures. PRMC began investigating McLean in 2006 after a quality control review revealed McLean had performed inappropriate stent procedures in 13 cases. PRMC then conducted its own review, which confirmed that McLean had performed inappropriate stents in approximately half of 25 randomly selected cases, after which McLean resigned on account of an alleged eye condition. In 2007 the United States subpoenaed patient files from McLean’s practice, but when FBI agents arrived at his office, they found the files stacked on McLean’s desk and a shred bin nearby.
At trial, two expert cardiologists for the government testified that coronary stents were not medically necessary until a certain threshold. One of the experts testified that McLean had grossly overstated the level of blockage in the patient files he reviewed, often over-recording stenosis for patients. In addition, testimony from PRMC staff revealed that McLean overstated the stenosis shown in angiograms. Patients testified that McLean had recorded symptoms in medical records that the patients had never experienced. The government also offered peer comparison data which showed that the patients McLean chose to stent received nearly twice as many stents on average as the patients of his peers and these stent reimbursement claims increased dramatically in the same year that McLean purchased a 1.7 million dollar condominium.
On appeal, McLean challenged his convictions on the basis that (1) the health care fraud statute was unconstitutionally vague as applied to him; (2) that the evidence was insufficient to support his convictions on all counts; (3) and that his trial was prejudiced by the government’s failure to disclose impeachment evidence and certain erroneous evidentiary rulings committed by the district court. First, the court analyzed whether the statute was unconstitutionally vague on the basis of whether an ordinary person would understand that the health care fraud statute prohibited McLean’s charged conduct. The court did not find it unconstitutionally vague, recognizing that it is a simple fraud statute and not a medical malpractice statute. Therefore, although the statute does not enumerate every possible fraud scheme, an average person would understand that this kind of conduct is prohibited. Second, the court analyzed whether the jury’s verdict was supported by “substantial evidence” on the basis of whether evidence existed that a reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant’s guilt beyond a reasonable doubt. The court evaluated the evidence supporting the health care fraud charge and then the evidence supporting the false statement charge. For both charges, the specific intent to defraud could be inferred from the totality of the circumstances and did not need to be proven by direct evidence. In addition, sufficient evidence existed to rule out non-criminal explanations for the overstatements such as McLean’s expertise, the fact that his eye condition did not affect his central vision, and the fact that the cases at issue were not borderline cases. In rebutting this evidence, McLean argued that the government’s pattern evidence was not probative of fraud because a study existed where the average error rate was not much lower than his own. However, the court found that the import of the pattern evidence was not simply that McLean repeatedly performed medically unnecessary stents, but rather that he repeatedly overstated blockage by a wide margin. For the false statement charge, the court again found that sufficient evidence existed on account of the sheer disparity between the stenosis McLean recorded and what the angiograms showed, as well as the other evidence of fraud previously discussed. Third, the court analyzed whether the trial was prejudiced by failure to produce impeachment evidence to McLean on the basis of whether such evidence was favorable to the accused, suppressed by the government, or material. The court found that PRMC’s settlement with the government had little impeachment value, no witnesses in McLean’s case were parties to the settlement, and that disclosure of such settlement would not likely have altered the jury’s verdict. Although McLean also challenged the government’s permission to conduct voir dire on his expert, the court found it was proper on account of the fact that McLean did not respond with an appropriate written summary under Rule 16 for any expert testimony that will be used at trial. McLean also challenged the government’s objections to several aspects of his expert testimony; however, the court again finds no abuse of discretion because McLean did not provide appropriate notice and the expert’s personal observations were not admissible under Federal Rule of Evidence 702. Finally, the court analyzed McLean’s challenge of the procedural reasonableness of his sentence and how the amount of loss was established. In calculating the loss, the district court considered factors such as the reimbursement received not only for the unnecessary stent procedures, but also the follow up tests, as well as how much the hospital repaid to federal programs in connection with the settlement. The Fourth Circuit found that both were properly included as losses from relevant conduct, because neither the follow-up tests nor the hospital’s losses would have occurred but for the medically unnecessary stents McLean performed.
- Sarah Bishop
Decided: April 19, 2013
The Fourth Circuit affirmed the decision of the district court to dismiss the Appellants’ lawsuit for failure to state a claim upon which relief could be granted. Appellants asserted five separate claims against Wells Fargo Bank (“Wells Fargo”) after Wells Fargo denied the Appellants’ application for a mortgage modification under the Home Affordable Modification Program (“HAMP”).
The Appellants, after falling on difficult financial times and failing to keep up with their mortgage payments, submitted a “hardship letter” to Wells Fargo explaining their financial difficulties. The Appellants included two weekly pay stubs with their mortgage modification application. After receiving the letter, Wells Fargo responded and requested additional proof of income, specifically requesting two additional weekly pay stubs. The letter from Wells Fargo stated that if the information requested was not received within ten days, the modification request would be considered cancelled. The Appellants submitted the additional proof of income eleven days past the deadline. Wells Fargo subsequently sent a delinquency notice. Three months later, Wells Fargo sent a second HAMP introduction letter and application packet and additional delinquency notices along with a “Notice of Intent to Foreclose.” Later, Wells Fargo sent Appellants a denial of their HAMP application, citing failure to provide requested documentation within the specified time period. Appellants continued to apply for a mortgage modification and were denied each time. Approximately a year after the initial denial, Appellants filed suit against Wells Fargo alleging five counts: breach of an implied-in-fact contract, negligence, violations of the Maryland Consumer Protection Act (“MPCA”), negligent misrepresentation, and common law fraud. Wells Fargo subsequently removed the action to federal court. The district court dismissed the complaint in its entirety citing the absence of a Trial Period Plan (“TPP”) agreement. Without such an agreement, there was no privity of contract and the suit seeking enforcement of the HAMP guidelines would have to fail without such an agreement. The TPP agreement is implemented after the bank determines a borrower is eligible for mortgage modification.
The Fourth Circuit affirmed the district court’s decision. With regards to the breach of an implied-in-fact contract claim, the Appellants asserted there was sufficient consideration given on their side by submitting an application to give rise to an implied-in-fact contract. Moreover, the Appellants argued that Wells Fargo “bound itself to comply with the applicable ‘standard of care’” for the following reasons: Wells Fargo entered into an agreement with the U.S. Treasury to participate in HAMP and consented to being publicly listed as a HAMP participant, Wells Fargo promise in the foreclosure notice that if the Appellants were eligible for HAMP then Wells Fargo would look into the Appellants’ financial situation and determine an affordable payment plan, and finally, Wells Fargo regularly sent “HAMP Starter Kits” that stated if Appellants provided the required documentation, then Wells Fargo would determine if they qualified for the TPP. The Fourth Circuit held that none of this conduct was “sufficient to constitute a ‘meeting of the minds’” to create an implied-in-fact contract. More specifically, the court asserted that Wells Fargo’s offer “to process an application under HAMP” only required to Wells Fargo to process the application, which they actually did, and required them to do nothing more. With respect to the negligence claim, the Fourth Circuit held that the evidence showed that Wells Fargo owed no duty to the Appellants. Without “special circumstances,” that did not exist here, “banks typically do not have a fiduciary duty to their customers.” Because no contractual privity between the parties had been pled or otherwise proven, then no duty existed. For the MPCA claim, Appellants alleged that Wells Fargo made a misrepresentation when it requested more proof of income information and cited the failure to provide the required information as a reason for rejecting their HAMP application. According to the Appellants, Wells Fargo had enough information when the original two pay stubs were sent with their “hardship letter.” The court rejected this claim because the MPCA claim “sounds in fraud” and is therefore subject to heightened pleading standards and Appellants failed to show that Wells Fargo’s statements were made with the “purpose of defrauding” the Appellants. Moreover, Appellants could not prove that Wells Fargo actually made any false statements. Regarding the negligent misrepresentation claim, the court held that Appellants had failed to establish that any of the statements made by Wells Fargo were false and that Appellants “took action in reliance on the alleged false statements.” Finally, the court held Appellants failed to satisfy any of the elements of their common law fraud claim for many of the reasons stated before. Specifically, the court asserted that Appellants could not show that Wells Fargo actually made any false representations nor did Appellants satisfy the heighted pleading standards associated with a common law fraud claim.
- John G. Tamasitis
Decided: April 18, 2013
The Fourth Circuit held that the United States District Court for the District of Maryland properly applied a sixteen-level sentencing enhancement to Trino Medina-Campo’s prison term, as his felony conviction under an Oregon statute proscribing unlawful delivery of a controlled substance qualified as a “drug trafficking offense” warranting such enhancement.
After he was deported to Mexico in 2005, Medina-Campo returned to the United States. On April 1, 2011, he was arrested for driving under the influence. Medina-Campo subsequently pled guilty to a charge of illegal entry after deportation, and the district court sentenced him to fifty months in prison. Section 2L1.2 of the federal Sentencing Guidelines (“Guidelines”), titled “Unlawfully Entering or Remaining in the United States,” provides for a sixteen-level sentencing enhancement if the defendant reentered the United States unlawfully after a felony conviction for “a drug trafficking offense for which the sentence imposed exceeded 13 months.” In 2001, Medina-Campo pled guilty to unlawful delivery of a controlled substance in Oregon, after which he was sentenced to a twenty-four month prison term. The district court therefore applied the sixteen-level sentencing enhancement to Medina-Campo’s offense level. Medina-Campo appealed, arguing that his Oregon felony conviction did not constitute a “drug trafficking offense.”
On appeal, Medina-Campo argued that the Oregon felony of unlawful delivery of a controlled substance did not, categorically speaking, constitute a “drug trafficking offense” for purposes of sentence enhancements for prior convictions. Medina-Campo asserted that the relevant statute penalized solicitation, attempted delivery, and actual delivery of controlled substances; that solicitation is a separate crime from attempted delivery or actual delivery; and that, because the statute covered separate crimes, the court had to apply the modified categorical approach to the review of his prior conviction. Medina-Campo maintained that the documents relevant under this approach—i.e., the indictment and the petition and order evincing his guilty plea—lacked details necessary for the court to determine whether he committed solicitation, attempted delivery, or actual delivery. Medina-Campo then noted that, though an Application Note to § 2L1.2 noted that the statute “includes[s] aiding and abetting, conspiring . . . and attempting . . . to commit [a drug trafficking offense],” it did not mention solicitation; furthermore, though the term “include” indicates a non-exhaustive list, the crime of solicitation was insufficiently similar to the enumerated offenses to be covered by the Application Note. Thus, according to Medina-Campo, solicitation cannot be considered a “drug trafficking offense” under § 2L1.2, rendering the documents related to his conviction too indeterminate for a sentence enhancement.
The Fourth Circuit rejected Medina-Campo’s arguments, stating that solicitation, aiding and abetting, conspiracy, and attempt are “simply different ways to commit the broad, unitary offense of drug trafficking described in the Guidelines.” The court therefore applied the categorical approach to the Oregon statute, concluding that unlawful delivery of a controlled substance constitutes a drug trafficking offense—even if the defendant merely committed solicitation.
- Stephen Sutherland
Decided: April 15, 2013
The Fourth Circuit affirmed the district court’s dismissal of plaintiffs’ complaint under the Administrative Procedures Act (APA) for lack of subject matter jurisdiction because the U.S. Army Corps of Engineers (“Corps”) failed to take “final agency action” that is subject to judicial review under the APA. The Fourth Circuit also affirmed the dismissal of plaintiff’s breach of contract action, finding that the letters at issue did not create a contract that would justify the exercise of admiralty jurisdiction.
In the 1980s and 1990s, the Corps advanced proposals to widen and deepen the 37-mile channel in Cape Fear that allows access to the deep-water port in Wilmington, North Carolina. Before beginning construction in 2000, the Corps discovered rock at the bottom of the channel, requiring the Corps to revise its original harbor project. Plaintiff contended that the revisions would cause ecological damage to its beaches. After exchanging letters, the Corps adopted a plan agreeable to the plaintiff. The plan included semi-yearly maintenance programs designed to replenish sand on the plaintiff’s beaches. The Corps completed the harbor project in 2002. In the winter of 2011, the Corps informed the plaintiff that it had to curtail the maintenance program for budgetary reasons. Plaintiff filed a complaint against the Corps alleging breach of the maintenance plan, seeking specific performance. The district court dismissed the complaint for lack of subject-matter jurisdiction, holding that the claims under the APA were not “final agency action” that was subject judicial review, and that the court lacked admiralty jurisdiction over the remaining claims. Plaintiff appealed on both counts.
On appeal, plaintiff first argued that its APA claims constitute “final agency action” subject to judicial review either as “physical activities in the field,” or, in the alternative, as a reviewable “failure to act.” The Fourth Circuit disagreed, holding that performance of the maintenance plan failed to meet the definition of “agency action,” much less “final agency action” under the APA. The court determined that “agency action” under the APA concerns project approval rather than the project performance, which the plaintiff challenged in this case. Additionally, the Corps’ performance in maintaining the plaintiff’s beaches could not be “agency action” because it was ongoing and not “circumscribed and discrete” as required by the APA. The court said that injecting itself into the Corps’ maintenance plan would place itself into “the role of monitoring whether the Corps had complied with vague, undefined corrective measures,” which was far from a discrete agency action. Furthermore, even assuming that the Corps’ maintenance plan constituted agency action, the court held that it still failed to rise to the level of “final agency action,” finding that the final action occurred when the Corps approved the plan in 2000, and not when the Corps implemented the maintenance plan. Similarly, the court held that the failure to comply with the maintenance plan was not a reviewable “failure to act” because failing to perform the maintenance plan did not equate to a failure to take a discrete “agency action.” The court found that the plan was only a projection of its performance, and thus, not a binding commitment to the plaintiff.
Plaintiff also argued on appeal that the district court erred in holding that it did not have admiralty jurisdiction over the contract that the plaintiff alleges was created in the the letters between itself and the Corp. The Fourth Circuit disagreed, finding that the alleged contract concerned the maintenance of beaches, rather than the required “maritime commerce” that gives rise to admiralty jurisdiction. While the harbor project as a whole constituted “maritime commerce,” the letters expressed concerns about the preservation of the plaintiff’s recreational and aesthetic interests. Moreover, the court reiterated its earlier holding that the letters did not create binding commitments on the Corps that gave rise to an enforceable contract.
- Wesley B. Lambert
Decided: April 15, 2013
Consolidating appeals from a joint-criminal trial, the Fourth Circuit affirmed the District Court for the Eastern District of Virginia with respect to the district court’s evidentiary rulings and one defendant’s argument that a conviction on a particular count was not supported by sufficient evidence. Based on the facts of the case, with respect to both defendants, the court vacated the district court’s decision regarding conspiracy convictions that were prosecuted on a theory of “material alteration” and further vacated a conviction on a particular count, with respect to one defendant, based on insufficient evidence. Based on the vacation of several counts of conviction, the Fourth Circuit remanded for sentencing.
Co-defendants, Zhao and Cone, were married immigrants from China, living and working in the United States. They formed JDC Networking, Inc. (“JDC”), a licensed distributor of products made by and for Cisco. JDC conducted frequent business with a Hong Kong based company, allegedly operated by members of Zhao’s family, known as Han Tong. As a Cisco “registered partner,” JDC was prohibited from purchasing Cisco products for resale from outside the US. Yet, trial records reflect that, from 2004 through 2010, JDC frequently imported shipments from Han Tong containing both genuine Cisco products and fake imitations. During that time frame, as evidenced by emails introduced at trial, several JDC customers returned products because they believed that they were counterfeit Cisco products. Also during that time frame, Zhao filed income tax returns indicating that JDC was struggling and that she was only earning a small salary; however, to the contrary, JDC was thriving by purchasing Cisco products (or purported Cisco products) in China for resale at rates considerably below the expected market price. Beginning in 2006, U.S. Customs and Border Patrol (“CBP”) began intercepting shipments, however, that investigation went cold until 2010. In 2007, Zhao and Cone’s marriage began to deteriorate. Upset with their faltering marriage, Cone sent a series of emails to Zhao implicating both defendants in the counterfeiting conspiracy at issue. In 2010, CBP got a new lead in their investigation leading them to Zhao. CBP agents, along with Immigration and Customs Enforcement agents, executed a search warrant at Zhao’s residence and a storage unit maintained by her, which resulted in a wealth of evidence. During a post-arrest interview, Zhao eventually confessed to selling “fake” Cisco products. Subsequently, Cone was interviewed and arrested after confessing that JDC received and resold both real and counterfeit Cisco products from Han Tong. With respect to “authentic” Cisco products, Cone further admitted that he and Zhao altered the products, representing that they were higher end products than they actually were. Following their joint-trial, the jury returned a mixed verdict, convicting Cone of conspiracy, convicting Zhao of conspiracy along with several other charges. Cone was sentenced to 30 months imprisonment. Zhao was sentenced to 60 months imprisonment. Both Zhao and Cone appealed several of the district court’s rulings; the Fourth Circuit consolidated the appeals.
The Fourth Circuit held that “material alteration”—one of the three theories of conspiracy, which the prosecution relied on to support criminal liability under the federal counterfeiting statute—is not a crime as defined by the statute. In so holding, the court found that Zhao and Cones’ acts of obtaining a genuine Cisco product bearing a genuine mark and altering the product, but not the mark, was not a criminal act as defined under the statute. The court was not persuaded by the fact that, in the context of civil cases, courts have found liability based on a material alteration theory under the Lanham Act. Zhao’s conviction for money laundering was also vacated because the court found that the “material alteration” theory may have formed the basis for her money laundering convictions. Similarly, because the court found that the district court may have utilized some of the acts under the material alteration theory in arriving at the sentences, the Fourth Circuit vacated and remanded the sentences with respect to both Zhao and Cone. Zhao and Cone, also challenged the introduction of JDC customer emails complaining that JDC products were “fake.” The Fourth Circuit found that the evidence was properly introduced, as non-hearsay, to prove that the defendants were on notice that their products may be fraudulent, but that the district court committed error by not issuing a limiting instruction to the jury. However, in light of the context of a twelve-day jury trial in which the government adduced overwhelming evidence of guilt, the court held that his was harmless error.
The Fourth Circuit also addressed several of Zhao’s individual challenges. First, she challenged the sufficiency of the evidence, with respect to two counts, upon which she was convicted. The court quickly concluded the jury had ample evidence on which to convict her on with respect to one count. However, with respect to the other count, the court found that testimony from a client that packaging was not genuine, standing alone, was not sufficient to sustain a conviction under the statute for a counterfeit mark on the goods in the package. Next, the court addressed Zhao’s argument that the district court committed reversible error by admitting Cone’s out-of-court statements against her in violation of the Confrontation Clause. Applying Fourth Circuit precedent, the court held that the substitution of Zhao’s name with “another individual” was sufficient to protect her rights under the Confrontation Clause. Addressing Cones’ individual challenge to his conviction for conspiracy to import misdeclared goods, the court found that, because the record reflects Cones’ active participation in the overall scheme, the government adduced sufficient evidence to support a conviction
- W. Ryan Nichols
Decided April 12, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of the plaintiff’s claims challenging sections 9.1–900 et seq. and 18.2-370.5 of the Virginia Code, as well as the policy of the Spotsylvania County School Board (“the Board”) for implementing the Code, on the basis that the claims were not justiciable.
The plaintiff, Jane Doe (“Doe”), had a sexual relationship with a minor child who was a student under her supervision. For this Doe was convicted in 1993 of the felony of having carnal knowledge of a minor, without the use of force. Under the Virginia Code at that time, Doe was required to publicly register as a sex offender, but could after a certain period of time petition a Virginia circuit court for removal from the Registry. However, in 2008, an amendment reclassified Doe’s conviction as a “sexually violent offense.” Sexually violent offenders cannot petition for removal from the Registry and, therefore, remain on it for life. In addition, sexually violent offenders are forbidden from accessing any school property without a successful petition from both (1) a circuit court and (2) a school board or owner of a private daycare. Therefore, under this classification, Doe must first successfully petition a school to access any school property, specifically that of her eleven-year-old stepson and two biological children nearing school age. Without a petition, Doe cannot attend parent-teacher conferences or other school functions, nor can she drop off or pick up her kids from school. Doe contended that this would force her to home school the children. Although she did not actually attempt to petition the school, Doe challenged this requirement on the basis that she could not acquire such a petition without revealing her identity and thereby tarnishing her family’s reputation.
Rather than petitioning either a circuit court or the school board, Doe instead brought a complaint against the Superintendent of the Department and the Board, alleging violations of her substantive due process, procedural due process, associational, and free exercise rights. Most notably, Doe alleged that the defendants infringed upon her fundamental right to raise and educate her children and that the Board violated her right to procedural due process by failing to provide her with a procedure by which she may anonymously petition to enter school property. She petitioned the court to declare the reclassification and, therefore, its registration and petition requirements unconstitutional and to order the Board to implement an anonymous petition procedure.
The Court of Appeals reviewed de novo the district court’s dismissal of Doe’s claims for lack of ripeness and standing. To have Article III standing, Doe must have an (1) actual injury, (2) that is traceable to the conduct, and (3) likely to be redressed. Because Doe has not yet attempted to petition, the court found that the injury arising from the Board’s lack of an anonymous procedure was only hypothetical, rather than “actual or imminent.” The court did, however, recognize an actual injury to Doe as a result of the Superintendent’s making her reclassification publicly available in the Registry without affording her a challenging procedure. Therefore, the court did find the requisite injury for standing in Doe’s procedural due process claim against the Superintendent but not in her substantive due process claim against the Board. The court then addressed the standing requirements of traceability and redressability. Both prongs become problematic when third persons not party to the litigation must act in order for an injury to arise or be cured. Because the Virginia statute allows for third parties to grant her permission to enter the school properties, the court found that Doe could not establish either prong. Doe’s right to access school property depends on the school, rather than the court. Where she has not petitioned the school, which is the entity with final authority over the matter, the court’s relief might not redress Doe’s injury. Regarding the claim against the Board for lack of an anonymous petition procedure, the court also declined to find redressability. Even if such a procedure were implemented, the statute still requires court approval for a successful petition and, therefore, the Court of Appeals declined to find redressability where relief was dependent on an additional party. However, the court did recognize traceability and redressability where Doe’s injury was the reclassification itself.
The court then addressed the ripeness requirement, which is determined by balancing the fitness of the issues for judicial decision with the hardship to the parties of withholding court consideration. Because Doe had not yet petitioned, the court found that the issues were not fit for judicial decision. The court also found that the Virginia law would not cause her undue hardship. However, again the court did recognize ripeness of Doe’s procedural due process claim, where her injury arose from the reclassification itself, rather than a speculative petition process. But, even though the court recognized standing and ripeness of Doe’s procedural due process claim, it did not withstand Federal Rule of Civil Procedure 12(b)(6). The court cited to the Supreme Court’s holding in Conn. Dep’t of Pub. Safety v. Doe requiring the registry information for all sex offenders to be publicly disclosed- whether the offenders have been proven dangerous or not.
- Sarah Bishop
Decided: April 11, 2013
The Fourth Circuit affirmed the decision of the district court and held that (1) the employees’ union had adequately consented to the notice of removal of the action to federal court; (2) that temporary employees who brought the action failed to state a claim for relief; and (3) the district court did not err granting a motion to strike the temporary employees’ motion for reconsideration.
Five current or former Temporary Employees of the Board of Education of Prince George’s County, Maryland (the “School Board”) filed a class action complaint in state court against the School Board and the employees’ labor union (the “Union) asserting employee-compensation claims. The Temporary Employees claimed that, even though a collective bargaining agreement (“CBA”) excluded “temporary employees” from the “bargaining unit,” they nonetheless should have been entitled to benefits of an arbitration award. The arbitration award at issue was based on a grievance filed by the Union against the School Board. The Union asserted that the School Board’s practice of hiring temporary or substitute employees and retaining them in the same position for more than 60 days was in violation of the CBA. The arbitrator decided the School Board’s conduct did, in fact, violate the CBA and issued a decision that directed, inter alia, the Union and School Board to reach a settlement agreement. Under the settlement agreement, the School Board agreed to pay over $1 million in back-pay and agreed to hire an additional number of full-time “bargaining unit employees.” The Temporary Employees subsequently filed a class action seeking a declaratory judgment that the arbitration award applied to their class as well as the permanent employees. They also claimed that the Union “breached its duty of fair representation by fraudulently misleading” the Temporary Employees about the arbitration decision and accepting a payoff from the School Board. The Temporary Employees also asserted that, based on being employed by the School Board for more than 60 days in the same position, should be considered third-party beneficiaries under the CBA and therefore entitled to the same compensation and benefits as full time employees.
The School Board filed a notice of removal, pursuant to 28 U.S.C. § 1441, in which they stated that the Union had been consulted and consented to the removal of the action to federal court. Shortly after the case was removed, the Union filed a motion to dismiss the complaint for failure to state a claim. The Temporary Employees opposed the motion to dismiss and filed a motion to remand the case back to state court. They argued that the Union’s should have been required to file its own notice of removal and, as a result, the removal was “defective.” The motion to remand was denied by the district court and it also dismissed all claims under Rule 12(b)(6). The Temporary Employees then filed notice of appeal and, several weeks later, filed a motion in the district court requesting reconsideration on the order dismissing the complaint. The School Board filed a motion to strike the motion for reconsideration on the grounds that it was untimely. The district court granted the School Board’s motion to strike. On appeal, the Temporary Employees asserted, inter alia, (1) that the Union’s consent to removal was inadequate; (2) that the district court incorrectly concluded the Union did not owe the temporary employees a duty of fair representation and they were not entitled to the arbitration award; (3) that the district court erred in dismissing the claim for breach of the CBA under the “third-party beneficiary theory”; and (4) that the district court abused its discretion by striking its motion for reconsideration.
First, the Fourth Circuit tackled the challenge to the removal petition. The court noted that it had not yet addressed the precise issue of what constituted adequate notice of removal for multiple defendants. The Temporary Employees asserted that because the Union had not signed the notice of removal nor did it file its own notice in a timely manner or provide written consent to the School Board’s notice, the removal was defective and should be remanded back to state court. The court admitted that the text of 28 U.S.C. § 1446, which provides the requirements for removal, “does not address how a case involving multiple defendants is to be removed or how the defendants must coordinate removal, if coordination is required.” Based on Supreme Court precedent, the only requirement was that of “unanimous consent” which requires all defendants to consent to removal. However, binding precedent had yet to specify, “how [multiple] defendants are to give their ‘consent’ to removal.” According to the court, some circuits have adopted a “formal approach” that requires a signature from all defendants to constitute a proper petition for removal. Other circuits have adopted a “less formal process” which is akin to what the defendants in this case did. The Fourth Circuit adopted the “less formal process” and concluded that, “a notice of removal signed and filed by an attorney for one defendant representing unambiguously that the other defendants consent to the removal satisfies the requirement of unanimous consent for purposes of removal.” Next the Fourth Circuit took up the Temporary Employees’ allegation that the Union breached its “duty of fair representation.” The Fourth Circuit affirmed the district court’s decision to dismiss the claim because it agreed with the lower court that the Union owed no duty to the Temporary Employees because the arbitrator’s decision limited the award only to “permanent employees” and expressly rejected including temporary employees who were not identified in the CBA as being part of the “bargaining unit.” In addition, the Fourth Circuit upheld the district court’s dismissal of the Temporary Employees’ “third-party beneficiaries” theory. The court again relied on the expressed language in the CBA that excluded Temporary Employees from the bargaining unit and, as a result, rejected the theory as against the plain language of the CBA. Finally, the Fourth Circuit agreed with the district court and affirmed its decision to grant the School Board’s motion to strike the motion to reconsider the court’s order dismissing the complaint. Though the district court did not provide any rationale for its decision on this issue, the Fourth Circuit surmised that it could have been decided based upon the fact that the Temporary Employees’ motion was filed after the 28-day period as governed by Rule 59(e) and, “more importantly,” the Temporary Employees did not advance a new argument that would require the district court to alter its judgment.
- John G. Tamasitis
Decided: April 5, 2013
Affirming the United States District Court for the Eastern District of Virginia, the Fourth Circuit held that OpenBand violated an order of the Federal Communications Commission by including exclusivity provisions in telecommunications contracts with Lansdowne on the Potomac Homeowners Association. The Fourth Circuit therefore found OpenBand’s various contracts with Lansdowne null and void and enjoined their enforcement.
In 2001, the land development partnership Lansdowne Community Development (“LCD”) and the Lansdowne on the Potomac Homeowners Association (“the homeowners association” or “association”) entered into telecommunications contracts with OpenBand—a group of affiliated cable service providers—to obtain telecommunications services for a residential development in Loudoun County, Virginia. LCD granted an exclusive easement to an OpenBand affiliate for the purpose of, inter alia, building and maintaining the telecommunications infrastructure. The homeowners association, which was named as a party to the deed, ratified the easement. Furthermore, certain Covenants, Conditions, and Restrictions (“CC&Rs”) for the residential development incorporated the easement and recognized the OpenBand affiliate’s exclusive right to install and provide services to the development. Lastly, the homeowners association entered into a contract with the OpenBand affiliate titled “Agreement to Obtain Telecommunication Services” (“TSA”), which incorporated the CC&Rs and granted the affiliate the exclusive right to administer certain telecommunications services. When residents complained about the quality of OpenBand’s services, the homeowners’ association began searching for another telecommunications company; however, due to the exclusivity provisions described above, the association could not obtain another provider. In August 2011, the homeowners’ association filed suit in federal court. The association claimed that, inter alia, OpenBand’s contractual arrangements violated a 2007 Exclusivity Order of the Federal Communication Commission (“FCC”). providing that “[n]o cable operator . . . shall enforce or execute any provision in a contract that grants it the exclusive right to provide any video programming service . . . to a [multiple dwelling unit]. Any such exclusivity clause shall be null and void.” 47 C.F.R. § 76.2000(a). The district court granted summary judgment to the homeowner’s association, enjoining OpenBand from enforcing any exclusivity provision against the association or the Lansdowne residents, and declaring the provisions null and void.
On appeal, the Fourth Circuit first addressed two challenges to the justiciability of the case, holding that the housing association had standing to sue and that the suit was ripe for review. With regard to standing, the court found that the housing association had met the requirements of injury in fact, causation, and redressability. The court also found the case ripe for review, as the issues were fit for judicial decision and the hardship to the association was immediate and substantial.
The Fourth Circuit then decided that the right of action provided by the relevant statute, 47 U.S.C. § 401(b), covered the housing association’s claim. Under this statute, a party injured when “any person fails or neglects to obey any order of the Commission” may ask a federal district court to enforce the order. OpenBand contended that § 401(b) only applied to adjudicatory orders, as the Administrative Procedure Act (“APA”) excludes agency rulemaking from its definition of “order.” In the alternative, OpenBand argued that, even if this provision did cover certain rulemaking orders, the Exclusivity Order would still fall outside the scope of § 401(b) because the Order did not confer rights or duties on the parties. The Fourth Circuit rejected both assertions. First, the court noted that, inter alia, the APA’s definitions are only mandatory within the APA itself, and that the Supreme Court construed the word “order” in the preceding statutory provision to include some rulemaking orders. Second, the court found that the Exclusivity Order did confer rights and duties on the parties: It forbade OpenBand from creating exclusivity arrangements, described OpenBand’s contract rights in the event of such arrangements, and gave the housing association the right to remain free of exclusivity clauses.
Lastly, the Fourth Circuit found the OpenBand affiliate to be an “open video system operator” (“OVS operator”) subject to the Exclusivity Order, and that the relevant contract clauses violated the Order. OpenBand argued that it could not be considered a “provider” of cable services. The Fourth Circuit disagreed, asserting that OpenBand had merely “attempt[ed] to circumvent the FCC’s definition of an OVS operator” by “playing a shell game” involving multiple affiliated business associations. OpenBand also argued that the easement, CC&Rs, and TSA had to be considered separately as independent contracts. The Fourth Circuit rejected this argument as well: Under Virginia law, “contemporaneous written agreements executed as part of the same transaction will be construed together as forming one contract,” and OpenBand’s cumulative contractual arrangement gave it the exclusive right to bring video service to Lansdowne. The court also noted that, even if it did consider each contract separately, each contract would still violate the Exclusivity Order.
Southern Walk at Broadlands Homeowners Assoc., Inc. v. OpenBand at Broadlands, LLC, No. 12-1331 and No. 12-2083
Decided: April 5, 2013
Consolidating two cases, the Fourth Circuit Court of Appeals affirmed the district court’s dismissal of Southern Walk’s declaratory judgment action, as well as OpenBand’s request for attorneys’ fees. However, to the extent that Southern Walk’s declaration request was dismissed with prejudice, the Fourth Circuit vacated and remanded with instructions to dismiss without prejudice.
In 2001, OpenBand, a wire-based video service provider, contracted with Southern Walk securing the exclusive right to provide wire-based video services to Southern Walk homeowners. Seeking a declaratory judgment, Southern Walk alleged that the 2007 Exclusivity Order issued by the FCC rendered the 2001 contract “null and void.” Based on lack of standing, the district court dismissed Southern Walk’s claim with prejudice. Subsequently, OpenBand moved for attorneys’ fees pursuant to a fee-shifting provision in the 2001 contract. That claim was also dismissed. On appeal, the two cases were consolidated.
The Fourth Circuit first addressed the standing issue, noting that Southern Walk had the opportunity to establish standing in its own right or as a representative of its members. The court first examined Southern Walk’s claim that it had standing in its own right and found that its alleged injury was non-redressable because it did not demonstrate personal harm that was traceable to the challenged contract or redresssable by the court. Specifically, Southern Walk claimed that it was harmed personally by a provision in the contract that required it to pay for all services from OpenBand for which its member households fail to pay. However, the court reasoned that regardless of the challenged exclusivity arrangement, the bulk billing provisions of the 2001 contract would still require payment. Thus Southern Walk would still be required to pay for OpenBand’s services regardless of the outcome of the case. Consequently, Southern Walk did not allege any economic injury to itself caused by the exclusivity arrangement.
Next, the Fourth Circuit examined Southern Walk’s standing as a representative of its members and found insufficient standing because Southern Walk failed to identify a single specific member. Citing a Supreme Court decision, the court noted that an organization must make specific allegations establishing that at least one identified member had suffered or would suffer harm in order to establish standing as a representative of its members. The court rejected Southern Walk’s contention that the identification requirement only applied to large, diverse advocacy groups with voluntary membership refusing to create an exception for smaller groups with mandatory membership, like homeowners’ associations. Similarly, Southern Walk’s alternative contention that it satisfied the identification requirement by alleging that each of its members were harmed by the exclusivity arrangement was also rejected because the complaint only alleged that the homeowners’ association was being harmed, not any of its individual members.
Finally, the court addressed OpenBand’s challenge to the district court’s refusal to grant attorneys’ fees pursuant to the fee-shifting provision in the 2001 contract. The fee-shifting provision authorized the prevailing party, in any litigation commenced in connection with the contract, to recover attorneys’ fees. Because a dismissal for lack of standing does not constitute a determination on the merits, the court held that OpenBand was not a “prevailing party.”
- W. Ryan Nichols
PCS Nitrogen Inc. v. Ashley II of Charleston, LLC, Nos. 11-1662, 11-2087, 11-2099, 11-2104, & 11-2297
Decided: April 4, 2013
The Fourth Circuit affirmed the District Court on all issues arising out of a dispute for cleanup of hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”).
At the center of this dispute is a forty-three-acre piece of property located in Charleston, South Carolina (“Property”). From 1884 until 1972, the Property housed several fertilizer manufacturers that, as a by-product of fertilizer production, contaminated the soil with hazardous waste. The case concerns two of the fertilizer producing companies: Ross Development Corporation (“Ross”) whose predecessor company manufactured fertilizer at the site from 1906 to 1966, and PCS Nitrogen, Inc. (“PCS”) whose predecessor company manufactured fertilizer at the site from 1966 until 1972. Following 1972, the property was no longer used for fertilizer manufacturing. In 1985, the property was purchased by two private parties (“Holcombe and Fair”), divided into three parts, and between 1987 and 2003, sold to Allwaste Tank Cleaning, Inc. (“Allwaste”), Robin Hood Container Express (“RHCE”) and Ashley II of Charleston LLC (“Ashley”). Ashley currently owns the largest share of the property. Since purchasing the property, Ashley spent $194,000 investigating and remediating the contamination of the Property. In 2005, Ashley filed a declaratory judgment action arguing that PCS was jointly and severally liable for these costs as a “potentially responsible person” under CERCLA. The district court bifurcated the trial. In the first trial, the district court determined that PCS was liable as a “potentially responsible person.” In the second trial, the court determined that many of the other owners of the Property were also liable as “potentially responsible persons” and allocated a percentage of the liability for remediation costs to each “potentially responsible person.” Four issues were appealed.
First, the Fourth Circuit affirmed the determination that PCS was a “potentially responsible person” under CERLCA. The court stated that PCS would only be liable if the predecessor was acquired through a stock sale rather than an asset sale. The Fourth Circuit first looked to the plain language of the acquisition agreement to determine whether the parties intended to engage in a stock sale or an asset sale, and found that the agreement was ambiguous. Finding ambiguity, the Fourth Circuit moved to the extrinsic evidence surrounding the agreement. The parties agreed that the successor in interest would acquire “all of [predecessor in interest] that was not specifically retained or sold to another entity.” Also, the predecessor discounted its asking price by $5 million, provided that the business and assets were taken “as is.” Furthermore, two other agreements executed at the same time as the acquisition agreement provided that “substantially all” of the predecessor company was acquired in the sale. Looking at the extrinsic evidence, the Fourth Circuit found that the district court did not commit plain error in its determination that the extrinsic evidence established that a stock sale occurred, making PCS a “potentially responsible person.”
Second, the Fourth Circuit affirmed the district court’s finding that many of the other companies were also potentially responsible persons under CERCLA. Given that PCS was liable as a potentially responsible person, PCS was jointly and severally liable. Thus, under CERCLA, it was PCS’s burden to show that others were also potentially responsible persons and thus liable for a portion of the remediation costs. First, Holcombe and Fair argued that PCS did not carry its burden in showing that they were potentially responsible persons because PCS had no direct evidence that they contributed to the hazardous waste problem. The Fourth Circuit disagreed, following the Second Circuit’s determination that “CERCLA does not require a smoking gun.” The evidence in the case established that Holcombe and Fair affected “at least 27.9%” of the Property through construction and grading, giving the district court sufficient justification to find that Holcombe and Fair qualified as potentially responsible persons. Second, RHCE argued that they were not a potentially responsible person because their interest was not a part of the “facility” affected by Ashley’s declaratory judgment action. The Fourth Circuit disagreed, finding that CERCLA defined “facility” broadly and that fertilizer and construction activities which contributed to the contamination on the Property included that part of the property occupied by RHCE. Third, Ashley argued that they were not a potentially responsible person because they were a “bona fide prospective purchaser” under CERCLA. The Fourth Circuit again disagreed, concluding that Ashley did not meet the “appropriate care” requirement of the bona fide prospective purchaser defense by failing to fill contaminated sumps that even Ashley’s expert conceded should have been filled a year before Ashley did so.
Third, the Fourth Circuit affirmed the district court’s denial of apportionment of harm on the Property. The court found that PCS failed to show that liability could be effectively apportioned because of the difficultly differentiating in the amount of harm caused by the fertilizer producing companies and that amount of harm caused by construction and development of the Property by the non-fertilizer producing companies. In addition, the court rejected RHCE’s argument that its portion of the harm should be apportioned because no disposal of hazardous waste occurred during its operation of the facility. The court stated that RHCE’s argument would undermine the clear liability that CERCLA places on a current owner or operator, regardless of whether the current owner or operator disposed of any hazardous waste on the property.
Finally, the Fourth Circuit affirmed the percentage of the harm allocated to each potentially responsible person, finding that the district court did not abuse its discretion in its allocation of liability. Noting that the “record might have supported a different allocation,” the Fourth Circuit held that the district court’s allocation was supported by the evidence.
- Wesley B. Lambert
Decided: April 1, 2013
The Fourth Circuit reversed the judgment of the district court and held that a Drug Enforcement Agency (“DEA”) officer’s misconduct – deliberately lying on an affidavit for a search warrant that produced the sole basis for a search of the defendant’s home where evidence was uncovered that provided the foundation for the criminal charge – rendered defendant’s guilty plea involuntary and violated his due process rights.
Mark Lunsford, a Baltimore City DEA Task Force Officer, applied for a warrant to search Cortez Fisher’s residence and vehicle for evidence of a crime. Lunsford provided the sole affidavit to accompany the application for the warrant. The affidavit provided that Lunsford first became aware of Fisher after a confidential informant indicated that Fisher was distributing narcotics and had a handgun in his residence. On the basis of this lone affidavit, Lunsford obtained the warrant and executed a search on Fisher’s vehicle and residence. The search resulted in the discovery and seizure of crack cocaine and a loaded handgun. Defendant was later charged with possession with intent to distribute cocaine base in violation of 21 U.S.C. § 841 and one count of possession of a firearm by a convicted felon in violation of 18 U.S.C. § 922(g). Defendant entered into a plea agreement where he plead guilty to the illegal firearm charge and was sentenced to ten years in prison. Over a year later, Lunsford was charged with various offenses, including “falsely attributing information to a confidential informant with whom he was splitting reward money.” Lunsford later admitted that the confidential informant that he identified in his affidavit to search Fisher’s residence and vehicle “had no connection to the case” and that someone else was the actual informant. Following his guilt plea, Fisher filed a pro se motion seeking to have his guilt plea vacated. The district court denied Fisher’s motion to vacate under the reasoning that Fisher did not deny he had, in fact, unlawfully possessed a firearm regardless of Lunsford’s conduct.
On appeal, Fisher argued that Lunsford’s deliberate misrepresentations in the affidavit, which was the sole basis for obtaining the search warrant, “induced” the guilty plea and, as a result, rendered his plea involuntary and invalid under the standard set forth in Brady v. United States, 397 U.S. 742 (1970). The Fourth Circuit agreed and expanded the application of Brady v. United States as a bar against involuntary pleas to include, not only “prosecutorial promises designed to elicit a guilt plea,” but also “affirmative government misrepresentation” that results in defendant’s misapprehension of the strength of the government’s case and, therefore, affects the defendant’s decision to accept the plea of guilt in order to secure leniency in sentencing. The Fourth Circuit rejected the government’s good faith prosecution argument and recognized that both parties did not dispute the fact that the evidence presented to Fisher and his counsel during plea deliberations were obtained through a search warrant that was issued solely on the basis of intentional misrepresentation by law enforcement. As a result, the Fourth Circuit maintained that Fisher was successful in proving that 1) “impermissible government conduct” resulted in the government securing a search warrant that led to collection of evidence against him, and 2) that there was “a reasonable probability” that, but for that misconduct, Fisher would not have plead guilty. Lastly, the Fourth Circuit held that its decision to vacate Fisher’s plea was supported by the important interest of deterring police misconduct and ensuring public confidence in the judicial system.
- John G. Tamasitis
Decided April 1, 2013
The Fourth Circuit Court of Appeals reversed the district court’s holding that it could not compel arbitration based on the unconscionability of three provisions in the parties’ franchise agreement. The Fourth Circuit did not find these contractual provisions unconscionable and, therefore, vacated the district court’s judgment and remanded the case for entry of an order compelling arbitration.
The plaintiff, Samuel Muriithi, brought suit based on the franchise agreement he signed as part of his employment with the defendant taxicab service, Shuttle Express, Inc (“Shuttle Express”). Muriithi claims that Shuttle Express induced him to sign a Unit Franchise Agreement that improperly classified him as an “independent contractor,” rather than an “employee” and thereby afforded him lesser compensation. Muriithi asserted claims against Shuttle Express based on the Fair Labor Standards Act and Maryland state law. Shuttle Express moved to dismiss the complaint or to compel arbitration. Shuttle Express based its motion to compel arbitration on the Arbitration Clause included in the parties’ Franchise Agreement. The district court held that because Muriithi’s claims “arise out of” the Franchise Agreement, they were within the scope of the Arbitration Clause. However, the district court concluded that the Arbitration Clause was not enforceable based on three unconscionable provisions in the Franchise Agreement: (1) the fee-splitting provision, (2) the class action waiver, and (3) the one-year limitations provision.
The Fourth Circuit first addressed the enforceability of the class action waiver. The district court held that the class action waiver prevented Muriithi from fully vindicating his statutory rights and thereby rendered the Arbitration Clause unconscionable. On appeal, Shuttle Express cited the Supreme Court’s recent decision in Concepcion, which held that “[r]equiring the availability of class-wide arbitration interferes with the fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.” Although Muriithi tried to argue that the Supreme Court’s holding is limited in scope to the FAA’s preemption of state law on this issue, the Fourth Circuit disagreed and concluded that the Supreme Court’s holding was not merely an assertion of federal preemption, but also plainly prohibited application of the general contract defense of unconscionability to invalidate an otherwise valid arbitration agreement under these circumstances.
The Fourth Circuit next addressed the enforceability of the fee-splitting provision. The district court held that this provision imposed prohibitive arbitration costs on Muriithi and thereby rendered the Arbitration Clause unconscionable. However, the Fourth Circuit indicated that the party seeking to invalidate an arbitration agreement based on prohibitive costs bears the “substantial” burden of showing a likelihood of incurring such costs. The Fourth Circuit concluded that Muriithi did not meet this burden because he merely alleged the likelihood of incurring prohibitive costs, rather than establishing the likelihood with firm proof. Muriithi also failed to provide evidence about the value of his claim. Further, Shuttle Express agreed to pay all arbitration costs if this case is referred to arbitration. Therefore, the Fourth Circuit concluded that Muriithi has not carried his burden of showing that he likely would incur prohibitive costs as a result of arbitration subject to the fee-splitting provision.
Finally, the Fourth Circuit addressed the enforceability of the one-year limitations provision, which the district court found unconscionable because it unreasonably restricted Muriithi’s ability to arbitrate “employment-related statutory claims.” Because the one-year limitations provision is not referenced in the Arbitration Clause, but is only applicable generally to the Franchise Agreement, the Fourth Circuit concluded that it was not properly considered by the court in a motion to compel.
- Sarah Bishop
Decided: March 29, 2013
Price pled guilty to accessing the Internet with the intent to view child pornography, in violation of 18 U.S.C. §§ 2252A(a)(5)(B) and (b)(2). The district court found that Price’s offense involved more than 600 images of child pornography, and thus imposed a five-level sentencing enhancement pursuant to 2G2.2(b)(7)(D). On appeal, Price challenged the five-level enhancement, arguing that duplicate images should not be counted when applying 2G2.2(b)(7). In the alternative, Price argued that sending the same image multiple times via email does not constitute duplication. The Court of Appeals rejected Price’s arguments and affirmed his sentence.
First, the Court of Appeals held that any image should be counted when applying the 2G2.2(b)(7) enhancement without regard to its originality so long as the image depicts child pornography and is relevant to the underlying conviction.
Next, the Court of Appeals noted that reproducing pornographic images with the click of a send button as opposed to the use of a photocopier still has the effect of increasing the number of images of child pornography, and thus held that where the same image is emailed multiple times, every image sent to every person should be counted when applying the number of images enhancement.
In summary, the Court of Appeals affirmed Price’s sentence, finding that the district court correctly counted each image in each email separately without regard to the uniqueness of the image when it applied the five-level enhancement under 2G2.2(b)(7)(D).
- Kassandra Moore
Decided: March 29, 2013
William Leonard Graham appealed his conviction of one count of conspiracy to distribute more than five kilograms of cocaine, in violation of 21 U.S.C. § 846. On appeal, Graham asserted reversible error on three bases: (1) an alleged violation of the Court Reporter Act, 28 U.S.C. § 753(b); (2) the admission of statements by coconspirators recorded during wiretapped conversations; and (3) a life sentence that allegedly contravenes the Constitution. The Fourth Circuit rejected Graham’s three contentions and affirmed the district court’s judgment.
Graham’s first argument on appeal is based on the fact that the Government introduced numerous recordings of wiretap conversations among Graham’s codefendants in which Graham was not a participant. On appeal, the Fourth Circuit appointed appellate counsel for Graham, and because none of the recordings played during trial were recorded or transcribed by the court reporter during their presentation to the jury, the appointed counsel was concerned that he had incomplete knowledge of the trial record that could impede his representation of Graham on appeal. Therefore, the Fourth Circuit granted a consent motion to rescind the briefing order, and the district court subsequently held an evidentiary hearing to determine which of the recordings were originally played for the jury during Graham’s trial. Despite the district court’s conclusion identifying the recordings that were played at trial, Graham argued that the court reporter’s failure to transcribe the contents of the wiretap conversations played to the jury during trial constituted a violation of the Court Reporter Act (“CRA”), 28 U.S.C. § 753(b). The Fourth Circuit reviewed the district court’s compliance with the CRA de novo and concluded that it did not need to resolve the issue because Graham could not satisfy the elements needed to obtain a new trial based on transcript errors, as described in its decision in United States v. Brown. Specifically, the Court found that the district court’s findings with respect to the recordings “were amply supported by the evidence presented at the [evidentiary] hearing and enabled Graham to ‘perfect [his] appeal.’” Therefore, Graham could not establish the prejudice necessary to substantiate his claim under the CRA.
Next, “Graham ague[d] that the district court erred in admitting the wiretap conversations of his coconspirators under Federal Rule of Evidence … 801(d)(2)(E) because the tapes merely captured ‘idle chatter’ between them about Graham’s past debt for marijuana, and because the conversations were not in the course, or in furtherance, of a conspiracy. The Court reviewed the district court’s admission of the statements for abuse of discretion and noted that the “existence of the three prongs of admissibility for coconspirator statements … must be supported by a preponderance of the evidence.” (citation omitted). On this issue, the Court first addressed Graham’s contention “that the district court erred by not making explicit findings on the existence of a conspiracy prior to admitting the statements.” The Court dismissed this argument, finding that “a trial court is not required to hold a hearing to determine whether a conspiracy exists before admitting statements under the rule, and the court need not explain the reasoning behind the evidentiary ruling.” (citation omitted). Second, the Court assessed Graham’s argument “that each of the five recordings played for the jury was nothing more than ‘profanity laden conversation’ about collecting a debt from Graham” and that the conversations could not constitute coconspirator statements. The Court found that even though Graham was not captured in any of the calls between the coconspirators that were recorded during the Government’s investigation leading up to the case, “and even though there was adversity between Graham and his coconspirators, each call played at trial contained discussions that rendered them ‘in furtherance’ of the overall conspiracy.” Therefore, the Court ultimately found the district court’s admission of the statements to be neither erroneous nor an abuse of discretion.
Finally, Graham challenged his mandatory life sentence imposed by the district court judge after the Government informed the judge that Graham faced a mandatory life sentence because it had filed an information under 21 U.S.C. § 851 based on Graham’s three prior felony offenses. Graham argued that his life sentence contravenes the Constitution. The Court rejected this argument, finding that it was bound by the Supreme Court’s decision in Almendarez-Torres v. United States, which holds that Graham’s argument cannot be sustained.
- Allison Hite
Decided: March 25, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of Washington Gas Light Company’s (Washington Gas) claim and grant of summary judgment in favor of Prince George’s County (the County). The Court held dismissal of a mandatory referral claim was proper under the abstention rules of Burford and that summary judgment was proper because the two laws alleged did not preempt county zoning ordinances.
Washington Gas operates a natural gas substation in Prince George’s County, Maryland. In 2004, Washington Gas sought to expand the substation to include liquefied natural gas storage. Washington Gas requested approval for the expansion from the County, which denied it based on recently enacted county zoning plans that prohibited industrial use in the area of the substation. After the denial, Washington Gas filed a federal action against the County seeking a declaration that the County erroneously denied the company permission to proceed under Maryland’s mandatory referral statute; a declaration that the National Gas Pipeline Safety Act (PSA), Natural Gas Act (NGA), and state law preempt county zoning regulations; and, finally, an injunction prohibiting enforcement of the zoning plans. In an order dated February 9, 2009, the district court first dismissed the mandatory referral claim for failure to state a claim upon which relief could be granted and on Burford abstention grounds. The court stated that the mandatory referral law did not provide a state law cause of action or federal question, and federal adjudication of the issue would frustrate state efforts to establish coherent policies regarding zoning. On March 9, 2012, the district court granted summary judgment on the preemption claims and thus denied the request for an injunction. The court concluded that the PSA only applied to safety standards, so the County Zoning Plans were not preempted. Also, the NGA does not preempt because Washington Gas is a local distributor exempt from NGA regulation. Washington Gas appealed the dismissal based on Burford and the ruling that the PSA and NGFA do not preempt county zoning laws.
The Fourth Circuit first stated that Burford abstention is allowed where the federal forum would frustrate and intrude on a state’s complex administrative system. Maryland’s mandatory referral statute allowed for certain privately owned utilities to be exempt from zoning, but the County had ruled this did not apply to Washington Gas. Plaintiff argued the question was one of straightforward statutory construction. The Fourth Circuit disagreed, pointing out that it certified a question regarding the language in the statute to the Maryland Court of Appeals previously. The Court held that abstention is proper where plaintiffs’ federal claims stem solely from construction of state or local land use or zoning law, not involving the constitutional validity of the same and absent exceptional circumstances. When turning to preemption, the Court noted that the PSA seeks to prevent harm from underground pipelines, and that the PSA preempts state laws with regards to safety. However, the county zoning plans are not safety regulations. Furthermore, since Washington Gas could comply with both the PSA and zoning laws, the PSA does not preempt. Finally, the Court looked to provisions of the NGA that stated gas companies that deal in interstate commerce are subject to the NGA, while local distributors are subject to local regulations. Even though Washington Gas technically provides service to customers in numerous states, the NGA allows the Federal Energy Regulatory Commission to make a determination about companies whose service areas straddle stat lines. Here, the FERC had determined that Washington Gas was still a local provider. Therefore, Washington Gas is subject to local, not federal, regulation.
Decided: March 25, 2013
Charlotte McCauley appealed the district court’s dismissal of her state law claims against Home Loan Investment Bank, F.S.B. (Home Loan) and Deutsche Bank National Trust Company (Deutsche Bank). The district court held that McCauley’s claims were preempted by the Home Owners’ Loan Act (“HOLA”). The Fourth Circuit Court of Appeals affirmed in part, revered in part, and remanded for further proceedings.
In 2001, McCauley bought a home in West Virginia under an installment sales contract. In 2006, McCauley paid off the installment sales contract with financing from Ocean Bank, F.S.B. (Ocean Bank). According to McCauley, the Ocean Bank appraiser falsely represented the value of the home as $51,000 or more, when it was actually worth approximately $35,700. Based on its assessment, Ocean Bank loaned McCauley $51,000. McCauley further alleged that during the loan closing, she received inadequate explanation of the closing documents. McCauley’s initial interest rate was 9.4 percent, but the loan was actually an adjustable rate mortgage that allowed the interest rate to “explode” to 15.49 percent. Because of the high interest rate, McCauley struggled with her loan payments and ultimately declared bankruptcy in 2010. Subsequently, McCauley sued Home Loan, the successor in interest to Ocean Bank, in West Virginia state court on the grounds of unconscionability and fraud. McCauley argued that the mortgage contract was unconscionable for the following reasons: the closing was hurried and conducted with inadequate explanation, the loan was induced by an inflated appraisal, and the loan’s terms were substantively unfair. Also, McCauley argued that Ocean Bank committed fraud by misrepresenting the market value of her property for the purpose of inducing her into the mortgage contract. At trial, the district court dismissed McCauley’s claims on the ground that they were preempted by HOLA. McCauley then filed a timely appeal.
The Fourth Circuit explained that under HOLA’s implementing regulation, certain types of laws are specifically preempted. The district court analyzed each aspect of McCauley’s unconscionability claim—the hurried closing, the inducement by inflated appraisal, the disparity between the size of the loan, and the value of the home—and found that each was of the nature of the laws specifically preempted under HOLA. McCauley argued that if the district court had analyzed her unconscionability claim as a whole instead in pieces, it would have determined that it was not preempted under HOLA. The Fourth Circuit disagreed and held that HOLA’s framework requires an analysis of each component of a plaintiff’s claim. Therefore, the court found that McCauley’s unconscionability allegations were specifically preempted.
Despite its ruling on the unconscionable claim, the court found that McCauley’s fraud claim was not preempted under HOLA. The court first found that intentional misrepresentation is not specifically preempted. Under the HOLA framework, however, a law can still be preempted if it “affects lending.” The court held that intentional misrepresentation only incidentally affects lending, and therefore, it reversed the district court’s dismissal of McCauley’s fraud claim.
Decided: March 25, 2013
From 2002 until 2006 Candice Hardwick was a student who first attended Latta Middle School and then attended Latta High School in Latta, South Carolina. During this time, Hardwick repeatedly wore to school various shirts that displayed the Confederate flag. School officials routinely forced Hardwick to change out of these shirts and prohibited her from wearing this type of clothing. In one incident, Hardwick was briefly suspended for refusing to change out of a shirt that displayed a picture of Robert E. Lee and the Confederate flag. Hardwick also wore—and was subsequently forced to remove—so-called “protest shirts”—shirts that displayed words and imagery in protest of the school’s dress code policy.
After several unsuccessful attempts to persuade officials from the Latta School District to reconsider the schools’ position against Hardwick’s apparel, Hardwick’s parents (on behalf of Hardwick) filed a lawsuit against the two schools’ principals and the school district’s board of trustees. Hardwick claimed under 42 U.S.C. § 1983 that the schools’ actions had violated her First Amendment right to free speech and expression. In addition, Hardwick alleged that the schools’ dress code policies were overbroad and vague and that their enforcement was in violation of her Fourteenth Amendment right to due process. The U.S. District Court for the District of South Carolina granted the defendants’ motion for summary judgment on each of Hardwick’s claims.
On appeal, the Fourth Circuit first considered the First Amendment claim. The court stated that there was clear evidence in the record indicating that “school officials could reasonably forecast that all of these Confederate flag shirts ‘would materially and substantially disrupt the work and discipline of the school.’” The court discussed the history and demographics of the town of Latta, including past racial tension and incidents specifically associated with the Confederate flag. Although the community and its schools had made “progress in race relations, [they were] not immune from incidents of racial conflict.” And because of the “vastly different views among students about the meaning of the Confederate flag,” the schools were justified in determining that a prohibition on Confederate flag shirts was necessary to prevent a disruption. Thus, the court held that the Latta school officials did not violate Hardwick’s First Amendment right.
With respect to Hardwick’s due process claim, the court examined the language of the school district’s dress code, which provided in part: “‘Generally, student dress is considered appropriate as long as it does not distract others, interfere with the instructional programs, or otherwise cause disruption.’” Moreover, the dress code proscribes “‘[s]hirts with obscene/derogatory sayings’” and clothing that is “‘deemed to be offensive.’” According to the Fourth Circuit, the school district’s dress code was neither overbroad nor vague. The court stated that the dress code policy was clear enough for a student to be able to “conform her speech to the required standards,” further pointing out that Hardwick was explicitly aware that Confederate flag apparel was not permitted under the terms of the dress code. Thus, the court held that Hardwick’s Fourteenth Amendment right to due process had not been violated.
-John C. Bruton, III
Decided: March 21, 2013
The Fourth Circuit reversed the judgment of district court, which permanently enjoined enforcement of § 5-306(a)(5)(ii) of the Public Safety Article of the Maryland Code which conditions carrying a handgun in public on having “good and substantial reason to do so.” The Fourth Circuit held that the good-and-substantial-reason requirement was constitutional, and thus did not have to address the district court’s “trailblazing pronouncement that the Second Amendment right to keep and bear arms for the purpose of self-defense extends outside the home.”
Four primary categories of applicants demonstrate “good and substantial reason[s]” to obtain a handgun permit: (1) business activities, (2) regulated professions, (3) “assumed risk” professions, and (4) personal protection. For personal protection, the Permit Unit considers whether the applicant needs a handgun permit as a safeguard against “apprehended danger.” On July 20, 2010, Raymond Wollard and the Second Amendment Foundation, Inc., initiated this action asserting that Maryland’s good-and-substantial-reason requirement for obtaining a handgun permit contravenes the Second Amendment. Wollard was attacked in his home by his son-in-law and restored order with his personal guns. Wollard subsequently applied for a handgun permit and was denied.
The case is decided under the two-part Chester inquiry: (1) whether the challenged law imposes a burden on conduct within the scope of the Second Amendment’s guarantee, and (2) application of an appropriate form of means-ends scrutiny. Courts are not obliged to impart a definitive ruling under the first step, and many courts instead resolve post-Heller challenges under the second step. The Fourth Circuit applies intermediate scrutiny and holds that the State has satisfied the standard as the good-and-substantial-reason requirement for obtaining a Maryland handgun permit is reasonably adapted to a substantial governmental interest.
Decided: March 21, 2013
The Fourth Circuit Court of Appeals affirmed the judgment of the district court in dismissing Trail’s complaint for failure to state a claim under the Labor-Management Reporting and Disclosure Act (LMRDA).
Melissa Trail was employed by General Dynamics until she was suspended on March 26, 2009. Trail belonged to Local 2850 of UAW/United Defense Workers of America (“Local 2850”). Trail was suspended after the plant’s unionized employees went on strike, and Trail was charged with felony identity theft for taking part in publishing the salaries and Social Security numbers of the facility’s salaried employees. Although the charges were ultimately dismissed against Trail, she was fired on September 15, 2009. After Trail was suspended, but before she was fired, Trail witnessed the Union’s President and Vice President viewing pornographic images on a work computer. After this incident, Trail claims that the company began to retaliate against her. As a result of this retaliation Trail brought an action claiming the company violated the LMRDA. The district court concluded that Trail failed to state a claim and granted the defendants’ motion to dismiss.
Trail argued on appeal that it is not necessary that she allege that she was formally “discipline[d]” within the meaning of the Act in order to have a viable retaliation claim under LMRDA. The court of appeals stated that in this instance the district court did go too far in curtailing an employee’s free-speech rights under the Act. In deciding whether or not a union member’s speech falls within the Act, the court adopted the test set forth in the Eighth Circuit which analogizes the rights of union members to the First Amendment rights of government employees. In order for the speech to be protected it must be of “union concern.” The court held here that Trail did not speak on a matter of union concern when she reported the alleged pornography incident, therefore affirming the judgment of the district court.
Decided on: March 21, 2013
Glynn brought a False Claims Act retaliation action, alleging that Defendant Impact Science & Technology (IST) and its parent company, EDO Corporation (EDO), fired Glynn because he reported IST to the government for what he believed to be fraudulent conduct. The Fourth Circuit agreed with the district court that Glynn was not engaged in activity that qualified him for protection under the FCA and affirmed the grant of summary judgment to the defendants.
IST hired Glynn as an engineer in 2004 to work in a department that produced devices that jammed frequencies used to detonate IEDs often employed in Afghanistan and Iraq. In May 2006, Glynn was told to conduct testing on a module to see if they performed adequately at 85 degrees Celsius. Glynn passed the modules despite the fact that they did not meet the threshold. After further testing, IST placed a corrective component into the units still in stock, but did not recall 800 units in the field. Glynn asked that the units be recalled, but his superiors did not comply. On September 13, 2006, Glynn contacted AUSA Philip Halpern and said he thought IST was shipping goods that would put the troops in jeopardy. Several days later, Glynn told a superior that he had reported to officials, and that manager alerted others. IST decided to terminate Glynn’s employment on October 13, and officially terminated him on December 14. Glynn sued for unlawful retaliation. The district court granted the defendants’ motion for summary judgment and Glynn appealed.
The FCA is designed to discourage contractor fraud against the federal government and includes an anti-retaliation provision to protect whistleblowers. Pursuant to Zahodnick v. Int’l Bus. Mach. Corp., 135 F.3d 911, 914 (4th Cir. 1997), an employee bringing a retaliation claim under the FCA must prove that: (1) he engaged in “protected activity” by acting in furtherance of a qui tam suit; (2) his employer knew of these acts; and (3) his employer took adverse action against him as a result of those acts. The district court found that Glynn failed to satisfy all three elements, which provided the basis for its grant of summary judgment to the defendants. The Fourth Circuit disposes of the case on the first element. Glynn puts forth three theories under which he argues that he was engaged in a protected activity: (1) he investigated and opposed IST’s provision of defective devices to the government customer; (2) he investigated and opposed IST’s false certification of compliance with the contract; and (3) he initiated government investigations of IST’s fraudulent conduct. The Fourth Circuit held that none of these actions raised a possibility of a viable FCA action and were not protected. Accordingly, the Fourth Circuit upheld the district court’s decision to grant summary judgment in favor of defendants.
Decided: March 18, 2013
The Fourth Circuit Court of Appeals reversed the dismissal of a qui tam action that the district court held was barred by the statute of limitations and the first-to-file bar under the False Claims Act (“FCA”). Carter brought a qui tam action against Halliburton Company, KBR, Inc., Kellogg, Brown, & Root Services, Inc. (collectively “KBR”) for alleged fraudulent billing of the United States for services provided to the military serving in Iraq. KBR provided logistical support to the United States military in Iraq under a government contract; Carter worked for KBR in a water purification unit. Carter alleged that no water purification took place for over four months when KBR represented it was and was billing the government during that time, and further, that employees were instructed to submit time sheets for 12 hour days, 7 days per week when that time was not actually worked. Carter’s action was originally filed February 1, 2006; the complex procedural history of his complaint involved his lawsuit being dismissed twice and this action was re-filed on June 2, 2011. The district court held his action was barred by the statute of limitations, but Carter alleged, and the Fourth Circuit agreed, that the Wartime Suspension of Limitations Act (“WLSA”) tolled the statute of limitations.
Under the WSLA, the running of the statute of limitations is tolled for actions involving fraud against the United States until three years after the termination of hostilities as proclaimed by the President. The question presented to the court was what the term “at war” means for the purposes of the WSLA. The Fourth Circuit determined that the term does not require a declaration of war, and the “at war” status ceases at the time of a Presidential proclamation. Therefore, the WLSA governs the relevant time period in this action. Next, the Court interpreted the term “offense” in the WLSA to include civil actions like this one and rejected KBR’s argument that it applies only to criminal cases. The Court also concluded that the WLSA does apply only to cases that are brought by a relator, and not to cases where the United States is a party as KBR alleged.
Next, the Court considered whether Carter’s action was barred by the first-to-file rule under the FCA. The Court adopted the “material elements” test which states that a later suit is barred if it is based upon “the same material elements of fraud” as the earlier suit even if the allegations include somewhat different details. The two other lawsuits that barred Carter’s suit were both dismissed; therefore, those lawsuits cannot have a preclusive effect on Carter’s suit. KBR argued in the alternative that the Court should affirm the dismissal on the alternative ground of the public disclosure bar. The FCA’s public disclosure bar removes subject matter jurisdiction for FCA claims that are based upon matters that have been disclosed publicly unless the relator was the original source of the allegations. The Court declined to address this issue for the first time on appeal. The case was reversed and remanded to the district court.
Judge Wynn wrote separately in concurrence to respond to the dissent and emphasize the reasoning why the Court held that the WLSA applied to the instant case. Judge Agee wrote separately concurring in part and dissenting in part. Judge Agee agreed with the majority that the first-to-file bar did not bar this case, but did not agree that the WLSA applied to toll the statute of limitations.
-Jennifer B. Routh
Decided: March 18, 2013
Woods was convicted of numerous charges arising from a tax fraud scheme. On appeal, he argued that his trial was prejudiced by three errors: (1) that the district court improperly restricted his constitutional right to testify in his own defense, (2) that the prosecutor committed reversible error by making an improper statement during closing argument, and (3) that the district court’s instructions to the jury were improper. The Court of Appeals found that, while two errors occurred during the Woods’ trial, neither constituted reversible error. As such, the Court affirmed Woods’ convictions.
Woods first argued that he was effectively denied his constitutional right to testify in his own defense because the district court repeatedly sustained the government’s objections during his testimony and otherwise limited his presentation of evidence. The Court of Appeals reviewed the entire record and concluded that the district court did not abuse its discretion in its evidentiary rulings, did not act arbitrarily, and did not impose limitations on Woods’ testimony that were disproportionate to the legitimate evidentiary and trial management concerns. As such, the Court held that the district court did not deprive Woods of his constitutional right to testify in his own defense.
Woods also alleged that he was prejudiced by an improper statement that the prosecutor made during closing argument; specifically, by the prosecutor’s argument that Woods had lied under oath. The Court first noted that since Woods did not object to the prosecutor’s statement at trial, plain error review applied, under which Woods must show that the district court committed plain error and that the error affected his substantial rights thereby impacting the outcome of the trial. The Court then reviewed the record and found that, in light of the volume of evidence of Woods’ guilt, the one improper statement by the prosecutor did not violate Woods’ substantial rights and thus did not warrant reversal of his convictions.
Woods also contested the jury charge on the grounds that the district court improperly declined to include his requested character evidence instruction and improperly instructed the jury on the statutory elements of an offense. The Court of Appeals rejected these arguments finding that, in light of the strength of the government’s case in comparison to the defense evidence, the jury would have returned guilty verdicts with or without the requested character instruction, and that, considering the jury charge as a whole, the instructions accurately stated the statutory elements of the offense at issue.
Finally, Woods argued that his convictions should be vacated because the cumulative effect of the alleged errors prejudiced the outcome of his trial. The Court of Appeals rejected this argument holding that it could not conclude that the two errors that occurred during Woods’ trial prejudiced his case so as to justify the unusual remedy of reversal based on cumulative error.
In summary, the Court of Appeals found that Woods’ trial was affected by two errors, but held that those errors, when considered both individually and cumulatively, do not warrant reversal of Woods’ convictions.
- Kassandra Moore
Decided: March 15, 2013
In this case, a daycare center located in the City of Fredericksburg, Virginia, filed a lawsuit against the city after the city council had denied the center’s application to extend its daycare program to disabled children. The plaintiff asserted a number of claims arising under federal law, but the U.S. District Court granted the defendant’s motion to dismiss the complaint. Following this dismissal, the plaintiff filed a “Motion for Leave to File Amended Complaint” under Federal Rule of Civil Procedure 15. The district court denied this motion without undertaking any Rule 15 analysis to determine whether to accept an amended complaint.
On appeal, the Fourth Circuit held that the district court had properly denied the plaintiff’s motion to amend their complaint. The court stated: “We have repeatedly held that a motion to amend filed after a judgment of dismissal has been entered cannot be considered until the judgment is vacated.” Because the plaintiff had waited until after its complaint had been dismissed by a final judgment to file its motion, there was no longer an existing complaint able to be amended. Thus, Rule 15’s liberal standard for allowing pleading amendment was inapplicable. Instead, at this point, the plaintiff’s options were either to appeal the decision to dismiss or to move to open or vacate the judgment under Federal Rule of Procedure 60(b)—none of which had been done.
-John C. Bruton, III
Decided: March 15, 2013
Karen Balas appealed the district court’s denial of relief on her claims of discrimination, retaliation, and hostile work environment, brought under Title VII of the Civil Rights Act of 1964 (“Title VII”), as well as her claims of wrongful discharge, assault, and battery, brought under Virginia state law, against Huntington Ingalls Industries, Inc., (“Huntington Ingalls”) the successor to Balas’s former employer, Northrup Grumman Corporation. For the following reasons, the Fourth Circuit affirmed the district court’s decision.
This case began after Balas was fired for falsifying some of her time records while employed by Northrup Grumman. Shortly after she was fired, Balas began the administrative process with the Equal Employment Opportunity Commission (the “EEOC”), which ultimately concluded with the EEOC’s dismissal of her charge and its issuance of her right to sue letter. Balas subsequently filed a pro se action in the district court, alleging the Title VII and state law claims listed above. In response, Huntington Ingalls filed a motion for judgment on the pleadings, and the district court granted this motion in part.
On appeal, the Fourth Circuit first addressed “Balas’s argument that the district court erred in considering only her amended EEOC charge, and not the contents of her intake questionnaire or the two letters she submitted to the EEOC.” The Court noted that Balas’s argument depends on Fourth Circuit precedent establishing “the fact that federal courts lack subject matter jurisdiction over Title VII claims for which a plaintiff has failed to exhaust administrative remedies,” and it reviewed this subject matter jurisdiction claim de novo. After reviewing the procedural steps undertaken by Balas at the EEOC, the Court noted that “[i]n any subsequent lawsuit alleging unlawful employment practices under Title VII, a federal court may only consider those allegations included in the EEOC charge.” (citation omitted). Following this directive, the Court stated that it was “not at liberty to read into administrative charges allegations they do not contain” and agreed with the district court in concluding that “[t]he intake questionnaire and the letters Balas submitted to the EEOC cannot be read as part of her formal discrimination charge without contravening the purposes of Title VII.” Accordingly, the Court affirmed the district court’s refusal to consider any allegations not included in Balas’s EEOC charge.
Next, the Court considered the district court’s denial of leave for Balas to amend her complaint. While acknowledging Rule 15(a)’s (Fed. R. Civ. Pro.) instruction that “[l]eave to amend a pleading should be freely given ‘when justice so requires,’” the Court agreed with the district court’s determination that “Balas’s proposed amendments would be futile.” Therefore, citing to Fourth Circuit precedent holding that “[l]eave to amend a pleading should be denied only when … the amendment would be futile,” the Court found that the district court did not abuse its discretion in denying Balas’s leave to amend her complaint.
Third, the Court looked at “Balas’s Title VII claim of retaliatory discharge” and reviewed the district court’s summary judgment grant in favor of Huntingon Ingalls de novo. The Court began by listing the elements required to be satisfied in order to establish a prima facie case of retaliation. Ultimately, the Court found that Balas could not establish her claim because she failed to present evidence showing the requisite causal connection between her employment termination and her alleged protected actions (i.e., her alleged complaints of discrimination to her former supervisor). Therefore, the Court affirmed the district court’s grant of summary judgment to Huntington Ingalls on the retaliatory discharge claim.
Finally, the Court considered the district court’s grant of summary judgment in favor of Hungtington Ingalls on the assault and battery claims. With respect to the battery claim, the Court found that Balas had failed to raise a genuine question of material fact “as to whether the hug [the alleged battery] was objectively offensive.” Therefore, the Court found that Balas’s claim failed to satisfy the state law’s requirement that the alleged act be objectively offensive in order to be considered battery. With respect to the assault claim, the Court found that “Balas presented no evidence that the hug was harmful or offensive, or that [her supervisor] intended the hug to involve any contact beyond the hug itself or intended to make Balas think that it would.” Therefore, the Court found that Balas had failed to establish the necessary elements of an assault claim and affirmed the district court’s summary judgment grant as to the assault and battery claims.
- Allison Hite
Decided: March 14, 2013
The Fourth Circuit Court of Appeals reverse the district court’s ruling that vacated a jury verdict in favor of Georgia-Pacific and awarded judgment to Von Drehle based on a preclusion defense. The Court found the district court was in error because Von Drehle waived the preclusion defenses and the district court erred by considering the defenses sua sponte.
The original dispute in this appeal was a contributory trademark infringement case brought by Georgia-Pacific in 2005 involving its automatic paper towel dispensers and the paper towels used in those dispensers. The Fourth Circuit originally heard an appeal from the district court’s granting of summary judgment for Von Drehle. See Georgia-Pacific Consumer Products, LP v. Von Drehle Corp., 618 F.3d 441 (4th Cir. 2010). In August of 2010, The Fourth Circuit remanded the case for a jury determination of whether Von Drehle was liable for contributory copyright infringement. Three months after the Fourth Circuit’s decision, Von Drehle sought to amend its answer to include the affirmative defenses of claim and issue preclusion. These defenses were based on the supposedly preclusive effect of a federal district court in Arkansas’s ruling in favor of a Von Drehle distributor. More than 480 days had elapsed since the Arkansas court’s ruling and Von Drehle’s motion to amend. The district court denied the request to amend, ruling that Von Drehle did not assert the defenses in a timely matter, and that the change was prejudicial to Georgia-Pacific. At trial, the jury issued a verdict in favor of Georgia-Pacific. The district court then ordered a judgment vacating the judgment and awarding judgment in Von Drehle’s favor, based on the preclusive effect of the Arkansas ruling. Georgia-Pacific appealed from that judgment.
The Fourth Circuit ruled that the district court erred in vacating the jury verdict and by applying the preclusive defenses sua sponte. The Court noted that issue and claim preclusion are affirmative defenses that must be plead or they will be waived. Even if the defenses are not available at the outset of litigation, a party can waive them if they wait too long to assert them. Von Drehle did not raise these defenses at the first reasonable opportunity and allowed three significant opportunities conclude before asserting them: the time between the Arkansas decision and the grant of summary judgment, the 12 month period that the 4th Circuit maintained jurisdiction in the original appeal, and the three months from the Court’s decision and Von Drehle’s motion. Also, the district court should not have applied the defenses sua sponte, because this is only allowed in “special circumstances.” One such special circumstance is when a certain defense is not known to a court during trial. Here, this was not the case and Von Drehle did not prove any other special circumstances.
-Jonathan M. Riddle
Decided: March 12, 2013
William Scott MacDonald challenged the district’s court denial of his writ of habeas corpus. The Fourth Circuit Court of Appeals vacated the district court’s judgment and remand for an award of habeas corpus. The court held that MacDonald had been prosecuted under a facially unconstitutional statute.
On the evening of September 23, 2004, MacDonald met with a seventeen year old girl. At one point during the evening, MacDonald asked the girl to perform a sexual favor on him. MacDonald also asked the girl to have sex. The girl refused both requests, and she then drove MacDonald home. Nearly three months later, MacDonald accused the girl of sexually assaulting him. Detectives interviewed the girl, and she gave a very different version of events. The detectives credited the girl’s version of events and charged MacDonald, with, among other things, felony criminal solicitation. At trial, McDonald asked the Virginia circuit court to dismiss the solicitation offense on the ground that the predicate felony —an anti-sodomy provision — was unconstitutional. MacDonald argued that under Lawrence v. Texas, all state statutes that prohibit “consensual sodomy between individuals with the capacity to consent” are facially invalid. On July 25, 2005, the circuit court denied MacDonald’s motion to dismiss. The following day, the court found MacDonald guilty of solicitation (via the anti-sodomy provision). Thereafter, MacDonald appealed his conviction through the Virginia state court system, but he was unsuccessful. On September 16, 2009, MacDonald filed a habeas corpus petition in the Eastern District of Virginia. The court denied his petition, and MacDonald filed a timely appeal to the Fourth Circuit.
On appeal, MacDonald argued that Lawrence v. Texas compelled the facial invalidation of the anti-sodomy provision under the Fourteenth Amendment. The Fourth Circuit agreed. The court stated, “[W]e adhere to the Supreme Court’s holding in Lawrence by concluding that the anti-sodomy provision, prohibiting sodomy between two persons without any qualification, is facially unconstitutional.” Therefore, the court reversed the district court’s judgment and remanded for an award of habeas corpus relief.
Decided: March 8, 2013
The Fourth Circuit Court of Appeals affirmed the judgment of the district court in holding that appellants were not “customers” of Raymond James Financial Services (“RJFS”), and therefore the arbitration agreement was not binding on RJFS.
The appellants are several Inofin investors who sustained losses after acquiring unregistered promissory notes. Appellants met with David Affeldt, a tax attorney, to discuss the investment opportunity. Affeldt recommended that the appellants invest in these promissory notes. Affeldt was acting for Kevin Keough, who claimed to be an RJFS representative, at the time. Inofin ultimately filed for bankruptcy and the appellants brought an action against RJFS alleging violations of various state securities laws. Appellants sought arbitration of their claims under an arbitration clause that requires RJFS to arbitrate disputes “between a customer and a member or associated person of a member.” The issue disputed was whether or not the appellants were customers of RJFS. The district court ultimately found that the relationship between RJFS and appellants was “insufficient” to bring the dispute within the scope of the arbitration agreement.
Appellants argued on appeal that their claims were subject to arbitration because Affeldt had connections with Keough who was a representative of RJFS. The court of appeals declined to find a customer relationship in the present case because the appellants made their decision to invest independently of any recommendation of RJFS. Appellants argued that any ambiguities in the meaning of the word “customer” should be resolved in favor of arbitration because there is strong public policy favoring arbitration. The court, however, affirmed the district court’s judgment and held that the appellants were not customers of RJFS and therefore had no right to arbitration.
Decided: March 7, 2013
The Fourth Circuit held that convictions under Tennessee’s statutory rape statute, which sets the age of consent at eighteen, do not categorically qualify for the crime-of-violence sentencing enhancement established at U.S.S.G. § 2L1.2(b)(1)(A)(ii).
At the age of fifteen the defendant, who was born in Mexico, settled illegally in Tennessee. In April 2009, Rangel was convicted in Tennessee state court of “aggravated statutory rape” for having sex with his then sixteen-year-old girlfriend, who was twelve years his junior. The victim stated that she willingly participated in the relationship and that Rangel thought she was eighteen. Rangel received a suspended two-year prison sentence. Rangel was subsequently convicted of illegal reentry in federal district court and again deported to Mexico in September 2009. Once more Rangel returned to the United States unlawfully, this time settling in North Carolina. In 2010, he was convicted in state court of driving while impaired and failing to register as a sex offender. Rangel was then indicted in federal court for one count of illegal reentry by an alien who was removed after an aggravated felony conviction. He pleaded guilty in June 2011. At a sentencing hearing, the district court held that Rangel’s Tennessee statutory rape conviction constituted a “crime of violence” pursuant to the sentencing enhancement codified at U.S.S.G. § 2L1.2(b)(1)(A)(ii).
In Taylor v. United States, the Supreme Court held that where Congress has not indicated how a prior offense enumerated in a sentencing enhancement statute is to be interpreted, it should be understood to refer to the “generic, contemporary meaning” of the crime. The age of consent is central to the conception of statutory rape in every jurisdiction. The majority of American jurisdictions set the general age of consent at sixteen years old, while Tennessee sets the age of consent at eighteen years old. The Fourth Circuit concluded that the “generic, contemporary meaning” of the term “statutory rape” in U.S..S.G.. § 2L1.2 is sixteen. Tennessee’s higher age of consent is overbroad and thus does not qualify for the crime-of-violence sentencing enhancement. The Fourth Circuit also refused to affirm the sentencing enhancement on the alternative basis that a statutory rape conviction constitutes a “forcible sex offense” or an “aggravated-felony” under the Tennessee statute.
Decided on: March 7, 2013
The Francises appealed a decision by the district court finding that diversity jurisdiction existed and granting summary judgment to Allstate on its claim that the Francises’ insurance policy did not provide coverage for the claims asserted in the underlying action. The Fourth Circuit upheld both decisions by the district court and affirmed.
In March 2008, Troy Towers, an employee at the Maryland School for the Deaf, sued the Francises, alleging that they made false statements claiming sexual abuse by Towers. At the time, the Francises were insured under a California Renters Policy issued by Allstate. The Francises filed suit against Allstate, contending that Allstate had a duty to defend them against Towers’ suit pursuant to the policy. By the time a final judgment in favor of the Francises was rendered in the underlying suit, the Francises had incurred $66,347 in attorney’s fees and costs. Allstate removed and filed a motion for summary judgment, contending that the insurance policy did not provide coverage for the claims asserted in the underlying action. The Francises moved to remand on the ground that the amount in controversy did not exceed $75,000. The Francises also opposed Allstate’s motion on the merits. The district court granted Allstate’s motion for summary judgment. The Francises appealed.
When Allstate filed its Notice of Removal, the object of the litigation was the Francises’ request that Allstate defend them in the underlying action, which cost $66,347, so the Francises argued that the amount in controversy was not satisfied. Allstate countered that the requirement was satisfied when attorney’s fees were added. Attorney’s fees are not generally included in the amount in controversy calculation, except where the fees were provided for by contract or are permitted by statute. Allstate brought its action under a suit that permitted recovery of attorney’s fees and thus satisfied the amount in controversy requirement. Next, the Francises challenged the merits of the district court’s coverage determination. The Fourth Circuit found that Maryland choice of law provisions applied, and, under those provisions, California law controlled whether Allstate had a duty to defend the Francises in the underlying action. Under California law, the Francises had to establish that the underlying action arose from an accident. The Fourth Circuit found that the Francises’ behavior was not an accident because it was calculated and deliberate—they clearly intended to make the statements at issue. Accordingly, the Fourth Circuit affirmed the district court’s ruling.
Decided: March 6, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s judgment awarding Francine Helton retroactive pension plan payments for a time period where she was eligible for benefits, but was unaware that she was eligible. Francine Helton worked for AT&T from 1980 until 1997; she left AT&T to begin a restaurant and for a period of time was on an unpaid leave of absence before finally resigning on May 30, 1997. In August 1997, AT&T amended its pension plan and allowed certain participants to elect benefits at age fifty-five without benefit reduction; Helton was in this category and eligible to receive benefits in October 2001 when she turned fifty-five. Two letters were mailed to plan recipients notifying them of the change, but Helton never received any communication about the change. When Helton was approaching her sixty-fifth birthday, she contacted the pension plan about her benefits and was mailed some information. Helton discovered, through this information, that she was eligible to receive benefits immediately even though she was not sixty-five. Helton requested payments back-dated to when she was fifty-five but her request was denied. Helton appealed the decision to the AT&T Employee Benefits Committee and her appeal was denied; she then filed suit under ERISA. After a bench trial, the district court awarded her back benefits in the amount of $121,563.90 plus interest.
AT&T appealed challenging the district court’s findings of fact and conclusions of law underlying the judgment. AT&T alleged that court erred in relying on evidence outside the administrative record; it erred in holding that AT&T’s denial of Helton’s claim was not reasonable; it should have remanded the case to AT&T for reconsideration after finding that AT&T abused its discretion in denying Helton’s claim; and it was precluded under the terms of the plan from awarding Helton retroactive benefits. First, AT&T claimed that the court was barred from considering evidence outside the administrative record. The Fourth Circuit distinguished the precedent relied on by AT&T and stated the proper inquiry is whether the evidence was known by the plan administrator at the time of the decision. Second, the Fourth Circuit examined AT&T’s claim that the court erred in holding Helton’s claim was not reasonable by looking at the eight Booth factors and determined that AT&T did abuse its discretion in denying Helton’s claim. Third, AT&T did not raise the issue of remand at trial, and therefore, this issue was reviewed under a plain error standard. The Court concluded that because remand is not required, this did not constitute plain error or a miscarriage of justice. Finally, the Court concluded that AT&T was not precluded from awarding retroactive benefits under the plan. The Court also considered AT&T’s claim that the court incorrectly held that AT&T violated the reporting and disclosure requirements of ERISA by not properly notifying Helton. Though there was conflicting evidence on this issue, the holding was properly supported by various testimony and therefore did not constitute an abuse of discretion.
-Jennifer B. Routh
Decided: March 5, 2013
Thirteen North Carolina residents brought suit after a statutory change imposing stricter eligibility requirements for in-home personal care services (“PCS”) eliminated their access to in-home PCS. The residents (“the PCS recipients”) contended that the new restrictions on the PCS program violated the Social Security Act, the Americans with Disabilities Act, and the Rehabilitation Act. Additionally, the PCS recipients alleged that the boilerplate termination letters they received did not meet the Fourteenth Amendment’s due process requirements. The district court granted the PCS recipients’ motion for a preliminary injunction and motion for class certification. Delia, Acting Secretary of the North Carolina Department of Health and Human Services (“DHHS”), appealed.
On appeal, DHHS contends that: (1) the district court lacked subject matter jurisdiction; (2) the district court erred in granting the motion for class certification; (3) the injunction qualifies as a mandatory preliminary injunction which necessitates a heightened standard of review; (4) the PCS recipients failed to make a case for a preliminary injunction; and (5) the district court’s order does not satisfy Rule 65 of the FRCP. The Court of Appeals found that a preliminary injunction was appropriate in this case, but that the district court’s order failed to comply with Rule 65. As such, the Court remanded the case to allow the district court to revise the order.
The Court of Appeals rejected DHHS’ first contention—that the controversy is moot and not ripe for review such that the district court lacked subject matter jurisdiction—finding that it lacked merit. Next, the Court addressed DHHS’ argument regarding class certification, noting that, pursuant to 28 U.S.C. § 1292(a)(1), it could not review the district court’s class certification decision on appeal unless the class certification issue was inextricably bound up with the injunction. The Court found that the class certification was distinct from the preliminary injunction, and thus the issue was not properly before the Court on appeal. The Court also rejected DHHS’ argument that the injunction qualifies as a mandatory preliminary injunction—which necessitates a heightened standard of review—finding that when the PCS recipients filed their motion for a preliminary injunction, the injunction sought to prohibit implementation of the new policy regarding in-home PCS, and thus was prohibitory rather than mandatory.
The Court of Appeals then turned to DHHS’ argument that the preliminary injunction was improperly granted. The Court found that the district court misapplied the Winter factors, but nonetheless affirmed the court’s judgment in favor of the PCS recipients on the issue, applying a different line of reasoning to find that the pubic interest prong of the Winter test was satisfied. The Court then addressed DHHS’ final argument and agreed that the district court’s order failed to comply with Rule 65. However, the Court decided to remand the case without vacating the order, instead allowing the district court to revise the order to such that it complies with Rule 65.
In summary, the Court of Appeals found that a preliminary injunction was appropriate, but that the district court’s order failed to comply with Rule 65. As such, the Court remanded the case to allow the district court to revise the order.
Judge Agee, in dissent, found the district court’s grant of a preliminary injunction to be an abuse of discretion and would have vacated the district court’s order and remanded for further proceedings.
- Kassandra Moore
Decided: March 4, 2013
The Government appealed the district court’s decision to reduce the Defendant’s sentence under 18 U.S.C. § 3582(c)(2), contending that the district court erred in its interpretation of its original sentencing ruling and that the district court could have made additional findings in its resentencing determination. The Fourth Circuit found that the district court judge, who also presided at the Defendant’s original trial and sentencing, was entitled to deference in his sentence reduction analysis, and the Court found that the judge’s interpretation of his original ruling was reasonable in light of the record. Additionally, the Court found that the district court judge was not obligated to make any new findings at the resentencing hearing and that he did not error in exercising the discretion afforded to him under § 3582(c)(2) by not making any such additional findings. Based on these determinations, the Court affirmed the district court’s decision.
This case was based on the Defendant’s motion for a sentence reduction in light of the United States Sentencing Commission’s 2011 amendments to the Sentencing Guidelines that were originally used by the district court to sentence the Defendant to 252 months’ imprisonment for his jury conviction of one count of possession with intent to distribute cocaine base and one count of distribution of cocaine, both in violation of 21 U.S.C. § 841(a)(1) (2006). At the time of these amendments, the Defendant had been serving his sentence for approximately thirteen years, and his motion relied on these amendments, which retroactively lowered the penalties for crack cocaine offenses by raising the minimum crack cocaine quantity necessary to justify the base offense level that the Defendant was sentenced under.
The Fourth Circuit reviewed the district court’s decision to reduce a sentence under § 3582(c)(2) for abuse of discretion, the district court’s ruling as to the scope of its legal authority under § 3582(c)(2) de novo, and the district court’s factual determinations at the resentencing hearing for clear error. The Court first found that while the record of the sentencing hearing was not clear, precedent required the Court to “defer to the sentencing judge’s reasonable understanding of the record—and particularly his interpretation of his own earlier findings.” (citation omitted). Affording the district court judge the deference due, the Court concluded that “the district court’s interpretation was reasonable in light of the record.”
Next, the Court addressed the Government’s argument “that the district court could have made additional findings as to drug amounts, consistent with its original findings, in making its resentencing determination.” After noting that it had not addressed this contention in a published opinion, the Court followed its sister courts’ decisions “that additional findings lie within a sentencing court’s discretion.” (citations omitted). Accordingly, the Court concluded that the district court “did not err in exercising its discretion not to make additional findings more than a decade after the original sentencing.”
Finally, the Court applied § 3582(c)(2) to the facts of the case and found that the district court “did not abuse its discretion in concluding that Mann was eligible for a sentence reduction.” Based on these findings and conclusions, the Court affirmed the district court’s decision to reduce the Defendant’s sentence.
- Allison Hite
Decided: March 4, 2013
In this case, the Fourth Circuit held that the Employee Retirement Income Security Act of 1974 (ERISA) does not preempt the enforceability of a state law waiver that was entered into by a beneficiary of certain retirement and life insurance plans. The ex-husband of the decedent claimed that he was the rightful owner of the proceeds from the decedent’s ERISA plans because, although the decedent and he had obtained a divorce decree and marital settlement agreement, the decedent had failed to remove him as the named beneficiary of the plans. Despite this oversight on the decedent’s behalf, the terms of the marital settlement agreement provided that the ex-husband waived any interest in the wife’s retirement plan and that he released and relinquished any future rights as a beneficiary under the decedent’s life insurance policy. The court stated that the ERISA provision which commands the plan administrator to “distribute benefits to the beneficiary named in the plan” did not preempt the enforcement of the ex-husband’s wavier to the decedent’s property. Thus, the court concluded that the ERISA plan administrator was to pay out the proceeds to the ex-husband as beneficiary, but that in accordance with a prior state court order, the ex-husband was to waive his rights and distribute the money back to the decedent’s estate.
-John C. Bruton, III
Decided: March 1, 2013
The Fourth Circuit Court of Appeals reversed and vacated the defendant’s conviction of a carjacking and remanded the case for a new trial. The Fourth Circuit ruled that the district court abused its discretion when it denied a new trial based on newly discovered evidence. The district court improperly ruled that the defendant did not meet the materiality prong of the Chavis test.
In November of 20007, Donald Roarty was carjacked by a man holding a revolver in Baltimore, Maryland. Roarty could not see the suspects face, and only noticed his eyes and dreadlocks. The suspect was also carrying a revolver. Three days later, undercover detectives conducted a drug buy with a man named Larry Pollin. Pollin was driving a Jeep that turned out to belong to Roarty. Pollin was not arrested for the drug buy or suspected carjacking, but was arrested and booked in December for an unrelated crime. Four days after the drug buy, an officer stopped a man who was a known drug dealer. This man pulled out a key which belonged to a Jeep that turned out to be Roarty’s. Shortly after that, the officer obser4ved the defendant, Tyrone Moore, another known gang member, walk by. Due to the defendant wearing a Baltimore Orioles shirt and an Orioles cap being found in the Jeep, the officer questioned Moore about the carjacking. Moore denied any involvement, and the other man was arrested for the carjacking. The police then prepared a photo lien-up for Roarty, including a photo of Moore. Roarty picked out Moore due to the eyes and the fact that he had dreadlocks. At trial, Moore attempted to prove Pollin committed the carjacking, and that Pollin had dreadlocks at the time. The prosecution provided a booking photo of Pollin dated December 31, 2007, in which Pollin had short hair. The prosecution also provided a picture of Pollin with dreadlocks, which was undated. At trial, an officer involved in the drug buy stated that Pollin had short hair during the drug buy. These testimonies, along with the dated photograph of Pollin with short hair, lead the jury to convict Moore. After the trial, Moore’s attorney contacted Pollin’s attorney who had a booking picture of Pollin from December 2007 where Pollin had dreadlocks. The error occurred due to a police department procedure where a defendant who changes his looks drastically will have a new photo put on file with the original booking date. The short hair picture, while dated December 31, 2007, was actually taken in January of 2009. Based on this evidence, Moore moved for a new trial based on the five prong Chavis test. The district court stated Moore met the first three prongs, dealing with evidence discovered after trial, due diligence, and the evidence not being cumulative. However, the court stated that Moore could not meet the materiality prong because Moore had presented two other disingenuous defenses and that placing the blame on Pollin was tangentially related to these defenses. The court did not reach the issue of whether the new evidence was likely to result in an acquittal. From this ruling, Moore appealed. Moore also appealed the introduction of witness testimony stating that Moore owned a revolver, and physical evidence showing Moore owned a semi-automatic pistol. Moore appealed the introduction of this evidence as improper propensity evidence.
The Fourth Circuit first looked to the five prongs of the Chavis test. The Court stated that Moore not only met the first three prongs, but that materiality was met because proving that Pollin was the likely carjacker was the main part of Moore’s defense. The identity of the carjacker was the main issue involved, thus the new photo was material to the issues involved in the trial. Without explaining its reasoning, the Court also held that Moore met the fifth prong of Chavis. Finally, while it was not dispositive, the Court ruled on the introduction of witness testimony and physical evidence of Moore’s gun ownership. The Court allowed the witness testimony of Moore owning a revolver, because it was relevant an necessary to proving his guilt. However, the evidence showing Moore owned a semi-automatic pistol was merely used to prove that Moore had a certain character and acted in accordance with this character. Thus it is improper propensity evidence under FRE 404(b).
-Jonathan M. Riddle
Decided: March 1, 2013
The Municipal Association of South Carolina (the “MASC”) sought a declaration in district court that South Carolina municipalities are entitled to assess “municipal business taxes” against insurance companies. The taxes are measured by the total flood insurance premiums collected in the particular municipality by insurance companies under an arrangement with the Federal Emergency Management Agency (“FEMA”). Various insurance companies filed motions for summary judgment challenging the declaratory judgment. The district court denied the motions. On appeal, the Fourth Circuit Court of Appeals held that the taxes violated principles of sovereign immunity. Therefore, the court reversed the district’s court’s decision.
The MASC consists of almost all of the municipalities in South Carolina, and one of its primary duties is to collects business license taxes from insurance companies that conduct business within the participating municipalities. The business license tax imposed on each insurance company is two percent of the gross premiums received by the insurance company in the prior calendar year in a particular municipality. The party-insurance companies write and sell policies in South Carolina, and they offer and collect premiums on Standard Flood Insurance Policies (“SFIPs”) pursuant to the FEMA National Flood Insurance Program (the “NFIP”). At the district court proceedings, the insurance companies argued that the municipal business taxes would violate principles of sovereign immunity and preemption because the flood insurance premiums were federal property. The district court disagreed, and the insurance companies appealed.
On appeal, the Fourth Circuit held that the flood insurance premiums collected by the insurance companies were federal property and therefore could not be taxed by the state of South Carolina. The court also held that since the insurance companies participated in the NFIP, they are federal instrumentalities are therefore immune from taxation. Therefore, the court reversed the district court’s denial of the insurance companies’ summary judgment motions.
Decided: March 1, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s award of summary judgment by the bankruptcy court to The Hanover Insurance Co. (“Hanover”). The court found that ESA’s transfer of money to Hanover within 90 days of ESA’s filing for bankruptcy did not constitute an avoidable preference under the bankruptcy code.
ESA performed construction projects for the federal government and was required to obtain surety bonds before contracts were awarded. In 2006, Hanover issued bonds on behalf of ESA prior to the government awarding eight contracts. Additionally ESA took out a $12.2 million loan from Prospect Capital Corp. (“Prospect”). ESA also received money from Prospect to put into a CD. In 2007 ESA was awarded additional contracts, however filed for bankruptcy on August 1, 2007. The bankruptcy court sold all of ESA’s assets to Prospect. The bankruptcy trustee filed an adversarial proceeding against Hanover, because it claimed that Hanover was an indirect beneficiary of ESA’s transfer of its loan proceeds into a CD. The bankruptcy court ultimately granted Hanover’s motion for summary judgment.
The court of appeals held that the bankruptcy court erred in holding that the earmarking defense applied to Hanover. The court noted that the funds in this case were not used to pay an antecedent debt which is a crucial element of the defense. The court of appeals held, however, that the bankruptcy court correctly held that Hanover proved all of the necessary elements to establish the new-value defense under § 547(c)(1) of the bankruptcy code. The court determined that there was no error by the bankruptcy court in concluding that the earmarking defense applied because the new-value defense did apply.
Judge Traxler dissented stating that Hanover was not entitled to summary judgment because it did not have a valid new-value defense. He argued that a receipt of a conditional promise for payment in the future does not constitute “new value.”
Decided: February 28, 2013
The Fourth Circuit affirmed Deffenbaugh’s conviction for conspiracy to cause a false distress call to be communicated to the U.S. Coast Guard, and causing a false distress call to be communicated to the U.S. Coast Guard, in violation of federal law. The Fourth Circuit also affirmed Deffenbaugh’s eighty-four month sentence.
Deffenbaugh designed a plan to fake his death with the assistance of his girlfriend in order to avoid a state probation violation hearing. Deffenbaugh went boating with his brother in Virginia, and when his brother wasn’t looking he jumped off the boat. Deffenbaugh swam to shore where his girlfriend was waiting for him, and they fled to Texas. The U.S. Coast Guard searched for Deffenbaugh for fifteen hours, which cost $220,940. Deffenbaugh was not declared dead and was subsequently arrested in Texas.
Deffenbaugh argued that there was no conspiracy to cause a false distress call to be made to the U.S. Coast Guard because his girlfriend did not have knowledge and intent that the recipient of the false distress call would be the U.S. Coast Guard. The Fourth Circuit rejects this argument, citing United States v. Yermian, 468 U.S. 63 (1984) in which the United States Supreme Court “held that the federal nature of a crime need not be in the mind of the perpetrator.” The Fourth Circuit also confirmed the reasonableness of Deffenbaugh’s eighty-four month sentence.
Decided on: February 28, 2013
Michael Defonte Bernard appealed the district court’s decision to allow him to represent himself at trial, despite his questionable mental capacity. Bernard argued that Indiana v. Edwards, 554 U.S. 164 (2008), required that, where a borderline competent defendant seeks to represent himself at trial, the court must conduct an additional inquiry and hold the defendant to a higher standard of competency. The Fourth Circuit disagreed and affirmed the district court’s decision.
Bernard suffered from a long history of mental illness and drug abuse. A grand jury indicted Bernard on various charges. After a court-ordered evaluation, a government psychologist recommended that Bernard be found incompetent to stand trial because of his schizophrenia, paranoid delusions, and disorganized thought processes. Subsequently, a second psychologist recommended that Bernard be found competent to stand trial because his medications enabled him to understand the proceedings and assist his counsel. Bernard then made a request to proceed pro se, which the court granted, provided that Bernard have standby counsel. At trial, Bernard made no objections during the Government’s case-in-chief, failed to question two witnesses, and failed to call witnesses on his own behalf. The jury deliberated for only 12 minutes before finding Bernard guilty. At sentencing, Bernard was fully represented by former standby counsel, and was ultimately sentenced to 180 months imprisonment.
Bernard raised several arguments for the first time on appeal, thus the Fourth Circuit reviewed for plain error. Bernard could waive his right to counsel and represent himself, provided that certain requirements were met, but the right to self-representation must be weighed against the government’s interest in ensuring integrity and efficacy at trial. In Edwards, 554 U.S. at 177, the court recognized that the trial court is in the best position to assess mental competency. Edwards held that “the Constitution permits States to insist upon representation by counsel for those competent enough to stand trial…but who still suffer from severe mental illness to the point where they are not competent to conduct trial proceedings by themselves.” Id. at 175–76. Edwards does not compel the State to insist Bernard proceed with counsel, but rather outlines a permissive rule. Bernard argued that the court knew of his “severe mental illness,” and thus should have acted, pursuant to Edwards, to deny him the right to proceed pro se. However, the Fourth Circuit noted that the district court satisfied itself at the start of and throughout trial that Bernard was competent, and thus did not commit plain error. Accordingly, the Fourth Circuit affirmed the district court’s decision.
Circuit Judge Diaz dissented on the grounds that the district court was unaware of the discretion afforded by Edwards to apply a higher mental competency standard when deciding whether Bernard could waive his right to counsel. The district court thus abused its discretion by reaching a permissible result it believed to be mandatory.
Decided: February 26, 2013
A juvenile defendant-appellant appealed part of his sentence that required him to register under the Sex Offender Registration and Notification Act (“SORNA”). Appellant claimed that requiring him to register contravened his confidentiality protection under the Federal Juvenile Delinquency Act (“FJDA”) and violated the Eighth Amendment’s prohibition on cruel and unusual punishment. The Fourth Circuit Court of Appeals held that the District Court did not err for imposing this condition of his sentence.
The defendant-appellant admitted to sexually abusing his two half-sisters, ages ten and six at the time. He was charged with a one-count Information filed under seal in the District of South Carolina; the Information alleged that he was a juvenile under the age of eighteen and had committed an act of juvenile delinquency, aggravated sexual abuse. He was sentenced to incarceration and juvenile delinquent supervision; he was also required to comply with the mandatory reporting requirements of SORNA.
The Fourth Circuit considered the conflict between the FJDA, requiring juvenile information to be kept confidential, and the mandatory reporting requirements of SORNA which requires typically confidential information about juveniles to be made public. When two statutes conflict, a more specific statute controls over a more generalized provision; therefore, the Court concluded that the specific provision of SORNA which provides that juvenile sex offenders over the age of fourteen register controlled the outcome of this conflict. This was further supported by Congressional intent where the legislative history showed in balancing between juvenile confidentiality and public safety, the policy choice was made to protect the public and potential victims by requiring minors to register. The court also noted that the later in time statute should rule, and SORNA was enacted later than the FJDA.
The Court also considered the defendant-appellant’s argument that the SORNA reporting requirement violated the Eighth Amendment. To determine whether SORNA’s requirements rose to the level of punishment, the court must consider whether the civil regulatory scheme is punitive in purpose or effect. The court considered the seven factors from Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168-69 (1963). The court concluded that SORNA was a civil, nonpunitive regulatory scheme in purpose and effect, and therefore did not violate the Eighth amendment. Therefore, the district court’s judgment was affirmed.
-Jennifer B. Routh
Decided: February 26, 2013
In a putative class action, prospective luxury home buyers brought suit against a real estate development company and several of its subsidiaries (collectively “Toll Brothers”), alleging that Toll Brothers unlawfully refused to return deposits when the prospective buyers were unable to obtain mortgage financing. The Agreement of Sale used by Toll Brothers included an arbitration provision, but the district court denied Toll Brothers’ motion to dismiss or stay the suit pending arbitration, finding that the arbitration provision lacked mutuality of consideration under Maryland law since it required the buyer, but not the seller, to submit disputes to arbitration. Toll Brothers appealed. The Court of Appeals held that the appeal was properly brought before the Court, and that the arbitration provision is unenforceable for lack of mutual consideration under Maryland law.
On appeal, the plaintiffs argued that the Court of Appeals lacked jurisdiction over the interlocutory appeal. However, the Court of Appeals noted that, under an exception to the final judgment rule established by the Federal Arbitration Act, a party may appeal the denial of a motion to stay an action concerning a matter that a written agreement has committed to arbitration.
The Court then addressed whether the lower court erred in holding that the arbitration provision was unenforceable for lack of mutual consideration. The Court held that, under Maryland law, an arbitration provision must be supported by consideration independent of the contract underlying it. Since the arbitration provision binds only the plaintiffs to arbitration, the Court held that it lacks mutuality of consideration. Furthermore, the Court of Appeals found that there were no ambiguities in the provision, thus rejecting Toll Brothers’ argument and that lower court failed to resolves all ambiguities in favor of arbitration. The Court also declined to distinguish Cheek v. United Healthcare of Mid-Atlantic, Inc., which sets forth the current articulation of Maryland law regarding the validity of arbitration agreements. Finally, the Court rejected Toll Brothers’ argument that, under AT&T Mobility LLC v. Concepcion, the Cheek rule is preempted by the Federal Arbitration Act. Noting that the United States Supreme Court has never held that Congress intended the Federal Arbitration Act to preempt states from requiring mutual consideration in an arbitration provision, the Court of Appeals declined to so hold. The Court further noted that Toll Brothers could have avoided implicating this serious constitutional question by simply binding itself to arbitration as it contends it intended to all along.
In summary, the Court of Appeals held that it had jurisdiction over the Toll Brothers’ appeal, and affirmed the district court’s holding, finding that the arbitration provision is unenforceable for lack of mutual consideration.
- Kassandra Moore
Decided: February 26, 2013
In this case, a psychic and spiritual counselor in Chesterfield County, Virginia, brought an action in federal court challenging the county’s ordinance regulating the activities of “fortune tellers”—a statutorily defined term that encompassed the plaintiff’s profession. The plaintiff alleged that the county’s regulatory scheme violated her First Amendment rights to free speech and free exercise of religion, her rights under the Religious Land Use and Institutionalized Persons Act (“RLUIPA”), 42 U.S.C. § 2000cc et seq., and her rights under the Fourteenth Amendment’s Equal Protection Clause. The district court granted summary judgment for the defendant on each claim.
On appeal, the Fourth Circuit stated that fortune telling activity was an exercise of speech entitled to some degree of First Amendment protection; however, the court, applying the “professional speech doctrine” derived from the Supreme Court, concluded that the county’s regulation of the fortunate telling occupation did not violate the plaintiff’s constitutional right to free speech. The Fourth Circuit also concluded that the plaintiff’s set of beliefs more closely resembled a philosophical “way of life” as opposed to a religious faith. Thus, the court affirmed the district court’s determination that the county had not violated the plaintiff’s right to freely exercise her religion under the First Amendment or the RLUIPA. And finally, the court ruled that the county had not abridged the plaintiff’s right to equal protection under the law. Under a rational basis analysis, the court held that the plaintiff failed to overcome the presumption that the licensing and zoning ordinances applicable to fortune tellers were reasonably related to the county’s interest in regulating that particular profession.
-John C. Bruton, III
Decided: February 26, 2013
The Fourth Circuit affirmed the district court’s award of summary judgment in favor of Defendants, Lennar Corporation, Lennar Carolinas, LLC, and Drafting & Design, Inc., concluding that the Plaintiff, Building Graphics, Inc., lacked sufficient evidence to support a prima facie case of copyright infringement.
Plaintiff alleged that Defendants infringed on three home plans that Plaintiff created and obtained copyrights for, and Plaintiff sought damages and injunctive relief against Defendants. Defendants subsequently filed motions for summary judgment, which the district court granted after “concluding there was insufficient evidence on critical elements of [Plaintiff’s] infringement claim.” The Fourth Circuit reviewed the district court’s decision de novo and stated that in order “‘[t]o establish a claim for copyright infringement, a plaintiff must prove that it owned a valid copyright and that the defendant copied the original elements of that copyright.’” (citation omitted). Because the Court found that it was clear that Plaintiff held valid copyrights to the three plans at issue, it determined the question on appeal to be “whether Lennar copied Building Graphics’ house plans.” After noting that “[c]opying can be proved through direct or circumstantial evidence” and that direct evidence in copyright infringement claims is often hard to establish, the court focused on whether the Plaintiff had successfully relied on circumstantial evidence in its infringement claim.
To establish a copyright claim based on circumstantial evidence, the Court found that Plaintiff needed to satisfy two elements: (1) “that it is reasonably possible that Lennar had access to the Building Graphics plans,” and (2) “‘that the defendant’s work is ‘substantially similar’ to the protected material.’” (citation omitted). In order to satisfy the first element, the Court stated that Plaintiff must “demonstrat[e] that the infringer had an opportunity to view or to copy the protected material” and “must establish more than a ‘mere possibility that such an opportunity could have arisen” such that it is “‘reasonably possible that the paths of the infringer and the infringed work crossed.’” (citation omitted). After reviewing precedent cases, the Court concluded that Plaintiff “has not shown a chain of events or wide dissemination sufficient to show a reasonable possibility that Lennar had access to [its] plans.” It found that the facts and circumstances of the case “amount[ed] to inferences built upon inferences” which “do not give rise to more than a mere possibility of access.” Thus, the Court held that the Plaintiff had failed to establish the first element required to substantiate its copyright claim, and it affirmed the district court’s grant of summary judgment in favor of the Defendants.
- Allison Hite
Decided: February 25, 2013
The Fourth Circuit Court of Appeals reversed and vacated the district court’s denial of a motion to suppress a firearm obtained during an improper Terry stop. The Fourth Circuit ruled that the defendant was seized without particularized reasonable suspicion.
In June of 2010, two Charlotte-Mecklenburg officers were patrolling the Eastway Division of Charlotte. They observed a man, later identified as Dior Troupe, sitting alone in a vehicle at a gas pump. Troupe did not pump gas or leave the car, which the officers felt was indicative of a drug transaction. Later, Troupe drove to a parking lot between two apartment complexes the officers knew were high crime areas. Troupe walked up to a group of five men sitting in the parking lot. Neither officer observed any illegal activity, but decided to call for backup and voluntarily contact the men. After a total of six officers arrived, they approached the men. Troupe indicated that he was carrying a firearm openly, which is generally legal in North Carolina. The officers secured the firearm and ran Troupe’s identification. While the officers approached the other men, Defendant Nathaniel Black offered his ID and stated he did not live in the apartment complexes and was just visiting friends. The officers found Black to be “overly cooperative,” which they found unusual. The officers questioned the other men, who were not cooperative. The officers were looking for other firearms, due to a “one-plus” departmental rule. This rule was a presumption that when there is one firearm, there will be more. While questioning the other men, Black began to leave. The officers told him he could not leave and tried to block his path, eventually grabbing his bicep and feeling an incredibly fast pulse rate. Black began to run, and one officer tackled him. The officers found a firearm and eventually learned that Black was a convicted felon. Black was charged under § 922(g)(1). Black moved to suppress the firearm, arguing that he was seized when told he could not leave, and the seizure was not supported by reasonable articulable suspicion. The government argued that Black was not seized until the officers grabbed his bicep and certain indicia of suspiciousness supported the stop. When his motion was denied, Black plead guilty and was sentenced to 180 months.
The Fourth Circuit first looked to when Black was seized for Fourth Amendment purposes. In view of all the circumstances, Black was seized before he was told he could not leave. This is due to factors such as the collective show of authority by the police, the fact that Troupe could not leave, officers were frisking other men indicating they would frisk others, and the officers had pinned Black’s ID to his uniform. These factors lead to a decision that a reasonable person would not have felt free to leave. Furthermore, all of Blacks interactions with the police before his bicep was grabbed were not consensual. The Court then looked to Terry to see if the seizure was reasonable, which requires a reasonably and articulable suspicion particularized for the person in question. The Court held that the officers relied on indicia of suspiciousness that were not particular to Black being involved in criminal activity. The officers tried to use reasonable suspicion as to the other men to Black. The Court felt that some of the factors that led to reasonable suspicion Troupe was engaged in criminal activity was suspect as well. Finally, Black’s cooperation and the “one plus” rule were not sufficient to establish a particular suspicion of Black engaging in criminal activity. For these reasons, the Court vacated the ruling of the district court and remanded the case.
-Jonathan M. Riddle
Decided: February 25, 2013
Larry Junior Copeland pleaded guilty to distributing five or more grams of crack cocaine, in violation of 21 U.S.C.§ 841(a)(1). Copeland waived his right to appeal in his plea agreement. However, Copeland appealed his sentence. On appeal, Copeland argued that the district court incorrectly calculated his sentence range under the Sentencing Guidelines and imposed an “illegal” and substantively unreasonable sentence. Copeland also argued that the district court abused its discretion by denying his motion to continue his sentencing hearing. The Fourth Circuit Court of Appeals dismissed the sentencing issues and affirmed the continuance issue.
In early 2010, Copeland sold 28.7 grams of cocaine and 39.2 grams of crack cocaine to a confidential informant. Based on this evidence, the government charged Copeland with one count of distributing five or more grams of cocaine (Count One) and one count of distributing five or more grams of crack cocaine (Count Two), both in violation of 21 U.S.C. § 841(a)(1). On June 28, 2010, the government notified Copeland that it was seeking an enhanced sentence based on Copeland’s prior felony drug offenses. On February 22, 2011, Copeland pleaded guilty to Count Two, and the government dismissed Count One. As part of the plea agreement, Copeland waived his right to appeal. The plea agreement also set out the statutory sentencing ranges mandated by §841(b)(1)(b), which is a five- to forty-year term that can be increased to ten years to life by the statutory enhancement. The plea agreement made clear that Copeland could not withdraw his guilty plea even if the court imposed the maximum. Copeland also acknowledged to the district court that he understood the terms of the plea agreement. Therefore, the court found that Copeland’s guilty plea was entered into freely and voluntarily.
The Fourth Circuit first examined whether Copeland entered into a valid waiver. The court explained that “[a] defendant may waive the right to appeal his conviction and sentence so long as the waiver is knowing and voluntary.” The court found that Copeland knowingly and intelligently waived his right to appeal because he affirmed to the district court that he had read and discussed the entire plea agreement with his lawyer. Nevertheless, Copeland argued that his sentencing challenge did not fall within the scope of the waiver. The court disagreed and held that Copeland’s sentencing challenge fell within the scope of the waiver. Finally, the court held that the district court did not abuse its discretion in denying Copeland’s motion to continue his sentencing hearing. The court explained that Copeland’s sentencing hearing had been scheduled for over three months and that Copeland therefore had adequate time to prepare.
- Graham Mitchell
Decided: February 25, 2013
The Fourth Circuit Court of Appeals affirmed the conviction of David Anthony Runyon for conspiracy to commit murder-for-hire among other charges including carjacking resulting in death and murder with a firearm in relation to a crime of violence. Runyon received a capital sentence.
David Runyon was hired by Catherina Voss (“Cat”) and Michael Draven to murder Cory Voss, Cat’s husband. On April 20, 2007 Cat opened a bank account and sent Voss to an ATM to withdraw cash from the account. A surveillance camera at the ATM showed an individual entering Voss’s truck while he was standing at the ATM. The next morning Voss was found dead in his truck in a parking lot near the bank where the ATM was located.
Runyon appealed both his conviction and his sentences. Runyon attempted to claim that the murder for hire statutes under which he was convicted were unconstitutional. The court held that Congress did not exceed its power under the Commerce Clause in enacting the statute. Runyon next challenged the “nonstatutory aggravating factors charged by the prosecution and found by the jury” during his sentencing. Runyon challenged the use of an interrogation video that showed him being asked questions about his race and religion. The court found that it was error to allow the jury to hear the remarks made to Runyon. After making this determination, the court stated that it would take the most defendant-favorable standard in order to determine whether or not this error required Runyon’s sentences to be reversed. The court ultimately found that admitting the video into evidence did not contribute to the verdict obtained. Runyon also challenged evidence regarding victim-impact, his personal training and experience, and his physical abuse towards women. The court found that the admittance of this evidence was constitutional, and the district court did not err in admitting it.
Judge Niemeyer concurred in the opinion of the court and found that the district court did not err in admitting the video tape of Runyon into evidence. Judge Niemeyer found the video tape to be relevant, voluntarily given by Runyon after being read Miranda rights, and showed Runyon’s lack of remorse.
Decided on: February 21, 2013
The Fourth Circuit addressed whether a “biological opinion” (“BiOp”) issued by the National Marine Fisheries Service (“the Service”) to the Environmental Protection Agency (“EPA”) is arbitrary and capricious under the Administrative Procedure Act. The BiOp concluded that pesticides in question would jeopardize several endangered species and their habitats and therefore could not be reregistered without substantial restriction. The Fourth Circuit held that the BiOp was in fact arbitrary and capricious.
Dow AgroSciences and other manufacturers (“Manufacturers”) hold EPA registrations for various pesticides. The Manufacturers’ pesticides had to be reregistered. If the proposed action is likely to affect an endangered species, the agency must consult with the Secretary of the Interior to obtain an opinion evaluating the agency’s action under the Endangered Species Act. The Service agency issued a BiOp that explains whether the proposed action will jeopardize the continued existence of endangered species or their habitats. In reregistering, the Manufacturers agreed to voluntarily take measures to reduce the impact of their products on the environment, but the EPA did not consult with the Secretary of the Interior to obtain a BiOp, prompting several environmental groups to file suit. After several years, the Service issued a draft BiOp, which the EPA, the Manufacturers, several states, and others criticized. After the Service revised the BiOp, the Manufacturers commenced an action under the Administrative Procedure Act, alleging that the BiOp was arbitrary and capricious. The district court dismissed the complaint on the ground that the BiOp was judicially reviewable only after the EPA issued a final reregistration order. On appeal, the Fourth Circuit reversed and remanded. On remand, the district court granted summary judgment to the Service.
On appeal, the Manufacturers argued that the district court erred in permitting the Service to supplement the record and the BiOp with post hoc justifications. In reviewing the Service’s decision, a court can only consider the record before the agency at the time it acted and contemporaneous justifications. The district court concluded that the record before the service was inadequate on certain points and inappropriately admitted new evidence and permitted post hoc justifications. The Manufacturers also argued that the BiOp was arbitrary and capricious, namely in: (1) failing to provide support for its use of a 96-hour modeling assumption; (2) relying on a U.S. Geological Survey’s water monitoring study; and (3) failing to justify uniform buffers. The Fourth Circuit agreed with the Manufacturers as to all of these arguments, stating that the Service may have had satisfactory explanations for the choices it made, but failed to adequately reflect those explanations in the BiOp. Accordingly, the Fourth Circuit reversed.
Decided: February 21, 2013
The issue in the case was whether a municipal ordinance, which prohibits individuals form soliciting immediate donations near two streets that run through the Downtown Mall in Charlottesville, Virginia, unconstitutionally restrict the free speech of individuals who regularly beg on the Downtown Mall. The Fourth Circuit held that the district court erred by resolving this issue at the pleadings stage, and reversed and remanded for further proceedings.
The Court first finds that appellants have standing to bring the First Amendment challenge to the Ordinance. The Supreme Court has held that solicitation of “charitable contributions” is protected speech under the First Amendment. The appellants complaint generally alleges that Appellants regularly beg on the Downtown Mall and the Ordinance may constitute a cognizable injury to Appellants merely by interfering with or creating the “need to plan the substance and placement of” their speech. The Court then finds that the Downtown Mall is a traditional public forum. “Because Appellants seek to engage in protected speech in a traditional public forum, the government’s power to regulate that speech is limited, though not foreclosed. The government may impose reasonable content-neutral time, place and manner restrictions that are narrowly tailored to serve a significant government interest and leave open ample alternative channels of communication.”
The ordinance plainly prohibits solicitations that request immediate donations of things of value, but based on the record, the Court cannot determine the government’s reasons for enacting the Ordinance or assess the strength of its underlying concerns. The Fourth Circuit also notes that the district court erred by impermissible reaching outside the pleadings by watching video archives at the pleadings stage in order to make findings of fact.
Decided: February 15, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s decision to exclude evidence that was obtained during a warrantless search. The government argued that the exigent circumstances exception applied to render the evidence admissible, but the Fourth Circuit disagreed noting that the officer’s behavior at the time of the search contradicted the idea that exigent circumstances existed.
On December 31, 2011, police responded to a 911 call regarding a domestic dispute at the home of Joseph Robert Yengel, Jr. (“Yengel”) between Yengel and his wife. Shortly after arriving on the scene, Yengel was arrested and removed from the scene. Sargeant Staton then interviewed Yengel’s wife and Yengel’s mother. Staton learned that Yengel kept a large number of firearms and a “grenade” inside the house. Staton also learned that Yengel’s young son was sleeping inside the house. Staton asked where the “grenade” was, and Yengel’s wife collected a variety of firearms strewn about the master bedroom and asked Staton to remove them. Staton again asked about the location of the grenade; Mrs. Yengel showed Staton a closet inside the guest bedroom that was locked with a combination keypad and thumbprint scanner. Mrs. Yengel did not have the combination lock but told Staton the grenade was inside. Mrs. Yengel gave Staton permission to kick open the door or do whatever he needed to get inside. Staton was able to pry the door open with a screwdriver. Once inside the closet, Staton identified military equipment including gun safes, camouflage, and other weapons. Only after the entry into the closet, Staton ordered the evacuation of the house and surrounding residences. He requested the assistance of an explosive ordnance disposal team. Once the team arrived, they discovered, not a grenade, but a container of smokeless shotgun powder and a partially assembled explosive device attached to a kitchen timer.
Yengel was charged with possession of an unregistered firearm. He moved to suppress the evidence gained from the warrantless search of the locked closet. The district court granted his motion to suppress the evidence, and the Government appealed following an unsuccessful motion for reconsideration. Searches without warrants are presumptively unconstitutional, but the touchstone for a warrantless search inquiry is “reasonableness.” Therefore, there are certain exceptions that will render warrantless evidence admissible in court. However, the court determined that there were no circumstances that would constitute an exigency sufficient to justify the warrantless search of private property. The information available to the officer was limited to what Mrs. Yengel told him and this did not justify a reasonable belief that the grenade was live or could detonate at any moment. Further, the location of the grenade diminished the scope of any possible emergency. Finally, the officer did not evacuate the sleeping son or surrounding area until after the closet had been entered which provides evidence that the officers did not actually think there were emergent circumstances such to justify a warrantless entry.
-Jennifer B. Routh
Decided: February 11, 2013
After a jury trial, Holness was convicted of interstate domestic violence and attempted witness intimidation. On appeal, Holness alleged that the district court erred in denying his motion to suppress certain evidence flowing from jail cell conversations Holness had with Stephen McGrath. Holness alleged that this evidence was obtained in deprivation of his Sixth Amendment right to the assistance of counsel.
McGrath was Holness’s cell mate when Holness was incarcerated in connection with a state murder charge. Holness contended that McGrath became an agent of the police as of August 31, 2009, when McGrath met with Sergeant Hall of the Maryland State Police homicide unit. Since Holness had retained the services of a public defender in connection with the state murder charge, he argued that his subsequent conversations with McGrath— which his lawyer was not present for—amounted to police interrogation in contravention of the Sixth Amendment. Subsequent to McGrath’s meeting with Hall, the state court charges were dismissed when the US Attorney charged Holness with interstate domestic violence, attempted witness intimidation, and two other counts that were ultimately dismissed. At that time, Holness moved to suppress all statements he made to McGrath and any evidence obtained as a result of those statements.
The Court of Appeals concluded that, since there was no involvement by the federal government in advance of the August 31, 2009 meeting between McGrath and Hall, no actions imputable to the state deprived Holness of his Sixth Amendment right to counsel with respect to the federal charges of which he was convicted. However, the Court went on to address whether those actions contravened Holness’s Fifth Amendment rights, noting that “although the Sixth Amendment right to counsel is offense-specific, the similar right derived from the Fifth Amendment is not.”
The Court presumed that the relevant evidence was obtained in contravention of the Fifth Amendment, but found that the evidence of Holness’s guilt went “far beyond mere sufficiency,” such that the lower court’s judgment could not have been substantially swayed by the improperly obtained evidence. Thus, the Court held that, under the circumstances of the case, any Fifth Amendment error was harmless beyond a reasonable doubt.
In summary, the Court of Appeals found that the underlying facts failed to sustain Holness’s Sixth Amendment theory, but noted that the facts indicate a potential violation of Holness’s Fifth Amendment privilege against self-incrimination and right to counsel. However, the Court held that remand to further develop the record was unnecessary since any Fifth Amendment error was harmless beyond a reasonable doubt. Thus, the Court affirmed Holness’s convictions.
- Kassandra Moore
Decided: February 8, 2013
This case involved a sea vessel chartering company’s attempt to reach the assets of two shipping companies—entities claimed to be controlled by the corporate owner of a certain vessel that had been the cause of an oil spill in the country of Estonia—in an effort to satisfy an outstanding judgment that the chartering company had recovered against the vessel owner in an English court.
In 2000, the plaintiff, Vitol, S.A., was chartering the Capri Marine-owned vessel, ALAMBRA, when the ship caused marine pollution in an Estonian port. Vitol subsequently sued Capri Marine in England for breach of the warranty of seaworthiness; Vitol went on to recover a judgment for $6.1 million. The English judgment was never paid off by Capri Marine, however, and at the time that this case reached the Fourth Circuit, with interest still accruing, the judgment totaled over $9 million. In 2009, Vitol filed suit in the U.S. District Court for the District of Maryland against Spartacus Navigation Corp. and Primerose Shipping Company (collectively “S&P”)—two entities that Vitol claimed to be the corporate alter ego of Capri Marine. Thus, Vitol requested that the district court pierce the corporate veil of Capri Marine and hold S&P liable for Vitol’s outstanding English judgment. The district court granted Vitol’s motion for a maritime attachment of a Spartacus vessel that was then docked in the Baltimore harbor; however, S&P submitted to the court’s jurisdiction on a restricted basis and the court released the attachment in exchange for S&P posting $9 million as collateral. In its 2010 order, although it ruled that it had competent jurisdiction to hear the dispute, the district court nonetheless granted S&P’s motion to dismiss for failure to state a claim.
On appeal, the Fourth Circuit first considered whether the district court had properly asserted subject matter jurisdiction over the case. In answering that question, the court had to determine whether the plaintiff’s complaint “sound[ed] in admiralty so as to invoke the district court’s admiralty jurisdiction under [28 U.S.C.] § 1333.” The court noted that it was well established that U.S. federal courts had admiralty jurisdiction to enforce the judgments of foreign admiralty courts. The court rejected the argument by S&P that because the admiralty judgment was rendered in the English Commercial Court—and not the English Admiralty Court—that the claim lacked the “admiralty character” necessary to invoke the admiralty jurisdiction of the U.S. District Court. The court pointed out that both parties’ expert witnesses on English law stated that there was overlap between those two English jurisdictions and that admiralty claims were occasionally brought in the Commercial Court. The Fourth Circuit held, “[i]nasmuch as the English Commercial Court exercised jurisdiction over a maritime claim, we agree with the district court’s conclusion that ‘the Commercial Court was an admiralty court with respect to the English Judgment.’”
After resolving that jurisdictional question, the Fourth Circuit turned to the district court’s dismissal of Vitol’s alter ego claim. The court was forced to determine whether Vitol had pled facts sufficient to state a claim for piercing the corporate veil of Capri Marine and thus exposing S&P to liability on the English judgment. The court examined at depth the factual contentions in Vitol’s complaint concerning the ownership and operations of Capri Marine, focusing on the relationship between the entity that controlled Capri Marine (and its network of affiliates) and S&P. In determining whether the alleged facts suggested that the defendants were the alter ego of Capri Marine, the court analyzed various factors including, the corporate formalities, transfers of money, comingling of funds, and corporate structures. The court ultimately concluded that while the plaintiff had alleged a close business relationship, “there [was] nothing in the allegations of interconnectness [sic] that plausibly suggests the sort of dominion, control, failure to observe corporate formalities, or fundamental unfairness needed to state a claim for alter ego status.” And under the pleading standards required by Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the complaint’s “bald allegations” and “legal conclusions couched as factual allegations” were insufficient to show that the plaintiff was entitled to relief. Thus, the Fourth Circuit affirmed the trial court’s dismissal for failure to state a claim.
-John C. Bruton, III
Decided: February 8, 2013
Petitioner Bruce C. Bereano appealed the district court’s denial of his petition for a writ of coram nobis in which Bereano sought coram nobis relief to vacate his seven mail fraud convictions and to secure repayment of a fine imposed as part of his sentencing. Bereano’s petition relied on the Supreme Court’s decisions in Skilling v. United States that limited the application of the “honest services fraud” theory, one of the two theories considered by the jury that convicted Bereano of mail fraud. The Fourth Circuit agreed with the district court’s denial of Bereano’s petition and affirmed the lower court’s decision.
The basis of Bereano’s petition arose out of the trial judge’s instructions to the jury during Bereano’s trial for his mail fraud charges. The judge’s instructions stated that the jury could convict Bereano if it found him guilty under the “pecuniary fraud” or “honest services fraud” theories. Because the jury returned a general verdict on each count of fraud, there was no indication as to which theory Bereano was convicted under, and the Fourth Circuit recognized that Bereano was convicted and prosecuted under both theories.
In light of the Supreme Court’s subsequent decision in Skilling, in which the Court circumscribed the honest services fraud theory and limited it to cases involving actual bribery and kickbacks, Bereano appealed, contending that a constitutional error occurred at trial “when the district court erroneously instructed the jury that it could convict Bereano on the honest services fraud theory.” While recognizing that Bereano’s honest services fraud scheme did not involve the bribery or kickbacks required under Skilling, the district court nonetheless denied Bereano’s petition, reasoning that Bereano’s fraudulent actions implicated the pecuniary fraud theory, which was not affected by Skilling, and therefore, despite the existence of a constitution error under Skilling, the error was “harmless beyond a reasonable doubt.”
To analyze the district court’s denial of Bereano’s petition, the Fourth Circuit applied the harmless error review prescribed by the Supreme Court in Neder v. United States for cases involving constitutional errors brought about through “a failure to properly instruct on an element of an offense.” The court additional relied on its decision in United States v. Jefferson in which it “ratified the Neder harmless error standard as the law of this Circuit with respect to Skilling error,” and it applied the harmless error test described in Jefferson to the facts of the present case. Applying this test, the court concluded that there was sufficient evidence that Bereano had committed “pecuniary fraud” and that this pecuniary fraud was “necessarily accepted by the jury.” Furthermore, the court found that “no reasonable jury could have acquitted Bereano of pecuniary fraud for falsely billing his clients, but convicted him of honest services fraud for the same false billing scheme.” Therefore, despite the instructional error on the honest services fraud theory, Bereano had failed to establish the fourth prerequisite for coram nobis relief: “identification of ‘an error of the most fundamental character.’” Therefore, the court refused to grant the “‘extraordinary’ remedy of coram nobis relief” and affirmed the district court’s decision.
- Allison Hite
Decided: January 18, 2013
Center for Individual Freedom (CFIF) and West Virginians for Life (WVFL), both organizations that engage in election-related speech, and a West Virginian resident, Zane Lawhorn, who wants to receive WVFL’s communications, brought suit against West Virginia’s secretary of state, members of the West Virginia State Election Commission, and a class of West Virginia’s prosecuting attorneys. The suit alleged that West Virginia’s campaign finance statutes were constitutionally impermissible. The district court struck down some provisions, but upheld others. On appeal, the court affirmed in part, reversed in part, and remanded for further proceedings.
The appellate court first considered WVFL and Lawhorn’s contention that the district court erred in concluding that W.Va. Code § 3-8-1a(12)(C), which defines “expressly advocating” as “any communication that . . . [i]s susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate,” is unconstitutionally vague. The court found that the holding in The Real Truth About Abortion, Inc. v. FEC—specifying that “a court should find that an ad is the functional equivalent of express advocacy only if the ad is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate—was controlling and thus held that subsection (C) of the statute was not unconstitutionally vague. The court also found that the subsection was not overbroad. As such, the court reversed the district court’s decision with respect to its conclusion that W.Va. Code § 3-8-1a(12)(C) is unconstitutional.
The court then considered CFIF’s contention that the district court erred in holding that the inclusion of periodicals in its definition of “electioneering communication” rendered the definition overbroad, and its decision to sever the statute’s reference to materials “published in any newspaper, magazine or other periodical.” The court agreed with CFIF’s argument, that even if the government could demonstrate a sufficiently important interest, the “legislature’s failure to empirically justify the statute’s application to periodicals renders it overbroad and prevents it from bearing a substantial relation to West Virginia’s stated interests.” As such, the court affirmed the district court’s decision to sever the statute’s reference to materials “published in any newspaper, magazine or other periodical.”
Next, the court addressed CFIF’s argument that the district court erred in its decisions regarding three exemptions to the “electioneering communication” definition. Specifically, the district court: (1) upheld the “grassroots lobbying” exemption, (2) declined to address the merits of CFIF’s challenge to the “bona fide news account” exemption, and (3) upheld a provision exempting communications by § 501(c)(3) organizations. The appellate court affirmed the district court’s decision to uphold the grassroots lobbying exemption and its decision to decline to consider the merits of CFIF’s challenge to the bone fide news account exemption, but reversed its decision with respect to its choice to uphold the § 501(c)(3) exemption.
The court then reviewed the district court’s conclusion that the reporting requirement for electioneering communications was ambiguous as written, and its decision to restrict the reporting requirement to “individuals who respond to a solicitation for electioneering communications or earmark their contributions for such use.” The court found that McConnell v. FEC controls and necessitates reversal of the lower court’s conclusion that the electioneering communication reporting requirement is unconstitutionally vague and its application of a limiting construction.
Finally, the court addressed WVFL and Lawhorn’s contention that the district court should have vacated two earlier injunctions as moot rather than barring prosecutions for violations that occurred when the injunctions were in effect. The appellate court found no abuse of discretion in the lower court’s decision to dissolve the injunctions at issue rather than vacate them as moot.
In summary, the appellate court affirmed the district court’s decisions to: (1) sever the statute’s reference to materials “published in any newspaper, magazine or other periodical,” (2) uphold the grassroots lobbying exemption, (3) decline to consider the merits of CFIF’s challenge to the bone fide news account exemption, and (4) prohibit prosecutions for violations that occurred while the earlier injunctions were in effect rather than vacating the injunctions as moot. The appellate court reversed the district court’s decision with respect to: (1) its conclusion that W.Va. Code § 3-8-1a(12)(C) is unconstitutionally vague, (2) its choice to uphold the § 501(c)(3) exemption, and (3) its conclusion that the electioneering communication reporting requirement is unconstitutionally vague such that a limiting construction must be applied.
- Kassandra Moore
Decided: January 16, 2013
Defendant Irvin Bumpers appealed the district court’s denial of his pre-trial motion to suppress the firearm that served as the basis of his conviction of being a felon in possession of a firearm and ammunition in violation of 18 U.S.C. § 922(g)(1). Bumpers argued that the firearm and ammunition were taken as a result of an unlawful seizure. The Fourth Circuit dismissed Bumpers’ argument and upheld the district court judge’s ruling, finding that the police officer’s retrieval of these goods was the result of a lawful stop and arrest. The court further articulated its belief that appellate courts should “uphold a district court’s Terry ruling when it is objectively reasonable in light of the record … [in order to] best achieve in the aggregate the very equipoise between individual liberty and public safety that the Fourth Amendment commands.”
The facts revealed that Bumpers was arrested in a high crime area when a police officer, who was patrolling the area, noticed Bumpers acting suspiciously and suspected that Bumpers and a companion were trespassing upon property. After the officer stopped Bumpers to question him, the officer’s search of computer records revealed an outstanding warrant for Bumpers. Consequently, the officer arrested Bumpers and conducted a search incident to this arrest which revealed that Bumpers was carrying the firearm and ammunition at issue on appeal.
In its analysis of this case, the majority focused on numerous factors surrounding the officer’s arrest of Bumpers. After stating that “[t]he touchstone of the Fourth Amendment inquiry is one of simple reasonableness” and citing to the Supreme Court’s decision regarding police investigatory stops in Terry v. Ohio, the court concluded that in cases involving police stops an individual’s “liberty interest” must be balanced with the “weighty interest on the other side of the balance: the community’s interest in basic public safety.” The court then defended its decision to defer to the trial judge’s factual findings and inferences regarding the circumstances surrounding Bumpers’ arrest, stating that “[t]e most precise instrument that the judiciary possesses for ensuring the proper balance between the interests that undergird the Fourth Amendment is the on-the-ground assessment of district courts.” Ultimately, the court was convinced that the trial judge rightfully considered the totality of the factors surrounding the officer’s stop and concluded that the district court correctly determined that the officer had the reasonable suspicion necessary to conduct the stop in question. Therefore, the court upheld the district court’s denial of Bumpers’ motion to suppress.
- Allison Hite
Decided: January 16, 2013
In this case, the parents of an eighth grade student suffering from Attention Deficit Hyperactivity Disorder (“ADHD”) brought suit against the Baltimore City Board of School Commissioner (“BCBSC”) in federal district court. The parents alleged that, due to his learning disorder, the student was qualified for special education services under Section 504 of the federal Rehabilitation Act of 1973, 29 U.S.C. § 794. However, because the student was enrolled in a private religious school, the BCBSC had denied the student’s request to receive these education services. The BCBSC had informed the parents that their child would have to enroll in a Maryland public school in order to be eligible for the Section 504 assistance. The district court granted the BCBSC’s motion for summary judgment, and the parents appealed to the Fourth Circuit.
On appeal, the Fourth Circuit reviewed Section 504 and the regulations promulgated under it which require public schools to provide a Free Appropriate Public Education (“FAPE”) to “‘each qualified handicapped person who is in the recipient’s jurisdiction.’” A FAPE requires the “‘provision of regular or special education and related aids and services that…are designed to meet individual educational needs of handicapped persons….’” However, under the law, a FAPE does not require that the public school system “pay for a child’s education in a private school.”
After considering the relevant administrative guidance, statutory purposes, legal precedent, and public policy, the court concluded that nonpublic school students were not entitled to receive Section 504 services. Thus, the court held that the BCBSC’s policy to deny this special assistance to private school students was not invalid under the statute. According to the court, the public school district was required only to make these special services available to students enrolled in public school. The court also held that this section of the Rehabilitation Act was not an unconstitutional burden on the parents’ right to direct the education of their child. Although the BCBSC’s policy would make it more expensive for the parents to provide their child with a private religious education, the parents “retain[ed] full discretion over which school D.L. attends.”
-John C. Bruton, III
Decided: January 14, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of all claims against Bank of America brought by representatives of a putative class of plaintiffs. The plaintiffs were participants in a Pension Plan and 401(k) plan and brought breach of fiduciary duty claims against the bank under ERISA.
The plans in question were two ERISA benefit plans sponsored by Bank of America: a Pension Plan and a 401(k) Plan. The Pension plan is a defined benefits plan where a participant’s benefits are based on compensation and investment credits. The 401(k) Plan is a defined contribution plan where participants contribute pre-tax earnings and the Ban matches the contribution. Plaintiffs alleged that the Bank and individual members of the Bank’s Corporate Benefits Committee breached their fiduciary duties under ERISA by selecting and maintaining Bank-affiliated mutual funds in the investment menu for the Plans.
Plaintiffs originally made claims regarding breach of fiduciary duties and engaging in prohibited transactions regarding both plans in their Second Amended Complaint. The district court accepted the magistrate’s recommendation that the claims with regard to the Pension Plan be dismissed due to lack of Article III standing due to the failure by plaintiffs to allege an injury in fact. In their Third Amended Complaint, plaintiff’s asserted numerous claims on behalf of the 401(k) Plan on the part of two classes: the “Removal Class” (consisting of 401(k) Plan participants who invested in certain mutual funds between August 7, 2000, and December 31, 2007) and the “Selection Class” (consisting of 401(k) Plan participants who invested in certain mutual funds between July 1, 2000 and December 31, 2007). The claims dealt with standards for removing and including Bank sponsored mutual funds. The Bank moved for summary judgment on the issue of limitations and the district court agreed, stating that the only transaction that caused injury occurred more than 6 years before the case was filed, thus time-barring the claim under ERISA. The court refused to allow the plaintiffs to file a Fourth Amended Complaint and dismissed the claims with prejudice. The plaintiffs’’ appeal followed.
The Fourth Circuit agreed that the plaintiffs did not have Article II standing with regards to the Pension plan because even though ERISA requires claims to be filed on behalf of the plan as a whole, plaintiffs have to show a direct injury and not just the risk that a plan will be underfunded. Furthermore, the plaintiffs do not have standing as assignees, since no contractual assignment was involved, under trust law, or due to a deprivation of statutory rights. In regards to the limitations issue, ERISA requires all claims to be brought within 6 years, or 3 years if the plaintiff had actual knowledge of the breach. This period begins immediately upon the last action which constituted a part of the breach or violation. Here, the section of the Bank sponsored funds was the last action which constituted a part of the breach. The failure of the Bank or the CBC to remove the funds does not qualify as a transaction under ERISA. Therefore, the omission or failure to act by the bank cannot be an action to start or re-start the limitations period. With regards to the selection class, who were not able to participate in the bank sponsored funds until August of 2000, the original selection of the funds in 1999 constituted the breach. Finally, the Court held that the district court did not abuse its discretion by dismissing the case with prejudice because it was apparent that the district court dismissed with prejudice because plaintiffs did not move to amend the Third Amended Complain, and because plaintiffs had already filed four complaints in this matter.
–Jonathan M. Riddle
Decided: January 14, 2013
The bankruptcy trustee (the “Trustee’) for debtor Total Realty Management Company (“TRM”) appealed the district court’s dismissal of his adversary action against R.A. North Development, Inc. and R.A. North Development I, Inc. (collectively, “R.A. North”). In his complaint, the Trustee sought contribution from R.A. North for TRM’s liabilities under the Land Sales Full Disclosure Act (the “Disclosure Act”). The Disclosure Act prohibits developers from making fraudulent and misleading statements to real estate buyers, and the Trustee alleged that TRM and R.A North had jointly sold properties at artificially inflated prices in North and South Carolina. The Court of Appeals held that TRM was not entitled to contribution as a matter of law because it had failed to make payments to aggrieved purchasers stemming from its violations of the Disclosure Act.
According to the Trustee, TRM and R.A. North engaged in a real estate fraud scheme in 2006 and 2007. TRM would purchase a number of subdivision parcels from R.A. North at fair market value and would then, hours later, resell the parcels to individual purchasers at substantially above fair market value. TRM then used the proceeds from the sales to finance its purchases from R.A. North, and R.A. North and TRM would keep the differences in value as profit. To attract purchasers, TRM held seminars for potential investors. During these seminars, R.A. North and TRM representatives made several false and misleading representations regarding the investment potential of the properties. Subsequently, one group of aggrieved purchasers sued TRM and R.A. North under the Disclosure Act in the U.S. District Court for the Eastern District of Virginia. That group then put TRM into involuntary bankruptcy in 2009. On April 19, 2011, the Trustee brought an adversary proceeding against R.A. North in bankruptcy court. R.A. North then successfully moved the Trustee’s action to district court in Virginia. Thereafter, R.A. North moved to dismiss the Trustee’s action under Federal Rule of Civil Procedure 12(b)(6). The district court granted R.A. North’s motion, and the Trustee appealed.
The Fourth Circuit explained that in order to state a claim for contribution under the Disclosure Act, a complaint must allege the following: (1) the plaintiff is liable under the statute; (2) the defendant is independently liable for the same conduct; and (3) the plaintiff is entitled to “contribution” from the defendant. The court assumed without deciding that TRM was liable to the property purchasers, so the case turned on the second two requirements of the Disclosure Act. The Trustee argued that R.A. North was independently liable because it participated in the marketing and sale of the properties. R.A. North, on the other hand, argued that under the Disclosure Act, purchasers are required to look to the developer from whom they purchased the lot. Since TRM was the developer, R.A. North reasoned that TRM alone was liable to the purchasers. The court noted that the issue of whether liability under the Disclosure Act extends to entities that were not actually involved in the challenged real estate transaction was one of first impression in the Fourth Circuit. By examining the Disclosure Act’s plain language, Congressional intent, and precedent in other circuits, the court held that the Disclosure Act’s fraud provision encompassed an entity that was ultimately not a party to the transaction. However, despite holding that R.A. North was potentially liable to the purchasers for its role in TRM’s sales, the court held that TRM was not entitled to contribution from R.A. North. The court explained that Congress intended to draw precedent from the 1933 Securities Act in drafting the Disclosure Act, and the contribution provision of the Securities Act had consistently been interpreted as requiring payment by a potentially liable party as a precondition from a jointly liable party. Therefore, the court held that a party liable under the Contribution Act is not entitled to contribution until it has actually made payment to the aggrieved parties.
Decided: January 11, 2013
The Fourth Circuit Court of Appeals affirmed the decision of the district court to dismiss relator’s action under the False Claims Act. The court of appeals found that the district court did not abuse its discretion.
Noah Nathan (Relator) is a sales manager for Takeda Pharmaceuticals (Takeda) and brought this action against his employer under the False Claims Act. Relator claimed that certain types of drugs that have not been approved by the Food and Drug Administration (FDA) are not reimbursable under federal health insurance programs. Relator claimed that since these drugs were not reimbursable, presenting a claim for payment for these drugs was a violation of the False Claims Act. The Act prohibits anyone from knowingly “caus[ing] to be presented” to the government false claims for payment or approval. The district court dismissed the case on two grounds: (1) the complaint did not allege the “presentment” of a false claim to the government for payment; and (2) the complaint also failed to adequately allege causation.
The court of appeals held that the Relator did not meet the pleading standards of Rule 9(b) of the Federal Rules of Civil Procedure. Rule 9(b) requires a False Claims Act plaintiff to provide “some indicia of reliability” that an actual false claim was presented to the government. The court of appeals found that the Relator did not provide evidence of any false claims being submitted to the government but only general allegations. The False Claims Act requires more specific allegations than those given by the Relator. Since the Relator’s amended complaint was speculative, the motion to dismiss granted by the district court was affirmed.
Decided: January 9, 2013
The Fourth Circuit affirmed the district court’s grant of summary judgment to the Army. The Army satisfied its burden of showing that disclosure of the documents requested by Pinnacle under the Freedom of Information Act (“FOIA”) would impair the Government’s ability to obtain necessary information in the future.
The Army privatized family housing at several Army installations. The privatization was accomplished through bids from the private sector to develop, own, manage, and maintain family housing. The Army owned percentages of the managing entities. One of the involved entities, Clark Realty Capital, LLC (“Clark”) discovered evidence of alleged fraud being committed by another involved entity, American Management Services, LLC, d/b/a Pinnacle (“Pinnacle”). As a result, Clark wanted to appoint a replacement property manager and initiate litigation against Pinnacle. Under its operating agreement, Clarke was obligated to obtain the Army’s approval. Clark met with the Army on May 6, 2010, and provided the Army with a binder of documents prepared by Clark’s outside counsel. The Army approved Clark’s plan of action. Pinnacle then sought the documents shared by Clark’s counsel, among others, in discovery and then through a FOIA request to the Army. The Army refused the request.
The court reasoned that the Army could not be compelled to share such documents because public disclosure of such documents would make entities like Clark “less willing to share information with the Army, which would aversely impact decision-making processes with regard to taking actions on behalf of a housing LLC.” J.A. 67. Disclosure would have a chilling effect on a company’s decision to initiate litigation or provide a government agency with the same quality and quantity information that it might otherwise receive. Furthermore, the Army and Clark shared a common interest when the Army approved Clark’s course of action on May 14, 2010. Thus the communications between Clark and the Army after May 14 are protected by the common interest doctrine and qualify as intra-agency communications exempt from disclosure.
Decided on: January 9, 2013
Kimberly Laing appealed the district court’s award of summary judgment to Federal Express Corporation (“FedEx”). The Fourth Circuit held that the district court’s summary judgment award was proper because Laing did not present direct evidence of discrimination, nor did she satisfy the McDonnell Douglas burden-shifting standard. Accordingly, the Fourth Circuit affirmed the district court’s award of summary judgment in favor of FedEx.
Kimberly Laing fell while making deliveries for FedEx and suffered significant knee damage. Laing provided her supervisor a note from a specialist ordering surgery. The supervisor later noted that Laing might have been falsifying delivery records in order to artificially enhance performance. Laing applied for leave under the FMLA, which FedEx granted. When Laing returned, her supervisor placed her on an investigatory suspension with full pay. After the investigation concluded, FedEx terminated Laing’s employment because Laing had falsified her records. Laing filed suit and argued that FedEx terminated her employment in violation of the FMLA in retaliation for her decision to take medical leave and by failing to restore her to an equivalent position upon her return from leave. The district court granted summary judgment to FedEx, stating that Laing established a prima facie case of discrimination, but failed to show that FedEx’s reasons for termination were pretextual.
On appeal, Laing contends she presented direct evidence of discrimination in the form of comments made to her by various supervisors. However, the statements did not suggest a discriminatory attitude, but rather constituted informal, lighthearted communication between coworkers. Next, the Fourth Circuit turned to the McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), burden-shifting framework, wherein the plaintiff must establish a prima facie case of discrimination to shift the burden to the employer to articulate a nondiscriminatory reason for its action. The plaintiff is then entitled to prove that the employer’s explanation “was in fact pretext.” Id. at 802–04. Laing established a prima facie showing of discrimination, but FedEx met its burden in articulating a “legitimate, nondiscriminatory reason for” suspending Laing, because FedEx discharged her for falsifying records. Id. at 802. Laing did not satisfy the burden of proving that FedEx’s reason for terminating her was pretextual, primarily because she did not produce evidence that a similarly situated employee was given more favorable treatment. Accordingly, the Fourth Circuit affirmed the district court’s award of summary judgment in favor of FedEx. Laing also argued that FedEx denied her right under the FMLA to be restored to her original position before taking leave. The Fourth Circuit also affirmed the district court’s grant of summary judgment as to this claim, noting that the FMLA does not afford an “absolute right to restoration.” Yashenko v. Harrah’s N.C. Casino Co., 466 F.3d 541, 549 (4th Cir. 2006).
Decided: January 9, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s grant of summary judgment to United Parcel Service (UPS), Young’s employer, regarding claims of discrimination under the Americans with Disabilities Act (ADA) and Pregnancy Discrimination Act (PDA) when Young was unable to continue working during her pregnancy.
Peggy Young started working for UPS in 1999 and started driving a delivery truck in 2002. She held a part-time, early morning driver position by 2006 and throughout the relevant time period. In 2006, Young was granted a leave of absence to try a third round of in vitro fertilization after two failed attempts. When Young became pregnant, her doctor provided a note stipulating that she should not lift more than twenty pounds for the first twenty weeks of pregnancy and not more than ten pounds thereafter. Martin, UPS’s occupational health manager, informed Young that UPS policy would not permit her to continue working with a twenty-pound lifting restriction because the job requires being able to lift up to seventy pounds. Martin also concluded that Young was ineligible for a light duty assignment. Young used the remainder of the leave provided by the Family Medical Leave Act and went on an extended leave of absence receiving no pay and losing her medical coverage. Sometime after she gave birth she returned to work.
Young sought damages for sex and race discrimination under Title VII and for disability discrimination under the ADA. She voluntarily dismissed her race discrimination claim. UPS moved for summary judgment after eighteen months of discovery, and the district court granted its motion. Young claimed that UPS impermissibly regarded her as disabled in violation of the ADA, and she contended that UPS discriminated against her in violation of the PDA. A “regarded as” disabled claim under the ADA “includes the circumstance when the employer ‘mistakenly believes that an actual, non-limiting impairment substantially limits one or more life activities.’” Young alleged that UPS considered her pregnancy-related work limitations as a disability. However, because UPS did have objective evidence that she was unable to perform some of her central job functions and the “relatively manageable” weight restriction and short duration, the court concluded there was no evidence that Young’s pregnancy or lifting restrictions constituted a disability within the ADA.
Young’s claim under the PDA stemmed from a UPS policy which entitled workers who were injured on-the-job, disabled within the meaning of the ADA, or who lost their DOT certification to light duty work, but did not allow pregnant workers to qualify for light duty work. Young, and an amicus brief from the ACLU, argued that the PDA requires employers to treat all employees the same and that Young should have been entitled to light duty work because it was made available to other workers. The court rejected this claim reasoning that interpreting the PDA would require employers to provide accommodation or light duty work to a pregnant worker whose restrictions arise from her pregnancy while denying any such accommodation to an employee unable to lift as a result of an off-the-job injury. The court concluded that this result was contrary to the legislative intent of the PDA and held that when a policy treats pregnant and nonpregnant workers alike, the employer has complied with the PDA.
The court also concluded that Young failed to make out a prima facie case under the McDonnell Douglas burden shifting framework. Young met the first three elements by showing that she was a member of the protected class, raised a genuine issue of material fact regarding her satisfactory job performance, and she suffered an adverse employment action when she could not continue work. However, she failed to produce evidence that similarly-situated employees outside the protected class received more favorable treatment. The court reasoned that a pregnant worker is not similar in ability or inability to work to an employee who is disabled under the ADA or prevented from driving a truck because the worker lost his or her DOT certification. Therefore, according to the court, while the UPS policy may be characterized as “insufficiently charitable,” Young cannot establish a claim for discriminatory animus directed at a protected class of employees.
-Jennifer B. Routh
Decided: January 4, 2013
A jury found Harold Ford guilty of being a felon in possession of a firearm. Based on a post-trial change in law effected by United States v. Simmons, 649 F.3d 237 (4th Cir. 2011), the court of appeals reversed and remanded the case. On remand, Ford was convicted again. He appealed that conviction on double jeopardy grounds. The court found no error and affirmed the conviction.
The Double Jeopardy Clause prohibits the retrying of a defendant whose conviction is reversed on appeal solely for lack of sufficient evidence to sustain the jury verdict, but does not prohibit retrying a defendant whose first conviction was set aside because of an error in the proceedings leading to the conviction. In line with precedent in this and other circuits, the court noted that where a reviewing court determines that the evidence presented at trial is rendered insufficient only by a post-trial change in law, it is analogous to one for procedural error and thus does not bar retrial.
As such, the court found no error in the retrial of Ford and affirmed the conviction.
- Kassandra Moore
United States v. Min, No. 11-4702; United States v. Johnson, No. 11-4703; United States v. Stevens, No. 11-4704; United States v. Phun, No. 11-4758; United States v. McCalister, No. 11-4795; United States v. Un, No. 11-4796
Decided: January 3, 2013
This case involved an appeal brought by six defendants (collectively, the “Defendants”) convicted of various counts related to their participation in a conspiracy to steal cocaine from the stash house of a drug cartel. Unbeknownst to the Defendants, their planned robbery was orchestrated by undercover law enforcement officers, and they were arrested just before they could carry out the robbery. When the Defendants were arrested, the law enforcement officers recovered five loaded firearms from the Defendants’ van and one of the Defendants waived his Miranda rights and confessed to his involvement in the conspiracy to rob a drug trafficker of cocaine and money.
The Fourth Circuit first addressed “whether the district court erred in denying the five non-confessing defendants’ motions to sever and admitting the redacted confession of their non-testifying codefendant … in the resulting joint trial.” Reviewing the decision to deny the motion to sever for abuse of discretion, the court noted that while the general rule calls for defendants to be “indicted and charged together if they are alleged to have participated in the same act or transaction,” there are “some situations [in which] the risk of prejudice is so high as to require a separate trial.” The court acknowledged that the non-confessing defendants’ situation, “where the out-of-court confession of a non-testifying codefendant … inculpates one or more of the other defendants” could be one such situation in which a separate trial is necessary. However, the court relied on its decision in United States v. Akinkoye in which it “held admissible a codefendant’s redacted statement that referred to the existence of another person through neutral phrases” and concluded that “the obfuscation of the names of other defendants in the version of [the codefendant’s] confession admitted at trial was not obvious.” The court was convinced that because the redacted statement was written in third person in grammatically correct sentences and “referred generally and without facial incrimination to some number of individuals who could, or could not, be the other defendants,” it “did not implicate any one defendant in particular, nor did it leave the jury to fill in any obvious blanks.” Therefore, the court determined that the redacted confession was properly admitted against the Defendants with a limiting instruction and affirmed the district court’s denial of the non-confessing defendants’ motion to sever.
Next, the court looked to determine “whether factual impossibility is a defense to the crime of conspiracy.” The Defendants argued that because “the stash house, drugs, and entire factual premise of the robbery were the fictional creation of law enforcement officers,” they should be able to assert factual impossibility as a defense to their conspiracy charges. The court rejected the Defendants’ argument and “conclude[ed] that factual impossibility is not a defense to the crime of conspiracy” after finding that “[i]t is well-established that the inchoate crime of conspiracy punishes the agreement to commit an unlawful act, not the completion of the act itself.” Accordingly, the court “reject[ed] defendants’ arguments that factual impossibility of the robbery they conspired to commit render[ed] their convictions legally insupportable.”
The court also reviewed the sufficiency of the evidence in the case and found “that the evidence was more than sufficient to sustain each conviction on these particular facts.” The “Defendants argue[d] the evidence established neither the amount of cocaine defendants conspired to steal nor the possession of firearms.” The Defendants relied on the Fourth Circuit’s decision in United States v. Hickman, which required “evidence of the amount of drugs the conspiracy intended to possess and distribute.” The court distinguished the present case from Hickman and determined that “the evidence introduced was replete with references to the amount of cocaine the defendants conspired to steal.” The court additionally concluded that “there was a wealth of evidence that the defendants planned to possess firearms while committing the robbery, and did possess them in furtherance of the conspiracy.” Therefore, reviewing the sufficiency of the evidence under a substantial evidence standard, the court found that the evidence introduced to prove each element of the crimes at issue “support[ed] the jury’s verdict … beyond a reasonable doubt.”
Next, the court addressed the Defendants’ “challenge [to] the district court’s decision to permit Detective Snyder to testify at trial regarding conversations he had with [one of the Defendants] while setting up the sting.” The Defendants argued that the detective’s testimony amounted to “narrative gloss” testimony and was improper under Federal Rule of Evidence 701 that governs lay witness opinion testimony. The court reviewed the district court’s admission of this testimonial evidence for abuse of discretion and found that “each of Rule 701’s requirements [were] satisfied here.” Specifically, the court found that it was critical that the detective “had been a participant in each of the conversations about which he testified” such that his testimony “was rationally based on his perception.” The court also found that the detective’s testimony “easily” met Rule 701’s third requirement because “[t]he kinds of questions asked and answers elicited went directly to [the detective’s] personal knowledge … rather than calling upon any specialized expertise he might have.” Accordingly, the court concluded that the testimony “was rationally based on [the detective’s] own personal perception” and was properly admitted.
Finally, the court addressed an argument made by Phun, one of the Defendants, “that the correction of an error in [Phun’s] verdict form during the jury’s deliberations constituted reversible error.” The court noted that the record was very unclear about the circumstances surrounding the alleged improper influence, and it also expressed concerns with the methods used by the district court in “correcting a substantial error on the jury form,” calling the methods “less than ideal.” However, despite these concerns, the court found that the “Defendants fail to identify and we fail to see how any of these events could have improperly influenced the jury.” Therefore, it concluded that “even if some improper influence unclear from the record constituted error, it was harmless,” and it found “no reason to overturn any of the defendants’ convictions” based on such error.
Based on the foregoing, the court affirmed the district court’s judgment.
Decided: January 3, 2013
The issue in this appeal involved the in-court identification of a defendant charged with armed bank robbery and brandishing a firearm during and in relation to a crime of violence. During the defendant’s trial, the prosecution put on the witness stand a bank teller who had been present during the robbery. The bank teller had not been able to make an out-of-court identification of the perpetrator, likely because the witness had only a limited opportunity to view the robber, who was had been wearing a makeshift disguise. In addition, the trial took place seventeen months after the robbery, and during that time, the teller was “not once asked to view a lineup or photo array or assist a police artist in drawing a sketch.” During the government’s direct examination, the prosecutor asked the witness to look at the accused sitting at the defense table and describe any similarities between him and the robber she had seen. The defendant was ultimately convicted by a jury on both criminal offenses.
On appeal, the Fourth Circuit considered whether it was plain error for the trial court to have admitted this witness’s testimony. The court applied a two-step test established by the Supreme Court to determine the admissibility of identification testimony: “First the court must consider whether the identification procedure is unnecessary suggestive. Second, if the procedure was unnecessarily suggestive, a court must look at several factors to determine if the identification testimony is nevertheless reliable under the circumstances.” After a lengthy analysis of the first prong of the test, the court concluded that the identification testimony was unnecessarily suggestive. According to the court, the prosecutor’s action in asking the witness if the defendant sitting in the courtroom reminded her of the robber was designed to put undue pressure on the witness and was thus unreliable. In addition, the impermissible procedure utilized to elicit the testimony was not overcome by other indicia of reliability in the identification. Applying the so-called Biggers factors (from Neil v. Biggers, 409 U.S. 188 (1972)), the court stated that other circumstances, such as the witness having had only a hurried view of the disguised armed robber, demonstrated a lack of reliability. Thus, the court held it was error for the trial court to admit this in-court identification.
Nonetheless, because the defendant had not objected at trial to the witness’s testimony, the Fourth Circuit reviewed the lower court’s error under the plain error doctrine. The court stated that the error was plain, in that it is “well-settled that a prosecutor cannot verbally or physically point to a defendant and ask a witness if the defendant is the person who committed the crime.” However, the Fourth Circuit then stated that the plain error did not affect the defendant’s substantial right to a fair trial. According to the court, there was “strong independent evidence” indicated that the defendant had committed the robbery. The bank teller’s testimony, while damaging to the defendant, had not been an essential part of the prosecutor’s case against the defendant. Thus, the court refused to reverse the defendant’s convictions on the basis of plain error.
-John C. Bruton, III
Decided: January 2, 2013
The Fourth Circuit Court of Appeals reversed the district court’s decision to deny a motion to suppress defendant’s statement. The Court held that defendant’s three-hour detention violated his Fourth Amendment Rights, vacated the judgment, and remanded the case.
Prentiss Watson was convicted of possession of a firearm by a felon and possession of ammunition by a felon, in violation of 18 U.S.C. § 922(g). The convictions stemmed from a statement he made while detained by Baltimore police officers. The officers were observing drug activity in a building in which Watson both worked and lived. After arresting a target for drug related activities and not finding a firearm, the officers decided to search the building. At the time, Watson and his employer were working at the convenience store on the first floor of the building. According to procedures, the officers checked the building for armed suspects and detained all individuals in the building, and put them in a central location. While waiting for a search warrant, the officers detained Watson for three-hours. The officers informed Watson of his Miranda rights before detaining him. The officers had no information linking Watson to any crime. Watson was never told that he was free to leave, and during the three-hour detention, he was asked no questions. After securing the search warrant, an officer found a shotgun in the back room of the second floor. After informing him of his Miranda rights, the officer asked Watson about the gun. He replied that he lived in the front room of the second floor and did not know about the shotgun. The officer returned to the front room and found a Ziploc bag with a revolver and various ammunition. When asked about it, Watson replied, “[T]hat old thing, it doesn’t even work.” At trial, Watson filed a motion to suppress his statement on the grounds that he was subjected to an unlawful detention without probable cause, and that his statement was the product of an illegal arrest. The district court denied the motion. Watson was convicted and sentenced to consecutive terms of 31 months. This appeal followed.
The Fourth Circuit first determined that Watson was seized for purposes of the Fourth Amendment because a reasonable person would not have felt free to leave. Because the seizure was unsupported by probable cause, the Court employed a balancing test of the legitimate government (public) interests and personal privacy interests to determine reasonableness. The Court held that the intrusion into Watson’s privacy interests outweighed public concerns, mainly protecting officer safety and preventing the destruction of evidence. Precedent relied on by the government which allowed such action were distinguishable because here, unlike other cases, the officers did not already have a warrant and could not tie Watson to any criminal activity to justify detention for safety reasons. For these reasons, Watson’s detention was an illegal custodial arrest. Additionally, the Court stated that there was no break in the casual chain between the illegal seizure and the statement made by Watson. Despite the Miranda warnings given and lack of flagrant police misconduct, the Court held that no intervening circumstances occurred which sufficiently attenuate the illegal arrest from Watson’s statement. Finally, the erroneous admission of Watson’s statement was not harmless error because the evidence presented by the government to prove Watson knowingly owned a firearm included Watson’s statement and the Court was unable to conclude that a reasonable fact-finder would have found Watson guilty beyond a reasonable doubt without the statement.
Decided: January 2, 2013
On remand from the Court of Appeals for resentencing, the district court entered an amended restitution against George Pileggi, which he appealed. On appeal, the court vacated the district court’s amended restitution order and ordered the district court to reinstate the original restitution order. The court held that the district court had the lacked authority to reconsider the amount of restitution on remand.
From 2003 to 2006, Pileggi and other co-conspirators ran a fraudulent sweepstakes scheme out of Costa Rica. Costa Rican officials extradited Pileggi to the United States on the condition that Pileggi, if convicted, would not spend the rest of his natural life in prison. At trial, Pileggi was convicted of one count of conspiracy to commit wire fraud, mail fraud, travel fraud in violation of 18 U.S.C. § 371, and 22 counts of wire fraud in violation of 18 U.S.C. §§ 1343. At sentencing, the prosecutor told the court that the United States had promised Costa Rica that it would not seek a sentence of more than 50 years. The court then sentenced Pileggi, who was then 48, to exactly 50 years in prison. The court also ordered Pileggi to pay $3,952,985 in restitution. Pileggi appealed his 50 year sentence, arguing that the trial court relied on the government’s misrepresentation concerning the extradition assurances given to Costa Rica. Pileggi did not appeal the restitution order. The Court of Appeals held that the trial court had committed a significant procedural error by entering a “de facto life sentence” in reliance on the government’s false information concerning the promises made to Costa Rica. The court then remanded the case for resentencing. At the resentencing hearing, the trial court imposed a sentence of 25 years and increased Pileggi’s restitution amount to $4,274,078.40. Though the government stated that “it didn’t mind” the restitution figure, the government nevertheless argued that the restitution amount should have been much higher. The trial court kept the restitution figure at $4.2 million but schedules a hearing to reconsider the matter so that the government had time to file amended restitution figures. At the restitution hearing, the government argued that the restitution amount should about $20 million. The district court agreed and increased the restitution figure to $20,726,005.18. In doing so, the district court rejected Pileggi’s argument that it lacked authority to reconsider the restitution amount on remand. Pileggi then filed an appeal challenging the amended restitution order.
On appeal of the amended restitution order, Pileggi argued that the district court lacked authority to reconsider the restitution figure because the Court of Appeals’ mandate remanded the case for the sole purpose of resentencing. The court began its analysis by explaining that the “mandate rule” prohibits lower courts from adjudicating issues that had been expressly or impliedly decided by the appellate court. Based on the mandate rule, court agreed with Pileggi and held that the district court erred in reconsidering the restitution order on remand. The court noted that neither party had raised the restitution issue during the first appeal, and therefore, the district court only had authority to address the length Pileggi’s sentence.