Case Summaries 2014

SMEDLEY v. SMEDLEY, NO. 14-1414

Decided: November 5, 2014

The Fourth Circuit held that the district court properly afforded comity to a German court’s ruling in a custody dispute between a German mother, living in Germany with the couple’s two children, and an American father, who refused to return the children to Germany after their visit to North Carolina.

The Smedleys, Mark and Daniela, met and married in Germany, where Mark was stationed in the Army. Daniela was a German citizen. The couple had two children, both born in Germany. In 2010, the family moved to North Carolina after Mark was transferred. Shortly thereafter, Daniela returned to Germany with the two children in contemplation of divorce. Ultimately, Daniela decided to remain in Germany with the children. Mark obtained a temporary custody order from a North Carolina court, and sought to have the order enforced in Germany under the Hague Convention. The German court refused to enforce the temporary order, finding that Mark had consented to the children’s move to Germany, and thus the removal provision under the Hague Convention was inapplicable. Two years later, the children visited their father in North Carolina for the summer. In contravention of his signed agreement to return the children at the end of the summer, he refused, and enrolled the children in school in North Carolina. Daniela filed a Hague petition in U.S. District Court, seeking to enforce the custody decision of the German court. The district court afforded comity to the German court’s decision, determined that Daniela’s removal of the children when she initially moved back to Germany was not wrongful, and awarded her physical custody.

Mark averred that the district court erred when it afforded comity to the German court’s decision because the German court misinterpreted the Hague Convention and did not meet the minimum reasonableness standard. Under the Hague Convention, when a parent wrongfully removes a child from his or her habitual residence, the parent must return the child unless the parent can prove that a defense applies. See Hague Convention arts. 12, 13. Removal is wrongful if it breaches a parent’s custody rights under the law of the child’s habitual residence. Id. art. 3. Article 13 provides defenses for wrongful removal, including a parent’s consent or ratification of the child’s removal; a grave risk that return of the child would cause physical or psychological harm; or the child does not want to return and is mature enough to make such a decision. Id. art. 13. Proof of one of these defenses makes return of the child discretionary. Id. The German court determined that Daniela did not wrongfully remove the children because there was sufficient evidence that Mark consented to her move to Germany with the children. Notably, the German court did not begin by determining whether the children’s habitual residence was Germany or North Carolina.

The Court reasoned that comity was proper for the German court’s decision. First, in response to Mark’s averment that the German court misinterpreted the Hague Convention by considering defenses to removal without first establishing the children’s habitual residence, the Court stated that the Hague Convention does not create such a requirement. Moreover, the Court reasoned that whether the habitual residence was determined to be Germany or North Carolina, the outcome would likely have been the same. Second, the Court concluded that the German court’s finding that Mark consented was at least minimally reasonable, despite the contradictory evidence, because the German court found Daniela’s testimony more credible. As comity was properly granted, the Court affirmed the district court’s ruling.

Full Opinion

Amanda K. Reasoner

SMEDLEY v. SMEDLEY, NO. 14-1414

Decided: November 5, 2014

The Fourth Circuit held that the district court properly afforded comity to a German court’s ruling in a custody dispute between a German mother, living in Germany with the couple’s two children, and an American father, who refused to return the children to Germany after their visit to North Carolina.

The Smedleys, Mark and Daniela, met and married in Germany, where Mark was stationed in the Army. Daniela was a German citizen. The couple had two children, both born in Germany. In 2010, the family moved to North Carolina after Mark was transferred. Shortly thereafter, Daniela returned to Germany with the two children in contemplation of divorce. Ultimately, Daniela decided to remain in Germany with the children. Mark obtained a temporary custody order from a North Carolina court, and sought to have the order enforced in Germany under the Hague Convention. The German court refused to enforce the temporary order, finding that Mark had consented to the children’s move to Germany, and thus the removal provision under the Hague Convention was inapplicable. Two years later, the children visited their father in North Carolina for the summer. In contravention of his signed agreement to return the children at the end of the summer, he refused, and enrolled the children in school in North Carolina. Daniela filed a Hague petition in U.S. District Court, seeking to enforce the custody decision of the German court. The district court afforded comity to the German court’s decision, determined that Daniela’s removal of the children when she initially moved back to Germany was not wrongful, and awarded her physical custody.

Mark averred that the district court erred when it afforded comity to the German court’s decision because the German court misinterpreted the Hague Convention and did not meet the minimum reasonableness standard. Under the Hague Convention, when a parent wrongfully removes a child from his or her habitual residence, the parent must return the child unless the parent can prove that a defense applies. See Hague Convention arts. 12, 13. Removal is wrongful if it breaches a parent’s custody rights under the law of the child’s habitual residence. Id. art. 3. Article 13 provides defenses for wrongful removal, including a parent’s consent or ratification of the child’s removal; a grave risk that return of the child would cause physical or psychological harm; or the child does not want to return and is mature enough to make such a decision. Id. art. 13. Proof of one of these defenses makes return of the child discretionary. Id. The German court determined that Daniela did not wrongfully remove the children because there was sufficient evidence that Mark consented to her move to Germany with the children. Notably, the German court did not begin by determining whether the children’s habitual residence was Germany or North Carolina.

The Court reasoned that comity was proper for the German court’s decision. First, in response to Mark’s averment that the German court misinterpreted the Hague Convention by considering defenses to removal without first establishing the children’s habitual residence, the Court stated that the Hague Convention does not create such a requirement. Moreover, the Court reasoned that whether the habitual residence was determined to be Germany or North Carolina, the outcome would likely have been the same. Second, the Court concluded that the German court’s finding that Mark consented was at least minimally reasonable, despite the contradictory evidence, because the German court found Daniela’s testimony more credible. As comity was properly granted, the Court affirmed the district court’s ruling.

Full Opinion

Amanda K. Reasoner

MOHAMED v. HOLDER, NO. 13-2027

Decided: October 17, 2014

The Fourth Circuit held that failure to register as a sex offender is not a crime of moral turpitude, and, therefore, the Board of Immigration Appeals (“BIA”) erred in relying on that conviction to initiate the petitioner’s removal. The Court reversed and remanded with instructions to vacate the petitioner’s order of removal.

The petitioner, Khalid Mohamed, born in Sudan and a lawful permanent resident of the United States as of 2003, pleaded guilty to sexual battery in Virginia in 2010. After he was convicted of failing to register as a sex offender in 2011, the Department of Homeland Security sought his removal under 8 U.S.C. § 1227(a)(2)(A)(ii), which deems an alien deportable after two convictions for crimes of moral turpitude. The petitioner sought cancellation of removal, claiming that failure to register as a sex offender was not a crime of moral turpitude; the immigration judge however denied his application. The BIA then denied the petitioner’s cancellation application and ordered his removal.

In determining that failure to register as a sex offender is not a crime of moral turpitude, the Court defined a crime of moral turpitude as one that “must involve conduct that not only violates a statute but also independently violates a moral norm.” The Court rejected the Government’s argument that because the purpose of the sex offender registration statute is to reduce the number of sex offenders that commit additional offenses, failure to register violates a moral norm. Instead, the Court concluded that the registration requirement is regulatory in nature and failure to register does not implicate any moral values. Accordingly, the Court held that the BIA erred in using the failure-to-register conviction as a basis for deportation pursuant to the federal alien deportation statute.

Full Opinion

Amanda K. Reasoner

U. S. v. PINEDA, NO. 13-4555

Decided: October 29, 2014

The Fourth Circuit upheld the Appellant’s conviction for possession of a firearm in furtherance of a drug-trafficking crime. The Court also upheld the district court’s application of sentencing enhancements under the U.S. Sentencing Guidelines (U.S.S.G.).

In November 2011, the Appellant, Jesus Pineda, accompanied an individual to a drug deal in which the individual sold cocaine and a stolen assault rifle to a criminal informant (“CI”). After the transaction, Pineda arranged to sell additional drugs to the CI. The CI reported the information back to Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) agents. In January 2012, the CI purchased cocaine and a sawed-off shotgun from Pineda, all under police surveillance. Pineda had a handgun on him during the transaction, but he refused to sell the gun to the CI despite their previous agreement. Pineda explained that he could not sell the handgun because it was the only one he had at that time. In February 2012, Pineda again sold the CI cocaine and the handgun that he had refused to sell in the last transaction. Pineda was convicted of two counts of distributing cocaine—stemming from the January and February transactions, but not the November 2011 sale; possession of a firearm in furtherance of a drug-trafficking crime; and possession of a sawed-off shotgun. The probation officer included the November 2011 transaction in the presentence report, so that Pineda received enhancements for possessing a stolen firearm, committing crimes involving three firearms, and trafficking of firearms. The district court sentenced Pineda to 132 months in prison.

Pineda conceded that he possessed a firearm during the January 2012 drug deal, but claimed that there was insufficient evidence to show that he possessed a firearm in furtherance of a drug-trafficking crime. The Court has previously established that merely having a gun accessible during a drug sale can lead to a reasonable inference that the gun was in furtherance of the drug sale because the gun provides potential protection in case anything goes wrong. United States v. Jenkins, 566 F.3d 160, 164 (4th Cir. 2009). In this case, Pineda explicitly stated that he could not sell the CI the gun because he needed it for protection, which is substantial evidence to support the jury’s finding.

Pineda also claimed that the district court erred in designating the November 2011 transaction to be relevant conduct and therefore applicable to his sentencing enhancements. Conduct is relevant to sentencing when “two or more offenses . . . constitute part of a common scheme or plan” or if the offenses are part of the same course of conduct. U.S.S.G. § 1B1.3 cmt. n.9(A) and (B). Offenses are part of the same course of conduct “if they are sufficiently connected or related to each other as to warrant the conclusion that they are part of a single episode, spree or ongoing series of offenses.” Id. Because of both the similarity and regularity of the three transactions, the Court determined that the transactions were part of the same course of conduct, and therefore the November 2011 transaction was relevant conduct under the U.S.S.G. Thus, the Court affirmed the district court’s conviction and sentencing.

Full Opinion

Amanda K. Reasoner

LIN v. HOLDER, NO. 13-1016

Decided: November 14, 2014

The Fourth Circuit held that the Board of Immigration Appeals (BIA) did not abuse its discretion when it refused to reopen the petitioner’s second motion to reopen his asylum claim because petitioner failed to provide sufficient evidence that Lin would be subject to China’s sterilization policies.

In 2007, the Department of Homeland Security initiated removal proceedings against the petitioner, Wanrong Lin, a Chinese citizen who entered the United States without inspection. At the time of the removal proceedings he was married to a U.S. citizen who was a Chinese native, and the couple had two children, both U.S. citizens. Lin applied for asylum on the grounds that due to China’s one-child family planning policy, he feared persecution, including forced sterilization, if he returned to China. An immigration judge (IJ) denied his application for asylum concluding that he did not find Lin’s testimony credible, nor his evidence sufficient to substantiate his claims that he would be tortured upon his return to China for having more than one child. The BIA denied Lin’s appeal. In 2010, Lin filed with the BIA to reopen his asylum claim on the grounds that he had new evidence that would show that conditions had changed in China since his previous application, and that he would face fines and sterilization if he returned. Lin also argued that the May 2007 Department of State Profile of Asylum Claims and Country Conditions on China (“2007 Profile”), which suggested that Lin was unlikely to experience the treatment he alleged, and on which the IJ and BIA relied, was unreliable. The BIA denied his motion to reopen. In 2012, Lin filed a second motion to reopen his asylum claim; again, the BIA denied his motion.

Generally, aliens are entitled to one motion to reopen an asylum claim. A petitioner can overcome this limitation when the motion to reopen is due to changed circumstances in the country to which the petitioner is to be deported. The evidence of the changed circumstances must be material and neither available nor discoverable at the time of the previous hearing. 8 C.F.R. § 1003.2(c)(2). For changed country conditions in China related to family planning policies, the BIA will only reopen an asylum claim when genuine, authentic, and objectively reasonable evidence proves that the country conditions changed; the applicant violated the family planning policies in place in the alien’s province or municipality; and the likely punishment for the violation would generate a well-founded fear of persecution. In re S-Y-G-, 24 I.N. Dec. 247, 251 (BIA 2007).

The Court relied upon four reasons for its conclusion that the BIA did not abuse its discretion in determining that Lin’s evidence did not support a finding that Lin would be subject to China’s sterilization policies. First, Lin failed to sufficiently authenticate many of the foreign documents he sought to introduce as evidence that he would be sterilized upon his return to China. Second, many of the documents he offered into evidence were previously available to him. Third, the documents that were new were immaterial because they filed to address Lin’s specific circumstances. Specifically, the evidence described the treatment of people in municipalities other than Lin’s; the treatment of women, rather than men; and the treatment of families in which all family members were Chinese citizens. Fourth, Lin failed to provide sufficient evidence to discredit the findings in the 2007 Profile. Accordingly, the Court denied Lin’s petition for review.

Full Opinion

Amanda K. Reasoner

WEST v. MURPHY, NO. 13-2014

Decided: November 14, 2014

The Fourth Circuit held that the appellees were entitled to qualified immunity, and affirmed the district court’s grant of appellees’ motions for summary judgment.

The named appellants, who went through the booking process at the Baltimore Central Booking and Intake Center (“Central Booking”), represent a certified class of individuals arrested between May 12, 2002 and April 30, 2008 “(a) on charges [or in cases] not involving weapons, drugs, or felony violence, and (b) strip searched (c) prior to or without presentment before a court commissioner or other judicial officer.” Appellants brought suit against two former wardens of Central Booking challenging the constitutionality of the strip searches, which were conducted in a room with other arrestees. Appellees filed a motion for summary judgment on the basis that they were entitled to qualified immunity. The motion was initially denied, but an intervening decision by the U.S. Supreme Court caused the district court to reverse course its summary judgment decision. In Florence v. Board of Chosen Freeholders of County of Burlington, 132 S. Ct 1510 (2012), the U.S. Supreme Court held that all detainees admitted to the general population may be subjected to “a close visual inspection while undressed.” The district court determined that this decision overruled some aspects of Fourth Circuit precedent that it had relied on in denying the Appellees’ motion for summary judgment.

Under the doctrine of qualified immunity, a government official is immune from suit if: (1) the facts are sufficient to show a violation of a constitutional right, and (2) the right at issue was clearly established at the time of the alleged misconduct. The Fourth Circuit noted that a right is clearly established if a reasonable official would have known that his conduct violated that right. Appellees contend, that Florence demonstrated that the law was not clearly established. The Court, however, emphasized that the relevant inquiry is whether the law was clearly established at the time of the search. This timing aspect is “tethered to the need for notice.” Thus, the Florence decision that was issued after the alleged violation does not affect whether the law was clearly established at the time of the conduct, unless the Florence decision itself established whether the law was clearly established at the time of the challenged official action. Here, the Court noted that Florence did not demonstrate that the law on jail strip searches either was or was not clearly established at the time the alleged searches were conducted.

The Court then turned to three other cases, relied on by Appellants, where the Court had previously found strip searches unconstitutional. The Court, however, concluded that those cases did not clearly establish that the Appellees’ alleged conduct was unlawful. Unlike the Appellees’ alleged conduct, which was conducted in a search room, the conduct at issue in those cases was in a much more public setting and more intrusive. Furthermore, there were no security reasons strong enough to justify the nature of the searches in those cases. Because there was no precedent that would provide fair notice, the Court determined that the law on strip searches in jails was undeveloped, and that “the immunity defense [did] not permit [it] to tax correction officers with clairvoyance.” Accordingly, the Court held that the officers were entitled to qualified immunity.

Judge Wynn concurred in the majority’s opinion, but wrote a separate concurrence to emphasize the importance of addressing the constitutionality of strip-searching detainees out of the general population.

Full Opinion

Abigail Forrister

U.S. v. SPINKS, NO. 13-4771

Decided: October 28, 2014

The Fourth Circuit held that a court may not consider factors other than the substantial assistance offered to the prosecution when determining the extent of a defendant’s sentence reduction (i.e. downward departure) below the mandatory minimum.

Defendant (“Spinks”) was sentenced to a 240-month mandatory minimum sentence for conspiracy to distribute cocaine and cocaine base. Pursuant to 18 U.S.C. § 3553(e), the Government filed a motion to reduce Spinks’ sentence on the ground that he had provided the Government with substantial assistance in the prosecution of the codefendant. The motion was granted and Spinks’ sentence was reduced by thirty percent to 168 months. Spinks’ also requested that the court consider other factors to further reduce his sentence, but the court rejected his request. Spinks appealed this denial, but the Fourth Circuit affirmed. After a habeas review, Spinks was re-sentenced to 120 months, and the Government renewed its § 3553(e) motion, which was again granted, reducing Spinks’ 120 months sentence to 84 months. Spinks asked the court to further reduce his sentence based on his post-conviction rehabilitation. The district court, however, denied that it had the authority to depart any further from the minimum sentence based on § 3553(a) factors. Spinks filed an appeal challenging the court’s failure to consider other factors.

Spinks argued that Pepper v. United States, 131 S. Ct. 1229 (2011), and United States v. Davis, 679 F.3d 190 (4th Cir. 2012), permitted the district court to consider factors other than the substantial assistance to the prosecution. The Fourth Circuit, however, held that precedent clearly establishes that “the extent of a § 3553(e) departure below a mandatory minimum guideline must be based solely on a defendant’s substantial assistance and factors related to that assistance.” The Court emphasized that United States v. Hood, 556 F.3d 226 (4th Cir. 2009), addressed the same issue and concluded that the statutory language limited departures from the mandated minimum sentence only where a defendant provided substantial assistance to the prosecution. The Court rejected Spinks’ reliance on Davis. Unlike the present case, Davis involved a motion for sentence reduction pursuant to Federal Rule of Criminal Procedure 35(b), a much broader rule. Davis established that a district court may consider additional factors only after a Rule 35(b) motion had been granted, which was not the case for Spinks. Similarly, the Court rejected Spinks’ claim that Pepper supported his argument. The defendant in Pepper sought a variance from the advisory U.S. Sentencing Guidelines range, not a variance from a mandatory minimum.

Judge Davis concurred in the judgment, but disagreed with the majority’s reasoning. Citing to the First and Sixth Circuits, Judge Davis emphasized that “there is no logical reason to treat Rule 35(b) and § 3553(e) differently,” as the majority did. He also noted that even if the district court would have considered Spinks’ post-rehabilitation, the record shows that the district court would still have imposed the same sentence.

Full Opinion

Abigail Forrister

U.S. v. MCLAURIN, NO. 13-4138

Decided: August 22, 2014

The Fourth Circuit affirmed Appellants’ convictions, but vacated McLaurin’s sentence and remanded for resentencing.

Appellants were working with disgruntled drug couriers, and implemented a plan to rob a drug “stash house” containing between seven to nine kilograms of cocaine. However, the stash house did not exist, and the alleged drug couriers were actually undercover law enforcement officers. Appellants were arrested, and convicted on a variety of conspiracy and firearms charges. Appellants each moved to sever the felon-in-possession charges from the conspiracy charges, which the district court granted for Lowery, but denied for McLaurin. Both received a jury trial on the remaining charges, and both primarily relied on an entrapment defense. However, the jury rejected the defense and convicted both Appellants. Appellants filed timely appeals.

The Fourth Circuit found no error in the district court’s jury instructions regarding Appellants’ entrapment defense, and its supplemental instruction on the term “inducement.” The Court stated that the district court’s elaboration on the circumstances for inducement were consistent with Fourth Circuit law. Further, the Court stated that the district court did not err by admitting evidence of prior bad acts by Appellant Lowery because evidence that tended to prove that Lowery had the ability to bring a powerful firearm to the planned stash house robbery was relevant in determining Lowery’s predisposition to commit the robbery. Also, the Court found that Appellant McLaurin’s prior conviction of common law robbery, the district court was in the best position to determine whether McLaurin opened the door to the introduction of his past history with robbery. The Court stated that Appellant McLaurin was not prejudiced by the district court’s denial of his motion to sever his felon-in-possession charges from his conspiracy charges, and agreed that the charges were properly joined because both charges were logically related to each other, and helped give a complete picture of the criminal enterprise that McLaurin planned. However, the Fourth Circuit did vacate McLaurin’s sentence and remand for resentencing due to an error in the calculation of McLaurin’s criminal history that increased his sentencing range from 121-151 months’ imprisonment, to 151-188 months’ imprisonment under the U.S. Sentencing Guidelines (U.S.S.G.).

Full Opinion

Alysja S. Garansi

EQT PRODUCTION CO. v. ADAIR, NO. 13-414

Decided: August 19, 2014

The Fourth Circuit held that the district court abused its discretion when it certified five class action suits. The Court vacated the lower court’s decision and remanded for reconsideration.

The appellees are five separate classes that believed that the appellants, producers of coal-bed methane (CBM), withheld CBM royalties from the classes of appellees that claimed ownership of the CBM and underpaid royalties to the classes that had lease agreements with the appellants. The district court certified the five classes and their claims; the appellants petitioned the Court to review on an interlocutory basis the decision granting class certification.

The Federal Rules of Civil Procedure (F.R.C.P.) require that a prospective class satisfy the following conditions: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation. Rule 23(a).   The Court also noted that an implicit requirement of F.R.C.P. Rule 23 is that “the members of a proposed class be ‘readily identifiable.’” Hammond v. Powell, 462 F.2d 1053, 1055 (4th Cir. 1972). The district court did not address the potential difficulty of identifying class members who may have acquired ownership after the initial compilation of CBD ownership twenty years prior to the current claim. Accordingly, the Court instructed that on remand the “district court should reconsider the ascertainability issues posed by the ownership classes.” The Court also reasoned that the commonality element was not clearly met and would require further inquiry because the deeds that conveyed property rights at issue contained varying language.

In addition to meeting the four requirements of F.R.C.P. Rule 23(a), “the class action must also fall within one of the three categories enumerated in Rule 23(b).” Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 423 (4th Cir. 2003). The district court certified the royalty underpayment claims under F.R.C.P. Rule 23(b)(3), which requires a showing of predominance and superiority. The Court reasoned that while the appellants used common practices, it was unclear whether the common conduct was sufficient to ensure the litigation would focus on a predominant common issue, rather than individual issues. Thus, the Court concluded that the district court’s analysis “lacked the requisite rigor to ensure the requirements of F.R.C.P. Rule 23 were satisfied by any of the certified classes,” and remanded the case.

Full Opinion

Amanda K. Reasoner

U.S. v. WHITE, NO. 13-4949

Decided: November 17, 2014

The Fourth Circuit affirmed Michael White’s (“White”) conviction for arson-related charges, and affirmed his enhanced sentence for commission of arson to a “dwelling.”

White was something of an entrepreneur in West Virginia. Among other ventures, in 1998, he began renting a duplex apartment building. Unfortunately, by 2009, White’s financial situation had deteriorated. One of his ventures had failed, and White’s tenants at the duplex were not paying their rent. Prior to the arson, White obtained an eviction order against one tenant, but apparently the other was never notified and never removed her personal belongings from the apartment. In June 2009, White took out a fire insurance policy on the duplex, and later that summer he paid the Kinders, who lived across the street from the duplex, to burn it down, so that he could collect the insurance proceeds. In the aftermath of the arson, White reneged on his promise to pay the Kinders but he also made comments to an insurance agent that tended to exonerate them of liability. However, the Kinders ultimately implicated White in their testimony to the police, and White was eventually tried and convicted for conspiracy to commit arson, aiding and abetting arson, and accessory after the fact to arson.

The Court first reasoned that the Government had established White was involved in an “activity that [sufficiently] affect[ed]” interstate commerce, as required for the first two convictions. Although White conceded that renting real estate is an “activity” that sufficiently affects interstate commerce, he argued that the duplex was no longer being rented because his tenants had vacated it when the arson took place. However, according to the Court, there was enough evidence to show that the duplex was still being rented at the time of the arson. First, it remained insured as a commercial property. Second, White’s act of commissioning the arson indicated that he did not intend to “remove” the duplex from the rental market, but rather, he intended to collect on the insurance policy.

Next, the Court affirmed White’s conviction for accessory after the fact to arson because, even though he made untruthful statements to an insurance agent instead of a police officer, a reasonable juror could infer that White knew the insurance agent would relay his comments to law enforcement. Further, White’s only purpose for lying to the insurance agent was to shift police attention away from himself and the Kinders.

Finally, the Court affirmed White’s enhanced sentence for committing arson to a “dwelling,” even if the duplex was vacant at the time of the arson. According to the Court, a “brief [vacancy] period” did not warrant a status change from dwelling to “mere building.” Therefore, the Court affirmed White’s convictions.

Full Opinion

James Bull Sterling

MULYANI v. HOLDER, NO. 13-1653

Decided: November 14, 2014

The Fourth Circuit denied Petitioner’s claim for review of the Board of Immigration Appeals’s (“BIA”) decision.

Petitioner (“Mulyani”) grew up as a Christian in Indonesia, which is a primarily Muslim country. Mulyani and her husband came to the U.S. in 2000 for vacation, and chose to stay in the U.S. when their vacation ended. Petitioner asserts that they would endure religious persecution if they were forced to return to Indonesia, describing several instances of religiously motivated violence she experienced during her youth because of her Christian faith. In September 2008, the Department of Homeland Security initiated removal proceedings against Mulyani. Petitioner conceded removability under the Immigration and Nationality Act (“INA”), but sought relief in the form of asylum by arguing that the Indonesian Government was indifferent, if not hostile, towards Christian rights. The immigration judge (IJ) denied all relief, and the BIA also concluded that she was not entitled to relief. Mulyani filed a petition with the Fourth Circuit for review.

The Fourth Circuit concluded that it lacked jurisdiction to consider whether Mulyani’s asylum application was untimely and qualified for an extraordinary circumstances exception to the one-year time limit because Congress has expressly restricted the Court’s power to review agency decisions that involve a time bar. Further, the Fourth Circuit found unpersuasive Mulyani’s argument that the Indonesian Government would be unwilling, or unable, to protect her from religious persecution, and that the BIA ruled in error on this issue. The Fourth Circuit stated that substantial evidence supported the BIA’s determination that Mulyani does not qualify as a “refugee,” and that Mulyani’s description of past experiences and articles recounting Christian persecution accompanying her application were insufficient to qualify her for asylum and withholding of removal. The Fourth Circuit also stated that Mulyani failed to offer any evidence that she was entitled to relief under the Convention Against Torture (CAT) because she failed to demonstrate that the Indonesian Government knows her identity or would harm her because of her Christian faith. Thus, Mulyani was not entitled to any relief.

Full Opinion

Alysja S. Garansi

U.S. v. DOWELL, NO. 13-4576

Decided: November 13, 2014

The Fourth Circuit held that the district court erred in applying a “vulnerable victim” sentence enhancement to John Dowell’s (“Dowell”) conviction for child pornography-related crimes. However, the Court also held that the district court’s error was harmless, and affirmed Dowell’s 960-month sentence.

Dowell was arrested in late 2011 on child pornography charges. After his arrest, a search of his computers revealed over 70,000 pornographic files, seventy-five percent of which were child pornography. Some of the files included videos of Dowell engaging in sexual acts with two minor children. Thereafter, Dowell was convicted on twelve counts of producing child pornography, and one count of transportation of child pornography.

The Court first reasoned that “as applied” to Dowell, the district court’s sentence did not amount to a “cruel and unusual” punishment in violation of the Eighth Amendment of the U.S. Constitution because the sentence was not “grossly disproportionate” to the crimes he committed. The Court rejected Dowell’s claim that his life-sentence was cruel and unusual merely because he never threatened the minor children with physical harm. Psychological damage, the Court noted, can be just as harmful to the children; for instance, it may cause the minor children to have developmental issues for the rest of their lives.

Next, in considering the district court’s application of the U.S. Sentencing Guidelines (U.S.S.G.), the Court determined that the district court had impermissibly “double count[ed]” when it applied a “vulnerable victim enhancement” to Dowell’s production of child pornography charges. Double counting “occurs when a provision of the Guidelines is applied to increase punishment on the basis of a consideration that has been accounted for by application of . . . a statute.” Although the vulnerable victim enhancement could have been applied in this case for a non-age related reason, the district court clearly applied it based on “age related factors” that were already accounted for in the original charge. However, notwithstanding its double counting, the district court’s error was harmless because Dowell would be still be subject to the same length prison term even if his sentence were recalculated without the double counting.

Full Opinion

James Bull Sterling

U.S. v. AVILA, NO. 13-4606

Decided: November 14, 2014

The Fourth Circuit affirmed the judgment of the district court and upheld an eight-level sentencing enhancement under the U.S. Sentencing Guidelines (“U.S.S.G.”) based on Defendant’s prior first-degree burglary conviction. The Court concluded that Defendant’s prior conviction supported the enhancement because the crime was a crime of violence under California’s statute. The Court further concluded that the district court’s sentencing was procedurally adequate.

Defendant (“Avila”), a Mexico citizen, had a long history of illegally entering the United States and engaging in criminal activity while in the United States. Following a sentence for first-degree burglary in 1994 in California, Avila was removed to Mexico, but again reentered the United States, and was arrested in North Carolina where Avila was indicted by a federal grand jury for illegal reentry following an aggravated felony conviction. The United States Probation Office prepared a pre-sentence investigation report (“PSR”) and recommended an eight-level enhancement. Avila pleaded guilty to illegal entry, and the district court adopted the recommended guidelines range in the PSR.

On appeal, Avila challenged the district court classification of his first-degree California burglary conviction as an aggravated felony justifying an eight-level enhancement under the U.S.S.G. The Court rejected Avila’s argument. First, the Court noted that U.S.S.G. § 2L1.2(b)(1)(C) provides an eight-level increase to the base offense level of any defendant who “previously was deported, or unlawfully remained in the United States, after . . . a conviction for an aggravated felony.” The Court then noted that the relevant statute defines “aggravated felony” by listing a series of qualifying offenses, including a “crime of violence.” Employing a categorical approach, and relying on Leocal v. Ashcroft, the Court concluded that California’s first-degree burglary qualifies as a crime of violence within the meaning of U.S.C. § 16(b), and therefore qualifies as an aggravated felony. 543 U.S. 1 (2004).

Separately, Avila argued that the district court district court failed to sufficiently individualize the assessment or address his “non frivolous argument for a below-guideline sentence.” The Court, however, held that the district court’s explanation of its sentencing was more than sufficient to preclude a finding of error. The Court similarly rejected Avila’s argument that the district court failed to address his non frivolous argument for a below-guideline sentence concluding that the district court made clear that it considered Avila’s personal history and characteristics.

Full Opinion

Abigail Forrister

YANG v. HOLDER, NO. 13-1682

Decided: October 29, 2014

The Fourth Circuit reversed the Board of Immigration’s (“BIA”) decision to deny Xing Yang (“Yang”) relief from deportation. The Court held that the BIA erred by excluding evidence, and applied an incorrect legal standard, when it ruled that Yang was guilty of fraud and willful misrepresentation. The Court also held that Yang had not “abandoned his adjustment application by failing to submit updated biometric data[.]”

Yang, a native of China, came to the United States in early 1993. In March 1993, Yang applied for asylum and withholding of removal. Although a deportation order was entered against Yang in 1997, in 2004 his mother, a “lawful permanent resident” in the United States, successfully acquired an immigration visa for him. Meanwhile, in 2002, Yang’s deportation proceedings were reopened. In his revised application for relief, Yang sought asylum, withholding of removal, and protection under the Convention Against Torture (“CAT”). However, at a 2008 evidentiary hearing in front of an immigration judge (“IJ”), Yang and his mother provided testimony that was inconsistent with statements he made in his asylum application. The IJ subsequently ruled against Yang on all three grounds of relief, and also entered a credibility ruling against Yang based on the inconsistencies between his testimony and his application.

Yang appealed to the Board of Immigration Appeals (“BIA”), which subsequently remanded his case back to the IJ because of the immigration visa his mother had acquired. However, the IJ once again denied Yang a status adjustment, and ruled that Yang’s inconsistent testimony at the 2008 hearing amounted to “fraud and willful misrepresentation[,]” that he had not maintained “current biometric data[,]” and that he had insufficient income to qualify for the immigration visa. The BIA affirmed.

The Court reasoned that the BIA had committed legal error by affirming the IJ’s second ruling because the IJ had based its finding of fraud and willful misrepresentation solely on an earlier finding of “adverse credibility.” According to the Court, evidence of adverse credibility does not necessarily compel a finding of fraud and willful misrepresentation. Furthermore, Yang’s inconsistent testimony at the 2008 hearing was insufficient to constitute fraud and willful misrepresentation because the inconsistencies were immaterial to his asylum application.

Finally, the Court reasoned that Yang had not abandoned his adjustment application by failing to submit updated biometric data because he was legally entitled to be notified of his obligation to update this data but never received that notice. Therefore, the Court reversed the BIA’s decision and remanded his case for further review of Yang’s application for relief from deportation.

Full Opinion

James Bull Sterling

U.S. v. BRILEY, NO. 13-4831

Decided: October 22, 2014

The Fourth Circuit affirmed Jay Briley’s (“Briley”) conviction on two felony counts and one misdemeanor count of violating 18 U.S.C. § 111(a) by causing injury to Federal Park Officers (“Officers”) during their official duties. The Court held that the Government did not have to prove an “assault” occurred to obtain a conviction under § 111(a). The Court also held that the district court erred when it allowed the introduction of evidence of Briley’s “other bad acts” to convict him for misdemeanor disorderly conduct. However, the Court found that the error was harmless, and affirmed that conviction as well.

In January 2012, two Officers who were patrolling a national park in Virginia discovered Briley and another man in Briley’s car about to engage in “sexual relations.” The two Officers asked Briley to exit the vehicle but he refused, which led to a struggle between Briley and the Officers. Finally, with the help of two other Park Officers, who arrived during the struggle, Briley was removed from the car and placed under arrest. After a trial, Briley was convicted on three counts of injuring various Park Officers, and one count of disorderly conduct. On the disorderly conduct charge, the district court allowed the Government to introduce evidence of a subsequent incident where Park Officers arrested Briley under similar circumstances. During this subsequent arrest, however, Briley did not act violently.

The Court first reasoned that the Government was not required to prove an “assault” occurred to obtain a conviction under § 111(a) because doing so would render the statute superfluous. Section 111 imposes penalties in varying degrees for a person who “forcibly assaults, resists, opposes, impedes, intimidates, or interferes with” a federal officer. While the specific penalty depends on the severity of the crime committed, each penalty referred back to these previously mentioned “violative acts.” Therefore, Briley could be held liable under § 111(a) for committing any of the six violative acts, including, but not limited to, an assault.

The Court also reasoned that Briley’s subsequent arrest was improperly admitted into evidence by the district court, under Federal Rule of Evidence (F.R.E.) 404(b), to support the disorderly conduct charge because Briley did not act violently during the subsequent arrest. F.R.E. Rule 404(b) evidence can be introduced as evidence of other bad acts but not to show that the defendant has a “propensity” to break the law. In this case, there was no evidence that Briley was violent during the subsequent arrest. The error in admitting this subsequent arrest was harmless, however, because the Government only needed to prove to the jury that Briley knew his conduct was “inappropriate.” Other evidence that the Government introduced at trial satisfied this “modest bar[,]” and so the Court affirmed Briley’s convictions.

Full Opinion

James Bull Sterling

U.S. v. CATONE, JR., NO. 13-4663

Decided: October 15, 2014

The Fourth Circuit upheld Defendant’s (“Catone”) conviction for making a false statement in connection with his receipt of federal worker’s compensation benefits, but vacated his sentence and the restitution order, and remanded for further proceedings.

In 2006, Catone, a former United States Postal Service employee, began receiving payments under the Federal Employees Compensation Act based on injuries arising from extended periods of driving. To verify his continued eligibility for benefits, Catone was required to submit a form each year, which disclosed whether he had been employed, or earned any compensation, during the past fifteen months. From March 2007 to September 2009, Catone reported that he was unemployed for all periods and had not earned any compensation. Catone, however, had received $635 for custodial services. As a result, Catone was convicted by a jury for violating 18 U.S.C. § 1920. The district court sentenced Catone to a sixteen-month term of imprisonment, and imposed restitution in the amount of $106,411.83.

On appeal, Catone challenged his conviction, imprisonment, and the imposed restitution amount. First, Catone argued that the Government should have produced a form that he had submitted to the Department of Labor in March 2007, which disclosed the $ 635 compensation. Catone claimed that the Government’s failure to produce the form as part of discovery constituted a Brady violation. See Brady v. Maryland, 373 U.S. 83 (1963). Reviewing the claim for plain error, the Court rejected Catone’s argument because the material was known to Catone; the form was publicly available and could have been uncovered by Catone; and, because Catone was unable to show that had the form been disclosed, it would have likely changed the verdict.

The Court, however, citing 18 U.S.C. § 1920, did conclude that the imposition of Catone’s sixteenth months’ felony sentence violated his Sixth Amendment right to trial by jury. Section 1920 establishes two levels of sentencing depending on the amount of benefits “falsely obtained.” If the amount of loss does not exceed $1,000, the defendant may be convicted of a misdemeanor, but if the amount received is more than $1,000, the defendant may be convicted of a felony. Thus, the Court adopted the Eleventh Circuit’s interpretation of § 1920, and held that the amount of benefits falsely obtained constitutes a substantive element for a felony offense, which must be submitted to the jury and proven beyond a reasonable doubt. The Court further rejected the Government’s claim that the error was harmless. Rather, the Court concluded that the jury made no finding that the amount of benefits obtained exceeded $1,000, which would support a felony sentence. Accordingly, the Court vacated Catone’s felony conviction, and instructed the district court to impose a misdemeanor sentence on remand.

Finally, the Court held that the district court erred in calculating the loss amount for purposes of sentencing enhancement and restitution. The district court failed to use the correct formula, as established in United States v. Dawkins, 202 F.3d 711, 715 (4th Cir. 2000), when calculating the loss amount. Thus, the Court vacated the restitution order and remanded to the district court for calculation under the correct formula.

Full Opinion

Abigail Forrister

GESTAMP SOUTH CAROLINA, L.L.C. v. NLRB, NO. 11-2362

Decided: October 8, 2014

The Fourth Circuit held that the “recess session” appointment of a National Labor Relations Board (“NLRB”) member was valid under the U.S. Constitution. The Court also held that the General Counsel of the NLRB failed to establish a prima facie case that two Gestamp South Carolina, LLC (“Gestamp”) employees had been discharged in violation of the National Labor Relations Act (“NLRA”). Finally, the Court held that substantial evidence supported an Administrative Law Judge’s (“ALJ”) finding that a Gestamp supervisor had made a threat to one of the discharged employees for attempting to unionize.

David Kingsmore (“Kingsmore”) worked as a “quality inspector” and Reggie Alexander (“Alexander”) worked as a “supply coordinator” for Gestamp until both were fired in late February of 2010. Prior to being fired, Kingsmore had contacted United Steelworkers (“the union”) about unionizing Gestamp’s hourly employees. Alexander eventually joined Kingsmore on a small committee of Gestamp employees to explore unionization. Supervisors for the two employees were aware of the committee, and Kingsmore’s supervisor warned him that he would be “gone” for attempting to unionize. Shortly thereafter, Alexander was fired for falsifying one day on his timesheet. He failed to correct a discrepancy between when the company system automatically signed him in, and the time he actually arrived—a period of thirty-eight minutes. Meanwhile, Kingsmore had been denied access to a nearby BMW facility, which also happened to be his former employer, while making a trip to the facility on behalf of Gestamp. This incident prompted an inquiry in to whether Kingsmore had been truthful when he told Gestamp that his employment at BMW had ended on amicable terms. After Kingsmore was unable to explain why he was banned from the BMW facility, he was fired from Gestamp for “falsification of work history” and failure to present documentation from his previous employer.

First, the Court reasoned that the recess appointment of a NLRB board member was constitutional because it occurred during a two-week Senate recess. The Recess Appointment Clause gives the President power to fill vacancies during a Senate recess. Although the Supreme Court had previously held that a recess of less than ten days was presumptively not long enough, a two-week recess, according to the Court, was adequately long to fall within the Recess Clause.

Next, the Court reasoned that neither Kingsmore nor Alexander had been discharged from Gestamp in violation of the NLRA because neither was able to carry his burden of proving that the Gestamp employee who fired both of them did so with knowledge of their union activity. The Court rejected Kingsmore and Alexander’s assertion that the requisite knowledge of their union activity could be automatically imputed to that Gestamp employee merely because Kingsmore and Alexander’s supervisors were aware of their union activity.

Finally, the Court upheld the ALJ’s ruling that Kingsmore had been threatened for his union activities because there was “substantial evidence” presented to the ALJ that he was threatened, and that a qualified “supervisor” (as defined in the NLRA) made the threat. Gestamp appealed this ruling because the ALJ’s decision was based largely on Kingsmore’s testimony, and the ALJ had already determined that his testimony was “not fully reliable[.]” Further, the ALJ had determined that a Gestamp employee who testified on this issue was credible. However, that Gestamp employee admitted that he did not remember certain facts. Ultimately, the Court found that the ALJ’s decision as a whole was not so inconsistent with the testimony as to warrant reversal.

Full Opinion

James Bull Sterling

DUKE v. NORTH CAROLINA, NO. 14-1845

Decided: October 1, 2014

The Fourth Circuit reversed the district court’s denial of a preliminary injunction on House Bill 589’s (“H.B. 589”) elimination of same-day registration and prohibition on counting out-of-precinct ballots, and remanded with instructions to the district court to enter a preliminary injunction. However, the Fourth Circuit affirmed the district court’s denial of Appellant’s request for a preliminary injunction regarding other provisions of H.B. 589.

The Supreme Court lifted certain Voting Rights Act (“VRA”) restrictions on June 25, 2013, that had previously prevented jurisdictions from passing laws that denied minorities equal access to voting. The next day, North Carolina started pursuing broad voting reform by introducing House Bill 589 which—among other effects—imposed rigorous voter identification requirements; cut a week off of early voting; prohibited local election boards from keeping the polls open on the final Saturday afternoon before elections; eliminated same-day voter registration; and barred votes cast in the wrong precinct from being counted at all. Appellants, and the U.S. Government, sued North Carolina in response, alleging that H.B. 589 violates the Equal Protection provisions of the U.S. Constitution, as well as the VRA. Appellants requested that the district court grant a preliminary injunction to prevent H.B. 589 from taking effect, but the district court refused. Appellants then timely filed an appeal.

The Fourth Circuit stated that Appellants failed to establish at least one of the elements necessary to win a preliminary injunction with respect to the following provisions of H.B. 589: (i) the reduction of early-voting days; (ii) the expansion of allowable voter challengers; (iii) the elimination of the discretion of county boards of elections to keep the polls open an additional hour on Election Day in “Extraordinary circumstances”; (iv) the elimination of pre-registration of sixteen and seventeen-year-olds who will not be eighteen-years-old by the next general election; and (v) the soft roll-out of voter identification requirements that will go into effect in 2016. Thus, the Fourth Circuit declined Appellants’ request for a preliminary injunction as to those provisions of H.B 589. However, the Fourth Circuit also stated that it was not suggesting that Appellants could not prove and eventually succeed on their challenges to all of these H.B. 589 provision at trial. The Fourth Circuit did grant Appellants’ request for a preliminary injunction with respect to the H.B. 589 provision affecting same-day registration and out-of-precinct voting because Appellants demonstrated through substantial evidence that they were likely to succeed on their Section 2 claims under the VRA; that Appellants’ were likely to suffer irreparable harm because minority voters in North Carolina would be disproportionately, and adversely, affected with no redress; that the balance of hardships showed that old systems could be resurrected to counteract the little time that North Carolina would have to implement the relief granted by the Fourth Circuit; and that the injunction was in the public interest because it stripped away the ability of qualified voters to participate in elections.

Full Opinion

Alysja S. Garansi

HENTOSH v. OLD DOMINION UNIVERSITY, NO. 13-2037

Decided: September 24, 2014 

The Fourth Circuit affirmed the district court’s order granting summary judgment.

Appellant (“Hentosh”), a white female, was a professor at Old Dominion University (“ODU”) from 2006 to 2013 in ODU’s School of Medical Laboratory and Radiation Sciences. The Appellant’s claims related to her belief that ODU had an unwritten policy of discriminating against whites and in favor of minorities. Hentosh alleged that this practice caused ODU to ignore her complains about an Asian professor. Further, after filing a charge of discrimination and retaliation against ODU with the Equal Employment Opportunity Commission (“EEOC”) relating to her complaint against the Asian professor, Hentosh claimed that it led ODU to deny her application for tenure during the ongoing EEOC investigation. The district court granted ODU’s motion to dismiss Hentosh’s discrimination claim, but denied the motion to dismiss her retaliation claim. The district court subsequently granted ODU’s motion for summary judgment on the retaliation claim, and Hentosh timely filed a notice of appeal.

The Fourth Circuit rejected Hentosh’s claim that the district court did not have subject matter jurisdiction over the retaliation claim. The Fourth Circuit stated that Hentosh met the jurisdictional requirement that she exhaust her administrative remedies for her Title VII discrimination claims. Thus, it followed that the district court had jurisdiction over the related Title VII retaliation claim. The Fourth Circuit rejected Hentosh’s argument that her failure to timely file her discrimination claims with the EEOC meant that those claims were never properly before the district court who, therefore, lacked jurisdiction over her related retaliation claims. However, the Court said that because Hentosh relied on an unpublished decision, it was neither controlling nor persuasive because it conflicted with published precedent. Although Hentosh did untimely file her discrimination claims with the EEOC, the Fourth Circuit stated that the district court did have subject matter jurisdiction over the related retaliation claim based on the denial of Hentosh’s tenure application.

Full Opinion

Alysja S. Garansi

CHEVRON CORP. v. PAGE, NO. 13-1382

Decided: September 24, 2014

The Fourth Circuit held that decisions on applications for discovery filed under 28 U.S.C. § 1782 are immediately appealable, and affirmed the district court’s order requiring that Appellants produce the requested documents.

This appeal stemmed from a multi-billion-dollar judgment rendered in Ecuador against Chevron Corporation (“Chevron”) for claims that Chevron’s operations caused substantial environmental damage in Ecuador. Chevron alleged that Ecuadorian plaintiffs and their lawyers, Steven Donziger (“Donziger”) and Aaron and Daria Page (“Page”), fraudulently obtained the multi-billion-dollar judgment. To obtain evidence of the fraudulent behavior, Chevron sought discovery of documents in several American courts. Chevron made the discovery requests under 28 U.S.C. § 1782, which provides that federal district courts may order persons to give testimony or produce documents for use in a foreign or international proceeding. Specifically, Chevron sought to compel attorneys Donziger and Page to produce certain documents. The Second Circuit concluded that Donziger made an unsubstantiated privilege claim. Specifically, that court concluded that Donzinger had waived any privileges he may have had, and ordered him to produce the documents. Similarly, Page refused to turn over adequate responses, and Chevron asked the District Court of Maryland to compel production, arguing that Page had inappropriately asserted privilege over some of the responsive documents. The District Court of Maryland granted Chevron’s motion to compel.

After determining that the § 1782 order constituted a final order, the Fourth Circuit concluded that it had subject matter jurisdiction to hear an immediate appeal from the District Court’s order. The Court ultimately concluded that Page’s claims failed on the merits. First, the Court rejected Page’s argument that the Donzinger Waiver should not have defeated his privilege claims. The Court noted that the doctrine of comity compelled the Court to affirm the application of the waiver in the Maryland proceeding to the documents in Page’s possession because a contrary ruling would cause the courts to “step on each other’s toes.” Furthermore, the Court emphasized that the District Court had two other independent bases to permit discovery of the documents that Page had asserted privilege from disclosure: (1) Page’s involvement in the alleged fraudulent judgment invoked the crime-fraud exception to the asserted privilege; and, (2) various voluntary disclosures defeated the privileges asserted and effectively created a subject-matter waiver. Accordingly, the Court affirmed the District Court’s order.

Full Opinion

Abigail Forrister

PRIORITY AUTO GROUP v. FORD MOTOR COMPANY, NO. 13-1696

Decided: July 30, 2014

The Fourth Circuit affirmed the district court’s decision to dismiss Priority’s right of first refusal claim for lack of standing, and also dismissed Priority’s claim for tortious interference with a contract.

Priority Auto brought both claims against Ford Motor Company (“Ford Motor”) for obstructing its attempt to purchase the Kimnach Ford car dealership. Ford Motor’s contract with Kimnach Ford gave Ford Motor the right of first refusal, which Ford Motor exercised, then used to direct a sale of Kimnach Ford’s assets, and to close the dealership. Priority Auto brought suit in Virginia state court, claiming that Ford Motor unlawfully exercised its right of first refusal, and, in the alternative, that Ford Motor tortiously interfered with the sales contract between Priority Auto and Kimnach Ford. After Ford Motor removed the case to federal court based on diversity jurisdiction, the district court dismissed both of Priority Auto’s claims, and Priority Auto appealed.

The Court reasoned that Priority Auto lacked standing to bring the right of first refusal suit because it was not within the class of plaintiffs that the Virginia statute sought to protect. According to the Court, only the dealer—Kimnach Ford—had standing to bring an action against Ford Motor for unlawfully exercising its right of first refusal. Priority Auto could only recover—and had already recovered from Ford—for its reasonable expenses paid in pursuit of the sale.

Alternatively, the Court reasoned that Priority Auto’s tortious interference claim was properly dismissed because Ford Motor did nothing unlawful by exercising its right of first refusal. A claim for tortious interference with a contract requires the tortfeasor to interfere using an “improper method.” Here, Ford Motor did not interfere with the sale using an improper method because it had a right to interfere with the sale pursuant to its contract with Kimnach. Therefore, the Court affirmed the district court’s dismissal of Priority Auto’s claims.

Full Opinion

James Bull Sterling

DE LEON v. HOLDER, NO. 13-1651

Decided: July 30, 2014

The Fourth Circuit held that for cancellation of removal under the Nicaraguan Adjustment and Central American Relief Act (NACARA), an illegal immigrant enters the United States free from restraint if a government agent first observes the immigrant miles after the immigrant has crossed into the U.S. Based on its holding, the Court granted a Guatemalan immigrant’s petition for review of the Board of Immigration Appeal’s (BIA) decision, and remanded his application for relief.

Appellant Oscar De Leon, a Guatemalan citizen, entered the United States illegally in 1988 and ultimately settled in Delaware. In 2003, upon returning from a trip to Latin America, a border patrol agent apprehended De Leon north of the Arizona-Mexico border. De Leon, who is married and has three United States-citizen children, applied for cancellation of removal under NACARA. Under section 203 of NACARA, illegal immigrants from Guatemala may apply for the special rule that allows cancellation of removal if they are able to meet the statutory requirements. One requirement is that individuals who enter the United States after December 31, 1990, must prove that they were not “apprehended at the time of entry.” 8 C.F.R. § 1240.619(a)(1). Entry, as defined by the BIA, requires (1) crossing into the United States, (2) admission into the country after inspection by an immigration officer, or intentional evasion of inspection, and (3) freedom from official restraint. In re Pierre, 14 I&N Dec. 467, 468 (BIA 1973). Freedom from restraint requires that the individual enjoy some amount of liberty after crossing into the United States prior to apprehension. An immigration judge (IJ) denied De Leon’s application, and found that De Leon failed to prove that he entered the country free from official restraint. As a result, the IJ ordered that De Leon be removed to Guatemala

The Fourth Circuit reasoned that the border patrol agent’s report stated that the agent first observed De Leon approximately twenty miles north of the Arizona-Mexico border, and that this fact satisfied De Leon’s burden of proof that he entered the county free from official restraint. The Court remanded the case to the BIA for application of the proper legal standard to De Leon’s application, and clarified that the Court had no opinion as to whether De Leon satisfied the additional requirements for NACARA eligibility.

Full Opinion

Amanda K. Reasoner

TATUM v. RJR PENSION INVESTMENT COMMITTEE, NO. 13-1360

Decided: August 4, 2014

The Fourth Circuit affirmed the district court’s holding that the RJR Pension Investment Committee (“RJR Pension”) had breached its fiduciary duty of care to Tatum by divesting a pension plan of certain stock, which resulted in a loss to the pension-holders. The Court also reversed the district courts holding, in favor of RJR Pension, which applied the incorrect standard for rebutting loss causation, and remanded to the district court for an opportunity to apply the correct standard. Finally, the Court reversed the district court’s decision to dismiss two committees as defendants, but affirmed the district court’s decision to not allow Tatum to amend his complaint to add the individual pension committee-members as defendants.

In March 1999, RJR Nabisco decided to spin-off its Nabisco business to protect its Nabisco stock from litigation involving RJ Reynolds tobacco products. Under a pension plan that was created on the date of the spin-off, RJR Pension was supposed to keep the Nabisco stock in the pension “frozen” so that members of the plan could maintain their investments. However, a “working group” made up of RJR employees decided to divest the plan of its Nabisco stock in six months. The stock had been declining in value, and when the group sold it, the pension-holders sustained substantial losses. Shortly after the stock was sold it rebounded, and ultimately appreciated in value compared to when the group sold it. Thereafter, Tatum brought a class action lawsuit against the Benefits Committee, Investment Committee, and RJR Pension for breaching their fiduciary duties under the Employee Retirement Income Security Act (“ERISA”).

The Court agreed with the district court that RJR Pension breached its “duty of procedural prudence” under ERISA because it did not act “solely in the interest of” the pension-holders. RJR Pension failed to conduct a thorough investigation before selling the Nabisco stock, but rather decided to sell based on an “unconfirmed assumption” that the pension was required to do so under ERISA. Further, the decision to sell was out of fear that the RJR company might otherwise face legal liability, when the decision should have considered the pension-holder’s best interests.

Next, the Court reasoned that after Tatum was able to show RJR breached its duty, the burden to refute causation shifted to RJR because “this burden-shifting framework comports with the structure and purpose of ERISA[,]” as well as general trust law principles. To carry its burden, RJR Pension had to show that its decision to sell the Nabisco stock was “objectively prudent.” Although the district court correctly shifted the burden, the Court reversed the district courts holding on the causation issue because the district court applied the wrong standard for refuting causation. The district court held that RJR Pension could carry its burden by showing a prudent fiduciary “could” have made the same decision, when the proper inquiry was whether a prudent fiduciary “would” have made the same decision. Failure to apply the more stringent “would” standard was a “real and legally significant” mistake, rather than harmless error.

Finally, the Court reversed the district court’s decision to dismiss the Benefits and Investment Committees as defendants because, although ERISA does not expressly say “committees” may be liable, the Court reasoned that here they were proper defendants as “person[s] who are fiduciaries[.]” However, the Court affirmed the district court’s decision to deny Tatum’s motion for leave to amend his complaint to name the individual committee members as defendants because he deliberately chose not to name the individuals as defendants in both his initial complaint and his first amended complaint.

Full Opinion

James Bull Sterling

FLAME S.A. v. FREIGHT BULK PTE. LTD., NO. 14-1189

Decided: August 5, 2014 

The Fourth Circuit held that the district court did not err in denying Flame S.A.’s (“Flame”) motion to vacate a writ of maritime attachment issued in favor of Freight Bulk Pte. Ltd. (“Freight Bulk”) under Supplemental Rule B of the Federal Rules of Civil Procedure (F.R.C.P.).

Flame, an integrated shipping and trading company, entered into four Forward Freight Swap Agreements (“FFAs”) with Industrial Carriers, Inc. (“ICI”). ICI defaulted on the contracts after a steep decline in freight rates, and a default judgment was entered against ICI. Flame brought an action seeking attachment of a shipping vessel to satisfy an English judgment against Freight Bulk, as the alter ego of ICI. The district court issued the attachment order. On appeal, Freight Bulk challenged the subject matter jurisdiction of the district court to issue this order.

The Fourth Circuit first addressed whether U.S. federal law or foreign law controlled the jurisdictional inquiry. The Court recognized that under English law the FFAs would not be maritime contracts, and under U.S. federal law the FFAs would be maritime contracts. Thus, if English law applied, then the district court did not have jurisdiction over the matter. After reviewing relevant precedent, the Court concluded that “U.S. Supreme Court precedent strongly indicates that federal law should control [its] determination of whether a claim, such as the FFA dispute . . . sounds in admiralty.” Accordingly, the Court held that federal law, rather than foreign law, controlled the procedural inquiry into whether a foreign judgment is a maritime judgment. Thus, the district court had admiralty subject matter jurisdiction under federal law.

The Court next considered whether FFAs are maritime contracts under federal law to determine if the district court properly exercised admiralty jurisdiction in the case. The Court first concluded that maritime contracts need not refer to any particular vessel or any particular shipment. Also, despite Freight Bulk’s claim, the Court concluded that the fact that the FFAs call for cash settlement does not preclude the conclusion that these FFAs are maritime contracts. Here, the FFAs were between two shipping companies engaged in maritime commerce, and as the district court determined, the companies created the FFAs as a component of their shipping businesses. Accordingly, the Court held that the district court did not err in concluding that the FFAs at issue were maritime contracts, and thus, that the district court had subject matter jurisdiction to hear the matter. Importantly, the Court noted that its holding did not resolve the issue of whether all FFAs are maritime contracts as a matter of law.

Full Opinion

Abigail Forrister

MINTER v. WELLS FARGO BANK, N.A., NO. 13-2131

Decided: August 5, 2014

The Fourth Circuit held that the district court did not abuse its discretion on any of the Appellants’ claims.

Wells Fargo and Walker Jackson Mortgage Corporation, a subsidiary of Long & Foster Real Estate (“Long & Foster”), created Prosperity Mortgage Company (“Prosperity”) in 1993. Prosperity operated as a mortgage lender, and funded its loans through a wholesale line of credit provided by Wells Fargo. Appellants used Long & Foster as their realtor and purchased their homes through mortgages from Prosperity. In 2007, Appellants filed a class action lawsuit alleging that Wells Fargo and Long & Foster formed Prosperity as a “front” organization to facilitate illegal referral fees and kickbacks in violation of the Real Estate Settlement Procedures Act (“RESPA”). The jury returned a verdict in favor of Appellees, and Appellants moved for a new trial. The district court denied Appellants’ motion, and Appellants filed a timely appeal.

The Fourth Circuit stated that the district court did not abuse its discretion in denying Appellants’ motion for a new trial because Appellants raised its argument for the first time post-verdict that the statements made by defense counsel in its closing amounted to a judicial admission that Long & Foster referred Appellants to Prosperity to obtain their mortgages. Further, in reviewing the evidence, the Fourth Circuit found that it could not conclude that there was a total absence of evidence to support the jury’s verdict. Appellants also challenged the district court’s decision to allow testimony about the lack of economic harm that Appellants suffered from their use of Prosperity’s settlement services. However, the Fourth Circuit noted that the decision to allow Appellees’ attorneys to get general testimony from Appellants about Prosperity’s competitive loan pricing was relevant to determine whether Prosperity was in fact a “front” business, and whether it independently priced its loans, or was controlled by Wells Fargo and Long & Foster. Finally, the Fourth Circuit found that the district court did not abuse its discretion by refusing to strike the statements made by Appellees’ attorney in its closing statement. The Fourth Circuit stated that although defense counsel’s statements were improper, the statements were an isolated incident over the course of a seventeen-day trial, and had no bearing on the real issues. Thus, the Court found that no reasonable probability existed that these isolated comments diverted the jury from deciding the issues on the evidence and law it received from the trial court.

Full Opinion

Alysja S. Garansi

CHERRY v. MAYOR OF BALTIMORE CITY, NO. 13-1007

Decided: August 6, 2014

The Fourth Circuit held that the City of Baltimore did not violate the Contract Clause of the U.S. Constitution when it changed the method for calculating pension benefit increases.

The City of Baltimore (City) instituted a public pension plan for public safety employees and, in 1983, instituted a variable benefit. The variable benefit entitled retirees to a benefit increase if the plan’s investments earned more than 7.5 percent in the preceding year. In 2008, in response to budget deficits, the City replaced the variable benefit plan with a cost of living allowance (COLA), which increased benefits by a maximum of two percent each year. Under the variable benefit method, retirees’ benefits increased an average of three percent. Appellants, retired police officers and firefighters, filed a class action suit averring that the ordinance establishing the COLA violated the retirees’ rights under the Contract Clause. The test of whether a sovereign has violated the Contract Clause is a three-part inquiry. The court considers (1) whether an impairment exists, (2) whether the state law in question substantially impairs a contractual relationship, and (3) if the impairment is substantial, whether the impairment is permissible. Balt. Teachers Union v. Mayor of Baltimore, 6 F.3d 1012, 1015, 1018 (4th Cir. 1993).

The Court concluded that no contract impairment existed because the ordinance did not preclude the appellants from pursuing a breach of contract claim under state law; did not protect the City from paying damages arising out of a breach of contract; and did not create a statutory defense to a breach of contract claim. Additionally, Maryland law allows appellants to challenge whether the change to pension benefits was a reasonable modification and entitles plaintiffs to relief if the modification is unreasonable. Therefore, the Court reasoned that state law provides plaintiffs the necessary protection for breach of contract and the ordinance did not violate the Contract Clause.

Full Opinion

Amanda K. Reasoner

U.S. v. MODANLO, NO. 13-4378

Decided: August 7, 2014

The Fourth Circuit denied Modanlo’s midtrial notice of appeal, and held that the district court was not stripped of jurisdiction when Modanlo made his midtrial notice of appeal.

Modanlo was charged on eleven counts relating to his involvement in “conspiring to illegally avoid the [Iran] trade embargo[,]” money laundering, and transferring “criminally derived property[.]” Count Eleven of Modanlo’s indictment charged him with obstructing joint bankruptcy proceedings for him and his closely held business. However, eight months prior to the trial the joint proceedings were dismissed, and Modanlo argued that dismissal collaterally estopped the Government from bringing the obstruction charge against him. The district court denied Modanlo’s motion but failed to provide a written opinion until the sixth day of trial. During trial, Modanlo filed a notice of appeal on Count Eleven, which he argued could be severed from the other counts. The district court denied his motion and Modanlo was convicted on all but one count. Modanlo appealed, asserting that his midtrial appeals, “divested the court of jurisdiction to adjudicate his case,” therefore rendering his convictions and sentences a “legal nullity.”

The Court reasoned that Modanlo’s appeals were the “nullity” because he waited to file a notice of his appeal until after the trial began, and before the trial court entered a final judgment against him. Although the trial court failed to provide a written ruling on his pretrial motion until after the trial began, Modanlo was “without a basis for extraordinary relief[,]” and, therefore, had to wait for a final judgment to be entered against him before appealing. Thus, Modanlo’s midtrial appeals were dismissed.

Full Opinion

James Bull Sterling

WOOD v. CRANE CO., NO. 13-1868

Decided: August 15, 2014 

The Fourth Circuit held that Appellant, Crane Co. (“Crane”) was not entitled an opportunity to assert another basis for federal jurisdiction after the district court remanded its case to Maryland state court when Appellee, James Joyner (“Joyner”), amended his complaint to eliminate the claim underlying Crane’s federal defense, and concluded that Crane’s attempt to amend its notice was untimely.

Joyner filed suit against Crane in Maryland state court alleging that Crane manufactured and supplied asbestos-containing valves and gaskets to the Navy, on whose ships Joyner worked. Crane removed the case to federal court pursuant to 28 U.S.C. § 1442(a)(1), averring that it would assert a federal contractor defense because it supplied the valves in conformance with military specifications. Crane’s notice of removal, however, did not explicitly assert the defense as it related to the gaskets, but only as it related to the valves. Joyner then amended his complain to eliminate the claims related to the valves, and thus eliminated the claims underlying Crane’s federal defense. Joyner also requested that the case be remanded to state court, which the district court allowed. Crane contested Joyner’s motion, arguing that Joyner manipulated his complaint to avoid federal jurisdiction; that Federal Rule of Civil Procedure (F.R.C.P.) 15 did not permit such a calculated amendment; and, that it could assert its federal defense in relation to the gaskets. The district court rejected Crane’s arguments, and remanded the claims to Maryland state court.

As an initial matter, the Fourth Circuit noted that, contrary to Joyner’s contentions, it had jurisdiction over the appeal pursuant to § 1442(a)(1). The Court then rejected Crane’s claim that Joyner’s disclaimer of damages on the valves was a legal nullity. The Court noted: “[a]s we have no reason to believe that the state court will fail to hold Joyner to this disclaimer, it effectively precludes any defense based on valves alone.” The Court also rejected Crane’s argument that Joyner’s amendment should be disallowed as a “manipulative tactic[]”, and concluded that such manipulation is not prohibited.

Accepting the disclaimer’s effect, the Court addressed whether Crane could assert any other grounds of federal subject matter jurisdiction. Crane suggested that it should have an opportunity to amend its notice of removal. The Court, however, noted that “where the amendment is something more than a minor technical correction”, courts generally require that the amendment must be filed within the thirty day removal period. The Court emphasized that Crane made a strategic decision in open court to not include the gaskets as a ground for removal. The Court noted that parties are generally held “to that sort of strategic decision,” and that Crane’s case presented no reason to depart from the general rule.

Full Opinion

Abigail Forrister

RUSSELL v. ABSOLUTE COLLECTION SERVS., NO. 12-2357

Decided: August 15, 2014

The Fourth Circuit affirmed the district court’s judgment.

Appellant, a debt collection service, persistently made repeated collection demands to Appellee regarding on a debt that she incurred in 2008. Appellee paid the outstanding debt in full within one month of receiving the first collection letter from Appellant. However, in the following months, Appellant continued to send Appellee demand letters that falsely stated that the already paid debt remained due, and threating to report the debt to credit bureaus as past due. Appellee filed suit alleging that Appellant violated the Fair Debt Collection Practices Act (“FDCPA”). The district court granted Appellee’s motion for judgment as a matter of law (“JMOL”) regarding the FDCPA claims, and allowed the state claims to go to the jury, which found in favor of Appellee and awarded her $37,501.00. Appellant filed a timely appeal.

The Fourth Circuit stated that one of the FDCPA’s primary purposes is to make it unlawful for a debt collector to make any deceptive or false statements while conducting their collection activities. See 15 U.S.C. § 1692e. A debt collector that violates the FDCPA is liable for actual damages, costs, reasonable attorneys’ fees, and potential statutory damages. See 15 U.S.C. § 1692(k)(a)(1), (a)(2)(A), & (a)(3). The Fourth Circuit rejected the Appellant’s argument that it was not liable for any false or deceptive statements made because the Appellee failed to dispute the debt in writing within thirty days of receiving the initial collection letter. The Court stated that nothing in the FDCPA’s text suggested that the ability to state a claim under § 1692e depends on a debtor first disputing the validity of the debt in compliance with § 1692g. Further, the express language and remedial purpose of the FDCPA confirm that a debtor is not required to dispute the debt before bringing a § 1692e claim. The Fourth Circuit also affirmed the district court’s decision granting Appellee’s JMOL motion because the Appellant’s collection letter served as a threat to communicate credit information, which it knew or should have know was false, as well as using deceptive means to collect the debt. Further, the Fourth Circuit affirmed the district court’s determination that Appellant violated the disclosure requirements of Federal Rules of Civil Procedure (F.R.C.P.) 26(a) and (e). The Fourth Circuit also affirmed the decision to exclude evidence related to Appellant’s bona fide error defense because Appellant failed to provide any justification for its late disclosures after twenty months of initial litigation.

Full Opinion

Alysja S. Garansi

U.S. v. STEPHENS, NO. 12-4625

Decided: August 19, 2014

The Fourth Circuit declined application of the exclusionary rule to suppress evidence police officers gathered against Stephens, and affirmed his conviction for illegal possession of a firearm.

In 2011, police officers attached a GPS device to Stephens’s car because of a tip that informed them Stephens, a convicted felon, would be carrying a weapon. The officers used the GPS device to track Stephens to a nightclub and, after his behavior provided the officers with reasonable suspicion, they performed a patdown on Stephens that revealed an empty holster. The officers then used a dog to inspect the outside of Stephens’s car, which led to a search of the car, where they found a firearm. While Stephens’s case was pending, the U.S. Supreme Court decided United States v. Jones, in which it held that “installation of a GPS device on a target’s vehicle . . . constitutes a ‘search’” under the Fourth Amendment. Consequently, although it had previously been standard practice for police to attach GPS devices to a suspect’s vehicle, after Jones that practice had uncertain constitutional validity.

In affirming Stephens’s conviction, the Court reasoned that it would be contrary to the purpose of the exclusionary rule—“deter[ring] future Fourth Amendment violations”—to suppress the evidence gathered against Stephens, even if the search was unconstitutional after Jones. Here, the officers acted in good-faith reliance on what appeared to be a settled legal precedent, and well-established practices. Therefore, admitting the evidence against Stephens was unlikely to lead to future Fourth Amendment violations.

Further, the Court applied the good-faith inquiry here because the officers had acted reasonably by relying on the widely understood legal principal from the U.S. Supreme Court decision in United States v. Knotts. Many courts understood Knotts to support the proposition that use of a beeper to track a vehicle on public roads, and that this action did not constitute a search. Although Jones proved that reading of Knotts was flawed, the Court reasoned that the good-faith inquiry depends on the totality of the circumstances. Here, the circumstances supported introducing the evidence against Stephens, and so the Court affirmed Stephens’s conviction.

Full Opinion

James Bull Sterling

DANSER v. STANSBERRY, NO. 13-1828

Decided: July 3, 2014

The Fourth Circuit held that the district court erred in denying the defendants’, employees at a federal detention center, motion for summary judgment based on qualified immunity.

After he was assaulted by another inmate in the Butner, North Carolina Federal Correctional Institute, Plaintiff, David Danser, alleged that Theron Boyd, a correctional officer, Lieutenant Bobby Roy, Boyd’s immediate supervisor, and Patricia Stansberry, the prison warden, violated Danser’s Eighth Amendment right to be free from cruel and unusual punishment. Specifically, Danser alleged that the defendants showed deliberate indifference to his safety. Defendant Boyd’s job duties included, inter alia, grouping inmates in the recreation cages for outdoor time and supervising the recreation area. Boyd assigned Danser, who was serving a sentence for sexual abuse and exploitation of a minor, and possession of child pornography, and three other inmates, including a member of a violent prison gang, to the same recreation cage. In violation of his duties, Boyd left the recreation area for several minutes. While Boyd was gone, the gang member assaulted Danser, and during the assault commented about Danser’s sexual abuse of children. Danser suffered “a ruptured spleen, a punctured lung, some broken ribs, and numerous bruises and abrasions.” The defendants filed a motion for summary judgment on the basis of qualified immunity, and the district court denied the motion.

In reviewing the district court’s decision to reject the defendants’ qualified immunity claim, the Court applied the two-step Saucier test. The Saucier test first requires that the reviewing court “decide whether the undisputed facts show that the government official’s actions violated the plaintiff’s constitutional rights.” Saucier v. Katz, 533 U.S. 194, 201 (2001). If the first step is satisfied, then the court “must determine whether the right at issue was ‘clearly established’ at the time of the events in question.” Id. To prove the deprivation of a constitutional right a prisoner must show (1) a serious deprivation in the form of a “serious or significant physical or emotional injury,” Brown v. N.C. Dep’t of Corr., 612 F.3d 720, 723 (4th Cir. 2010), and (2) that the prison official allegedly responsible for the deprivation had a “sufficiently culpable state of mind.” Farmer v. Brennan, 511 U.S. 825, 834 (1994). Here Danser suffered serious physical injuries, thus the Court found the first element was satisfied. Specific to the claim against Boyd, the Court reasoned that Boyd may have been negligent when he left the inmates unsupervised, but that Danser failed to provide any evidence to suggest that Boyd acted out of deliberate indifference. With respect to the claims against Stansberry and Roy, the Court concluded that the district court’s conclusions were erroneous for two reasons. First, government officials cannot be held liable under a theory of respondeat superior. Second, the record revealed no evidence that the prison had a policy or practice that failed to provide adequate protection for sex offenders. Because Danser failed to prove the first step of the Saucier test, the Court concluded that the district court erred in denying the defendants’ summary judgment motion on the basis of qualified immunity without reaching the second step of the Saucier test.

Full Opinion

Amanda K. Reasoner

FLYING PIGS, LLC v. RRAJ FRANCHISING, LLC, NO. 13-2135

Decided: July 1, 2014

The Fourth Circuit vacated the district court’s dismissal order and remanded the case to state court for failure to state a federal question sufficient for removal and federal jurisdiction. See 28 U.S.C. §§ 1331, 1441(a).

Flying Pigs, LLC (“Flying Pigs”) commenced this action to enforce an equitable lien against trademarks and associated goodwill, which RRAJ Franchising, LLC (“RRAJ”) now owns. In 2010, Flying Pigs was awarded a default judgment of $567,000 for rental payments owed by Chelda, Inc. (“Chelda”), its delinquent commercial tenant. Chelda and Ham’s Restaurants, Inc. (“Ham’s”) executed a twenty-year lease with Flying Pigs, but Ham’s filed for Chapter 11 bankruptcy. Thus, Flying Pigs may only recover from Chelda. In attempt to satisfy this judgment, Flying Pigs sought and was awarded an equitable lien against two federally registered trademarks, and their associated goodwill. Flying Pigs registered notice of the lien with the United States Patent and Trademark Office (“PTO”). Chelda registered the trademarks, but Ham’s used them exclusively. The bankruptcy court approved the sale of Ham’s assets to RCR, but the Bank of North Carolina (“BNC”) filed suit against RCR and Chelda on the morning of the sale’s closing. BNC claimed to hold a perfected security interest in Chelda’s personal property, and asserted that Chelda was the actual owner of a large number of the assets that RCR allegedly purchased in the bankruptcy proceeding. The bankruptcy court proceeded with the sale to RCR, and eventually BNC, Chelda, and RCR settled their claims. In light of the settlement, the PTO recorded an assignment of the intellectual property from Chelda to RCR; BNC released its security interest in the intellectual property; and RCR assigned the intellectual property to RRAJ, its sister entity

Flying Pigs originally filed in state court, in Lenoir County, for foreclosure of its equitable lien against the intellectual property through a judicial sale, and to enjoin RRAJ from any further use of the intellectual property while operating Ham’s restaurants. RRAJ removed the case to federal court claiming that a dispute over the Federal Lanham Act was embedded within the complaint. RRAJ then moved for dismissal by claiming that the lawsuit with BNC, which was settled and Flying Pigs was not a party to, prevented the foreclosure action through principles of res judicata. Flying Pigs moved to remand the suit to state court for lack of federal jurisdiction. The district court denied the remand and granted RRAJ’s motion to dismiss on the basis of res judicata. Flying Pigs appealed.

The Fourth Circuit stated that for removal to be proper a district court must have original jurisdiction. 28 U.S.C. § 1331. Here, the Court noted that the dispute arose under an action created by state law, and therefore reasoned that the action must implicate a “significant” federal issue. See Grable & Sons Metal Prod., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 312 (2005). The Court reemphasized its prior statement that “a plaintiff’s right to relief for a given claim necessarily depends on a question of federal law only when every legal theory supporting the claim requires the resolution of a federal issue.” See Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004) (en banc). The Court concluded that this dispute was merely a foreclosure action, which does not implicate a significant federal issue or meet the requirements of Grable. Thus, the Court noted that under principles of comity it is bound to respect the state court lawsuit and remand the case.

Full Opinion

Samantha R. Wilder

NUCOR CORP. v. BROWN, NO. 14-154

Decided: July 25, 2014

The Fourth Circuit denied Nucor’s petition for interlocutory review of the district court’s refusal to decertify a class in a class action lawsuit as untimely.

The Fourth Circuit previously vacated and remanded the district court’s denial of the motion for class certification in this lawsuit claiming racial discrimination. In light of that order, the district court certified two classes, one involving disparate treatment and impact, and one involving a hostile work environment, in 2011. The district court denied Nucor’s motion to reconsider the certification order, but partially granted Nucor’s second motion for decertification in 2012. The hostile work environment class remained intact. Nucor then filed a third motion for decertification of the hostile work environment class in light of Comcast Corp. v. Behrend, 133 S.Ct. 1426 (2013), which the district court denied. Nucor filed an interlocutory appeal challenging the district court’s refusal to decertify the hostile work environment class.

The Court stated that Federal Rule of Civil Procedure (F.R.C.P.) 23(f) allows it to review decisions, which grant or deny class certification. The Court recognized “[a]n appeal from a certification order must be filed within fourteen days of the order.” Pashby v. Delia, 709 F.3d 307, 318 (4th Cir. 2013). The Court noted that the clock beings as soon as the original order is entered. The Court then joined the Third, Fifth, Seventh, and Eleventh Circuits by holding that “the time for appeal will not reset when a court rules on certification motions filed subsequent to the original ruling so long as the later rulings do not alter the original ruling.” See In re DC Water & Sewer Auth., 561 F.3d 494, 496 (D.C.Cir. 2009). Thus, the Court found that Nucor’s petition was untimely, and reasoned that the district court’s post-certification orders failed to alter the status of the hostile work environment class. Therefore, the district court’s orders were not orders that granted or denied certification as to that class, and the latest date that Nucor could have appealed the certification of that class passed over three years ago.

Full Opinion

Samantha R. Wilder

IN RE RAILWORKS CORP., NO. 13-1931

Decided: July 28, 2014

The Fourth Circuit held that Railworks could not recover a premium payment transfer under 11 U.S.C. § 550, nor avoid the transfer under 11 U.S.C. § 547, following a Chapter 11 bankruptcy filing.

Railworks, a national provider of railway services, filed for Chapter 11 bankruptcy. TIG provided insurance to Railworks, and CPG was TIG’s managing general underwriter. According to the agreement between CPG and TIG, CPG would hold all premiums collected in trust for TIG as the property of TIG. Guttman, the Chapter 11 Litigation Trustee for Railworks, filed to avoid and recover premium payments that had been paid to CPG within ninety days of Railworks bankruptcy filing.

Under the preference avoidance statute, § 547, a trustee may avoid transfers made out of the debtor’s estate before the bankruptcy petition is filed. These transfers are known as “preferences.” The trustee must show that the transfer was:

(1) of an interest of the debtor in property; (2) to or for the benefit of a creditor; (3) for or on account of an antecedent debt owed by the debtor before the transfer was made; (4) made while the debtor was insolvent; (5) made on or within ninety days of the filing of the bankruptcy petition; and (6) it must enable the creditor to receive a greater percentage of its claim than it would under the normal distributive provisions in a liquidation case under the Bankruptcy Code.

Morrison v. Champion Credit Corp., 952 F.2d 795, 798 (4th Cir. 1991). Under the recovery statute, § 550, a transfer may be recovered from “the initial transferee of such transfer or the entity for whose benefit such transfer was made.” § 550(a)(1). Because the Bankruptcy Code does not define “initial transferee,” the Fourth Circuit determined whether an entity is an “initial transferee” using the “dominion and control” test. The initial transferee must: “(1) have legal dominion and control over the property…and (2) exercise this legal dominion and control.” The initial transferee is not a “‘mere conduit’ for the party who had a direct business relationship with the debtor.” The Court further distinguished between avoidance of a transfer and recovery from the transferee. In order to recover from a transferee, a trustee must avoid a transfer; however, a trustee does not automatically recover under § 550 by avoiding the transfer. Thus in order for funds to be avoidable under § 547, the funds must first be recoverable under § 550.

The Fourth Circuit rejected CPG’s argument that Guttman failed to properly plead his claims under §§ 547 and 550 because a plaintiff is not limited by one specific legal theory in a complaint. The Court then proceeded to determine whether Guttman could recover the premium payment transfers under § 550. The Fourth Circuit reasoned that a party cannot be the entity for whose benefit the transfer was made if that entity is only a mere conduit for the party that had a direct business relationship with the debtor. The Court noted that according to the agreement between CPG and TIG, CPG, as a trustee for TIG, only had physical control of the transfers, but did not have the freedom to use the funds as CPG wished. If the extinguishment of contingent liability benefitted CPG, then there would be no conduit defense. The Court expressly noted that it was unwilling to eliminate the conduit defense. Because CPG was unquestionably a mere conduit, and a party cannot be both a conduit and a benefitting entity, the Fourth Circuit held that Guttman could not recover the premium payment under § 550.

Full Opinion

Verona Sheleena Rios

AMUER v. GATES, NO. 13-2011

Decided: May 13, 2014

The Fourth Circuit held that the U.S. Supreme Court’s decision in Boumediene v. Bush, 553 U.S. 723 (2008), did not strike down 28 U.S.C. § 2241(e)(2), and that § 2241(e)(2) was severable from § 2241(e)(1), which was struck down in Boumediene.

Amuer was detained as an enemy combatant at Guantanamo Bay before being released to his native country after an administrative review board determined that he was no longer a threat. Amuer sought compensatory damages against U.S. officials involved in his detention under the Alien Tort Claims Act, 28 U.S.C. § 1350; the Religious Freedom Restoration Act, 42 U.S.C. §§ 2000bb-bb-4; and the United States Constitution for alleged abuses during his detention by the United States. The district court dismissed the case for lack of subject matter jurisdiction under the Military Commissions Act of 2006 (“MCA”), 28 U.S.C. § 2241(e)(2).

With the exception of habeas corpus petitions, § 2241(e)(2) of the MCA strips all courts of jurisdiction to hear any claims by formerly detained enemy combatants on the conditions of the enemy combatant’s detention by the United States. After determining that Amuer’s claims fell within the plain language of the MCA statute, the Fourth Circuit considered the constitutionality of § 2241(e)(2) after Boumediene. In Boumediene, the U.S. Supreme Court ruled a different section of the MCA unconstitutional because it forbid judicial review over habeas corpus petitions of enemy combatants detained at Guantanamo Bay. 28 U.S.C. § 2241(e)(1). The Fourth Circuit reasoned that Boumediene did not expressly strike down this applicable provision, § 2241(e)(2), because the U.S. Supreme Court only considered § 2241(e)(1). The Court further reasoned that “§ 2241(e)(2) lacks any nexus” to the U.S. Supreme Court’s reasoning in Boumediene because § 2241(e)(2) “does not limit, discuss, relate to, or otherwise touch upon [§ 2241(e)(1)].”

The Court then considered the severability of § 2241(e)(2) from the distinct statutory section considered in Boumediene, and stated that § 2241(e)(2) would be non-severable from § 2241(e)(1) in one of three limited circumstances: (1) the provision is unconstitutional; (2) the provision is incapable of “functioning independently;” or (3) the separate existence of the provision would be inconsistent with “Congress’ basic objectives in enacting the statute.” United States v. Booker, 543 U.S. 220, 258–59 (2005).

Addressing the first circumstance for severability, the Fourth Circuit provided four reasons for the constitutionality of § 2241(e)(2). First, § 2241(e)(2) is constitutional because the Supreme Court has not required judicial review of cases involving only compensatory damages on multiple occasions, even in cases where money damages are the plaintiff’s only means of recovery. Second, Congress did not violate the separation of powers doctrine by dictating how a court must decide an issue of fact, or by binding the Court to a rule that is independently unconstitutional. Third, courts should apply a rational basis standard of review because nationality is not a suspect class that requires a higher standard of review. The Court then determined that § 2241(e)(2) survived rational basis review because it “limit[ed] court interference in our nation’s war on terror[,]” and granted a high level of deference to Congress to distinguish between citizens and non-citizens. The Court further reasoned that Congress may have rationally concluded that courts are ill equipped to deal with matters involving foreign relations, immigration, or military affairs in cases concerning non-citizen combatants. Finally, the Court determined that § 2241(e)(2) was not a bill of attainder under three tests: the “historical” test, contemplating the traditional ways the legislature has chosen to mete out punishment; the “functional” test, regarding the reasons for the bill; and the “motivational” test, considering the legislature’s actual motives. Under these three tests, the Court concluded that this statute was not a bill of attainder because there were: no historical examples of limits on jurisdiction as a punishment; legislative purposes for the statute beyond punishment; and no punitive motivations in the legislative history. Furthermore, the Court observed that the statute did not restrict jurisdiction for any specific or named person or group.

The Court, in deciding whether the provision was capable of functioning independently, held that § 2241(e)(2) did function independently from § 2241(e)(1). The Court noted that the applicable statute in this case, § 2241(e)(2), was still constitutional despite: cross-references the MCA section struck down in Boumediene, § 2241(e)(1); the necessity of § 2241(e)(1) to understand the language of § 2241(e)(2); and the Government’s change in terminology from “enemy combatant” to “unprivileged enemy belligerent.”

The Fourth Circuit also concluded that § 2241(e)(2) was consistent with Congress’ basic objective in enacting the MCA. The Court reasoned that the congressional purpose of § 2241(e)(2) was to limit judicial review of enemy combatants, and, therefore, the expansion of judicial review to habeas corpus petitions in Boumediene did not change Congress’ ability to achieve its objective under § 2241(e)(2). In reviewing the legislative history, the Court found no evidence of Congressional intent that § 2241(e)(2) should be non-severable from § 2241(e)(1). Also, the Court did not consider congressional inaction after Boumediene, or the absence of a severability clause, to be dispositive of congressional intent that § 2241(e)(2) and the statute in Boumediene were non-severable.

Full Opinion

Verona Sheleena Rios

UNITED STATES v. SEIGNIOUS, NO. 12-4621

Decided: July 1, 2014

The Fourth Circuit held that: (1) Seignious failed to show prejudice because the district court failed to follow the various procedures that 18 U.S.C. § 3664(a)–(d) required; (2) Seignious was not entitled to relief from the district court’s factual finding on the actual losses caused by the conspiracy; and (3) there was no reason to believe that the district court would have ordered Seignious to pay a different amount under the Mandatory Victims Restitution Act (“MVRA”), 18 U.S.C. § 3663A, if the district court had explained its reasoning for imposing the restitution.

Seignious, the Defendant, was a key player in a conspiracy to steal credit card numbers. The Government’s evidence included a color-coded spreadsheet listing three categories of stolen credit cards: 1) credit cards gained through the bulk purchase of stolen credit card numbers that could have been purchased by people outside of the conspiracy; 2) credit cards with evidence verifying usage by the conspiracy; and 3) credit cards with evidence verifying usage by the conspiracy, but without corroborating evidence on the computers that were used by the conspiracy. This spreadsheet was prepared as the law enforcement agency was gathering evidence, and was not created specifically for trial. The Defendant appealed the district court’s judgment for restitution, and the Government submitted the Restitution Worksheet shortly after the appeal was filed, which specified the names of the victims and their addresses.

The Fourth Circuit first examined whether the Government and the district court sufficiently complied with 18 U.S.C. § 3664(a)–(d), which lays out the procedures for issuance and enforcement of a restitution order under MVRA. The Fourth Circuit reviewed the case for plain error because Seignious failed to object to the procedural compliance with § 3664(a)–(d) in the lower court. The four prongs of plain error review considered by the Court were: (1) whether the existence of legal error had been waived by the appellant; (2) whether the legal error was “clear or obvious;” (3) whether the obvious legal error affected the outcome of the district court’s proceedings; and (4) if the first three prongs were satisfied, whether “the error seriously affect[s] the fairness, integrity or public reputation of judicial proceedings.” Puckett v. United States, 556 U.S. 129, 134 (2009). The Court reasoned that, though all required procedures were not followed, Seignious failed to show an obvious legal error that would have affected the outcome of the district court’s proceedings because the district court had all of the evidence that it relied on when it calculated the restitution, and Seignious had a fair opportunity to challenge the evidence.

Also under plain error review, the Fourth Circuit found that the district court’s accounting of the evidence was plausible because: (1) the district court had evidence to support at least half of the loss amounts even without the bulk purchase stolen credit cards; (2) the spreadsheet was based on losses found during the time period in which the conspiracy was ongoing and in which the conspiracy had care, custody, and control of the credit card information; and (3) the evidence included corroborating coconspirator testimony. Focusing on the third prong of plain error review, the Court further determined that Seignious would not be able to show that the district court’s failure to sufficiently explain its reasoning would have affected his substantial rights because the Court could find no reason to believe that the outcome would have been different when the district imposed the restitution. Finally, the Court concluded that the lower court’s failure to specifically identify the victims and their respective losses in its judgment was not plain error because filing of the Restitution Worksheet approximately one week after the district court’s judgment did not affect Seignious’ substantial rights.

Full Opinion

Verona Sheleena Rios

BOSTIC v. SCHAEFER, NO. 14-1167

Decided: July 28, 2014

The Fourth Circuit affirmed the district court and held as unconstitutional Virginia’s statutes and constitutional amendments that prohibit (1) same-sex marriage in Virginia and (2) state recognition of same-sex marriages performed outside of Virginia.

The Appellees, two same-sex couples, each in committed relationships for more than twenty years, challenged the constitutionality of Virginia statutes and constitutional amendments that ban same-sex marriage in the state. Specifically, the Appellees objected to: (1) Virginia Code section 20-4.2, which prohibits marriage between persons of the same-sex and declares as void all same-sex marriages performed outside of Virginia; (2) Virginia Code section 20-4.3, which applies the same-sex ban to civil unions and any other similar arrangements; and (3) the Marshall/Newman Amendment to the Virginia Constitution, which provides that the only valid marriages in Virginia are those between members of the opposite sex. The Appellees averred that the aforementioned laws violate the Due Process and Equal Protection Clauses of the Fourteenth Amendment of the U.S. Constitution.

After determining that the Appellees had standing, the Fourth Circuit addressed the appropriate level of scrutiny for the Appellees’ Fourteenth Amendment claims. The Court noted that the United States Supreme Court has held that marriage is a fundamental right, and that in its seminal right-to-marriage cases, the U.S. Supreme Court defines the right to marriage broadly, instead of as the “the right to marry interracially” or “the right of prison inmates to marry.” See Turner v. Safley, 482 U.S. 78 (1987); Loving v. Virginia, 388 U.S. 1 (1967). Finding that the right to marry was a fundamental right that applied to same-sex couples, the Court declared that the appropriate level of scrutiny is strict scrutiny for laws that impede on same-sex couples’ right to marry. Thus, to justify the laws, the proponents of these laws would need to show that the laws furthered a “compelling state interest” and that the laws were “narrowly drawn to express only those interests.” Cary v. Population Servs. Int’l, 431 U.S. 678, 686 (1977).

The Fourth Circuit rejected each of the five compelling interests that the proponents of these laws claimed, which included: (1) Virginia’s federalism-based interest in defining marriage within the state; (2) the history and tradition of marriage as a relationship between a man and woman; “(3) protecting the institution of marriage; (4) encouraging responsible procreation; and (5) promoting the optimal childrearing environment.”

The Court reasoned that (1) federalism does not “justify denying individuals of their constitutional rights;” (2) neither history nor tradition are compelling interests; (3) same-sex couples seek marriage for the very same hallmarks that the state seeks to protect, including faithfulness, and allowing same-sex couples to marry will likely “strengthen the institution of marriage;” (4) because infertile opposite-sex couples are permitted to marry, prohibiting same-sex couples from marrying “makes little sense;” and (5) in addition to the “dubious proposition that same-sex couples are less capable parents,” there is no congruency between the same-sex marriage prohibition, and the state’s desired outcome of “optimal childrearing;” a prohibition on marriage does not preclude same-sex couples from raising children. Ultimately, the Court noted that “inertia and apprehension are not legitimate bases for denying same-sex couples due process and equal protection of the laws,” and to do so violates the Fourteenth Amendment.

Full Opinion

Amanda K. Reasoner

NATIONAL HERITAGE FOUNDATION v. HIGHBOURNE FOUNDATION, NO. 13-1608

Decided: July 25, 2014

The Fourth Circuit affirmed the district court, and held that the National Heritage Foundation (“NHF”) failed to demonstrate exceptional circumstances to justify the enforcement of the Release Provision in its Chapter 11 reorganization plan.

Appellee, the NHF, is a non-profit public charity. In 2009, Appellee filed for Chapter 11 bankruptcy, and the bankruptcy court approved a plan containing a non-debtor release provision that claimed to release Appellee, and several appellee-related committees and directors, from liability in connection with the bankruptcy. The lower court ruled that the release provision was invalid, and NHF appealed.

In its reasoning, the Fourth Circuit addressed the six factors used to determine the validity of a release provision set forth in Class Five Nevada Claimants v. Dow Corning Corp. Those factors are the following:

(1) There is an identity of interests between the debtor and the third party . . . ; (2) The non-debtor has contributed substantial assets to the reorganization; (3) The injunction is essential to reorganization . . . ; (4) The impacted class, or classes, has overwhelmingly voted to accept the plan; (5) The plan provides a mechanism to pay for all, or substantially all, of the class or classes affected by the injunction; [and] (6) The plan provides an opportunity for those claimants who choose not to settle to recover in full.

The Court addressed each factor in turn. First, the Court determined that the presence of an indemnity obligation between the debtor and the released parties weighed in favor of the Appellee. However, the Court determined that all of the other factors weighed against the Appellee. NHF failed to satisfy the second factor because none of the released parties made any financial contribution to the reorganization. Appellee failed to satisfy the third factor largely because it provided little, or no, evidence that investor lawsuits would imperil the Appellee’s reorganization. On the fourth factor, Appellee failed to satisfy because the class most affected by the release provision was not given the opportunity to accept or reject the plan. Appellee failed to satisfy the fifth factor because of an absence of a mechanism for affected donors to pursue claims post-bankruptcy. Finally, Appellee failed to satisfy the sixth factor because, similar to the fifth factor analysis, NHF did not provide a mechanism to pay donor claims outside of the bankruptcy proceedings. Accordingly, the Fourth Circuit affirmed the lower court ruling because the totality of the Corning factors weighed against the Appellee.

Full Opinion

Chris Hampton

U.S. v. VALDOVINOS, NO. 13-4768

Decided: July 25, 2014

The Fourth Circuit affirmed the Appellant’s sentence enhancement based on the district court’s finding that he illegally reentered the country after his prior conviction for felony drug trafficking in North Carolina (NC).

In May 2013, the Appellant illegally reentered the United States, and was arrested a few weeks later for resisting a public officer. The district court increased the Appellant’s sentence due to his prior 2008 NC conviction for felony drug trafficking, a charge punishable by more than one year in prison. The Appellant argued that his prior conviction was not punishable by more than a year because he was sentenced according to a plea agreement that capped his prison sentence at twelve months. Thus, the Appellant stated that his prior conviction was not a felony for the purpose of the sentence enhancing guidelines. However, the district court rejected the Appellant’s argument, and found that this plea agreement did not change the fact that the original offense was punishable by imprisonment for over a year because the maximum statutory penalty was sixteen months. The Appellant filed a timely appeal.

The Fourth Circuit stated that in determining the maximum sentence an offender may receive for a prior conviction, a judge must examine three pieces of evidence: the offense class, the offender’s prior record level, and the aggravated sentencing range’s applicability. U.S. v. Simmons, 649 F.3d 237, 247 n.9 (4th Cir. 2011). In the Appellant’s case, the NC Structured Sentencing Act (NCSSA) authorized a maximum sentence of sixteen months in prison due to his prior conviction. The Court found it irrelevant that the Appellant’s sentence pursuant to his plea deal was only recommended to range from ten to twelve months. Further, the Fourth Circuit stated that prior NC conviction qualified as a federal sentencing predicate because it was punishable by imprisonment over one year based on the Appellant’s prior offense class, record level, and sentencing range. The Court also found no precedent to support the Appellant’s argument that the plea deal negotiations that he participated in displaced the NCSSA and established the maximum punishment for any offender sentenced pursuant to a plea negotiation deal. The Court stated that the Appellant should have tried to plead guilty to a lesser crime if he wanted to avoid a conviction punishable under NC law by imprisonment greater than a year, but the reality was that the Appellant did plead guilty to an offense punishable under NC law by a maximum imprisonment of sixteen months in prison. Thus, the Appellant could not now claim that the district court unfairly enhanced his sentence based on a predicate offense. Therefore, the Fourth Circuit affirmed the district court’s judgment, and held that NC’s legislatively mandated sentencing structure determined whether the Appellant’s prior NC conviction was punishable by more than one year in prison, not the sentence recommended in the Appellant’s plea deal.

Full Opinion

Alysja S. Garansi

KING v. BURWELL, NO. 14-1158

Decided: July 22, 2014

The Fourth Circuit affirmed the district court, and held that the applicable Affordable Care Act (the “ACA”) statutory language is ambiguous and subject to multiple interpretations; applying deference to the IRS’s determination, the Court upheld the rule as a permissible exercise of the agency’s discretion.

Section 1401 of the Affordable Care Act (the “ACA”) provides for tax credits for eligible taxpayers purchasing insurance “through an Exchange established by the State under [ACA Section 1311].” ACA Section 1311 directs the states to establish health insurance exchanges, but does not refer to federally facilitated exchanges. Under ACA Section 1321, the federal government will “establish and operate” an exchange in a state that does not create one. The IRS authorized tax credits for insurance purchased on Exchanges from both the state and those federally facilitated.

Appellees contended that the IRS’s interpretation is contrary to the language of the statute, which, Appellees asserted, authorizes tax credits only for individuals who purchase insurance on state-run Exchanges.

In its reasoning, the Fourth Circuit relied on a test set out in Chevron U.S.A. v. NRDC. The Chevron test determines whether agency action is within the scope of the agency’s authority, and has two prongs:

First, has Congress “directly spoken to the precise question at issue? If the intent of Congress is clear, that is the end of the analysis; for the court as well as the agency must give effect to the unambiguously expressed intent of Congress.”

Second, “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”

In addressing the first prong, the Fourth Circuit determined that the ACA contained ambiguity, and moved to the second prong. The Court then reasoned that the IRS Rule should be upheld because the standard of review was highly deferential with a presumption in favor of finding the agency action valid.

Full Opinion

Chris Hampton

MASSEY v. OJANIIT, NO. 13-1460

Decided: July 21, 2014

The Fourth Circuit affirmed the district court’s judgment as to Officers Ojaniit and Esposito, and dismissed the appeal as to Officer Ledford.

The Appellant initiated a civil action against officers of the Charlotte-Mecklenburg Police Department under 42 U.S.C. § 1983 and North Carolina law, after his release from prison in early 2010. The Appellant alleged that the police department fabricated evidence that led to his arrest, convictions, and subsequent incarceration. In support of his claims, Appellant’s relied on two allegedly falsified reports. The officers moved for a Federal Rule of Civil Procedure (F.R.C.P.) 12(c) judgment on the pleadings. The district court granted all three motions, although the magistrate’s report recommended that the Appellant’s claims against Ledford be dismissed, and the motions by Ojaniit and Esposito be denied. The district court stated that the officers were entitled to qualified immunity, and Appellant failed to state a § 1983 claim on which relief could be granted against Ojaniit or Esposito. The Appellant then filed a timely appeal.

The Fourth Circuit stated that the Appellant’s attempt to revive his claim against Officer Ledford failed because he unequivocally stated to the district court that he did not object to the magistrate’s recommendation that Ledford’s F.R.C.P. Rule 12(c) motion be granted. Thus, Appellant’s failure to file an objection to the magistrate’s report waived his right to appeal on that issue. The Court stated that it applied a F.R.C.P. Rule 12(b)(6) standard to determine the district court’s grant of F.R.C.P. Rule 12(c) judgments to Ojaniit and Esposito. The Appellant failed to state a claim on which relief could be granted under § 1983 because the facts alleged did not assert a violation of a constitutional right. The Fourth Circuit stated that fabrication of evidence alone is insufficient to support a claim for a due process violation, and that the Appellant must plead facts that demonstrate that his loss of liberty directly resulted from the fabrication. Further, the Court agreed that there was not a “sufficiently strong [causal nexus]” that led to a conclusion that Esposito’s allegedly fabricated statement and Ojaniit’s fabricated statement were the but-for proximate cause of the Appellant’s convictions, nor were the convictions a foreseeable consequence of the alleged fabrication. The Appellant’s Fourth Amendment claim failed to meet the materiality requirement, in that, even after removing the fabricated evidence, there was still sufficient probable cause to arrest the Appellant. Appellant’s conspiracy claim also failed because he did not state a claim for deprivation of a constitutional right. Additionally, Appellant’s state law claims fell short because he failed to present probable cause and adequately plead the essential elements for his these claims. Thus, the Fourth Circuit affirmed the district court’s judgment as to Officers Ojaniit and Esposito, and dismissed the appeal as to Officer Ledford.

Full Opinion

Alysja S. Garansi

CORDOVA v. HOLDER, NO. 13-1597

Decided: July 18, 2014

In Cordova v. Holder, the Fourth Circuit granted Cordova’s petition for review, and remanded the case to the Board of Immigration Appeals (“BIA”) for further proceedings after concluding that the BIA had failed to provide an adequate basis for their legal conclusions.

Cordova, Petitioner, entered the United States without inspection in July 2010. Four months later the Government served Petitioner with a Notice to Appear on charges that he was an alien present in the U.S. in violation of 8 U.S.C. § 1182(a)(6)(A)(i). Petitioner submitted an application for asylum. Petitioner testified that he was attacked and threatened on multiple occasions by two El Salvador gangs, MS-13 and Mara 18, who demanded that Petitioner either join either of their respective gangs, or pay for their protection. Petitioner further testified that he feared he would be killed after members of MS-13 saw him with his cousin, who was a member of Mara 18. Based on his familial ties to the Mara 18 gang member, Petitioner claimed membership in a “particular social group” for purposes of 8 U.S.C. § 1101(a)(42)(A). The Immigration Judge (“IJ”) denied Petitioner’s application for asylum and concluded that Petitioner was merely a person from El Salvador who had experienced problems with a gang. The IJ reasoned that Petitioner had not suffered past persecution, and that his fears did not amount to “fear based on a reasonable probability of future prosecution.” The BIA affirmed the IJ’s denial of asylum and withholding of removal because it concluded that Petitioner’s relationship to gang members was not a “social group.” Additionally, the BIA concluded that Petitioner had failed to demonstrate a nexus between the proposed social group and the threats he had received.

The Fourth Circuit rejected both of the BIA’s conclusions, and found that Petitioner had demonstrated that he was part of a family-based social group. First, the Court noted that Petitioner’s familial relationships were a central reason that MS-13 threatened to kill him. Petitioner’s cousin and uncle, both of whom were associated with Mara 18, were killed as a result of their association with Mara 18. The Court emphasized that even the BIA’s opinion stated that the motivation of the gang members who attacked Petitioner “was . . . retaliation for [his cousin and uncle’s] membership in a rival gang.” Reviewing the BIA’s opinion, the Court concluded that Petitioner had demonstrated a cognizable family-based social group, and that the BIA had failed to provide an adequate basis for concluding otherwise. Accordingly, the Court held that the “proper course with regard to nexus is to ‘remand to the agency for additional investigation or explanation.’”

Full Opinion

Abigail Forrister

U.S. v. JONES, No. 12-7675

Decided: July 14, 2014

The Fourth Circuit affirmed the district court, and held that McQuiggin v. Perkins does not extend to cases in which a movant asserts actual innocence from his sentence, rather than from his crime of conviction.

Appellee was convicted of federal cocaine charges, with a sentence enhancement based on two prior Florida state court convictions, among other things. Appellee’s state convictions were later vacated; he subsequently challenged the federal sentencing enhancements but his motions were denied as untimely. Appellee then appealed to the Fourth Circuit, arguing that, under McQuiggin, he was “actually innocent” of his sentence, and was entitled to equitable relief from the one year statute of limitations. In McQuiggin, the United States Supreme Court, for the first time, provided equitable relief to a statutory bar to prevent the “miscarriage of justice” when an appellee was “actually innocent” of his conviction.

The Fourth Circuit held that that McQuiggin did not extend to actual innocence from sentences. The Court reasoned that because the McQuiggin Court “made no explicit indication that its holding was intended to be applied to the actual innocence of sentence context”, and that “the McQuiggin standard . . . cannot . . . be easily applied to a sentencing decision,” the Appellee was not entitled to equitable relief.

Full Opinion

Chris Hampton

ALT v. CHESAPEAKE BAY FOUNDATION, NO. 13-2200

Decided: July 14, 2014

The Fourth Circuit affirmed the district court’s denial of Chesapeake Bay Foundation’s, Incorporated (“CBF”), untimely motion to intervene as a defendant.

Plaintiff sued the Environmental Protection Agency (“EPA”) seeking declaratory relief in connection with EPA’s administrative enforcement proceedings. In the latter stages of Alt’s litigation, Appellant, CBF, motioned to intervene as a defendant. The district court denied CBF’s intervention motion as untimely, which CBF appealed.

After a second modified scheduling order, the district court ordered that all plaintiffs file any summary judgment motions by a specified date. The next day, CBF first appeared in the litigation, and asserted its right to intervene pursuant to Federal Rule of Civil Procedure (F.R.C.P.) 24(a), and, alternatively, sought permission to intervene under F.R.C.P. Rule 24(b). The district court denied CBF’s motion to intervene solely on the grounds that CBF’s motion was filed untimely, and would, “by [its] very nature . . . unduly delay the adjudication of the original parties’ rights.”

On appeal, the Fourth Circuit stated that “[i]n order to properly determine whether a motion to intervene in a civil action is sufficiently timely, a trial court in this Circuit is obliged to assess three factors: first, how far the underlying suit has progressed; second, the prejudice any resulting delay might cause the other parties; and third, why the movant was tardy in filing its motion.” On the first factor, the Court observed that when CBF motioned to intervene, the proceedings below were already at relatively advanced stage of the proceedings. On the second factor of prejudice, the Court deferred to the district court, and found no reason to disagree. Considering the third factor, the Court found no abuse of discretion by the district court when CBF acknowledged that it closely monitored the case, and made the strategic decision not to intervene in the earlier stages of litigation because CBF believed that the case would be dismissed and needed to conserve its limited resources.

Full Opinion

Grace D. Faulkenberry

LEFEMINE v. WIDEMAN, NO. 13-1629

Decided: July 11, 2014

In Lefemine v. Wideman, the Fourth Circuit held that the district court erred, and that Appellant was entitled to attorney’s fees he incurred in connection with his civil lawsuit against various Greenwood County Sheriffs’ Office officials.

Appellant and other members of his group, Columbia Christians for Life, staged a demonstration on a public sidewalk in Greenwood County, South Carolina with the purpose of conveying their anti-abortion message. After receiving several complaints about the graphic images displayed, the Sheriff’s Office instructed Appellant to take the signs down, but Appellant refused. The following year, Appellant sent a letter to the Sheriff informing him that the group intended to return to the area and protest in a similar fashion. The letter also stated that the group would pursue legal action if there were any interference with their demonstration. In response, the Sheriff’s Office declared that, faced with the same circumstances, it would respond in the same manner.

Appellant then filed suit alleging First Amendment violations, and seeking a declaratory judgment, a permanent injunction, damages, and attorneys’ fees. Appellant was successful on his First Amendment claim again the officials, but the district court held that Appellant could not recover damages, and refused to award attorneys’ fees. Appellant appealed; the Fourth Circuit affirmed the district court; and, Appellant sought and was granted certiorari by the United States Supreme Court. The Supreme Court remanded the case to the Fourth Circuit, who, in turn, remanded to the district court to award fees unless the court determined by express findings that special circumstances rendered such an award unjust.

Generally, “[p]laintiffs who prevail in suits to vindicate civil rights are entitled to attorney’s fees.” The district court, however, concluded that “special circumstances” existed such that an award of attorney’s fees to Appellant would be unjust. The Fourth Circuit reversed. Relying on the language and purpose of § 1988, the Court emphasized that awarding attorney’s fees to prevailing plaintiffs is particularly important where constitutional rights are to be protected. The Court also noted that the special circumstances exception is a narrow exception.

After summarizing relevant cases, the Court asserted that no precedent supported the district court’s conclusion that qualified immunity constitutes a special circumstance. Rather, the Court stated, “special government immunities that restrict civil rights plaintiffs’ recoveries weigh in favor of-and certainly not against-awarding Section 1988 fees.”

Next, the Court rejected the district court’s conclusion that the absence of a policy or custom of discrimination by the Sheriff’s Office constituted a special circumstance. The district court noted that Appellant failed to show that the Sheriff’s Office had a policy or custom of discrimination, and thus, found that Appellant could not obtain damages from the Sheriff’s Office. Notwithstanding, the Fourth Circuit emphasized that neither it nor the Supreme Court had ever suggested that the inability to bring a viable claim against an entity “somehow blocks otherwise prevailing civil rights plaintiffs from obtaining their attorneys’ fees under Section 1988.”

Finally, the Fourth Circuit concluded that the limited nature of the relief granted to Appellant did not constitute a special circumstance that made a § 1988 fee award unjust. The Court stated that the district court downplayed the relief Appellant received, but that the relief Appellant received was in fact “notably broader than the district court acknowledged.” Accordingly, the Court held that the district court erred in denying Plaintiff attorneys’ fees.

Full Opinion

Abigail Forrister

SOUTHERN APPALACHIAN MOUNTAIN STEWARDS v. A & G COAL, CORP., NO. 13-2050

Decided: July 11, 2014

The Fourth Circuit affirmed the district court, and held that the “permit shield” defense for discharges of selenium was unavailable to a corporation that failed to disclose the presence of the pollutant during the permit application process.

A & G Coal Corporation (“A&G”) owned and operated the Kelly Branch Surface Mine (“Kelly Branch”) in Virginia. In 2010, A&G applied for a National Pollutant Discharge Elimination System permit from the Virginia Department of Mines, Minerals, and Energy. In its application, A&G provided information regarding the discharges from more than two-dozen existing and proposed discharge points, including two artificial ponds. However, the application failed to indicate whether or not A&G would be discharging selenium, an element that can be harmful in high doses, and is categorized as a toxic pollutant under the Clean Water Act (“CWA”). The permit does not restrict or authorize the discharge of selenium from the plant.

Appellee environmental groups (“SAMS”) tested water in the two ponds and found that they contained selenium. SAMS brought this action against A&G seeking declaratory and injunctive relief, as well as civil penalties, claiming A&G violated the CWA by discharging selenium without authorization. A&G contended that it properly complied with its legal obligations by disclosing those pollutants it knew, or had reason to know, were present at the site, which selenium was not among. Thus, A&G claimed it was protected by the “permit shield” provision of the CWA. The district court rejected this defense, and held that the defense was unavailable to A&G because of its failure to disclose selenium in its permit application.

The permit scheme requires individuals wishing to discharge one or more pollutants to apply for an individual permit from the appropriate state authority. Federal regulations require permit applications to include substantial detail about the nature and composition of expected discharges. For discharge points that discharge “process wastewater,” like some of the discharge points at Kelly Branch, applicants must report data on a large number of pollutants, including selenium. If the discharge is not “process wastewater,” applicants must still “indicate whether it knows or has reason to believe that any of the pollutants in table II or table III of appendix D to this part [including selenium] . . . for which quantitative data are not otherwise required . . . [is] discharged from each outfall.” 40 C.F.R. § 122.21(g)(7)(vi)(B). Additionally, the Environmental Protection Agency (“EPA”) requires that applicants mark whether each listed element, one of which is selenium, is “believed present” or “believed absent.” Thus, the disclosure process requires applicants to acknowledge either the presence or absence of a pollutant, like selenium. Virginia has adopted these same requirements under its state statutory permit scheme.

The CWA contains a “permit shield” provision, which provides that “[c]ompliance with a permit issued pursuant to this section shall be deemed compliance” with other sections of the CWA that detail effluent limitations and their enforcement. 33 U.S.C. § 1342(k). “By rendering permits final, the shield allows permit holders to conduct their operations without concern that an unexpected discharge might lead to substantial liability.” However, to be protected by the “permit shield,” applicants must fully comply with federal and state reporting requirements. The Fourth Circuit has adopted a two-part test to determine whether the “permit shield” defense protects a permit holder from liability:

We therefore view the NPDES permit as shielding its holder from liability under the Clean Water Act as long as (1) the permit holder complies with the express terms of the permit and with the Clean Water Act’s disclosure requirements and (2) the permit holder does not make a discharge of pollutants that was not within the reasonable contemplation of the permitting authority at the time the permit was issued.

Piney Run Pres. Ass’n v. Cnty. Comm’rs, 268 F.3d 255, 259 (4th Cir. 2001).

Under the first prong, A&G argued that it had no obligation to disclose selenium unless it knew or had reason to know it would be present, which it did not. The Court rejected this argument, noting that the discharges in A&G’s application met the regulatory definition of “process wastewater.” Thus, A&G was required to test for selenium, and other pollutants, and submit this information with its application, which it failed to do. Even if the discharge was not “process wastewater,” the Court noted that A&G still failed to comply with reporting requirements. The application required data about selenium, which A&G did not submit. Furthermore, at a minimum, A&G was required to acknowledge whether selenium was “believed to be present,” or “believed to be absent,” which it also did not do. Thus, the Court held that A&G failed to comply with its disclosure obligation as required by the first prong of the Piney test. Because A&G failed to meet the first prong of the test, the Court declined to address A&G’s claim that it was able to satisfy the second prong of the Piney test.

In sum, the Court found that “A&G was required by its DMME permit application instructions to test for the presence of selenium and by federal and state regulations to, at minimum, report whether it believed selenium to be present or absent.” A&G failed to fulfill these disclosure obligations, and therefore, could not assert a “permit shield” defense.

Full Opinion

Jennifer Jokerst

PETRY v. PROSPERITY MORTGAGE CO., NO. 13-1869

Decided: July 10, 2014

The Fourth Circuit affirmed the district court’s judgment as a matter of law in favor of Prosperity Mortgage, and found that Prosperity Mortgage did not violate the Maryland Finder’s Fee Act.

Appellants, Petry, borrowed money from Prosperity Mortgage, the Appellee, to purchase a house, and contended that the fees that Prosperity Mortgage charged at closing violated the Maryland Finder’s Fee Act because of the way Prosperity Mortgage operated in relation to Long & Foster Real Estate, Inc., and Wells Fargo Bank, N.A., each of which indirectly owned one-half of Prosperity Mortgage. When Appellants purchased their house, their Long & Foster real estate agent introduced them to a Prosperity Mortgage loan officer, who in turn arranged a mortgage loan that enabled them to purchase their house without a down payment. To fund the loan, Prosperity Mortgage drew on a line of credit with Wells Fargo. At closing, the Appellants paid Prosperity Mortgage the typical lending fees, and after closing, Prosperity Mortgage sold the loan to Wells Fargo.

After discovery was completed, the district court advised the parties that the fees Prosperity Mortgage charged were not “finder’s fees” within the meaning of the Maryland Finder’s Fee Act, unless the fees had been inflated so that the overcharge could be considered a disguised finder’s fee. When the Appellants acknowledged their lack of proof to meet this burden, the district court entered judgment as a matter of law in favor of the Prosperity Mortgage.

The Fourth Circuit reasoned that because Prosperity Mortgage was identified as the lender in the documents executed at closing, it was not a “mortgage broker” as the Maryland Finder’s Fee Act defines that term, and therefore was not subject to the Act’s provisions.

Full Opinion

Grace D. Faulkenberry

MARSHALL v. JAMES B. NUTTER & CO., NO. 13-1940

Decided: July 10, 2014

The Fourth Circuit held that the Defendant, Nutter, was not a “mortgage broker” under Maryland Finder’s Fee Act, Md. Code Ann. § 12-804(e), and so he could not be liable for conspiring to charge an illegal finder’s fee in a mortgage transaction.

In 2008, Marshall entered into a reverse mortgage agreement with Savings First Mortgage, LLC (Savings First). Under a prior agreement, Nutter table funded the loan between Marshall and Savings First—meaning he provided to Savings First the actual funds that it loaned to Marshall, and Savings First’s agreed to assign the note to Nutter at closing. The note between Marshall and Savings First included a prohibited “loan origination fee” and “correspondent fee.” Based on those two fees, Marshall brought a class action lawsuit against Nutter for conspiring to charge a finder’s fee on a mortgage transaction in violation of the Maryland Finder’s Fee Act.

The Court reasoned that Nutter was not liable for conspiring to violate the Maryland Finder’s Fee Act because, according to the Maryland common law of conspiracy, he was not “legally capable” of violating the Act. Nutter was not legally capable of violating the Act because the Act was silent about liability for conspiring to charge a finder’s fee. The Act only imposed liability on “a mortgage broker,” and Nutter was not a mortgage broker.

Full Opinion

James Bull Sterling

U.S. v. PERRY, NO. 13-4012

Decided: July 1, 2014

The Fourth Circuit affirmed the district court, and held that the indictment contained sufficient evidence to support the Defendant’s convictions, and identify the essential elements of the crimes charged.

Perry, the Defendant, was convicted of three counts of fraud related to his receipt of Social Security and healthcare benefits. On appeal, Defendant argues that the district court should have dismissed the indictment for failure to include essential elements of the fraud charges, and because it was barred by the statute of limitations. In addition, Defendant claimed that the Government failed to prove that he engaged in a scheme, or artifice to defraud the government.

Defendant applied for Social Security disability insurance benefits, and agreed to report to the agency if his medical condition improved such that he could work. Defendant later held several jobs, and continued to receive aid from the Medicare Part D program and the Low Income Subsidy program. Defendant was then accepted to the Federal Career Intern Program, a two-year paid training program to become a Benefits Technical Examiner with the Social Security Administration (“SSA”). After repeated failed requests to report his income from the SSA to Defendant, the SSA terminated Defendant’s aid. On appeal, Defendant argued that Counts One and Two of the indictment were unconstitutionally defective because they failed to specify the “event” that triggered his obligation to disclose his employment to the Government; that the indictment failed to allege specific intent for all three counts; that the indictment failed to allege a scheme, or artifice, to defraud the Government on Count Three; and that the indictment is time-barred by the statute of limitations. Defendant also challenges the sufficiency of the evidence on Count Three.

The Fourth Circuit agreed with the district court that the indictment contained sufficient evidence to uphold the Defendant’s convictions, and identify the essential elements of the crimes charged. The Court noted that the indictment tracked the statutory language, provided specific details about the nature of the charges, and identified the “event” triggering Defendant’s disclosure obligations. The Court also agreed with the district court, and held that Defendant’s indictments did allege specific intent to defraud (as an essential element of the crime) by stating that the Defendant “did conceal and fail to disclose said events with intent to fraudulently secure payment [:] . . .” 1) in a greater amount than is due and when no payment is authorized, and 2) concealed and failed to disclose his employment and earnings to Medicare. Furthermore, the Court refuted the Defendant’s statute of limitations argument by applying the continuing offense doctrine.

Full Opinion

Grace D. Faulkenberry

U.S. v. BROWN, NO. 13-4249

Decided: July 1, 2014

The Fourth Circuit affirmed Brown’s convictions for conspiring to traffic drugs, and for her role in a related murder. The Court concluded that the police did not violate Brown’s Fifth Amendment rights by interviewing her without her attorney present; that the district court did not commit plain error when it left the bench while the jury watched Brown’s taped interview with the police; and that although the district court miscalculated the conversion rate of kilograms to pounds, which enhanced Brown’s sentence, the miscalculation resulted in harmless error.

For many years, Brown ran a drug trafficking operation where she smuggled drugs into the United States from Mexico, and sold them throughout the Northeast. She moved about one ton of marijuana per month, using a portion of the proceeds to invest in real estate in Jamaica. In 2010, Brown was indicted and pled guilty to “bulk cash smuggling” money out of the United States. While in jail, she elected to conduct two interviews with the police to discuss her role in the murder of Michael Knight. Brown’s attorney was not present for either interview, but each time she waived her Miranda Rights prior to speaking with the police. Based on her two interviews and further investigation, the Government brought charges against Brown for conspiring to traffic drugs, and for her role in Knight’s murder. For sentence enhancement purposes, on the drug trafficking charge, the Government had to prove that Brown conspired to traffic 1,000 or more kilograms of marijuana. However, when the jury was charged, all parties miscalculated the proper conversion ratio between kilograms and pounds. The parties believed 2,200 pounds equates to 1,000 kilograms, but 2,200 pounds actually equates to just less than 998 kilograms. Therefore, the Government presented evidence that Brown trafficked 2,200 pounds of marijuana, when it needed to prove she trafficked 2,204.63 pounds. Brown’s attorney initially questioned the conversion but failed to object, and Brown was convicted on all counts.

The Court reasoned that the district court did not err by introducing the videotaped interviews between Brown and the police, although these interviews were conducted without Brown’s attorney present, because she made those statements voluntarily. Furthermore, Brown’s attorney was not constitutionally ineffective under the Sixth Amendment simply because her attorney failed to “insist” in joining the interviews.

The Court also reasoned that the district court’s “vacation from the bench” while the jury watched those taped interviews was not reversible error per se because the district court was “absent for a relatively short time after all the evidence had been presented; no rulings were requested during the court’s absence”; and nothing else “of note” happened in its absence. Furthermore, Brown’s attorney failed to make a timely objection to preserve the error on appeal.

Finally, although the district court mistakenly calculated the kilograms to pounds conversion, Brown’s attorney failed to timely object—rather, her attorney questioned the conversion numbers, but then accepted the district court’s flawed conversion. Thus, the district court’s flawed conversion was a harmless error because the Government presented evidence that Brown trafficked drugs more than 2,204.63 pounds, which was the requisite. In fact, the jury foreperson’s words to the district court seemed to understand that to be the case, and stated that the jury found that Brown trafficked 2,200 pounds “or more.”

Full Opinion

James Bull Sterling

SHIMARI v. CACI PREMIER TECHNOLOGY, INC., NO. 13-1937

Decided: June 30, 2014

The Fourth Circuit held that the appellants’ claims of torture and mistreatment against a national defense contractor sufficiently “touch and concern” the territory of the United States (U.S.) so as to “displace the presumption against extraterritorial application of the Alien Tort Statute.”  However, the record contained insufficient facts to determine whether the claims presented nonjusticiable political questions.

The four appellants were all foreign nationals who had been detained at Abu Ghraib after the U.S. invaded Iraq and took control of the prison in 2003.  The U.S. hired civilian contractors from CACI, a U.S. corporation headquartered in Virginia, to interrogate the detainees.  A Department of Defense (DoD) report found widespread abuse and mistreatment of detainees at Abu Ghraib between October and December 2003.  Further investigations by the DoD found that CACI interrogators “directed or participated in some of the abuses, along with a number of military personnel.”  The appellants’ claims against CACI alleged that its employees “instigated, directed, participated in, encouraged, and aided and abetted conduct towards detainees that clearly violated” international and domestic law.

CACI was under contract with the Department of the Interior to provide interrogation management, support, and supervision at the prison.  Appellants alleged that in performing the contract, CACI failed to adequately supervise its employees; ignored reports of abuse; denied any wrongdoing by its employees; and attempted to cover up the abuses.  The appellants filed claims under the Alien Tort Statute (“ATS”), and asserted numerous common law claims, including assault and battery, and negligent hiring and supervision.  The district court dismissed all ATS claims, holding that the court lacked jurisdiction because the conduct giving rise to the claims occurred entirely outside the U.S.  The court also dismissed the common law claims, finding that Iraqi law precluded imposing liability on the appellees for those claims.

CACI challenged the Court’s jurisdiction under the ATS and under the political question doctrine.  The ATS is a jurisdictional statute that gives district courts jurisdiction over civil actions filed by aliens for torts committed in violation of international law.  The U.S. Supreme Court recently addressed whether an ATS claim can reach extraterritorial conduct in Kiobel v. Royal Dutch Petroleum Co, 133 S. Ct. 1659 (2013).  In Kiobel,  several Nigerian nationals were granted asylum in the U.S., and brought claims under the ATS against British, Dutch, and Nigerian corporations.  The plaintiffs alleged that the corporations violated international law by supplying Nigerian forces with food and supplies, thus aiding and abetting the atrocities they committed, including murder and rape.  All alleged tortious conduct occurred in Nigeria, and the only connection to the United States was that the defendant corporations were listed on the New York Stock Exchange.  The U.S. Supreme Court held that the ATS claims were barred, relying primarily on “principles underlying an established canon of statutory interpretation, which raises a presumption against extraterritorial application of acts of Congress.”  Because the statute gave no indication that Congress intended it to have extraterritorial reach, the U.S. Supreme Court found the plaintiffs’ claims concerning conduct occurring outside the United States were barred.

As the Fourth Circuit noted, the U.S. Supreme Court based its holding largely on the fact that all the alleged tortious conduct occurred outside the U.S.  The U.S. Supreme Court in Kiobel explained that “even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application.” Id. at 1669. In the present case, the Fourth Circuit emphasized how broad the “touch and concern” standard is, noting that the majority in Kiobel explicitly rejected narrower standards proposed by the concurrence.  The Fourth Circuit stated that the broader standard contemplates that all facts underlying an ATS claim should be examined when determining whether the claim sufficiently “touches and concerns” the U.S., not just the alleged tortious conduct.

In the present case, the appellants’ “claims reflect extensive ‘relevant conduct’ in United States territory, in contrast to the ‘mere presence’ of foreign corporations that was deemed insufficient in Kiobel.”  Here, the allegations involved conduct by U.S. citizens employed by an American corporation that was under contract with the U.S. Government to provide services abroad.  Furthermore, the alleged tortious conduct occurred while performing the contract at a military facility operated by the U.S. Government.  Finally, the appellants’ claims do not solely involve conduct abroad, but also alleged CACI executives in the U.S. ignored reports of abuse and attempted to cover up the misconduct. Thus, the ATS claims sufficiently touch and concern the U.S. and the district court erred in finding that it lacked subject matter jurisdiction. The judgment dismissing the plaintiffs’ ATS claims based on lack of jurisdiction was vacated.

Next, the Court addressed whether the ATS and common law claims were barred by the political question doctrine.  The district court, at an earlier stage in the litigation, found that the appellants’ claims did not present nonjusticiable political questions.  In this appeal, CACI renewed its political question challenge.  In Taylor v. Kellogg Brown & Root Services, Inc., the Fourth Circuit established a test for determining the justiciability of claims brought against government contractors performing services for the military.  658 F.3d 402 (4th Cir. 2011). Under this test, the Court addressed two critical factors: “(1) whether the government contractor was under the ‘plenary’ or ‘direct’ control of the military; and (2) whether national defense interests were ‘closely intertwined’ with military decisions governing the contractor’s conduct, such that a decision on the merits of the claim ‘would require the judiciary to question actual, sensitive judgments made by the military.’”  In the present case, the Court found the factual record was insufficiently developed to answer the questions posed by the Taylor test and remanded the case for the district court to reexamine the issue of justiciability.

Full Opinion

Jennifer Jokerst

NAT’L HERITAGE FOUND. v. HIGHBOURNE FOUND., NO. 13-1608

Decided: June 27, 2014

The Fourth Circuit held that the Non-Debtor Release Provision provided in the National Heritage Foundation’s (NHF) Chapter 11 reorganization plan was unenforceable, which affirmed the bankruptcy and district courts’ holding.

NHF, a non-profit public charity, filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code.  The bankruptcy court approved an amended plan which included a Non-Debtor Release Provision (the Release Provision).  The Release Provision essentially released NHF, its officers, directors, and employees from any liability arising out of NHF’s business, other than failure to follow the reorganization plan.  NHF donors appealed the bankruptcy court’s confirmation of the Release Provision; the donors averred that the provision was invalid.  On remand, the bankruptcy court concluded that the Release Provision was unenforceable and NHF appealed the decision.

Within the Fourth Circuit non-debtor releases are enforceable, but are to be approved “cautiously and infrequently.”  Behrman v. Nat’l Heritage Found., 663 F.3d 704, 712 (4th Cir. 2011).  The Court has instructed bankruptcy courts to consider the six factors provided in In re Dow Corning Corp., 280 F.3d 648 (6th Cir. 2002).  The six factors include whether (1) there is an identity of interests between the debtor and third party; (2) the non-debtor has contributed substantial assets to the reorganization; (3) the injunction is essential to reorganization; (4) the impacted class has overwhelmingly voted to accept the plan; (5) the plan provides a mechanism to pay for all, or most, of the class or classes affected by the injunction; and (6) the plan provides the opportunity for those claimants who choose not to settle to recover in full.  The Fourth Circuit concluded that only the first factor weighed in NHF’s favor.  Therefore, the Non-Debtor Release Provision was unenforceable.

Full Opinion

Amanda K. Reasoner

U.S. v. HENRIQUEZ, NO. 13-4238

Decided: June 27, 2014

The Fourth Circuit vacated the Defendant’s enhanced sentence, and remanded the case for resentencing.

Henriquez, the Defendant, pled guilty to illegally reentering the United States (U.S.) in violation of 8 U.S.C. § 1326(a) and (b)(2).  Defendant’s pre-sentence report (PSR) listed his 2000 conviction for first-degree burglary in Maryland as a crime of violence.  Thus, the district court applied the sentencing enhancement to the Defendant’s sentence based on his PSR and sentenced Defendant to forty-one months’ imprisonment.  Defendant filed a timely appeal, arguing that a Maryland conviction for first-degree burglary did not qualify as a crime of violence, and, thus, did not allow for an enhancement of Defendant’s PSR.

The Fourth Circuit stated that a defendant previously convicted of a crime of violence is subject to a sentencing enhancement if the defendant is later convicted of illegally re-entering the U.S.  “Burglary of a dwelling” is specifically listed as a crime of violence under the U.S. Sentencing Guidelines (U.S.S.G.).  § 2L1.2(b)(1)(A)(ii).  However, the Fourth Circuit stated that a sentencing court must ascertain whether a defendant’s prior burglary conviction included an “unlawful or unprivileged entry into, or remaining in, a building or other structure, with intent to commit a crime” before it can apply a sentencing enhancement.  Taylor v. U.S., 495 U.S. 575, 598 (1990).  Further, the burglary must have occurred in a “dwelling.”  U.S. v. Bonilla, 687 F.3d 188, 190 n.3 (4th Cir. 2012).  The Supreme Court’s definition of generic burglary excludes boats, motor vehicles, or any other enclosures from the term “dwelling.”  Shepard v. U.S., 544 U.S. 13, 16 (2005).  Federal courts cannot interpret a state statute differently from a state’s highest court.  Maryland’s criminal code does not define the meaning of dwelling under its robbery statutes.  However, Maryland’s highest court determined that the test for a dwelling is whether it is used regularly as a place to sleep.  Thus, Maryland’s statutory definition for “dwelling” is broader than the U.S. Supreme Court’s generic burglary definition.  The Fourth Circuit stated that it did not have the authority to place a limiting construction on the Maryland statute to exclude boats, motor vehicles, or other enclosures not covered by the federal definition of generic burglary.  The Court also noted that a “realistic probability” existed that Maryland would apply its first-degree burglary statute to conduct that falls outside of the U.S. Supreme Court’s generic definition of burglary.  The Fourth Circuit stated that a sentencing court is unable to determine whether a first-degree burglary in Maryland did not involve an excluded enclosure because federal courts are precluded from looking at the facts that underlie a prior conviction. Therefore, the district court erred by applying a sentencing enhancement to Defendant’s conviction.

Full Opinion

Alysja S. Garansi

AMERICAN STEAMSHIP OWNERS MUTUAL PROTECTION & INDEMNITY ASSOC., INC. v. DANN OCEAN TOWING, INC., NO. 13-1495

Decided: June 26, 2014

The Fourth Circuit affirmed the district court’s decision and held that the choice-of-law provision in the parties’ maritime insurance contract required the application of New York’s six-year statute of limitations, rather than the equitable doctrine of laches, which is ordinarily applied under maritime law, to determine the timeliness of certain claims brought under the insurance contract.

The American Steamship Owner’s Mutual Protection and Indemnity Association, Inc. (the “Club”) provided insurance for a tugboat owned by Dann Ocean Towing, Inc. (“Dann Ocean”).  After Dann Ocean’s tugboat damaged a barge, the barge owner asserted a claim for property damage against Dann Ocean.  The United States also asserted a claim against Dann Ocean for environmental damage to the reef.  Both cases settled.

Though the Club originally agreed to contribute an amount towards the settlement, one of Dann Ocean’s underwriters became insolvent, and was unable to pay its portion of the settlement.  The Club, however, paid the shortfall to preserve the “extremely favorable” settlement offer.  Dann Ocean refused to reimburse the Club for the shortfall.  In response, the Club declined to reimburse Dann Ocean for certain insurance claims.  Dann Ocean then refused to pay its insurance premiums and the Club filed suit, alleging a breach of the maritime insurance contract by failing to reimburse the Club for the shortfall and by failing to pay the premiums.  Dann Ocean filed a counterclaim alleging that the Club breached the insurance contract by failing to indemnify Dann Ocean for covered losses.  Both parties alleged that the respective claims against them were time-barred, and thus filed cross motions for summary judgment.

On appeal, the Court noted the absence of any authority that would prevent a federal court sitting in admiralty from enforcing a choice-of-law provision in a maritime contract, which incorporates a statute of limitations, in place of the traditional doctrine of laches.  The Court stated that the plain language of the maritime contract provided that New York law governed the contract.  The Court asserted that this provision evidenced the parties’ intent that, subject to stated exceptions in the contract, New York law would determine the timeliness of claims brought under the contract.  The Court also noted that the parties failed to indicate or preserve the application of the doctrine of laches for any claims brought under the contract.  Furthermore, the Court noted that under basic principles of contract interpretation, ambiguities are to be resolved against the insurer and in favor of the insured party.  Therefore, the Fourth Circuit affirmed the district court’s application of New York’s six-year statute of limitations to the Club’s claims.

Full Opinion

Abigail Forrister

MCAIRLAIDS, INC. v. KIMBERLY-CLARK CORP., NO. 13-2044

Decided: June 25, 2014

The Fourth Circuit held that a genuine issue of material fact existed for the jury to determine whether McAirlaids’ pixel pattern on absorbent pads was functional or merely an ornamental device.

McAirlaids, Inc., patented its manufacturing process for making absorbent pads, but it also registered its pixel pattern, which involved a repeating pattern of dots that fused the absorbent materials together, as trade dress with the U.S. Patent and Trademark Office.  McAirlaids initiated a suit against Kimberly-Clark Corp. after Kimberly-Clark began using a similar dot pattern on its absorbent bed mats, which are manufactured in a different way than McAirlaids’ pads.  The district court granted summary judgment to Kimberly-Clark on the issue of whether McAirlaids’ pixel pattern was functional, and thus not protectable as trade dress.

The Fourth Circuit emphasized that summary judgment is only appropriate when there is no genuine issue of material fact.  In this case, the Court addressed the issue of whether the pixel pattern used in the bonding process by McAirlaids for its absorbent pads was functional.  Functionality is generally a question for a jury.  In re Becton, Dickinson & Co., 675 F.3d 1368, 1372 (Fed. Cir. 2012); Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1258 (9th Cir. 2001).  Trademark law indefinitely protects designs that link a product with its manufacturer, TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 28 (2001); whereas, patent law protects new product designs, or functions, for a limited time, Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 164 (1995).  The functionality doctrine promotes competition by preventing trademark law, which protects competition by protecting a firm’s reputation, from impeding competition by allowing the inventor to monopolize a useful product design or function.  Qualitex, 514 U.S. at 164.  The functionality doctrine has been incorporated into the Lanham Act.  15 U.S.C. § 1052(e).  Proof of a design element’s functionality is a complete defense in trademark-infringement cases.  Shakespeare Co. v. Silstar Corp. of Am., 9 F.3d 1091, 1102 (4th Cir. 1993).

The Fourth Circuit distinguished this case from TrafFix, where the U.S. Supreme Court reasoned that the design feature in question was “the reason the device works” and determined that the product design was functional based on evidence of other utility patents and evidence of the product designs functionality.  Id. at 33–34.   First, the burden of proof was different because in TrafFix the design element was not registered as a trade dress.  Additionally, the defending party had to show that the design element was nonfunctional under the Lanham Act.  15 U.S.C. § 1125(a)(3).  However, in this case, the design element was registered as a trade dress, which serves as prima facie evidence that the design element was nonfunctional.  15 U.S.C. § 1057(b); Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, 696 F.3d 206, 224 (2d Cir. 2012).  The Court reasoned that this prima facie evidence caused a burden shifting effect, which required the challenging party to prove that the trade dress was invalid by a preponderance of the evidence.  Second, in TrafFix, the design element was protected under utility patents.  In this case, however, the Court noted that the process of manufacturing the absorbent pads was protected by patent, but the pixel design element was not.  “[T]he pattern is not the ‘central advance’ of any utility patent” as it was in TrafFix.  The Court determined that the patents were evidence of the pixel design element’s functionality, but they were not the “strong evidence” of the patents found in TrafFix.  Thus, the Fourth Circuit found that TrafFix was inapplicable to the facts in this case.

Next, the Fourth Circuit addressed the weight given to the facts in this case by the district court, holding that McAirlaids presented sufficient evidence to demonstrate a genuine issue of material fact regarding the functionality of the design element.  Reviewing the evidence in the light most favorable to McAirlaids as the nonmoving party, the Court assessed the design element’s functionality based on four factors: (1) the existence of utility patents; (2) advertising focusing on the utilitarian advantages of a design; (3) the availability of “functionally equivalent designs[;]” and (4) the effect of the design on manufacturing.  Valu Engineering, Inc. v. Rexnord Corp., 278 F.3d 1268, 1274 (Fed. Cir. 2002) (citing In re Morton-Norwich Prods., Inc., 671 F.2d 1332, 1340-41 (C.C.P.A. 1982)).  The Court reviewed the testimony of McAirlaids officials, who stated that the pixel pattern was picked for aesthetic reasons, and at evidence of a marketing campaign that described the “unique bonding pattern” as increasing absorbency.  Testimony also indicated that other patterns could have been chosen, though these patterns must fall within certain sizing and spacing specifications to be effective.  Ultimately, the Fourth Circuit reasoned that a jury would be the most appropriate way to decide the issue because determining the functionality of design element requires credibility determinations and the weighing of evidence.

Full Opinion

Verona Sheleena Rios

U.S. v. ADEPOJU, NO. 12-5007

Decided: June 23, 2014

The Fourth Circuit affirmed the defendant’s convictions for bank fraud and identity theft, and vacated the defendant’s sentence; the Court determined that the Government failed to establish that defendant used sophisticated means, and the district court erred by shifting the burden to the defendant to disprove sophistication.

Defendant was involved in a bank fraud scheme with a government confidential informant (“CI”).  The CI opened two bank accounts using false identification documents provided by the defendant.  Defendant then provided checks for the CI to deposit, and asked the CI to withdraw the money, and share the proceeds with defendant.  The district court applied a two-level enhancement to the bank fraud sentences for using sophisticated means, as required by the U.S. Sentencing Guidelines (U.S.S.G.).  The district court determined that because defendant could not show that he used unsophisticated means (i.e. common internet sources) to commit bank fraud, the evidence “reinforces the view that [defendant’s] scheme must have been sophisticated.”  Accordingly, the district court applied the sentencing enhancement.

The Fourth Circuit determined that the district court erred in shifting the burden to defendant to disprove the use of sophisticated means.  Relying on the axiom that the Government must prove by a preponderance of the evidence the applicability of a sentencing enhancement, the Fourth Circuit determined that the district court erred in applying the sentencing enhancement by failing to rely on any evidence that defendant had used sophisticated means in committing bank fraud.

Full Opinion

Chris Hampton

SARTIN v. MCNAIR LAW FIRM, PA, NO. 13-1265

Decided: June 23, 2014

The Fourth Circuit affirmed the district court’s clarifying order, and determined that the district court properly construed Federal Rules of Civil Procedure (F.R.C.P.) 60(a) when it found that the late notice of appeal had no impact on Appellant’s malpractice claim.

The Fourth Circuit construed the proper scope of F.R.C.P. Rule 60(a), which authorizes district courts to correct mistakes in judgments and orders.  The Appellant, Sartin, hired the Appellee, McNair Law Firm, to represent him in a legal malpractice suit, and commenced this action when the Appellee filed a notice to appeal two days late.  Appellant claimed that the Appellee’s failure to file a timely notice of appeal was a proximate cause of his failure to recover attorneys’ fees in the malpractice suit against him.  The Court concluded that the Appellant suffered no injury because of the late notice of appeal, inasmuch as the district court in the earlier action properly employed F.R.C.P. Rule 60(a) to clarify its sanctions orders.  Therefore, the Appellant would not have succeeded on his appeal of that order, even had the notice of appeal been timely filed.

Full Opinion

Grace Faulkenberry

U.S. EX. REL. AHUMADA v. NISH, NO. 13-1672

Decided: June 23, 2014

The Fourth Circuit affirmed the district court’s decision to dismiss Mike Ahumada’s False Claims Act (FCA) claim on behalf of the United States against the defendants, National Industries for the Severely Handicapped (NISH), Green Bay Packaging (Green Bay), International Paper Company (IPC), and Smurfit-Stone Container (Smurfit), for lack of subject-matter jurisdiction.  The Court also affirmed the district court’s decision to dismiss Ahumada’s FCA claim against defendant Weyerhaeuser because Ahumada failed to plead his claim with particularity, as required by Federal Rule of Civil Procedure (F.R.C.P.) 9(b).

Ahumada worked for the National Center for Employment of the Disabled (NCED) over a six-month period in 2004.  NCED produced and sold products to the U.S. Government in accordance with the Javits-Wagner-O’Day Act (the Act), which was created to promote the employment of disabled people.  NISH ensured that participating businesses, such as NCED, actually followed the Act’s rules.  In late 2005, The Oregonian and El Paso Times published articles that alleged NCED suppliers IPC, Green Bay, Smurfit, and Weyerhaeuser (the Suppliers) helped NCED violate this Act.  The Suppliers allegedly helped NCED violate the Act by selling to NCED finished products, despite the Act’s mandate that NCED manufacture the products on its own.  Allegedly, the Suppliers also intentionally overcharged NCED in order to get rebates that were then paid to their management.  NCED, and its CEO, settled with the Government, and Ahumada pursued his FCA claims against NISH and the Suppliers separately.

The Court reasoned that the district court lacked subject-matter jurisdiction to hear Ahumada’s claims against NISH and all of the Suppliers except Weyerhaeuser because of the FCA’s public-disclosure bar.  The “public-disclosure bar provide[s] that ‘[n]o court shall have jurisdiction over an action under [the FCA] based upon the public disclosure of allegations or transactions . . . unless . . . the person bringing the action is an original source of the information.’”  However, a FCA claim can overcome the public disclosure bar if the plaintiff is the “original source” of the public disclosure.  A plaintiff is the original source if he: (1) has “direct and independent knowledge” of the publicly disclosed allegations; and (2) “voluntarily provided the information to the Government before filing [the] action.”

The Court reasoned that Ahumada was unable to prove his direct and independent knowledge of the publicly disclosed allegations against defendants NISH, Green Bay, and Smurfit by way of his employment at NCED because he had been terminated by NCED when the illegal activity took place.  Further, the majority of his allegations against the three Suppliers cited testimony from an earlier trial, which “strongly suggest[ed] that this public disclosure was in fact the source of Ahumada’s knowledge.”

In regard to Ahumada’s FCA claim against IPC, he failed to prove how he had direct knowledge that IPC “unquestionably knew”—the necessary scienter element of an FCA claim—that NCED was violating the Act.  The transactions between NCED and IPC, without more, were not enough to prove IPC’s scienter, and Ahumada was unable to provide specific details except that “someone” told him IPC knew NCED was violating the Act.

Finally, the Court reasoned that the district court had subject-matter jurisdiction to hear Ahumada’s FCA claim against Weyerhaeuser because Ahumada satisfied the original source exception to the public disclosure bar by showing that he personally witnessed, and confirmed, illegal transactions between NCED and Weyerhaeuser, and that he voluntarily provided this information to the Government prior to filing suit.  However, Ahumada’s claim still failed to satisfy F.R.C.P. 9(b)’s particularity requirement because it did not “allege ‘the who, what, when, where and how of the alleged fraud.’”  His claim that Weyerhaeuser sold pre-manufactured products to NCED was not particular enough, without more, to support an FCA claim.  Neither was his allegation that Weyerhaeuser “provided [NCED with] inflated invoices” for its products.  Therefore, the district court had properly dismissed Ahumada’s claims against Weyerhaeuser, as well as the other defendants.

Full Opinion

James Bull Sterling

BYNUM v. NORFOLK S. RY. CO., NO. 13-2127

Decided: June 23, 2014

The Fourth Circuit held that it lacked jurisdiction to review a district court’s order that remanded a case to state court.

Gilbert Bynum, a Norfolk Southern Railway employee, was injured on the job when he tripped over debris that had accumulated alongside the railroad tracks.  Bynum applied for, and was awarded, workers’ compensation benefits as provided under the Federal Longshore and Harbor Workers’ Compensation Act (LHWCA).  Bynum also filed a lawsuit in state court under the Federal Employers Liability Act (FELA), which alleged negligence on the part of Norfolk Southern.  Norfolk Southern removed the case to federal court contending that (1) because Bynum recovered under LHWCA he was barred from recovery under FELA and (2) whether Bynum’s injury was covered by the LHWCA was a federal question that should not be answered by state courts.  Bynum filed, and the district granted, a motion to remand to state court on the basis that Congress expressly eliminated the federal court’s jurisdiction over the LHWCA.

Under 28 U.S.C. § 1447, appellate courts are generally prohibited from reviewing the merits of a district court’s remand order.  While the prohibition on appellate review has been limited in some ways, case law establishes that appellate courts may not review a remand that was ordered on the basis of either (1) lack of subject matter jurisdiction or (2) a defect in removal that was raised within thirty days after the notice of removal was filed.  Ellenburg v. Spartan Motor Chassis, Inc., 519 F.3d 192, 196 (4th Cir. 2008).  The Court reasoned that Norfolk Southern’s failure to comply with the statutory removal requirements, i.e. removing a FELA claim to federal court in contravention of the statutory bar to removal of FELA claims, constituted a defect and, therefore, the Court lacked jurisdiction to review the remand on appeal.

Full Opinion

Amanda K. Reasoner

U.S. v. LOUTHIAN, NO. 13-4231

Decided: June 23, 2014

The Fourth Circuit affirmed the Western District of Virginia Court’s decision convicting Appellant of multiple offenses related to a healthcare fraud scheme.

Appellant was the former President and Business Manager of the Saltsville Rescue Squad, Inc., (the “Squad), which provided ambulance transport for medical emergencies, as well as non-emergency transportation for dialysis patients.  The Medicare Fraud Control Unit of the Virginia Attorney General’s began investigating the Squad in 2008, and discovered that it provided transportation to three dialysis patients on a weekly basis who could have been transported by less extraordinary means.  The Squad double billed Medicare and a private insurer approximately $1200 to $1500 per trip.  Testimony at trial revealed that Appellant encouraged staff to falsify patients’ physical conditions to ensure that Medicare paid for the Squad’s transport.  A jury convicted Appellant of health care fraud and perjury.  The district court also awarded the Government a money judgment of forfeiture against Plaintiff for $907,521.77.  Plaintiff then filed a timely appeal.

The Fourth Circuit rejected Appellant’s assertion that the prosecution presented insufficient evidence to support his conviction on the health care fraud because it failed to prove the transport of the patients to dialysis was not “medically necessary.”  The Court stated that the prosecution’s evidence at trial sufficiently displayed that the Squad’s transport patients could stand, walk, and perform manual labor, yet Appellant submitted information describing the patients as bedridden.  Further, Appellant was personally aware of the patients’ conditions since he participated in some of the transports, and even altered the Squad’s reporting practices to cover up the fraud.  The Fourth Circuit also found sufficient evidence to support Appellant’s perjury conviction.  A perjury charge requires that the prosecution prove that Appellant knowingly made a “false material declaration” while he was under oath.  At trial, the prosecution compared Appellant’s testimony that one of the clients was transported on a stretcher by the Squad for a couple of years against a video of Appellant watching that same client walk from the ambulance to her home a few months before trial.  The Fourth Circuit also rejected Appellant’s “baseless” argument that it was inconsistent for a jury to convict Appellant of the health care fraud when it acquitted the Squad.  The U.S. Supreme Court established that a defendant cannot challenge a conviction simply because the conviction is inconsistent with a jury’s acquittal on another count. The Fourth Circuit also found no abuse of discretion in Appellant’s forty-eight month sentence because he failed to show that the sentence was unreasonable or tainted by procedural flaws.  Finally, the Court found that Appellant was not prejudiced by the criminal forfeiture since 18 U.S.C. § 982(a)(7) required that the prosecution seek a court order to mandate the Appellant forfeit any property derived from the commission of his health care fraud.

Full Opinion

Alysja S. Garansi

UNDER SEAL v. U.S., NO. 13-4933

Decided: June 16, 2014  

The Fourth Circuit ruled that the district court erred in adopting the parent-child privilege and excusing a son “from testifying before a grand jury” on potential federal charges against his father.  In doing so, the Court joined several other circuits, which have declined to recognize a parent-child privilege under Federal Rules of Evidence (F.R.E.) 501.

Sheriff deputies responded to an emergency domestic assault call from the Defendant’s (Mr. Doe) wife, and mother of their son (Doe Jr.).  During this response, numerous firearms were discovered and seized at the Doe home.  Though the assault charges were dismissed, the Government began an investigation to determine whether Mr. Doe unlawfully possessed unregistered firearms in violation of 26 U.S.C. § 5861(d).  Mr. Doe and his wife separated, and Doe Jr. moved in with his father.  The Government referred the case to a grand jury for possible indictment, and subpoenaed Doe Jr. “to determine the ownership of the illegal guns” found at the Doe home.  Doe Jr. filed a motion to quash, claiming parent-child privilege.  The district court granted the motion, emphasizing the privacy rights of Doe Jr. and concluding that the relationship between Doe Jr. and his father created a privilege.

After canvassing cases in other circuits, the Court stated that “reason and experience” did not warrant creation of the privilege in the face of substantial authority to the contrary.  Moreover, the Court found that the nineteen-year-old son did not make a strong showing of the need for the parent-child privilege.  The Court explained that the son was “not an impressionably very young child,” but rather an adult college student.  The Court also referenced Doe Jr.’s testimony that he did not think his father would “cut [him] off[,]” or “hold it against [him]” if he testified truthfully.  Because the Government only sought to determine the ownership of the firearms found at the Doe residence, the Court could not “say with certainty that Doe Jr.’s potential testimony would be of a nature that would damage the father-son relationship.”

The Court emphasized the “fundamental principal that the public has a right to ‘every man’s evidence.’”  Doe Jr. was the only individual available to testify to the ownership.  Thus, his testimony was particularly relevant to the grand jury’s investigation.  On these facts, the Court stated that:  “[c]reating a parent-child privilege in this case would therefore discount the [U.S.] Supreme Court’s admonishment that only limited exceptions should trump ‘the normally predominant principle of utilizing all rational means for ascertaining truth.’”

Lastly, the Court opined that allowing Doe Jr. to assert the parent-child privilege would fail the purpose of the privilege.  Doe’s wife called 911 alleging spousal abuse, and, automatic weapons, firearms, and illegal weapons were discovered in the home.  Based on these facts, the Government certainly had reason to investigate.

Full Opinion

Abigail Forrister

U.S. v. HAIRSTON, NO. 12-8096

Decided: June 11, 2014

The Fourth Circuit held that when the facts that supported the Appellant’s motion for resentencing did not exist at the time of his first 28 U.S.C. § 2255 motion, then his subsequent § 2255 motion was not successive, and remanded his case; therefore reversing the district court’s dismissal of his claim.

In 2003, Appellant, Robert Hairston, pled guilty to conspiracy to possess with intent to distribute (P.W.I.D.) cocaine, cocaine base, and marijuana.  According to the U.S. Sentencing Guidelines (U.S.S.G.), Appellant’s criminal history was a category IV, and thus received a 324-month sentence, which was at the lowest end of his range under the Guidelines.  Appellant filed his first § 2255 motion within a year of sentencing, which the district court denied.  Appellant then repeatedly filed motions to vacate one of his North Carolina convictions for eight years.  In 2011, North Carolina vacated this conviction, which had factored into his category IV criminal history.  Thus, Appellant filed this successive § 2255 motion to lower his criminal history to category III, which would subsequently lower his sentence range for his 2003 P.W.I.D. under the U.S.S.G.  The district court dismissed Appellant’s motion as unauthorized under 28 U.S.C. § 2244(b)(3)(A).

The Court granted a Certificate of Appealability (COA) on the issue of “whether [Appellant’s] numerically second § 2255 motion is a ‘second or successive’ motion for purposes of 28 U.S.C. § 2255(h), where the basis for his claim did not arise until after the district court denied his first § 2255 motion,” and reviewed the district court finding de novo.  The Court restated § 2255(h) of the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA), and noted that the Tenth and Eleventh Circuits have held that § 2255 motions are not successive when asked to reopen a federal sentence upon the vacatur of a state conviction.  See In re Weathersby, 717 F.3d 1108, 1111 (10th Cir. 2013); Stewart v. United States, 646 F.3d 856, 863–65 (11th Cir. 2011).  Ultimately, the Court aligned with the Tenth and Eleventh Circuits, and reemphasized its position that not every petition is “second or successive” under the statutory definition of AEDPA.  In re Williams, 444 F.3d 233, 235 (4th Cir. 2006).

Full Opinion

Samantha R. Wilder

U.S. v. SAAFIR, NO. 13-4049

Decided: June 11, 2014

The Fourth Circuit held that law enforcement conducted an unreasonable search of the defendant’s car because the probable cause to search the vehicle was tainted, and thus the defendant’s statements and evidence of the weapon found in the car should have been suppressed.

The defendant, Saafir, was pulled over by law enforcement for speeding through a residential area and for excessively tinted windows.  Saafir informed the officer that his license had been revoked.  The officer then ran a check on Saafir’s identification, and discovered that Saafir was considered an armed and dangerous person, a validated gang member and had an order to stay away from Durham Public Housing Authority property.  The officer radioed for backup and requested that Saafir step out of the car so that the officer could explain the warnings that the officer was giving for speeding and for tinted windows.  When Saafir exited the car, the officer noticed a flask in the pocket of the driver’s side door.  The officer informed Saafir of shootings and violence in the area and requested permission to frisk Saafir, to which Saafir consented.  After a second officer arrived, the officer then requested permission to search the vehicle, and Saafir refused, saying that he did not own the car.  The officer further attempted to “talk [Saafir] into letting him search the car,” stating that the driver could give consent without being the vehicle’s owner.  In the face of Saafir’s continued refusal, the officer said that he had probable cause to search the vehicle due to the presence of the flask because it is illegal to possess alcohol that is not in the original unopened manufacturer’s container.  Saafir did not give express consent, but did not stop the officers from conducting the search.  The officers asked if there was anything they should know about inside the vehicle. Saafir responded that there “might” be a gun in the vehicle and that the gun “might” be under the seat.  The officer’s did not find a weapon.  The officers did not check the flask, nor did either officer detect the odor of alcohol in the vehicle or on Saafir’s person.  Upon request, Saafir gave the officers the key to the locked glove box where they found a pistol.  In the district court, Saafir moved to suppress evidence of the pistol.  The district court denied his motion holding that the officer had probable cause based on Saafir’s statement that there “might” be a gun in the car.

The Fourth Circuit determined that the officer’s assertion of probable cause to search the vehicle based on the presence of the flask was “an independent, antecedent threat to violate the Fourth Amendment that ultimately fatally taints the search of the car and the seizure of the gun.”  A search is unreasonable when the searching officer lacks probable cause.  Ornelas v. United States, 517 U.S. 690, 696 (1996).  Probable cause exists “where the known facts and circumstances are sufficient to warrant a [person] of reasonable prudence in the belief that contraband or evidence of a crime will be found.”  Id.  There was no evidence that Saafir was under the influence of alcohol, and the officers did not check the flask for alcohol.  A search or seizure is unconstitutional when premised on a law enforcement officer’s misstatement of authority to perform the search or seizure.  E.g. Bumper v. North Carolina, 391 U.S. 543, 547–50 (1968) (invalidating a search of a home after the officer falsely stated that he had a warrant).  “[E]ngaging or threatening to engage in conduct that violates the Fourth Amendment” does not justify a law enforcement officer’s search or seizure.  Kentucky v. King, 131 S. Ct. 1849, 1858 (2011).  Thus, the Fourth Circuit reasoned that because Saafir’s admission that there might be a gun in the car was given only after the officer falsely stated his authority to search the car, Saafir’s admission could not provide probable cause to search the vehicle for a weapon.  The Court held that the evidence of the pistol and Saafir’s statements should have been suppressed.  Wong Sun v. United States, 371 U.S. 471, 487–88 (1963).

Full Opinion

Verona Sheleena Rios

U.S. v. MUNGRO, NO. 13-4503

Decided: June 11, 2014

The Fourth Circuit held that defendant’s prior “breaking or entering” convictions qualified as Armed Career Criminal Act (“ACCA”) predicate offences.  Affirmed.

Defendant had three prior state convictions for “breaking or entering.”  The ACCA establishes minimum sentencing requirements for felons in possession of a firearm when the felon has previously been convicted of three, or more, “predicate offenses,” which include burglary.  Defendant argued that his convictions for “breaking or entering” were not burglary as defined in the ACCA, and, therefore, the district court erred in applying the heightened sentence.

The Court compared North Carolina’s “breaking or entering” statute with the generic burglary offense as defined in the Model Penal Code and popular treatises, and determined that it fell within the definition of burglary found in the ACCA because the North Carolina’s “breaking or entering” offense “sweeps no more broadly” than generic elements of burglary.

Full Opinion

Chris Hampton

MEYER v. COLVIN, NO. 13-1700

Decided: June 10, 2014

The Fourth Circuit affirmed the district court’s denial of a social security claimant’s motion for attorney’s fees under the Equal Access to Justice Act (“the Act”).

Social Security claimant, Meyer, appealed the district court’s denial of his motion for attorney’s fees under the Act.  The Act provides that a party who prevails in litigation against the United States is entitled to an award of attorney’s fees unless “the position of the United States was substantially justified” or “special circumstances make an award unjust.”  28 U.S.C. § 2412(d)(1)(A).  The district court determined that Meyer prevailed in his lawsuit against the Commissioner of Social Security, but that attorney’s fees were unwarranted because the Commissioner had pursued a substantially justified position when he weighed the evidence of Meyer’s claim.  In determining whether the Government’s position in a case is substantially justified, the Court looked beyond the issue on which the petitioner prevailed to determine, from the totality of the circumstances, whether the Government acted reasonably in causing the litigation, or in taking a particular stance during the litigation.  In applying this reasonableness standard, the Court emphasized that the standard required looking to whether a reasonable person could have believed that the litigation position was correct.  In this case, the Court agreed with the district court and considered the weight of evidence in favor of the Commissioner’s position; therefore, the Court affirmed the district court’s decision.

Full Opinion

Grace Faulkenberry

U.S. v. BAREFOOT, NO. 13-4108

Decided: June 9, 2014

The Fourth Circuit affirmed the district court’s decisions to deny Charles Barefoot’s motion to represent himself at trial; to admit into evidence proof of Barefoot’s involvement in a previous murder; and to uphold Barefoot’s convictions for receiving explosives, and soliciting an associate to help use those explosives to blow up a courthouse, because the government presented sufficient evidence to support those convictions.  Conversely, the Court reversed the district court’s decisions to deny Barefoot’s motion to dismiss charges for improperly storing explosives (Count Five), and providing explosives to a minor (Count Six), which the Government had brought in violation of Barefoot’s plea agreement.  However, these dismissals, the Court ultimately denied Barefoot’s appeal for resentencing.

Based on a tip from an informant, police stopped and searched Barefoot’s van for weapons.  Inside the van, police found two handguns, and later they found more guns, Ku Klux Klan material, and material used for making explosives at Barefoot’s home.  Police also searched the home of Barefoot’s son, Daniel, where they found more explosives, which Daniel said Barefoot had given him.  Barefoot was indicted on one count for his possession of a firearm, and subsequently entered into a plea agreement with the Government whereby he pled guilty to that charge in exchange for the Government’s agreement “not to use any information provided by [Barefoot] . . . to prosecute him for additional crimes, except for crimes of violence[.]”  However, based on police discussions with Barefoot, and upon further investigation, the Government learned about Barefoot’s involvement in several other crimes of violence.  The Government found evidence that Barefoot had been involved in the murder of a fellow clansman, the theft of over thirty weapons, the receipt of explosives with the intent to use them to bomb a courthouse, and the solicitation of an associate to help bomb the local courthouse.

The Court reasoned that the district court did not abuse its discretion by ruling that, given all of the circumstances, Barefoot was not mentally competent to represent himself at trial.  The district court did not err when it considered a psychiatric evaluation from the prior year because, even if that report alone was not enough to prove Barefoot’s competency, the district court also relied on its personal observations of Barefoot, and the lack of evidence Barefoot presented to prove his competency.

The Court also reasoned that the district court did not abuse its discretion by admitting evidence of Barefoot’s involvement in a discussion that led to the murder of a fellow clansman as a “prior bad act.”  Barefoot’s prior bad act showed his intent to kill a fellow clansmen, and because that plan was executed, it increased the likelihood that in the “analogous situation” where Barefoot solicited an associate to help him bomb a courthouse, he actually had the intent to follow through with the bombing.  Additionally, the district court on multiple occasions gave the jury limiting instructions on the purpose of the murder evidence.

Finally, the Court agreed with the district court that the Government had presented sufficient evidence to prove Barefoot had received explosives with the intent “to use [them] for prohibited purposes[,]” and that the Government had presented sufficient evidence to prove Barefoot had actually solicited his associate to help him use the explosives to blow up the courthouse.  Based on the timeframe that Barefoot acquired the explosives, and then solicited his associate, the Government was able to prove his mal intent.  Although Barefoot never solicited his associate by “just ask[ing]” for help with the bombing, ample testimony existed to prove he “endeavored to persuade” his associate throughout the conversation.  Further, even if Barefoot only requested help with transportation to the courthouse, and not actually setting off the bomb, his associate would still have been liable as a principal for “aid[ing] and abet[ing]” in the crime.

The Court reversed the district court’s verdicts on Counts Five and Six because those charges violated the “use immunity” the Government agreed to grant Barefoot in his plea agreement.  The Court interpreted use immunity to include direct, and “derivative use immunity[,]” so that the Government should not have been allowed to make indirect use of Barefoot’s statements in connection to his plea agreement to charge him with other related non-violent crimes.  The Government violated the plea agreement with the Count Five conviction, which was a non-violent misdemeanor.  The Court declined to definitively rule whether the Count Six conviction constituted a violent crime, but reasoned that the ambiguity should favor Barefoot, and so it reversed the Count Six conviction as well.

Although the Court reversed Barefoot’s convictions for Counts Fix and Six, it denied his appeal for resentencing because the convictions “had no material effect on his sentence.”  The Court noted that the Count Six conviction ran concurrently with other convictions, and the Count Fix conviction was for a misdemeanor offense.

Full Opinion

James Bull Sterling

ANAND v. OCWEN LOAN SERVICING, LLC, NO. 13-1900

Decided: June 6, 2014

The Fourth Circuit affirmed the district court’s dismissal of a quiet title action.

The Anands obtained a $500,000 mortgage on their home secured by a Deed of Trust (Deed), which provided that (1) ownership of the home would be transferred to a trust, and (2) the trust had the authority to foreclose on the home if the Anands failed to repay the loan according to the terms of the promissory note.  Deutsche Bank National Trust Company (Deutsche Bank) held the rights under the Note and Deed of Trust.  Ocwen Loan Service, LLC (Ocwen) serviced the loan.  After the Anands defaulted on their loan, they brought a quiet title action under Maryland law seeking (1) a declaration that Deutsche Bank and Ocwen (collectively, Appellees) no longer held an interest in their home; (2) an order requiring the Appellees to release their liens; and (3) an order precluding Appellees from foreclosing on the Anands’ home.  The Anands averred that both Appellees had insurance that compensated them in an amount equivalent to what the Anands owed, thus the payments triggered the release provision in the Anands’ Deed of Trust.

With respect to the Anands’ quiet title action, the Court reasoned that the Anands’ reliance on the provision within the Deed that provided “[u]pon payment of all sums secured by this Security Instrument, Lender or Trustee, shall release this Security instrument and mark the Note ‘paid’ and return the Note to Borrower” failed to give “meaning and effect to every part of the contract.”  Instead, the release provision was only triggered when the borrowers, the Anands, paid the amount secured by the Note.  Thus, the Court emphasized that because the Anands indisputably do not own legal title to their home, a quiet title action is inapplicable to their circumstances.

Full Opinion

Amanda K. Reasoner

CALDERON v. GEICO GEN. INS. CO., NO. 13-2149

Decided: June 6, 2014

The Fourth Circuit held that it lacked jurisdiction to consider Appellees’ and Appellant’s interlocutory appeals and, thus, dismissed the appeals.

Appellees previously worked as security investigators in Appellant GEICO’s Claims Department, and investigated suspected fraudulent claims.  Appellant classifies its security investigators as exempt from the Fair Labor Standards Act’s (FLSA) overtime pay protections, and Appellees filed suit in 2010 seeking recovery of the overtime pay they were allegedly owed, and that Appellant wrongfully withheld in violation of the FLSA, and New York state law.  The district court rejected Appellant’s classification of Appellees as exempt under the “administrative function” exemption, and granted Appellees’ motion for partial summary judgment.  The district court entered an order, which it described as a “final judgment,” that contained a formula for calculating the back pay owed to Appellees.  The Order also stated that the district court retained jurisdiction to resolve or oversee any issue concerning the back pay remedy.  Appellant appealed the Order, and Appellees cross-appealed the district court’s remedy rulings.

The Fourth Circuit stated that its appellate jurisdiction, with limited exceptions, extends only to reviewing any final decisions rendered by the district courts.  28 U.S.C. § 1291.  A final decision is one that ends litigation on its merits, and leaves only the execution of a judgment for the court.  A judgment on liability where the damages are not fixed is not a final judgment, as an assessment of damages consists of part of a claim on the merits, and must be determined for a final judgment.  Further, the label given to an order by a district court does not determine whether an order is final.  The Fourth Circuit found that although the district court decided many of the issues determinative of the amount of damages Appellees are entitled to, the district court’s order was not final because it did not determine all of the facts necessary to be able to compute Appellees’ damages, nor did it determine how its back pay formula applies to the facts of the case.  The Court noted that a number of factual or legal issues could potentially arise that may affect the amount of damages, as evidenced by the district court’s retention of jurisdiction should any disputes arise between the parties in calculating Appellees’ damages.  Thus, the district court had to accomplish more than merely enforcing its judgment, and its judgment was not final.  The Fourth Circuit, therefore, concluded it did not have a final decision to review, and had no choice but to dismiss the parties’ appeals.

Full Opinion

Alysja S. Garansi

U.S. v. WEISS, NO. 13-4039

Decided: June 6, 2014

The Fourth Circuit affirmed the United States District Court for the Middle District of North Carolina and held that: 1) a defendant’s false representation of himself as a certified public accountant (CPA) warranted an increase of two levels in his base offense level for sentencing by his abuse of a position of trust; 2) a defendant could be held accountable at sentencing for knowingly and intentionally failing to claim his illegally acquired gains as income; and 3) the district court did not plainly err by not appointing various experts sua sponte to assist in his defense at sentencing.

The defendant, who headed up a payroll processing company, was convicted of abuse of a position of trust after his convictions for wire fraud, money laundering, and corrupt interference with the United States’ internal revenue laws.  The presentence report (PSR) calculated Weiss’ total offense level under the U.S. Sentencing Guidelines (the U.S.S.G.) at thirty-three, which included a two-level enhancement for the abuse of a position of trust.  The offense level of thirty-three included twenty levels for the loss attributable to the defendant.

The Court upheld the two-level enhancement and reasoned that “[t]he central purpose of [the applicable rule] is to penalize defendants who take advantage of a position that provides them with the freedom to commit a difficult-to-detect wrong.”  The Court found that the defendant’s false representation of himself as a CPA reasonably induced at least one company to do business with him as a professional employer organization (PEO), and caused it to repose a higher level of trust or confidence in him, which is statutorily required to increase his sentencing offense level by two levels.

The Court further agreed with the district court that the personal federal income tax due on the defendant’s illegal gains could be included as part of the loss calculation under the U.S.S.G., in addition to the illegal gain.  The Court noted that the district court’s reasoning was “on the money.”  Specifically the Court stated that the defendant’s first offense was complete when he fraudulently diverted income to himself.  Thus, when he also knowingly and intentionally failed to report such ill-gotten income as income on his federal income tax return, he committed a second, and distinct, offense.

On appeal, the defendant further claimed that the district court abused its discretion by failing sua sponte to appoint him various experts to assist in his defense at his sentencing.  Because the defendant never requested any of the expert assistance that he claimed on appeal was crucial to his ability to mount a successful defense at sentencing, the Court’s review was limited to plain error.  On this standard, the Court held that even assuming arguendo that defendant could establish error as he alleged, there was still no basis to conclude that such error was plain.  Accordingly, the Court concluded that the defendant was not entitled to relief on his claim for various experts on appeal, when he never made known to the district court.

Full Opinion

Abigail Forrister

U.S. v. TAYLOR, NO. 13-4316

Decided: June 6, 2014

The Fourth Circuit affirmed Taylor’s convictions for two counts of Hobbs Act robbery, in violation of 18 U.S.C. § 1951(a) and one count of using a firearm in furtherance of a crime of violence, in violation of 18 U.S.C. § 924(c).

Taylor, as part of a robbery group known as the Southwest Goonz, broke into the homes of drug dealers to steal drugs and money.  The victims were assaulted and held at gunpoint.  Money, jewelry, cell phones, and a marijuana cigarette were stolen.  The district court granted the Government’s motion to preclude Taylor from offering evidence that the robbery of drugs grown within the state borders does not affect interstate commerce, reasoning that the drug dealing effects interstate commerce as a matter of law under United States v. Williams, 342 F.3d 350 (4th Cir. 2003).  After a guilty verdict on the Hobbs Act crimes, the district court dismissed Taylor’s motion to set aside the verdict because the Government failed to offer evidence that Taylor’s actions affected interstate commerce.  Taylor appealed.

The Fourth Circuit reasoned that to show a Hobbs Act crime, the Government must prove that (1) there was a robbery or extortion, and (2) that there was interference with commerce.  United States v. Tillery, 702 F.3d 170, 174 (4th Cir. 2012).  The U.S. Supreme Court has recognized that the Hobbs Act should be interpreted broadly.  Stirone v. United States, 361 U.S. 212, 215 (1960).  The Fourth Circuit has previously held that the Government need only prove that the robbery would have a “minimal” effect on interstate commerce.  United States V. Spagnola, 546 F.2d 1117, 1119 (4th Cir. 1976).  The effect could be de minimis, United States v. Buffey, 899 F.2d 1402, 1404 (4th Cir. 1976), and the Government may show an effect on interstate commerce by “proof of probabilities,” United States v. Brantley, 777 F.2d 159, 162 (4th Cir. 1985).  The Hobbs Act violator does not need to intend to effect interstate commerce; rather, the effect can be the “natural, probable consequence of the defendant’s actions.”  Williams, 342 F.3d at 354.  Furthermore, the Court does not consider whether the individual act has an effect, but that the “relevant class of actions” has an impact.  Tillery, 702 F.3d at 174.  The U.S. Supreme Court has repeatedly determined that Congress may regulate conduct that has an aggregate effect on interstate commerce.  See, e.g., Gonzales v. Raich, 545 U.S. 1, 18–19, 22 (2005); Wickard v. Filburn, 317 U.S. 111, 128–29 (1942).  The Fourth Circuit has extended this reasoning to violations of the Hobbs Act.  Tillery, 702 F. 3d at 174–75; Williams, 342 F.3d at 355.  The Court found that other circuits agree with this theory as well.  See United States v. Powell, 693 F.3d 398, 402 (3d Cir. 2012); United States v. Robinson, 119 F.3d 1205, 1214 (5th Cir. 1997); United States v. Davis, 473 F.3d 680, 683 (6th Cir. 2007); United States v. Marrero, 299 F.3d 653, 655 (7th Cir. 2002); United States v. Bolton, 68 F.3d 396, 399 (10th Cir. 1995); United States v. Guerra, 164 F.3d 1358, 1361 (11th Cir. 1999).  The Fourth Circuit determined that the legality of the business was irrelevant, and that it is enough that the transactions are commercial enterprises.  The Court also reasoned that, because businesses can be operated out of the home, the fact that the robberies took place in a private residence was not dispositive of whether the Hobbs Act.

The Fourth Circuit held that a jury could reasonably have found that the Government met its burden of showing that the Hobbs Act applies.  First, the jury could have reasonably found that Taylor’s robberies would have an effect on interstate commerce by depleting the drug dealers of assets, known as the depletion of assets theory.  Buffey, 899 F.2d at 1404.  The Court determined in Williams that drug dealing was “an inherently economic enterprise that affects interstate commerce.”  342 F.3d at 355.   There was sufficient evidence at trial to show that Taylor’s victims were drug dealers, and that Taylor took part in the robberies because he expected to find drugs and drug proceeds in the homes.  The stolen items were enough to satisfy the de minimis standard for showing a depletion of assets.  The jury could also reasonably conclude that Taylor had attempted to steal drugs and drug proceeds.  Second, there was evidence to suggest that Taylor intentionally targeted these businesses engaged in interstate commerce, known as the targeting theory.  Although intent is not a necessary required element, intent can be probative of whether the robberies would have the “natural consequence[]” of affecting commerce.  The Fourth Circuit limited its holding to the robbery of businesses which fall under the Hobbs Act.  The Court noted that the Hobbs Act would not apply to the “private citizens in a private residence,” even if some of the stolen assets belonged to a business in interstate commerce.  United States v. Wang, 222 F.3d 234, 240 (6th Cir. 2000) (stating that the Hobbs Act did not apply where the defendant robbed a private residence and happened to steal cash that belonged to the homeowners restaurant business).

Full Opinion

Verona Sheleena Rios

U.S. v. MARTIN, NO. 12-5001

Decided: June 5, 2014

The Fourth Circuit held that the district court erred by treating the defendant’s 2009 conviction for fourth degree burglary as a “crime of violence” for the purposes of determining his base offense level under the U.S. Sentencing Guidelines (U.S.S.G.).

Martin was convicted for being a felon in possession under the Armed Career Criminals Act (“ACCA”).   According to the applicable Sentencing Guideline for the ACCA, there is a four-point discrepancy for an individual’s base offense level based on his prior felony convictions for crimes of violence.  At the time he plead guilty, Martin had three previous convictions, including two Maryland convictions, one for conspiracy to commit robbery, and one for fourth degree burglary.  The district court held that both convictions involved crimes of violence, and set Martin’s base offense level at twenty-four.  As a result, Martin’s advisory sentencing guideline range was seventy-seven to ninety-six months, and Martin was ultimately sentenced to seventy-seven months’ imprisonment.  On appeal, Martin accepted that the conspiracy charge as a crime of violence, but argued that the fourth degree burglary charge was not.  Martin contended that his base level offense should have been twenty, with a corresponding guideline range of fifty-one to sixty-three months.

The applicable U.S.S.G. defines a “crime of violence” as any federal or state offense that is punishable by more than one years’ imprisonment and that (1) “has as an element the use, attempted use, or threatened use of physical force against the person of another” of (2) “is burglary of a dwelling, arson, or extortion, involves use of explosives, or otherwise involves conduct that presents a serious potential risk of physical injury to another.”  The Court noted that the statute does not involve an element of attempted, or threatened, use of force against another, and so its analysis focused on the second prong.

Maryland’s fourth degree burglary statute includes four different crimes: (1) “breaking and entering the dwelling of another,” (2) “breaking and entering the storehouse of another,” (3) “being in a dwelling or storehouse of another” with the intent to commit theft, and (4) “possessing burglar’s tools with the intent to use.”  In Taylor v. United States, the U.S. Supreme Court defined burglary under the ACCA as “an unlawful or unprivileged entry into, or remaining in, a building or other structure, with intent to commit a crime.” 495 U.S. 575, 602 (1990). The ACCA adds an additional element that the unlawful entry be in a dwelling.  Therefore, under this definition, the fourth degree burglary statute does not qualify as “burglary” under the ACCA because it lacks the requirement that the offender intend to commit a crime.  Thus, the Court noted that in order to be considered a “crime of violence,” the Maryland statute must satisfy the residual clause—that is, it must involve “conduct that presents a serious potential risk of physical injury to another.”

The Court reviewed the U.S. Supreme Court precedent discussing the scope of the residual clause.  In Begay v. United States, the U.S. Supreme Court held that the residual clause only encompasses crimes similar in kind and of comparable risk to the enumerated crimes. 553 U.S. 137 (2008). Under this analysis, the U.S. Supreme Court noted that all of the enumerated offenses generally involve “purposeful, violent, and aggressive conduct.”  In a subsequent decision, Sykes v. United States, 131 S. Ct. 2267 (2011),the U.S. Supreme Court returned to a comparable degree of risk analysis, by analyzing the degree of risk posed by the offense in order to determine whether it qualifies under the residual clause.  Specifically, the U.S. Supreme Court noted that Begay involved a strict liability offense.

The Fourth Circuit acknowledged that most circuits have held that Sykes has limited Begay’s similar-in-kind inquiry to only those offenses involving strict liability, negligence, or recklessness.  However, the Fourth Circuit continues to apply Begay to residual clause cases, and the Court did so in this case.  Under the degree of risk test, the Court found that the offense of fourth degree burglary presents a comparable risk of harm to general burglary—the closest enumerated offense—because the risk associated with both is the possibility of a face-to-face confrontation between the burglar and property owner.  In so holding, the Court rejected Martin’s contention that the risk of harm from general burglary stems from the burglar’s intent to commit a crime.

However, this conclusion did not end the Court’s analysis because under the approach adopted by the Fourth Circuit, the offense must also be similar in kind to the offenses enumerated in the U.S.S.G.—burglary, arson, extortion, or a crime involving explosives.  After examining Maryland’s statute, the Court determined that the crimes could be committed based on an unreasonable assumption that an individual had permission to enter, which constitutes negligent, but not purposeful, conduct.  Therefore, the Court held that the fourth degree burglary statute is not similar in kind to the enumerated offenses.  As such, it does not qualify as a crime of violence under the applicable Sentencing Guideline, and the district court erred in its treating it as such.  The Court vacated Martin’s sentence and remanded the case for resentencing.

Judge Diaz wrote separately to concur, and specifically noted the lack of clarity surrounding this issue, and urged Congress or the U.S. Supreme Court to “shed light on this ‘black hole of confusion and uncertainty.’”  In his dissent, Judge O’Grady agreed with the majority’s degree-of-risk analysis.  However, Judge O’Grady disagreed that Begay should apply in this case because fourth degree burglary is not a strict liability or negligence crime.  Judge O’Grady noted that the Fourth Circuit’s application of Begay and Sykes has been inconsistent, and recent cases have limited its application to only those cases involving strict liability or negligence offenses.  However, even if Begay did apply, the dissent argued that the presence of a defense for reasonable mistake does not mean the crime is one of negligence.  Rather, a breaking and entering under the fourth degree burglary statute must be knowingly committed, which constitutes purposeful conduct under Begay.

Full Opinion

Jennifer Jokerst

U.S. v. GRANT, NO. 13-4302

Decided: June 3, 2014

The Fourth Circuit affirmed the district court’s inclusion of the Appellant’s two court-martial convictions as violent felonies for purposes of armed career criminal status under 18 U.S.C. § 924(e).  Therefore, increasing Appellant’s appropriate sentencing range for being a felon in possession of ammunition.

The Appellant received both violent felony convictions in 1980 while serving with the Army in Korea.  In the first incident, Grant used a razor blade to cut a fellow service member in the face, and received a general court-martial for assault by inflicting grievous bodily harm.  Subsequently, Grant overtook the guards that were transporting him after his assault charge, and received a general court-martial for kidnapping.  Ultimately, Grant was dishonorably discharged, and returned to the U.S. to serve out his sentence for both court-martials.  Later, on August 18, 2012, a fifteen-year-old girl disappeared from Columbia, South Carolina, and the Appellant, Freddie Grant, was the main suspect.  During the investigation, the Richland County Sheriff Department and Elgin Police Department executed a search warrant at Grant’s home where they discovered two boxes of ammunition.  Grant was arrested by the Federal Bureau of Investigation (FBI) and convicted for being a felon in possession of ammunition.

Under the Armed Career Criminal Act (ACCA), an individual who has “three previous conviction by any court referred to in section 922(g)(1) . . . for a violent felony or a serious drug offense, or both, committed on occasions different from one another” qualifies under the statute.  18 U.S.C. § 924(e)(1) (emphasis added).  On appeal, Grant argued that a general court-martial is not “any court” under the ACCA definition.  Specifically, Grant relied upon Small v. United States to support his claim that court-martials substantially differ from civilian courts, and, thus, should not meet the ACCA definition.  544 U.S. 385 (2005).  In Small, the U.S. Supreme Court held that convictions in foreign courts did not meet the statutory definition of “any court” under the ACCA, section 922(g)(1).  Id.

The Fourth Circuit noted some differences between military courts, Article I courts under the U.S. Constitution, and civilian courts, Article III courts.  However, the Court emphasized that both courts are required to find an individual guilty beyond a reasonable doubt.  Additionally, the Court reviewed fellow U.S. Court of Appeals’ decisions, and found that the Seventh and Ninth Circuit have held that court-martials meet the ACCA’s statutory definition for “any court.”  The Court reasoned that the legislative history and congressional intent surrounding the ACCA support its holding.  Moreover, the Court found that the differences Grant emphasized failed to reach the level of concern the U.S. Supreme Court relied upon in Small.  Therefore, the Court declined to extend that precedent without clear indication from Congress or the U.S. Supreme Court.

Full Opinion

Samantha R. Wilder

FOWLER v. JOYNER, NO. 13-4

Decided: June 2, 2014

The Fourth Circuit held that the pre-trial identification process used to identify the appellant was not impermissibly suggestive, and even if it were unduly suggestive, that the witness’s identification of appellant was reliable.  Affirmed.

Appellant sought federal habeas relief after his state convictions for assault with a deadly weapon with intent to kill, first-degree murder, and two counts of robbery with a dangerous weapon were affirmed on direct appeal.  The district court denied the petition, and declined to issue a certificate of appealability; the Fourth Circuit then granted a certificate of appealability, and affirmed the ruling of the district court.  The Court relied upon Perry v. New Hampshire, 132 S. Ct. 716, 724 (2012), which established a two-part test to determine whether an in-court eyewitness’s identification must be suppressed.  The test requires a court to first consider whether the identification procedure employed by the police was both suggestive and unnecessary, and, second, assess whether improper police conduct creates a substantial likelihood of misidentification.

The witness observed that the appellant was not wearing a mask for five seconds from a distance of twenty-five feet.  Prior to trial the witness was presented with two photographic displays, each containing the appellant’s photograph.  Witness did not positively identify appellant from these arrays.  At a hearing before trial, witness confidently identified appellant as the person he witnessed at the scene of the crime.  Appellant argued that the pretrial identification procedures relating to the photographic arrays were impermissibly suggestive and violated due process.

The Court reasoned that “the North Carolina state court’s rejection of [appellant’s] claim was not contrary to, or an unreasonable application of, clearly established federal law, as determined by the United States Supreme Court,” and affirmed the lower court’s denial of appellant’s petition for habeas relief.  The Court found that the photographs of appellant were substantially different in each photographic array.  Further, the record reflected no evidence that police “rigged” the appellant’s identification.

Full Opinion

Chris Hampton

PPL ENERGYPLUS, LLC v. NAZARIAN, NO. 13-2419

Decided: June 2, 2014

The Fourth Circuit affirmed the district court’s holding that a program to subsidize the participation of a new power plant in the federal wholesale energy market is preempted by the Federal Power Act’s authorizing provisions, which grant exclusive authority over interstate rates to the Federal Energy Regulatory Commission.

The Court focused on two theories, which preempt the program by the Supremacy clause: field preemption and conflict preemption.  The doctrine of field preemption applies when Congress has legislated comprehensively to occupy an entire field of regulation, leaving no room for the States to supplement federal law.  Actual conflict between a challenged state enactment and relevant federal law is unnecessary to a finding of field preemption; instead, the Court emphasized the mere fact of intrusion.  The federal energy scheme thus leaves no room for direct state regulation of the prices of interstate wholesales of energy, or for state regulations, which would indirectly achieve the same result.  Thus, the Court found that the program in question was field preempted because the program functionally set the rate that the appellant receives for its sales.  Alternatively, conflict preemption applies “where under the circumstances of a particular case, the challenged state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”  As with field preemption, the Court concluded that the impact of state regulation of production on matters within federal control, via the program, is so extensive and disruptive of the market that preemption is appropriate.

Full Opinion

Grace Faulkenberry

U.S. v. GARCIA, NO.13-4136

Decided: May 15, 2014

The Fourth Circuit held that the district court abused its discretion on its evidentiary rulings as viewed in their totality due to its inadequate adoption of safeguards to avoid the substantial risk of prejudice of the decoding expert’s testimony.  However, the Court also held that the district court did not abuse its discretion by admitting the expert testimony.

Garcia was named in five counts, including conspiracy to distribute heroin, possession with intent to distribute (P.W.I.D.) heroin, and P.W.I.D. 100 grams or more of heroin on three separate occasions.  At trial, Federal Bureau of Investigation (FBI) agents, Drug Enforcement Administration (DEA) agents, and state and local law enforcement officers testified about the government’s surveillance of Garcia and other defendants, including wiretaps on four mobile phones used by Garcia and his accomplices.  FBI Special Agent Carrie Dayton testified as an expert witness about coded telephone conversations gathered in the course of this investigation, appearing on eighteen separate occasions during six days over the two-week trial.  Agent Dayton’s experience included time as paralegal; over six years as an attorney; and over eight years in law enforcement with the FBI.  Agent Dayton was involved in twenty narcotics investigations and five wiretap investigations where she listened to thousands of phone conversations.  Prior to this trial, Dayton had never testified as an expert witness on coded drug language.  Defense counsel repeatedly objected to Agent Dayton’s testimony, particularly for her blending of fact testimony with her expert testimony, failure to conform to recognized methodologies, and failure of counsel to lay a foundation for many of her interpretations.

The Fourth Circuit affirmed the district court’s admission of Agent Dayton’s expert testimony.  Under Federal Rules of Evidence (F.R.E.) 702, a witness is a qualified expert based on knowledge, skill, experience, training, or education.  The Court reasoned that it was the quality of the agent’s experience and not the quantity, which qualified her as an expert.  In particular, her focus on narcotics trafficking for the previous five years with the FBI, which included listening to thousands of wiretap conversations.  However, the Court noted that her description of methodology was vague, but found that the methodology was similar to that described by a decoding expert in U.S. v. Wilson, 484 F.3d 267 (4th Cir. 2007).  Thus, the Court found no indication that the district court abused its discretion.

Furthermore, the Court commended the district court for its early identification of two potential problems with the testimony: (1) the need to distinguish between Agent Dayton’s lay fact testimony and her expert opinion, and (2) the need to ensure that the testimony is based on her experience and expertise and not simply relating what Garcia’s co-conspirators or other witnesses had told her, especially because Agent Dayton had debriefed several of Garcia’s co-conspirators in this case.  Despite early acknowledgement of these issues, the district court failed to safeguard the jury against the danger of confusing when Agent Dayton was offering lay testimony versus expert testimony.  The Court offered recommended safeguards including: requiring the witness to testify at separate times with lay testimony or with expert testimony; giving cautionary instruction to the jury regarding the basis of the testimony; allowing the defense counsel to cross-examine the witness; establishing a proper foundation for the expertise; or having counsel base the question in either fact or expertise while asking the question.  In many instances, a cautionary instruction may be enough to protect against the possible confusion; however, the instructions given here were insufficient.  The district court informed the jury that the Government would clearly ask questions based on the facts or expertise; however, Agent Dayton repeatedly oscillated between these two roles without clarification.  On several occasions, the Government asked Agent Dayton for an expert opinion, and then followed with a fact question based on the agent’s knowledge.  Under F.R.E. Rule 702, an expert must reliably apply their method in forming an opinion that will be helpful to the jury, and not as a way to give fact testimony in the guise of expert opinion.

Agent Dayton relied on her debriefing of the co-conspirators, which lead the court to question whether she was merely channeling out-of-court statements, instead of basing her testimony on her experience with law enforcement and wiretaps.  The U.S. Supreme Court has held that out-of-court testimony by an absent witness is allowed “only where the declarant was unavailable, and only where the defendant has had a prior opportunity to cross-examine.”  Crawford v. Washington, 541 U.S. 36, 59 (2004).  In the Fourth Circuit, the test for whether an expert is giving expert opinion or simply channeling an out-of-court witness is “whether the expert is, in essence, giving an independent judgment or merely acting as a transmitter for testimonial hearsay.”  U.S. v. Johnson, 587 F.3d 625, 635 (4th Cir. 2009).  The Court did not rule on whether Agent Dayton was giving expert opinion or channeling out-of-court witnesses because the Government failed to lay a proper foundation for much of the expert opinion.  The impact of the multilingual telephone conversations on her methodology was not addressed.  Agent Dayton’s interpretations were sometimes inconsistent with each other, and any fact witness would have sufficed for some words and phrases, which were in common parlance.  Thus, the reliability of the record was questionable from the lack of foundation because it was unclear whether Agent Dayton executed her claimed methodology in forming her expert opinion.

Furthermore, the Court was not able to find Agent Dayton’s testimony to be harmless because a lot of the case relied on her interpretation of the wiretap conversations.  These conversations were the only evidence tying Garcia to some of the charges against him.  The test is whether the error had “a substantial and injurious effect or influence in determining the jury’s verdict.” U.S. v. Curbelo, 343 F.3d 273, 278 (4th Cir. 2003) (quoting Kotteakos v. U.S., 328 U.S. 750, 776 (1946)).  The Court considered it irrelevant that there was other evidence inculpating Garcia because the concern was whether the error had a substantial influence.

Full Opinion

Verona Sheleena Rios

BOYER-LIBERTO v. FONTAINEBLEAU CORP. & BERGER, NO. 13-1473

Decided: May 13, 2014

The Fourth Circuit affirmed the district court’s decision holding that Liberto did not have valid discrimination or retaliation claims under Title VII and 42 U.S.C. §1981, based on an isolated incident of a racial slur used by a fellow employee.

Liberto, an African-American woman, was hired as a day hostess at the Clarion Hotel in early August and was fired in late September, a week after a confrontation with another employee, Clubb, who called Liberto a “porch monkey.”  Clubb used this slur twice over two days in regards to the same incident.  On the first occasion, Liberto took a short cut through the kitchen to get a drink for a customer.  Clubb called after Liberto, but Liberto, did not hear Clubb calling, and kept going. When Clubb caught up with Liberto, she got in Liberto’s face, close enough for Liberto to feel spittle on her face, and used the racial slur.  Though Clubb was a day manager, Liberto was unaware that Clubb held any official authority.  While Liberto was reporting the incident on the following day, Clubb confronted Liberto about the prior incident, again using the racial slur.  Management met to discuss Liberto’s performance, noting that she had substantial performance issues and had failed the hotel’s bartending test.  Management then decided to fire Liberto despite her complaint, stating that “there’s not going to be a good time to let her go.” Clubb was not involved in the decision, and management stated in a deposition that the complaint was not considered in making the termination decision.

Liberto filed suit, claiming a violation of Title VII and 42 U.S.C. § 1981 for two counts of racial discrimination and two counts of retaliation.  The district court held that the offensive conduct was too isolated to support Liberto’s claims for discrimination and retaliation, excluding “vague” answers to interrogatories given by Liberto, which were not executed on personal knowledge and included hearsay.  The court did take Liberto’s testimony about the two confrontations with Clubb as true, but granted summary judgment to the defendants.  Liberto appealed.

First, Liberto challenged the exclusion of Liberto’s interrogatory answers from the summary judgment record.  The Fourth Circuit found no error in excluding this testimony because the declarant must give information in an affidavit that complies with Federal Rules of Civil Procedure (F.R.C.P.) 56, or give answers to interrogatories based on personal knowledge.  To comply with F.R.C.P. Rule 56, the facts forming the basis for a summary judgment must (1) be material, (2) be undisputed, and (3) be admissible in evidence.  The facts must demonstrate that the declarant has personal knowledge of the facts and is competent to testify to them.  The Court reasoned that Liberto did not rely solely on personal knowledge, but also on the information of others.

Second, Liberto challenged the district court’s holding that the undisputed facts in the summary judgment record did not demonstrate a hostile work environment as a matter of law.  Requiring an employee to work in a hostile work environment is a violation of Title VII, which makes it unlawful for an employer to discriminate against an employee based on race, color, religion, sex, or national origin.  A hostile work environment exists when “the workplace is permeated with discriminatory intimidation, ridicule, and insult that is sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.”  A court must, in light of all the circumstances, examine: (1) the frequency of the discriminatory conduct, (2) its severity, (3) whether it is physically threatening or humiliating, or a mere offensive utterance, and (4) whether it unreasonably interferes with an employee’s work performance.  Though the racial slur was derogatory and highly offensive, the use of the word twice over a two-day period in regards to a single incident was not, as a matter of law, so severe or pervasive as to create a hostile work environment.  Generally, a hostile work environment results “only after an accumulation of discrete instances of harassment.”  Jordan v. Alternative Resources Corp., 458 F.3d 332, 339 (4th Cir. 2006).  Liberto’s claim failed because there is no Fourth Circuit precedent finding that a hostile work environment is created from a single incident.  The Court applied the same principles for a hostile work environment claim under Title VII to Liberto’s claim under 42 U.S.C. § 1981.  See Spriggs v. Diamond Auto Glass, 242 F.3d 179 (4th Cir. 2001); Ayissi-Etoh v. Fannie Mae, 712 F.3d 572 (D.C. Cir. 2013); Tawwaab v. Virginia Linen Servs., Inc., 729 F. Supp. 2d 757 (D. Md. 2010).

Finally, Liberto challenged the district court’s dismissal of her retaliation claims under Title VII and 42 U.S.C. § 1981.  To prove retaliation, the employee must show an objectively reasonable belief that there was a hostile work environment, and that the employee was terminated because of the complaint.  Liberto’s claim failed because her belief was based on one incident over two days with one coworker who was not a supervisor; thus, the Fourth Circuit reasoned that she was much less likely to have had an objectively reasonable belief that conduct complained of was unlawful under Title VII or 42 U.S.C. § 1981.  Furthermore having held that no objectively reasonable juror could have found a hostile work environment, the Court determined that Liberto could not have had an objectively reasonable belief that she was working in a hostile work environment.  A plaintiff may also allege a hostile work environment if such an environment is likely to be created, but there must be some evidence that the hostile conduct would “ripen” into such an environment.  Clubb received a warning following the incident, and there was nothing in the record to indicate that there was some “plan” to create the hostile work environment.

Chief Judge Traxler concurred that Liberto did not prove a hostile environment under Title VII or §1981, but dissented in the grant of summary judgment on Liberto’s retaliation claims.  Judge Traxler disagreed with the determination that, as a matter of law, the lack of a hostile work environment necessarily resolved the retaliation claim.  According to Traxler, so long as the employee has an objectively reasonable belief that an employment practice is unlawful, then opposition to that activity is protected.  Traxler relied upon Judge Kavanaugh’s concurring opinion in Ayissi-Etoh, and emphasized that a single incident could suffice to create a hostile work environment if the incident is sufficiently severe.  In Sprigss, the court showed how a racial slur could be more than a “mere offensive utterance,” and the term in this case could be such a term.  Traxler distinguished this case from Jordon, where a coworker used a racial slur once in the employee’s presence which was directed at criminals on television, and was not directed at the employee personally or at any other employee.  In this case, Clubb aggressively used the racial slur against Liberto personally on more than one occasion, accompanied by the threat of speaking with Clubb’s friend, the hotel owner, in an effort to get Liberto fired.

Full Opinion

Verona Sheleena Rios

U.S. v. BLACKLEDGE, NO. 12-7419

Decided: May 5, 2014

The Fourth Circuit held that the district court abused its discretion by denying the motions to withdraw as council, and, thus, vacated these denials and remanded the decision.

Respondent-Appellant was civilly committed as a sexually dangerous person under the Adam Walsh Child Protection and Safety Act of 2006 (“Adam Walsh Act”).  Before a hearing on his commitment, Respondent successfully moved for the appointment of an expert forensic examiner, who confirmed that he was a sexually dangerous person.  In response, Respondent sought the appointment of a second expert and an extension of the deadline for discovery.  A magistrate judge denied both motions without prejudice.  Respondent’s counsel renewed the motions after the discovery deadline had passed, but the motions were again, denied.

Council for Respondent moved to withdraw from the case, reasoning that she could “no longer continue to ethically represent” Respondent.  Respondent’s counsel also added that she had arranged for new counsel to take over the hearings.  The magistrate judge, however, denied the motion.  Respondent’s counsel appealed the decision to the district court and filed a second motion to withdraw, noting that Respondent had filed a bar complaint against her.  Both motions were denied.  Respondent challenged the denial of the motions to extend and reopen the discovery period, motions to withdraw as counsel, and motions to appoint a second expert forensic examiner.

The Fourth Circuit vacated and remanded the district court’s decision, concluding that it abused its discretion in denying the motions to withdraw as counsel.   The Court concluded that the district court forced Respondent to be represented by counsel, despite asserting multiple conflicts of interest.  In deciding whether a district court abused its discretion in denying a motion to withdraw or to substitute counsel, the Court considers three factors: (1) timeliness of the motion; (2) adequacy of the court’s inquiry; and (3) whether the attorney/client conflict was so great that it had resulted in a total lack of communication preventing an adequate defense.

Examining the first factor, the Court concluded that at least the second motion to withdraw was untimely.  The district court, however, failed to engage in an adequate inquiry regarding the Respondent’s dissatisfaction with his counsel.  The district court also failed to inquire into the factual basis of the conflicts asserted by Respondent’s counsel.  Moreover, the conflict between Respondent and his counsel was so substantial that “[their] relationship had deteriorated to a point that [they] [could not] discuss [Respondent’s] case.”  Thus, Respondent and his counsel were unable to adequately prepare for trial.  Accordingly, the Court held that the district court abused its discretion in requiring counsel to continue representing Respondent.

Where a court abuses its discretion, the ruling is subject to harmless error review.  The Court concluded that, in proceedings that could result in lifelong incarceration for a Respondent who had already served his full prison sentence, to force the Respondent into representation by counsel with whom Respondent could not communicate is not harmless.  Thus, the Court vacated the district court’s judgment denying the motions to withdraw and remanded for the district court to consider the motions after engaging in the appropriate inquiry regarding the extent of counsel’s conflict.

Full Opinion

Abigail Forrister

BARNES v. JOYNER, NO. 13-5

Decided: May 5, 2014

The Fourth Circuit held that the state post-conviction court’s failure to apply a Remmer presumption of prejudice over external juror communication and failure to investigate Barnes’ juror misconduct claim were unreasonable applications of clearly established federal law.  The Court remanded the case to determine whether the state court’s failures had a substantial and injurious effect, or influence, on the jury’s verdict.

In 1994, Barnes was convicted of first-degree murder, and sentenced to death.  Barnes alleged that, after counsel’s provocative closing argument that a juror’s soul would be damned if the death penalty was recommended, a juror discussed the death penalty with her pastor prior to giving a sentencing recommendation.  Barnes later alleged that the juror relayed this discussion to fellow jurors, brought a Bible into the jury room, and read passages suggested by the pastor.  The North Carolina Supreme Court held that Barnes failed to prove that the juror’s contact with her pastor prejudiced Barnes, or denied him the right to an impartial jury.  Despite new evidence in 1999 that confirmed some of what Barnes alleged, the state post-conviction court denied Barnes’ claim, and adopted the same analysis as the state supreme court because the court was procedurally barred from considering an issue on which the state supreme court had already ruled.  Barnes then applied for a Writ of Habeas Corpus in federal court.  A federal magistrate judge recommended that all claims be denied, which the district court then adopted.  The district court determined that the state court’s application of federal law was valid, but granted Barnes’s a Certificate of Appealability on the issue of whether the external juror communication violated Barnes’s Sixth Amendment right to a fair trial.

The Fourth Circuit began its habeas corpus analysis with the question of whether a state prisoner “is in custody in violation of the Constitution or laws or treaties of the United States.”  28 U.S.C. § 2254(a).  Because the Court determined that the decision made by the state court was on the merits, its analysis is constrained by the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA).  After a previous state court rules on the merits, habeas relief may be granted only if the state court’s decision “resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established Federal law.”  28 U.S.C. § 2254(d)(1).  A ruling is contrary to clearly established federal law if the state court arrived at a decision that is opposite to the U.S. Supreme Court’s decision on a question of law or if the result is different form a previous U.S. Supreme Court’s decision on materially similar facts.  William v. Taylor, 529 U.S. 362, 413 (2000).  A ruling is an unreasonable application of clearly established federal law as interpreted by the U.S. Supreme Court when the state court unreasonably applies the law to the facts of the prisoner’s case.  Id. at 413.  The petitioner has the burden of proving that the state court’s ruling so lacked in justification that the error existed “beyond any possibility for fairminded disagreement.”  White v. Woodall, 2014 WL 1612424, at *4 (2014).  The state court’s decision is reviewed under an “objectively unreasonable” standard.  Robinson v. Polk, 438 F.3d 350, 355 (4th Cir. 2006).  Before granting habeas relief, the court must also determine that the error had “a substantial and injurious effect or influence in determining the jury’s verdict,” Fullwood v. Lee, 290 F.3d 663, 679 (4th Cir. 2002), that actually prejudiced the habeas petitioner, Bauberger v. Haynes, 632 F.3d 100, 104 (4th Cir. 2011).

U.S. Supreme Court precedent clearly establishes that external influences on jury deliberations are a violation of a criminal defendant’s right to an impartial jury.  In Remmer v. U.S., the U.S. Supreme Court established a presumption of prejudice against any communications or contact between a third party and a juror on a pending matter, and required an evidentiary hearing to determine if the defendant’s case suffered actual prejudice.  347 U.S. 227 (1954).  The Court acknowledged that the Remmer presumption remains good law in the Fourth Circuit, despite a circuit court split.  See Smith v. Phillips, 455 U.S. 209 (1982); United States v. Olano, 507 U.S. 725 (1993).  The U.S. Supreme Court determined that, though there are cases where an intrusion should be presumed prejudicial, the ultimate inquiry is: “did the intrusion affect the jury’s deliberations and thereby its verdict?”  Olano, 507 U.S. at 739.  The Fourth Circuit has interpreted this to mean that there can be either a presumption of prejudice, or a specific analysis of the contact or communication on the jury’s verdict.  U.S. v. Lawson, 677 F.3d 629 (4th Cir. 2012).

The Fourth Circuit applies the Remmer presumption to direct appeals, and those under § 2254 review.  Post-Remmer case law confirms that a constitutional right to due process requires a hearing to ascertain whether contact or communication with a juror in a pending trial is prejudicial to the defendant’s right to a fair trial.  Depending on when the issue arises, the hearing can be held during or after trial.  Remmer hearings are triggered when the defendant shows unauthorized contact with a juror, and that the integrity of a verdict is reasonably in question.  In other words, the contact must be “more than innocuous interventions,” U.S. v. Cheek, 94 F.3d 136, 141 (4th Cir. 1996).  Scenarios include bribes to a juror; applications by a juror to the prosecuting attorney’s office during a trial; comments to a juror about what the juror should decide; pressure from the juror’s spouse to decide a certain way; comments by the bailiff about how to decide, or that any incorrect verdict will be corrected by a higher court.  AEDPA does not require identical facts to previous U.S. Supreme Court precedent to find clearly established law to guide the court’s decision.

The state court’s adjudication of Barnes’s claim was an unreasonable application of clearly established federal law.  Despite additional claims before the state court based on juror testimony that there was contact between a juror and her pastor which led to certain Bible passages being read to jurors who were unsure about the death penalty, the state court essentially required Barnes to prove a Sixth Amendment violation before giving Barnes a Remmer hearing.  If Remmer applied this way, then the Remmer hearing requirement, which is meant to determine what, if any, violation actually happened, would be meaningless.  The defendant only needed to make a threshold showing that the external contact was more than just an “innocuous intervention” about a matter pending before the jury.  The Fourth Circuit reasoned that this was clearly a matter before the jury because the jury was charged with determining whether to give a death sentence.

The Court remanded the decision to the district court to determine whether the state court’s failure to apply Remmer and to investigate whether the external contact had a substantial and injurious effect or influence on the jury’s verdict.  The Court noted that, in deciding to grant a habeas petition, Barnes will not be entitled to the Remmer presumption because it does not apply in the federal habeas corpus context, and thus Barnes would need to affirmatively prove actual prejudice by showing that the jury’s verdict was tainted by the extraneous communication between the juror and her pastor.

In the dissent, Judge Agee argued that the majority failed to give proper AEDPA deference to the state court’s adjudication of this matter.  In his opinion, AEDPA deference includes not only any reasoning articulated by the state court, but also any arguments or theories that could have supported the state court’s decision.  Instead, Judge Agee claimed that the majority disagreed with the state court’s interpretation of Remmer, and inserted the federal court’s interpretation over that of the state court.  Ultimately, Judge Agee agreed that the state court reasonably applied Remmer as clearly established precedent, but that the state court’s interpretation was reasonable because no court had determined when a matter was pending before the jury.  Thus, the majority should not have addressed the issue in the first instance because the state court’s interpretation was not unreasonable.  According to the dissent, the state court could have reasonably concluded that the communication at issue was not about the pending matter because it was not about the choice of sentencing.  The jurors were not charged with deciding the eternal consequences of their soul.

Full Opinion

Verona Sheleena Rios

U.S. v. OCASIO, NO. 12-4462

Decided: April 29, 2014

The Fourth Circuit affirmed the Defendant’s conviction on count one, a conspiracy charge, but vacated the sentencing court’s restitution award to Erie Insurance because it found that Erie did not qualify as a victim under the Victim Witness Protection Act (“VWPA”).

Samuel Ocasio (“Defendant”), a former officer with the Baltimore Police Department (the “BPD”), was found guilty of four offenses that related to his involvement in a kickback scheme to funnel wrecked automobiles to a Baltimore repair shop in exchange for monetary payments.  Defendant was convicted of three Hobbs Act extortion counts, plus a charge of conspiracy to commit extortion.  On appeal, Defendant maintained that his conspiracy was fatally flawed.  He also challenged a portion of the sentencing court’s restitution award.

Defendant, along with nine other BPD officers, Moreno and Mejia, co-owners and operators of the Majestic Repair Shop (“Majestic”), were indicted for conspiracy to commit extortion.  The indictment alleged that the defendants, along with others “known and unknown” violated the Hobbs Act by agreeing to “unlawfully obtain under color of official right, money and other property” from the co-owners and Majestic.  A grand jury returned a seven-count-superseding indictment charging only Defendant and Manrich, another BPD officer who had not initially been indicted.  Count one alleged that the defendants conspired to violate the Hobbs Act.  Counts two through four alleged that Manrich unlawfully obtained, under color of official right, money and property.  Counts five through seven charged Defendant with Hobbs Act extortion of one of the co-owner of Majestic on three occasions.

The prosecutions underlying Defendant’s appeal resulted from an extensive investigation by the BPD and Federal Bureau of Investigation (“FBI”).  The investigation of BPD officers and Majestic established that there was a wide-ranging kickback scheme in which BPD officers would refer accident victims to Majestic for repair, and in exchange for these referrals the officers would receive monetary payments.  At trial, Defendant raised his primary argument that was the crux of his appeal:  that he could not be convicted of conspiring with the co-owners of the repair shop, because they were the victims of the alleged Hobbs Act extortion conspiracy.  Defendant moved for judgment of acquittal in relation to the extortion conspiracy, but his motion was denied.  At the conclusion of his trial on the superseding indictment, Defendant renewed his judgment of acquittal motion, which was again denied.  The jury found Defendant guilty of all charges and he was sentenced to eighteen months in prison.  The court also ordered Defendant to make restitution to the BPD for the cash payments Defendant had received from the repair shop.  The prosecution further sought restitution with respect to Erie Insurance, predicated on the proposition that Defendant had defrauded GEICO, which in turn had been reimbursed by Erie (as insurer for the at-fault driver involved in an accident with Defendant’s wife).  The court entered an amended judgment, which directed Defendant to make restitution to Erie in an amount representing the difference between the total reimbursement made by Erie and the amount actually attributable to Erie.  Defendant timely noticed his appeal.

Reviewing Defendant’s contention that his count one conspiracy conviction was fatally flawed, the Court noted that it must sustain a guilty verdict if, viewing the evidence in the light most favorable to the prosecution, the verdict is supported by substantial evidence.  The Court also noted that it must review de novo a question of law, including an issue of statutory interpretation.  The Hobbs Act defines “extortion”, in part, as “the obtaining of property from another, with his consent, . . . under color of official right.”  To prove such an offense, the prosecution “need only show that a public official . . . obtained a payment to which he was not entitled, knowing that the payment was made in return for his official acts.”  The Court concluded that, contrary to Defendant’s arguments, the Hobbs Act contains no language that forecloses the possibility that “another” can also be a conspirator of the public official.  The Court also rejected Defendant’s argument that the law requires that victim under the Hobbs Act be a person outside the conspiracy.  Accordingly, the Court affirmed Defendant’s count one conspiracy.

The Court, however, vacated the sentencing court’s award of restitution to Erie Insurance, concluding that it was unable to endorse the sentencing court’s determination that Erie Insurance suffered any losses that resulted from the Hobbs Act extortion conspiracy charge in count one.  The Court concluded that because Erie was not a “victim”, as required by the VWPA, the award of restitution must be vacated.

Full Opinion

Abigail Forrister

HOME BUYERS WARRANTY CORP. v. HANNA, NO. 13-1834

Decided: April 29, 2014

The Fourth Circuit held that the warranty companies could not proceed in federal court because the claims required the joinder of necessary and indispensable parties under the Federal Rules of Civil Procedure (F.R.C.P.) 19, which eliminated diversity jurisdiction.

Hanna entered into a contract with Clark Lamp II (Lamp) and Innovative Design & Construction, LLC (Innovative) to have a home built.  Lamp gave Hanna a Builder’s Warranty, with no authorization or indication in this agreement that Lamp would enroll the new house in a warranty offered by a third party.  Before closing, Lamp and Innovative enrolled the house into a 2-10 Home Owners Warranty (2-10 Warranty) with third party warranty companies, which included an arbitration clause.  The 2-10 Warranty was issued pursuant to a builder application of home enrollment that Hanna allegedly signed with the builder.  However, Hanna claims no such document was signed, and the record contains no application for enrollment.  Though Hanna found out about the 2-10 Warranty before closing on the house, Hanna claims no knowledge of the arbitration clause until after closing.  Believing the house had some defects, Hanna notified the builders, who then filed a claim with the third party warranty companies.  Unsatisfied with the warranty companies and the claims adjusters, Hanna filed suit in state court against the builders, warranty companies, and claims adjusters for state law claims, including tort claims.  Hanna argued that the arbitration clause was unenforceable on state law grounds; the warranty companies sought enforcement of the arbitration clause in federal court based on diversity jurisdiction.  The builders were not joined as parties.  Hanna filed for dismissal because the entire controversy included non-diverse parties.  Alternatively, Hanna argued for dismissal because the builders were non-diverse parties who were necessary and indispensable parties which the warranty companies failed to join under F.R.C.P. Rule 19.  The warranty companies were foreign parties; however, Hanna shared state citizenship with Lamp, Innovative, and at least three other builders.

The warranty companies argued that the parties were diverse and that, under the Federal Arbitration Act (FAA) and Moses H. Cone Memorial Hosp. v. Mercury Construction Corp., 460 U.S. 1 (1983), the co-defendants in the state court action need not be joined in this action.  The district court abstained based on the factors in Colorado River Conservation District v. U.S., 424 U.S. 800 (1976), and determined that there was no reason the petitioners’ could not pursue their rights in the state court system, nor that the arbitration decision could be decided only in federal court.  The lower court dismissed without addressing subject matter jurisdiction.  The warranty companies appealed.

The Fourth Circuit did not reach the issues of abstention or enforceability because the district court lacked subject matter jurisdiction.  A party must demonstrate that the court has jurisdiction because federal courts are courts of limited jurisdiction through Article III of the Constitution, or Congressional statute.  The warranty companies argued federal jurisdiction under both 28 U.S.C. § 1332 (diversity) and 9 U.S.C. § 4 (FAA).  The Court rejected the warranty companies’ argument that § 4 of the FAA created federal jurisdiction because § 4 only applies when there is diverse citizenship or an independent basis for federal jurisdiction.  Thus, jurisdiction could only be found if the citizenship of each plaintiff differs from each defendant under 28 U.S.C. § 1332.

F.R.C.P. Rule 19 sets forth a two-part test to determine whether a party is “necessary” and “indispensable”: (1) “whether a party is necessary to a proceeding because of its relationship to the matter” and (2) if the party is necessary, but would destroy complete diversity, the court must then decide “whether the proceeding can continue in that party’s absence.”  The court should use this test pragmatically, taking into account the possible prejudice to all parties.  Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102 (1968); Owens-Illinois, Inc. v. Meade, 186 F.3d 435 (4th Cir. 1999).

A party is necessary if the non-joined party “claims an interest relating to the subject of the action” and the non-joined party’s absence would interfere with its “ability to protect the interest”, F.R.C.P. 19(a)(1)(B)(i), or that absence would “leave an existing party subject to substantial risk of incurring…inconsistent obligations because of the interest,” F.R.C.P. 19(a)(1)(B)(ii).  The Court concluded that the builders were necessary parties because of the potentially prejudicial outcomes under either standard.  Under Rule 19(a)(1)(B(i), the builders have a direct pecuniary interest, and are actively contesting their liability in state court for tort claims.  Though joint tortfeasors are not automatically necessary parties, the builders’ interest extended beyond the possible tort liability to a natural interest in any interpretation of the contract terms.  Furthermore, the builders are critical to determining the enforceability of the arbitration clause.  F.R.C.P. Rule 19(a)(1)(B)(ii) protects against inconsistent obligations for the non-joined party.  The state court and the federal court may both have to determine whether the arbitration clause is enforceable because the builders are already in front of the state court.  The more efficient approach would be to allow the state court to determine the enforceability of the arbitration clause along with Hanna’s other state law claims.  F.R.C.P. Rule 19(a)(1)(A) also requires the builders to be present for the determination of the arbitration clause due to the importance of all defendants being bound by a common judgment.

After considering the possible prejudice to the parties, the Court also determined that the builders were indispensable to the litigation based on the four factors in F.R.C.P. Rule 19(b).  First, the risk of prejudice is high since the builders would not be arguing their own interests; Hanna has a strong interest in having all of her claims addressed with all the defendants before one tribunal.  Second, parallel proceedings would likely be prejudicial because the courts would not have sufficient protective measures to avoid confusion.  Third, the results could lead to incomplete, inconsistent, and inefficient rulings, which are not in the interest of the courts or the public.  Fourth, all parties would have an adequate remedy for their claims in the state courts.  Furthermore, the FAA is not a separate source of subject matter jurisdiction despite its strong public policy to enforce arbitration agreements, and the Court found no clear reason why an arbitration clause must be enforced in federal court over state court.

Full Opinion

Verona Sheleena Rios

COMPANY DOE v. PUBLIC CITIZEN, NO. 12-2209

Decided: April 16, 2014

The Fourth Circuit held that the district court order that sealed litigation records violated the public’s right to access under the First Amendment, and that the district court abused its discretion by allowing the company to proceed under a pseudonym.  Ultimately, the Court vacated the district court’s intervention denial and remanded the decision.

The plaintiff, Company Doe, filed suit under the Administrative Procedure Act seeking to enjoin the U.S. Consumer Product Safety Commission (CPSC) from publishing a “report of harm.”  The report alleged that a product that was manufactured, and sold, by Company Doe’s was related to the death of an infant.  Company Doe requested that the district court allow it to proceed under a pseudonym, and that the proceedings be sealed.  The district court granted both, and as the Fourth Circuit noted, “[r]egrettably . . . allowed the entire litigation to proceed . . . behind closed doors.”  The district court ultimately ruled in favor of Company Doe on the merits also, issuing a permanent injunction that barred the CPSC from publishing the alleged report.

Following the judgment, the court released an opinion “with sweeping redactions.”  The CPSC did not appeal the decision.  Rather, three consumer advocacy groups (collectively Consumer Groups) filed a post-judgment motion to intervene for the purposes of appealing both conditions.   The district court, however, did not rule on the motion until the period to appeal the underlying judgment expired.   Consumer Groups noted their appeal of the district court’s sealing and pseudonymity orders as well as the court’s “constructive denial” of the motion to intervene.  Consumer Groups filed their appeal, and three months later the district court denied the motion to intervene.

The Fourth Circuit vacated the court’s order denying intervention and concluded that the consumer groups had standing to appeal even though they “were neither parties to, nor intervenors in, the underlying case . . . because they [met] the requirements for nonparty appellate standing and have independent Article III standing to challenge the sealing . . . orders.”  The Consumer Groups also succeeded on the merits.   The Court noted the difficult balancing act involved: weighing Company Doe’s interest in sealing the bulk of the court record against the First Amendment Interest of the CPSC and Consumer Groups.  The Fourth Circuit ultimately held that the seal of the records violated the public’s right of access under the First Amendment.  Accordingly, the Court remanded the case to the district court and ordered that all documents be unsealed, unredacted, and made available to the consumer groups and the public.  The Court also concluded that the district court abused its discretion by allowing Company Doe to litigate under a pseudonym.

Full Opinion

Abigail Forrister

U.S. v. PEREZ, NO. 13-6043

Decided: May 15, 2014

The Fourth Circuit affirmed the district court’s civil commitment of the defendant to the custody of the United States Attorney General when the district court found that he was a sexually dangerous person under the Adam Walsh Child Protection and Safety Act of 2006 (“the Act)”, 18 U.S.C. § 4248(a).

Under the Act, the government may civilly commit “sexually dangerous” inmates at the end of their federal prison sentence by filing a certification to this effect with the clerk of court in the district where the inmate is held.  Procedurally, this filing stays the inmate’s release until an evidentiary hearing may be held, and the government proves its case by clear and convincing evidence.  The Act requires that (1) the person has previously “engaged or attempted to engage in . . . child molestation” 18 U.S.C. § 4247(a)(5); (2) the person currently “suffers from a serious mental illness, abnormality, or disorder” 18 U.S.C. § 4247(a)(6); and (3) “the government is required to show that the defendant, as a result of the illness, abnormality, or disorder, ‘would have serious difficulty in refraining from . . .child molestation if released’” 18 U.S.C. § 4247(a)(6).  The Act also sets forth procedural guarantees for each defendant, which include: the right to counsel, the right to testify, right to present evidence, right to subpoena witnesses, the right to confront witnesses, and the right to cross-examine those witnesses.  18 U.S.C. § 4247(d).

On January 6, 2011, the government filed a certification that the defendant, Jose Perez (“Perez”), was a sexually dangerous person under the Act because Perez’s twenty-year federal sentence for transportation of a minor in foreign commerce with intent to engage in criminal sexual activity, 18 U.S.C. § 2423(a), and importation of an alien for immoral purposes, 8 U.S.C. § 1328, had almost expired.  The district court denied Perez’s motion to dismiss, and held an evidentiary hearing.  After electing to appear pro se, Perez failed to participate or appear for the evidentiary hearing because he believed it to be unlawful; the hearing continued in his absence.  During the evidentiary hearing, the government presented three forensic psychologists’ expert testimony that relied on individual evaluations of Perez, and his criminal history that involved multiple sexual encounters with minors.  Specifically, Perez’s criminal history includes an incident in September 1970, two incidents in May 1982, an incident in March 1983, and the two incidents in September 1993 that led to his twenty-year sentence.  After reviewing the data, all three experts diagnosed Perez with pedophilia, and agreed that he met the other statutory requirements.  Thus, the district court found that Perez qualified as a sexually dangerous person under the Act.  On appeal, Perez claims that the district court lacked personal jurisdiction over him when the government failed to serve him with a summons pursuant to Federal Rules of Civil Procedure (F.R.C.P.) 4.  Perez also claims that the district court clearly erred when it found that he was a sexually dangerous person under the Act.

After generally noting that the F.R.C.P. apply to civil commitment hearings, the Fourth Circuit found that the procedural requirements in the Act, which require that a copy of the certificate be sent to the defendant, 18 U.S.C. § 4248(a), displaced the Rule 4 summons requirement.  The Court reasoned that the primary functions of service of process were unnecessary in light of the statutory proceeding requirements under the Act.  Then, the Court reviewed the district court’s record for a “definite and firm conviction that a mistake has been committed,” United States v. Hall, 664 F.3d 456, 462 (4th Cir. 2012), on its finding that Perez was a sexually dangerous person.  The Court found no clear error, and upheld the district court’s order, and commended its careful review of evidence.  Finally, the Court quickly dismissed Perez’s constitutional arguments that the Act deprived him of equal protection under the Fifth and Fourteenth Amendments and imposed an unconstitutional criminal punishment by reiterating its previous decision in United States v. Timms, 664 F.3d 436, 449, 455 (4th Cir. 2012).

Full Opinion

Samantha R. Wilder

FREEMAN v. DAL-TILE CORP., NO. 13-1481

Decided: April 29, 2014

The Fourth Circuit reversed, and remanded, the district court’s grant of summary judgment for Dal-Tile on the Title VII claims of a sexually and racially hostile work environment, as well as the § 1981 claim for a racially hostile work environment.  However, the Court affirmed the district court’s grant of summary judgment for Dal-Tile on the constructive discharge claim and the North Carolina obstruction of justice claim.

Lori Freeman (“Freeman”) began working as a receptionist for Dal-Tile’s predecessor in August 2006, and became a Dal-Tile employee after the merger and acquisition of her employer.  In November 2009, Freeman’s position was reclassified as a Customer Service Representative.  Throughout her employment, Freeman regularly interacted with Timothy Koester (“Koester”), an independent sales representative for one of Dal-Tile’s customers.  During these interactions, Koester was well known for regularly using racially degrading language, detailing his own sexual conquests, sharing photos of naked women with Freeman from his cell phone, making sexually explicit remarks about a co-worker’s daughters, as well as other sexually inappropriate remarks, and passing gas on Freeman’s telephone.  Other co-workers testified that Koester engaged in this type of behavior, and Koester confirmed that he made inappropriate sexual comments, and that his racial remarks may have been inappropriate.  Koester’s behavior included using the terms n****r and black b***h.  Freeman confronted Koester about his language, and that it made her feel uncomfortable, and at various times Freeman’s supervisors were either present, or informed by her of the incidents with Koester, but nothing was done until she reported Koester’s remarks to human resources.  After promising to ban Koester from the premises, human resources lifted the ban and simply barred Koester’s communication with Freeman.  After taking a medical leave of absence for depression and anxiety, Freeman ultimately resigned from her position because she feared running into Koester.

The Fourth Circuit reviewed the record, facts, and inferences in favor of the nonmoving party, as required by a summary judgment motion.  To succeed on a hostile work environment claim, Freeman must demonstrate to a reasonable juror that the harassment was “(1) unwelcome, (2) based on [Freeman’s] gender or race, (3) sufficiently severe or pervasive to alter the conditions of her employment and create an abusive atmosphere, and (4) imputable to [Dal-Tile].”  EEOC v. Cent. Wholesalers, Inc., 573 F.3d 167, 175 (4th Cir. 2009) (citing EEOC v. Sunbelt Rentals, Inc., 521 F.3d 306, 313–14 (4th Cir. 2008)).  The Court concluded that a reasonable juror could find that a racially or sexually hostile work environment existed from the facts presented.

The Court also formally adopted a negligence standard, and stated that “an employer is liable under Title VII for third parties creating a hostile work environment if the employer knew or should have known of the harassment and failed ‘to take prompt remedial action reasonably calculated to end the harassment.’  Amirmokri v. Baltimore Gas & Elec. Co., 60 F.3d 1126, 1131 (4th Cir. 1995) (quoting Katz v. Dole, 709 F.3d 251, 256 (4th Cir. 1983)) (internal quotation marks omitted) (applying this standard to co-worker harassment).”  Here, the Court reasoned that Freeman presented a jury question on whether Dal-Tile’s remedial actions were sufficient, and that a reasonable juror could find Dal-Tile through its agent knew, or should have known, of the harassment.  However, the Court agreed that Freeman voluntarily left her position, and therefore affirmed the district court’s grant of summary judgment for her constructive discharge claim.  Similarly, the Court found no evidence that Dal-Tile destroyed emails as a barrier to litigation, and affirmed the district court’s holding that no feasible obstruction of justice claim existed.

In Judge Niemeyer’s separate opinion, which concurred in part and dissented in part, he disagreed with the majority’s interpretation of the record, and believed that the employer effectively intervened on Freeman’s behalf.  Moreover, Judge Niemeyer believed that the majority greatly increased the scope of Title VII beyond those recognized rulings made by the U.S. Supreme Court.

Full Opinion

Samantha R. Wilder

IN RE: UNDER SEAL, NO. 13-4625

Decided: April 16, 2014

The Fourth Circuit held that the district court did not clearly err by holding Lavabit LLC (“Lavabit”) and its owner, Levison, in contempt for their failures to comply with a Pen/Trap Order.

Lavabit and Levison (“Lavabit”) provided email service to around 400,000-plus users, and used the industry-standard Secure Sockets Layer (“SSL”) encryption and decryption method to transmit its data.  Essentially, this encryption method relies on a public key, less important, and a private key, which may compromise the data of all users if a third party gains access.  In 2013, the Government obtained court orders under the Pen/Trap State, 18 U.S.C. §§ 3123–27, and the Stored Communications Act (“SCA”), 18 U.S.C. §§ 2701–12, which required Lavabit to turn over metadata, not email content, on the target account for a criminal investigation.  While meeting with Federal Bureau of Investigation (FBI) agents, Lavabit signaled that he did not plan to comply with the order, but indicated he was “technically capable [of] decrypt[ing] the [target’s] information.”  Thus, the Government secured an order to compel Lavabit’s compliance with the Pen/Trap Order.  This order specifically stated that a failure to comply could result in a criminal contempt of court proceeding against Lavabit.  Nonetheless, Lavabit disregarded the court’s order, ignored the FBI’s requests to confer, and withheld the unencrypted metadata.  After a series of court orders, hearings, failed compliance, and attempted demands to pay for his services; Lavabit allowed a Pen/Trap Device to be installed but failed to provide the encryption keys so that the information was useless to the Government.  Then, Lavabit moved to quash the seizure warrant, which the district court denied, and held a compliance hearing that ordered Lavabit to provide the private keys by August 5.  Again, Lavabit failed to comply.  On August 5, the Government moved for sanctions in the amount of five-thousand-dollars per day against Lavabit and Levinson until they complied.  Finally, after six weeks of data was lost, Lavabit complied.  Now, Lavabit appeals its civil contempt charges with various statutory and constitutional challenges.

Before addressing the appeal, the Fourth Circuit noted that the civil contempt order presented a live controversy because Lavabit and Levison may be sanctioned further for their conduct.  The Court noted that Lavabit’s failure to raise its statutory challenges to the Pen/Trap Order and the SCA in the district court constricted the Fourth Circuit to “reverse only if the newly raised argument establishes ‘fundamental error’ or a denial of fundamental justice.”  Stewart v. Hall, 770 F.2d 1267, 1271 (4th Cir. 1985).  The Court emphasized that forfeiture and waiver rules are critical to maintaining the integrity of courts, avoiding unfair surprise to opponents, preserving finality, and conserving judicial resources.  Holly Hill Farm Corp. v U.S., 447 F.3d 258, 267 (4th Cir. 2006).

The Court refused to rewrite Lavabit’s own statements to create a specific, timely objection that would preserve a claim on appeal, and instead stated that Lavabit’s own statements likely misled the Government, and the district court.  The Court emphasized that Lavabit’s failure to raise his challenges in the district court required that he demonstrate a plain error standard for reversal by this Court.  In re Celotex Corp., 124 F.3d 619, 631 (4th Cir. 1997).  Instead, Lavabit attempted to persuade the Fourth Circuit to craft a new exception; by claiming that the district court and Government induced him to forfeit his challenges; to answer his question of pure law; to sympathize with him because he appeared pro se in the lower court; and to recognize that this case is one of “public concern.”  The Court found none of these arguments persuasive, and reiterated that Lavabit failed to make his most essential argument for plain error.  Therefore, the Court reasoned that Lavabit abandoned that argument as well.  Finally, the Fourth Circuit noted that two independent bases supported the district court’s civil contempt order, which allowed the Court to avoid any constitutional challenges, and uphold the district court.

Full Opinion

Samantha R. Wilder

U.S. v. GALLOWAY, NO. 12-4545

Decided: April 15, 2014

The Fourth Circuit held that the defendant failed to meet the high standard on appeal for his ineffective assistance of counsel claim.  The Court also found that the district court acted reasonably, in light of past securities breaches, when it prohibited the defendant from taking any discovery materials back to his detention center.  The Court concluded that the district court did not err when it denied the defendant’s motion to suppress the evidence from his wiretaps because each of the affidavits provided specific facts that demonstrated the necessity of the wiretaps.  Finally, the Court held that the district court acted within its scope of discretion, as granted by Federal Rule of Evidence (F.R.E.) 702, and did not plainly err in its admission of expert testimony, and its management of that testimony to avoid confusion.

The defendant, Charles Galloway, was convicted of conspiracy to distribute and possession with intent to distribute (P.W.I.D.) heroin from wiretaps and testimony of drug traffickers in the Baltimore area.  He was then sentenced to 292 months’ imprisonment.  While investigating an international drug trafficking conspiracy, Drug Enforcement Agency (DEA) Special Agent (SA) Karas uncovered a link between the defendant, and Santos Chavez, a coconspirator in Los Angeles, California.  After this discovery, SA Karas notified Detective Sokolowski of the Baltimore City Police Department, who then began his investigation of the defendant.  As a result of Sokolowski’s investigation, wiretaps were placed on four of the defendant’s cellphones, which were used as evidence in his trial.  During the defendant’s trial, SA Karas and Detective Sokolowski both testified as fact and expert witnesses on drug distribution methods and interpreting the coded language used in drug-related telephone calls.

While an effective assistance of counsel claim is typically raised as a collateral challenge with the district court, the Fourth Circuit noted that a defendant may raise this challenge on appeal “if it conclusively appears from the record that” counsel failed to provide effective assistance.  United States v. Smith, 62 F.3d 641, 651 (4th Cir. 1995).  Upon review of the record, the Court reasoned that the defendant failed to meet this high standard, and that the defendant’s lack of trial preparation resulted from his decisions to fire his lawyer, withdraw a continuance motion, and represent himself.

The defendant also claimed that the district court abused its discretion by prohibiting him from taking any discovery materials to the detention center while he prepared his pro se defense.  The Fourth Circuit reasoned that any inconvenience the defendant suffered was reasonable because the district court had experienced past security issues with discovery at federal detention facilities, which resulted in the killing of witnesses.  The Court also noted that the district court attempted to mitigate the defendant’s inconveniences while he prepared his pro se defense, and that the defendant failed to seek a continuance as a result of the logistical challenges.

Next, the defendant claimed that the district court erred when it denied his motion to suppress the evidence from the wiretaps because two of the three affidavits failed to specify facts that demonstrated the necessity of the wiretaps.  The Fourth Circuit emphasized that bare conclusory statements do not meet the requirements of 18 U.S.C. § 2518(1)(c), but that specific factual information is enough for “‘wiretapping [to] become reasonable, despite ‘the statutory preference for less intrusive [investigation] techniques.’”  United States v. Smith, 31 F.3d 1294, 1297–98 (4th Cir. 1994).  The Court reasoned that the government met this burden by detailing around ten alternative investigatory procedures, along with the likelihood of success on each procedure, in each of the three affidavits.

Finally, the defendant claimed that the district court erred in its admission of expert testimony, and in its management of the testimony presented to avoid confusion.  The Fourth Circuit reviewed the district court’s admission of expert testimony and management of the witnesses’ dual capacity for plain error because the defendant failed to object during trial.  Plain error requires that the court review for “a miscarriage of justice that would seriously affect the fairness, integrity, or public reputation of the judicial proceedings.”  United States v. Baptiste, 596 F.3d 214, 220 (4th Cir. 2010).  Here, the Court found that the district court specifically instructed the prosecutor to “be careful that we separate . . . lay testimony as a lay witness from the proffer of any expert testimony” in front of the jury.  In addition, the Court reasoned that the jury, as fact finder, was able to accept or reject any of the testimony presented.  Therefore, the district court acted properly and followed established protocol.

Full Opinion

Samantha R. Wilder

IN RE: CONSTR. SUPERVISION SERVS., INC., NO. 13-1560

Decided: May 22, 2014

The Fourth Circuit, affirming the decisions of the bankruptcy and district courts, held that under North Carolina law, where a creditor subcontractor is entitled to a lien upon funds a third party owes a debtor construction company, the subcontractor’s property interest in the liens arises upon delivery of the materials to the building site.  Therefore, if the debtor construction company files a bankruptcy petition, a subcontractor entitled to a lien is exempt from the automatic stay on debt collections imposed during federal bankruptcy proceedings, notwithstanding its failure to perfect the lien pre-petition.

Construction Supervision Services (CSS), a North Carolina construction company, placed orders with multiple subcontractors (the Subcontractors).  The Subcontractors in turn delivered the requested goods to the building site and invoiced CSS for the amount due.  CSS then failed to pay the creditor Subcontractors and filed for Chapter 11 bankruptcy.  While federal bankruptcy petitions trigger an automatic stay on creditor claims against the debtor, 11 U.S.C. § 362(b)(3) provides an exception for “any act to perfect . . . an interest in property to the extent that the trustee’s rights and powers are subject to perfection under section 546(b) . . . .”  Section 546(b) extends the exception to instances where state law creates a property interest before the date of perfection.  Under North Carolina law, the Subcontractors were entitled to a lien on funds owed to CSS and, with the belief that the exception to the stay applied, sought to serve notice to CSS’s debtors thereby perfecting the liens.  Branch Banking & Trust Company (BB&T), concerned with recovering funds in excess of one million dollars it lent to CSS, objected to the Subcontractors’ post-petition perfection.  BB&T averred that because the Subcontractors failed to notice and perfect their liens prior to CSS’s bankruptcy petition, they did not have a property interest in the liens; therefore, the exception did not apply and their claims were stayed by the federal bankruptcy court order.

Because the bankruptcy stay exception applies to any act to perfect a pre-petition property interest, the Court had to determine whether, under the relevant North Carolina statute, a subcontractor’s property interest begins when the subcontractor becomes entitled to a lien or instead only after the subcontractor perfects the lien.  After its analysis of the statute, the Court reasoned that the statute simply secures an already existing property interest.  Because entitlement to a lien arises at the time the creditor subcontractor delivers the materials, so does the subcontractor’s property interest.  Therefore, the Subcontractors had a property interest at the time that CSS filed its bankruptcy petition, and the bankruptcy stay did not preclude them from perfecting their interest post-petition.

Full Opinion

-Amanda K. Reasoner

U.S. v. MCFADDEN, NO. 13-4349

Decided: May 21, 2014

The Fourth Circuit affirmed the district court’s judgment that found the Appellant guilty of nine counts under the Substance Analogue Enforcement Act of 1986 (the Act) originating from his distribution of substances prohibited by the Act.

Congress enacted the Act to prohibit underground chemists from creating new drugs that have a similar effect on the human body to drugs that are illegal under federal drug laws.  The Act states that a “controlled substance analogue” intended for human ingestion will be treated as a Schedule I controlled substance under federal law.  21 U.S.C. § 813.  Police from the Charlottesville, Virginia area began investigating the use and distribution of “bath salts,” a synthetic stimulant, in July 2011.  When consumed, bath salts have an effect similar to cocaine, methamphetamine, and methcathinone, which are all illegal under federal drug laws.  Police discovered that the bath salts were being sold out of a local video store, and later seized that store’s supply.  The video store’s owner cooperated with the police, told them that the appellant was her supplier, and participated in recorded phone conversations where she placed orders with the appellant for more bath salts.  As a result of the phone calls, police received bath salts from appellant on five separate instances, and led to his indictment in November 2012, where he was charged with nine offenses under the Act.  The jury trial focused on whether certain chemicals in the bath salts counted as “controlled substance analogues” under the Act.  After testimony from experts on both sides, the jury found the defendant guilty of all nine counts, and the defendant appealed.

The Fourth Circuit began with appellant’s argument that the Act was unconstitutional as applied to him because it failed to provide a person of ordinary intelligence notice that his conduct was unlawful.  In particular, (1) the Act uses general terms and does not provide a list of prohibited substances, (2) the Act is subject to arbitrary and discriminatory enforcement since there is no statutory guidance on prohibited conduct, and (3) despite appellant’s significant efforts to learn about what he could and could not do under the Act, he was not aware that his distribution of controlled substance analogues qualified as prohibited conduct under the Act.  The Fourth Circuit stated that an act is unconstitutionally vague if it does not describe an offense in a manner such that it is sufficiently defined, and ordinary people understand the type of conduct that is prohibited.  However, referencing an earlier decision, the Fourth Circuit stated that its holding in that case defeated the appellant’s argument that the term “substantially similar” is unconstitutionally vague as applied to the chemicals at issue in his trial because the experts sufficiently addressed the chemical diagrams of the substances at issue and compared them to the chemical structure of ecstasy.  The Fourth Circuit also rejected appellant’s argument that the term “human consumption” is unconstitutionally vague under the Act because it clearly includes the use of a substance by a human being in a way that introduces the substance into the human body.  Further, the Fourth Circuit rejected Appellant’s argument that the Act was unconstitutionally vague because it did not include a list of prohibited substances, and noted the possibility that the rate at which new substances are created would outpace the ability of authorities to identify and catalog those substances in a list.

The Fourth Circuit also found no merit in the appellant’s claim that the Act was subject to arbitrary and discriminatory enforcement because the intent element under the Act requires the government to prove that a defendant intended for a human to consume the substance at issue.  In addition, the government must prove the substantial chemical similarity between the alleged analogue substance and the controlled substance.  The Court also rejected the appellant’s claim that he attempted to educate himself on whether the chemicals he was selling were illegal by looking on the DEA’s website, by citing the settled principal that “ignorance of the law is no excuse.”  See U.S. v. Mitchell, 209 F.3d 319, 323 (4th Cir. 2000).  The Fourth Circuit reviewed appellant’s claims that the district court erred in certain evidentiary and jury instruction rulings for an abuse of discretion, and found that the district court had not abused its discretion in these rulings.  Finally, the Court addressed appellant’s argument that challenged the sufficiency of evidence and the district court’s denial of his motion for judgment of acquittal, and concluded that the evidence in the record provided the government with sufficient evidence that the chemicals at issue were substantially similar in structure to a controlled substance, and that these chemicals have similar effects on the human body as a controlled substance.

Full Opinion

-Alysja S. Garansi

U.S. v. FERGUSON, NO. 13-4396

Decided: May 21, 2014

The Fourth Circuit held that a Virginia district court committed legal error when it denied the defendant the opportunity to cross-examine the forensic examiner whose report was presented at the defendant’s revocation hearing.

The defendant served ten years in prison, and began his first period of supervised release in 2010.  After several violations, the defendant was sentenced to a second term in prison.  The defendant, again, had a series of violations, which primarily involved the possession of marijuana.  At his revocation hearing, the defendant contested one of the violations, which was the crux of his appeal.  Following a traffic stop, the defendant was arrested for possession of marijuana.  The recovered marijuana was then sent to a forensic lab to test the weight and nature of the substance.  During the defendant’s hearing, this forensic report was introduced by the arresting officer, not the forensic examiner.  Based on this report, the district court revoked the defendant’s supervised release and sentenced him to forty-two months in prison.

The defendant claimed the introduction of the forensic report, in the absence of an opportunity to cross-examine the forensic examiner, violated Federal Rule of Criminal Procedure 32.1(b)(2)(C).  This rule entitles defendants to “an opportunity . . . to question any adverse witness unless the court determines that the interest of justice does not require the witness to appear.” Although revocation hearings are less formal than trials, due process rights still apply to these hearings.  Relying on its holding in United States v. Doswell, the Court noted that the application of Rule 32.1(b)(2)(C) requires “the district court to balance the releasee’s interest in confronting an adverse witness against any proffered good cause for denying such confrontation.”  Thus, if the government is unable to show good cause for denying a defendant the right to confront his witnesses, the hearsay evidence is inadmissible at revocation hearings.

In the defendant’s case, the Government did not proffer an explanation for the examiner’s absence.  Still, the district court concluded that the report was reliable and that the other evidence presented corroborated the report.  Conversely, the Fourth Circuit concluded that this was legal error; neither reliability nor the existence of corroborating evidence obviates the requirement to show good cause.  Both the majority and concurring opinion  emphasized their frustrations with the “government’s barefaced failure to abide by [their] command in Doswell.”

Additionally, on appeal, the Government argued that notwithstanding the legal error, the error was harmless because there was adequate evidence for the district court’s sentence.  The Court ultimately concluded that the district court’s error was an evidentiary mistake, not a constitutional error.  Accordingly, the Court concluded that “the proper harmlessness test must ensure that the error had no ‘substantial and injurious effect or influence’ on the outcome.”  After noting that reversal is reserved for serious errors that affect substantial rights or that directly affect the outcome of the case, the Court determined that the district court’s error constituted both, and vacated and remanded the district court’s decision.

In her dissent, Judge Keenan opined that the majority’s harmless error analysis was inappropriate.  Instead, Judge Keenan concluded that the proper standard was harmless beyond a reasonable doubt.  Even applying the higher standard, Judge Keenan asserted that the district court’s error was harmless in light of the weight of evidence against the defendant.

Full Opinion

Abigail Forrister

SMITH v. GILCHRIST, No. 12-2503

Decided: May 14, 2014

The Fourth Circuit overturned a summary judgment motion in favor of District Attorney (DA) Peter Gilchrist, holding that there was a jury question on whether Gilchrist was entitled to a qualified immunity defense for firing Assistant District Attorney (ADA) Sean Smith in violation of Smith’s First Amendment right to free speech.

In 2010, Smith informed Gilchrist that he had decided to run for the office of the county district court judge.  Within the scope of his candidacy for judicial office, and unrelated to his duties as ADA, Smith gave a public interview, in which he expressed concerns about “defensive-driving” courses that were offered to ticketed drivers.  Smith stated that he was worried that ticketed drivers were not paying attention during the courses; that police officers were “improperly providing” legal advice to ticketed drivers by giving them information pamphlets with their tickets; and that ticketed drivers were “unwittingly” making decisions detrimental to their legal interests.  The DA office had a policy of supporting the program, which reduced its caseload and allowed the office to allocate those resources elsewhere.  When Gilchrist heard about Smith’s interview, he and the Deputy DA met with Smith to discuss Smith’s disagreement with the DA office’s policy in regard to the defensive-driving courses.  During this meeting, Smith disclosed that he disagreed with other DA office policies as well, but he declined to specify which these were.  The next day, Gilchrist fired Smith for insubordination.  Smith brought this claim under 42 U.S.C. § 1983 against Gilchrist in his personal capacity for allegedly violating Smith’s First Amendment right to free speech.  The District Court ruled that Gilchrist was entitled to qualified immunity as a public official, and Smith appealed.

To overcome Gilchrist’s qualified immunity claim, Smith had to satisfy a two-pronged test: (1) Smith’s allegations must “substantiate [a] violation of a federal statutory or constitutional right”, and (2) the violation must be of a “clearly established right of which a reasonable person would have known.”

The Court used a three-prong test to determine whether Gilchrist violated Smith’s First Amendment right to free speech as a public employee.  Smith must have been (1) “‘speaking as a citizen upon a matter of public concern’ rather than ‘as an employee about a matter of personal interest’”; (2) “his ‘interest in speaking upon the matter of public concern [must have] outweighed the government’s interest in providing effective and efficient services to the public’”; and (3) “his ‘speech [must be] a substantial factor’ in the employer’s decision to take action against him.”  The Court held that Smith satisfied the first two prongs.  First, whether ticketed drivers were attentive during the courses, receiving improper legal advice from police officers, and acting against their best legal interests, were all matters of public concern.  Second, Smith’s concerns outweighed the DA office’s interests in providing effective and efficient services because Smith merely expressed concerns over the defensive-driving courses, actions taken by police officers, and ticketed drivers, not DA policy.  The Court gave little weight to the possibility that a change in the defensive-driving courses would impact the DA office’s effectiveness and efficiency by increasing its caseload.  The Court also gave little weight to Gilchrist’s testimony that he disagreed with the “vision” Smith expressed in his public statements because they related to “critical services” that the DA office had “no legitimate interest in opposing.”  Finally, in regard to the third prong, the Court declined to opine on whether Smith’s public statements were a “substantial factor” in Gilchrist’s decision to terminate him.

The Court also held that Smith satisfied the second prong of the qualified immunity test – whether Gilchrist violated a “clearly established” right, and a “reasonable [DA] official” would have known that Smith’s interests outweighed those of the DA office.  Any reasonable official would know that Smith had a clearly established right to make the public comments because they were made in Smith’s capacity as a candidate for public office, concerned matters of public concern, and did not negatively impact the DA office.  Furthermore, a reasonable DA official would have known Smith’s interests outweighed those of the DA office because there was nothing weighing in favor of the DA office – there was no evidence that the speech would affect the DA office’s efficiency.

Full Opinion

James Bull Sterling

CORETEL VIRGINIA, LLC v. VERIZON VIRGINIA, LLC., NO. 13-1765

Decided: May 13, 2014

The Court held that Verizon Virginia, LLC (“Verizon”) was required to offer entrance facilities to CoreTel Virginia, LLC (“CoreTel”) at cost-basis for interconnection; CoreTel’s ports and multiplexers did not qualify as entrance facilities; Verizon did not have to pay reciprocal compensation charges for calls even if it did not provide “EMI data” to CoreTel; and CoreTel did not provide “terminations in the end office of end user lines” because it did not utilize its own facilities to connect its customers by converting incoming calls into Internet data streams.

Congress passed the Telecommunications Act (the “Act”) to reduce the competitive advantages enjoyed by telecommunications carriers, known as “incumbent carriers,” over new market entrants, known as “competing carriers.”  Verizon, an incumbent carrier, entered into an agreement (the “ICA”) pursuant to the Act to share network resources with CoreTel, a competing carrier.  A dispute arose between CoreTel and Verizon regarding the ICA, with claims and counterclaims between the two parties.  The district court organized the various claims into four broad categories: (1) Verizon’s facilities claims relating to its bills for the entrance facilities CoreTel leased; (2) CoreTel’s facilities claims relating to its bills for the entrance facilities that CoreTel contends Verizon leased; (3) Verizon’s reciprocal compensation claims; and (4) Verizon’s claims that CoreTel improperly billed it for services under CoreTel’s tariffs.  The district court granted summary judgment in favor of Verizon on all claims; CoreTel appealed.

For the first category of claims, the Fourth Circuit determined that CoreTel was entitled to summary judgment on both parties’ claims for declaratory relief that related to Verizon’s facilities charges.  The Court noted that a provision in the ICA authorized CoreTel to lease entrance facilities from Verizon at “rates[, which were listed at cost basis] and charges, set forth in this Agreement.”  For the second category of claims, the Court reasoned that CoreTel’s trunk ports and multiplexers are not entrance facilities, Verizon was entitled to summary judgment on CoreTel’s facilities claims.  For the third category of claims, the Court reasoned that Verizon did not have to pay reciprocal compensation charges for calls even if Verizon did not provide “EMI data” to CoreTel because Verizon and that data were needed to properly categorize every call.  For the fourth category of claims, the Court reasoned that CoreTel did not deploy its own facilities to connect it to its customers by converting incoming calls into an Internet data stream once they reached CoreTel’s office.  Accordingly, CoreTel did not provide “terminations in the end office of end user lines” as required by its tariffs.  Thus, CoreTel’s general definition of switched-access service that explicitly permitted CoreTel to charge for that service did not override the more specific definition of end-office switched access provided in the Communications Act of 1934.

Full Opinion

Chris Hampton

FELDMAN v. LAW ENFORCEMENT ASSOCIATES CORP., NO. 13-1849

Decided: May 12, 2014

The Fourth Circuit affirmed the district court’s grant of summary judgment by holding that the appellant failed to make a prima facie showing of his Sarbanes-Oxley Act of 2002 (“SOX”), 18 U.S.C. § 1514A, claims because he did not sufficiently prove that the alleged protected activities were a contributing factor to his termination.

Appellant argued that he was unlawfully fired in retaliation for engaging in activities protected under SOX.  These activities included: (1) reporting to the Board of Directors (Board) and the federal government about the potentially illegal exports with SAFE Source; (2) objecting to falsified Board meeting minutes; (3) objecting to leaks of information by the Outside Directors to Carrington; and (4) notifying the government of suspected insider trading.  The district court granted summary judgment to the Appellees, and held that plaintiffs failed to make a prima facie showing of their SOX claims because they did not sufficiently prove that the alleged protected activities were a contributing factor to their respective terminations.  Appellant filed a timely appeal and argued that the district court erred by holding that these activities did not contribute to his termination.  Appellant also argued that the district court erred by failing to decide whether Appellees had sufficiently demonstrated that he would have been fired regardless of these activities.

The SOX protects whistleblowers of publicly traded companies by prohibiting employers from retaliating against employees that provide information about potentially illegal conduct.  The Court applies a burden-shifting framework to SOX whistleblower claims.  The plaintiff must first establish a prima facie case by proving, by a preponderance of the evidence, that: “(1) he engaged in protected activity; (2) the employer knew that he engaged in the protected activity; (3) he suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action.”  If the employee meets this burden, the defendant must then “rebut the employee’s prima facie case by demonstrating by clear and convincing evidence that the employer would have taken the same personnel action in the absence of the protected activity.”  This appeal centers on the fourth prong.  The Court found that the appellant failed to satisfy his light burden of showing by a preponderance of evidence, and that the activities tended to affect his termination in at least some way.

First, the Court found that there is no temporal proximity between appellant’s most significant protected activities because his reports regarding SAFE Source occurred roughly twenty months before his termination.  The Court reasoned that such a lengthy gap in time weighed against a finding that it is more likely than not that the alleged protected activities played a role in his termination.  Second, and most significantly, the Court noted that the appellant took a contradicting action that constituted a legitimate intervening event further undermining a finding that his long-past protected activities played any role in the termination.  While the Court mentioned that in SOX cases the contributing factor standard is meant to be broad and forgiving, it also emphasized the history of antagonism between the appellant, his employers, and the above referenced intervening events.  Furthermore, the Court opined that, under the particular circumstances here, the standard would be toothless if it held that a preponderance of the evidence showed that the long-past activities affected appellant’s termination.

Full Opinion

Grace Faulkenberry

PROUSALIS v. MOORE, NO. 13-6814

Decided: May 7, 2014

The Fourth Circuit held that a change in law to an implied private cause of action under 17 C.F.R. § 240.10b-5 (“Rule 10b-5”) was inapplicable in the context of a criminal cause of action under Rule 10b-5.

Thomas Prousalis was a securities lawyer who failed to accurately disclose his retainer agreement to the Securities and Exchange Commission (SEC) while he represented a company, Busybox, in the process of filing its initial public offering (IPO).  Prousalis admitted that he knew his acts were deceitful, violated the law, and that if he had accurately disclosed his retainer agreement to the SEC Busybox would not have been eligible to be listed on the NASDAQ.  Based on his non-disclosures, Prousalis pled guilty to multiple counts of fraud, but subsequently appealed the Rule 10b-5 criminal charges.  He was denied collateral relief under 28 U.S.C. § 2255(e), and then habeas relief under 28 U.S.C. § 2241.  On appeal, Prousalis seeks § 2241 relief on the basis that the U.S. Supreme Court “changed the substantive law such that the conduct of which” he was convicted was no longer criminal “subsequent to his direct appeal and § 2255(e) motion.”  According to Prousalis, the U.S. Supreme Court case Janus Capital Group v. First Derivative Traders changed the law so that he no longer qualified as a “maker” of false statements.  If Prousalis did not make any false statements, then he could not be guilty of directly violating Rule 10b-5.

The Court denied Prousalis’s § 2241 appeal because Janus only applied to an implied private cause of action brought under Rule 10b-5, and did not affect a criminal conviction under Rule 10b-5.  Therefore, the definition of a “maker” in Janus did not apply to Prousalis.  The Court reasoned that “context” was very important to the Janus decision.  Janus had to be construed narrowly because it dealt with a judicially created private cause of action under Rule 10b-5.  Further, the U.S. Supreme Court did not hold that their decision applied outside of the civil context.  Therefore, “judicial restraint and legislative primacy” supported a narrow reading of Janus.  On the other hand, Prousalis’s criminal charges under Rule 10b-5 did not trigger the same policies of judicial restraint and legislative primacy because Congress clearly acknowledged the judiciary’s power to sanction those who violate Rule 10b-5 with criminal penalties.  Prousalis’s actions clearly fell within the spectrum of conduct that Congress sought to prevent when it passed Rule 10b-5, and so the Court denied his appeal.

Full Opinion

James Bull Sterling

IN RE: VASSELL, NO. 13-284

Decided: May 6, 2014

The Fourth Circuit denied Tadd Vassell’s (Vassell) motion for leave to file a successive motion under 28 U.S.C. § 2255 to challenge his mandatory life sentence without parole.

In 1997 Vassell received a life sentence without parole for conspiracy to traffic controlled substances.  Vassell became involved with the conspiracy when he was a seventeen-year-old, and his involvement continued until he was almost nineteen.  Pursuant to 28 U.S.C. § 2255, federal prisoners may file one motion to set aside or reduce a sentence after final judgment; Vassell’s first § 2255 motion was denied.  In order to file successive motions, prisoners must first obtain the authorization of a court of appeals, and must also satisfy the gate-keeping requirements of § 2244.  Section 2244 requires that successive motions contain either “a new rule of constitutional law, made retroactive to cases on collateral review by the Supreme Court, that was previously unavailable” or “newly discovered evidence.”  Vassell filed a motion for leave to file a successive § 2255 motion based on the U.S. Supreme Court’s decision in Miller v. Alabama, 132 S. Ct. 2455 (2012).  In Miller, the Supreme Court held that, when imposed on juveniles, mandatory life sentences without parole for homicide are unconstitutional.

The Court denied Vassell’s motion for leave because the holding from Miller, while “a new rule of constitutional law,” applies to juvenile homicide offenders, not non-homicide offenders.  Rather, Vassell’s potential right to resentencing, assuming that he actually qualifies as a juvenile offender, became available after the U.S. Supreme Court’s opinion in Graham v. Florida, 560 U.S. 48 (2010), in which the U.S. Supreme Court held that imposing a life sentence without parol on a juvenile offender convicted of a non-homicide is unconstitutional.  However, the statute of limitations for § 2255 motions is one year, and the Graham decision was published more than a year prior to Vassell’s motion for leave.  The Court noted that while § 2244 requires only a new rule of constitutional law or newly discovered evidence for the Court to grant leave for a successive § 2255 motion, the statute does not require the Court “to authorize a successive § 2255 motion that is plainly barred as a matter of law.”  Therefore, because Vassell’s § 2255 motion would necessarily rely on the holding from Graham, which was decided more than one year prior to Vassell’s motion for leave, the statute of limitations had already run.

Full Opinion

-Amanda K. Reasoner

SANTORO v. ACCENTURE FED. SERVS., LLC, NO. 12-2561

Decided: May 5, 2014

The Fourth Circuit affirmed the district court’s order compelling the Appellant to arbitrate his federal claims, and held that where the Appellant does not pursue his Dodd-Frank whistleblower claims, neither 7 U.S.C. § 26(n)(2) nor 18 U.S.C. § 1514A(e)(2) override the Federal Arbitration Act’s (FAA) mandate that arbitration agreements are enforceable.

The appellant started his employment at Accenture in 1997, and progressed through several positions over the years.  In 2005, the appellant signed an employment contract that automatically renewed each year, and included an arbitration provision stating that all disputes that arose out of appellant’s employment at Accenture would be settled through arbitration.  Appellant alleged that the new supervisor he received in 2010 disliked him.  In 2011, Accenture terminated appellant’s employment as a cost cutting measure, and replaced him with a younger employee.  Appellant then filed suit for age discrimination under the District of Columbia’s Human Rights Act.  Accenture moved to compel the appellant to submit to arbitration, and appellant opposed Accenture’s motion to compel, and stated that the arbitration clause was void under the whistleblower provisions of the Dodd-Frank Act.  The district court rejected appellant’s argument, and granted defendant’s motion to compel arbitration.  However, while the motion to compel was pending, appellant filed another action stating claims under the ADEA, FMLA, and ERISA.  Accenture moved to compel arbitration for these claims as well. The district court granted Accenture’s motion, and found that because appellant did not bring a Dodd-Frank whistleblower claim, appellant could not use Dodd-Frank to invalidate a valid arbitration clause.  Appellant filed a timely appeal.

The Fourth Circuit found that Congress enacted the FAA in 1925, and stated that arbitration agreements are valid and irrevocable unless equity or law determines otherwise.  Further, the Court noted that the FAA embodies the national policy of favoring arbitration, and therefore courts should “rigorously enforce arbitration agreements according to their terms.”  Am. Express Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2309 (2013).  However, the Court mentioned that the FAA could be overridden by a contrary congressional command.  Here, the appellant argued that Dodd-Frank represented a “contrary congressional command” and overrode the valid arbitration clause in his employment contract.  Dodd-Frank strengthened whistleblower protections for employees that report illegal or fraudulent activities conducted by their employers.  Dodd-Frank includes 7 U.S.C. § 26(n)(2) and 18 U.S.C. § 1514A(e)(2), which prohibit retaliation against a whistleblower employee, and create causes of action and remedies for these employees.  Appellant argued that because his employment contract did not carve out Dodd-Frank claims from arbitration, and requires those claims to be arbitrated, that the entire arbitration agreement was invalid or unenforceable.  However, the Fourth Circuit stated that where an arbitration clause neglects to exempt Dodd-Frank whistleblower claims from arbitration, it does not follow that non-whistleblowers claims are similarly prohibited from arbitration.  Further, the Fourth Circuit found that nothing in Dodd-Frank to indicate that Congress intended to bar the arbitration of every claim simply because the agreement did not exempt Dodd-Frank claims.  Thus, the appellant’s argument, in light of Dodd-Frank’s language and context, failed to meet the burden of showing that Dodd-Frank represents a “contrary congressional command” and overrode the validity of arbitration agreements according to the FAA.

Full Opinion

-Alysja S. Garansi

WILKINS v. MONTGOMERY, NO. 13-1579

Decided: May 5, 2014

In this appeal, the Court held that the district court properly granted summary judgment for the plaintiff’s 42 U.S.C. § 1983 and gross negligence claims because the plaintiff did not meet the burden of proof required for a § 1983 claim, and the plaintiff did not present facts evidencing the requisite level of negligence required for a gross negligence claim.  The Court also held that the exclusion of the plaintiff’s expert witness was proper because the plaintiff did not disclose the expert’s written report by the agreed-upon deadline, and thus was in violation of the Pre-Trial Order and Federal Rule of Civil Procedure (F.R.C.P.) 26(a)(2).  Furthermore, the Court held that the district court’s denial of a motion to amend the complaint was proper because plaintiff filed for motion to amend after the statute of limitations had expired and the requested amendment, to join additional defendants, did not relate back to the claim.

Appellant brought this action against the defendant, Montgomery, after another patient at Central State Hospital murdered her son.  She filed three claims: grossly negligent supervision, gross negligence under the Virginia Wrongful Death Act, and a 42 U.S.C. § 1983 claim for supervisory liability.  The district court struck Appellant’s expert witness because he was disclosed in an untimely fashion; denied Appellant’s second motion to amend her complaint to add two defendants because such amendment would be futile; and, finally, concluded there was insufficient evidence to support the claims against Montgomery, who was an assistant director in charge of administrative matters at the time of her son’s death.

In affirming summary judgment of the negligence claims, the Court reviewed the record and found the appellant failed to provide sufficient evidence to meet the elements outlined in 42 U.S.C. § 1983, and as provided by Virginia state law for the common law gross negligence claims.  The Court reviewed the district court’s ruling for abuse of discretion regarding the exclusion of the expert witness and, according to F.R.C.P. Rule 37(c)(1) and Fourth Circuit case law, found that excluding the expert witness was an appropriate sanction for the plaintiff’s failure to disclose the expert’s report.  In determining whether an amended complaint related back, the Court looked to F.R.C.P. Rule 15(c)(1).  The Court found that the proposed added defendants did not know or could not have known about the action within the time period set forth in F.R.C.P. Rule 4(m).

Full Opinion

Grace Faulkenberry

COLLINS v. POND CREEK MINING CO., NO. 13-1702

Decided: May 1, 2014

The Fourth Circuit determined that physicians’ opinions provided sufficient evidence that a coal miner’s lung disease hastened his death.  Accordingly, the Court reversed and remanded the administrative board’s decision.

Johnnie Collins (“Collins”) was a coal miner that contracted Chronic Obstructive Pulmonary Disease (“COPD”) after working in the mines.  He successfully obtained benefits under the Black Lung Benefits Act (the “Act”) until his death in 1997.  His wife applied for survivor benefits under the Act and received them until 2012, when they were denied by an administrative board for insufficient evidence showing that Collins died from his lung disease, rather than from smoking.  Collin’s wife appealed that decision to the Fourth Circuit.

Collin’s treating physician had compiled a multitude of notes that showed the seriousness of Collin’s lung condition, and laid out the details of Collin’s final weeks in a letter to the Department of Labor.  Another physician stated that in his opinion Collin’s lung disease caused his death, after a review of the case file, death certificate, and additional hospital records.  All of this evidence was sufficient to show that Collin’s lung disease hastened his death.

Full Opinion

Chris Hampton

U.S. v. CARTER, NO. 12-5045

Decided: April 30, 2014

The Fourth Circuit held that Carter’s conviction under 18 U.S.C. § 922(g)(3), for possession of firearms while being an unlawful user of, and addicted to, marijuana, did not violate his Second Amendment right to bear arms.

Police came to Carter’s apartment after receiving complaints of drug use on the premises.  Carter allowed the police to enter his apartment where they found evidence of marijuana use.  He would later admit to being a long-term user of the drug.  Carter also told the police that there were two firearms in his closet that he claimed to have purchased for protection.  The police seized Carter’s firearms, and he was subsequently convicted under § 922(g)(3).  The Court remanded the case to give the Government an opportunity to present “empirical evidence or data” to show that there was “a reasonable fit” between § 922(g)(3), and a substantial government interest, thereby justifying the infringement on Carter’s Second Amendment right to bear arms.  Carter appealed the District Court’s ruling in favor of the Government.

The Court reasoned that § 922(g)(3) did not violate Carter’s constitutional rights because the Government satisfied an intermediate scrutiny inquiry.  The Government showed “‘a reasonable fit’ between § 922(g)(3), and ‘a substantial [or important] government objective.’”  First, the Government satisfied the “substantial government interest” prong by showing that it had a substantial interest in protecting the community from gun violence.  Then, the Government satisfied the “reasonable fit” prong because it presented empirical evidence that established a reasonable fit between the law and the Government’s substantial interest in protecting the community from gun violence.  The Court disagreed with Carter’s argument that the Government’s empirical evidence was too general – suggesting a connection between violence and drug use in general, as opposed to marijuana specifically.  The Court reasoned that the Government’s empirical evidence “amply demonstrate[d] a connection between marijuana use specifically and violence.”  According to the Court, the Government’s empirical evidence satisfied the reasonable fit prong even though it did not show that marijuana use “caused” increased gun violence because the Government did show a “correlation” between marijuana use and gun violence.  Finally, although empirical evidence was necessary to satisfy the “reasonable fit” prong, the District Court was not precluded from also using “common sense” to support its judgment.

Full Opinion

James Bull Sterling

BARLOW v. COLGATE PALMOLIVE CO., NO. 13-1839

Decided: April 30, 2014

The Fourth Circuit held that the district court correctly denied Colgate Palmolive Company’s (Colgate) motion for vacatur seeking to strike the order remanding the case to state court.

Two plaintiffs filed separate lawsuits against multiple companies, including Colgate, alleging that the companies’ products exposed the plaintiffs to asbestos.  On the basis of diversity jurisdiction, Colgate removed both cases to federal court.  At this juncture, the only viable claim identified was against Colgate for a specific line of cosmetic products.  As the other defendants were nondiverse companies and there existed the possibility that after further discovery the plaintiffs could recover against the nondiverse defendants, the district court granted the plaintiffs’ motion to remand the cases to state court.  However, on remand, the plaintiffs moved to consolidate their cases, now alleging that the only source of both plaintiffs’ asbestos exposure was Colgate’s line of products.  Colgate, seeking to strike the court’s remand to state court, argued that plaintiffs’ misrepresentations justify an exception to the general rule that federal courts are precluded from reviewing an order to remand a case, previously removed to federal court, to state court.

The federal removal statute precludes federal courts from reviewing remands to state court for lack of subject matter or defects in the removal procedure.  The Court was unpersuaded by Colgate’s argument that an exception should exist when remand was based on a party’s misrepresentation.  The Court found no indication in the federal removal statute that Congress intended the prohibition to apply only when the parties acted with integrity.  Colgate also argued that its motion seeking vacatur of the remand did not require “review” of the order to remand the case to state court.  Rather Colgate sought vacatur as a sanction for the plaintiffs’ misrepresentations.  Because Colgate’s motion would necessarily involve review of the remand and Congress did not create the exception that Colgate argued should apply, the Court held that the district court correctly denied Colgate’s motion for vacatur.

Full Opinion

-Amanda K. Reasoner

U.S. v. RAMIREZ-CASTILLO, NO. 13-4158

Decided: April 30, 2014

The Fourth Circuit vacated the Appellant’s conviction and sentence, and remanded the case because the district court violated the Appellant’s right to have a jury determine his guilt beyond a reasonable doubt.

Appellant was charged with knowingly possessing prohibited objects while incarcerated as an inmate at a South Carolina (SC) Federal Correctional Institute in violation of 18 U.S.C. §§ 1791(a)(2), (b)(3), and (c).  A jury trial was held on September 25, 2012, where the district court charged the jury with determining whether the first object at issue (a shank) was a “weapon,” and whether the second object (a sharpened piece of metal) was in the appellant’s possession.  The jury answered, “yes” to each question, but never determined whether the appellant was “guilty” or “not guilty” of the charged offense.  Despite never being found guilty, the appellant was sentenced to thirty-three months in prison in 2013.  Appellant then timely appealed.

The Fourth Circuit stated that it reviewed for plain error when the appellant’s trial counsel failed to raise an objection to a particular issue before the district court.  Here, the district court rejected the suggestion that the verdict form should ask the jury for a finding of “guilty” or “not guilty,” and drafted the questions that went to the jury itself.  The Fourth Circuit stated that according to Federal Rule of Criminal Procedure 52(b) it may only correct an unpreserved error if (1) an error was made, (2) the error is plain, (3) the error affects substantial rights, and (4) the error seriously affects the fairness, integrity, or public reputation of judicial proceedings.  Here, the Court reasoned that the district court instructed the jury that they need not consider certain elements of each crime, instead of asking the jury to determine whether or not the appellant was guilty beyond a reasonable doubt of each element of the charged offenses.  By giving these instructions, the district court infringed on the jury’s role by stating that certain facts essential to appellant’s conviction had already been conclusively established.  Further, the Court found that the district court erred by preventing the jury from making the “ultimate, indispensible conclusion” of guilty or not guilty.  Additionally, the Court determined that the error was plain because a court is prohibited from directing a verdict against a defendant, and requires that a jury make the ultimate determination of guilt.  The Court stated that appellant was deprived of the right to a jury finding him guilty beyond a reasonable doubt.  This right is a basic protection without which a criminal trial does not serve its requisite function, thus, the Court opined that the district court’s error also affected appellant’s substantial rights.  The Fourth Circuit exercised its discretion and noted that the district court’s plain error by stating that a failure to do so would gravely affect the fairness, integrity, and public reputation of the judiciary.

Full Opinion

-Alysja S. Garansi

U.S. v. GOMEZ-JIMENEZ, NO. 12-5030

Decided: April 29, 2014

The Fourth Circuit held that the evidence was sufficient to support the defendant’s conviction; the district court’s sentencing enhancement for defendant’s use of a minor in the commission of a crime was warranted; the district court did not err in applying the sentencing enhancement for possession of a dangerous weapon to defendant; and any error in the application of sentencing enhancements regarding defendant’s use of a minor to commit a crime and defendant being an organizer, leader, manager, or supervisor was harmless.

Defendants Erasto Gomez–Jimenez (“Erasto”) and Aaron Juarez–Gomez (“Juarez–Gomez”) were charged with various drug related charges including: conspiracy to distribute and possession with intent to distribute (P.W.I.D.) cocaine; distribution of cocaine on four separate occasions; P.W.I.D. cocaine, as well as aiding and abetting the P.W.I.D.; and finally, Jaurez-Gomez was charged for being an alien in possession of a firearm.  Defendants appealed the application of various sentencing enhancements that the district court applied to their convictions.  Specifically, Juarez–Gomez appealed the application of sentencing enhancements for use of a child in carrying out a crime and sentencing enhancement for being an organizer, leader, manager, or supervisor of a crime; Erasto appealed the application of sentencing enhancements for use of a child in a crime and possession of a firearm.

The Fourth Circuit reasoned that the prosecution presented sufficient evidence to support Juarez–Gomez’s conviction for conspiracy to distribute and possess cocaine because there was a trailer that was used to store drugs, contained firearms, and held materials used to package the cocaine for distribution.  In addition, the Court noted that Juarez–Gomez returned to the trailer following drug sales, stayed in the trailer overnight, and his minor son, who participated in the drug activities, lived in the trailer with him.  The Court reasoned that the application of the sentencing enhancement for use of a minor was warranted when Juarez–Gomez’s son lived in the trailer, sometimes paid rent, and accompanied his father on drug deals.  As to Erasto, the Court determined that it was reasonably foreseeable that his coconspirator’s possession of a firearm would warrant application of the sentencing enhancement for firearm possession to Erasto.  As to the leadership sentencing enhancement and use of child sentencing enhancement for Juarez–Gomez, the Court ruled that they were both harmless because the district court certified that it would apply the same penalty regardless of these enhancements.

Full Opinion

Chris Hampton

IN RE: GEOFFREY A. ROWE, NO. 13-1270

Decided: April 28, 2014

The Fourth Circuit held that, absent extraordinary circumstances, Chapter 7 trustees must be paid on a commission basis, as required by 11 U.S.C. § 330(a)(7).  Thus, the Court reversed and remanded the district court’s decision, which affirmed the bankruptcy court’s non-commission-based fee award, with instructions to vacate the Trustee’s fee award, and remand the matter to the bankruptcy court to determine the proper commission-based fee to award to the Trustee.

The Trustee, Gold, in this Chapter 7 case, requested a trustee’s fee of $17,254.61.  Finding that Gold failed to properly or timely complete his duties, however, the bankruptcy court reduced his fee to $8,020.00.  In determining the Trustee’s fee, the bankruptcy court found that he did not properly discharge his duties.  Gold did not administer the estate expeditiously and in a manner compatible to the best interests of the parties in interest.  This court also found that he neglected to adequately supervise the case.  Consequently, the bankruptcy court based the Trustee’s compensation on an hourly rate, as opposed to a commission-based rate that § 330(a)(7) dictates.  The Trustee contends that the bankruptcy court violated his right to due process when it reduced his compensation (1) without advance notice that it thought his fee request to be extraordinary, or (2) a meaningful opportunity to put forth evidence to assuage the bankruptcy court’s misgivings.

The Court reviewed two questions in this appeal.  The first was one of first impression: whether, in light of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), a bankruptcy court is required, absent extraordinary circumstances, to compensate Chapter 7 trustees on a commission basis.  The second question was whether the case should be remanded to the bankruptcy court with instructions to apply the correct legal standard after an evidentiary hearing.

The Court followed the plain meaning rule, and determined that the definitions of the operative terms in the independent clause of § 330(a)(7) indicated that, absent extraordinary circumstances, a Chapter 7 trustee’s fee award must be calculated on a commission basis.  The Court held that the bankruptcy court should have determined what the maximum statutory commission rate for this case was pursuant to § 326(a).  Only after that determination should the bankruptcy court have decided whether any extraordinary circumstances existed such that the proper commission rate set out in § 326(a), which is presumptively reasonable, was unreasonable, and, thus, should have been reduced.  The Court did not decide the second question on appeal.  The Court reversed the district court’s decision affirming the bankruptcy court’s non-commission-based fee award, and remanded the case to the district court with instructions to vacate the Trustee’s fee, and remand the matter to the bankruptcy court to determine the proper commission-based fee to award to the Trustee.

Full Opinion

Grace Faulkenberry

U.S. v. MCVEY, NO. 13-4285

Decided: April 23, 2014

The Fourth Circuit affirmed Terry McVey’s seventy-eight-month sentence, holding that the district court did not clearly err when applying a two level sentencing enhancement to his distribution of child pornography conviction.

In December of 2010, McVey began emailing a man that he believed to be the stepfather of three minor girls, ages eight, eleven, and fourteen.  For several months McVey emailed the man, who was actually an undercover police officer, and expressed his interest in performing sexual acts with the minor girls.  In response to McVey’s request for a video of the girls, the undercover officer mailed McVey a DVD containing child pornography in exchange for $10.  On July 28, 2011, when the DVD arrived at McVey’s residence, police executed a federal search warrant and discovered child pornography on his computer.  During an interview, McVey was forthcoming about his activities and admitted to purchasing the DVD, possession and distribution of child pornography over the previous ten years, and to uploading child porn at least six times.  Further investigation revealed that on December 31, 2008 McVey uploaded child pornography; despite his confession, this upload is the only documented instance of McVey’s distribution of child pornography.  McVey pled guilty to one count of knowingly possessing images and videos of child pornography that had been shipped and transported through interstate commerce.  During sentencing, McVey received and accepted multiple sentence enhancements, but objected to the sentence enhancement for distribution of child pornography.  McVey argued that because so much time passed between the conduct that led to his arrest and when he uploaded the video, the upload was not relevant conduct to the offense.  The district court rejected McVey’s argument and applied five sentencing enhancements, including the distribution of child pornography.

The Court determined that the district court had sufficient evidence to conclude that the distribution conduct was part of the same course of conduct as the conviction, despite the significant passage of time.  First, McVey admitted to uploading child pornography at least six times, which supports that the crimes were an ongoing, single course of conduct.  Second, possession and distribution are tightly connected crimes; possession is a prerequisite of distribution, and they share a common purpose.  Lastly, McVey admittedly possessed child pornography for an ongoing period of at least ten years, and distributed porn at least six times throughout that period.  With these facts, the Court concluded that a court could reasonably find that McVey’s distribution was in the same course of conduct as his possession conduct.

Full Opinion

-Amanda K. Reasoner

IN RE PFISTER, No. 12-2465

Decided: April 17, 2014

The Fourth Circuit reversed the district court’s finding that a resulting trust severed the plaintiff’s legal and equitable interests in property.  Thus, the Fourth Circuit stated that the district court’s judgment was vacated and remanded the case back to district court.

On May 10, 2001, the plaintiff and her husband (the Pfisters) acquired property in Greer, South Carolina (SC), which they put in their names, and then leased to her husband’s wholly owned corporation, Architectural Glass Construction, Inc. (AGC).  AGC made its rental payments directly to the bank, and not the Pfisters.  The Pfisters subsequently refinanced the property’s mortgage several times, with the names of the borrowers differing on multiple occasions by listing the Pfisters, AGC, or both as the borrower.  On December 31, 2008, AGC received an $87,000 loan from Greer State Bank, and the Pfisters listed the property as collateral.  However, the attorney realized that AGC could not grant the mortgage because it was not listed on the property’s deed.  To fix this issue, the Pfisters deeded the property to AGC in exchange for ten dollars consideration. The plaintiff then declared bankruptcy seven months later, and the bankruptcy trustee moved to set aside the transfer as a constructively fraudulent conveyance because she disposed of the property for nominal consideration when her interest was worth $270,000.  The bankruptcy court agreed with the trustee and ordered AGC to reimburse the bankruptcy estate.  However, the district court found that AGC’s use of the property and payment of the mortgage warranted reversal, stating that the facts created a resulting trust under which AGC held equitable title to the property and the plaintiff held only bare legal title.  Thus, the district court found that the plaintiff’s interest lacked any value when she conveyed it such that she did not make a voidable, constructively fraudulent conveyance in 2008.  The trustee appealed.

On appeal, the Fourth Circuit stated that the Bankruptcy Code permits a bankruptcy trustee to recover property the debtor fraudulently conveyed before filing a petition for bankruptcy.  11 U.S.C. §§ 544 & 548.  The alleged constructive fraud occurs when an insolvent debtor, in the two years before filing for bankruptcy, transfers an asset for less than “reasonably equivalent value.”  Id. § 541(a)(1)(B).  If the debtor transfers an asset for less than “reasonably equivalent value,” the trustee may avoid the transaction, and the debtor must either surrender the property or provide the trustee with its cash equivalent.  Under SC law, the general rule is that when real estate is conveyed to a spouse, the presumption is that the property was supposed to be a gift or advancement.  Caulk v. Caulk, 43 S.E.2d 600, 603 (S.C. 1947).  Here, AGC paid for the property deeded to the Pfisters, and plaintiff’s husband is the sole owner of AGC.  Thus, SC law presumes that the property was intended as a gift to the plaintiff.  However, the gift presumption may be rebutted by clear evidence that a gift was not intended.  In order to overcome the gift presumption and establish a resulting trust, a party must prove by clear and convincing evidence that (1) it paid for the property, (2) with the intent to own it, and (3) on the date of purchase.  Although AGC committed to pay for the property under post 2001 mortgages, and intended to be the owner of the property after the 2008 transfer, the facts presented did not show that all of the requirements were met on the date the property was purchased in May 2001.  First, the property was entirely financed by BB&T on the date of purchase, and neither the Pfisters nor AGC paid for the property on the date it was purchased.  Second, at the time the property was purchased a rental agreement was propositioned indicating that AGC served as the property’s tenant, not the property’s owner, further proving that AGC did not intend to own the property on the date of its acquisition.  Thus, the Fourth Circuit concluded that the bankruptcy court did not clearly err when determining that there was no justification for a resulting trust.

Full Opinion

-Alysja S. Garansi

ANTONIO v. SSA SECURITY, INC., NO. 13-1031

Decided: April 14, 2014

The Fourth Circuit held that the home-buyers were not entitled to recover damages for emotional distress based on SSA Security, Inc.’s (SSA), a security guard company, alleged conduct; that SSA was not liable for the home-buyers’ emotional injuries based on its employees’ alleged conduct; and that the certification of a question on the scope of the Maryland Security Guards Act was warranted.

African American plaintiffs (“Plaintiffs”) brought suit against SSA under various negligence-based claims, and a claim premised on a provision of the Maryland Security Guards Act claiming damages for emotional distress resulting from an arson conspiracy.  Two SSA employees carried out a conspiracy to set ablaze homes that Plaintiffs contracted to purchase, but had not yet purchased at the time of the arson.

The Fourth Circuit determined that under Maryland law, a plaintiff ordinarily cannot recover for emotional injury caused by witnessing, or learning, of negligently inflicted injury to the plaintiffs’ property.  However, plaintiffs would be able to recover damages for emotional injury if they could show that (1) their personal safety was in jeopardy, or (2) if SSA’s hiring of the employees was inspired by fraud, malice, or like motives.  Plaintiffs were unable to show that SSA had prior notice of their emotional injuries and, thus, the Court held that Plaintiffs could not recover for these injuries.  Also, the Court determined that plaintiffs’ emotional injuries were not a foreseeable result of SSA’s hiring of the security guards.  Thus, SSA was not liable for damages.

Full Opinion

Chris Hampton

U.S. v. COBLER, NO. 13-4170

Decided: April 11, 2014

The Fourth Circuit affirmed the district court by finding that it did not abuse its discretion by imposing a 120-year sentence on a defendant convicted of production, possession, and transportation of child pornography, in connection with sexual molestation of a four-year-old boy.  The Court held that the sentence was appropriate because it was designed to protect the public, and address the seriousness of the defendant’s crimes.

Numerous images and video recordings depicting the sexual abuse of children were found on defendant’s computer.  During an interview with police, defendant admitted he downloaded, possessed, and shared child pornography.  Defendant also confessed that he had sexually molested a four-year-old boy while acting as the child’s babysitter on several occasions and had documented the encounters.  Further, the defendant admitted to having a serious communicable disease at the time he molested the child, and acknowledged the possibility that his disease could be transmitted to the child by sexual contact.  None of the defendant’s criminal charges provided for a lifetime sentence but the sentence was ultimately calculated to be 120 years, which represented the sum of the statutory maximum sentences available for each count of the defendant’s conviction.  The defendant argued that his 120-year sentence violates the Eighth Amendment’s prohibition against cruel and unusual punishment because the sentence is disproportionate to the severity of his crimes.

A defendant may challenge the proportionality of a sentence under the Eighth Amendment in two different ways.  First, under an “as-applied” challenge, a defendant contests the length of a certain term-of-years sentence as being disproportionate under the totality of circumstances.  Second, in a “categorical” challenge, a defendant asserts that an entire class of sentences is disproportionate based on the nature of the offense, or the characteristics of the offender.  In this appeal, the defendant argued that his sentence is constitutionally infirm under both these approaches.

Before an appellate court concludes that a sentence is grossly disproportionate based on an as-applied challenge, the court first must determine that a “threshold comparison” of the gravity of the offense and the severity of the sentence “leads to an inference of gross disproportionality.”  In the event that such an inference may be drawn, the court is required to compare the defendant’s sentence: (1) to sentences for other offenses in the same jurisdiction; and (2) to sentences for similar offenses in other jurisdictions.  If this extended analysis validates the threshold determination that the sentence is grossly disproportionate, then the sentence is deemed cruel and unusual punishment under the Eighth Amendment.

With respect to a categorical challenge, the reviewing court first determines whether a national consensus against the sentencing practice at issue is evident from objective societal standards.  Next, the court exercises its independent judgment whether the punishment violates the Constitution.  Thus, a categorical challenge requires consideration of the culpability of the class of offenders in light of their crimes and characteristics, along with the severity of the punishment.

Given the defendant’s shocking and vile conduct, the Court held that he failed to substantiate the required threshold inference of gross disproportionality.  The Court also held that the defendant’s categorical challenge likewise lacked merit.  Thus, the sentence of 120 years’ imprisonment did not constitute cruel and unusual punishment under the Eighth Amendment.  The Court also reviewed the defendant’s challenge to the reasonableness of his sentence.  The Court determined that the sentencing court did not commit significant procedural error.  Further, the Court determined that the sentence was substantively reasonable as the district court explicitly considered the need for defendant’s sentence to deter others from engaging in what the court considered “the most serious and egregious conduct.”  Judgment affirmed.

Full Opinion

Grace Faulkenberry

T-MOBILE NE., LLC v. THE LOUDOUN CNTY. BD. OF SUPERVISORS, NO. 12-2396

Decided: April 3, 2014

The Fourth Circuit affirmed the district court’s decision by holding the following: (1) that the Loudoun County Board of Supervisors (Board) improperly denied T-Mobile Northeast’s, LLC, (T-Mobile) permit to build a telecommunications tower at the “Silo Site” because the Board based the decision on environmental effects in violation of the Telecommunications Act of 1996 (the Act); and (2) that the Board’s decision to deny T-Mobile’s permit to build a tower at the “Bell Tower” site was based on substantial evidence, and did not violate the Act.

T-Mobile applied to the Board seeking special exception permits required for the construction of two telecommunications facility sites in Loudoun County, Virginia.  T-Mobile’s proposed sites included the “Silo Site”— a 90-foot antenna disguised as a silo on a privately owned farm—and the “Bell Tower Site”— an 80-foot bell tower on church property to house an antenna.  The Act limits state and local governments’ ability to freely regulate wireless facilities.  For example, the Act expressly prohibits regulation decisions based on the environmental effects of radio frequency emissions.

The Board denied the special exception permit for the Silo Site for the following reasons: (1) the proposed design created “an unnecessary visual impact on surrounding properties”; (2) the height of the silo did not “blend with the . . . surrounding area”; (3) a denial of the application would not prohibit “the provision of personal wireless services in this area”; and (4) the facility would have a “negative environmental impact.”  On appeal, the district court held that the Board improperly denied T-Mobile’s permit for the Silo Site by relying on the potential environmental effects of the tower.  The court entered an injunction requiring that the Board issue T-Mobile the necessary permits to build the Silo Tower.

The Board denied the special exception permit for the Bell Tower site for the following reasons: (1) it was not a preferred location; (2) it was not on an existing structure; and (3) it did not mitigate the impact on adjacent residential uses.  On appeal, the district court affirmed the Board’s decision, stating that substantial evidence existed in support of the Board’s rejection.

In affirming the district court’s decision on the Silo Site, the Fourth Circuit reasoned that despite the three valid reasons the Board provided for rejecting T-Mobile’s permit, the fourth reason, environmental concerns, still violated the Act.  The Court also affirmed the district court’s decision not to remand the case to the Board for a decision based on permissible reasons.  The Court reasoned that allowing the Board to simply remove the impermissible basis for denying the application would circumvent Congress’s express prohibition on using environmental concerns as the basis for a decision; even if not reflected in the written statement, the environmental concerns would remain a reason for the Board’s denial.

With respect to the Bell Tower Site, the Court reasoned that those residents’ concerns about aesthetics, effects on property value, and noise pollution constituted substantial evidence in support of the Board’s decision to deny the permit.  Because T-Mobile failed to provide sufficient evidence that no reasonable alternative sites existed, the Court rejected the claim that the denial of the permit prevented T-Mobile from providing wireless service, in violation of the Act.  The Court also rejected T-Mobile’s claim that the Board’s decision was based on concern of the environmental effects of radio wave emissions.  While citizens voiced their concerns about the tower’s effect on their health, the Act does not prevent such expression, and there was no evidence that the potential health and environmental effects formed any basis for the Board’s decision.  Therefore the Fourth Circuit affirmed the district court’s decision with respect to both of T-Mobile’s permits, and allowed T-Mobile to build at the Silo Site, but not the Bell Tower Site.

Full Opinion

– Amanda K. Reasoner

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION v. BALTIMORE COUNTY, NO. 13-1106

Decided: March 31, 2014

The Fourth Circuit held that a provision in Baltimore County (the County), Maryland’s employee retirement benefit plan unlawfully discriminated against older County employees on the basis of age, in violation of the Age Discrimination in Employment Act (ADEA).  The Court upheld the district court’s grant of partial summary judgment for the plaintiff’s on the issue of the County’s liability for violating the ADEA, and remanded the case for further proceedings on the issue of damages.

The County’s original plan, the Employee Retirement System (the plan) required that employees contribute a fixed percentage, based on the employees’ age at the time of enrollment, of their annual salaries over the course of their employment.  Under the plan, older employees were required to contribute a higher percentage of their salaries than younger employees because their contributions would earn interest for fewer years.  Later amendments to the plan provided separate provisions for service-based eligibility that allowed employees to retire after a certain number of years of service irrespective of their age, but didn’t change the contribution rates.  Two officers that were enrolled in the plan, Wayne A Lee and Richard J. Bosse, Sr, ages 51 and 64, respectively, filed charges with the Equal Employment Opportunity Commission (EEOC) alleging that the County’s plan, and disparate contribution rates, discriminated against them based on their ages.  The EEOC filed suit against the County, on behalf of the two officers, and other similarly situated employees.  The EEOC alleged that the plan facially discriminated based on employees’ ages at the time of enrollment by requiring them to pay higher pension contributions than their younger counterparts.  In its defense, the County argued that the disparate rates were a permissible objective because of the “time value of money” because the plan was funded entirely by the County.  The County also claimed that it was shielded from liability through the plan’s “safe harbor provision.”

The Fourth Circuit relied on the statutory language set forth in 29 U.S.C. §§ 623, 630, and 631.  The Court asserted that the ADEA prohibits employers from discriminating against any person “because of” age with all employee benefits.  Thus, a plan that treats older employers differently from younger employees violates the ADEA, unless the disparate treatment “is based on reasonable factors other than age.” The County argued that the U.S. Supreme Court’s decision in Kentucky Retirement v. EEOC, 554 U.S. 135 (2008), allowed the County’s pension plan.  In that case, the Supreme Court held that Kentucky’s retirement plan, which treated employees differently based on their pension status, did not violate the ADEA because the disparate treatment was not “actually motivated” by an employee’s age.  However, the Fourth Circuit noted that unlike Kentucky’s plan, the County’s plan did not consider an employee’s pension status.  Rather, the different contribution rates “escalated explicitly in accordance with employee’s ages at the time of enrollment.”  The Court rejected the County’s claim that the “time value of money” was a reasonable factor to justify the treatment because the plan required employees to contribute with age-based rates regardless of when they chose to retire.  Thus, the Court concluded that the disparate treatment was “because of” age.  The Fourth Circuit also concluded that the safe harbor provision was inapplicable because it failed to address employee contribution rates.

Full Opinion

– Abigail Forrister

KOLON INDUS. v. E.I. DUPONT, NO. 12-1587

Decided: April 3, 2014 

The Fourth Circuit held that the district court acted properly by denying Kolon Industries’ (Kolon) recusal motion because of timeliness under 28 U.S.C. § 455(b).  Further, the Fourth Circuit deferred to the district court’s discovery oversight, and agreed that Kolon failed to raise a triable issue of material fact to prove its claims that E.I. DuPont de Nemours & Co. (DuPont) either attempted, or actually had, a monopoly over the U.S. para-aramid market.  Thus, the Fourth Circuit affirmed the district court’s grant of summary judgment for DuPont.

Kolon alleged that DuPont held a monopoly over the para-aramid fiber market in violation of the Sherman Act (§ 2).  In the U.S., the three main producers of para-aramid are: DuPont, Teijin Aramid (Teijin), and Kolon.  Together, DuPont and Teijin account for 99% of the para-aramid sales in the U.S.  Moreover, there are high entry barriers into the para-aramid market.  Kolon claimed that it was unable to obtain more than a de minimis share of the market when it entered in 2005 because DuPont executed numerous supply agreements with high-volume customers.

DuPont argued that Kolon failed to penetrate the U.S. market because of its own shortcomings.  Specifically, Kolon used only seven sales agents that contacted a small percentage of potential customers, and inadequately invested in product offerings and supply capacity.  DuPont sued Kolon, alleging theft and misappropriation of trade secrets, and Kolon counterclaimed with its anti-trust claim.  DuPont moved to dismiss the counterclaim, which the district court granted with leave to amend.  Kolon filed amended counterclaims, which were also dismissed. Kolon appealed the dismissal, and the Fourth Circuit reversed, and stated that Kolon had adequately pleaded its monopoly claims and remanded for further proceedings.  On remand, the district court tried the trade secrets claim separately, resulting in a $919.9 million jury verdict for DuPont.  Ultimately, the district court granted summary judgment to DuPont on the anti-trust claims.  Kolon then filed an appeal.

On appeal, the Fourth Circuit reviewed Kolon’s argument that the district court judge should have recused himself from the anti-trust and trade secrets cases.  The district court judge was a partner at McGuire Woods, which had handled patent lawsuits relating to para-aramid, prior to his appointment to the bench, and represented DuPont in the current litigation.  Both parties received notice of the judge’s related financial interest. The parties were given twenty days to file a motion for disqualification, but neither party did. Instead, Kolon filed its motion for recusal after a $920 million dollar award against it—two days prior to the deadline for summary judgment motions in the anti-trust case against DuPont. The district court denied the recusal motion because Kolon filed its motion a year after the alleged conflict, finding that 28 U.S.C § 455, although silent on the matter, includes a timeliness requirement.  The Fourth Circuit found that Kolon failed to “raise the disqualification . . . [of the judge] at the earliest moment after [its] knowledge of the facts.” U.S. v. Owens, 902 F.2d 1154, 1156 (quoting Satterfield v. Edenton-Chowan Bd. of Educ., 530 F.2d 567, 574–75 (4th Cir. 1975)).

The Fourth Circuit found no abuse of discretion in the district court’s discovery rulings, and stated that the district court’s discovery denial was justified by its determination that the production of sales, pricing, and margin data would have been “unduly burdensome” on DuPont by requiring compilation of all this information onto one spreadsheet as requested by Kolon.   Kolon also appealed the district court’s grant of a protective order that barred a F.R.C.P. Rule 30(b)(6) deposition of DuPont’s use of the supply agreements.  The Fourth Circuit found that Kolon violated Local Civil Rule 30(H), which requires eleven days’ advanced notice of a deposition, and Federal Rule of Civil Procedure 30(b)(1), which requires “reasonable notice,” when it gave only five days’ notice for the replacement deposition notice.

Reviewing Kolon’s Sherman Act claim de novo, the Fourth Circuit found that DuPont lacked monopoly power in the U.S. para-aramid market from 2006 to 2009 because DuPont’s 60% market share fell significantly short of monopoly power under E.I. du Pont de Nemours & Co. v. Kolon Indus. (DuPont I), 637 F.3d 435.  Further, the Fourth Circuit found that DuPont lacked durable market power because of Teijin’s ascendancy in the market over the past several decades, which led to DuPont’s steady decline in market share.  The Fourth Circuit also found that DuPont did not engage in conduct that forecloses competition, gains a competitive advantage, or attempts to destroy a competitor.  See Eastman Kodak v. Image Technical Servs., Inc., 504 U.S. 451, 482–83 (1992).  Kolon argued that DuPont’s twenty-one supply agreements—out of 1,000 potential consumers in the U.S. para-aramid market—demonstrated that DuPont willfully maintained its monopoly power.  However, the Fourth Circuit determined that those agreements did not violate the willful maintenance prong set forth in DuPont I.

With regard to Kolon’s attempted monopolization claim, the Fourth Circuit stated that DuPont’s conduct was not prohibited by Sports, Inc. v. McQuillan, 506 U.S. 447 because its supply agreements did not foreclose a substantial share of the para-aramid market.  Furthermore, the Fourth Circuit found that there was no dangerous probability that DuPont would successfully monopolize the market in violation of McQuillan because of Teijin’s growth in market share.

Full Opinion

– Alysja S. Garansi

WHITESIDE v. UNITED STATES, NO. 13-7152

Decided: April 8, 2014

The Fourth Circuit held that Whiteside could use 28 U.S.C. § 2255 to challenge his erroneous “career offender enhancement” prison sentence under the United States Sentencing Guidelines (U.S.S.G.).  The Court also held that Whiteside did not waive his right to collaterally attack the sentence in his plea agreement, and the Court tolled the one-year limitations period normally allowed for Whiteside’s motion to vacate the sentence.  Ultimately, the Court vacated the sentence and remanded for resentencing.

Whiteside was indicted on a charge of Possession With Intent to Distribute (PWID) cocaine.  Based on an earlier felony drug conviction he received, the Government sought a career offender enhancement prison sentence under the U.S.S.G.  The U.S.S.G. defines a career offender as a person with “a prior state conviction for an offense punishable by imprisonment for a term exceeding one year . . . .”  Whiteside entered into his plea agreement with the Government under the assumption that he qualified as a career offender because of his prior conviction, and he received a prison sentence based on the U.S.S.G.’s recommended range for a career offender.  His prison sentence was eight years longer than it would have been had he not qualified as a career offender.  After Whiteside’s sentencing, a Fourth Circuit decision changed the law that applied to his prior offense so that he would not have been punished by more than one year in prison.  Thus, Whiteside should not have qualified as a career offender, nor be subject to a longer prison sentence.  Whiteside moved to set aside his sentence in the plea agreement as “in violation of the Constitution or Laws of the United States” under 28 U.S.C. § 2255, because he lacked the necessary predicate offense.

The Court reasoned that Whiteside could use 28 U.S.C. § 2255 to vacate his prison sentence under the plea agreement because the application of the erroneous career offender enhancement had a “significant impact” on his sentence, and refusal to allow Whiteside to appeal would amount to a “miscarriage of justice.”  This erroneous enhancement amounted to a miscarriage of justice even though Whiteside’s sentence in the plea agreement fell below the applicable range recommended in the U.S.S.G.  Furthermore, although technically “advisory” in nature, the U.S.S.G. significantly influenced Whiteside’s sentence.

The Court also reasoned that Whiteside’s waiver in the plea agreement did not bar an appeal of his prison sentence because the waiver was ambiguous.  Additionally, the Court tolled the limitations period for Whiteside’s motion to vacate his prison sentence because the erroneous application of the career offender enhancement “worked a gross miscarriage of justice[,]” Whiteside pursued his motion “diligently[,]” and “extraordinary circumstances” caused the delay in filing.

Full Opinion

– James Bull Sterling

DICKENSON-RUSSELL COAL COMPANY, LLC V. SECRETARY OF LABOR, NO. 13-1374

Decided: March 27, 2014 

The Fourth Circuit held that the Dickenson-Russell Coal Company (Dickenson Coal) had an unconditional duty—under Part 50 regulations to the Federal Mine Safety and Health Act of 1977, 30 C.F.R. § 50.20(a)—to file an MSHA Mine Accident, Injury, and Illness Report Form 7000-1 (Form 7000-1) within ten work days of Charlie Wood’s (Wood) occupational injury at a Dickenson Coal mine.  The Fourth Circuit therefore denied Dickenson Coal’s petition for review.

Dickenson Coal owns and operates a coal mine, the Roaring Fork No. 4 Mine (Roaring Fork), in Virginia.  Bates Contracting and Construction, Inc. (Bates), an independent contractor, provided miners to work at Roaring Fork.  In May 2009, Wood—a Bates employee—suffered an occupational injury at Roaring Fork.  Wood was under Dickenson Coal’s control and supervision on the day of the incident.  Three days after the incident, Bates reported Wood’s injury to the Mine Safety and Health Administration (MSHA) by submitting a Form 7000-1; however, Dickenson Coal did not report the injury.  In July 2009, the MSHA cited Dickenson Coal for “failure to timely report an occupational injury and file a Form 7000-1,” per the requirements of 30 C.F.R. § 50.20(a).  Dickenson Coal then contested the MSHA citation before an Administrative Law Judge (ALJ) appointed by the Federal Mine Safety and Health Review Commission (the Commission).  Dickenson Coal contended that Bates was an operator under § 50.20(a); thus, “either Bates or Dickenson Coal could have satisfied the obligation to report Wood’s injury.”  The ALJ ruled against Dickenson Coal, finding that Bates was not an operator under the regulatory definition of the term, 30 C.F.R. § 50.2(c)(1), because it was not “operating, controlling, or supervising” activities at Roaring Fork at the time of the injury.  Thus, the ALJ found that Bates was not a required reporter under § 50.20(a)—and therefore concluded that Bates’s Form 7000-1 filing was gratuitous and “did not relieve Dickenson [Coal] of its [reporting] obligations under section 50.20(a).”  The Commission declined Dickenson Coal’s request for discretionary review, and Dickenson Coal petitioned the Fourth Circuit.  On petition for review, Dickenson Coal argued that that ALJ incorrectly applied the regulatory definition of operator in § 50.2(c)(1) rather than the statutory definition of the term, 30 U.S.C. § 802(d)—under which, according to Dickenson Coal, independent contractors clearly qualify as operators.  Dickenson Coal asserted that, where an incident involves more than one required reporter, only one of the reporters needs to file a Form 7000-1.

The Fourth Circuit found the language of § 50.20(a) unambiguous; thus, the Fourth Circuit declined to apply Auer deference to the agency’s interpretation of the regulation.  Auer v. Robbins, 519 U.S. 452.  However, the Fourth Circuit found the ALJ’s decision consistent with the plain language of § 50.20(a): the Fourth Circuit concluded that, even if Bates qualifies as an operator, Bates’s Form 7000-1 filing did not excuse Dickenson Coal from filing its own Form 7000-1—as § 50.20 requires every operator subject to the reporting requirement to report every relevant injury or accident.  The Fourth Circuit also rejected Dickenson Coal’s argument that such an interpretation of § 50.20(a) will lead to absurd results, noting that the Secretary of Labor stated plausible reasons for requiring potentially duplicative reports under the regulation.

Full Opinion

– Stephen Sutherland

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION V. PROPAK LOGISTICS, INC., NO. 13-1687

Decided: March 25, 2014

The Fourth Circuit affirmed the district court’s decision ordering the Equal Employment Opportunity Commission (“EEOC”) to pay attorneys’ fees to Propak Logistics, Inc. (“Propak”) because the EEOC acted unreasonably in filing the complaint.

Michael Quintois, a former supervisor at Propak’s Shelby, North Carolina facility, filed a discrimination charge with the EEOC against Propak in January 2003. Quintois alleged that Propak terminated his employment based on his “American” national original after he complained that the company hired only Hispanic workers for certain supervisory positions. Based on Quintois’ discrimination charge, the EEOC initiated an investigation that lasted nearly six years. Among other things, the EEOC designated the matter as a “class case” in September 2004, yet failed to notify Propak of its procedural decision until about four years later in September 2008. In addition, the EEOC failed to contact Propak for about two years, between June 6, 2005 and June 7, 2007. In June 2007, the EEOC contacted Propak to speak with Kathy Ponder, the Propak manager responsible for hiring decisions at the Shelby, North Carolina facility during the period of Quintois’ employment. Propak, however, no longer employed Ponder and her whereabouts were unknown.

The EEOC concluded its investigation and issued a “determination letter,” in September 2008, which stated the EEOC had found reason to conclude that Propak violated Title VII by failing to hire a class of non-Hispanic job applicants because of their race or national origin. In the letter, the EEOC invited Propak to participate in informal conciliation to resolve the matter. In attempting to conciliate the matter, the EEOC proposed certain remedial measures concerning Propak’s facilities in North Carolina and South Carolina. These measures would have required Propak in these locations to offer certain employment opportunities, to provide training for supervisors and managers, and to post certain notices. By this time, however, Propak had closed all its facilities in those states, thereby rendering implementation of such remedial measures impossible. Propak advised the EEOC of this fact.

Nevertheless, the EEOC initiated a lawsuit in August 2009, seeking certain injective relief, including an order requiring Propak to institute policies and programs to benefit non-Hispanic person in order to mitigate the effects of the allegedly unlawful employment practices. The EEOC also sought monetary relief on behalf of the affected class of non-Hispanic employment applicants. In response, Propak filed a motion to dismiss arguing that the doctrine of laches barred the action. The district court denied the motion and ordered the parties to engage in limited discovery on the issue of whether Propak suffered prejudice resulting from the EEOC’s extensive delay in initiating the litigation. At the conclusion of this discovery period, Propak filed a motion for summary judgment, again based on the doctrine of laches. This time, the district court granted Propak’s motion, concluding that the EEOC’s delay in initiating the litigation was unreasonable. The EEOC initially filed an appeal but later sought dismissal, which the Fourth Circuit granted.

Propak later filed a motion seeking attorneys’ fees incurred by Propak after the EEOC filed the complaint. The district court, relying on Supreme Court precedent, granted the motion, concluding that an award of attorneys’ fees was appropriate because the EEOC knew or should have known that its claim “was frivolous, unreasonable, or groundless.” The district court held that the EEOC acted unreasonably in filing the complaint because by the time the EEOC determined to bring the action it was clear that a lawsuit would be moot. And, the district court alternatively held that the EEOC acted unreasonably in continuing the litigation in view of the developing record because it reaffirmed that purported victims and witnesses could not be located and the facilities were closed. This appeal followed.

On appeal, the Fourth Circuit first discussed Title VII’s fee-shifting mechanism, which gives district courts the discretion to award reasonable attorneys’ fees to a prevailing party. The court observed that a heightened standard applies to a prevailing defendant seeking such an award in a Title VII action. For a prevailing defendant to receive such an award, the court must find that the plaintiff’s action was frivolous, unreasonable, or without foundation. The court then conducted a review for an abuse of discretion.

As an initial matter, the court rejected the EEOC’s request that it consider the issue of whether laches is available as an affirmative defense to an action filed by a United States agency because the EEOC abandoned its appeal of the summary judgment order. Next, the court rejected the EEOC’s contention that the district court improperly based its decision awarding attorneys’ fees on the court’s earlier laches ruling. In so doing, the court recognized that, while the district court referenced its previous findings of delay and prejudice from the summary judgment holding, the two holdings were based on different principles of law. Specifically, the summary judgment holding of laches was based on the EEOC’s unjustified delay in bringing the lawsuit, and on the resulting prejudice affecting Propak’s ability to defend itself in the action. In contrast, however, the district court awarded attorneys’ fees on the basis that the EEOC’s lawsuit effectively was moot at its inception. The district court’s fee award, therefore, reflected proper consideration of the Supreme Court’s standard articulated in Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), because it assessed whether the EEOC acted unreasonably in initiating the litigation.

Next, the court addressed the EEOC’s attack on the district court’s factual finding that the EEOC could not identify individual members of the class of victims eligible for monetary relief. The Fourth Circuit observed that the record showed that the EEOC made efforts to identify the class of victims. The record, however, lacked any indication that such efforts were successful. Thus, the court found no clear error in this factual finding. Lastly, the court rejected the EEOC’s alternative argument that the district court’s factual finding that the EEOC was unable to identify claimants was an “irrelevant consideration.” In doing so, the court noted that it had previously held that an award of attorneys’ fees to a defendant under the Christiansburg standard was justified in part because the plaintiff sought relief that it knew or should have known was unavailable.

The Fourth Circuit, therefore, concluded that the district court did not abuse its discretion in holding that the EEOC acted unreasonably. Consequently, it did not address the district court’s alternative holding that the EEOC’s continued pursuit of litigation was unreasonable in light of the developing record in the case.

Full Opinion

– W. Ryan Nichols

UNITED STATES V. BLACKMAN, NOS. 13-4406; 13-4483

Decided: March 21, 2014

The Fourth Circuit affirmed the conviction of criminal defendant, Khalil Blackman for his involvement in a conspiracy to commit armed robbery, holding that there was sufficient evidence to sustain his conviction. Additionally, the Fourth Circuit reversed the district court’s decision to deny the government’s request for forfeiture, finding that the United States code removed the court’s discretion to deny the government’s motion to impose forfeiture.

In 2011, Blackman and several others entered into a conspiracy to commit armed robbery. The conspirators targeted a transportation contractor responsible for transporting Apple products. While other conspirators were principal organizers of the scheme and performed most of the acts during the robbery, Blackman was present for the planning stages, which contemplated the use of a firearm. Blackman principally contributed to the conspiracy by acting as a “fence”—i.e. “the individual responsible for disposing of stolen goods.” After the first robbery went successfully, with Blackman successfully selling the stolen products, the conspirators planned a second robbery on a second driver of the same transportation contractor. Again, Blackman was the “fence” for the scheme. Emboldened by a second successful armed robbery, the conspirators decided to take on a much larger scale heist. This time, they targeted a tractor-trailer of the transportation contractor and obtained a U-Haul to transport the stolen goods. Once Again, Blackman fenced the stolen goods. Blackman was indicted on two counts: conspiracy to commit robbery and a violation of 18 U.S.C. § 924(c) which prohibits “using or carrying a firearm during and in relation to a crime of violence.” The indictment contained a forfeiture notice. Blackman continued to trial despite his co-conspirators all pleading guilty. The district court convicted Blackman on all counts and sentenced him to ten years in prison. Blackman and the government filed cross-appeals.

Blackman appeals on the grounds that the evidence was insufficient to convict him on the second count of his indictment because there was no evidence that he carried or used a firearm during the robberies. Additionally, Blackman asserted that because the indictment did not mention Pinkerton v. United States, the government could not rely on it to sustain a conviction. The Fourth Circuit disagreed. Pinkerton provides that a defendant is “liable for substantive offense committed by a co-conspirator when their commission is reasonably foreseeable and in furtherance of the conspiracy.” Agency principals support the Pinkerton doctrine, such that each co-conspirator acts as an agent for the other conspirators, and thus, all co-conspirators are bound by the acts of his “agents.” The Fourth Circuit dismissed the argument, explaining that in its earlier case of United States v. Ashley, the court held that the Pinkerton need not be charged in the indictment, “even when it later acts as the legal basis for the defendant’s conviction.” Moreover, the court found that the government’s evidence was “plainly sufficient” for the court to find Blackman guilty on this count. Blackman was privy to the planning of the robberies, which contemplated the use of a firearm, and he played a crucial role in the success of the operation by acting as a fence for the stolen goods.

The government also appealed the district court’s ruling, arguing that the district court erroneously denied forfeiture. The Fourth Circuit agreed. The government’s argument rested on a series of statutes within the United States code. The civil forfeiture statute provides that, “any property, real or personal, which constitutes or is derived from proceeds traceable… any offense constituting specified unlawful activity” (emphasis added). “Specified unlawful activity” is defined to include armed robbery. The civil forfeiture statute goes on to provide that “if the defendant is convicted of a [criminal offense] giving rise to the forfeiture, the court shall order the forfeiture of the property as part of the sentence in the criminal case” (emphasis added). The Fourth Circuit emphasized that the plain language of the code provides that the court “shall order” forfeiture, thus removing the district court’s discretion to deny the government’s motion for forfeiture. The court held that the district court should have ordered forfeiture notwithstanding court-ordered restitution. While restitution acts to compensate the victim, forfeiture serves a separate policy of punishing the wrongdoer. The Fourth Circuit stated that its position was in agreement with numerous other circuits that hold that ordering both restitution and forfeiture in the same case does not amount to double recovery. Moreover, the court cannot decline to order forfeiture if the defendant lacks the assets necessary to satisfy the order. Therefore, the Fourth Circuit held that the district erroneously denied the government’s request to impose a penalty of forfeiture on the defendant.

Full Opinion

– Wesley B. Lambert

URBINA V. HOLDER, NO. 13-1465

Decided:  March 17, 2014

The Fourth Circuit Court of Appeals denied in part and dismissed in part a Nicaraguan immigrant’s petition for review of the Board of Immigration’s finding that he was ineligible for cancellation of removal.

The Immigration and Nationality Act permits the Attorney General to cancel removal of aliens that have been physically present in the United States for a continuous period of not less than 10 years preceding the date of such application. Defendant Gustavo Urbina (“Urbina”) entered the United States on October 4, 2000, on a tourist visa and overstayed its expiration. In December 2009, the Department of Homeland Security (“DHS”) served Urbina with a notice to appear, charging him with having illegally entered the United States. This charge was based on Urbina’s own representations in applications for temporary protected status, asserting that he had entered the country in 1998. Before an Immigration Judge (“IJ”), Urbina asserted that, although he was not in the United States legally, he had entered legally in October 2000 and, therefore, the charge against him was incorrect. The IJ asked Urbina to file a copy of his passport showing his October 2000 entry. Urbina, in turn, requested that the government file an I-261 form at the next hearing, swapping the original charge on the notice to appear (illegal entry) for the factually correct charge (illegal presence). The DHS amended the charge, alleging that Urbina was removable as an alien who overstayed his period of authorized presence.

On appeal, Urbina argued that (1) the original notice to appear was invalid and thus did not stop the accrual of the ten-year statutory period; (2) the IJ erred in denying his motion to terminate and in continuing the proceedings to allow DHS to amend the charge against him; (3) the DHS did not have the authority to promulgate the regulation permitting such an amendment; (4) the IJ violated his procedural due process right; and (5) the BIA improperly denied his motion to reconsider.

First, Urbina contended that his original notice to appear was invalid because it had an incorrect charge and did not include the specific date and time of the hearing. However, the BIA in In re Camarillo held that the stop-time rule does not require that the notice to appear include the date and time of a hearing. Although Camarillo did not directly address whether its analysis would also apply to incorrect charges, the BIA in a footnote suggested that “there is no reason to conclude that Congress would have intended an alien to be able to accrue time between service of the notice to appear and service of an I-261, which may occur much later.”

Second, Urbina argued that the IJ improperly denied his motion to terminate the removal proceedings. However, in asking DHS to file the I-261 form, the IJ did precisely what Urbina had originally requested. Moreover, Urbina did not object to the IJ’s decision to continue the case.

Third, Urbina contended that the amended charge itself was invalid, based on the fact that the Immigration and Nationality Act clearly provides for changes to the time and date of proceedings on a notice to appear, but does not contain a similar provision for amending charges. However, the Fourth Circuit held that although the statute is silent regarding the amendment of charges, it is sensible to allow DHS discretion to make changes as it acquires more information.

Fourth, Urbina contended that the IJ violated his procedural due process right by pretermitting his application for cancellation of removal. He claimed there were “open factual issues” regarding his eligibility of relief: that is, whether the court should measure the ten years from Urbina’s purported January 1998 entry date, rather than the October 2000 entry. However, the Fourth Circuit concluded that it lacked jurisdiction to review the claim because Urbina failed to raise the question before the BIA.

Finally, Urbina asked that the Fourth Circuit reverse the BIA’s denial of his motion to reconsider. Urbina focused on the BIA’s claim that the inaccuracies in the original notice to appear were based upon Urbina’s fraudulent statements in his previous sworn applications for temporary protected status. Urbina argued that the BIA overstepped its authority by finding the statements “fraudulent,” as the IJ never made such a finding itself. The BIA’s decision, however, made clear that it relied on Camarillo as the primary basis for denying the motion for reconsideration.

Full Opinion

– Sarah Bishop

UNITED STATES EX REL. OBERG V. PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, NO. 12-2513

Decided: March 13, 2014

The Fourth Circuit held that Dr. Jon H. Oberg (Dr. Oberg), a relator for the United States, sufficiently alleged that the Pennsylvania Higher Education Assistance Agency (PHEAA) is a person for purposes of the False Claims Act (FCA), 31 U.S.C. §§ 3729 et seq.; that Dr. Oberg sufficiently alleged that the Vermont Student Assistance Corporation (VSAC) is a person under the FCA; and that the Arkansas Student Loan Authority (ASLA) is an arm of the state and therefore not subject to FCA suits.  The Fourth Circuit therefore affirmed the judgment of the United States District Court for the Eastern District of Virginia in part, vacated it in part, and remanded the case.

According to Dr. Oberg, the PHEAA, the VSAC, and the ASLA (collectively, the appellees) “defrauded the Department of Education by submitting false claims for Special Allowance Payments” (SAPs), a federal subsidy for the interest on student loans.  Dr. Oberg contented that the actions of the appellees constituted violations of the FCA, under which “any person” who, inter alia, “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” to certain government officials may be held liable.  31 U.S.C. § 3729(a)(1)(A).  While the FCA does not define person, the Supreme Court held in a 2000 opinion that, while states and state agencies are not persons under the FCA, the FCA presumptively covers corporations.  Vermont Agency of Natural Resources v. United States, ex rel. Stevens, 529 U.S. 765.  In a previous appeal by Dr. Oberg, the Fourth Circuit held that, with regard to state-created corporations, courts should apply the Eleventh Amendment arm of the state analysis to determine whether such corporations may be held liable under the FCA.  United States ex rel. Oberg v. Kentucky Higher Education Student Loan Corporation, 681 F. 3d 575.  Because the district court dismissed Dr. Oberg’s complaint without conducting the arm of the state analysis, the Fourth Circuit vacated the judgment of the district court and remanded the case.  On remand, the district court found that the appellees were arms of their respective states.  The district court therefore granted the appellees’ motions to dismiss, and Dr. Oberg appealed.

The Fourth Circuit noted that, in the FCA context, the arm of the state analysis involves a statutory question rather than an affirmative defense.  The Fourth Circuit then applied a nonexclusive four-factor test to determine whether each corporation is an arm of the state.  Under this test, the Fourth Circuit considered whether judgments against the corporations would be paid by the state; the level of autonomy the corporations exercise; whether the corporations are primarily involved with state or non-state concerns, such as local or out-of-state operations; and the treatment of the corporations under the laws of their respective states.  With regard to the PHEAA, the Fourth Circuit found that Pennsylvania is not liable for judgments against the PHEAA from either a legal or a functional perspective; that, when considering “all reasonable inferences in favor of the plaintiff,” the autonomy factor also weighed against arm of the state status; that the PHEAA’s focus on the “legitimate state concern” of providing financial aid services weighed toward arm of the state status; and that the PHEAA’s treatment under Pennsylvania law also weighed in favor of arm of the state status.  The Fourth Circuit concluded that, despite the indications to the contrary, Dr. Oberg sufficiently alleged that the PHEAA is a person.

With regard to the VSAC, the Fourth Circuit found that Vermont’s liability for judgments against the VSAC is unclear—but that, construing the facts “in the light most favorable to the plaintiff,” the liability factor counseled against arm of the state status; that the VSAC’s level of autonomy “also present[ed] a close question”—but that, “draw[ing] all reasonable inferences in favor of the plaintiff,” the autonomy factor weighed against arm of the state status; that the VSAC’s financial statements indicated a focus on state educational concerns; and that Vermont law provides that, inter alia, the VSAC “shall be an instrumentality of the state,” Vt. Stat. Ann. tit. 16, § 2823(a).  The Fourth Circuit concluded that, despite the indications to the contrary, Dr. Oberg sufficiently alleged that the VSAC is a person.

With regard to the ASLA, the Fourth Circuit found that Arkansas would pay for judgments against the ASLA under state law; that the ASLA “operates with little autonomy from Arkansas despite its corporate powers”; that Dr. Oberg did not allege any facts “indicating that ASLA is not primarily involved with the state concern of helping to finance higher education for Arkansas residents”; and that the ASLA is an arm of the state under Arkansas law.  The Fourth Circuit therefore concluded that the ASLA is an arm of the state.

Full Opinion

-Stephen Sutherland

UNITED STATES V. NEUHAUSER, NO. 13-6186

Decided: March 11, 2014

The Fourth Circuit affirmed the district court by holding that a defendant’s term of supervised release does not commence while he remains in federal custody pending the resolution of his status under the Adam Walsh Child Protection and Safety Act (the “Act”).

In 1999, Defendant Jeffrey Neuhauser pled guilty to one count of interstate travel with intent to engage in sex with a minor and one count of distribution of child pornography. The court sentenced him to 109 months and an additional five years of supervised release. Just two weeks before his release, the Government certified Neuhauser as a “sexually dangerous person” under the Act. The certification stayed Neuhauser’s release from prison for four and a half years, but the district court ultimately held that Neuhauser did not qualify as a “sexually dangerous person” and released Neuhauser. Six months after his release, Neuhauser moved to terminate his five-year period of supervised release on the grounds that his four and half-year confinement under the Act counted toward his five year supervised release period. The district court disagreed and held that Neuhauser’s supervised release period did not begin until he was released from prison confinement. Neuhauser appealed.

On appeal, Neuhauser argued that the district court erred by finding that his “supervised release” began only after being released from physical custody, and instead contended that his “supervised release” began on the date that his prison sentence ended. The Fourth Circuit affirmed the district court. Under the Act, “a defendant’s ‘term of supervised released commences on the day the person is released from imprisonment.’” Neuhauser argued that his “imprisonment” only lasted as long as the government detained him as punishment for a crime. The Fourth Circuit dismissed his argument, explaining that the term “imprisonment” “evinces no necessary link to criminal punishment.” Furthermore, in other legal contexts, such as a period of detention before conviction, the term “imprisonment” does not describe service of a criminal sentence. Moreover, the Act itself explains that a period of supervised release is tolled “when a person is imprisoned in connection with a conviction.” Finally, the court concluded a broad reading of the term “imprisonment” comports with the Act’s policy of protecting children. Therefore, the Fourth Circuit affirmed the district court and held that Neuhauser had not satisfied his period of supervised release.

Full Opinion

– Wesley B. Lambert

UNITED STATES V. ABDELBARY, NO. 13-4083

Decided: March 11, 2014

The Fourth Circuit held that the United States District Court for the Western District of Virginia properly concluded that the attorney’s fees expended by Jordan Oil in defense of its interests against fraud committed by Youssef Hafez Abdelbary (Abdelbary) in his bankruptcy proceedings were recoverable under the Mandatory Victim Restitution Act (MVRA), 18 U.S.C. § 3663A.  The Fourth Circuit therefore affirmed the judgment of the district court.

Abdelbary, the owner and operator of a gas station and convenience store, bought gas from Jordan Oil.  In February 2008, Jordan Oil stopped sending gas to Abdelbary after Abdelbary failed to pay for a gas delivery.  Jordan Oil then sued Abdelbary to recover the money owed.  In May 2008, Jordan Oil obtained a final judgment in its favor.  Abdelbary filed for bankruptcy after consulting with an attorney in July 2008.  On his bankruptcy filing, Abdelbary “denied having made any gifts within one year or having transferred any property within two years of the filing.”  Also, at the creditors’ meeting, Abdelbary said he had not transferred assets to a member of his family.  However, Abdelbary had in fact sent $76,000 to his brother during the two years prior to filing.

Abdelbary was eventually charged with, inter alia, bankruptcy fraud under 18 U.S.C. § 152(3).  Abdelbary was convicted on all counts.  At sentencing, the district court ordered Abdelbary to, inter alia, pay Jordan Oil restitution for the attorney’s fees it expended during Abdelbary’s bankruptcy proceeding.  While the district court cited both the MVRA and the Victim and Witness Protection Act (VWPA), 18 U.S.C. § 3663, it did not clarify which provision it was relying on.  On appeal, the Fourth Circuit vacated the award of restitution and remanded the case with regard to this award, as the district court did not clarify whether it relied on the MVRA or the VWPA and “had overlooked making the factual findings required by the appropriate act.”  On remand, Abdelbary and the government agreed that the MVRA governed the issue.  However, Abdelbary argued that, inter alia, the attorney’s fees expended by Jordan Oil constituted a consequential loss rather than a direct one—and therefore could not be compensable under the MVRA.  The district court rejected this position, ordering Abdelbary to pay restitution to Jordan Oil under the MVRA.  Abdelbary appealed, arguing that, inter alia, attorney’s fees are not compensable under the MVRA per the Fourth Circuit’s decision in United States v. Mullins, 971 F.2d 1138.  Abdelbary argued that Mullins—in which the Fourth Circuit held that VWPA restitution cannot include consequential damages such as attorney’s fees incurred to recover the property at issue—was consistent with the “American Rule” for attorney’s fees.

The Fourth Circuit found the American Rule inapplicable, as Abdelbary’s appeal involved the types of losses includable as criminal restitution rather than entitlement to fee shifting.  The Fourth Circuit then enumerated the rule applicable to the case at hand, quoting United States v. Elson, 577 F.3d 713: “[W]here a victim’s attorney fees are incurred in a civil suit, and the defendant’s overt acts forming the basis for the offense of conviction involved illegal acts during the civil trial . . . such fees are directly related to the offense of conviction” and can be recovered under the MVRA.  The Fourth Circuit then distinguished the instant case from Mullins, noting that Abdelbary’s bankruptcy fraud was the direct and proximate cause of Jordan Oil’s fee expenditures—and Abdelbary’s bankruptcy fraud therefore “result[ed] in damage to or loss or destruction of property of a victim of the offense,” 18 U.S.C. § 3663A(b)(1).

Full Opinion

– Stephen Sutherland

BARTON V. HOUSE OF RAEFORD FARMS, INC., NOS. 12-1943; 12-1945; 12-1946

Decided: March 11, 2014

A group of former employees brought suit against Raeford Farms, Inc. d/b/a/ Columbia Farms, Inc. (“Columbia Farms”), a chicken processing plant in Greenville, South Carolina for the payment of unpaid wages and for unlawful retaliation against them after instituting workers’ compensation proceedings. The jury returned a verdict for the employees on the unpaid wages and retaliation claims. On appeal, the Fourth Circuit reversed the district court on the unpaid wages claims, finding that the Labor Management Relations Act (“LMRA”) preempted the employees’ state law claims. Additionally, the Fourth Circuit reversed the district court’s verdict regarding certain retaliation claims, but affirmed as to other employees.

Employees at Columbia Farms received wages under a collective bargaining agreement (“CBA”) negotiated by the United Food and Commercial Workers’ Union (the “Union”). In 2004, Columbia Farms negotiated a change in its “meal and rest policy” in exchange for a one-time raise to the employees’ hourly rate that changed the structure of employees’ breaks. The revised CBA also provided a grievance procedure with respect to any dispute “aris[ing] over the interpretation” of the CBA. The CBA did not specify how employees’ compensable time would be calculated, but Columbia Farms’ practice was to pay its employees based on their “line time,” meaning the time that they actually spent working on the production line. Hence, the employees were not compensated for time spent cleaning up, putting on protective gear, or walking to and from the production line. According to numerous employees, Columbia Farms never informed its employees that their hours were based solely on “line time.” A group of employees brought suit for wages due under the Fair Labor Standards Act (“FLSA”) and the South Carolina Wages Act (“Wages Act”). The FLSA claim was dismissed prior to trial, but the court allowed the Wages Act claims to be heard by the jury, over Columbia Farms’ arguments that the Wages Act was preempted by the LMRA. Columbia Farms’ appealed, arguing that the district court erred by not holding that the LMRA preempted the Wages Act.

On appeal, the Fourth Circuit agreed with Columbia Farms, holding that the LMRA preempted the Wages Act. The LMRA applies where a plaintiff’s entitlement to unpaid wages stems from the application and construction of a CBA. Under the Columbia Farms CBA, the employees were not allowed to have alternate contracts with Columbia Farms outside of the agreed terms of employment contained in the CBA. Thus, the CBA was the only contract that the court had to examine to determine whether employees were owed wages. The employees responded that their claims were not preempted by the LMRA because the Wages Act provides a remedy for failing to properly notify employees that they are to be paid according to line time. The Court disagreed, however, emphasizing that any determination regarding unpaid wages turned on the interpretation and application of the CBA, a remedy reserved exclusively for the LMRA. Furthermore, the employees failed to follow the grievance procedure proscribed by the CBA. Thus, the Fourth Circuit reversed the district court’s decision on the Wages Act claims and dismissed the claims.

Additionally, another group of employees alleged that the Columbia Farms terminated them as retaliation for instituting workers’ compensation proceedings in violation of South Carolina Code Annotated § 41-1-80. At trial, the district court found that Columbia Farms retaliated through its use of the “point system” designed to enforce its attendance policy. Under the point system, employees were terminated if they accumulated more than five “points.” Employees received points for violations of the attendance policy. Of particular importance was Columbia Farms’ application of a point to an employee who missed time with a medical excuse but who failed to provide at least two days notice. The employee would receive just one point for the entire excused absence, in contrast with an average absence for which the employee received one point per day. An employee received no points for workers’ compensation injuries, absences, or approved doctor’s visits when the employee visited the company doctor. Columbia Farms’ supervisors confirmed that they kept a list of employees who frequently visited the plant’s doctor for medical care. Two groups of employees complained about retaliation. The first group received first aid treatment from the plant nurse, sought private treatment when they were denied treatment from the plant doctor, and were terminated when the point that they received for their absence placed them above the five point threshold (“Group I Employees”). A second group of employees sustained workplace injuries, were seen by company doctors, and received accommodations for injuries sustained in their workplace injuries (“Group II Employees”). Columbia Farms terminated the Group II Employees after they were found away from their workstation seeking treatment for their injuries. The court found retaliation for both groups of employees. Columbia Farms appealed, arguing that there was insufficient evidence that the employees “instituted a workers’ compensation proceeding” and that the employees failed to adequately allege a causal connection between the workers’ compensation proceeding and termination.

On appeal, the Fourth Circuit reversed the district court’s retaliation award with respect to the Group I employees, but affirmed with respect to the Group II employees. With respect to the Group I employees, the court explained that the “instituting” of a workers’ compensation proceeding required more than simply receiving treatment for an injury. South Carolina law does not to so far as to require the formal filing of a workers’ compensation claim to give rise to a claim for retaliation, however. For example, an employer’s agreement to pay for medical care or the employer’s receipt of written notice from a health care provider are enough to give rise to a claim for retaliation. No South Carolina courts have held that conduct as insignificant as receiving treatment is sufficient to give rise to an action for retaliation. Furthermore, the Fourth Circuit held that the Group I employees failed to show that their termination “resulted from” instituting workers’ compensation proceedings. Although the employees received “points” for receiving medical treatment, the employees failed to show that the point system was a mechanism for retaliation rather than the uniform application of a company policy.

On the other hand, the Fourth Circuit affirmed the district court’s verdict for the Group II employees. Unlike the Group I employees, the Group II employees fell at work and were treated by the company doctor. In fact, one of the Group II employees even instituted a formal workers’ compensation proceeding. Furthermore, a supervisor at Columbia farms indicated that one of the Group II employees “would likely be terminated as a result of her injury.” Therefore, the Fourth Circuit upheld the district court’s verdict with respect to the Group II employees.

Full Opinion

– Wesley B. Lambert

YATES V. MUNICIPAL MORTGAGE & EQUITY, LLC, NO. 12-2496

Decided: March 7, 2014

The Fourth Circuit held that the United States District Court for the District of Maryland properly dismissed the plaintiff shareholders’ claims against Municipal Mortgage & Equity (MuniMae) and certain directors and officers of MuniMae (collectively, the MuniMae defendants) under the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. § 78u-4, as the plaintiffs did not adequately plead scienter in their action under § 10(b) of the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. § 78j(b); that the plaintiffs’ claim under § 11 of the Securities Act of 1933 (Securities Act), 15 U.S.C. § 77k(a), was time-barred by the three-year statute of repose in § 13 of the Securities Act, 15 U.S.C. § 77m; and that named plaintiff Charles W. Dammeyer (Dammeyer) did not sufficiently allege standing to bring a claim under § 12(a)(2) of the Securities Act, 15 U.S.C. § 77l(a)(2).  The Fourth Circuit therefore affirmed the judgment of the district court.

During the putative class period—spanning from May 3, 2004, to January 29, 2008—MuniMae “was one of the nation’s largest syndicators of low-income housing tax credits” (LIHTCs).  MuniMae organized certain LIHTC investment partnerships (LIHTC Funds) to pool LIHTCs and sell them to investors.  During the putative class period, MuniMae typically served as the general partner of these LIHTC Funds.  MuniMae mainly considered its LIHTC Funds to be off balance sheet entities before 2003.  In 2003, “the Financial Accounting Standards Board adopted Financial Accounting Standards Board Interpretation No. 46R” (FIN 46R), addressing the reporting requirements for off balance sheet entities therein.  FIN 46R created a new category of off balance sheet entity, the Variable Interest Entity (VIE); pursuant to FIN 46R, a company that is the “primary beneficiary” of a VIE must consolidate the VIE’s assets and liabilities onto its financial statements.  MuniMae first reported compliance with FIN 46R in the first quarter of 2004 and continued to assert compliance in its financial filings with the Securities and Exchange Commission through mid-2006.  MuniMae also conducted a secondary public offering (SPO) in February 2005.  In March 2006, MuniMae revealed that it was restating certain financial statements that involved financial reporting errors unrelated to FIN 46R.  In September 2006, MuniMae announced another restatement (the second restatement).  While MuniMae initially did not tell investors that the second restatement would deal with FIN 46R compliance issues, it later revealed that it had yet to “reach[] a conclusion regarding the extent of the [second] restatement.”  In January 2007, MuniMae disclosed that the second restatement would deal with accounting errors involving FIN 46R; MuniMae stated that it would “be required to consolidate substantially all of the [LIHTC] equity funds it has interests in.”  In a November 2007 teleconference with investors, MuniMae officers declined to estimate the second restatement’s cost—though they admitted that the cost would be substantial.  In January 2008, MuniMae announced cuts to its quarterly dividend, attributing the cuts to, inter alia, the cost of the second restatement.  However, MuniMae also asserted that it did “not believe the results of the restatement w[ould] materially change the previously recorded cash balances of the Company and its subsidiaries.”  MuniMae’s share price dropped precipitously in late January.  In a conference call on January 29, MuniMae gave investors more details about the second restatement—including details about the second restatement’s massive scope.  In April 2008, MuniMae revealed that it had spent over $54 million on the second restatement.

After shareholders brought multiple lawsuits against the MuniMae defendants and the 2005 SPO’s lead underwriters, their suits were consolidated for pretrial proceedings; the shareholders then filed a class action complaint.  They brought claims under the Exchange Act and the Securities Act, alleging that the MuniMae defendants committed securities fraud through false representations of MuniMae’s compliance with FIN 46R and concealment of the second restatement’s cost.  With regard to the plaintiffs’ claims under § 10(b) of the Exchange Act, the district court held that—under the PSLRA’s heightened pleading standards—the plaintiffs’ amended complaint did not sufficiently plead scienter.  The district court also found the plaintiffs’ claim under § 11 of the Securities Act time-barred by the Act’s statute of repose; furthermore, the district court found that Dammeyer—“the only named plaintiff asserting Securities Act claims with respect to the SPO”—did not have standing to bring a claim under § 12(a)(2) of the Securities Act.  The district court therefore dismissed these claims, and the plaintiffs appealed.

With regard to the plaintiffs’ claims under § 10(b) of the Exchange Act, the Fourth Circuit concluded that, under the PSLRA’s heightened pleading standards, the inference that the MuniMae defendants acted with intent or severe recklessness—which the plaintiffs aimed to establish through the statements of three confidential witnesses, the presence of certain red flags, allegations of insider trading, and general business motivations for committing fraud—was not at least as compelling as the opposing inference that the MuniMae defendants acted innocently or negligently.  The Fourth Circuit also considered the disclosures made by the MuniMae defendants during the class period when making this comparative inquiry.  With regard to the plaintiffs’ claims under § 11 of the Securities Act, the Fourth Circuit found that the date upon which the securities in the SPO were “bona fide offered to the public” was the effective date of MuniMae’s registration statement—January 14, 2005.  Because the plaintiffs brought their § 11 action more than three years after this date, the Fourth Circuit found their claim time-barred by the statute of repose.  Lastly, with regard to the claim under § 12(a)(2) of the Securities Act, the Fourth Circuit found that the “pursuant and/or traceable to” language in the amended complaint to be conclusory; furthermore, the Fourth Circuit found that this language was not accompanied with sufficient supportive facts to support a plausible inference of standing.

Full Opinion

– Stephen Sutherland

IN RE: KBR, INC., NO. 13-1430

Decided: March 6, 2014

The Fourth Circuit, finding that the district court lacked the information necessary to dismiss Appellants’ claims, vacated the district court’s decision granting summary judgment in favor of Appellee and remanded for further proceedings.

Fifty-eight individuals, the majority of whom are United States military personnel (Servicemembers), brought various state tort and contract claims against KBR, Inc.; Kellog Brown & Root LLC; Kellog Brown & Root Services, Inc.; and Halliburton (collectively, KBR). The Army contracted with KBR to provide waste disposal and water treatment services on military bases in Iraq and Afghanistan. Unfortunately, according to the Servicemembers, they suffered injuries as a result of KBR’s waste disposal and water treatment practices, which allegedly breached the contract.

The Servicemembers contended that KBR violated the waste management and water disposal components of the contract by failing to properly handle and incinerate waste and by providing contaminated water to military forces. The Judicial Panel on Multidistrict Litigation transferred all of the cases to the District of Maryland for consolidated pretrial proceedings. KBR then filed a motion to dismiss for lack of subject matter jurisdiction, arguing that (1) the Servicemembers’ claims are nonjusticiable under the political question doctrine; (2) KBR is entitled to derivative sovereign immunity based on the discretionary function exception to the federal government’s waiver of immunity in the Federal Tort Claims Act (FTCA); and (3) the FTCA’s combatant activities exception preempts the state tort laws underlying the Servicemembers’ claims. The district court denied the motion to dismiss without prejudice, concluding that it did not have enough information to decided the issue. And, due to its concern about unleashing “the full fury of unlimited discovery” on government contractors operating in war zones, the court asked the parties to submit a joint discovery plan for limited jurisdictional discovery.

The district court, subsequently, stayed the proceedings in light of the Fourth Circuit’s pending decision in Al-Quraishi v. L-3 Services, Inc. Following the resolution of those appeals, the district court granted KBR’s renewed motion to dismiss, holding that the political question doctrine, derivative sovereign immunity, and the combatant activities exception each provided a basis on which to dismiss the Servicemembers’ claims. This appeal followed.

On appeal, the Fourth Circuit first addressed whether the district court erred in dismissing Appellants’ complaint on the basis of the political question doctrine. In addressing this issue, the court performed its analysis using only the Taylor test, which is made up of two factors— (1) the “Military Control” factor; and (2) the “National Defense Interests” factor—either one of which, if satisfied, would render the Servicemembers’ claims nonjusticiable. For purposes of the “Military Control” factor the court observed it must consider the extent to which KBR was under the military’s control. With respect to this factor, although it noted that evidence showed that the military exercised some level of oversight over KBR’s burn pit and water treatment activities, the court held more evidence was needed to determine whether KBR or the military ultimately chose how to carry out the relevant operations. With respect to the “National Defense Interests” factor, the court found that KBR’s causation defense does not require evaluation of the military’s decision making unless (1) the military caused the Servicemembers’ injuries, at least in part, and (2) the Servicemembers invoke a proportional-liability system that allocates liability based on fault. Thus, this factor did not necessarily counsel in favor of nonjusticiability.  The court, therefore, concluded that the political question doctrine did not render the Servicemembers’ claims nonjusticiable at this time.

Next, the Fourth Circuit addressed whether the district court erred in finding KBR was entitled to derivative sovereign immunity under the FTCA’s discretionary function exception. At issue was whether the government authorized KBR’s actions. As the court observed, that inquiry required the court to determine whether KBR exceeded its authority under the contract. However, at this point in the litigation, the court determined the record lacked sufficient evidence to make that determination and, therefore, held that the district court erred in granting KBR’s summary judgment motion on the basis of derivative sovereign immunity.

Lastly, the Fourth Circuit reversed the district court’s ruling that the Servicemembers’ state tort law claims were preempted under the FTCA’s combatant activities exception. The court acknowledged, however, that KBR did engage in combatant activities under the court’s analysis. With respect to the remaining inquiry, though, while it was evident that the military controlled KBR to some degree, the extent to which KBR was integrated into the military chain of command could not be determined without further discovery. Accordingly, the court vacated the district court’s decision to dismiss the Servicemembers’ claims and remanded for further proceedings.

Full Opinion

– W. Ryan Nichols

CARNELL CONSTRUCTION CO. V. DANVILLE REDEVELOPMENT & HOUSING AUTHORITY, NOS. 13-1143; 13-1229; 13-1239

Decided: March 6, 2014

After a series of mistrials, a jury finally rendered a verdict on claims of race discrimination, retaliation, and breach of contract brought by a “minority-owned” corporation surrounding the construction of a low-income housing project. On appeal, the Appellants presented a number of issues for review: (1) whether a minority owned corporation has standing to sue for race discrimination under Title VI of the Civil Rights Act of 1964 (“Title VI”); (2) whether the district court erred in awarding summary judgment dismissing one of the defendants from the alleged discrimination and retaliation claims; (3) whether the court abused its discretion in allowing certain impeachment evidence; (4) whether the court erred in deciding certain contract issues relating to Virginia’s Public Procurement Act; and (5) whether the court erred in modifying the jury’s award of contract damage.  In a lengthy opinion, the Fourth Circuit affirmed the district court’s decision in part and vacated the decision in part.

The dispute arose out of work performed by Carnell Construction Company (“Carnell”), a contractor in Danville, Virginia on the Blaine Square Project (“the project”), a large public housing venture designed to provide low-income housing to Virginia residents. The project was funded in part by a grant from the United States government to the Danville Redevelopment and Housing Authority (“Housing Authority”). Carnell was the successful bidder for an initial phase of the contract that included clearing the site, grading the land, and installing drainage and erosion systems. Carnell was a certified “minority owned business” under Virginia law because its owner was African-American. Shortly after awarding the contract to Carnell, HUD leased the project site and assigned its interest to Blaine Square, LCC (“Blaine”), a nonprofit instrumentality of the Housing Authority. Blaine agreed that the Housing Authority would continue to supervise the actual construction of the project. Carnell began work in 2008, and the relationship between Carnell and the Housing Authority deteriorated quickly as each side complained about the other’s poor performance.  After an unsuccessful mediation, the Housing Authority advised Carnell that it would not extend Carnell’s contract beyond the stipulated May 2009 completion date, requiring that Carnell remove its equipment and personnel from the project by that date, regardless of whether the work was completed. Carnell complied, but requested reimbursement for unpaid work. The Housing Authority refused to pay and declared default under Carnell’s performance bond. Carnell then filed suit based on claims of race discrimination and breach of contract. In response, the Housing Authority filed counterclaims for breach of contract. After two mistrials, the jury returned a verdict for Carnell on its breach of contract claims, but not for its discrimination claims. The district court then reduced the award for breach of contract damages. The parties filed cross-appeals.

On appeal, the Court first held that a minority owned corporation has standing to sue for race discrimination under Title VI. The Housing Authority conceded that Carnell had constitutional standing to sue, but contested its prudential standing to sue under Title VI on the grounds that Carnell was not in the “zone of interests protected or regulated by” Title VI. Under Title VI “[n]o person in the Untied States shall, on the ground of race…be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.” The defendants argue that Carnell, as a corporation, is not a person, and thus lacks a “race.” While the Fourth Circuit has not addressed this issue, other circuits have allowed corporations to establish a racial identity. For example, the Ninth Circuit held that a minority-owned corporation may establish an “imputed racial identity” to satisfy standing requirements. In the present case, the Fourth Circuit similarly held that Carnell had standing to bring discrimination claims under Title VI. Carnell was certified under Virginia law as a “small, women, and minority-owned business.” Carnell made this information public when it contracted to perform work for the Housing Authority. Therefore, the Fourth Circuit held that Carnell sufficiently demonstrated an imputed racial identity to satisfy standing requirements under Title VI.

Second, the Fourth Circuit held that the district court properly awarded summary judgment to Blaine on Carnell’s race discrimination claims, finding that Blaine did not engage in any of the alleged discriminatory conduct directly or as a principal for the Housing Authority. Carnell contested the district court’s finding on appeal, arguing that Blaine possessed sole control of the financing of the project and withheld payments from Carnell. The Fourth Circuit disagreed, explaining that Blaine was merely “a passive entity [that] would ensure that the checks would be written to [the Housing Authority] for purposes of paying contractors.” All decisions to withhold payments to Carnell were made by the Housing Authority. Furthermore, the court found that Blaine was not vicariously liable for the alleged discriminatory conduct of the Housing Authority because Blaine exercised no control over the Housing Authority. The agreement between Blaine and the Housing Authority grants the Housing Authority “sole responsibility for managing construction of the project as an independent contractor.” Moreover, the agreement expressly disclaims any formation of an agency relationship between the entities.

Third, the Fourth Circuit held that the district court abused its discretion by allowing defense counsel to use certain impeachment evidence in cross-examining Carnell’s president, Michael Scales. The contested evidence consisted of an unsigned proposal prepared by a marketing consulting group, which stated the consultant’s objective as to “[s]hape the initial story so that it is sympathetic to Carnell and critical of [the Housing Authority” and garner additional statewide support for Carnell. On cross-examination, defense counsel asked Scales whether he wanted to “shape” the evidence to “make out a race claim.” When Scales denied these accusations, defense counsel introduced the proposal as a prior inconsistent statement under Rule 613(b) of the Federal Rules of Evidence. The Fourth Circuit determined that the district court should have excluded the evidence under Rule 613(b) and Rule 403. First, the evidence was improper as a “prior inconsistent statement” under Rule 613(b) because there was insufficient evidence to conclude that the statement in the proposal was “reasonably attributable” to Scales. Scales denied recalling the proposal and did not sign the document. Upon signing and returning the consulting agreement to the consultants, Scales did not refer to any of the proposals. Second, the district court should have withheld the proposal under Rule 403 because the risk of unfair prejudice substantially outweighed the limited probative value of the evidence. The court found that the probative value of the proposal was minimal since the statements in the proposal were not fairly attributable to Scales. Additionally, the risk of unfair prejudice was “exceedingly high” by allowing the defense counsel to impeach Scales based on another person’s statement. Moreover, defense counsel relied on the evidence extensively at trial, even displaying a poster exhibit of the proposal during his closing argument.

Fourth and finally, the Fourth Circuit examined the competing breach of contract claims. The Fourth Circuit held that Carnell did not present sufficient evidence at trial for the court to determine that it complied with the notice requirements under Virginia’s Public Procurement Act (“VPPA”) to make claims for unpaid work. The VPPA requires that any contractor making a claim for unpaid work must provide written notice of each particular claim. In the third trial, Carnell erroneously failed to introduce evidence showing that it provided sufficient notice to the Housing Authority for its unpaid work claims. Under the VPPA, the Fourth Circuit held that Carnell could not state a claim for items of unpaid work for which it did not prove notice to the Housing Authority. Additionally, the Fourth Circuit affirmed the district court’s decision to reduce the amount of damages award under the contract for unpaid work claims pursuant to the VPPA’s limitation of the amount by which public contracts can be increased. Carnell did not contest that its contract increased more than the amount allowed under the VPPA, but rather asserts that the limitation on increase either does not apply to Carnell or, in the alternative is unconstitutional. The Fourth Circuit held that Carnell was subject to the VPPA through its participation in a public project. Furthermore, the court held that the VPPA’s limitation was neither a due process violation nor an unconstitutional taking. Finally, the court held that the district court properly denied Carnell’s claims for special damages because Carnell failed to adequately plead special damages in its breach of contract claims. Therefore, the Fourth Circuit affirmed the district court’s decision in part and reversed in part.

Full Opinion

– Wesley B. Lambert

UNITED STATES V. COX, NO. 13-4066

Decided: March 5, 2014

The Fourth Circuit held that the United States District Court for the District of South Carolina did not commit error by applying a cross-reference to Harvey Cox’s (Cox) sentence pursuant to § 2G2.2(c)(1) of the Sentencing Guidelines (U.S.S.G.).  The Fourth Circuit therefore found Cox’s sentence to be procedurally reasonable and affirmed the judgment of the district court.

In 2011, Cox was arrested during the course of an investigation concerning the sexual assault of a minor.  After Cox’s arrest, A.C.—Cox’s daughter—turned over forty-six Polaroid photographs of a naked young girl to authorities.  A.C. identified the girl in the pictures as M.G.—Cox’s niece—and told investigators that she found the photos in Cox’s truck and bedroom.  Each photograph was marked with a date, written in Cox’s handwriting; the dates ranged from June 2004 to December 2005.  When investigators interviewed M.G., she verified that she was the girl in the photos.  The PSR reiterated evidence that, inter alia, Cox photographed M.G. after having sexual intercourse with her; that Cox gave M.G. alcohol and money; that Cox threatened to “do it” to M.G.’s little sister if M.G. disclosed the sexual abuse; and that Cox kept the photos of M.G. “for as many as seven years.”  While Cox was in jail prior to the adjudication of his case, he wrote letters to A.C.; in one letter, Cox instructed A.C. to lie about the origins of the photos.

Cox pleaded guilty to, inter alia, knowingly possessing material containing images of child pornography, a violation under 18 U.S.C. § 2252A(a)(5)(B).  When preparing the PSR, a probation officer applied U.S.S.G. § 2G2.2 in the calculation of Cox’s sentencing range.  A cross-reference to this section, § 2G2.2(c)(1), applies “[i]f the offense involved causing . . . a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct.”  When the cross-reference is applicable, it advises the court to apply a different section, § 2G2.1, if this section would result in the imposition of an adjusted offense level greater than the relevant adjusted offense level under § 2G2.2.  The probation officer found the cross-reference applicable to Cox’s case; the application of § 2G2.1 instead of § 2G2.2 resulted in an increase of thirteen offense levels.  Cox objected, arguing that there was not sufficient evidence to support a finding of acting “for the purpose of producing a visual depiction of [sexually explicit conduct].”  The district court overruled the objection and applied the cross-reference.  Cox appealed, challenging his sentence’s procedural reasonableness.  On appeal, Cox argued that, while he “caus[ed] . . . a minor to engage in sexually explicit conduct” and took photographs of the sexually explicit conduct, production of his photos was not a “central component of the sexual encounters.”  Cox also asserted that the district court’s only basis for applying the cross-reference was the “existence of the photographs”—and argued that this basis is impermissible.

The Fourth Circuit first noted that the “purpose” requirement in the relevant cross-reference “is to be construed broadly,” U.S.S.G. § 2G2.2 cmt. n.5, and found that the purpose requirement “is satisfied anytime one of the defendant’s purposes was to produce a visual depiction of the sexually explicit conduct.”  The Fourth Circuit then found that the district court did not use the existence of the photos as the sole basis for applying the cross-reference: rather, the district court relied on evidence recounted in the PSR, as well the instructions Cox sent to A.C. from jail.  The Fourth Circuit also found that the evidence reiterated in the PSR corroborated Cox’s purpose—to produce visual depictions of sexually explicit conduct.  The Fourth Circuit therefore did not reach the question of whether the mere production of sexually explicit photos involving minors can, without more, support the application of the relevant cross-reference.

Full Opinion

– Stephen Sutherland

UNITED STATES V. STRAYHORN, NOS. 12-4487, 12-4495

Decided: February 26, 2014 

The Fourth Circuit held that (1) the United States District Court for the Middle District of North Carolina committed error by denying Janson Strayhorn’s motion for judgment of acquittal with regard to the charges of robbery—in violation of the Hobbs Act, 18 U.S.C. § 1951—and brandishing a firearm in relation to the robbery, in violation of 18 U.S.C. § 924(c)(1); (2) that the district court did not commit error by denying Janson Strayhorn’s motion for judgment of acquittal with regard to the charges of conspiracy to commit robbery—in violation of the Hobbs Act—and using a firearm in relation to the Hobbs Act conspiracy, in violation of § 924; and (3) that the district court committed error by applying an enhanced mandatory minimum to Jimmy Strayhorn’s sentence for brandishing a firearm—in violation of § 924—without instructing the jury on the element of brandishing.  The Fourth Circuit therefore affirmed the judgment of the district court in part, reversed it in part, and vacated and remanded the cases for resentencing.

In August 2010, two robbers arrived at P & S Coins (P & S)—a North Carolina store—in a cream-colored Cadillac.  While one robber held the store’s owner at gunpoint, the other robber tied up the owner, binding his legs with duct tape and tying his hands with zip ties.  The robbers took coins and a revolver from the store.  Two months later, Jimmy Strayhorn—who had been detained as a suspect for unrelated crimes—made several phone calls to Thania Woodcock (Woodcock), his girlfriend.  The police monitored his calls and discovered that, to obtain money for bond, Jimmy Strayhorn had asked Janson Strayhorn—his brother—to rob a Butner, North Carolina store called All American Coins and Collectibles (All American Coins).  Jimmy Strayhorn’s calls were forwarded to the Butner police.  From Jimmy Strayhorn’s phone conversations, the Butner police knew that the robbers would probably drive a Cadillac belonging to Woodcock.  In late October 2010, a Butner police officer saw a Cadillac drive slowly past All American Coins; after observing certain suspicious behavior, Butner called in the license plate of the car and confirmed that he was following the “targeted Cadillac.”  He then stopped the Cadillac and searched it with another officer.  The officers found that, inter alia, Janson Strayhorn drove the car and the Cadillac was registered to Woodcock.  The officers also discovered two revolvers in the car—one of which was the revolver stolen from P & S.  The officers arrested Janson Strayhorn.  After obtaining a search warrant, the officers search Woodcock’s house, finding a coin taken from P & S; black zip ties, like those used to tie up the owner of P & S; and ammunition.  While Jimmy Strayhorn resided at Woodcock’s house—at least occasionally—Janson Strayhorn did not.

With regard to the P & S robbery, Janson and Jimmy Strayhorn (collectively, the defendants) were each charged with robbery under the Hobbs Act (Count 1) and using a firearm by brandishing it, in violation of § 924 (Count 2).  With regard to the incidents related to All American Coins, the defendants were each charged with conspiracy to commit robbery (Count 3)—again under the Hobbs Act—and using a firearm in relation to this conspiracy (Count 4).  At trial, the owner of P & S identified Jimmy Strayhorn as one of the people who had robbed the store; however, the owner failed to identify Janson Strayhorn.  Furthermore, though a fingerprint expert testified that the duct tape used to bind the owner had a partial fingerprint belonging to Janson Strayhorn on it, the expert “could not determine when that fingerprint had been imprinted on the tape and [testified] that such a print could remain on the tape for as long as a year.”  The jury found the defendants guilty on all counts.  The district court denied the defendants’ motions for a judgment of acquittal, the defendants appealed.  On appeal, Janson Strayhorn challenged the sufficiency of the evidence used to support his convictions, and Jimmy Strayhorn challenged his sentence for the § 924 offense charged in Count 2.

The Fourth Circuit noted that Janson Strayhorn’s convictions on Count 1 and Count 2 were based primarily on the duct-tape fingerprint—and that duct tape is an easily movable object.  Regarding challenges to convictions supported by fingerprints on easily moveable objects, the Fourth Circuit stated that “in the absence of evidence regarding when the fingerprints were made, the government must marshal sufficient additional incriminating evidence so as to allow a rational juror to find guilt beyond a reasonable doubt.”  The Fourth Circuit then noted that, while Janson Strayhorn was in possession of a stolen gun, “the gun was no longer recently stolen by the time Butner police stopped [him]”; furthermore, the gun was “small light, and easily transferable,” and the presence of the gun in the Cadillac could be explained by Jimmy Strayhorn’s participation in the P & S robbery, combined with Janson Strayhorn’s use Woodcock’s car to case All American Coins.  The Fourth Circuit also rejected the Government’s assertion that the conspiracy to rob All American Coins indicated Janson Strayhorn’s guilt with regard to the P & S robbery, terming this assertion “an impermissible propensity argument.”  Furthermore, the Fourth Circuit found that the use of the Cadillac in both incidents and the presence of the zip ties in Woodcock’s house were not probative of Janson Strayhorn’s guilt with regard to the P & S robbery.  However, the Fourth Circuit found that substantial evidence supported Janson Strayhorn’s convictions on Count 3 and Count 4, as the transcripts of Jimmy Strayhorn’s phone calls indicated that Janson Strayhorn agreed to rob All American Coins, the transcript of a phone conversation between Janson Strayhorn and Woodcock after his arrest indicated his involvement with the conspiracy, and Janson Strayhorn took certain steps in furtherance of the conspiracy.  With regard to Jimmy Strayhorn’s sentence as to Count 2, the Fourth Circuit noted that, per Alleyne v. United States, 133 S. Ct. 2151, facts that increase the mandatory minimum sentence are “elements” and have to be submitted to the jury.  The Fourth Circuit found that, while the jury instructions “reflected that brandishing was one method of ‘using’ the firearm,” the district court did not inform the jury that brandishing was an element of the offense—therefore making Jimmy Strayhorn’s enhanced mandatory minimum sentence impermissible under Alleyne.

Full Opinion

– Stephen Sutherland

TRANS ENERGY, INC. V. EQT PRODUCTION CO., NO. 12-2553

Decided: February 25, 2014

The Fourth Circuit affirmed the district court’s decision to quiet title in favor of plaintiffs, Trans Energy, Inc. to the gas rights located on a 3800-acre plot of land in northern West Virginia. However, in order to retain subject matter jurisdiction, the court vacated the district court’s decision as it pertains to plaintiff Republic Energy Ventures.

At the center of this dispute lies an oil and gas lease first conveyed in 1892 by John Blackshere (“Blackshere Lease”). In 1892, Blackshere entered into an oil and gas lease with South Penn Oil Company (“South Penn”) that would later become Pennzoil Products Company (“Pennzoil”) that was recorded with the county clerk. In 1901 and 1902, South Penn entered into two indenture agreements to sever its oil and gas rights from the Blackshere Lease and allocate them to Carnegie Natural Gas Company and Hope Natural Gas Company (“Hope”). These indentures were never recorded. In 1965, Hope conveyed all of its interests in any property in the county to a predecessor in interest to EQT Production Company (“EPC”). This transfer was recorded, but did not mention the Blackshere Lease specifically. EPC asserts gas rights in the Blackshere Lease through this recorded conveyance.

In 1996, Pennzoil assigned its rights in the Blackshere Lease to Cobham Gas Industries, Inc. (“Cobham”) through an assignment and bill of sale that was filed and recorded with the County Clerk. In 2004, Cobham conveyed its interest to the plaintiff, Trans Energy, Inc. (“Trans Energy”) through a recorded transfer. Trans Energy assigned half of its interest to plaintiff Republic Partners VI, LP (“Republic Partners”). Republic Energy Ventures (“REV”) claimed an interest in the royalties that Republic Partners obtained form the lease.

In 2011, the West Virginia Department of Environmental Protection granted Trans Energy a permit to drill a new gas well on the Blackshere Lease property. Before drilling the new well, the plaintiffs discovered EPC’s alleged interest in the Blackshere Lease and filed an action to quiet title on the basis that Trans Energy was a bona fide purchaser for value with no actual or constructive knowledge of a competing interest in the property when it acquired the property in 2004. EPC responded and asserting a competing claim to quiet title. Both parties then filed cross-claims for summary judgment. The district court awarded summary judgment to the plaintiffs. EPC appealed.

On appeal, EPC first argued that the district court lacked subject matter jurisdiction in the case. The plaintiffs relied on diversity of citizenship to file the case in federal court. The defendant, EPC is a Pennsylvania company. Plaintiffs conceded that a partner of REV was a citizen of Pennsylvania and proposed that the court dismiss REV as a party under Federal Rule of Civil Procedure 21. EPC did not consent to the dismissal, however, insisting that REV was an indispensable party under Rule 19 who could not be dismissed. The court agreed with the plaintiffs and dismissed REV in order to retain subject matter jurisdiction. The Fourth Circuit found that REV’s interest in the case was limited only to its royalty interest, and would be adequately protected by the remaining plaintiffs. Furthermore, EPC was unable to show “a single tangible way in which it will be harmed by REV’s absence.”

Next, EPC asserted three arguments based on the merits of the case. First, EPC argued that the 1996 transfer from Pennzoil to Cobham was limited to oil rights in the Blackshere Lease, and did not include the gas rights. EPC’s argument principally relied on an exhibit attached to the Assignment that indicated that the “rights” associated with the Blackshere Lease were “oil.” Based on this exhibit, EPC contended that the term “rights” referenced the actual ownership rights of the lease rather than the wells being transferred. Thus, because “oil” was the only right associated with the Blackshere Lease wells, the conveyance was limited to oil rights. The Fourth Circuit disagreed, finding that the exhibit merely indicated the existing wells on the property and not the ownership rights. Additionally, in several locations other than exhibit EPC relied upon, the record indicated that the transfer included both oil and gas rights. The court found that the exhibit should not be read in isolation of the rest of the recorded document.

Second, EPC argued that the district court lacked a factual basis to find that Trans Energy received title through the 2004 assignment because the plaintiffs accidentally failed to place the 2004 Assignment into the record. The Fourth Circuit dismissed this argument, finding extensive testimony from witnesses and experts that established the existence of the 2004 assignment.

Third, EPC argued that Trans Energy had notice of its competing claim at the time of the 2004 Assignment, and therefore, did not qualify as a bona fide purchaser. The Fourth Circuit disagreed. The court found that without recorded documents containing information about a Hope’s interest in the Blackshere Lease, a reasonably prudent purchaser would not be placed on notice of EPC’s competing claim. Additionally, mere rumors in the oil and gas industry that EPC held an interest in the property was insufficient to constitute constructive notice of a competing interest. Furthermore, the court found that Trans Energy was not placed on inquiry notice by EPC’s operation of two gas wells on the Blackshere Lease property. Trans Energy spent several days visiting well sites and found not sign of EPC’s wells. The property consists of 3800 acres of undeveloped and heavily forested land. Thus, the court held that Trans Energy conducted adequate due diligence in its search of the site. Therefore, the Fourth Circuit affirmed the district court’s judgment that quieted title in favor of the plaintiffs, but vacated the judgment as it applied to REV in order to retain subject matter jurisdiction.

Full Opinion

– Wesley B. Lambert

VALENTINE V. SUGAR ROCK, INC., NO. 12-2273

Decided: March 12, 2014

The Fourth Circuit elected to certify the following question of law to the Supreme Court of Appeals of West Virginia:

Whether the proponent of his own working interest in a mineral lease may prove his entitlement thereto and enforce his rights thereunder by demonstrating his inclusion within a mining partnership or partnership in mining, without resort to proof that the lease interest has been conveyed to him by deed or will or otherwise in strict conformance with the Statute of Frauds.

The dispute involves a diversity action filed by the alleged owner of certain fractional working interests in four Ritchie County mining partnerships, Clifton Valentine, against Sugar Rock, Inc. (“Sugar Rock”), the operator of the oil wells. Valentine maintains that he purchased the working interests from the original leaseholder in the late 1950s and received his proportionate share of the net proceeds generated by the well operations for approximately 40 years. Those payments stopped, however, when the original leaseholder passed away and his son subsequently sold the majority interest in the partnership to Sugar Rock. In the current action, Sugar Rock maintains that the creation of the leaseholds transferred interests in real property and therefore any subsequent assignments by the lessee of the portions of its working interest similarly conveyed an interest in real property. Thus, Sugar Rock contends that the original transfer in the late 1950s could only be effected by a writing contemplated by the West Virginia Statute of Frauds. Conversely, Valentine argues that he possesses an ownership in a partnership arising under operation of law, and thus an indirect ownership interest in the working interests. He, therefore, contends that his interest can be proved by parol evidence and by the parties’ course of conduct. Perceiving that the answer to the certified question of West Virginia law may be determinative of the case, the Fourth Circuit, accordingly, availed itself of the privilege afforded by the State of West Virginia through the Uniform Certification of Questions of Law Act, West Virginia Code sections 51-1A-1 through 51-1A-13.

Full Opinion

– W. Ryan Nichols

UNITED STATES V. MCDOWELL, NO. 13-4370

Decided:  March 11, 2014

The Fourth Circuit Court of Appeals affirmed the defendant’s 196-month sentence imposed pursuant to the Armed Career Criminal Act. The Fourth Circuit held that the district court did not err by relying an uncertified criminal record check as proof that the defendant committed a violent felony in New York more than forty years ago.

In August 2010, DEA agents authorized a confidential informant to buy heroin from the defendant, Ernest James McDowell, Jr. (“McDowell”). In March 2011, McDowell pled guilty without a plea agreement to one count of possession of heroin with intent to distribute and one count of being a felon in possession of a firearm. Prior to the sentencing hearing, McDowell’s probation officer prepared a pre-sentence report (“PSR”) with an increased recommended sentence, on the ground that he was an “armed career criminal” as defined by the Armed Career Criminal Act (“ACCA”). The officer concluded that three of McDowell’s prior convictions met the ACCA’s definition of a “violent felony.” The Government located formal court judgments evidencing two of the tree convictions, but was unable to produce a formal judgment documenting the third—a 1971 conviction in the Bronx for second-degree assault. Instead, the Government relied on a criminal record check obtained from the National Crime Information Center (“NCIC”) database, which listed the 1971 assault among the crimes for which McDowell had been convicted. NCIC typically links suspects’ criminal histories to their fingerprints. The one at issue here listed four different names for McDowell, as well as two social security numbers and four different birthdays that were all inaccurate. The report correctly detailed McDowell’s birthplace, height, weight, and hair color. It indicated that McDowell pled guilty under the name “Michael Mc Dowell” to second-degree assault in the Bronx in 1971, a conviction for which he received a sentence of four years.

On appeal, McDowell contended that the NCIC report could not establish, even by a preponderance of the evidence, the fact of the 1971 conviction. However, every court of appeals has concluded that a district court may use an NCIC report to help establish the fact of a prior conviction. Although the NCIC database is fallible, there is no evidence to suggest that it is categorically unreliable. In fact, McDowell’s counsel pointed to Urbina-Mejia, which recounted a probation officer’s remark that one out of two hundred NCIC reports he had encountered in his career was inaccurate. This 99.5% accuracy rate actually suggests that the NCIC database is generally (albeit not always) accurate. Moreover, the pervasive use of NCIC reports throughout the criminal justice system further indicates that such reports may be trusted.

The Fourth Circuit rejected McDowell’s argument that this specific report was still unreliable, based on its inaccurate statement of his name and birthday and the passage of forty years. Although the issues did cast some doubt on the report’s accuracy, the Government provided unrebutted explanations regarding each of the report’s alleged defects. The PSR noted that McDowell occasionally used the alias “Michael” and that the report includes any names and birthdays provided by the defendant upon arrest—including false ones. In addition, the probation officer spoke with an FBI agent who confirmed that the NCIC report linked McDowell to the 1971 assault through fingerprint analysis. Further, the Government pointed out that McDowell had been convicted of other crimes in the Bronx under the alias “Michael” shortly before 1971, rendering the subsequent conviction more likely. And finally, the Government noted that McDowell was convicted of a federal crime in 1983—a conviction that would have resulted in a criminal background check revealing the 1971 conviction—and that if he had a legitimate basis for challenging the 1971 conviction, would have done so then. The Fourth Circuit held that the district court did not clearly err in finding that this report, in addition to the corroboration provided by the Government, established the facts of the 1971 conviction by a preponderance of the evidence.

Then, McDowell contended that in applying the preponderance-of-the-evidence standard to establish the fact of his prior conviction, the district court violated his Sixth Amendment right to have the jury find each element of his offense beyond a reasonable doubt. However, the Supreme Court has recognized an exception to the general Sixth Amendment rule: a jury need not find the “fact of a prior conviction” beyond a reasonable doubt. Instead, the Court has held that the Sixth Amendment permits a judge to find the fact of a prior conviction by a mere preponderance of the evidence, even if this fact raises the statutory maximum or minimum penalty for the current offense.

Full Opinion

– Sarah Bishop

LINCOLN V. DIRECTOR, OFFICE OF WORKERS’ COMPENSATION PROGRAMS, NO. 13-1594

Decided: March 11, 2014

The Fourth Circuit denied Petitioner’s petition for review of the District Director of the Office of Workers’ Compensation Programs’ decision to deny attorney’s fees under 33 U.S.C. § 928(a).

On May 24, 2011, Steven Lincoln (“Lincoln”) filed a claim with the District Director of the Office of Workers’ Compensation Programs (“OWCP”) for benefits under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), alleging that he sustained hearing loss in both ears as a result of his work as a longshoreman. Although Lincoln worked for several different companies over the course of his career, he alleged that he was employed by Ceres Marine Terminals, Inc. (“Ceres”) at the time of his injury. Ceres responded to Lincoln’s claim two days later by filing forms with the OWCP, one of which was a notice of controversion. In the notice, Ceres explained that it was controverting Lincoln’s claim because, while it accepted the fact that his hearing loss was noise-induced, additional information was needed before Ceres could determine the correct disability payment. The OWCP formally served Ceres with notice of Lincoln’s claim on June 14, 2011. Subsequently, on July 7, Ceres paid Lincoln $1,256.84, the equivalent of one week of permanent partial disability pay under the maximum compensation rate. Thereafter, the parties agreed to a settlement compensation order entered by the District Director of the OWCP on October 4. The settlement awarded benefits to Lincoln totaling $23,879.96 in compensation and $4,000 in medical benefits. Ceres did not pay any money to Lincoln between the July 7 disability payment and the October 4 settlement.

Lincoln, thereafter, filed a petition with the OWCP requesting that the Director award him $3,460 in attorney’s fees under Section 928(a) of the LHWCA, which shifts fees from a successful claimant to the employer when the employer declines to pay any compensation on or before the thirtieth day after receiving written notice of a claim. The Director denied the petition, ruling that Ceres was not liable for Lincoln’s attorney’s fees. Lincoln then appealed to the Benefits Review Board (“BRB”), which found that the Director acted within his discretion in denying Lincoln’s petition. This appeal followed.

On appeal to the Fourth Circuit, Lincoln contended that the Director erred in denying his fee petition for three independent reasons: (1) Cere’s July 7 payment was only a partial payment and thus not “any compensation”; (2) the payment did not technically constitute “compensation” for the purposes of Section 928; and (3) Ceres’s notice of controversion automatically triggered fee shifting. The Fourth Circuit quickly addressed these arguments in turn. Addressing Lincoln’s first contention, the court held that the term “any compensation” is unambiguous and plainly encompasses an employer’s partial payment of compensation. As explained by the court, Section 928 provides employers a safe harbor: if it admits liability for the claim by paying some compensation to the claimant and only contests the total amount of the benefits, it is sheltered from fee liability under Section 928(a). Thus, because Ceres provided partial payment within thirty days, Ceres was entitled to the safe harbor provided by Section 928(a).

Next, the court rejected Lincoln’s argument that Ceres’s July 7 payment was not “compensation” in any true sense under Section 928(a) because it was merely an attempt to avoid fee liability. In doing so, the court distinguished the facts in the record from the facts of a case where the employer paid the claimant $1 within the thirty day window. Here, because Ceres based its calculations of the July 7 payment on Lincoln’s alleged disability, the court held that it qualified as “compensation” within the meaning of Section 928(a). Lastly, the Fourth Circuit rejected Lincoln’s argument that, because Ceres filed a notice of controversion prior to the July 7 payment, it irrevocably triggered Section 928(a). In rejecting this contention, the court found that the only explicit trigger contained in Section 928(a) is the payment of “any compensation” within thirty days of receiving official notice of a claim. Because Ceres met this requirement, it was, therefore, entitled to the safe harbor afforded by Section 928(a). Accordingly, the court denied Lincoln’s petition for review.

Full Opinion

– W. Ryan Nichols

KENNEY V. THE INDEPENDENT ORDER OF FORESTERS, NO. 13-1788

Decided:  March 10, 2014

The Fourth Circuit Court of Appeals reversed the district court’s dismissal of the insurance beneficiary’s complaint against the insurance company, for bad-faith “handling” of her claim for proceeds on the policy, pursuant to the West Virginia Unfair Trade Practices Act (“WVUTPA”). The Fourth Circuit held that actions brought pursuant to the WVUTPA sound in tort and not in contract. The Fourth Circuit further held that West Virginia law governs the underlying lawsuit and that the complaint states a claim upon which relief can be granted.

On September 19, 2011, Ronald Kenney passed away, leaving his wife, Audrey Kenney (“Kenney”) as the sole beneficiary of a life-insurance policy (the “policy”) issued by The Independent Order of Foresters (“IOF”), a Canadian corporation. At the time of Mr. Kenney’s death, the Kenneys were residents of West Virginia. At the time that IOF issued the policy, the Kenneys resided in Virginia. The policy contains a choice-of-law provision that states that rights will be governed by “the laws of the State in which this certificate is delivered.” On September 21, 2011, Kenney filed a claim with IOF to collect the policy benefits, which she believed to be $130,000, but IOF responded that the policy was worth only $80,000. However, although the policy was originally worth only $80,000, Mr. Kenney subsequently applied for and received a $50,000 increase in coverage. For almost one year, IOF refused to pay $130,000 to Kenney. On July 20, 2012, IOF reversed course and agreed to pay $130,000.

Kenney sued IOF in West Virginia state court, pursuant to the WVUTPA. She acknowledged that she had obtained the coverage to which she was always entitled. However, she alleged that IOF’s conduct in connection with its handling of her claim constituted an unlawful settlement practice prohibited by the WVUTPA.

On appeal, the Fourth Circuit addressed three issues: (1) whether Kenney’s lawsuit pursuant to the WVUTPA sounds in tort or contract; (2) whether West Virginia law or Virginia law governs the outcome of the suit pursuant to West Virginia’s choice-of-law rules; and (3) whether the complaint’s factual allegations sufficiently state a claim upon which relief can be granted.

First, the Fourth Circuit concluded that Kenney’s WVUTPA claim sounds in tort. Although Kenney’s WVUTPA claim would not exist but-for the policy, her claim was not predicated on the terms of the policy itself; rather Kenney’s complaint makes clear that her cause of action stems from IOF’s allegedly bad-faith “handling” of her claim for proceeds on the policy. In other words, not withstanding the repeated references to the policy (a contract) in the complaint, the “essential claim” underlying Kenney’s lawsuit is IOF’s allegedly tortious conduct. The tort-nature of the action is further evidenced by the type of damages available under the WVUTPA and the type of relief prayed for in the complaint. A successful plaintiff suing pursuant to the WVUTPA may recovery attorney’s fees and punitive damages, which are not available in contract cases.

Second, the Fourth Circuit concluded that West Virginia law applies pursuant to the lex loci delicti approach and the Restatement approach. Under the lex loci delicti choice-of-law approach, courts apply the “law of the place of the wrong.” The Fourth Circuit rejected IOF’s argument that Kenney felt the effects of its allegedly unlawful conduct in Virginia, the state where the policy was issued and where Mr. Kenney applied for the increase in coverage. The Kenneys moved from Virginia to West Virginia in 2003 and lived there continuously until Mr. Kenney passed away in 2011. Kenney filed her claim on the policy with IOF from West Virginia and remains a West Virginia resident. Therefore, the injury to Kenney undoubtedly occurred in West Virginia, not Virginia, and West Virginia law applies pursuant to the lex loci delicti choice-of-law approach.

The Fourth Circuit then addressed the Restatement choice-of-law approach, which applies the law of the state with the most significant relationship to the occurrence and the parties under the principles stated in § 6. Section 145(2) then lists four contacts to consider determining the most significant relationship. The first is “the place where the injury occurred,” which is West Virginia. The second is “the place where the conduct causing the injury occurred,” which is Canada, the place where the letter denying the full benefit of the policy to Kenney was sent from IOF. The third is “the domicile, residence, nationality place of incorporation and place of business of the parties.” Here, Kenney is currently a West Virginia resident and IOF is headquartered in Canada. The fourth is “the place where the relationship, if any, between the parties is centered,” which is West Virginia, where Kenney sought to collect, and was denied, policy benefits. In sum, none of the contacts point to Virginia, and three of the four point to West Virginia.

However, the contacts must be analyzed against several factors set forth in section 6, which, inter alia, include: “the relevant policies of the forum;” “the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue;” “the protection of justified expectations;” and “the basic policies underlying the particular field of law.” The Fourth Circuit rejected IOF’s argument that, based on Oakes, the section 6 factors lead to applying Virginia law. In contrast to the Oakes plaintiff, who filed a claim in the nonforum state, Kenney filed a claim with the Commissioner in West Virginia- not an analogous entity in Virginia. Thus, the relevant policies of West Virginia are operative, and its public policy should be “vindicated.”

Unlike the majority of states, it is well settled that West Virginia law, and the WVUTPA specifically, allows plaintiffs to recover for unfair settlement practices independent of any claim on a policy or contract. The difference between West Virginia’s law and Virginia’s law is substantial: one state’s law allows Kenney’s cause of action to proceed and the other state’s law does not. West Virginia courts will not apply the substantive law of a foreign state when that state contravenes its public policy. Accordingly, even assuming that the majority of the section 145(2) contacts point to Virginia law–which, as analyzed above, they do not—West Virginia’s favoritism toward laws that align with its own public policy trumps any comity to Virginia’s law. Therefore, West Virginia law also applies pursuant to the Restatement approach and the district court erred in determining that Virginia law applies.

Finally, the Fourth Circuit concluded that Kenney’s complaint stated a claim upon which relief could be granted pursuant to West Virginia law. IOF’s motion to dismiss, its opposition to Kenney’s motion for reconsideration, and its brief on appeal, each focus nearly exclusively on resolving the issue of which state’s law applies and on arguing that Kenney’s complaint failed to state a claim pursuant to Virginia law. IOF never contended, however, that Kenney’s complaint would also fail to state a claim upon which relief could be granted should West Virginia law apply; consequently, IOF waived any such argument.

Full Opinion

– Sarah Bishop

CORE COMMUNICATIONS V. VERIZON MARYLAND, NO. 12-2572

Decided:  March 6, 2014 

The Fourth Circuit Court of Appeals affirmed the district court’s award of summary judgment to defendant Verizon Maryland, LLC (“Verizon”) on claims pursued by plaintiff Core Communications, Inc. (“Core”) for concealment and unfair competition. The Fourth Circuit also affirmed the district court’s award of nominal damages of only one dollar to Core on its breach of contract claim.

The Telecommunications Act of 1996 was designed to increase competition in local telephone markets. To that end, the Act required established telephone companies to enter into contracts known as interconnection agreements (in the singular, an “ICA”) with new market entrants seeking to connect with existing markets. Pursuant to the Act, Core, a market entrant, sought an ICA with Verizon, the established phone company in the Baltimore area.  On July 14, 1999, the companies jointly submitted their proposed ICA to the Maryland Public Service Commission (the “PSC”) for approval. On July 27, 1999, while the ICA was pending approval, Core wrote Verizon to request that the proposed interconnection— as to which Core would be a wholesale customer of Verizon— be accomplished by September 10, 1999. At a meeting on August 11, 1999, the companies agreed that Core’s interconnection would occur at Verizon’s “Wire Center” in Baltimore, which is physically connected to Verizon’s central network and houses the needed equipment. However, Verizon estimated that it would take another four to six months before the essential new equipment for Core’s interconnection would be available for use. Hoping to avoid those months of delay, Core suggested that instead of installing new equipment, Verizon should utilize the existing equipment already in the Wire Center. Verizon acknowledged that this was technically feasible, but declined to do so. On August 15, 1999, Verizon advised Core that, in any event, the existing equipment were already assigned to a Verizon “customer of record.” Only later did Verizon disclose that the “customer of record” was Core itself, already a Verizon retail consumer in a separate context. The existing equipment was never used for the Core interconnection, and Verizon installed the new equipment in late November 1999. The Core interconnection was consummated on December 23, 1999.

On appeal, Core argued that the district court erred in: (1) allowing Verizon to invoke the ICA’s Exculpatory Clause, and then by enforcing the Clause as a bar to Core’s recovery of consequential damages; (2) awarding summary judgment to Verizon on Core’s concealment and unfair competition tort claims; and (3) ruling that Core was entitled to only nominal damages on its breach of contract claim.

First, the Fourth Circuit assessed the timeliness and application of the Exculpatory Clause. Core advanced two arguments: first, that Verizon failed to timely invoke the Clause; and second, that the Clause was void under principles of Maryland contract law. The Fourth Circuit noted that, in analyzing a party’s failure to timely invoke an exculpatory provision, it has recognized an exception to Rule 8(c) where, as here, the pertinent provision was “evident” in the contract before the trial court. Furthermore, the district court properly observed that Core was neither unfairly surprised nor unduly prejudiced by Verizon’s delay in invoking the Exculpatory Clause. Thus, the Clause was timely and appropriately invoked. Then, Core contended that the Exculpatory Clause nonetheless could not be enforced because Maryland law bars the use of “exculpatory agreements in transactions affecting the public interest.” However, because the Clause is enforceable under federal law, state law principles cannot, at this stage, void a provision of an ICA already approved by the appropriate State commission. The proper time for Core to object on the asserted basis of Maryland’s public policy was prior to PSC’s approval of the Core ICA.

Second, the Fourth Circuit assessed Core’s challenge to the district court’s summary judgment awards with respect to Core’s state law tort claims for concealment and unfair competition. Both claims require proof of intentional fraud or deceit. The Fourth Circuit concluded that no reasonable jury could find that Verizon unlawfully concealed any material fact from Core. Core offered no evidence suggesting that Verizon’s failure to identify Core as the “customer of record” was driven by any intent to defraud or deceive Core.  Mingo, Core’s president, could merely assert that the failure to disclose occurred, and then theorize that Verizon must have done so intentionally in order to improperly delay the Core connection. Moreover, Mingo’s concession that he knew, and did not share, that Core was a retail customer in the Baltimore Wire Center establishes that Core could not have reasonably relied on the intentional concealment it alleges. Core’s unfair competition tort claim failed for the same reason. The Fourth Circuit also stressed its concern that both tort claims amounted to little more than “the assertion of a contract claim in the guise of a tort.” Where the essence of the relationship between the parties is contractual, the plaintiff only has an action for breach of contract, and tort claims are not available.

Third, the Fourth Circuit reviewed the district court’s judgment awarding nominal damages of one dollar to Core for Verizon’s breach of the Core ICA. Core contended that it was entitled to more for three reasons. First, Core argued that it could recover consequential damages because the breach involved “willful or intentional misconduct,” which the Fourth Circuit rejected. The “willful or intentional misconduct” exclusion to the Exculpatory Clause applies exclusively to actions sounding in tort, because an intent to defraud or deceive is ordinarily not an issue in a breach of contract claim. Second, Core argued that the Exculpatory Clause only limits Verizon’s liability for consequential damages in connection with services offered under the ICA, and that the interconnection was not a “service” within the meaning of the Clause. Although “interconnection” is not a “telecommunications service” for purposes of the Act, the parties did not use the term “Telecommunications Service” in the Clause, but instead used the single word “services.” Thus, the parties intended to draw a distinction between a “Telecommunications Service” and mere “services” and the word “service” in the Clause must include the provision of an interconnection at Core’s request. Finally, Core maintained that it was entitled to “performance penalties” under section 27.3 of the Core ICA, which provides for a limited remedy not barred by the Exculpatory clause. However, Core provided no evidence to satisfy the predicate conditions for the performance penalties provided for in section 27.3.

Full Opinion

– Sarah Bishop

ROSS V. EARLY, NO. 12-2547

Decided: March 5, 2014

The Fourth Circuit affirmed the district court with respect to Appellant’s constitutional and state law challenges arising from two arrests that occurred when Appellant failed to obey a police officer’s lawful enforcement of a policy restricting protected speech. The Fourth Circuit held the policy was constitutional under the reasonable time, place, and manner doctrine.

Aaron Ross (“Ross”) brought this action against Officer Wayne Early (“Officer Early”), the Mayor and City Council of Baltimore (collectively, the “City”), the Baltimore City Police Department (“BCPD), and other government officials after he was arrested twice—first on March 12, 2008 and again on March 25, 2009. The arrests took place outside the First Mariner Arena (the “Arena”) in Baltimore, Maryland when the Ringling Brothers Barnum and Bailey Circus (the “Circus”) was performing in the Arena. At the time of both arrests, Ross was participating in protest activities as a member of the People for the Ethical Treatment of Animals organization.

For a number of years, the City of Baltimore leased the Arena to the Circus annually. Due to the Arena’s central location, the sidewalks and streets adjacent to it frequently experience heavy pedestrian and automotive traffic. The Circus performances, moreover, attracted large crowds, including a number of animal welfare activists, such as Ross. During the Circus’s run, these activists engaged in various protest activities on the sidewalks contiguous to the Arena. Before 2004, the City had no official policy restricting the demonstrators’ access to the relevant streets. In March 2004, however, the Chief of the Legal Counsel Division in the City’s Law Department issued the current policy (the “Policy”) setting forth certain limitations on the location of sidewalk demonstrators prior to Circus performances. The Policy sets forth multiple designated areas where protestors should confine their protest activities on each street adjacent to the Arena. Additionally, the Policy states the problems the location restrictions seek to alleviate—primarily to eliminate congestion and allow sufficient room for Circus attendees to access the Arena. The Policy further directs police officers to issue at least two verbal warnings prior to making any arrest for failure to obey a lawful order.

On March 12, 2008 and March 25, 2009, Ross was leafleting within the prohibited area outside the Arena. On each occasion, Officer Early repeatedly warned Ross to move to the nearest designated area and, when he refused, Officer Early arrested him for failing to obey a lawful order. Ross subsequently filed suit in the district court, alleging common law and constitutional torts against Officer Early as well as claims under Section 1983 against the City, BCPD, and other government officials for violating his First and Fourth Amendment rights. The district court, applying intermediate scrutiny, upheld the Policy as a reasonable time, place, and manner restriction on protected speech, and thus entered judgment in favor of the City and BCPD. Additionally, because the court determined Officer Early was entitled to qualified immunity, the court granted Officer Early’s motion for summary judgment as to the claims against him in his individual capacity. This appeal followed.

On appeal, the Fourth Circuit primarily focused its analysis on the time, place, and manner doctrine to determine whether the Policy’s restrictions on protected speech violated the First Amendment. At the outset of its analysis, the court observed that the parties did not dispute that the Policy is content-neutral. It thus applied intermediate scrutiny, focusing its analysis, in turn, on (1) whether the Policy is narrowly tailored to serve a significant governmental interest, and (2) whether it leaves open ample alternative channels for communication of the information.

In examining the first issue, the court found that, because undisputed evidence revealed that the sidewalks surrounding the Arena suffers from severe congestion during Circus performances, and because, at least once—in the years preceding the Policy’s issuance—the presence of protestors caused a significant safety hazard, the Policy materially reduced the risks the City intends to prevent. Therefore, the court held that the Policy’s limited proscription on the locale of expressive activities is narrowly tailored to address threats to sidewalk congestion and public safety. In examining the final prong of the time, place, and manner test, the court held that the limited nature of the prohibition at issue left no doubt that the designated area afforded ample opportunity for protestors to communicate, and engage in expressive activities, with their intended audience. The court, therefore, held that the district court correctly granted summary judgment as to Ross’s First Amendment claims against the City and BCPD.

Next, the Fourth Circuit addressed Ross’s challenge that the district court improperly granted Officer Early’s summary judgment motion with respect to Ross’s First and Fourth Amendment claims on the basis of qualified immunity. Finding that Officer Early did not arrest Ross with a content or viewpoint-based discriminatory purpose, the court held that Officer Early was entitled to qualified immunity and therefore affirmed the district court with respect to both Ross’s First and Fourth Amendment claims.

Finally, the court held that the district court correctly granted summary judgment in favor of Officer Early with respect to Ross’s state law false arrest and false imprisonment claims. In so holding, the court observed that Ross failed to show that his liberty was deprived without justification. The Fourth Circuit, therefore, affirmed the judgment of the district court with respect to all claims.

Full Opinion

– W. Ryan Nichols

PISANO V. STRACH, NO. 13-1368

Decided:  February 27, 2014

The Fourth Circuit Court of Appeals affirmed the district court’s conclusion that North Carolina’s May 17 petition-filing deadline for the formation of new political parties was justified, and any burden it imposes is ameliorated by other aspects of North Carolina’s statutory framework.

North Carolina provides three ways for a candidate to appear on a general election ballot when running for a partisan, federal, state, county, or municipal office. First, a “recognized” political party may nominate candidates. Second, unaffiliated candidates may petition to appear on a general election allot. Third, and most relevant here, a “new” political party may nominate candidates.

For a new party to nominate, it must select its candidates by party convention and submit its nominees by July 1. To qualify as a new party, a group must file petitions with the State Board of Elections before 12:00 PM on June 1 in the election year in which the group desires to participate. A separate petition must be filed for each county in which the group gathers signatures. The petitioners must collectively be “signed by registered and qualified voters in North Carolina equal in number to two percent (2%) of the total number of voters who voted in the most recent general election for Governor,” with at least 200 signatures from each of at least four congressional districts. In addition to complying with the June 1 deadline, a group must submit each petition for verification to the chairperson of the county board of elections in the county where the signatures were obtained by 5:00 PM on May 17.

North Carolina held a primary election on May 8, 2012. The Republican presidential candidate was nominated in August, and the Democratic in September. The general election as held on November 6. To nominate candidates for North Carolina’s general election allot, a group needed to collect and timely submit 85, 379 signatures, a figure amounting to two percent of the total number of votes cast in North Carolina’s 2008 gubernatorial election.

On appeal, Al Pisano, Nichols Triplett, the North Carolina Constitution Party, and the North Carolina Green Party (“Plaintiffs”) alleged that the May 17 deadline violates the First and Fourteenth Amendments and the Equal Protection Clause because it severely burdens their ability to field presidential candidates. Although Plaintiffs did not challenge North Carolina’s two percent signature requirement, they argued that the deadline, in combination with the signature requirement, created an impermissible barrier to ballot access.

Plaintiffs first argued that the district court erred in denying their Rule 56(d) motion. A court may deny a Rule 56(d) motion when the information sought would not by itself create a genuine issue of material fact sufficient for the nonmovant to survive summary judgment. Plaintiffs sought the following discovery: (1) production of any state records regarding minor parties’ attempts to gain ballot access for presidential candidates in North Carolina; (2) a deposition of Gary Bartlett, then Executive Director of the State Board of Elections, to explore North Carolina’s justifications for the May 17 deadline; and (3) information from officials in other states as to the efficacy of later filing deadlines. However, the record includes information regarding other minor parties’ efforts to gain ballot access in recent years. In addition, the State Board of Elections posts the status of current statewide petitions in each county on its website. In any event, this information by itself would not create a genuine issue of material fact sufficient to preclude summary judgment, given that the question before us is principally one of law, and there is a wealth of case law assessing similar challenges. Second, the record provides justifications for the May 17 deadline. In a sworn declaration, Bartlett highlighted the problems that the state fears would arise without ballot-access requirements, including “tremendous voter confusion and chaos.” The fact that Plaintiffs believe North Carolina should say more goes to the merits of their claim—not to whether the district court properly denied the Rule 56(d) motion. Finally, the district court did not bar Plaintiffs from obtaining and presenting evidence they sought from officials in other states regarding possible alternatives to the May 17 deadline. However, Plaintiffs chose not to do so. The Fourth Circuit found no abuse of discretion on the record.

The Fourth Circuit then addressed whether the May 17 deadline violates Plaintiffs’ First and Fourteenth Amendment rights. In analyzing whether state election laws impermissibly infringe on such rights, the Supreme Court has instructed us to weigh the plaintiff’s asserted injury against the state’s interests in the rule. Election laws that impose a severe burden on ballot access are subject to strict scrutiny, and a court may uphold the restrictions only if they are “narrowly drawn to advance a state interest of compelling importance.” On the other hand, if a statute imposes only modest burdens, the state’s important regulatory interests will usually be enough to justify reasonable, nondiscriminatory restrictions.

The Fourth Circuit concluded that the district court erred in relying on the Fourth Circuit decision in McLaughlin for the appropriate level of scrutiny. McLaughlin involved a significantly more restrictive statutory framework in the context of a different type of challenge and, therefore, does not mandate strict scrutiny in this case. North Carolina no longer requires groups seeking new party status to submit notarized affidavits and verification fees, nor does it impose a ten percent retention requirement. Thus, the pre-1996 history in McLaughlin is immaterial to the question at hand: whether the current statutory framework imposes a severe burden. In addition, Plaintiffs challenge the filling deadline only in the context of presidential elections and, therefore, the concern in McLaughlin about the regulations’ effect on candidates in local elections is irrelevant.

In assessing the constitutionality of the May 17 petition-filing deadline, the Fourth Circuit first addressed whether the deadline imposed a severe burden on Plaintiffs’ constitutional rights. Plaintiffs alleged that the deadline created an impermissible barrier to ballot access, specifically by preventing them from gathering signatures at the height of the presidential election season. However, North Carolina does not limit groups to a short time frame for gathering signatures, and groups are on notice of the number of signatures they need to collect three-and-one-half years before the deadline.  In addition, given that North Carolina held a primary on May 8, 2012, the May 17 deadline allowed Plaintiffs to engage voters during the height of the primary season. The cases where courts have struck down filing deadlines involve deadlines that preceded the state’s primary, whereas the deadline here falls after. The Fourth Circuit has found that election law schemes with modest signature requirements and filing deadlines falling close to or after the primary election do not impose severe burdens. And although not dispositive, Plaintiffs did not come close to meeting the other petition requirements for the 2012 general election—most notably the two percent signature requirement. By April 17, 2012, the North Carolina Constitution Party had submitted only 3,521 signatures out of the required 85,379 and the North Carolina Green Party had submitted no petitions. Therefore, the Fourth Circuit concluded the deadline did not impose a severe burden on Plaintiffs; rather, the burden imposed was modest.

Because there was no severe burden, the Fourth Circuit declined to apply strict scrutiny and, instead, simply balanced the burdens imposed against the state’s interest in regulating the election process. This interest necessarily requires the imposition of some cutoff period “to verify the validity of signatures on the petitions, to print the ballots, and, if necessary, to litigate any challenges.” Admittedly, a state has a less important interest in regulating Presidential elections than statewide or local elections, because voters beyond the State’s boundaries will largely determine the outcome of the former. However, states still maintain an interest in regulating presidential elections. Therefore, the Fourth Circuit concluded that North Carolina’s choice of May 17 as the operative deadline outweighed the modest burden imposed on Plaintiffs.

Full Opinion

– Sarah Bishop

MEYERS V. LAMER, NO. 13-1438

Decided: February 25, 2014

The Fourth Circuit vacated the decision of the district court granting summary judgment in favor of the defendants on the basis that the plaintiff, Jamie Meyers, assumed a risk that he would be struck by a tractor-trailer while working above an open lane of traffic and because Meyers was contributorily negligent. The case was, therefore, remanded for trial.

This case stems from a collision that occurred when Meyers was working in a utility bucket positioned above an unblocked lane of traffic and a tractor-trailer operated by Michael Lamer struck the bucket. As a result of the collision, Meyers was ejected and suffered injuries to his back and lower body. At the time of the collision, Meyers was performing work for Rommel Engineering & Construction, Inc. (“Rommel”), a company that contracts with the State of Maryland to maintain traffic signals. Meyers’ task that day was to replace the traffic signals at the intersection of Maryland Route 5 and Maryland Route 249. In order to do so, Meyers had to be in a boom-supported bucket positioned above the intersection. Eric Hatfield, who was also employed by Rommel, accompanied Meyers that day as Meyers’ groundsman, tasked with keeping a lookout for oncoming traffic and alerting Meyers when any vehicle approached that might require him to increase his clearance.

The set up for that job required Meyers and Hatfield to park their respective trucks along the shoulder of Route 5. Hatfield’s truck had a light board that displayed blinking lights to signal “caution,” as well as flashing strobe lights, both of which were activated. Meyer’s truck also had flashing strobe lights. Additionally, Meyers and Hatfield placed warning signs along the shoulder of Route 5 to indicate that work was being performed ahead and that drivers should proceed with caution. In the 100 feet immediately before the intersection, Meyers and Hatfield placed cones along the line separating their vehicle travel lane from the should of Route 5, where their trucks were parked. Notably, Hatfield and Meyers did not close the lane of travel adjacent to the shoulder or use flagmen with signs to allow traffic to pass only intermittently. The parties and their experts disputed whether these failures were consistent with the standard of care for the industry.

The collision giving rise to the underlying lawsuit occurred when a tractor-trailer owned by Carrol County Foods, LLC, and operated by Lamer (together, “Appellees”) collided with Meyers’ bucket. Deposition testimony revealed that Meyers informed Hatfield that he had to turn his back to the northbound lane of traffic on Route 5 to perform his work and that Hatfield responded, “[N]o problem, I got you.” Meanwhile, Lamer was on his cell phone as he approached the intersection where Meyers was working and did not notice the caution signs placed along the shoulder of the road leading to the intersection. He did, however, see Meyers’ bucket but erroneously thought that there was enough ground clearance for him to safely pass under the bucket. As a result, Meyer’s was ejected from the bucket. And, although he was wearing a safety harness, he nevertheless suffered injuries to his back and lower body. Meyers filed suit against Appellees in Maryland state court. Appellees, however, removed the action to the district court based on diversity. Following discovery, both parties moved for summary judgment. The district court granted Appellees’ motion, reasoning that Meyers assumed a risk that he would be struck by a tractor-trailer while working above an open lane of traffic and because Meyers was contributorily negligent. This appeal followed.

On appeal, the Fourth Circuit first addressed Meyers contention that the assumption-of-risk doctrine does not apply to him because he was a worker engaged in work-related tasks in the roadway. The court agreed, citing Maryland case law holding that the doctrine does not apply to “persons such as workers in the street … if they are in the course of the normal pursuit of their duties.” The court did so even though Meyers failed to challenge the applicability of the assumption-of-risk defense below stating, “it is the fundamental province of this Court to decide cases correctly, even if that means considering arguments raised for the first time on appeal.”

Next, the Fourth Circuit held that the district court erred in granting summary judgment on the basis that Meyers was contributorily negligent. In so holding, the court noted that the real issue was not whether Meyers could have done more to protect himself, but rather whether an ordinarily prudent person under the same or similar circumstances would have turned his back to continue working, as Meyers did. After framing the issue as such, the court noted that Meyers and Hatfield had worked together for years and the record lacked any indication that Hatfield had previously failed to warn Meyers to adjust the height of the bucket or that collisions with tractor-trailers commonly occur when a worker is in a bucket and has an assistant on the ground keeping watch for approaching vehicles. The Fourth Circuit, therefore, vacated the district court’s ruling and remanded for trial.

Full Opinion

-W. Ryan Nichols

FEDERAL TRADE COMMISSION V. ROSS, NO. 12-2340

Decided: February 25, 2014

The Fourth Circuit Court of Appeals affirmed the district court’s judgment enjoining the defendant from participating in deceptive Internet advertising practices and holding her jointly and severally liable for equitable monetary consumer redress.

The Federal Trade Commission (the “Commission”) sued Innovative Marketing, Inc. (“IMI”), and several of its high-level executives and founders, including Kristy Ross (“Ross”), for running a deceptive Internet “scareware” scheme in violation of the prohibition on deceptive advertising in Section 5 (a) of the Federal Trade Commission Act. The defendants operated a massive, Internet-based scheme that tricked consumers into purchasing computer security software, referred to as “scareware.”

On appeal, Ross challenged the district court’s judgment on four bases: (1) the court’s authority to award consumer redress; (2) the legal standard the court applied in finding individual liability under the Federal Trade Commission Act; (3) the court’s prejudicial evidentiary rulings, and (4) the soundness of the district court’s factual findings.

First, Ross contended that the district court did not have the authority to award consumer redress—a money judgment—under the Federal Trade Commission Act. The Act authorizes the Commission to sue in federal district court so that “in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction.” However, although the statute’s text does not expressly authorize the award of consumer redress, precedent dictates otherwise. The Supreme Court in Porter v. Warner Holding Co. held that Congress’ invocation of the federal district court’s equitable jurisdiction brings with it the full “power to decide all relevant matters in dispute and to award complete relief even though the decree includes that which might be conferred by a court of law.” Here, by authorizing the district court to issue a permanent injunction in the Federal Trade Commission Act, Congress presumably authorized the district court to exercise the full measure of its equitable jurisdiction. Accordingly, absent some countervailing indication sufficient to rebut the presumption, the court had sufficient statutory power to award “complete relief,” including monetary consumer redress, which is a form of equitable relief. Congress does not need to use the magic words, “other order” to invoke the full injunctive powers of the district court.

Second, Ross challenged the legal standard for finding individual liability under the Federal Trade Commission Act. The district court held that there was individual liability if the Commission proves that the individual (1) participated directly in the deceptive practices or had authority to control them, and (2) had knowledge of the deceptive conduct, which could be actual knowledge, reckless indifference to the truth, or an awareness of a high probability of fraud combined with intentionally avoiding the truth (i.e., willful blindness). Ross proposed a standard that requires proof of an individual’s (1) “authority to control the specific practices alleged to be deceptive,” coupled with a (2) “failure to act within such control authority while aware of apparent fraud.” The Fourth Circuit adopted the district court’s standard, recognizing that Ross’ proposal would effectively leave the Commission with the “futile gesture” of obtaining “an order directed to the lifeless entity of a corporation while exempting from its operation the living individuals who were responsible for the illegal practices” in the first place.

Third, Ross mounted three evidentiary challenges. First, she contended that the district court improperly precluded her expert from testifying bout how “the advertisements linkable to Ross’ responsibilities’ were non-deceptive.” However, because the individual liability standard does not require a specific link from Ross to particular deceptive advertisements and instead looks to whether she had authority to control the corporate entity’s practices, the expert’s testimony was immaterial, and thus irrelevant, to the issue reserved for trial. Second, Ross challenged the admission of a 2004 to 2006 profit and loss statement that the district court relied on to calculate the amount of consumer redress. Ross’ co-defendant submitted an affidavit with this profit and loss summary. The Fourth Circuit recognized that although the district court admitted the profit and loss statement under the residual exception to the rule against hearsay, it may affirm on the basis of any ground supported by the record. The Fourth Circuit concluded the statement was admissible as an adoptive admission by Ross. Ross expressly adopted her co-defendant’s affidavit in her own affidavit. Third, Ross contended that the district court improperly admitted hearsay evidence: an email from a co-defendant to a payment processor, listing Skype numbers and titles for a group of high-level company executives. Ross’ telephone number is listed on the email, as is her title, “Vice President.” While it is true that the proponent for admission of a co-conspirator’s out-of-court statement “must demonstrate the existence of the conspiracy by evidence extrinsic to the hearsay statement,” that requirement was satisfied in this case. Moreover, the email was a quintessential example of a statement made “in furtherance” of the conspiracy because its role was to maintain the logistics of the conspiracy and “identify names and roles” of members of the deceptive advertising endeavor.

Fourth, Ross contended that the district court erred in finding that she had “control” of the company, participated in any deceptive acts, and had knowledge of the deceptive advertisements. The Fourth Circuit concluded Ross had “control,” based on her affidavit, in which she swore she was a high-level business official with “product optimization” duties, and based on evidence that other employees requested her authority to approve certain advertisements. The Fourth Circuit also concluded Ross “directly participated in the deceptive marketing scheme.” She directed the design of particular advertisements, as memorialized in chat logs between her and other employees. Ross was a contact person for the purchase of advertising space for IMI, and there was evidence that she had the authority to discipline staff and developers when the work did not meet her standards. Finally, the Fourth Circuit concluded Ross had actual knowledge or was at least recklessly indifferent or willfully blind to the deceptive marketing scheme. There was evidence that she edited and reviewed the content of multiple advertisements and, at one point, ordered the removal of the word “advertisement” from a set of ads. Also, Ross was on notice of multiple complaints about IMI’s advertisements, including that they would cause customers to automatically download unwanted IMI products.

Full Opinion

– Sarah Bishop

UNITED STATES V. ROBINSON, NO. 12-4639

Decided: February 21, 2014

The Fourth Circuit affirmed Steven Robinson’s 140-month sentence for cocaine distribution, finding that the district court committed no error in following the sentencing guidelines relating to the drug quantity assigned and in calculating his criminal history.

In 2010, police videotaped Robinson and others selling crack cocaine to a police informant. Robinson was indicted of conspiring to distribute crack cocaine from 2002 to 2011, aiding and abetting the distribution of crack cocaine, and distribution of crack cocaine. After both of his co-conspirators pled guilty, Robinson finally pled guilty to the charges on the day of his trial. At sentencing, Robinson objected to the court’s calculation of the quantity of drugs attributable to him and his criminal history.

At sentencing, Robinson first objected to the district court’s reliance on the pre-sentence report (“PSR”) drafted by a probation officer attributing “50 grams or more” of crack cocaine to Robinson. Although Robinson was captured on tape selling far less than 50 grams, the probation officer concluded that between 2002 and 2011, Robinson sold far more crack cocaine than what was caught on tape. The probation officer largely relied on the testimony of a police informant who claimed to have purchased drugs regularly from Robinson between 2000 and 2008 in amounts totaling more than a kilogram. Robinson challenged the credulity of the police informant largely because the informant first claimed to have bough 6 kilograms of the drug before revising his estimate to 1.4 kilograms. Furthermore, Robinson claims that he could not have sold the informant drugs between 2005 and 2008 because he was away at culinary school during the period. The government defended the “50 grams or more” quantity of crack cocaine, claiming that its informant simply revised the amount of drugs purchased to an amount that was more conservative and reliable than the first estimate. Moreover, the government claimed that there was ample evidence that Robinson sold drugs to other witnesses in amounts exceeding 50 grams without resorting to the drugs sold from the 2005 to 2008 period when Robinson claims to have been away at culinary school. The district court gave Robinson two options: start the pre-sentence report process over again, realizing that Robinson may potentially receive a worse sentence, or go forward with the evidence as presented. Robinson chose not to restart the process and opted to move forward with the information in the record. Robinson appealed the district court’s sentence based on its calculation of the amount of drugs.

On appeal, the Fourth Circuit upheld the district court’s calculation of drugs attributable to Robinson. The court reasoned that Robinson “made the conscious choice at sentencing to proceed on the basis of the information contained the PSR,” waving his right to appeal the district court’s reliance on the information. The district court clearly provided Robinson with the choice of either: postponing sentencing until the parties could collect more evidence as to the proper drug quantity, or proceeding based on the evidence before the court. Robinson stated that he “would rather go ahead and do it now.” Moreover, even when the district court gave him the opportunity again, Robinson maintained that he wished to proceed. Thus, the court believed that Robinson consciously and with a full appreciation of the consequences, chose to waive his right to challenge the information contained in the PSR.

Robinson also objected to the PSR’s assignment of criminal history points on the basis of his one-day probation for a 2003 marijuana conviction. Robinson claimed that the PSR wrongly concluded that Robinson violated his probation on that day by selling drugs because he spent his entire day traveling home from Maryland, and thus, could not have sold drugs on that day. The district court rejected Robinson’s argument and adjusted Robinson’s range upward accordingly from 121-151 months to 135-168 months. The court ultimately imposed a sentence of 140 months, which fell “well within” both ranges. On appeal, the Fourth Circuit upheld the enhancement, holding that even if he did not sell crack cocaine during the 24 hours of probation, the sentencing enhancement was still proper because “even a short period of probation imposed during an ongoing conspiracy triggers an enhancement.” Thus, because the conspiracy conviction included the day of probation in 2003, the sentencing enhancement was proper.

Full Opinion

– Wesley B. Lambert

UNITED STATES V. OMNICARE, NO. 12-2431

Decided:  February 21, 2014

The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of relator’s False Claims Act (“FCA”) claim, which alleged that the defendants presented false claims to the government for reimbursement of drugs packaged in violation of Food and Drug Administration (“FDA”) regulations and, therefore, ineligible for reimbursement.

Omnicare provides certain pharmaceutical services to senior citizens through its drug repackaging and pharmacy facilities. Omnicare owned Heartland Repack Services, LLC (“Heartland”), the drug repackaging operation located in Toledo, Ohio (“the Toledo building”). Omnicare also operated the pharmacy that shared the Toledo building with Heartland. Although Heartland repackaged non-penicillin drugs for distribution, the Omnicare pharmacy that shared the Toledo building processed penicillin products. From 1997 until 2006, Relator Barry Rostholder (“relator”), a licensed pharmacist, was employed at Heartland. In 2004, when Omnicare executive Denis Holmes suggested that Heartland begin repackaging penicillin products, relator informed him that any repackaging of penicillin drugs would constitute a violation of FDA regulations requiring the separate processing of penicillin and non-penicillin products. In February 2006, relator resigned from Heartland due to his concerns about the facility’s quality control efforts. Relator then notified the FDA, which investigated Heartland and discovered that penicillin was being repackaged in the Toledo building.

The Fourth Circuit first addressed whether the district court lacked subject matter jurisdiction over the action due to the “public disclosure bar” in the FCA, which requires the person bringing the action be an original source of the information. The Fourth Circuit concluded relator had independent knowledge, apart from Securities and Exchange Commission’s filings regarding Omnicare’s revenue, that Omnicare caused claims to be submitted to the government for payment. Therefore, the public disclosure bar did not divest jurisdiction.

The Fourth Circuit then addressed whether the district court erred in dismissing relator’s complaint on the ground that he did not adequately allege a false statement or fraudulent course of conduct as required for an FCA claim. To plead an FCA claim, a relator must plausibly allege four distinct elements: (1) there was a false statement or fraudulent course of conduct; (2) made or carried out with the requisite scienter; (3) that was material; and (4) that caused the government to pay out money or to forfeit moneys due.

Relator’s assertion that Omnicare fraudulently made claims for payment for “adulterated” drugs was based on the statutes governing reimbursement under Medicare and Medicaid. Those statutes define “covered outpatient drugs” as those “approved for safety and effectiveness” under the FDCA. Therefore, to qualify as a “covered outpatient drug” as defined in the Medicare and Medicaid statutes, FDA must merely approve the drug. The relevant statues do not provide that when an already-approved drug has been produced or packaged in violation of FDA Safety regulations, that particular drug may not be the proper subject of a reimbursement request under Medicare and Medicaid. Therefore, the Fourth Circuit concluded that once a new drug has been approved by the FDA and thus qualifies for reimbursement under the Medicare and Medicaid statutes, the submission of a reimbursement request for that drug cannot constitute a “false” claim under the FCA on the sole basis that the drug has been adulterated as a result of having been processed in violation of FDA safety regulations.

Although compliance with FDA regulations is material to the government’s decision to provide reimbursement for regulated drugs, a relator must allege both materiality and a “false statement or fraudulent course of conduct” as distinct elements of an FCA claim. The Fourth Circuit noted that were it to accept relator’s theory of liability based merely on a regulatory violation, it would sanction use of the FCA as a sweeping mechanism to promote regulatory compliance, rather than a set of statutes aimed at protecting the financial resources of the government from the consequences of fraudulent conduct.

The Fourth Circuit further concluded that relator failed to allege Omnicare acted with the requisite scienter. The FCA requires actual knowledge, deliberate ignorance, or reckless disregard of the truth or falsity of the information. Because the Medicare and Medicaid statutes do not prohibit reimbursement for drugs packaged in violation of the FDA regulations, Omnicare could not have knowingly submitted a false claim for such drugs.

Full Opinion

– Sarah Bishop

STEVENSON V. CITY OF SEAT PLEASANT, NO. 12-2047

Decided: February 21, 2014

The Fourth Circuit held that Marques Stevenson (Stevenson), Gary Barnett (Barnett), and Christopher Howard (Howard) (collectively, the appellants) waived any challenge to the United States District Court for the District of Maryland’s partial or total dismissal of claims against Officer LaVance Lowery (Lowery), Officer Rickie Adey (Adey), Prince George’s County, Maryland (County) (collectively, the appellees), and the City of Seat Pleasant, Maryland (Seat Pleasant); that the district court correctly determined, after the trial, that the appellants sufficiently stated a cause of action for bystander liability in their complaint—and that the district court’s previous ruling on summary judgment, in which the court reached the opposite conclusion, was therefore erroneous; that because the district court’s previous summary judgment ruling was erroneous, the court’s denial of the appellants’ motion under Federal Rule of Civil Procedure 60(b) did not warrant consideration on appeal; and that the district court did not abuse its discretion by denying the appellants’ Rule 59(e) motion.  The Fourth Circuit therefore affirmed the judgment of the district court in part, reversed it in part, and remanded the case with instructions.

On July 8, 2007, police officers—including Lowery, who works for Seat Pleasant, and Adey, who works for the County—allegedly attacked the appellants in an unprovoked assault outside a County nightclub.  In July 2009, the appellants sued Lowery, Adey, the County, and Seat Pleasant, suing Lowery and Adey in their official and individual capacities and using the theory of vicarious as to the County and Seat Pleasant.  The appellants’ complaint contained counts for, inter alia, excessive force and police brutality, battery, deprivation of civil rights under 42 U.S.C. § 1983, and “a count under Articles 245 and 26 of the Maryland Constitution.”  Each defendant moved for partial or complete dismissal of the applicable counts; the appellants did not oppose these motions.  All of the counts were dismissed except the following: the § 1983 count against Lowery, the excessive force and battery counts against Adey and the state constitutional count against the County.  The district court dismissed all the counts against Seat Pleasant.  The appellees then moved for summary judgment.  At a hearing on December 21, 2010, the district court granted the appellees’ motions, except for Stevenson’s § 1983 claim against Lowery.  In addition to its assessment of the other counts, the district court found that the appellants had not stated a cause of action under the theory of bystander liability.  The district court placed its finding on summary judgment in a written order, which it entered on December 22, 2010.  In January 2011, the appellants moved to alter or amend the district court’s summary judgment ruling under Rule 59(e).  The appellants disputed, inter alia, the district court’s conclusions with regard to bystander liability.  On May 19, 2011, the district court denied the motion.

In the subsequent jury trial, the district court allowed Stevenson’s attorney to mention bystander liability during closing arguments.  After the jury found that Lowery violated Stevenson’s constitutional rights through the use of excessive force, Lowery moved for judgment as matter of law under Rule 50(b).  He argued that bystander liability had not been pleaded—and the reference to this theory during closing arguments was therefore improper.  However, at a hearing in January 2012, the district court found that the appellants’ complaint did state a cause of action for bystander liability.  The district court then ordered a new trial under Rule 50(b); however, Lowery and Stevenson settled prior to trial.  In May 2012, the appellants made a Rule 60(b) motion to vacate the district court’s order of May 29, 2011, with regard to bystander liability.  The district court denied the motion. In August 2012, the district court “entered an order respecting Officer Lowery and Stevenson’s settlement agreement and dismissing all claims.”  On appeal, the appellants disputed the district court’s decisions with regard to the appellees’ motions to dismiss, the appellee’s motions for summary judgment, the Rule 60(b) motion, and the 59(a) motion.

The Fourth Circuit declined to consider the district court’s grant of the various motions to dismiss, as the appellants did not present arguments on this issue in their brief.  With regard to summary judgment on the issue of bystander liability, the Fourth Circuit noted that, in paragraph 35 of the appellants’ complaint—which discussed the § 1983 count—the appellants stated that Lowery and Adey “did . . . commit or allow to be committed an unreasonable seizure . . .” (emphasis added).  The Fourth Circuit found inapposite the appellants’ failure to use the phrase “bystander liability” in their complaint.  The Fourth Circuit also rejected the appellees’ contention that they were not put on notice due to the lack of a bystander liability claim in the appellants’ discovery responses, attributing this failure to the appellees’ line of questioning and noted that the complaint—and not the parties’ discovery responses—is the source of “fair notice.”  However, the Fourth Circuit also noted that the reversal of summary judgment would only affect Lowery, as “he is the only defendant against whom the § 1983 count survived dismissal.”  The Fourth Circuit then found that there was no reason to consider the appellants’ Rule 60(b) motion due to its conclusion on the underlying summary judgment issue.  However, the Fourth Circuit noted that the appellants also appealed the district court’s conclusions—with regard to summary judgment and the Rule 59(e) motion—on Adey’s status as a principal actor and the County’s vicarious liability for Adey’s alleged assault.  On this issue, the Fourth Circuit noted that the appellants relied principally on affidavits—especially Barnett’s affidavit—in support of their points, and that Barnett’s affidavit contained inconsistencies and contradictions of earlier testimony.  Because the Fourth Circuit affirmed the summary judgment in favor of Adey, it also found that the County could not be held liable under a theory of vicarious liability.  Also, pursuant to the evidentiary findings of the district court, the Fourth Circuit affirmed the summary judgment in favor of Lowery with regard to his purported role as a principal actor pursuant to the § 1983 claim—but only with regard to Barnett and Howard.  This left room for reconsideration, on remand, “of Officer Lowery’s and Howard and Barnett’s summary judgment papers pursuant to a framework in which bystander liability was properly pleaded.”

Full Opinion

– Stephen Sutherland

IN RE TANEJA, NO. 13-1058

Decided: February 21, 2014

The Fourth Circuit, finding that (1) the lower courts applied the correct legal principles relevant to evaluating defendant’s good-faith affirmative defense and (2) the lower courts did not clearly err in determining that defendant satisfied its burden of proving a good-faith defense under the Bankruptcy Code, affirmed the decision of the district court and the bankruptcy court dismissing the bankruptcy trustee’s adversary action.

Vijay Taneja (“Taneja”) operated Financial Mortgage, Inc. (“FMI”), a business engaged in originating home mortgages and selling those loans to secondary purchasers. In carrying out its business operations, FMI worked with numerous financial institutions known as “warehouse lenders.” The warehouse lenders would typically extend lines of credit and advance funds to FMI, thus, enabling it to extend mortgage loans to individual mortgagees. The warehouse lenders required FMI to sell the mortgage loans to secondary purchasers within a certain time period. After the sale, FMI would replenish the warehouse lenders’ lines of credit according to the terms of the particular agreement. At some point after 1999, Taneja and FMI began selling the same mortgage loans to several different secondary purchasers and conspiring with other business entities controlled by Taneja to conceal the fraud.

FMI began a business relationship with First Tennessee Bank, National Association (“First Tennessee”) in 2007. Before extending a line of credit to FMI, First Tennessee performed a standard investigation of FMI and Taneja. The investigation, however, did not reveal any negative business information involving FMI or Taneja, and the parties entered into an agreement in July 2007, under which First Tennessee agreed to extend to FMI a $15 million line of credit. The lending agreement obligated FMI to send certain documents to First Tennessee within two business days after each mortgage loan closed. Although FMI routinely did not meet this two-day timeline, it eventually provided First Tennessee with the most critical security document underlying each transaction, the original promissory note for each loan. By mid-October 2007, FMI owed nearly $12 million on its line of credit with First Tennessee. As a result, First Tennessee suspended payment of any additional advances to FMI. Thereafter, First Tennessee executives, Robert Garrett and Benjamin Daugherty, met with Taneja at FMI’s place of business in November 2007 to discuss strategies to clear the line of credit. In that meeting, Taneja informed Garrett and Daugherty that FMI’s failure to produce timely, adequate documentation to complete mortgage loan sales to secondary purchasers was caused by the unexpected departure of one of FMI’s loan processors.

Garrett and Daugherty again met with Taneja at FMI’s office in January of 2008 to address the outstanding balance of advanced funds. In that meeting, Taneja proposed a collateral swap, in which Taneja would sell other real estate to “pay the bank off.” Taneja represented that the mortgage loans had lost value, and that Tanenja did not want to sell them until their value increased. Also during that meeting, Garret asked Taneja’s attorney whether FMI’s loans were valid, and free from fraud. Taneja’s attorney assured Garret that there were no issues with the loans. After that meeting, Garrett and Daugherty performed additional research into the properties serving as security for FMI’s loans. Thereafter, the two met once again with Taneja and her attorney. At that meeting, Garret and Daugherty reiterated the importance of confirming that the mortgage loans were real. Again, they were assured that the loans were good, and First Tennessee ultimately approved a forbearance agreement with FMI, in which Taneja agreed to provide additional collateral to secure the bank’s interests. First Tennessee learned otherwise, however, in April 2008, when it discovered that the deeds of trust securing the mortgage notes held by it were fraudulent. Immediately thereafter, First Tennessee declared FMI in default under the lending agreement. As a result of First Tennessee’s relationship with FMI and Taneja, it lost more than $5.6 million.

Taneja and his corporate affiliates, including FMI, filed Chapter 11 bankruptcy in June 2008. The bankruptcy trustee filed an adversary pleading in the bankruptcy court against First Tennessee, seeking to avoid and recover the funds that FMI transmitted to the bank in the twelve payments made under the lending agreement on the grounds that the funds were conveyed fraudulently. In response, First Tennessee contended that it received the payments from FMI for value and in good faith. A three-day trial ensued. At trial, First Tennessee relied on the testimony of Garrett and Daugherty to establish its good faith defense. Ultimately, the bankruptcy court determined that First Tennessee reasonably thought that the lagging secondary mortgage market, rather than any inappropriate conduct by FMI and Taneja, was the cause of the delayed sales. The bankruptcy court further determined that First Tennessee did not have any information that would reasonably have led it to investigate matters further, and that its actions were in accordance with the industry’s usual practices. In making its determinations, the bankruptcy court acknowledged that Garrett and Daugherty were responsible for the bank’s warehouse lending and transactions with FMI, but stated that it considered these factors in assessing whether their employment and job conduct may have affected their credibility. Having concluded that First Tennessee established its good-faith defense, the bankruptcy court dismissed the trustee’s action. The district court affirmed that decision, and this appeal followed.

On appeal, the Fourth Circuit first addressed the bankruptcy trustee’s contention that both the bankruptcy court and the district court erred in applying the good-faith standard, as articulated in In re Nieves, in conducting their analyses. Addressing this contention, the Court declined to adopt a bright-line rule requiring that a party asserting a good-faith defense present evidence that his every action concerning the relevant transfers was objectively reasonable in light of industry standards. Instead, the Court noted its inquiry regarding industry standards serves only to establish the correct context in which to consider what the transferee knew or should have known. The Court, additionally, noted that a defendant asserting a good-faith defense is not compelled to present third-party expert testimony in order to establish prevailing industry standards. And, therefore, the Fourth Circuit held that the bankruptcy court and the district court applied the correct legal standard in evaluating whether First Tennessee proved its good-faith defense.

Next, the Fourth Circuit rejected the trustee’s argument that First Tennessee presented insufficient objective evidence to prove its good-faith defense. In so doing, the Court reasoned that, in light of Garrett and Daugherty’s extensive experience in warehouse lending, no third-party expert testimony was required on the objective component of the good-faith defense. The Court further observed that the bankruptcy court explicitly stated that it considered the fact that Garrett and Daugherty were employed by the bank in assessing the weight to be given their testimony. Thus, the Court found Garrett and Daugherty provided competent evidence regarding the objective component of the good-faith defense. The Court then addressed evidence cited by the trustee, which he alleged should have signaled to First Tennessee that Taneja and FMI were committing fraud. The Court, however, held that the bankruptcy court did not clearly err in concluding that First Tennessee accepted the relevant transfers from FMI in good faith and without knowledge of facts that should have alerted it that the transfers were part of a fraudulent scheme. Thus, the decisions of the bankruptcy court and district court were affirmed.

Full Opinion

– W. Ryan Nichols

CLEAR SKY CAR WASH LLC V. CITY OF CHESAPEAKE, NO. 13-1492

Decided: February 21, 2014

The Fourth Circuit held that the United States District Court for the Eastern District of Virginia properly dismissed Clear Sky Car Wash LLC’s (Clear Sky) complaint against the City of Chesapeake (the City), the Virginia Department of Transportation (VDOT), the United States Department of Transportation (USDOT), and certain employees and agents of the City (collectively, the defendants) because §§ 4651 and 4655 of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) do not contain any individually enforceable rights, 42 U.S.C. § 1983 cannot be used to enforce §§ 4651 and 4655, and Clear Sky did not assert a claim under the Administrative Procedure Act (APA).  The Fourth Circuit therefore affirmed the judgment of the district court.

In November 2008, the Chesapeake City Council approved a VDOT project (the project) to widen part of U.S. Route 17 and replace a bridge on the Elizabeth River.  Though the City was going to manage the project, the funds for the project were to come from the City, VDOT, and USDOT.  The project required the City to obtain a parcel of land owned by Clear Sky.  The City hired two appraisers, each of whom valuated the parcel on a square-foot basis without examining the values of other “pad sites”—that is, other “freestanding parcel[s] of commercial real property located in front of or near a shopping center such that it benefits from traffic to the shopping center.”  The City gave copies of the appraisals to Clear Sky in August 2011, stating that it was accepting the lower of the two appraisals—which valuated the parcel at $2.15 million.  In January 2012, the City offered Clear Sky $2.15 million as just compensation; Clear Sky rejected the City’s offer.  The City then initiated a quick take proceeding under Virginia Code §§ 33.1-119 and 33.1-120, filing a certificate of take and depositing the valuation amount with the Circuit Court for the City of Chesapeake.

Clear Sky filed a lawsuit against the defendants, claiming that the defendants violated Clear Sky’s rights under the URA—specifically, rights provided by §§ 4651 and 4655.  The defendants then filed Rule 12(b)(a) and 12(b)(6) motions to dismiss, and the district court granted the defendants’ motions.  On appeal, Clear Sky noted that, under § 4651 of the URA, federal agencies acquiring real property must follow ten specific policies “to [inter alia] assure consistent treatment for owners . . . and to promote public confidence in Federal land acquisition practices”; furthermore, because the federal government provided some of the funding in this instance, § 4655 made § 4651 applicable to the project.  Thus, Clear Sky argued that it was entitled to enforce § 4651’s policies through a direct cause of action against the defendants, through a cause of action pursuant to 42 U.S.C. § 1983, and under the APA.

With regard to the purported direct cause of action, the Fourth Circuit noted that 42 U.S.C. § 4602(a) explicitly states that “[t]he provisions of section 4651 of this title create no rights or liabilities and shall not affect the validity of any property acquisitions by purchase or condemnation”; furthermore, § 4655 simply modifies the scope of § 4651 in certain instances and does not create any policies by itself.  The Fourth Circuit then found that, because §§ 4651 and 4655 do not provide individually enforceable rights, Clear Sky had no remedy under 42 U.S.C. § 1983—as § 1983 does not confer substantive rights.  Lastly, the Fourth Circuit found that Clear Sky’s brief reference to the APA in its opening statement of jurisdiction did not sufficiently plead a cause of action under the APA; furthermore, even under a liberal reading of the alleged facts in Clear Sky’s complaint, there was no “final agency action” that could be judicially reviewed under the APA.

Full Opinion

– Stephen Sutherland

MILLENNIUM INORGANIC CHEMICALS, LTD. V. NAT’L UNION FIRE INS., NO. 13-1194

Decided: February 20, 2014

The Fourth Circuit held that the term “direct,” as used in the two commercial liability insurance policies at issue, was not ambiguous and, therefore, reversed and remanded the case to the district court for entry of summary judgment in favor of National Union Fire Insurance (“National Union”) and ACE American Insurance Company (“ACE”) (collectively, the “Insurers”).

Millennium Inorganic Chemicals Ltd. (“Millennium”) purchased a commercial liability insurance policy including contingent business interruption (“CBI”) insurance coverage from National Union and ACE. Pursuant to the purchase agreement, the Insurers respectively agreed to bear responsibility for 50% of Millennium’s covered losses, up to the specified limits. As pertinent to the CBI coverage, both Insurers issued a Binder of Insurance, stating that the liability coverage only applied to losses attributed to direct suppliers. Neither Binder provided any coverage for indirect suppliers. Shortly after issuing the Binders, both Insurers issued policies to Millennium with essentially identical terms. Specifically, each policy included an Endorsement titled “Contingent Business Interruption Contributing Properties Endorsement” (the “Endorsement”). The Endorsements insured Millennium against certain losses resulting from the disruption of Millennium’s material supply caused by damage to certain “contributing properties.”

Millennium was in the business of processing titanium dioxide at its processing plant in Western Australia. Natural gas received through the Dampier-to-Bunbury National Gas Pipeline (the “DB Pipeline”) was the energy source for Millennium’s operation. Millennium purchased the gas under a contract with Alinta Sales Pty Ltd. (“Alinta”), a retail gas supplier. Alinta, however, purchased the gas it offered for sale from a number of natural gas producers, one of which was Apache Corporation (“Apache”). Once Apache processed the natural gas, it injected the gas into the DB Pipeline, at which point custody, title, and risk passed from Apache to Alinta. Under Alinta’s contract with Millennium, title to the gas passed to Millennium only at the time of delivery, i.e., when the gas left the DB Pipeline and was delivered to Millennium’s facility by way of a separate delivery line. Millennium’s contract for the purchase of natural gas was solely with Alinta, and Millennium had no business relationship with Apache.

An explosion occurred at an Apache facility causing its natural gas production to cease on June 3, 2008. Apache notified Alinta, and Alinta, in turn, sent a notice of force majeure to Millennium and other customers. As a result, Millennium’s gas supply was curtailed, and it was forced to shut down its titanium dioxide manufacturing operations for several months. Consequently, Millennium sent notice of claim letters to the Insurers, seeking coverage for its losses. The Insurers, however, denied coverage because they concluded that Apache was not a direct supplier to Millennium.

Invoking diversity jurisdiction, Millennium filed a declaratory judgment action in the District Court for the District of Maryland. Millennium, further, asserted claims of breach of contract and failure to act in good faith. The district court denied the Insurers’ motion for summary judgment with respect to the declaratory judgment claim and granted the Insurers’ motion with respect to the bad faith claim. In an accompanying opinion, the court concluded that coverage under the policies extended only to “direct contributing properties.” The court then reviewed the meaning of that term and held that, because the term “direct” was ambiguous under the policies, the doctrine of contra proferentem applied in favor of Millennium. Accordingly, the district court held that Apache qualified as a “direct” supplier to Millennium, and that Apache’s facility was a “direct contributing property” within the meaning of the policies. In so holding, the district court observed that, despite not having a direct contractual relationship with Apache, Apache’s facility provided a direct supply of natural gas to Millennium’s premises.

As an alternative holding, the district court opined that the Endorsements also provided coverage for damage to contributing properties “which wholly or partially prevents delivery of material to Millennium or to others for the account of Millennium.” The court then concluded that this provision was also ambiguous because if failed to explain who must hold the account of the insured—the one who delivers, or the other to whom delivery is made. Based upon this ambiguity, it again applied the doctrine of contra proferentem, construing the phrase “for the account of” in favor of coverage for Millennium. After the district court granted Millennium’s motion for partial summary judgment, the parties stipulated and agreed to entry of judgment in favor of Millennium in the amount of $10,850,000, with the Insurers expressly preserving their right to appeal the judgment. Final judgment was then entered against the Insurers in the stipulated amount, and this appeal followed.

On appeal, the Fourth Circuit examined the plain language of the policies and held that the term “direct” was clear and without ambiguity. In so holding, the Court defined the term “direct,” according to Webster’s Third New International Dictionary, as “proceeding from one point to another in time or space without deviation or interruption,” or “transmitted back and forth without an intermediary.” The Court, therefore, reasoned that for Apache to be considered a direct contributing property to Millennium, it must have supplied Millennium with materials necessary to the operation of its business “without deviation or interruption” from “an intermediary.” Based on the undisputed facts of the case, however, the Court found that neither Apache nor Apache’s facilities could be considered a “direct contributing property” of Millennium. Specifically, Millennium did not dispute that it received its gas from Alinta, and that Alinta—not Apache—had the sole ability to control the amount of gas directed to Millennium. The court, therefore, found the relationship between Apache and Millennium was clearly interrupted by “an intermediary,” Alinta.

Next, the Court addressed Millennium’s alternative argument that it could also receive coverage under the “for the account of” clause of the Endorsements, and found that this contention failed for the same reason as Millennium’s primary argument. Because coverage under the policies was only triggered by damage to direct contributing properties, there could be no coverage under any reading of the “for the account of” clause because apache was not a direct supplier. Thus, the Fourth Circuit reversed and remanded the case to the district court for entry of summary judgment in favor of the Insurers.

Full Opinion

– W. Ryan Nichols

AMERICAN CIVIL LIBERTIES UNION OF NORTH CAROLINA V. TATA, NO. 13-1030

Decided: February 11, 2014

The Fourth Circuit held that the First Amendment prohibited North Carolina from allowing its drivers to purchase “Choose Life” license plates while refusing to offer a pro-choice alternative.

In 2011, North Carolina enacted a law that authorized many “Special Registration” license plates, including a “Choose Life” license plate. However, the law authorized no alternative pro-choice specialty license plate. Under North Carolina law, the Department of Motor Vehicles (“DMV”) may only issue a specialty plate after receiving three hundred applications from individuals interested in acquiring the plate. Once the DMV issues the plate, any driver may purchase it from the DMV. In addition to the “Choose Life” plate, there are over two hundred other options to choose from. According to North Carolina, the specialty plate program “allows citizens with common interests to promote themselves and/or their causes.” After refusing to offer a specialized pro-choice license plate, North Carolina vehicle owners who wanted the plate and the ACLU (collectively “Plaintiffs”) filed suit. The district court granted a preliminary injunction before granting summary judgment for the Plaintiffs and permanently enjoining the “Choose Life” plate. North Carolina appealed.

On appeal, North Carolina did not dispute that it engaged in “viewpoint discrimination” by not providing a competing pro-choice license plate. Rather, North Carolina argued that it was free to discriminate based on viewpoint because the license plate was covered under the “government speech doctrine.” Under this doctrine “[a] government entity has the right to speak for itself. It is entitled to say what it wishes, and to select the views that it wants to express.” Conversely, the Plaintiffs argued that the license plate speech implicates private speech concerns and its prohibition on viewpoint discrimination. Because there was no dispute that the license plate was viewpoint discrimination that is prohibited under private speech concerns, the only issue for the Fourth Circuit was whether the “Choose Life” license plate was government speech or private speech. The court held that the license plate was a combination of government and private speech, but that it mainly implicated private speech concerns. The court dismissed North Carolina’s argument that the party having “control of the message” was the determinative factor, and instead followed its “instructive” four-factor test to determine whether the license plate was government or private speech.

The Fourth Circuit held that the first factor, “the central purpose of the program in which the speech in question occurs” weighed slightly in favor of concluding that the license plate constituted private speech. The court determined that the purpose of the license plate program was “to allow North Carolina drivers to express their affinity for various special interests, as well as raise revenue for the state.” While the purpose implicates both government and private speech concerns, the Fourth Circuit held that the purpose weighed primarily in favor of private speech because it was impossible to claim that the over two hundred options for specialty license plates, ranging from controversial confederate flag logos, to religious symbols, to university emblems all “constitute North Carolina’s—and only North Carolina’s—message.” Next, the court held that the second factor, “degree of editorial control exercised by the government or private party over the content” weighed in favor of the government because the government has “complete editorial control” over determining whether or not to make a particular license plate. Then, the court held that the third factor, “the identity of the literal speaker,” weighed in favor of private speech. Any typical driver would expect that the message selected on one’s license plate is the message of the vehicle’s owner. Even though the license plates are technically state property, the court held that “the driver… is the ultimate communicator.” Finally, the court held that the fourth factor, “whether the government or the private party bears the ultimate responsibility for the speech’s content,” similarly weighed in favor of private speech. The Fourth Circuit emphasized that when a driver purchases a specialty license plate, the driver essentially “engages the government to publish his message” and not the other way around. Furthermore, without the individual’s action collecting three hundred others to seek the plate, the specialty license plate would never exist. Additionally, once the plate is produced, those seeking it must pay an additional fee, above and beyond the cost of a traditional license plate. Therefore, with three out of four factors weighing in favor of private speech, the Fourth Circuit held that the “Choose Life” specialty license plate was a form of private speech on which the government could not practice viewpoint discrimination.

The court also noted that its decision was largely in accord with its sister circuits, with only the Sixth Circuit in disagreement. Furthermore, while the court explained that under its current system, North Carolina could not offer the “Choose Life” license plate without a pro-choice alternative, North Carolina may alternatively choose to exclude any representations regarding such a controversial political and moral issue from its license plates entirely without any First Amendment violation.

Full Opinion

– Wesley B. Lambert

UNITED STATES V. KEITA, No. 12-4957

Decided: February 6, 2014

The Fourth Circuit Court of Appeals affirmed the defendant’s conviction for various charges related to credit and debit card fraud. The Fourth Circuit rejected the defendant’s arguments that the district court: should have dismissed the government’s case based on the Speedy Trial Act; erred in allowing certain business records into evidence; and miscalculated the loss at sentencing.

On January 31, 2012, pursuant to a search warrant based on a credit card fraud investigation, federal agents searched the residence of Defendant Mohammed Keita (“Defendant”). There, they seized laptop computers containing stolen credit card information, credit and debit cards bearing Defendant’s name but re-encoded with stolen credit card information, numerous credit card receipts, and a device for re-encoding credit cards.

Defendant first argued that the district court erred in denying his motion to dismiss the indictment based on asserted violations of his rights under the Speedy Trial Act. The Speedy Trial Act provides that “any information or indictment charging an individual with the commission of an offense shall be filed within thirty days from the date on which such individual was arrested or served with a summons in connection with such charges.” An indictment filed in violation of the thirty-day time limit must be dismissed. However certain delays shall be excluded when calculating the thirty-time period, such as those resulting from plea negotiations or from a continuance. Here, Defendant was arrested on January 31, 2012 and, therefore, the government was required to file an indictment by March 1, 2012. However, the parties twice jointly requested additional time and the district court accordingly granted two continuances: The first secured a continuance until March 15, 2012, and the second secured a continuance until April 5, 2012. Applying the exclusions, the speedy trial clock began on February 1 (the day after Defendant’s arrest) and stopped on February 10 (when the first continuance was granted). It resumed on April 6 (when the second continuance lapsed) and stopped again on April 9 (when the indictment was filed). Thus, a total of twelve non-excluded days elapsed, well within the Speedy Trial Act’s thirty-day limit.

Defendant next argued that the introduction of business records relating to cardholders who did not testify at trial violated his Sixth Amendment right to confrontation and that those records were irrelevant. In accordance with the Confrontation Clause, testimonial statements of witnesses absent from trial are admitted only where the declarant is unavailable, and only where the defendant has had a prior opportunity to cross-examine. But, business and public records are generally admissible absent confrontation because they are not testimonial. Business records are generally not testimonial if they are created for the administration of an entity’s affairs rather than for proving some fact at trial. Here, American Express maintains certain records called common point of purchase reports, which are internal documents identifying customer accounts that have been compromised. American Express creates the reports daily as part of its regular business practices and sends them throughout the global security team throughout the country. Many of the business reports do not mention individual cardholders, let alone contain statements made by cardholders. Therefore, the Fourth Circuit concluded that the reports were not were not testimonial. Defendant further objected to the business records as irrelevant, because they were not probative of the aggravated identity theft charges, and unfairly prejudicial, because they identified cardholders other than those named in the indictment. To prove the three counts of access device fraud, the government had to show that Defendant “knowingly and with intent to defraud” used an “unauthorized access device” to “obtain anything of value aggregating $1,000 or more” for each of the three one-year periods charged in the indictment. Thus, the Fourth Circuit concluded that even if the business records were not probative of the identity theft charges, they were probative of the access device fraud charges.  The Fourth Circuit further concluded that the evidence was not unduly prejudicial under Rule 403, which excludes evidence only if any unfair prejudice substantially outweighs its probative value. Based on the substantial evidence presented by the government, which included videotapes and photographs of Defendant using the cloned credit cards, as well as highly incriminating evidence seized from Defendant’s laptop computers, the Fourth Circuit concluded that introduction of the business records posed no disproportionate risk of inflaming the passions of the jury to “irrational behavior.”

Finally, the Defendant asserted that the district court erred in calculating the amount of loss at sentencing. Each loss attributed to Defendant was supported by videotape evidence. According to those calculations, the actual loss caused by Defendant’s conduct was $117,313, and the amount of intended loss, where Defendant swiped a card but it did not go through, was $19,525.30. Therefore, the district court added the two numbers together and found that the government established $136,838.30 as the amount of loss. Therefore, the Fourth Circuit concluded that factual findings regarding the amount of loss were supported by a preponderance of the evidence. The court need only make a reasonable estimate of the loss, and it could include evidence of unauthorized transactions to which no cardholder testified.

Full Opinion

– Sarah Bishop

CHEN V. HOLDER, NO. 12-2279

Decided: February 5, 2014

On petition for review, the Fourth Circuit held that (1) the Board of Immigration Appeals’ (BIA) decision to deny Jin Xiu Li’s (Li) and Ai Hua Chen’s (Chen) (collectively, the petitioners) applications for political asylum and withholding of removal—based on their fear of involuntary sterilization pursuant to China’s one-child policy—was not supported by substantial evidence, and (2) that the BIA’s decision to deny the petitioners’ applications for religious asylum and withholding for removal—based on the petitioners’ fear of persecution for their Christian faith—was supported by substantial evidence.  The Fourth Circuit therefore granted the petition for review in part and denied it in part.

Li and Chen are both natives of the Fujian Province in China.  Li entered the United States without proper documentation in June 2001.  The Department of Homeland Security (DHS) placed him in removal proceedings.  Li applied for political and religious asylum; however, in 2003, an immigration judge denied the application.  The BIA affirmed the decision of the immigration judge in 2005, but granted Li’s motion to reopen in 2010.  Chen, on the other hand, entered the United States legally in January 2003.  She entered the country on a nonimmigrant K-1 visa, 8 U.S.C. § 1101(a)(15)(K)(i), which “permits the foreign-citizen fiancée of an American citizen to travel to the United States to marry his or her citizen sponsor within ninety days of arrival.”  Chen’s fiancé decided not to marry her, and Chen stayed in the United States after the ninety-day statutory period expired.  Li met Chen in 2005 and married her in 2007.  Chen gave birth to two children in 2007.  She applied for political asylum in August of that year; however, as a result of her application, DHS commenced removal proceedings against her.  These proceedings were consolidated with Li’s proceedings in 2011.

Li and Chen sought political and religious asylum.  They claimed that Chinese officials would find them in violation of the one-child policy, and they would therefore be subject to “fines, imprisonment and involuntary sterilization” when they returned to their native country.  With regard to religious asylum, Li and Chen asserted that, as practicing Christians, their beliefs would compel them to attend an illegal “house church” in China—which “would result in their arrest and detention,” as well as governmentally coerced renunciation of their ties with the church.

The immigration judge (IJ) found both petitioners to be credible witnesses with regard to their application for political asylum and related application for withholding for removal.  However, he found that Li and Chen “failed to prove that their genuine fear of future persecution under the family-planning policy was objectively reasonable.”  Citing a 2007 report by the State Department titled China: Profile of Asylum Claims and Country Conditions (the 2007 China Report), the IJ found that the petitioners did not prove they were in violation of the one-child policy; furthermore, even if Li and Chen were in violation of the one-child policy, they would only face fines or other economic penalties that fail to qualify as persecution.  Though Li and Chen submitted contradictory evidence—including an affidavit from a man named Renzun Yuan, who said he was sterilized after his removal to the Fujian Province for violating the one-child policy “even though his children were born in the United States”—the IJ simply indicated that he found the 2007 China report “more persuasive.”  Additionally, the petitioners submitted evidence that the IJ did not mention or simply ignored, including the governmentally issued 2009 Annual Report from the Congressional–Executive Commission on China (2009 CECC Report) and a screenshot of a website maintained by the family planning committee in Fuzhou City, Fujian (the family planning screenshot), containing a response to a question about “out-of-plan” children born to Chinese nationals in other countries; the committee responded that, in this situation, “sterilization is mandatory” for violators of the one-child policy.  The BIA adopted and affirmed the decision below.  The BIA noted evidentiary issues with certain items of contradictory evidence submitted by the petitioners.  While the BIA also relied on the 2007 China Report, it did not mention the family planning screenshot or the 2009 CECC Report.

The IJ also found the petitioners to be credible witnesses with regard to their religious asylum application and related withholding of removal application.  However, the IJ found that—despite the testamentary evidence to the contrary provided by Li, Chen, and their pastor Steven Chang—the petitions did not establish an objectively reasonable fear of future religious prosecution.  The IJ relied on the 2007 China Report and the State Department’s 2010 International Religious Freedom Report in reaching this decision, which the BIA affirmed.

On appeal, the Fourth Circuit noted that, while State Department Country Reports are “highly probative evidence in a well-founded fear case,” Gonahasa v. U.S. INS, 181 F.3d 538, they are not to be treated “as Holy Writ,” Galina v. INS, 213 F.3d 955; furthermore, immigration judges and the BIA must provide their decisions “in terms sufficient to enable a reviewing court to perceive that they have heard and thought and not merely reacted,” Ayala v. U.S. Att’y Gen., 605 F.3d 941.  The Fourth Circuit then found that the IJ and the BIA did not adequately account for the petitioners’ contradictory evidence; on remand, the Fourth Circuit ordered the BIA to account for the Renzun Yuan affidavit, the 2009 CECC Report, and the family planning screenshot.

However, with regard to the BIA’s decision on the application for religious asylum and withholding of removal, the Fourth Circuit found that Li and Chen’s evidence was “not so compelling that we cannot defer to the agency’s factual determinations.”

Full Opinion

– Stephen Sutherland

UNITED STATES V. MOSTELLER, NO. 12-4434

Decided: February 4, 2014

The Fourth Circuit Court of Appeals affirmed the district court’s judgment charging Megan Hanson Mosteller (“Mosteller”) with theft of government funds. The Fourth Circuit held that although Mosteller’s attempt to waiver her rights under the Speedy Trial Act (“the Act”) was null and void, she was not entitled to assert for the first time on appeal that a violation of the Act occurred, based on the plain language of the Act. Therefore, in view of this waiver imposed by statute, the Fourth Circuit may not review for plain error Mosteller’s argument asserting a violation of the Act.

In September 2007, Megan and Jeremy Lewis Mosteller, Jr. (“Jeremy”) were married. In March 2008, Jeremy committed suicide. After Jeremy’s death, Megan Mosteller applied for and began receiving “dependency and indemnity compensation” as Jeremy’s surviving spouse from the Department of Veteran Affairs (“VA”). She was required to inform the VA of any change in marital status. Mosteller also applied for and received education benefits, for which she was obligated to notify the VA if she ceased attending classes or remarried. In August 2008, Mosteller remarried. She did not inform the VA of her change in marital status and continued to receive surviving spouse benefits until October 2010. Additionally, Mosteller did not inform the VA that after receiving the education benefits, she had not attended any classes. Mosteller was charged with one count of theft of government funds. Notably, the indictment charged her with theft of surviving spouse benefits but did not include any reference to education benefits.

Mosteller’s first trial began on November 11, 2011. When evidence was introduced at trial regarding the education benefits, for which she was not charged, Mosteller moved for a mistrial. The court decided to grant a mistrial on the condition that Mosteller waive her rights under the Act. Two weeks later, the grand jury issued a superseding indictment, charging Mosteller based on her receipt of both the education and the surviving spouse benefits. Although Mosteller’s second trial began on February 21, 2012, well more than 70 days after the mistrial, Mosteller did not move to dismiss the superseding indictment based on a violation of the Act.

On appeal, Mosteller argued that the district court erred in requiring that she waive her rights under the Act as a condition of granting a mistrial, and that her rights under the Act were violated.

The Act generally requires that a trial begin “within 70 days of the filing of an information or indictment or the defendant’s initial appearance.” Or, in the event of a mistrial, a new trial must begin within 70 days “from the date the action occasioning the retrial becomes final.” Under the Act, if a defendant makes a timely motion to dismiss, the remedy for a violation of the Act is dismissal of the information or indictment. Significantly, the Act contains a waiver provision stating that the “failure of the defendant to move for dismissal prior to trial or entry of a plea of guilty or nolo contendere shall constitute a waiver of the right to dismissal under this section.”

The Fourth Circuit initially agreed with Mosteller that the district court erred in requiring that she agree to waive her rights under the Act as a condition of granting the mistrial. Based on the Supreme Court’s holding in Zedner, a defendant may not waive application of the Act for a violation that has not yet occurred. However, the Zedner court further explained that although a defendant may not waive future application of the Act, a waiver nevertheless will result by operation of the statutory waiver provision if the defendant fails to move to dismiss the indictment before the new trial begins. Therefore, the Fourth Circuit concluded that Mosteller’s failure to make a timely motion to dismiss an indictment before the start of the new trial constituted a waiver of the defendant’s right to assert a violation of the Speedy Trial Act, based on Zedner.

However, the Fourth Circuit for the first time addressed the question whether plain error review was available to consider asserted violations of the Act not timely raised in the district court. The Fourth Circuit noted that the express language of the waiver provision states that the failure to file a motion to dismiss before trial “shall” constitute a “waiver of the right to dismissal” under the Act. Based on the unambiguous terms of the statute, “waiver of the right to dismissal” is the only possible outcome of a defendant’s failure to file a timely motion to dismiss under the act. Therefore, because the Act specifies that such a “waiver” occurs when a defendant fails to timely assert a Speedy Trial Act violation in the district court, the Fourth Circuit concluded it was not permitted to conduct any appellate review, for plain error or otherwise, of Mosteller’s claim.

Full Opinion

– Sarah Bishop

UNITED STATES V. ANTONE, NO. 12-2400

Decided: February 4, 2014

The Fourth Circuit, finding that the Government failed to establish by clear and convincing evidence that Bryan Neil Antone (“Antone”) is a sexually dangerous person subject to civil commitment, reversed and remanded the district court’s judgment with instructions to dismiss.

Antone, now forty-one years old, was born and raised on an Indian Reservation in Arizona. Antone was often neglected and both verbally and physically abused as a child. By age seven, his aunt, on several occasions, sexually abused him. By age fifteen, he had engaged in sexual intercourse with at least two adult women. Not surprisingly, Antone had serious behavioral issues as a child, which led to school expulsions and stints in juvenile detention. He dropped out of high school in the ninth grade and was unable to maintain steady employment thereafter. When he was nineteen years old, in 1991, Antone was arrested. The arrest related to two sexual acts with his sixteen-year-old girlfriend. The first sexual act was consensual. The second, however, was forcible rape. Antone pled guilty to the rape in tribal court and served six months in jail.

Antone went on to engage in several other acts of sexual misconduct between 1997 and 1999. As a result, Antone entered into a consolidated plea agreement and judgment was entered on March 16, 2009. The consolidated tribal judgment related to four victims and spanned incidents from 1992 through 1997. The incidents included sexual assault, attempted rape, two instances of forcible rape, and improper touching. He was sentenced to 3,600 days in jail by the tribal court. Notably, Antone has a serious history of substance abuse and the incidents described above all took place when Antone was either intoxicated from alcohol and/or high on cocaine.

At the initiation of Antone and his attorney, Antone was sentenced in the United States District Court for the District of Arizona for a charge related to one of the sexual assaults that was also a subject of his consolidated tribal judgment. The reasoning was to enable Antone to be transferred to federal custody and thereby have access to sex offense treatment designed specifically for Native Americans. Antone was incarcerated in the federal prison from November 1999 through February 23, 2007, when the Government initiated a civil commitment proceeding four days before his expected release. Since then, Antone has resided in FCI-Butner, a medium security prison in North Carolina, awaiting his civil commitment hearing and its resolution. As a result, he has been in continuous federal custody for the past fourteen years, or since he was twenty-seven years old.

During his entire period of custody, Antone had not been shown to consume alcohol or drugs even though the Bureau of Prisons regularly administers Breathalyzer tests on inmates in recognition of the fact that it is possible to make and obtain contraband alcohol within the prison. Antone, moreover, attended Alcoholics Anonymous, Narcotics Anonymous, as well as, other drug education and substance abuse programs on his own initiative. He has had minimal behavioral problems while in prison. He completed his GED in 2001 and maintained employment as an orderly in his housing unit, where his work performance was characterized as “superior.” In addition, Antone regularly seeks out advice and counseling from his prison’s counselors and treatment specialists. He has taken classes in art, beading, meditation, and guitar. He now teaches other inmates guitar. As for sexual conduct, Antone’s record indicates that he has not engaged in sexual misconduct during his incarceration. In sum, Antone has been a model inmate.

Four days before Antone’s expected release date, on February 23, 2007, the Government filed a civil commitment order naming Antone as a sexually dangerous person. The district court referred the matter to a magistrate judge for an evidentiary hearing and a report and recommendation. During a three day hearing in October 2011, the Government presented the testimony of Antone and two expert witnesses; Antone presented the testimony of a specialist and a counselor at the prison at which he resided, a United States Probation Officer from Arizona, and an expert witness. On April 30, 2012, the magistrate judge issued his M&R, in which he recommended that Antone not be found a sexually dangerous person. Although the district court accepted the magistrate judge’s credibility determinations and findings of historical fact, it rejected the M&R’s ultimate recommendation of a finding of not sexually dangerous. Rather, the district court found that the combination of Antone’s mental illnesses would cause him to have serious difficulty in refraining from sexually violent conduct if released. Antone was, therefore, committed to the custody of the United States Attorney General as a sexually dangerous person. This appeal followed.

On appeal, the Fourth Circuit was left to address only the third prong of the requirements that must be proven before an individual can be civilly committed under Section 4248. The third prong requires the Government to prove, by clear and convincing evidence, that the individual would have serious difficulty in refraining from sexually violent conduct or child molestation if released. The Court first discussed the clear and convincing standard, which requires the court to identify credible supporting evidence that renders its factual determinations “highly probably.” Next, after assessing the record, the Court found that the aggregate of historical, direct, and circumstantial evidence contained therein, at most, rose to a level of preponderance in favor of commitment. But, it did not satisfy the statutory burden of clear and convincing evidence.

In so finding, the Court observed that the core of Antone’s case was his decade-long process of rehabilitation, which the Government’s expert completely discounted and the district court dismissed with one sentence. Notably, the Government relied on one of its expert witness’s opinions that was based entirely on Antone’s conduct prior to incarceration and did not take into account his rehabilitation. Thus, the Fourth Circuit concluded that the appellate record did not support the district court’s determination that Antone would have serious difficulty refraining from sexually violent conduct if released. Accordingly, the district court’s judgment was reversed and remanded with instructions to dismiss the petition.

Full Opinion

– W. Ryan Nichols

UNITED STATES OF AMERICA V. HASSAN, NOS. 12-4601; 12-4603; 12-4607

Decided: February 4, 2014

Three defendants, Omar Hassan, Ziyad Yahi and Hysen Sherifi (collectively “Defendants”) were tried jointly in the Eastern District of North Carolina and convicted of several offenses arising from terrorist activities.  After numerous challenges, the Fourth Circuit affirmed the conviction and sentence.

Defendants’ offenses stem from a conspiracy to commit terrorist acts orchestrated by Daniel Boyd (“Boyd”). Boyd pled guilty to the crimes and, as a part of his plea agreement, testified against Defendants. Boyd spent time in his early life at a training in Pakistan and Afghanistan run by Osama Bin Laden. Eventually, Boyd settled with his family in Raleigh, North Carolina. By 2004, Boyd was fully immersed in radical Islam and disassociated himself from the mainstream Islamic community. He began meeting with others at his Raleigh home and at a grocery store he owned and operated to discuss his violent religious views. Boyd explained that “to him, jihad required ‘doing something to fulfill [his] obligation in Islam.’” Boyd and Defendants met numerous times from 2004 to 2009 to discuss ways to fulfill this objective. The FBI initiated an investigation of Boyd in 2005, and two federal agents developed a close personal relationship with Boyd, with Boyd eventually helping one agent obtain a passport to travel abroad to engage in violent jihad. These federal agents provided much of the evidence necessary to capture Boyd and the Defendants.

Defendant Yaghi met Boyd in 2006 when Yaghi was just eighteen years old. Yaghi asked Boyd about his time in Afghanistan and the two developed a close personal relationship. The men regularly met and discussed Boyd’s experiences in the Middle East and his views on Islam and violent jihad. Yaghi sought Boyd’s advice about traveling to Jordan and asked Boyd where to find the “best brothers,” in an effort to join the violent Islamic resistance movement in Jordan. Before traveling to Jordan in 2006, Yaghi met with Boyd and others and had a “joyous send-off” where well-wishers conveyed messages to Boyd, encouraging him to make his way to the battlefield and engage in jihad against the “kuffar” (non-Muslims). Additionally, Yaghi expressed an interest in finding a “wife” overseas, a term synonymous with engaging in violent jihad. Yaghi was not successful in engaging in jihad while overseas, but he did post numerous statements on Facebook reflecting his sympathies to the violent jihadist ideology, particularly Anwar al-Awlaki, a prominent American born al-Qaida militant. After returning, Yaghi spoke to the Islamic Association of Raleigh “promoting jihad and the corresponding moral obligation to commit violence against non-Muslims.”

While overseas, Yaghi also kept in touch with Defendant, Hassan. The two primarily talked through Facebook, frequently posting vulgar rap songs and poems about their animosity toward the non-Muslim Kuffar. After returning from Jordan, Yaghi introduced Hassan to Boyd and the three men discussed their desire to engage in violent jihad around the world. In fact, when Boyd traveled to Israel and Palestine in 2007, Yaghi and Hassan sought to travel with Boyd and his family. Boyd declined, but helped the men obtain plane tickets to travel to the Middle East to engage in jihad. Hassan and Yaghi also assisted Boyd in creating a bunker beneath Boyd’s home to conceal his large stockpile of weapons. While abroad, Boyd claims that rumors circled regarding his involvement in violent jihad. Boyd learned that Hassan’s father was particularly troubled by the rumors and had a heated discussion with Boyd regarding his son’s whereabouts. After the 2007 trip, Yaghi and Hassan remained close friends, but their contacts with Boyd diminished. In 2009, Yaghi and Hassan were arrested on unrelated charges. While detained, Hassan asked his paramour to contact al-Awlaki to seek advice on his behalf and to remove some of Hassan’s postings on Facebook related to violent jihad.

In March 2008, Boyd met Defendant Sherifi, often discussing shared views of violent jihad and that dying as a martyr was an important goal for a good Muslim. Sherifi, Boyd and others made regular efforts to raise money to support jihadist causes. In June 2008, Sherifi gave Boyd $500 “for the sake of Allah.” Shortly before his arrest, Sherifi received a $15,000 check from a man who attended the same mosque as Sherifi to contribute to the cause. When Sherifi encountered difficultly traveling, Boyd suggested that “if Sherifi could not travel, he should ‘make jihad’ in the United States.” Eventually, Sherifi traveled to Kosovo and developed a relationship with a FBI informant. During Sherifi’s relationship with the informant, Sherifi provided literature and videos, including one depicting a beheading. Sherifi explained that beheading was what happened to those who leave the Islamic religion. Sherifi returned to North Carolina to save money to buy a family farm is Kosovo to help other jihadists on the battlefield. As a method of saving money, Sherifi worked delivering medical supplies to Fort Bragg Army Post in North Carolina. Sherifi boasted about the ease of accessing the military base as a military truck driver. Boyd and Sherifi then identified Quantico Marine Corps Base in Virginia as a target. They discussed the possibility of kidnapping a Marine officer for ransom to seek the release of an Islamic scholar imprisoned in the United States. As part of the kidnapping, Boyd suggested cutting off the officer’s finger and sending it to the other officials so that they would “know it was him.” In 2009, Sherifi participated in two weapons training sessions in Caswell County, North Carolina on a rural property actually owned by the United States government and under heavy surveillance. Shortly after the second training session, the Defendants were arrested.

After a lengthy trial, the Defendants were convicted and sentenced. Defendants appealed the conviction and sentence to the Fourth Circuit on several grounds. First, Defendants argued that their conviction could not stand because the district court committed reversible error in instructing the jury on the First Amendment. Defendants claimed that they were prosecuted “purely for their offensive discourse” and that they “never agreed to take action in connection with their beliefs.” The Fourth Circuit held that the district court did not err in dismissing the Defendants’ First Amendment defense. In this case, the Defendants’ actions went far beyond speech, committing many overt acts in furtherance of the conspiracy. The trial court adequately charged the jury regarding the Defendants’ rights to speak freely and exercise their religion under the First Amendment, but the Defendants’ were not prosecuted for their speech. Rather, the Defendants were convicted for acts far beyond their speech, including traveling abroad to engage in violent jihad, recruiting others, and engaging in extensive weapons training.

The Defendants also raised a number of evidentiary issues on appeal. The Fourth Circuit dismissed the Defendants’ claims on all counts. First, the Fourth Circuit affirmed the district court’s allowance of the testimony of the government’s expert to explain various aspects of Islamic extremism. The court explained that the expert’s extensive knowledge of Islamic phrases and of the structure, recruiting methods, and leadership of Islamic extremist groups likely helped the jury understand many of the unfamiliar facts of the case.

Second, Defendants Hassan and Yaghi objected to the presentation of exhibits consisting of Facebook pages and videos hosted on YouTube, arguing that it was not properly authenticated and violated the rule against hearsay. The Fourth Circuit disagreed, ruling that the information contained on the web was self-authenticating and admissible as business records. All information was accompanied by a certification of records custodians verifying that the sites were maintained as business records in the course of regularly conducted business activity. Hassan additionally argued that allowing the presentation of certain training videos to the jury while refusing to admit his related comments under his video violated the rule of the completeness. The video at issue contained numerous quotations suggesting Hassan’s terrorist sympathies. However, Hassan’s lawyer sought to introduce a comment that Hassan posted under the video stating that he “does not support terrorists.” The Fourth Circuit held that there was no violation of the rule of completeness by refusing to also introduce the subsequent exculpatory statements and that the additional comments violated the rule against hearsay. Furthermore, the court affirmed the use of a cell phone video of Hassan using a firearm at an outdoor location near the Islamic center in Raleigh in 2009, determining that it was relevant to show Hassan’s weapons training and his continued involvement in the terrorist conspiracy. In fact, on cross-examination, a government witness readily admitted that the mere possession or firing of the rifle was not illegal.

Third, the Defendants’ argued that the district court improperly allowed Boyd to present lay opinion testimony regarding his understanding of Defendants’ statements during face-to-face and email conversations. The Fourth Circuit found that Boyd’s opinion testimony was permissible under Federal Rule of Evidence 701. Boyd’s testimony was based purely on his perception after consistent contact with the witnesses. Furthermore, the testimony was helpful to assist the jury in understanding many words associated with violent jihad of which the jury is likely unfamiliar.

Next, the Defendant Yaghi asserted that district court erred by allowing the government to present evidence obtained pursuant to Foreign Intelligence Surveillance Act (FISA) because there was no probable cause for the government to believe that Yaghi was an agent of a foreign power, as required by FISA. The Fourth Circuit disagreed, citing the government’s strict adherence with all formal requirements under FISA. Moreover, after an in camera review of the documents, the court determined that the government had sufficient probable cause to suspect that Yaghi was an agent of a foreign power.

As their final evidentiary challenge, the Defendants argued that there was insufficient evidence to support their convictions. The court conceded that while a majority of the evidence was circumstantial, the evidence against the Defendants was substantial enough to support the conviction. To support the conviction of Defendant Yaghi, the court explained that the substantial evidence supporting the jury’s conviction included, inter alia, seeking out Boyd at as Islamic center to exchange views on radical Islam, traveling to the Middle East with the expressed intention to commit violent jihad, recruiting other to the terrorism conspiracy, and violent Facebook messages promoting radical jihadist beliefs. Additionally, the jury had sufficient evidence to conclude that Sherifi was involved in the terrorism conspiracy alleged, including, inter alia, the sharing of a violent Islamist ideology with Boyd, openly advocating for the overthrow of United States law in favor of Shari’ah Law, traveling to Kosovo for the purpose of “being closer to the battlefield,” participation in firearms training with like-minded individuals, assisting Boyd in building a bunker to store Boyd’s weapons arsenal, his attempt to raise funds to purchase a farm to aid Islamic terrorists in the “battlefields” of Kosovo, and his efforts relating to targeting an American Military base for violent jihad. Finally, the court found that there was sufficient evidence for the jury to conclude that Hassan entered into the terrorism conspiracy, such as, regular contact with Boyd, seeking assistance to travel abroad to the Middle East to participate in jihadist efforts, discussion with Boyd about “killing and maiming,” participation in weapons training, the posting of the physical training video showing his determination to train for violent jihad, his contacts with Anwar al-Awlaki, and his online posting showing support for car bombings and other forms of violent jihad.

Finally, the Fourth Circuit affirmed the sentences imposed by the district court. The court held that the district court properly imposed the “federal crime of terrorism” sentencing enhancement under the federal sentencing guidelines. In order to impose the terrorism enhancement, the court must conclude that the defendant committed a “federal crime of terrorism,” defined as, inter alia, actions “calculated to influence or affect he conduct of government by intimidation or coercion, or to retaliate against government conduct.” The district court found that the Defendants “became part of a loose group of conspirators whose goal was to kill non-Muslims.”  Based on the considerable evidence presented, the court affirmed the conviction, the sentencing, and the terrorism enhancement.

Full Opinion

– Wesley B. Lambert

WALL V. WADE, NO. 13-6355

Decided: February 3, 2014

The Fourth Circuit held that (1) the Red Onion State Prison’s (ROSP) decision to abandon its policy of requiring prisoners to present physical indicia of Islamic faith to qualify for special Ramadan meals did not moot Gary Wall’s (Wall) claims for equitable relief under the First Amendment and the Religious Land Use and Institutionalized Persons Act (RLUIPA), 42 U.S.C. § 2000cc, et seq., and (2) that the defendant officials were not entitled to qualified immunity with regard to Wall’s claim for damages under the First Amendment.  The Fourth Circuit therefore vacated the decision of the United States District Court for the Western District of Virginia and remanded the case to the district court.

Wall, a member of the Islamic faith, is a state prisoner at ROSP.  In 2008 and 2009, he participated in Ramadan while in custody: prison officials provided him with special meals prior to sunrise and after sunset.  Before 2010, ROSP’s Muslim inmates simply had to sign up to partake in Ramadan observance.  However, after ROSP officials determined that many participating inmates were not actually Muslims, ROSP created a new policy for 2010 (the 2010 Ramadan policy): this year, inmates “had to provide some physical indicia of Islamic faith, such as a Quran, Kufi, prayer rug, or written religious material obtained from the prison Chaplain’s office” to participate in Ramadan.  When Wall was asked by three of the defendant officials to provide such evidence of the sincerity of his beliefs, he could not do so: Wall told the officials that his possessions had been lost when he was transferred to ROSP, and showed one of the officials a judgment against the state indicating that the Virginia Department of Corrections (VDOC) had lost his belongings.  Wall also told the officials that he had participated in Ramadan in the two previous years and produced documentary evidence that he was receiving “common fare” meals,” in accordance with his religious beliefs.  However, the officials removed Wall from the list of prisoners participating in Ramadan.  Wall filed an informal complaint explaining his situation, but ROSP’s food services manager simply reiterated the new policy.  Wall subsequently filed a formal grievance; however, this grievance was also denied.  Wall was ultimately forbidden from observing Ramadan in 2010.

Wall filed a lawsuit under the RLUIPA and 42 U.S.C. § 1983, alleging, inter alia, violations of RLUIPA and the First Amendment and seeking equitable and monetary relief.  Wall was subsequently transferred to another facility.  After his transfer, the district court granted the defendants’ summary judgment motion, holding that Wall’s claims for equitable relief were mooted after the transfer and that the defendants were entitled to qualified immunity with regard to Wall’s damages claim.  Wall was transferred back to ROSP after the district court issued its decision; according to the defendants, ROSP had since abandoned the 2010 Ramadan policy.

On appeal, the Fourth Circuit found that, under Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, the defendants could not meet their burden of showing that it is “absolutely clear” that the VDOC would not reinstate the 2010 Ramadan policy.  With regard to qualified immunity, the Fourth Circuit noted the defendants’ concession that the 2010 Ramadan policy resulted in a substantial burden on Wall’s religious freedom; in addition, the Fourth Circuit found that the 2010 Ramadan policy was not “reasonably adapted to achieving a legitimate penological objective,” Lovelace v. Lee, 472 F.3d 174, as it did not satisfy the four factors from Turner v. Safley, 482 U.S. 78 (1987).  The Fourth Circuit also found that Wall’s right to observe Ramadan was clearly established under Lovelace, and that reasonable officials in the defendants’ position would not have “felt it permissible to apply the policy in so strict a fashion.”

Full Opinion

– Stephen Sutherland

DANA CLARK V. ABSOLUTE COLLECTION SERVICE, NO. 13-1151

Decided: January 31, 2014

The Fourth Circuit, finding that 15 U.S.C. § 1692g(a)(3) permits consumers to orally dispute the validity of a debt, vacated the district court’s order dismissing the plaintiff’s complaint and remanded for further proceedings.

Dana Clark and David Clark (“the Clarks”) brought this class action suit under the Fair Debt Collection Practices Act (“FDCPA”) against Absolute Collection Service, Inc. (“ACS”) for its actions in attempting to collect a debt. The Clarks incurred two debts at a health care facility in Raleigh, North Carolina. When the Clarks failed to pay, the health care facility referred the debts to ACS, a third-party collector. In its efforts to collect, ACS sent the Clarks separate collection notices. In both collection notices, a disclosure statement provided that all portions of the debt “shall be assumed valid unless disputed in a writing within thirty days.”

Claiming that ACS violated their right to challenge their debt orally under Section 1692g(a)(3) of the FDCPA, the Clarks brought this class action. ACS, however, moved to dismiss the suit, contending that the collection notice complied with the FDCPA because Section 1692g(a)(3) contains an inherent writing requirement. The district court granted ACS’s motion, and this appeal followed.

On appeal, addressing this matter of first impression for the court, the Fourth Circuit noted that the Third Circuit held that Section 1692g(a)(3) must be read to include a writing requirement. In contrast, however, the Second and Ninth circuit held that the plain text of Section 1692g(a)(3) permits oral disputes, and that such a reading results in a logical, bifurcated scheme of consumer rights. In line with the Second and Ninth Circuit, the Fourth Circuit held that the FDCPA clearly defines communications between a debt collector and consumers. In so holding, the court noted that Sections 1692g(a)(4), 1692g(a)(5), and 1692g(b) explicitly require written communication, whereas 1692g(a)(3) plainly does not. Thus, the court rejected ACS’s argument that 1692g(a)(3) must be read to impose an inherent writing requirement, and refused to insert additional language. The Court, therefore, found that Section 1692g(a)(3) permits consumers to orally dispute the validity of a debt. Accordingly, it vacated the district court’s judgment and remanded for further proceedings.

Full Opinion

– W. Ryan Nichols

MCCRAY V. MARYLAND DEPT. OF TRANSP., NO. 13-1215

Decided: January 30, 2014

Plaintiff, Marie McCray worked for the Maryland Transit Administration (“MTA”), a division of the Maryland Department of Transportation (“MDOT”) for nearly forty years before her position was eliminated due to budget cuts. McCray then brought a suit alleging employment discrimination. The district court dismissed McCray’s suit on the grounds of legislative immunity before McCray could conduct any meaningful discovery. The Fourth Circuit disagreed, finding that the termination occurred before the requisite legislative action took place. However, the court held that McCray’s age and disability discrimination claims were nonetheless barred by the doctrine of sovereign immunity.

McCray began working for the MTA in 1971. Her main duty was to generate annual ride usage reports for trains and buses. McCray was diagnosed with diabetes in 1995, but it did not affect her work until 2007 when she unexpectedly fainted at work and had to miss time. After the incident, McCray submitted proof that she was medically able to continue working, but her supervisor continually pressured her about her health. Eventually, the supervisor demanded that she submit to an independent medical examination, which again concluded that she was medically able to continue working. Nevertheless, McCray’s supervisors continued to pressure her about her health. In January 2008, her job was transferred to a consultant and she was left without meaningful work. When McCray requested more responsibility, her requests were denied. In October 2008, McCray was terminated as a part of Maryland’s budget cuts. McCray then filed a complaint with the Equal Employment Opportunity Commission (“EEOC”) asserting discrimination based on age, disability, race, and gender. The MTA moved to dismiss on the grounds of legislative immunity. In response, McCray moved, pursuant to Rule 56(d) of the Federal Rules of Civil Procedure, for more time to conduct discovery to establish a discriminatory motive. The district court dismissed McCray’s suit, finding that any additional discovery would not impact its finding as to legislative immunity. McCray appealed.

On appeal, the MTA argued that sovereign immunity barred McCray’s age and disability discrimination claims. Although the MTA did not assert sovereign immunity at trial, the Fourth Circuit allowed the MTA to present this defense for the first time on appeal because of the jurisdictional nature of sovereign immunity. The court held that while Congress abrogated Sovereign Immunity under Title VII, it had not done so under the ADA or the ADEA; thus, McCray’s claims for age and disability were barred by sovereign immunity, while the gender and race discrimination claims were not.

Next, the Fourth Circuit held that the district court erred by dismissing McCray’s gender and race discrimination claims before allowing McCray to conduct meaningful discovery. MTA argued that McCray’s claims for race and gender discrimination were foreclosed because the state’s decision to cut McCray’s position was entitled to legislative immunity. The Fourth Circuit disagreed, concluding that many of the adverse employment actions that McCray complained of occurred prior to the budget cuts in October of 2008. Therefore, the Fourth Circuit determined that McCray’s Rule 56(d) motion should have been granted and remanded the action for further proceeding.

Full Opinion

– Wesley B. Lambert

UNITED STATES V. BISHOP, NO. 13-4356

Decided:  January 28, 2014

The Fourth Circuit Court of Appeals affirmed the defendant’s conviction for attempting to export small-arms ammunition to Jordan without a license. The Fourth Circuit held that there was sufficient evidence to support the district court’s conclusion that the defendant willfully violated the Arms Export Control Act (“ACEA), which regulates the export of “defense articles” such as ammunition, and subjects to criminal liability anyone who “willfully” violates its requirements.

In 2011, Brian Keith Bishop (“Bishop”) worked as a financial-management Foreign Service Officer (“FSO”) at the U.S. embassy in Amman, Jordan. In the summer of 2011, Bishop sought to ship certain personal possessions from his parents’ home in Alabama to Jordan via a government contract carrier, Paxton Van Lines (“Paxton”). The shipment included nearly 10,000 rounds of small-arms ammunition: 9mm, 7.62X39mm (for use in AK-47 assault rifles), .45-caliber rounds, and 12-gauge shotgun shells. The inventory of shipped items signed by Bishop, however, did not reference the 366 pounds of ammunition included in his household effects, instead listing them as weights. Bishop also signed a statement certifying that his belongings did not include “any unauthorized explosives, destructive devices or hazardous materials.” Paxton employees discovered the ammunition during the repacking process, and removed it from the boxes labeled “weights.” One of the boxes did in fact contain a single small weight. In September 2012, a federal grand jury returned a two-count indictment against Bishop relating to his attempted transportation of the ammunition.

On appeal, Bishop raised two challenges to his conviction: (1) that he did not willfully violate the ACEA because he did not know that it applied to the ammunition, and (2) that there was insufficient evidence that he even knew that exporting the ammunition was generally illegal rather than merely a violation of administrative policy.

Regarding (1), the Fourth Circuit looked to the Supreme Court case Bryan v. United States to determine whether a conviction under the AECA requires specific intent. The Bryan Court interpreted the Firearm Owners’ Protection Act (FOPA), which established a willfulness requirement for certain violations of prohibitions against dealing in firearms without a license. Bryan held that, to establish a willful violation of a statute, the Government only has to prove that the defendant acted with knowledge that his conduct was unlawful, and does not have to prove that he knew of the federal licensing requirement. The Fourth Circuit also noted that, as with FOPA, the ACEA’s language and structure make clear that Congress struck a balance between punishing those who intentionally violate the law and ensnaring individuals who make honest mistakes. But, the AECA does not include any highly technical requirements as might inadvertently criminalize good-faith attempts at reliance. The export of 9mm and AK-47 ammunition to Jordan would quickly strike someone of ordinary intelligence as potentially unlawful. Further, ACEA’s legislative history makes clear that Congress was especially concerned that arms exports not become an “automatic, unregulated process.” Therefore, the Fourth Circuit concluded that reading the willfulness requirement as narrowing as Bishop proposes would be a step toward such an unregulated system and undermine congressional intent. The Fourth Circuit further concluded that he did not need to know that 9mm and 7.6X39mm ammunition were, in fact, on the United States Munitions List (USML) and, therefore, subject to ACEA. If Bishop believed that the “ammunition could not be shipped,” and “he knew what he was doing was unlawful,” he would necessarily have believed that exporting each type of ammunition – 9mm and 7.62X39mm included— was illegal as well.

Then, the Fourth Circuit addressed (2), whether there was sufficient evidence to conclude that Bishop knew his actions were illegal rather than merely violations of State Department policy. First, Bishop was thoroughly trained in the rules and regulations surrounding the State Department’s transportation policies. He was required to attend training that warned against transporting ammunition and was provided with numerous documents that not only informed him that transporting ammunition was prohibited but also referenced the ACEA and explained that violations could be punished by imprisonment. Bishop also received an email from Paxton reiterating that he could not transport ammunition, and was told explicitly by a DSS agent prior to his trip to Alabama that he could not keep firearms in Jordan. In addition, Bishop’s own witness characterized him as skilled at following complex legal rules and performing sophisticated independent legal research. Moreover, Bishop engaged in numerous acts of deception. He told Paxton packers that the boxes generally contained weights and failed to include ammunition on inventory lists that he signed. When the ammunition was discovered, Bishop’s first instinct was to ask if the State Department knew how much ammunition he had tried to ship, and he changed his story about why he attempted to ship the ammunition.

Full Opinion

– Sarah Bishop

Drager v. PLIVA USA, Inc., No. 12-1259

Decided: January 28, 2014

The Fourth Circuit held that the United States District Court for the District of Maryland did not abuse its discretion by denying Shirley Gross’s (Gross) request to amend her complaint, and that the district court did not commit error by finding Gross’s state law tort causes of action to be preempted by the Federal Food, Drug, and Cosmetics Act (FDCA), 21 U.S.C. §§ 301 et seq.  The Fourth Circuit therefore affirmed the judgment of the district court.

Gross was prescribed the drug Reglan in 2006.  Reglan, a brand of metoclopramide, is “used to treat gastroesophageal reflux disease and other ailments.”  Gross also took a generic metoclopramide produced by PLIVA USA, Inc. (PLIVA) for ten months.  Gross developed permanent injuries as a result of her long-term use of metoclopramide.  In January 2010, Gross sued PLIVA and certain manufacturers of brand name Reglan, alleging “state law claims of negligence, breach of warranty, fraud and misrepresentation, strict liability, and failure to warn.   In November 2010, the district court dismissed Gross’s claims against the brand name producers; in April 2011, the district court stayed the proceedings against PLIVA pending the decision of the Supreme Court in PLIVA, Inc. v. Mensing, 131 S. Ct. 2567.   The district court lifted the stay after the Supreme Court issued its decision in Mensing.  PLIVA then filed motion for judgment on the pleadings, arguing that under Mensing, the FDCA preempted Gross’s claims.  In her response to this motion, Gross asked the district court for leave to amend her complaint, seeking to make allegations “that PLIVA violated a state law duty by failing to update its warnings to include changes made by brand name manufacturers in 2004.”  The district court granted PLIVA’s motion in November 2011 and denied Gross’s request to amend her complaint.  Gross then filed a motion to alter or amend the judgment; the district court denied the motion in January 2012.  Gross died during the pendency of the present action, and Arthur L. Drager (Drager) continued the case as a personal representative for her estate.  On appeal, Drager argued that the district court abused its discretion by denying Gross’s request to amend her complaint; Drager further contended that the district court committed error by finding Gross’s state law tort causes of action to be preempted by the FDCA.

With regard to the district court’s denial of Gross’s request to amend her complaint, the Fourth Circuit noted that Gross never actually filed a motion to amend or a proposed amended complaint.  With regard to Drager’s contentions regarding Gross’s state tort claims, the Fourth Circuit noted that, under Mensing and Mutual Pharmaceutical Co., Inc. v. Bartlett, 133 S. Ct. 2471, manufacturers of generic drugs cannot—under the FDCA—unilaterally change their labeling, change their product formulations, be required to leave the market, or accept liability for state torts.  The Fourth Circuit then found that the district court’s failure to conduct a full preemption analysis did not constitute reversible error.  With regard to Gross’s negligence claims, the Fourth Circuit found it questionable as to whether Maryland recognizes “specific causes of action for negligent testing, inspection, and [post-market] surveillance”—and that, even if Maryland recognizes a general duty to protect consumers from injuries resulting from negligent marketing and sales, a manufacturer of generic drugs with a product that is unreasonably dangerous as sold could not satisfy the general duty without taking one of the four prohibited actions from Mensing and Bartlett.  With regard to Gross’s strict liability claims, the Fourth Circuit found that Drager’s arguments were based on the “stop selling” rationale prohibited by Bartlett; the Fourth Circuit also found the difference between the state law method of assessing the unreasonableness of a products’ danger at issue in Bartlett (risk utility) and at issue under Maryland law (consumer expectations) immaterial.  Next, the Fourth Circuit found that PLIVA breached the implied warranty of merchantability and the implied warranty of fitness for a particular purpose by selling metoclopramide—but that PLIVA’s only method of avoiding liability for breach of these warranties was leaving the market.  Furthermore, while Drager contended that breach of express warranty is a violation of contract law—and therefore not preempted by the FDCA—the Fourth Circuit noted that “the content of generic drug manufacturers’ product descriptions and other assertions is mandated by federal law,” and found that PLIVA could only avoid liability for breaching this warranty by exiting the market.  Lastly, with regard to Gross’s allegations regarding negligent misrepresentation and fraudulent concealment of safety information, the Fourth Circuit found that—assuming PLIVA made false or misleading representations—PLIVA’s only recourse would be to exit the market or accept state tort liability.

Full Opinion

– Stephen Sutherland

United States v. Bridges, No. 13-4067

Decided: January 27, 2014

The Fourth Circuit Court of Appeals held that the district court correctly found defendant’s plea of nolo contendere with adjudication constituted a conviction for the purposes of the Sex Offender Registration Act (“SORNA”) because it resulted in a penal consequence. The Fourth Circuit affirmed the district court’s denial of defendant’s motion to dismiss.

On February 17, 1999, Defendant William David Bridges (“Defendant”) entered a plea of nolo contendere in Florida State court to a charge of Attempted Sexual Battery upon a Child under 15 Years of Age. The court entered judgment, ordering that adjudication of guilt be withheld, but directing Defendant to pay court costs and serve two years of probation. As a result of this judgment, Defendant was required to register as a sex offender under Florida law. In 2010, Defendant moved to Virginia, where he was registered as a sex offender. However, in 2011, Virginia authorities discovered Defendant no longer lived at his reported address and that he had not updated his registration.

On appeal, the issue was whether Defendant’s nolo contendere plea to a Florida attempted sexual battery charge, in which adjudication was withheld, qualified as a conviction for purposes of the federal registration requirements.

Congress enacted SORNA in order to protect the public from sex offenders and offenders against children. In order to address the significant number of “missing” sex offenders, SORNA established a comprehensive national system for the registration of sex offenders. SORNA thus requires a sex offender, defined as “an individual who was convicted of a sex offense,” to register in each jurisdiction where he resides. Congress left the statutory term “convicted” undefined and expressly granted authority to the Attorney General to issue guidelines and regulations to interpret and implement SORNA. The Attorney General promulgated The National Guidelines for Sex Offender Registration and Notification (“SMART Guidelines”), which have the force and effect of law. Under these Guidelines, an adult sex offender is “convicted” for SORNA purposes if the sex offender remains subject to penal consequences based on the conviction. The federal registration requirement cannot be avoided simply because a jurisdiction has a procedure under which the convictions of sex offenders in certain categories are referred to as something other than “convictions.” Rather, so long as the sex offender is nevertheless required to serve what amounts to a criminal sentence for the offense, he is “convicted” and falls within the ambit of SORNA’s registration requirements.

Here, the Fourth Circuit held that Defendant was sentenced to a two-year term of probation pursuant to his nolo contendere plea to the attempted sexual battery charge, and he served three days in jail. Defendant conceded that probation is a penal consequence.

In addition, the Court held that the ambiguity in SORNA’s use of the term “convicted” did not rise to the level of grievousness that would warrant application of the rule of lenity.

Full Opinion

– Sarah Bishop

Montgomery County v. Federal National Mortgage Association, Nos. 13-1691; 13-1752

Decided: January 27, 2014

The Fourth Circuit combined two similar cases from the district courts of South Carolina and Maryland to consider whether the Federal National Mortgage Associate (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) are exempt from paying state and local taxes on the transfer of real property.  Both district courts held that Fannie Mae and Freddie Mac were exempt from paying transfer taxes. The Fourth Circuit affirmed. In addition, the Fourth Circuit held that Congress acted within its power under the Commerce Clause in exempting Fannie Mae and Freddie Mac from property transfer taxes.

During the Great Depression, Congress created Fannie Mae to provide banks with more capital for mortgage lending with the intent that additional capital would increase credit stability and to provide additional access to residential mortgages throughout the country. In 1970, Congress established Freddie Mac as a competitor to Fannie Mae, with similar purposes. Fannie Mae and Freddie Mac met these goals by purchasing mortgages originated by third-party lenders, pooling the mortgages into securities, and then selling those mortgage-backed securities to fund further purchases. Ideally, these activities promote access to mortgage credit and stabilize the residential lending market. To help accomplish their goals, Congress exempted Fannie Mae and Freddie Mac generally from all state and local taxes “except that any real property [of Fannie Mae or Freddie Mac] shall be subject to State, territorial, county, municipal, or local taxation to the same extent as other real property is taxed.” Like many other states, South Carolina and Maryland impose taxes on the ownership and the transfer of real property. The Counties of South Carolina and Maryland charged with collecting property transfer taxes (“Counties”) claim that the exemption did not apply to the transfer taxes because of Congress’ real property exception to the tax exclusion. On the other hand, Fannie Mae and Freddie Mac claim that the real property exception is sufficiently narrow to only cover the payment of property ownership taxes and thus, does not extend to similarly require the payment of property transfer taxes. The district courts of South Carolina and Maryland agreed with Fannie Mae and Freddie Mac, upholding the exemption. The Counties appealed.

On appeal, the Fourth Circuit first affirmed the district court’s determination that the tax exemption applied to property transfer taxes. Courts have consistently distinguished general property taxes from taxes levied on the transfer of property. The Fourth Circuit noted the extensive Supreme Court precedent providing that recording taxes are distinct from property taxes, explaining that “a privilege tax is not converted into a property tax because it is measured by the value of the property.”

Secondly, the court affirmed the constitutionality of the tax exemption. The court began by noting that Congress only needed a “rational basis” to grant the exemption from state taxation. The Counties argued that Congress did not have a rational basis to grant such an exemption because the transfer tax was purely a local, intrastate activity beyond Congress’ control. The Fourth Circuit disagreed, emphasizing the substantial economic effect that Fannie Mae and Freddie Mac had on the nationwide mortgage market. The 2008 mortgage collapse provided ample evidence of the extensive impact that local mortgages have on the entire nation’s economy.

Convinced that mortgage lending has a substantial effect on the nation’s economy, the Fourth Circuit then considered whether Congress’ tax exemption was necessary and proper to Congress’ legitimate exercise of its power under the Commerce Clause. The Court held that “Congress could rationally have believed that state taxation would substantially interfere with or obstruct the legitimate purposes of Fannie Mae and Freddie Mac of regulating and stabilizing the secondary mortgage market.” First, imposing excessive taxes on Fannie Mae and Freddie Mac could undermine their ability to purchase mortgages by reducing their access to capital. Second, the inconsistencies in state property transfer taxes would impose varied transactions costs between states that may undermine the ability to provide the same mortgage liquidity to all parts of the country. Third, without such an exemption, the large volume of the mortgage portfolios held by Fannie Mae and Freddie Mac would pose an attractive target for large taxes by states and localities. Thus, the Fourth Circuit held that the tax exemption was a necessary and proper exercise of Congress’ Commerce Clause power.

Full Opinion

– Wesley B. Lambert

Martinez v. Holder, No. 12-2424

Decided: January 27, 2014

The Fourth Circuit partially granted Julio Ernesto Martinez’s (“Martinez”) Petition for Review, finding that a group consisting of former MS-13 gang members constitutes a “particular social group” within the meaning of 8 U.S.C. § 1231(b)(3).

Martinez was born in San Miguel, El Salvador, in 1980. In 2000, he unlawfully entered the United States. When Martinez was stopped for a traffic offense in May 2011, the Department of Homeland Security initiated removal proceedings against Martinez. Martinez conceded that he was subject to removal, but sought relief on the ground that his life would be endangered should he return to El Salvador. At the hearing before the Immigration Judge (“IJ”), Martinez testified that his stepfather died when he was 12 and that soon after he befriended a group of older boys who had also lost family members. He later learned that some of the boys who had recruited him into this group were also associated with MS-13. After several members of MS-13 were deported from the United States and arrived in Martinez’s neighborhood, Martinez’s group was then “incorporated” into the larger MS-13 gang structure. This was, to some extent, involuntary. Upon being told that he had no option, Martinez, who was now 15, agreed to undergo MS-13’s initiation rite of a beating that lasts 13 seconds. Thereafter, the deportees killed the original leaders of Martinez’s group of friends and became the new gang leaders. They ordered him to get tattoos signifying his allegiance to MS-13. He did. They also ordered him to extort money from members of the community. He refused. Because of this, he was beaten on a weekly basis. Although he admitted to participating in one beating of another gang member, Martinez testified that thereafter he refused to join in those disciplinary beatings, which consequently subjected him to further beatings.

MS-13 held weekly meetings for its members. Martinez attended most of those meetings. When he did not attend, he was beaten. At the meetings, members were informed as to who had the “green light,” which indicated that the member was to be executed. A principal reason for receiving the “green light” was attempting to leave MS-13. Indeed, two of Martinez’s friends who attempted to leave the gang were killed. By the time Martinez turned 16, he became tired of the beatings and wished to leave MS-13. When he made this known, gang members beat him and stabbed him, leaving him for dead. Martinez survived, however, and, after leaving the hospital, went to live with a cousin about an hour south of San Miguel. Two months later, MS-13 members found him and shot at him from a car. Martinez was hospitalized again for several weeks. After recovering, Martinez went into hiding again. However, MS-13 members found him once more. This time, Martinez was able to escape without injury. Soon after, he fled to the United States and entered illegally. He believes that if he were to return to El Salvador, MS-13 members would kill him. Even while in the United States, he claims that he has refrained from going places where he might meet an MS-13 member, such as Spanish nightclubs.

Based on his fear of bodily harm at the hands of MS-13, Martinez sought several forms of relief from removal. He argued that under 8 U.S.C. § 1231(b)(3), he was eligible for withholding of removal because his life was threatened on account of his membership in the particular social group of former gang members from El Salvador. He also argued that he qualified for protection under the Convention Against Torture (“CAT”) because the Salvadoran government would acquiesce in his torture should he be removed. Finally, he applied for temporary protected status and, as an alternative, he requested voluntary departure. Following a hearing, the IJ found Martinez credible but nonetheless denied him all relief except his application for voluntary departure. The Board of Immigration Appeals (“BIA”) also rejected Martinez’s request for relief. This appeal followed.

On appeal, the Fourth Circuit first addressed Martinez’s challenge to the BIA’s determination that, for purposes of Section 1231(b)(3), “former members of a gang in El Salvador” are not a “particular social group” as that term is used in the statute, because members of the group do not have “a common, immutable characteristic where that characteristic results from voluntary association with a criminal gang.” Without applying Chevron deference, the court held that the BIA erred as a matter of law in its interpretation of the phrase “particular social group” by holding that former gang membership is not an immutable characteristic of a particular social group for purposes of the statute. In so holding, the Court distinguished between current and former gang members, finding that former MS-13 members shared an immutable characteristic. Next, the Court rejected Martinez’s contention that the BIA erred in rejecting his claim for protection under CAT, finding that the IJ and the BIA reviewed the relevant evidence before them in concluding that Martinez failed to make the necessary showing to warrant CAT protection. Thus, Martinez’s Petition for Review was granted in part, denied in part, and remanded for further proceedings.

Full Opinion

-W. Ryan Nichols

Cobra Natural Resources, LLC v. Federal Mine Safety & Health Review Comm’n, No. 13-1406

Decided: January 27, 2014

The Fourth Circuit held that it was without jurisdiction to consider a coal operator’s petition for review following the Federal Mine Safety and Health Review Commission’s (the “Commission”) decision to temporarily reinstate a coal miner.

Russell Ratliff (“Ratliff”) filed a discrimination complaint with the Secretary of Labor (“Secretary”), alleging that Cobra Natural Resources, LLC (“Cobra”) discharged him after he voiced safety concerns with respect to Cobra’s mining operation; thus violating the Mine Safety and Health Act of 1977’s (“the Mine Act”) whistleblower provision. In accordance with the Mine Act, after receiving Ratliff’s discrimination complaint, the Secretary determined it was not “frivolously brought” and applied to the Commission for an order temporarily reinstating Ratliff’s employment. Cobra, however, disagreed with the Secretary’s finding and requested a hearing before an ALJ, contending that Ratliff’s complaint was frivolous and also asserting a tolling defense. A coal operator’s temporary reinstatement obligation can be “tolled” by the occurrence of certain events, such as a subsequent reduction-in-force that would have included the miner.

At the hearing, the ALJ agreed with the Secretary that Ratliff’s discrimination complaint was not frivolously brought and also rejected Cobra’s tolling contention, concluding that Cobra had failed to show that work was not available to Ratliff because of an asserted multi-employee layoff. As a result, Ratliff was immediately reinstated with the same hours of work, rate of pay, and benefits received. Cobra next sought Commission review. The Commission affirmed the ALJ’s decision. Cobra then filed this petition for review, summarily asserting jurisdiction under the collateral order doctrine and contending that the Commission erroneously denied Cobra’s tolling defense.

On appeal, the Fourth Circuit found that it was without jurisdiction to consider Cobra’s petition for review. In doing so, it noted that the Mine Act authorizes “any person adversely affected or aggrieved by an order of the Commission” to seek review in the appropriate court of appeals. Importantly, although the Act uses the term “order” rather than “final order,” the Court recognized that only final Commission orders are entitled to review. Thus, the issue before the Court was whether the Commission’s decision granting temporary reinstatement was immediately appealable by Cobra under the collateral order doctrine.

Having explained the issue before it, and having noted the limited persuasive effect of sister circuit court decisions on the issue, the Court assessed each requirement of the collateral order doctrine. Analyzing the first requirement: that a putatively appealable order conclusively determine a disputed question, the Court held that, because an order of temporary reinstatement remains subject to modification during the pendency of a coal miner’s discrimination complaint, it fails to satisfy this initial requirement. Next, the Court held that, because the considerations involved in the temporary reinstatement process are deeply enmeshed with the same issues comprising the miner’s underlying discrimination claim, it plainly failed the collateral order doctrine’s “separate” requirement. Lastly, the Court addressed the doctrines third requirement: that the order be “effectively unreviewable on appeal from a final judgment.” Again, the Court held that this requirement was not met because Cobra’s implicated interest was primarily economic in nature. In so holding, the Court noted that a coal operator’s financial interest in avoiding wage payments to a reinstated miner who returns to his job in the coal mines pales in comparison to those interests that have been deemed sufficiently important to give rise to collateral order jurisdiction.

Full Opinion

– W. Ryan Nichols

United States v. Zayyad, No. 13-4252

Decided: January 24, 2014

The Fourth Circuit held that the United States District Court for the Western District of North Carolina did not abuse its discretion by prohibiting Awni Shauaib Zayyad (Zayyad) from cross-examining government witnesses regarding the existence of a gray market for certain prescription pills and that—when assessed in the light most favorable to the Government—the evidence sufficiently established that Zayyad knew he was selling counterfeit prescription drugs.  The Fourth Circuit therefore affirmed the judgment of the district court.

Essam Elasmar (Elasmar) sold counterfeit erectile-dysfunction drugs that looked like Cialis and Viagra in Charlotte, North Carolina.  After Elasmar sold drugs to an undercover Department of Homeland Security (DHS) agent and a fruitful search revealed hundreds of pills, Elasmar “agreed to cooperate with investigators.”  Elasmar gave his supplier’s telephone number to DHS officials, who traced it to Zayyad.  Under the direction of government authorities, Elasmar then ordered drugs from Zayyad twice.  Police detained Zayyad when he delivered the second shipment of pills, finding over 800 unpackaged pills in the sunglasses holder and glove box of Zayyad’s van.  Police also visited Zayyad’s home on the day of the traffic stop; a search of the home revealed a yellowish pill on a toilet with an “industrial strength flushing system.”  Though some of the pills seized by government officials looked like genuine Viagra and Cialis, chemical analyses revealed that the pills had “incorrect compositions and active-ingredient levels”; at trial, various specialists testified that all of the pills they sampled were counterfeit.

A federal grand jury indicted Zayyad on “one count of conspiracy to traffic in and dispense counterfeit drug products, three counts of trafficking in counterfeit goods, and three counts of selling and dispensing counterfeit prescription drugs.”  At trial, the Government relied mainly on the nature of the drug transactions to prove Zayyad’s knowledge of the counterfeit nature of the pills.  Through cross-examination, Zayyad tried to suggest that he thought the pills came from the “gray market”—which involves goods that are “imported outside the distribution channels that have been contractually negotiated by the intellectual property owner,” Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351.  The evidence also showed that Zayyad said the pills were real when speaking to Elasmar; furthermore, there was no evidence indicating that Zayyad ever said the pills were counterfeit.

After the jury deadlocked during deliberations, the district court declared a mistrial.  The grand jury then issued a superseding indictment that narrowed the scope of the conspiracy count and removed two of the other counts.  Prior to the second trial, the Government made a motion in limine to prevent Zayyad from raising gray-market evidence through cross-examination; the Government argued that this evidence would only be relevant if, for instance, Zayyad was to testify during his case-in-chief regarding his state of mind—specifically, that he believed the pills he sold were genuine pills from a specific part of the gray market or “diversion market.”  The district court granted the Government’s motion, finding that gray-market evidence was not relevant under Federal Rule of Evidence 401.  The district court also excluded the evidence under Rule 403, finding that the probative value of the evidence would be overwhelmed by “concerns about confusion of the issues, misleading the jury, and considerations of waste of times.”  After the closure of the evidence in the second trial, Zayyad moved for a judgment of acquittal.  The district court denied his motion, and the jury convicted him on all counts.  Zayyad appealed, arguing that the district court committed error by prohibiting the gray-market evidence and that the Government did not provide sufficient evidence to prove the knowledge element of the offenses charged.

With regard to the gray-market issue, the Fourth Circuit first noted that the district court only limited Zayyad’s right to cross-examine witnesses—and that Zayyad did not make a proffer of gray-market evidence or try to introduce gray-market evidence during his case-in-chief.  The Fourth Circuit then found that Zayyad likely did not preserve this argument below—but that the result would be the same under either the plain error standard or the abuse of discretion standard.  The Fourth Circuit concluded that the proposed subject of cross-examination was irrelevant: Zayyad never suggested that he believed he was peddling gray-market goods, and he also did not even establish his knowledge of the gray market.  The Fourth Circuit also rejected the implication of an infringement upon Zayyad’s constitutional right not to testify, finding that “Zayyad cannot use the privilege against self-incrimination as a means to free himself from the basic rules of relevancy.”  In addition, the Fourth Circuit found that, even if the gray-market evidence was relevant, the district court did not commit reversible error “by directing the evidence to Zayyad’s case-in-chief”; the Fourth Circuit noted that Zayyad had the chance to present gray market evidence during his own case, and that Zayyad had the opportunity to cross-examine Government witnesses on other issues.  With regard to the district court’s alternative ruling on Rule 403 grounds, the Fourth Circuit noted that gray-market evidence “threatened to lead the jury into pure speculation based on no foundational evidence as to Zayyad’s state of mind.”  Lastly, with regard to Zayyad’s challenge to the sufficiency of the evidence, the Fourth Circuit found that the jury could reasonably infer that the drugs were counterfeit based on the circumstantial evidence provided by the Government.

Full Opinion

 -Stephen Sutherland

North Carolina Utilities Comm’n v. Federal Energy Regulatory Comm’n, No. 12-1881

Decided: January 24, 2014

The Fourth Circuit, “[c]onstrained by the standard of review,” held that the Federal Energy Regulatory Commission (“FERC”) properly exercised its discretion in declining to grant the North Carolina Utilities Commission (“NCUC”) rehearing and in evaluating the Virginia Electric and Power Company’s (“VEPCO”) application for incentives. Therefore, FERC’s decision was affirmed.

Under the Federal Power Act (“FPA”), FERC has jurisdiction over all rates, terms, and conditions of interstate electric transmission services provided by public utilities. In response to concerns about the reliability of the country’s aging transmission system, the FPA required FERC to promulgate a rule establishing incentive-based rate treatments for qualifying projects to spur infrastructure investment. The final rule established the following three-prong test for evaluating applications for incentives: (1) the utility must show that its infrastructure project will increase reliability or reduce congestion; (2) the utility must demonstrate a nexus between the requested incentive and the project; and (3) the utility must prove that its resulting rates with the incentive remain “just and reasonable.”

In 2008, VEPCO sought incentives for eleven transmission projects. After notice of VEPCO’s filings was published, NCUC and numerous other parties moved to intervene. The parties challenged the grant of incentives to five of the eleven projects. On appeal to FERC, NCUC challenged only one project under prong one, arguing that it would not increase reliability. It challenged all five projects under prong two, however, contending that they failed to meet the nexus requirement. FERC ultimately granted VEPCO’s application in full. NCUC filed a petition for rehearing on September 29, 2008. In its request for rehearing, NCUC reiterated its objections to the incentives for the five challenged projects and identified other errors in FERC’s order as well. On May 22, 2012, FERC finally issued its Order Denying Rehearing almost four years after its initial order. In the meantime, in 2010, a policy change was instituted with respect to the nexus requirement. Nonetheless, FERC declined to grant rehearing to apply the change. This appeal followed.

Noting the extremely deferential standard of review constraining it, the Fourth Circuit addressed in turn NCUC’s arguments: (1) that FERC erred by declining to grant rehearing to apply the 2010 policy change with respect to the nexus test; and (2) that FERC abused its discretion by granting VEPCO incentives based on the five challenged projects. In addressing NCUC’s first contention, the Court first determined it had jurisdiction because NCUC adequately exhausted its administrative remedies. Next, it explained that FERC’s decision whether to apply the new policy on rehearing is committed to the agency’s sound discretion. Noting that VEPCO was entitled to rely on consistent application of administrative rules, the Court found no error in FERC’s decision to deny NCUC’s rehearing request to apply the policy change.

Then, the Court addressed NCUC’s challenges based on the grant of incentives to certain projects. Looking for a “rational connection between the facts found and the choice made,” the Court found the first two projects satisfied this requirement of the nexus test by resulting from a regional planning process, facing ongoing and significant local opposition, and involving construction challenges based on changeable elevation and the use of new technology. For two other projects, the Court found FERC’s decision was supported by substantial evidence because the projects’ construction risks, ongoing local opposition, and impact on regional reliability satisfied the nexus test. Likewise, the Court affirmed FERC’s decision as to the final project even though it twice incorrectly stated that the project involved the replacement of only nine, instead of the actual thirty-two, transformers. In so holding, the Court concluded that, based on the record as a whole, FERC fully understood the nature of the project and believed it would increase reliability. It further determined it was innovative and a large-scale undertaking. Consequently, the Court concluded FERC’s decision was supported by substantial evidence.

Full Opinion

-W. Ryan Nichols

United States v. Williams, No. 12-4374

Decided: January 23, 2014

The Fourth Circuit held that the United States District Court for the District of Maryland properly denied Leconie Williams, IV’s (Williams) motion to suppress evidence and did not abuse its discretion by excluding evidence of prior police misconduct allegations against Williams’s arresting officers.  The Fourth Circuit therefore affirmed the decision of the district court.

On June 12, 2009, at about 1:00 AM, police officer Joseph McCann (McCann) saw a vehicle sitting still in the “middle of the road” while driving through a residential area.  He observed the vehicle in this posture for thirty seconds to a minute.  Williams—the driver of the vehicle—gestured for McCann to drive by him; however, McCann stayed behind Williams.  When Williams started to pull away, McCann turned his lights on, and Williams “pulled over to the side of the road.”  Another police officer, Edward Finn (Finn), arrived at the scene.  While McCann and Finn approached Williams’s vehicle, Finn saw Williams take an object out of his pants and drop it on the floorboard, making a “thud.”  McCann and Finn removed the occupants of the vehicle and searched it, discovering a gun on the floorboard near the driver’s seat.  Finn cited Williams for violating a section of the Maryland Code that prohibits leaving a vehicle sitting in such a way that it obstructs traffic.  Md. Code Ann., Transp. § 21-1001(b).

The Government subsequently indicted Williams for, inter alia, being a felon in possession of a firearm under 18 U.S.C. § 922(g)(1).  Williams moved to suppress the gun before trial, asserting that McCann did not have the requisite probable cause to make the traffic stop.  The district court denied Williams’s motion, concluding that McCann had reasonable suspicion that Williams violated another state statutory provision—specifically, § 21-1001(a) of the Transportation Article.  Additionally, the district court granted the Government’s motion to exclude evidence of prior police misconduct allegations against McCann and Finn under Federal Rule of Evidence 404(b).  At trial, the jury could not reach a verdict on the felon in possession of a firearm charge, and the district court granted a mistrial on that count.  At the next trial—upon Williams’s motion—the district court reaffirmed its decisions with regard to the suppression issue and the exclusion of the evidence of prior police misconduct allegations.  The jury found Williams guilty.  Williams appealed.

On appeal, Williams asserted that the district court committed error by denying his motion to suppress the gun, as McCann did not have the requisite probable cause or reasonable suspicion to stop Williams’s vehicle; he argued that McCann incorrectly identified his pre-stop conduct as illegal—as § 21-1001(b) of the Transportation Article does not apply to roads in residential areas.  Williams also argued that the district court erred by excluding the evidence of prior police misconduct allegations.

Quoting the Sixth Circuit’s decision in United States v. Hughes, 606 F.3d 311, the Fourth Circuit asserted that probable cause or reasonable suspicion of traffic law violations is not undermined by “a police officer’s inability to identify the correct code section at the time of a stop.”  The Fourth Circuit found that, while § 21-1001(b) could not serve as the basis for stopping Williams’s vehicle, Williams’s conduct was plainly illegal under a different provision in the Transportation Article—specifically, § 21-1004(a).  The Fourth Circuit also found that “the conduct relied upon by McCann” in making the stop “supported the reasonable suspicion to believe that [Williams] had violated Section 21-1004(a).”  Additionally, the Fourth Circuit found that Williams did not demonstrate clear error on the part of the district court with regard to the factual basis for a violation under § 21-1004(a).  With regard to the district court’s exclusion of the prior police misconduct allegations, the Fourth Circuit noted that, under the four-factor test enumerated in United States v. Queen, 132 F.3d 991, proffered Rule 404(b) evidence must also satisfy Rule 403.  The Fourth Circuit then found that the district court did not act in an “arbitrary” or “irrational” manner by excluding the evidence of prior police misconduct, as this evidence had minimal probative value, could have created admissibility problems, and probably would have been time-consuming and confusing to the jury.

Full Opinion

– Stephen Sutherland

United States v. Dehlinger, No. 12-7121

Decided: January 23, 2014

The Fourth Circuit Court of Appeals affirmed the judgment of the district court, denying the defendant habeas relief. The Fourth Circuit held that the trial counsel’s failure to call three witnesses, who were involved in the same fraudulent tax scheme as the defendant, was an objectively reasonable strategic decision.

The defendant, Dr. Erik Dehlinger (“Dehlinger”), was convicted of three counts of filing false income tax returns. Dehlinger was involved with Anderson’s Ark and Associates (“AAA”), which marketed programs enabling users to avoid current income tax liability and “recapture” taxes paid in the previous two years. Dehlinger avoided $363,207 in tax liability and obtained annual refunds. Dehlinger retained Scott Engelhard (“Engelhard”) based largely on Engelhard’s relative success as court-appointed counsel for AAA planner Tara LaGrand (“LaGrand”) in her 2004 trial. Before undertaking representation of Dehlinger, Engelhard obtained a conflict waiver from LaGrand and, therefore, no longer represented LaGrand. However, when LaGrand was later subpoenaed to testify in the prosecution of other AAA clients, Engelhard was re-appointed to serve as LaGrand’s counsel due to his familiarity with the AAA prosecutions. Engelhand filed a motion to quash the subpoena of LaGrand. Dehlinger fired Engelhard when he learned that Engelhard had filed this motion on behalf of LaGrand.

On appeal, Dehlinger contended that, in preparation for and during his trial, Engelhard labored under an active conflict of interest because of Engelhard’s history with LaGrand, Kuzel, and Redd.

In order to establish constitutionally deficient performance on the basis of an alleged conflict of interest, a defendant, like Dehlinger, who has raised no objection at trial, must establish that (1) an actual conflict of interest (2) adversely affected his lawyer’s performance. In order to establish that the conflict of interest adversely affected his lawyer’s performance, the defendant must satisfy the three-prong test set forth in Mickens v. Taylor: (i) identify a plausible alternative defense strategy or tactic, (ii) show the alternative strategy or tactic was objectively reasonable, and (iii) show failure to pursue that strategy or tactic was linked to the actual conflict.

Like the district court, the Fourth Circuit based its denial of Dehlinger’s request for habeas relief on its determination that—even assuming arguendo than an actual conflict of interest existed—Dehlinger failed to satisfy the third prong of Mickens. The court focused on whether Engelhard’s decision to call witnesses other than LaGrand, Kuzel, and Redd was “linked” to the asserted conflict, or instead was the product of a legitimate trial strategy.

Dehlinger, as the defendant, bears the burden of proving the requisite “link” and, therefore, must show Engelhard’s decision was not objectively reasonable. With regard to potential witnesses Kuzel and Redd, Dehlinger barely knew them and they had not prepared any of his tax returns. Thus, it is unlikely that either of them would have been permitted to testify as to Dehlinger’s assertedly innocent state of mind. Even if they were, Dehlinger failed to demonstrate that they could have provided testimony not elicited from the defense witnesses who did testify on his behalf at trial. As to LaGrand, Engelhard believed that the risk of LaGrand’s testimony outweighed the benefits, and informed Dehlinger of this strategy, as seen in several emails. The strategic considerations that led Engelhard to conclude that calling LaGrand would be “too risky” were objectively reasonable. Not only was LaGrand a convicted felon, she had also pled guilty to tax fraud involving the very same fraudulent organization that provided the basis of its charges against Dehlinger. In addition, LaGrand had a history of conflicting statements made under oath about this tax fraud and played no part in Dehlinger’s decision to follow the AAA tax “plan.”

Full Opinion

– Sarah Bishop

Summers v. Altarum Institute, Co., No. 13-1645

Decided: January 23, 2014

The Fourth Circuit reversed the district court’s determination that a plaintiff did not qualify for protection under the Americans With Disabilities Act (“ADA”) where the plaintiff suffered from only a temporary disability, finding that the 2008 Amendments to the ADA brought temporary disabilities under ADA protection in certain circumstances.

Plaintiff, Carl Summers began working as a senior analyst for the Altarum Institute (“Altarum”) in July 2011 where he conducted research, wrote reports and made presentations for Altarum’s client, the Defense Centers of Excellence for Psychological Health and Traumatic Brain Injury (“DCoE”) in Maryland. While on his way to work on October 17, 2011, Summers fell on a train platform, severely injuring both knees. Following the accident, Summers could not place any weight on his legs for six weeks. Additionally, even after surgery and considerable physical therapy, the injury prevented Summers from walking normally for at least seven months. While hospitalized, Summers contacted Altarum’s human resources department about obtaining short-term disability benefits and working from home until he was fully recovered. Altarum’s insurance company approved Summers’ application for short-term disability, but despite suggestions from Summers, never agreed to a plan that would allow Summers return to work. On November 30, 2011, Altarum informed Summers that he was being terminated effective December 1, 2011.

Summers filed a complaint against Altarum asserting that Altarum wrongfully discharged him under the ADA and failed to accommodate his disability. The district court dismissed the complaint for failure to state a claim. The district court dismissed the wrongful discharge claim because Summers was not “disabled” under the ADA because he was expected to heal within one year and he could have worked with the assistance of a wheelchair. Similarly, the court held that Summers did not state a claim for failure to accommodate because he failed to allege that he requested a reasonable accommodation. Summers chose to appeal only the wrongful discharge claim.

To establish a claim for wrongful discharge, a plaintiff must first establish that he or she qualifies as “disabled” under the ADA. One method of establishing a “disability” under the ADA is to prove an “actual disability” where the plaintiff has a “physical or mental impairment that substantially limits one or more major life activities.” Walking qualifies as a “major life activity” under the ADA. The Fourth Circuit noted that Congress broadened the scope of the ADA to construe coverage “to the maximum extent permitted.” The Equal Employment Opportunity Commission (“EEOC”) promulgated regulations explaining that a “substantial limitation” of a major life activity should be “construed broadly in favor of expansive coverage.” Furthermore, the EEOC regulations expressly provide that “effects of an impairment lasting or expecting to last fewer than six months can be substantially limiting for purposes of proving an actual disability.” The regulations go on to explain that “if an individual has a back impairment that results in a 20-pound lifting restriction that lasts for several months, he is substantially limited in the major life activity of lifting, and therefore covered [as having an actual disability].”

Following the EEOC’s guidance in response to the 2008 Amendments to the ADA, the Fourth Circuit held that the district court wrongly concluded that Summers was not disabled. Summers’ inability to walk plainly qualified as a restriction on a major life activity. Moreover, if the EEOC regulations provide that a person unable to life more than twenty pounds for several months is disabled, then surely Summers with two broken legs and injured tendons that render him immobile for seven months qualifies as disabled. Furthermore, Summers’ disability claim was in no way hindered by the fact that he could have worked with the assistance of a wheelchair. “If the fact that a person could work with the help of a wheelchair meant he was not disabled under the [ADA], the ADA would be eviscerated.” Therefore, the district court erred in holding that Summers was not disabled.

Finally, Altarum argued that even if Summers was disabled under the existing definition of “substantially limited” defined by the EEOC, the court should not follow that definition because the EEOC’s definition was an unreasonable interpretation of the ADA.  The Fourth Circuit disagreed; noting the numerous congressional directives to impose a broad scope in defining a disability under the 2008 Amendments to the ADA made the EEOC’s interpretation a reasonable one. Therefore, the Fourth Circuit reversed the district court and found that Summers was disabled under the ADA.

Full Opinion

– Wesley B. Lambert

United States v. Beckton, No. 13-4037

Decided: January 21, 2014

Defendant Reggie Beckton was convicted of two counts of bank robbery. Beckton appeals on two grounds: (1) that the district court erred in refusing to permit him to testify in narrative form; and (2) that the district court erred in forcing him to choose between his right to testify in his own defense and his right to represent himself.

In the months leading up to his trial, Beckton was unable to find a satisfactory public defender. Beckton alleged that his first public defender presented a conflict of interest. The court allowed Beckton’s second public defender to withdraw after Beckton made crude sexual remarks. Finally, a week before trial, Beckton made an oral motion to disqualify his third public defender on the grounds of a conflict of interest. The court denied his motion, finding that Beckton’s complaints did not constitute a conflict of interest. The court similarly denied Beckton’s motion to postpone his trial. After denying both motions, Beckton stated that he wished to proceed pro se. The court acknowledged Beckton’s right to do so, but strongly cautioned him against it, warning him that he would be held to the same standards as an experienced attorney. Nevertheless, Beckton insisted that he continue on his own behalf. The court allowed him to proceed pro se with the third public defender serving as standby counsel.

Beckton’s trial was riddled with evidentiary errors and ad hominem attacks against the government and the prosecutor. At the close of the prosecution’s case, Beckton stated that he wished to testify in narrative form. The court denied his request, requiring Beckton to both ask and answer the question, to afford the government an opportunity to object. The court denied Beckton’s request to draft questions for the public defender to ask, insisting that Beckton could either choose to continue on his own or avail himself of the public defender, but not both. During testimony, Beckton slipped into narrative form on a couple of occasions, accused the court of “favoring one party,” and asked why he had to “keep quiet about this corruption.” After several such outbursts, the court declared the evidence closed and the jury convicted Beckton on both counts of bank robbery. Beckton appealed.

On appeal, the Fourth Circuit affirmed the conviction. First, the court held that the district court’s requirement that Beckton proceed in question-answer format was not an abuse of discretion. Federal Rule of Evidence 611(a) gives the district court considerable discretion to control the mode of examining witnesses and presenting evidence “to make those procedures effective for determining the truth.” Furthermore, the court may place any restrictions on a defendant’s right to testify are not “arbitrary or disproportionate to the purposes they are designed to serve.” The Fourth Circuit acknowledged that the pro se litigant’s questioning himself was awkward and uncomfortable, but nonetheless held that the requirement was not an abuse of discretion. Moreover, Beckton had the opportunity to avail himself of the assistance of counsel and repeatedly refused. Second, the Fourth Circuit similarly held that the district court did not abuse its discretion in forcing Bectkon to choose between his right to represent himself and the right to testify in narrative form in response to questions from counsel controlling his case. The district court gave Beckton the opportunity to exercise his right to testify and his right to represent himself, but Beckton lost that opportunity when he repeatedly defied the court’s instruction on using the question and answer format proscribed. Therefore, the Fourth Circuit affirmed the conviction.

Full Opinion

– Wesley B. Lambert

Corr v. Metropolitan Washington Airports Authority, No. 13-1076

Decided: January 21, 2014

The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of plaintiffs’ complaint attacking the legality of the toll charged by the Metropolitan Washington Airports Authority (“MWAA”) for use of the Dulles Toll Road. The Fourth Circuit held that the tolls were user fees, not taxes, under Virginia law.

In 1950, Congress authorized the construction of the Washington Dulles International Airport. The federal government acquired a right-of-way on which it constructed the Dulles Airport Access Highway, which runs exclusively to service traffic to and from the airport, and has no exits or tolls. In 1980, the Virginia Department of Transportation received an easement on which to construct a toll road within the right-of-way to serve non-airport traffic, known as the Dulles Toll Road. In 1984, the United States Secretary of Transportation proposed the formulation of a regional airport authority which would take over control of Ronald Regan Washington and Dulles International Airports from the United States. Congress passed legislation approving the compact and leased the two airports to the newly formed MWAA. Congress explicitly granted MWAA the power “to levy fees or other charges.” Nonetheless, the Dulles Toll Road continued to be operated not by MWAA but by the Virginia Commonwealth Transportation Board (“CTB”). In the ensuing decades, the Virginia General Assembly repeatedly authorized CTB to use toll revenue to fund mass transit projects within the Dulles Corridor. In 2004, it granted CTB open-ended authority to issue revenue bonds to fund a mass-transit rail project in the Dulles Corridor, to be paid with revenue s from the Dulles Toll Road. CTB then raised the Dulles Toll Road rates. Meanwhile, MWAA shared Virginia’s goal of extending the Metrorail system to Dulles Airport, which the FAA master plans called for. So that MWAA could fulfill this mandate, Virginia transferred control to MWAA, giving it the power to set tolls on the Dulles Toll Road, so long as they were exclusively used for transportation improvements within the Dulles Corridor. On appeal, plaintiffs argued that the toll paid by users of the Dulles Toll Road was an illegal tax.

Before reaching the substance of plaintiffs’ argument, the Fourth Circuit addressed the question of standing. The Fourth Circuit concluded that the plaintiffs did have standing because they suffered the concrete harm of having paid what were, in their view, inflated tolls. They sought tangible and particularized relief: they wanted their money back. Moreover, they were not so numerous, and their grievance was not so attenuated.

The substance of plaintiffs’ argument was based on the premise that, under the Virginia Constitution, the state legislature is unable to delegate its taxing authority to an independent body, like MWAA. The Fourth Circuit therefore addressed what fund-raising powers the General Assembly could have delegated to the MWAA under Virginia law, and whether the toll charged was even a tax.

To determine whether a given exaction is a tax, Virginia courts ask whether it is a bona fide fee-for-service. The “fee-for-service” inquiry does not focus narrowly on whether the fee is calculated to defray just the costs actually incurred by the user. Rather, Virginia law requires only that there be a “reasonable correlation between the benefits of the service provided and burdens of the fee paid.”

According to the Fourth Circuit, the tolls paid by drivers on the Dulles Toll Road are not taxes for precisely the reasons articulated by the Virginia Supreme Court in Elizabeth River Crossings. First, the Court reasoned that it was clear that toll road users pay the tolls in exchange for a particularized benefit not shared by the general public. The planned expansion adds multiple stops both before and after the airport, on a route that closely follows the Dulles Toll Road for the evident purpose of serving the commuters who normally travel that route. Second, the Fourth Circuit explained that drivers were not compelled by government to pay the tolls or accept the benefits of the Project facilities. The fee is both voluntarily paid and the resulting benefits are voluntarily received. Nobody is forced to drive on the Dulles Road and, therefore, the toll is voluntarily paid. Funds raised for the Metrorail expansion project directly benefit only travelers who use the Dulles Corridor, not the community as a whole. Therefore, receipt of the benefit is voluntary in that it only accrues to those who have chosen to travel in the corridor. Finally, the Court  decided that the tolls were collected solely to fund the Project. The Metrorail expansion is part of the same project as the Dulles Toll Road. They run through the same narrow transit corridor, serve many of the same areas, and will benefit many of the same commuters. Because they are parts of the same project, tolls charged on the Dulles Toll Road are not transformed into taxes merely by being used to fund the Metrorail expansion. No evidence exists that the surplus tolls were diverted outside those confines or are treated, in any sense, as general revenue.

Full Opinion

– Sarah Bishop

United States v. Heyer, No. 12-7472

Decided: January 17, 2014

The Fourth Circuit held that the United States District Court for the Eastern District of North Carolina did not abuse its discretion by allowing only simultaneous sign language interpretation—rather than consecutive interpretation—for respondent–appellant Thomas Heyer (Heyer) during commitment proceedings under the Adam Walsh Child Protection and Safety Act of 2006, 18 U.S.C. §§ 4247–48; that the district court did not commit plain error by failing to allow a hearing on the interpretation issue; that the district court did not commit a mistake of law by labeling the case a civil matter during its discussion of the interpretation issue; that the district court did not commit clear error by finding Heyer to be a “sexually dangerous person” under 18 U.S.C. § 4248; and that the district court did not commit error by rejecting Heyer’s due process and equal protection claims. The Fourth Circuit therefore affirmed the judgment of the district court.

In 1993, Heyer—a deaf man—was convicted of kidnapping after he molested a ten-year-old, tied him up, and placed him in a hole.  Heyer was later convicted of possession of child pornography after he “was found to have approximately 180 images of child pornography in his possession” around 2002.  After serving time in prison, Heyer began sex offender treatment during supervised release; however, his supervised release was revoked in 2007 when he went to a treatment session while under the influence of alcohol.  Heyer also admitted that, inter alia, he looked at “a lot of different websites that were triple-x” while on probation and that the pictures he viewed included both adults and children in sexual situations; that he showed some of the pictures to a young teenage boy and that he engaged in sexual activity with the boy over a period of about one-and-a-half years; that he knew his sexual activities with the boy were wrong, but he continued them because Heyer “liked it and [the boy] was willing”; that he had sexual contact with between eighteen and twenty-five boys after his eighteenth birthday; that his adolescent years were “plagued by fighting and being the victim of sexual aggression”; and that he experienced “some arousal to pre-pubescent boys, around age eight.”

In December 2008, the Government sought to have Heyer civilly committed as a “sexually dangerous person.”  The district court conducted an evidentiary hearing in May 2012.  Two forensic psychologists, Dr. Jeffrey Davis (Dr. Davis) and Dr. Heather Ross (Dr. Ross), testified that Heyer met the criteria for civil commitment; another forensic psychologist testified that Heyer did not meet the criteria, and an expert in “deafness and psychological issues related to deafness” also testified on behalf of Heyer.  Heyer moved the court to provide consecutive interpretation at the hearing; the district court denied the motion, stating “[w]ell, it’s a civil case.  The answer is no.  We are not going to make this into a marathon.”  In July 2012, the district court issued its Findings of Fact and Conclusions of Law, in which it found that the Government had met is evidentiary burden of proving that Heyer was a “sexually dangerous person.”  The district court civilly committed Heyer under 18 U.S.C. § 4248.  Heyer appealed, raising issues with the district court’s denial of his motion for consecutive interpretation, the district court’s conclusion that he is a “sexually dangerous person,” and with regard to equal protection and due process.

The Fourth Circuit noted that, under the Court Interpreters Act (CIA), 28 U.S.C. § 1827(k), there is a presumption of simultaneous interpretation for non-witnesses unless the district court finds that consecutive interpretation “will aid in the efficient administration of justice”—and the district court found that consecutive interpretation would unduly delay and enlarge the hearing.  Furthermore, Heyer’s attorney offered only a speculative reason for using consecutive interpretation, and the district court offered numerous linguistic accommodations to Heyer.  With regard to the district court’s failure to holding a hearing on the interpretation issue under 28 U.S.C. § 1827(k), the Fourth Circuit stated that, inter alia, it was unclear what—if any—additional evidence Heyer would have submitted during the hearing and that there was no evidence that Heyer suffered prejudice from the lack of a hearing on the issue.  The Fourth Circuit also found that the district court’s statement about the civil nature of the case made no indication that the court lacked understanding of the CIA’s application to civil and criminal cases alike.  With regard to the district court’s conclusion that Heyer is a “sexually dangerous person,” the Fourth Circuit noted the high level of deference owed to the district court’s determinations regarding the credibility expert witnesses.  The Fourth Circuit then noted that there was no dispute regarding Heyer’s engagement in past acts of child molestation and found that the district court adequately took Heyer’s deafness and linguistic difficulties into account, the district court properly quoted the American Psychiatric Association’s definition of pedophilia, and that Heyer failed to show that the opinions of Dr. Davis and Dr. Ross were unreasonable.  Lastly, the Fourth Circuit found that Heyer’s equal protection argument (that § 4248 creates an improper classification by subjecting Federal Bureau of Prisons individuals, but not other individuals under federal control, to civil commitment) and his due process argument (that § 4248 is better categorized as a criminal statute, and therefore fails to protect various rights provided to criminal defendants) were foreclosed by the Fourth Circuit’s decision in United States v. Timms, 664 F.3d 436.

Full Opinion

– Stephen Sutherland

United States v. Green, No. 12-4879

Decided: January 17, 2014

The Fourth Circuit affirmed the district court’s denial of Herbert Green’s (“Green”) suppression motions based on the scope and duration of a traffic stop and the reliability of the drug-detection dog.

Trooper Daryl Johnson (“Johnson”) executed a traffic stop of Green’s vehicle because the windows appeared to be excessively tinted and the license plate was partially obscured. To begin the stop, Johnson approached Green’s vehicle and explained his reasons for making the stop. Johnson later testified that Green appeared to be excessively nervous and that the vehicle contained a strong “air-freshener” odor and had a “lived-in look.” After obtaining his license and registration, Johnson had Green accompany him to the patrol car so he could check Green’s information on his computer. While in the patrol car, Johnson reiterated the reasons for the traffic stop, questioned Green about his itinerary, and radioed Trooper Brian Dillon (“Dillon”), who was positioned some distance behind Johnson’s vehicle, to “come on up.” Soon after, Johnson’s computer program responded to his inquiry, notifying him of a protective order against Green, which alerted Johnson to potential officer safety issues. Johnson and Green then had a brief exchange about the protective order and Jonson requested additional information from dispatch. Thereafter, Johnson checked the window tint on Green’s vehicle and found that it was illegal. After informing Green that the tint was illegal, Johnson asked Green if there were any drugs in the vehicle. Johnson later testified that Green became visibly nervous and uncomfortable after being asked about drugs. He then questioned Green about his criminal history and requested a criminal history from dispatch. Green was not entirely truthful regarding his criminal history. Before receiving Green’s history from dispatch, Johnson left the patrol car and requested that Trooper Dillon conduct a free-air sniff using his drug-detection dog, Bono.

Bono alerted to the vehicle’s rear passenger panel. Just after completing the sniff, dispatch informed Johnson that Green’s criminal history raised multiple officer safety issues and included charges for homicide, carrying concealed weapons, robbery, kidnapping, and terroristic threats. Upon another officer’s arrival, the troopers began searching Green’s vehicle. The search revealed a duffle bag containing over one kilogram of cocaine and approximately $7,000 in cash. The entire traffic stop took place between 10:08:35 AM and 10:21:42 AM. Green was indicted for possession with intent to distribute cocaine. Following his indictment, Green moved to suppress the evidence found in the vehicle, contending that the traffic stop was unreasonable in its scope and duration, and that the delay was not justified by reasonable suspicion of criminal activity. The district court denied both motions. This appeal followed.

On appeal, the Fourth Circuit first addressed Green’s contention that the 14-minute period of detention between the initial stop and Bono’s alert was not reasonably related in scope to the circumstances that justified the stop. The Court held that the delay, at most, amounted to a de minimis intrusion on Green’s liberty interest and thus did not constitute a violation of his Fourth Amendment rights. In so holding, the Court noted that at all times before learning of Green’s criminal history, Johnson was focused on pursuing the reason for the initial stop. Next, the Court addressed Green’s challenge that Bono’s alert did not justify probable cause to search his vehicle because Bono’s track record in the field is not sufficiently reliable. Recognizing that, for numerous reasons, a drug-detection dog’s field performance does not accurately reflect the dog’s reliability; the Court held that the totality of the circumstances established Bono’s reliability in detecting drugs.

Full Opinion

-W. Ryan Nichols

United States of America v. Freeman, No. 12-4636

Decided: January 17, 2014

The Fourth Circuit reversed and remanded the district court’s order directing a defendant to pay restitution to victims that he defrauded because the crime for which the defendant was convicted did not cause the victims’ loss.

Defendant, Robert J. Freeman purported to be a minister and through fraudulent charities, caused several parishioners to take out substantial loans purportedly to help the church. In reality Freeman used the loan proceeds to accumulate substantial assets including: a $1.75 million house and more than $340,000 in luxury automobiles. Freeman convinced the parishioners that, although they took out the loan, he and the church would make payments. By October of 2005, Freeman and his wife owed debts in excess of $1.3 million and filed for bankruptcy. At his creditors meeting, Freeman falsely misrepresented his assets and presented fabricated earnings statements to a fictitious business.  The government charged Freeman with numerous crimes relating to his fraudulent activity; however, as a result of a plea agreement, he only pled guilty to one count of obstructing an official proceeding, relating to his misrepresentations at his bankruptcy hearing. Freeman was not convicted nor did he plead guilty to any crime relating to defrauding parishioners. The district court sentenced Freeman to 27 months in prison and ordered him to pay a total restitution of $631,050.52 to his victims. Freeman appealed to challenge the legality of the order of restitution.

On appeal, the Fourth Circuit first explained that a court may only order restitution based on statutory authority. In this case, the court determined that the district court ordered restitution as a condition of supervised release, pursuant to 18 U.S.C. § 3583(d). Under that section, a court may order restitution to repay victims “of the offense.” The Fourth Circuit held that, based on the plain language of the statute, “of the offense” meant that the court may order restitution “only for the loss caused by the specific conduct that is the basis of the offense of the conviction.”  In adopting this position, the Fourth Circuit sided with the overwhelming weight of authority from other circuits. In the present case, the Fourth Circuit held that the government failed to demonstrate the requisite causal connection between Freeman’s misrepresentations to bankruptcy officials and the victims’ significant financial loss. Even if Freeman had been entirely truthful at his bankruptcy proceeding, his victims would have suffered no less in unfortunate financial loss. Therefore, the Fourth Circuit reversed the district court order of restitution and remanded to the district court to determine whether or not to impose a fine.

Full Opinion

– Wesley B. Lambert

Temu v. Holder, No. 13-1192

Decided: January 16, 2014

The Fourth Circuit Court of Appeals vacated the Board of Immigration Appeals’ (“BIA”) order finding that a Tanzanian national who suffers from severe bipolar disorder was not a member of a social group, or persecuted for such membership, for asylum under the Immigration and Nationality Act (“INA”).

Tumaini Temu (“Temu”) first had a mental breakdown after his mother died in a car accident. Because of his behavior, Tanzanian officials took him to Muhimbili Hospital in Dar es Salaam, Tanzania, in 2003. In Tanzanian culture, severe mental illness with visibly erratic behavior is seen as a manifestation of demonic possession. Tanzanians even have a label for the group, “mwenda wazimu,” which means demon-possessed. The nurses at Muhimbili Hospital treated Temu with violence and abuse. When his condition worsened, his “treatment” became more inhumane. While binding and beating Temu with leather straps, the nurses said, “this is how we treat people who are mentally ill like you.” All prisoners were beaten, but Temu received worse beatings, and so did other prisoners who also suffered from severe mental illness.

Individuals qualify for asylum if they were persecuted on account of membership in a particular social group. On appeal, the Fourth Circuit addressed two questions: (1) whether Temu was persecuted because of membership in his proposed group and (2) whether Temu’s proposed group of “individuals with bipolar disorder who exhibit erratic behavior” qualifies as a “particular social group”.

Regarding the first question, the Fourth Circuit found that BIA’s conclusion that Temu was not persecuted because of membership in his proposed group was based on two logical contradictions that no rational fact finder could hold. First, it was impossible to square the BIA’s conclusion with the undisputed facts of the case. Nurses explicitly told Temu that “this is how we treat people who are mentally ill like you” and Temu was singled out for worse beatings, as were other prisoner with mental illness. Second, the BIA’s nexus finding and CAT finding were at logical loggerheads. The BIA concluded that Temu’s beatings were due to his erratic behavior, not his bipolar disorder per se. However, the IJ granted CAT relief, finding that Temu “was singled out for more frequent beatings because he was mentally ill.”

Regarding the second question about whether Temu’s proposed group qualified as a “particular social group,” the Fourth Circuit rejected the BIA’s conclusion that Temu’s proposed group did not qualify. The BIA has formulated a three-part test for a “particular social group:” (i) individuals share a common, immutable characteristic, (ii) the group has social visibility, and (iii) the group is defined with particularity.

Under the first-part of the test, the BIA improperly found no immutability, based on the fact that Temu’s erratic behavior could be controlled with medication. According to the Fourth Circuit, there is no cure for bipolar disorder. Therefore, Temu’s membership in his proposed group is not something he has the power to change. Further, the BIA itself has found that severe mental illness is immutable.

Next, the Fourth Circuit held that social visibility does not mean ocular visibility. Rather, it speaks to whether a group is in fact recognized as a group. The BIA found that while Tanzanian society unquestionably targets individuals who exhibit erratic behavior for serious forms of mistreatment, this mistreatment is not limited to those who have a diagnosis of bipolar disorder. Because the prosecutors used erratic behavior as an overbroad proxy for identifying victims, the persecutors did not view Temu’s proposed group as a group in the first place. However, the Fourth Circuit held this does not show that social visibility is lacking. Tanzanians still appear to view the “mwenda wazimu” as a group, and that is all that social visibility requires.

Finally, the BIA improperly concluded that Temu’s group lacked particularity, by breaking the proposed group into pieces and rejecting each piece, rather than analyzing his group as a whole. First, bipolar disorder is broad, covering a wide range of severity. Second, the definition of erratic behavior changes and has no precise, identifiable boundaries. However, Temu’s group is not “individuals with bipolar disorder” nor “individuals who exhibit erratic behavior.” Rather, Temu limits his group to those individuals with bipolar disorder who exhibit erratic behavior. Furthermore, the BIA itself has accepted individuals with bipolar disorder as a particular social group in the past.

Full Opinion

– Sarah Bishop

United States v. Aparicio–Soria, No. 12-4603

Decided: January 14, 2014

On rehearing en banc, the Fourth Circuit held that the Maryland crime of resisting arrest, Md. Code, Crim. Law § 9-408(b)(1), does not categorically qualify as a “crime of violence” under U.S. Sentencing Guideline § 2L1.2 (the reentry Guideline).  The Fourth Circuit therefore vacated the judgment of the United States District Court for the District of Maryland and remanded Marcel Aparicio–Soria’s (Aparicio–Soria) case for resentencing.

Aparicio–Soria pled guilty to a count of unlawful reentry of a deported alien subsequent to an aggravated felony conviction, under 8 U.S.C. §§ 1326(a) and (b)(2).  At sentencing, the Government argued that Aparicio–Soria’s sentence should be enhanced pursuant to the reentry Guideline, which advises federal district judges to enhance the offense level of a defendant convicted of certain immigration offenses “if that defendant has a prior conviction for ‘a crime of violence,’” U.S.S.G. § 2L1.2(b)(1)(A).  Specifically, the Government argued that Aparicio–Soria’s sentence should be enhanced pursuant to the “force clause” of the reentry Guideline—under which a state offense “that has as an element the use, attempted use, or threatened use of physical force against another” constitutes a crime of violence, U.S.S.G. § 2L1.2 cmt. N.1(B)(iii)—due to Aparicio–Soria’s prior conviction for resisting arrest in Maryland.  The district court found that, under the categorical approach, Aparicio–Soria’s prior conviction did not constitute a crime of violence under the force clause; however, under the modified categorical approach, his prior conviction did constitute a crime of violence.  Aparicio–Soria appealed.

The intervening precedent Descamps v. United States, 133 S. Ct. 2276, established that the district court erred in applying the modified categorical approach in this case.  However, because the Fourth Circuit can “affirm the district court on any ground in the record, including those rejected by the district judge,” United States v. Moore, 7098 F.3d 287, the Government argued for affirmation of the judgment under the categorical approach.

The Fourth Circuit noted that, under the Supreme Court’s analogous reasoning in Johnson v. United States, 130 S. Ct. 1265, the term physical force means “violent force—that is, force capable of causing physical pain or injury to another person.”  On the other hand—per the Maryland Court of Appeals case Nichols v. State, 44 A.3d 396—the force necessary for conviction under Maryland’s resisting arrest statute is the de minimis force constituting offensive touching.  The Fourth Circuit also found the Government’s reliance on Rich v. State, 44 A.3d 1063, unavailing; found the cases United States v. Wardrick, 350 F.3d 446, and United States v. Jenkins, 631 F.3d 680, irrelevant to the case at hand; and rejected the Government’s focus on the “realistic probability” of a resisting arrest conviction based on something other than violent force, as the focus in the categorical analysis is on the “elements, not facts.”

Full Opinion

– Stephen Sutherland

United States v. Shepperson, No. 11-4618

Decided: January 8, 2014

Chinua Shepperson was convicted several crimes, including racketeering, conspiracy, and murder in connection with his involvement in the Latin King gang. The district court sentenced Shepperson to life plus ten years’ imprisonment. Shepperson argues that the district court erred by not affording him the assistance of two attorneys at trial and by not excluding the testimony of a witness based on the government’s failure to furnish him with a list of witnesses three days before commencement of trial. On appeal, the Fourth Circuit affirmed Shepperson’s convictions.

On appeal, Shepperson first argued that the district erred by not affording him the assistance of two attorneys as required by the United States Code where a defendant is on trial for “treason or other capital crime.” Although the Attorney General did not seek a capital sentence in this particular case, the Fourth Circuit previously held that a defendant is entitled to representation by two attorneys in any capital-eligible case whether or not the death penalty is actually sought. Shepperson admitted that he did not request additional counsel; however, he asserted that the court nevertheless was obligated to inform him of his right to two attorneys sua sponte because of Shepperson’s obvious dissatisfaction with his own attorney. The Fourth Circuit disagreed, finding that the district court had no affirmative obligation with respect to the appointment of a second attorney where the defendant did not ask for one. Moreover, while the right to the assistance of a single attorney is a constitutional right guaranteed by the sixth amendment, the right to a second attorney in a capital case is a right created entirely by statute. Thus, the district court had no burden beyond the plain language of the statute, which merely imposed the obligation on the district court to appoint a second attorney upon the defendant’s request.

Secondly, Shepperson contended that the district court erred by not excluding the testimony of a witness for the government because the government did not furnish Shepperson with a list of witnesses three days before the commencement of trial as required in a capital case under the United States Code. The Fourth Circuit found this requirement inapplicable because the Attorney General elected not to pursue the death penalty. Moreover, while the government did not provide a list of witnesses three days before trial, the statute’s purpose of avoiding surprise was nevertheless met because the witness’s name was read aloud during the first day of jury selection, three days before the witness testified. Furthermore, Shepperson made no effort to exclude the witness’s testimony during trial because of the late disclosure. Therefore, the Fourth Circuit affirmed Shepperson’s convictions in district court.

Full Opinion

– Wesley B. Lambert

Swatch AG v. Beehive Wholesale, LLC, No 12-2126

Decided: January 7, 2014

The Fourth Circuit held that the district court did not err in finding that the marks at issue in this trademark infringement case were not confusingly similar and therefore affirmed the district court’s order dismissing all claims.

This trademark infringement claim arose out of a dispute between a well-known Swiss watchmaker, Swatch AG (“Swatch”), and Beehive Wholesale, LLC (“Beehive”), a Louisiana company engaged in wholesale and retail sales of a variety of products including watches and watch parts. Swatch is the owner of three U.S. registrations for the mark SWATCH. Beehive produces and sells watch bands and faces under the mark SWAP. Beehive’s products are defined by the fact that the parts are interchangeable. Swatch brand watches, on the other hand, do not include interchangeable components. And, are typically sold at a higher price point. Beehive applied to register its mark in mid-2004. The application was preliminarily granted and published for opposition on December 26, 2005. Swatch filed a notice of opposition in April 2008, primarily arguing that the similarity between the two marks in combination with the similar character of their products was likely to result in confusion among customers as to the origin of the goods. It also argued that SWAP was too generic to be registered. The Trademark Trial and Appeal Board (“TTAB”) held a hearing on the opposition and dismissed all counts.

Swatch then filed suit and added new claims for trademark infringement and federal unfair competition under the Lanham Act; trademark dilution under the Trademark Dilution Act; state trademark infringement under Virginia law; and common law unfair competition.  Though Swatch presented documentary evidence not presented to the TTAB, the district court affirmed the TTAB, holding that there was no likelihood of confusion between the two marks and no likelihood that SWAP would dilute SWATCH. It dismissed Swatch’s infringement and unfair competition claims as a matter of law. It also concluded that Beehive’s mark is registrable because it is suggestive, not merely descriptive. This appeal followed.

On appeal, the Fourth Circuit first noted that the district court articulated its standard of review erroneously; stating de novo review of the entire record is required where new evidence is submitted. The district court, however, stated it would apply a hybrid review to its analysis. This was incorrect because the district court had evidence available that was not considered by the TTAB. Nonetheless, the court found that the district court recited sufficient facts of its own to support its opinion.

Addressing Swatch’s first challenge, the Fourth Circuit held that the district court committed no error in determining that the SWAP mark was suggestive rather than descriptive. In so doing, the court noted that the district court found that SWAP was suggestive because merely showing the mark and the product together would be insufficient to convey its attributes. Next, the court addressed Swatch’s challenge that the district court erred in holding that there was no likelihood of confusion. Rejecting this contention, the court found that the lower court properly found that despite the name of SWATCH and the similarity of the goods, the lack of similarity between the marks, lack of predatory intent, lack of similar advertising and only minimal similarity in facilities, in combination with the most significant factor, actual confusion, resulted in no likelihood of confusion between SWATCH and SWAP. In addition, because there was no likelihood of confusion between the marks, the court held, as a matter of law, that Swatch’s federal, state, and common law trademark infringement and unfair competition claims were properly dismissed. Similarly, because the two marks were found not to be confusingly similar, Swatch’s dilution claim was also properly dismissed.

Full Opinion

– W. Ryan Nichols

Snider Int’l Corp. v. Town of Forest Heights, No. 12-2490

Decided: January 7, 2014

The Fourth Circuit affirmed the district court’s decision and held that two Maryland towns’ use of first-class mail to issue electronically-signed speeding citations and use of those citations as evidence at trial did not violate due process.

Snider International Corporation, Mark Cranford, Stan Brown, and Al Goyburu (“Plaintiffs”) received citations from the Town of Forest Heights, Maryland and the Town of Riverdale Park Maryland (“Defendants”). The citations were issued under Maryland’s speed camera program. These speed cameras produce electronically-recorded images of vehicles traveling in excess of the speed limit by at least twelve miles per hour. The automated citations carry a civil penalty no greater than forty dollars. Nonpayment and failure to contest the citation amounts to an admission of civil liability. The appropriate agency mails the citation to the registered owner of the recorded vehicle, and the citation must have the prescribed contents. A citation recipient may elect a trial in lieu of payment. At trial, the agency may introduce the citation as evidence without any corroborating evidence or authentication by the systems operator.

On appeal, the Fourth Circuit addressed whether the automated citations violated both procedural and substantive due process. At bottom, procedural due process requires fair notice of impending state action and an opportunity to be heard. Proper notice is that which is “reasonably calculated to effect actual notice.” The Supreme Court has routinely recognized that the use of mail satisfies the notice element of due process. Here, first-class mail was reasonably calculated to confer actual notice. Defendants used registration information collected by the state’s transportation agency to mail summonses to the addresses registered in connection with the recorded vehicles. Due to successful delivery, Plaintiffs lacked any indication that first-class mail could not reasonably provide actual notice. In addition, sufficiency of notice does not turn upon the distinctions of in personam, in rem, and quasi in rem. Finally, no evidence indicated that the United States Postal Service delivers certified mail at a rate so superior to that of first-class mail that the Fourth Circuit should have declared first-class mail not reasonably calculated to provide actual notice. Therefore, notice via first-class mail comports with due process.

The Fourth Circuit also addressed the validity of electronic signatures on citations and the admissibility of the citations as sworn testimony in trial. Having found notice sufficient, the Fourth Circuit only needed to evaluate the opportunity to be heard. This prong of the procedural due process inquiry has three factors: (1) the private interest involved, (2) the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards, and (3) the state interest, including fiscal and administrative burdens imposed by additional process. Here, Plaintiffs received constitutionally sufficient notice of the citation and potential penalty, and they could elect a trial. The notice set forth the basis for the adverse action. The trial permitted Plaintiffs to call witnesses and rebut the state’s evidence with their own. Plaintiffs’ driving privileges were unaffected and the $40 civil penalty was not subject to additional monetary penalties for nonpayment. The state has an interest in efficiently enforcing traffic laws would be greatly burdened were additional procedural safeguards required. Moreover, the mere availability of a trial is fatal to Plaintiffs’ procedural due process claims. Further, having forgone the opportunity to object to the use of electronically-signed citations as evidence, Plaintiffs were not able raise this issue for the first time on appeal in federal court.

Finally, the Fourth Circuit held that there was no substantive due process violation. Only the most egregious official conduct qualifies as constitutionally arbitrary. Plaintiffs failed to identify any element of the disputed procedures that equate to egregious official conduct unjustified by the state interest in traffic enforcement. Further, assessment of the $40 civil penalty was subject to correction through trial, presentation of witnesses, and rebuttal evidence and was, therefore, not arbitrary.

Full Opinion 

– Sarah Bishop

Hoschar v. Appalachian Power Company, No. 12-2482

Decided: January 7, 2014

The Fourth Circuit held (1) that the United States District Court for the Southern District of West Virginia properly denied Roger and Judy Hoschar’s (collectively, the appellants) motion to remand, as federal jurisdiction was proper due to complete diversity between the parties; and (2) that the district court properly granted summary judgment to Appalachian Power Company (APCO) because—under West Virginia law—there was no genuine issue of material fact regarding APCO’s actual or constructive knowledge of certain health risks associated with accumulations of bird excrement on the precipitators of its coal-fired power plant.  The Fourth Circuit therefore affirmed the judgment of the district court.

APCO owns the Philip Sporn power plant (Sporn), located in West Virginia.  Sporn, a coal-fired power plant, has five precipitators that “remove granular ash particles (fly ash) from the gasses produced by burning coal.”  APCO hired Industrial Contractors, Inc. (ICI) to perform maintenance at Sporn—including welding on the precipitators to prevent fly ash leakage.  Roger Hoschar (Mr. Hoschar), a boilermaker employed by ICI, worked exclusively at Sporn from March 2006 to March 2007.  Usually, Mr. Hoschar’s duties consisted of hanging from a suspended platform and welding corroded parts of the ducts on the Unit 5 precipitator (Unit 5).  Before welding, Mr. Hoschar had to remove debris that had agglomerated in the steel channels—including bird excrement.  ICI terminated Mr. Hoschar in March 2007.  In March 2009, Mr. Hoschar’s doctor discovered a mass on his right lung; after part of Mr. Hoschar’s lung was removed, a biopsy revealed that the mass was histoplasmosis—“an infectious disease caused by inhaling the spores of a naturally occurring soil-based fungus . . . .”  While Mr. Hoschar was performing maintenance at Sporn, the Occupational Safety and Health Administration website contained a page titled “Respiratory Protection: Hazard Recognition”; this page referenced a publication by the National Institute for Occupational Safety and Health (NIOSH) called “Histoplasmosis: Protecting Workers at Risk” (the NIOSH publication).  The NIOSH publication asserted that the relevant fungus “seems to grow best in soils having a high nitrogen content, especially those enriched with bird manure or bat droppings” and stated that the fungus “can be carried on the wings, feet, and beaks of birds and infect soil under roosting sites or manure accumulations inside or outside buildings.”

The appellants sued APCO and ICI for negligence in a West Virginia state court.  They sought damages for Mr. Hoschar’s histoplasmosis infection, alleging that he contracted the disease after inhaling contaminated dust while removing the bird manure and fly ash from Unit 5’s steel channels.  APCO removed the action to federal district court under 28 U.S.C. § 1332, stating that its principal place of business is in Columbus, Ohio, and that there was complete diversity among the parties.  The appellants filed a motion to remand the lawsuit to state court, asserting that complete diversity did not exist because APCO’s principal place of business is in Charleston, West Virginia.  The district court found that APCO’s principal place of business is in Columbus, Ohio, and therefore denied the appellants’ motion to remand.  After the discovery period, ICI and APCO filed separate summary judgment motions, both of which were granted by the district court.  The appellants subsequently settled with ICI; however, the appellants also appealed the district court’s denial of their motion to remand to state court, as well as the court’s grant of summary judgment in favor of APCO.

The Fourth Circuit found that—consistent with Hertz Corp. v. Friend, 559 U.S. 77, and Central West Virginia Energy Co. v. Mountain State Carbon, LLC, 636 F.3d 101—APCO’s “nerve center” is in Columbus, Ohio.  The Fourth Circuit noted that, inter alia, “APCO’s entire Board of Directors is located in Columbus,” as are twenty-two of its twenty-seven corporate officers—including its CEO, CFO, Secretary, and Treasurer; that the corporate officers in Columbus make significant decisions and make corporate policy “such that they direct, control, and coordinate APCO’s activities”; that only five of the twenty-seven corporate officers are based in Charleston; and that the Charleston officers simply conducted “day-to-day operations and public interface” rather than the corporate direction, control, and coordination indicative of a nerve center.  The Fourth Circuit rejected the appellants’ asserted difference between “ultimate” control and “actual” control, finding that these two terms are synonymous under Hertz—“provided that ultimate control amounts to directing, controlling, and coordinating the corporation’s activities.”  The Fourth Circuit also found that APCO’s references to Charleston as its “headquarters” was merely a misnomer, and that the actual nerve center activities occur in Columbus.  With regard to the district court’s grant of APCO’s summary judgment motion, the Fourth Circuit noted that there was no evidence that APCO employees knew the relevant fungus was present at Sporn.  Furthermore, with regard to constructive knowledge, the Fourth Circuit noted that APCO did not have reason to be award of the NIOSH publication.

Lastly, though the appellants argued that the question of APCO’s knowledge was inherently a factual determination for the jury, the Fourth Circuit noted that the knowledge determination pertained to “whether a legal duty was owed to Mr. Hoschar in the first place”—and that the appellants failed to present evidence creating a genuine issue of material fact in this regard.

Full Opinion

– Stephen Sutherland

Fox v. Elk Run Coal Co., No. 12-2387; 12-2402

Decided: January 3, 2014

The Fourth Circuit concluded that a coal miner’s wife was not entitled to benefits under the Black Lung Benefits Act (“BLBA”) dating back to 1997 because the Elk Run Coal Company did not commit fraud on the court by failing to disclose advantageous evidence to a coal miner at his 1997 BLBA benefits proceedings.

Gary Fox worked as a coal miner at the Elk Run Coal Company (“Elk Run”) in West Virginia for more than 30 years before dying from pneumoconiosis (also known as Black Lung Disease) in 2009. In 1997, x-rays revealed that Fox had an unidentified mass in his right lung. In 1998, a pathologist obtained surgical samples of the mass. Fox filed for benefits under the BLBA, asserting that the mass in his right lung was pneumoconiosis he sustained from working in mines. The Director of the United States Department of Labor’s Office of Workers’ Compensation (“Director”) determined that Fox was entitled to benefits under the BLBA. Elk Run then moved for an evidentiary hearing before an Administrative Law Judge (“ALJ”) to contest the Director’s finding. Elk Run solicited opinions from numerous pathologists, two of which determined that Fox likely suffered from pneumoconiosis. At the evidentiary hearing before the ALJ, Elk Run presented findings of several pathologists, but did not provide the two reports favorable to Fox. Fox appeared pro se at the hearing, only presenting his personal testimony in support of his case. The ALJ denied benefits. Fox did not appeal.

In 2006, Fox retained counsel and filed a new claim under the BLBA. Once again, the Director found that Fox was entitled to benefits under the BLBA and Elk Run requested an evidentiary hearing before an ALJ. This time, Fox’s attorney conducted intensive discovery. Elk Run admitted liability for Fox’s 2006 claims and disclosed numerous documents, including the pathology reports supporting Fox’s 1997 claim. Fox then moved to set aside the previous judgment, arguing that Elk Run committed fraud on the court that justified awarding benefits dating back to Fox’s original 1997 petition for benefits. The ALJ agreed and awarded benefits dating back to January 1997. On appeal, the Benefits Review Board disagreed, finding that Elk Run’s failure to disclose the reports did not rise to the level of fraud on the court. Fox then appealed to the Fourth Circuit.

The Fourth Circuit affirmed, holding that Elk Run’s conduct did not constitute fraud on the court. The court emphasized that fraud on the court was a high bar that required showing conduct on one party’s “deliberately planned and carefully executed scheme that severely undermined the integrity of the judicial process.” Such a finding requires more than ordinary fraud, such as “bribery of a judge or juror, or improper influence exerted on the court by an attorney, in which the integrity of the court and its ability to function impartially is directly impinged.” In the present case, Fox had the opportunity at the first ALJ hearing to cross-examine witnesses and present his own evidence, yet he declined to do so. He did not hire counsel to represent him in the first proceeding, even though the ALJ advised Fox of the desirability of doing so and the BLBA’s allowed for the recovery of attorneys’ fees. In the subsequent proceeding, Fox’s attorney easily discovered the favorable pathology report. While Fox most likely would have won with proper counsel, Elk Run was under no obligation to present unfavorable evidence at the ALJ hearing. Thus, the Fourth Circuit held that Elk Run’s decision not to disclose the unfavorable reports at the first proceeding did not rise to the level of fraud on the court.

Full Opinion

– Wesley B. Lambert