Case Summaries 2015

ETIENNE v. LYNCH, NO. 14-2013

Decided: December 30, 2015

The Fourth Circuit denied Petitioner Eddy Etienne’s (“Etienne”) petition for review.

In 1984, Etienne entered the United States as an illegal immigrant. In 1986, Etienne pleaded guilty to conspiracy to violate the controlled dangerous substances law of Maryland. After his release from prison, Etienne continued to live in the United States illegally. After the Haiti earthquake in 2006, Etienne applied for Temporary Protected Status (“TPS”) and his request was accepted. However, in 2014, the Department of Homeland Security (“DHS”) denied his application for renewal. DHS initiated expedited removal proceedings against Etienne and charged him with being deportable under the Immigration and Nationality Act (“INA”) for being an alien convicted of an “aggravated felony.” DHS claimed that Etienne’s 1996 Maryland conspiracy conviction was an aggravated felony.  On March 20, 2014, DHS issued a Final Administrative Removal Order for Etienne’s removal to Haiti. As a result, Etienne filed his petition for review to the Fourth Circuit.

On appeal, Etienne argued that his 1996 Maryland conspiracy conviction did not constitute an “aggravated felony” under the INA, and therefore, the DHS erred in finding him deportable. The Court, however, had to first address whether Etienne’s failure to raise this argument in the administrative proceedings deprived the Court of jurisdiction. The Court agreed with Fifth Circuit case law and found that, in expedited removal proceedings, an alien has no opportunity to challenge the legal basis of his removal. As a result, the Court determined that it had jurisdiction over Etienne’s case.

Second, the Court addressed whether Etienne’s conspiracy conviction was an “aggravated felony” under the INA. The parties agreed that a categorical approach had to be applied to determine whether a state-law crime qualified as an “aggravated felony.” The parties, however, disagreed as to whether, under a categorical approach, “the term ‘conspiracy’ in 8 U.S.C. § 1101(a)(43)(U) is defined as it was at common law or by the prevailing contemporary meaning of the term, which requires proof of an overt act.” Etienne argued that because Maryland’s conspiracy crime did not require proof of an overt act, that his conviction did not qualify as an “aggravated felony.” The Court disagreed, however, and noted that there was no evidence that Congress intended not to incorporate the common-law definition of “conspiracy” when it included that term in the INA. As such, the Court held that a state-law conspiracy conviction does not require an overt act as an element for the conviction to qualify under the INA as an “aggravated felony.” Therefore, the Court found that DHS properly classified Etienne’s conviction.

Accordingly, the Court denied Etienne’s petition for review.

Full Opinion

Meredith Weisler

RICH v. U.S., NO. 14-7204

Decided: December 29, 2015

The Fourth Circuit affirmed in part and remanded in part.

This case stemmed from Joshua Rich’s (“Rich”) attack in a recreation area while serving a fifty-seven year sentence. He sued for the prison officials’ negligence under the Federal Tort Claims Act, alleging that they failed to protect him from the attack by failing to pat down all inmates before the attack. The district court granted the government’s motion to dismiss due to lack of subject matter jurisdiction due to the discretionary function exception. This appeal followed.

The Fourth Circuit began by determining that the standard of review in this case was de novo for lack of subject matter jurisdiction, and abuse of discretion for denial of jurisdictional discovery. The Court first examines the discretionary function exception, noting that courts apply a two-pronged test. They then applied that test to determine if the discretionary function applied in this case, specifically, if “the challenged governmental conduct involves an element of judgment or choice and, if so, whether that judgment was based on considerations of public policy.” The Court looked at the regulations governing the system (“CIM”) that monitors certain inmates, especially those that need to be separated from others. The Court notes that 28 C.F.R. § 524.72(d) provides that those inmates “may” require separation, but that no specific action is required; officials are instead supposed to consider several factors and use their own judgment to determine if inmates need to be separated. Because they exercise broad discretion, the Court concluded that the first prong of the test was satisfied. The Court then turned to the second prong of the test. Because this is a novel issue for the Court, they looked to other circuits for guidance, and in doing so, agreed that the discretionary functions exception applied in this case.

As to Rich’s argument that he was entitled to discovery, the Court held that the discretionary function exception would still apply “to the decision of the officials regarding prisoner placement,” so the district court did not abuse its discretion when it refused to allow Rich discovery. However, on the issue of whether the district court properly denied discovery regarding Rich’s allegations that the officials did not search his attackers properly, the Court said that those facts are “intertwined” with the “disputed jurisdictional facts.” Because Rich alleged that no pat downs occurred, and because the Court said that even if pat-downs had occurred, there still needed to be a determination if those pat-downs comported with the guidelines in the manual, the Court found that Rich should have been allowed discovery on that issue. Finally, the Court held that Rich may have been able to establish jurisdiction, because the exception would not have applied if the officials’ conduct had been “marked by individual carelessness or laziness.” Therefore, the Fourth Circuit affirmed the application of the discretionary function exception, but vacated the judgment with respect to the pat downs and remanded.

Full opinion

Jennie Rischbieter

CALDERON v. GEICO, NO. 14-2111

Decided: December 23, 2015  

GEICO is in the business of supplying insurance for its customers. The plaintiffs are employees or former employees of GEICO that worked in the capacity of security investigators (Investigators). The Investigators work in GEICO’s Claims Department primarily investigating claims that are suspected of being fraudulent. Under the Fair Labor Standards Act (FLSA) employers are required to pay overtime for each hour their employees work in excess of 40 hours per week; however, the Act exempts “any employee employed in a bona fide executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). GEICO has been classifying its Investigators as exempt from the FLSA’s requirement to pay overtime. This case primarily concerns the validity of that classification and the damages that would be due if GEICO had violated the FLSA.  

In FLSA exemption cases, “the question of how [employees] spen[d] their working time…is a question of fact,” but the important question of whether the exemption applies is a question of law. FLSA exemptions are narrowly construed against the employers. Specifically, the Act exempts “any employee employed in a bona fide executive, administrative, or professional capacity.” Congress did not define this phrase but delegated authority to the Labor Department to issue regulations to define these terms. The regulations provide that the administrative exemption covers employees: (1) who are compensated at a rate of not less than $455 per week; (2) whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. The parties stipulated at the district court that the first element has been satisfied. The district court also determined the second element was likely satisfied. However, the district court ruled that the plaintiffs were entitled to partial summary judgment because GEICO failed to establish the third element. Determination of an employee’s primary duty must be based on all the facts of the case, with a major emphasis on the character of the employee’s job as a whole.

The Fourth Circuit determined that the Investigator’s conducting of factual investigations, regardless of how important they were to the employer, was not directly related to the management of general business operations of GEICO. Regardless of how the Investigators’ work product was used or who the Investigators were assisting, whether their work was directly related to management policies or general business operations depend on what their primary duty consists of. The primary duty of the Investigators, conducting factual investigations and reporting the results, is not analogous to the work in the “functional areas” that the regulations identify as exempt. The Fourth Circuit concluded that although the issue presented a very close legal question, GEICO did not show that the Investigator’s primary duty was directly related to GEICO’s management or general business operations. Therefore, the district court properly granted partial summary judgment to the plaintiffs on the issue of whether GEICO improperly classified the plaintiffs as exempt.

Further, the plaintiffs argued in their cross-appeal that the district court erred in granting partial summary judgment to GEICO on the issue of willfulness under the FLSA. Under the Portal-to-Portal Act, the length of the FLSA’s statute of limitations depends on whether the violation was willful. If it willful, then the limitations period is three years, and if it is not willful, the statute of limitations is two years. Negligence is insufficient to establish willfulness. Only employers who either knew or showed reckless disregard for the matter has willfully violated the FLSA. GEICO addressed the determination for exemption several times by bringing in high level officers, and the district court determined the decision to continue to classify the Investigators as exempt was a reasonable one. The Fourth Circuit determined that the district court was correct, and there was no basis upon which a reasonable factfinder could conclude that GEICO’s decision to classify its investigators as exempt was knowingly incorrect or reckless.

Additionally, the plaintiffs argued that the district court erred in the calculation of the compensation they were due for unpaid overtime and the denial of their request for liquidated damages. However, the Fourth Circuit concluded that the district court was correct in its calculation of compensation and its denial for liquidated damages. Lastly, the plaintiffs argue that, in the absence of an award of liquidated damages, the district court erred in declining to award prejudgment interest on the basis that GEICO acted in good faith in treating its Investigators as exempt. Under the FLSA, normally, prejudgment interest is necessary in the absence of liquidated damages, to make the plaintiff whole. Because the prejudgment interest on an FLSA overtime claim is compensatory and not punitive, the fact that the defendant’s decision not to treat the plaintiffs as exempt was reasonable or in good faith is not a valid basis for the denial of the award. Accordingly, regarding the New York Labor Law claims, the Fourth Circuit determined the district court did not have the discretion to decline to award prejudgment interest.

Full Opinion

Austin T. Reed

 

U.S. V. BARLOW, NO. 15-4114

Decided: December 21, 2015

In a case about criminal sentencing, the Fourth Circuit found that Camden Barlow’s prior state convictions qualified as felonies under federal law, but that, given new law, he did not have enough predicate violent felonies to qualify as an armed career criminal under the Armed Career Criminal Act (ACCA).  On this basis, the Fourth Circuit partially affirmed, and partially reversed the District Court, and remanded the case for resentencing.

In April, 2013, Barlow pled guilty to two North Carolina counts of felony speeding to elude arrest.  In July, 2013, Barlow pled no contest to two North Carolina counts of felony breaking and entering.  In May, 2014, Barlow was indicted by a federal grand jury for being a felon in possession of a firearm who had committed three prior violent state felonies.  At trial, Barlow pled guilty, but maintained that his prior state crimes were not felonies, and that he did not have three prior violent felonies as required for ACCA sentencing enhancement.  The District Court found against Barlow on both counts.  The Court found that his state crimes were felonies because they carried a possible sentence of more than one year.  The Court then counted his two speeding convictions as two felonies, but his two breaking and entering convictions as one felony because the two breaking and entering charges came from the same incident.  The Court also found that Barlow’s prior North Carolina juvenile delinquency conviction for discharging a firearm into occupied premises could be a predicate violent felony.  Having found at least the three required predicate violent felonies, the District Court sentenced Barlow as an armed career criminal under the ACCA to the mandatory minimum 180 months imprisonment.  Barlow appealed to the Fourth Circuit.  He argued that his speeding convictions did not qualify as predicate violent felonies under the ACCA.  He also argued that none of his prior state convictions constituted felonies, because North Carolina sentencing law required a nine-month post-release supervision period for the last nine months of his sentence, and each of his actual prison sentences was thus under one year, so he did not meet the definition of a felon, and thus could not be a felon in possession.  

The Fourth Circuit first found that the two speeding to elude arrest convictions did not constitute predicate violent felonies under the ACCA.  The Fourth Circuit noted that for a felony to be an ACCA violent felony, it must: 1) involve “use, attempted use, or threatened use of physical force” against another person, 2) be among an ACCA list of violent felonies, or 3) fall into a residual category as a crime that “‘otherwise involves conduct that presents a serious potential risk of physical injury to another.’”  Speeding to elude arrest did not fit into the first two categories, so it could only be an ACCA predicate violent felony if it fit into the third category.  The Supreme Court’s 2015 Johnson v. U.S. ruling held this third category to be unconstitutionally vague.  On this basis, the Government in the instant case conceded that the two speeding to elude arrest convictions no longer qualified as predicate violent felonies under the ACCA.  Thus, Barlow only had at most two predicate violent felonies under the ACCA, and thus was no longer eligible for ACCA sentencing enhancement.

The Fourth Circuit next found that Barlow’s remaining state convictions qualified as felonies.  The Fourth Circuit found that under North Carolina’s Structured Sentencing Act and Justice Reinvestment Act, all felonies in North Carolina now include a minimum possible sentence of at least 13 months, so all qualify as predicate felonies under federal law.  The new laws also require a mandatory nine-month period of supervised release to be served as the last nine months of the prison sentence imposed for a category of felonies including those for which Barlow was convicted.  Based upon North Carolina’s statutory language, a contrast with the federal sentencing system, and how North Carolina treats revocation of post-release supervision, the Fourth Circuit held that this post-supervision release period did not cut down the prison sentence, but was part of the prison sentence.  Because the period of imprisonment for Barlow’s state crimes was thus long enough to qualify them as felonies under federal law, Barlow could be a felon in possession of a firearm.  On this basis, the Fourth Circuit partly affirmed, and partly reversed the District Court, and remanded the case for resentencing.

Full Opinion

Katherine H. Flynn

 

U.S. v. RUSH, NO. 14-4695

Decided: December 21, 2015

The Fourth Circuit reversed the order of the district court and remanded the case for further proceedings.

On May 23, 2012, Marquita Willis (“Willis”) called the Metropolitan Drug Enforcement Network Team of Charleston, West Virginia (“MDENT”) to inform them that she suspected Defendant Kenneth Rush (“Rush”) of dealing drugs from her apartment. Willis gave the police officers a key to her apartment. The officers found Defendant asleep in the master bedroom. After waking Defendant, the officers handcuffed and questioned Defendant. Sergeant Winkler told Defendant that the officers had a warrant to search the apartment, however, they did not in fact have a warrant. In a search of the apartment, the officers found crack cocaine and digital scales. Defendant was arrested and charged with one count of knowingly and intentionally possessing with intent to distribute twenty-eight grams or more of cocaine base in violation of 21 U.S.C. § 841(a)(1). Defendant moved in limine to suppress the evidence obtained from the warrantless search of Willis’s apartment. The district court found a constitutional violation, however, it denied the motion to suppress. The court noted that the police lied “in a justifiable effort to protect Willis.”

On appeal, the Fourth Circuit noted that both parties agreed that the Defendant’s Fourth Amendment rights were violated. The parties, however, disagreed about whether the resulting evidence should be suppressed. The Court stated that exclusion of evidence is appropriate when the deterrence benefits of suppression outweigh the “substantial social costs” of excluding the evidence. The Court cited United States Supreme Court case law that found a good-faith exception, “when police act with an objectively reasonable good-faith belief that their conduct is lawful.”

In this case, the Court found that the search was unconstitutional due to the intentional decision of Sergeant Winkler to tell Defendant that he had a search warrant, when he did not. Furthermore, the Court held that the good-faith exception did not apply because the officers did not hold an objectively reasonable belief that it was lawful to conduct the search after lying about the existence of a warrant. The government argued that the officers acted in good faith because the officers merely sought to protect Willis. The Court, however, disagreed and reiterated that the good-faith exception only applies if the officers have an objectively reasonable belief that their conduct is actually lawful. Therefore, the Court found that the good-faith exception did not apply in this case.

Accordingly, the Court reversed the judgment of the district court and remanded the case.

Full Opinion

Meredith Weisler

 

MONTGOMERY CO. v. F.C.C. NO. 15-1240, 15-1284

Decided: December 18, 2015

The Fourth Circuit denied the petition for review.

The Fourth Circuit began by laying out the statutory and regulatory framework, looking at the creation of the Spectrum Act, specifically Section 6409(a) of the Act, and an Order issued by the FCC implementing that section. The Court focuses on two aspects of the Order, one that establishes a “deemed granted remedy,” and the other that clarifies the definitions of “substantial,” “wireless towers,” and “base stations.” After carefully describing both aspects of the Order, the Court then turned to Petitioners’ arguments that the FCC’s order violates the Tenth Amendment “by compelling the states to grant permit applications,” and that the definitions in the Order are inconsistent with the Act.

With respect to the Tenth Amendment argument, the Court determines that it has jurisdiction to review constitutional challenges, and that it is to set aside agency action that is “contrary to constitutional right.” Specifically, as delineated in case law, the Tenth Amendment does not allow the federal government to require states to enforce federal law, subject to certain exceptions. However, when the Court reviews the “deemed granted” procedure, it concludes that the procedure complies with the Tenth Amendment. The Order does not force the states to take action, because the “deemed granted” provision gets rid of the need for the states to “affirmatively approve applications,” instead allowed them to be granted by default without states’ approval. Therefore, there is no Tenth Amendment conflict.

The Court then turns to the Petitioners’ contentions that the FCC terms were unreasonably defined in the Act. However, the Court determined that it could set aside the Order only if concluded that the FCC’s rules were “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Furthermore, under Chevron, the FCC was entitled to deferential review of its interpretation of Section 6409(a). The Court then applied the Chevron analysis. First, the Court found that the terms at issue are ambiguous. Therefore, the sole inquiry before the Court under the analysis was whether the interpretation was “based on a permissible construction of the statute.”  Specifically, the Court looked at how the FCC defined “substantially change” and “base station.” Petitioners argue that the FCC should have permitted municipalities to review applications on a case-by-case basis, and because of this, the Court determines that they are not arguing about the standards themselves, but about the fact that the FCC set those standards at all, an argument that the Court deems is improperly raised in the Court. However, the Court concludes that the standards do allow for the incorporation of some context, even if there is no case-by-case consideration. As to the definition of “base station,” the Court determines that its definition does align with the purpose of Section 6409(a), and that it is defined in accordance with the regulatory schemes; in this case, the definition is “consistent with Congress’s intent to promote the expansion of wireless networks through collocation.” Therefore, the Fourth Circuit held that the Petitioners failed to carry their burden, and denied their petition.

Full opinion

Jennie Rischbieter

U.S. v. STOVER, NO. 14-4283

Decided: December 18, 2015  

The Fourth Circuit affirmed the district court’s denial of the defendant’s motion to suppress a firearm as the fruit of an illegal seizure.  

In the early morning hours, two uniformed police officers were patrolling the “King Sector” of Temple Hills, Maryland. This was an area where several violent robberies had recently occurred. At approximately 1:00 a.m., the officers noticed a vehicle double-parked in the small private parking lot of an apartment building. Despite noting that it was “not suspicious for someone to be sitting in a parking lot,” the officers returned a few minutes later to check on the car. Because of the car’s out-of-state plates, the area’s reputation for crime, and the double-parking, the officers concluded they had the right to stop the occupant of the car to see what was going on.  The officers pulled behind the vehicle, activated the emergency lights, and illuminated the driver’s side of the vehicle with a spotlight.  

During the suppression hearing, there was conflicting testimony between the officers and a passenger that was in the vehicle. After considering the conflicting accounts, the district court found the following facts by a preponderance of the evidence. When the police vehicle pulled up, Stover did at some point get out of the vehicle and open two of the vehicle’s doors. Stover, at some point, did walk to the front of the car. At some point, one of the officers said, “get back in the car” and tried to stop Stover from getting out of the car. When one of the officers saw Stover move to the front of the vehicle, the officer ran to the front of the vehicle with his gun out, and put the gun in Stover’s face. It was the presence of the officer’s gun in the face of Stover that caused Stover to “acquiesce” and for Stover to drop a gun in front of the vehicle. Only after Stover dropped his loaded gun did he comply with the officers and got back in the vehicle.

Stover was charged with a single count of possessing a firearm as a felon, in violation of 18 U.S.C. § 922(g)(1) (2012). Stover attempted to suppress the gun as the fruit of an illegal seizure. The government did not maintain that the officers had reasonable suspicion to stop Stover; however, the government argued that under California v. Hodari, Stover never submitted to police and thus was not seized until after he dropped the loaded gun at the hood of the vehicle. The district court agreed and because Stover dropped his gun prior to complying with police orders, the district court found that the gun had been abandoned before the seizure and was admissible at trial. Stover was found guilty and appealed, challenging the district court’s denial of his motion to suppress.

Neither party disputed that a seizure occurred during the interaction in the parking lot. However, they did dispute exactly when the seizure occurred. Stover argues that the officers seized him, without reasonable suspicion, when the police vehicle pulled up behind his vehicle in the parking lot, rendering his gun the fruit of an illegal seizure. Conversely, the government argues that the officers did not seize Stover until after he abandoned his firearm in front of his car, prior to submitting to police authority.

The Fourth Amendment protects the rights of the people against unreasonable seizures. Generally, law enforcement officers do not seize individuals by merely approaching them in a public place and putting questions to them. In Terry v. Ohio, the Supreme Court explained, “only when the officer, by means of physical force or show of authority, has in some way restrained the liberty of a citizen may we conclude that a seizure has occurred.” When there is an absence of physical force, a seizure requires both a “show of authority” from law enforcement officers and “submission to the assertion of authority” by the defendant. In order to display a “show of authority,” an objective test is used, looking at the circumstances of the incident and whether a reasonable person would have believed that he was not free to leave. But without actual submission to the police, there has only been an attempted seizure, which is not subject to protection by the Fourth Amendment.

First, the Fourth Circuit considered whether, under the totality of the circumstances, a reasonable person would have felt free to leave after the officers pulled behind Stover’s car. The officers blocked Stover’s vehicle, were armed and uniformed and did not ask if they could speak to him, activated the blue lights, drew their weapons, and shined a spotlight on Stover. The Fourth Circuit determined this was not a close question and the police officers’ aggressive conduct from the start of their interaction would have made a reasonable person feel unable to leave.

Second, the Fourth Circuit considered whether Stover’s conduct constituted a submission to the assertion of authority by the police officers. Stover argues that he passively acquiesced to police authority by remaining at the scene. However, the district court determined his actions did not show his submission to the assertion of the officer’s authority. The evidence shows that instead of remaining seated in his car, Stover exited the vehicle with the loaded gun in his hand. Officers attempted to get him to stay in the car; however, Stover continued to walk away towards the front of the vehicle. Only after Stover dropped his firearm did he comply with police orders. The Fourth Circuit concluded that, under the totality of the circumstances, it could not hold that “walking away from police with a loaded gun in hand, in contravention of police orders, constitutes submission to police authority.” Therefore, the Fourth Circuit held the gun was not the fruit of the seizure, but was abandoned.

Judge Gregory dissented, believing that Stover passively acquiesced to the police’s show of authority because he remained at the focal point of the investigation without attempting to avoid being seized; therefore, the firearm would have been the fruit of an illegal seizure.

Full Opinion

Austin T. Reed

 

WILLIAMS v. GENEX SVCS., LLC, NO. 14-1966

Decided: December 18, 2015

In a case about entitlement to overtime pay under the Fair Labor Standards Act (FLSA) and Maryland Wage and Hour Law (MWHL), the Fourth Circuit found that Nancy Williams was employed as a professional, and thus, Genex Services, LLC (Genex) did not have to pay her overtime.  On that basis, the Fourth Circuit upheld the District Court’s grant of summary judgment to Genex.

Williams began working at Genex in 2011 after Genex acquired her former employer.  Genex provides “integrated managed care services” to employers and workers’ compensation insurers in an attempt to control the costs of health care and disability, ensure provision of quality health care, and improve workers’ ability to return to work.  Williams, who was a registered nurse, and held several professional certifications, worked for Genex as a Field Medical Case Manager (FMCM).  In this capacity, she worked with a variety of people, including attorneys, carriers, doctors, and employees to ensure that workers received quality health care, and were able to return to work.  

In July, 2013, Williams sued Genex arguing that Genex violated FLSA and MWHL by not paying her overtime.  The District Court granted summary judgment to Genex on the basis that Williams was a learned professional, and thus Genex was not required to pay her overtime.  The District Court based this finding on the fact that Williams was a registered nurse, and required to be one to hold her position, that she did work requiring specialized knowledge, and that she used this knowledge to serve her clients while also using discretion in performing her job duties.  Williams appealed to the Fourth Circuit.  

The Fourth Circuit focused its analysis on Williams’s FLSA claim because the definition of professional in the FLSA and MWHL is the same, so if the FLSA claim failed because Williams was a professional, the MWHL claim would as well.  The Fourth Circuit then noted that Department of Labor regulations define a professional employee as one who earns at least $455 per week, and whose primary job duty is work that requires advanced knowledge normally achieved through specialized learning, or which requires creativity.  Here, Williams, who earned over $80,000 per year in 2012 and 2013, clearly met the salary requirements.  The Fourth Circuit found that Williams also met the requirements of a job whose primary duty involved advanced knowledge.  They noted that the job description Williams proved on her resume included “‘assessing patient needs,’” creating patient plans, analyzing data, and working with other professionals.  Further, Williams routinely used her skills as a registered nurse in performing her job duties including coordinating medical care, teaching employees about their conditions, and suggesting alternate treatments.  Williams did much of her work without supervision.  On this basis, the Fourth Circuit found that Williams fit within the FLSA’s definition of a professional employee, and thus Genex was not required to pay her overtime.  For this reason, the Fourth Circuit affirmed the District Court’s grant of summary judgment to Genex.

Full Opinion

Katherine H. Flynn

PEARSON v. COLVIN, NO. 14-2255

Decided: December 17, 2015

The Fourth Circuit reversed the order of the district court and remanded the case for further proceedings.

On February 5, 2009, Plaintiff Jeffrey Pearson (“Pearson”) was laid off from his most recent job. Six weeks later, Pearson applied for Social Security disability benefits under Titles II and XVI of the Social Security Act. Pearson claimed to be disabled due to arthritis of the spine, degenerative joint disease and a torn rotator cuff in his right shoulder, shin splints, degenerative artery disease in his feet, a hiatal hernia, irritable bowel syndrome, post-traumatic stress disorder, depression, and anxiety. Pearson’s application was initially denied and an administrative law judge (ALJ) affirmed the denial. The Social Security Appeals Council (Appeals Council) granted Pearson’s request for review and remanded the case for further consideration, including testimony from a vocational expert.

At the second ALJ hearing, the ALJ posed several scenarios to the vocational expert. The expert testified that the hypothetical individual with Pearson’s disabilities would have been unable to perform Pearson’s previous jobs, but that Pearson could perform many other jobs in the national economy The expert did not mention any conflicts between his testimony and what is contained within the Dictionary of Occupational Titles (“Dictionary”). As such, the ALJ affirmed its initial denial of benefits to Pearson. The ALJ concluded the Pearson could not perform his past jobs, but that he could perform jobs that exist in a significant number in the national economy. The Appeals Council denied a second review. Next, Person filed this action in federal court. The magistrate judge recommended a grant of summary judgment for the Social Security Administration Commissioner (“Commissioner”). Person filed objections, but the district court adopted the magistrate judge’s recommendation.

On appeal, the Fourth Circuit noted that it must uphold the determination of the ALJ when it has applied correct legal standards and the factual findings are supported by substantial evidence. Pearson argued that the ALJ must do more than simply ask the vocational expert if his testimony conflicts with the Dictionary. The Commissioner disagreed, and argued that the ALJ only has the single “affirmative responsibility” to ask the vocational expert whether his testimony conflicts with the Dictionary. The Court agreed with Pearson and held that the ALJ must independently identify conflicts between the expert’s testimony and the Dictionary. The Court found that, in this case, the expert’s testimony conflicted with the Dictionary. However, the Court noted that this simply “means that the ALJ and the expert should address exactly what form of reaching the stated occupations require and whether the claimant can fulfill those requirements.” Therefore, in this case, the vocational expert must testify as to how many of the possible positions do not require bilateral overhead reaching so that Pearson could perform all aspects of the job. If there are a sufficient number of the positions that do not require frequent bilateral overhead reaching, then the ALJ can properly find that Pearson is not disabled.

Accordingly, the Court reversed the judgment of the district court and remanded the case with instructions to remand it to the Commissioner for further proceedings.

Full Opinion

Meredith Weisler

 

U.S. v. WILLIAMS, NO. 15-7114

Decided: December 14, 2015

The Fourth Circuit vacated and remanded.

Lance Antonio Williams (“Williams”) appeals the decisions of the Middle District of North Carolina that ruled he was ineligible for a sentence reduction. Williams argues that Guidelines Amendment 780 revised § 3582(c)(2)’s policy statement covering sentence reductions, thus qualifying him for relief. Williams had originally pled guilty to distributing cocaine base, and prior to his plea, the U.S. Attorney filed notice that Williams’ previous North Carolina drug conviction would be used to enhance his sentence. They then calculated the proper sentence, and after Williams’ filed a pro se motion for a sentence reduction under 18 U.S.C. § 3582(c)(2), the district court denied his motion because his sentence was based on a statutory mandatory minimum, as opposed to the Guidelines range that had been lowered. This appeal followed.

The Fourth Circuit began by determining that the standard of review for the case was de novo. The Court first summarized the principles behind sentence reductions. Primarily, the Court relies on the idea that the Commission has the power to “abrogate precedent in the courts of appeals,” and has the power to set and amend the guidelines where it sees fit. Therefore, the Court recognized that the “precedent in the sentence-reduction context must give way if it conflicts with the Commission’s amendments.” The Court then looked at U.S. v. Hood, the case the district court relied on its decision. Specifically, the Court looked at its then-treatment of Amendment 706, which at the time did not impact any of the provisions in Guidelines section 5K1.1, and because of that, could not provide relief per § 3582(c)(2). However, following Hood and the subsequent circuit split, the Commission passed Guidelines Amendment 780, which modified § 3582(c)(2) relief. This Amendment, reasoned the Court, changes the outcome of Hood, so the district court’s reliance on that case was wrong. The Amendment “explicitly provides that a defendant in Williams’s situation is eligible for a § 3582(c)(2) sentence reduction.” After rejecting the applicability of Hood, the Court then turned to the question of whether Williams was eligible for a sentence reduction under Guidelines section 1B1.10. Going through the factors, the Court determined that Williams was indeed eligible for such a reduction; however, because the amount of the reduction Williams is eligible for is a “decision for the sentencing court,” the Fourth Circuit vacated the judgment of the lower court and remanded the case.

Full opinion

Jennie Rischbieter

U.S. v. WILLIAMS, NO. 14-4049

Decided: December 14, 2015  

The Fourth Circuit concluded the district court was incorrect in finding that reasonable suspicion existed to extend a traffic stop beyond its initial purpose; and therefore, vacated the defendant’s conviction and sentence and remanded for such other and further proceedings as may be appropriate.

Williams and his girlfriend were pulled over in North Carolina for speeding by a deputy sheriff. The deputy sheriff requested another deputy to stop and assist with administering a breathalyzer test after smelling alcohol. The test revealed that Williams was not intoxicated, and he was issued a written warning. Next, the officers asked if there was anything illegal in the vehicle, and Williams denied consent to search the vehicle. The officer told Williams to hold on, and the officer had a drug dog sniff the vehicle. The dog alerted the deputy, and a search of the trunk revealed crack cocaine. Williams attempted to suppress this evidence; however, he was unsuccessful. The court explained the Government had reasonable suspicion due to five specific factors: (1) Williams was driving in a rental car; (2) Williams was traveling in a known drug corridor; (3) Williams stated inconsistent travel plans; (4) Williams had contradictions in the addresses he provided; and (5) Williams stated he was traveling with the car ahead of him, but that car’s driver denied any association with Williams. Further, the court stated that the two-minute-and-forty-second extension for the dog sniff fell within the general parameters of a de minimis delay that does not offend the Fourth Amendment. However, after a reconsideration hearing, the evidence regarding the court’s fifth factor was determined to be inconsistent, but there was sufficient evidence to deny the suppression motions.  Williams was sentenced to prison and this appeal followed.

On appeal, Williams reiterated his contention that the deputies did not have the reasonable suspicion required to extend the traffic stop beyond its initial purpose. The government conceded that the de minimis ground for denying the suppression was not legally valid. Since a traffic stop is a “seizure” and is akin to an investigative detention, the Fourth Circuit analyzed the constitutionality of such a stop under the two-prong test illustrated in Terry v. Ohio. First, the officer’s reason for the traffic stop needs to be reasonable. Second, the officer’s actions during the seizure needs to be “reasonably related in scope” to the basis for the traffic stop. In Rodriguez v. United States, the Supreme Court held that, absent reasonable suspicion of criminal activity, a detaining officer may not extend an otherwise-completed traffic stop in order to conduct a dog sniff. Under the second prong, authority for the seizure ends when tasks tried to the traffic stop are reasonably completed.

With respect to the first Terry prong, whether the reason for the traffic stop was legitimate, Williams did not dispute that the deputy had every right to stop his vehicle for speeding. However, the Fourth Circuit discussed Terry’s second prong, whether the officers’ actions were reasonably related in scope to the basis for the traffic stop. The propriety of extending Williams’ detention beyond the completion of the traffic stop turns on whether reasonable, articulate suspicion existed when the deputy decided to conduct a dog sniff of the vehicle. Reasonable suspicion is a commonsense, nontechnical standard that relies on the judgment of experienced law enforcement officers. The court was required to look at the totality of the circumstances.

The Fourth Circuit walked through each of the four factors used by the district court in determining that reasonable suspicion existed. The Fourth Circuit was critical of the use of the first factor, determining the reasons provided by the deputies that the fact that the defendant was driving in a rental car was of minimal value to the reasonable suspicion analysis. Similarly, the fact that the defendant was driving “on a known drug corridor at 12:37 a.m.” was not very convincing because the number of persons using the interstate highways as drug corridors pales in comparison to the number of innocent travelers on those roads, even at the late hour. Further, no reasonable, articulable suspicion of criminality arises from the mere fact that Williams’ travel plans were likely to exceed the initial duration of the rental agreement. Finally, although the district court related that Williams had failed to provide either deputy with his home address, the record showed that neither deputy specifically asked Williams for his home address. Neither officer identified any aspect of the fourth factor as suspicious. Each of the factors, standing alone, failed to support any reasonable, articulable suspicion of criminal activity.

Also, the Fourth Circuit noted “reasonable suspicion may exist even if each fact standing alone is susceptible to an innocent explanation.” However, the record failed to show how the four factors reasonably pointed to criminal activity. Therefore, the Fourth Circuit vacated Williams’ conviction and sentence and remanded for such other and further proceedings that may be appropriate.  

Full Opinion

Austin T. Reed

 

U.S. v. BLUE, NO. 13-4069

Decided: December 10, 2015

The Fourth Circuit found the evidence was insufficient to support Daniel Blue’s convictions for possession with intent to distribute 100 grams or more of heroin, and aiding and abetting, and conspiracy to distribute and possess with intent to distribute 100 grams or more of heroin.  On that basis, the Fourth Circuit reversed Blue’s convictions.

With the help of Herbert Fenner, who had been arrested on heroin distribution and firearms charges, Baltimore police in June, 2011, set up a controlled heroin buy targeting Keith Townsend, a middleman from whom Fenner claimed to have bought heroin.  While police observed from a nearby car, Fenner called Townsend to order 50 grams of heroin, and Townsend told him that he would be ready in fifteen minutes.  Townsend then emerged from his house, and interacted with occupants of a nearby Lexus, handing the driver money, and putting his hands briefly inside the Lexus.  Townsend then met with Blue on a street corner.  At the start of that interaction, Blue had a tan item in his left fist.  The two men then moved their left hands towards each other.  When the men lowered their hands, Townsend was holding an item, which he put in his left front pants pocket, and Blue’s hand was empty.  On the way home, Townsend called Fenner to say he was ready.  Police arrested Townsend, and searched his person, finding a plastic bag with a folded slice of bread in his pants pocket.  Inside the bread was a plastic bag with 49.87 grams of heroin.

Two weeks later, police hid a GPS tracker on Blue’s car.  Police then followed Blue to the Fox Hall apartment complex, and observed him enter building seven, though they could not see whether he entered a particular apartment.  Blue emerged in under five minutes holding a “sandwich-sized, cloudy white, plastic container,” got into his car, and drove away.  Police followed Blue to a lake recreation area known for narcotics trafficking.  There, Blue exited his car holding just his mobile phone, got into a car with another man, Jamar Holt, and Holt drove them around the lake.  Several minutes later, Blue got out of the car, and Holt drove away.  Shortly thereafter, while following Holt, police stopped him for a traffic violation.  The stop escalated with Holt brandishing a handgun and attempting to run over one of the policemen, and the policemen firing on Holt.  Holt then fled the scene.  The police found Holt’s vehicle an hour later with no firearms or narcotics inside.  Later the same day, Blue’s car was GPS tracked to a home on Sinclair Lane, where he was arrested based upon his June meeting with Townsend.

A search of Blue’s person yielded a set of keys, one of which unlocked the door to an apartment at Fox Hall.  A police search of the apartment discovered, hidden inside a footstool, 108.6 grams of heroin, two scales with heroin residue, and empty plastic sandwich bags.  The police also found mail addressed to Tiffany Elliott and to her brother, Brandon Cooper.  Cooper was asleep in the apartment.  A search of the Sinclair Lane house revealed no evidence incriminating Blue.  

Blue was indicted for conspiring with Townsend and others to distribute and possess with intent to distribute 100 grams or more of heroin or heroin mixture, possession with intent to distribute a detectable amount of heroin or heroin mixture and aiding and abetting, and possession with intent to distribute 100 grams or more of heroin or heroin mixture and aiding and abetting.  A jury found Blue guilty on the two 100 gram charges, and acquitted him on the other charge.  After Blue moved for acquittal, the district court upheld the jury findings, though it noted that the sufficiency of the evidence as to the amount of heroin involved in the conspiracy was a close call.

Blue appealed denial of an earlier motion to suppress evidence, and denial of his motion for acquittal.  While the appeal was pending, Blue moved for a new trial on the two counts of which he was convicted based on newly discovered evidence.  The Fourth Circuit granted a motion by Blue to stay his appeal, and remanded his case to reconsider his motion for a new trial.  The District Court denied that motion.  Blue again appealed, and the Fourth Circuit consolidated the appeals for a new trial and for conviction.

The Fourth Circuit first found that there was not sufficient evidence to support Blue’s conviction for possession with intent to distribute 100 grams or more of heroin or heroin mixture and aiding and abetting.  The Fourth Circuit noted that for Blue to have had constructive possession of the heroin, he had to know of the 108.6 grams of heroin in the Fox Hall apartment, and have had dominion and control over the heroin.  Here, Blue’s having a key to the apartment, entering a Fox Hall building, and taking a container out of the building was not enough to establish his constructive possession.  This was particularly so given that there was no evidence that Blue lived in or leased the apartment, had any personal property in the apartment, or had any connection to the people who lived in the apartment, the plastic container was never found, and there was no evidence of connection between Blue and the heroin seized from Townsend, or the drugs or drug-related items found in the apartment.

The Fourth Circuit next found that there was not sufficient evidence to support Blue’s conviction for conspiracy to distribute and possess with intent to distribute 100 grams or more of heroin or a heroin mixture.  Because the Fourth Circuit found that there was not enough evidence to show that Blue knew about the 108.6 grams of heroin in the Fox Hall apartment, and because there was no evidence of a relationship between Blue, Townsend, or Holt and the apartment’s occupants, the Fourth Circuit found that there was not enough evidence to support the conspiracy conviction.  On this basis, the Court overturned Blue’s convictions.  The Fourth Circuit then declined to enter judgment on the lesser-included charge of conspiracy to distribute less than 100 grams of heroin because it felt that to do so would be to insert itself in the jury’s place.  Further, because of the way the jury verdicts were found at trial, the Fourth Circuit found that it could not know whether the jury found a conspiracy independent of finding a conspiracy involving 100 grams or more of heroin.  

Full Opinion

Katherine H. Flynn

 

GOODE v. CENT. VA. LEGAL AID SOC’Y, INC., NO. 14-1939

Decided: December 9, 2015

The Fourth Circuit dismissed the appeal for lack of jurisdiction and remanded the case to the district court.

The Central Virginia Legal Aid Society (“CVLAS”) terminated Plaintiff Freddie Lee Goode’s (“Goode”) employment in March of 2013. Goode was 72 years old at the time of his termination and had worked for CVLAS for 25 years. Goode was one of CVLAS’s two Senior Managing Attorneys. Goode reported to Executive Director, Stephen Dickinson (“Dickinson”), a white male. On April 17, 2014 Goode brought a claim against CVLAS for violations of Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act (“ADEA”). In Goode’s complaint, he alleged that five African American employees, including Goode, were terminated as a result of the CVLAS’s restructuring. CVLA contended that it eliminated Goode’s position because representation for Social Security cases at the litigation stage was a service available through the private bar and that CVLA was going to focus on family law cases. Goode challenged this rationale as pretext. On July 15, 2014, CVLAS filed a motion to dismiss for failure to state a claim under Rule 12(b)(6). The district court granted CVLA’s motion and dismissed the case without prejudice, holding that Goode had failed to state a claim for unlawful discrimination under Title VII, 42 U.S.C. § 1981, and the ADEA.

On appeal, CVLAS argued that the district court’s order granting its motion to dismiss without prejudice was not appealable because Goode could have amended his complaint to cure the pleading deficiencies. The Fourth Circuit agreed and found that it lacked jurisdiction over the appeal. The district court’s dismissal “did not clearly indicate that no amendment could cure the defects in the complaint.” As a result, the order of dismissal was not final, and therefore, not appealable. The Court considered whether a plaintiff could have amended the complaint to satisfy the pleading standards that the district court imposed. In this case, the district court dismissed Goode’s case because he failed to allege sufficient facts to present direct or circumstantial evidence of discrimination or to establish a prima facie case of discrimination. The Court concluded that Good could have amended his complaint to add factual allegations that satisfied the standards under McDonnell Douglas, and that the district court’s order failed to indicate otherwise. Likewise, the Court found that the district court’s order did not prevent Goode from amending his complaint to properly allege a plausible claim of discrimination based on age. The Court ultimately held that the “grounds for dismissal in this case did not clearly preclude amendment.”

Accordingly, the Fourth Circuit dismissed Goode’s appeal for lack of jurisdiction and remanded the case to the district court with instruction to allow Goode to amend his complaint.

Full Opinion

Meredith Weisler

 

HERNANDEZ-NOLASCO v. LYNCH NO. 14-2036, NO. 14-2346

Decided: December 4, 2015

The Fourth Circuit dismissed in part and denied in part.

The Fourth Circuit began by determining that the proper standard of review of BIA decisions was de novo, and that because the BIA expressly adopted the decision of the IJ, that both decisions were reviewable. The Court turns to Hernandez-Nolasco’s argument that the IJ and BIA erred in determining that he was convicted of a “particularly serious crime,” because although he was convicted of possession with intent to distribute cocaine, that offense was not “particularly serious” as defined in U.S.C. § 1231(b)(3)(B)(ii) because his conviction did qualify as an “aggravated felony.” Furthermore, Hernandez-Nolasco argued that his case qualified under the “unusual circumstances” exception and the IJ should have received evidence about the unusual circumstances. However, the Court disagreed with Hernandez-Nolasco. After tracing the definitions of “particularly serious crime,” “aggravated felony,” “drug trafficking crime,” and “unusual circumstances,” the Court determined that because the conviction of possession of cocaine with intent to distribute gave Hernandez-Nolasco a five-year sentence, that sentence rendered the crime per se a “particularly serious crime.” Therefore, because it was a “particularly serious crime,” the “unusual circumstances” exception did not apply since that exception only applies when the sentenced imposed is less than five years.

As to Hernandez-Nolasco’s argument that the IJ and the BIA were wrong in concluding that he “failed to meet his evidentiary burden to establish that he qualifies for deferral of removal under the CAT,” the Court determined that it lacked jurisdiction to take up this issue. Because the INA limited the Court’s jurisdiction solely to constitutional claims or questions of law, this argument, which turned purely on a question of fact, was outside the Court’s purview. The Fourth Circuit then dismissed in part and denied in part Hernandez-Nolasco’s petition for review.

Full opinion

Jennie Rischbieter

BERRY v. LEXISNEXIS RISK & INFO. ANALYTICS GROUP, NO. 14-2006

Decided: December 4, 2015  

The Fourth Circuit affirmed the district court’s decision finding no error in the release of the statutory damages claims as part of a Rule 23(b)(2) settlement, and no abuse of discretion in the approval of the settlement agreement.

This dispute involved Lexis’s sale of personal data reports to debt collectors. According to the class action plaintiffs, Lexis failed to provide the protections of the Fair Credit Reporting Act (FCRA) in connection with these identity reports (Accurint for Collections). However, according to Lexis, its data reports do not qualify as “consumer reports” within the meaning of the FCRA; therefore, it is not required to comply with the FCRA. After a large amount of time and expenses, a deal was agreed upon. Lexis would make changes to its product offerings in order to secure consumer information, and in exchange, the members of the class action would release any statutory damages claims under the Act. The district court certified a settlement class under Federal Rules of Civil Procedure Rule 23(b)(2) and approved the class action settlement. Here, a group of class members are seeking to undo that settlement agreement wanting to pursue statutory damages individually. In order for these members to receive statutory damages, they must prove not only that Lexis violated the FCRA, but also that it did so willfully. Unless Lexis was “objectively reasonable” in concluding its Accurint reports were not “consumer reports” subject to the FCRA, then there would be no liability for statutory damages.

First, the objectors challenged the district court’s certification of the (b)(2) class for settlement purposes. The decision to certify a class is reviewed for “clear abuse of discretion.” Substantial deference is given to the district court in making this decision. Under the Federal Rules of Civil Procedure, Rule 23(a), a party seeking class certification must first demonstrate “(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.” Next, if these requirements are met, then the proposed class must fit within one of the three types of classes listed in Rule 23(b). Here, objectors take issue with Rule 23(b)(2), which allows certification where “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” Rule 23(b)(2) classes are to be a homogenous group with little conflicting views because “opt-out rights” for class members are not provided.

Rule 23(b)(2) classes can occasionally, but not often, be certified even when monetary relief is at issue; however, monetary relief must be incidental to injunctive or declaratory relief. However, the Fourth Circuit agreed with the district court in that the “meaningful, valuable injunctive relief” awarded by the Agreement is indivisible and benefits all members of the class at once. There are surely individualized monetary claims at issue; however, those are claims for actual damages and are retained by the (b)(2) class members. Additionally, the objectors argue that due process precludes the certification of a class without opt-out rights; however, the Fourth Circuit declined to go where the Supreme Court has not and followed the precedence of not recognizing the rigid opt-out rule proposed by the objectors. Further, the Fourth Circuit deferred to the judgment of the district court in approving the Class Representatives’ fee award because there was no conflict of interest between the Class Representatives and the rest of the class.

Next, the objectors challenge the approval of the district court regarding the (b)(2) class settlement, arguing that it was unfair and inadequate because it releases the statutory damages claims of the class members without providing any monetary relief in exchange. The Fourth Circuit concluded that the district court correctly considered the identified factors bearing on this issue: “(1) the posture of the case at the time the settlement was proposed, (2) the extent of discovery that had been conducted, (3) the circumstances surrounding the negotiations, and (4) the experience of counsel in the area of [FCRA] class action litigation.” In order to recover statutory damages under the FCRA, the plaintiffs would have to show a “willful” violation by Lexis, which in turn would require that Lexis adopted an “objectively unreasonable” reading of the FCRA when it concluded that its reports were not covered as “consumer reports.” Lexis had agency guidance from the Federal Trade Commission expressly stating that these reports are not subject to the FCRA. Therefore, the Fourth Circuit determined that Lexis did not act unreasonable by adopting that reading, and ultimately, the district court was appropriate to approve the settlement as fair, reasonable, and adequate under Rule 23(e).

Finally, a single objector challenged the district court’s approval of class counsel’s approximate $5.3 million dollar attorneys’ fee. The award of attorneys’ fees must be reasonable and will only be overturned if it is clearly wrong. The Fourth Circuit determined the district court’s approval of the fee award was appropriate because class counsel “expended large amounts of time and labor, and achieved an excellent result in this large and complex action.”

Full Opinion

Austin T. Reed

SEVERN PEANUT CO., INC. v. INDUSTRIAL FUMIGANT CO., NO. 15-1063

Decided: December 2, 2015

Industrial Fumigant Co. (Industrial) applied pesticide at Severn Peanut Co.’s (Severn) peanut storage dome, resulting in a fire and explosion.  The Fourth Circuit found that Severn’s claim against Industrial for breach of contract was barred by the contract between the parties, and Severn’s claims for negligence were likely barred by North Carolina’s economic loss doctrine.  On this basis, the Fourth Circuit upheld the District Court’s grant of summary judgment to Industrial on all claims.  

In April, 2009, Industrial and Severn entered into a contract for Industrial to apply the pesticide phosphine at Severn’s peanut storage dome in Severn, North Carolina.  The contract required Industrial to apply the pesticide in the correct manner, contained an agreed upon price of $8,604, and noted that the price was not sufficient for Industrial to assume any risk of consequential damages.  On August 4, 2009, Industrial applied phosphine to the dome in such a way that phosphine tablets piled up on one another, which was against the rules for usage noted on the phosphine label.  As a result, a fire broke out on August 10, and continued despite fire fighting efforts until August 29, when an explosion occurred, causing major damage to the peanut dome, and the loss of nearly 20,000,000 pounds of peanuts.  Severn’s insurer ultimately paid more than 19 million dollars for loss of peanuts, loss of income, damage to the dome, and fire fighting costs.  

In January, 2012, Severn, its insurer, and the insurer’s parent company brought suit in federal court against Industrial and its parent company for breach of contract, negligence, and negligence per se.  In March, the District Court granted summary judgment to Industrial on the breach of contract claim, finding that the consequential damages claim was barred by the contract between the parties.  After briefing on the issue of contributory negligence, the District Court granted summary judgment to Industrial on the negligence claims, finding that Severn was contributorily negligent.  Severn appealed both grants of summary judgment to the Fourth Circuit.

The Fourth Circuit first found that the contract between Severn and Industrial barred Severn’s breach of contract claim.  The Fourth Circuit noted that North Carolina policy generally gives parties the freedom to contract as they wish.  Further, in this case, Severn and Industrial were sophisticated parties who bargained for a contract with a clause limiting consequential damages, the contract was neither unconscionable nor against public policy, and Severn purchased, and received payment from, an insurance policy to cover the risk from breach of contract.

The Fourth Circuit next held that there were material issues of fact in relation to Severn’s contributory negligence, such that summary judgment on that ground was inappropriate.  The Fourth Circuit nonetheless upheld summary judgment for Industrial on the negligence claims based upon North Carolina’s economic loss doctrine.  The economic loss doctrine generally will not allow a tort claim for breach of contract.  Because the contract here included a consequential damages exclusion, Severn would likely be unable to bring negligence claims for Industrial’s breach of contract.  On the basis of these holdings, the Fourth Circuit upheld the grants of summary judgment to Industrial on both the breach of contract and negligence claims.

Full Opinion

Katherine H. Flynn

 

FONTANEZ v. O’BRIEN, NO. 14-7607

Decided: December 2, 2015

The Fourth Circuit reversed the district court’s order and remanded the case for proceedings on the merits.

In 2004, Defendant Jeremy Fontanez (“Fontanez”) plead guilty and was convicted for his involvement in a series of armed robberies. The sentencing court imposed restitution in the amount of $27,972.61. The Inmate Financial Responsibility Program (“IFRP”) is a program initiated by the Bureau of Prisons (“BOP”) that enables prisoners to make payments from their inmate accounts towards court ordered financial obligations. IFRP is a voluntary program, therefore, the BOP cannot compel an inmate to make a payment. However, inmates with financial obligations who refuse to participate in the IFRP might lose many other privileges in prison, including more desirable housing or work outside the prison. In April of 2013, Fontanez was moved to the United States Penitentiary- Hazelton (“USP-Hazelton”), where he signed an Inmate Financial Plan. One year later, he filed a written request to be released from the IFRP, arguing that the BOP’s requirement that he make IFRP payments violated the Mandatory Victims Restitution Act of 1966 (“MVRA”). The MVRA obligates a district court to “specify in [a] restitution order the manner in which, and the schedule according to which, the restitution is to be paid.” Fontanez argued that the sentencing court had failed to set a schedule for his restitution payments, and instead delegated its power to the BOP. He contended that the BOP lacked the authority to require him to make restitution payments through the IFRP or to punish him for refusing to pay. The Warden of USP Hazelton, Terry O’Brien (“O’Brien”), denied Fontanez’s request.

In June 2014, Fontanez filed an application for a writ of habeas corpus under 28 U.S.C. § 2241 in the Northern District of West Virginia. Fontanez argued that he had a claim under § 2241 because he was challenging the execution and not the validity of his sentence. The matter was referred to a magistrate judge, who issued a report that the government’s motion to dismiss be granted and Fontanez’s position be denied. The district court adopted the ruling of the magistrate judge and dismissed the case.

On appeal, the Fourth Circuit reviewed the district court’s denial of habeas corpus relief de novo. The Court reasoned that the district court denied Fontanez’s petition because it understood his claim to be challenging the validity of his sentencing order, not the execution of his sentence. However, the Court noted that Fontanez was instead only challenging the execution of his sentence by the BOP. Fontanez did not seek to have the sentencing order set aside. The Court stressed, “it is well established that attacks on the execution of a sentence are properly raised in a §2241 petition.” Therefore, the Court held that an inmate’s challenge to the BOP’s administration of the IFRP is a challenge to the execution of a sentence, not the validity of the sentence, and is therefore cognizable under § 2241.

Accordingly, the Court reversed the district court’s order and because the district court did not reach the merits of the case, remanded it for further proceedings.  

Full Opinion

Meredith Weisler

 

U.S. v. SCHNITTKER, NO. 14-4905

 

Decided: December 2, 2015

The Fourth Circuit affirmed the district court’s ruling that there was no Double Jeopardy.

This case arose when Michael Schnittker (“Schnittker”) pled to the possession of child pornography under 18 U.S.C. 2252(a)(4) and then was tried and convicted under 18 U.S.C. 2252(a)(2) for the receipt of child pornography. There were two hard drives containing images at issue: the Maxtor hard drive and the Western Digital hard drive. Schnittker brought this appeal, claiming that the plea should have barred his conviction of the second charge due to the Fifth Amendment’s Double Jeopardy Clause.

The Fourth Circuit began by briefly reciting the facts and procedural history of the lower court, and then determined that the proper standard of review was de novo. First, the Fourth Circuit determined whether or not the two charges were the same in fact, after assuming for the purposes of this case that they’re the same in law. The Court said that “the inquiry must focus on what a reasonable person would understand at the time the defendant entered his plea, because that is the time at which jeopardy attaches.” The Court decided that an “objective person” in Schnittker’s place would have thought he was pleading guilty to possession only in regard to the Western Digital hard drive. Furthermore, once the government learned of his intent to plea, the government expressly limited his guilty plea to what was found on the Western Digital hard drive, and had spreadsheets documenting the file names on the different hard drives to show that the Maxtor hard drive only applied to Count 1 and the Western Digital hard drive only applied to Count 2. Although the hard drives shared some of the same images, the Court decided that because there were different files on the Western Digital hard drive that did not support the receipt of files that the Maxtor hard drive supported, there was no double jeopardy. Accordingly, the Fourth Circuit affirmed.

Full opinion

Jennie Rischbieter

NAT’L ORG. FOR MARRIAGE v. U.S., NO. 14-2363

 

Decided: December 2, 2015  

The Fourth Circuit affirmed the district court’s denial for the National Organization for Marriage (NOM) to collect attorneys’ fees because the government’s litigation position was “substantially justified” showing NOM was not a “prevailing party” under the statute.  

NOM is a tax-exempt, nonprofit organization that works to protect and sustain marriage and faith throughout the United States. NOM is required to annually file Internal Revenue Service (IRS) Form 990, which includes names, addresses, and contribution amounts of donors who give $5,000 or more during the year. The IRS is required to disclose this information to the public but must redact the names and addresses. However, an IRS clerk released a copy of the unredacted donor list, and it eventually was published online by the Human Rights Campaign (HRC) and the Huffington Post.

NOM filed suit against the IRS seeking damages for the unlawful inspection and disclosure of confidential tax information by agents of the IRS in violation of 26 U.S.C. § 6103. NOM sought statutory damages, actual damages, punitive damages, and costs and attorneys’ fees under § 7431(c). The government conceded that its release of the information entitled NOM to a single recovery of statutory damages but not actual damages, punitive damages, costs, or attorneys’ fees. After discovery, the government moved for summary judgment. The district court granted partial summary judgment to the government. The court found that NOM was not entitled to punitive damages and NOM’s claim of unlawful inspection failed due to a lack of evidence. However, the district court determined NOM was entitled to actual damages, and the parties entered into a consent judgment for the government to pay NOM $50,000 to resolve its claims for actual damages and costs. NOM then moved for $691,025.05 in attorney’s fees. The district court denied this motion, and NOM appealed.

Reasonable attorneys’ fees, when the defendant is the United States, are available under § 7430(c)(4). Section 7430(c)(4)(B)(i) requires that if the government is the defendant, the plaintiff “shall not be treated as the prevailing party…if the United States establishes that [its] position…in the proceeding was substantially justified.” The district court determined that the government “reasonably contested NOM’s unfounded willful disclosure and inspection allegations that would have supported a claim for punitive damages if properly proven.” However, the court did not comment on whether the government’s position regarding actual damages was substantially justified. Here, NOM argues there was an abuse of discretion.

The litigation position of the government is “substantially justified” if it has a “reasonable basis in law and fact” or if it is “justified to a degree that could satisfy a reasonable person.” The burden is on the government to show that it was substantially justified. In determining whether the government’s position was substantially justified, the court looked at the available objective indicia of the strength of the government’s position and conducted an independent assessment of the merits of the government’s position with respect to actual damages.

Here, NOM sought statutory, actual, and punitive damages. The Fourth Circuit concluded that the government adopted a reasonable strategy in conceding statutory damages, but challenging both actual and punitive damages. The government had substantial justification to argue that the proximate cause had been broken. If the government would have conceded actual damages early on, this could have hurt the government’s position later if NOM had been able to submit evidence enabling it to proceed on the punitive damages issue. Therefore, the Fourth Circuit could not say that the government acted unreasonable prior to the summary judgment stage of the litigation by waiting to see what NOM’s evidence was and then challenging its sufficiency. The Fourth Circuit held that the government’s position was substantially justified, making NOM not entitled to attorney’s fees because it was not a prevailing party.

Full Opinion

Austin T. Reed

DIOP v. LYNCH, NO. 14-2115

Decided: December 2, 2015

In a case about continuing or closing an immigration removal proceeding for petitioner Madiagne Diop to receive a mental health evaluation, the Fourth Circuit found no error in the Immigration Judge’s (IJ) assessment of Diop’s mental health.  On this basis, the Fourth Circuit denied Diop’s petition for review.

Diop, a native of Senegal, was admitted to the United States in October of 1997 on a B-2 visitor visa which expired in April, 1998.  Diop overstayed his visa, living in the United States without legal immigration status from April, 1998.  In January, 2012, Diop was arrested following a psychotic episode at the store where he worked.  Following his arrest, he was given a hospital psychological evaluation before being placed in police custody.  The psychological evaluation diagnosed psychosis, and prescribed antipsychotic medication.  Diop ultimately pled guilty to three counts of second-degree assault, and was sentenced to 3 years probation.  In November, 2012, the Department of Homeland Security served Notice to Appear on Diop, indicating that he was removable for overstaying his visa.  

Diop’s removal proceedings included five appearances before an IJ between November, 2012 and May, 2013.  At the November, 2012 hearing, the IJ indicated that she would evaluate Diop’s mental competency at the next hearing.  At a December, 2012 hearing, the IJ asked Diop a series of questions.  In response to the questions, Diop indicated that he was able to communicate with an attorney, except that he had to pay to use the phone where he was staying, that he had no history of mental health problems, and that he understood the hearings to be about immigration.  Based on this exchange, Diop’s attorney’s evaluation, and the full record, the IJ found Diop mentally competent.  In a February, 2013 hearing, Diop admitted the allegations against him, and agreed that he was removable.  The IJ granted a continuance, so that Diop’s attorney could seek prosecutorial discretion.  In April of 2013, Diop sought a continuance or closing of his proceeding to await passage of an immigration reform law he felt would affect his case.  The IJ denied his request, and granted him voluntary departure, or alternatively, ordered his removal.  In June, 2013, Diop appealed to the Board of Immigration Appeals (BIA).  Based upon mental health records from his January, 2012 arrest, Diop argued that the IJ should have closed or continued his case to allow him to undergo a mental health evaluation, which he also claimed would have allowed him to argue for withholding of removal on the grounds of mental incompetency.  The BIA, finding that the mental health records from January, 2012, reflected only Diop’s mental state at the time, and were contradicted by a currently clean mental health record, and that Diop had not argued his withholding claim before the IJ, affirmed the IJ.  Diop then petitioned the Fourth Circuit for review, arguing that the IJ’s refusal to continue or close the removal proceeding to allow for a mental health evaluation was a violation of due process.

The Fourth Circuit found that the IJ did not err in not closing or continuing the removal proceedings to allow Diop to seek a mental health evaluation.  The Fourth Circuit noted that the BIA standard for competency includes whether the petitioner has an understanding of the proceedings, whether the petitioner can consult with his attorney or representative, and whether the petitioner has an opportunity to present evidence, and cross-examine.  If there is an indication of incompetency, the IJ is required to take measures, which will vary depending on the circumstances, to evaluate competency.  Here, the Fourth Circuit found that there were no indications of Diop’s incompetency.  Despite the psychological evaluation from his January, 2012 arrest, Diop denied a history of mental health problems at his removal hearings, and his attorney further indicated that she thought Diop had no mental health problems.  In fact, the Court noted, in seeking a continuance, Diop himself argued that he was mentally healthy, and that the January, 2012 incident was an aberration.  Diop supported this claim of mental health with current mental health records.  Nonetheless, the Fourth Circuit noted, the IJ evaluated Diop’s competency, holding a hearing to evaluate his mental health and his ability to interact with his attorney.  Based on these findings, the Fourth Circuit denied Diop’s petition for review.  The Fourth Circuit also upheld the BIA’s denial of Diop’s withholding of removal claim, finding it had not been raised before the IJ.

Full Opinion

Katherine H. Flynn

 

TOMMY DAVIS CONSTR., INC. v. CAPE FEAR PUB. UTIL. AUTH., NO. 14-1778

Decided: December 1, 2015

The Fourth Circuit affirmed the ruling of the district court.

Plaintiff, Tommy Davis Construction, Inc. (“Davis Construction”), while developing a residential subdivision named Becker Woods, arranged to have Aqua NC provide water and sewer services to each lot in the subdivision. In February 2005, Davis Construction applied for building permits from the County for Becker Woods. The County informed Davis Construction that it would be required to pay “impact fees” to the Water and Sewer District, even though the County would not be providing water and sewer services to Becker Woods. Therefore, Davis Construction was required to pay fees to both Aqua NC and the County’s Water and Sewer District. Davis Construction objected repeatedly, but eventually paid the fees. Between March 2005 and July 2006, Davis Construction paid $34,268.96 in impact fees to build houses on 23 lots. In 2007, the County created Cape Fear Public Utility Authority (“Authority”), which assumed all the rights and liabilities of the Water and Sewer District and began operating the public water and sewer system in the region. During this period, the Authority and the County changed the prior impact fee policy, and as a result, when Davis Construction applied for another lot in Becker Woods, the County did not collect an impact fee. Davis Construction subsequently requested a refund for his previous impact fees, but the Authority denied the request. As a result, Davis Construction commenced this action, seeking a refund of the impact fees it paid to the Water and Sewer District in 2005 and 2006, plus interest and attorney’s fees.

The district court, on the parties’ cross-motion for summary judgment, ruled in favor of Davis Construction, holding that the Defendants’ collection of impact fees from Davis Construction for the Becker Wood property was “an ultra vires act beyond their statutory authority.” The court ordered Defendants to pay plaintiffs $34,268.96 with interest, plus attonrey’s fees of $20,000.

On appeal, the Court first addressed the Defendants’ argument that the district court erred in refusing to dismiss Davis Construction’s claims as untimely. The Court found that while the federal due process claims were time barred, Davis Construction’s state claims were timely filed. The Court concluded that N.C. Gen. Stat. § 1-56, which provides a 10-year statute of limitations, applied to Davis Construction’s state-law claims, and were therefore filed well within the limitations period.

The Court next addressed whether the district court erred in concluding that Defendants’ collection of impact fees from Davis Construction was ultra vires. The district court concluded that the Defendants’ failed to show that they would be able to furnish water and sewer services, per the requirements of N.C. Gen. Stat. §162A-88, to Becker Woods within any meaningful time in the future. The Court agreed with the district court’s reasoning and concluded that the Defendants exceeded their statutory authority by requiring Davis Construction to pay the impact fees. Further, the Court held that the district court had authority to award attorney’s fees to Davis Construction.

Accordingly, the Court affirmed the district court’s judgment and its award of attorney’s fees.

Full Opinion

Meredith Weisler

 

TELEGUZ v. ZOOK NO. 11-9 & NO. 14-2

 

Decided: November 30, 2015

The Fourth Circuit affirmed.

Ivan Teleguz (“Teleguz”) was convicted of capital murder for hire of his ex-girlfriend, and after his habeas corpus relief was granted due to the district court’s failure to fully inquire into his habeas petition, the district court conducted a full evidentiary hearing and denied his petition for writ of habeas corpus. Teleguz appealed.

After briefly delving into the underlying facts of the case and Teleguz’s habeas corpus efforts, the Court looked at Teleguz’s three categories of evidence in support of his Gateway Innocence claim, reviewed de novo. Teleguz claimed that the district court’s analysis was unsound and that its decision amounted to reversible error. The Court first determined that a gateway innocence claim must be supported by new reliable evidence, and that the new evidence must be considered along with the old evidence in considering the claim, and the district court must determine that the “totality of the evidence would prevent an reasonable juror from finding him guilty beyond a reasonable doubt, such that his incarceration is a miscarriage of justice;” only after clearing this high hurdle would the district court then be able to reach the merits of the claim. The Court then looked at the three categories of evidence Teleguz presented to see if they met that hurdle. As to the testimony that the two key witnesses recanted, one of whom claimed he was coerced into testifying by the prosecution, the Court was unpersuaded, agreeing with the district court in finding their testimony unreliable as it was provided only by affidavits and not by in-person testimony, and was at odds with the in-person testimony of the government witnesses. As to Hetrick’s testimony, the Court again refused to disturb the district court’s finding that his testimony was credible, as the district court had a full opportunity to observe his testimony. The next category of evidence, whether or not Teleguz attended a birthday party in which he allegedly hired his ex-girlfriend’s killer, the Court agreed with the district court that the affidavits presented were not reliable, and in fact may have had their integrity called into question by one of the affiants. Finally, as to the category of evidence that a Pennsylvania murder that was alluded to during the trial never occurred, the Court agreed with the district court that such evidence simply failed to satisfy the requirements necessary to support a gateway innocence claim, because the Court said that the issue had no bearing on whether or not Teleguz was innocent of the murder that took place in Virginia. Furthermore, when the Court compared Teleguz’s case to the House case, it found that Teleguz’s case simply did not rise to the “rare” or “extraordinary” case in which it was “more likely than not that no reasonable jury would have convicted Teleguz.”

As to Teleguz’s argument about the Pennsylvania murder, although the Court acknowledged that the district court erred when it said that Teleguz failed to preserve his Martinez claim with respect to that Pennsylvania argument, the district court’s rejection of Teleguz’s Martinez claim was not a fatal error. Teleguz, under Martinez, had to show that there was a substantial ineffective assistance of trial counsel claim, such that counsel “made errors so serious that counsel was not functioning as the counsel guaranteed,” and the Court, after looking at the record and the instances in which the potential Pennsylvania murder was mentioned, rejected Teleguz’s argument. The Fourth Circuit therefore affirmed the district court’s dismissal of Teleguz’s petition.

Full Opinion

Jennie Rischbieter

OLIVA v. LYNCH, NO. 14-1780

Decided: November 25, 2015  

The Fourth Circuit determined that the Board of Immigration Appeals (BIA) was incorrect in interpreting the nexus requirement too narrowly and that the plaintiff successfully showed that membership in his proposed social groups was at least one important reason for his persecution. Additionally, the Fourth Circuit concluded the BIA did not adequately address the record evidence in making its determination that the plaintiff’s proposed social groups were not cognizable under the Immigration and Nationality Act (INA).

Oliva, a citizen of El Salvador, entered the United States illegally in 2007. In 2010, the Department of Homeland Security served Oliva with a Notice to Appear, charging him with removability under the INA, as an alien present in the United States without admission or parole. In 2011, Oliva filed an application for asylum and withholding of removal. In 2013, during a hearing in front of an immigration judge (IJ), Oliva explained that he joined a gang (MS-13) in El Salvador at the age of 16. However, shortly he witnessed a brutal murder of a rival gang member and decided to distance himself from the gang. The gang forbids members from quitting, kills anyone who attempts to leave, and requires inactive members to pay rent. After moving around El Salvador in fear and getting brutally beaten by the gang, Oliva decided to flee to America to protect himself and received threatening phone calls from the gangs while he was in America threatening to kill him if he ever returned to El Salvador. Despite accepting his testimony as credible, the IJ denied Oliva’s application for asylum and withholding removal. Oliva appealed the IJ’s decision, and a one-member panel of the BIA dismissed the appeal.

While a three-member panel of the BIA is entitled to Chevron deference for its reasonable interpretations of immigration statutes, a one-member panel of the BIA is entitled to Skidmore deference. The opinion of the one-member panel is not controlling on the Fourth Circuit, but the Fourth Circuit can consider the opinion, looking at the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade. The findings of the BIA are conclusive unless any reasonable adjudicator would be compelled to conclude to the contrary.

Despite admitting he was eligible for removal from the country, Oliva argues that the BIA erred in denying his request for withholding removal under Section 241(b)(3)(A) of the INA, which states the Attorney General cannot remove an alien whose life would be threatened because of the alien’s race, religion, nationality, membership in a particular social group, or political opinion. Oliva argued that his life would be threatened due to his membership in one of two particular social groups. First, by “Salvadorans who are former members of MS-13 and who left the gang, without its permission, for moral and religious reasons.” Second, by “Salvadorans who were recruited to be members of MS-13 as children and who left the gang as minors, without its permission, for moral and religious reasons.” The BIA dismissed this argument on two grounds: (1) Oliva’s purposed social group was not cognizable under the INA, and (2) Oliva failed to demonstrate that the persecution he feared was due to his membership in either of the proposed social groups – the nexus requirement.

In order to satisfy the nexus requirement under the INA, the applicant must show his or her past or threatened persecution was on account of his or her membership in that group. The BIA found Oliva’s fear of persecution was not on account of his becoming an inactive gang member, but because of his specific conduct of violating the gang’s rules, specifically, refusing to pay rent. The Fourth Circuit determined that this was an overly restrictive view of Oliva’s case. The Court concluded that a close review of the record shows the “inextricable relationship between Oliva’s membership in his proposed social groups and his refusal to pay rent.” While Oliva’s decision to stop paying rent was the immediate trigger for the gang’s brutal assault, it was Oliva’s status as a former gang member that led MS-13 to demand money in the first place and to assault him for failure to pay it. Further, the fact that he left the gang for moral and religious reasons is not merely “incidental, tangential, superficial, or subordinate” to his refusal to pay, but it was a central reason for his persecution. Thus, the Fourth Circuit held that Oliva satisfied the nexus requirement.

The BIA has held that a particular social group is cognizable for purposes of the INA if the group is: “(1) composed of members who share a common immutable characteristic, (2) defined with particularity, and (3) socially distinct within the society in question.” The BIA did not consider the immutability and particularity prongs because it held Oliva’s proposed social groups failed the requirement for social distinction. In order to be socially distinct, the group must be “perceived as a group by society.” The BIA claimed that Oliva identified only one example to show the social distinction of the gang: his assertion that former gang members suffer employment discrimination. However, the BIA did not address other information that Oliva put forth, including evidence of community and government-driven programs to help the rehabilitation of former gang members who leave for moral or religious reasons. The Fourth Circuit concluded that the case must be remanded back to the BIA for consideration of the unaddressed evidence.

Full Opinion

Austin T. Reed

 

GRAY v. ZOOK, No. 12-5

Decided: November 25, 2015

In a murder case, the Fourth Circuit found that the Supreme Court of Virginia considered the petitioner’s evidence, and did not make an unreasonable determination of facts under the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) by resolving an ineffective-assistance-of-counsel claim without holding an evidentiary hearing.  The Fourth Circuit also found that the state court had already decided Gray’s ineffective-assistance claim, and thus he could not raise the claim in the District Court under Martinez v. Ryan.  On this basis, the Fourth Circuit affirmed the District Court’s holdings.  

During a 2006 home burglary, Gray violently murdered Mr. and Mrs. Harvey and their two young children.  The trial jury found Gray guilty of five counts of capital murder, and issued verdicts of life imprisonment on three counts, and death sentences for the childrens’ murders.  The Supreme Court of Virginia affirmed.  Gray filed a state habeas corpus petition.  One of Gray’s claims was that his trial counsel did not sufficiently investigate his confession.  Gray alleged that he repeatedly asked police for an attorney and a phone call, but received neither, and that he told police that his drug use on the day of the murders left him with no memory of what happened.  The Supreme Court of Virginia dismissed all but one of Gray’s habeas claims.  In dismissing the insufficient investigation claim, the court found that Gray showed neither that counsel performed unreasonably, nor that counsel’s performance caused him prejudice.

Gray filed a federal habeas corpus petition alleging that the Supreme Court of Virginia’s dismissal of his ineffective investigation claim was an unreasonable determination of facts under AEDPA.  While Gray was awaiting the District Court’s ruling, the Supreme Court decided Martinez v. Ryan.  Martinez is an exception to the rule that state habeas counsel errors do not excuse procedural default.  Where state habeas counsel was ineffective, and an ineffective-assistance claim was procedurally defaulted in state court, Martinez allows federal courts to review the claim de novo.  Because Gray’s counsel represented him in both the state and federal habeas proceedings, there was a conflict of interest in arguing a Martinez claim.  Gray thus moved for appointment of new counsel, a motion denied by the District Court.  The District Court also denied Gray’s habeas petition finding that the procedures employed, including the lack of evidentiary hearing, were not per se unreasonable.  The District Court certified two questions to the Fourth Circuit.  The Fourth Circuit reserved the first question: whether dismissal of the ineffective investigation claim was based on unreasonable determination of facts.  On the second question, whether Martinez entitled Gray to appointment of new counsel, the Fourth Circuit found that Gray was entitled, and directed the District Court to appoint counsel to prepare a Martinez claim.  

Gray and his new counsel filed an amended federal habeas petition with several claims, one of which alleged that trial counsel was ineffective for not presenting evidence of Gray’s voluntary intoxication at the time of the burglary, and state habeas counsel was ineffective for not bringing the claim before the State Supreme Court.  The District Court again dismissed the petition, finding the claim had not been procedurally defaulted, and even if it had, it did not meet other elements of Martinez.  The District Court issued a certificate of appealability with respect to the penalty phase of his trial.  Gray appealed to the Fourth Circuit.  In regards the earlier reserved issue, Gray claimed that the Supreme Court of Virginia had ignored Gray’s evidence, and had dismissed his habeas petition without an evidentiary hearing, and that this amounted to an unreasonable determination of the facts.  Gray also claimed that his ineffective-assistance claim should have been allowed under Martinez.  

The Fourth Circuit first found that the Supreme Court of Virginia did not unreasonably determine the facts in dismissing Gray’s habeas petition.  Based on the record, the Fourth Circuit found that the Virginia court reviewed Gray’s evidence, but did not find it credible.  The Fourth Circuit further found that an evidentiary hearing is not always required.  In Gray’s case, the Fourth Circuit found that his allegations were conclusory, and strongly rebutted by other evidence.  Thus, an evidentiary hearing was not required before dismissing the habeas petition.

The Fourth Circuit next found that Gray’s ineffective-assistance claim was presented to the state court, and thus did not qualify under Martinez.  Although Gray may have strengthened the evidence supporting his ineffective-assistance claim, the Fourth Circuit found that the federal ineffective-assistance claim was essentially the same as the state ineffective investigation claim.

Judge Davis wrote a concurring/dissenting opinion.  He agreed with the dismissal of Gray’s Martinez claim, but dissented on the need for an evidentiary hearing.  Judge Davis felt the Supreme Court of Virginia gave too much weight to the affidavit of Gray’s trial counsel, did not allow Gray the opportunity to fully develop his claim, and did not fully consider Gray’s evidence.

Full Opinion

Katherine H. Flynn

 

FLAME S.A. v. FREIGHT BULK PTE. LTD., NO. 14-2267

 

Decided: November 24, 2015

The Fourth Circuit affirmed the ruling of the district court.

Industrial Carriers, Inc. (“ICI’) breached numerous contracts during its last few months of operation. Among those contracts breached were Plaintiffs, Flame S.A. (“Flame”) and Glory Wealth Shipping Pte. Ltd. (“Glory Wealth”). Flame obtained a foreign judgment against ICI for the breach of four Forward Freight Swap Agreements (“FFAs”), and Glory Wealth obtained a foreign arbitration award against ICI for the breach of a charter party. Both Plaintiffs sought a writ of maritime attachment to attach to the vessel M/V Cape Viewer when it docked in Norfolk, Virginia. Defendant Freight Bulk Pte. Ltd. (“Freight Bulk”) is the legal owner of the vessel, but Plaintiffs assert that Freight Bulk was the alter ego of ICI, and that ICI fraudulently conveyed its assets to Freight Bulk to evade its creditors. On trial in district court, the Plaintiffs argued that the court could enforce their claims against ICI through Freight Bul. The district court agreed and awarded judgment to Flam and Glory Wealth, ordered the sale of the M/V Cape Viewer, and confirmed the distribution of the sale proceeds to Flame and Glory Wealth.

On appeal, Defendants had six separate arguments. (1) Defendant argued that under Fourth Circuit precedent, United States substantive law should not apply to this dispute, therefore the district court lacked subject matter jurisdiction. The Fourth Circuit disagreed, holding that both Flame and Glory Wealth had claims arising within federal admiralty jurisdiction, per 28 U.S.C. § 1333. (2) Defendants argued that under Supreme Court precedent, in Peacock v. Thomas, Flam and Glory Wealth’s allegations of alter ego and fraudulent concealment did not independently provide the district court subject matter jurisdiction, and that a plaintiff cannot rely on a prior lawsuit’s basis for the court’s jurisdiction in a subsequent suit to shift liability. The Court disagreed; recognizing Supreme Court precedent that a district court’s admiralty jurisdiction extends to claims to enforce foreign admiralty judgments. Therefore, because the district court had admiralty jurisdiction under § 1333, the district court also had authority to consider the questions of alter ego and fraudulent conveyance. 3) Defendants further argued that the district court erred in distributing funds from the sale of M/V Cape View to Glory Wealth because Glory Wealth failed to register its New York default judgment with the district court. The Court declined to consider the substance of this argument, noting that Freight Bulk did not raise this argument to the district court, and therefore, the issue was not properly preserved for appeal. (4) The district court abused its discretion by imposing certain discovery sanctions. The Court concluded that it need not go into the details of this argument, because even if the district court abused its discretion, its error was harmless. (5) The Defendants argued that there was insufficient evidence as to both the alter ego liability and fraudulent conveyance. As to alter ego liability, the Court found that the district court properly applied Fourth Circuit case law to the facts presented. Similarly, the Court found that there was sufficient evidence to support the judgment against Freight Bulk as to the fraudulent conveyance claim. (6) Finally, Defendants argued that the district court judge had a personal bias against Defendants’ Ukrainian nationality. The Court noted that Freight Bulk did not challenge the district court judge’s impartiality to hear the case at any time throughout the proceedings. As such, Freight Bulk failed to preserve this claim for appellate review. Further, the Court found that no exceptional or extraordinary circumstances exist in this case to justify reviewing it on the merits.

Accordingly, the Court affirmed the district court’s ruling in favor of Flame and Glory Wealth.  

Full Opinion

Meredith Weisler

 

LORENZO v. PRIME COMM., L.P., NO 14-1622, 14-1727

 

Decided: November 24, 2015

The Fourth Circuit affirmed.

Rose Lorenzo (“Lorenzo”) was a “solutions specialist” at Prime Communications (“Prime”) and was then promoted to store manager. She brought an action against Prime alleging that Prime violated the Fair Labor Standards Act (“FLSA”) and the North Carolina Wage and Hour Act, alleging that Prime miscalculated her commissions and bonuses and failed to pay her overtime pay. The district certified her claims, and Prime filed a motion to compel arbitration based on an arbitration provision contained in the Employee Handbook (“Handbook”). The district court denied the motion for arbitration based on lack of evidence that Lorenzo agreed to arbitration, and further refused to change its position when Prime brought a signed acknowledgment form to the court due to language in the form stating that the Handbook didn’t create a contract. Prime filed an interlocutory appeal for the denial of arbitration and filed a petition to appeal the designation of the claims as a class action, with Lorenzo filing a motion to strike the petition. The Fourth Circuit consolidated the two appeals.

The Fourth Circuit began its analysis by looking at the arbitration language in the Handbook and at the form Lorenzo signed. The Court looked to these documents to decide whether or not the parties entered into a contract to arbitrate employment disputes. The Court looked to North Carolina contract law as the controlling law, which states that in a contract, the parties “assent to the same thing in the same sense, and their minds meet.” Although the Court found that the district court erred in not finding that Lorenzo’s acknowledgment that she received the Handbook and her continuation of work after reviewing the arbitration language could have created implied assent, the Court found that that error was not harmful. Because Lorenzo signed the acknowledgment form, which provided that the terms in the Handbook did not create binding commitments, any implied agreement formed by receipt of the Handbook was expressly nullified. As to Prime’s petition to appeal the class action certification, Rule 23(f) authorizes review of interlocutory orders granting or denying class certifications, but only if the petition is filed within 14 days after the order is entered. Prime filed its petition seeking permission to appeal 17 days after the district court entered its order. For these reasons, the Fourth Circuit affirmed the district court’s order denying the motion to compel arbitration, and dismissed Prime’s appeal from the class action certification order.

Full Opinion

Jennie Rischbieter

HERNANDEZ-ZAVALA v. LYNCH, NO. 14-1878

Decided: November 20, 2015  

The Fourth Circuit denied Hernandez-Zavala’s petition for review of the Board of Immigration Appeal’s (BIA’s) order affirming the Immigration Judge’s (IJ’s) pretermission of Hernandez-Zavala’s application for cancellation of removal.

On March 8, 2012, Hernandez-Zavala, a citizen of Mexico, was charged with several misdemeanors under North Carolina law. Additionally, on March 21, 2012, he pleaded guilty to the offense of assault with a deadly weapon in violation of North Carolina law. General assault and battery is covered by this offense; it does not specifically cover incidents of domestic violence or require proof of a domestic relationship. The victim of this incident was a woman Hernandez-Zavala referred to as his “partner,” with whom he resides and shares a child.

On March 9, 2012, the Department of Homeland Security (DHS) served Hernandez-Zavala with a Notice to Appear. DHS charged him with removability under the Immigration and Nationality Act (INA), and Hernandez-Zavala conceded removability and applied for cancellation of removal. In February of 2013, DHS moved to pretermit his application noting that he had been convicted of a crime of domestic violence. Under the INA, “any alien who at the time after admission is convicted of a crime of domestic violence…is deportable.” Claiming that Hernandez-Zavala had committed such a crime, DHS argued that he was thus ineligible for cancellation of removal. Hernandez-Zavala contested this assertion, arguing his assault conviction did not constitute as a “crime of domestic violence.” The IJ granted DHS’s motion to pretermit Hernandez-Zavala’s application for cancellation of removal because the IJ determined he was statutorily ineligible for cancellation of removal due to his conviction of a crime of domestic violence. Hernandez-Zavala timely appealed.

The Fourth Circuit analyzed whether a conviction under a state law that does not have a domestic relationship as an element of the offense can constitute a crime of domestic violence. In order to be a crime of domestic violence, the crime must be: (1) a crime of violence and (2) the crime must have been committed by an individual who was in a domestic relationship with the victim. There is no question that this case constituted a crime of domestic violence or that Hernandez-Zavala was in a domestic relationship with the victim. The relevant question is whether the domestic relationship requirement in the statute must be an element of the underlying offense of conviction, triggering the categorical approach, or if it must merely be an attendant circumstance of the underlying conviction, triggering the circumstance-specific approach.

Hernandez-Zavala argues that the categorical approach would apply, only looking at the statutory definition of the North Carolina offense to see if it contains the necessary elements of a crime of domestic violence under the INA. Conversely, the government argues that the circumstance-specific approach would apply, and the court may also consider underlying evidence of the conviction to determine if a domestic relationship existed between Hernandez-Zavala and his victim.

The Fourth Circuit determined that when assessing whether an underlying state conviction qualifies as a crime of domestic violence under the INA, the use of the circumstance-specific approach is proper in determining whether the requisite domestic relationship existed. Therefore, the Fourth Circuit concluded that Hernandez-Zavala’s conviction for assault with a deadly weapon against a woman that he had a relationship with was a domestic relationship and constituted a crime of domestic violence causing his cancellation of removal inapplicable. Ultimately, the Fourth Circuit affirmed the decision of the BIA and denied Hernandez-Zavala’s petition for review.

Full Opinion

Austin T. Reed

 

U.S. v. SELLERS, No. 14-4568  

Decided: November 18, 2015

The Fourth Circuit held that, in deciding whether a prior conviction qualifies as a predicate for federal sentence enhancement, the standard is what sentence might have been imposed for the prior crime, not what sentence was actually imposed.  On that basis, the Fourth Circuit upheld the District Court.

In 1999, Sellers pled guilty to three counts of possession with intent to distribute crack cocaine in violation of South Carolina statute.  He was sentenced under the Youthful Offender Act (YOA) to an indeterminate period of custody not to exceed six years.  In 2014, a federal jury found Sellers guilty of unlawful possession of a firearm.  The presentence report recommended that Sellers be sentenced as an armed career criminal under the Armed Career Criminal Act (ACCA) based upon his earlier South Carolina drug offenses.  The ACCA provides for enhanced sentences for defendants with three prior convictions for drug offenses that carry a maximum prison term of ten years or more.  The South Carolina statutes under which Sellers had been previously convicted carried maximum prison terms of 15 years or more.  Sellers objected to the presentence report, arguing that his prior convictions did not qualify as ACCA predicates because his YOA sentence imposed a maximum penalty of six years imprisonment.  Sellers recognized that the Fourth Circuit had rejected this argument in United States v. Williams, but argued that United States v. Simmons abrogated Williams.  The District Court overruled Sellers’s objections, and sentenced him to 210 months imprisonment and five years supervised release.  Sellers appealed to the Fourth Circuit arguing that Simmons overruled Williams, and thus his earlier drug convictions did not qualify for ACCA sentence enhancement, because his YOA sentence was for a maximum of six years imprisonment

The Fourth Circuit began its analysis by reviewing Williams and Simmons.  In Williams, a case very similar to the instant case, the defendant argued that his YOA sentence did not qualify for ACCA sentence enhancement because his maximum term of imprisonment under the YOA was six years.  The Fourth Circuit rejected this argument, finding that the YOA allowed for a variety of sentencing alternatives, and that eligibility for ACCA sentence enhancement should be decided based on the maximum sentence allowed under the statute of conviction, not based upon the sentence actually imposed.  In Simmons, which concerned predicate sentences for sentencing enhancement under a different federal Act, the defendant had been previously sentenced under North Carolina’s unique Structured Sentencing Act (SSA).  The SSA requires judges to match class of offense and prior history of offender to a statutory table, which gives presumptive, mitigated, and aggravated sentencing ranges.  Barring additional findings/procedures allowing for sentencing in another range, defendants must be sentenced in their presumptive ranges.  The Fourth Circuit found that a prior North Carolina conviction is punishable by imprisonment over one year only if the sentence for that particular defendant could exceed one year.

The Fourth Circuit found Sellers’s argument that Simmons overruled Williams, and thus his ACCA sentence enhancement was incorrect because his YOA sentence was for a maximum of six years, was incorrect.  It held this on the basis of the difference between the discretionary YOA and the mandatory SSA, and because the standard for predicate crimes for federal sentence enhancement has been, and remains, the sentence which could have been imposed, not the sentence actually imposed.

The Fourth Circuit held that the test for whether a crime qualifies as a predicate for federal sentence enhancement is the maximum sentence permitted, not the sentence imposed, and whether the judge could have imposed a qualifying sentence.  Under that standard, Sellers’s prior convictions qualified as predicate crimes for ACCA sentence enhancement, because the judge could have sentenced Sellers to more than ten years of prison for his prior drug convictions.  On this basis, the Fourth Circuit affirmed the District Court.

Full Opinion

Katherine H. Flynn

 

U.S. v. QAZAH, NO. 14-4204

Decided: November 17, 2015

The Fourth Circuit affirmed the Defendants’ convictions, but vacated their sentences, remanding for resentencing.

In 2010 and 2011, Defendant Kamal Zaki Qazah (“Qazah”), along with other conspirators, began purchasing thousands of cases of stolen cigarettes from undercover law enforcement officers. The officers had represented that the cigarettes had been stolen from Philip Morris trucks. Qazah sold the cigarettes to conspirators who operated convenience stores in South Carolina. Qazah’s Uncle, Defendant Nasser Kamal Alquza (“Alquza”) eventually became a part of the conspiracy in order to make additional money by laundering the undercover officers’ cash proceeds from the cigarette sales. In November 2011, the officers arranged a final controlled purchase. However, instead of completing the transaction, the officers arrested Qazah and Alquza, where they also executed a search warrant of Qazah’s house, where they found 1.3 million dollars in cash and a notebook in which Qazah had recorded his cigarette sales. Later that day, officers executed another search warrant at Alquaza’s house, recovering relevant financial records and false identification documents. On trial, a jury convicted Qazah and Alquza of conspiracy, in violation of 18 U.S.C. § 371, by conspiring to receive and transport stolen cigarettes in interstate commerce in violation of 18 U.S.C. §§ 2314 and 2315, along with other charges. The district court sentenced Qazah to 216 months’ imprisonment and Alquza to 108 months’ imprisonment.

On appeal, Alquza challenged the district court’s denial of his motion to suppress evidence recovered from a search of his home. He argued that because the search warrant for his home identified items that were instead in Qazah’s home, that the warrant did not satisfy the Fourth Amendment’s particularity requirement. The Court agreed with the district court’s ruling, holding that this error was a technical one, which did not influence the warrant’s issuance or affect its execution. Further, the Court found that the officers were acting in good faith, therefore, the suppression of evidence in this case would have no deterrent effect. Qazah challenged the court’s denial of his motion to sever his trial from Alquza’s. The Court affirmed the district court, finding that when defendants are charged together, a district court should grant severance only if there is a “serious risk that a joint trial would compromise a specific trial right of the defendants.”

Both Defendants challenged their respective sentences, claiming that the district court inaccurately calculated the “loss” for which they were responsible under the Sentencing Guidelines. Defendants claimed that the court relied on the retail value of the stolen cigarettes, rather than their wholesale value. The Court held that the district court’s reasoning behind their calculation of loss was in error, but that the final number was not necessarily incorrect. The Court concluded that the district court needed to re-evaluate their calculations to expand its inquiries into the intended victim of the relevant offenses and then to recalculate the Defendants’ sentencing ranges based on its findings and conclusions about the amount of loss that they intended to result from their commission of their crimes.

Accordingly, the Court affirmed in part, vacated in part, and remanded for resentencing.

Full Opinion

Meredith Weisler

 

CLASS v. TOWSON UNIV., NO. 15-1811

Decided: November 13, 2015

The Fourth Circuit reversed and vacated the injunction.

Gavin Class (“Class”), who had been a member of the Towson University (“Towson”) football team, suffered heatstroke during practice, which resulted in numerous surgeries and a long recovery time. Although Class wanted to return to play football, he was unable to receive clearance from the Team Physician under the “Return-To-Play Policy,” (“Policy”) because although he underwent a rigorous training program, he could not pass the heat tolerance tests on numerous occasions. Class brought this action against Towson, claiming the decision violated Title II of the Americans with Disabilities Act (“ADA”), and Section 504 of the Rehabilitation Act, claiming that his inability to regulate his body temperature and susceptibility to heatstroke amounted to a “disability.” The district court ruled in favor of Class, and issued a permanent injunction prohibiting Towson from violating those two Acts. Towson appealed, claiming that the district court erred in holding that Class was disabled as defined by the Acts and that Class was “otherwise qualified” for the program.

The Fourth Circuit began by carefully reviewing the district court’s record, including testimony Dr. Kindschi, (“Kindschi”) the Team Physician, and Dr. Casa, (“Casa”) the Institute’s Chief Operating Officer. It then addressed Towson’s claim that the district court erred in finding that Class had a disability. Towson argued that although an impairment “that is episodic or in remission would qualify as a disability if it substantially “limits a major life activity when active,” Class’s limitations were not episodic or in remission. Towson also argued that intercollegiate football was not a major life activity. The Court carefully reviewed the statutory requirement for showing disability, including the definition of a “major life activity.” The Court specifically focused on the phrase “when active,” to determine the exact limits of the phrase, although declined to investigate whether the phrase extended to cover a condition that became active only under extreme conditions because it found that Class was not “otherwise qualified” to participate in the football program with accommodations.

In order to show that he was “otherwise qualified,” Class had to show the “academic and technical standards requisite to admission or participation in the school’s education program or activity,” with the term “technical standard” referring to all nonacademic admissions criteria. The Court acknowledged that it would allow a measure of deference to the school’s professional judgment when looking at whether an eligibility requirement was essential and had been met. Specifically, Towson contended that its Policy was an essential eligibility requirement, and the Court agreed that such a Policy that gave the Team Physician final clearance authority was consistent with NCAA guidelines and was a fair and reasonable method for Towson to employ. The Court thus concluded that the Towson’s requirement that a student-athlete needed to obtain the Team Physician’s clearance to return to play is an essential eligibility requirement. Nevertheless, Class argued that the specific decision to reject his proposed accommodations was unreasonable, because, he claimed, the decision was based on her feelings and not on medical or scientific evidence. In looking at whether the Team Physician’s opinion was reasonable, the Court pointed out that although the Team Physician was accorded some deference, the Court still needed to make sure that the decision was not a pretext for illegal discrimination. The Court specifically focused on whether the Team Physician and Towson reasonably considered the six proposed accommodations. Towson claimed that two of the accommodations were unreasonable, and although the Court dismissed some of Towson’s contentions, the Court accepted the contentions that the accommodations were not reasonable because they “would not effectively satisfy Towson University’s safety concerns” and “would require fundamental changes in the nature of its football program.” Looking at the record, the Court concluded that the Kindschi’s decision that Class couldn’t play football without substantial risk was well supported. Furthermore, the Court found that her opinion that the accommodation to monitor Class’s internal body temperature would not adequately meet the needs of health and safety was also supported. Finally, the Court agreed that the accommodations would fundamentally alter the nature of its football program, because it would substantially impinge on the Team Physician’s role.

For these reasons, the court vacated the injunction, and did not reach the challenges to the district court’s evidentiary rulings.

Full Opinion

Jennie Rischbieter

 

CORETEL VA., LLC v. VERIZON VA., LLC, NO. 15-1008

Decided: November 13, 2015  

The Fourth Circuit held that the judgment of the district court involving the calculation of damages and late fees was appropriate.

In accordance to the Telecommunications Act of 1996, CoreTel and Verizon entered into interconnection agreements (ICAs). The Act requires incumbent local exchange carriers such as Verizon to allow competitive local exchange carriers such as CoreTel to connect with end users over the incumbent’s network. Carriers negotiate private agreements with each other to establish the rates and terms in which their networks will be interconnected. The ICAs govern certain aspects of interconnection such as CoreTel’s use of Verizon’s physical telecommunications facilities.

In CoreTel I, the Fourth Circuit addressed a dispute between the parties involving what rates CoreTel must pay to use Verizon’s facilities. The Court held that Verizon should have billed CoreTel for facilities at the total element long-run incremental cost (TELRIC) rate instead of the tariff rates. Therefore, CoreTel was entitled to summary judgment regarding Verizon’s claim for declaratory relief relating to Verizon’s facilities charges. The Fourth Circuit did not resolve Verizon’s claim for damages associated with CoreTel’s breach of the ICAs. Instead, the case was remanded so that the district court could apply the proper TELRIC rates to calculate what CoreTel owes Verizon for the use of Verizon’s facilities.

On remand, the district court held a bench trial, where Verizon presented the tariff-based monthly bills it had issued to CoreTel and the “pricing attachments” to the ICAs. These monthly bills explained “(1) what facilities Verizon provided to CoreTel; (2) whether the facility was provided by Verizon Virginia or Verizon South and, if split between those two, the percentage of the facility in each company’s service area; and (3) for transport facilities billed by the mile, the number of transport miles provided. From the evidence, Verizon developed a summary spreadsheet showing the specific amount owed for each at TELRIC rates. The entries totaled $227,974.22 in damages. Verizon also calculated late fees at 1.5% per month on the facilities charges under the ICAs, totaling $131,885.25. CoreTel objected to Verizon’s proposed damages calculations, but the district court rejected and entered judgment for Verizon in the full amount. This appeal followed.

Here, CoreTel argues (1) that the district court violated the Fourth Circuit’s mandate in CoreTel I by awarding as damages any TELRIC-based facilities charges at all; (2) that even if Verizon can recover facilities charges, the district court erred in calculating the total amount owed; and (3) that the district court also erred in its calculation of late fees.  The Fourth Circuit clarified that the mandate rule applies, prohibiting lower courts from considering questions that the mandate of a higher court has laid to rest. CoreTel was incorrect in believing CoreTel I froze not only the law of the case but also all of the underlying facts. The only matter that the mandate of CoreTel I “laid to rest” was that TELRIC rates should apply, not tariff rates. The district court did not err and followed that ruling.

The Fourth Circuit determined that the district court did not err when it considered Verizon’s damages claim. In CoreTel I, the Court expressly did not resolve Verizon’s claim for damages associated with CoreTel’s breach of the ICAs. The case was remanded to the district court to consider Verizon’s damages claim, and the district court appropriately followed this mandate.

After discussing background information regarding the technical aspects of ICAs, the Fourth Circuit affirmed the district court’s calculation of the TELRIC-based facilities charges CoreTel owes Verizon. CoreTel must pay TELRIC based facilities charges for any Verizon facilities it uses to transport traffic between the point of interconnection (POI) and the relevant Verizon interconnection point (IP). The specific objections that CoreTel had with the district court’s damages calculations were addressed individually; however, the Fourth Circuit ultimately rejected each argument and affirmed the calculation of the facilities charges set forth by the district court.

Finally, CoreTel challenged the district court’s award of $138,724.47 in late fees to Verizon. CoreTel argued “(1) that it cannot owe late fees under the ICAs because Verizon has never issued it formal bills at the proper TELRIC rates, (2) that Virginia law limits any late fees to 5% per year rather than the ICA-prescribed 18% per year that the district court imposed, and (3) that the principal on which any late fees are calculated should be offset by certain payments Verizon has withheld from CoreTel during this course of litigation.” However, similarly, the Fourth Circuit rejected each of CoreTel’s arguments and concluded that the district court properly calculated the late-fees. Therefore, the ultimate judgment of the district court was affirmed.

Full Opinion

Austin T. Reed

 

ASSOCIATED COAL CORP. v. DIR., OFFICE OF WORKERS’ COMPENSATION PROGRAMS, U.S. DEP’T OF LABOR. 14-1923

Decided: November 6, 2015

In a black lung benefits case, the Fourth Circuit found that the Administrative Law Judge’s (ALJ) decision applying the fifteen-year presumption to the claim did not reopen an earlier claim, and thus did not contravene separation of powers.  The Fourth Circuit also found that the ALJ did not improperly use the fifteen-year presumption to establish that a condition of entitlement had changed since the earlier claim was denied.  On this basis, the Fourth Circuit upheld the finding of the Benefits Review Board (BRB) awarding benefits to Arvis Toler, and denied Eastern Associated Coal Corporation’s (Eastern) petition for review of the BRB’s decision.

Toler worked in Eastern’s West Virginia mines for 27 years, 16 of them underground and exposed to high concentrations of coal dust.  From 1966 to 1997, Toler also smoked about a pack of cigarettes per day.  In the mid-1980s, Toler began to have shortness of breath, and by 1993, Toler’s health was so bad, he had to leave his coal mining job.  Toler’s health, however, continued to decline.  By 2000, he used supplemental oxygen, and by 2008, he used oxygen 24 hours per day.

The Congressionally created black lung benefits program provides benefits to coal miners and their dependents for miners who are fully disabled due to pneumoconiosis, a respiratory disease stemming from exposure to coal dust.  To obtain benefits, a miner must show that he has pneumoconiosis, that the disease arose from coal mine employment, that he is totally disabled, and that the pneumoconiosis contributes to his total disability.  In 1972, Congress amended the Act to provide a presumption of total disability for a coal miner who worked underground for at least 15 years, and had a totally disabling respiratory/pulmonary problem.  The presumption was repealed in 1981 for claims filed on or after January 1, 1982, but reenacted in March, 2010 for claims filed after January 1, 2005 and pending on or after March 23, 2010.  The reenacted presumption could be rebutted by establishing that the miner did not have legal or clinical pneumoconiosis stemming from coal mine work, or that no part of the total disability was caused by pneumoconiosis.

Toler filed his first black lung benefits claim shortly before leaving Eastern in 1993.  The ALJ denied the claim, finding that Toler was totally disabled by pulmonary disease, but that he failed to show it was coal mine work (as opposed to smoking) that had caused the disease.  The denial was upheld by the BRB and by the Fourth Circuit.  In 2008, Toler filed a second black lung benefits claim.  This time, the parties stipulated that Toler was a coal miner, and was totally disabled by pulmonary disease.  Applying the 15-year presumption, the ALJ found that the only remaining issue was whether Eastern could show Toler did not have pneumoconiosis.  Finding that Eastern failed to do so, the ALJ granted Toler benefits.  Eastern appealed to the BRB, which remanded to the ALJ for Eastern to rebut the 15-year presumption.  The ALJ again granted Toler’s claim for benefits, finding that Eastern did not rebut the 15-year presumption.  Eastern again appealed to the BRB, this time on the basis that in deciding the second claim, the ALJ improperly reopened Toler’s first claim violating finality and res judicata, that the 15-year presumption could not be used as a change of condition of entitlement required to submit a new claim for benefits, and that the ALJ used an improper rebuttal standard.  The BRB found against Eastern, and upheld the grant of benefits to Toler.  Eastern appealed, arguing that applying the 15-year presumption in the second claim violates separation of powers by reopening the earlier claim, and that the 15-year presumption cannot be used to establish a change in conditions of entitlement necessary to file a second claim.

The Fourth Circuit first held that the presumption could be used to show a change in a condition of entitlement.  The Fourth Circuit based this holding on the language of the Act and regulations, the language of the preamble to the 2000 Final Rule, and on deference to the Secretary of Labor.  Further, the Fourth Circuit found that Toler submitted new physical evidence with his second claim for benefits.

The Fourth Circuit then held that the application of the presumption to the second claim did not allow Toler to reopen a final decision.  The Fourth Circuit based this holding on case precedent holding that a subsequent claim for benefits is not the same as a previous claim.  On the basis of these holdings, the Fourth Circuit affirmed the BRB’s grant of benefits to Toler, and denied Eastern’s petition for review.   

Full Opinion

Katherine H. Flynn

 

U.S. v. PALOMINO-CORONADO, NO. 14-4416

Decided: November 5, 2015

The Fourth Circuit reversed and vacated the district court’s ruling.

Defendant, Anthony Palomino-Coronado was convicted of knowingly employing, using, persuading, inducing, enticing, or coercing a minor in sexually explicit conduct, for the purpose of producing a visual depiction of that conduct, in violation of 18 U.S.C. § 2251(a).

On May 3, 2012, Prince George’s county police offers were called to a home in response to a report of a missing seven-year-old girl, B.H. Police eventually found B.H. who had been sexually assaulted. At a hospital, B.H. was examined and the nurse found that B.H.’s hymen had been torn and that she had an infection, indicating that the sexual activity had also occurred previously. Detective Cleo Savoy interviewed B.H. During the unrecorded portion of the interview, B.H. told Savoy that the Defendant kissed her and had sex with her. However, once the interview began to be recorded, B.H. denied having any sexual intercourse with Defendant. On the same day, police seized Defendant’s cell phone and found several photos of B.H., as well as deleted sexually explicit photos. On May 15, 2012, Martha Finnegan, and FBI child forensic interview specialist, interviewed B.H. During that interview, B.H. told Finnegan that she and Defendant had sexual contact.

At trial, B.H. testified that Defendant had touched her private parts on several occasions and that she was afraid to tell the police the truth in her first interview. She identified herself and Defendant in the pictures from his cell phone, including the sexually explicit photo. Finnegan also testified at trial. As part of her testimony, she evaluated B.H.’s interview with Detective Savoy and explained that it was coercive and did not follow established protocols. Finnegan also testified about her own conversation with B.H., where B.H. told her that Defendant and B.H. had engaged in sexual conduct. At the close of trial, Defendant motioned for acquittal based on insufficient evidence pursuant to Federal Rule of Criminal Procedure 29, which the district court denied. Defendant wa found guilty.

On appeal, the Court noted that it must affirm the district court’s verdict if it is supported by substantial evidence, viewed in the light most favorable to the government. Substantial evidence is “evidence that a reasonable fact finder of fact could accept as adequate and sufficient to support a conclusion of a defendant’s guilt beyond a reasonable doubt. Defendant contended that the government failed to prove one of the elements of § 2251(a) that he acted for the purpose of producing a visual depiction. Section 2251 contains a specific intent element, therefore the government was required to prove that production of a visual depiction was a purpose of engaging in the sexual activity. The Court found that the evidence produced at trial did not support the conclusion that Defendant engaged in sexual conduct with B.H. for the purpose of producing a picture. The fact that Defendant took one photo of B.H. does not show that he engaged in sexual activity with her only to take that picture. The Court stressed that to find otherwise would eliminate the specific intent requirement, thus turning Section 2251 into a strict liability offense. Therefore, the Court held that the government produced insufficient evidence to show that Defendant acted for the purpose of producing a visual depiction of the sexual act.

Accordingly, the Court reversed and vacated the judgment of the district court.

Full Opinion

Meredith Weisler

 

US v. VINSON NO. 14-4078

Decided: November 3, 2015

The Fourth Circuit affirmed the district court’s order dismissing the indictment.

Marshall Vinson (“Vinson”) was charged with “possession of a firearm by a prohibited person” after police officers found a rifle and ammunition at his residence, because the government determined that his prior North Carolina conviction qualified as a “misdemeanor crime of domestic violence.” The government appealed the district court’s grant of Vinson’s motion to dismiss because the court determined that Vinson was not a prohibited person.

The Fourth Circuit first began by looking to the Federal statute that prohibited possession of firearms by those convicted of a “misdemeanor crime of domestic violence” (“MCDV”), and determined that it was necessary to decide if Vinson was a prohibited person by deciding if the underlying state offense had an element of “physical force” by using the “categorical approach” to look at the elements of the prior offense as opposed to the conduct that caused the conviction. The Court also considered a divisible approach for circumstances in which the underlying crime had multiple elements, to determine if those elements in the state statute match the Federal offense. Although under the categorical approach the district court determined that Vinson’s conviction would not qualify under the Federal statute, the government argued that the North Carolina statute was divisible and that the modified categorical approach should be applied, and that in doing so, Vinson’s battery against his wife counted as a prior MCDV such that the district court erred in dismissing the indictment. The government argued that since North Carolina law defined assault through three alternative elements, it was divisible. The court assumed for the purposes of the case, but didn’t actually decide, that the assault definitions amounted to “alternate elements creating separate forms of the offense,” but ultimately found that none of those definitions required the requisite level of intent needed to be considered an MCDV. The Court then looked at MCDV’s definition, and focused on the “use or attempted use of physical force” requirement, and looking at case law, determined that North Carolina requires a defendant to act intentionally to be guilty of assault. Because North Carolina law allowed intent to be established through “culpable negligence,” North Carolina law allows convictions for all forms of assault, and since those forms of assault didn’t categorically qualify as an MCDV, assault was not a divisible approach, and the Fourth Circuit rejected the government’s argument and affirmed the district court’s dismissal of the indictment.

Full Opinion

Jennie Rischbieter

UNITED STATES v. MCLEOD, NO. 14-4766

Decided: October 30, 2015  

The Fourth Circuit concluded that the evidence the government offered with respect to at least four of the defendant’s five burglary convictions did not show that the convictions qualified as “violent felonies” under the Armed Career Criminal Act (ACCA) because the government was unable to demonstrate that the object of each conviction was a building or structure, apart from a vehicle, boat, or airplane.

McLeod pleaded guilty to unlawfully possessing a firearm in May of 2014. Since the presentence report showed that McLeod had five earlier convictions for second-degree burglary, the district court determined at sentencing that those convictions were “violent felonies” and that McLeod therefore qualified as an armed career criminal, requiring a sentence of at least 15 years imprisonment. On appeal, McLeod argues the two issues he preserved: “(1) that the district court should not have been able to enhance his sentence under ACCA because the government did not include his predicate convictions in the indictment and (2) that his 1998 South Carolina convictions for second-degree burglary do not qualify as “violent felonies” for ACCA sentence-enhancement purposes.”

As to McLeod’s first argument, the Fourth Circuit determined that the argument was foreclosed by a decision previously made by the Supreme Court. See Almendarez-Torres v. United States, 523 U.S. 224 (1998). Therefore, since that case is still controlling law, the Fourth Circuit affirmed the district court’s rejection of this argument.

Second, McLeod contended that the district court erred in relying on his 1998 South Carolina convictions for second-degree burglary to enhance his sentence under ACCA, claiming those convictions do not qualify as predicate convictions under the ACCA. Specifically, McLeod argues that the elements of the offense for which he was convicted in South Carolina are broader than generic burglary because the statute prohibits not only the breaking and entering of a building and structure but also of other “edifices and things.” McLeod points out that the statute of conviction also prohibits the breaking and entering of vehicles, boats, or planes. Therefore, he argues that the convictions cannot serve as predicate burglary convictions, which are required to be limited to the breaking and entering into a building or structure. Conversely, the government argued that his previous South Carolina convictions qualify as predicate offenses under the ACCA because the relevant indictments show that his convictions were for “burglary of a building,” which matches the generic definition of burglary determined by the Supreme Court.

The ACCA states that any person convicted under 18 U.S.C. § 922(g) who has three prior convictions for a violent felony shall be imprisoned for not less than 15 years. A violent felony includes the crime of burglary when punishable by imprisonment for a term exceeding one year. When examining burglary as a predicate offense under the ACCA, it intended to refer to a generic definition of burglary and not the state definitions. The Supreme Court defined generic burglary as an “unlawful or privileged entry into, or remaining in, a building or structure, with intent to commit a crime.” When a statute defines burglary with alternative elements such that one alternative corresponds to generic burglary and another does not, a sentencing court may apply the “modified categorical approach,” which allows it to examine relevant court records or documents to find out whether the defendant was convicted of generic burglary or an alternative form of burglary that would not qualify as a predicate offense. Those documents are often limited to the charging document, written plea agreement, transcript of the plea colloquy, and any explicit factual finding by the trial court to which the defendant assented.

Here, McLeod was charged with second-degree burglary of a building under South Carolina law, which includes entering a building without consent. This crime includes a sentence for over one year. At first glance, this seems to mimic the definition of generic burglary; however, in South Carolina a “building” can include a structure, vehicle, watercraft, or aircraft. While the modified categorical approach would allow the district court to determine whether McLeod’s plea involved generic or nongeneric burglary, the government presented no documentation to show that the crime of conviction was generic burglary. Therefore, since the Fourth Circuit could not determine whether McLeod pleaded guilty to generic burglary with respect to four of his convictions, they cannot serve as predicate offenses under the ACCA. McLeod’s conviction was affirmed, but his sentence was vacated and remanded for resentencing.  

Full Opinion

Austin T. Reed

 

U.S. v. ANDREWS, No. 14-4422

Decided: October 30, 2015

In an armed robbery case, the Fourth Circuit found that the District Court properly applied a sentence enhancement against Andrews for obstruction of justice.  On that basis, the Fourth Circuit upheld the sentence enhancement.  

In March, 2011, Andrews entered a Domino’s Pizza in Kannapolis, North Carolina, with a handgun.  He forced an employee at gunpoint into the office, and ordered the manager to open the safe.  When he was told there was nothing in the safe, Andrews stole from the cash register, from two employees, and took the manager’s wallet.  During the encounter, Andrews pointed his gun at the employees, and twice threatened to shoot.  The Domino’s manager reported the robbery right away.  In searching for Andrews, police found an abandoned car.  Inside the car were wallets belonging to Andrews and the manager, a cell phone with photos of Andrews’s family which records showed had been used in Kannapolis near the time of the robbery, a traffic ticket issued to Andrews, sales records showing Andrews owned the car, and a baseball cap matching that described as worn by the robber, which DNA analysis showed belonged to Andrews.  

Andrews was charged with interference with commerce by robbery and carrying and using a firearm during and in relation to a crime of violence in violation of federal statutes.  He pled not guilty, and filed several pre-trial motions including one accusing prosecutors of witness intimidation.  He also filed a notice of alibi with a brief describing expected alibi testimony.  At trial, during opening statement, Andrews’s attorney identified Andrews’s girlfriend and her mother as alibi witnesses, and previewed their testimony.  During the trial, Andrews’s alibi witnesses testified that he was at their house at the time of the robbery, but the mother of one of Andrews’s children testified that he had visited her the night of the robbery, and told her he robbed a Domino’s store.  The trial jury found Andrews guilty on all charges.  The Fourth Circuit reviewed an appeal, found that Andrews was no longer eligible to be sentenced as a career offender, vacated his sentence, and remanded for resentencing.  

On remand, the Probation Office calculated Andrews’s total offense level as 22.  The government requested a two-level enhancement for obstruction of justice, and the Probation Office added this enhancement to its recommendations.  Andrews objected to the enhancement.  The District Court found that Andrews knew his attorney would present the alibi witnesses, and must have known what they would say.  On this basis, the District Court found sufficient evidence that Andrews obstructed justice by allowing the false testimony without objecting, and thus was subject to the enhancement.  Andrews was sentenced to 115 months imprisonment on one charge, and 84 months imprisonment on the second charge served consecutively, followed by five years of supervised release.  

Andrews appealed to the Fourth Circuit arguing that the sentencing enhancement was improper.  The Fourth Circuit found that an enhancement for obstruction of justice is proper under the U.S. Sentencing Guidelines if there is a proper finding of obstruction, even if there was no specific finding of suborning perjury.  The Fourth Circuit analyzed the facts of the case.  A large amount of evidence placed Andrews at the scene of the crime.  Further, Andrews knew what his alibi witnesses would testify to, as shown in his notice of alibi, accompanying brief, his attorney’s opening statement, and his motion accusing the prosecutors of witness intimidation, including intimidating one of his alibi witnesses.  Even if Andrews didn’t know what the first alibi witness would say, the testimony of the first witness put him on notice of what the second witness would say.  Based on these elements, the Fourth Circuit held that the District Court properly found that Andrews obstructed justice by allowing his alibi witnesses’ false testimony, and thus upheld the sentence enhancement.  The Fourth Circuit further found that the sentence enhancement did not penalize Andrews for exercising his Fifth Amendment right to remain silent, nor was Andrews’s Sixth Amendment right to counsel violated.

Full Opinion

Katherine H. Flynn

 

GRIFFIN v. BALTIMORE POLICE DEP’T, NO. 14-1494

Decided: October 27, 2015

The Fourth Circuit affirmed the district court’s ruling.

In 1982, Plaintiff, Wendell Griffin was convicted for the murder of James Williams Wise and also for related weapons charges. In June of 2010, Griffin filed a pro se petition seeking post-conviction DNA testing of certain evidence. Griffins’ appointed counsel filed a Maryland Public Information Act request, which provided documents that allegedly revealed that Baltimore City Police Department detectives withheld from the defense certain exculpatory evidence.  On February 2, 2012, Griffin moved for state post-conviction relief and on May 23, 2012, Griffin was placed on three years unsupervised probation. Griffin then sued the Baltimore City Police Department and three of its former detectives under 42 U.S.C. § 1983 for damages. The district court dismissed his claims pursuant to the bar set forth in Heck v. Humphrey, stating that Griffin had “ample opportunity to seek federal review . . . prior to his release from incarceration.”

In Heck, the United States Supreme Court prohibited § 1983 claims from implicating issues more appropriately resolved via federal habeas corpus or state post-conviction relief. Griffin argued that his claims were not subject to Heck because they fell under an exception recognized in Wilson v. Johnson. Wilson recognizes an exception to the Heck bar in cases where a litigant could not have sought habeas corpus relief while in custody. The Court found, however, that Griffin did not lack access to habeas relief while he was in custody. Griffin had three decades to seek habeas relief, whereas Wilson only had a few months to make a habeas claim. Griffin was even able to bring a federal habeas claim while in custody. Although his petition was denied, the fact that he was able to file it demonstrates the differences between his case and Wilson. Therefore, the Court found that Griffin had no obstruction to habeas access allowing an expansion of the Heck exception. The Court noted that its decision sounded in procedure and not substance. Its holding was not meant to bar Griffin from seeking a remedy for possible police misconduct, only that the vehicle he chose was not appropriate under Supreme Court and circuit precedent.

Accordingly, the Court affirmed the judgment of the district court.

Full Opinion

Meredith Weisler

 

U.S. v. PATIUTKA, NO. 14-4932

Decided: October 23, 2015

The Fourth Circuit affirmed the lower court’s ruling.

The district court rejected all of the Government’s contentions that that the evidence was admissible under Fourth Amendment exceptions, granted the defendant’s motion to suppress, and the Government appealed.

After determining that the standard of review on a motion to suppress was de novo, and then examined the two exceptions to the warrant requirement that the Government set forth. The first exception that the Government contends applied was that the search was incident to Patiutka’s arrest. Although the Court agreed that a search incident to an arrest may be made under appropriate circumstances, and cited to appropriate case law, in this instance, the Court found that the officers did not have probable cause to arrest Patiutka for any offense after he revoked consent for officers to search his car. The Court pointed to the district court’s findings that Trooper Cox’s testimony regarding probable cause was not held to be creditable, and specifically noted that the video shown at the hearing showed that Cox stopped the search as soon as Patiutka objected, which indicated that the search was purely consent-based. Therefore, because Trooper Cox did not have probable cause to arrest Patiutka, the search incident to arrest exception was inapplicable.

As to the Government’s second argument, that the search was valid under the automobile exception, the Court again found that this argument was without merit. After carefully setting forth the automobile exception rule, as well as the probable cause definition, the Court then delineated the facts that the district court used in making its determination, and agreed with the district court that those facts did not provide an adequate objective basis for finding probable cause to search an automobile. Because the Court found that there were legitimate, law-abiding reasons for Patiutka to have had credit card readers, iPads, and suitcases in his car, and that at best Trooper Moore potentially had a “reasonable articulable suspicion” that should have resulted in further questioning, the automobile exception did not apply.

Although the Government attempted to argue that the “collective-knowledge doctrine” should impute Trooper Cox’s suspicion about Patiutka’s identification to Trooper Moore, the Court agreed with the district court that the doctrine did not apply, albeit for a slightly different reason. The Court found that because Trooper Cox had no probable cause to “communicate to a fellow officer,” and that Trooper Moore continued the search even though Trooper Cox had halted the search, the collective knowledge doctrine was insufficient to provide probable cause. For those reasons, the Fourth Circuit held that neither of the exceptions applied and affirmed the district court’s grant of Patiutka’s motion to suppress.

Full Opinion

Jennie Rischbieter

U.S. v. SLOCUMB, NO. 14-4733

Decided: October 22, 2015  

The Fourth Circuit reversed the district court’s denial of defendant’s motion to suppress, vacated the defendant’s conviction and sentence, and remanded for further proceedings after determining the Culpeper, Virginia, Police Department lacked reasonable suspicion to detain the defendant.

The Culpeper Police department executed a search warrant on a house that was suspected for drug activity. The police used the parking lot of Culpeper Salvage, located across the street, as a staging area for the search. When the officers arrived, they found Slocumb, his girlfriend, Lewis, and an infant in the parking lot transferring a child seat from one car to the other. The officers observed Slocumb hurrying Lewis along, and Slocumb told an officer that one of the cars had broken down. The officers informed Slocumb and Lewis to not leave and had an officer wait with them as the other officers executed the warrant.

At some point, the officer waiting with Slocumb and Lewis asked Slocumb for identification. Slocumb cooperated and gave the officer the name “Anthony Francis.” Further, Slocumb declined to give the officer consent to search him and answered inconsistently to several questions. When Lewis was asked what Slocumb’s name was, she responded that his name was “Hakeem,” which officers recognized as someone who was under investigation for drug trafficking. Slocumb was promptly arrested for providing a false name, and officers found approximately $6,000 on his person. When asked by officers, Lewis gave permission for the search of one of the vehicles. The officers found methamphetamine, cocaine powder, cocaine base, and marijuana in the car. At that moment, Slocumb claimed ownership of the drugs. A subsequently obtained search warrant for Slocumb’s residence uncovered more drugs and paraphernalia.  

Slocumb made a motion to suppress the physical evidence seized and the statements made. The district court denied the motion, finding that his initial detention was supported by reasonable suspicion, and the officers had probable cause to arrest him. Additionally, the district court found Lewis had authority to consent to the search of the vehicle. Slocumb appealed.

In review of Slocumb’s seizure, the court looks at the totality of the circumstances to determine whether the officer had reasonable suspicion of criminal activity. The district court determined that factors such as the high-crime area, the lateness of the hour, the fact that the business had been closed for many hours, and Slocumb’s individual behavior are permissible factors that can contribute to a finding of reasonable suspicion. However, the Fourth Circuit determined that these factors were insufficient to support reasonable suspicion. When a defendant does not try to flee or leave the area, we have found reasonable suspicion on a showing of more “extreme” or unusual nervousness or acts of evasion. It is important to not overplay a suspect’s nervous behavior in situations where citizens would normally be expected to be upset. Here, Slocumb’s behavior was normal considering the situation, and his behavior did not give rise to reasonable suspicion. Therefore, the district court erred in denying Slocumb’s motion to suppress.

Full Opinion

Austin T. Reed

 

U.S. ex. rel. OBERG v. PA. HIGHER EDUC. ASSISTANCE AGENCY, NO. 15-1093

Decided: October 21, 2015

 In a False Claims Act (FCA) case, the Fourth Circuit held that Pennsylvania Higher Education Assistance Agency (PHEAA) was not an arm of the State of Pennsylvania.  As such, PHEAA was not immune to suit under the 11th Amendment.  On this basis, the Fourth Circuit vacated the District Court’s grant of summary judgment to PHEAA, and remanded for further proceedings.

Oberg brought suit under the False Claims Act against PHEAA and other state-created student-loan providers alleging that from 2002 to 2006, the providers had fraudulently claimed federal student loan interest-subsidy payments.  Over the history of the lawsuit, the other defendants settled or were dismissed, leaving PHEAA as sole defendant.  On its first decision in this case, the Fourth Circuit held that the District Court erred by concluding PHEAA was a state agency, and dismissing the complaint without applying arm-of-state analysis.  On a subsequent appeal, after the District Court applied arm-of-state analysis, the Fourth Circuit found that the District Court erred in dismissing the case against PHEAA, because Oberg had alleged enough to claim that PHEAA was not an arm-of-state.  The Fourth Circuit engaged in an arm-of-state analysis, and found the factors mixed, but sufficient to overcome PHEAA’s motion for dismissal.  On remand, after discovery, PHEAA moved for summary judgment on the arm-of-state issue, and the District Court granted the motion, finding that all factors in the analysis pointed towards PHEAA being an arm-of-state.  The sole issue on appeal before the Fourth Circuit in the instant case was whether PHEAA was an arm-of-state of Pennsylvania, and thus immune from FCA liability.

The Fourth Circuit analyzed four factors to decide whether PHEAA was an arm-of-state.  First, an entity is an arm-of-state if judgments against the entity will be paid by the state.  This factor encompasses both legal and functional liability.  Second, an entity is an arm-of-state if it is not autonomous from the state.  Third, an entity is an arm-of-state if it is involved with state concerns rather than non-state concerns.  Fourth, an entity is an arm-of-state if state law treats it as such.

The Fourth Circuit found that the first factor, liability, strongly suggested that PHEAA was not an arm-of-state.  In its previous decision, the Fourth Circuit had found that Pennsylvania was not legally liable for judgments against PHEAA, and that finding remained controlling in regards to legal liability.  The Fourth Circuit found in the instant case that Pennsylvania was not functionally liable for judgments against PHEAA.  The Fourth Circuit made this finding based on PHEAA’s financial strength and independence, including gubernatorial recognition of PHEAA as having control over its own monies, PHEAA’s ability to settle previous suits against it, and PHEAA’s creation of its own charitable organization.  Despite some degree of control over PHEAA funds, such as requiring that commercial funds be deposited in the State Treasury and that the Treasurer approve payments, the Fourth Circuit found, based on state law and the actual Treasury approval process, that these elements did not make PHEAA funds into state funds.

The Fourth Circuit found that the second factor – autonomy – also suggested PHEAA was not an arm-of-state.  Because PHEAA was financially independent, granted broad statutory powers, and operated largely free of legislative interference, the Fourth Circuit found that PHEAA was autonomous from the state.  The Fourth Circuit found that this independence outweighed factors which suggested state control, such as Attorney General review of contracts over $20,000, requiring commercial funds be deposited in the state treasury, and PHEAA being subject to state laws.  

With respect to the state concerns factor, the Fourth Circuit found that the factor pointed weakly towards PHEAA being an arm-of-state.  Although on remand, a discovery violations sanction established that PHEAA’s revenue should be considered majority out-of-state from 2002 to 2014, the Fourth Circuit found that PHEAA provides services to Pennsylvania citizens, and provides an “‘essential government function.’”

On the fourth factor, the Fourth Circuit found that PHEAA’s treatment under state law pointed towards it being an arm-of-state.  The Fourth Circuit noted that the District Court found that PHEAA was created by, and its powers came from, the General Assembly, that PHEAA was exempt from state tax, subject to state law, and that PHEAA employees were state employees.  The District Court thus found that this factor weighed heavily in favor of PHEAA being an arm-of-state.  The Fourth Circuit agreed that the factor weighed in favor of PHEAA being an arm of Pennsylvania, but didn’t find the factor as weighty.

The Fourth Circuit’s analysis of the four factors was thus mixed.  With that mixed analysis, the Fourth Circuit considered the purpose of 11th Amendment immunity – protecting state treasuries, and respecting the sovereignty of states.  Given those purposes, and the mixed arm-of-state analysis here, the Fourth Circuit found that PHEAA should not be considered an arm-of-state, and thus should be subject to FCA liability.  On this basis, the Fourth Circuit vacated the district court’s grant of summary judgment, and remanded for further proceedings.  

Full Opinion

Katherine H. Flynn

 

LEE v. NORFOLK SOUTHERN R.R., NO. 14-1585

Decided: September 17, 2015

The Fourth Circuit vacated the district court’s judgment and remanded for further proceedings.

Charles Lee was a carman, who inspected railcars to identify potential service-related defects for Norfolk Southern Railroad (“NS”) in Asheville, North Carolina. In July 2011, NS suspended Lee without pay for six months. The parties did not agree on the reason for the suspension. NS claimed that it was because Lee drank a beer on duty and then operated a company owned automobile in violation of a company policy, whereas Lee, an African-American, claimed that the suspension was motivated by his race and in retaliation for federal rail safety whistleblowing.

In his first lawsuit, filed in September 2011, Lee alleged that his suspension constituted racial discrimination in violation of 42 U.S.C. § 1981. Less than two months after filing his first lawsuit, Lee also filed a complaint with the Occupational Safety and Health Administration (“OSHA”) under the Federal Railroad Safety Act’s (“FRSA”) whistleblower provision, 49 U.S.C § 20109. Lee alleged that NS was capping the number of cars he could tag as defective, which was a violation of federal law. When Lee refused to comply with the caps, NS suspended him. On September 21, 2012 OSHA dismissed Lee’s whistleblower complaint after deciding that NS did not commit any FRSA violations. The district court, on December 12, 2012, granted NS summary judgment and only addressed Lee’s Section 1981 claims, not his FRSA whistleblowing claims. Less than a month later, Lee filed a FRSA retaliation lawsuit. On May 20, 2014, the district court granted NS summary judgment on Lee’s FRSA claims holding that his first lawsuit under Section 1981 constituted an election of remedies under FRSA Section 20109(f) and barred Lee’s subsequent FRSA retaliation action.

The Fourth Circuit began its analysis examining the meaning of the disputed FRSA’s Election of Remedies provision. In its current form, the FRSA Election of Remedies provision prohibits an employee from “seek[ing] protection under both this section and another provision of law for the same allegedly unlawful act of the railroad carrier.” The district court determined that Lee’s first lawsuit under Section 1981 was an attempt to “seek protection under another provision of law.”

The Fourth Circuit determined that the Election of Remedies provision is unambiguous because it is only susceptible to one reasonable interpretation, that a suspension on the basis of race is not “the same allegedly unlawful act” as a suspension in retaliation for FRSA whistleblowing. The Court held that these acts are distinct causes of action with different elements and burdens of proof. NS argued that its interpretation of the Election of Remedies provision is supported by federal policies prohibit claim splitting. However, the Court rejected this argument noting that nothing in the plain language of the Election of Remedies provision suggests that it should be considered a substitute for a rule against claim-splitting. Therefore, the Court held that the Election of Remedies provision did not apply to Lee’s second whistleblowing lawsuit.

Accordingly, the Fourth Circuit reversed the district court’s order and remanded for further proceedings.

Full Opinion

Meredith Weisler

 

SD3, LLC v. BLACK & DECKER (U.S.) INC., NO. 14-1746

Decided: September 15, 2015

The Fourth Circuit affirmed in part, vacated in part, and remanded.

SD3, LLC and its subsidiary, SawStop, LLC (“SawStop”) together allege that a group of table-saw manufacturers formed a conspiracy to boycott certain SawStop technology to keep it off of the market in a violation of §1 of the Sherman Antitrust Act (“§ 1”). The district court dismissed the case for failure to plead facts that established an unlawful agreement, and this appeal followed.

The Fourth Circuit begins with a discussion of the facts, since, as the appeal is of a motion to dismiss, the only facts it can consider are those in SawStop’s complaint. The Fourth Circuit first addresses what it sees as a problem with the entirety of SawStop’s complaint, that it has filed suit against a broad range of defendants and has not sufficiently alleged specific complaints against each individual defendants, as required in § 1. Specifically, SawStop has included certain corporate parents in the complaint even though it made no factual allegations against them, and so the Fourth Circuit concluded that the district court properly dismissed the claims as to those defendants. The Court next looks at the conspiracy element of §1, specifically looking at how the Act requires more than just “parallel conduct,” because such conduct “is equally consistent with lawful conduct.” In order to move forward with a § 1 claim, SawStop would have to have alleged parallel conduct plus “something more,” categorized as “further circumstances pointing toward a meeting of the minds.” The Court next determined if the district court properly applied the “plausibility-focused standard” derived from case law. Importantly, the Court determined that the district court committed two errors in applying that standard: that it used the incorrect standard as a basis for its ruling by using the standard for summary judgment instead of motion to dismiss, and, in looking at the facts, “applied a standard much closer to probability than plausibility.” This combination of errors, according to the court, meant that the district court imposed an improper heightened pleading requirement.

Since the Court reviewed the case de novo, it proceeded to determine if SawStop pleaded sufficiently to establish a group boycott. The Court concluded that SawStop had adequately alleged parallel conduct, because none of the defendants used SawStop’s technology, and the Court concluded that this was enough similarity to be plausible at the pleading stage. The Court next turned to whether SawStop had alleged the additional “more” that it asserted earlier was required. Because SawStop was able to point to a specific meeting in which the boycott was formed, how the boycott was sealed, and how the defendants intended to implement the boycott, the Court found that it had alleged enough to meet the “more” standard.

The Fourth Circuit then considered whether or not the plaintiff had sufficiently alleged that the conspiracy “produced adverse, anti-competitive effects within the relevant product and geographic market.” However, in looking at the lower court’s decision, it concluded that the issue was inadequately briefed and the district court did not adequately treat the issue, and stated that the defendants would be allowed to raise that issue on remand.

The Court then turned to address the standard-setting conspiracies that SawStop alleged in its complaint. It concluded, however, that SawStop did not adequately establish either of the two additional conspiracies that it alleged, because the facts implied “nothing beyond ordinary participation in lawful standard-setting processes.” It therefore affirmed the district court’s decision to dismiss the standard-setting claims and the group-boycott claims against certain of the defendants, but held that it erred in dismissing the group-boycott claims against the rest of the defendants, and partially remanded.

Full Opinion

Jennie Rischbieter

INTERTAPE POLYMER CORP. v. NAT’L LABOR RELATIONS BD., NO. 14-1517

Decided: September 8, 2015  

The Fourth Circuit held that the National Labor Relations Board correctly determined that Intertape unlawfully interrogated an employee and unlawfully confiscated union materials from an employee break room; however, the National Labor Relations Board erred in holding that Intertape engaged in unlawful surveillance of union activities. Because of the Fourth Circuit’s decision to eliminate one of the two bases used by the Board to set aside the election, the Fourth Circuit remanded the case for the Board to reconsider its decision to grant a second election.

Intertape runs an adhesive tape manufacturing facility in Columbia, SC. In January of 2012, the United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC (“Union”), began a campaign to organize the employees of Intertape. The Union filed its representation petition with the National Labor Relations Board (“Board”) on March 16, 2012. Later, on April 26 and 27, a secret-ballot election was held. The Union lost by a vote of 142 votes against and 97 votes for the Union.

Before and after the election, the Union had filed complaints with the Board alleging unfair labor practices against Intertape. Additionally, the Union filed objections to the completed election, wanting to be declared invalid due to unlawful conduct during the “critical period” from March 16 to April 27. The Board’s General Counsel issued a complaint against Intertape on July 26, 2012.

After a hearing, the administrative law judge (“ALJ”) determined that Intertape had violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) by: “(1) interrogating employee Johnnie Thames regarding his views about the union; (2) confiscating union literature from an employee break room; (3) surveilling employees’ union activities by leafleting at the plant gate at the same time that union supporters were leafleting; and (4) threatening employees that selecting the union as its collective-bargaining representative would be futile. Because of claims 2-4, the ALJ recommended a second election be held.

After review, the Board agreed that Intertape had violated Section 8(a)(1) by committing claims 1-3. However, the Board rejected the ALJ’s finding that Intertape threatened employees. Ultimately, the Board set aside the election results and ordered a new election due to the violations regarding confiscation and surveillance.

The Fourth Circuit must affirm the Board’s factual findings if they are supported by substantial evidence on the record. Substantial evidence means a reasonable mind would accept it to be adequate to support a conclusion. Section 8(a)(1) of the NLRA states that it is “an unfair labor practice for an employer…to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7” of the Act. Under Section 7, employees are guaranteed “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Employers violate Section 8(a)(1) when their conduct is considered to be intimidating. But, the expression of views and dissemination of materials is not considered evidence of an unfair labor practice as long as the expressions do not contain threats of reprisal or force or promise of benefit.

The interrogation of employees is a violation of Section 8(a)(1) if it is coercive in nature. The court must consider a variety of factors including “the history of employer hostility to the union, the nature of information sought, the identity of the questioner, and the place and method of questioning.” The Fourth Circuit determined that there was substantial evidence to support the Board’s finding that Thames’ boss, Williams’, questioning of Thames about his Union sentiments was sufficiently coercive and intimidating to qualify as unfair labor practice under the Act.

Regarding the violation of Intertape’s confiscation of literature from the employee break room, an employee cannot confiscate union literature provided to employees in non-work areas during non-work times. However, an employer will not be in violation of the Act for incidental disposals under good housekeeping policies. The distribution of union flyers in Intertape’s break room was not prohibited. Intertape conceded that Williams removed union literature from the break room; however, it asserts that the General Counsel failed to prove that Intertape changed its distribution or housekeeping policies during the critical period or due to union activity. The Fourth Circuit disagreed and held that substantial evidence supports the Board’s determination that Williams’ removal of the union literature from the break room was an unfair trade practice.

Regarding the surveillance violation, a court will consider “the duration of the observation, the employer’s distance from its employees while observing them, and whether the employer engaged in any coercive behavior during its observation.” An employer observing its employees on company property during union activities, without being coercive, is not a violation of the Act. During the periods of simultaneous leafleting, the supervisors did not say anything to the union members, take notes or pictures, nor engage in any threatening or intimidating behavior. Section 8(c) of the Act protects the free speech by both unions and employers. The Fourth Circuit held that there was not substantial evidence to support the Board’s conclusion that Intertape engaged in unlawful surveillance.  

Concurring, Judge Wilkinson agreed with Judge Traxler’s “fine opinion.” However, Judge Wilkinson would have held that, “even if the unfair labor practices alleged by the General Counsel had occurred, the Board would have exceeded its remedial discretion by ordering a new election.” The decision of the Board to order a new election failed to respect the choice made by Intertape’s employees.

Full Opinion

Austin T. Reed

 

U.S. v. DUCTAN, NO. 14-4220

Decided: September 2, 2015

In this case about the Sixth Amendment right to counsel, the Fourth Circuit held that Ductan neither forfeited nor waived his right to counsel.  Based on these findings, the Fourth Circuit vacated Ductan’s conviction on drug charges, and remanded the case for a new trial.  

In April, 2004, a tip from a confidential informant to police that Ductan offered to sell him 100 pounds of marijuana led to a controlled buy.  During the controlled buy, Ductan arrived with two other men, showed the informant marijuana, and threw a firearm to the ground when police closed in on him.  Ductan was charged with state charges for trafficking in marijuana and carrying a concealed firearm, but the charges were dismissed.  

In September, 2004, Ductan and his co-conspirators were indicted by a federal grand jury for conspiracy to possess with intent to distribute marijuana, possession with intent to distribute marijuana and aiding and abetting the same, and carrying a firearm during and in relation to a drug trafficking crime.  In his first appearance before the federal magistrate, Ductan said that he had retained an attorney, Brant, but Brant moved to withdraw, saying that Ductan was uncooperative, would not sign a discovery waiver, and failed to communicate with him.  At the hearing on Brant’s motion, Ductan told the magistrate that he did not consent to appointment of a new lawyer, but did not want to represent himself.  The magistrate explained that Ductan could represent himself, have counsel appointed, or hire new counsel.  At that point, Ductan began making “nonsense statements.”  As the hearing continued, Ductan said more nonsensical things, and the judge asked whether Ductan was under the influence of drugs or alcohol.  The magistrate said that he would not appoint new counsel, because Ductan could be said to have waived his right by making nonsense statements.  The magistrate told the Federal Defender to appoint standby counsel, and granted Brant’s motion to withdraw.

One month later, standby counsel, Lee, moved to withdraw because Ductan did not want his representation, and would not sign a discovery agreement.  At a hearing on the motion, Ductan said he felt Lee had spent too little time with him to represent him.  The judge explained that Lee was serving only in a standby capacity because Ductan had waived his right to appointed counsel at the earlier hearing, and was thus representing himself.  Ductan said he did not wish to have Lee represent him, and was looking for a private attorney.  The magistrate judge denied Lee’s motion to withdraw, told Ductan he was proceeding pro se unless he hired an attorney or worked with Lee, and explained the dangers of pro se representation to Ductan.  

At a hearing the day before jury selection, Ductan made a nonsense comment, said he was looking for a private attorney, and said he could not represent himself.  At jury selection, Ductan said he was not prepared to move forward, and made several nonsense comments during the venire.  The magistrate told him to stop interrupting.  When Ductan continued to interrupt, the magistrate held him in contempt, and placed him in a holding cell outside the courtroom where he could observe, but not participate in, jury selection.  Lee remained in the courtroom for jury selection, introduced himself to prospective jurors, and attended a bench conference, but did not strike jurors, or otherwise participate in jury selection.  Once the jury was empaneled, the magistrate brought Ductan back to the courtroom, invited him to participate in the trial, and told him he would purge the contempt citation if he followed court rules.  Ductan said he did not want to represent himself, did not want Lee’s representation, and would like to find private counsel.  The magistrate said that Ductan seemed to be choosing to proceed pro se because the court was ready to begin.  Ductan disagreed with that characterization, and said he did not want this type of representation.  The district court proceeded with the trial, telling Ductan that he was proceeding pro se, but could have Lee’s assistance.  Following a normal trial, the jury found Ductan guilty on all three counts.  Per his request, Ductan was represented by an appointed attorney at sentencing.  He was sentenced to a total of 84 months imprisonment.  Ductan appealed on the basis that his Sixth Amendment right to counsel was violated when the magistrate incorrectly found that he forfeited or waived his right to counsel, and when the magistrate deprived him representation during jury selection by removing him from the courtroom without counsel representing him in the courtoom.

The Fourth Circuit held that the magistrate erred in finding that Ductan forfeited or waived his right to counsel.  Under Fourth Circuit precedent, the right to counsel can only be relinquished through waiver, and the waiver must be knowing, intelligent, clear, and unequivocal.  The Court found that Ductan’s behavior did not meet that standard, and even if he had clearly and unequivocally waived his right to counsel, the magistrate judge did not complete the Faretta inquiry, so no valid waived occurred.  Finding this error sufficient as a violation of Ductan’s right to counsel, the Fourth Circuit vacated Ductan’s conviction and remanded for a new trial.

Judge Davis wrote a separate concurring opinion explaining how the error during jury selection was an independent ground for vacating Ductan’s conviction.  He argued that representation during jury selection is critical.  If a disruptive pro se defendant must be removed from the courtroom, the proper procedure is thus for the court to revoke the right to self-representation, and appoint an attorney.  Here, Lee was not representing Ductan.  Thus, the magistrate erred in not providing Ductan representation during jury selection, and thereby violated Ductan’s right to counsel.

Full Opinion

Katherine H. Flynn

 

U.S. v. BOLLINGER, NO. 14-4086

Decided: August 19, 2015

The Fourth Circuit affirmed the district court and held that 18 U.S.C. § 2423(c) is constitutional because of the Foreign Commerce Clause.

Defendant, Larry Bollinger (“Bollinger”), is an ordained Lutheran minister who moved to Hati in 2004 to run a large ministry outside of Port Au Prince with his wife. In 2009, Bollinger, a self-proclaimed sex addict, began molesting young girls. Bollinger molested four girls. The first was a 16-or 17-year-old and the other three were each 11-years-old. Bollinger testified that the girls would come to the ministry and make themselves available to him and he then “took advantage of them.” After returning to the U.S., the minister attended a three-day intensive therapy session with Dr. Magness, a psychologist who treats clergy members who have sex addictions. Bollinger told Magness about the molestations, who had to report the molestations according to an informed consent form Bollinger signed. Magness reported the molestations and Bollinger was later arrested for the offenses.

Bollinger was charged with two counts of engaging in an illicit sexual act with a minor after traveling in foreign commerce, in violation of 18 U.S.C. § 2423(c) and (e). Bollinger moved to dismiss the indictment, arguing that Section 2423(c) is unconstitutional because it criminalizes non-commercial activity and exceeds Congress’s authority to regulate commerce under the Foreign Commerce Clause.  The district court denied Bollinger’s motion to dismiss and found that Congress had authority under the Necessary and Proper Clause to enact the statute as a rational means to implement the Optional Protocol. The district court then sentenced Bollinger to 25 yeas imprisonment. On appeal, Bollinger challenged the constitutionality of 18 U.S.C. § 2423(c) and the length of his prison sentence.

Regarding the constitutionality of 18 U.S.C. § 2423(c), the Fourth Circuit held that the Foreign Commerce Clause allows Congress to regulate activities “that demonstrably affect” foreign commerce. The Court reiterated that a rational basis exists to determine whether defendant’s activities, taken in the aggregate, substantially affect interstate commerce. Here, the Court concluded that it is rational to believe that prohibiting non-commercial sexual abuse of children abroad by Americans has a demonstrable effect on sex tourism and the commercial sex industry. Accordingly, the Court found 18 U.S.C. § 2423(c) to be constitutional as a result of the Foreign Commerce Clause.

As for Bollinger’s 25-year prison term, the Court disagreed with Bollinger’s argument that the district court committed both procedural and substantive error with regards to his sentence. Procedurally, the Court found that the district court had a “reasoned basis” for its sentence because it expressly recognized that Bollinger had self-reported and considered all of the other mitigating factors in its decision. Substantive reasonableness is determined by looking at the totality of the circumstances to determine whether the district court abused its discretion in applying the factors to be considered in imposing a sentence, per 18 U.S. Code § 3553(2). In this case, the Court determined that the district court’s sentence of a 60% downward variance was not unreasonable in light of its deferential standard of review, the statements of the victims, and the minister’s abuse of authority.

Full Opinion

Meredith Weisler

 

FED. DEPOSIT INS. CORP. v. RIPPY ET. AL., NO. 14-2078

Decided: August 18, 2015

The Fourth Circuit affirmed in part, reversed in part, vacated in part, and remanded.

This case was an appeal from summary judgement in which plaintiff, the Federal Deposit Insurance Corporation as Receiver for Cooperative Bank (“FDIC-R”) brought an action against officers and directors of Cooperative Bank (“Bank”), alleging negligence, gross negligence, and breach of financial duties that resulted in the Bank’s failure. The claims arose out of events surrounding FDIC’s annual reviews of the Bank from 2006 to 2008, wherein the Bank scored poorly each year, leading to a Cease and Desist order in 2009, and when the Bank was unable to fulfill its obligations under the Order, the Bank was closed, and FDIC-R filed a complaint against the Bank, seeking damages against the named officers and directors (“officers”) of the Bank for negligence, gross negligence, and breach of their fiduciary duties in approving certain loans in 2007 and 2008. The named officers and directors moved to dismiss the claims on the grounds that North Carolina law does not allow for negligence claims against officers and that, even if it did, the business judgment rule would shield them from negligence and breach of fiduciary claims. The district court denied their motions to dismiss, and after discovery, both parties filed for summary judgment. The district court granted summary judgment for the officers because FDIC-R failed to provide any evidence that would strip the officers of the protection of the business judgment rule, and FDIC-R appealed.

The Fourth Circuit began its analysis by setting forth that the proper review of summary judgment is de novo. The Court first addressed FDIC-R’s contention that the district court incorrectly interpreted the business judgment rule, and while the Court found that the lower court correctly interpreted the rule, it incorrectly applied that rule. The Court examined director liability first, and determined that unless there is a genuine issue of material fact that the directors breached their duty of good faith, they are protected under an exculpatory provision in the Banks’ articles of incorporation, and the Court found that there was no genuine issue of material fact. The Court affirmed that part of the judgment. The Court next examined officer liability, noting that the articles of incorporation do not cover officers and thus must be examined through the business judgment rule. The Court noted that the business judgment rule can be rebutted if FDIC-R presents sufficient evidence, and determined that in this case, FDIC-R presented sufficient evidence to rebut the presumption, and that they did not act in accordance with general business practices. Specifically, FDIC-R presented the affidavit of Brian Kelley, an independent banking consultant, who stated that the Bank’s practices of approving loans over the telephone, often without first receiving the documents, were inconsistent with other banking institutions, and that furthermore, the Bank had not complied with its obligations to correct the problems brought up in its yearly evaluations. The Court therefore vacated summary judgment on the claims of ordinary negligence and breach of fiduciary duties of the officers. The Court then turned to the gross negligence claims, disagreeing with FDIC-R’s argument that North Carolina law does not require intentional wrongdoing for a claim of gross negligence. After examining the case law, the Court found that North Carolina, in enacting its gross negligence statute, only abrogated the common law definition of gross negligence in cases where the plaintiff seeks punitive damages. Since the FDIC-R was not seeking punitive damages, the common law definition, and not the statutory definition, of gross negligence applied, and so FDIC-R was required to show that there was a genuine issue of material fact that the officers and directors’ conduct amounted to “wanton conduct done with conscious or reckless disregard for the rights and safety of others.” However, the Court concluded that the FDIC-R had not provided sufficient evidence to fulfill the definition, and affirmed the district court on this claim. Finally, the Court addressed the officers and directors’ claims that summary judgment could be entered on alternative grounds that the district court did not address. The Fourth Circuit quickly dispensed with those arguments. The Court therefore affirmed in part, reversed in part, vacated in part, and remanded those parts of the case that were not affirmed.  

Full Opinion

Jennie Rischbieter

U.S. v. FUERTES, NO. 13-4755

Decided: August 18, 2015  

The Fourth Circuit held that it was appropriate for the district court to allow evidence of violent acts and threats of violence against competitors and that it was appropriate for the government’s expert witness to testify. Additionally, the Fourth Circuit affirmed the Fuertes judgment in No. 13-4755 and under Ventura’s appeal, No. 13-4931, concluded that the conviction under 18 U.S.C. § 924(c) was erroneous because sex trafficking by force, fraud, or coercion is not categorically a crime of violence.

Ventura, with the assistance of Fuertes, was operating brothels in Annapolis, Maryland. To guarantee exclusivity of their business, Ventura and Fuertes threatened competitors with violence. Ramirez, an Annapolis-area pimp, received threatening phone calls and eventually was murdered. Following the murder, Fuertes was arrested after an unrelated traffic stop. While providing booking information, Fuertes provided a phone number that matched one of the numbers used to make threatening calls to Ramirez. With warrants, police later uncovered evidence of the brothel and that Ventura was the subscriber for the other number that made the threatening calls to Ramirez. While investigating both Fuertes and Ventura for the murder of Ramirez, they began to uncover evidence of the brothel. The police uncovered expansive evidence of the illegal operations in which Ventura and Fuertes were participating.

On November 29, 2011, a federal grand jury returned an indictment, charging Fuertes and Ventura with “conspiracy to transport an individual in interstate commerce for the purpose of prostitution, in violation of 18 U.S.C. § 371 (Count One); transportation of individuals in interstate commerce for the purpose of prostitution, in violation of 18 U.S.C. § 2421 (Count Two); and sex trafficking by force, fraud, or coercion, in violation of 18 U.S.C. § 1591(a) (Count Six).” Further, Ventura was charged separately with “coercing or enticing an individual to travel in interstate commerce for the purpose of prostitution, in violation of 18 U.S.C. § 2422(a) (Count Three); transportation of individuals in interstate commerce for the purpose of prostitution, in violation of 18. U.S.C. §2421 (Counts Four and Five); and possession and use of a firearm in relation to a crime of violence – namely, sex trafficking by force, fraud, or coercion – in violation of 18 U.S.C. § 924(c) (Count Seven).”

At trial, a jury found Ventura guilty of all counts and Fuertes guilty of Count One and the part of Count Six that was based on events after December 24, 2008. The jury found Fuertes not guilty of Count Two. On appeal, Fuertes and Ventura argue that the district court erred in admitting evidence of violent acts and threats of violence against competitors because: “(1) such evidence was offered for no purpose other than to establish their bad character; (2) the evidence was not relevant, as it did not make it more likely that they actually committed the sex trafficking offenses for which they were charged; and (3) even if the evidence was relevant, its probative value was far outweighed by the danger of unfair prejudice.”

Rule 404(b) of the Federal Rules of Evidence bans evidence of past crimes or wrongs solely to prove a defendant’s bad character; however, such evidence can be admissible for other purposes, such as proof of motive, opportunity, intent, or knowledge. To be admissible under this rule, the evidence of “bad acts” must be relevant to issues other than character, needed to prove an element of the crime charged, reliable, and “its probative value must not be substantially outweighed by its prejudicial nature.”

The Fourth Circuit determined that the district court did not err in admitting evidence of violent acts and threats of violence against the competitor pimps. The evidence was relevant to Ventura’s familiarity with the prostitution business, as well as their intent to participate in the business, and that they conspired with each other to do so. The decision of the district court to admit evidence of violence and threats of violence was neither legally erroneous nor an abuse of discretion.

Further, Fuentes and Ventura argue that there was error in allowing Dr. Baker, an expert witness to testify regarding the injuries of one of the prostitutes. Rule 702 of the Federal Rules of Evidence provides an expert witness is qualified by knowledge, skill, experience, training or education. The Fourth Circuit determined there was no error by the district court to allow Dr. Baker to testify despite her focus being on child abuse because there is no distinction between adults and children when it comes to cutaneous findings.

Additionally, Ventura claims the district court erred in denying his motion of acquittal for Count Seven because sex trafficking by force, fraud, or coercion was not a predicate offense for his § 924(c) conviction. To be convicted under § 924(c), the government must show Ventura (1) used or carried a firearm and (2) did so during and in relation to a crime of violence. The Fourth Circuit determined that sex trafficking by force, fraud, or coercion does not qualify categorically as a crime of violence and; therefore, the district court committed obvious error in its instruction to the jury.

Finally, Fuertes argues that the district court erred in denying his motion for acquittal on Count Six. He stated that there was insufficient evidence that he knew or recklessly disregarded that one of the prostitutes was coerced or forced to engage in commercial sex acts. However, the Fourth Circuit determined the district court was proper because a reasonable jury could have found that Fuertes knew or recklessly disregarded that the prostitute was forced or coerced to commit commercial sex acts.

Full Opinion

Austin T. Reed

 

U.S. v. SAID, NO. 14-4413

Decided: August 13, 2015

In this piracy case, the Fourth Circuit rejected the defendants’ objections to the district court’s failure to dismiss piracy charges, jury instructions on piracy, and sufficiency of evidence on piracy and other charges.  The Fourth Circuit found merit in the Government’s appeal of the district court’s finding that the statutorily mandated life sentences for piracy violated the Eighth Amendment prohibition against cruel and unusual punishment.  On this basis, the Fourth Circuit reversed the district court’s Eighth Amendment Order, vacated defendants’ sentences, and remanded for resentencing.

In early 2010, seven Somalis including Said piloted a boat into the Gulf of Aden for the purpose of seizing a merchant ship.  Their plan was foiled when they were stopped by a British warship, the HMS Chatham, and ultimately sent home.  In April, 2010, another group of seven Somalis including Said and three of his earlier accomplices took a boat into the Gulf of Aden.  Incorrectly thinking that it was a merchant ship, the Somalis attacked a United States Navy warship, the USS Ashland.  During the attack and resulting response from the Ashland, several of the Somalis sustained injury, one Somali died, and the Somali boat was destroyed.  There was little to no damage to the Ashland and her crew.  The crew of the Ashland apprehended the Somalis.

In April, 2010, a grand jury in the Eastern District of Virginia indicted the six remaining Somalis (the six).  In July of that same year, the grand jury, in a superseding indictment based only on the Ashland incident, indicted the six for various crimes, including piracy under 18 U.S.C. § 1651.  In July, the six moved to dismiss the piracy charge on the basis that piracy required robbery at sea, and because they had not seized the Ashland, they could not be guilty of robbery at sea.  The district court granted their motion, and dismissed the piracy charge.  In August, one of the six agreed to assist the government in the prosecution of the remaining five Somalis (the five), and subsequently pled guilty to three non-piracy charges.  The government appealed the district court’s dismissal of the piracy charges.  Following the Fourth Circuit’s holding in United States v. Dire, which found that the definition of piracy did not require robbery on the high seas, the Fourth Circuit in May, 2012, vacated the dismissal of the piracy charges, and remanded for further proceedings.  

In August, 2012, the grand jury indicted the five in a second superseding indictment on piracy and related charges which incorporated both the Chatham and Ashland incidents.  The five again moved to dismiss the piracy charges, and the district court rejected the motion based on Dire.  At trial, the five moved unsuccessfully for acquittal of charges, and objected unsuccessfully to jury instructions based on Dire.  In February, 2013, the five were convicted on all counts.  They again moved unsuccessfully for acquittal.  Before sentencing, the five moved to invalidate the mandatory life sentence under 18 U.S.C. § 1651 as constituting cruel and unusual punishment in violation of the Eighth Amendment.  Applying the two prong test from Graham v. Florida for as-applied non-capital punishment, the district court first found that the there was a gross disproportion between the crime here and the life sentence, because the five had in effect committed only attempted piracy.  Under the second prong of the test, the court found the life sentence disproportionate in relation to other crimes requiring mandatory life sentence which nearly all involve the death of another, and in relation to global sentences for piracy, which average 14 years.  On the basis of this analysis, the district court found the mandatory life sentences for piracy cruel and unusual, and sentenced the five to from 360 to 500 months imprisonment, of which 140 to 264 months were for piracy.  The government appealed the district court’s decision not to impose the mandatory life sentence under 18 U.S.C. § 1651.  The five cross-appealed the court’s failure to dismiss the piracy charge, jury instructions on piracy, and sufficiency of evidence supporting their convictions.

The Fourth Circuit first analyzed the five’s objections.  The Court held that the district court did not err in declining to dismiss piracy charges, nor in instructing the jury on piracy.  The Court based this finding on Dire’s holding that piracy did not require robbery on the seas, which the five conceded the district court had to, and did, follow.  The Fourth Circuit then held, based on Dire and the trial evidence, that there was sufficient evidence to prove a case against the five on piracy.  The Court also held, based on the trial evidence, that there was sufficient evidence against four of the five of conspiracy, intent to perform an act of violence against an individual on a ship, and consequently against two of the five on related firearms charges.  

The Fourth Circuit next analyzed the government’s objection to the finding that the statutorily mandated life sentences for piracy violated the Eighth Amendment.  Using the Graham v. Florida test, the Fourth Circuit found that the first prong was not met, because it is hard to meet the grossly disproportionate standard for non-capital sentences, and Congress had rationally decided that piracy should be harshly punished.  Because the first prong of the test was not met, the Fourth Circuit did not analyze the second prong.

On this basis, the Fourth Circuit affirmed the conviction of the five, reversed the district court’s holding in regards to the Eighth Amendment, vacated the sentences of the five, and remanded for resentencing.  Judge Davis wrote a separate concurring opinion to note that not all piracy offenses are alike.  Though he found the Fourth Circuit’s holding correct under the current law, he noted that Congress could allow federal judges more discretion in sentencing those convicted of piracy, so that the sentences would more accurately reflect the actual crimes committed.

Full Opinion

Katherine H. Flynn

 

CAHALY v. LAROSA, NO. 14-1651

Decided: August 6, 2015

The Fourth Circuit held that under the content-neutrality framework articulated in Reed v. Town of Gilbert, South Carolina’s anti-robocall statute was a content-based regulation that did not survive strict scrutiny, and was therefore deemed unconstitutional. The Court affirmed the district court’s judgment, except for its compelled speech claim, which was vacated and remanded with instructions to dismiss.

The South Carolina General Assembly, in 1991, enacted a “robocall” statute, which regulates automated telephone calls that deliver recorded messages. The statute has different restrictions for robocalls, depending on whether they are (1) unsolicited and (2) made for consumer, political, or other purposes. All qualifying robocalls are banned except for three exceptions, which are based on the express or implied consent of the party called.

On September 23, 2010, Plaintiff Robert Cahaly (“Cahaly”), a self-described Republican political consultant, allegedly placed robocalls in six South Carolina house legislative districts. The calls consisted of a one-question survey that did not advocate for a particular candidate. The day before Cahaly made the calls, the Attorney General issued a letter stating that as long as the calls do not advocate a particular candidate, they may be made, even if they are of a political nature. However, Cahaly’s calls were still reported and in November 1, 2010, a state magistrate judge issued six warrants for Cahaly’s arrest. The warrants were dismissed eighteen months later.

The Fourth Circuit found that, according to Reed, South Carolina’s anti-robocall statute is content-based because it makes content distinctions on its face. Therefore, per Reed, the government’s regulatory purpose need not be considered. Content-based regulation is subject to strict scrutiny, where the government must prove “that the restriction furthers a compelling interest and is narrowly tailored to achieve that interest.” The Court held that the government failed to prove that the anti-robocall statute is narrowly tailored to serve the government interest of protecting residential privacy. As a result, the Court affirmed the district court’s judgment declaring the statute unconstitutional. The Court also agreed with the district court’s ruling that Cahaly lacked standing for his vagueness challenge because the Court found that the statute squarely covered Cahaly’s calls.

The Court, however, did not agree with the district court’s ruling on Cahaly’s compelled-speech challenge. The Court found that Cahaly lacked standing to challenge the disclosure provision as compelled speech because Cahaly did not suffer an “injury in fact,” under the standing requirement of Article III.

Finally, the Court found that there was probable cause for Cahaly’s arrest. A law enforcement officer who obtains an arrest warrant only loses the protection of qualified immunity “where the warrant application is so lacking in indicia of probable cause as to render official believe in its existence unreasonable.” Even if a police officers determination was wrong as a matter of law, the officer may still have probable cause to arrest based on “reasonable mistakes of law.” Consequently, the Court held that the police officers had probable cause to arrest Cahaly.

Full Opinion

Meredith Weisler

 

CHORLEY ENTERS. INC. v. DICKEY’S BARBECUE REST., NO. 14-1799

 

Decided: August 5, 2015  

The Fourth Circuit reversed the decision of the district court and held that the clear and unambiguous language of the provisions of the arbitration agreements require that the common law claims asserted by Dickey’s must proceed in arbitration, while the franchisees’ claims under Maryland Franchise Law must proceed in the district court of Maryland.

Dickey’s Barbeque Restaurants, Inc. (Dickey’s) is a restaurant chain that offers franchising opportunities. Both sets of plaintiffs were franchisees and previously operated Dickey’s restaurants in Maryland under franchise agreements. Shortly after opening, Dickey’s claimed that several of its franchisees breached their franchise agreements by running their restaurants poorly. The franchisees claimed that Dickey’s misrepresented the costs of running the restaurants in violation of Maryland Franchise Law and never gave them a chance to succeed in operating the restaurants. The franchisees wanted to bring suit in the district courts of Maryland, and Dickey’s wanted to arbitrate.

The arguments of the parties depend on the “interplay” between two provisions of the franchise agreements: (1) the dispute resolution provisions in Article 27 and (ii) the Maryland specific provisions in Article 29. Article 27 contains the Arbitration Clause and requires the parties to first mediate their claims before proceeding to arbitration. If mediation fails, either party is entitled to seek arbitration at the office of the American Arbitration Association nearest to Plano, Texas. The parties also agreed to arbitrate “all disputes, controversies, claims, causes of action and/or alleged breaches or failures to perform arising out of or relating to this Agreement (and attachments) or the relationship created by this Agreement.” The agreements also included “State Specific Provisions” in Article 29. In Article 29.1, the “Inconsistent Provision Clause” provided that Maryland law would control any inconsistent provisions. Also, Article 29.2(4), the “Maryland Clause” states that the “provisions of this Agreement shall not require you to waive your right to file a lawsuit alleging a cause of action arising under Maryland Franchise Law in any court of competent jurisdiction in the State of Maryland.” The Maryland Clause is similar to a Maryland regulation that states a franchisor violates the Maryland Franchise Law if it requires a franchisee to waive the franchisee’s right to file a lawsuit alleging a violation of Maryland Franchise Law in any court of competent jurisdiction in the state of Maryland.

The franchisees claimed that the Maryland Clause conflicts with the Arbitration Clause and renders the Arbitration Clause void, allowing the proceedings in district court. Dickey’s claimed the Maryland Clause is consistent with the Arbitration Clause because the Maryland Clause merely preserves the rights of the franchisees to bring an action under the Maryland Franchise Law in either arbitration or in court. In the alternative, assuming the interpretation provided by the franchisees, Dickey’s said the Federal Arbitration Act (FAA) preempted the Maryland Clause as an invalid prohibition on arbitration. The district court found the provisions to be conflicting and ambiguous and stated a jury must determine exactly which claims, if any, the parties agreed to arbitrate.

The Fourth Circuit determined that they had jurisdiction under 9 U.S.C. § 16(a)(1). That section of the FAA authorizes interlocutory appeals from a district court’s refusal to either stay litigation pending arbitration under Section 3 of the FAA or compel arbitration under Section 4 of the FAA. The district court expressly denied the motions to compel arbitration “without prejudice,” and that is all that is necessary to grant the Fourth Circuit appellate jurisdiction.

The court will compel arbitration under Section 4 of the FAA if: (1) the parties have entered into a valid agreement to arbitrate, and (2) the dispute in question falls within the scope of the arbitration agreement. The court must give the parties the intentions as expressed in the agreement. However, a party cannot be forced to arbitrate if it has not agreed to do so.

The franchisor’s breach of contract claims clearly “arise out or relate to” the Franchise Agreements, and thus fall within the Arbitration Clause. Additionally, the franchisor’s claim that the franchisees falsified sales reports falls within the Arbitration Clause because that claim arises directly from the franchise relationship created by the agreement. As to the common law claims, the Arbitration Clause is not contrary to the Maryland Clause.  Therefore, the franchisees agreed to arbitrate the franchisor’s common law claims.

However, the franchisees’ claims directly implicate the Maryland Clause, which states nothing in the agreements shall require the waiver of bringing a claim under the Maryland Franchise Law in a court in Maryland. By looking at its plain language, the Maryland Clause conflicts with the Arbitration Clause. The Fourth Circuit concluded that the Maryland Clause trumps the more general Arbitration Clause as to Maryland Franchise Law claims, allowing the franchisees to sue in Maryland court. By agreeing to this Maryland Clause, the parties agreed to litigate in Maryland and arbitrate all other claims in Texas.

Alternatively, Dickey’s claims that if the Maryland Clause does prohibit arbitration of the claims of the franchisees, then the Clause is preempted by the FAA. Where the state law prohibits the arbitration of a claim, the conflicting law is preempted by the FAA. However, the Fourth Circuit determined the Maryland Clause is not a state law prohibiting arbitration, but a contractual provision prohibiting arbitration. When a party to a contract voluntarily assumes an obligation to proceed under certain state laws, the traditional preemption doctrine does not apply to protect a party from liability for a breach of that agreement.

The Fourth Circuit realized that requiring the parties to litigate in two different forums was inefficient and could lead to conflicting results; however, this outcome is mandated by the Federal Arbitration Act, which requires piecemeal litigation when agreements call for arbitration of some claims, but not others. Therefore, the Fourth Circuit vacated the order of the district court and remanded for further proceedings.

Full Opinion

Austin T. Reed

U.S. v. GRAHAM, NO. 12-4659  

Decided: August 5, 2015

 In this case stemming from a series of armed robberies, the Fourth Circuit held that obtaining cell service location information (CSLI) without a warrant violates the Fourth Amendment, but that the Government here relied in good faith on the Stored Communications Act, so the district court did not err in admitting CSLI obtained without a warrant.  Further, the Fourth Circuit upheld the district court on several issues related to Graham’s co-defendant, Jordan.  These included restrictions on Jordan’s testimony, denial of a motion for severance, exclusion of out-of-court statements by Graham, admission of evidence seized in a search of Jordan’s home, and denial of a motion by Jordan for dismissal based on insufficient evidence.  On this basis, the Fourth Circuit affirmed the district court.

Following the armed robberies of six businesses in and around Baltimore, Maryland in early 2011, Aaron Graham and Eric Jordan were charged with being felons in possession of a firearm, Hobbs Act robbery, conspiracy to commit Hobbs Act robbery, brandishing a firearm during a crime of violence, conspiracy to brandish a firearm during a crime of violence, and related aiding and abetting charges.  Jordan was also charged with possession of an unregistered, sawed-off shotgun.  Prior to trial, Graham and Jordan moved for severance, and to suppress CSLI as violating the Fourth Amendment.  Jordan also moved to suppress evidence seized in a search of his home based on an allegedly invalid warrant.  The district court denied all pre-trial motions.  At trial, Graham and Jordan objected to testimony by a Sprint/Nextel representative and an FBI agent related to CSLI as inadmissible expert opinion, but the district court disagreed, and admitted the testimony.  The district court also denied Jordan’s motion in limine to admit a written statement by Graham, which it found was unauthenticated hearsay, and a phone call by Graham, which it found irrelevant.  Finally, the district court restricted Jordan’s testimony by not allowing him to discuss items prejudicial to Graham.  At the close of the case, the Government moved to dismiss the conspiracy to possess a firearm charge, and Graham and Jordan moved for acquittal on all remaining charges for insufficient evidence.  The court granted acquittal to Jordan on the felon-in-possession count, and denied the motion for acquittal on all other counts for both Graham and Jordan.  The trial jury found Graham and Jordan guilty on all remaining counts, and the court denied their motions for new trials.

Graham and Jordan appealed to the Fourth Circuit, arguing that the district court erred in admitting the CSLI, and testimony related to the CSLI by the Sprint/Nextel representative, and the FBI agent.  Graham and Jordan also argued that the district court erred in restricting Jordan’s testimony, denying severance, excluding the statements by Graham, admitting the evidence from Jordan’s apartment, and finding sufficient evidence to support the charges against them.

The Fourth Circuit first held that obtaining CSLI that covers a long period of time without a warrant, as was done here, violates the Fourth Amendment.  The Fourth Circuit made this finding based on the fact that CSLI enables tracking a person through public and private domains, and despite Sprint/Nextel’s privacy policy, which did not state that location information would be disclosed, and was often not read or understood.  The Fourth Circuit also found that the third-party doctrine did not apply here, because cell phone users do not voluntarily disclose their location to cell phone providers.  Notwithstanding the Fourth Amendment violation, the Fourth Circuit found that the good faith exception applied, because the officers here relied on the Stored Communications Act, which allowed for CSLI to be obtained without a warrant, and on orders issued by a Magistrate Judge under the Act.  On that basis, the Fourth Circuit upheld the district court’s admission of the CSLI evidence.

The Fourth Circuit then upheld the district court’s findings on all other issues Graham and Jordan appealed.  The Fourth Circuit found the Sprint/Nextel representative’s testimony in part factual, and thus lay testimony, and in part closer to expert opinion, but found that admitting the expert portion was harmless error.  The Fourth Circuit found that the FBI agent’s testimony was lay testimony.  The Court found some of the restrictions on Jordan’s testimony were consistent with a desire not to prejudice Graham, and still allowed Jordan to engage in a full defense.  The Court found that the district court abused its discretion in relation to restrictions on anti-impeachment testimony, but that Jordan forfeited his right to object by not objecting at trial, and the error did not impact Jordan’s substantial rights.  The Fourth Circuit upheld the district court’s denial of severance because Graham’s and Jordan’s defenses were quite similar.  The Court also upheld the district court in not admitting Graham’s statements because the written statement was not truly adverse to Graham, and was not trustworthy, and the call was irrelevant.  The Fourth Circuit also upheld the admission of the evidence seized from Jordan’s home, finding no reason to set aside the presumption of warrant validity.  Finally, the Court found the evidence sufficient to uphold the convictions.  On this basis, the Fourth Circuit affirmed the district court.

Judge Thacker wrote a separate concurrence to note how privacy was breaking down in the face of new technologies.  Judge Motz wrote a concurring/dissenting opinion, in which she agreed with the overall finding of the court upholding the district court.  She argued, however, based on the third-party doctrine, that obtaining the CSLI without a warrant did not violate the Fourth Amendment.

Full Opinion

Katherine H. Flynn

 

U.S. v. SURRATT, NO. 14-6851

Decided: July 31, 2015

The Fourth Circuit affirmed the district court’s ruling.

In 2005, Raymond Surratt (“Surratt”) was found guilty of conspiracy to distribute cocaine and sentenced to life imprisonment. The Government sought enhanced penalties based on Surratt’s criminal history. According to the Government, if two or more of Surratt’s prior convictions constituted “felony drug offenses,” then Surratt would face a mandatory term of life imprisonment. Before Surratt’s sentencing, the Fourth Circuit decided United States v. Harp, which held that a North Carolina drug conviction was a “felony drug offense” if “the maximum aggravated sentence that [the state court] could [have] imposed for that crime upon a defendant with the worst possible criminal history” exceeded one year. The district court sentenced Surratt to life imprisonment. On appeal, the Fourth Circuit affirmed Surratt’s sentence.  Surratt then filed a post-conviction relief motion in 2008, but both the district court and Fourth Circuit denied that as well. More than three years after his first motion was denied, the Fourth Circuit decided Simmons, which overruled Harp. In Simmons, the Court held that a prior North Carolina conviction will constitute a felony for purposes of an enhanced punishment only if the prior conviction was punishable for more than one year of imprisonment as to that defendant. Surratt and the Government agreed that only one of his prior convictions would qualify was a “felony drug offense” under Simmons.

Hoping to capitalize on the Simmons decision, in the Fourth Circuit, Surratt filed another motion for post-conviction relief under 28 U.S.C § 2255. The Court denied the motion because it fell outside of the statutory exceptions enumerated under §2255. Simultaneously, Surratt filed a petition for a writ of habeas corpus under 28 U.S.C. § 2241 seeking relief under Simmons. However, as a federal prisoner, Surratt could not challenge his conviction under Section 2241 unless 28 U.S.C § 2255(e), the “savings clause,” applied, and the district court concluded that it did not give the court jurisdiction to consider Surratt’s claim.

On appeal, the Fourth Circuit stressed that it was not unsympathetic to the gravity of Surratt’s sentence of life imprisonment. However, the Court determined that Congress was given the power to define the scope of the writ of habeas corpus, and Congress used that power to carefully limit the circumstances in which a Section 2241 petition can be brought. The Court stressed that Section 2255(e) preserves “only the chance to request relief, not the ultimate and absolute right to obtain it.” Surratt’s case did not fall under one of the limited circumstances under Section 2255(e) and therefore, the Court held that the district court lacked the jurisdiction to hear Surratt’s § 2241 petition.

Dissenting, Justice Gregory argued that the role of habeas corpus is to protect against convictions that violate a fundamental fairness. He argued that the plain language of the United States habeas corpus statutes, precedent, and the Constitution demands that Surratt should not die in prison.

Full Opinion

Meredith Weisler

 

TREJO v. RYMAN HOSP. PROP., INC., NO. 14-1485

Decided July 29, 2015

The Fourth Circuit affirmed the district court’s dismissal of the complaint.

This was a case brought by Mohammad Sazzad and Anthony Gomes (“Plaintiffs”) against Ryman Hospitality Properties Inc., and Marriott International, Inc. (the “Defendants”) for violating the tip-credit provision of the Fair Labor Standards Act (FLSA), a collective bargaining agreement, and Maryland’s Wage Payment. The Plaintiffs, who work for the Defendants, alleged that the Defendants took a percentage of their tips in a tip-pooling arrangement and reapportioned it to other workers. When the Plaintiffs asked an official from the union they belonged to if such an arrangement was legal, the official informed them that it was not, and Plaintiffs filed suit in response. Specifically, they alleged that Defendants “violated the FLSA by ‘not paying Plaintiffs all their earned tips,’” and only requested damages in the form of the actual amount of tips taken from them by Defendants. The district court granted the Defendants’ motion to dismiss, and the Plaintiffs appealed.

After stating that they review a motion to dismiss under Rule 12(b)(6) de novo, the Fourth Circuit began their analysis by characterizing the Plaintiffs’ argument as one of statutory interpretation, and look first to the “plain meaning” of the FLSA and the context in which it was enacted. The Court characterized the FLSA as the “minimum wage/maximum hour law.” However, since Plaintiffs were not alleging that they were not paid the minimum wage, Plaintiffs did not have a private right of action under the § 216(b) of the statute, and instead claimed that § 203(m) created a right to “bring a claim for lost ‘tip’ wages.” Because that section of the statute provides that a tip-pool can only be used to increase the minimum wage of employees if employees are told about the tip-pool and are allowed to keep their tips, Plaintiffs argue that their rights were violated when they were not informed about the tip-pool. However, the Court, looking at the section in context with the entire FLSA statute, determined that the statutory requirements of § 203(m) does not apply to employees in the Plaintiffs’ situation who only seek the recovery of their tips not in relation to a minimum wage or overtime claim. Therefore, because the Plaintiffs conceded that their wages did not fall below the statutory minimum, their claim did not fall within the FLSA, and the Fourth Circuit affirmed the district court’s dismissal of their claim.

Full Opinion

Jennie Rischbieter

DOE v. ROSA, NO. 14-1748

Decided: July 28, 2015

The Fourth Circuit affirmed the judgment of the district court and held that Defendant, under 42 U.S.C. § 1983, did not have an affirmative duty to protect the Plaintiffs from a pre-existing danger under the Due Process Clause of the Fourteenth Amendment.

Plaintiffs are John Doe 2 and his brother, John Doe 3, who were sexually abused by Louis “Skip” ReVille from 2005 to 2007. ReVille began abusing Doe 2 when ReVille volunteered to coach Doe 2’s basketball team. ReVille later became a part-time caregiver to Doe 2 and Doe 3, and began molesting Doe 3.  During this time, the Plaintiffs attended the Citadel Summer Camp, where ReVille, a former Citadel cadet, worked.  Defendant, John Rosa, was the president of The Citadel during this time period. In April 2007, he received a phone call from a father of a former camper alleging that ReVille had molested his son in 2002. Rosa did not report the complaint to law enforcement and, the Plaintiffs contended, attempted to conceal the allegations. The Plaintiffs argued that Defendant’s actions allowed ReVille to continue the abuse of Plaintiffs throughout the summer of 2007.

Plaintiffs argued that Defendant was liable under §1983 based on a state-created danger theory. To prevail under a state-created danger theory, a plaintiff must show that the state actor created or increased the risk of private danger, and did so directly through affirmative acts, not merely through inaction or omission. The Court disagreed with Plaintiffs and found that their claim failed because they could not demonstrate that Defendant created or substantially enhanced the danger. The Court concluded that ReVille began abusing the Plaintiffs two years before Defendant could have been aware of the complaint. Furthermore, the Court found that Defendant did not create or increase the risk of the Plaintiffs abuse. Allowing continued exposure to an existing danger by failing to intervene is not equivalent to creating or increasing the risk of that danger. Therefore, the Court held that the state-created danger doctrine did not impose liability on Defendant for ReVille’s ongoing abuse of the Plaintiff.

Accordingly, the Court affirmed the district court’s order.  

Full Opinion

Meredith Weisler

 

U.S. v. PARRELL-DOMINGUEZ, NO. 14-4546

Decided: July 23, 2015

The Fourth Circuit vacated Dominguez’s sentence and remanded for further proceedings

This case was an appeal from the district court decision in which Edgar Parrell-Dominguez (“Dominguez”), an illegal immigrant, was charged with trafficking cocaine and was subjected to a sentencing enhancement. Since Dominguez had a prior offense that the district court described as a “crime of violence,” he was subjected to a 16-level enhancement to his sentence, even though he argued that his prior offense was not a crime of violence and that he should therefore only be subjected to an 8-level enhancement. The district court, in taking into consideration the sentencing guidelines, sentenced Dominguez to 65 months, and this appeal followed.

The Fourth Circuit first looked at whether Dominguez’s prior crime, discharging a firearm into an occupied building under N.C.G.S.A. § 14-34.1(a), was a crime of violence for the purposes of enhancement. The Court first had to determine what a crime of violence is under the enhancement statute § 2L1.2, and applied the “categorical approach,” a test that looks at “only the elements of the statute of conviction rather than the defendant’s conduct underlying the offense.” Although the statute did not define the phrase “crime of violence,” it contained a “use-of-force” clause that notably included only force against the person of another. By looking at the plain meaning of the statute, the Court concluded that this meant that the use-of-force clause did not involve the use of force against property and, furthermore, did not include “acts that merely pose a risk of harm to another person.” The Court then turned to the statute itself, noting that Supreme Court of North Carolina had “read a knowledge element into the offense,” and that the statute therefore proscribed a person from “intentionally, without legal justification or excuse, discharg[ing] a firearm into [a]n occupied building [A] with knowledge that the building is then occupied by one or more persons or [B] when he has reasonable grounds to believe that the building might be occupied by one or more persons.” Based on this reading, the Court concluded that the statute did not require the use of force against a person, so it did not require a finding that a crime committed under that statute was a crime of violence; the crime could be accomplished merely by firing at a building that the shooter knew or had reason to believe the building was occupied. Therefore, Dominguez’s prior offense was not a crime of violence.

After finding that Dominguez’s prior offense was not a crime of violence, and that therefore the district court erred in applying the sentencing guidelines, the Court then turned to a harmless error analysis. An error in this case would have been harmless if the district court would have sentenced Dominguez in the same way even if the district court had decided the crime of violence issue in Dominguez’s favor. When it looked at the 65 month sentence, the amount of time that the court below took in determining the sentence, and the recommendation of the Government that the judge sentence Dominguez in the mid-to-high end of the range that the judge subsequently followed, the Court determined that the error was not harmless, and vacated Dominguez’s sentence and remanded the case.

Full opinion

Jennie Rischbieter

UNITED STATES v. VINSON, NO. 14-4078

Decided: July 21, 2015  

The Fourth Circuit held that the district court erred in dismissing the indictment against the defendant. The Fourth Circuit determined the analytical approach called the “modified categorical approach” applies to this case. Therefore, the defendant was convicted of a qualifying misdemeanor crime of domestic violence, and the indictment should be reinstated.

During a consensual search of Rodney Vinson’s residence, police officers found a rifle and ammunition. After determining that Vinson had a prior North Carolina misdemeanor conviction of domestic violence under 18 U.S.C. § 921(a)(33)(A), the government charged Vinson with possession of a firearm by a prohibited person under 18 U.S.C. § 922(g)(9). Possession of firearms by persons convicted of a “misdemeanor crime of domestic violence” is prohibited. 18 U.S.C. § 922(g)(9). The district court granted the defendant’s motion to dismiss, concluding that the defendant was not a prohibited firearm possessor because the relevant state statute did not qualify as a misdemeanor crime of domestic violence.

When determining whether a prior conviction qualifies the defendant as a prohibited person under § 922(g), the court applies a categorical approach. Under the categorical approach, the court looks “only to the fact of conviction and the statutory definition of the prior offense…focus[ing] on the elements of the prior offense rather than the conduct underlying the conviction.” United States v. Cabrera-Umanzor, 728 F.3d 347, 350 (4th Cir. 2013). The categorical approach can be modified and can be used in situations where the underlying state crime “consists of the multiple alternative elements creating several different crimes, some of which would match the generic federal offense and others that would not.” Omargharib v. Holder, 775 F.3d 192, 197 (4th Cir. 2014). A state crime is divisible for purposes of applying the modified categorical approach only if at least one of the categories into which the crime may be divided constitutes, by its elements, a qualifying predicate offense. Cabrera-Umanzor, 728 F.3d at 352.

The district court concluded that the North Carolina state crime was not divisible and that the modified categorical approach was therefore inapplicable. Under the categorical approach, the district court concluded that a violation of the North Carolina statute did not amount to a misdemeanor crime of domestic violence (MCDV) because the use or threatened use of physical force is not an element of assault under North Carolina law.

The question for the Fourth Circuit is whether Vinson’s conviction under N.C. Gen. Stat. § 14-33(c)(2) qualifies as a conviction for a MCDV, defined by 18 U.S.C. § 921(a)(33)(A). The government contends that the modified categorical approach should have been applied by the district court. Any convictions for the completed-battery form of assault would necessarily include the use of physical force sufficient to satisfy the federal definition of an MCDV. The Fourth Circuit determined that the kind of conduct proscribed by the different formulations of assault should be treated as separate crimes warranting the use of the modified categorical approach. When determining the divisibility of a state crime, the Fourth Circuit looks to the manner in which the offense is charged to the jury. Omargharib, 775 F.3d at 199. In North Carolina, a single definition of assault is typically given, and that definition is nothing more than a description of the charged conduct. The jury instructions, with their focus on the single form of assault, implicated by the underlying facts, indicates that the alternative formulations of assault are alternate elements, not alternate means. The Fourth Circuit concluded that for purposes of inquiry under 18 U.S.C. § 922(g)(9), the attempted-battery and completed-battery forms of assault effectively create separate crimes with separate elements.

Further, the Magistrate’s Order charges Vinson with assault by completed-battery, which establishes that the various formulating of assault are alternate elements, which establishes that the assault is divisible. Because the Fourth Circuit determined the offense to be divisible, the modified categorical approach is applicable, and under this approach, Vinson’s prior conviction qualifies as a MCDV. Therefore, the Fourth Circuit held that the district court erred by dismissing the case and remanded to the district court to reinstate the indictment.

Dissenting, Justice Gregory stated that North Carolina’s common law crime of assault is ambiguous and/or inconsistently applied. For that reason, Gregory stated it would be smart to err on the side of constitutional caution, construing the state law in a way that minimizes the danger of the Sixth Amendment by imposing a sentence based on a fact that need not be found beyond a reasonable doubt. Additionally, the modified categorical-approach should only be applied in a narrow range of cases. Gregory could not agree with the conclusion of the majority that the North Carolina crime of assault encompasses functionally separate alternative offenses such that the modified categorical approach would be permissible.

Full Opinion

Austin T. Reed

 

U.S. v. WATSON, NO. 14-4388

Decided: July 17, 2015

The Fourth Circuit reversed the order of the district court and found that the government did not meet its burden of proving that involuntary medications were substantially likely to restore Defendant’s competency to stand trial.

In 2012, Defendant, John Watson (“Watson”), was arrested for firing a handgun at a Coast Guard helicopter. No one was injured or killed in the incident. After Watson’s arrest he was interviewed by a psychologists, who determined that he was “unable to participate meaningfully and effectively in his defense,” as a result of his many delusions. Watson was transferred to the Federal Medical Center (“FMC”) in Butner, North Carolina for further mental health evaluation. Six months later, the government submitted to the court a report by FMC psychiatrist, which recommended that Watson be forcibly medicated in order to render him competent to stand trial.

In 2014, the magistrate judge recommended that Watson be forcibly medicated in order to restore his competency. The district court then issued a brief order adopting the recommendations and findings of the magistrate judge and granting the government’s motion for involuntary medication.

Given the critical liberty interests at stake, the Court required the government to meet a heavy burden to justify forcible medication. The Court required that the government meet its burden by the “clear and convincing” standard. The Fourth Circuit applied a four-factor test to determine whether the burden had been met. First, the government had to show that important governmental interests are at stake and that special circumstances did not mitigate those interests. Second, the government had to show that involuntary medication significantly furthered the government’s interests, which requires proof that the medication is substantially likely to render the defendant competent to stand trial. Third, the involuntary medication must be necessary to further the government’s interests and less intrusive means must be unlikely to achieve substantially the same results. Finally, the Court must conclude that the administration of drugs is medically appropriate and in the patients best medical interests in light of his condition.

The Fourth Circuit found that the district court did not undertake the searching and individualized assessment of Watson’s likely susceptibility to forcible medication that is required by the four-factor test. The district court took the government at its word when it argued that the requirements of the test had been met, without considering whether the government had produced evidence “relating the proposed treatment plan to the individual defendant’s particular medical condition.”

Accordingly, the Court reversed the district court’s order.  

Full Opinion

Meredith Weisler

 

ELDERBERRY OF WEBER CITY, LLC v. LIVING CENTERS – SOUTHEAST, INC., NO. 13-2176

Decided: July 21, 2015

In a case about entitlement to damages for non-payment of rent and related items, the Fourth Circuit held that the district court erred in calculating damages.  The Fourth Circuit thus affirmed the district court in part, vacated in part, and remanded the case for recalculation of appropriate damages.  

In November, 2000, Elderberry of Weber City, LLC (“Elderberry”) leased a skilled nursing facility to Living Centers – Southeast, Inc. (“Living Centers”) for a ten-year period.  Although the lease did not initially allow assignment without prior written permission from Elderberry, it was eventually amended.  The amended lease allowed assignment to FMSC Weber City Operating Company, LLC (“FMSC”), its affiliates, or subsidiaries without prior approval from Elderberry with a guaranty from Mariner Health Care, Inc. (“Mariner”), a company with majority ownership in FMSC and full ownership of Living Centers.  Under this amendment, the lease reset to an April, 2017 expiration date, and was assigned from Living Centers to FMSC in January, 2007, and from FMSC to Continiumcare of Weber City, LLC (“Continium”), a company owned and controlled by a then-manager of FMSC, in November, 2011.  During this period, the facility had a variety of problems.  In March, 2012, Continium stopped paying rent.  Elderberry and Continium tried to negotiate a rent reduction, but in May, 2012, Continium indicated it was no longer able to pay rent.  In August 2012, Elderberry hired a company to help it find and sign a new tenant for the facility, and on August 15, Elderberry sent a letter to Living Centers, Continium, Mariner, and their attorneys demanding payment of past due rent.  On August 17, 2012, Continium discharged the last patients in the facility, and abandoned the property.  On August 24, 2012, Elderberry mailed a lease termination letter to Living Centers, FMSC, Continium, and Mariner.

Mariner filed suit against Elderberry seeking a declaratory judgment that the guaranty was unenforceable.  Elderberry then filed suit against Living Centers, FMSC, and Continium for breach of lease and breach of contract, and against Mariner for breach of guaranty.  These suits were consolidated, and the parties filed summary judgment motions.  The district court denied the summary judgment motions, and found the guaranty was enforceable.  The district court then ruled in favor of Elderberry on all counts, and found Elderberry entitled to $2,742,029.50 in damages, plus interest.  The damages covered unpaid rent from April to August, 2012, and from September, 2012 to February, 2013, a subsequent rent shortfall, other unpaid bills from August, 2012 to February, 2013, maintenance and rehabilitation of the facility, and amounts paid to the company that helped find and sign the new tenant.  Living Centers, FMSC, Continium, and Mariner appealed.  

The Fourth Circuit first held that Elderberry was entitled to unpaid rents only through the date it terminated the lease.  The court reasoned, based on earlier case law, that upon a tenant abandoning a property, a landlord can recover unpaid rent for the balance of the lease only if the landlord does not terminate the lease.  Although Elderberry argued that the lease allowed it to both 1) terminate, and 2) retake possession of the property without termination and without absolving the lessee of liability for rent, the Fourth Circuit disagreed.  The Court argued that remedies allowing for future rent are to be strictly construed, leases should be construed against the lessor, the language of the lease here was itself inconsistent, and the Court’s reading would allow Elderberry to seek other possible remedies.  The Fourth Circuit thus found that Elderberry was entitled to unpaid rents only through the August 24, 2012 termination of the lease.

The Fourth Circuit next found that Elderberry was entitled to non-rent damages only through lease termination.  Based on case law and legal principles, the Court found that landlords are entitled to non-rent damages that occur prior to lease termination.  Based upon that finding, and the fact that Living Centers, FMSC, Continium, and Mariner did not specifically challenge the district court’s findings regarding non-rent damages, the Fourth Circuit found that Elderberry was entitled to non-rent damages that occurred prior to the August 24, 2012 lease termination.

The Fourth Circuit then found that Mariner’s guaranty did not violate the Georgia statute of frauds, and was thus enforceable.  Although the guaranty contained several blanks, which would normally violate the statute of frauds, the Court found that, under Georgia case law, the guaranty could be interpreted together with the lease amendment to which it was attached.  Further, the Court found that the statute of frauds allowed using parol evidence to determine the meaning of ambiguous guaranty terms.  Using the lease amendment and parol evidence, the Court found enforceable the guaranty in which Continium was the debtor who failed to pay rent from March, 2012 until lease termination, and Mariner was the guarantor.

Based on the foregoing, the Fourth Circuit affirmed the district court in part, vacated in part, and remanded for recalculation of damages.  

Full Opinion

Katherine H. Flynn

 

BUTLER v. DRIVE AUTO. INDUS. OF AM., INC. NO. 14-1348

Decided: July 15, 2015

The Fourth Circuit reversed and remanded.

This case was an appeal from the district court’s grant of summary judgment to Drive Automotive Industries (“Drive”). Butler, who was a temp agent for ResourceMFG and worked at Drive, filed suit after she was terminated from her job at Drive. She claimed that she was fired because she had complained that her manager at Drive was sexually harassing her, and that he requested that she be fired after she made several complaints against him. The district court granted Drive’s motion for summary judgment because it found that Drive was not Butler’s employer under Title VII because it did not exercise enough control over the terms of her employment. Butler appealed this decision, claiming that Drive was an employer under the statute.

The Fourth Circuit began by asserting that it would be reviewing this appeal de novo, and then moved into a discussion of what qualifies as an employer under Title VII. The problem for Butler is that she had two employers, ResourceMFG and Drive, and the first question the Court considered was whether an employee could have multiple employers under Title VII. The Court concluded, after examining the “joint employment doctrine” in other circuits, that it was possible for an employee to have multiple employers, and affirmed the district court’s decision on that point. The Court then looked at whether the district court correctly applied the joint employment doctrine, and looked at the extent to which Drive controlled Butler’s activities as an employee. The Court considered the three tests that other courts use to determine control in a joint employment context: the economic realities test, that Butler wanted to use; the control test, that Drive wanted to use; and the hybrid test. After examining both the control and economic realities tests, the Court decided that the hybrid test, which neither party argued in favor of, was the relevant test to apply. It then set forth its own compilation of factors, drawing on other cases that had used this test, and applied those factors to Butler’s case. Based on that application, the Court concluded that the district court incorrectly determined that Drive did not have substantial control over Butler and therefore did not count as her employer for purposes of Title VII. Because the Court concluded that Drive was an employer under Title VII, it remanded the case back to the district court to review the merits of Butler’s claims.

Full opinion

Jennie Rischbieter

UNITED STATES v. MCRAE, NO. 13-6878

Decided: July 13, 2015  

The Fourth Circuit held that the recent Supreme Court jurisprudence is clear that the defendant’s motion constitutes a mixed Federal Rules of Civil Procedure 60(b) and 28 U.S.C. § 2253(c)(1)(B) and remanded to the district court to allow the defendant the opportunity to decide whether to abandon his improper claim or to proceed with a successive habeas petition.

In 2004, Immigration and Customs Enforcement (ICE) began investigating McRae’s codefendant, Rodney Green, after becoming suspicious of drug trafficking. The ICE Agent learned that learned that Green and McRae had traveled to Jamaica along with other women, Spears, Bailey, and Harris. The women were stopped at Charlotte Douglas International Airport and customs agents seized cocaine and marijuana. Bailey identified McRae, and he was later arrested and charged with four drug charges in February 2005. After a three-day trial in September, McRae was convicted of all charges and was sentenced to 210 months imprisonment.

McRae filed a petition in 2008 under 28 U.S.C § 2255 to vacate the sentence claiming ineffective assistance of counsel at trial and prosecutorial misconduct. Later without holding an evidentiary hearing, the district court granted the government’s motion for summary judgment and the Fourth Circuit determined that McRae could not appeal absent a Certificate of Appealability (COA). After unsuccessfully filing petitions for rehearing and a writ of certiorari, he filed a motion entitled “Motion for Relief from Judgment 60(b)(1)(3)(6).” In his motion he alleged five errors in the district court’s § 2255 proceedings: 1) the district court falsely stated that the court had not mentioned counsel’s failure to move to suppress when denying counsel’s motion for voir dire; 2) the district court mistakenly stated that McRae admitted to knowing Bailey; 3) the district court did not consider every statement made by McRae in determining whether his counsel was ineffective for failing to move to suppress; 4) the district court mistakenly attributed one of the ICE Agent’s testimony that McRae knew his rights; and 5) the district court misquoted the ICE Agent as telling McRae an attorney would be appointed for him if he could not afford one. McRae’s Rule 60(b) motion for lack of subject-matter jurisdiction was dismissed and the court held that the motion was a successive § 2255 motion for which he failed to obtain preauthorization under 28 U.S.C. § 2244(b)(3), and declining to issue a COA. The issue for the Fourth Circuit is whether McRae’s appeal of the district courts dismissal of his Rule 60(b) motion as an unauthorized § 2255 motion is subject to the COA requirement.

McRae argues that the district court erred in treating his motion as a successive habeas petition rather than a mixed Rule 60(b)/§ 2255 motion, and that this Court may review the district court’s determination without first issuing a COA. In a habeas proceeding, a Rule 60(b) motion which attacks “the substance of the federal court’s resolution of a claim on the merits” is not a true Rule 60(b) motion, but instead a successive habeas petition. Gonzales v. Crosby, 545 U.S. 524, 531-32 (2005). The district court does not allow a successive habeas petition to be filed without preauthorization from a court of appeals. The court of appeals may issue a COA only if the applicant has made a substantial showing of the denial of a constitutional right. However, a Rule 60(b) motion that attacks a defect in the habeas proceedings is a true Rule 60(b) motion and is not subject to the preauthorization agreement.

The Fourth Circuit held that there was no need to decide whether it needed to issue a COA before determining whether the district court erred in dismissing McRae’s purported Rule 60(b) motion as an unauthorized successive habeas petition. Both parties agree that the district court erred in dismissing McRae’s motion as an impermissible successive § 2255 petition. McRae argues, and the government agrees, that his first, second, fourth, and fifth claims are properly categorized as Rule 60(b) claims. However, the government contends that 1) McRae’s Rule 60(b) claims were untimely, and 2) he failed to make the requisite showing of extraordinary circumstances.

Under the Federal Rules of Civil Procedure, Rule 60(b) motions must be made no more than a year after the entry of judgment or order of the date of the proceeding. McRae filed his motion nearly 18 months after the district court denied the § 2255 motion. Therefore, the government argues that the motion is barred. However, McRae argues that this decision should be made by the district court so he has the opportunity to come forward with evidence that might justify the application of equitable tolling or otherwise establish the motion should not be time-barred. Therefore, the Fourth Circuit determined that the proper action was to remand the case back to the district court.

Dissenting, Justice Motz determined it was inappropriate for the majority to hold that a habeas petitioner need not obtain a COA before appealing a district court’s order denying a Rule 60(b) motion as an improper successive habeas petition. Justice Motz believed that this holding was contradictive to binding circuit precedent which requires the dismissal of this appeal.

Full Opinion

Austin T. Reed

U.S. v MCDONNELL NO. 15-4019

Decided: July 10, 2015

The Fourth Circuit affirmed the judgment of the district court.

This case was an appeal of a jury trial that found Robert McDonnell and his wife guilty of accepting bribes in exchange for helping a Virginia company acquire testing at a state university for a dietary supplement developed by the company. Specifically, the jury found McDonnell guilty of eleven counts of corruption and not guilty on the two counts of making a false statement. McDonnell appealed, challenging the jury instructions, claiming there was insufficient evidence against him, that he and his wife’s trials should have been severed, that his Sixth Amendment rights were violated during voir dire, and that the district court incorrectly ruled on several evidentiary issues.

After a lengthy description of the alleged occurrences between McDonnell, his wife, and Williams, the Fourth Circuit began its analysis by reviewing the motion for severance for abuse of discretion. Since McDonnell and his wife were defendants together as members of a conspiracy, the Court noted that McDonnell needed to make an initial showing of a need for his wife’s testimony, and that since he only made vague statements about the need for her testimony, he did not meet the initial threshold. The Court next considered McDonnell’s argument that the district court failed in its voir dire of potential jurors in that it specifically failed to question jurors on the pretrial publicity. Although McDonnell argued that the Supreme Court’s decision in Skilling v. United States supported his position, the Fourth Circuit emphasized that Skilling in fact underscored the very opposite of McDonnell’s argument because Skilling maintained that jury selection remained “particularly within the province of the trial judge.” Although McDonnell challenged the sufficiency of the jury questionnaire, as well as the decision of the trial judge to question the jurors as a group instead of individually about pretrial publicity, the Court found that the trial judge’s questions were “adequate to provide a reasonable assurance that prejudice would be discovered if present.”

The Court then considered McDonnell’s claim that the district court erred multiple times in ruling on evidence. The Court noted that it reviewed such rulings for abuse of discretion, “affording substantial deference to the district court.” After considering the exclusion of expert testimony, the admission of statements of economic interest, admission of other gifts evidence, admission of email exchange regarding free golf, and the return of forensic image of Williams’s iPhone, the Court upheld the lower court’s rulings, and noted that in any case, the iPhone claim had not been properly preserved for appeal.

The Fourth Circuit then turned to what it considered to be the core arguments of the appeal. First, the Court addressed McDonnell’s claims that the jury instructions “misstated fundamental principles of federal bribery law.” McDonnell claimed that the jury instructions of bribery were too expansive of the definition, and the Court determined that it would review de novo this jury instruction. Furthermore, even if an element of the charge was misconstrued, the Court could dismiss the error as harmless provided that it was “clear beyond a reasonable doubt that a rational jury would have found the defendant guilty absent the error.” After examining the relevant statutes that McDonnell was convicted under and comparing the language in the statutes to the jury instructions, and examined the challenged definition of “official act,” the Court found that McDonnell had failed to show that the “official act” instructions were “anything less than a fair and accurate statement of law.” The Court also rejected McDonnell’s “Quid Pro Quo” instruction arguments. Then, the Court addressed the claim that the “Government’s evidence was insufficient to support his convictions pursuant to the honest-services wire fraud statute and the Hobbs Act.” The Court also reviewed this claim de novo to determine the sufficiency of the evidence in a light most favorable to the Government. Although the Court acknowledged that the Government had to prove that Williams’s payments to the family came with a “corrupt understanding” and that the “key to that understanding was the expectation that Appellant would perform certain official acts for Williams’s benefit,” an examination of the evidence presented at trial showed that McDonnell’s acts were official acts and that the Government satisfied its burden in showing corrupt intent on both sides. The Fourth Circuit therefore held that McDonnell received a fair trial and affirmed the judgment of the district court.

Full opinion

Jennie Rischbieter

LIBERTY UNIV. INC. v. CITIZENS INS. CO. OF AM., NO. 14-2254

Decided: July 10, 2015

The Fourth Circuit reversed the district court’s grant of summary judgment and held that Citizens Insurance Company of America (“Citizens”) had no duty to defend Liberty University (“Liberty”) against the complaint filed by Janet Jenkins.

In 2012, Janet Jenkins sued Liberty University, alleging that the school participated in a scheme to kidnap Jenkins’ daughter. Jenkins alleged that Liberty aided Lisa Miller, the child’s biological mother and former partner in a same sex civil union, to take the child to Nicaragua. This lawsuit stems from Jenkins complaint against Liberty.

The district court found that Citizens had a duty to defend Liberty against the complaint. According to the policy at issue, Citizens must defend Liberty against suits alleging certain harms that arise from an “occurrence” or an unexpected accident, which does not fall under any of the listed coverage exclusions. The policy also contains a “Separation of Insureds” provision, which requires a court to evaluate a claim by each named insured individually.  The district court found that the Separation of Insureds provision was ambiguous and should therefore be interpreted in Liberty’s favor. Furthermore, the district court refused to consider the intent of Liberty’s agents when determining if the complaint alleged an accidental “occurrence” and whether the policy’s exclusions applied. The district court concluded that Jenkins’ complaint failed to “sufficiently allege” Liberty’s vicarious liability. Accordingly, the district court granted summary judgment to Liberty.

The Fourth Circuit disagreed and found that Jenkins’ complaint did not allege an “occurrence” and that the complaint triggered the policy’s coverage exclusions. Therefore, Citizens did not have a duty to defend Liberty. The Court applied Virginia law and concluded that the Separation of Insureds provision in the policy did not displace Virginia’s rule that an insurer has no duty to defend against a suit alleging the insured is liable for the intentional acts of its agents under a theory of respondent superior. Furthermore, the Court found that because the complaint alleged only intentional acts, it did not claim Liberty’s liability for damage arising from an “occurrence.”

Accordingly, the Court reversed the district court’s grant of summary judgment and remanded for further proceedings.

Full Opinion

Meredith Weisler

 

CVLR PERFORMANCE HORSES, INC. v. WYNNE, NO. 14-1021  

Decided: July 9, 2015

In a case related to a RICO action, the Fourth Circuit affirmed the district court’s denial of a motion to intervene, and denied the defendant’s motion to dismiss the appeal of the district court’s denial.

In September of 2011, CVLR Performance Horses, Inc. (“CVLR”) filed suit against John Wynne and his solely owned companies for RICO violations, claiming Wynne held out one of his companies as a bank, made loans under false pretenses, and engaged in insurance fraud.  Wynne moved to dismiss, and the district court granted his motion, finding CVLR failed to state a claim.  On appeal, the Fourth Circuit reversed, finding CVLR’s pleadings had stated a RICO claim, and remanded to the district court.  Four months later (more than two years after the original filing), Karen Foster and Vicki Marsh, acquaintances of Wynne who claimed injury from his financial dealings, moved to intervene as plaintiffs.  The district court denied Foster and Marsh’s motion, finding that the statute of limitations on RICO claims had passed, and equitable tolling was not warranted.  Foster and Marsh appealed.  CVLR and Wynne then settled their dispute, and the district court, per CVLR and Wynne’s agreement, dismissed the case.  Wynne then moved to dismiss Foster and Marsh’s appeal, arguing that the dismissal of CVLR’s case made Foster and Marsh’s appeal moot, since there was no longer a case in which to intervene.  

The Fourth Circuit first held that dismissal of CVLR’s case did not moot Foster and Marsh’s appeal.  The Fourth Circuit reasoned that Foster and Marsh made their motion to intervene, and appealed denial of that motion, before CVLR’s case against Wynne was dismissed.  The Court further reasoned that the settlement of CVLR’s case did not provide a remedy to Foster and Marsh, and if the Fourth Circuit were to reverse the denial of Foster and Marsh’s motion to intervene, Foster and Marsh would be able to pursue a claim against Wynne independent of CVLR’s case.  

The Fourth Circuit then held that the district court did not err in finding equitable tolling should not be applied to Foster and Marsh’s appeal.  The Fourth Circuit noted that, by their own admission, Foster and Marsh exceeded the RICO statute of limitations by at least 14 months.  The Fourth Circuit then found that equitable tolling was inappropriate in this case.  The Fourth Circuit noted that equitable tolling is an extraordinary remedy allowed where applicants have diligently pursued their rights, but been unable to timely file a claim due to extraordinary circumstances.  Here, the Fourth Circuit found that Foster and Marsh had not alleged taking any steps towards timely filing a RICO claim, and had not alleged that a claimed mental impairment (Marsh’s claimed autism) had any relation to the failure to timely file.  Further, the Fourth Circuit found that no extraordinary circumstances caused Foster and Marsh’s failure to timely file a claim.  Foster and Marsh claimed that the first dismissal of CVLR’s case (for failure to state a claim) was an extraordinary circumstance, because filing a claim against Wynne after the dismissal would have been subject to a Rule 11 sanction since the district court had found Wynne’s conduct did not violate RICO.  The Fourth Circuit disagreed, noting that while Foster and Marsh’s separate lawsuit against Wynne would likely have been dismissed in the wake of the dismissal of the CVLR case, Rule 11 allows for arguments based not only on existing law, but also on nonfrivolous arguments to modify or reverse existing law, and thus Foster and Marsh would likely not have faced faced Rule 11 sanctions for filing a separate lawsuit against Wynne.

Based on the above, the Fourth Circuit denied Wynne’s motion to dismiss Foster and Marsh’s appeal of the district court’s denial of their motion to intervene.  The Fourth Circuit affirmed the district court’s denial of Foster and Marsh’s motion to intervene.

Full Opinion

Katherine H. Flynn

 

JEHOVAH v. CLARKE, NO. 13-7529

Decided: July 9, 2015  

The Fourth Circuit held that the dismissal of Jehovah’s Sabbath claims, cell assignment claims, and deliberate indifference claim was inappropriate. Additionally, the Fourth Circuit held that the trial court erred in granting summary judgment to the Appellees regarding Jehovah’s communion wine claim. The district court’s judgment was reversed in its entirety and remanded back to the lower court.

Jehovah is an inmate who was incarcerated at Sussex I Prison (SIP) in Virginia when he filed this suit. Jehovah alleged in his complaint four separate actions taken by Virginia Department of Corrections (VDOC) employees that violated his rights under the First Amendment and the Religious Land Use and Institutionalized Persons Act (RLUIPA). First, Jehovah claimed that certain prison policies have prevented him from taking communion in the manner required by his religious beliefs. The final VDOC policy did not allow prisoners to consume communion wine. Second, Jehovah claimed that he has not been able to obtain a job that will allow him to observe his Sabbaths. According to Jehovah, there are very few jobs at SIP that allow for prisoners to work and still observe the Sabbaths. Third, Jehovah claims that VDOC has housed him with nonbelievers and anti-Christians, contrary to his beliefs. Fourth, Jehovah alleged that he received several medical ailments that VDOC staff deliberately ignored. Jehovah filed this lawsuit seeking compensatory and injunctive relief for these alleged violations of RLUIPA, the First Amendment, and the Eighth Amendment.

On appeal, Jehovah argues that the district court erred in 1) dismissing his Sabbath, cell assignment, and deliberate indifference claims under § 1915A, and 2) granting Appellees summary judgment on his communion wine claim. RLUIPA requires a stricter protection of prisoners’ free exercise rights than does the First Amendment, applying “strict scrutiny instead of reasonableness.” Lovelace v. Lee, 472 F.3d 174, 186 (4th Cir. 2006). The Fourth Circuit determined the award of summary judgment on his communion wine claim was inappropriate because the district court did not allow Jehovah an opportunity to brief the court regarding whether the wine ban substantially burdened his religious exercise and the record was insufficient to support the conclusion that the wine ban was the least restrictive means to address the government’s purported security interest. The court found that a reasonable jury could rule in Jehovah’s favor regarding the communion wine issue.

The district court dismissed Jehovah’s Sabbath work claims because prisoners do not have a constitutional right to job opportunities while incarcerated. However, Jehovah correctly pointed out that the constitutional right being violated is his right to free exercise of his religious beliefs; the unavailability of prison jobs accommodating his Sabbath schedule is the alleged burden on that right. When stating a RLUIPA claim, Jehovah need only plead facts tending to show a substantial burden on his exercise of sincerely held religious beliefs. 42 U.S.C. § 2000cc-2(b). Here, Jehovah has alleged that his religious practice forbids him from working on the Sabbaths. The Fourth Circuit determined that Jehovah alleged enough facts that support a plausible claim for relief under the RLUIPA and the First Amendment and remanded the claim for further proceedings.

The district court dismissed Jehovah’s housing claims because it determined that Jehovah did not have a right to choose a cellmate based on that person’s religious background. However, again, the Fourth Circuit determined the proper inquiry is to what extent VDOC burdened Jehovah’s right to exercise his religious beliefs by assigning him cellmates who did not share his religious views. Jehovah claimed that he was harassed and burdened on account of his religious beliefs by being housed with these inmates. Additionally, Jehovah claimed that his housing assignments were deliberately done to harass him. Based on Jehovah’s claims, the Fourth Circuit held that Jehovah alleged enough facts that support a plausible claim for relief under the RLUIPA and the First Amendment and remanded the claim for further proceedings regarding his housing assignment.

In order to present a claim of deliberate indifference under the Eighth Amendment, the inmate must show “the deprivation of a basic human need was objectively sufficiently serious” and “subjectively the officials acted with a sufficiently culpable state of mind.” De’Lonta v. Angelone, 330 F.3d 630, 634 (4th Cir. 2003). Jehovah alleged constant chest pain, chronic headaches, and diminished hearing and eyesight. Additionally, Jehovah claimed he has been diagnosed with pulmonary hypertension, a serious and sometimes fatal condition. Jehovah received some treatment; however, his doctors ignored and failed to treat many of his symptoms. Sufficient factual allegations supporting a plausible claim for relief was presented by Jehovah and the Fourth Circuit held that the district court erred in dismissing Jehovah’s Eighth Amendment claim.

Full Opinion

Austin T. Reed

 

CHRISTIAN v. BALLARD, NO. 13-7333

Decided: July 8, 2015

In this post-conviction relief case, the Fourth Circuit found that the district court had reasonably determined Gregory Christian’s trial attorney did not render ineffective assistance of counsel regarding West Virginia’s recidivist statute.  On this basis, the Fourth Circuit affirmed the district court’s denial of federal habeas corpus relief to Christian.  

In June, 2002, a Huntington, West Virginia restaurant and gas station were robbed at gunpoint.  The responding officers were told that the suspects might be in a particular apartment.  Upon arriving at the apartment, the officers found the suspect vehicle parked in front.  When officers entered the apartment, Christian who was hiding inside, began shooting.  One of the officers suffered a gunshot wound to the chest, and Christian subsequently surrendered.  

Public defender Gerald Henderson was appointed to defend Christian.  Christian and Richard Adams, who was also in the apartment, were indicted under West Virginia law for two counts of first-degree robbery involving use of a firearm, and Christian was also indicted for malicious assault on a police officer.  In addition, Christian was indicted separately under federal law for possession of a Molotov cocktail, and possession of a firearm by a convicted felon.  West Virginia law provides for lengthening of a sentence for a second felony conviction, and for a sentence of life in prison without parole eligibility for 15 years for a third felony conviction.  Under West Virginia rules, Christian had one prior felony, and thus his sentences for the robberies and the malicious assault could have been lengthened.  

Early in the plea negotiations, Christian made it clear that, due to his declining health, he wished to serve as much of his time as possible in the federal penitentiary, where he felt conditions were better.  The state prosecutor was willing to consider a plea where state time was served concurrent to federal time, but not until the federal sentence was actually received.  In May, 2003, after pleading guilty to the federal charges, Christian received a federal sentence of only 63 months, some 1/3 of the sentence the federal public defender expected, which meant that Christian would be unable to serve the majority of his sentence in federal prison.  In August of 2003, Christian agreed to a plea deal in which the state would recommend 25 year sentences for each robbery, served concurrently, and with credit for time already served, and 3-15 years for malicious assault, all state time to be served after the federal time.  The state also agreed to various conditions, including that there would “‘BE NO RECIDIVIST’” filed.

On September 3, 2003, Christian appeared in state court for his guilty plea hearing.  At first, it appeared he would plead guilty only to malicious assault, but he ultimately entered a guilty plea on all counts after confirming to the court his understanding of the possible penalty range for each offense, and confirming that he was pleased with his attorney’s representation.  The trial court explained the consequences for any future third felony violation.  The court then sentenced Christian in line with the plea agreement.  Christian did not appeal.On September 3, 2003, Christian appeared in state court for his guilty plea hearing.  At first, it appeared he would plead guilty only to malicious assault, but he ultimately entered a guilty plea on all counts after confirming to the court his understanding of the possible penalty range for each offense, and confirming that he was pleased with his attorney’s representation.  The trial court explained the consequences for any future third felony violation.  The court then sentenced Christian in line with the plea agreement.  Christian did not appeal.

In July of 2007, Christian filed a habeas corpus petition in state court in which he denied nearly all the factual representations he had made at his plea hearing.  The state court denied Christian’s petition in its entirety, largely due to lack of credibility and lack of proof.  Christian appealed this denial to the Supreme Court of Appeals of West Virginia, raising for the first time an ineffective assistance of counsel claim based on incorrect advice about the applicability of the recidivist statute.  Christian claimed that he had told Henderson that he had two prior felonies, but that Henderson did not investigate, and that on the day of his plea, Henderson told him that the state would enhance his sentence under the recidivist statute if he pleaded guilty only to malicious assault.  Christian claimed to believe this meant that the state court would sentence him to a mandatory life sentence if he pleaded guilty only to malicious assault.  The appellate court affirmed the state court.  Christian then filed a federal habeas petition to the district court on identical grounds, and added an additional claim that Henderson effectively advised him that he would get a life sentence if he pleaded guilty only to malicious assault, and did not refer to the lengthened sentence under the recidivist statute.  The district court denied the petition, finding Henderson did not violate the constitution by not investigating Christian’s prior felonies.  The district court granted a certificate of appealability on the issue of whether Henderson rendered ineffective assistance of counsel in advising Christian on the applicability of the West Virginia recidivist law.

The Fourth Circuit first held that Christian had exhausted his state court remedies before appealing to the West Virginia Supreme Court of Appeals.  Though Christian raised the ineffective assistance of counsel claim for the first time to that court, he had offered testimony on this point at the state court.  Further, the appellate court noted that it had considered all of the arguments in Christian’s briefs.

The Fourth Circuit next summarized Christian’s basic claim as being that Henderson failed to investigate Christian’s prior felonies, and incorrectly advised Christian that conviction on any of the three counts against him in federal court would lead to a mandatory sentence of life in prison with no parole eligibility for 15 years.  The Fourth Circuit found that while Christian may have interpreted Henderson’s advice prior to the plea hearing as meaning a mandatory life sentence would be imposed if he pleaded guilty to only malicious assault, there was no evidence that Christian communicated this interpretation to Henderson.  Therefore, the Fourth Circuit reviewed the state court denial of habeas only to see whether it was an unreasonable finding based on the standards for ineffective assistance of counsel.  

The Fourth Circuit then held that the appellate court did not err in denying Christian’s habeas petition based on his ineffective assistance of counsel claim.  The Court first found that there is no duty for counsel to investigate a prior felony record during plea negotiations.  Case law does not support such a duty, and there was no evidence that Henderson believed a life sentence based on the recidivist statute was involved in this case.  Further, even if Henderson failed by not investigating Christian’s prior felonies, the Court found that he would still have needed to include the “‘no recidivist’” language in the plea deal to avoid a possible lengthened sentence for a second felony.

The Fourth Circuit next found that Henderson did not violate the constitution by failing to look into Christian’s felony record the morning of the plea hearing. Based on the record, the Court reasoned that, at most, Henderson properly advised Christian that if he had two prior usable felonies, he might be subject to a recidivist sentence of life in prison.  Such truthful advice did not meet the standard for constitutional deficiency.

The Fourth Circuit also found that the appellate court could reasonably have rejected Christian’s claim that he believed he was subject to a life sentence under the recidivist statute.  Christian’s testimony to this effect was conclusory, self-serving, and vague, or did not refer to Henderson’s advice about the recidivist statute, or to the morning of the plea hearing.  Henderson’s own testimony, which more strongly supported Christian’s claim, was not strong enough to overcome the benefit of the doubt accorded to counsel’s representation, and the state court’s view on evidence.  Further, Christian’s behavior in the months leading up to the plea hearing undercut his claim that he believed pleading guilty to only one of the three counts would lead to a mandatory life sentence.  Christian confirmed at the hearing that he understood the court believed him to have only one prior felony, and in a subsequent letter to Christian, Henderson noted that the state would not file a recidivist based on Christian’s previous felony.

Finally, the Fourth Circuit held that the appellate court could reasonably have believed that any errors on the part of Henderson were not the but-for cause of Christian pleading guilty rather than going to trial.  Christian never claimed that if not for the alleged ineffective assistance, he would have pleaded not guilty and gone to trial.  Even if he had made such a claim, the court could have found it not credible.  Further, going to trial on the robbery counts would not have been a rational choice given the evidence of Christian’s guilt, and the likely sentence.

On the above basis, the Fourth Circuit affirmed the Supreme Court of Appeals of West Virginia’s denial of Christian’s habeas corpus petition.

Judge Gregory dissented from the Court’s opinion.  In his dissent, Judge Gregory argued that Henderson gave bad legal advice about the effect of the recidivist statute on Christian’s sentence, and Christian relied on that advice in agreeing to plead guilty.

Full Opinion

Katherine H. Flynn

 

U.S. v. APLICANO-OYELA, NO. 14-4244

 

Decided: July 7, 2015

The district court sentenced Gerson Arturo Aplicano-Oyuela (“Aplicano”) to sixteen months in prison and three years of supervised release for an illegal reentry offense that followed his removal from the United States after a felony conviction. Aplicano appealed and challenged his term of supervised release. The Fourth Circuit affirmed the district court’s sentencing.

In 2002, Aplicano illegally entered the United States from Honduras. In 2006, he plead guilty to second-degree assault in Maryland. Following his assault charge, Aplicano was removed to Honduras. Aplicano proceeded to once more illegally reenter the United States. After several arrest, Aplicano was indicted in 2013 and charged with illegal reentry under 8 U.S.C. § 1326. Aplicano submitted a plea letter to the district court and acknowledged the maximum sentence of illegal reentry, including supervised release for a period of three years. The district court sentenced Aplicano to sixteen months in prison and three years of supervised release. The court found the supervised release to be appropriate because of Aplicano’s history of illegal reentry and the court wanted to ensure that if Aplicano attempted to illegally reenter the United States, he would receive longer jail time.

Aplicano challenged his three-year term of supervised release on the grounds that it was procedurally and substantively unreasonable, and that his guilty plea was not knowingly and voluntarily entered because the court failed to advise him of the nature and consequences of supervised release. The Fourth Circuit addressed each of Aplicano’s challenges and reviewed the district court’s sentencing for plain error.

Accordingly, the Court found that there was no plain error by the district court in regards to the procedural reasonableness of the sentence because the district court was aware of the guidelines to supervised release, considered Aplicano’s specific circumstances, and determined that additional deterrence was required in this circumstance. Next, the Court addressed the substantive reasonableness of the supervised release. Taking into account the totality of the circumstances, the Court found the trial court’s intention to provide deterrence and protect the community to be substantively reasonable. Therefore, the Court found no error. Finally, the Court assessed whether the trial court failed to explain the nature and consequences of supervised release to Aplicano, in violation of Rule 11 of the Federal Rules of Criminal Procedure. The Court did not rule on whether a violation occurred, but instead held that the record failed to show that Aplicano would have refrained from pleading guilty but for the assumed Rule 11 error. As a result, Aplicano was unable to satisfy the third prong of the plain error analysis, that the error affected his substantial rights.

Consequently, the Court affirmed the district court’s sentence of Aplicano to sixteen months in prison and three years of supervised release.

Full Opinion

Meredith Weisler

 

POINDEXTER v. MERCEDES-BENZ CREDIT CORP. NO 14-1858

Decided: July 7, 2015

The Fourth Circuit affirmed the district court’s grant of summary judgement to the Mercedes-Benz Credit Corporation (“MBCC”).

This case was an appeal from the district court’s grant of summary judgement to MBCC. Virginia Poindexter (“Poindexter”) originally purchased a car from a dealer in Virginia, and although she was originally in a contract with the dealer, the dealer assigned that contract to MBCC. Subsequent to that assignment, Poindexter chose to participate in MBCC’s Owner’s Choice program, whereby “Poindexter would grant MBCC a lien against her Potomac Falls residence by a deed of trust (“Deed”) as security for the outstanding automobile loan.” This program would allow her to make the interest deductible for federal tax purposes. Poindexter signed a disclosure allowing the loan to be governed by the Real Estate Settlement Procedures Act “(RESPA), executed a Deed of Trust to MBCC, and that deed was properly recorded. Although under the terms of the Deed MBCC would release the lien upon full payment, when Poindexter traded in her car for another one, her obligation to pay was terminated and MBCC failed to release the Deed. When Poindexter tried to refinance her existing mortgage, this error was discovered, she was denied, and thereafter filed suit against MBCC. MBCC then filed a certificate that released the lien, and moved for summary judgment, claiming that Poindexter’s claims were time-barred and that she failed to make the necessary showing. The district court granted summary judgment, and Poindexter appealed.

The Fourth Circuit began by determining that it would review the case de novo, and that it would examine each of the claims set forth by Poindexter. First, the Court looked at the breach of contract claim. At the outset, the Court noted that Poindexter had conceded on appeal that her claim was untimely, but that she nevertheless asserts that MBCC should be equitably estopped from using the statute of limitations against her. The Court quickly disposed of this argument, saying that she did not show by “clear, precise, and unequivocal evidence” that she fulfilled the conditions for equitable estoppel. Specifically, the Court noted that there was nothing in the record that showed that Poindexter was unable to get information about the status of the MBCC lien, and that there was no evidence of a false representation or a concealment of a material fact. Turning to the slander of title claim, the Court quickly dismissed that claim because the record did not contain any evidence that MBCC acted with any form of malice when it failed to file a timely certificate of satisfaction. The Court then looked at Poindexter’s RESPA claim, which required in part that Poindexter had to have sent MBCC a “qualified written request for information relating to the servicing of such loan.” Although Poindexter contended that the multiple requests she made to MBCC satisfied this requirement, the Court agreed with the district court that those requests did not satisfy the definition. Not only were the majority of the requests not written, they also did not qualify because they did not relate to the servicing of a RESPA loan. The Court looked to a Ninth Circuit case for guidance, and applied that case to determine that these requests were not related to servicing the loan. The Court then turned to the VCPA claims, and agreed with the district court’s ruling because Poindexter entered into a modification of her loan with MBCC, so they fell under the mortgage lender exception to the statute. Finally, the Court looked at Poindexter’s claims under Virginia statute § 55-66.3. However, the Fourth Circuit also agreed with the district court that this claim fell outside the two-year statutory limitation. Therefore, the Court affirmed the district court’s judgment. The Court did, however, did write a cautionary note at the end of its opinion criticizing MBCC and advising it to review its business practices, as Poindexter’s claims might have been viable if she had raised them in the correct timeframe.

Full opinion

Jennie Rischbieter

JONES v. DANCEL, NO. 14-2160

Decided: July 6, 2015  

The Fourth Circuit held that the district court was correct in declining to vacate challenged aspects of an arbitration award. The arbitrator only awarded punitive damages for violations of the Credit Repair Organizations Act (CROA), and the arbitrator determined the amount of attorneys’ fees and costs requested by the plaintiffs was unreasonable. The plaintiffs argue that by reaching these terms, the arbitrator disregarded the law and exceeded his scope of authority under the Federal Arbitration Act (FAA).

Between 1998 and 2003, the plaintiffs entered into several contracts to participate in a debt management program with Genus Credit Management Corporation (Genus). Genus contracted with Amerix Corporation and its affiliates to perform certain functions for Genus. The relevant contracts included an arbitration clause. Even though Genus represented itself to be a non-profit corporation providing debt relief free of charge, Genus accepted many “voluntary contributions” from the plaintiffs and participating creditors.  In 2004, the plaintiffs filed a class action suit against Genus and other defendants alleging a conspiracy to violate state and federal law. The District Court for the District of Maryland dismissed the case, holding that the arbitration provision required the plaintiffs to arbitrate their claims. During the arbitration, the plaintiffs’ claims included alleged violations of the CROA, the Racketeer Influenced and Corrupt Organizations Act (RICO), and the Maryland Consumer Protections Act (MCPA). Some of the original defendants entered into class-wide settlements with the plaintiffs. The arbitrator approved these settlements and awarded $2.6 million in attorneys’ fees. After the settlement, the only remaining defendants included Amerix, its affiliates, and Dancel (Amerix’s founder).

Following extensive hearings, the arbitrator issued a final arbitration award granting the plaintiffs only partial relief of their claims. The arbitrator concluded that the defendants were “credit repair organizations” under the CROA and had failed to make certain disclosures to consumers required under the Act. In determining the amount of compensatory damages to award the plaintiffs, the plaintiffs sought compensation for certain class members under the CROA’s actual damage provision. Under the CROA, actual damages include “any amount paid by the person to the credit repair organization.” 15 U.S.C. § 1679g(a)(1)(B). The arbitrator concluded that the voluntary contributions of the plaintiffs were not “amounts paid” because a large amount of these class members did not make any voluntary contributions in exchange for credit repair services; therefore, the arbitrator declined to award actual damages. The arbitrator did award punitive damages to the plaintiffs because the plaintiffs should have received certain disclosures. Finally, the arbitrator determined the request for more money in attorneys’ fees was unreasonable due to deficiencies in the attorneys’ billing process. The district court concluded that the arbitrator’s decisions were proper.

Under the FAA, an arbitration award can be set aside when: (1) there was corruption in procuring the award; (2) there was partiality or corruption on the part of the arbitrator; (3) the arbitrator was guilty of misconduct in refusing to postpone a hearing; or (4) the arbitrator exceeded his or her powers that a mutual, final, and definite award upon the subject matter submitted was not made. 9 U.S.C. § 10. Judicial review of an arbitration award in federal court is extremely limited and should not be overturned just because the district court believes the arbitrators misinterpreted the law. The plaintiffs argue that these principles do not govern the present case because the arbitrator considered the remedies created by statute, rather than the rights established by contract. The Fourth Circuit determined that this argument had no merit and proceeded to review the case under its extremely limited power.

The plaintiffs argue that the district court erred by refusing to vacate the arbitration award because the arbitrator manifestly disregarded the law. The manifest disregard standard requires that a plaintiff show that: (1) the legal principle in dispute is clearly defined and not subject to reasonable debate and (2) the arbitrator refused to apply that legal principle. Wachovia Sec., LLC v. Brand, 671 F.3d 472, 483 (4th Cir. 2012). The Fourth Circuit concluded that the plaintiffs failed to satisfy their burden of proving the arbitrator manifestly disregarded the law when determining not to award actual damages. The plaintiff’s argument does nothing more than challenges the arbitrator’s interpretation of the applicable law. At no point did the arbitrator’s interpretation fall beyond the point of reasonable debate. Additionally, the Fourth Circuit determined that the arbitrator correctly observed the deficiencies in the attorneys’ billing methods, and he had the authority to disallow the fee in its entirety. Finally, the Fourth Circuit held that the arbitrator did not exceed the scope of his contractually delegated authority under the FAA. Therefore, the judgment of the district court was affirmed.

Full Opinion

Austin T. Reed

 

U.S. ex. rel. DRAKEFORD v. TUOMEY, NO. 13-2219

Decided: July 2, 2015

In a case under the False Claims Act (“FCA”), the Fourth Circuit affirmed the district court’s grant of a new trial to the government, although it did so based on different reasoning from the district court.  The Fourth Circuit found no errors by the district court in the second trial.  On this basis, the Fourth Circuit affirmed the district court.  

Tuomey is a nonprofit hospital located in a rural, medically underserved area of South Carolina.  Around 2000, doctors began moving from performing outpatient surgery at Tuomey to performing such surgeries in their offices or at off-site surgical centers.  This shift represented a substantial loss in income for Tuomey, which tried to prevent the loss by employing local physicians part-time.  In creating the employment contracts, starting in 2003, Tuomey sought advice from its law firm, a consulting firm, a former Inspector General with the U.S. Department of Health and Human Services, and an additional lawyer on the impact of the Stark Law, 42 U.S.C. § 1395nn.  The Stark Law prohibits physicians from referring patients to health care entities where the physician receives compensation based on the volume or value of the referrals, and prohibits hospitals from submitting Medicare claims which violate this referral rule.  The employment contracts Tuomey designed based compensation largely on the physician’s collections the previous year, and also paid an incentive bonus based on collections.  The contracts required physicians to perform outpatient surgeries at Tuomey.  Tuomey entered into these contracts with 19 physicians, but Dr. Drakeford objected, believing that the contracts violated the Stark Law.  In 2005, Tuomey and Drakeford sought the advice of attorney Kevin McAnaney, who had experience in the federal government and the Stark Law, and who noted that the employment contracts raised “‘red flags’” under the Stark Law, and would be an easy case for the government to prosecute.

Drakeford sued the hospital in a qui tam action claiming the employment contracts violated the Stark Law, and thus the hospital knowingly submitted false payment claims to Medicare in violation of the FCA.  The government intervened, and added equitable claims seeking return of payments made.  At trial, McAnaney’s testimony and opinions were excluded as either an offer to compromise or settle under Fed. R. Evid. 408, or as a violation of the duty to his clients Tuomey and Drakeford.  The trial court also excluded the deposition of Gregg Martin, Tuomey’s Senior Vice President and Chief Operating Officer, regarding a conversation he had with Tuomey’s attorney about McAnaney’s opinions as a way of getting McAnaney’s opinion admitted.  The jury found that Tuomey had violated the Stark Law, but not the FCA.  The government filed a motion for judgment on its equitable claims, and a motion for judgment as a matter of law on the FCA claim, or for a new trial due to the exclusion of McAnaney’s testimony and opinions and Martin’s deposition.  The district court denied the motion for judgment as a matter of law, but granted the motion for a second trial, finding it committed a substantial error in excluding Martin’s deposition from the trial.  The court also granted judgment for the government for nearly $45 million dollars plus interest on the Stark Law equitable claims.  On appeal, the Fourth Circuit vacated the judgment, finding that the district court’s grant of a new trial made the finding of a Stark Law violation null, and remanded for a new trial on all claims.

At the second trial, the judge admitted both the Martin deposition and McAnaney’s testimony.  The jury found for the government on both the Stark Law and FCA claims.  Based on 21,730 false claims submitted to Medicare with a value of over $39 million, and trebling of actual damages and additional civil penalty required under the FCA, the trial court entered a judgment of more than $237 million against Tuomey.  Tuomey appealed, arguing that the trial court erred in granting the government’s motion for a new trial on the FCA claim, or if not, the district court erred in either denying Tuomey’s motion for judgment as a matter of law or new trial following the second trial, or awarding damages based on the jury’s finding of an FCA claim.

The Fourth Circuit first held that the district court did not err in granting a new trial on the FCA claim.  The Fourth Circuit found that the probative value of Martin’s deposition was low, and its exclusion thus did not substantially affect the government’s rights.  The Fourth Circuit found, however, that McAnaney’s testimony was key on the issue of whether Tuomey knowingly submitted false claims in violation of the FCA, and that Tuomey failed to present a good reason for omitting the testimony.  McAnaney, the Court noted, was an expert on the Stark Law hired as an advisor by Tuomey.  The Court further reasoned that Fed. R. Evid. 408 was not properly applied to exclude McAnaney’s testimony, since McAnaney was arguably not hired to compromise or settle a disputed claim, and even if he was, Tuomey allowed admission of his testimony by defending itself on the basis of advice-of-counsel.  Finally, the Court reasoned that Tuomey did not show how McAnaney’s duty of loyalty to his clients barred admission of his testimony under Fed. R. Evid. 403.

The Fourth Circuit next held that the district court did not err in failing to grant Tuomey’s motion for judgment as a matter of law or new trial following the second trial.  The Fourth Circuit found that, as the employment contracts were actually implemented with physician pay varying to a large degree on collections, a reasonable jury could find that the contracts violated the Stark Law.  The Fourth Circuit next found that, given the totality of the evidence, which showed that Tuomey tried to find positive opinions of its employment contracts while ignoring negative opinions, a reasonable jury could find that Tuomey knowingly submitted false claims in violation of the FCA.  

The Fourth Circuit next found that the district court did not err in providing jury instructions, and thus Tuomey was not entitled to a new trial on that basis.  The Fourth Circuit found that the jury instructions on Stark Law violations properly allowed for the admission of extrinsic evidence of intent.  Further, since the jury found that Tuomey possessed scienter under the FCA, a separate jury instruction on knowledge under the Stark Law was unnecessary.  Additionally, the Court found that since Tuomey either violated the Stark Law or didn’t, there was no need to charge the jury that “claims based upon differences of interpretation of disputed legal questions are not false under the FCA.”  The Fourth Circuit found that the district court did not err by not charging the jury that Tuomey could rely on legal advice that turned out to be wrong because the instructions the district court gave covered that issue.  

Finally, the Fourth Circuit found that the district court did not err in calculating the judgment against Tuomey.  The Court reasoned, based on Stark Law language and case law, that the district court properly took into account both the inpatient and outpatient procedures in calculating the damages.  Further, Tuomey offered no evidence that a claim for an improper referral must identify the referring physician, so the district court’s calculations were proper.  Based on case law, the Court found that the district court properly calculated damages based on Medicare forms UB-92/04 submitted rather than cost reports.  Based on the statutory language of the Stark Law, the court held that the district court properly based damages on the full amount of claims submitted, rather than on the difference between the services provided and the price paid.  Finally, the Court found that the judgment against Tuomey was large, but not unconstitutional under the excessive fines clause of the Eighth Amendment or the due process clause of the Fifth Amendment to the U.S. Constitution.  It found the judgment reasonable given the repeated actions and intentional conduct at issue here.  

For the above reasons, the court affirmed the holding of the district court.

Judge Wynn wrote a concurring opinion to point out that the outcome in this case, with which he agreed, meant that a community hospital in an underserved community would likely be forced to close.  He was concerned about this outcome given the complexities of the Stark Law, which make it difficult for medical entities to follow.  The majority opinion acknowledged this concern, and left the issue to be addressed by Congress.

Full Opinion

Katherine H. Flynn

 

INCUMAA v. STERLING, NO. 14-6411

Decided: July 1, 2015

The Fourth Circuit held that Plaintiff’s twenty-year solitary confinement amounted to atypical and significant hardship in relation to the general population and implicated a liberty interest in avoiding security detention. In holding so, the Court reversed the district court’s judgment in part, and remanded it in part.

Plaintiff, Lumumba Incumma, is a member of a religious group known as the “Five Percenters.” In 1988, Plaintiff began serving a sentence of life imprisonment without the possibility of parole in a prison operated by the South Carolina Department of Corrections. After participating in a prison riot in 1995, he was placed in solitary confinement and has remained there for the past twenty years.

Plaintiff challenged his confinement on the grounds that the confinement violated the Religious Land Use and Institutionalized Persons Act (RLUIPA) and also that the confinement violates his right to procedural due process. RLUIPA is a federal law that prohibits states from imposing a substantial burden on an inmate’s religious exercise unless that burden furthers compelling ends in the least restrictive way. Plaintiff argued that the prison would release him from solitary only if he renounced his Five Percenters beliefs. However, the Court found that the prison was not requiring Plaintiff to renounce his beliefs and he failed to demonstrate the Department’s policy imposed a substantial burden on his religion. Furthermore, his participation in the riot was the cause of his solitary confinement, not his religious beliefs. Consequently, the Court affirmed the portion of the district court’s ruling discarding Plaintiff’s RLUIPA claim as being insufficient to go before a jury.

As far as the due process claim, the Court concluded that Plaintiff had a liberty interest in avoiding solitary confinement. Furthermore, Plaintiff demonstrated a triable dispute on his procedural due process claim because the record supports his assertion that the Department’s review process is inadequate and fails to honor the basic values of procedural due process.

Accordingly, the Court remanded the case for further proceedings.

Full Opinion

Meredith Weisler

 

GOLDFARB v. MAYOR & CITY COUNCIL OF BALTIMORE, NO. 14-1825

Decided: July 1, 2015

The Fourth Circuit held that the District Court for the District of Maryland incorrectly granted Defendants’ Motions for Dismissal on claims the Plaintiffs brought under the Resource Conservation and Recovery Act (RCRA).  The Fourth Circuit thus vacated the dismissals, and remanded the case.

In 2012, the Mayor of Baltimore, City Council of Baltimore, and City of Baltimore Development Corporation (hereinafter collectively “City”) made an agreement with CBAC Gaming and its subsidiary CBAC Borrower LLC (hereinafter collectively “CBAC”) to develop an 8.5 acre site in Baltimore as a casino.  The site had previously been used for a variety of industrial purposes.  One of the former landowners, Maryland Chemical Co., Inc. (“Maryland Chemical”), had “conducted ‘chemical manufacturing and/or bulk chemical storage, repackaging and distribution’” for around 50 years when it owned part of the land.

Plaintiffs, residents of Maryland, brought suit against City, CBAC, and Maryland Chemical.  Based on environmental assessments from the 1990s and early 2000s, Plaintiffs alleged that the casino site was contaminated with hazardous waste, which was moving downhill to an adjacent City-owned riverfront recreation site, and into the river.  Plaintiffs further alleged that Defendants’ actions on the casino site violated RCRA.  Defendants moved to dismiss the claims against them, and the district court granted all dismissals.  Plaintiffs appealed.

RCRA, 42 U.S.C. 6901 et.seq., is a comprehensive environmental statute which covers how to store, treat, and dispose of solid and hazardous waste.  Part of the RCRA, 42 U.S.C. 6972(a)(1)(A)-(B), authorizes suit by private citizens for violations.  Citizens can sue for:  1) an ongoing violation of a permit required under the RCRA, or under a parallel state standard authorized under RCRA, or 2) a past or present violation which poses a substantial, imminent danger to health or the environment.  

Plaintiffs sued CBAC under both prongs of 42 U.S.C. 6972(a)(1)(A)-(B), claiming that remedial activities it promised to undertake in during construction did not meet RCRA, and that construction would contribute to contamination, and the migration of contaminants.  CBAC moved for dismissal under Fed. R. Civ. P 12(b)(1) for lack of subject matter jurisdiction, arguing that an anti-duplication provision of RCRA meant that the permits it obtained under a different environmental protection system protected it from RCRA liability.  CBAC also moved for dismissal under Fed. R. Civ. P 12(b)(6) for failure to state a claim.  Although the district court did not clearly state the rule under which it dismissed the claims against CBAC, it found that a RCRA claim could not proceed against CBAC because the requirements under the alternative permitting system would be inconsistent with the requirements under the RCRA.  The Fourth Circuit found the district court’s reasoning incorrect under either Fed. R. Civ. P. 12(b)(1), or 12(b)(6).  Under 12(b)(1), the Fourth Circuit held that the plain language of the RCRA non-duplication statute was not jurisdictional.  Under 12(b)(6), the court found that the district court did not properly analyze whether the requirements of the two permitting systems were actually inconsistent, and in any case, the complicated facts and issues at stake made the case particularly ill-suited to dismissal for failure to state a claim.  The Fourth Circuit thus held that the district court improperly dismissed the claims against CBAC under either 12(b)(1) or 12(b)(6).  

Plaintiffs also brought claims under both prongs against the City, and the district court dismissed for failure to state a claim.  The Fourth Circuit held that Plaintiffs had shown a sufficient case under each prong to survive a motion to dismiss.  Under the ongoing permitting prong, the Fourth Circuit found that Plaintiffs had alleged the City owned some of the property where violations were occurring, and there were ongoing specific violations of the type RCRA covers.  Under the past or present violations threatening harm to health or the environment prong, the Fourth Circuit found that Plaintiffs had alleged actions by the city that fit within the RCRA, and that even if the City was trying to remediate past damage, it could violate RCRA during remediation.  

Plaintiffs brought a claim against Maryland Chemical under the past or present violations harming health or the environment prong.  The district court dismissed for failure to state a claim, since it found that the Plaintiff’s allegations did not include enough active human participation by Maryland Chemical to meet the requirements of a RCRA claim.  Relying on the plain language of the statute, the Fourth Circuit found that the Plaintiffs’ allegations contained enough evidence of active participation by Maryland Chemical in activities that would violate RCRA to survive a motion to dismiss.  

For the above reasons, the Fourth Circuit vacated the district court’s dismissal of all claims, and remanded to the district court.

Full Opinion

Katherine H. Flynn

 

HOUCK v. SUBSTITUTE TRUS. SERVS., NO. 13-2326

Decided: July 1, 2015

The Fourth Circuit vacated the judgment awarded by the district court, reversed its order dismissing the plaintiff’s claims against the Substitute Trustee, and remanded for further proceedings.

This appeal stemmed from the district court’s grant of defendant’s motion to dismiss concluding that Houck failed to allege facts that plausibly supported her claim that the violation of the automatic stay was willful, a required element of a 11 U.S.C. § 362(k) claim. Houck was deeded land in North Carolina, and Houck and her fiancé, Ricky Penley placed a mobile home on the property after receiving financing from a predecessor of LifeStore Bank. After refinancing in 2007, Houck lost her job and struggled making her loan payments. Later, Houck and Penley got married and asked LifeStore for a loan modification. LifeStore referred Houck to Grid Financial Services, who denied her request because she was unemployed. Soon, Houck defaulted on the loan.

In July of 2011, the Hutchens Law Firm served Penley with a notice of foreclosure. Houck, acting pro se, filed a Chapter 13 bankruptcy petition to stop the foreclosure proceedings. The bankruptcy court dismissed Houck’s petition because she failed to file certain required schedules and statements, and the Substitute Trustee, by its counsel, the Hutchens Law Firm, reactivated the foreclosure proceedings. Later, Houck filed a second Chapter 13 bankruptcy petition, and Penley called the Hutchens Law Firm to notify it of the filing. Also, Penley notified LifeStore who told Penley that it intended to wait for notice from the bankruptcy court before taking any action. A few days later, the Substitute Trustee, represented by Hutchens, sold Houck’s home at a foreclosure sale. The next day, the bankruptcy court dismissed Houck’s petition, and she did not object because her home had already been sold. Houck commenced this action against the Substitute Trustee, LifeStore, and Grid Financial asserting a claim under 11 U.S.C. § 362(k) for violation of the automatic stay.

The Fourth Circuit determined that they had jurisdiction to hear Houck’s appeal under the doctrine of cumulative finality. Cumulative finality exists in circumstances where all claims are dismissed, albeit at different times, before the appeal taken from the first dismissal order is considered. See Equip. Fin. Grp., Inc. v. Traverse Computer Brokers, 973 F.2d 345, 347 (4th Cir. 1992). Because the district court’s February 20, 2014 order disposed the entire case, the order was a final judgment and the doctrine of cumulative finality must be considered. Here, Houck’s claims against the Substitute Trustee were dismissed in its October 1, 2013 order, leaving open the claims against LifeStore and Grid Financial. Because the district court could have certified such an order as a final judgment under Rule 54(b) and because the court later entered final judgment against the other defendants in its February 20, 2014 order before Houck’s interlocutory appeal was considered by the Fourth Circuit, the Fourth Circuit held that the doctrine of cumulative finality applied, and their jurisdiction is appropriate.

Additionally, the district court dismissed Houck’s federal claim on the ground that it lacked subject matter jurisdiction. The district court concluded that a claim under § 362(k) could only be brought in a bankruptcy court, not in a district court. However, the cases relied upon by the district court, analyzed the pre-1984 version of § 362, which lacked subsection (k)’s private cause of action. In 1984, with the enactment of the Bankruptcy Amendments and Federal Judgeship Act of 1984, Congress created a private cause of action for the willful violation of a stay. See 11 U.S.C. § 362(k). By creating this cause of action, Congress did not specify which courts possess jurisdiction over a § 362(k) claim. Therefore, the Fourth Circuit determined that in no circumstance did the Act, in conferring such adjudicatory authority give exclusive jurisdiction to a bankruptcy court, and subject matter jurisdiction was appropriate.   

Houck argues that the district court erred in dismissing her 362(k) claim against the Substitute Trustee, claiming that the court applied the incorrect legal standard and that her complaint was sufficient under the correct standard. The district court focused on the elements of a § 362(k) claim and noted that Houck failed to provide notice to the Substitute Trustee, precluding any allegation of willfulness. The Fourth Circuit determined that while the district court correctly accepted the complaint’s factual allegations as true, the district court incorrectly undertook to determine whether a lawful alternative explanation appeared more likely. In order to survive a motion to dismiss, a plaintiff need not demonstrate her right to relief is probable or that alternative explanations are less likely; rather, she must merely advance her claim “across the line from conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The inquiry of the district court as to whether an alternative explanation was more probable violated the plausibility standard. Further, the Substitute Trustee argued that Houck failed to provide it with notice of her bankruptcy petition in writing and could not have willfully violated the automatic stay. However, the Fourth Circuit determined that the requirements of § 362(k) did not include any provision that a particular form of notice be given. Ultimately, the Fourth Circuit concluded that Houck stated a plausible claim under § 362(k).

Finally, the Substitute Trustee, as an alternative ground for dismissal of Houck’s claims, contended that Houck was not an eligible debtor when she filed her second bankruptcy petition within 180 days of her first petition and did not trigger the stay automatically under § 362(a). The Fourth Circuit determined that the issue of whether Houck was an eligible debtor when she filed her second petition is a question of fact that will require evidentiary support.

Full Opinion

Austin T. Reed   

 

PRIETO v. ZOOK, NO. 14-4

Decided: June 30, 2015

The Fourth Circuit affirmed the judgment of the district court.

This case was an appeal from the Virginia district court’s denial of Alfredo Rolando Prieto’s (“Prieto”) petition for a writ of habeas corpus. Prieto was originally convicted of two counts of capital murder, two counts of the use of a firearm in the commission of murder, grand larceny, and rape. Although juror misconduct at his first trial led to a mistrial, he was convicted again at a second trial, and although Prieto brought forth substantial evidence of an intellectual disability that would render him ineligible for the death penalty under Atkins, the jury still found him intellectually competent and sentenced him to death. Although the Supreme Court of Virginia vacated his death sentence and remanded, on remand a third jury sentenced him to death, and the Supreme Court of Virginia affirmed. Prieto filed a habeas petition with the Supreme Court of Virginia, claiming, inter alia, that his counsel was ineffective and that his death sentence was prohibited under Atkins, but the court held that he could not bring his Atkins claim because he did not raise it on direct appeal of his original death sentence. Prieto then filed a habeas petition pursuant to 28 U.S.C. § 2254, but the district court dismissed his Atkins claim as procedurally defaulted, and the rest of his claims as meritless. This appeal followed.

The Fourth Circuit first examined the standard for intellectually disabled criminals, specifically looking at the two-prong test for determining intellectual disability. Under the first prong, although Virginia courts require an IQ score of 70 or below, the Fourth Circuit looked to the recent decision in Hall that held that a specific number cutoff for intellectual disability was not the correct test. Instead, the court should consider both prongs because no one factor alone was sufficient to determine intellectual disability. Therefore, the Fourth Circuit determined that Virginia’s previous interpretation of the first prong violated the Eighth Amendment, and that a state could not “deny a defendant the opportunity to establish his intellectual disability based on evidence of ‘deficiency? in adaptive functioning over his lifetime,’ simply because that defendant has an IQ score above 70.” However, in order to resolve the question before it, the court needed to determine whether or not Prieto had procedurally defaulted on the Atkins claim.

In determining that question, the court first stated that it was not appropriate for it to review a question of federal law that had been decided by a state court “if the state court’s decision rests on an independent and adequate state ground.” Under a procedural rule established in a Virginia case, a “non-jurisdiction issue that could have been raised during the direct appeal process is not cognizable in a petition for a writ of habeas corpus,” and the court stated that this rule satisfied the state ground requirement for a denial of a habeas petition. Because Prieto procedurally defaulted, only the existence of one of the two exceptions to the procedural default rule would save his claim. Thus, Prieto would have had to establish either “cause and prejudice” for the default or that the default would work a “fundamental miscarriage of justice.” Prieto argued that both exceptions applied to his case. Since the district court held that his ineffective of assistance of counsel claim was without merit, that defeated his “cause and prejudice,” leaving only the “fundamental miscarriage of justice” exception. After examining the definition of “fundamental miscarriage of justice,” the court concluded that the “innocent of death” definition applied here, and that Prieto must show “through clear and convincing evidence that, but for a constitutional error, no reasonable juror would have found the petitioner eligible for the death penalty under the applicable state law.” After a thorough examination of the evidence that both Prieto and the State provided as to Prieto’s intellectual disability, the court concluded that Prieto could not meet the high burden required for the “actual innocence” exception, and that no reasonable juror would sentence him to death. Accordingly, the Fourth Circuit affirmed the judgment of the district court.

Full Opinion

Jennie Rischbieter

U.S. v. NEWBOLD, NO. 10-6929

Decided: June 30, 2015

On remand from the United States Supreme Court, the Fourth Circuit denied the government’s motion to remand the case to district court and vacated Defendant’s sentence and remanded for further proceedings consistent with its opinion.

In 2005, Defendant Joseph Newbold plead guilty to being a felon in possession of a firearm. At his sentencing, the district court found he possessed three prior North Carolina state court convictions that triggered enhancements under the Armed Career criminal Act (ACCA), including a fifteen-year mandatory-minimum prison term. Newbold argued that at least one of the convictions should not have been considered a predicate serious drug offense because it was not punishable by a term of ten years of imprisonment. Newbold challenged his designation as a career criminal by 28 U.S.C. § 2255 motion. Section 2255 allows a federal prisoner to move to set aside a sentence on the grounds that “the sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack.” 28 U.S.C. § 2255(a).

The Court held that pursuant to Miller, a petitioner may challenge on collateral review, under a 28 U.S.C. 2255 motion, a Simmons error resulting in his erroneous designation as an armed career criminal. The Court found that Simmons was retroactive and the sentencing error Newbold sought to challenge was cognizable on collateral review. The court proceeded to examine Newbold’s prior convictions, and found that nothing in the record supports the idea that Newbold ever faced more than the presumptive term of three years for the state court, possession of drugs with intent to deliver conviction that the government sought to use as a federal ACAA predicate. The Court concluded that based on an examination of North Carolina’s sentencing regime, as well as Newbold’s criminal history and the circumstances of his offence, he should not have been sentenced under the ACCA as a career criminal.

Accordingly, the Court vacated Defendant’s sentence and remanded for further proceedings.

Full Opinion

Meredith Weisler

 

MARKS & JOHNSON v. SCOTTSDALE INS. CO. NO. 14-1823

Decided: June 29, 2015

The Fourth Circuit affirmed the judgment of the magistrate judge, holding that he correctly granted summary judgement to the Scottsdale Insurance Company and denied summary judgment to Marks and Johnson.

This case arose as an appeal from an award of summary judgement to Scottsdale Insurance Company following an original suit in which Plaintiff-Appellant Danny Ray Marks, Jr. (“Marks”) sued Plaintiff Timothy B. Johnson (“Johnson”) and the Northumberland Hunt Club (“Club”) for negligence in connection with Marks’ shooting accident, and Scottsdale denied coverage to Johnson. Scottsdale had issued a policy to the Club, covering both it and its members, but only to the extent of “member liability for the Club’s activities or activities members perform on the Club’s behalf.” The key question for consideration was whether Johnson, who was a member of the Club, was an “insured” under the policy for purposes of the original suit. Marks filed two complaints, one against Johnson and the Club for negligence in the shooting accident, and one against Scottsdale seeking, under Virginia law, that Scottsdale had a duty following the insurance policy on behalf of Johnson to defend the suit and indemnify Johnson because Johnson’s shooting was considered one of the Club’s activities. The case was removed to federal court based on diversity jurisdiction, and Scottsdale filed a counterclaim saying that it did not have a duty to defend Johnson in the suit because the policy does not cover Club members for purely personal activities. A magistrate judge heard the two cross-motions for summary judgment and ruled on Scottsdale’s behalf.

In deciding this question, the Fourth Circuit first established that it would review the case de novo and, because there was diversity jurisdiction in this case, determined that Virginia law would control. Thus, under Virginia law, the court was to construe the insurance policy using ordinary contract interpretation rules, and set out those rules. The court then examined the policy itself, and decided that the policy was not ambiguous and therefore should not be construed in Johnson’s favor. Specifically, the court said that the members were covered only “with respect to their liability for the Club’s own corporate activities, not with respect to anything they may do during or in connection with Club activities,” and that member activities are only covered when they are “undertaken at the request or for the benefit of the Club.” After determining the extent of the policy, the court then looked at whether Scottsdale had a duty to defend Johnson based on Marks’ complaint. However, after looking at the complaint, the court concluded that it did not claim to hold Johnson vicariously liable for the Club’s activities nor did it claim to hold Johnson liable for member activities on the Club’s behalf, and instead rest solely on “the recreational pursuits indulged in by Club members,” claims that were insufficient to trigger the policy. The Fourth Circuit therefore affirmed the magistrate judge’s decision.

Full Opinion

Jennie Rischbieter

TRS. OF THE PLUMBERS AND PIPEFITTERS NAT’L PENSION FUND v. PLUMBING SERVS. INC., NO. 13-2403

Decided: June 29, 2015

The Fourth Circuit affirmed the judgment of the district court holding that (1) the district court had appropriate personal and subject matter jurisdiction, (2) venue was correct in Virginia, and (3) the defendant bound itself to make contributions to the Pension Fund.

This appeal stemmed from the district court’s dismissal of the defendant’s motions regarding a lack of personal jurisdiction and a change in venue. Additionally, the district granted the plaintiff’s motion for summary judgment. The Pension Fund (“Fund”) is a multiemployer pension benefit plan maintained under a collective bargaining agreement between the Associated Plumbing, Heating and Cooling Contractors of Jefferson County, Alabama and the affiliated local unions. The Fund is governed by the Employment Retirement Income Security Act of 1974 (“ERISA”). The defendants, Plumbing Services Inc. (“PSI”), are the Alabama corporations engaged as plumbing and pipefitting contractors. On April 8, 1998, PSI’s sole shareholder, Kenneth Julian, entered into a collective bargaining agreement requiring participating employers to make contributions to the Fund for each hour worked by their employees. PSI paid into the fund until March 10, 2011, when Julian decided PSI would stop contributing into the Fund. The Fund informed PSI and its successor entity, PSI Mechanical, Inc., that it owed “withdrawal liability” pursuant to 29 U.S.C. § 1381. This suit occurred after the defendants refused to pay the sum owed.

ERISA was enacted by Congress to promote the “soundness and stability of [employee benefit] plans” in the private industry sector. 29 U.S.C. § 1001(a). ERISA establishes the minimum standards required to protect employee and beneficiary interests. Id. The Multiemployer Pension Plan Amendments Act (“MPPAA”) was passed to further this goal by establishing withdrawal liability. See 29 U.S.C. §§ 1381, 1391. Withdrawal liability exists “to assign to the withdrawing employer a portion of the plan’s unfunded obligations in rough proportion of that employer’s relative participation in the plan over the last 5 to 10 years.” Borden, Inc. v. Bakery & Confectionary Union & Indus. Int’l Pension, 974 F.2d 528, 530 (4th Cir. 1992). Employers owe withdrawal liability when they make a complete or partial withdrawal from the pension plan. 29 U.S.C. § 1381 (a).

The defendants argued that since they were Alabama Corporations, they engaged in business exclusively in Alabama, and did not have sufficient minimum contacts with Virginia, personal jurisdiction was incorrect, and the suit should be dismissed because the correct forum was in the Northern District of Alabama. However, the Fourth Circuit determined that personal jurisdiction and venue was appropriate in the Eastern District of Virginia. The Fund is administered in Alexandria, Virginia, and any action brought under ERISA “may be brought in the district where the plan is administered.” 29 U.S.C. § 1132(e)(2). Furthermore, ERISA provides for nationwide service of process. Id. When a defendant has been validly served pursuant to a federal statute’s nationwide service provision, the district court has personal jurisdiction over the defendant as long as there is no violation of the Fifth Amendment. The Fourth Circuit determined that the defendants were unable to show an extreme inconvenience that would be necessary to constitute a violation of the Fifth Amendment.

Additionally, the defendants argued that the district court did not have appropriate subject matter jurisdiction because the plaintiff’s claim involves an unfair labor practice that should have been brought before the National Labor Relations Board. However, ERISA requires an employer that is under contract to make contributions to a retirement fund in accordance with the collective bargaining agreement. 29 U.S.C. § 1145. Section 1145 allows for the collection of delinquent contributions, including overdue withdrawal liability. Therefore, the Fourth Circuit determined that the district court plainly had subject matter jurisdiction.

Finally, the defendants argued that the grant of summary judgment to the Fund was inappropriate claiming the evidence produced by the Fund was insufficient. However, the Fund supported its motion by providing an affidavit from the administrator of the pension fund, correspondence between the fund and PSI documenting the assessment of withdrawal liability and PSI’s request for review, PSI’s admissions, and several other documents. The Fourth Circuit determined that the evidence presented was more than enough to shift the burden to produce evidence showing a genuine issue for trial to the defendants. Further, the Fourth Circuit held that PSI was an employer subject to ERISA’s arbitration requirement because the Letter of Assent was sufficient to bind PSI to make contributions to the Fund in accordance to the terms of the collective bargaining agreement. Since PSI failed to timely demand arbitration, all the Fund needed to win summary judgment was that it presented PSI proper notice of the assessed withdrawal liability. Therefore, the district court’s grant of summary judgment was appropriate.

Full Opinion

Austin T. Reed  

 

U.S. v. OBEY, NO. 14-4585

Decided: June 24, 2015

The Fourth Circuit held that the Government did not breach a plea agreement with Obey, and the district court did not commit plain error in crafting Obey’s sentence for the drug charges to which he pleaded guilty.  On this basis, the Fourth Circuit affirmed the district court.

In January 2013, Obey was convicted by a federal grand jury on a variety of counts involving distribution of cocaine and cocaine base.  The district court sentenced him to 540 months imprisonment, and Obey appealed.  While the appeal was pending, the Government filed a motion to remand the case for a new trial pursuant to a Giglio v. U.S., 405 U.S. 150 (1972), error.  The Fourth Circuit granted the motion, vacated Obey’s conviction and sentence, and remanded to the district court.  Obey then pleaded guilty to cocaine distribution and aiding and abetting.  In his plea agreement, Obey waived his right to appeal and the Government agreed to recommend an 18-year term of imprisonment.  At the July, 2014 sentencing hearing, the Government recommended the 18-year term of imprisonment, and the court asked about a pending state murder charge, which the Government said was due to go to trial in August, 2014.  The court found that the Government’s request for a lower sentence lacked merit, and imposed a 240-month term of imprisonment, the statutory maximum.  The court further made the prison term “‘consecutive to any other State or Federal sentence, including any unimposed sentence [Obey] might receive’ for the pending state murder charge.”  Obey appealed, arguing that the Government breached its plea agreement, and that the district court did not have the authority to make his prison sentence for the drug charges consecutive to a future sentence.  

The Fourth Circuit first reviewed the claim that the Government breached its plea agreement.  Since Obey first raised this claim on appeal, the court reviewed for plain error, and found no breach by the Government.  The Fourth Circuit based this finding on the fact that the prosecutor encouraged the district court several times at the sentencing hearing to adopt the 18-year prison sentence the Government agreed to recommend, and did so without critiquing the terms of the plea agreement, or undercutting its legality.  Though the prosecutor did not explicitly give reasons supporting the recommended sentence, the Fourth Circuit found that the plea agreement did not require the prosecutor to do so.  Further, the court found that the prosecutor explained at sentencing why the Government supported the plea agreement, though the plea agreement did not require him to do so.  Obey argued that at one point during the sentencing hearing, the prosecutor testified that there was “‘no real rhyme or reason for coming to [an agreement of] 18 years [imprisonment],’” and that this statement constituted a breach of the plea agreement.  The Fourth Circuit found, however, that taken in context, this statement merely explained to the sentencing court how the Government and Obey came to an agreement on 18 years imprisonment.  

The Fourth Circuit next analyzed Obey’s claim that the district court erred in imposing a sentence to run consecutive to any future Federal or State sentence.  Because Obey raised this claim for the first time on appeal, the court again reviewed for plain error.  The Fourth Circuit reviewed case law, which held that a district court could impose a sentence to run consecutive to an anticipated state sentence, but at least in the Fourth Circuit, a district court cannot impose a sentence to run consecutive to an anticipated Federal sentence.  On this basis, the Fourth Circuit held that while Obey was correct that the district court erred in ordering his sentence run consecutive to “‘any other State or Federal sentence,’” the court found that this error was not plain, especially given an unpublished Fourth Circuit opinion which supported the actions of the district court here.  On this basis, the court found that the district court did not plainly err in imposing its sentence.

Full Opinion

Katherine H. Flynn

 

HUMPHREYS & PARTNERS ARCHITECTS, L.P. v. LESSARD DESIGN, INC., NO. 14-2030

Decided: June 23, 2015

The Fourth Circuit affirmed the district court’s award of summary judgment to Defendant, Lessard Inc., on the basis that no reasonable jury could find that the two apartment designs at issue were similar.  

Plaintiff, Humphreys & Partners Architects (HPA), is an architecture firm that designed a high-rise residential tower known as Grant Park in 2001. In 2003, HPA registered the Grant Park design as an architectural work with the United States Copyright Office. The Grant Park building was constructed in Minneapolis, Minnesota in 2004. In 2008, Sixth Penrose Investing Co. began developing a high-rise apartment building called Two Park Crest in McLean, Virginia and solicited design proposals from HPA and Defendant, Lessard. Penrose chose Lessard to design the Two Park Crest Project.

HPA filed this action alleging one count of copyright infringement against Lessard. Lessard argued that they did not copy the Grant Park design and that the two designs are not substantially similar. HPA supported its claim with an expert, who identified nine characteristics that are shared by both designs. The district court granted Defendants’ motion for summary judgment because there was no direct evidence of copying and no reasonable jury could find that the Grant Park and Two Park Crest designs are objectively similar.

The Fourth Circuit agreed that HPA failed to carry its burden of identifying a specific similarity between the Two Park Crest design and the protected elements of its Grant Park design. The evidence merely showed that the two apartments incorporate nine of the same concepts, but it does not establish that the two designs have a similar overall form, or that the designs arrange or compose elements and spaces in a similar manner.

Accordingly, the Court affirmed the district court’s judgment.

Full Opinion

Meredith Weisler

 

RECOVERY LTD. P’SHIP v. THE WRECKED & ABANDONED VESSEL S.S. CENT. AM., NO. 14-1950

Decided: June 22, 2015

The Fourth Circuit affirmed the district court’s dismissal of Robol’s claim.

This case was an appeal from the district court’s dismissal of Richard T. Robol and Robol Law Office, LLC’s (“Robol”) in rem admiralty action to recover a salvage award on the basis that he had provided voluntary assistance when he turned over files pertaining to the salvage of the S.S. Central America, and that he had encouraged Milton T. Butterworth, Jr., (“Butterworth”) to do the same. The district court, however, dismissed his claim for failure to state a claim because Robol, as the former attorney of the Columbus-America Discovery Group (“Columbus-America”) and the Recovery Limited Partnership (“Recovery Limited”), was obligated under the rules of professional responsibility and under court order to return the files and did not act voluntarily, which defeated his salvage award claim. This appeal followed.

The Fourth Circuit first examined Robol’s contentions that his turning over of the files was voluntary. Robol’s claim turned on whether or not his actions were voluntary because a salvage award was for people “by whose voluntary assistance a ship at sea or her cargo or both have been saved in whole or in part from impending sea peril, or in recovering such property from actual peril or loss, as in cases of shipwreck, derelict, or recapture.” Although Robol argued that the district court’s failure to take his allegations as true when ruling on a Rule 12(b)(6) motion, the Court determined that his allegation of voluntariness was merely a legal argument that the district court appropriately resolved as a matter of law. Specifically, because of the existence of an attorney-client relationship between Robol and Columbus-America, Robol had a duty to turn over the documents under the Virginia Rules of Professional Conduct and was preventing from exercising liens on the documents dues to Columbus-America’s failure to pay. The Court also dismissed Robol’s contention that the district court reached beyond the claim in deciding that Robol’s actions were not voluntary, stating that the district court properly considered that Robol had been the attorney on record for Columbus-America and courts are permitted to consider matters of public record when deciding motions to dismiss. Robol himself admitted in his opposition to the motion to dismiss that he had been the attorney on record, and also that some of the documents that he turned over were “the property of his clients in which he had asserted a retaining lien,” so the district court did not fail to follow 12(b)(6) ruling procedures. The Court then examined the merits of Robol’s contention that turning over the documents was voluntary, but ultimately concluded that his actions were not voluntary.

First, the Court established that Robol’s retaining lien was prohibited under the modern rules of professional conduct under both Virginia and Ohio rules, particularly when to assert a retaining lien would cause foreseeable prejudice to the client. Here, Robol admitted that the documents he turned over saved Recovery Limited “in excess of $600,000,” and the Court concluded that it would have been prejudicial indeed for Robol to refuse to turn over the documents and force Recovery Limited to recreate the information found in the documents. Robol also argued that he owned the documents and not his clients because EZRA’s failure to pay rent for the storage of the documents invoked a default under the lease and the subsequent failure on EZRA’s part to retrieve the documents constituted an abandonment of the documents. However, the Court pointed out that there was no applicable Ohio law that permitted this, and that repossession through failure of the tenant to pay was not included in the lease. Furthermore, in an action in Ohio court, Robol admitted that the documents belonged to his clients and in response to the receivership order stated that the documents were his clients, and therefore he did not turn the documents over voluntarily. Similarly, his claim that he convinced Butterworth to turn over files entitled him to a salvage award also failed, according to the Court, because Butterworth was under legal obligation to turn them over, and Robol’s conduct was merely a “collateral push” to comply. The Court therefore affirmed the district court’s decision.

Full Opinion

Jennie Rischbieter

 

BROWN v. GNC CORP., NO. 14-1724

Decided: June 19, 2015

The Fourth Circuit determined that marketing statements that accurately describe the findings of duly qualified and reasonable scientific experts are not literally false; and therefore, there was no violation of consumer protection laws in different states.

This appeal stemmed from the district court’s dismissal of the plaintiffs’ claim alleging that GNC and Rite Aid violated the consumer protection laws of various states by marketing certain supplements as promoting joint health. Plaintiffs purchased a variety of joint health supplements produced by GNC and Rite Aid. GNC sells this product under the brand name TriFlex, and Rite Aid sells a similar product produced by GNC. GNC is obligated to indemnify Rite Aid for any claims regarding these products. These supplements contain the compounds glucosamine hydrochloride and chondroitin as well as other ingredients including beneficial herbs. The TriFlex and Rite Aid products represent that the supplements “promote[] joint mobility & flexibility.” Additionally, the product label states that it was “[c]linically studied” and the results were presented in a chart on the supplement bottle.

Several plaintiffs purchased these products in a number of different states and brought suit because they allege that the products are incapable of providing the advertised joint health benefits, and that they would not have purchased these products but for the companies’ false advertising. Specifically, plaintiffs allege that the representations on the packaging qualifies as false because the majority of scientific evidence indicates that glucosamine and chondroitin are ineffective at treating the symptoms of osteoarthritis.

In order to have a viable claim under the different state consumer protection statutes, the plaintiffs must plead facts in which it can be inferred that the representations made on the packaging of the products were false, misleading, or deceptive. A plaintiff is required to show either (a) that the representation is literally false or (b) that the representation is literally true but nevertheless misleading. See Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997). A plaintiff arguing that a representation is misleading must show extrinsic evidence of actual consumer confusion. See Scotts Co. v. United Indus. Corp., 315 F.3d 264, 272-73 (4th Cir. 2002). However, if it is assumed to be false, it is assumed that the representation is also misleading. Id. In this case, plaintiffs only alleged that the representations were false, and at no time did plaintiffs argue that the representations were literally true but misleading. Therefore, the Fourth Circuit determined whether the representations were literally false.

The Fourth Circuit held that the plaintiffs failed to allege that the representations were literally false. Plaintiffs did not allege that all scientists agree that the chemical compounds are ineffective at providing the promised joint health benefits. Instead, plaintiffs alleged that the vast weight of evidence shows that it was not beneficial. The Fourth Circuit determined that when “litigants concede that some reasonable and duly qualified scientific experts agree with a scientific proposition, they cannot also argue that the proposition is ‘literally false.’” Therefore, in order to state a false advertising claim on a theory that false representations have been made, plaintiffs must allege that all reasonable experts in the field agree that the representations are false.

Full Opinion

Austin T. Reed

 

DESIGN RES., INC. v. LEATHER IND. OF AMERICA, NO. 14-1990

Decided: June 18, 2015

The Fourth Circuit held that Design Resources, Inc. (DRI) failed to show that Defendants made false or misleading descriptions or representations of facts in commercial advertising about DRI’s leather-like product.  On that basis, the Fourth Circuit affirmed the district court in granting summary judgment for Defendants on DRI’s claim for false advertising under the Lanham Act.  

DRI manufactures furniture coverings for sale to furniture manufacturers.  In 2006, DRI developed a leather-look covering made of polyurethane, poly/cotton, and leather, which it named NextLeather.  In December 2006 and January 2007, DRI asked Dr. Cory with the Leather Industries of America (“LIA”) for advice on labeling and composition testing NextLeather.  Dr. Cory said that the product could not be marketed as leather, but could be labeled, “‘not leather,’ ‘reconstituted leather,’ or ‘[b]onded leather.’”  DRI marketed NextLeather as bonded leather, listed the product’s composition on a label, and sold samples of Next Leather to 25 furniture manufacturers, so they could show furniture made with NextLeather at the 2007 Spring High Point Market.  Prior to the Market, Ashley Furniture (“Ashley”), a leading furniture manufacturer and retailer, placed a series of advertisements in a trade magazine.  One of the advertisements read in part “‘Is it REALLY LEATHER? . . .  Some upholstery suppliers are using leather scraps that are misrepresented as leather . . . .  Know What You Are Buying . . . .’”  In July, 2007, the same trade publication published two articles.  In the first article, entitled “‘Chemist fears confusion over imitators may hurt category,’” Dr Cory was quoted saying that calling leather alternatives, like bonded leather, leather was deceptive and fraudulent, and that bonded leather was not leather, but a synthetic material with leather fibers on the bottom.  The second article advocated against calling bonded leather by that name as being confusing to consumers who would think it to be leather.  Dr. Cory was quoted as saying that calling bonded leather by that name was deceptive and not representative of its vinyl or polyurethane composite nature.  

In February 2010, DRI sued Ashley, Ashley’s president, LIA, and Dr. Cory for false advertising under the Lanham Act, and for violations of various North Carolina and Washington laws.  The district court dismissed Ashley’s president and Dr. Cory for lack of personal jurisdiction.  DRI argued that the Ashley ad targeted DRI because DRI was the only company selling the type of product the advertisement described, and the advertisement was false, because DRI did not market its product as leather.  DRI argued that, in the first article, Dr. Cory accused DRI of selling a fraudulent product, but that they did not sell NextLeather as leather.  Regarding Dr. Cory’s statement in the second article, DRI argued that it was false because marketing NextLeather as bonded leather was both allowed and encouraged.  Finally, DRI argued that the advertisement and articles damaged its customer relationships. DRI moved for partial summary judgment, and Ashley and LIA cross-moved for summary judgment.  The district court granted summary judgment to Ashley and LIA, finding that DRI failed to present sufficient evidence that the advertisement or articles were false or misleading.  

To establish a claim for false advertising under the Lanham Act, the Plaintiff must first show that the Defendants made a false or misleading statement or representation of facts in a commercial advertisement.  The Fourth Circuit found that DRI did not meet that first element, and therefore affirmed the district court without analyzing the other elements of a false advertising claim.

With regard to the advertisement, the Fourth Circuit first found that it could not be literally false, since it referred to products marketed as leather, not as bonded leather, like NextLeather.  The Fourth Circuit also found that the advertisement could not be literally false by implication, since finding falsehood in the advertisement would require going beyond the face of the advertisement to the context of the advertisement.  Finally, the court found that the advertisement could not be impliedly false, because DRI did not show that consumers were confused by the advertisement.

The Fourth Circuit next analyzed the two articles.  In regards to the first article, the Fourth Circuit found that Dr. Cory’s statement could not be false because it was true.  In regards to the second article, the Fourth Circuit found Dr. Cory’s statement was not false advertising, because the statement was a hypothesis rather than implying a fact, and opinions are not actionable under the Lanham Act.

For these reasons, the Fourth Circuit affirmed the district court’s grant of summary judgment to the Defendants.

Full Opinion

Katherine H. Flynn

 

S.C. COASTAL CONSERVATION LEAGUE v. U.S. ARMY CORPS OF ENGINEERS, NO. 14-1796

Decided: June 17, 2015

The Fourth Circuit affirmed the district court’s dismissal of the action as moot because Plaintiff failed to offer additional basis for standing, and also denied Plaintiff motion seeking leave to amend its First Amended Complaint.

Plaintiff, South Carolina Coastal Conservation League (the “League”) is a non-profit corporation with a mission to protect the natural environment of the South Carolina coastal plain. The League brought the instant case against various parties to stop what it “fears will be significant degradation to the 485 acres of freshwater and wetlands and its conversion to saltwater wetlands.” Defendant South Coast Mitigation Group, LLC (“South Coast”), owns the tract of land at issue. South Coast wishes to allow its entire 700-acre tract, of which the 485 acres of freshwater and wetlands are a part of, to become a functioning tidal marsh integrated with the Savannah River. The U.S. Army Corps of Engineers’ (the “Corps”) concluded that there would be no significant impact from South Coast’s project proposal based on the Corps’ environmental assessment of the project. The League fears that unless the project is stopped, saline water from the Savannah River will intrude onto the Embanked Tract and cause conversion of the freshwater wetlands to saltwater wetlands, therefore harming its members’ use and enjoyment of the Lower Savannah River ecosystem.  South Coast conducted tests between January 2014 and February 2014 regarding the salinity of the water. The League also submitted affidavits of three wetland experts.

The district court found the League’s claims to be moot based on a change in facts because the water in the Embanked Tract already contained more saline than the water the League was trying to prevent from entering the Embanked Tract. Therefore, no meaningful relief could be provided for the League’s feared harm of the wetlands on the Embanked Tract turning from freshwater wetlands to saltwater wetlands.

The Fourth Circuit agreed with the district court and found that the League had provided no evidence to challenge the salinity readings relied upon by the district court in making its mootness determination.

Accordingly, the Court affirmed the district court’s judgment.

Full Opinion

Meredith Weisler

 

YANEZ-MARQUEZ v. LYNCH, NO. 13-1605

Decided: June 16, 2015

The Fourth Circuit denied the petition for review.

This case stemmed from an original notice to appear to Maria Yanez-Marquez (“Yanez”) an alleged illegal immigrant who was summoned to a removal hearing to determine if she should remain in the country. At the hearing, Yanez moved to suppress evidence gained during a raid in which she claimed her Fourth Amendment rights were egregiously violated, her Fifth Amendment rights were violated, and Immigration and Customs Enforcement (“ICE”) agents failed to follow five federal regulations, relying on INS v. Lopez-Mendoza, a case that permitted the exclusionary rule in a civil removal proceeding where Fourth Amendment violations “were either widespread or egregious.” The Department of Homeland Security (“DHS”) argued that the exclusionary rule did not apply, and alternatively, that even if it did apply, Yanez failed to set forth a prima facie case, and that the ICE agents did not violate any regulations, and any violations were insufficient to require suppression. The Immigration Judge (“IJ”), although rejecting DHS’s argument that the exclusionary rule did not apply in removal proceedings, set forth what was required to make a prima facie case, and held that Yanez had not carried her burden, and denied the motion to suppress and to terminate. The Immigration Judge then found that the government had sustained its burden, and ordered Yanez removed from the United States, a decision that Yanez appealed to the Board of Immigration Appeals (“BIA”), who subsequently dismissed her appeal. Yanez then appealed that decision to this court.

The Fourth Circuit began by addressing the nature of its review, determining that it would review the BIA’s affirmation of the IJ’s decision as a final agency action, and would uphold it absent the decision being “manifestly contrary to the law and an abuse of discretion,” and then further determined the burdens of proof.

The Fourth Circuit then turned to the primary question of whether the ICE agents’ conduct violated the Fourth Amendment, and whether the exclusionary rule could apply in a civil removal action. This was followed by an extensive and in-depth examination of the Fourth Amendment doctrines and Rule 41 of the Federal Rules of Criminal Procedure. This included an in-depth discussion of the Lopez-Mendoza case that Yanez primarily relied upon in her appeals, and the court concluded that the exclusionary rule, although a remedy that could be available at a civil removal hearing, should nonetheless be used sparingly in order to prevent complicating the “simple” and “streamlined” deportation system. The Fourth Circuit held that the exclusionary rule could be used in cases where there were “egregious violations of the Fourth Amendment.” This meant that immigrants attempting to use the exclusionary rule had to satisfy a two-prong test: (1) whether the facts allege a violation of their Fourth Amendment rights, and (2) whether the facts allege that the violation was egregious. The court then examined the definition of what constituted an egregious violation, examining a variety of cases that had decided what constituted egregious.  Although there are two circumstances in which evidence should be excluded, on the basis that its probative value is undermined by the activities of government agents or that the actions of government agents transgressed notions of fundamental fairness, the court concluded that in this case, only the fundamental fairness prong would be appropriate. To decide what violations transgressed notions of fundamental fairness, the court looked to the Ninth Circuit’s qualified immunity doctrine on the one hand and compared it to the Second, Third, and Eighth Circuits’ totality of the circumstances doctrine on the other hand, concluding that it would follow the totality of the circumstances line of cases and conducted an in-depth examination of the cases in those circuits.  

The court then turned to address Yanez’s claims. First, the court examined Yanez’s contentions that the warrants failed the particularity requirements because they misidentified the type of home she lived in, that the agents should have stopped searching once they realized she lived in a multi-dwelling home, and that she should have been listed on the warrant as an item to be seized. However, the court concluded that the ICE agents had conducted a reasonable investigation that was not invalidated by the description in the warrant because their belief that the house Yanez dwelled in was a single-family dwelling was reasonable, and, furthermore, that the presence of a locked bedroom was unusual enough to have caused the agents to realize the home was a multi-family dwelling. The court then looked at Yanez’s claims that the time of the execution of the warrant violated her Fourth Amendment rights, in another exhaustive examination of the Fourth Amendment as well as an examination of Rule 41 of the Federal Rules of Criminal Procedure that implemented the protection against warrantless searches. Specifically, the court looked at the time requirements that warrants are normally executed in the daytime unless there is good cause for serving a warrant at night, and focused on the Third and Tenth Circuit decisions. The court also noted that the Attorney General had similarly concluded that a “daytime warrant does not convey authority to conduct a nighttime search,” and held that a “nighttime execution of a daytime warrant violates the Fourth Amendment, absent consent or exigent circumstances,” and listed several good cause factors that could be considered. However, the Fourth Circuit also held that such a violation was a Rule 41 violation and not a constitutional violation, meaning that a violation would result in suppression “only if the party seeking suppression suffered prejudice or the government intentionally violated the rule,” choosing to follow the reasoning from the Third and Tenth Circuits and the Supreme Court, and choosing not to follow the Second, Sixth, and Eighth Circuits. In applying this holding to Yanez’s case, the court found that the ICE agents had a daytime warrant that expressly rejected a nighttime search and that the agents violated that requirement, a violation that would be construed against the ICE agents. Although the court determined that the agents did indeed violate Yanez’s Fourth Amendment rights, an examination of whether that violation was egregious led the court to conclude that, despite the fact that the violation occurred in her home and during the night, the totality of the circumstances did not end in an egregious violation. Specifically, the court found that because the officers had a valid search warrant and no excessive force was used, determined by using the Fourth Amendment’s “reasonableness” standard, the violation did not rise to the level of egregiousness.   

The Fourth Circuit then examined whether or not Yanez’s statements were involuntary and therefore used against her in violation of her rights under the Fifth Amendment. The court quickly disposed of this issue, however, and found that there was no evidence of involuntariness, and rejected her reliance on the Second Circuit case Singh v. Mukasey.

Finally, the Fourth Circuit examined Yanez’s claims that the ICE agents failed to follow five regulations, but again, quickly disposed of those arguments, and denied Yanez’s petition for review.

Full Opinion

Jennie Rischbieter

ADAMS v. ANNE ARUNDEL CNTY. PUB. SCHS., NO. 14-1608

Decided: June 15, 2015

The Fourth Circuit affirmed the judgment of the district court determining that there was no merit to the plaintiff’s claims of the defendant violating his rights under the Family and Medical Leave Act of 1993 (FMLA) and the Americans with Disabilities Act of 1990 (ADA).   

This appeal stemmed from the district court’s grant of defendant’s motion for summary judgment regarding the plaintiff’s FMLA interference and retaliation claims and the plaintiff’s ADA discrimination and retaliation claims. In January of 2010, Adams, an assistant principal at MacArthur Middle School, was involved in an incident with a student. The student claimed that Adams grabbed her arms, shook her, and held her against the wall. Due to the incident, Child Protective Services (CPS) launched a child abuse investigation and referred the matter to the School Board. In the meantime, Adams was reassigned from MacArthur.

On February 25, Adams was transferred back to MacArthur. However, that same day, Adams went on medical leave upon recommendation from an internal medicine specialist due to the stress and anxiety caused by the incident. On two other instances, Adams attempted to return, but took medical leaves due to stresses from the incident. Adams’ doctor diagnosed him with acute stress disorder and informed the Board that Adams would need to be transferred to another school, due to the likelihood of panic attacks at MacArthur. During Adams’ medical leave, the School Board continued its investigation regarding the incident. On August 4, Adams began working at J. Albert Adams Academy (JAA), a specialized middle school for children with behavioral issues. JAA is a much smaller school with a more favorable staff-to-student ratio. Adams’ salary remained the same for two years and then was reduced less than one percent due to JAA’s smaller size. JAA employees are ineligible for certain discretionary bonuses available at other schools. Adams contends that the Board interfered with his FMLA rights and retaliated against him for taking medical leave, and he contends that the Board discriminated and retaliated against him in violation of the ADA.

Under the FMLA, employees are allowed to take a total of twelve workweeks of leave during a twelve month period if the employee is burdened with “a serious health condition that makes the employee unable to perform” his job. 29 U.S.C. § 2612(a)(1)(D). Also, when returning from FMLA leave, employees are entitled to be restored to their previous position or an equivalent position. An interference occurs under the FMLA when an employee demonstrates that (1) he is entitled to an FMLA benefit; (2) his employer interfered with that benefit; and (3) that interference caused harm. See 29 U.S.C. § 2617(a)(1). Notably, the Fourth Circuit found that Adams was not denied FMLA leave. As a matter of fact, he took three different medical leaves that exceeded the twelve week maximum. Alternatively, Adams argues the Board interfered in a variety of ways that stopped short of actual denial of his leave. However, the Fourth Circuit determined that the actions taken by the School Board, including the requirement of second medical opinions, the investigative procedures, and the verbal reprimands, did not constitute “interference.”  

Additionally, Adams claimed that the School Board retaliated against him under the FMLA. However, the Fourth Circuit determined that there was “no retaliatory animus” present. The Board essentially accommodated for Adams’ disability by moving him to JAA, after the request was made to move Adams from MacArthur. The fact that the school deals with children that have behavioral problems is not sufficient due to the smaller number of students and the great reviews that Adams has already received. Further, the Fourth Circuit determined the slight decrease in pay and ineligibility to receive certain bonuses did not constitute retaliation.

The Fourth Circuit also did not find any merit regarding the claims brought by Adams under the ADA. The ADA forbids employers to discriminate or retaliate. In order to have a claim involving discrimination or retaliation, the plaintiff must have suffered an adverse employment action. This standard seeks to differentiate actions that are “significant” from actions that are “trivial.” Here, the Fourth Circuit determined that none of the actions taken by the School Board rose to the level of an adverse employment action. “Dislike of or disagreement with an employer’s decisions does not invariably make those decisions ones that adversely affected some aspect of employment.”

Finally, Adams claimed that the Board failed to reasonably accommodate for his disability by moving him to JAA. However, the Fourth Circuit determined that the Board’s accommodations for Adams’ disability were plainly reasonable. The Board, in its appropriate discretion, weighed the negative of the school being for children with bad behavioral problems with the positives of the small student population and the excellent staff-to-student ratio. Further, Adams never objected to his assignment at JAA, and he has “thrived” there.     

Ultimately, the Fourth Circuit held that there were no violations of the FMLA and the ADA, and the decision of the district court was affirmed.

Full Opinion

Austin T. Reed

 

REYAZUDDIN v. MONTGOMERY CO., MD., NO. 14-1299

Decided: June 15, 2015

The Fourth Circuit held that genuine issues of material fact remained with respect to (1) whether Reyazuddin could perform the essential functions of a call center employee, (2) whether the County reasonably accommodated her, and (3) whether any failure to accommodate could be excused by undue hardship.  Thus, the Fourth Circuit reversed the district court’s grant of summary judgment to the County on Reyazuddin’s claims under section 504 of the Rehabilitation Act of 1973 (“Section 504”).  The Fourth Circuit affirmed the district court’s grant of summary judgment to the County on Reyazuddin’s claim under Title II of the Americans with Disabilities Act (“Title II”), finding that Title II does not apply to public employment discrimination.

In 2008, Montgomery County, Maryland (“County”) centralized the phones for 38 offices into one call center.  To operate the call center, County used software which could be operated in two modes: high-interactivity, which was not accessible to blind employees, and low-interactivity, which was accessible to blind employees.  The County chose to operate entirely in high-interactivity mode.

Reyazuddin, who is blind, had been employed since 2002 in County’s Department of Health and Human Services.  Prior to the creation of the call center, Reyazuddin used screen reader software and a Braille embosser to perform her job.  Following the conversion to the call center, Reyazuddin was not transferred to the center, but remained with the County doing various non-full-time work, albeit with the same salary and benefits as before.  A supervisor recommended her for priority reassignment in another vacant position with the County, and Reyazuddin applied for a call center vacancy, but did not get the position.  

Reyazuddin sued County under Section 504, claiming failure to accommodate her by not making the call center software accessible, and discrimination against her by not transferring her to the call center with her co-workers.  Reyazuddin also claimed County violated Title II by not hiring her to fill the call center vacancy.  Reyazuddin and County both moved for summary judgment.  The district court granted County’s motion, finding a genuine issue as to whether Reyazuddin could perform the essential job of call center operator, but finding that County had accommodated her by providing comparable employment.  The district court found for County as a matter of law on the defense of undue hardship.  On the issue of Reyazuddin not being transferred to the call center, the court found non-transfer was not discriminatory because accommodation would have been an undue hardship.  Finally, on the Title II claim, the court found that Reyazuddin presented insufficient evidence that the failure to hire her for the call center vacancy was pretext for discrimination.

On the failure to accommodate claim, the Fourth Circuit found that Reyazuddin qualified as disabled, and County had notice of her disability.  The court found, however, that it was unclear whether Reyazzudin could be reasonably accommodated.  Though she had the basic skills for a call center job, there were questions as to whether operating the center software in low-interactivity mode was less productive, and as to whether it was essential to a call center job to be able to operate the software in high-interactivity mode.  The court also found that there was a genuine question as to whether the non-full-time jobs County pieced together for Reyazuddin were a reasonable accommodation.  Finally, the Fourth Circuit found that the district court improperly reduced a multi-factor test for undue hardship to a single factor – cost – and improperly found for County on that basis on undue hardship.  On this basis, the Fourth Circuit reversed the district court’s grant of summary judgment to County on the failure to accommodate claim.  

On the disparate treatment claim, the Fourth Circuit found that Reyazuddin had a disability, but that there were genuine questions as to whether she was otherwise qualified for the job, and as to whether she suffered an adverse employment action.  The Fourth Circuit’s analysis of the second and third points followed its earlier analysis of Reyazuddin’s ability to perform essential job functions, and reasonable accommodation, respectively.  Further, following its earlier undue hardship analysis, the court found that a genuine issue existed with respect to whether the County had a legitimate, nondiscriminatory reason for treating Reyazuddin differently.  On this basis, the court reversed the district court’s grant of summary judgment to County on the disparate treatment claim.  

Finally, the Fourth Circuit found that Title II did not apply to public employment discrimination claims.  The court made this finding on the basis of statutory language and structure.  For this reason, the court upheld the district court’s grant of summary judgment to the County on Reyazuddin’s Title II claim.

For the above reasons, the Fourth Circuit reversed the district court’s grant of summary judgment to County on the Section 504 claims, affirmed the district court’s grant of summary judgment to County on the Title II claim, and remanded the case to the district court.  

Full Opinion

Katherine H. Flynn

 

HUNTER v. TOWN OF MOCKSVILLE, NO. 14-1081

Decided: June 15, 2015

The Fourth Circuit denied Defendants’ appeal from the district court’s denial of summary judgment, holding that the Plaintiff officers spoke out on corruption as citizens and were therefore protected by the First Amendment.

This appeal arises from the firing of three police officers who raised concerns about mismanagement by the police chief.  Initially, the three officers raised their concerns with the town manager.  When the situation did not improve and the Plaintiffs began to perceive retaliation, they anonymously took their complaints outside of the city.  The Plaintiffs used a disposable phone to call the state Attorney General’s office and the Governor’s office.  A representative from the Governor’s office referred the case to the State Bureau of Investigation (“SBI”).  The police chief ultimately discovered what the Plaintiffs had done and fired all of them.  The Plaintiffs filed suit in April 2012, alleging, among other things, that their First Amendment rights had been violated.  The Defendants moved for summary judgment under 42 U.S.C. § 1983, which was ultimately dismissed.  The Defendants appealed the denial of summary judgment.  

To successfully assert a § 1983 claim, a Defendant must show that either no Constitutional right was violated, or that the violated right was not clearly established.  Defendants first contended that the district court had erred when it found that the Plaintiffs had acted as citizens instead of employees.  The Fourth Circuit engaged in the requisite “practical” inquiry into whether the Plaintiffs’ speech had occurred in the normal course of the employees’ daily professional activities.  Ultimately, the Court held that calling the Governor’s office from a disposable phone was not part of the ordinary business of police officers and that the district court had rightly refused summary judgment on this basis.  

Defendants next argued that the Plaintiffs’ speech had not been a cause of their termination.  The Fourth Circuit ruled that this argument was not an issue for appellate review because a material issue of fact existed.   Defendants’ last argument on appeal was that if they had violated at Constitutional right, that the right was not clearly established at the time.  The Court rejected this argument, stating that a citizen’s speech about serious misconduct in police conduct was a clearly established right.  

Plaintiffs also appealed from the district court’s dismissal of their claims against the town of Mocksville.  The disposal of only the claims against the town of Mocksville did not constitute a final judgment, and appellate courts only have jurisdiction over final decisions.  Therefore, the Fourth Circuit held that this issue was not properly before it.

Full Opinion

William H. Yarborough

U.S. v. BASHAM, NO. 13-9

Decided: June 15, 2015

The Fourth Circuit upheld the District of South Carolina’s denial of Brandon Leon Basham’s (“Basham”) motion for habeas corpus relief pursuant to 28 U.S.C. § 2255.  

This appeal arises from a seventeen day, multi-state, crime spree in November 2002.  Basham was ultimately convicted in the District of South Carolina for multiple crimes and sentenced to death for two of them: carjacking resulting in death and kidnapping resulting in death.  Basham directly appealed his sentence, and the Fourth Circuit upheld his convictions in United States v. Basham, 561 F.3d 302 (4th Cir. 2009).  After the Fourth Circuit upheld his direct appeal, Basham moved for habeas corpus relief pursuant to 28 U.S.C. § 2255 and listed 34 claims for relief.  Two of Basham’s claims for relief were subsequently removed.  The district court denied Basham’s motion on all claims, which he now appeals.  

The Fourth Circuit reviews the appeal de novo and ultimately rejects all grounds for Basham’s appeal and upholds the district court’s ruling.  The Court first rejects Basham’s arguments that he was denied his right to the effective assistance of counsel because his lawyers permitted him to speak with investigators outside of their presence and later when they failed to challenge the admissibility of his inculpatory statement.  The Court cites Strickland v. Washington, 466 U.S. 668, 687 (1984), which states that a movant seeking relief for ineffective assistance of counsel must show (1) that his counsel’s performance was deficient, and (2) that the deficiency prejudiced his defense.  The Fourth Circuit found that Basham failed to establish prejudice strong enough to undermine the confidence in the outcome, as required by Strickland.  The Court next rejects Basham’s claims that the prosecution committed misconduct by presenting false testimony.  The Fourth Circuit stated that, to establish prosecutorial misconduct in this manner, a movant “must demonstrate three elements: (1) that the testimony at issue was false; (2) that the prosecution knew or should have known of the falsity; and (3) that a reasonable probability exists that the false testimony may have affected the verdict.”  The district court found that the prosecution did not commit misconduct.  The Fourth Circuit holds that this finding is plausible based on the record, and thus, Basham has failed to establish the first of the required elements to establish prosecutorial misconduct.  The Court next rejects Basham’s challenge to his competency to stand trial and that his counsel was ineffective because they failed to raise any issues regarding his competency.  The Fourth Circuit reasons that the district court’s finding that he was competent to stand trial was not clearly erroneous and must be upheld.  Because the Fourth Circuit upheld that he was competent to stand trial, they also hold that his claims that his ineffective assistance of counsel for failure to raise the issue also lack merit.  The Court rejects Basham’s final challenges by finding that Basham was not denied effective assistance due to trial counsel’s failure to object to evidence about crimes committed against another victim or due to trial counsel’s refusal to deliver his complete file to his appellate lawyers.  In the first instance, the Fourth Circuit found that Basham was unable to show that his counsel performed in a deficient manner merely because counsel allowed evidence to come in for strategic reasons.  In the second instance, the Fourth Circuit concluded that Basham was not prejudiced simply because his counsel would not turn over the original physical copies of the files where they allowed reasonable access to the files.  

Full Opinion

William H. Yarborough

U.S. v. SHELL, NO. 14-4211

Decided: June 12, 2015

The Fourth Circuit vacated and remanded the lower court opinion, holding that a defendant’s prior conviction in North Carolina for second-degree rape was not automatically a crime of violence under sentencing guidelines for career criminals.  The Fourth Circuit also held that in order for a defendant’s sentencing to be enhanced under the guidelines for recklessly creating a substantial risk of death or serious bodily injury to another person in the course of fleeing from a law enforcement officer, the defendant must have known that he was being pursued by law enforcement.  

This appeal arises from Aaron Eugene Shell’s (“Shell”) guilty plea to felon in possession of a firearm in violation of 18 U.S.C. § 922(g) (2012).  The presentencing report (“PSR”) recommended that Shell receive an enhanced base offense level for two reason.  First, the PSR found that Shell’s prior felony conviction of second-degree rape was a crime of violence.  Second, the PSR recommended an enhanced base offense level for Shell’s reckless driving in the course of fleeing from a law enforcement officer that created a substantial risk of death or serious bodily injury to others.  Shell objected to both enhancements.  During sentencing, the district court overruled both of Shell’s objections. The court reasoned that second-degree rape constituted a violent crime under the U.S. Sentencing Guidelines Manual § 2K2.1(a)(4)(A) (2014).  Shell appeals the district court’s determination that his second-degree rape conviction was a crime of violence.

The Fourth Circuit reviewed Shell’s appeal, as a question of law, de novo.  In considering whether Shell’s second-degree rape conviction constituted a crime of violence, the Court applied the categorical approach, which focuses on the elements of the prior offense.  With this approach, the particular events that occurred in the commission of the crime are irrelevant, and the Court had to decide if any second-degree rape under the North Carolina statute would qualify as a violent crime when compared to the Sentencing Guidelines’ use of the phrase “crime of violence.”  The Court looked at the two separate offenses in the statute.  Because the records of Shell’s conviction for second-degree rape did not specify which subsection of the statute formed the basis for his prior conviction, the Court reasoned that the conviction could only be treated as a crime of violence only if both subsections qualified as crimes of violent.  The Court concluded that the first subsection of the statute, which required force, easily qualified as a crime of violence under the Guidelines.  The Court held that the second subsection, however, did not require the state to prove force and could be violated if there is legally insufficient consent.  Therefore, the Court reasoned that under the second subsection, second-degree rape in North Carolina does not qualify as a crime of violence.  The Court also held that the enhanced base offense level for recklessly creating a substantial risk of death or serious bodily injury to another person in the course of fleeing from a law enforcement officer could only be applied when the fleeing suspect was aware of law enforcement being in pursuit.  The Court vacated Shell’s sentencing and remanded the case for resentencing consistent with this opinion.

Full Opinion

William H. Yarborough

 

CAPITAL CITY REAL ESTATE, LLC v. CERTAIN UNDERWRITERS AT LLOYD’S LONDON, NO. 14-1239

Decided: June 10, 2015

The Fourth Circuit vacated and remanded the lower court, finding that a general contractor is covered where the subcontractor, as the named insured, was partially negligent and that the allegations in the tort actions potentially brought the claim within the coverage of the policy.  

This appeal stems from Plaintiff, operating as a general contractor for the renovation of a building, subcontracting foundation, structure, and underpinning work to Marquez Brick Work, Inc (“Marquez”).  The subcontract required Marquez to indemnify the Plaintiff for any damages caused by its work and also required that Marquez maintain liability insurance with Plaintiff named as additional insured.  The Defendant issued an insurance policy to Marquez with Plaintiff listed as an additional insured.  During the course of the work, a wall collapsed and ultimately Plaintiff made a claim against Marquez.  The Defendant insurance company denied coverage and the Plaintiff filed an action for declaratory judgment against Defendant.  The district court granted summary judgment to the Defendant, and the Plaintiff appeals.  

Maryland courts ask, when determining if an insurer has a duty to defend the insured, (1) what is the coverage and what are the defenses under the terms and requirements of the insurance policy, and (2) do the allegations in the tort action potentially bring the tort claim within the policy’s coverage.  St. Paul Fire & Marine Ins. Co. v. Pryseski, 438 A.2d 282, 285 (Md. 1981). The Defendant sought to limit liability based on a theory of vicarious liability.  The Court ultimately held that the language of the insurance contract must control, and the language lacked vicarious liability limitations and, therefore, the first element of the Maryland test was satisfied.  Having determined the scope of the policy, the Fourth Circuit then examined the second step of the Pryseski analysis.  The Court noted that the underlying Complaint faulted the Defendants for improperly excavating and supporting and for failing “to comply with the applicable standard of care while performing said renovations.”  Therefore, the Fourth Circuit found that there was a potentiality for coverage and that the Defendant had a duty to defend the Plaintiff in the underlying tort claim.

Full Opinion

William H. Yarborough

 

AMOS v. LYNCH, NO. 1633

Decided: June 10, 2015

The Fourth Circuit held that the Board of Immigration Appeals (BIA) erred as a matter of law in concluding that Petitioner’s conviction of child abuse qualified as an aggravated felony, and vacated the order for Petitioner’s removal.

Petitioner entered the United States in 1980 as a lawful permanent resident. In 1990, he was convicted in a Maryland state court of child abuse, in violation of former Maryland Code, Article 27 §35A. In 2008, an immigration judge held that Amos was removable based on his felony conviction for sexual abuse of a minor. The BIA approved the immigrations judge’s order of removal. Amos appealed, but the BIA denied Petitioner’s motion for reconsideration. The question on appeal was whether Petitioner’s conviction, under the former Maryland statute, qualifies as the aggravated felony of “sexual abuse of a minor,” within the meaning of 8 U.S.C § 1101(a)(43)(A).

Petitioner contended that his Maryland conviction did not render him removable under 8 U.S.C § 1101(a)(43)(A), because “the conduct proscribed by the former Maryland statute is not encompassed within the generic federal offense of ‘sexual abuse of a minor.’” The Court was not persuaded by the BIA’s analysis that the failure to act to prevent child abuse is encompassed within the generic offense of “sexual abuse of a minor” in U.S.C § 1101(a)(43)(A). Accordingly, the Court vacated the order for Petitioner’s removal and granted his petitions for review.

Full Opinion

Meredith Weisler

 

U.S. v. PADGETT, NO. 14-4625

Decided: June 9, 2015

The Fourth Circuit upheld the District Court’s revocation of Defendant’s two current terms of supervised release and sentence of consecutive terms of imprisonment, followed by new concurrent terms of supervised release.

Defendant was convicted in 1998 of conspiracy to distribute and possess, with intent to distribute cocaine, in violation of 21 U.S.C. § 846. In 2009, he was convicted for attempted escape from custody. This appeal stems from the District Court’s revocation of Defendant’s supervised release in 2014. The District Court held that the Government had proven by a preponderance of the evidence, through three witness testimonies, that Padgett had possessed a firearm. The Fourth Circuit reviewed the District Court’s factual findings underlying the revocation for clear error. The Court concluded that the District Court did not clearly err in finding that the Defendant possessed a firearm, and therefore, revocation of his supervised release was not an abuse of discretion.

Accordingly, the Fourth Circuit affirmed the District Court’s judgment.

Full Opinion

Meredith Weisler

 

U.S. v. SPAN, NO. 14-4655

Decided: June 8, 2015

The Fourth Circuit held that the Government failed to prove by a preponderance of the evidence that the Defendant’s prior felonies were separate and distinct criminal episodes for the purposes of the Armed Career Criminal Act, 18 U.S.C. § 924(e) (“ACCA’). The Court vacated the District Court’s application of the ACCA enhancement and remanded for resentencing.

Defendant, Span, appealed the District Court’s ruling that each of his three robbery offenses were distinctly separate offenses. A defendant qualifies for an enhanced sentence under the ACAA if the defendant has three previous convictions for a violent felony or serious drug offense and if those offenses were committed on occasions different from one another. The Court found that Span’s robbery offenses were not “committed on occasions different from one another” under the ACCA because discrepancies in the state court documents casted doubt on the date of the robberies and the Court’s application of the Letterlough factors did not lead the court to the conclusion that the robbery occurred on a separate occasion. The Letterlough factors include 1) whether the offenses arose in different locations; 2) whether the nature of each offense was substantively different; 3) whether each offense involved different victims; 4) whether each offense involved different criminal objectives; and 5) whether the defendant had the opportunity after committing the first-in-time offense to make a conscious decision to engage in the next offense.

Accordingly, the Court vacated the District Court’s judgment and remanded the case for further proceedings.

Full Opinion

Meredith Weisler

 

MCCORKLE v. BANK OF AMERICA CO., NO. 14-1011

Decided: June 8, 2015

The Fourth Circuit held that the Plaintiffs had both statutory and Article III of the U.S. Constitution standing, and that the Plaintiffs claim was not time-barred. Consequently, the Court reversed and remanded the District Court’s dismissal of the Plaintiff’s case.

Plaintiff’s William Pender and David McCorkle, collectively with those similarly situated, elected to transfer their 401(k) account balances to a bank Pension Plan. The Internal Revenue Service (IRS) opened an audit of the Bank’s plans. In 2005, the IRS issued a technical advice memorandum, in which it concluded that the transfers of 401(k) Plan participants’ assets to the Pension Plan violated the Internal Revenue Code. In May 2008, the Bank and the IRS entered into a closing agreement. The Plaintiffs’ alleged a violation of ERISA § 204(g)(1), 29 U.S.C. § 1054(g)(1), which states that an ERISA-plan participant’s “accrued benefit” “may not be decreased by an amendment of the plan, unless specifically provided for in ERISA or regulations promulgated pursuant to ERISA. The Plaintiffs sought the profit the Bank made using their assets. The District Court dismissed the case on the basis that the Plaintiffs lacked standing.

On appeal, the Fourth Circuit found that the Plaintiffs had statutory standing under section 502(a)(3) to bring their claim. Plaintiffs incurred an injury in fact because they “suffered an individual loss.” The Court found that the Plaintiffs also have standing under Article III, because they satisfy the causation and redressability requirements. Additionally, the Court held that the Plaintiffs’ claims were not time-barred by the ten-year limitations period because the first of the transfers took place in 1998 and the Plaintiffs filled suit in 2004, leaving a full four years before the ten year statute of limitations would have run. Accordingly, the Court reversed and remanded the District Court’s order.

Full Opinion

Meredith Weisler

EVERETT v. PITT CNTY. BD. OF EDUC., NO. 13-2312

Decided: June 3, 2015

The Fourth Circuit affirmed a North Carolina district court’s grant of a motion requesting that the court declare that Defendant’s school district is unitary in compliance with desegregation orders. This case involved two desegregation orders entered in 1970 by a North Carolina district court for Greenville City and Pitt County Board of Education who were operating racially segregated schools. Following the school districts’ initial compliance with the orders, the cases were administratively closed and lay dormant for over thirty-five years until concerns about the School Districts’ consideration of race when devising student assignment plans framed the present dispute. In 2011, Plaintiffs moved to enjoin the implementation of the Board’s 2011-12 student assignment plan, arguing that it failed to move the school district toward unitary status. Defendants filed a motion requesting that the district court declare the school district unitary, which was granted by the district court and rendered Plaintiff’s injunction against the plan moot.

First, the Court addressed whether, procedurally, the district court could have determined unitary status before deciding whether, for the purposes of an injunction, the student assignment plan was a sufficient method for achieving unitary status. Plaintiffs contented that “the district court violated the law of the case by considering the unitary status question before first deciding whether the 2011-12 student assignment plan moved the school district toward that status. According the Fourth Circuit, the burden of proving discriminatory intent shifts to the Plaintiffs when the district court determines that the Board first achieved unitary statuts. Thus, a district court “may assess unitary status before addressing the request for relief that brought the plaintiff before the court in the first place.” Moreover, the district court’s decision to assess unitary status “comports with its obligation to ‘restore state and local authorities to the control of a school system that is operating in compliance with the Constitution.’”

Then, the Court determined whether the district court’s finding that the school district is unitary was of merit. The standard of appellate review on this issue is clear error. The test for determining whether a school district is unitary is a two-prong test: (1) whether the school district “complied in good faith with the desegregation decree since it was entered”; and, (2) whether the district court is satisfied that “the vestiges of past discrimination have been eliminated to the extent practicable.” Weighing the facts presented by both parties against the test provided, the Court found that the school district was unitary.

The dissent disagreed concerning the present unitary nature of the school district. The dissent cited statistical examples that the dissenting judges contended showed a racial imbalance that lingers within the school districts.

Full Opinion

Katie Ramseur

HUNTINGTON INGALLS INDUS., INC. v. EASON, NO. 14-1698

Decided: June 2, 2015

The Fourth Circuit granted the petition for review and remanded the case to the Benefits Review Board to enter an order dismissing Eason’s claim for temporary partial disability under the Longshore and Harbor Workers’ Compensation Act (LHWCA) after the Court found that Eason’s

The LHWCA defines “disability” as “incapacity because of injury to earn the wages which the employee was receiving at the time of injury in the same or any other employment.” Four different categories of disabilities are set forth in the LHWCA: (1) permanent total disability; (2) temporary total disability; (3) permanent partial disability; and (4) temporary partial disability. Placement in each of the four categories dictates the amount of compensation paid to the employee. Eason injured his right need while employed with the Newport News Shipbuilding and Dry Dock Company in Newport News, VA (NNS). His injury and required surgery kept Eason out of work for 9 months. Eason was paid compensation for permanent partial disability in addition to his regular weekly salary during those 9 months, extending until to a year after Eason’s return to work. Months later Eason began experiencing reoccurring pain in his knee and was placed on work restrictions. He was not compensated for this time and was not offered light-duty employment within his restrictions. Eason brought a claim against Huntington Ingalls Industries, Inc. for temporary total disability, or alternatively, temporary partial disability for the second flare up period.

The Fourth Circuit recognized that when dealing with a scheduled disabilities loss program such as the one at issue, “benefits are payable for a specific duration regardless of the actual impact of the disability on the claimant’s prospects of returning to. . . work.” Therefore, “once Eason’s permanent partial disability compensation is set under the schedule, he is not entitled to received additional disability compensation for the same scheduled injury unless the circumstances warrant a reclassification of that disability to permanent total or temporary total.” The Court found no evidence on record supporting a reclassification of Eason’s disability to a permanent total or temporary total disability. Accordingly, the case was remanded to the BRB to enter an order dismissing Eason’s claim for temporary partial disability under the LHWCA.

Full Opinion

Katie Ramseur

DILLON v. BMO HARRIS BANK, N.A.; GENERATIONS FEDERAL CREDIT UNION; BAY CITIES BANK; AND FOUR OAKS BANK & TRUST COMPANY, NO. 14-1728

Decided: May 29, 2015

The Fourth Circuit held that the district court impermissibly denied appellants’ renewed motions to compel arbitration, vacated the order denying the renewed motions and remanded for further proceedings.

This case stemmed from a class action against the named group of Banks, where Dillon alleged that the Banks, because they allowed the transfer of funds from third-party lenders to and from Dillon’s bank account, facilitated the lenders’ illegal practices by giving them access to an electronic payment system, the Automated Clearing House Network. After Dillon initiated a lawsuit against the Banks, the Banks filed motions to compel arbitration and to stay further court proceedings. As a basis for their motions, the Banks asserted that Dillon agreed to arbitration as part of the application process for the loans. In response, Dillon argued that the Banks had not carried their burden of proof to show that he had agreed to arbitration since he argued that the loans were inadmissible hearsay due to their lack of physical signature and proof of authentication. The Banks, however, asserted that since the loan agreements were significant to Dillon’s case, that Dillon was the party who had signed the agreement in the first place, and that Dillon was merely questioning the Banks’ burden of proof and not the authenticity of the loans themselves, that it was proper for the loans to be admitted. Although the district court initially denied the Banks’ motions, the Banks attempted to cure their motions, by attempting to authenticate the loan documents. However, Dillon opposed the motion by saying that the district court had already “fully and finally” decided the issues, and the district court agreed, denying the motions for “failure to justify reconsideration,” and the Banks appealed.

The Fourth Circuit first discussed the Federal Arbitration Act (FAA), and its significance to the case, looking at both sections 3 and 4 of the FAA and examining how they provide for a hearing to resolve questions of material fact, and noting that section 16 allows for an appeal of a decision about a section 3 or 4 action. By looking at the FAA, the Fourth Circuit then determined that it did have jurisdiction to hear this case. Although Dillon argued that this was an appeal of an order denying reconsideration, the Court determined the Banks were seeking to enforce arbitration, and therefore section 16 applied. By examining the language in the Banks’ motions, the Court noted the explicit reference to “compel” and “stay,” which triggered sections 3 and 4, giving the court jurisdiction. After determining that it had jurisdiction, the Fourth Circuit then turned to the merits of the case, and determined that the lower court erred in deciding that the renewed motions were motions for reconsideration and denying them because of that. Although the Fourth Circuit allowed for two plausible reasons for the district court’s decision, but swiftly disposed of both of those reasons, stating that there is no rule that limits a party to only one motion under sections 3 and 4 of the FAA, and furthermore, the renewed motions presented different issues, so the law of the case rule was no longer applicable. Since the Fourth Circuit determined that the district court denied the Banks’ motions in a way that was inconsistent with the strong policy that favors arbitration, nor for any other plausible reason, the court vacated the order and remanded for further proceedings.

Full Opinion

Jennie Rischbieter

WRIGHT v. STATE, NO. 13-2312

Decided: May 27, 2015

The Fourth Circuit held that the thirteen citizens of Wake County, North Carolina (“Plaintiffs”) stated a claim upon which relief could be granted when they sued the State of North Carolina and the Wake County Board of Elections to challenge a state law redrawing the Wake County Board of Education electoral districts. In their complaint, Plaintiffs alleged that the new redistricting plan resulted in a Board of Education with a Democratic majority. This result caused the Republican-controlled General Assembly to pass a new Session Law that “made numerous changes to the Wake County Board of Education’s methods of election.” The new law changed the Board of Education’s make-up from nine single-member districts to seven single-member districts and created “super districts” that consisted of outer, rural areas of the county. Plaintiffs alleged that the districts created by the new law were “visually and mathematically” ineffective, and therefore unjustifiable. Principally, Plaintiffs claimed the Session Law “violates the United States Constitution’s one person, one vote guarantees and the North Carolina Constitution’s equal protection clause.” Plaintiffs also sought leave to amend the complaint to add Governor Patrick McCrory, Senate President Pro Tem Phillip Berger, and General Assembly Speaker Thom Tillis in their official capacities.

First, the Fourth Circuit considered whether Tillis and Berger are proper parties to this suit, to which it answered no. The Eleventh Amendment provides protection from suit for certain state officials. The Court recognized that a special relationship must exist between the state official being sued and the challenged action for the official to be amenable to suit. The Court found that neither Tillis nor Berger had “a special duty to enforce the challenged Session Law, and thus neither is amendable to suit.” Also, the Court found, there are other ways for future claimants to “force[] a constitutionally valid election, should [future claimants] succeed in enjoining the Session Law.”

The Fourth Circuit’s finding that the district court erred when it dismissed Plaintiffs complaint for failure to state a claim was framed by the Fourteenth Amendment’s equal protection clause that guarantees that “[h]aving once granted the right to vote on equal terms, the State may not, by later arbitrary and disparate treatment, value one person’s vote over that of another.” To establish a claim, Plaintiffs were required to show a “taint of arbitrariness or discrimination” in the apportionment process. According to the Court, Plaintiffs accomplished such by complaining that “the challenged districts discriminated between urban and rural voters, overpopulating, without justification, certain districts, causing the vote of Plaintiffs living in those overpopulated districts to be weighed less than votes of citizens in districts that are unjustifiably under-populated.” Also, Plaintiffs contended that the challenged redistricting was intended “to disfavor incumbents who are registered Democrats and support progressive education policies.” The Fourth Circuit determined that the facts alleged in Plaintiff’s complaint were sufficient when “viewed through he forgiving lens mandated at the motion-to-dismiss stage.” The Court also disagreed with the district court—which claimed that political gerrymandering claims are nonjusticiable—because the claims alleged by Plaintiffs presented an equal protection claim, not merely a gerrymandering claim. Accordingly, the Fourth Circuit held that Plaintiffs allegations were sufficient to state a claim that the Session Law violates the one person, one vote principle.

The dissent believed that the complaint failed to state a claim upon which relief can be granted because the Plaintiffs were not able to provide evidence that the apportionment process had a taint of arbitrariness or discrimination. The dissent expressed concern that the Plaintiffs may have preferred another redistricting plan, however, that fact does not make the current plan unconstitutional.

Full Opinion

Katie Ramseur

 

FOSTER v. UNIV. OF MARYLAND-EASTERN SHORE, NO. 14-1073

Decided: May 21, 2015

The Fourth Circuit reversed in part the district court’s ruling to grant the University of Maryland-Eastern Shore (“the University”) summary judgment on Foster’s retaliation claim because a reasonable jury could conclude that the University fired Foster for unlawful reasons.

In 2007, Iris Foster was hired as a campus police officer at the University.  Shortly after her hiring, Foster was sexually harassed by Rudolph Jones, her supervisor.  Among other things, Jones made lewd comments and inappropriately touched Foster.  A month after the harassment began, Foster notified Jones’s superiors about the inappropriate conduct.  Although Jones was punished, Foster also claims to have been punished.  Foster claims that her probation was extended in retaliation for her complaints.  Furthermore, among other things, Foster claims that due to her complaints, her schedule was changed without notice and she was barred from attending a training session while she was on injury leave.

Title VII prohibits an employer from discriminating against an employee on the basis of sex and retaliating against an employee for complaining about prior discrimination or retaliation.  The Fourth Circuit held that Nassar does not alter the causation prong of a prima facie case of retaliation.  Furthermore, the court held that Foster failed to show that the retaliation was the actual reason for the challenged employment action.  Additionally, the court held that Foster made a prima facie case for retaliation due to her evidence regarding (i) Billie’s statement of retaliatory animus; (ii) the temporal proximity between Foster’s final complaint of retaliation and her termination; and (iii) the additional retaliatory acts that preceded her firing.  “Foster argued that the University’s proffered non-retaliatory reasons are pretextual because: (i) Foster’s immediate supervisor and the department scheduler both testified that Foster was not inflexible in scheduling; (ii) Wright testified that there was no documentation of Foster’s supposed inflexibility in her personnel file; (iii) Foster’s immediate supervisor testified that Foster had been given permission to edit the office forms and that Wright had initially praised her work; (iv) Foster’s immediate supervisor repeatedly praised her work and discussed promoting her to corporal before she made her sexual harassment complaint; and (v) the University did not initially provide Foster with a reason for her termination.”  Based on the foregoing, the Fourth Circuit held that a reasonable jury could conclude that the University’s proffered justifications were deceitful.  Accordingly, the Fourth Circuit held that the University is not entitled to summary judgment on Foster’s retaliation claim.

Full Opinion

Chris Toner

BLAKE v. ROSS, NO. 13-7279

Decided: May 21, 2015

The Fourth Circuit held that Blake reasonably believed that he had exhausted his administrative remedies as required under the Prison Litigation Reform Act (PLRA), and reversed and remanded for further proceedings.

This appeal stemmed from the district court’s dismissal of Blake’s § 1983 claim against Ross in favor of Ross’s summary judgment. Ross was originally a co-defendant in an action that Blake brought against Madigan, a prison guard who severely beat him until he sustained nerve damage. After the incident, Blake filed a report with the Internal Investigative Unit of the Maryland Department of Public Safety, who conducted an investigation and issued a report confirming the events of Blake’s beating, and the report did not put him at fault for the incident. Following the report, Blake filed pro se claims against Madigan and Ross, among others, and Ross moved to dismiss or for summary judgment on the issues. The district court denied summary judgment to Ross, and appointed counsel to Blake to proceed. Almost two years after Ross filed an answer to Blake’s complaint, Ross attempted to amend his answer, which Blake’s counsel agreed to do on the condition that Blake be allowed to file an amended complaint. When Ross filed his amended answer, he asserted a new defense, that Blake had not exhausted all of his remedies, and the district court granted the motion to amend without giving Blake the opportunity to object. Blake moved two different times to strike the amended answer, while Ross moved for summary judgement; the district court denied Blake and granted Ross’s summary judgment. After succeeding in his trial against Madigan, Blake appealed the denial of his claim against Ross, asserting that Ross waived his exhaustion defense because he failed to include it in his initial answer or motion, and that even if Ross had not waived his defense, Blake had exhausted all of his administrative remedies. The Fourth Circuit held that Ross’s exhaustion defense was without merit without reaching the issue of whether or not he had waived that defense.

The court first established that they would be reviewing the decision de novo, and, as it was summary judgment, viewing the evidence in the light most favorable to Blake, the nonmovant. The court then examined the PLRA’s requirements for exhausting remedies, noting that although “true exhaustion” is required, “an administrative remedy is not considered to have been available if a prisoner, through no fault of his own, was prevented from availing himself of it.” The court further noted the main source of conflict in this case: the intersection between the Administrative Remedy Procedure, (ARP), and the IIU, and examined the procedures required by both of those administrative bodies. Although Blake did not go through the ARP process, he contended that since he complied with the IIU investigation, he was prevented from the ARP process through no fault of his own. To decide this matter, the court first addressed the question of what legal standard Ross had to meet in order to show that Blake did not exhaust his remedies. After considering the policy reasons for the exhaustion requirement, the court noted that in certain cases, exceptions to the exhaustion requirement could be necessary, and adopted the two-part test from the Second Circuit’s decisions in Marias and Giano. To satisfy the two-prong test, the claimant must have procedurally believed he had exhausted his remedies because the administrative system was confusing, and substantively he must have exhausted his remedies by permitting authorities enough time to conduct an internal investigation. In applying the test, the court found that Blake very clearly satisfied the substantive prong, as the IIU’s one-year investigation into the incident provided them with ample time to deal with the situation. The court then looked to see if the process was confusing, examining the Handbook, Maryland Code of Regulations, and Maryland Department of Corrections Directives. The Fourth Circuit concluded that these three manuals were ambiguous, and Blake’s interpretation of their “murky process” was reasonable in light of the ambiguities. The court thus held that the district court erred when it granted Ross’s summary judgment motion on the basis of the exhaustion defense, and reversed and remanded for further proceedings.

Full Opinion

Jennie Rischbieter

 

U.S. v. WYNN, NO. 14-4599

Decided: May 20, 2015  

The Fourth Circuit held that a defendant’s prior drug convictions increased the extent to which a defendant’s marijuana offenses during supervised release were punishable under 21 U.S.C. § 844(a).  

This appeal stemmed from the district court determining, based on the defendant’s status as a recidivist drug offender, that certain drug offenses committed during defendant’s supervised release were Grade B violations under the United States Sentencing Commission’s advisory policy statements for violations of probation and supervised release. Anthony Wynn was convicted in 2003 of conspiracy to distribute and possession with the intent to distribute heroine and cocaine base, a violation of 21 U.S.C. §§ 846 and 841(a)(1). Wynn was sentenced to a term of imprisonment, followed by a five-year period of supervised release. As a condition of his supervised release, Wynn was required to refrain from the unlawful use of controlled substances and was required to submit to drug testing. After a petition from Wynn’s parole officer alleging numerous violations, Wynn admitted in front of the district court during a supervised release revocation hearing to possessing marijuana on the several alleged occasions.

Therefore, Wynn had his supervised release revoked. The probation officer calculated Wynn’s new term of imprisonment using the advisory policy statements. His calculation was based on his conclusion that, due to Wynn’s prior drug convictions, his marijuana offenses constituted Grade B violations because each offense was punishable by imprisonment of more than one year under an enhancement for recidivism. Wynn argued that the instances of possessing marijuana were Grade C violations because the penalty under federal law does not exceed a one-year term of imprisonment, and the district court was prohibited from the policy statements from considering his prior convictions. Wynn states that these prior convictions were only relevant in determining his term of imprisonment at his original sentencing hearing.   

Here, the Fourth Circuit had to determine whether the district court correctly determined that Wynn’s conduct of possessing marijuana constituted a Grade B violation under the policy statements. Wynn cited the Supreme Court’s decision in Carachuri-Rosendo v. Holder arguing that the district court was prohibited from finding that the drug offenses that he committed during supervised release were punishable under an enhanced statutory penalty. Specifically, Wynn argued that the government was in violation of 21 U.S.C. § 851(a)(1) by not filing notice signifying the intent to rely on Wynn’s prior convictions at his revocation sentencing.

Despite Wynn’s argument, the Fourth Circuit determined that nothing in the decision in Carachuri-Rosendo suggested that § 851 prevents a district court from considering a defendant’s prior convictions during a supervised release revocation hearing. The purpose of this hearing is to determine the gravity of the breach of trust committed by the defendant. Additionally, by the plain terms of the statute, § 851 applies only to the sentencing of criminal defendants who have been convicted of a crime following the “entry of a plea of guilty” or a “trial.”

Further, Wynn argued that the district court could only consider the “basic” penalty imposed for simple possession of marijuana, rather than the penalty for these acts committed by a recidivist defendant. To support his argument, Wynn relied on Application Note 1 to U.S.S.G. § 7B1.1. However, his argument failed to support his position. Instead of limiting a district court’s ability to consider the conduct of a defendant, Application Note 1 states that district courts should consider all conduct that affects the maximum penalties for a supervised release violation. Accordingly, the district court was correct in determining that Wynn’s instances of possessing marijuana during his supervised release equated to Grade B violations under the Guidelines’ Chapter 7 advisory policy statements.

Full Opinion

Austin T. Reed

USSERY v. MANSFIELD, NO. 14-7096

Decided: May 19, 2015

The Fourth Circuit affirmed a North Carolina district court’s denial of summary judgment to correctional officers implicated in a Section 1983 excessive force claim.

The 1983 claim arose from Ussery’s forcible extraction from his cell. According to Ussery, in the several days leading up to the extraction, officers had searched his cell repeatedly and never found any weapon or other contraband. On the date of the extraction, when told to exit his cell, Ussery refused to do so for fear that his cell would be “tossed.” Upon his refusal, Sergeant Mansfield pepper sprayed Ussery, but Ussery continued to refuse to exit. The parties agree about the extraction, but have significantly different versions of the event. While they all agree Sergeant Mansfield assembled a team of five correctional officers for the extraction and one to videotape the extraction per prison procedure, then telling the team that Ussery had a weapon and threatened to harm anyone who entered, Ussery denies ever possessing a weapon or making a threat. Furthermore, the team found no weapons. Ussery contends when his cell was unlocked, the officers restrained him on the floor and repeatedly beat, punched, and kicked him. While the video is consistent with Ussery’s account in some respects, Sergeant Mansfield stood in front of the camera for a significant period of time, blocking the view of the extraction. Later, Ussery had to go to a hospital for emergency treatment of his wounds and lacerations, which he contends medical records indicated caused an increase in bi-lateral hearing loss, neck pain, loss of vision in the right eye, chronic swelling and loss of feeling in his hands and knees, and recurring migraines. As a result, the North Carolina Department of Corrections launched an investigation into whether the officers employed excessive force. The report was inconclusive but stated the behavior of the officers appeared too aggressive for the situation. The officers denied punching and kicking Ussery and relied on a report from a prison doctor who had not personally examined Ussery that stated Ussery’s injuries were all minor and had since healed.

Given the timing of the incident, the applicable precedent (prior to the Wilkins standard adopted in 2010) required that an inmate must show more than de minimis injuries or that the defendants’ use of force be repugnant to mankind’s conscience. The trial court found there was insufficient evidence in the record regarding the extent of injuries and noted that the repugnant circumstances were a question of fact for the jury, thereby precluding a granting of summary judgment. The Fourth Circuit disagreed with the officers’ account that Ussery’s injuries were de minimis and pointed to the Department of Corrections investigation into the incident to establish that the injuries were likely severe if they warranted an investigation into excessive force. The court also compared Ussery’s injuries to comparable injuries that were not held to be de minimis.

Full Opinion

Kayla M. Porter

 

THE RADIANCE FOUND., INC. v. NAT’L ASS’N FOR THE ADVANCEMENT OF COLORED PEOPLE, NO. 14-1568

Decided: May 19, 2015

The Fourth Circuit held that The Radiance Foundation (“Radiance”) neither infringed upon, nor diluted through tarnishment, the National Association for the Advancement of Colored People’s (“NAACP”) trademarks when Radiance authored an article entitled “NAACP: National Association for the Abortion of Colored People.”  The Fourth Circuit vacated the district court’s injunction against Radiance, and remanded to the court with instructions to dismiss the NAACP’s counterclaims for trademark infringement and dilution. 

NAACP is the nation’s largest and oldest civil rights organization, and owns several trademarks, including “NAACP,” and “National Association for the Advancement of Colored People.” Radiance is a non-profit which seeks to educate the public from a Christian perspective about issues impacting the African-American community.  In January, 2013, Radiance’s founder wrote an article entitled “NAACP: National Association for the Abortion of Colored People,” which criticized the NAACP’s Image Awards, ties to Planned Parenthood, and its purported position on abortion.  The article appeared on two Radiance websites, and one third-party site, in somewhat different formats.  On both Radiance websites, the article appeared next to a link to donate to Radiance.  On the third-party site, the NAACP’s Scales of Justice graphic was beneath the article headline.  The NAACP sent a cease-and-desist letter to Radiance.  Radiance brought a declaratory action, arguing that it had neither infringed upon, nor diluted, NAACP’s trademarks, and that its use of the marks was protected under the First Amendment.  The NAACP counterclaimed for trademark infringement and trademark dilution.  The district court found for the NAACP on all claims, and granted a permanent injunction prohibiting Radiance from using “National Association for the Abortion of Colored People” in a way that created the likelihood of confusion or dilution among consumers.  Radiance appealed to the Fourth Circuit.

The Fourth Circuit began its analysis by noting the  values behind the Lanham Act and the First Amendment.  The Lanham Act, which protects trademarks from infringement and dilution, protects consumers from confusion in the marketplace.  The First Amendment provides for free expression of ideas.  To prevent the two from conflicting, for infringement to occur under the Lanham Act, the infringer must use the trademark holder’s mark “‘in connection with’ goods or services in a manner that is ‘likely to cause confusion’” as to the source of the goods or services.  The Fourth Circuit first found that Radiance had not used the NAACP’s marks in connection with the sale, or offering for sale, of goods or services. The speech here, the court found, was more political or social than commercial in nature while the language of the Lanham Act statute requires something more like commercial speech for the mark to have been used “in connection with” the sale of goods or services.  The court argued that, to extend Lanham Act protections against infringement to the trademark use here would bring the Act into conflict with the First Amendment, especially given that the definition of a good or service remains fuzzy.  The Fourth Circuit also countered the district court’s argument that Radiance had used the mark in connection with its goods or services because the Radiance article appeared in a Google search for “NAACP,” thereby potentially sending users to Radiance’s article, instead of NAACP’s websites, and thus creating a connection to NAACP’s goods and services.  The Fourth Circuit reasoned that the Lanham Act usually protects against use of the mark in connection with the infringer’s goods, not the trademark holder’s. The court further reasoned that Radiance used the trademark only in the article title, not in the website domain name, which previous case law had held to be enough for a mark to be used “in connection with” the sale of goods or services.  The court found that Radiance did not use the marks in close enough connection with the sale, or offer for sale, of any of its own goods or services, since it only provided information on its websites, and the use of the marks was too attenuated from the donation seeking on the sites.

The Fourth Circuit also found that there was no likelihood of confusion from Radiance’s use of the NAACP’s trademarks.  The district court found such confusion in part because surveys showed people thought NAACP stood for National Association for the Abortion of Colored People.  The Fourth Circuit, however, reasoned that trademark protections protect against confusion about the source of goods, not the marks themselves, nor the position of the trademark holders on political or social issues.  Further, the court thought it unlikely that consumers would think an article highly critical of the NAACP was from the NAACP.  The court felt that this was particularly true given the satirical nature of the mark use, the fact that the domain names and webpage headings where the article appeared indicated organizations other than the NAACP, and the fact that the trademark was used in a title, which is generally supposed to be about article contents, not authorship.

Finally, the Fourth Circuit found that there was no dilution by tarnishment here.  The Lanham Act prohibits using another’s mark in commerce in a way that dilutes the mark’s value by harming the reputation of the mark, but the Act provides explicit exceptions for: 1) fair use, 2) news reporting and news commentary, and 3) noncommercial use.  The Fourth Circuit found that the NAACP showed a prima facie case for dilution by tarnishment, but Radiance’s use was both a fair use, and a noncommercial use.  Radiance’s use was a fair use because it used the mark to critique the NAACP.  Radiance’s use was noncommercial because the article was not an advertisement, and the possibility of donating to Radiance on the website where the article appeared was not sufficient to make the use commercial.  Further, a reasonable consumer was unlikely to read the article as offering a transaction.  On this basis, and upholding Radiance’s First Amendment right to free speech, the Fourth Circuit vacated the district court’s injunction against Radiance

Full Opinion

Katherine H. Flynn

U.S. v. BERCIAN-FLORES, NO. 13-4504

Decided: May 14, 2015

The Fourth Circuit held that the statutory maximum term of imprisonment set by Congress, not the top sentence in the Sentencing Guidelines range, is determinative of whether a defendant committed a predicate felony under U.S.S.G. § 2L1.2(b)(1)(A)(vii), affirming the district court’s order to impose a twelve-level sentence enhancement for Bercian-Flores’s earlier conviction.

This appeal follows Bercian-Flores’s 2012 conviction for being found in the United States following his removal subsequent to his commission of a felony in violation of 8 U.S.C. §§ 1326(a) and (b)(1).  In 1997, Bercian-Flores had pled guilty to transporting an alien in violation of 8 U.S.C. § 1324(a)(1)(A)(ii), which had a statutory maximum punishment of five years imprisonment.  However, the Guidelines range for his 1997 conviction under the Sentencing Guidelines, which were mandatory at the time, was zero to six months’ imprisonment.  Bercian-Flores pled guilty to the 2012 charge, and the probation office prepared a presentence report, enhancing Bercian-Flores’s sentence based on his commission of a prior felony.  Bercian-Flores argued that the Sentencing Guidelines should control, and that his 1997 charge should not be considered a felony for sentencing purposes.  However, the district court disagreed and held that the statutory maximum sentence, not the Guidelines range, controlled.  Thereafter, Bercian-Flores appealed.

On appeal, Bercian-Flores argued that the district court erred in imposing the sentence enhancement for a prior felony because his 1997 conviction was not punishable by a term of imprisonment exceeding one year.  Specifically, Bercian-Flores argued that the district court did not have the authority to sentence him to more than six months for the 1997 conviction because the Guidelines range, which was mandatory in 1997, allowed for zero to six month term of imprisonment.  The Fourth Circuit, however, determined that the district court could have imposed a sentence of up to 5 years because the statutory maximum sentence set by Congress, not the top sentence in the Guidelines range, is determinative of whether the prior conviction constitutes a predicate felony under U.S.S.G. § 2L1.2(b)(1)(A)(vii).

Full Opinion

Charles Buist

U.S. v. BAJOGHLI, NO. 14-4798

Decided: May 11, 2015

The Fourth Circuit reversed and remanded the district court’s ruling because it abused its discretion in excluding evidence that was reasonably necessary for the government to make its case regarding the fraudulent scheme.  

Dr. Amar Bajoghli was indicted for executing a scheme to defraud when billing public and private healthcare benefit programs in violation of 18 U.S.C. § 1347, and for related offenses.  Dr. Bajoghli filed three pretrial motions to limit the government’s evidence against him at trial: (1) motion to strike allegations of certain financial details from the indictment; (2) motion in limine to exclude evidence of post-scheme conduct, which the government planned to introduce to show consciousness of guilt; and (3) motion in limine to exclude any evidence that was not directly related to one of the 53 executions specifically charged in the indictment.

The Fourth Circuit found that evidence of a scheme is an element of § 1347, and thus, evidence of the entire scheme is relevant to proving each particular act of fraud.  The Court held that when the government elects to only charge some of the executions of the scheme, its election does not limit its proof to only the charged executions.  Although a district court retains broad discretion to manage trials, “its discretion must be balanced by the need to give the government adequate latitude to prove its case….”  Additionally, because evidence not charged may be relevant to the nature of the fraudulent scheme, such evidence is intrinsic to the “scheme” element; therefore, Rule 404(b) does not limit it as “other bad acts” evidence.  Furthermore, the Fourth Circuit found that the district court misapplied Rule 403 because unfair prejudice “speaks to the capacity of some concededly relevant evidence to lure the factfinder into declaring guilt on a ground different from proof specific to the offense charged.”  Neither Bajoghli nor the district court identified any ground that would support a finding of guilt different from proof that is specific to the offense charged.  Thus, because the district court misapplied Rule 404(b) and Rule 403 in excluding evidence of Bajoghli’s post-scheme conduct, it abused its discretion.  Accordingly, the Fourth Circuit reversed and remanded.

Full Opinion

Chris Toner  

 

BROWN v. NUCOR CORP., NO. 13-1779

Decided: May 11, 2015

The Fourth Circuit vacated a South Carolina district court’s decertification order of a class of black steel workers who allege endemic racial discrimination at a South Carolina plant owned by Nucor Corporation. The workers’ employment discrimination claims rest upon the two theories of liability under Title VII: disparate treatment in promotions decisions and disparate impact of facially neutral promotions policies and procedures.

According to the Fourth Circuit, the appropriate standard of review for class certifications requires a two-step approach: (1) examining de novo whether the district court’s decision to reconsider the certification of the workers’ class violated Brown v. Board of Education, 347 U.S. 483 (1954) (Brown I), and (2) if no such violation occurred, whether the district court abused its discretion in decertifying the promotions class.  While the present case was pending in the Fourth Circuit and in the South Carolina district court, the United States Supreme Court established new law in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), the reestablished the requirements for class certification under Rule 23 of the Federal Rules of Civil Procedure. Specifically, in light of the Wal-Mart decision, the district court reexamined the issue of commonality for class certification after the Fourth Circuit ordered certification of the class on remand. On appeal, the standard for review is abuse of discretion.

The commonality element of class certification requires that “there are questions of law or fact common to the class.” According to the district court, the Wal-Mart decision “required decertification of the workers’ promotions class.” To decide the merits of the present case, the Fourth Circuit examined the new and old precedent to determine how Wal-Mart will alter a certification analysis. According to the Court’s analysis, it was bound by precedent in that: (1) the Court could engage in the merits of a claim only to the extent necessary to verify that Rule 23 has been satisfied; (2) plaintiffs may rely on other reliable data sources (such as Census data) when a company has destroyed or discarded the primary evidence in a discrimination case.

The Court observed that the statistical disparity is statistically significant from what would be expected if race were a neutral factor, the surrounding circumstances and anecdotal evidence of discrimination are present in the record, and plaintiffs present two common, class-wide contentions by asserting disparate treatment and disparate impact claims rooted in racial discrimination. Based these facts, the Court held that the district court abused its discretion by reconsidering the certification of workers under Brown I because the extent of the statistical disparity was sufficient to overcome the first prong of the two prong apporach. The Court also found that the district court abused its discretion in decertifying the workers’ promotions class based on the facts presented above and remanded the case to the district court with instructions to certify the class.

The dissent believes that the majority went beyond the bounds of the standard of review for a class certification decision. Decisions involving well-supported factual findings should be left to the district court, according to the dissent.

Full Opinion

Katie Ramseur

 

CERTAIN UNDERWRITERS AT LLOYD’S, LONDON v. COHEN, NO. 14-1227

Decided: May 5, 2015

The Fourth Circuit reversed the grant of summary judgment to the Underwriters and remanded the case to the district court to determine whether the answers Dr. Cohen supplied on the policy applications were material misrepresentations.   

This appeal stemmed from a magistrate judge granting summary judgment to the Underwriters due to Dr. Cohen’s material misrepresentations on his policy applications and denying Dr. Cohen’s motion in limine to exclude all references to the Consent Order. Cohen, on April 1, 2011, submitted initial applications for disability insurance. Each of the insurance applications contained questions that were pertinent to the applicant’s personal, financial, and medical information. Three of Cohen’s responses were at issue. Cohen checked the “Yes” box when asked “Are you actively at work?” In response to the question “Are you aware of any fact that could change your occupation or financial stability?,” Cohen checked the “No” box. Finally, when asked “Are you party to any legal proceeding at this time?,” Cohen checked the “No” box. Cohen signed final applications with these responses on August 8, 2011.

Notably, on April 12, 2011, after submission of his initial application and before submission of his final applications, Cohen signed a Consent Order with the Maryland State Board of Physicians, which suspended his license to practice. Cohen’s suspension would begin on August 2, 2011 and would last for three months. Further, the Consent Order stated that if Cohen returned to active practice after his suspension, he would be on probation for five years. On September 8, 2011, Cohen sought medical treatments for injuries to his thumb and leg. The Underwriters retained Disability Management Services, Inc. to investigate and adjust the potential claim. This investigation uncovered the Consent Order, and the Underwriters notified Cohen that they intended to rescind the policy. Under the policy’s grievance procedures and informal review, the rescission was upheld. Later, the magistrate judge concluded that the Underwriters validly rescinded the insurance policies due to the material misrepresentations made by Cohen in his applications.

Under Maryland law, a material misrepresentation on an insurance policy application allows for the recession on an insurance policy issued on the basis of that application. Applying the principles of contracts, the Fourth Circuit could only conclude that each of the questions to which Cohen allegedly gave false answers for is subject to more than one reasonable interpretation. Being “actively at work” was considered by the Underwriters to include surgery, from which he was banned. “Actively at work” was considered by Cohen to include the administrative duties of running his practice. The court determined that neither of these interpretations was unreasonable.  Each of the general questions contains undefined terms susceptible to more than one reasonable interpretation, “making them ill-suited to elicit the specific type of information the Underwriters claim to have requested.” On remand, the court may consider whether extrinsic or parol evidence can be used to cure the ambiguity. The Fourth Circuit noted that it is of course within the court’s discretion, on remand, to conduct any further proceedings that it finds appropriate, including further consideration of summary judgment.  

Further, Cohen contends that the admissibility of the Consent Order was contrary to Maryland law, which requires express consent of all parties before such an Order can be admitted in a civil proceeding. The plain language of Health Occupations § 14-410 bars the “admission of ‘any order’ of the Board in ‘a civil or criminal action’ except by consent, or when ‘a party to a proceeding before the Board’ brings a civil action, claiming to be ‘aggrieved by a decision of the Board.’” Therefore, only by the express stipulation and consent of all parties before the Board can a Board order be admitted into evidence in a civil proceeding like this one. There was no consent here. The Fourth Circuit held that while public documents, Board Orders are not admissible in a civil or criminal action absent consent, except for in an action brought by a party aggrieved by a Board decision. Therefore, the judgment of the district court was reversed and the case remanded.

Full Opinion

Austin T. Reed

HERNANDEZ-AVALOS v. LYNCH, NO. 14-1331

Decided: April 30, 2015

The Fourth Circuit vacated a final order of removal entered by the Board of Immigration Appeals and remanded the case for further proceedings.

The appeal arose out of Hernandez’s and her son’s illegal entry into the United States in 2008. Within a month, the Government initiated deportation proceedings. While Hernandez stipulated to the facts in the deportation proceeding, she sought asylum under the Immigration and Naturalization Act. At her hearing before the immigration judge, Hernandez related that she had received three death threats from the Mara 18 gang in El Salvador, two of which were directly in response to Hernandez’s refusal to allow the gang to initiate her son into its membership. After the third threat, the gang told Hernandez she had one day to turn her son over, prompting her illegal entry to the United States. She testified that seeking protection from the El Salvadoran government was not an option because it routinely arrested and then quickly released gang members who then sought retaliation. The immigration judge found Hernandez to be generally credible but denied her request for asylum. The Board of Immigration Appeals later reached the same conclusion in a separate opinion.

The Fourth Circuit summarized the requirements for asylum as follows: (1) a well-founded fear of persecution (2) on account of a protected ground under the Immigration and Naturalization Act (3) perpetrated by an organization the applicant’s home country is unable or unwilling to control. While the immigration judge and Board of Immigration Appeals found that elements two and three were lacking, the Fourth Circuit disagreed. Regarding the second element, one recognized protected ground is membership in a particular social group, which includes a nuclear family unit. Here, the court found that Hernandez’s relation to her son was the reason she was threatened, rejecting the government’s argument that the threats resulted from gang recruitment and was not related to the nuclear family. The Fourth Circuit found that the fact that the boy’s mother was threatened and not anyone else heavily supported a finding that the threats were directly because of a family relation. Additionally, regarding the third element, while the government argued that the El Salvadoran’s government imprisonment of a gang member for unrelated crimes demonstrated they were willing and able to control the threat, the Fourth Circuit noted that the record provided no evidence for what motivated the imprisonment. Hernandez testified that reporting to the police would not really be an option, and the immigration judge found her credible. This testimony, coupled with a 2011 State Department Human Rights Report for El Salvador noting that El Salvador suffered from widespread gang influence and corruption, was sufficient to satisfy the third element. Thus, the Fourth Circuit vacated the Order and remanded for proceedings consistent with its opinion.

Full Opinion

Kayla M. Porter

 

HARRIS v. NORFOLK S. RY. CO., NO. 13-1975  

 

Decided: April 30, 2015

The Fourth Circuit held that there was a genuine issue of material fact as to whether Norfolk Southern Railway Company (“Norfolk”) was the cause of Harris’s injuries, and on that basis, the court reversed the district court’s grant of summary judgment to Harris on the issue of liability.  The Fourth Circuit also held that the level of misconduct Harris alleged the railway had engaged in did not reach the level required under West Virginia law for punitive damages, and thereby affirmed the district court’s grant of summary judgment against Harris on the issue of punitive damages.

On July 21, 2009, Harris was working on the second floor of a Cobra Natural Resources (“Cobra”) coal-loading plant in West Virginia when Norfolk employees backed an empty set of Norfolk freight cars over the Norfolk railroad track which ran under the Cobra plant.  Though no one was aware, 35 feet from the plant, the track was corroded and cracked, and had been for “months or years before,” such that the rail had come apart.  This damage to the track caused several freight cars to derail and hit the Cobra plant’s support beams, causing the collapse of the loadout in which Harris sustained injuries.  Harris sued in state court, alleging negligence against Norfolk, and seeking compensatory and punitive damages.  Norfolk removed the case to federal court, and Harris and Norfolk both filed for summary judgment.  The district court found as a matter of law that Norfolk violated its duty to inspect the track, since the track was always covered with coal, dirt and debris, and that the railway knew or should have known of the damage to the track.  The district court thus granted summary judgment to Harris on the issue of liability, but granted summary judgment against him on the issue of punitive damages, finding insufficient evidence to sustain the award of such damages.  A district court jury subsequently awarded Harris nearly three million dollars, and Norfolk moved unsuccessfully for a new trial or remittitur.   Norfolk and Harris both appealed to the Fourth Circuit.

The Fourth Circuit began its analysis by noting that the Federal Railway Safety Act and the Track Safety Standards promulgated by the Secretary of Transportation created a duty for Norfolk to inspect the tracks, and provided some limited guidance on how the inspections should be completed.  The court then found that the district court erred in granting summary judgment to Harris on the issue of liability.  The court found, based on statutory and regulatory language and policy considerations, that Norfolk had a duty to address track defects of which it knew, or should have known.  The court further found that, based on regulatory language, practicalities, and policy considerations, the regulations did not require Norfolk to visually inspect every inch of track structure, but did give Norfolk an obligation to make a reasonable visual inspection of the tracks under all the circumstances.  The court found that Norfolk breached this duty when it failed for months and years to look at any embedded portion of the track, despite the fact that the track was so covered in coal and debris that an inspection made on foot or from a vehicle would not have allowed inspectors to see the rail beneath the rail head.  Despite Norfolk’s breach of duty, the court found that the evidence that Norfolk’s breach was the proximate cause of the derailment, and thus of Harris’s injuries, was not so one-sided that summary judgment should have been granted for Harris on the issue of liability.  The court further found that, under West Virginia law, punitive damages are reserved for cases of extreme negligence, and the evidence in the instant case did not support such a finding, or the resulting punitive damages.  As a result, the Fourth Circuit reversed the district court’s grant of summary judgment to Harris on the issue of liability, affirmed the district court’s grant of summary judgment against Harris on the issue of punitive damages, and remanded to the district court for further proceedings.

Full Opinion

Katherine H. Flynn

 

RAUB v. CAMPBELL, NO. 14-1277

Decided: April 29, 2015

The Fourth Circuit affirmed the district court’s decision to grant the Defendant summary judgment on the basis of qualified immunity and to deny Plaintiff’s request for injunctive relief.

This appeal stemmed from the district court’s granting of summary judgment to a mental health evaluator, Michael Campbell, for petitioning the state for a temporary detention order for the Plaintiff, Brandon Raub after Raub composed a series of ominous Facebook posts, which drew the attention of his former fellow marines.  Local officers, acting on Campbell’s recommendation, detained Raub for evaluation, and Raub was subsequently questioned at his home.  Thereafter, authorities placed Raub in custody and transported him to a local jail where Campbell asked Raub about his recent Facebook posts and radical beliefs.  After interviewing Raub, Campbell petitioned for and received a temporary detention order from a magistrate judge.  Raub was then taken to a hospital and then to treatment.  Raub subsequently filed suit under 42 U.S.C. § 1983, seeking damages and injunctive relief against Campbell for violating his Fourth and First Amendment rights.  The district court granted summary judgment to Campbell and denied Raub’s request for injunctive relief.  Thereafter, Raub appealed, arguing that Campbell violated his Fourth and First Amendment rights.  Additionally, Raub claimed that, even if his constitutional claims failed, he was still entitled to injunctive relief.

The court determined that summary judgment on Raub’s Fourth Amendment argument was proper because Campbell’s conduct was not proscribed by clearly established law and because his actions were reasonable under prevailing legal standards.  Moreover, the court determined that Raub failed to establish a viable First Amendment claim because Campbell’s decision to recommend Raub’s detention was not based solely on Raub’s statements, but it was also based on Raub’s demeanor, emails, the nature of his posts, and other facts that were indicative of Raub’s mental disturbance.  Lastly, the court rejected Raub’s claim for injunctive relief because Raub’s claim that he would be subject to unreasonable seizures and retaliation in the future were merely speculative.  Thus, the court affirmed the district court’s judgment.

Full Opinion

Charles Buist

JENKINS v. WARD, NO. 14-1385

Decided: April 27, 2015

The Fourth Circuit reversed and remanded the district court’s decision to deny dismissal of a trustee’s complaint because the trustee’s complaint was filed sixty-nine days after the creditors’ meeting, as opposed to the statutory limit of sixty days.

In 2012, Jenkins filed for Chapter 7 bankruptcy relief.  A creditors’ meeting was held on July 19 to discuss Jenkins’ financial affairs.  During a meeting, the trustee stated that she was “not going to conclude the meeting today.”  However, no notice of a continued meeting was ever filed and the meeting never reconvened.  The trustee filed a complaint objecting to Jenkins discharge due to Jenkins’ “general lack of cooperation” throughout the process.

As outlined in Bankruptcy Rule 4004(a), the trustee had to make the objection within sixty days after the meeting, but he didn’t object until sixty-nine days after.  Thus, the trustee’s objection to discharge was not timely.  Although trustee attempted to adjourn the creditors’ meeting on July 19, 2012, he failed to announce the date and time of the adjournment meeting or to file a statement thereafter containing that information.  Rule 2003(a) unequivocally requires these acts to effectuate an adjournment; therefore, the meeting was never adjourned and was actually concluded.  Accordingly, the Fourth Circuit dismissed trustee’s complaint because trustee didn’t properly adjourn the meeting, which means that the meeting ended on July 19, and therefore, trustee’s complaint was made sixty-nine days after the meeting.  Based on the foregoing, the Fourth Circuit reversed and remanded.

Full Opinion

Chris Toner

U.S. v. FOOTE, NO. 13-7841

Decided On: April 27, 2015

The Fourth Circuit held that defendant’s collateral appeal, based on §2225 allegations, did not state a claim of error that sufficiently fulfilled the high standards required in §2225, and affirmed the lower court’s decision.

The appellant, Foote, originally pled guilty to drug crimes that resulted in his designation as a “career offender,” and a sentence of 262 months. Under the sentencing guidelines, and due to a decision rendered in U.S. v. Harp, one of Foote’s prior drug crimes qualified him as a “career offender,” which elevated his offense level and the sentence range, and the district court sentenced him at the bottom of the sentencing range. Although Foote appealed, and the Fourth Circuit affirmed based on Harp, the Supreme Court vacated and remanded for consideration due to the decision in Kimbrough v. U.S. On remand, the district court applied the same sentence, and the Fourth Circuit again affirmed. However, a subsequent case, U.S. v. Simmons, abrogated Harp in light of Carachuri-Rosendo v. Holder, which held that a court should look to the conviction itself, and not the crime or sentence that a defendant could have been sentenced with when determining a defendant’s “career offender” status. Because the court announced that Simmons could be applied retroactively, and because this appeal was still pending at that announcement, appellant amended his §2225 complaint, asking the court to resentence him, and reduce his sentence.

The court first determined that, since the appeal was a matter of pure law, it could review the case de novo. The court then examined §2225 itself, noting that if the error is neither constitutional nor jurisdictional, then a district court would not have jurisdiction to hear the case unless the alleged error was of a nature of “exceptional circumstances where the need for the remedy afforded by the writ of habeas corpus is apparent.” The court first looked at U.S. v. Davis, a case where the court held that defendants could bring a §2225 claim when they are convicted for acts that are later determined to be non-criminal. The court then looked at other cases where §2225 claims were not allowed, such as when a district court’s failure to follow procedural rules did not prejudice the defendant. In between these two types of cases, what the court termed the “spectrum,” the court placed the kinds of cases where §2225 claims were unsuccessful, where the way the court’s sentencing was changed but not in a way that made the sentence unlawful. After looking at these cases, the court then proceeded to examine how three other circuits had decided cases similar to Foote’s, noting that those cases were “nationally consistent yet internally divided.” Although the three circuits reached the same conclusion, and that there is no circuit where  “a challenge to one’s change in career offender 21 status, originally determined correctly under the advisory Guidelines, is cognizable on collateral review,” the court also recognized that these were close decisions that needed to be addressed. The court then looked at two Fourth Circuit cases that held that errors in applying the Sentencing Guidelines normally could not be addressed in §2225 claims, and that errors in the “post-conviction context are grounded in actual innocence.” Furthermore, the court was “hesitant to declare that a fundamental defect or a complete miscarriage of justice has occurred in a situation in which Appellant was (and on remand, would again be) sentenced under an advisory Guidelines scheme requiring individualized analysis of the sentencing factors set forth in 18 U.S.C. § 3553(a).” Since Foote was not claiming innocence, and since the district court did not seem to have overstepped its discretion in sentencing, and since the Fourth Circuit did not think that the “career offender” designation was a “fundamental” error, and, even though the Fourth Circuit acknowledged that Foote’s sentence was increased due to the “career offender” status, the Fourth Circuit affirmed the district court’s decision.

Full Opinion

Jennie Rischbieter

SHAMMAS v. FOCARINO, NO. 14-1191

Decided: April 23, 2015  

The Fourth Circuit held that the imposition of all expenses in an ex parte proceeding, regardless of whether a plaintiff wins or loses, does not involve “fee shifting” that would implicate the American Rule but instead an unconditional compensatory charge imposed on a dissatisfied applicant who elects to engage the Patent and Trademark Office (PTO) in a district court proceeding.

This appeal stemmed from the district court granting the Director of the PTO’s request and ordering Shammas to pay the PTO a total of $36,320.49 in expenses, including the salary expenses of the PTO attorneys and a paralegal who were required to defend the Director. In June 2009, Shammas applied for a federal trademark for the mark “PROBIOTIC” to be used regarding the fertilizer products produced by his company. The trademark-examining attorney for the PTO denied Shammas’ application in an ex parte proceeding because the term was “generic and descriptive.” The Trademark Trial and Appeal Board affirmed this decision. Instead of appealing to the Federal Circuit, Shammas elected to bring this action against the PTO in district court, allowable under 15 U.S.C. § 1071(b)(1). The district court granted the PTO’s motion for summary judgment and ordered Shammas to pay the $36,320.49 in expenses that the PTO incurred in the proceeding. Shammas opposed this motion, claiming that the PTO was in essence claiming attorney’s fees and that § 1071(b)(3) did not, in authorizing the recovery of all expenses in the proceeding, explicitly provide for the shifting of attorney’s fees as would be required to overcome the American Rule. The district court granted the PTO’s motion in its entirety, reasoning that the terms “all expenses” clearly seem to include attorney’s fees.

Shammas’ main argument is the American Rule, which states that “the prevailing party may not recover attorneys’ fees as costs or otherwise.” Shammas argued “a district court may not read a federal statute to authorize attorney-fee-shifting unless the statute makes Congress’ intention clear by expressly referring to attorney’s fees.”  Shammas’ argument depended on the assumption that if § 1071(b)(3) were to be construed to include attorney’s fees, it would constitute a fee-shifting statute that would need to refer explicitly to attorney’s fees in order to overcome the presumption of the American Rule.

The Fourth Circuit determined that this assumption was incorrect under the circumstances of this case. A statute that requires the payment of attorney’s fees without regard to a party’s success is not a fee shifting statute that operates “against the backdrop of the American Rule.” It is clear that § 1071(b)(3) is not a fee-shifting statute that is held to the American Rule. This statute, instead, imposes expenses on the ex parte plaintiff, “whether the final decision is in favor of such party or not,” rather than imposing expenses based on whether the PTO prevails.  

Further, the reading that § 1071(b)(3) imposes a unilateral, compensatory fee, including attorney’s fees, on every ex parte applicant who elects to engage the resources of the PTO when bringing an action in district court, whether the applicant succeeds or fails, is confirmed by the statute’s structure and legislative history. This is mainly due to the higher costs of the district court having to review this case de novo. Shammas had the option of appealing the decision directly to the Federal Circuit, but he chose to commence a de novo civil action in the federal district court. By requiring the dissatisfied applicant to pay “all of the expenses of the proceeding,” whether successful or unsuccessful, Congress clearly intended to reduce the financial costs of the PTO in defending such a proceeding. Due to this specific purpose, it makes sense for all of the expenses to include the attorney and paralegal fees. Additionally, the statute’s legislative history shows that § 1071(b)(3) was intended to be a funding provision, created to relieve the PTO of the financial burden that results from the applicant’s decision to pursue the more expensive de novo review of the district court.

Therefore, the Fourth Circuit affirmed the decision of the district court. In his dissent, Judge King stated that § 1071(b)(3) makes no reference to attorney’s fees and does not accurately reflect Congress’ intention to authorize these awards. The American Rule is a well-settled tradition that should not have been disregarded. Judge King concluded his dissent by saying that “Absent explicit statutory language authorizing attorney’s fees awards, the courts can only speculate on whether the phrase ‘all the expenses of the proceeding’ includes the PTO’s attorney’s fees. Against the backdrop of the American Rule, however, the courts are not entitled to make educated guesses.”

Full Opinion

Austin T. Reed

 

JONES v. CLARKE, NO. 14-6590

Decided: April 22, 2015

The Fourth Circuit held that a federal trial court’s order granting habeas corpus based on a claim of ineffective assistance of counsel must be vacated and the petition remanded for dismissal.

In state court, Jones waived a jury trial after being charged with grand larceny and breaking and entering. During the period that Jones was awaiting trial, the victim visited Jones in jail, informed him that police had his fingerprints, and asked why he did it, to which Jones replied he made a mistake. While the only evidence explicitly connecting Jones to the crime, which involved the breaking of a window and theft of a television and other items, was a single fingerprint on the broken glass offered without the testimony of a fingerprint analyst, Jones’s attorney failed to object to the hearsay evidence. The judge ultimately held that the fingerprint evidence in conjunction with Jones’s admission to the victim, which his attorney argued was ambiguous and not a clear admission, constituted enough evidence to find Jones guilty beyond a reasonable doubt. The Supreme Court of Virginia ultimately denied Jones’s habeas petition, prompting Jones to file a petition with a federal trial court, which ultimately granted the relief on the grounds that the Supreme Court of Virginia unreasonably applied the Strickland v. Washington, 466 U.S. 668 (1984), standard in rejecting Jones’s ineffective assistance of counsel claim.

In vacating the trial court’s order, the Fourth Circuit noted that because the state supreme court had adjudicated the matter on the merits, a federal court lacked the ability to grant habeas relief unless the state court’s adjudication was (1) contrary to federal laws as determined by the United States Supreme Court or (2) based on an unreasonable determination of facts in light of the evidence. Additionally, the court noted that an ineffective assistance of counsel claim required both a showing of deficient performance by counsel and a resulting prejudice to the defendant. The court reasoned that here the Strickland standard was reasonably applied because there was no reasonable, substantial likelihood that the result would have differed in the absence of the fingerprint evidence because of Jones’s jailhouse admission to the victim. Since the judge explicitly found Jones’s statement to the victim to be an admission, the court must presume that the factual finding was correct. Accordingly, even if the fingerprint evidence had been excluded, Jones was not prejudiced by that evidence because of his jailhouse admission.

Dissent: The dissent noted that trial counsel did very little in the way of actually defending Jones, surrendering the Sixth Amendment right of confrontation and ultimately putting up no fight at all. The dissent expounded the trial judge’s statement that the fingerprint evidence combined with the jailhouse admission gave rise to guilt beyond a reasonable doubt as follows:  the logical conclusion of such reasoning was that the lack of fingerprint evidence would give rise to a reasonable probability of Jones’s acquittal.

Full Opinion

Kayla M. Porter

FREIGHT DRIVERS & HELPERS LOCAL UNION NO. 557 PENSION FUND v. PENSKE LOGISTICS LLC, NO. 14-1464

Decided: April 21, 2015

The Fourth Circuit held that bringing an action by filing a complaint, rather than filing an application by motion under the Federal Arbitration Act, is the proper way for a party to an arbitration under the Multiemployer Pension Plan Amendments Act of 1980 (“MPAA”) to seek to have an arbitration award modified or vacated.  On this basis, the Fourth Circuit reversed the district court’s dismissal of the Freight Drivers and Helpers Local Union No. 557 Pension Fund’s (“Pension Fund”) claim against Penske, and remanded to the district court.  

Between 2001 and 2004, Penske Truck Leasing transferred ownership of a subsidiary, Leaseway Motorcar Transport Company, to a third party in which Penske Truck Leasing retained a minority interest.  Leaseway stopped making contributions to the Pension Fund, which responded by assessing withdrawal liability against Penske Truck Leasing and affiliate Penske Logistics LLC.  The Penske Companies did not pay the liability, and the parties entered arbitration as provided for by the MPAA.  The arbitrator ultimately dismissed Pension Fund’s claim, finding that the Penske Companies were exempt from liability under an exception for trucking industry funds.  Pension Fund filed a complaint alleging that the trucking industry exception had been misapplied, and brought suit as “‘Freight Drivers and Helpers Local Union No. 557 Pension Fund, by its Trustee, William Alexander’” v. “‘Penske Logistics LLC [and] Penske Truck Leasing Co., LP.’”  The Penske Companies filed a motion to dismiss on the basis that Pension Fund did not have standing because it attempted to sue through one trustee, rather than through its four person Board of Trustees.  The district court granted Penske’s motion, and allowed Pension Fund 21 days to amend its complaint.  Pension Fund filed an amended complaint within the 21 day period, bringing suit through its Board of Trustees.  The Penske Companies filed a second motion to dismiss, arguing that a challenge to an arbitration award under the MPAA must be brought through a motion in accordance with the FAA rather than through a complaint.  Penske further argued that, even if Pension Fund’s amended complaint was a motion, it was untimely because more than 30 days had passed since the arbitration award, and it also failed to comply with local rules requiring a motion to be accompanied by a memorandum.  The district court granted Penske’s motion to dismiss, finding that the MPAA provides that arbitration proceedings should be conducted in accordance with the FAA, and the FAA requires parties wishing to vacate an arbitration award to do so by bringing a motion.  The district court, however, treated Penske’s complaint as a motion, but found it deficient for untimeliness, since under the Federal Rules of Civil Procedure, a motion cannot relate back to the original filing date as a complaint can, and for not containing a memorandum.  The district court denied Pension Fund’s motion for reconsideration, and Pension Fund appealed to the Fourth Circuit.

The Fourth Circuit first found that the MPAA requires that a party to an arbitration challenge the arbitration award through filing a complaint, rather than by filing a motion. The court argued that the plain meaning of the MPAA statutes, language surrounding those statutes, and parallel procedure under the statute for collecting withdrawal liability where there was no arbitration all suggest that a complaint is the proper form for challenging an arbitration award under the MPAA.  The court also found that the House Committee Report on the MPAA bolstered the argument that a complaint was the proper form for challenging an award.  The court also noted that even the district court here, reviewing the original complaint and motion to dismiss, analyzed the MPAA as requiring a civil action or complaint to review an arbitration award.  The court further found, on the basis of statutory and regulatory language, and case law, that there is a distinction between arbitrations under the MPAA, which must be conducted in accord with the FAA, and review of arbitration awards under the MPAA, which are to be commenced under MPAA rules by filing a complaint.  Having concluded that filing a complaint is the proper method to gain review of an arbitration award under the MPAA, the court then held that Pension Fund’s amended complaint was timely, because it related back, under Federal Rule of Civil Procedure 15, to Pension Fund’s original complaint.  The court reasoned that in Pension Fund’s amended complaint, Pension Fund remained the named party, and both the conduct challenged and the claim against Penske remained the same.  Thus, Pension Fund’s amended complaint could relate back to the filing date of the original complaint, which was within 30 days of the arbitration award.  The Fourth Circuit thus found that Pension Fund’s amended complaint was timely.  On this basis, the Fourth Circuit reversed the district court’s dismissal of Pension Fund’s claim, and remanded to the district court.

Full Opinion

Katherine H. Flynn

 

LEBLANC v. HOLDER, NO. 13-2474

Decided: April 21, 2015

Ashton LeBlanc petitioned for a review of the denial of his motion to reopen the denial of an I-130 petition filed on behalf of his son, Robert LeBlanc.  The court dismissed LeBlanc’s petition for lack of jurisdiction over the petition.

Ashton LeBlanc worked in Nigeria from 1968 to 1978 on off-shore oil rigs.  While in Nigeria, he entered into a relationship, and his son, Robert LeBlanc, was born on September 6, 1970.  Ashton left Nigeria in 1978.  In 2001, Robert entered the United States to visit his father.  During Robert’s visit, both Ashton and Robert decided that Robert should stay in the US.  In 2002, Ashton’s attorney, Stuart Snyder, filed an I-130, which was denied in May 2007.  Thereafter, Ashton and Robert remained in contact with Snyder about the appeal, and Snyder assured them everything was moving forward.  Moreover, in 2011, Ashton contacted a second attorney to look into Robert’s citizenship status.  Snyder assured the attorney that everything had been handled properly.  However, upon hiring a third attorney in 2011, Ashton learned that Snyder had not been diligent in performing his duties.  Thereafter, that attorney moved to reopen the denial of the I-130 petition with the Board of Immigration Appeals (BIA).  The BIA denied the motion in November of 2013 because Ashton LeBlanc had not made a claim of ineffective assistance of counsel against the second attorney” and Ashton subsequently filed a petition for review.

The court determined that it lacked jurisdiction over Ashton LeBlanc’s petition for review.  In the immigration context, the court’s jurisdiction is limited to reviewing a final order of removal.  It was undisputed, however, that Robert was not and had never been in deportation proceedings.  Thus, the court had no jurisdiction over Ashton’s petition for review because the petition for review was from Ashton’s denied motion to reopen his visa petition, not an order of removal against Robert.

Additionally, the court determined that 28 U.S.C. § 1631 did not apply to this case.  This section provides that when a petition for review is filed in a court that lacks jurisdiction, “the court shall, if it is in the interest of justice, transfer such action . . . to any other such court in which . . . the action could have been brought at the time it was filed or noticed.”  The court determined that the “interests of justice” did not require transfer because an I-130 could not have led to Robert gaining US citizenship.  Thus, the court dismissed Ashton LeBlanc’s petition.

Full Opinion

Charles Buist

DAN RYAN BUILDERS, INC. v. CRYSTAL RIDGE DEV., INC., NO. 13-2234

Decided: April 20, 2015

The Fourth Circuit affirmed the ruling of the district court to dismiss plaintiff’s tort claim seeking additional damages because plaintiff rested his claim solely on a breach of contract without alleging that defendant had an independent legal duty.

In 2005, Dan Ryan and Lang Brothers, Inc. (Defendant) entered into a Lot Purchase Agreement (LPA).  The LPA stated that Defendant was to build a fill slope that would provide grading on certain lots to accommodate construction.  Defendant completed the work and was paid in full by Ryan.  In 2007, cracks appeared in the basement slab and foundation walls of a partially constructed home.  The parties amended the LPA with Ryan agreeing to purchase the remaining lots and reapportioned the parties’ responsibilities.  Later that year, the slope behind one of the lots began sliding downhill toward a nearby highway.  Furthermore, Ryan began experiencing difficulties with Defendant’s stormwater management system, development permits, and entrance drive.

The court reasoned that Ryan’s tort claim failed under the “gist of the action” doctrine, which bars recovery in tort when the duty that forms the basis of the asserted tort claim arises solely from a contractual relationship.  The Fourth Circuit acknowledged the “principle of party presentation”, but “[a] party’s failure to identify the applicable legal rule certainly does not diminish a court’s responsibility to apply that rule.”  Thus, even though Defendant didn’t raise the “gist of the action” doctrine as a defense, the court can apply the defense because it is an “antecedent” and “dispositive” issue, since it is goes to the duty element of any tort claim.  Moreover, the Fourth Circuit found that Defendant had no separate legal duty besides the one owed in the contract.  Tort recovery is barred “where liability arises solely from the contractual relationship between the parties.”  Accordingly, the Fourth Circuit affirmed the dismissal of plaintiff’s tort claim seeking additional damages.

Full Opinion

Chris Toner

 

LEE v. CLARKE, NO. 13-7914

Decided: March 20, 2015

The Fourth Circuit held that Virginia’s state habeas court incorrectly applied the Strickland standard because they did not find prejudice in a lack of a heat of passion jury instruction, and reversed and remanded for a writ of habeas.

This case was an appeal from a dismissal of a writ of habeas corpus, in which appellant Lee claimed ineffective assistance of counsel due to his attorney’s failure to ask for a jury instruction that defined heat of passion.  In the original trial, when Lee was charged with murder, there was evidence presented that demonstrated that Lee killed the man after the man attacked him. Defense counsel therefore moved to proceed either on a second degree murder charge or manslaughter charge, since defense contended that the prosecution failed to show premeditation, and that there was no malice present since Lee was provoked. The trial court denied the motions, and the defense then presented their case and a witness who testified on Lee’s behalf. Defense counsel then moved to proceed solely on the manslaughter charges, but again trial counsel rejected the defense’s motions, and proceeded to ask both sides for the appropriate jury charges. Although there were several forms to choose from, neither side chose any charges that included the definition of heat of passion, although defense counsel attempted to distinguish between the definition of malice and the definition of heat of passion in his closing arguments. During deliberations, the jury was given an Allen charge twice, as well as a clarification of another legal term. The jury pronounced him guilty, and the Court of Appeals of Virginia upheld the conviction, and the Supreme Court of Virginia declined to hear his subsequent appeal. Lee then, with new counsel, filed a state habeas petition claiming that he received ineffective assistance of counsel due to his attorney’s failure to ask for a heat of passion jury charge. The Circuit Court of Richmond denied his appeal, as did the Supreme Court of Virginia. He then filed a federal petition in the Eastern District of Virginia, who denied his claim and also noted that the evidence against Lee was strong enough that he was not prejudiced by the lack of a heat of passion instruction.   

After asserting that it would review the proceedings de novo, the Fourth Circuit went on to define both the Antiterrorism and Effective Death Penalty Act of 1996 (“AEDPA”) test for habeas petitions and the Strickland two-prong test for ineffective assistance of counsel, and determined that it was appropriate to apply both simultaneously in this case. The court then looked at the facts of the case and, based on the facts present, said that because there were facts that were in dispute in the case, it was appropriate for it to go before the jury. However, the court firmly stated that in cases where there is “ample evidence” of heat of passion, it was ineffective to request a manslaughter instruction and fail to also request a heat of passion instruction. Since the court could not find that there was a legitimate strategic reason for failing to request the instruction, defense counsel failed the first prong. The Fourth Circuit then examined the second prong, whether or not there was prejudice by the failure to request the instruction. The court noted that even though the Director argued that it was sufficient for defense counsel to mention heat of passion in closing arguments, juries do not give closing arguments the same weight as they do jury charges. Furthermore, even though defense counsel attempted to distinguish between malice and heat of passion, he did so without the benefit of the jury having heard the full definitions of those terms. Based on the facts of the case, which the court believed created a substantial jury question that could have resulted in a different outcome had the jury been able to choose based on knowing the definition of heat of passion, as well as on the fact that Lee’s sentence would have been considerably shorter had he been charged with manslaughter, the Fourth Circuit reversed the district court’s order and remanded to issue Lee a writ of habeas corpus unless Virginia decided to hold a new trial.

Full Opinion

Jennie Rischbieter

U.S. v. FLORES-GRANADOS, NO. 14-4249

Decided: April 15, 2015

The Fourth Circuit held that North Carolina’s second-degree kidnapping statute constituted a “crime of violence” so as to justify a 16-level sentence enhancement pursuant to United States Sentencing Guidelines §2L1.2(b)(1)(A)(ii) for a prior conviction of a crime of violence. Accordingly, it affirmed the enhancement of Flores-Granados’s conviction of illegal reentry to the United States after deportation based on a prior second-degree kidnapping conviction in North Carolina.

Flores-Granados was convicted of two counts of second-degree kidnapping in North Carolina state court in 2007 and deported to Honduras thereafter. At some point before August 5, 2013, when he was arrested in Virginia for possession of a controlled substance and assault and battery, he reentered the United States illegally. Sometime afterwards, he pled guilty to a charge of illegal reentry. While the initial pre-sentence investigative report recommended only an 8-level enhancement for a previous conviction of an aggravated felony, the government argued, and the probation office agreed, that the prior kidnapping convictions constituted crimes of violence so as to warrant a 16-level sentence enhancement. The trial court agreed with the 16-level enhancement, noting that it did not accept the enhancement based merely on the title of the offense but on Flores-Granados’s use of a gun, threats, and a screwdriver to stab the victim, which illustrated that the crime was indeed one of violence.

While affirming the sentence enhancement, the Fourth Circuit held that the district court erred in referring to facts of the offense in enhancing Flores-Granados’s sentence rather than relying on a “categorical generic definition” of the offense to determine if the following elements were satisfied: (1) the unlawful restraint or confinement of another, (2) by force, threat, or deception (or, in the case of minors, without parental consent), and (3) either (a) for a specific nefarious purpose or (b) in a manner substantially interfering with the victim’s liberty. In defining these elements, the court relied on the United States Supreme Court’s test for a “violent felony” under the Armed Career Criminal Act, which adopts the “generic, contemporary meaning” of a crime. Comparing North Carolina’s statute with the MPC’s and other states’, the court held that North Carolina’s statutory framework was not broader than the generic meaning, particularly because it explicitly required nefarious intent. Given this requirement, the court held that all requisite elements had been met and upheld Flores-Granados’s sentence.

Full Opinion

Kayla M. Porter

 

 

HERNANDEZ v. HOLDER, NO. 14-1148

Decided: April 14, 2015

The Fourth Circuit held that 8 U.S.C. § 1229b(b)(1)(C) applies to both legal aliens and illegal aliens, and renders both ineligible for cancellation of removal from the United States when they have committed a crime of moral turpitude which falls under 8 U.S.C. §§ 1182(a)(2), 1227(a)(2), or § 1227 (a)(3), even if the crime committed would otherwise fall under a petit-offense exception within those statutes.  The Fourth Circuit thus upheld the Board of Immigration Appeals’s (“BIA”) denial of Marina Hernandez’s application for cancellation of removal from the United States.  

Hernandez, a native and citizen of El Salvador, entered the United States illegally around 1997, and has lived in Virginia since then with her four U.S. citizen children.  In 2001, Hernandez was given temporary protected status, which prevented her removal to El Salvador on the basis that return there would be unsafe.  In January, 2007, Hernandez was convicted of petit-larceny under Virginia statute, and was sentenced to 30 days in jail.  When she did not respond to a request for documentation concerning her criminal record, U.S. Citizenship and Immigration Services terminated her application for renewal of her protected status.  In March, 2009, the U.S. Department of Homeland Security brought removal proceedings against Hernandez, who they argued was in the United States illegally.  Hernandez conceded that she was removable, but filed an application for cancellation of removal under 8 U.S.C. § 1229b(b)(1), arguing that her removal would be a hardship on her children.  The immigration judge pretermitted the application, finding that the petit-larceny conviction made Hernandez ineligible for cancellation of removal, and ordered Hernandez returned to El Salvador.  Hernandez appealed to the BIA.  The BIA dismissed her appeal, finding that Hernandez had conceded that petit-larceny was a crime of moral turpitude under 8 U.S.C. § 1227(a)(2), and finding that that the petit-offense exception to 8 U.S.C. § 1182(a)(2) did not apply to offenses described in 8 U.S.C. § 1227(a)(2), and that the offenses described in 8 U.S.C. §§ 1227(a)(2) and 1227(a)(3) applied to both legal and illegal aliens, including Hernandez.  Hernandez appealed to the Fourth Circuit.  

The Fourth Circuit first found that the BIA’s decision in this case, and in its prior case of Matter of Cortez Canales, 25 I. & N. Dec. 301 (2010), 2010 WL 3250517, were entitled to Chevron deference.  In Cortez Canales, which the BIA relied on in deciding this case, the BIA found that 8 U.S.C. § 1229b(b)(1)(C) cross-referenced only the offenses listed in 8 U.S.C. §§ 1182(a)(2), 1227(a)(2), and 1227(a)(3), not the substantive operation of the offenses.  Thus, the BIA held in this case that because Hernandez committed the type of crime listed in 8 U.S.C. §1227 (a)(2), she was ineligible for cancellation of removal, even though substantively, the section did not apply to her, because it refers to aliens lawfully admitted, which Hernandez was not.  The BIA further found that 8 U.S.C. §1227 (a)(2) did not allow for a petit-offense exception.  The Fourth Circuit found that, while the BIA’s decision in this case was rendered by a single person, the BIA’s Cortez Canales decision, on which the instant decision relied, was rendered by a three judge panel, and thus both decisions were due Chevron deference, since both involved statutory construction by the agency charged with applying the statute.  The Fourth Circuit then found, based on statutory language, that both unadmitted, and admitted but deportable, aliens can be ineligible for cancellation of removal for committing a crime of moral turpitude.  The court  argued that while its reading of 8 U.S.C. § 1229b(b)(1)(C) might not be the only reasonable reading, it was consistent with the BIA’s analysis in Cortez-Canales, which was due Chevron deference.  On this basis, the Fourth Circuit upheld the BIA’s denial of Hernandez’s appeal, and denied her petition for review.

Full Opinion

Katherine H. Flynn

YOUNG v. UNITED PARCEL SERVICE, INC., NO. 11-2078

Decided: April 10, 2015

The Fourth Circuit affirmed the district court’s conclusion that Young did not establish a prima facie case of pregnancy discrimination against her employer, United Parcel Service (“UPS”).

This appeal followed the district court’s decision to grant summary judgment to Young’s employer, UPS, on her claims under Title VII of discrimination on the basis of race, sex, and pregnancy after UPS would not allow her to return to work while she was pregnant.  Young requested a leave of absence in July of 2006 to try a round of in vitro fertilization, and the UPS occupational health manager, Carolyn Martin, granted Young’s request.  In September, 2006, Young gave her supervisor a doctor’s note, which stated that Young would not be able to lift more than 20 pounds for the first 20 weeks of her pregnancy and no more than 10 pounds thereafter.  Martin informed Young that UPS would not permit her to work if Young could not lift 20 pounds.  In October of 2006, Young had a check-up with her midwife, Cynthia Shawl, who wrote a letter recommending that Young not lift more than 20 pounds.  Based on these lifting limitations, Martin subsequently determined that Young could not return to work until she was no longer pregnant.  The Capital Division Manager in the D.C. Building, Myron Williams, affirmed Martin’s decision in November of the same year.  Young subsequently went on an extended leave of absence, receiving no pay and losing her medical coverage by the end of the year.  Thereafter, Young filed her discrimination claims, and the district court granted summary judgment for UPS.  This appeal followed.

On appeal, Young rested her claims on two arguments.  First, she argued that UPS violated the Americans with Disabilities Act (ADA) by impermissibly regarding her as disabled.  The court determined that Young could not establish that she had a disability as defined in the ADA because she could point to “no more than the objective fact of her pregnancy,” and she could not show that UPS’s occupational health manager, Carolyn Martin, subjectively believed that Young was disabled.  Second, Young claimed that UPS violated the Pregnancy Discrimination Act (PDA) by discriminating against her because she was pregnant.  The court determined that Young could not show any direct evidence of pregnancy discrimination. Moreover, the court determined that Young could not offer evidence sufficient to make out a prima facie case of discrimination because Young could not establish that other, similarly-situated employees “received more favorable treatment.”  Accordingly, the court affirmed the district court’s order.

Full Opinion

Charles Buist

U.S. v. BEYLE, NO. 13-4985

Decided: April 3, 2015

This is an appeal from a jury trial convicting the defendants of murder. Beyle and Abrar were Somali pirates who were part of a group that raided an American ship and took four Americans hostage. During a confrontation with the US Navy out in the middle of the ocean, the pirates killed the four American hostages. Both men were convicted of murder.  Beyle appeals, claiming that the murders did not take place on the high seas. Abrar claims that his Fifth and Sixth Amendment rights were violated because he was not able to call pertinent witnesses to prove that he had been forced into piracy. However, since the Fourth Circuit determined that the pirates were on the high seas when the murders took place, they affirmed Beyle’s conviction. Furthermore, they concluded that Abrar’s Fifth and Sixth Amendment rights were not violated, and confirmed his convictions as well.

After an in-depth discussion of the circumstances surrounding the murder of the hostages, the Court first looked to the Constitution’s provisions on piracy and the high seas, and determined that the statutes used to convict Beyle were constitutional. Next, the Court addressed Beyle’s argument that even if the statutes weren’t facially unconstitutional, he wasn’t actually on the high seas when the murders took place, and so the Court had no jurisdiction. The Court thus addressed the issue of whether or not a person is considered “on the high seas” if they are thirty to forty nautical miles off the coast of Somalia, a question that they reviewed de novo. To determine this question, the Court first looked to various case law to determine the meaning of “high seas,” defining it as “beyond the boundary of the various territorial waters,” and looked to customary international law to see if it supports such a meaning. The Court looked to the Geneva Convention on the High Seas as well as the UN Convention on the Law of the Sea (UNCLOS). According to the UNCLOS, there is an exclusive economic zone (EEZ) that is within two hundred miles of a nation’s coast. Beyle contended that this meant he was not on the high seas; however, the Court pointed out that although that zone has special protections, it is still considered the “high seas,” and at any rate, special economic protections are quite different from a nation’s exclusive authority to punish criminals. Finally, the Court established, through the weight of the authorities it examined, that the outer territorial limits for a country is twelve nautical miles, and thus, the pirates were on the high seas when they murdered the Americans, and therefore fell within American jurisdiction. The Court noted that although the United States is not a signatory to the treaty, the United States still recognizes the treaty as customary international law, so its provisions should apply, and that furthermore the U.S. had a policy in place that it does not recognize claims that a country’s territory extends beyond the twelve nautical miles. Although Beyle raised the argument that Somalia passed legislation that extended its territory to two hundred nautical miles, the Court rejected this argument by pointing out that since Somalia signed onto UNCLOS, they agreed to be bound by the twelve nautical mile restriction in the treaty, so their territory does not extend beyond that. The Court also considered the policy implications of extending Somalia’s territory to the two-hundred-mile designation, and concluded that policy reasons point in favor of limiting their territory to twelve nautical miles.

As to Abrar’s claims, the Court looked to the Constitutional provisions, noting that the Sixth Amendment right is not unlimited, and that the Sixth Amendment does not grant the witness the right to call any and all witnesses. The problem for Abrar was that all of the witnesses he sought were foreign nationals, and thus were outside of the court’s power to subpoena, due to a problem created by Somalia, a problem that the U.S. did not have the authority or power to resolve. The Court also noted that there was little evidence that the testimony of the witnesses would even have been material to Abrar’s duress defense, so their absence did not work a hardship on his defense. Furthermore, Abrar was given multiple opportunities to prepare his defense, and the Court noted that the weight of the evidence against Abrar was so strong that they did not see a reason to disturb the jury’s verdict.

Accordingly, the Court affirmed the District Court’s orders against both defendants.

Full Opinion

Jennie Rischbieter

ANTONIO V. SSA SEC., INC., NO. 13-1031

Decided: April 3, 2015

The Fourth Circuit affirmed the ruling of the district court to grant SSA Security, Inc. summary judgment on the Homeowners’ negligence-based claims and under Md. Code Ann. § 19-501 (“Maryland Security Guards Act”) because the common law doctrine of respondeat superior does not expand to security companies.

The appellants (“Homeowners”) consist of 30 victims of one of the largest residential arsons in Maryland.  The Homeowners alleged that one of SSA Security, Inc.’s security guards was responsible for the arson.

After affirming the grant of summary judgment on the Homeowners’ negligence-based claims, the Fourth Circuit certified to the Court of Appeals of Maryland the question of whether, based on the Maryland Security Guards Act, an employer may be responsible for off-duty criminal acts that an employee planned while he or she was on duty.  The Court of Appeals of Maryland responded in the negative.  Next, the Fourth Circuit analyzed the Maryland Security Guards Act using the canons of statutory interpretation and concluded that § 19-501 has the same meaning as Maryland’s common law doctrine of respondeat superior.  Subsequently, the Homeowners did not challenge the district court’s analysis under the common law and conceded the issue.  Accordingly, the Fourth Circuit affirmed the grant of summary judgment in favor of SSA Security, Inc.

Full Opinion

Chris Toner

W. VA. CWP FUND v. BENDER, NO. 12-2034

Decided: April 2, 2015 

The Fourth Circuit held that the Department of Labor acted within its regulatory authority in requiring the operators of coal mines to show, in the case of miners who meet the criteria under the Black Lung Benefits Act for the presumption, that “no part of the miner’s respiratory or pulmonary total disability was caused by pneumoconiosis.” 20 C.F.R § 718.35(d) (2014). Additionally, the Fourth Circuit held that the decision from the Administrative Law Judge (ALJ) to award benefits to the miner was supported by substantial evidence.

This appeal stemmed from an award of benefits to Page Bender, Jr. under the Black Lung Benefits Act. 30 U.S.C. §§ 901 through 945. The Act is intended to provide benefits to coal miners who are completely disabled due to pneumoconiosis (black lung disease) and to surviving family dependents of those miners who died due to the disease. Under § 921(c)(4) of the Act, there is a rebuttable presumption of total disability due to pneumoconiosis. This presumption exists if the miner worked for at least 15 years in underground coal mines, if a chest x-ray does not show the presence of complicated pneumoconiosis, and if there is other evidence that shows the existence of a totally disabling respiratory or pulmonary impairment. In 2013, the Department of Labor promulgated a revised regulation, which was at issue in this case. The regulation stated that the party opposing the award of benefits may rebut this presumption by “establishing that no part of the miner’s respiratory or pulmonary total disability was caused by pneumoconiosis….” 20 C.F.R. § 718.305(d)(1) (2014). Basically, any party who is looking to rebut the presumption must “rule out” any connection between a miner’s pneumoconiosis and his disability.

Bender was employed by an underground coal mine for 21 years and stopped working in the mines around 1995. Additionally, Bender smoked daily one to two packs of cigarettes for over 40 years, and Bender continues to smoke three to four cigarettes each day. Bender is in extremely poor health suffering from lung cancer and diabetes. Bender filed a claim to receive black lung benefits in 2009 after previously being denied benefits in 2003. The ALJ applied the statutory presumption due to the 21 years Bender had worked in the mine and the medical consensus of his disabling respiratory condition. At the time of the ALJ’s decision, the current “rule-out” version of the regulation providing the standard for rebuttal had not yet been promulgated. However, the ALJ applied an analogous “rule-out” standard that had been used in previous instances. During the hearing, the coal mine operator provided expert opinions from three physicians to rebut this presumption stating that Bender’s pneumoconiosis was not do to the inhalation of coal mine dust, but due to his cigarette use, lung surgery, and cancer treatments. The ALJ accorded very little weight to these opinions because the experts did not sufficiently explain why Bender’s worsened condition could not be due to coal workers’ pneumoconiosis, a progressive disease. Bender provided an expert with conflicting evidence, stating that Bender’s exposure to coal dust was a major contributor. The ALJ determined that the operator had failed to rebut the presumption by showing that Bender’s pneumoconiosis did not in any way contribute to his disability, and determined Bender should be awarded benefits.

In addressing the operator’s legal challenge to the “rule-out” rebuttal standard of the regulation promulgated by an executive agency, the Fourth Circuit applied the principles of deference presented in Chevron v. Natural Resources Defense Council. Under the first step of Chevron, the operator argued that the rebuttal standard in the statute is unambiguous and applied only to the Secretary. The operator believed the proper rebuttal standard would be one that would allow the operator to rebut the presumption in the statute through showing the miner’s pneumoconiosis is not a “substantially contributing cause” of their total disability. The Fourth Circuit distinguished the holding of the Supreme Court in Usery v. Turner Elkhorn Mining Co., where the “rule-out” standard did not apply to operators, by explaining that Usery was decided before the 1978 amendments to the Black Lung Benefits Act. Additionally, the Supreme Court in Usery did not answer whether Congress left a gap in § 921(c)(4) that the agency was permitted to fill by regulation, or whether application of the “rule-out” standard to coal mine operators in a regulation would be a reasonable exercise of agency authority in filling the gap in the statute. The Fourth Circuit determined that because the statute does not speak to the standard operators must meet to rebut the presumption, Congress intended for the “gap” to be filled by the agency.

Further, under the second step of Chevron, the Fourth Circuit determined that the regulation set forth by the Department of Labor was a reasonable exercise of authority within the gap left open to the agency by Congress. There was no showing that Congress intended a different interpretation of the statute, and the “rule-out” standard unquestionably advances Congress’ purpose and intent in enacting the statutory presumption. Congress implemented the statutory presumption to make it easier for those miners most likely disabled by the coal dust to obtain benefits. In practice, the operators will only have to satisfy the “rule-out” standard when necessary elements of presumption exist. The alternative rebuttal standard, suggested by the operators, would effectively nullify the statutory presumption for coal miners whom Congress intended to protect. Therefore, the “rule-out” standard presented in § 718.305(d) is a reasonable exercise of the agency’s authority under Chevron, and the regulation applies to both the Secretary and coal mine operators.

Finally, the operator argued that the decision of the ALJ to award benefits was not supported by substantial evidence due to the ALJ declining to give credit to the operator’s medical experts. Following the regulation, an operator must establish that the miner’s disability is attributable exclusively to a cause other than pneumoconiosis. A medical expert must explain why pneumoconiosis was not at least a partial cause of the disabilities of the miner. The Fourth Circuit deferred to the determination of the ALJ concerning the proper weight to be accorded competing medical evidence. It was clearly within the discretion of the ALJ to weigh the credibility of the experts. The Fourth Circuit concluded that they would not go against the decision of the ALJ to credit the opinion of one expert to another. Accordingly, the decision from the ALJ to award benefits to Bender was affirmed.

Full Opinion

Austin T. Reed

 

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

Decided: April 2, 2015

The Fourth Circuit held, adopting the answers to certified questions to the Supreme Court of Appeals of West Virginia, that a person owning an interest in a West Virginia common law “mining partnership” must prove such partnership with a deed, will, or other written acquaintance and that a general partnership owning leases to extract oil and gas from real property need not be evidenced by a written instrument for a person to prove he/she is a partner of that general partnership. In so holding, the court affirmed the district court’s judgment in part, vacated it in part, and remanded it.

This appeal arose out of a mining partnership venture between Valentine and Sugar Rock, Inc., among others, which owned certain mining leases. Valentine filed the suit as a diversity action alleging fractional working interests in mining partnerships and demanding an accounting for the partnership as well as damages. Sugar Rock, Inc. responded to Valentine’s Complaint with a counterclaim for cumulative operating expenses of Valentine’s working interests in the partnerships. The district court granted Sugar Rock, Inc.’s motion for summary judgment on the ground that Valentine could not evidence his co-ownership of leases under certain mining partnerships. Thereafter, Valentine sought to voluntarily dismiss his action against Sugar Rock, Inc. so that he could bring a class action styled Washburn v. Sugar Rock, Inc., which included nine other purported owners of working interests in the mining partnerships. Upon the Washburn plaintiffs’ motion for partial summary judgment, the district court held that the plaintiffs were partners in the mining partnerships regardless of their ability to produce a written instrument evidencing such.

The reasoning that the Supreme Court of Appeals of West Virginia gave in its Order that was adopted by the Fourth Circuit reflected the idea that a mining partnership requires partners to be co-owners of mineral interests, and under the Statute of Frauds, such partnership interest may only be evidenced through a written instrument. On the other hand, a general partnership solely owns leases to extract minerals itself, making it impractical to require a general partner to produce a written instrument of the property interest because a stake in a general partnership need not be proven by a purported partner through a deed, will, or other written instrument under West Virginia Law.

Full Opinion

Kayla M. Porter

U.S. v. HELTON, NO. 13-4412

Decided: April 2, 2015

The Fourth Circuit held that, under the facts of the case, a lifetime term of supervised release following a 60 month term of imprisonment was both substantively and procedurally reasonable, and affirmed the district court’s sentence.

The West Virginia Internet Crimes Against Children Task Force, with the help of the FBI, caught the 19-year-old defendant, Steven Helton (Helton), with 961 child pornography images on his computer, of which 42 were actively accessible for viewing.  Helton alleged that he had been sexually abused as a juvenile, and admitted he had sexually abused another minor while a minor himself, and that he had a history of viewing child pornography, for which he had sought unsuccessful treatment.  A federal grand jury indicted Helton for two counts of knowing receipt and possession of child pornography under 18 U.S.C. §§ 2252A(a)(2), (a)(5)(B), and § 2252A(b)(1)-(2).  Helton pled guilty to one count of knowing possession of child pornography under U.S.C. § 2252A(a)(5)(B) and § 2252A(b)(2).  Following the preparation of a presentence report and a sentencing hearing, the district court judge sentenced Helton to 60 months imprisonment and a lifetime of supervised release.  Helton appealed the supervised release portion of the sentence.

The Fourth Circuit found the lifetime term of supervised release both substantively and procedurally reasonable.  The Court said that sentences within the Sentencing Guideline range are presumed substantively reasonable.  Here, the lifetime supervised release was within the Sentencing Guideline under U.S.S.G. § 5D1.2(b), and within the statutory rule under 18 U.S.C. § 3583(k).  Thus, the supervised release term was substantively reasonable.  For a sentence to be procedurally reasonable, the sentencing judge must consider the factors under 18 U.S.C. 3553(a), and explain why the particular sentence fits the goals of sentencing.  The Fourth Circuit found that the district court judge specifically reviewed the factors under 18 U.S.C. 3553(a) in fashioning her sentence.  Further, the district court judge granted a downward departure from the prison term of 78 to 97 months recommended in the presentence report, finding that in light of Helton’s age, lack of prior criminal convictions, the seriousness of the crime, and the lifetime term of supervised release, the interests of punishment and deterrence would be served by the shorter prison term.  The Fourth Circuit further noted that the U.S. Sentencing Commission Guidelines Manual specifically recommends the maximum supervised release term of lifetime supervised release for sex offenses.  Finally, the court noted that Helton could petition to reduce his supervised release term after completing one year of supervised release.

Judge Gregory wrote a separate concurring opinion.  He found that the lifetime supervised release sentence imposed in this case was both substantively and procedurally reasonable, though he felt the case was closer for substantive reasonableness.  Judge Gregory wrote separately to warn against granting “undue deference” to the Sentencing Guidelines, which are advisory.  He noted that the Sentencing Guidelines for child pornography cases are unusual, and can lead to under- or over-sentencing for the actual crime committed.  Against this backdrop, he warned that a sentence within the Guideline range – at least in the area of child pornography crimes – may not, in fact, be substantively reasonable under all the circumstances of a given case.

Full Opinion

Katherine H. Flynn

UNITED STATES v. RANGEL, NO. 13-7445

Decided: April 1, 2014

The Fourth Circuit affirmed the judgment of the district court and denied Rangel’s motion to vacate his conviction and sentence under 28 U.S.C. § 2255, alleging that his trial and appellate counsel had rendered constitutionally ineffective assistance.

In October of 1992, Rangel and alleged co-conspirators were arrested for possessing 5.25 pounds of marijuana.  Upon questioning Rangel’s alleged co-conspirators, police learned details regarding the men’s drug dealing enterprise.  Specifically, the police learned that the men had been driving to Mexico and San Antonio, TX and bringing back around 50 pounds of marijuana each trip.  The men had been doing this for several years.

On November 28, 1995, a federal grand jury indicted Rangel, charging him in four counts: Count 1 for conspiracy to distribute over 1,000 kg of marijuana from 1990 through 1995; Count 4 for possession with intent to distribute marijuana on September 30, 1992; Count 7 for distribution of marijuana on October 1, 1992; and Count 10, which was later dismissed.  Following his indictment, Rangel fled to Texas, where he evaded arrest until March 23, 2010.  Thereafter, a jury tried Rangel and found him guilty on the charges in the indictment on August 25, 2010.

Based on his conviction and, more specifically, that the court attributed 1000 kg of marijuana to Rangel, the mandatory minimum sentence was 120 months.  Moreover, the presentence report provided that his advisory guideline range was 121 to 151 months.  If, however, the court had attributed 50 kg or less to Rangel, the default statutory term would have been 0 to 5 years instead of 0 to 20 years.

Rangel argued that his trial counsel was ineffective for not requesting an instruction that the jury find a drug weight based on the amount attributable to or reasonably foreseeable by Rangel; that his appellate counsel was ineffective for not raising the failure to request that instruction as an issue on direct appeal; and that his trial counsel was ineffective for failing to object to the drug weight and advisory guidelines range of sentencing.

The court applied the Strickland v. Washington test for ineffective assistance of counsel, which provides that a defendant must show (1) that “counsel’s performance was deficient,” and (2) that “the deficient performance prejudiced the defense.”  The court determined that Rangel’s trial counsel did not render ineffective assistance of counsel because Rangel would have received the same guideline range and the same sentence if his trial counsel had requested a different instruction.  Further, the court determined that Rangel’s appellate counsel was not ineffective because, if any error was committed, it was harmless; thus, Rangel could not demonstrate prejudice.  Lastly, the court determined that Rangel suffered no prejudice as a result of his trial counsel’s failure to challenge the district court’s drug weight finding and the resulting guideline range.

Full Opinion

Charles Buist

VONROSENBERG v. LAWRENCE, NO. 14-1122

Decided: March 31, 2015

The Fourth Circuit held that in considering whether to abstain in cases where a plaintiff seeks both declaratory and nondeclaratory relief, a federal court’s task is to determine whether exceptional circumstances justify surrendering jurisdiction.

This appeal arises from a dispute between two clergymen who each believe himself to be the leader of the Protestant Episcopal Church (the “Church”) in the Diocese of South Carolina.  Bishop Mark Lawrence (“Lawrence”) was allegedly ousted from his position as Bishop of the Dioscese of South Carolina in December 2012.  Bishop Charles VonRosenberg (“VonRosenberg”) was elected and installed by a Convention of the Diocese to be Lawrence’s replacement.  On January 4, 2013, Lawrence filed suit in South Carolina alleging service mark infringement and improper use of names, styles, and emblems under state law.  VonRosenberg subsequently filed the present action seeking declaratory and injunctive relief, alleging that Lawrence improperly continued to use the Church’s service marks and falsely advertised himself as leader of the Church after he had been replaced, in violation of the Lanham Act, 15 U.S.C. §§ 1114, 1125(a)(1)(A) (2012).  Lawrence asked the District Court to abstain in favor of the pending state court proceedings.  The District Court of South Carolina granted Lawrence’s motion to abstain, relying on doctrine articulated in Brillhart v. Excess Insurance Co. of America, 316 U.S. 491 (1942) which gives courts “broad discretion to … decline to grant[] declaratory relief”.

The Fourth Circuit ultimately concluded that the district court had used the wrong standard when it decided to abstain.  The Brillhart/Wilton standard used by the district court gives federal courts broad discretion to abstain from deciding declaratory judgment actions when concurrent state proceedings are underway.  The Fourth Circuit noted that it had never expressly held which abstention standard applies to a federal complaint, like VonRosenberg’s, which asserts claims for declaratory and nondeclaratory relief.  The Fourth Circuit rejected the Brillhart/Wilton standard in mixed cases because it would “deprive a plaintiff of access to a federal forum simply because he sought declaratory relief in addition to an injunction or money damages.”  Ultimately, the Court adopted the Colorado River standard for all cases where a plaintiff seeks declaratory and nondeclaratory relief.  The Colorado River standard states that a federal court’s task is to “ascertain whether there exists ‘exceptional’ circumstances . . . to justify the surrender of [federal] jurisdiction.”  Colorado River Water Conservation District v. United States, 424 U.800, 813 (1976).  The Court further stated that the only exception to the standard arises when a party’s request for the nondeclaratory relief is frivolous or only made to avoid the Brillhart standard.  Because the district court did not apply the Colorado River standard, the Fourth Circuit vacated the District Court’s decision and remanded for further proceedings consistent with its opinion.

Full Opinion

William Yarborough

GEORGIA-PACIFIC CONSUMER PRODS. V. VON DREHLE CORP., NO. 13-2003

Decided: March 30, 2015 

The Fourth Circuit vacated, reversed in part, and remanded in part the judgment of the district court that von Drehle’s infringement justified a permanent, nationwide injunction, treble damages, attorney’s fees, and prejudgment interest.

Von Drehle produced paper towels that were capable of being used in Georgia-Pacific Consumer Products LP’s (“Georgia-Pacific”) proprietary paper-towel dispensers. In response, Georgia-Pacific launched three actions against von Drehle and its distributors alleging trademark violations. In the first two actions, the Western District of Arkansas and the Northern District of Ohio ruled against Georgia-Pacific’s claims. Both decisions were affirmed by the Eighth and Sixth Circuits, respectively. However, in the Eastern District of North Carolina, Georgia-Pacific prevailed. The Court found von Drehle’s infringement to be “willful and intentional,” and therefore issued treble damages, attorney fees, prejudgment interest, and a permanent, nationwide injunction prohibiting von Drehle from infringing Georgia-Pacific’s trademarks. Von Drehle appealed the district court’s remedies, arguing (1) the injunction was unduly broad geographically in light of the Eighth and Sixth Circuits’ rulings, (2) the court applied the wrong legal standard for trebling jury awards, (3) the court applied the wrong legal standard for awarding attorney fees, and (4) the court applied the wrong legal standard for awarding prejudgment interest.

The Fourth Circuit agreed with all of von Drehle’s arguments.  First, the Court held that the District Court abused its discretion by applying a nationwide injunction. The Court noted that to enforce an injunction in circuits that had ruled against Georgia-Pacific would be an affront to the jurisdiction of those courts and that comity required the Court to limitthe injunction to the Fourth Circuit.

Second, the Court held that the District Court applied the wrong standard to treble damages. The District Court relied upon the Larsen “willful and intentional” standard, which applies only to recovery under § 1117(b) for the knowing and intentional use of a counterfeit trademark. The Court found Larsen to be inapplicable because von Drehle was not accused of using a counterfeit mark.  The Court also found § 1117(a) to be inapplicable because the damages trebled were based upon profits, whereas § 1117(a) allows for trebling damages only for actual damages.

Third, the Court held that the District Court erred in finding “exceptional” circumstances to grant attorney’s fees because the District Court conflated von Drehle’s willful and intentional conduct with the proper standard, which requires willful and intentional infringement. The Court noted that the Supreme Court’s decision in Octane Fitness provided guidance that attorney’s fees are appropriate where the non-prevailing party’s position is either frivolous or objectively unreasonable. The Court found von Drehle’s position to be reasonable, in spite of the finding of infringement, and therefore rejected attorney’s fees.

Finally, the Court rejected prejudgment interest on similar grounds as its rejection of treble damages and attorney’s fees. Because von Drehle did not use a counterfeit mark, nor were there exceptional circumstances, the Court found no circumstances to justify prejudgment interest. Accordingly, the Court vacated, reversed, and remanded the District Court’s order.

Full Opinion

Robert I. Smith, III

 

JOHNSON v. AMERICAN TOWERS LLC, No. 13-1872

Decided: March 25, 2015

The Fourth Circuit affirmed the district court’s ruling that it had federal jurisdiction over the plaintiff’s state-law claims and that the plaintiff failed to allege sufficient facts to set forth a claim for relief.

The plaintiff, Robert Johnson (“Johnson”), is a prison guard in Bishopville, SC. He was shot multiple times in his home after a prisoner at the prison Johnson works ordered the attack by using a contraband cell phone. The plaintiff sued several cellular phone service providers and owners of cell phone towers, alleging that the defendants were liable for Johnson’s injuries because they knew their services were facilitating the use of illegal cell phones by prison inmates and yet failed to take action.

First, the Court addressed the district courts finding that it had federal jurisdiction over Johnson’s state-law claims. The Court found that although the plaintiff’s state claims were not completely preempted by the Federal Communications Act, the district court nevertheless properly exercised jurisdiction on the basis of diversity of citizenship of the parties. Despite the lack of complete diversity, the Court held that the trial court had properly retained subject matter jurisdiction, per the fraudulent joinder doctrine. The fraudulent joinder doctrine applied because the Court found there was “no possibility” that the plaintiff would be able to establish a cause of action against the two non-diverse defendants in state court.

Finally, the Court determined that the trial court correctly held that the plaintiff’s claims failed to state a claim as a matter of law. According to the Court, the plaintiff’s claims were merely speculative in nature and failed to allege sufficient facts to set forth a plausible claim for relief. The Court noted that the complaint, in its current state, resembled a “prohibited fishing expedition.” However, the Court reiterated that the complaint was dismissed without prejudice. Therefore, the Johnsons were free to amend their complaint if they acquired additional information supportive of their non-preempted claims. Accordingly, the Court affirmed the district court’s order.

Full Opinion

Meredith Weisler