Week Eleven

Week of March 13, 2017 through March 17, 2017

U.S. v. Robert Winston (Keenan 3/13/2017): The Fourth Circuit held that Winston’s conviction for Virginia common law robbery did not constitute a violent felony under the Armed Career Criminal Act (ACCA), 18 U.S.C. § 924(e)(1). The Court based its reasoning on a United States Supreme Court case, Johnson v. United States, 135 S. Ct. 2551 (2015) (Johnson II), which invalidated a portion of the ACCA’s definition of “violent felony.” The Court disagreed with the district court’s substantive conclusion because Virginia common law robbery does not necessarily include the use of force to cause pain or injury as is necessary to be classified as an ACCA violent felony. The Court vacated the judgment of the district court and remanded the case for further proceedings. Full Opinion

Luz Cantillano Cruz v. Jefferson Sessions III (Keenan 3/14/2017): The Fourth Circuit held that Cruz’s familial ties to her murdered husband, Johnny Martinez, was a central reason for Cruz to have a fear of persecution and that Cruz’s establishment of this fear of persecution met the statutory “nexus requirement” for asylum provided in the Immigration and Nationality Act (INA), 8 U.S.C. § 1158(1)(B)(i). Cruz’s petition for a final order of removal by the Board of Immigration Appeals (BIA) was granted and the case was remanded to the BIA for further proceedings. Full Opinion

U.S. v. Juan Lara (Keenan 3/14/2017): The Fourth Circuit held that a defendant affirmatively waived any psychotherapist-patient privilege when he agreed as part of his conditions of probation for a prior case to the disclosure of any statements he made while participating in a Sex Offender Treatment Program. The Court also stated the Fifth Amendment privilege against self-incrimination did not apply to Lara’s treatment program statements, because Lara voluntarily made the statements while participating in the treatment program. The Court concluded that the district court did not err in considering Lara’s treatment program statements at a sentencing hearing. Full Opinion

U.S. v. Bailey Mills (Thacker 3/15/2017): The Fourth Circuit held that the district court did not commit a plain error in considering the defendant’s past convictions under the North Carolina taking indecent liberties with children statute, N.C. Gen. Stat. § 14-202.1, as a state crime that relates to “the sexual exploitation of children” under 18 U.S.C. § 2251(e). The Court affirmed the district court’s sentence of 45 years based on defendant’s prior convictions being a state crime related to “the sexual exploitation of children.” Full Opinion

U.S. ex rel. Patrick Carson v. Manor Care, Incorporated (Agee 3/16/2017): The Fourth Circuit held that the district court lacked subject matter jurisdiction to hear Carson’s claims against Manor Care related to Manor Care’s violations of the False Claims Act (FCA) for overbilling respective governments for medical services because of the FCA’s first-to-file rule. Since another plaintiff had already brought a similar action against Manor Care, it was proper for the district court to dismiss Carson’s complaint. The Court declined addressing Carson’s retaliation and state fraud claims because it wanted the district court to address them on the merits first. The Court affirmed the district court’s dismissal of Carson’s action under the FCA for lack of subject matter jurisdiction, but vacated and remanded the judgment related to Carson’s retaliation and state fraud claims. Full Opinion

CSX Transportation, Inc. v. South Carolina Dep’t of Revenue (Traxler 3/17/2017): The Fourth Circuit held that CSXT could bring a claim against the South Carolina Department of Revenue under 49 U.S.C. § 11501(b)(4) and it did not have to be other § 11501(b)(1) because its claim alleged that the State’s imposition of a tax had a discriminatory effect on CSXT’s rail road property compared to other commercial and industrial property. The Court reasoned (b)(4) related to other prohibitions not found in the other three (b) subsections and thus, bringing a claim under (b)(4) would not make those other subsections superfluous. The Court vacated the district court’s judgment and remanded the case to determine whether or not the State’s actions were discriminatory under (b)(4). Full Opinion

Mil Mason v. Machine Zone, Inc. (Keenan 3/17/2017): The Fourth Circuit held that Mason did not “lose money” when she “spun” the virtual wheel from a mobile video game and therefore, she failed to state a claim under the Maryland’s gambling loss recovery statute, Md. Code Ann., Crim. Law § 12-110. The Court did not interpret “money” to include virtual items won by playing the virtual spinning wheel in the mobile game and so Mason did not lose any “money” under the loss recovery statute by playing the gaming device. The Court upheld the district court’s judgment to dismiss the case for failure to state a claim. Full Opinion

Jatinder Sharma v. USA International, LLC (Niemeyer 3/17/2017): The Fourth Circuit held that Sharma established an issue of material of fact related to the actual value of USA International’s restaurants at the time of the sale to Sharma through multiplying weekly gross sales by 36 and by multiplying the restaurants’ monthly earnings before interest, tax, depreciation, and amortization (“EBITDA”) by 48. The Court determined this methodology provided adequate evidence of the plaintiffs damages from the fraudulently sale of the defendant’s restaurants and therefore summary judgment for the defendant should not have been granted. The Court stated that Sharma introduced sufficient evidence to create a dispute of material fact over the amount of damages. The district court’s granting of defendant’s summary judgment motion was vacated and the case was remanded for further proceedings. Full Opinion


Highlight Case

CSX Transportation, Inc. v. South Carolina Dep’t of Revenue, No. 16-1726

Decided: March 17, 2017

CSXT brought an action in federal district court against the South Carolina Department of Revenue and its director (the State) alleging that the South Carolina Real Property Value Reform Act (SCVA), S.C. Code §§ 12-37-3110 et seq. violated the Railroad Revitalization and Regulatory Reform Act of 1976 (the “4-R Act”), 49 U.S.C. § 11501(b)(4). The SCVA limits increases in appraised values of commercial and industrial real properties to 15% within a particular five-year period but it does not apply to real property valued by the unit valuation concept. Because railroad property is valued by this method, railroads do not benefit by the 15% cap. CSXT’s claim stated that the 15% cap not applying to railroad property was imposing another tax that discriminated against a rail carrier under 49 U.S.C. § 11501(b)(4) of the 4-R Act and was thus a tax related conduct that the State was barred from doing. The district court granted judgment against CSXT on the basis that CSXT had not shown it was challenging the imposition of a “tax” under the meaning of (b)(4). The district court reasoned CSXT’s claim was against the SCVA, which does not impose a tax but only caps, the increase in appraised values within the context of an already existing tax scheme. The lower court thought CSXT should have brought its 4-R action under (b)(1) and that CSXT had failed to meet its burden of proving discrimination under (b)(4) because that subsection could not be used to challenge SCVA’s 15% cap. Having rejected the case on that reasoning, the district court did not address the State’s arguments that CSXT had not proven a (b)(4) violation.

The Fourth Circuit agreed with CSXT that the district court erred in concluding that CSXT had failed to challenge the imposition of a tax within the meaning of (b)(4). The Court noted that (b)(4) bars states from imposing another tax that discriminates against a rail carrier. Because “impose” and “tax” were not defined in the 4-R Act, the Fourth Circuit looked at the ordinary definition of those words and found it was undisputed that property taxes would be imposed for the 2014 tax year based on the assessed value of CSXT’s property. The fact that SCVA does not itself impose the taxes is immaterial. Assuming that CSXT actually did challenge the imposition of a tax, the State also argued alternatively that CSXT was required to bring its challenge under (b)(1) and was precluded from bringing its claim under (b)(4). The State saw (b)(1) as specifically dealing with property tax assessment values while (b)(4)’s scope was more general and reading (b)(4) to apply to the tax here would make (b)(1) superfluous.  CSXT argued against the State’s reasoning by stating that CSXT’s claim is not that the state’s tax regime had produced the result that the railroad property is assessed at a higher percentage but rather that the State’s tax scheme on its face singles out railroad property for less favorable treatment than other commercial and industrial property. Thus, (b)(4) which prohibits discrimination by imposing a tax against rail carriers, is the proper subsection for CSXT’s action. The Fourth Circuit agreed with CSXT, stating that the type of conduct prohibited by (b)(4) is significantly different from which the other three subsections of (b) address. The Fourth Circuit reasoned that since (b)(4) prohibited an entirely different action than the other three subsections of (b), (b)(4) was not a general subsection and that there would be no danger in construing (b)(4) to cover discrimination alleged here that would make the other three (b) subsections superfluous.  Thus, the Fourth Circuit determined if CSXT can prove that the tax imposed was discriminatory, it would have demonstrated a (b)(4) violation.

Since the district court granted judgment against CSXT without reaching the question of whether the imposed tax was discriminatory, the Fourth Circuit vacated the judgment and remanded the case for further proceedings.

Full Opinion

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