Decided: December 19, 2013

The Fourth Circuit held that private parties have standing in civil suits under the False Claims Act (“FCA”) to seek redress on behalf of federal government interests, and ordered the trial court to impose $24 million in FCA penalties against the defendants.

The Department of Defense (“DOD”), in its effort to provide its armed forces and civilian personnel with their household goods across the Atlantic, instituted the International Though Government Bill of Lading Program to govern transoceanic moves and the Direct Procurement Method (“DPM”) to contract for transport strictly in Europe. The DOD’s Military Traffic Management Command (the “MTMC”) administered both methodologies. The MTMC solicited domestic vendors to bid on one or more “through rates” for moving household goods along shipping channels. The successful bidders contracted with the MTMC to supply door-to-door service. Subcontractors, including Gosselin World Wide Moving (“Gosselin”), provided services in connection with the European segment, and the prices quoted by those subcontractors were taken into account by the freight forwarders. In 2000, Gosselin and a number of its industry peers met and agreed to charge a non-negotiable minimum price for these local services. Pursuant to that agreement, Gosselin was awarded a contract after colluding with its fellow bidders to artificially inflate the submitted bids.

Despite the efforts of Gosselin and its cohorts, freight forwarder Covan International (“Covan”) was awarded a contract in Summer 2001. In order to increase the likelihood of obtaining business in those channels, other freight forwarders with which Gosselin had a continuing relationship would have been compelled to match Covan’s through rate. Instead, Gosselin threatened to withdraw financing from Covan in another business venture. Consequently, Covan cancelled its bid, and Gosselin spread the word that the freight forwarders should match only the second-lowest bid on the Covan channels during the second phase of bidding. The previous scenario was duplicated one year later when Cartwright International Van Lines (“Cartwright”) submitted the low bid on twelve Germany-U.S. channels. For it’s actions in connection with that, Gosselin was convicted of federal criminal offenses in 2005.

The above-described acts gave rise to the underlying civil actions premised on the False Claims Act (“FCA). Pursuant to the FCA, Kurt Bunk (“Bunk”) brought this action in the government’s name in 2002, asserting claims arising from the DPM scheme. Also in 2002, Ray Ammons (“Ammons”) brought a similar suit in the same capacity in the Eastern District of Missouri. In 2007, the Ammons matter was transferred and consolidated with the Bunk Proceeding. The United States intervened in substitution of Ammons. By its February 2012 order, the district court assessed a single penalty in the sum of $5,500 in favor of the United States, as to a single portion of its FCA claim; finding Gosselin immune under the Shipping Act, decreed judgment for Gosselin on the remainder of the FCA claim; granted judgment as to liability with respect to a single FCA claim alleged by Bunk against Gosselin in the second action; but denied recovery of civil penalties on that claim because such penalty would violate the Eighth Amendment.

On appeal, Gosselin first argued that Bunk, as a relator seeking solely civil penalties, lacked standing. The Fourth Circuit rejected this contention and held that relators seeking solely civil penalties are entitled to sue because denying the recovery on the ground that the relator cannot pursue penalties alone would be to deny the United States due recompense, or, in the alternative, to deprive the government of its choice to forgo intervention.

The primary issue before the court was whether the district court erred in determining that, concerning 9,136 false invoices at the heart of Bunk’s claim, any award under the FCA must necessarily exceed more than $50 million. Because the district court ruled that such an assessment would contravene the Eighth Amendment’s Excessive Fines Clause, it awarded nothing. The Fourth Circuit, however, reversed and remanded for entry of Bunk’s requested award of $24 million. In so doing, the court noted that the discretion accorded to the government and a relator to accept reduced penalties within constitutional limits avoids injustice. And, in this case, it found that $24 million appropriately reflected the gravity of Gosselin’s offenses and provided the appropriate deterrent effect going forward.

Lastly, the court addressed the issue of whether the district court properly declared Gosselin immune under the Shipping Act. Relying on the preclusive effect of its prior judgment in the criminal proceeding, the Fourth Circuit reversed, holding that Gosselin was not entitled to immunity under the Act and therefore remanded this issue for further proceedings.

Full Opinion

– W. Ryan Nichols

Occupy Columbia v. Haley, 738 F.3d 107 (4th Cir. 2013)

• Majority Opinion: Thacker
• Argued: October 31, 2013
• Decided: December 16, 2013

The Fourth Circuit held that the appellants—a number of state officials including Governor Nikki Haley (Governor Haley)—were not entitled to qualified immunity at the Rule 12(b)(6) or Rule 12(c) stage with regard to a 42 U.S.C. § 1983 claim brought by the group Occupy Columbia and fourteen individual protestors (collectively, Occupy Columbia), as Occupy Columbia pled a constitutional violation arising solely out of the arrest of its constituent members for assembling on State House grounds after 6:00 p.m. on November 16, 2011; that Occupy Columbia’s relevant complaint sufficiently alleged that its members were partaking in protected speech at the time of their arrest; that there were no valid time, place, and manner restrictions on the speech of Occupy Columbia’s members at the time of their arrest; and that Occupy Columbia’s right to protest in this regard has been clearly established since the 1963 case Edwards v. South Carolina, 372 U.S. 229.  The Fourth Circuit therefore affirmed the United States District Court for the District of Columbia’s denial of qualified immunity at this stage of the lawsuit.

In October 2011, Occupy Columbia members began “protesting around-the-clock” at the South Carolina State House in Columbia, South Carolina as a way to “express their message of taking back our state to create a more just, economically egalitarian society.”  On November 16, 2011—after thirty-one days of continuous “occupation” by the Occupy Columbia protestors—State Senator Harvey S. Peeler, Jr. sent a letter to Governor Haley asking “what the Budget and Control Board will be doing about the Occupy Columbia group”?  Governor Haley then sent a letter to the Director of the Department of Public Safety and the Chief of Police of the Bureau of Protective Services, asking for their assistance in removing Occupy Columbia members who remain on the State House grounds after 6:00 p.m. without certain written authorization.  Governor Haley claimed that the Budget and Control Board requires “any individual or organization that wishes to remain at the Statehouse after 6:00 p.m. to receive written permission from the agency,” and cited paragraph 8 of a document titles “Conditions for Use of South Carolina State House Grounds” (Condition 8) as support for this purported policy.  Certain members of Occupy Columbia were arrested shortly after 6:00 p.m. on November 16.  Occupy Columbia alleged that, at the time its members were arrested, they “were assembled on the [S]tate [H]ouse grounds, protesting and petitioning our government, and [they] were no violating any law.”

On November 23, Occupy Columbia filed a lawsuit in state court, seeking to enjoin the appellants from interfering with the protest on State House grounds.  The appellants removed the case to federal court.  In December 2011, the district court granted Occupy Columbia’s motion for a preliminary injunction.  The Budget and Control Board then passed an emergency regulation—codified at S.C. Code Ann. § 10-1-35—prohibiting the “use of the State House grounds and all buildings located on the grounds for camping, sleeping, or any living accommodation purposes.”  The district court subsequently found that this regulation was valid with respect to time, place, and manner.  In January 2012, Occupy Columbia filed a Second Amended Complaint and added a claim for damages under 42 U.S.C. § 1983.  The district court granted the Budget and Control Board Defendants’ motion to dismiss the complaint as moot due to the enactment of § 10-1-35—as well as a revision to Condition 8 that removed the references to specific time limitations on the use of the State House grounds.

Occupy Columbia filed a Third Amended Complaint in September 2012.  The appellants moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) or for judgment on the pleadings under Rule 12(c), asserting that Occupy Columbia’s injunctive relief claims were moot and that the appellants were entitled to qualified immunity on the claims for damages.  The district court dismissed the injunctive relief claims as moot.  With regard to the qualified immunity issue, the district court found that, as the time of the arrests, there was no clearly established constitutional right “to camp, sleep, or live continuously on the State House grounds.”  However, the district court also found that Occupy Columbia had made an allegation that its members’ “constitutional rights were violated when they were arrested for their presence and protests on the State House grounds after 6:00 p.m.”; the district court then and rejected the appellants’ qualified immunity arguments with regard to this separately alleged violation of constitutional rights.  The appellants filed a notice of appeal to obtain review of the qualified immunity ruling.

Like the district court, the Fourth Circuit relied “solely on the allegations in the Third Amended Complaint and those documents that are integral to the complaint” in assessing qualified immunity.  The Fourth Circuit noted that certain paragraphs of Occupy Columbia’s complaint “state[d] that the arrests occurred when Occupy Columbia was simply assembled on State House grounds for the purpose of protesting and petitioning the government,” and made no mention of continued occupation and camping.  The court also noted that Governor Haley’s letter focused on removing Occupy Columbia protestors who remained on the grounds of the State House after 6:00 p.m. without certain written permission—rather than focusing more generally on the removal of people who were camping, sleeping, or living on the grounds of the State House.  The Fourth Circuit also found that, according to the allegations in the Third Amended Complaint, the members of Occupy Columbia were “protesting and petitioning our government” in a public forum at the time they were arrested.  Next, the Fourth Circuit found that, on the face of the Third Amended Complaint, Occupy Columbia’s members were not violating South Carolina law—specifically, S.C. Code §§ 10-11-20, 10-22-30, or 10-11-330—at the time they were arrested.  Furthermore, the court found that Condition 8 is, on its face, “simply a mechanism for groups to obtain reservations to utilize the State House grounds” in ways that avoid scheduling conflicts—and that, even if Condition 8 imposed a time, place, and manner restriction, that restriction would be invalid.

Lastly, with regard to the “clearly established” prong of the qualified immunity analysis, the Fourth Circuit noted the Supreme Court and Fourth Circuit jurisprudence supporting the conclusion that “in the absence of a valid time, place and manner restriction, arresting members of Occupy Columbia for their presence and protest on State House grounds after 6:00 p.m. was a violation of their First Amendment rights.”

Full Opinion

Stephen Sutherland

Decided: December 11, 2013

The Fourth Circuit affirmed the district court’s order compelling arbitration of a breach of warranty claim in accordance with a lease agreement between the parties.

Christine and Antwan Seney (the “Seneys”) entered into a “Rental-Purchase agreement” with Rent-A-Center (“RAC”) for a bedframe and mattress. In that contract, the Seneys agreed to rent the bed for two weeks, with an option to renew the lease. The contract also contained a purchase option. Pursuant to the contract, RAC retained the manufacturer’s warranty to the bed. However, RAC provided its own warranty to repair, replace, and service the bed during the lease term. Additionally, the parties agreed to submit any contract dispute to binding arbitration. Soon thereafter, RAC delivered the bed to the Seneys’ home and assembled it in their son’s bedroom. Within a week, the boy was infested with bedbugs. After Mrs. Seney notified RAC, RAC employees returned to the home and replaced the mattress, but not the bedframe, which apparently was also infested with bedbugs. The infestation continued. Ultimately, RAC returned once more, this time removing both the mattress and the frame, but not before dragging them through the Seneys’ home. The bed shed bugs, and the infestation spread. RAC paid for a partial fumigation, but refused to treat the entire house.

The Seneys’ filed suit in Maryland state court, alleging breach of warranty in violation of the Magnuson-Moss Warranty Act (“MMWA” or “the Act”). RAC removed to federal court and filed a motion to compel arbitration. The district court rejected the Seneys’ argument that the regulations promulgated by the Federal Trade Commission (“FTC”) interpreting the MMWA ban binding arbitration and therefore granted RAC’s motion to compel arbitration. This appeal followed.

On appeal, the Fourth Circuit first held that the district court erred in holding that the FTC regulations contain no ban on binding arbitration. The court explained that, although the ban is intricate and limited, it certainly exists. Nonetheless, the court held that the Act’s ban on arbitration did not apply to the rental agreement at issue in this case. In so holding, the court found that the contract fell outside the FTC regulation banning binding arbitration because the Seneys’ relied on a warranty in a lease agreement—not a sales agreement. Specifically, the FTC ban applies only to dispute settlement procedures included in a “written warranty.” According to the FTC regulations, the term “written warranty” must implicate a sale. Here, because the promise made in the contract was not made in connection with a sale, but rather in connection with a lease, the FTC regulation banning binding arbitration did not apply. Therefore, the district court’s order compelling arbitration was affirmed.

Full Opinion

  – W. Ryan Nichols

Decided: December 10, 2013

The Fourth Circuit affirmed the district court’s civil commitment of the defendant, Richard Savage, as a “sexually dangerous person” under the United States Code. Savage appeals his commitment on the grounds of that the district court lacked the jurisdiction to order his commitment.

In 2006, Savage pled guilty and was convicted of distributing heroin in violation of the District of Columbia Code (“D.C. Code”). Savage served his three-year sentence in a facility operated by the Bureau of Prisons (“BOP”) in North Carolina. Prior to his release, the United States Government certified Savage as a “sexually dangerous person” pursuant to 18 U.S.C. § 4248 and ordered Savage civilly committed. Savage moved to dismiss the commitment proceedings on the grounds that the district court lacked jurisdiction because, as a District of Columbia offender, he was merely in physical custody of the BOP and not in legal custody of the BOP as required by § 4248. The district court denied his motion and ordered Savage civilly committed as a sexually dangerous person under § 4248. Savage appealed his commitment.

On appeal, the Fourth Circuit affirmed the district court’s jurisdiction to issue the civil commitment. In order to issue a civil commitment under § 4248, the prisoner must be “in the custody of” the BOP. Savage argued that the BOP lacked custody under § 4248 because, despite his confinement in a prison operated by the BOP, his conviction under District of Columbia law rather than federal law deprived the BOP of the legal custody required by § 4248. Savage argued that his case mirrored the Fourth Circuit’s decision in United States v. Joshua, 607 F.3d 379 (4th Cir. 2010), where the court held that an army prisoner detained under the Uniform Code of Military Justice (“UCMJ”) did not qualify as being “in the custody of” of the BOP because the Army retained legal custody over the offender pursuant to a memorandum of agreement under the Uniform Code of Military Justice (UCMJ), even after the prisoner was confined in a prison operated by the BOP.

The Fourth Circuit disagreed. The court distinguished Savage’s case from Joshua because, unlike the prisoner in Joshua who was a prisoner in the military criminal justice system, Savage was a prisoner of the District of Columbia criminal justice system. Under the military system, the prisoner is merely “confined” in a federal prison that may fall within the BOP while the military retains “custody” over the prisoner. In contrast, under the District of Columbia’s criminal justice system, all prisoners are confined to prisons operated by the BOP. Moreover, all D.C. criminals are subject to “any law or regulation applicable to persons committed for violations of laws of the United States.” Moreover, the D.C. Code requires that the BOP retain responsibility for the care and custody of prisoners convicted of a violation of D.C. law. The Fourth Circuit held that, by placing D.C. criminals in physical custody of the BOP and subjecting them to the laws and regulations of the BOP, Congress intended to place D.C. criminals under both physical and legal custody of the BOP. Therefore, by possessing physical and legal custody, the Fourth Circuit held that the district court did not err in determining that it had the jurisdictional authority to civilly commit Savage as a “sexually dangerous person” under § 4248.

Full Opinion

– Wesley B. Lambert

Decided: December 3, 2013

The Fourth Circuit affirmed the district court’s judgment and held that the defendant’s prior North Carolina state convictions, which sentenced the defendant in the mitigated rather than the presumptive range of punishment under North Carolina’s Structured Sentencing Act, did qualify as predicate felonies for sentencing under the Armed Career Criminal Act (“ACCA”) and for a 18 U.S.C. § 922(g)(1) conviction.

Norman Alan Kerr (“Kerr”) was charged with one count of possession of a firearm by a convicted felon, in violation of 18 U.S.C. § 922(g)(1). The indictment alleged that, for purposes of the ACCA, Kerr had previously been convicted of three violent felonies or serious drug offenses punishable by imprisonment for a term greater than one year. Kerr had three 2008 North Carolina state convictions for felony breaking and entering.

On appeal, the Fourth Circuit reviewed the novel question of whether a district court, in determining whether a defendant has the requisite predicate felonies for sentencing as an armed career criminal, must consider the fact that the defendant received a mitigated sentence of less than one year in prison under North Carolina law for those felonies.

North Carolina law establishes three sentencing ranges based on the appropriate offense class and prior record level. The presumptive sentencing range is the default. The sentencing judge may deviate from the presumptive range if the judge makes written findings of aggravating or mitigating factors, finds that aggravating factors outweigh mitigating factors (or vice versa), and chooses to depart. But North Carolina law also provides that a judge may sentence a defendant in the presumptive range even if the judge finds that mitigating factors outweigh those in aggravation. In Simmons and Edmonds, the Fourth Circuit held that the maximum sentence the particular defendant faced—not the sentence actually imposed—controls whether the defendant has a qualifying predicate felony.

The state court judge who sentenced Kerr found that the relevant mitigating factors outweighed those in aggravation and then chose to exercise her discretion by sentencing Kerr to a mitigated range sentence of 8 to 10 months’ imprisonment for his crimes. But, the judge remained free at all times to sentence Kerr to a presumptive prison term of up to 14 months.

Because the maximum possible prior sentence that Kerr faced for his prior state convictions exceeded one year, and because that potential punishment was far from hypothetical, the Fourth Circuit held that Kerr’s prior state convictions qualified as predicate felonies for sentencing under the ACCA. For the same reasons, the Fourth Circuit held that Kerr had the requisite predicate felony for his § 922(g)(1) conviction.  Because he was not innocent of his § 922(g)(1) conviction, his contention that his prior appellate counsel was ineffective for failing to raise this very issue in his first appeal was held to be moot.

Full Opinion

– Sarah Bishop

Decided: November 22, 2013

The Fourth Circuit held that the Immigration Judge and the Board of Immigration Appeals (collectively, the agency) had substantial evidence to support an adverse credibility determination against Qing Hua Lin (Lin) with regard to her applications for asylum, withholding of removal, and deferral of removal under the Convention Against Torture (CAT); that the agency had substantial evidence to support its determination that Lin failed to prove actual past persecution through independent evidence; and that the Immigration Judge did not violate Lin’s due process rights by permitting the Government to submit supplemental evidence after Lin’s initial merits hearing.  The Fourth Circuit therefore denied Lin’s petition for review.

Lin, a native citizen of the People’s Republic of China (China), entered the United States illegally on August 19, 2009.  The Department of Homeland Security subsequently commenced removal proceedings against Lin, charging her with removability “as an alien who, at the time of application for admission to the United States, was not in possession of valid entry documents.”  8 U.S.C. § 1182(a)(7)(A)(i)(I).  In response to these charges, Lin applied for asylum, withholding of removal, and deferral of removal under the CAT.  However, Lin made certain conflicting statements at different phases of the asylum process.  For instance, in a previous interview with a Border Patrol Agent (the Border Patrol Interview), Lin told the Agent that, inter alia, she was not married; she had one child; she entered the United States “[t]o avoid population control regulations in China”; and she planned to have more children, but she would be forced to have an abortion or a tubal ligation if she became pregnant again.  However, at a subsequent credible fear hearing, Lin asserted that, inter alia, she was married to a man who was currently residing in China with their son, and she left China because she was forced to have an unwanted abortion.

Also, in response to Lin’s application for asylum, the Government submitted a State Department report on China’s population control policies; the report “stated that the policies were no longer strictly enforced” and noted the paucity of reports of forced abortions or sterilizations in the relevant province in the preceding twenty-year period.  Furthermore, during Lin’s initial merits hearing, the Immigration Judge asked Lin why she requested an abortion certificate after the forced abortion, and Lin changed her answer several times.  Lin also had a second merits hearing after the Government requested that the court consider certain additional evidence—specifically, evidence from the Border Patrol interview that the Government’s attorneys discovered after the close of evidence.  At the second merits hearing, Lin said she told the Border Patrol Agent she was not married due to a cultural misunderstanding; she also explained her failure to mention the forced abortion to the Agent in vague and nonresponsive answers, stating that, inter alia, the Agent told her not to provide details of her claim and she thought there was not room for detailed answers on the Agent’s form.

The Immigration Judge found that Lin was not credible “in light of the inconsistencies, implausibilities, and contradictions” in her testimony, application, and statements during the Border Patrol interview.  The Judge also rejected Lin’s explanations for the inconsistencies and took issue with her failure to mention the forced abortion during the Border Patrol interview.  Furthermore, the Judge found that the adverse credibility determination could not be overcome, as Lin had not provided sufficient evidence to independently prove past persecution in the form of a forced abortion.  The Immigration Judge therefore denied Lin’s applications, ordering her removed to China.  The Board of Immigration Appeals affirmed and adopted the Immigration Judge’s decision, and Lin appealed.

While the Fourth Circuit acknowledged concern with the agency’s unqualified reliance on statements made during “airport interviews”—such as Lin’s Border Patrol interview—the court also could not “countenance” Lin’s failure to mention the forced abortion during the Border Patrol interview, as this was “the very core of her claim.”  The Fourth Circuit also found that Lin’s testimony regarding her marital status involved “a direct contradiction for which she was later unable to provide a believable explanation” and noted her “demeanor and non-responsiveness during questioning on certain topics.”  With regard to the prospect of actual past persecution proven by independent evidence, the Fourth Circuit found that, inter alia, Lin’s abortion certificate was suspect due to Lin’s unreliable testimony, and that evidence from the State Department report countered certain evidence of the enforcement of family planning regulations.  Lastly, with regard to any due process issues stemming from the Immigration Judge’s decision to allow the Government to submit supplemental evidence after the initial merits hearing, the Fourth Circuit noted the discretionary authority of Immigration Judges “to set and extend deadlines for the submission of evidence,” as well as Lin’s opportunity to explain her previous statements at the second merits hearings—which both parties had several months to prepare for.

Full Opinion

– Stephen Sutherland

Decided: November 18, 2013

The Fourth Circuit upheld the district court’s denial of Randall Justin McGee’s (“McGee”) motion to suppress evidence and further held that the district court did not commit clear error in its sentencing procedure.

Following an anonymous tip, police first encountered McGee on July 10, 2011. After a search of McGee revealed a bus ticket in the name of someone else, officers handcuffed him and, with his consent, searched his bag. Inside the bag, the police found $5,800 in cash. McGee stated that he had been unemployed for over a year and that he was traveling to see the mother of his child. Because McGee did not have a reasonable explanation for his possession of the cash, the police seized the money. Police then contacted McGee’s mother who stated that McGee did not yet have a child. She also reported that McGee was in West Virginia “earning money.” Police also seized his phone and discovered texts that they believed to be “drug related.” McGee was later released without being arrested.

Approximately two weeks later, Officer Jonathan Halstead (“Halstead”) stopped a vehicle, in which McGee was a passenger, after he observed it had a defective brake light. Because the driver admitted to having a suspended drivers license, Halstead spoke with McGee to determine whether he had a valid drivers license. Halstead later testified that McGee was visibly nervous during the exchange. Soon after, backup arrived and McGee exited the vehicle at the officers’ request and consented to a search. The search produced a bag of pills containing 246 oxycodone pills and 151 oxymorphone pills. McGee was charged with possession with intent to distribute oxycodone.

Before trial, McGee filed a motion to suppress the drugs seized at the traffic stop, claiming the car did not have a defective headlight. At the hearing on the motion, the three police officers present at the scene testified. The district court denied the motion, finding that Halstead’s testimony was “entirely credible.” Several weeks later, McGee filed a renewed motion to suppress based on newly obtained evidence. This time McGee presented evidence that tended to show that all the brake lights in the vehicle were operational in November 2011, and that the rental car company had no record of a repair after the traffic stop in July 2011. Another hearing was held. Again, the court denied McGee’s motion, finding that the evidence was ultimately insufficient to overcome Halstead’s direct and unimpeached testimony. McGee was ultimately convicted.

Before sentencing, the presentence investigation report laid out the “Offense Conduct,” describing the traffic stop as well as the earlier incident at the bus station. Over McGee’s objection, it also converted the $5,800 seized from McGee at the bus station, stating the cash “is viewed as representing proceeds of drug distribution, since McGee was later found with the drugs and “he has had no legitimate employment” since 2006.  With the conversion, McGee’s base offense level under the Guidelines was raised from 22 to 24. Thus, the final Guidelines range was 51 to 63 months rather than 41 to 51 months. The court sentenced McGee to 55 months. This appeal followed.

On appeal, the Fourth Circuit first addressed McGee’s challenge to the district court’s order denying his motion to suppress evidence of the pills obtained at the traffic stop. McGee argued that the district court erred in relying on Halstead’s testimony, which was undermined by conflicting evidence. The court rejected this argument, noting it was in no position to say that the district court committed clear error even if the court would have reached a different determination if presented with the same evidence in the first instance. Next, the court addressed McGee’s challenges to the procedural reasonableness of his sentence in turn. As to McGee’s first procedural challenge: that the district court erred in including the drug equivalent of the cash seized from him weeks before his arrest in its Guidelines range calculation, the court held that no clear error was committed in finding that the two incidents comprised the same course of conduct. The court also rejected McGee’s contention that the district court erred in failing to afford him an individualized assessment in arriving at his sentence. In so doing, the court found that the district court offered a sufficiently individualized rationale for its sentence, without undue emphasis on McGee’s status as a nonresident importer of drugs into the district.

Full Opinion

– W. Ryan Nichols

Decided: November 7, 2013

The Fourth Circuit affirmed the district court’s determination that two police officers were not entitled to qualified immunity or public officers’ immunity, respectively, in response to the plaintiff’s federal and state claims for excessive use of force.

On May 7, 2007 two cousins spent the day performing home repairs for a nearby relative. Later that evening, the cousins spent time sitting outside the North Carolina home of the plaintiff, George Cooper, talking, drinking, smoking marijuana laced with cocaine, and consuming a pint of brandy. Around 11:00 p.m., a neighbor called the police, claiming to hear screams coming from Cooper’s property. Two police officers, Carlisle and Sheehan (collectively “Officers”) responded to the call and arrived at around 11:30 that evening. The officers heard screaming coming from the property. Officer Sheehan then approached the door of Cooper’s mobile home and tapped on the window with his flashlight. Neither officer announced his presence or identified himself as a police officer. The Officers then heard obscenities coming from inside the home. Eventually, Cooper emerged from the mobile home’s rear door and called out for anyone on the property to identify himself. When neither officer responded, Cooper reentered his home and retrieved his shotgun. Cooper then took a couple of steps out onto the porch of the mobile home, with the butt of his shotgun in hand and the muzzle pointed toward the ground. Upon seeing the shotgun, the Officers drew their guns and fired on Cooper without warning. Cooper suffered multiple gunshot wounds, but ultimately recovered. In 2010, Cooper filed a lawsuit against the Officers for excessive force under § 1983 and similar state law claims. The Officers moved for summary judgment on the grounds of qualified immunity and public officer’s immunity from the plaintiff’s federal and state claims, respectively. The district court denied the motion. The Officers appealed.

The Fourth Circuit first held that the district court correctly denied the Officers’ qualified immunity claim in response to the plaintiff’s § 1983 claim for the excessive use of force. The Fourth Circuit explained that a police office is not entitled to qualified immunity when: (1) a constitutional violation occurred, and (2) the right violated was clearly established. The court explained that a police officer violates a person’s constitutional rights through the excessive use of force when an officer’s actions are unreasonable “from the perspective of a reasonable officer on the scene.” Furthermore, an officer is only justified to use deadly force when, “based on a reasonable assessment, the officer or another person is threatened with [a] weapon.” First, the Officers argued that they did not violate Cooper’s constitutional rights because they were justified in the use of deadly force because Cooper brandished his shotgun in “plain view.” The Fourth Circuit disagreed, finding that although Cooper had a shotgun, the threat from the gun did not justify the use of deadly force. The court emphasized that the muzzle remained pointed at the ground. In addition, Cooper made no sudden moves or threats that would justify a reasonable officer to feel threatened by Cooper’s actions. Moreover, the Officers never identified themselves, which had they done so, may have led to the reasonable assumption that “a man who greets law enforcement with a firearm is likely to pose a deadly threat.” Secondly, the court found that “the right to be free from deadly force when posing not threat” was clearly established at the time of the incident. Thus, the Fourth Circuit denied the Officer’s qualified immunity defense to Cooper’s § 1983 claim for the excessive use of force.

Similarly, the Fourth Circuit determined that the Officers were not entitled to public officers’ immunity in response to Cooper’s state tort claims. In North Carolina, a public officer is not entitled to immunity when he acts in a manner that a man of reasonable intelligence would know to be contrary to his duty. The Fourth Circuit determined that a North Carolina police officer could only use deadly force when reasonably necessary to defend against “the use or imminent use of deadly physical force.” The court determined that the test for public officers’ immunity was the functional equivalent of the test for qualified immunity in this case. Thus, the Fourth Circuit similarly denied the Officers’ state public officer’s immunity claim.

Full Opinion

– Wesley B. Lambert

Decided: October 31, 2013

The Fourth Circuit Court of Appeals held that the defendant’s 20002 South Carolina conviction for the common law crime of assault and battery of a high and aggravated nature (“ABHAN”) is not categorically a predicate “violent felony” for sentencing purposes under the Armed Career Criminal Act (“the ACCA”). However, the Fourth Circuit further held that the modified categorical approach had no role to play in this matter.

On June 28, 2011, a grand jury returned an indictment charging Leroy Deon Hemingway (“Hemingway”) with illegal possession of a firearm, having previously been convicted of a felony. The probation officer then prepared Hemingway’s presentence report (the “PSR”), recommending that his sentence be enhanced under the ACCA because four of his previous convictions were for ACCA predicate offenses. Hemingway objected to the PSR, asserting that two of the four crimes identified in the PSR – ABHAN and its lesser included offense of assault of a high and aggravated nature (“AHAN”) – were not predicate offenses under ACCA because they do not constitute ACCA violent felonies.

The Fourth Circuit addressed whether ABHAN constitutes a “violent felony” under the ACCA.

The first step of the Fourth Circuit’s review related to whether the district court properly applied the categorical approach or whether the court should have analyzed Hemingway’s ABHAN conviction under the modified categorical approach. Under the categorical approach, courts look only to the elements of a defendant’s prior offense, and not to the particular underlying facts. Under the modified categorical approach, courts look beyond the statutory elements to the charging paper and jury instructions. After Decamps, the modified categorical approach applies only in cases where a divisible statute, listing potential offense elements in the alternative, renders opaque which element played a part in the defendant’s conviction.

In this case, the Fourth Circuit held for the first time that the divisibility analysis should also apply to common law offenses. As a practical matter, state criminal statutes, for the most part, codify existing common law crimes. Furthermore, a common law offense can be a predicate offense under the ACCA and the Guidelines. In addition, the language of the ACCA directs courts to examine “previous convictions,” meaning the fact of the convictions themselves and not to the underlying facts. Nothing in the ACCA suggests that Congress should only consider the fact of conviction for a statutory offense, but may examine the facts underlying a conviction for a common law crime. In addition, designating a common law crime as an ACCA predicate offense presents the identical Sixth Amendment concerns as those arising when the previous conviction was a statutory offense. Finally, the “difficulties and inequities” inherent in the modified categorical approach, which the Court cautioned against in Dechamps, may well be of greater concern in the context of common law crimes, which are often not as clearly defined as their statutory counterparts, and thus may be more susceptible to disparate treatment from the sentencing courts.

The Fourth Circuit then applied the divisibility analysis to determine whether Hemingway’s previous crime was a divisible common law offense and thus subject to the modified categorical approach. The Supreme Court of South Carolina has ruled that the elements of ABHAN are (1) the unlawful act of violent injury to another, accompanied by (2) circumstances of aggravation. Although (2) is a non-exhaustive list, these are simply alternative means of committing an offense, rather than elements listed in the alternative, so as to warrant the modified categorical approach. Therefore, the Fourth Circuit concluded that the district court properly applied the categorical approach.

The second step of the Fourth Circuit’s review related to whether the sentencing court erred in ruling that ABHAN is categorically an ACCA violent felony. Here, ABHAN could only qualify as an ACCA “violent felony” under the residual clause, which includes any crime that “otherwise involves conduct that presents a serious potential risk of physical injury to another.  The Supreme Court in James v. United States identified the relevant inquiry for assessing whether a previous crime qualifies as an ACCA violent felony under the residual clause. The inquiry is whether the risk posed by the crime is comparable to that posed by its closest analog among the enumerated offenses.

Here, the relevant residual clause inquiry, applying the categorical approach, was whether an ABHAN offense presents the same “serious potential risk of physical injury” as the ACCA’s enumerated offenses— “burglary, arson, or extortion, [or offenses that] involve use of explosives.” Because the first element of an ABHAN offense—a violent injury— can be satisfied even though “no actual bodily harm was done,” this element does not suggest that an ABHAN offense presents the same “serious potential risk of physical injury” as one of the ACCA’s enumerated offenses. The second ABHAN element, the presence of circumstances of aggravation, can be satisfied simply by showing, for example, a disparity in age, and such a showing fails to present a degree of risk similar to that posed by the ACCA’s enumerated offenses. These elements demonstrate that an ABHAN offense, in the generic sense, does not pose the requisite degree of risk to come within the residual clause and, therefore, ABHAN is not categorically a violent felony.

Finally, although Hemingway was reckless and ABHAN requires a mental state of recklessness, proof of recklessness does not satisfy the purposeful, violent, and aggressive test established in Bengay v. United States.

Full Opinion 

– Sarah Bishop

Decided: December 19, 2013

The Fourth Circuit affirmed the defendant’s thirty-two month sentence following the revocation of his supervised release. Because the district court appropriately focused its discussion on the Chapter Seven policy statements and based the defendant’s revocation sentence on factors listed in § 3583(e), the Fourth Circuit found no error in the district court’s consideration of related factors.

In 2006, defendant Austin Romaine Webb, Jr. (“Webb”) pled guilty to conspiracy to possess with intent to distribute fifty grams or more of cocaine base and a detectable amount of cocaine hydrochloride, and was sentenced to an eighty-month term of imprisonment followed by a five-year term of supervised release. Webb received a sixteen-month reduction to his sentence and began serving his supervised release in August 2010. Less that one year into his term of supervised release, Webb was arrested for possession of marijuana and tested positive for use of marijuana. In September 2011, the district court found Webb had committed a Grade C violation of his supervised release. In September and December 2011, Webb was arrested again and indicted for distribution, possession, and conspiracy to distribute cocaine base. In October 2012, Webb appeared for sentencing and for a hearing on the supervised release violation. As to the supervised release violation, the government pressed the court for sentencing at the high end of Webb’s Guidelines range, on account of his marijuana charge at the beginning of his supervised release, but the court imposed a sentence near the low end of the Guidelines range. The court concluded that Webb’s conduct constituted a Grade A violation, revoked the term of supervision, and sentenced Webb to thirty-two months’ imprisonment. In explaining the rationale for its sentence, the court referenced, among other factors, the seriousness of the offense, the need to promote respect for the law, and the need to provide just punishment for the offense.

Webb appealed the district court’s revocation sentence, claiming that the sentence was plainly unreasonable because the district court mentioned § 3553(a) factors not specifically cross-referenced in Section 3583(e), the statute governing supervised release.

The Fourth Circuit reviewed the district court’s sentence for plain error. In exercising its discretion to impose a sentence of imprisonment upon revocation of a defendant’s supervised release, a district court is guided by the Chapter Seven policy statements in the federal Guidelines manual, as well as the statutory factors applicable to revocation sentences under 18 U.S.C. § 3553(a) and 3583(e). Chapter Seven instructs that, in fashioning a revocation sentence, “the court should sanction primarily the defendant’s breach of trust, while taking into account, to a limited degree, the seriousness of the underlying violation and the criminal history of the violator.” Section 3583(e), the statute governing supervised release, further directs courts to consider factors enumerated in various sections of § 3553. Absent from these enumerated factors is § 3553(a)(2)(A), which requires district courts to consider the need for the imposed sentence “to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense.” However, the Fourth Circuit found that, although § 3583(e) enumerates the factors a district court should consider, it does not expressly prohibit a court from referencing other relevant factors omitted from the statute. Moreover, the factors listed in § 3553(a)(2)(A) are intertwined with the factors courts are expressly authorized to consider under § 3583(e). For example, the “nature and circumstances of the offense,” a mandatory revocation consideration under § 3583(e), necessarily encompasses the seriousness of the violation of supervised release.  Even assuming, arguendo, Webb were able to demonstrate the district court committed plain error, the Fourth Circuit nevertheless concluded that he was unable to show that the court’s error affected his substantial rights by influencing the outcome of the revocation hearing. Webb’s thirty-two month revocation sentence was near the bottom of his Chapter Seven range and was presumed reasonable.

Full Opinion

– Sarah Bishop

Decided: December 17, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s denial of defendant’s application for asylum and withholding of removal based on his claim that government officials would sterilize him if he returned to China. The Fourth Circuit also affirmed the denial of his claim under the Convention Against Torture (“CAT”).

In November 2008, defendant Hui Pan (“Pan”) left his home in China for Baltimore, Maryland. He arrived in the United States without valid entry documents, and the Department of Homeland Security (“DHS”) detained him and conducted a credible fear interview. Pan claimed that, if he returned to China, family planning officials would forcibly sterilize him for violating China’s one-child policy. Pan and his wife already had one child when his wife became pregnant in November 2008 and was, according to Pan, forced to have an abortion. Pan stated that, following the abortion, officials found his wife was “not suitable” for sterilization and that Pan would have to be sterilized instead.

The Fourth Circuit reviewed the lower courts’ adverse credibility determination, regarding Pan’s testimony and corroborating documents, using the “substantial evidence” standard.

The Immigration and Nationality Act (the “INA”) authorizes the Secretary of Homeland Security or the Attorney general to confer asylum on any alien who establishes refugee status. An applicant for asylum may prove refugee status by showing either that they were subjected to past persecution or that they have a well-founded fear of future persecution on account of one of the enumerated grounds. Pan attempted to demonstrate a well-founded fear of future persecution—that family-planning officials would sterilize him if he were removed to China. The “well-founded fear of persecution” standard has both a subjective and objective component. The subjective part requires credible testimony demonstrating a genuine fear of persecution. The objective part requires specific, concrete facts that would lead a reasonable person in like circumstances to fear persecution. A determination that the applicant’s testimony is not credible will generally defeat the subjective component. The Fourth Circuit concluded that the lower courts’ adverse credibility finding was supported by substantial evidence.

First, Pan’s testimony regarding why his wife could not be sterilized – resulting in the government’s decision to sterilize him – was vague and unclear. To corroborate his story, Pan offered a photocopy of a “Fujian Women and Children Health Center Disease Explanation Form,” which had an illegible signature and did not elaborate on his wife’s “skin disease” or explain the “operation” referenced. Next, Pan offered vague and inconsistent testimony regarding the circumstances of his flight from China to the United States. Pan’s testimony during his interview conflicted with statements on his asylum application. Even though Pan suggested these inconsistencies were due to a language barrier, the Fourth Circuit found Pan’s testimony not credible. Finally, the Fourth Circuit affirmed the lower courts’ conclusion that Pan’s corroborating documentation was unreliable and failed to rehabilitate Pan’s testimony. Pan failed to authenticate the documents by not making any attempt to establish how he acquired them or that they were genuine. Pan did not call his uncle as a witness to verify that he received the documents from China. In addition, the Fourth Circuit affirmed the lower courts’ conclusion that some of the documents were inherently unreliable. For example, the sterilization notice was a photocopy of an unsigned document allegedly issued by local officials. In addition, the disease explanation form did not legibly identify the doctor who purportedly created the form and set forth a confusing and vague description of the skin condition that rendered Pan’s wife unsuitable for sterilization. Finally, the Fuzhou Surgery Certificate, which purportedly established that an abortion was performed, conflicted with Pan’s testimony regarding how many months his wife was into her pregnancy when she had the abortion.

Full Opinion

– Sarah Bishop

Decided: December 24, 2013

The Fourth Circuit held that the United States District Court for the District of Maryland did not err in denying Reginald Dargan, Jr.’s (Dargan) motion to suppress evidence; that the district court did not abuse its discretion by admitting testimony involving certain out-of-court statements, per Federal Rule of Evidence 804(b)(3); and that the admission of these statements did not violate Dargan’s Sixth Amendment right to confront opposing witnesses.  The Fourth Circuit therefore affirmed the judgment of the district court.

On March 30, 2011, three men robbed a jewelry store in Columbia, Maryland.  Police subsequently arrested several people in connection with the robbery, including Deontaye Harvey (Harvey) and Aaron Pratt (Pratt).  The police investigation also implicated another person nicknamed “Little Reggie,” who was not yet in custody.  Dargan was arrested two months later.  Police suspected Dargan was Little Reggie.  Investigators later acquired a search warrant for Dargan’s residence.  An attachment to the warrant, Attachment A, catalogued the items subject to seizure.  These items included, among other things, “[i]ndicia of occupancy.”  While searching Dargan’s residence, officers seized a receipt for a $461.10 belt, which they found in a bag on a dresser in Dargan’s bedroom; the receipt indicated that the buyer, who had identified himself as “Regg Raxx,” bought the belt on the day after the robbery and paid for it with cash.  Also, at some point after Dargan’s arrest, Harvey allegedly told a cellmate named Zachary Shanaberger (Shanaberger) that he had robbed a jewelry store with two co-conspirators and that, at the time of the conversation, he and his-coconspirators were imprisoned in the same facility.

A federal grand jury indicted Dargan, Harvey, and Pratt on October 26, 2011.  Dargan moved to suppress the receipt for the belt prior to trial.  Though the district court concluded that the receipt did not fall under Attachment A’s terms, the court found that the plain-view exception to the warrant requirement justified the seizure.  Also, prior to trial, the Government filed a motion to admit testimony regarding Harvey’s out-of-court statements to Shanaberger; specifically, the Government sought to admit Harvey’s comments as statements against interest under Federal Rule of Evidence 804(b)(3).  Dargan objected to this categorization and argued that the introduction of Harvey’s statements would violate his rights under the Confrontation Clause.  The district court granted the Government’s motion.  At trial, the Government introduced the receipt as evidence and called Shanaberger as a witness, who testified as to Harvey’s aforementioned comments to him.  The jury returned a verdict of guilty, and Dargan appealed.  On appeal, Dargan argued that the seizure of the receipt violated the Fourth Amendment, as the receipt did not fall under any of Attachment A’s enumerated items; that Harvey’s statements were inadmissible under Rule 804(b)(3); and that the introduction of Harvey’s statements violated the Confrontation Clause.

With regard to Dargan’s Fourth Amendment arguments, the Fourth Circuit noted that courts should employ a “commonsense and realistic” approach to interpreting warrants.  The court found that “[t]he officers conducting the search could plausibly have thought that the occupant of the premises was also the purchaser identified on the belt receipt”—thus making the receipt one of the “[i]ndicia of occupancy” under Attachment A.  Furthermore, the officers were justified in opening the bag on Dargan’s dresser, as many of the items described in Attachment A could have been in the bag.  With regard to the admission of Harvey’s statements under Rule 804(b)(3), the Fourth Circuit found that Harvey was unavailable as a witness, as he invoked his Fifth Amendment right not to testify; that Harvey’s statements were self-inculpatory, as he made them to a cellmate rather than an investigator, and the statements demonstrated Harvey’s knowledge of “significant details about the crime” and “implicate[d] him in a conspiracy”; and that the factors enumerated in United States v. Kivanc, 714 F.3d 782, indicated that Harvey’s statements were supported by corroborating circumstances.  Lastly, with regard to Dargan’s Confrontation Clause argument, the Fourth Circuit found that Harvey’s statements to Shanaberger were non-testimonial.

Full Opinion

– Stephen Sutherland

Decided: December 19, 2013

The Fourth Circuit held that the United States District Court for the Northern District of West Virginia erred by aggregating the unnamed members of a proposed but uncertified class of defendant appraisers for purposes of the “at least 1 defendant” requirement, 28 U.S.C. § 1332(d)(4)(A), of the local controversy exception to the Class Action Fairness Act (CAFA).  The Fourth Circuit therefore vacated the decision of the district court and remanded the case.

Phillip Alig, Sara J. Alig, Roxanne Shea, and Daniel V. Shea (the plaintiffs) filed a lawsuit in West Virginia state court against Quicken Loans (Quicken), Title Source, Inc., and a class of defendant appraisers represented by Appraisals Unlimited, Inc., Dewey V. Guida, and Richard Hyett (the defendant appraisers).  The plaintiffs brought their suit “both individually and on behalf of a class of West Virginia citizens.”  They alleged, inter alia, that the defendant appraisers—including the named appraisers and the unnamed class of appraisers—were complicit in a scheme of unlawful loans originating in West Virginia.  Quicken filed a notice of removal in the district court, stating that the court had jurisdiction under CAFA.  The plaintiffs then filed a motion to remand based on the local controversy exception to CAFA, 28 U.S.C. § 1332(d)(4)(A).  The district court remanded the case to state court, and Quicken appealed.  On appeal, Quicken argued that the district court should not have aggregated the defendant appraisers in determining whether they satisfied the “at least 1 defendant” requirement of the local controversy exception.

The Fourth Circuit disagreed with Quicken, finding that the term at least “permits a reading that more than one defendant could satisfy the stated criteria.”  The court also held that disallowing such aggregation would produce an absurd result and would be contrary to clearly expressed congressional intent.  Thus, the Fourth Circuit concluded that the district court properly aggregated the named defendant appraisers.  However, the Fourth Circuit noted that the district court also aggregated the unnamed defendant appraisers—who, as members of a proposed but uncertified class, were not parties to the litigation.  The Fourth Circuit therefore remanded the case so the district court could determine whether the named defendant appraisers satisfied the “at least 1 defendant” element of the local controversy exception.

Full Opinion

– Stephen Sutherland

Decided: December 16, 2013

The Fourth Circuit held that, under Maryland statutory law, Maryland common law, or Tennessee law, the United States District Court for the District of Maryland properly granted summary judgment to ACE American Insurance Company (ACE), as Perini/Tompkins Joint Venture (PTJV)’s failure to obtain ACE’s consent prior to settling an underlying dispute precluded PTJV from claiming reimbursement under certain insurance policies with ACE.  Furthermore, PTJV did not demonstrate that ACE intentionally relinquished its right to invoke the voluntary payment and no-action clauses in these policies.  The Fourth Circuit therefore affirmed the decision of the district court.

In 2005, Gaylord National LLC (Gaylord) hired PTJV to manage the construction of a $900 million hotel and convention center (the Project) in Maryland.  Under its construction contract with PTJV, Gaylord agreed to purchase an Owner Controlled Insurance Policy (OCIP)—a program sold by ACE “to insure only the Project and its participants.”  Gaylord purchased two OCIP policies from ACE: a general liability policy and an excess liability policy (collectively, the Policies).  PTJV was, by endorsement, added as a named insured on both Policies.  Each of the Policies contained voluntary payment clauses, under which an insured could not—except at its own cost—“voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without [ACE’s] consent.”  Each of the Policies also contained no-action clauses, under which an insured could not sue for coverage “unless all of [the] terms [of the Coverage Part] have been fully complied with.”

During construction, certain property damage to the Project occurred.  After the completion of the Project, PTJV and Gaylord settled certain litigation arising from the Project—but PTJV did not seek to obtain ACE’s consent prior to settlement.  On May 6, 2009—about six months after the settlement and almost two years after the underlying damage to the Project occurred—PTJV sent ACE a formal, written notice of an insurance claim.  The letter did not mention PTJV’s settlement with Gaylord.  ACE issued a reservation of rights letter over ten months later, listing the potential grounds for denial of coverage.  On December 13, 2010, PTJV sued ACE in the district court, alleging breach of contract and other claims.  The district court granted summary judgment in ACE’s favor, and PTJV appealed.  PTJV argued on appeal that, inter alia, ACE must demonstrate actual prejudice before denying coverage under section 19-110 of the Maryland Code or under Maryland common law—thus creating an issue of fact—and that certain statements and conduct on the part of ACE should constitute waiver of its right to invoke the voluntary payment and no-action provisions in the Policies.

The Fourth Circuit first noted a choice of law issue—specifically, whether to apply the law of Maryland or the law of Tennessee, the state in which the Policies became binding insurance contracts.  However, the Fourth Circuit found that the outcome of the case was the same under either Maryland or Tennessee law.  While section 19-110 of the Maryland Code provides that the insurer may only disclaim coverage due to the insured’s failure to cooperate or failure to provide notice if the insurer proves, by a preponderance of the evidence, “that the lack of cooperation or notice has resulted in actual prejudice to the insurer,” the court applied the Maryland case Phillips Way, Inc. v. American Equity Insurance Co., 795 A.2d 216, to find this section inapplicable to PTJV’s failure to meet a condition precedent in the no-action clause.  The Fourth Circuit also held that ACE was not required to show prejudice under Maryland common law; the court applied a broad reading of Phillips Way, under which “an insured’s failure to obtain the insurer’s prior consent to a settlement does not ever require prejudice.”  However, even if ACE was required to show prejudice, the court held that ACE would have been prejudiced as a matter of law per the Maryland case of Prince George’s County v. Local Gov’t Ins. Trust, 879 A.2d 81.  Furthermore, the Fourth Circuit held that the Tennessee cases of Anderson v. Dudley Moore Insurance Co., 640 S.W.2d 556, and State Auto. Ins. Co. v. Lashlee-Rich, 1997 WL 781896, counseled the same result: ACE would also not be required to demonstrate prejudice under these cases.  Lastly, with regard to ACE’s purported waiver of its right to invoke the voluntary payment and no-action clauses, the Fourth Circuit noted that the statements and conduct cited by PTJV did not demonstrate intentional relinquishment.  Indeed, ACE stated that it would not waive “any other terms, conditions, exclusion or provisions” of one of the Policies in a September 8, 2010 letter, in which ACE offered to pay part of the claim.

Full Opinion

– Stephen Sutherland

Decided: December 11, 2013

The Fourth Circuit affirmed Keith Simmons’s (Simmons) convictions for securities fraud and wire fraud, but reversed his conviction for two counts of money laundering because the transactions underlying these latter convictions constituted essential expenses of Simmons’s fraudulent endeavor.  The Fourth Circuit therefore affirmed the decision of the United States District Court for Western District of North Carolina in part, reversed the decision in part, vacated Simmons’s sentence, and remanded the case.

Simmons operated a Ponzi scheme called Black Diamond Capital Solutions (Black Diamond) from April 2007 to December 2009.  He promised investors that, inter alia, he would invest their money in a foreign currency exchange, and that the investors could withdraw their investments at will after an initial ninety-day period.  Because numerous investors received returns from Black Diamond when they withdrew money after the ninety-day period, they sent Simmons even more money.  In reality, however, Simmons simply used deposits from subsequent investors to pay “returns” to earlier ones; furthermore, instead of investing in a foreign currency exchange, he used investments for his own purposes.  Simmons’s Ponzi scheme eventually unraveled.  The FBI raided his offices in December 2009, and Simmons confessed to the fraud.  A jury subsequently convicted Simmons on one count of securities fraud, one count of wire fraud, and two counts of money laundering; both of the money laundering convictions arose from payments Simmons made to Black Diamond investors.  Simmons challenged his convictions for money laundering on appeal, arguing that his payments to the investors did not involve the “proceeds” of fraud under 18 U.S.C. § 1956(a)(1)(A)(i).  He relied on United States v. Santos, 553 U.S. 507, in which a Supreme Court plurality held that the term proceeds only covers the profits of criminal endeavors—thus excluding the essential “crime-related expenses” of the underlying crime from the scope of the money laundering statute.

The Fourth Circuit noted that, though Congress effectively overruled Santos by amending the money laundering statute and defining proceeds to include “gross receipts,” 18 U.S.C. § 1956(c)(9), Congress’s amendment “was not enacted at the time of the conduct giving rise to Simmons’s money-laundering convictions”; thus, the court was bound by the Santos framework rather than Congress’s expanded definition.  Applying Santos, the Fourth Circuit found that Simmons’s payments to Black Diamond investors were essential to the operation of his fraudulent scheme.  The court noted that the victims who received the payments underlying Simmons’s money laundering charges “testified to the critical importance of those payments in fostering the (misplaced) confidence necessary to perpetuate fraud”; that Simmons’s scheme unraveled after he ceased making payments to investors; that the Government treated the payments as essential to the fraud throughout its prosecution; that payments to early investors “are understood to constitute essential features of Ponzi schemes”; that the Ninth Circuit reached the same conclusion in a similar case, United States v. Van Alstyne, 584 F.3d 803; and that, during the Congressional deliberations surrounding the congressional amendment of the money laundering statute, a Senate Report noted that payments from Ponzi schemes did not constitute money laundering under existing statute.

Full Opinion

– Stephen Sutherland

Decided: December 20, 2013

The Fourth Circuit, holding that Vernon Dale Wood (“Wood”) was a “sexually dangerous person” under the Adam Walsh Act (the “Act”), affirmed the district court’s order committing Wood to the custody of the Attorney General of the United States (“U.S.A.G.”).

Wood was born in 1953. In 1976, he was arrested for promoting prostitution and simple assault in the state of Washington. The prostitution charges were dropped, but Wood was convicted of the simple assault charge. The following year, Wood was arrested for promoting prostitution and compelling prostitution in Oregon. He was found guilty on both counts and served approximately five years in prison. One of the women involved in the Oregon prostitution offenses was sixteen years old. In 1987, Wood was charged with sexual abuse in Iowa. He was found guilty of this offense, which involved intercourse with a ten-year old girl, and sentenced to twenty years in prison. However, he was released in January 2001. The following April, Wood was arrested and charged with failure to comply with Iowa’s sex offender registry requirements. He was placed on probation. Wood’s probation was revoked in 2002, however, when he was arrested on five counts of supplying alcohol to minors. In 2004, Wood was again arrested in Iowa and charged with lascivious acts with a child and being a felon in possession of a firearm. The state of Iowa deferred to the U.S.A.G.’s office for prosecution and a grand jury charged Wood with two counts o f being a felon in possession of a firearm. While the federal charges were pending, in 2005, Wood was charged with seven counts of sexual abuse stemming from an alleged molestation of a female under the age of twelve over a period of three years. Following Wood’s 2006 conviction on the federal firearm charge, a presentence report (the “2006 PSR”) was prepared in preparation for sentencing. The 2006 PSR detailed Wood’s extensive criminal history, which also included numerous offenses in a variety of state courts for non-sexual offenses. Wood’s received concurrent 100-month sentences, his projected release date was August 13, 2012.

 In January 2012, the Bureau of Prisons certified that Wood was a “sexually dangerous person” in accordance with the Act, automatically staying his release pending an evidentiary hearing. The entire procedure was guided by a standing order governing all cases arising under the Act (the “Standing Order”). Paragraph 5(h) of the Standing Order provides for two types of examiners identified as a “court selected examiner” and an “additional examiner” selected by the defendant. The Standing Order bars counsel from either party from ex parte communication with either Paragraph 5(h) examiner. Additionally, Paragraph 5(h) provides an opportunity for the defendant to obtain a “non-testifying examiner” to assist in developing a defense. Wood, however, never sought the appointment of such an examiner. The district court, appointed Dr. Harry Hoberman (“Dr. Hoberman”), a licensed psychologist, as the “court selected examiner.” Following a motion by Wood, Dr. Fabian Saleh (“Dr. Saleh”) was selected as an “additional examiner.”  Wood then filed a motion seeking leave to substantively communicate ex parte with Dr. Saleh. The motion was denied.

The district court held a civil commitment hearing in July 2012. At the hearing, Dr. Tanya Cunic (“Dr. Cunic”), Dr. Hoberman, and Dr. Saleh testified as experts in the field of psychology. Based on a record review, Dr. Cunic testified that she diagnosed Wood with two serious mental disorders: (1) Pedophilia; and (2) Personality Disorder, Not Otherwise Specified with Antisocial Traits. Dr. Cunic further testified that, based on Wood’s serious mental disorders and dynamic risk factors; he would have serious difficulty in refraining from child molestation. Similarly, Dr. Hoberman testified that he diagnosed Wood with two serious mental disorders: (1) Pedophilia; and (2) Antisocial Personality Disorder. Dr. Hoberman also testified that he believed Wood would have serious difficulty refraining from future acts of child molestation. Dr. Saleh, on the other hand, testified that there was no evidence that Wood suffered from Pedophilia or Antisocial Personality Disorder. Dr. Saleh did, however, testify that he diagnosed Wood with Personality Disorder, Not Otherwise Specified but that there was no link in this case between the disorder and sexual reoffending. Dr. Saleh further testified that he believed Wood would not have serious difficulty in refraining from engaging in child molestation.

On September 6, 2012, the district court issued its civil commitment order. With regard to the second element required under the Act, the court credited the opinions of Drs. Cunic and Hoberman over the opinion of Dr. Saleh and found that Wood suffered from Pedophilia, a serious mental disorder. Moreover, the district court found Wood suffered from Personality Disorder, Not Otherwise Specified with Antisocial Traits. With regard to the third element, the district court found that Wood would have serious difficulty in refraining from child molestation if released. Again, the court credited the opinions of Drs. Cunic and Hoberman over that of Dr. Saleh. This appeal followed.

On appeal, the Fourth Circuit first addressed Wood’s contention that the Standing Order violated his due process rights because it did not allow him to substantively communicate ex parte with his selected examiner, Dr. Saleh. The court rejected this contention, reasoning that (1) Dr. Saleh’s expert opinions supported Wood’s claim that he was not a sexually dangerous person; and (2) Wood had the opportunity to select a “non-testifying expert” to assist in building his defense. Next, the court addressed Wood’s argument that the district court erred in admitting unreliable hearsay into evidence. The court also rejected this argument. In so concluding, the court noted that the challenged reports were admissible under Rule 703 of the Federal Rules of Evidence, which permits an expert to testify to opinions based on inadmissible evidence. Moreover, the reliability of the challenged reports was supported by the fact that they were used in preparation of the 2006 PSR, which was admissible as an official document under Rule 803(8). Importantly, the 2006 PSR set forth the vast majority of the relevant evidence contained in the challenged reports.

Full Opinion

-W. Ryan Nichols

Decided: December 20, 2013

The Fourth Circuit affirmed the district court’s application of a sentencing enhancement to the defendant’s conviction for participating in a drug conspiracy based on his role as a “manager or supervisor” of the drug conspiracy.

Defendant, Patrolman Kurt Steffen (“Steffen”) was arrested in November 2009 for his participation in a large-scale drug conspiracy in Dorchester County, South Carolina. Steffen was the owner of one of five properties involved in a large-scale drug conspiracy. In addition to his duties as a highway patrolman, Steffen allowed others involved in the conspiracy to use his property to cultivate marijuana in exchange for a share of the profits. Additionally, Steffen initially paid for equipment and a shed furnished with electricity for use in the operation prior to transferring the utilities into another conspirator’s name to avoid detection. Moreover, on a couple of occasions, Steffen used his patrol car to follow someone selling marijuana to “prevent any other law enforcement agency from stopping [the] vehicle.” At trial, the district court imposed a three-level upward sentencing enhancement for being a “manager or supervisor” of criminal activity primarily because his ownership of the land gave him the “ability…to pull the plug on the enter operation.” Steffen appealed the enhancement.

On appeal, the Fourth Circuit affirmed the enhancement, finding that the district court did not commit clear error in applying the enhancement. A defendant qualifies for the “manager or supervisor” enhancement if the defendant “managed or supervised ‘participants, as opposed to property, in the criminal enterprise.’” The Fourth Circuit found that Steffen exercised management responsibility on several occasions. Frist, his use of his patrol car to “prevent another other law enforcement officers from stopping” the vehicle transporting marijuana “reflected a management decision regarding the manner in which another participant in the conspiracy was to conduct the conspiracy’s business.” Second, the court found that Steffen’s transfer of the electric bill out of his name to “avoid detection” further reflected a management decision to reduce his risk of exposure. Therefore, under the deferential standard of review for clear error, the Fourth Circuit affirmed the sentencing enhancement.

Full Opinion

– Wesley B. Lambert

Decided: December 18, 2013

The Fourth Circuit held that Carlos Perez-Perez’s (“Perez-Perez”) prior conviction of indecent liberties with a minor, in violation of N.C. Gen. Stat. § 14-202.1, constituted a crime of violence, and warranted the the sixteen-level enhancement the district court imposed on him after he plead guilty to illegal reentry after deportation by an aggravated felon.

Perez-Perez, an illegal alien from Mexico, who was then twenty-four years old, had sex with a fifteen-year-old girl in 2001. He was charged with statutory rape in North Carolina, but pleaded guilty to taking indecent liberties with a minor and was subsequently deported. Perez-Perez unlawfully reentered the United States and was convicted in federal district court in Texas of reentry by an alien after deportation following an aggravated felony conviction. He was again deported to Mexico in 2004. After unlawfully reentering the United States yet again, Perez-Perez pleaded guilty in federal district court in North Carolina to illegal reentry after deportation by an aggravated felon. The district court concluded that Perez-Perez’s prior conviction for taking indecent liberties with a minor constituted a crime of violence and therefore applied the sixteen-level sentence enhancement, which raised Perez-Perez’s sentencing range from a range of one to seven months to a range of forty-six to fifty-seven months. Ultimately, Perez-Perez was sentenced to forty-six months.

On appeal, Perez-Perez contended that the district court erred in finding that his prior North Carolina conviction for taking indecent liberties with a minor qualifies categorically as sexual abuse of a minor, and thus as a crime of violence within the meaning of the reentry Guideline. In affirming the district court, the Fourth Circuit again held, as in Diaz-Ibarra, that a perpetrator can engage in conduct that constitutes sexual abuse when he is “in the actual or constructive presence of the minor.” The court further held that Perez-Perez’s argument, that Vann militates in favor of concluding that taking an indecent liberty with a minor is not a “crime of violence,” ultimately fails because accepting it would require the court to set aside prior precedent in Diaz-Ibarra. Accordingly, the court reaffirmed that a conviction for taking indecent liberties with a minor qualifies categorically as sexual abuse of a minor under Diaz-Ibarra and is therefore a crime of violence within the meaning of the reentry Guideline.

Full Opinion

-W. Ryan Nichols

Decided: December 17, 2013

The Fourth Circuit affirmed the district court’s decision that the defendants’ use of plaintiff’s “Flying B” logo that was used as the Baltimore Ravens’ logo from 1996 to 1998 in historical films and in historical exhibits was “fair use” and thus, did not infringe on the plaintiff’s copyright.

Prior to the Baltimore Ravens’ first season in 1996, Plaintiff, Frederick Bouchat accused the Ravens of using his “Flying B” logo without his permission. After the 1998 season, the Ravens adopted a new logo on their uniforms and merchandise. Bouchat and the Ravens subsequently underwent several rounds of litigation. In this, the fifth suit between Bouchat and the Ravens, Bouchat sued the NFL and the Ravens (collectively “Defendants”) over the use of the Flying B logo in videos shown on the NFL network and photographs located on the club level of the Ravens’ stadium. The district court found that the Defendants’ limited use of the Flying B logo constituted “fair use” of the logo, and thus, was not copyright infringement. Bouchat appealed.

On appeal, the Fourth Circuit first affirmed the district court’s finding that the NFL Network’s use of the Flying B was not copyright infringement. The Flying B logo is seen in three videos: Top Ten Draft Picks, Top Ten Draft Busts, and Sound FX. In the two Top Ten videos, the Flying B logo appears for less than one second, and is seen in video clips recounting the historical careers of NFL players. The NFL’s Sound FX video features audio clips from famous Ravens’ linebacker, Ray Lewis. One of the segments features a clip of Lewis at training camp where the Flying B logo is visible on some of the players’ helmets. Another shows Lewis making a tackle where the Flying B logo is visible on a helmet for less than a second. The Fourth Circuit found that the NFL’s use of the Flying B in these instances constituted “fair use,” primarily because the use of the logo was “transformative,” meaning that the NFL “employ[ed] the quoted matter in a different manner of or for a different purpose from the original.” The court explained that the videos were intended to present some historical narrative about NFL history, and not as an identifier for the Baltimore Ravens. Furthermore, the use of the logo was so insubstantial that the court found it “can be perceived only by someone who is looking for it.” Therefore, the NFL’s use of the Flying B logo constituted “fair use” that was not copyright infringement.

Similarly, the Fourth Circuit held that the Ravens’ use of photographs featuring the Flying B logo on its club level at the Ravens’ stadium was fair use that did not qualify as copyright infringement. The club level provides fans a host of amenities including spacious seating, carpeted floors, specialty concessions, and enhanced customer service. The cost of these tickets can exceed $350 per game. Within the club level concourse, there is a timeline tracing the Ravens’ history beginning in 1881. The portion of the exhibit covering the 1996 and 1997 seasons features ticket stubs and photos bearing the Flying B logo. The court again concluded that that the use of the Flying B was “transformative.” The court emphasized that the “Flying B logo is included merely as an incidental component of this broader historical narrative.” Moreover, the “historical” focus of the timeline artifacts differs significantly from the branding and identifying purpose that the Flying B originally served. Therefore, the Fourth Circuit affirmed the district courts’ decision that Defendants did not infringe on Bouchat’s copyright of the Flying B logo.

Full Opinion

– Wesley B. Lambert

Decided: December 13, 2013

The Fourth Circuit affirmed the district court and held that the required records doctrine superseded the Fifth Amendment privilege against self-incrimination and required production of certain foreign bank records.

John and Jane Doe (collectively “Appellants”) were targeted under a grand jury investigation to determine whether they used secret Swiss bank accounts to conceal assets and income from the IRS. Evidence presented to the grand jury indicated that, in 2008, John Doe opened an account at a Swiss investment bank in the name of a corporation, the name of which was redacted. The Swiss firm Beck Verwaltungen AG (“Beck”) managed the account, valued in excess of $2.3 million. In January 2009, Doe closed the account and transferred $1.5 million to Beck’s account at a different Swiss private bank. In May 2012, Appellants were served grand jury subpoenas. The subpoena requested that Appellants produce certain foreign bank account records that they were required to keep pursuant to Treasury Department regulations governing offshore banking. Appellants, however, citing the Fifth Amendment, moved to quash the subpoenas. The district court denied Appellants’ motion, finding that the required records doctrine overrode Appellants’ Fifth Amendment privilege against self-incrimination. Appellants refused to comply with the district court’s order to produce the requested records. The district court, therefore, held Appellants in civil contempt. Appellants filed this appeal and the district court stayed execution of the contempt order until this matter was adjudicated.

On appeal, the Fourth Circuit first noted that the Supreme Court has held that the privilege against self-incrimination does not bar the government from imposing recordkeeping and inspection requirements as part of a valid regulatory scheme. It then summarized the requirements of the required records doctrine as follows: (1) the purposes of the United States’ inquiry must be essentially regulatory; (2) information is to be obtained by requiring the preservation of records of a kind which the regulated party has customarily kept; and (3) the records themselves must have assumed public aspects which render them at least analogous to public document. Noting that it was joining in the consensus of the courts of appeals to have considered the issue, the court then concluded that the records required to be maintained under the Bank Secrecy Act (“BSA”) fall within the required records doctrine. In so holding, the court addressed, in turn, Appellants’ argument that the BSA record keeping provisions failed to meet each requirement under the required records doctrine, primarily focusing on the first requirement—that the records be “essentially regulatory.” Appellants argued that the BSA’s recordkeeping provision is criminal, rather than regulatory, in nature. The court, however, rejected this contention and found that the BSA’s recordkeeping requirements do not apply exclusively to those engaged in criminal activity. Rather, the requirements serve many purposes, a number of which are unrelated to criminal law enforcement. Therefore, it held that the requirements were in fact “essentially regulatory.”

Full Opinion

-W. Ryan Nichols

Decided: December 12, 2013

The Fourth Circuit Court of Appeals vacated the district court’s dismissal of Plaintiffs’ action under the False Claims Act (the “FCA”) against Purdue Pharma L.P. and Purdue Pharma, Inc. (together “Purdue”). The Fourth Circuit held that the district court erred by giving preclusive effect to United States ex rel. Radcliffe v. Purdue Pharma L.P. and, therefore, for dismissing their action on res judicata grounds.

Prior to Plaintiffs’ claim, Mark Radcliffe, the husband of Plaintiff Angela Radcliffe, filed a FCA action against Purdue (“Qui Tam I”). Radcliffe was a district sales manager for Purdue, laid off as part of a reduction in force in June 2005. He subsequently executed a general release (“the Release”) of all claims against Purdue in order to receive an enhanced severance package. The Fourth Circuit affirmed the district court’s with-prejudice dismissal of Qui Tam I in Radcliffe, concluding that the Release barred Radcliffe’s FCA claims. After Radcliffe, Steven May and Angela Radcliffe (the “Relators”) commenced this FCA action against Purdue (“Qui Tam II”) setting forth allegations nearly identical to those advanced by Mark Radcliffe in Qui Tam I.  On appeal, the Relators argued that the district court erred by giving preclusive effect to Radcliffe and dismissing their action on res judicata grounds.

According to the Fourth Circuit, whether res judicata precludes a subsequent action turns on the existence of three factors: (1) a final judgment on the merits in a prior suit; (2) an identity of the cause of action in both the earlier and the later suit; and (3) an identity of parties or their privies in the two suits. The Fourth Circuit concluded that Radcliffe was a “judgment on the merits,” and not merely a “jurisdictional dismissal,” as argued by the Relators. The Relators claimed that the dismissal in Radcliffe was premised on a determination that Mark Radcliffe lacked standing to pursue the FCA claims. However, the Fourth Circuit concluded that it had dismissed not because Radcliffe lacked standing, but because he had waived it through execution of the Release. The FCA statutorily vests private citizens with standing and, therefore, Radcliffe had the “right” to bring an FCA action before he signed the Release, wherein he waived, rather than lost, that right. However, even after finding Radcliffe was a “judgment on the merits,” the Fourth Circuit nonetheless agreed with the Relators that the district court improperly gave Radcliffe preclusive effect. In cases where the earlier action was dismissed in accordance with a release or other settlement, the traditional res judicata inquiry is modified– the principles of res judicata apply to the matters specified in the settlement agreement, rather than the original complaint. Settlement agreements operate on contract principles, and thus the preclusive effect of a settlement agreement should be measured by the intent of the parties. The Fourth Circuit explained that the Release executed by Mark Radcliffe in Qui Tam I was personal to him and addressed only his rights and the claims that he might assert against Purdue. Neither the Relators nor the government were parties to or intended beneficiaries of the Release. Therefore, the Release could not serve as a defense to any claims that the Relators might assert against Purdue and the judgment enforcing the Release cannot bar such claims.

Purdue and the government then argued that the district court’s dismissal could be affirmed because the action is prohibited by the FCA’s “public disclosure” bar.  To address that argument, the Fourth Circuit first determined which version of the statute applied to this case. Here, the Plaintiffs’ complaint was filed after the 2010 amendments to the public-disclosure bar. However, it concerned conduct that occurred between 1996 and 2005, before the 2010 amendments. Ordinarily, courts will assess the legal effect of conduct under the law that existed when the conduct took place. Although there is a presumption against retroactive legislation, it is limited to statutes “that would have genuinely retroactive effect.” Therefore, the Fourth Circuit explained that changes in jurisdictional and procedural rules, which take away no substantive right, are often applied to pending cases. However, those new rules apply because they do not have an impermissible retroactive effect, not because the complaint was filed before the statute was amended. The Fourth Circuit ultimately determined that it does not matter that Plaintiffs’ complaint was filed after the FCA was amended, so long as the application of the 2010 amendments would have an impermissible retroactive effect. Here, the amendments create a jurisdictional change, but it is one that would have an impermissible retroactive effect. Therefore, the Fourth Circuit held that the amended version of the statute should not apply. Under the prior version of the statute, the public-disclosure bar operated to divest the district court of subject-matter jurisdiction. Under the amended version, which deleted the unambiguous jurisdiction-removing language, the public-disclosure bar is no longer a jurisdiction-removing provision. In addition, the 2010 amendments significantly narrowed the class of disclosures that can trigger the public-disclosure bar, while at the same time expanding the number of private plaintiffs entitled to bring qui tam actions. Finally, the 2010 amendments also changed the required connection between Plaintiff’s claims and the qualifying public disclosure. As amended, the public-disclosure bar no longer requires actual knowledge of the public disclosure, but instead applies “if substantially the same allegations or transactions were publicly disclosed.” Because the Relators allege that they did not derive their knowledge of Purdue’s fraud from any public disclosure, their claims are viable under the pre-amendment version of the FCA, but not under the amended version. Therefore, the 2010 amendments would significantly imperil the Relators’ right to assert their claims against Purdue, and would deprive Purdue of the previously available jurisdictional defense; the Fourth Circuit concluded they had retroactive effect. The Fourth Circuit concluded that 2010 version of the public-disclosure bar could not be applied in this case, notwithstanding the fact that the complaint was filed after the effective date of the amendments.

Having concluded that the pre-2010 version applies, the Fourth Circuit then addressed whether the public-disclosure bar required dismissal of the action. The pre-amendment version provides that “no court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions” in various hearings, reports, investigations, audits, and news media. The Fourth Circuit has interpreted the “based upon” language as barring only those actions where the relator’s knowledge of the fraud alleged was actually derived from the public disclosure itself. Whether a relator derived his knowledge of the fraud from a public disclosure is a jurisdictional fact to be resolved by the district court. Therefore, the Fourth Circuit remanded the case to the district court for discovery and other proceedings as necessary to resolve the issues related to the applicability of the public-disclosure bar.

Finally, the Fourth Circuit rejected two additional arguments made by Purdue for sustaining the district court’s dismissal of this action. The Fourth Circuit concluded that, because the Relators have not had the opportunity to amend their complaint, it would be improper to rely on any Rule 9 deficiencies to affirm the district court’s dismissal. The Fourth Circuit also concluded that the FCA’s “first to file” bar did not require dismissal. The first-to-file bar applies only if the first-filed action was still pending when the subsequent action as commenced. Here, Qui Tam I was no longer pending at the time this action was commenced, thus making the first-to-file-bar inapplicable.

Full Opinion

– Sarah Bishop

Decided: December 12, 2013

The Fourth Circuit affirmed the district court’s determination that the defendant, deputy sheriff Christine Boczar, was not entitled to qualified immunity in defense to the plaintiff’s § 1983 claim. However, the Fourth Circuit vacated the district court’s award of attorney’s fees and reduced the award to $100,000.

In December 2010, Eileen McAfee stopped at a house in Powhtan County, Virginia, to help a dog that appeared to be in distress. As McAfee tried to give the dog a treat, the dog accidentally bit her hand, causing McAfee to seek medical treatment at a local hospital. The hospital reported the dog bite to Powhatan County Animal Control. Boczar, an animal control officer, investigated the dog bite. In January 2011, she called McAfee to ask about the dog bite and asked where the dog was housed. McAfee responded that she did not know the address, but could lead Boczar to the dog’s location. Bozcar declined McAfee’s offer and never followed up with her about the dog’s location. Bozcar then spoke with two other people in attempts to locate the dog; neither person knew about the dog’s location. Boczar then attained an arrest warrant for McAfee from a state court magistrate on the grounds that McAfee refused to disclose the location of a possibly rabid animal in violation of state law. McAfee was arrested and subsequently acquitted.

After McAfee was acquitted, she sued Bozcar on three counts: (1) a violation of § 1983 for an arrest in contravention of McAfee’s Fourth Amendment rights, (2) a claim for malicious prosecution, and (3) a false imprisonment claim. At trial, the jury found for McAfee on the § 1983 claim only. The jury did not award any compensatory or punitive damages above McAfee’s $2,943.60 in expenses related to her state defense. The court decided against Bozcar on the issue of qualified immunity. Finally, the court awarded $365,027 in attorney’s fees and an additional $10,000 in costs. Bozcar appealed the district court’s denial of her qualified immunity defense and claimed that the fee award was excessive in violation of law.

On appeal, the Fourth Circuit first affirmed the district court’s determination that Bozcar’s arrest was not subject to qualified immunity. Bozcar’s decision to arrest McAfee is only shielded by qualified immunity if the knowledge that Bozcar possessed was sufficient to convince a person of reasonable caution that McAfee committed offense in violation of state law. The Fourth Circuit agreed that Bozcar did not have sufficient information to convince a reasonable person that McAfee violated state law. Bozcar only spoke to three witnesses, none who suggested that McAfee was refusing to disclose the dog’s location. Furthermore, Bozcar lied to the Magistrate about the facts surrounding McAfee’s arrest, suggesting that Bozcar knew that her evidence did not meet the probable cause standard. Therefore, Bozcar cannot insulate herself from liability under qualified immunity.

Second, the Fourth Circuit determined that the attorney’s fee award was unreasonable. Although McAfee was the prevailing party, the attorney’s fee award grossly overrepresented the success of the verdict. McAfee only received compensation for her uncontested expenses in defending the state law claim. She received nothing on her additional compensatory and punitive damages claims. Furthermore, she received nothing for the causes of action beyond § 1983. Such a minimally successful plaintiff’s verdict was insufficient to support a fee award that was more than 100 times the award for compensatory damages. Therefore, the court vacated the fee award and remanded to the district court with the instructions to return a judgment for attorney’s fees in the amount of $100,000.

Full Opinion

– Wesley B. Lambert

Decided: December 11, 2013

The Fourth Circuit held that the record contained sufficient evidence to trigger Nicolas Rene Pastora-Hernandez’s (“Pastora”) burden to prove that he did not engage in persecution in his home country, and agreed with the Board of Immigration Appeals (“BIA”) and the Immigration Judge (“IJ”) that Pastora failed to meet this burden.

Pastora, a native of El Salvador, entered the United States illegally in 1986. After being granted voluntary departure in 1988, he illegally reentered the United States in 1989. In 1991, Pastora applied for asylum. The Immigration and Naturalization Service (“INC”) granted him Temporary Protected Status, which expired in 1994. In 1995, Pastora again applied for asylum. In the 1995 application, Pastora indicated that he served in the civil patrol unit in his hometown as commandant. He also indicated that, as a result of his position, he was targeted by the guerrilla organization and therefore was forced to leave his country to flee persecution. In 1999, Pastora applied for special rule cancellation of removal under Section 203 NACARA. On that application, he stated that he would face the possibility of being punished for not supporting the civil war if removed to El Salvador. In 2006, an officer with the United State Citizenship and Immigration Services interviewed Pastora regarding his NACARA application. During that interview he indicated that he had volunteered in the civil patrol for three hours per week for twelve years. He also stated that he had carried a knife in connection with his volunteer duties and that the military would give them firearms for a short period of time while on duty. Following the interview, the officer informed Pastora that he appeared to be barred from relief under section 240A(c)(5) of the Immigration and Nationality Act because of his possible participation in persecution. In 2009, during an interview with a second asylum officer, Pastora reaffirmed his participation in the civil patrol; however, he described his rank as “cabo” rather than commandant. He further testified that he was given weapons training, but he denied ever engaging in combat or seeing anyone arrested, harmed, or taken prisoner.

In 2011, the IJ conducted a hearing during which he received documents submitted by the Department of Homeland Security detailing human rights violations in the communities in El Salvador where Pastora lived and patrolled. In addition, the IJ also admitted a memo explaining why Pastora was found to be ineligible for special rule cancellation of removal. At the hearing, Pastora testified that he was part of an organization that protected the local community against guerilla. However, when asked to explain his duties, his rank, his length of service, and whether he carried a weapon or received training, Pastora’s testimony conflicted with what he had previously told the asylum officers in his sworn statements. The IJ deemed Pastora barred from relief because he was unable to meet his burden of proof to show that the persecutor bar to relief under NACARA did not apply. Pastora subsequently appealed to the BIA. On appeal, the BIA determined that Pastora’s admitted participation in the civil patrol, coupled with the evidence of human rights violations that occurred during the time and in the place that Pastora patrolled, was sufficient to trigger Pastora’s burden to show that the persecutor bar should not apply. Finding that Pastora failed to show the inapplicability of the persecutor bar, the BIA dismissed the appeal. This appeal followed.

On appeal, the Fourth Circuit addressed Pastora’s contention that the IJ and the BIA incorrectly determined that the persecutor bar applied and thus erred in requiring him to prove by a preponderance of the evidence that he did not engage in persecution. Rejecting this contention, the court noted that the record contained Pastora’s sworn statements that he served as a leader in a local civil patrol for many years during the height of El Salvador’s civil war, and that numerous human rights abuses were committed by armed groups, such as Pastora’s, in the area and during the years that Pastora admitted to patrolling for his unit. Furthermore, the court noted that, in addition to assisting in persecution carried out by the military, the local patrols were, themselves, directly responsible for numerous human rights abuses.

Full Opinion

-W. Ryan Nichols

Decided: December 11, 2013

The Fourth Circuit upheld the district court’s decision to deny the application of naturalization for Lakshmi Injeti, finding that she was never lawfully admitted for permanent residence based on misrepresentations about prior marriages contained on her application for permanent residency status.

Lakshmi Injeti is a native and a citizen of India who first entered the United States in 1991. In 2001, Injeti received the status of “lawful permanent resident.” She applied for naturalization in 2006. The United States Citizenship and Immigration Services (“USCIS”) denied her application, finding that although Injeti had been married twice, on her application for lawful permanent residence status, Injeti incorrectly stated that she had no former husbands. Furthermore, in connection with a separate proceeding, Injeti submitted a fraudulent death certificate of her first husband. Injeti appealed the USCIS’ decision to the district court. The district court granted summary judgment for USCIS. Injeti appealed to the Fourth Circuit.

To qualify for naturalization, an application must: (1) show that she was lawfully admitted for permanent residence, and (2) demonstrate good moral character. The Fourth Circuit affirmed the district court, finding that Injeti was not “lawfully admitted for permanent residence.” The Fourth Circuit explained that an immigrant is not “lawfully admitted” if “her admission, at the time it was granted, was ‘not in substantive compliance with the immigration laws.’” In this case, the court held that her status as a legal permanent resident was not “lawful.” First, she failed to indicate the identity of her former husband on her application for legal permanent residence status. Second, the death certificate of her former husband that Injeti filed was fraudulent.  Injeti downplayed the importance of the misrepresentation, arguing that it was merely a mistake by her attorney in filling out the form. The court disagreed, however, finding that by getting remarried without a divorce to her first husband, Injeti committed bigamy, a crime of moral turpitude, which renders an alien inadmissible for legal permanent resident status. Because the Fourth Circuit found that Injeti was not “legally entitled” to receive legal permanent resident status, rendering her ineligible for naturalization, it did not examine whether her she demonstrated the requisite “good moral character.”

Full Opinion

– Wesley B. Lambert

Decided: November 14, 2013 

Petition for rehearing denied.

Full Opinion

Decided: December 10, 2013

The Fourth Circuit held that the United States District Court for the District of Maryland did not err by denying Sheriff Robert N. Jones’s (Jones) motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b), in which Jones claimed qualified immunity from a suit brought by James Durham (Durham).  The Fourth Circuit therefore affirmed the judgment of the district court.

Durham, who was employed as a deputy sheriff in Somerset County, Maryland Sheriff’s Office (SCSO), used physical force and pepper spray to detain a suspect while assisting a Maryland state trooper on August 21, 2008.  After Durham prepared his incident report, multiple SCSO officials tried to force Durham to alter his report and to charge the suspect with assaulting him and resisting arrest.  Though Durham did not think it was proper to alter his report, and though he believed he had no basis to charge the suspect, the SCSO officials used various threats and interrogation techniques to convince Durham to comply.  Durham eventually filed an internal grievance and requested an outside investigation.  The day Durham filed the grievance, Jones demoted him from Deputy First Class to Deputy.  Durham was subsequently suspended with pay until further investigation could be made.  After Durham learned that the subjects of his grievance were also the officials who would investigate the grievance, Durham sent documents detailing his experiences to, inter alia, the Somerset County State’s Attorney, the Governor of Maryland, the Maryland State Police, and various media outlets.  Durham continued to send materials to various officials until Jones issued a “gag order” on September 28, 2008.

In May 2009, Durham was departmentally charged under the Law Enforcement Officers’ Bill of Rights (the LEOBR) with, inter alia, dissemination of departmental information.  In July 2009, the LEOBR Trial Board acquitted Durham of all charges except those relating to dissemination of departmental information; the Trial Board recommended a ten-day suspension as punishment.  However, Jones subsequently informed Durham that he was considering increasing the sanction.  After Durham appeared before Jones for a penalty hearing on September 16, 2009, Durham received notice of his termination.

Durham sued Jones under 42 U.S.C. § 1983, contending that Jones terminated him in retaliation for exercising his First Amendment free speech rights.  The district court denied Jones’s Rule 12(b)(6) motion to dismiss on the basis of qualified immunity; the court subsequently denied Jones’s motions for judgment as a matter of law under Rule 50(a) and Rule 50(b), in which Jones also asserted qualified immunity.  The jury found in Durham’s favor and awarded him $1,112,200 in damages.  Jones appealed, arguing that he did not violate Durham’s First Amendment rights—and that, even if he did violate Durham’s First Amendment rights, these rights were not clearly established.

The Fourth Circuit found that Durham’s speech pertained to a matter of public concern, rejecting the argument that Durham was simply making an internal grievance.  The court also found that the SCSO’s interest in preserving an effective law enforcement agency did not outweigh Durham’s First Amendment rights, noting the seriousness of the underlying matter of public concern and the fact that Jones was unable “to show at trial how Durham’s actions had an adverse impact on the proper functioning of the SCSO in some serious manner.” The Fourth Circuit therefore concluded that Jones violated Durham’s free speech rights under the First Amendment.  Furthermore, the Fourth Circuit found that Durham’s free speech rights were clearly established in September 2009, noting that the court “[has] been clear that where public employees are speaking out on government misconduct, their speech warrants protection.”

Full Opinion

– Stephen Sutherland

Decided: December 6, 2013

The Fourth Circuit affirmed the district court’s denial of Darnell Black’s (“Black”) motion to reduce his sentence pursuant to 18 U.S.C. § 3582(c)(2).

On September 14, 2006 Black pleaded guilty to conspiracy to distribute and possess with intent to distribute more than 50 grams of crack cocaine. Because the offense involved more than 50 grams of crack cocaine, Black was subject to a statutory minimum sentence of 120 months imprisonment. On January 23, 2007, he received the minimum 120 months prison sentence. More than three years later, Congress enacted the Fair Sentencing Act of 2010 (“FSA”) in response to criticism about the disparity in sentences between crack cocaine offenses and powder cocaine offenses. By increasing the quantity of crack cocaine necessary to trigger the 120 month minimum sentence from 50 grams to 280 grams, the FSA reduced statutory minimum sentences for such offenses. Under the FSA, Black would have been subject to a statutory minimum of 60 months imprisonment. In October 2012, Black filed a motion to reduce his sentence pursuant to 18 U.S.C. § 3582(c)(2), which allows for a sentence reduction in the case of a defendant who has been sentenced to a term of imprisonment based on a sentencing range that has subsequently been lowered by the Sentencing Commission. The district court, however, denied Black’s motion, relying on Fourth Circuit precedent holding that the FSA mandatory minimums do not apply retroactively.

On appeal, the Fourth Circuit reaffirmed prior precedent and held that the reduced statutory minimum sentences enacted in the FSA on August 3, 2010, do not apply retroactively to defendants who both committed crimes and were sentenced for those crimes before August 3, 2010. Addressing Black’s next argument, the court drew on the Supreme Court’s holding in Dorsey, that the FSA only applies prospectively to all sentences imposed after the Act’s effective date. Here, the court held that a proceeding commenced by filing a motion under § 3582(c)(2) is not a sentencing proceeding to which the holding of Dorsey applies. Lastly, the court concluded that Black was ineligible for a reduction under § 3582(c)(2) because the Sentencing Commission did not, nor could not, reduce the Congressionally mandated statutory minimum sentence for a person who has been convicted of a crack cocaine offense.

Full Opinion

-W. Ryan Nichols

Decided: December 6, 2013

 The Fourth Circuit held that the National Treasury Employees Union (“NTEU”) could not amend its collective bargaining agreement with the Internal Revenue Service (“IRS”) to provide additional grievance procedures that would allow “probationary employees” to challenge removals alleged to be in violation of statutory rights or procedures. The court found that allowing such procedures would violate the statutory and regulatory framework that Congress created to govern its civil service, create an inequitable circuit split, and overturn precedent.

In the federal government’s civil service, new employees go through a one-year “period of probation.” During this “probationary period” employees are subject to summary dismissal if they do not meet the qualifications of the position. While these probationary employees have some protections from dismissal, they are afforded far fewer protections than non-probationary (i.e. tenured) employees. The Office of Personnel Management (“OPM”) has codified the rules for probationary employees. The rules do not affirmatively grant probationary employees the right to grieve removals alleged to be in violation of statutory rights or procedures. Arguing that this grievance procedure was not specifically foreclosed by the OPM rules, NTEU sought to amend its collective bargaining agreement with the IRS to extend probationary employees’ rights to grieve such removals. The IRS refused, arguing that probationary employees may not grieve such removals as a matter of law, and that allowing such a grievance procedure would be in violation of OPM regulations. NETU appealed to the Federal Labor Relations Authority (“FLRA”), which agreed with the IRS. NETU appealed the FLRA’s decision to the Fourth Circuit.

On appeal, the Fourth Circuit agreed with the FLRA and the IRS. First, the court explained that while probationary employees have many statutory and procedural rights guaranteed by law, Congress did not intend that the same remedies be available to probationary and non-probationary employees. In fact, Congress enumerates far more rights afforded to non-probationary employees regarding removal or demotion. Furthermore, the legislative history of federal Civil Service laws emphasize Congress’ intention to afford fewer procedural protections against removal to probationary employees to allow for summary removal procedures. Second, OPM regulations accurately reflect Congress’ intention for the probationary period for new employees “to determine the fitness of the employee.” While OPM regulations afford a number of protections to probationary employees, including notice and the opportunity for an appeal, those protections are lesser than non-probationary employees. The Fourth Circuit concluded that any decision contrary to OPM regulations would “risk unraveling what, by any measure, is a meticulously crafted statutory and regulatory scheme.” Third, other circuits examining the issue reached the same result. The Fourth Circuit decided that declining to follow other circuits would “create confusion and inequity in the federal civil service” by giving employees different procedural rights depending on the circuit where they work. Finally, administrative precedent also counsels in favor of holding that probationary employees are not permitted under law or regulation to grieve removals. Therefore, the Fourth Circuit upheld the FLRA’s decision to deny additional grievance procedures to probationary employees.

Full Opinion

– Wesley B. Lambert

Decided: December 3, 2013

The Fourth Circuit held that the government did not meet its burden of proving Jamaal Robertson (Robertson) consented to a search conducted by Durham Police Officer Doug Welch (Officer Welch).  The Fourth Circuit therefore reversed the United States District Court for the Middle District of North Carolina’s refusal to suppress evidence seized during the search.

On April 14, 2011, Officer Welch responded to a call reporting an altercation involving three African-American males in white t-shirts.  While responding to the call, Officer Welch noticed a group of people in a sheltered bus stop, three of whom were African-American males in white shirts.  Robertson, who was wearing a dark shirt, was also in the bus shelter.  While other police officers were “dealing with the other subjects at the bus shelter,” Officer Welch focused on Robertson.  Robertson was sitting with his back to the bus shelter’s back wall so that he was blocked by walls on three sides when Officer Welch approached him.  Officer Welch stopped about four yards in front of Robertson and asked Robertson if he had anything illegal on him; Robertson remained silent.  Officer Welch then asked to conduct a search while simultaneously waving Robertson forward to search him.  Robertson stood up, walked toward officer Welch, turned around, and put his hands up.  Officer Welch then recovered a firearm from Robertson.  Because Robertson was a convicted felon, he was indicted for illegal possession of a firearm.  Robertson moved to suppress the evidence seized during the search, arguing that, rather than validly consenting to a search, he submitted to a search to obey an order from Officer Welch.  The district court denied Robertson’s motion to suppress, and Robertson appealed.

Basing its ruling exclusively on the facts garnered from Officer Welch’s testimony, the Fourth Circuit noted the circumstances of the search: around the bus shelter, there were three patrol cars and five armed, uniformed police officers; Robertson saw the other individuals in the bus shelter get “handled by” police officers prior to his interactions with Officer Welch; Officer Welch’s line of questioning was immediately accusatory; Officer Welch—who was blocking Robertson’s only exit—never told Robertson that he had the right to refuse to be searched; and Robertson never gave Officer Welch verbal or written consent.  Therefore, the Court determined that the government did not meet its burden of proving that Robertson consented to the search and reversed the decision of the district court below.

Full Opinion

– Stephen Sutherland

Decided: December 3, 2013

The Fourth Circuit affirmed the district court’s grant of summary judgment in favor of Horry County, thereby validating its Flow Control Ordinance that prohibits disposal of waste generated in Horry County at any site other than a designated publicly owned landfill.

Horry County occupies the northernmost coast section of South Carolina and landfill waste disposal there has been expensive and difficult. Consequently, in 1990 the County Council established the Horry County Solid Waste Authority, Inc. (“SWA”), a nonprofit corporation, to manage the county’s solid waste. The SWA is a public entity, which owns and operates two landfills and a recycling facility in Horry County. The SWA charges haulers and others who use its landfills “tipping fees” based on the tonnage of trash deposited, which provides revenue to fund SWA operations. Haulers who recycle a specified percentage of the waste they collect pay a reduced tipping fee through an application-based recycling incentive program. On March 17, 2009, the Horry County Council enacted Ordinance 02-09 to create a county-wide plan for solid waste disposal. It has been largely successful in ensuring that waste generated in Horry County is deposited at an approved landfill within the county. The remaining 1,844 tons of waste were taken to four landfills outside of the county, most of which was not “acceptable waste” under the Flow Control Ordinance—in other words, it was waste that the SWA landfills could not process. The enactment of the Ordinance altered the local economy of waste management. For example, Sandlands, which operates a private landfill for C&D waste in neighboring Marion County, South Carolina saw a significant decrease in its business. As an alternate business strategy, Sandlands attempted to open a facility to process recovered materials at its Marion County site, where it would have sorted general C&D debris into recyclable materials and landfill-ready waste. When Sandlands requested permission from Horry County to remove mixed C&D debris for this purpose, a representative from the Horry County Attorney’s Office responded that debris containing non-separated materials is still solid waste subject to the requirements of the ordinance.

On appeal, appellants argued that the Flow Control Ordinance violates the Equal Protection Clauses of the United States and South Carolina Constitutions, the Commerce Clause of the United States Constitution, and the Contract Clauses of the United States and South Carolina Constitutions.

The appellants first argued that there was a Commerce Clause violation and a Dormant Commerce Clause violation. The Fourth Circuit explained that a Dormant Commerce Clause violation will exist where a restriction on commerce is discriminatory—that is, it benefits in-state economic interests while burdening out-of-state economic interests. In United Haulers, the Supreme Court upheld flow control ordinances remarkably similar to the one at issue here, requiring haulers to bring waste to facilities owned and operated by a state-created public benefit corporation. Under United Haulers, the court must first determine whether the Flow Control Ordinance discriminates against interstate commerce. In United Haulers, the Court determined that flow control ordinances favoring the government while treating in-state private business interests exactly the same as out-of-state ones do not discriminate against interstate commerce. Like the ordinances in United Haulers, the Horry County Flow Control Ordinance benefits a clearly public facility. Because trash disposal is a traditional function of local government, county waste-management ordinances can permissibly distinguish between private and public facilities. However, the ordinance must treat all private businesses alike. Therefore, contrary to Appellants’ argument, the question was whether Sandlands has been treated differently from other private businesses – not other public entities. In addition, because appellants had not been treated differently from other private businesses, Horry County had not discriminated against them by prohibiting them from processing and sorting mixtures of acceptable waste and recyclables at their facility in Marion County.

Because the Flow Control Ordinance was not discriminatory, the Fourth Circuit then considered its burdens and benefits under Pike. In Pike, the Supreme Court held that if a “statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” Again pointing United Haulers, the Court there held that flow control ordinances do address a legitimate local public interest. It did not decide whether the ordinances imposed any incidental burden on interstate commerce because it found that any arguable burden does not exceed the public benefits of the ordinances. The same analysis was applicable to the Horry County Flow Ordinance because it clearly conferred public benefits that outweigh any conceivable burden on interstate commerce. To begin, the Ordinance had only an arguable effect on interstate commerce, even if it did affect intrastate commerce to some degree. In addition, it produces the same benefits that the Supreme Court recognized in United Haulers. Moreover, the Ordinance’s waste-management program was a quintessential exercise of local police power. And finally, the ordinance created a revenue stream through which the county supports waste management, recycling programs, and its 911 calling system.

The Fourth Circuit also rejected appellants’ argument that summary judgment was not appropriate because a factual dispute existed about whether the Ordinance discriminated against interstate commerce. The record revealed no disputes of material fact.

Finally, the Fourth Circuit rejected Appellants’ Equal Protection Clause claim. To succeed on such claims, the Appellants had to first demonstrate that it had been treated differently from others similarly situated and that the unequal treatment was the result of intentional or purposeful discrimination. If a party can make that initial showing, the court analyzes the disparity under an appropriate level of scrutiny. However, the Fourth Circuit did not reach that level of analysis because Sandlands and EDS failed to show that they were intentionally treated differently from other similarly situated companies.

Full Opinion

– Sarah Bishop

Decided: December 3, 2013

The Fourth Circuit held that the bankruptcy court reasonably exercised its discretion in balancing the interests of licensees with the interests of the debtor and found that application of Section 365(n) was necessary to sufficiently protect licensees. Therefore, the bankruptcy court’s ruling was affirmed.

In January 2009, Qimonda AG filed an insolvency proceeding in Germany. Dr. Michael Jaffé (“Jaffé “) was appointed to serve as insolvency administrator to liquidate the estate. The principal assets of the estate were approximately 10,000 patents, including 4,000 U.S. patents. The U.S. patents were subject to cross-license agreements with competitors.
Soon after the insolvency proceedings were commenced in Germany, Jaffé successfully commenced a Chapter 15 proceeding for recognition of the German proceeding as a “foreign main proceeding” under 11 U.S.C. § 1517. In addition, the bankruptcy court, pursuant to Section 1521(a)(5), entrusted him with all of Qimonda’s assets located within the United States, primarily the patents.

Contemporaneously with the Chapter 15 proceeding, Jaffé sent letters to Qimonda’s licensees under cross-license agreements declaring that the licenses were no longer enforceable under Section 103 of the German Insolvency Code.  The licensees, however, responded that they elected to retain their rights under the license pursuant to Section 365(n). In response, Jaffé sought a determination that Section 365(n) was not applicable. Initially, Jaffé prevailed in the bankruptcy court. However, on appeal, the district court reversed and remanded to the bankruptcy court for consideration of the Section 1522(a) balancing test and Section 1506 public policy considerations. After a four day evidentiary hearing on remand, the bankruptcy court issued an order holding that Section 365(n) applied with respect to the U.S. patents. The bankruptcy court found that the balancing of the debtor and creditor interests required by Section 1522 weighed in favor of application of Section 365(n). In addition, the bankruptcy court also concluded that deferring to German law under Section 1506, to the extent it allowed cancellation of U.S. patent licenses, would be contrary to public policy and therefore 365(n) should apply. This direct appeal to the Fourth Circuit followed.

On appeal, the Fourth Circuit addressed the significant question under Chapter 15 of the U.S. Bankruptcy Code of how to mediate between the United States’ interests in recognizing and cooperating with foreign insolvency proceeding and its interests in protecting creditors of the foreign debtor with respect to U.S. assets, as provided in Sections 1521 and 1522. Noting that the bankruptcy court properly recognized that in considering a request for discretionary relief under Section 1521(a), the court must also apply the balancing test set forth in Section 1522(a), the court held that the bankruptcy court reasonably exercised its discretion in (1) balancing the interests of licensees with the interests of the debtor and (2) finding that application of Section 365(n) was necessary to sufficiently protect licensees. Therefore, the bankruptcy court’s ruling was affirmed.

Full Opinion

-W. Ryan Nichols

Decided: November 26, 2013

The Fourth Circuit vacated appellant, Fabian Montes-Flores’, 46-month sentence, finding that the district court erroneously applied the modified categorical approach to determine that appellant’s prior conviction for assault and battery of a high and aggravated nature (“ABHAN”) was a “crime of violence” for purposes of a sentencing enhancement. The Fourth Circuit held that the district court should have applied the categorical approach as opposed to the modified categorical approach to the ABHAN conviction because it was an indivisible common law crime.

Appellant was arrested during a 2010 traffic stop when officers noticed alcohol and a loaded revolver in the appellant’s vehicle. Subsequent to his arrest, an Immigration and Customs Enforcement agent determined that appellant was previously deported following a 2006 ABHAN conviction in South Carolina state court. The district court determined that, beyond a sentence for illegal reentry, appellant was also subject to a sentencing enhancement for his prior ABHAN conviction. Appellant appealed his conviction, arguing that his prior ABHAN conviction did not constitute a “crime of violence” that triggered to the sentencing enhancement.

A “crime of violence” is defined by the sentencing guidelines to include, inter alia, “any…offense under federal, state, or local law that has an element the use, attempted use, or threatened use of physical force against the person of another.” There are two approaches to determine whether a prior conviction constitutes a crime of violence: the categorical approach and the modified categorical approach. Under the categorical approach, the trial judge is instructed to look “only to the fact of conviction and the statutory definition of the prior offense” to determine whether the prior conviction was a “crime of violence.” The defendant’s actual conduct is immaterial. Conversely, under the modified categorical approach, the trial judge looks beyond the elements of the crime to the defendant’s actual conduct. However, the Fourth Circuit explained that the modified approach is only to be used if the prior conviction rests on a statute that “contains divisible categories of proscribed conduct, at least one of which constitutes—by its elements—a violent felony.” The district court applied the modified categorical approach to Appellant’s ABHAN conviction.

The Fourth Circuit held that the district court should have applied the categorical approach to Appellant’s prior ABHAN conviction because the crime sets forth only two elements under South Carolina law: (1) an unlawful act of violent injury to another, and (2) injury to another accompanied by circumstances of aggravation. Although the “circumstances of aggravation” may be satisfied in a number of ways, the court found that it was a single divisible element of a crime. Thus, ABHAN was not the type of divisible crime subject to the modified categorical approach Following the categorical approach, the court found that ABHAN can be committed “with or without force—and even when force is involved, ABHAN can be committed in a violent or nonviolent manner.” Therefore, the Fourth Circuit held that an ABHAN conviction in South Carolina was not categorically a crime of violence. Because ABHAN was not a crime of violence, the Fourth Circuit found that the district court erred in applying the sentencing enhancement and vacated Appellant’s sentence and remanded his case to the district court for resentencing.

The Fourth Circuit was similarly not persuaded by the government’s assertion that any error in sentencing was harmless. Error in sentencing is harmless only where the court knows that the district court would have reached the same result without erroneously determining the guideline range and that the sentence was reasonable under the appropriate guideline range. The Fourth Circuit was uncertain whether the district court would have reached the same sentence under the appropriate guideline range. The sentencing guidelines departed downward by 22 months without the crime of violence included. Furthermore, the district court’s original sentence fell within the guidelines when the crime of violence enhancement was included, but was far above the sentence under the appropriate guideline range. Therefore, the Fourth Circuit vacated Appellant’s sentence and remanded the case for resentencing.

Full Opinion

– Wesley B. Lambert

Decided: November 22, 2013

The Fourth Circuit affirmed the district court’s judgment in favor of the plaintiff on the liability aspect of the negligence claim, but remanded for further proceedings with respect to damages.

Darryl Wayne Turner, age 17, died from cardiac arrest after a confrontation with police in which he was struck in the chest by electrical current emitted from a device commonly known as a “taser,” manufactured by TASER International, Inc. (TI). Turner was an employee of a Food Lion supermarket located in Charlotte, North Carolina. On March 20, 2008, Turner engaged in several acts of misconduct and the store manager terminated Turner’s employment for insubordination. However, when Turner refused to leave the store, his supervisor placed a telephone call to a 911 operator and requested police assistance. Turner acted aggressively throughout the entire incident and threw an umbrella and pushed a store display off a counter; however, he did not make physical contact with anyone during the dispute. Charlotte Mecklenburg Police Department (CMPD) Officer Jerry Dawson arrived at the scene and instructed Turner to “calm down,” but Turner continued behaving in an aggressive manner. Officer Dawson aimed the taser’s red “laser” dot at Turner’s chest and, when Turner stepped toward Officer Dawson, deployed the taser on Turner. After two darts struck Turner, he stayed on his feet and walked toward the store’s exit. As a result, Officer Dawson held down the taser’s trigger until Turner eventually collapsed, and then discharged the taser for an additional five seconds once Turner had fallen to the ground. When paramedics arrived, Turner was experiencing ventricular fibrillation and was unresponsive. After being taken to a hospital, Turner was pronounced dead.

From the introduction of the X26 taser in 2003, through the events at issue in this case, TI instructed taser users that the electrical current emitted by the X26 taser had no effect on heart rhythm. This information was used in training CMPD officers, including Officer Dawson. TI also provided visual depictions of the taser’s darts being fired at the middle of a person’s chest; therefore, Officer Dawson and other officers were trained to aim the taser at a suspect’s chest. TI’s primary warning was included as part of its Training Bulletin, issued in June 2006, in which it cautioned that prolonged exposure to the electrical discharge may impair breathing and respiration. Notably, this TI Training Bulletin discussed only the potential for respiratory harm, rather than the risk of severe cardiac problems. Shortly after the TI issued the 2005 Training Bulletin, two TI-funded studies revealed that the taser’s electrical pulses could capture cardiac rhythms, potentially leading to ventricular fibrillation. However, TI did not alter its training materials to warn users.

Turner’s estate initiated a negligence action against TI, primarily based on its failure to warn and, on appeal, TI raised four primary arguments. First, TI argued that the district court erred in barring TI’s contributory negligence defense. However, North Carolina’s Section 99B-4(3) requires that the claimant have “used” the product before the defense of contributory negligence can arise. In addition, every North Carolina product liability case addressing contributory negligence, whether under the current or former version of Section 99B-4(3), has involved a claimant’s actual use of the allegedly defective product. Finally, the Fourth Circuit observed that application of the contributory negligence doctrine under the present circumstances would absolve TI of its responsibility to provide adequate warnings to persons using TI’s tasers, and effectively would grant TI immunity from suit in North Carolina negligence actions that are based on police use of a taser on a suspect resisting arrest.

Second, TI argued that the district court erred in failing to direct a verdict in TI’s favor because the evidence purportedly failed to establish that an appropriate warning about the dangers of the X26 taser would have caused Officer Dawson to use the taser in a different manner. However, the Fourth Circuit held that there was sufficient evidence from which the jury could have concluded that Officer Dawson would have used the X26 taser in a different manner had TI provided an adequate warning concerning the dangers of firing the taser to make contact near a person’s heart. Officer Dawson testified that he read Taser’s training materials, received information about the taser’s safety during a “refresher” training course, and received instructions from CMPD trainers to aim the taser at a suspect’s chest.

Third, TI argued that the district court erred in failing to award judgment in TI’s favor on the basis of product misuse. TI contented that Officer Dawson misused the X26 device by employing it on Turner for 37 continuous seconds and that such misuse was contrary to the instructions and warnings provided by TI. However, the Fourth Circuit concluded that the jury had ample grounds on which to find that the warning was not “adequate.”

Finally, TI argued that the district court’s remittitur decision resulted in an excessive award that was not supported by the evidence. Because Fontenot failed to present any evidence showing that Turner’s services, care, and companionship had a value approaching $1000-$2000 per week, per parent and because there was no testimony concerning whether, and for what duration, Turner’s parents reasonably expected Turner to continue providing services such as babysitting his younger siblings and assisting with household chores, Fontenot essentially invited the jury and the district court to engage in the type of “pure conjecture” that North Carolina courts have prohibited.

Full Opinion

– Sarah Bishop

Decided: November 20, 2013

The Fourth Circuit vacated the district court’s denial of attorneys’ fees and expenses under the Equal Access to Justice Act (the “EAJA”). Under the EAJA, the prevailing party in litigation against the United States is entitled to attorneys’ fees and expenses unless, inter alia, “the position of the United States was substantially justified.” Because of its failure to consider the pre-litigation valuation of the appellants’ property in a condemnation proceeding, the Fourth Circuit vacated the district court’s determination that the United States’ position was “substantially justified” and defined a standard for determining whether the government’s position is “substantially justified.”

Appellant, 515 Granby, LLC (“Granby”) owned a parcel of property in Virginia on which it planned to develop luxury condominiums, retail, and office space. Although the property was never used for this purpose, Granby made various improvements to the property in preparation of its intended use. The United States wished to obtain the property to expand its federal courthouse in Norfolk, Virginia and had the building appraised in 2008 and 2009 for $7 million and $6.175 million, respectively. The United States instructed its appraisers to ignore improvements to the land. When Granby refused to sell for $6.175 million, the United States initiated condemnation proceedings. Granby initially obtained two appraisals for the property, which valued the property at over $30 million. By the time the parties reached trial, the government raised its valuation to $9 million and Granby lowered its valuation to $16.32 million. At trial, the jury returned a verdict for $13.4 million as just compensation for the property. Under the EAJA, the “prevailing party,” that is, the party whose highest trial valuation is closest to the final judgment value is entitled to attorneys’ fees. Granby moved for attorneys’ fees, but the United States argued that it was not obligated to pay attorneys’ fees because its position at trial was “substantially justified.” The district court agreed with the government. Granby appealed.

On appeal, Granby argued that the United States’ position was not “substantially justified” because its pre-litigation valuation of the property was unreasonable. Granby further asserted that the district court erred in considering its financial ability to litigate and the reasonableness of its position in determining whether the United States’ valuation was “substantially justified.” The Fourth Circuit agreed that the district court erred in its determination and vacated the judgment with new instructions for determining whether the government’s position in a condemnation proceeding is “substantially justified.” First, the court emphasized that the United States has the burden of showing that its position is substantially justified. Second, the court explained that a position is “substantially justified” when it is “justified to a degree that could satisfy a reasonable person.” Determining the reasonableness of the government’s position requires an examination of both its pre-litigation and litigation postures, looking to the “totality of the circumstances.”

In the present case, the Court examined the peculiar situation where the pre-litigation position was unreasonable, but the litigation position was reasonable. The court followed other circuits, holding that a determination of reasonableness “emphasizes” the pre-litigation position “without creating a bright line rule.”  The court explained that Congress intended the EAJA to prevent the government from “unjustifiably forcing litigation, then avoiding liability by acting reasonably during the litigation.” Thus, the court held that, in general, an unreasonable pre-litigation position will lead to an award of attorneys’ fees under the EAJA unless the government can prove that its unreasonable position did not “force” the litigation or “substantially alter the course of the litigation.” In making this assessment, the court explained that the district could should consider the following factors: the “experience, qualifications, and competence of the appraisers”; evidence of bad faith by the government; relationship of the government’s appraisals to each other; the government’s explanation for changes in its valuations; and the “severity of the alleged governmental misconduct.” Finally, the court instructed that the financial state of the prevailing party is not relevant to the determination of the reasonableness of the government’s position.

Full Opinion

– Wesley B. Lambert

Decided:  November 20, 2013

The Fourth Circuit = affirmed the district court’s grant of summary judgment in favor of the defendant, the United States Coast Guard (“USCG”), in a personal injury and wrongful death action. The Fourth Circuit held that the Coast Guard did not breach a duty of care in attempting to rescue Susan Turner and her husband, Roger Turner, Jr. and, therefore, that the Coast Guard was not liable for Mrs. Turner’s injuries or Mr. Turner’s death.

On July 4, 2007, Mrs. Turner and her husband (collectively, the “Turners”) left home on their private 20-foot long motorboat, intending to watch holiday fireworks. Before leaving, Mr. Turner told his father that the Turners would be going to one of three possible locations. After leaving a party on the Perquimans River, Mrs. Turner fell overboard, nearly one and half miles offshore. At some point thereafter, Mr. Turner also entered the water. The Turners’ boat stayed afloat, drifting downriver. When the Turners did not return home by 9:30 p.m., Mr. Turner’s father called 911. The USCG decided that, due to the number of potential locations and the current deployment of search assets on a confirmed emergency mission (a missing jet ski), the USCG would not initiate an active search for the Turners’ overdue boat at that time. Instead, the USCG would begin making radio calls and would inquire with local marinas later that morning. When the USCG discovered the Turners’ empty boat on the morning of July 5, it launched an air and sea search. During the night of July 4 and into the morning of July 5, Mrs. Turner tread water for nearly 12 hours, surviving by clinging to crab pot buoys. The USCG, despite extensive search efforts, did not find Mr. Turner; his body washed ashore two days later.

On appeal, Ms. Turner first argued that the Coast Guard breached a duty of care in attempting to rescue the Turners. The USCG’s enabling statute, 14 U.S.C. § 88, authorizes the USCG to undertake rescue efforts, but does not impose any affirmative duty to commence such rescue operations. However, pursuant to the Good Samaritan doctrine, once the Coast Guard undertakes a rescue operation, it must act with reasonable care. The Court held that this doctrine sets a high bar to impose liability on a rescuer: the evidence must show that the rescuer failed to exercise reasonable care in a way that worsened the position of the victim. The Turners did not show that the USCG’s actions worsened their position. The thrust of the plaintiff’s case was that the USCG should have done something to alleviate the Turners’ predicament sooner; however, the USCG was under no obligation to do so. Nor did the USCG’s actions worsen the Turners’ position by inducing reliance on the part of either the Turners or a third party. Because the Turners themselves never spoke with the Coast Guard, they could not have relied on representations by the USCG.

Second, Mrs. Turner demanded sanctions premised on the USCG’s alleged deliberate spoliation of evidence, which the court denied. A party seeking sanctions based on the spoliation of evidence must establish that the alleged spoliator had a duty to preserve material evidence. Here, Mrs. Turner said that the USCG wrongfully destroyed audio recordings of telephone calls to the Coast Guard by recycling them and recording over them. The Court found, however, that Mrs. Turner did nothing to trigger a duty to preserve evidence on the part of the USCG. She did not send the USCG a document preservation letter, or any other correspondence threatening litigation.

Third, Mrs. Turner challenged the propriety of USCG’s responses to Turner’s Freedom of Information (“FOIA”) request. A valid FOIA claim requires three components: the agency must have (1) improperly (2) withheld (3) agency records. Here, Mrs. Turner argued that the USCG’s failure to retain voice tapes and emails should stand as proof that the USCG’s search for such responsive documents was inadequate. However, the lack of responsive documents does not signal a failure to search.

Finally, Mrs. Turner argued that the district court deprived her of due process by permitting the USCG to file its summary judgment motion more than 12 months after the deadline for filing dispositive motions. However, the district court gave Mrs. Turner the opportunity to file a brief in opposition to USCG’s motion for summary judgment, and Mrs. Turner did so. Therefore, her due process rights were not violated.

Full Opinion

 – Sarah Bishop

Decided: November 20, 2013

The Fourth Circuit held that (1) there is no clear statement of Congressional intent in the Fair and Equitable Tobacco Reform Act (FETRA), 7 U.S.C. §§ 518 et seq., regarding the applicable excise tax rates to be used in determining the total national FETRA assessment paid by the collective manufacturers of each class of tobacco product, and that (2) the United States Department of Agriculture (USDA) permissibly interpreted FETRA by using only 2003 tax rates to determine this assessment allocation.  The Fourth Circuit therefore affirmed the United States District Court for the Eastern District of Virginia’s decision to grant the USDA’s motion for summary judgment.

FETRA created the Tobacco Trust Fund (the Fund), which funds “a temporary system of periodic payments to tobacco growers and other holders of tobacco quotas.”  The Fund is administered by the Commodity Credit Corporation (CCC), which is funded with CCC assets and assessments taken from manufacturers of tobacco products.  Under FETRA, the USDA—which administers the CCC—must annually determine the total funds that must be raised through the assessments (the initial allocations).  This determination involved two steps: determining the total national assessment to be paid by the collective manufacturers of each class of tobacco product (inter-class allocations)—including cigarettes and cigars—and determining the individual liability of each manufacturer.  FETRA provides that the assessment burden for each class—measured in percentages of the total nation assessment—must be adjusted “to reflect changes in the share of gross domestic volume” held by each class of tobacco product.  FETRA includes specific percentages of the initial allocations to be applied to the respective classes of tobacco products in fiscal year 2005, 7 U.S.C. § 518d(c)(1), and the USDA determined that, to calculate these allocations, Congress converted the applicable class volumes into dollars “by multiplying each class’s volume by the maximum excise tax rate applicable to that class.”  However, FETRA does not actually direct the USDA to use this method of calculating initial allocations.

Congress subsequently passed the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), which increased excise taxes on each class of tobacco product and equalized the tax rates for small cigars and cigarettes.  The equalization resulted in a much larger relative increase in tax rates for cigars than cigarettes.  Because the USDA’s regulations implied that inter-class allocations would be determined with current tax rates, CHIPRA would have increased the liability of the cigar industry and decreased the liability of the cigarette industry.  However, the USDA subsequently promulgated a technical amendment to 7 C.F.R. § 1463.5, in which the USDA stated it would continue to apply 2003 tax rates—which Congress used to set the initial allocations for fiscal year 2005.

Philip Morris contented that, under the new calculation framework, it would experience higher assessments than it would have if the USDA had applied current tax rates.  After unsuccessfully appealing the assessment and pursuing rulemaking from the USDA, Philip Morris brought the present lawsuit, arguing that the technical amendment was inconsistent with FETRA.  The district court granted summary judgment to the USDA, finding that the USDA calculation method “faithfully adjust[s] the percentage of the total amount required to be assessed against each class of tobacco product” and “reasonably reflects the congressional intent underlying FETRA.”  Philip Morris appealed.

Applying the two-part test from Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, the Fourth Circuit first determined that Congress had not “directly spoken to the precise question at issue.”  The Fourth Circuit noted that FETRA does not direct the USDA to use any specific tax rate to calculate the inter-class allocations.  The Fourth Circuit also concluded that Philip Morris’s various arguments did not meet its burden of proving the USDA’s decision “contrary to the unambiguously expressed intent of Congress.”  The Fourth Circuit then determined that the USDA’s interpretation of FETRA was reasonable, given Congress’s intent in passing it.  The Fourth Circuit stated that “there is no evidence that Congress intended for FETRA to do anything more than provide a workable methodology for the allocation of assessments across manufactures of tobacco product,” and found that Philip Morris could not provide anything more than a plausible alternative reading of the applicable statutes.

 Full Opinion

– Stephen Sutherland

Decided: November 20, 2013

The Fourth Circuit affirmed the district court, holding that, under North Carolina law, the plaintiff’s negligence claim failed because she was unable to establish that the Army owed her a duty, under the circumstances, to protect her from sexual assault.

On December 13, 2009, Aaron Pernell (“Pernell”), a member of the Army, unlawfully entered Maria Durden’s (“Durden”) home while inebriated, and raped her in front of her children. The record revealed that Pernell struggled emotionally and began using drugs and abusing alcohol upon returning to Ford Bragg following his deployment to Iraq. On several occasions, Pernell told his commanding officer and a fellow soldier that he was abusing alcohol and desired to kill himself and eleven current and former members of his unit. In September of 2009, Pernell burglarized a home in Fayetteville, North Carolina and assaulted the home’s occupants with a pellet gun. Civilian law enforcement arrested him and he was detained from September 11 to October 2, 2009. Upon his return to Fort Bragg, the Army began proceedings to administratively separate him. Here, each side disagreed over certain restrictions placed on Pernell following his release from jail. Durden insisted the army placed significant restrictions on him in order to protect the public from danger and his commanding officers were aware the restrictions were not properly followed. The government, however, disagreed. Following Durden’s rape in December 2009, Pernell became a suspect in January 2010 and ultimately consented to giving a DNA sample that identified him as the assailant. At this time, Pernell was also identified as being involved in burglaries and sexual assaults that occurred in 2008 and 2009 in Fayetteville. A mental health evaluation was then performed. It determined that Pernell posed a medium risk of harm to himself and others. Following the evaluation, according the government, the Army for the first time placed barracks restrictions and ordered that he be monitored at all times.

In December 2010, Pernell was convicted of raping Durden in a general court-martial proceeding. He was sentenced to fifty years imprisonment and dishonorably discharged from the Army.  Subsequently, alleging negligence by the Army, Durden sued the government pursuant to the Federal Tort Claims Act (“FTCA”). The district court, however, granted the government’s motion to dismiss for lack of subject matter jurisdiction and, alternatively, for failure to state a claim. Specifically, that the Army did not breach any duty owed to Durden under North Carolina law and that Durden’s complaint was barred by the FTCA’s intentional-tort exception. This appeal followed.

On appeal, the Fourth Circuit held that, even assuming that Durden’s allegations were true, the complaint still failed to establish that the Army breached a duty to her under North Carolina law. The court so held despite the district court’s “technically incorrect statement” purporting to dismiss Durden’s complaint for lack of subject matter jurisdiction because the district court considered the negligence issue as though it were the basis of a motion to dismiss for failure to state a claim that had been converted into a motion for summary judgment. In so doing, the court rejected Durden’s three theories that the Amry owed a duty to her under North Carolina law. The three theories alleged included: a theory based on the Army’s relationship with Durden as the landlord of Fort Bragg; a theory based on a special relationship creating a responsibility to take affirmative action for the aid or protection of another; and a theory based on the undertaking to render services to another, subjecting such person to liability to the third person for injuries resulting from his failure to exercise reasonable care in such undertaking. Next, the court rejected Durden’s contention that the district court abused its discretion by transforming the 12(b)(1) motion into a judgment on the merits without the opportunity for discovery. In doing so, the court noted that, even assuming Durden’s discovery requests were granted, her theories of negligence would still fall short of the Army being liable for her injuries.

Lastly, the Fourth Circuit addressed the district court’s alternative basis for dismissing Durden’s complaint: that the fact that the Army gained knowledge of Pernell’s allegedly violent propensity via his government employment was enough to nullify Durden’s claims pursuant to the FTCA’s intentional-tort exception. The court held that the district court erred in its dismissal on this alternative basis, noting that mere knowledge of a tortfeasor’s propensity for violence or criminal history gained as a result of the tortfeasor’s status as a government employee does not, per se, nullify an FTCA claim.

Full Opinion

-W. Ryan Nichols

Decided: November 15, 2013

The Fourth Circuit held that “for purposes of the nominal party exception to the rule of unanimity governing removal,” contractor G.R. Hammonds, Inc. (Hammonds) was a nominal party in a contribution suit between insurers, and Hammonds’ consent was therefore unnecessary to the removal of the suit to federal court.  Thus, the Fourth Circuit affirmed the holding of the United States District Court for the District of South Carolina.

Between 1995 and 2009, several insurance companies insured Hammonds for overlapping or subsequent periods. These companies included Hartford Fire Insurance Company (Hartford), Harleysville Mutual Insurance Company (Harleysville), and Assurance Company of America (Zurich).  Hammonds performed allegedly defective roofing work on a project in Charleston, South Carolina (Concord West Project), between 1998 and 2001.  After homeowners and their association sued Hammonds in state court (Concord West Action), Hartford, Harleysville, and Zurich agreed to split the costs of a million-dollar settlement by paying a third each—subject to the right to resolve the proper allocation through arbitration or litigation.  Harleysville then filed a declaratory judgment action in the United States District Court for the Eastern District of North Carolina (North Carolina Action), seeking a declaration of the rights and obligations of Hammonds’ various insurers with regard to the damages incurred during Hammonds’ Concord West Project, as well as Hammonds’ allegedly defective work on other projects.  Several days later, Hartford filed an action for declaratory judgment in a South Carolina state court (South Carolina Action), naming Hammonds and Hammonds’ other insurers as defendants; Hartford sought a declaration of each insurer’s share of the Concord West Action settlement, as well as equitable contribution from the other insurers in the event that the court found Hartford to have overpaid its share.  Harleysville removed the action to federal court.  The other defendant insurers consented to removal; however, Hammonds did not consent or object.  After removing the action, Harleysville filed a motion to dismiss, stating that the South Carolina Action duplicated the parallel North Carolina Action.  Hartford moved to remand, noting that Hammonds did not join in or consent to the notice of removal.  After finding that Hammonds was a nominal party, the district court dismissed the South Carolina Action under the first-to-file rule.  Hartford appealed the dismissal of this action.

Noting that it had “never defined a nominal party for purposes of the nominal party exception to the rule of unanimity necessary for removal,” the Fourth Circuit focused the practical inquiry on “whether the suit can be resolved without affecting the non-consenting nominal defendant in any reasonably foreseeable way.”  The Fourth Circuit noted that Hartford could not reasonably argue that Hammonds would be affected by the case’s outcome: Hartford did not seek a monetary judgment against Hammonds, and it did not seek non-declaratory injunctive relief—nor did any of the parties in the North Carolina Action.  Furthermore, Hammonds’ absence from the suit would not render the final judgment unfair to any of the parties.  The Fourth Circuit also noted the unlikelihood of a potential “whipsaw” effect that would deprive Hartford of due relief.

Full Opinion

– Stephen Sutherland

Decided: November 14, 2013

Addressing appeals by thirteen individuals involved in conspiracy to traffic khat, a leafy plant containing the controlled substance cathinone, the Fourth Circuit affirmed the district court’s rulings as to all challenges.

In August 2008, federal law enforcement began an investigation into the importation of khat into the United States and its subsequent distribution. The investigation ultimately led to Yonis Ishak, the head of a large-scale distribution operation. The investigation also revealed that proceeds from the sale of khat were laundered through the Virginia branch of Dahabshil, Inc., a wire transfer service, and sent to Ishak’s overseas suppliers. In June 2011, seventeen individuals, including Ishak, were indicted for their participation in the operation. Thirteen were also charged with conspiracy to commit money laundering. After four defendants, including Ishak, pleaded guilty pursuant to plea agreements, the remaining thirteen proceeded to trial. Pursuant to his plea agreement, Ishak served as the government’s principal witness. At trial, after the prosecution rested, the defendants sought to present an expert witness that had not previously been identified to testify. However, citing untimeliness and irrelevancy, the district court excluded the expert’s testimony. At the conclusion of the trial, all thirteen defendants were convicted of all charges, except one, who was acquitted of the money laundering charge.

All defendants appealed, arguing that the evidence was insufficient to convict them because it failed to show that they knew that cathinone was a controlled substance and that khat contained cathinone; that the district court erred in its instructions to the jury relating to scienter and willful blindness; and that the district court erred in excluding their expert witness. In addition, the defendants convicted of money laundering argued that the indictment failed to adequately identify the financial transaction and other details so as to give them sufficient notice of the charges. One defendant, Abokor Gurreh (“Gurreh”), also appealed the district court’s denial of his motion for severance made following counsel for Ismail Abdi’s cross-examination of Ishak.

On appeal, the Fourth Circuit first addressed the district court’s jury instruction on both scienter and willful blindness. With respect to scienter, the court rejected the defendants’ argument, noting that the government need only prove that the defendants knew that their khat contained some controlled substance, which it could do without showing that the defendants had ever heard of cathinone. With respect to willful blindness, despite noting that such an instruction is only appropriate in rare circumstances, the court found the district court’s instruction appropriate because numerous circumstances contained in the record demonstrated that there were sufficient warning signs that khat contained an unlawful substance.

Next, the Fourth Circuit addressed the defendants’ primary contention: that although the evidence was sufficient to show they possessed khat with the intent to distribute, the evidence was insufficient to convict them with conspiring to traffic cathinone. The court disagreed, however, holding that all defendants conducted themselves in a manner that indicated circumstantially that they knew that khat contained a controlled substance. In so holding, the court relied not only on Ishak’s testimony implicating all defendants in the conspiracy, but also on individualized evidence as to each defendant. The court then rejected the defendants’ challenge based on the district court excluding their expert witness, and agreed that the proffered testimony was both untimely and irrelevant. Next, it moved to Gurreh’s challenge based on the district court’s denying his motion to sever and found that, because Ishak’s cross examination by counsel for defendant Ismail Abdino did not prejudice Gurreh, the district court did not abuse its discretion.

Lastly, the Fourth Circuit rejected the challenge based on the alleged insufficiency of the indictment. Noting that the defendants failed to recognize that the first paragraph of the money laundering count incorporated by reference the other 37 paragraphs alleged in the introductory portion of the indictment, where the specific transactions, funds, and related unlawful activity were described, the court concluded that the defendants were adequately informed of the charges against them and were therefore provided with sufficient detail to enable them to plead an acquittal. Accordingly, the judgments of the district court were affirmed.

Full Opinion

-W. Ryan Nichols

Date Decided: November 13, 2013

In Miller v. Alabama, the Supreme Court held that the Eighth Amendment prohibits life imprisonment without possibility of parole for juvenile offenders. Criminal defendant, Jimmy Hunter claimed that Miller similarly prohibited sentencing enhancements based on felonies he committed as a juvenile. The Fourth Circuit disagreed.

At age thirty-three, Hunter sold a gun and ammunition to a confidential FBI informant. Defendant was indicted and pled guilty to knowingly possessing a firearm after a felony conviction. This crime typically carries a maximum sentence of ten years imprisonment. However, the probation officer recommended that Hunter receive a fifteen-year sentence under the Armed Career Criminal Act because he had more than three previous violent felony convictions. In fact, Hunter had five prior violent felony convictions: two of the felonies occurred when Hunter was fifteen, two occurred at age seventeen, and a fifth felony occurred when Hunter was twenty-five. Hunter argued that, under Miller, the juvenile convictions could not support the sentencing enhancement. The district court judge disagreed and sentenced Hunter to seventeen years’ imprisonment.

On appeal, Hunter argued that the sentencing enhancement violated the Eighth Amendment’s prohibition on cruel and unusual punishment. The Fourth Circuit disagreed. The court explained that in Miller and other cases examining sentencing of juveniles, the Supreme Court emphasizes that children receive more lenient treatment because of their “diminished culpability and greater prospects for reform.” While the defendants in Miller received life imprisonment for a murder committed at age fourteen, in Hunter’s case, the defendant faced punishment for a crime he committed at age thirty-three, an age exceeding concerns about maturity and prospects for reform. Furthermore, the Fourth Circuit emphasized that a sentencing enhancement is not punishment for past crimes. Instead, it is an aggravated offense because it is a repetitive one. Additionally, other circuits agree that juvenile offenses can properly serve as grounds for a sentencing enhancement for a post-majority conviction. The Fourth Circuit concluded by reinforcing that Hunter was “no juvenile when he committed the crime for which he was sentenced here” and thus, the Eighth Amendment concerns in Miller did not apply to Hunter’s present conviction.

Full Opinion

– Wesley B. Lambert

Decided November 12, 2013

The Fourth Circuit vacated the district court’s judgment and remanded for further proceedings. The Court concluded that language in a disability benefit plan provided by an employer was ambiguous and, therefore, does not clearly confer discretionary decision-making authority on the plan administrator, requiring de novo judicial review of the administrator’s denial of the plaintiff’s benefits claims under those plans.

Beth A. Cosey (“Cosey”) was employed as a senior clinical marketing manager for BioMerieux, Inc., a large medical diagnostics company. BioMerieux has a group insurance contract with the Prudential Insurance Company of America (Prudential), which acts as claims administrator for short-term disability (STD) and long-term disability (LTD) benefits under employee welfare benefits plans issued by Prudential. Near the end of May 2007, Cosey did not report for work and submitted a claim for benefits. Prudential provided benefits for about three weeks, after which time BioMerieux terminated Cosey’s employment. BioMerieux then re-hired Cosey, allowing her to work from home and, seven months later, Cosey filed another claim. Prudential paid STD benefits for about seven weeks. Cosey’s consultations with various physicians produced varying medical opinions with regard to her condition and, therefore, her ability to return to work. While Cosey’s primary care physician opined that she could not sustain any occupation, four medical reviewers hired by Prudential concluded that Cosey suffered no impairment. Prudential notified Cosey that it would not authorize further payments unless Cosey submitted additional medical information supporting her continued disability. Cosey did not timely submit additional evidence.  When Cosey filed an administrative appeal of Prudential’s termination of her STD benefits, the plan administrator upheld the earlier decision and also declared Cosey ineligible for LTD benefits.

On appeal, the Fourth Circuit examined whether the district court employed the appropriate standard of review in examining the plan administrator’s denial of LTD and STD disability benefits. The LTD benefits plan was subject to the Employee Retirement Income Security Act of 1974, where courts must conduct de novo review of an administrator’s denial of benefits unless the plan grants the administrator discretion to determine a claimant’s eligibility for benefits, in which case the administrator’s decision is reviewed for abuse of discretion. A grant of discretionary authority must be clear. Here, the LTD plan states that benefits only will be paid to a claimant who “submits proof of a continuing disability satisfactory to Prudential.” In Gallagher, the Fourth Circuit observed that plan language requiring a claimant to “submit satisfactory proof of total disability to us” was ambiguous, and could be interpreted as requiring either an objective or a subjective standard for determining whether a claimant’s “proof” was satisfactory.” Therefore, the Fourth Circuit held that the plan language did not clearly convey that the plan administrator had discretionary decision-making authority in deciding benefits claims. Here, the Fourth Circuit joined five sister circuits in holding that this language does not unambiguously confer such discretionary authority. The Court identified three major themes that pervaded the opinions of those courts: (1) the inherent ambiguity in the wording of the phrase “proof satisfactory to us”; (2) the likelihood that such language will fail to provide sufficient notice to employees that their disability claims will be subject to a plan administrator’s discretionary determination; and (3) the responsibility of insurance companies to draft clear plan language.

The STD plan, however, was not governed by the ERISA. The Fourth Circuit had to ascertain the appropriate standard for judicial review of a plan administrator’s benefits determination under the present STD plan. The Court held that the STD plan did not confer discretionary decision-making authority on the plan administrator, and that, therefore, the district court erred in reviewing the plan administrator’s denial of Cosey’s STD benefits claim under an abuse-of-discretion standard. The Court agreed with Cosey that the “satisfactory proof” language in the STD plan is the functional equivalent of the language held ambiguous in Gallagher.

Therefore, the Fourth Circuit agreed with Cosey that the district court’s use of an incorrect standard of review, and the court’s erroneous view that both benefits plans required Cosey to present objective evidence of her disability, mandates reversal of the summary judgment award. Neither the LTD nor the STD plans provided that a claimant’s submission of proof were required to contain an “objective component.” Therefore, the Fourth Circuit held that the district court erred in concluding that Prudential could deny Cosey’s STD and LTD claims on the basis that her proof lacked such objective evidence.

Full Opinion

– Sarah Bishop

Decided: November 5, 2013

The Fourth Circuit held that the United States District Court for the Eastern District of Virginia did not abuse its discretion by dismissing Project Management Company’s (PMC) case against DynCorp International LLC (DynCorp) as a sanction for discovery malfeasance.  The Fourth Circuit therefore affirmed the judgment of the district court.

After contracting with the State Department to aid in the development of Iraq’s civilian police force, DynCorp made a subcontract with PMC for operations and maintenance support between August 1, 2008 and February 17, 2009.  PMC executed the subcontract through Hussein Fawaz (Fawaz), its Managing Director and purported part owner of the company.  Under the subcontract, PMC Project Manager Greg Byers (Byers) was PMC’s point of contact with DynCorp.  The subcontract stated that, in response to invoices from PMC, DynCorp would tender payments through wire transfers to a PMC account at Kuwait Gulf Bank (Kuwait Account).  Furthermore, the subcontract stated that “[n]o oral statement of any person shall modify or otherwise affect the terms, conditions, or specifications stated in [the] [s]ubcontract.”  After beginning performance, PMC listed payment instructions on the face of each invoice; the instructions were consistent with the terms of the subcontract.  However, in December 2009, the PMC invoices started directing DynCorp to pay PMC through a different bank account: an account at the National Bank of Kuwait (Lebanon) held in the name of Fawaz (Lebanon Account).  Fawaz, Byers, and another PMC employee confirmed the change in instructions.  DynCorp eventually terminated the subcontract due to issues with PMC’s performance.  After termination, DynCorp learned that Fawaz was not a part owner of PMC.  DynCorp also learned that PMC’s actual owners included Rabea Al-Muhanna (Al-Muhanna); according to PMC, Al-Muhanna had sole authority over PMC’s financial affairs.

On January 25, 2012, PMC sued DynCorp in federal court, alleging that DynCorp breached the subcontract by transferring money to the Lebanon Account instead of the Kuwait Account.  The parties agreed to complete discovery by April 13, 2012, and the district court set the trial date on August 15, 2012.  During the discovery period, DynCorp discovered that at least some of the money it deposited into the Lebanon Account was used to pay PMC’s obligations.  DynCorp subsequently asked the district court to impose sanctions under the court’s inherent authority to issue sanctions for abuses of the judicial process, per United States v. Shaffer Equipment Co., 11 F.3d 450.  DynCorp claimed that PMC concealed documents that demonstrated PMC’s acquiescence to the use of the Lebanon Account; stated that PMC made a late production of documents demonstrating PMC’s acquiescence to the use of the Lebanon Account, and did so only after DynCorp received documents from a third party indicating that PMC used the Lebanon Account; and asserted that the late-produced documents demonstrated that PMC’s Rule 30(b)(6) representatives—Al-Muhanna and Philip Zacharia (Zacharia)—gave false or misleading testimony and that PMC gave false interrogatory answers.  DynCorp asked the district court to dismiss the case.  The district court granted DynCorp’s motion for sanctions but declined to dismiss the case; rather, the district court ordered that, inter alia, PMC produce its Rule 30(b)(6) representatives for additional depositions before August 11, 2012.  PMC then filed for a protective order, seeking to shield Zacharia from production for deposition and seeking relief from having to produce Al-Muhanna before August 13, 2012—two days before the trial.  DynCorp again asked the district court to dismiss the case under its inherent authority; the district court declined to do so, but instead ordered PMC to produce the Rule 30(b)(6) representatives by August 13, 2012.  PMC produced Al-Muhanna and Zacharia for deposition on August 13; however, it also told DynCorp that these witnesses were no longer its Rule 30(6)(b) representatives, and offered a new Rule 30(b)(6) representative.  PMC also produced additional, previously undisclosed documents—some of which were written in Arabic.

DynCorp submitted a supplemental memorandum asking the court to strike PMC’s claim of damages or, alternatively, to dismiss the case.  The district court reevaluated PMC’s conduct under the Shaffer Equipment standard.  The court detailed PMC’s discovery abuses, finding that, inter alia, PMC improperly withheld documents, the withheld documents contradicted Al-Muhanna’s deposition testimony, and that PMC gave a false answer to an interrogatory.  The district court concluded that PMC was highly culpable, that DynCorp was significantly prejudiced, and that the previous sanctions did not remedy the prejudice to DynCorp.  The district court then dismissed the case with prejudice.  PMC appealed, arguing that, inter alia, (1) Al-Muhanna did not provide false testimony; (2) the district court improperly considered its false interrogatory response, as DynCorp did not raise this issue as a reason for sanctions; (3) the district court’s culpability finding was not supported by substantial evidence; (4) DynCorp and the judicial process did not suffer prejudice, as DynCorp received all the relevant documents before the date of the trial; and (5) lesser sanctions could have remedied the prejudice and that public policy warranted a decision on the merits.

The Fourth Circuit first noted that the district court considered all six of the Shaffer Equipment factors, and the district court found that each factor weighed in favor of the case’s dismissal.  With regard to PMC’s first argument, the Fourth Circuit noted the support in the record for the conclusion that Al-Muhanna testified falsely.  With regard to the second argument, the Fourth Circuit noted that district courts are not limited to the parties’ arguments when exercising the inherent authority to impose sanctions under Shaffer Equipment.  With regard to the third argument, the Fourth Circuit referred back to the support in the record for a finding of culpability.  The Fourth Circuit noted that PMC failed to support its fourth argument with citation, and that PMC produced many documents after the end of the discovery period.  Lastly, with regard to PMC’s fifth argument, the Fourth Circuit recognized “the need to preserve the integrity of the judicial process in order to retain the confidence that the process works to uncover the truth,” and noted that the district court’s lesser sanctions did not alleviate the prejudice.

Full Opinion

– Stephen Sutherland

Decided: November 5, 2013

The Fourth Circuit affirmed the district court’s grant of summary judgment against Mary Johnson (“Mrs. Johnson”) and her husband, Ford Johnson (“Mr. Johnson”), individually, to reduce to judgment the remaining balance of the trust fund recovery penalties assessed against them.

Mr. Johnson formed a non-profit corporation, Koba Institute, Inc. (“Koba Institute”) in 1969 to perform various government contracts in conjunction with Koba Associates, Inc. (“Koba Associates”), a for-profit corporation that he owned and managed. Koba Associates failed to pay its payroll taxes in the mid-1990s and the IRS assessed trust fund recovery penalties against Mr. Johnson. This ultimately led Mr. Johnson to close Koba Associates and severely limited his ability to obtain credit for Koba Institute. Subsequently, Mr. and Mrs. Johnson restructured Koba Institute so as to facilitate its continued existence. As part of that restructuring, in 1998, Koba Institute converted to a for-profit corporation under Maryland law, with Mrs. Johnson as its sole shareholder, chair of its board of directors, and president. Koba Institute’s payroll account expressly provided that Mrs. Johnson had the power to sign singularly on that account. This enabled Koba Institute to operate unencumbered by a lien. However, because Mrs. Johnson was the primary caregiver of the couple’s children, Mrs. Johnson delegated and entrusted her authority in the corporation to Mr. Johnson, and thereafter elected him president of Koba Institute in 2001 despite a contrary bylaw requirement. Mrs. Johnson’s actual involvement at Koba Institute was limited during the period between 2001 and 2004, only coming to work once per month. Yet, she received a significant annual salary, as well as a corporate car and cell phone. Given her limited involvement in the corporations daily operation, Mrs. Johnson only signed checks that Mr. Johnson had already approved.

Near the end of 2004, however, Mrs. Johnson received a notice from the IRS that Koba Institute had not paid its payroll taxes for several quarters from 2001 to 2004. Upon learning this, Mrs. Johnson fired the finance director and directed Mr. Johnson to personally handle all future tax payments and to provide her with visual proof of all withholding tax payment made subsequently. Additionally, with regard to the payroll account, Mrs. Johnson no longer required instruction from Mr. Johnson before writing checks herself from the payroll account for payment of the taxes. Koba Institute then began paying its post-2004 payroll taxes in full. However, it did not pay the outstanding delinquent payroll taxes although it continued to pay its other business debts. Subsequently, the IRS assessed trust fund recovery penalties against Mr. and Mrs. Johnson individually, pursuant to 26 U.S.C. § 6672. On March 30, 2009, Mrs. Johnson filed suit seeking a refund of the portion of the penalty that she had paid, asserting that the assessment against her was erroneous. The Government filed a counterclaim against both of the Johnsons in order to reduce its assessments to judgment. The district court granted the Government’s motion for summary judgment. This appeal followed.

On appeal, the Fourth Circuit first summarily affirmed the district court’s judgment with respect to Mr. Johnson. Next, it addressed Mrs. Johnson’s contention that the district court erred in granting summary judgment against her because she was not a “person responsible” for Koba Institute’s withholding tax payments, and, alternatively, because she did not “willfully” fail to pay over those taxes. The court, however, disagreed. Finding that, despite delegating her authority to Mr. Johnson, Mrs. Johnson remained a “responsible person” because she maintained effective power to pay the trust fund taxes and to direct the corporation’s business choices during the relevant tax periods as evidenced by her conduct upon receiving notice of delinquency from the IRS. Having found that Mrs. Johnson was a “responsible person,” the court then found that her conduct was “willful” because Koba Institute continued to make payments to other creditors using unencumbered funds following Mrs. Johnson’s receipt of the IRS notice while the payroll taxes for numerous quarters during the relevant tax period remained unpaid. Consequently, the Fourth Circuit affirmed.

Full Opinion

-W. Ryan Nichols

Decided: November 1, 2013

The Fourth Circuit upheld the constitutionality of § 1997e(d)(2) of the Prison Litigation Reform Act of 1995 that caps attorneys’ fee award that a successful prisoner litigant may recover from the government in a civil rights action at 150 percent of the value of the prisoner’s monetary judgment.

Jamey Wilkins, a prisoner, filed a civil rights action against Officer Gaddy, a guard at the prison where he was incarcerated, where he alleged that Officer Gaddy opened his cell and physically harmed him by pinning, kicking, and punching him. Wilkins claimed various health complications resulting from the incident and sought damages. In his first action, Wilkins alleged that Officer Gaddy’s conduct violated the Eighth Amendment prohibition on cruel and unusual punishment. Ultimately, the Supreme Court agreed with Wilkins, but did not determine the appropriate amount of damages for his injury. At the trial to determine the amount of damages, the jury awarded only nominal damages of $0.99. Wilkins filed a motion to claim over $92,000 in attorneys’ fees as the prevailing party. The court declined to award the attorneys’ fees, citing § 1997e(d)(2) that caps attorneys fees for prisoner litigants at 150 percent of the monetary award. Wilkins argued that the fee shifting violated his equal protection rights under the Fifth Amendment. He claimed that statutes involving the rights of prisoners deserved a heightened sense of scrutiny; and, in the alternative, that the statute did not pass rational basis review.

First, the Fourth Circuit held that the statute at issue did not warrant a heightened standard of review. Although Wilkins admitted that prisoners are not a suspect class that warrants strict scrutiny, he argued that the unique characteristics of prisoners, including the inability to protect themselves in political processes and historical discrimination against prisoners, demanded a more searching form of rational basis. The Fourth Circuit disagreed finding that, “[b]ecause breaking the law is a voluntary act and many prisoners will eventually be released, the ‘status of incarceration is neither an immutable characteristic…nor an invidious basis of classification’” that warrants heightened scrutiny. Furthermore, the court concluded that it would be “ironic” to for the law to provide greater protection to those who had broken it.

Second, the Fourth Circuit held that § 1997e(d)(2) passed rational basis review. The Court cited the government’s legitimate objective of limiting the vast number of prisoner suits, in part, by capping the amount that attorneys can recover in fees. By limiting the amount for possible fees, Congress likely intended that many claims that lacked merit would not clog the courts’ dockets because prisoners are unlikely to find counsel for claims which have only a small opportunity for a fee recovery. Furthermore, the court emphasized the government’s goal of protecting public funds by limiting the amount of attorneys’ fees that the public treasury must pay. Therefore, the court upheld the constitutionality of § 1997e(d)(2).

Full Opinion

– Wesley B. Lambert

Decided:  November 1, 2013

The Fourth Circuit affirmed the defendant’s sentence for drug distribution. The Court held that the district court’s use of multiple hearsay evidence to calculate the defendant’s drug quantity did not render his sentence unreasonable.

On November 21, 2011, defendant Crawford (“Crawford”) plead guilty to distribution of 38.3 grams of crack cocaine without the benefit of a plea agreement. At sentencing, Crawford objected to the presentence report’s (PSR) drug quantity calculation, which found him responsible for 408.1 grams of crack cocaine from 2003 to 2011. Crawford argued that information that two paid informants- Veronica Ready and Melanie Latta- supplied via telephone interviews to Chad Nesbitt, an agent of the Bureau of Alcohol, Tobacco, Firearms and Explosives who did not testify at Crawford’s sentencing hearing, was not sufficiently reliable.  At Crawford’s sentencing hearing, Brunswick County Sherriff’s Office Deputy Jeffrey Beck testified regarding Latta and Ready. The informants worked with law enforcement for money and to reduce their crack cocaine charges; however, neither had provided false information in the past. Crawford alleged that his drug sentence was procedurally unreasonable because the district court utilized unreliable multiple hearsay evidence.

The Fourth Circuit evaluated the district court’s sentence under an abuse-of-discretion standard. Sentences must be both procedurally and substantively reasonable. Pursuant to the Sentencing Guidelines, where there is no drug seizure or the amount seized does not reflect the scale of the offense, the court shall approximate the quantity of the controlled substance. However, when the approximation is based only upon uncertain witness estimates, the Court instructed that district courts should sentence at the low end of the range to which the witness testified, which the district court did in this case. When determining facts relevant to sentencing, such as an approximated drug quantity, the Fourth Circuit explained that the Sentencing Guidelines allow courts to “consider relevant information without regard to its admissibility under the rules of evidence applicable at trial, provided that the information has sufficient indicia of reliability to support its probable accuracy.” Accordingly, for sentencing purposes, hearsay alone can provide sufficiently reliable evidence of drug quantity.

However, Crawford made three primary arguments that Beck’s recounting of Nesbitt’s interviews with Latta and Ready was not reliable evidence of drug quantity. First, Crawford argued that the evidence simply established that Crawford dealt drugs, not the quantity of drugs that the court attributed to him. However, the court did not dwell on Crawford’s relationship with Latta to establish that he was a drug dealer; it did so because this relationship showed that Latta had first-hand knowledge of the drug quantity attributable to Crawford and, therefore, provided information regarding drug quantity. Second, Crawford argued that the telephone was an inherently unreliable form of communication, which the court also rejected. Third, Crawford argued that the informants’ statements were unreliable because they are drug users who cooperated with law enforcement officials to reduce pending felony charges. However, the Court explained that while these factors may affect a witness’s credibility, they do not render a witness per se unreliable. Finally, the Court held that the Sixth Amendment’s Confrontation Clause does not apply at sentencing hearings.

Full Opinion

– Sarah Bishop

Decided: October 21, 2013

The Fourth Circuit held that, because prisoner James G. Blakely (Blakely) previously brought more than three federal lawsuits that were expressly dismissed at summary judgment as frivolous, malicious, or for failure to state a claim, Blakely could not proceed in forma pauperis in his present lawsuit.  The Fourth Circuit therefore denied Blakely’s motion for reconsideration.

Blakely, an inmate at Lee Correctional Institution in South Carolina, brought numerous lawsuits in federal and state court while incarcerated—including four federal lawsuits that were dismissed at summary judgment (the summary judgment dismissals).  In 2010, Blakely filed a § 1983 action against certain South Carolina officials (the defendants).  The defendants removed the case to federal court.  A magistrate judge deemed Blakely’s claims meritless, and the United States District Court for the District of South Carolina subsequently granted summary judgment in the defendants’ favor and dismissed the lawsuit.  On appeal to the Fourth Circuit, Blakely applied to proceed in forma pauperis.  The Fourth Circuit initially denied Blakely’s request; Blakely then moved for reconsideration.

The Fourth Circuit noted that, under the “three-strikes” statute of the Prisoner Litigation Reform Act, 28 U.S.C. § 1915(g), a prisoner who had previously brought more than three lawsuits that were dismissed as frivolous, as malicious, or for failure to state a claim generally cannot proceed in forma pauperis.  While Blakely argued that dismissals at summary judgment did not count as “strikes” under § 1915(g), the Fourth Circuit found the procedural posture of the case indeterminate: rather, the Fourth Circuit concluded that a summary judgment dismissal that states, on its face, that the dismissed case was a frivolous one, a malicious one, or one that failed to state a claim constitutes a strike.  The Fourth Circuit noted that all four of the summary judgment dismissals explicitly dismissed a case for one of these reasons.  Thus, the Fourth Circuit counted Blakely’s previously dismissed cases against him for purposes of the three-strikes statute.

Full Opinion

– Stephen Sutherland

Decided: October 30, 2013

The Fourth Circuit found that the district court improperly calculated William McManus’s (“McManus”) applicable Sentencing Guideline range and therefore vacated the sentence and remanded for resentencing.

Gigatribe is a file-sharing computer program. By way of an invitation and acceptance feature, Gigatribe allows users to share files with other users with whom they are “friends.” Despite being “friends” with a particular user, however, a user cannot access that particular user’s files unless the other user maintains a shared folder, accessible to friends that are populated with files. McManus used Gigatribe’s file-sharing feature to acquire and maintain child pornography. After an FBI agent downloaded several files containing child pornography from McManus’s Gigabtribe account, McManus was arrested and indicted. He subsequently pleaded guilty. The record indicated that the agent gave McManus nothing in exchange for the files he downloaded and there was no evidence that any other Gigatribe user downloaded pornographic files from McManus. Following McManus’s guilty plea, at his sentencing hearing, the district court applied a five-level enhancement to McManus’s base offense level by way of United States Sentencing Guideline § 2G2.2(b)(3)(B). Because Section 2G2.2(b)(3)(B) only applies when a defendant has “distributed” child pornography “for the receipt, or expectation of receipt, of a thing of value, but not for pecuniary gain,” McManus filed this appeal arguing that the district court erred by applying the five-level enhancement instead of the two level enhancement for simple distribution under Section 2G2.2(b)(3)(f), and therefore, his sentence was procedurally unreasonable.

On appeal, the Fourth Circuit first addressed the meaning of Section 2G2.2(b)(3)(B) and held that the meaning of the phrase at issue was unambiguous. The clear meaning of the text, according to the court, requires that for the enhancement to trigger, the government must prove that the defendant distributed pornography with the specific purpose of securing some kind of benefit in exchange. In other words, the government must show that the defendant conditioned his decision to distribute his files on his belief that he would receive something of value in return.

Next, the court applied its interpretation to the facts of the case and rejected the government’s proposed inherent reciprocity argument. In so doing, the court concluded that it is clearly possible, based on the features of the Gigatribe system, that a user could distribute his files without any reasonable expectation of receiving anything of value in exchange.  The court further found that the government did not submit sufficient individualized evidence of McManus’s intent to distribute his pornographic material in expectation of receipt of a thing of value. Therefore, because the district court’s improper sentencing range calculation constituted a significant procedural error that was not harmless to McManus, the Fourth Circuit vacated the district court’s sentence and remanded for sentencing.

Full Opinion

– W. Ryan Nichols

Decided: October 30, 2013

The Fourth Circuit dismissed a complaint for lack of subject matter jurisdiction finding that, absent a federal tariff, federal courts have no subject matter jurisdiction over a motor carrier’s breach of contract claim against a shipper for unpaid freight charges.

Plaintiffs, a group of motor carriers (“Carriers”), had agreements through Salem Logistics Traffic Services, LLC (“Salem”) to transport furniture for Klaussner Furniture Industries (“Klaussner”) throughout the United States. Salem coordinated all shipping logistics for Klaussner. Klaussner provided a fee to Salem for its services and Salem, in turn, agreed to pay all Carriers directly. After initially making payment, Salem defaulted on its obligation to pay the Carriers and went out of business. The Carriers filed suit against Klaussner under the Interstate Commerce Commission Termination Act (“ICCTA”) to recover the unpaid freight charges. The District Court found that Klaussner was not liable for the unpaid freight charges. Salem appealed.

On appeal, Klaussner, the prevailing party at the district court, for the first time argued that the district court lacked subject matter jurisdiction over the dispute. The Carriers responded that federal courts had jurisdiction over their claim under the ICCTA. In the alternative, Carriers argued that, even if the ICCTA did not provide a federal cause of action, the federal courts should create a federal cause of action because the ICCTA preempted state law breach of contract claims. The Fourth Circuit disagreed with the Carriers on both counts and found that the federal courts lacked subject matter jurisdiction.

First, the court held that the ICCTA did not provide a federal cause of action. The court explained that historically, Congress regulated all motor carriers to file a tariff with the Interstate Commerce Commission that included their price. Any disputes over price were adjudicated through a federally created administrative body. In 1995, however, Congress deregulated the motor carrier industry by passing the ICCTA, which removed the tariff requirement for most shipping contracts, and instead allowed the free market to set the prices for shipping. Congress retained some regulation over motor carriers by requiring compliance with federal licensing, employment, safety, and accessibility requirements. The court found that merely allowing private negotiation of shipping rates under the ICCTA, replacing the tariff requirement, was not enough to create a federal private cause of action under the ICCTA. The court contrasted that provision with another provision in the ICCTA that explicitly provided federal jurisdiction for a claim seeking compensation for goods damaged in shipping.  Additionally, the court found the ICCTA’s regulation of billing and collection practices insufficient to create federal jurisdiction because the regulations does not impose any obligations concerning rates.

Second, the court held that the ICCTA did not preempt the Carrier’s state law breach of contract claim. The court explained that the ICCTA’s preemption clause was taken directly from the Airline Deregulation Act (“ADA”). The Supreme Court’s interpreted the ADA to recognize an exception to preemption for routine breach of contract claims against airlines. Given the Supreme Court’s interpretation of the same provision under the ADA, the Fourth Circuit held that the ICCTA did not preempt ordinary breach of contract claims. Furthermore, the court emphasized that the resolution of the claim required the interpretation of no federal statute or regulation. Therefore, the court concluded that it lacked subject matter jurisdiction and dismissed the suit.

Full Opinion

– Wesley B. Lambert

Decided:  October 29, 2013

The Fourth Circuit reversed Faisal Hashime’s convictions on multiple counts related to child pornography and remanded the case for further proceedings because law-enforcement agents did not read Hashime his Miranda rights until well after he made numerous self-incriminating statements during an interrogation that occurred while law-enforcement agents searched his home.

In November 2010, a law-enforcement agent with Immigration and Customs Enforcement’s Homeland Security Investigations unit (“HSI”) discovered a naked picture of a minor boy while monitoring a website used to exchange child pornography that had the caption “Email me, t.campbell@gmail.com.”  In July 2011, the agent sent an email to the aforementioned address, asking to trade child pornography images.  In return, the agent received twenty-four images of a naked boy.  HSI traced the email account’s associated IP address and discovered that someone in the Hashime family home utilized the email account.  Based on that information, law enforcement obtained a search warrant for the email account and the Hashime’s home.  On May 18, 2012, a team of 15-30 state and federal agents executed the search warrant.  The team was equipped with a battering ram and, upon arrival, banged on the entrance to the home yelling, “Open the door.”  Hashime, who was 19 years old at the time, was living with his parents while attending a local community college.  The agents were let into the home by Hashime’s aunt and moved into the home with their guns drawn.  One of the officers entered Hashime’s bedroom and pointed a gun at him while he was in bed, naked and asleep.  The officer ordered Hashime out of bed and, after allowing him to put on boxer shorts, escorted Hashime by the arm out to the front lawn, where officers were keeping Hashime’s other family members outside.

When law enforcement finally allowed the family back into the home, they were quarantined in the living room while the officers completed their search.  Hashime was not allowed to use the bathroom until the officers completed their search and Hashime was given his clothes, but was not provided with shoes or socks.  Hashime’s mother, who was recovering from brain surgery, was not allowed to lie down.  All of Hashime’s family members were instructed that they had to be accompanied by officers at all times and the agents proceeded to interrogate each one of them individually.   Two officers escorted Hashime to the basement for questioning and the officers chose to conduct the interrogation in a room that was being used for a storage area.  According to Hashime’s mother, the officers told her that her son was under arrest.  The officers secretly recorded the interrogation of Hashime and lied to Hashime about whether they were recording the conversation.  The officers also told Hashime that he did not have to answer their questions and could leave at any time, but, at some point during the interrogation, one of the officers told Hashime, “I need to know, and I need you to be completely honest with me here even if you’re afraid, I don’t care if you say I don’t want to answer that or I’m afraid to answer it, but I need to know the truth.”  The agents did not read Hashime his Miranda rights until over two hours into the interrogation.  During the interrogation, Hashime admitted to having child pornography on his computer and provided details about how he obtained the photographs.  Hashime also provided the password to his computer and instructed the officers how to find the photographs on his hard drive.

Hashime was indicated on seven counts of production, distribution, receipt, and possession of child pornography in violation of federal law.  Prior to his trial, Hashime moved to suppress the statements made to law-enforcement agents during the interrogation.  Hashime argued that he was in custody at the time of the interrogation and, because he did not receive his Miranda warnings, his statements should be suppressed.  The district court denied the motion.  The district court asserted that Hashime’s demeanor during the interrogation, his familiarity with law-enforcement practices, and his apparent lack of concern with an imminent arrest led to the conclusion that Hashime believed he was free to leave and end the interrogation at any time.  Hashime subsequently pled guilty to the receipt and possession charge, but the government pressed forward and chose to prosecute Hashime on the production and distribution charges.  Hashime was convicted of these other counts following a bench trial.  Hashime appealed and argued that his conviction should be reversed because the law-enforcement officers failed to read him his Miranda rights at the beginning of the interrogation.

The Fourth Circuit explained that, generally, law enforcement officers are required to inform individuals in custody of their Miranda rights prior to interrogation.  In order to determine whether a defendant, not under formal arrest, was in custody for the Miranda requirements to apply, the court will look at the totality of the circumstances to make an objective inquiry into whether a reasonable person in the individual’s situation would have thought they were in custody.  The Fourth Circuit noted that the government conceded it interrogated Hashime, but argued that Hashime was not in custody so agents were not required to provide Miranda warnings.  The government’s argument rested on two grounds:  “law enforcement’s conduct toward and statement to Hashime prior to and during the interrogation, and Hashime’s tone and demeanor during the interrogation.”  With respect to law enforcement’s conduct, the Fourth Circuit concluded that even though law enforcement told Hashime that he did not have to answer any of their questions and he was free to leave, the broad setting of the entire search and interrogation, including the fact that Hashime was isolated from his family during the interrogation, would lead a reasonable person to believe he was in custody.  Importantly, the Court noted that Hashime and his family were unable to move freely throughout their own home.  The Court pointed to the fact that Hashime and his family, even though they were in their own home, were required to have law enforcement escort where they went in the house changed the entire setting of the interrogation.  Because the family had lost control of their home, the fact that the interrogation was conducted in his basement did not change the fact that the interrogation was conducted in a custodial setting.

Turning to the government’s argument that Hashime’s tone and demeanor during the interrogation demonstrated that Hashime did not believe he was in custody, the Court held that such factors were not dispositive of the custodial inquiry.  Rather, the Court provided that Hashime’s attitude was more of a subjective factor that went primarily to the voluntariness of his confession and had no real bearing on the objective inquiry into whether Hashime believed he was in custody at the time of the interrogation.  Instead, an objective inquiry should be more directed towards the conduct of law enforcement and how a reasonable person would interpret their actions.  Therefore, the Court held that Hashime was in custody for the purposes of Miranda and that law enforcement’s failure to read him his Miranda rights made his testimony inadmissible and required that the conviction be reversed.  The Fourth Circuit further related that because Hashime’s conviction was reversed on the Miranda issue, the Court chose not to render a decision on Hashime’s challenge to his sentencing under the Eighth Amendment.

Full Opinion

– John G. Tamasitis

Decided: October 29, 2013

On appeal, the Fourth Circuit Court of Appeals held that the district court did not err in its application of Listing 1.04A, the Social Security Administration regulation identifying disorders of the spine that merit an award of social security disability benefits. However, the Fourth Circuit vacated the district court’s judgment because its decision to direct the Administrative Law Judge to award benefits was an abuse of discretion.

Radford worked as a tree trimmer, and sustained an injury in 2002 lifting part of a tree at work. For the next five years, Radford consulted several doctors who collectively observed different symptoms of nerve root compression. In 2007, Radford applied for social security disability benefits. Under the Social Security Administration regulation, Listing 1.04A, a claimant is entitled to a conclusive presumption that he is disabled if he can show that his disorder results in compromise of a nerve root or the spinal cord. In addition, Listing 1.04A describes the criteria a claimant must “meet or equal” to merit this presumption. An Administrative Law Judge (“ALJ”) denied Radford’s claim, finding that he was not disabled because his back impairment did not “meet or equal” Listing 1.04A. The federal district court found that the evidence did show that Radford met Listing 1.04A and reversed the decision of the ALJ as unsupported by substantial evidence, and remanded for an award of benefits.

The issues on appeal were whether the district court applied the wrong legal standard in ruling that Radford’s condition met or equaled Listing 1.04A and whether the district court erred in remanding with instructions to award benefits.

The Fourth Circuit held that the district court applied the correct legal standard. The Social Security Commissioner argued that the district court improperly interpreted the regulation to require intermittent, rather than simultaneously present signs and symptoms for establishing a lasting impairment. The Fourth Circuit rejected the Commissioner’s argument, based on the text and structure of the regulation. The listed symptoms are connected by the word “and,” which means that all of the symptoms must be present, but not necessarily at the same time. The provision does not specify when the symptoms must be present. Moreover, the regulation already imposes a duration requirement on the claimant, who must prove the impairment lasted for a continuous period of at least 12 months. Furthermore, a court owes no deference to an agency’s interpretation where the regulation’s meaning is unambiguous. Because Listing 1.04A says nothing about a claimant’s need to show symptoms present simultaneously or in close proximity, the regulation is unambiguous and, therefore, the court owes no deference to the Commissioner’s interpretation.

Finally, the Fourth Circuit held that the district court erred in reversing and remanding with instructions to award benefits to Radford, and should have vacated and remanded with instructions for the ALJ to clarify why Radford did not satisfy Listing 1.04A. If the reviewing court has no way of evaluating the basis for the ALJ’s decision, then the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation. Because the ALJ provided no explanation for his conclusion that Radford’s impairment did not meet or equal a listed impairment, the district court had no way of reviewing the basis of his decision. In addition, the ALJ cited to state medical opinions in support of his conclusion, rather than the opinions of Radford’s treating physicians, which is especially suspect. The Court explained that remand would not be futile where there is at least conflicting evidence in the record as to whether Radford satisfied the listing. Moreover, the Court noted that it was not the province of the appellate or district court to reweigh conflicting evidence, make credibility determinations, or substitute its judgment for that of the ALJ.

Full Opinion

– Sarah Bishop

Decided: October 29, 2013

In a case of first impression, the Fourth Circuit held that the Fleuti doctrine did not survive the Illegal Immigration Reform and Immigrant Responsibility Act’s (“IIRIRA”) enactment of 8 U.S.C. § 1101(a)(13). Therefore, despite being a lawful permanent resident (“LPR”), the court found that Gurpinder Othi (“Othi”) was seeking admission into the United States and was, accordingly, subject to removal because of his criminal history.

Othi, a native and citizen of India, gained LPR status in 1983. In the 1990s Othi accumulated several criminal convictions: theft in 1995, possession of cannabis in 1997, and second-degree murder in 1999. After serving a 12-year prison sentence following his murder conviction, Othi travelled to India in early 2011 to get married. He returned there in December that same year to visit his new wife. On January 11, 2012, after 17 days outside the country, Othi returned to the US. Upon inspection at the airport, border agents obtained Othi’s criminal record and the Department of Homeland Security subsequently initiated removal proceedings against him on January 17, 2012. The Notice to Appear alleged that Othi was an arriving alien who was removable on three grounds: (1) his prior conviction for a crime of moral turpitude; (2) his prior conviction under a law relating to controlled substances; and (3) his prior convictions of two or more crimes having aggregate sentences of five years or more. Citing Rosenberg v. Fleuti, Othi argued that LPRs are permitted to take “innocent, causal, and brief” trips abroad without having to seek re-admission and therefore he was not an arriving alien because he never intended his trip abroad to meaningfully interrupt his permanent residence. The immigration judge, however, rejected Othi’s Fleuti-based argument and ordered removal. Othi appealed to the Board of Immigration Appeals (the “Board”), again arguing he was not an arriving alien pursuant to Fleuti. Additionally, Othi contended that removal violated his due process rights. The Board, however, found that Congress amended the IIRIRA provisions at issue in Fleuti and therefore LPRs who commit offenses like those committed by Othi are always treated as arriving aliens under the new statute. This appeal followed.

On appeal, the Fourth Circuit affirmed the Board’s decision and held that the plain text of the amended statute supplanted the Fleuti doctrine. In so holding, the court noted that all circuits considering the issue had reached the same result despite having done so in different ways. The court explained that LPRs are generally exempt from the statutory classification of all other “aliens” for purposes of an “admission” designation; however, Congress limited the LPR exemption in specific and clear terms. Relevant to this case, the general exemption from “admission” applies to all LPRs “unless the alien … has committed an [enumerated] offense.” The court therefore concluded that rather than benefiting from the general exemption granted to LPRs, Othi fell back into the general class of “aliens” who are treated as all other aliens for “admission” purposes. Next, the court summarily rejected Othi’s due process claim.

Full opinion

-W. Ryan Nichols

Decided: October 28, 2013

The Fourth Circuit held that a Chapter 13 bankruptcy debtor’s estate includes the debtor’s inheritance of property beyond the 180-day time limit under Bankruptcy Code § 541 but before the close, modification, or dismissal of the bankruptcy estate.

Bankruptcy debtors, Ricky and Cheri Carroll (“Carrolls”) filed for Chapter 13 bankruptcy in February of 2009. The reorganization plan approved by the bankruptcy court in August 2009 required the Carrolls to pay $2,416 for 6 months followed by $2,480 for 54 months. In August 2012, the Carrolls notified the bankruptcy court that Mr. Carroll anticipated a $100,000 inheritance after the death of his mother. The Chapter 13 trustee therefore moved to modify the Carrolls’ bankruptcy estate to include the $100,000 inheritance. Over the Carrolls’ objection, the bankruptcy court ordered the inheritance be included in the debtors’ plan to pay unsecured creditors. The Carrolls appealed the bankruptcy court’s decision to the Fourth Circuit.

On appeal, the Carrolls argued that the bankruptcy court erred in modifying the Carrolls’ bankruptcy estate to include Mr. Carroll’s inheritance because it occurred more than 180 days after the Carrolls’ bankruptcy petition. The Fourth Circuit disagreed based on its interpretation of Bankruptcy Code Sections 541 and 1306(a). The Court found that Bankruptcy Code Section 541 generally identifies the property in the bankruptcy estate to include, “any interest in property…that the debtor acquires or becomes entitled to acquire within 180 days [of filing the petition]…[including] by bequest, devise, or inheritance.” Then, the Court then explained that Bankruptcy Code Section 1306(a) expands the scope of the bankruptcy estate under Section 541 to also include, “all property of the kind specified in [Section 541] that the debtor acquires after the commencement of the case but before the case is closed, dismissed, or converted…whichever occurs first.” The Court determined that Sections 541 and 1306(a) together provided a formula for the bankruptcy estate that included the combination of: (1) property described in Section 541 subject to the 180 day time limit, and (2) property described in Section 541 (including inheritances) acquired before the Chapter 13 case is closed, dismissed or converted.  Beyond the plain language of the Bankruptcy Code, the court also noted that the majority of courts addressing the issue have also concluded that Section 1306 modifies the Section 541 time period in Chapter 13 bankruptcies. Therefore, the court held that the bankruptcy court properly included Mr. Carroll’s inheritance in the Chapter 13 bankruptcy estate.

Full Opinion

– Wesley B. Lambert

Decided:  October 23, 2013

The Fourth Circuit held that the bankruptcy court correctly determined that it lacked the authority to “strip off” the debtor’s valueless lien because only the debtor’s interest in the estate was before the bankruptcy court.  The Fourth Circuit rejected the debtor’s argument that the bankruptcy court should have stripped off the lien on the ground that his spouse’s property interest was not part of the bankruptcy estate.

Jose Alvarez filed a Chapter 13 petition in the U.S. Bankruptcy Court for the District of Maryland.  In that petition, Mr. Alvarez identified his property, which was owned by Mr. Alvarez and his wife as tenants by the entireties.  Importantly, Mrs. Alvarez was not a party to the bankruptcy petition, nor did she file a separate petition of her own.  At the time the petition was filed, the property was encumbered by two mortgage liens.  Chase Home Finance held the first-priority mortgage lien and HSBC Mortgage Service (HSBC) held the second-priority mortgage lien.  At the time of the petition, the value of Mr. Alvarez’s property was less than the full amount owned on the first-priority lien, thus rendering HSBC’s second-priority lien valueless.  As required by the Federal Rules of Bankruptcy Procedure, Mr. and Mrs. Alvarez jointly filed a complaint in the bankruptcy court against HSBC.  In the complaint, they maintained that because the HSBC lien was valueless and, thus, was unsecured under 11 U.S.C. § 506(a), they were entitled to strip off the lien from the property.  The bankruptcy judge held that the lien could not be stripped off because both “tenants by the entireties” had not filed a petition for bankruptcy.  The district court affirmed the decision and Mr. and Mrs. Alvarez filed this appeal.

The Court began its opinion by explaining the statutory framework for stripping off a valueless lien in a bankruptcy proceeding.  The Court provided that the main issue in the case was “whether a bankruptcy court, in a Chapter 13 case filed by only one spouse, can strip off a valueless lien on property that the debtor and his non-debtor spouse own as tenants by the entireties.”  The Fourth Circuit noted that this was an issue of first impression among the federal appellate courts and the bankruptcy courts had reached different conclusions on the issue.  The Court then discussed Maryland property law as it related to tenancy by the entirety.  According to the Court, a property held in a tenancy by the entirety, under Maryland law, is property not owned by either spouse individually, but rather by the marital unit where each spouse has an undivided interest in the whole property.  The Court provided that a tenancy by the entirety could only be severed, when both spouses are alive, by divorce or by the joint action of both spouses.  The Court then explained that when an individual files a bankruptcy petition, 11 U.S.C. § 541 mandates that a debtor’s bankruptcy estate contain “all legal or equitable interest of the debtor in property as of the commencement of the case.”  The Court agreed with the bankruptcy court that it lacked the authority to strip off the valueless lien on the property because where one spouse has filed for bankruptcy, then only that spouse’s interest in the entireties property, rather than the whole of the property, was before the bankruptcy court.  Therefore, the Court held that the bankruptcy court was without authority to modify a lienholder’s rights with respect to a non-debtor’s interest in property held in a tenancy by the entirety.

Full Opinion

– John G. Tamasitis

Decided: October 23, 2013

The Fourth Circuit Court of Appeals reversed and remanded the district court’s dismissal of plaintiffs’ Commerce Clause claim against the state of Virginia, for hindering the plaintiffs from opening facilities in the state through a certificate-of-need requirement. However, the Fourth Circuit affirmed the district court’s dismissal of plaintiffs’ Fourteenth Amendment claims.

Virginia requires medical providers to obtain a “certificate of public need” in order to launch a medical enterprise in the state. Applicants must demonstrate to the State Health Commissioner that a sufficient public need exists for the proposed medical services. The certificate application process is potentially lengthy, costly, and unpredictable. Plaintiffs, Colon Health Centers and Progressive Radiology, are medical providers who sought to avoid the burdens of this process. Colon Health combines the advantages of the two prevailing colon-cancer screening methods in a “one-stop shop” that screens, diagnoses, and treats colon cancer, all in one visit. Progressive Radiology specializes in using magnetic resonance imaging to diagnose neurological and orthopedic injuries.

On appeal, the plaintiffs challenged the certificate program as a violation of the dormant Commerce Clause and the Fourteenth Amendment’s Equal Protection, Due Process, and Privileges or Immunities Clauses.

With respect to the dormant commerce clause argument, the Fourth Circuit held that the district court erred in dismissing plaintiffs’ claim. The Court remanded for a factual investigation by the lower court as to whether the certificate program has a discriminatory effect on interstate commerce. In order to prove discriminatory effect, plaintiffs must demonstrate that the challenged statute would negatively impact interstate commerce to a greater degree than intrastate commerce. State laws that discriminate against interstate commerce can be per se invalid in three ways: facially, in practical effect, or in purpose. Under strict scrutiny analysis, a court must invalidate the challenged law unless the state demonstrates that it serves a legitimate purpose, which could not be better served by available nondiscriminatory means. In this case, plaintiffs alleged discrimination in both purpose and effect. Because the purpose of Virginia’s certificate program is to protect current healthcare providers from competition, the plaintiffs alleged the purpose is to protect in-state entities at the expense of out-of-state entrants. Because the certificate application process requires a lengthy fact-finding process, the plaintiffs alleged it grants in-state economic interests the power to obstruct the market entrance of new-, primarily out-of-state competitors. The Fourth Circuit held that determining whether Virginia’s certificate-of-need law discriminates, in either purpose or effect, necessarily requires looking behind the statutory text to the actual operation of the law, i.e. by proper fact-finding. In any event, plaintiffs’ claims of discrimination are sufficient to raise their right to relief above the speculative level and, therefore, satisfy the standard for surviving a motion to dismiss.

Moreover, even if the Virginia law discriminates neither in purpose nor in effect, it may still be unconstitutional under Pike v. Bruce Church, Inc., if it places an “undue burden” on interstate commerce in relation to the putative local benefits, under a rational basis test. The plaintiffs argued that Virginia’s certificate requirement does not actually achieve any legitimate local benefits. Because the challenge presented issues of fact that cannot be properly resolved on a motion to dismiss, the Fourth Circuit held that the district court erred in dismissing appellant’s Pike claim. However, The Fourth Circuit directed the lower court on remand to focus primarily on the discriminatory effects test, rather than the Pike test, which fails to properly cabin the judicial inquiry or effectively prevent the district court from assuming a super-legislative role. Under the discriminatory effects test, the proceedings must investigate the differential burdens imposed on out-of-state and in-state firms subject to the certificate-of-need process.

Regarding the plaintiffs Fourteenth Amendment claims, the affirmed the district court’s dismissal. First, plaintiffs’ alleged a violation of the Equal Protection clause, which centered on the state’s treatment of nuclear cardiac imaging, which is exempted from the certificate-of-need requirement, although similarly situated to other types of medical imaging. However, non-suspect classifications are accorded a strong presumption of validity. The Fourth Circuit held that Virginia articulated sufficient justifications for the nuclear cardiac imaging exemption to survive rational basis scrutiny. Next, plaintiffs alleged a violation of the Due Process clause, contending that the certificate program irrationally burdened their right to earn a living and failed to advance any state purpose other than bald economic protectionism. Because the program does not infringe on a fundamental right, it is subject to rational basis scrutiny, which is quite deferential. In addition, the Fourth Circuit held the certificate program served a variety of legitimate purpose. Finally, plaintiffs alleged a violation of the Privileges or Immunities Clause, contending that the certificate program contravenes the “right to earn an honest living” embodied in the clause, which provides that “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.” However, the plaintiffs conceded that the Supreme Court’s decision in Slaughter-House Cases confined the reach of this clause to a set of national rights that does not include the right to pursue a particular occupation.

Full Opinion

– Sarah Bishop

Decided:  October 16, 2013

The Fourth Circuit denied Baltazar Olea Garcia’s petition for review of an order by the Board of Immigration Appeals (“BIA”) that rejected his application for cancellation of removal on the ground that he failed to meet the “continuous physical presence” requirement of 8 U.S.C. § 1229b.

In 1995, Mr. Garcia entered the United States illegally.  In 2001, he returned back to his home country of Mexico to attend his father’s funeral and, when attempting to return to the United States, Immigration and Naturalization Service (“INS”) officers detained him.  The INS officers fingerprinted and photographed Mr. Garcia and then offered him the opportunity to appear before an immigration judge.  Mr. Garcia declined the opportunity and opted to return to Mexico voluntarily.  He reentered the United States undetected several days later.  In 2009, the Department of Homeland Security (“DHS”) initiated removal proceedings against Mr. Garcia, who conceded his removability, but filed an application for cancellation of that removal.  The immigration judge concluded that Garcia was statutorily ineligible for cancellation because he was unable to show that he “continuously resided in the United States for the preceding ten years.”  The immigration judge found that the US-VISIT report that was created in 2001 when Mr. Garcia was photographed and fingerprinted at the border crossing was sufficient to show that Mr. Garcia had been formally excluded from the United States, thus ending his continuous presence.  Mr. Garcia appealed.

The Fourth Circuit explained that a removable alien, like Mr. Garcia, may petition the Attorney General for cancellation of removal pursuant to 8 U.S.C. § 1229b.  In order to prevail, the petitioner must prove that he maintained a physical presence in the United States for a ten-year continuous period.  In addition to the conditions set forth in the statute, the BIA has held that an alien’s continuous physical presence terminates when he voluntarily leaves the country under threat of removal.  However, the BIA has also indicated that an alien’s departure is not disqualifying if the INS officers simply turn him away at the border because this type of encounter with INS officers is too informal to count as a departure under threat of removal.  The Court first addressed Mr. Garcia’s challenge that the BIA’s policy on removal conflicts with the text of § 1229b.  The Fourth Circuit employed the traditional Chevron review of agency interpretation and held that the BIA’s interpretation of “breaks in presence” requirement under the statute was reasonable.  The Fourth Circuit then analyzed Mr. Garcia’s argument that the BIA erred in applying the holding of In re Romalze-Alcaide, 23 I. & N. Dec. 423 (BIA 2002), which provided that an alien’s continuous physical presence terminates when he voluntarily departs the United States under threat of removal.  The Court explained that, under the established law, an alien’s departure only counts for severing physical presence in the country when the alien departs pursuant to a “formal, documented process.”  Mr. Garcia argued that the evidence of his border encounter in 2001 was insufficient to establish his formal documented departure, which had the effect of rendering his return to Mexico ineffective in terminating his continuous physical presence in the United States.  The Fourth Circuit disagreed and held that Mr. Garcia’s 2001 encounter with INS officers was formal enough and documented in such a matter as to render his decision to re-enter Mexico a voluntary departure under the threat of removal.  Therefore, the Fourth Circuit denied Mr. Garcia’s petition.

Full Opinion

– John G. Tamasitis

Decided: October 16, 2013

The Fourth Circuit denied Svetlana Kuusk’s untimely petition for review of a removal order by the Board of Immigration Appeals (“BIA”).

Svetlana Kuusk entered the United States in 2003 on a four-month visa, which she overstayed. When summoned for removal proceedings, Kuusk asked the Immigration Judge (“IJ”) to deny her removal based on asylum and withholding. The IJ denied her applications and Kuusk appealed to the Board of Immigration Appeals (“BIA”). While her appeal was pending with the BIA, Kuusk married a United States citizen. In a 2011 meeting with a United States Customs and Immigration Services (“USCIS”) officer, the officer informed Kuusk that she could file directly for a marriage based green card because her marriage to a United States citizen. Kuusk allegedly interpreted the advice of the USCIS officer to mean that she no longer needed to pursue her case before the BIA regarding the removal proceedings. After advising her attorney of her plans to pursue the marriage based green card, her attorney instructed her that she would still need to file a motion with the BIA to reopen her case within 90 days after the BIA’s final decision. The BIA denied her appeal based on her asylum and withholding. Kuusk neglected to file a timely motion to reopen the case. In March 2012, the USCIS denied Kuusk’s application for a green card based on her marriage because she subject to the earlier deportation order. Subsequently, Kuusk filed an untimely motion with the BIA to reopen her removal proceedings on the basis of equitable tolling. Kuusk argued that her motion was untimely because of her reliance on the USCIS officer’s allegedly incorrect advice. The BIA denied Kuusk’s motion to reopen her case, finding that she failed to show the necessary requirements for equitable tolling. Kuusk appealed the BIA’s decision to the Fourth Circuit.

On appeal, Kuusk first asserted that the BIA erred in applying the general standard for equitable tolling, arguing that a more lenient standard was required in the immigration context. The Fourth Circuit disagreed. The Fourth Circuit first held that the limitations period for filing a motion to reopen removal proceedings is subject to equitable tolling. Then, the court affirmed the standard used by the BIA. The BIA followed the general standard for equitable tolling articulated in Harris, in the context of a petition for a writ of habeas corpus. In Harris, the court held that equitable tolling was only proper when: “(1) the plaintiffs were prevented from asserting their claims by some kind of wrongful conduct on the part of the defendant; or (2) extraordinary circumstances beyond plaintiff’s control made it impossible to file the claims on time.”  The court conceded that the Harris standard was rigorous, but found that such a heavy burden was necessary to restrict equitable relief to those situations where “it would be unconscionable to enforce the limitation period against the party and gross injustice would result” by enforcing it.  Furthermore, the court noted that other circuits similarly apply a general standard for equitable tolling for immigration proceedings. Thus, the court held that the BIA applied the appropriate standard.

Kuusk then argued that the BIA incorrectly applied the Harris standard to the facts of her case because the wrongful conduct of the USCIS officer prevented her from asserting her claim. The Fourth Circuit again disagreed. Kuusk contended that based on the advice of the USCIS officer, she believed that filing a motion to reopen her removal proceedings was unnecessary, triggering the first element of equitable tolling. The court found that Kuusk’s simple misunderstanding of the officer’s instructions was not enough to trigger the first element of Harris. Importantly, the court found that USCIS officer did not actually give Kuusk wrong advice. It was true that she needed to file directly for a green card; she needed to appeal the decision from the BIA as well. Furthermore, Kuusk’s attorney advised her of the need to appeal the BIA’s decision. Therefore, the court affirmed the BIA’s denial of Kuusk’s untimely petition for review.

Full Opinion

– Wesley B. Lambert

Decided: October 16, 2013

The Fourth Circuit Court of Appeals reversed the district court’s denial of female employees’ (“Appellants”) motion to amend their complaint, in their sex discrimination and equal pay action against Family Dollar Stores, Inc. (“Family Dollar”).

Appellants were fifty-one named plaintiffs and a putative class consisting of females who are, or have been, store managers. Appellants primarily alleged that they were paid less than male store managers who perform the same job, requiring the same skill, responsibility and effort, under similar working conditions. Appellants had to show that these disparities were caused by centralized control of compensation at the corporate level, rather than the local level, in order to establish they had suffered a “common injury” for class action.

Family Dollar filed a motion to dismiss, arguing that Appellants did not satisfy the commonality requirement for class certification. Appellants moved for leave to file an amended complaint in order to elaborate on the original complaint’s allegations of “centralized control of compensation for store managers at the corporate level.” In the proposed amended complaint, Appellants alleged and challenged four specific company-wide policies that created disparities in store manager compensation. The district court denied Appellants’ motion for leave to amend.

The Court addressed the district court’s two primary reasons for denying Appellants’ request for leave to amend their complaint: (1) the proposed amendment was foreclosed by the Wal-Mart case and (2) the amendment would be prejudicial to Family Dollar.

The Court rejected (1) and held that the Appellants’ proposed amendment was not foreclosed by Wal-Mart. In Wal-Mart, the Supreme Court held that the employees’ allegations regarding manager discretion over employee pay were insufficient to satisfy the commonality requirement for class actions. However, Wal-Mart involved the exercise of discretion by lower-level employees, as opposed to upper-level, top-management personnel. In addition, it was not the subjective discretion itself, but the fact that it was not exercised in a common way with some common direction that prevented class certification in Wal-Mart. Furthermore, Wal-Mart indicated that even where the complaint alleges discretion, if there is also an allegation of a company-wide policy of discrimination, the putative class may still satisfy the commonality requirement for certification. In this case, the Court held that while the original complaint failed the commonality standard set forth in Wal-Mart, the proposed amended complaint did not. The proposed amendment complaint clearly specified four company-wide practices regarding employee pay, which is more in line with Wal-Mart’s requirements of uniform corporate policies or high-level corporate decision-making in a “common way under some common direction.” Furthermore, the discretionary decisions set forth in the proposed amended complaint were made by high-level corporate decision-makers with authority over a broad segment of Family Dollar’s employees, not on an individual store level as in Wal-Mart. And, in any event, our policy favors liberal amendment of complaints.

The Court also rejected (2) and held that the amendment would not be unduly prejudicial to Family Dollar. Although Appellants’ filed their proposed complaint over three years after their original complaint, this delay in filing was mostly due to Family Dollar. On numerous occasions, Family Dollar moved to dismiss the complaint and that had the effect of staying discovery, thereby prolonging the litigation. Furthermore, although Appellants did not seek to amend until briefing on Family Dollar’s motion for summary judgment was almost complete, this was not outside the typical briefing schedule for motions to dismiss or summary judgment. In addition, Appellants do not allege an entirely new theory in the amended complaint, but rather elaborate on one of two allegations that were previously pled in a conclusory fashion. Even if Appellants had sought a completely new legal theory, it would not be barred by judicial estoppel, which applies to inconsistencies based on fact rather than law or legal theory. Appellants’ present factual position in the proposed amended complaint is consistent with the original complaint, and the legal theory remains the same. In any event, the Court has held that “the filing of a supplemental pleading is an appropriate mechanism for curing numerous possible defects in complaint.” And finally, because prejudice can result where a new legal theory is alleged if it would entail additional discovery and evidentiary burdens on the part of the opposing party, this usually occurs where an amendment is offered shortly before or during trial. The parties here were still in discovery, many steps removed from trial.

Full Opinion

– Sarah Bishop

Decided: October 16, 2013

The Fourth Circuit, finding that Officer Roehrig had a reasonable suspicion that Decarlos George (“George”) was armed and dangerous, held that the protective frisk did not violate George’s Fourth Amendment rights and therefore affirmed the district court’s decision denying George’s motion to suppress evidence of the handgun and the judgment of the court.

At 3:30 a.m., while patrolling one of Wilmington’s high crime areas, Officer Roehrig observed a dark-colored station wagon, containing four male occupants, closely and aggressively following another vehicle—within a car’s length—as if in chase. During which time, the two vehicles made illegal right-hand turns through a red light at approximately twenty to twenty-five miles per hour. Following the turn, Officer Roehrig pulled behind the two vehicles causing the station wagon to slow down and make a left-hand turn, breaking off the apparent chase. The station wagon subsequently made three additional left-hand turns in an apparent effort to determine whether Officer Roehrig was following the vehicle. When Officer Roehrig decided to stop the station wagon for its aggressive driving and red light violation, he called for backup, which was answered by Officer Poelling. Upon Officer Poelling’s arrival, Officer Roehrig approached the vehicle. George, who was seated behind the driver’s seat, was holding up his I.D. card with his left hand, while turning his head away from Officer Roehrig’s view. His right hand was on the seat next to his leg and was concealed from view by his thigh. Officer Roehrig instructed George to place both of his hands on the driver’s seat headrest, but George placed only his left hand on the headrest. According to Officer Roehrig’s testimony, he requested George move his hand four or five times more before he ultimately complied; still, he did not make eye contact. Officer Roehrig then proceeded to speak with the driver and ultimately, after consulting with Officer Poelling, decided to remove all four passengers from the car in order to interview them separately. Officer Roehrig then directed George to step out of the vehicle. As George was doing so, he dropped his wallet and cell phone onto the ground. As George attempted to bend over and retrieve his possessions, Officer Roehrig, fearing such action would create an increased risk that George would reach for a weapon, stopped him and performed a protective frisk, uncovering a handgun. Officer Roehrig then placed George under arrest and, upon checking his criminal history, discovered that he was a convicted felon and that the handgun was stolen. George was charged and pleaded guilty to possession of a firearm by a convicted felon, in violation of 18 U.S.C. § 922(g)(1).  Before pleading guilty, however, George filed a motion to suppress evidence of the handgun on the ground that it resulted from an unlawful frisk in violation of his Fourth Amendment right to be free from unreasonable searches and seizures. The district court denied George’s motion to suppress. Consequently, he entered a conditional guilty plea, reserving the right to appeal the denial of his suppression motion. This appeal followed.

On appeal, the Fourth Circuit held that, based upon the “totality of the circumstances,” Officer Roehrig’s protective frisk was supported by objective and particularized facts sufficient to give rise to a reasonable suspicion that George was armed and dangerous. In so holding, the court explained seven factors contributing to its finding of reasonable suspicion. The most important factor, according to the court, was George’s movements in the vehicle when Officer Roehrig initially approached.

Full Opinion

-W. Ryan Nichols

Decided: September 26, 2013

Holding that the Appellant Anthony Dash (“Dash”) was not entitled to damages under 17 U.S.C. § 504(b), the Fourth Circuit affirmed the district court’s grant of summary judgment in favor of Floyd Mayweather, Jr. (“Mayweather”), Mayweather Promotions, Mayweather Promotions LLC, Philthy Rich Records, Inc., and World Wrestling Entertainment, Inc. (“WWE”), (collectively “Appellees”).

In 2005, Dash composed an instrumental track, entitled “Tony Gunz Beat” (“TGB”); however, he failed to file a copyright application until sometime in 2009 and has never received revenue from TGB. In February 2008, Mayweather contracted with the WWE, agreeing to promote and perform at Wrestlemania XXIV. The contract did not address Mayweather’s entrance music. However, the WWE communicated to Mayweather at some point prior to the event that it had selected a song. Nonetheless, on the eve of the event, one of Mayweather’s associates communicated to the WWE that Mayweather would be entering to a different song, entitled “Yep.” Mayweather’s manager represented to the WWE that Mayweather owned all rights to the song and was granting the WWE rights to use it in connection with his appearance. On March 30, 2008, Mayweather appeared at Wrestlemania XXIV, entering the arena to “Yep,” which played for approximately three minutes. Over a year later, in August of 2009, Mayweather appeared on the WWE’s live weekly program, RAW. Again, “Yep” was played in connection with his appearance. Dash claims that “Yep” combines lyrics with his now-copyrighted instrumental, TGB. Therefore, the claimed infringement is alleged to have occurred after Dash composed TGB, but before his copyright registration became effective.

At the district court level, the proceedings were bifurcated with respect to liability and damages. The parties stipulated to the existence and amount of several revenue streams associated with Wrestlemania XXIV and the August 24, 2009, RAW broadcast. The parties further stipulated that Dash had adduced no evidence indicating that the playing of the song “Yep” at the two events increased any of the WWE revenue streams beyond that which would have existed had it not been played, and that Dash had adduced no evidence that the WWE received any additional revenue beyond that which would have existed had it not been played. The parties submitted partial summary judgment motions concerning Dash’s entitlement to actual and profit damages under 17 U.S.C. § 504. To prove his damages, Dash relied on a report prepared by a retained expert, Dr. Michael Einhorn. The report discussed the amount of both actual and profit damages Dash had sustained based on the alleged infringement (the  “Einhorn Report”). The Einhorn Report listed four benchmark-licensing fees paid to other artists for the use of their music at Wrestlemania XXIV. Based on those fees, the Einhorn Report concluded that Dash’s actual damages were “no more than $3,000.” After considering the Einhorn Report, the district court concluded that Dash was neither entitled to actual nor profit damages and determined that the case need not proceed to the liability phase. Subsequently, Dash moved for reconsideration. His motion was denied and this appeal followed.

On appeal, the Fourth Circuit first addressed Dash’s entitlement to actual damages. Because Dash admitted that he never commercially exploited TGB, the burden shifted to him to provide non-speculative evidence establishing a genuine dispute as to the existence of damages. As he did at the district court level, Dash relied on the Einhorn Report’s estimation of the licensing fee he might have been paid to support his actual damages claim. After reviewing the Einhorn Report in detail, the court found that the lost licensing fee estimation was too speculative, primarily because it did not establish a fair market value for TGB rather it merely established that, in the event TGB did have a market value, it was less than $3,000.

The court noted that it was taking the opportunity to aid plaintiffs and their experts going forward by noting the many deficiencies in the Einhorn Report that compelled its conclusion. Having concluded that Dash failed to establish his entitlement to actual damages, the court next addressed his claim for profit damages. Following a summary of Fourth Circuit jurisprudence on the issue, the court held that many of the revenue streams claimed by Dash had no conceivable connection to the infringement because they involved revenues that consumers and businesses paid to Appellees, or agreed to pay Appellees, prior to discovering that “Yep” would be played. With respect to the revenue streams for which a conceivable connection arguably did exist, the court held that Dash failed to provide non-speculative evidence of a causal link between the infringement and the claimed revenues. In so holding, the court relied on the parties’ stipulations that Dash adduced no evidence that the playing of “Yep” either increased any of the WWE revenue streams or that the WWE received any additional revenue as a result of playing “Yep.”

Full opinion

-W. Ryan Nichols

Decided: September 25, 2013

The Fourth Circuit held that a Virginia regulation preventing the printing of alcohol advertisements violated the First Amendment as applied to college student newspapers.

The Virginia Alcoholic Beverage Control Board (the “ABC”) prohibits college student newspapers from printing alcohol advertisements (the “Ban”). The college student newspapers at the University of Virginia and Virginia Tech (collectively “College Newspapers” or “Plaintiffs”) challenged the Ban as an unconstitutional restriction of commercial speech under the First Amendment. ABC defended the Ban on the grounds that it serves the state’s objective of combating underage and abusive college drinking. Both parties moved for summary judgment. At the hearing, the parties presented conflicting expert testimony as to the effect of advertising on demand for alcohol. The ABC’s expert economist argued that advertising for alcohol on a college campus met a very targeted audience, and thus, unlike alcohol advertising in other forms, has a substantial effect on demand. The College Newspapers countered with considerable evidence that advertising for alcohol has little to no effect on overall demand and established that a majority of their readers are of legal drinking age. Ultimately, the district court granted summary judgment for ABC, finding that the Ban did not violate the First Amendment. The College Newspapers appealed.

On appeal, the Fourth Circuit began by noting that restrictions on commercial speech are less suspect than restrictions on other forms of speech, and need only survive intermediate scrutiny. The College Newspapers argued that the court should examine the Ban under strict scrutiny based on the Supreme Court’s recent decision in Sorrell v. IMS Health Inc., where the court invalidated a Vermont law that regulated pharmacy advertising. The court declined to decide whether strict scrutiny applied, however because the court found that the Ban failed under intermediate scrutiny as defined in Central Hudson. Under Central Hudson, a regulation of commercial speech will be upheld if (1) the regulated speech concerns lawful activity and is not misleading; (2) the regulation is supported by a substantial government interest; (3) the regulation directly advances that interest; and (4) the regulation is not more extensive than necessary to serve the government’s interest.

The Fourth Circuit found that the Ban violated the Central Hudson test as applied to the Plaintiffs. The court held that there was no controversy as to the first, second, and third element. First, alcohol advertising is clearly a legal activity. Second, Virginia has a substantial government interest in combatting underage and abusive drinking on college campuses. Third, the Ban advances the stated government interest given that there is a general correlation between advertising of a product and demand for that product. Moreover, if the alcohol vendors did not believe that they could affect demand by advertising, they would not seek to advertise in the College Newspapers. However, the court held that the Ban failed under the fourth element because it was more extensive than necessary to serve the government interest. The Fourth Circuit held that the Ban prohibited large numbers of adults who are of legal drinking age from receiving truthful information about a product that they are legally allowed to consume. The court cited the Supreme Court’s statement that states may not “seek to remove a popular but disfavored product from the marketplace by prohibiting truthful, non-misleading advertisements.” Therefore, the court held that the district court erred in finding that the Ban was appropriately tailored to achieve its object of reducing abusive college drinking and reversed the district court, finding that the Ban violated the First Amendment as applied to the College Newspapers.

Full Opinion

– Wesley B. Lambert

Decided: September 18, 2013

 The Fourth Circuit affirmed in part and reversed in part the district court’s order granting summary judgment against six plaintiffs in their action against the Sheriff of the City of Hampton, Virginia for his alleged retaliation against them in violation of their First Amendment rights. The Fourth Circuit also remanded the case for trial with respect to some of the claims.

B. J. Roberts, the Sheriff for the City of Hampton, was up for re-election in November 2009 and had been challenged in his reelection bid by Jim Adams, who had worked in the Sheriff’s Office for 16 years and had attained the rank of the third most senior officer.  Notwithstanding laws and regulations prohibiting the use of state equipment or resources for political activities, Sheriff Roberts used his office and the employees he controlled to further his reelection efforts.  Sheriff Robert won reelection in November 2009 and subsequently reappointed 147 of his 159 full-time employees.  The six plaintiffs, all former employees of the Hampton Sheriff’s Office (“the Sheriff’s Office”), were not reappointed to their positions. The plaintiffs filed suit in federal court against Sheriff Roberts, in his individual and official capacity, alleging that he violated their First Amendment right to free association when he refused to reappoint them because they failed to support his reelection bid.  In addition, four of the plaintiffs alleged that the Sheriff violated their First Amendment right to free speech when he refused to reappoint them because of various speeches they made in support of his opponent’s campaign.  The plaintiffs sought compensation for lost back pay and reinstatement in their former positions. Sheriff Roberts moved for summary judgment and the district court granted it.

With respect to the free speech claims, the district court concluded that the plaintiffs all failed to allege that they engage in expressive speech.  Regarding the association claims, the district court concluded that the plaintiffs had failed to establish a causal relationship between their support of Adams’s campaign and their non-reappointment.  Finally, the district court held that, even assuming that the sheriff did violate the plaintiffs’ First Amendment rights, he was entitled to qualified immunity on the individual capacity claims and Eleventh Amendment immunity on the official capacity claims.

On appeal, the Fourth Circuit concluded that, with respect to the free association claims, some of plaintiffs at least created a genuine factual dispute regarding whether the sheriff violated their rights; however, three of the plaintiffs did not.  The Court made a distinction based on the positions of the plaintiffs finding that the claims made by the uniformed jailers, that held the title of Sheriff’s deputies, had to be subjected to a Jenkins’s analysis. This required looking at the duties of the deputies in question and determining if political loyalty was appropriate requirement for the effective performance of their public employment as deputies. Based on the formal job descriptions provided, the Court held that the plaintiffs in this case did not exercise the “significant discretion” that North Carolina deputies normally exercise. Therefore, the Sheriff, at this point in the proceedings, had not established that the jailers’ arrest duties were “sufficiently significant” that they would affect whether their political allegiance to the share was an appropriate requirement for their effective performance of their jobs. With regards to the causation analysis for the free association claims, the Court concluded that the three jailers had at least created genuine factual disputes as to whether their lack of political allegiance to the Sheriff was a substantial basis for the decision not to reappoint them. On the other hand, the three non-deputy administrative employees could not establish a causal relationship between their non-reappointment and their lack of political allegiance to the Sheriff and the Court affirmed summary judgment with respect to their claims.

The Court next turned to the merits of the free-speech claims. Again, the Court agreed that the uniform jailers at least created general factual disputes regarding whether the Sheriff violated their free speech rights, but the non-sworn administrative employee did not.  In its analysis the Fourth Circuit first addressed whether the conduct that the employees maintained led to their non-reappointment constituted speech at all.  The Court held that “liking” the Adams’s campaign page on Facebook or posting a comment on the page qualified as speech and was also a form of symbolic expression.  The Court reasoned that clicking the “like” button on a campaign page is similar to placing a political candidate’s yard sign in a front yard. The Court also held that statements made by an employee at the polling place also constituted speech. Next, the Court quickly addressed whether the employees were speaking as a private citizen on a matter of public concern and found that employees’ conduct satisfied this element. The Court concluded that the employees’ interest in expressing support for his candidate outweighed the Sheriff’s interest in providing effective services to the public. Finally, as was the case with the free association claims, the Court found that the uniform jailers created a factual dispute regarding whether their speech was the cause for their non-reappointment.

The Fourth Circuit then addressed the Sheriff’s immunity defenses. With respect to the Eleventh Amendment immunity, the Court agreed with the plaintiffs that this immunity does not bar claims advanced against the Sheriff in his official capacity, to the extent that the plaintiffs were seeking the remedy of reinstatement because that relief was prospective in nature.  Regarding the qualified immunity defense, the Court held that the Sheriff was entitled to qualified immunity concerning the uniformed jailers claims because, following his election, the sheriff could have believed he had the right to choose not to reappoint his sworn deputies for political reasons. The Court reasoned that the Fourth Circuit’s decision in Jenkins sent “very mixed signals.” As a result, the Court concluded that the Sheriff could have believed that he was authorized to terminate any of his deputies for political reasons. Therefore, the district court properly ruled that the Sheriff was entitled to qualified immunity with regards to the plaintiffs’ claims seeking money damages against the Sheriff in his individual capacity.

Full Opinion

– John G. Tamasitis

Decided: September 16, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s denial of Defendant’s motion to vacate his sentence under 28 U.S.C. § 2255. Defendant Calvin Dyess (“Dyess”) pled guilty to conspiracy to commit money laundering and to conspiracy distribute cocaine, cocaine base, and marijuana, and was sentenced to life imprisonment.

Dyess and several co-conspirators were indicted for their operation of a large-scale drug conspiracy in Charleston, West Virginia, from 1955 to 1998. Dyess entered a plea agreement whereby he agreed to plead guilty to the aforementioned crimes. At the plea hearing, the district court expressly told Dyess that he was facing a sentence of ten years to life imprisonment for the drug conspiracy. Then, a presentence report (PSR) was prepared, indicating the particular amounts of drugs that Dyess was responsible for in the conspiracy. For those particular amounts, Dyess faced life imprisonment. Dyess objected to the drug amounts at a contested sentence hearing. The district court heard from several witnesses about the scope of Dyess’ drug enterprise, upheld the PSR’s findings and sentenced Dyess to life. Dyess appealed, during which time his ex-wife admitted to a sexual relationship with Hart, one of the lead investigators in Dyess’ case and to committing perjury at the sentencing hearing. On remand, Dyess moved to be resentenced. The district court deferred ruling on the motion pending an evidentiary hearing, limited to the issue of whether Hart’s misconduct and his ex-wife’s perjury at the sentencing affected Dyess’ sentence. The district court found the tainted testimony did not affect Dyess’ sentence and declined to hold a resentencing. Dyess appealed, and this court granted Dyess a COA on six claims.

Dyess’ first contention was that the district court erred in failing to address all of his § 2255 claims. In Dyess’ first § 2255 motion, he listed approximately 30 claims for relief, 25 of which consisted of a single sentence.  In Dyess’ “amended” § 2255 petition, he raised 16 claims, several of which were repeated from his earlier filings. The district court considered only the claims in the amended petition and this court found that was not error. Many of the claims in the amended motion were also raised in the original filing and the rest consisted only of vague and conclusory allegations.

Dyess’ second claim was that his sentence violated Apprendi because the indictment did not allege a specific drug quantity and, therefore, limits his maximum sentence to 20 years. The court rejected this claim for two reasons. First, Dyess cannot circumvent a proper ruling on direct appeal by re-raising the same challenge in a § 2255 motion. Dyess raised his Apprendi argument on remand to the district court and the district court rejected it. Second, this claim would still fail on the facts of this case. Dyess waited until the remand from this court to raise the issue, well after judgment issued. Therefore, the claim would be reviewed for plain error. On plain error, Apprendi errors will not be recognized when the evidence as to drug quantity is essentially uncontroverted, as in this case.

Dyess’ third claim was that trial counsel failed to investigate and discover Hart’s affair with Dyess’ wife prior to Dyess’ guilty plea. For ineffective assistance claims, the Defendant must show (1) that the attorney’s performance fell below an objective standard of reasonableness and (2) that he experienced prejudice as a result. The court found Dyess did not show (1) just because his attorney hired an investigator who failed to discover evidence of the affair. Under Strickland, counsel should conduct a reasonable investigation into potential defenses, but is not required to uncover every scrap of evidence that could conceivably help their client. In addition, Dyess could not establish prejudice under (2), where the Government had overwhelming evidence of Dyess’ guilt. Dyess’ arrest and prosecution were the result of a long investigation complete with wiretaps, drug buys, and co-conspirator testimony. Further, while Dyess subjectively claimed he would have gone to trial had he known about the affair, objectively a reasonable defendant would have pled guilty and offered substantial assistance.

Dyess’ fourth claim was that trial counsel should have recognized that drug weights were an element of the offense under § 841(b) that must be charged in the indictment. In Jones v. United States, the Supreme Court held that certain sentencing enhancements were actually elements of the charged offense. Jones was decided after Dyess’ superseding indictment but prior to his guilty plea and sentencing. The Fourth Circuit did not extend Jones and Apprendi to § 841 (b) until 2001, more than two years after Dyess’ sentencing. According, Dyess’ counsel was not deficient by failing to anticipate Apprendi. In any event, Dyess could not show that trial counsel’s performance prejudiced him, because of the overwhelming evidence in support of the drug weights.

Dyess’ fifth claim was that remand counsel failed to call all of the necessary witnesses at the evidentiary hearing involving Hart’s misconduct. However, counsel called all of the witnesses whose testimony was possibly tainted by Hart’s misconduct. Because the evidentiary hearing was limited to this one issue, it did not need all of the voluminous testimony from Dyess’ first sentencing hearing. In any event, the Fourth Circuit held that courts provide counsel wide latitude in determining which witnesses to call as a part of their trial strategy.

Dyess’ sixth claim was that remand counsel failed to “effectively challenge” his guilty plea on remand. Dyess moved to withdraw his guilty plea on remand, arguing that it was not knowing and voluntary. The court affirmed the district court’s denial of this motion, rejecting Dyess’ claim that his plea was unknowing because he faced a life sentence and because trial counsel failed to uncover the Hart/Rader relationship. Dyess also argued that his plea should have been attacked under Apprendi, but did not raise this claim to the district court. However, even though Dyess’ counsel did not raise Apprendi as a ground for withdrawing his guilty plea, Dyess did raise that argument when he was acting pro se and the court rejected it. Therefore, Dyess could not show prejudice.

Full Opinion

– Sarah Bishop

Decided:  October 1, 2013

The Fourth Circuit held that the government presented sufficient evidence to convict Thomas Royal (“Royal”) of possession of ammunition by a prohibited person, in violation of the federal Gun Control Act (“the GCA”), 18 U.S.C. § 922(g)(1); that the United States District Court of the District of Maryland properly instructed the jury on the meaning of the phrase “knowingly possessed ammunition”; and that the district court erroneously applied the modified categorical approach when determining whether Royal’s second-degree assault conviction qualified as a violent felony under the Armed Career Criminal Act (“the ACAA”), 18 U.S.C. § 924(e).  The Fourth Circuit therefore affirmed the decision of the district court in part, vacated the decision in part, and remanded the case for resentencing.

On January 8, 2009, a police officer and a detective recovered an antique Iver Johnson revolver (“the antique revolver”) from Royal’s car.  The antique revolver was loaded with five .32 caliber bullets.  The government charged Royal with possession of ammunition by a prohibited person, as Royal had previously been convicted of a crime punishable by more than a year in jail, and the GCA therefore prohibited him from knowingly possessing “any firearm or ammunition” that has passed through interstate commerce.  Under the GCA, the term “firearm” does not include antique firearms manufactured before 1898; “ammunition” denotes “ammunition . . . designed for use in any firearm.”  18 U.S.C. § 921(a)(3), (a)(16)(A), (a)(17)(A).

At trial, the evidence demonstrated that the rounds were .32 caliber bullets manufactured by the companies Remington and Winchester.  The government did not present specific evidence on the rounds’ design; additionally, though Royal cross-examined an expert witness on the manufacture dates of the rounds, he did not otherwise raise the issue of design.  Royal subsequently moved for a judgment of acquittal under Federal Rule of Criminal Procedure 29, arguing that the government did not provide sufficient evidence to support a guilty verdict.  The district court denied the motion.  After closing arguments, the district court instructed the jury on the mens rea component of the alleged violation, explaining, “whether the defendant acted knowingly . . . means [whether] he knew that the ammunition was ammunition as we commonly use the word.”  The jury found Royal guilty of violating 18 U.S.C. § 922(g)(1).  During the sentencing phase, the government asserted that Royal was subject to a mandatory minimum sentence of fifteen years, as he had three prior convictions “for a violent felony or serious drug offense,” 18 U.S.C. § 924(e)(1).  Royal argued that his conviction for second-degree assault under Maryland’s assault statute did not constitute a “violent felony” under the categorical approach.  However, the district court applied the modified categorical approach, finding that Royal’s second-degree assault conviction was a violent felony.  The district court sentenced Royal to fifteen years and eight months in prison.

On appeal, Royal argued that the government did not meet its burden of proving that the bullets were designed for use in any non-antique firearm; that the district court plainly erred by failing to instruct the jury that, to have the requisite mens rea, Royal had to have known that the bullets were designed for use in a non-antique firearm; and that the district court erroneously applied the modified categorical approach during the sentencing phase.

The Fourth Circuit concluded that the antique firearm exception to the GSA—in this case, the firearm exception as applied to the definition of ammunition in 18 U.S.C. § 921(a)(17)(A)—is an affirmative defense that the defendant must raise and support by evidence.  The Fourth Circuit found that Royal did not satisfy his burden of raising this defense.  With regard to the jury instructions, the Fourth Circuit found that the district court “adequately informed the jury that, to sustain a conviction, Royal needed to have knowledge of those facts that brought the rounds in this case within that legal definition.”  Lastly, the Fourth Circuit noted that in Descamps v. United States, 133 S. Ct. 2276, the Supreme Court held that, when assessing a defendant’s prior convictions for purposes of sentencing under the ACCA, courts cannot apply the modified categorical approach to indivisible criminal statutes.  The Fourth Circuit found that the applicable Maryland assault statute was indivisible, as it did not contain alternative elements that could be used to prove an offense.

Full Opinion

– Stephen Sutherland

Decided: September 4, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s grant of summary judgment to the defendant, Chesapeake Appalachia, L.L.C. (Chesapeake), upon the Whitemans’ claim for common law trespass. The court held that Chesapeake’s creation of drill waste pits was reasonably necessary for recovery of natural gas and did not impose a substantial burden on the Whitemans’ surface property.

The Whitemans own the surface rights to approximately 101 acres in Wetzel County, West Virginia. Chesapeake owns lease rights to minerals beneath the Whitemans’ surface property. The Whitemans use their land primarily for raising sheep and to produce hay. Chesapeake operates three natural gas wells on approximately ten acres of the Whitemans’ property. Chesapeake’s well operations and permanent drill waste disposal have rendered that portion of the Whitemans’ property unusable for any suitable purpose. However, Chesapeake did obtain valid permits and gave the Whitemans notice. Chesapeake then used the common disposal method employed in West Virginia to drill the wells. The Whitemans admitted at trial that their monetary damages were “trivial.” The only expert testimony offered in the case opined that Chesapeake’s drilling operations caused no diminution in value. Rather, the only harm alleged by the Whitemans was their fear of possible future liability that might stem from the waste pits. The issue on appeal was whether Chesapeake’s permanent disposal of drill waste upon the Whitemans’ surface property was “reasonably necessary” for the extraction of minerals.

The Fourth Circuit began its analysis by describing the applicable law at issue. began its analysis common law trespass is “an entry on another man’s ground without lawful authority, and doing some damage, however inconsiderable, to his real property.” A common source of “lawful authority” is a license. However, a mineral estate owner has authority to enter upon the surface estate, even without express license or otherwise. In West Virginia, a mineral estate owner that enters upon a surface estate owner’s land does so without lawful authority only if, under the “reasonable necessity” standard, the mineral estate owner “exceeds its rights…thereby invading the rights” of the surface estate owner. In other words, a grand of minerals underlying a tract of land carries with it a right to use so much of the surface as is fairly necessary to recover the mineral and preserve the mineral holder’s “reasonably profitable enjoyment” of the mineral.  What is necessary depends on the facts of each case.

The Fourth Circuit held that the drill waste pits did not impose a substantial burden on the Whitemans’ surface property. Chesapeake’s experts opined that the drill waste pits had no effect on the Whitemans’ property value, which they failed to rebut.  The court reasoned that their subjective fear of potential future liability was not sufficient. Plus, the Whitemans conceded their pecuniary loss was minimal. In addition, the drill waste pits were reasonably necessary for recovery of natural gas. The Fourth Circuit asserted that the fact that Chesapeake used the common method of waste disposal, rather than the newest alternative method, did not render its method unnecessary.

Full Opinion

– Sarah Bishop

Decided: August 27, 2013

The Fourth Circuit found that, although the claims asserted involve a sensitive area of North Carolina public policy, resolving them would not be sufficiently disruptive of that policy to warrant abstention and therefore reversed the district court’s decision to abstain and remanded for further proceedings.

This case arose out of a dispute between the Town of Nags Head (the “Town”), a coastal municipality bordered by the Atlantic Ocean, and Nags Head beachfront property owners, Matthew and Lynn Toloczko (the “Toloczko’s”). The Town’s beaches enjoy legal protection under the “public trust doctrine,” which entitles the state of North Carolina to appropriate title to tidal lands in trust for the public. Although the vagaries of beach topography make it difficult to delineate a fixed boundary, the Town and North Carolina both define the relevant areas as “seaward of the mean high water mark.” Historically, prevailing environmental conditions have pushed the high tide line westward resulting in the gradual migration of private beachfront property into public trust lands. Consequently, beachfront owners, like the Toloczko’s, have periodically replaced displaced sand and raised the height of their cottages to endure tidal surges. However, when a tropical storm inflicted serious damage on the Toloczko’s cottage in November 2009, the Town condemned the structure and found it was beyond rehabilitation because it was located within public trust lands and therefore a nuisance under the Town’s Nuisance Ordinance. The Town refused to allow the Toloczko’s to abate any nuisance by acquiring a permit to make repairs and began assessing daily fines to compel the Toloczko’s to demolish the structure. After the Toloczko’s refused to demolish their cottage, the Town sued them in North Carolina state court, seeking to collect the assessed fines and demolish the cottage. Based on diversity, the Toloczko’s removed the case to federal court and filed twenty-one counterclaims alleging violations of state and federal law. The district court, however, finding that the dispute involved “profound, unresolved state-law issues that transcend the case at hand,” invoked the Burford doctrine of abstention and declined to exercise federal jurisdiction. This appeal followed.

On appeal, the Fourth Circuit first considered whether the district court correctly abstained from resolving the claims for declaratory relief asserted by the Toloczko’s, the substance of which concerned the Town’s authority to ratify and enforce an ordinance regulating structures on public trust lands. After examining intermediate developments in North Carolina precedent, the court found that, because North Carolina law already bars the Town from enforcing its Nuisance Ordinance under the facts presented, continued abstention was not appropriate. Next, the court held that the district court improperly abstained from deciding the Toloczko’s claim under 42 U.S.C. § 1983 alleging due process and equal protection violations. Lastly, the court reviewed the district court’s dismissal of the Toloczko’s regulatory takings claim and its decision to stay the inverse condemnation claim because the Toloczko’s failed to obtain an inverse adjudication—the relevant state law remedy—in state court before removal to federal court in violation of the Williamson County ripeness doctrine. Recognizing that Williamson County is a prudential rather than a jurisdiction rule, the court exercised its discretion to suspend the state-litigation requirement in the interests of fairness and judicial economy and therefore remanded the federal and state law takings claim to the district court.

Full Opinion

– W. Ryan Nichols

Date Decided: August 26, 2013

The Fourth Circuit affirmed the district court’s conclusion that the police’s search of the defendant’s trashcan did not violate the defendant’s Fourth Amendment rights.

Around 4:00 a.m. on May 26, 2011, Richmond police officers pulled two garbage bags from a trash can located behind the apartment of Sierra Cox under the suspicion that Defendant Dana Jackson was selling drugs from the apartment. Jackson was Cox’s boyfriend and regularly stayed at the apartment. The layout of the apartment and surrounding areas was particularly important to the district court’s ruling. The court explained that the apartment was a row-type housing unit. Beyond the back door, each unit had a ten by twenty-foot patio that connected to a common sidewalk running the length of the building. Between the patio and a sidewalk ran a narrow strip of grass. Finally, beyond the patio and sidewalk, there was a courtyard that served as a common area.  The officers testified that the trashcan was partially on the patio and partially on the strip of grass beyond the patio. They further explained that they recovered two trash bags by stepping onto the grass and pulling the bags out of the trashcan. The officers claimed that they did not have to step onto the patio to recover the trash.

After recovering items in the trash bags consistent with drug trafficking, the police obtained a warrant and searched the home. In the home, the police found ample evidence of drug trafficking including firearms, scales, a large amount of cash, and other drug paraphernalia. At trial, Jackson moved to suppress the evidence obtained in the trash pull. Jackson argued that the search was unconstitutional under the Fourth Amendment’s prohibition on unlawful search and seizure on two grounds: first, because the police physically intruded on a constitutionally protected area, and second, because he had a reasonable expectation of privacy to the contents of the trash can. The district court dismissed both arguments and sentenced Jackson to 137 months imprisonment. Jackson appealed the district court’s ruling.

On appeal, Jackson first argued that the district court’s factual finding regarding the location of the trashcan was clearly erroneous. Cox testified that she often kept the trashcan chained and locked on her patio. She claimed that she unlocked the trashcan only to move it to the curb. Nevertheless, she could not say definitively where the trashcan was located on the day in question. In contrast, the officers testified with great precision about the location of the trashcan. The Fourth Circuit held that the discrepancy of the testimony, the differences in specificity, and the district court’s unique ability to evaluate the credibility of witnesses rendered the district court’s decision not clearly erroneous.

Jackson next argued that the officers’ actions involved an unlicensed physical intrusion of a constitutionally protected area so as to constitute an illegal search or seizure under the Fourth Amendment. Jackson contended that that the trash can was located within the “curtilage” of the home, that is, the “area immediately surrounding and associated with the home…[treated] as part of the home itself for Fourth Amendment purposes.” The Fourth Circuit, after conducting a de novo review, disagreed. The court acknowledged that if the trash can fell within the home’s curtilage, the officers were required to obtain permission to gather information under the Fourth Amendment. The parties stipulated that the curtilage of Cox’s apartment included the concrete patio behind her home. Beyond the patio, the parties disagreed as to whether the curtilage extended to the grass strip and the sidewalk behind the apartment. The Fourth Circuit held that the apartment’s curtilage did not extend beyond the patio.  The grass strip where the officers conducted the trash pull was at least twenty feet from the apartment’s back door. Furthermore, the trashcan was not included in an enclosure or shielded from public view. Most importantly, everything beyond the strip of grass was a “common area” used by all residents. Thus, the court held that because the officers “did not physically intrude upon a constitutionally protected area” Jackson was not entitled to relief under this “property-based approach” to the Fourth Amendment.

Finally, Jackson argued that the officers’ actions violated his Fourth Amendment by infringing on Jackson’s reasonable expectation of privacy in the trashcan’s contents. The Fourth Circuit found the situation fell under the Supreme Court’s Greenwood decision and disagreed. In Greenwood, the Supreme Court held that defendants’ Fourth Amendment rights were not violated where the police obtained the defendants garbage from the trash collector when he picked up the defendants’ garbage from the curb. The court concluded that the defendants had “exposed their garbage to the public sufficiently to defeat their claim to Fourth Amendment protection.” The court acknowledged that the present case differed slightly because the garbage at issue in this case was located behind the house rather than in front of the house for pickup, but nevertheless concluded that there was no reasonable expectation of privacy. The garbage can was easily accessible to all passing through the common area. Moreover, Cox testified that the trashcan contained contents that she “want[ed] to get rid of” and stuff that she “didn’t want anymore.” Therefore, the Fourth Circuit concluded that the Richmond Police’s trash pull did not offend Jackson’s Fourth Amendment rights and affirmed the district court’s decision to deny Jackson’s motion to suppress and the subsequent conviction.

Full Opinion

– Wesley B. Lambert

Decided:  August 26, 2013

The Fourth Circuit held that the Mid-Atlantic Retail Food Industry Joint Labor Management Fund (the “Fund”) was not a “labor organization” subject to the Labor Management Relations Act (“LMRA”), and that a genuine issue of material fact existed as to whether the United Food and Commercial Works Union Local 27 and 400 (“UFCW”) violated the secondary boycott provision of the National Labor Relations Act (“NLRA”).  The Fourth Circuit therefore affirmed the decision of the United States District Court for the District of Maryland in part, vacated the decision in part, and remanded the case to the district court.

Waugh Chapel South, LLC and Waugh Chapel South Properties Business Trust (collectively “WCS”) were the commercial real estate developers of the Village at Waugh Chapel South, a shopping center in Anne Arundel County, Maryland.  WCS planned to lease a storefront unit to Wegmans Food Markets, Inc. (“Wegmans”).  The UFCW and the Fund opposed the project, as Wegmans does not employ organized labor.  A union executive allegedly threated to “fight every project you [WCS] develop where Wegmans is a tenant” if Wegmans did not unionize.  The unions subsequently brought fourteen legal challenges to the development project, thirteen of which involved surrogate plaintiffs.  Ten of the petitions were subsequently withdrawn, two were dismissed, and two were mooted by subsequent developments.

WCS sued the unions under the LMRA, 29 U.S.C. § 187, alleging secondary boycott activity under § 158(b)(4)(ii)(B).  The district court granted the Fund’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), concluding that the Fund was not a “labor organization” subject to the LMRA.  The district court also did not find any of the unions’ legal challenges to be objectively baseless.  The district court therefore dismissed WCS’s secondary boycott allegation under the Noerr-Pennington doctrine.  WCS appealed.

The Fourth Circuit noted that, to fall under the NLRA’s definition of a “labor organization,” 29 U.S.C. § 152(5), an employee entity must meet the “dealing with” employers requirement.  The Fourth Circuit found that neither the purpose nor the activity of the Fund involved “dealing with” employers:  The Fund’s charter prohibits it from participation in union activities, and the Fund’s only interaction with an employer concerned the actual secondary boycott allegations.  Furthermore, though the Fund defined itself as a labor organization for purposes of tax liability, the Fourth Circuit concluded that Internal Revenue Code definitions could not be imported to the NLRA. Addressing the unions’ motion to dismiss the secondary boycott allegation as a motion for summary judgment, the Fourth Circuit first reconciled the different standards for the sham litigation exception to the Noerr-Pennington doctrine found in California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, and Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc. (“PREI”), 508 U.S. 49.  The Fourth Circuit concluded that the strict two-step test from PREI applies to a single instance of alleged sham litigation, whereas the California Motor test applies to a series of legal proceedings.  Applying the California Motor test, the Fourth Circuit noted, “the vast majority of the [unions’] legal challenges failed demonstrably.”  The Fourth Circuit also noted other indications of bad-faith litigation, including the withdrawal of ten of the suits under suspicious circumstances.

Full Opinion

– Stephen Sutherland

Decided: August 26, 2013

The Fourth Circuit held that, because the elements of sexual abuse under the Maryland Code do not correspond to the elements of any enumerated “crime of violence” under U.S.S.G. § 2L1.2(b)(1)(A)(ii), the district court erred in applying a 16-level sentencing enhancement to Cabrera-Umanzor’s (“Defendant”) sentence. The court therefore reversed and remanded for resentencing.

Defendant pleaded guilty to unlawful re-entry of a removed alien after an aggravated felony conviction. The base offense level for such conviction is 8, however, Section 2L1.2(b) provides for various offense-level enhancements depending on the specific characteristics of the Defendant’s offense. At issue in this case, was the 16-level enhancement that applies in cases where a Defendant was deported after a conviction for a “crime of violence,” as defined in Section 2L1.2 The district court held that the modified categorical approach applied because some, but not all, of the conduct proscribed by Section 35c would constitute a crime of violence. Then, without considering the elements of Section 35c, it concluded that having intercourse with an 11-year-old when Defendant was 19 was a forcible sex offense and thus a crime of violence. The district court therefore applied the 16-level enhancement and, consequently, the Defendant was sentenced to 41 months imprisonment.

Citing recent Supreme Court precedent, the Fourth Circuit noted that the central feature of both the categorical approach and the modified categorical approach is a focus on the elements, rather than the facts, of a crime. Then, after determining that the modified categorical approach was inapplicable because Section 35c is not divisible along crime of violence lines, the court held that, under the categorical approach, sexual abuse under Section 35c is not a “crime of violence” for purposes of the sentencing enhancement. In so holding, the court noted that sexual abuse under Section 35c does not require the use or threatened use of physical force, and the offense may be committed without committing any of the enumerated crimes of violence. Therefore, the elements of sexual abuse under Section 35c do not correspond to the elements of any of the “crimes of violence.” Consequently, the Fourth Circuit reversed and remanded for resentencing.

Full Opinion

– W. Ryan Nichols

Decided: August 23, 2013

The Fourth Circuit affirmed the sentence and conviction of Gregory Bartko in connection with his role in a fraudulent investment scheme. The court found that district court did not err in failing to award Bartko a new trial. Additionally the court held that the district court’s jury instructions were not an abuse of discretion and that the district court properly imposed sentencing enhancements.

Defendant Gregory Bartko was a securities attorney, investment banker, and a registered broker/dealer. Bartko led and organized a fraudulent financial scheme that involved securing money from investors to provide funding for private equity funds. Bartko and his accomplices led investors to believe that the money would be used for investments and loans while the money was actually used to pay salaries and expenses. Ultimately, Bartko personally received $2,684,928.86 from forty different investors. After a thirteen-day trial, the jury convicted him on all counts. Bartko made four motions for a new trial, which were all denied. He also objected to jury instructions, consideration of a sealed document, and several of the Sentencing Guideline enhancements. The district court overruled Bartko’s objections and sentenced him to 272 months imprisonment. Bartko appealed.

On appeal, Bartko first contends that the district court erred by not granting him a new trial, citing four separate grounds on which the trial court erred. The Fourth Circuit disagreed. The court dismissed the first ground for new trial, finding that Bartko had waived the argument by failing to include it in his brief. Second, Bartko argued that he was entitled to a new trial based on a government witness’s false testimony that he had not received any promises or inducements for his testimony and the government’s failure to correct such testimony. The court agreed that the witness should have disclosed certain promises that the government made regarding how the prosecution would use the witness’s testimony. However, the court denied the motion for a new trial on this ground, finding that it would have had little to no impact on the final judgment. The court cited the district court’s statement that it had “never seen a witness more thoroughly impeached.” Bartko’s final two arguments stemmed from the government’s failure to disclose agreements with witnesses. The court again agreed that the government should have produced this information, but held that Bartko was not prejudiced by the nondisclosure, citing the district court’s conclusion that the defense’s impeachment of the witness was “devastatingly thorough and thoroughly devastating” and that the additional information was merely cumulative. Nevertheless, the court issued a stern warning to the attorney general’s office in the Eastern District of North Carolina based on its failure to provide information. Second, Bartko argued that the court improperly considered a sealed document. After an in camera review, the Fourth Circuit held that the document was harmless to Bartko, providing no basis for a new trial. Third, Bartko appealed based on the district court’s jury instruction regarding accomplice/informant testimony and multiple conspiracies. Bartko’s requested instruction for accomplice/informant testimony included a provision that charged the jury to view testimony of the accomplice/informants with “great care and scrutiny.” On appeal, the Fourth Circuit held that the district court’s instruction was not an abuse of discretion, finding that the jury instruction given “substantially covered” the requested instruction. Bartko also argued that the district court did not have sufficient evidence to warrant a multiple conspiracy instruction. The Fourth Circuit disagreed, finding that there were sufficient similarities between the defendant’s investment schemes to justify the district court’s instruction, including similar methods of investor recruitment, the same actors, the same goals, and the same methods of handling money.

Finally, Bartko contended that the district court improperly imposed Sentencing Guideline enhancements based on the amount loss, the number of victims, and his status as a registered broker/dealer at the time of the offense. First, Bartko argued that the amount of loss enhancement was improper because the court failed to offset the amount of loss by the amount he returned to the victims. The court dismissed this argument on the grounds that he did not return the money until the government detected the crime. Second, Bartko argued that the district court improperly concluded that there were more than fifty victims of his crime. The court disagreed, finding that there were 171 investors in the fraudulent scheme, and while they could not all be pinned to Bartko’s actions, their money was sufficiently comingled to assign a pro-rata loss to each investor. Finally, Bartko challenged the broker/dealer enhancement on the grounds that his status as a broker/dealer was not used to commit the crime. The court acknowledged that his broker/dealer status was not used in the crime, but dismissed his argument. The court found that the Sentencing Guidelines required the enhancement where a broker or dealer’s criminal offense involves a securities law violation, regardless of whether a connection existed between the broker/dealer designation and the securities violation. Therefore, the Fourth Circuit affirmed the conviction and sentence.

Full Opinion

– Wesley B. Lambert

Decided: August 21, 2013

The Fourth Circuit Court of Appeals reversed the dismissal of defendant’s 28 U.S.C. § 2255 motion to vacate his conviction for violating 18 U.S.C. § 922(g)(1) – possession of a firearm by a convicted felon.

In 2008, Gordon Lee Miller (“Miller”) was convicted for a single count of possession of a firearm by a convicted felon, violating 18 U.S.C. § 922(g)(1). He was charged with possessing a firearm after having been previously convicted of one or more crimes punishable by imprisonment for a term exceeding one year. His previous convictions included felony possession of cocaine and threatening a court officer, both of which had sentences of six to eight months in prison. At the time of trial, under then valid precedent, Miller’s convictions were considered to be “punishable by imprisonment for a term exceeding one year.” In 2012, Miller filed a motion to vacate his conviction, arguing that in light of new precedent, his previous convictions did not constitute crimes “punishable by imprisonment for a term exceeding one year” and, therefore, he did not have any qualifying predicate convictions for the firearm offense.

The Fourth Circuit first explained the line of precedent on which Miller relied. In 2010, the Supreme Court in Carachuri held that an “aggravated felony” must be determined by looking at the defendant’s actual conviction and not the offense for which he could have possibly been convicted based on his conduct. Prior to Carachuri, the Fourth Circuit Court of Appeals considered the maximum aggravated sentence that could be imposed for that crime upon a defendant with the worst possible criminal history. After Carachuri, the Fourth Circuit Court of Appeals reconsidered its decision in Simmons. The court vacated Simmon’s sentence in light of Carachuri. It held that a prior conviction under North Carolina law is punishable by more than one year of imprisonment only if the defendant’s conviction, based on his individual characteristics and criminal history, allowed for such a sentence. Thus, Simmons announced a new rule affecting 18 U.S.C. § 922(g)(1). Prior to Simmons, the individual defendant’s actual criminal record did not matter; the conviction was based on a hypothetical defendant. After Simmons, the defendant’s actual criminal record became the only basis for a firearms possession conviction.  However, in this case, the court declined to vacate the defendant’s conviction. The court found that Carachuri announced a procedural rule that was not retroactive on collateral view. Therefore, the issue in the case was whether Simmons announced a new rule that applied retroactively and thereby entitled Miller to relief.

In Simmons, the Fourth Circuit applied Carachuri to create a new substantive rule. This did not mean that Carachuri itself announced a new rule of substantive criminal law. However, the court applied Carachuri in such a way as to announce a new substantive rule that is retroactively applicable. In Powell, the Fourth Circuit court determined that Carachuri announced a procedural rule that was not retroactively applicable on collateral review. However, the retroactivity of Simmons was irrelevant to Powell because Powell’s § 2255 petition could be sustained only by a retroactive Supreme Court decision. The court had to determine whether Carachuri was retroactive to decide if the motion filed by Powell was timely. In that context, Carachuri looks only at whether a certain procedure was followed in obtaining a prior conviction. Therefore, Powell does not necessarily mean that Simmons did not announce a substantive rule.  In sum, even though Powell determined that Carachuri is a procedural rule that is not retroactive, this does not mean that Simmons, in applying Carachuri, did not announce a substantive rule that is retroactive. Because Simmons did announce a new substantive rule that applies retroactively, the court vacated Miller’s conviction.

Full Opinion

– Sarah Bishop

Decided:  August 14, 2013

The Fourth Circuit held that Correctional Officer William Crum (“Crum”) was entitled to qualified immunity regarding inmate Demetrius Hill’s Bivens action.  The Fourth Circuit therefore reversed the order of the United States District Court for the Western District of Virginia, and remanded the case to the district court with instructions to enter judgment in favor of Crum.

On November 1, 2007, Crum allegedly assaulted Demetrius Hill (“Hill”) after Hill’s cellmate broke a fire sprinkler.  According to Hill, Crum punched him in the abdomen and ribs, elbowed him in the side of his head, and shouted “break another sprinkler, I’ll break your neck.”  Crum moved Hill to a holding cell after the assault, knocking Hill’s head against a gate in the process.  Hill alleged that the assault resulted in a bruised rib, temporary dizziness, and a vicious headache.  Video footage of Hill in his new cell did not indicate visible distress, though Hill alleged he had a swollen eye.  Nurse Theresa Meade (“Meade”) examined Hill while he was in the holding cell, and found that he did not have any injuries.  In April 2008, Hill brought a Bivens action in the district court against eleven prison officials.  Though Hill did not list Crum as a defendant in the complaint, he subsequently amended his pleading, including a separate excessive force claim against Crum based on the alleged assault.  Relying on Norman v. Taylor, 25 F.3d 1259, the district court dismissed Hill’s excessive force claim against Crum, and Hill appealed.  While Hill’s appeal was pending the Supreme Court decided Wilkins v. Gaddy, 559 U.S. 34, which abrogated Norman.  The Fourth Circuit therefore vacated the district court’s dismissal and remanded the case.  The case went to trial on remand.  At trial, Crum twice moved for judgment as a matter of law under Federal Rule of Civil Procedure 50(b) on the basis of qualified immunity.  The district court denied Crum’s motions, and the jury issued a verdict in favor of Hill.  After the trial, Crum moved for a new trial and for judgment as a matter of law; the district court granted Crum’s new trial motion but denied his Rule 50(b) motion.  Crum appealed the denial of his motion for judgment as a matter of law.

On appeal, the Fourth Circuit noted that the Wilkins Court rejected the Fourth Circuit’s approach in Norman, under which a plaintiff cannot prevail on an excessive force claim if, absent extraordinary circumstances, the plaintiff’s injury was no more than de minimis.  However, the Supreme Court decided Wilkins in 2010—several years after Crum’s alleged assault.  Thus, the Fourth Circuit found that Crum did not violate the court’s clearly established law in existence on November 1, 2007, as he inflicted no more than de minimis injuries on Hill.  Furthermore, the assault did not involve “extraordinary circumstances”:  It involved mere brute force rather than torture, humiliation, or degradation, and Hill’s injuries were not painful enough to constitute “more than de minimis injury.”

Full Opinion

– Stephen Sutherland

Decided: August 13, 2013

The Fourth Circuit held that a conviction under Virginia law for assault and battery of a police officer did not categorically qualify as a crime of violence that could serve as a predicate offense for a career offender enhancement. Nevertheless, with no prior controlling decision and an unsettled state of the law in other states, the court also held that it was not plain error for the district court to determine that a criminal defendant’s prior conviction for assault and battery of a police officer was a “crime of violence” constituting a predicate offense for the career offender enhancement.

Defendant, Jolon Devon Carthorne (“Carthorne”) pled guilty to possession with intent to distribute cocaine and possession of a firearm in furtherance of a drug trafficking crime as part of a plea agreement. As a part of the plea agreement, the government agreed to recommend a reduction in Carthorne’s sentence based on acceptance of responsibility. A probation officer filed Carthorne’s final presentence report (the “PSR”) recommending that Carthorne be sentenced as a “career offender” based on two prior convictions: (1) a felony conviction for distribution of cocaine; and (2) a felony conviction under Virginia law for assault and battery of a police officer (the “Virginia conviction”). The probation officer labeled the Virginia conviction as a “crime of violence,” subjecting Carthorne to a sentencing enhancement. Carthorne did not dispute the facts surrounding the Virginia conviction where Carthorne apparently spit in the face of a police officer without provocation. The district court adopted the PSR and sentenced Carthorne to 300 months imprisonment. Based on sentencing guidelines, without the “career offender” enhancement, Carthorne would have received between 181 and 211 months’ imprisonment for the conviction. At trial, however, Carthorne failed to object to the PSR’s conclusion that he should be classified as a career offender. In fact, when pressed, Carthorne’s counsel conceded that any argument that the Virginia conviction was not a crime of violence was “without merit.” Carthorne appealed the district court’s determination that the Virginia conviction was a crime of violence” under the federal sentencing guidelines.

On appeal, the Fourth Circuit reviewed the district court’s classification of the Virginia conviction for plain error because Carthorne failed to object to the ruling at the trial level. To establish plain error, the defendant must prove: (1) that an error was made; (2) that the error was plain; and (3) that the error affected his substantial rights. The court agreed with the defendant that the Virginia conviction did not categorically qualify as a “crime of violence.” The court found that the elements of the Virginia conviction did not involve the requisite “conduct that presents a serious potential risk of physical injury to another” to qualify as a crime of violence because assault and battery can occur under Virginia law without a resulting injury. In fact, under Virginia law, “the slightest touching of another…if done in a rude, insolent, or angry manner, constitutes a battery for which the law affords redress.” Therefore, because the elements of the Virginia conviction did not include “the use, attempted use, or threatened use of physical force against another,” it does not categorically qualify as a crime of violence. The court dismissed the government’s argument that the assault and battery conviction was aggravated by the fact that it was perpetrated on a police officer, parting with several other circuits.

Despite finding error, the court found that the error was not “plain.” Neither the Supreme Court nor the Fourth Circuit had previously determined whether the Virginia conviction was a crime of violence. Furthermore, other circuits have split on the issue. Since a district court does not commit plain error by following the reasoning of another circuit, the court determined that the error was not plain and affirmed the district court.

Full Opinion

– Wesley B. Lambert

Decided: August 7, 2013

Addressing Roxana Orellana Santos’s (“Santos”) appeal from the District Court for the District of Maryland’s dismissal of her 42 U.S.C. § 1983 action against the Frederick County Board of Commissioners, the Frederick County Sheriff, and two deputy sheriffs (“Defendants”), the Fourth Circuit affirmed the district court’s decision regarding Santos’s individual-capacity claims, vacated its decision regarding her municipal and official-capacity claims, and remanded the case to the district court for further proceedings.

In October 2008, while eating a sandwich and waiting for her shift to begin, Santos sat on a curb behind the Common Market food co-op where she worked as a dishwasher. As she ate, a Frederick County patrol car, apparently conducting a routine patrol of the area slowly approached her from her left. She remained seated and continued eating her sandwich. The deputies, Openshaw and Lynch, parked the patrol car and walked toward Santos. Openshaw stopped about six feet from Santos and asked if she spoke English, Lynch stood closer to the patrol car. Santos responded that she did not. Openshaw then asked several noninvasive questions in English, but the two had trouble communicating. He then asked if she had identification, and she responded in Spanish that she did not. Openshaw then stepped away from Santos to speak with Lynch near the patrol car. Soon thereafter, Santos recalled that she had her El Salvadoran national identification card in her purse. She remained seated but handed the card to Openshaw. The deputies then relayed Santos’s identification information to radio dispatch in order to run a warrant check. At some point during the warrant check but before dispatch had determined whether the warrant was active, Santos asked the deputies if there was any problem and Openshaw replied that there was not but gestured for her to remain seated.  Following the warrant check, dispatch informed the deputies that Santos had an outstanding ICE warrant for “immediate deportation.” Upon being informed that the warrant was active, the deputies placed Santos under arrest and transported her to a Maryland detention center. Approximately forty-five minutes after Santos’s arrest, ICE officials requested that the detention center hold Santos on ICE’s behalf. ICE initially held her in two Maryland facilities before transferring her to a jail in Massachusetts, where she stayed until her supervised release in November of 2008. In November 2009, Santos filed a Section 1983 complaint against the Defendants. The district court, concluding that the deputies did not violate Santos Fourth Amendment rights, granted the deputies motion for summary judgment and consequently dismissed the claims against all other Defendants. Santos moved for reconsideration, highlighting a number of federal court decisions after the district court’s summary judgment hearing holding that state and local governments lack inherent authority to enforce civil federal immigration law. The district court however denied Santos’s motion, holding that even if the Supreme Court’s landmark immigration decision in Arizona v. United States along with other federal court decisions suggested an “emerging consensus” that local officers may not enforce civil immigration law, the deputies were still entitled to qualified immunity for their conduct. Santos appealed.

On appeal, after determining that Santos was seized when Openshaw gestured for her to remain seated, the Fourth Circuit addressed the issue of whether the deputies violated her constitutional rights when they detained and subsequently arrested her based on the civil ICE warrant. Before getting to the merits of the case, however, the court found that the question was properly before it on appeal, as Santos had not abandoned any claim that the deputies’ actions constituted the unauthorized enforcement of federal civil immigration law despite an ambiguous statement made by her counsel during oral argument at the summary judgment motion hearing. Addressing the merits, the court first held that the deputies’ violated Santos’s rights under the Fourth Amendment at the time they seized her solely on the basis of the outstanding civil ICE warrant. Next, noting that Arizona v. United States makes clear that local law enforcement officers cannot arrest aliens for civil immigration violations absent direction or authorization by federal officials, the court rejected the Defendant’s contention that the deputies lawfully detained and arrested Santos because ICE officials did not request the deputies to detain Santos until a full forty-five minutes after her arrest. The Defendants next argued that the arrest was lawful because there was no evidence in the record that the ICE warrant was civil rather than criminal. However, after observing that the warrant was for “deportation,” a proceeding long characterized as civil in nature, the court found the record did indeed contain evidence the ICE warrant was civil in nature. Next, the court found that qualified immunity barred Santos’s individual capacity claims against the deputies because there was no controlling precedent, at the time the seizure took place, putting the deputies on notice that their actions violated Santos’s constitutional rights. Lastly, because qualified immunity does not extend to municipal defendants, the court vacated the district court’s dismissal of the claims against the Defendants’ in their official capacities and remanded the question of whether the deputies’ unconstitutional actions were attributable to an official policy or custom of the county or the actions of a final county policymaker.

Full Opinion

-W. Ryan Nichols

Decided: August 7, 2013

The Fourth Circuit Court of Appeals affirmed the district court order abstaining from exercising jurisdiction under the Colorado River doctrine in a case brought against Defendants.

In June 2004, Maryland residents filed a putative class action (“the Koch” action) against Defendants in Maryland state court, which was ultimately remanded to the Harford County Circuit Court. The complaint alleged several state law causes of action for the contamination of their properties by gasoline and the gasoline additive methyl tertiary-butyl (“MTBE”) from an Exxon station that Hicks operated. In February 2010, the state-court judge granted Plaintiffs’ request for class certification, but then decertified the class in June 2011. In October 2011, the state-court judge asked the Koch Plaintiffs to file a new action for the former class members so that he could consolidate it with the existing one and thereby adjudicate the claims of the named plaintiffs in Koch as well as the former class members. In November 2011, more than 750 former class members filed a new action (the “Ackerman” action) in the Harford County Circuit Court, alleging the same facts and state law claims as Koch. The court delayed issuing a consolidation order, during which time Defendants removed Ackerman from state court and the Koch Plaintiffs amended their state-court complaint to add the Ackerman plaintiffs. Koch was not removed. The Ackerman Plaintiffs also filed a motion in federal court seeking to remand the case to state court and requesting that the district court abstain under the Colorado River doctrine, which permits federal courts, under exceptional circumstances, to refrain from exercising jurisdiction in deference to pending, parallel state proceedings. The district court denied the remand motion, but granted the motion to abstain. The Defendants appealed, arguing that the district court erred by granting the Plaintiffs’ motion to abstain.

On appeal, the Fourth Circuit asserted that the threshold question under a Colorado River inquiry is whether the pending state and federal suits are parallel. Here, the Defendants challenged the district court’s threshold determination that the Koch action was parallel to Ackerman.  Federal courts may decline to exercise their jurisdiction where denying a federal forum would clearly serve an important countervailing interest. At issue in this case is the form of abstention approved by the Court in Colorado River– abstention in favor of ongoing, parallel state proceedings in cases where “considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation” clearly favor abstention.  The Fourth Circuit provided that state and federal actions are parallel “if substantially the same parties litigate substantially the same issues in different forums.” The Defendants conceded that the Koch action as amended was parallel to the Ackerman action, but not the Ackerman action and the pre-amendment Koch action. The Defendants argued that the amendment itself was void ab initio by operation of 28 U.S.C. 1446(d) and the “expressly authorized” exception to the Anti-Injunction Act, 28 U.S.C. § 2283. Under § 1446(d), removing defendants must promptly provide written notice of the removal to opposing parties and to the state court. After notice is provided, “the State court shall proceed no further unless and until the case is remanded.” The Fourth Circuit Court of Appeals agreed with the Defendants that the statute deprives the state court of further jurisdiction over the removed case and that any post-removal actions taken by the state court in the removed case action are void ab initio. However, 1446(d) speaks only in terms of the removed case and, therefore, deprives the state court of jurisdiction and restricts the state court’s actions only as to the removed case. Therefore, 1446(d) did not render the December 1 amendment of the Koch action void.

The Fourth Circuit Court also found that its conclusion did not change when the Anti-Injunction Act was added to the mix. Here, the Fourth Circuit Court found that the primary purposes of amending Koch was not a fraudulent effort to defeat federal jurisdiction and, therefore, an injunction was not permissible. Even if it were, the Fourth Circuit held that it would not exercise its discretion to enjoin the Koch amendment because enjoining would undermine the important goal of preserving an effective dual system of federal and state courts.  The determination that the Koch amendment was not void effective ended the inquiry into parallelism and the court’s decision to abstain. Accordingly, because the action now pending in state court was the Koch action as amended to include the Ackerman plaintiffs, the district court properly concluded that the actions are parallel for purposes of Colorado River abstention.

Full Opinion

– Sarah Bishop

Decided: August 6, 2013

The Fourth Circuit affirmed James Ernest Lespier’s jury conviction on two offenses arising from the murder of his ex-girlfriend on the Eastern Band of Cherokee Indians’ reservation.  In its opinion, the Fourth Circuit rejected Lespier’s challenges that the district court’s denial of judgment of acquittal, two of the court’s evidentiary rulings, and its decision not to instruct the jury on the lesser-included offense of second-degree murder.

On May 17, 2010, Lespier, an enrolled member of the Eastern Band of Cherokee Indians, spent the day fishing with friends and hosted a fish fry at his residence located within the boundaries of the Eastern Cherokee reservation.  The fish fry ended, however, when Lespier got into a verbal argument with his ex-girlfriend Mandi Smith, with whom he had a three-year-old son.  Lespier drove one of his friends home from the party and, when he returned to his residence, he shot Smith in the back of the head with a .38 caliber revolver, killing her instantly.  Later that evening, Lespier called 911 “screaming incomprehensibly but ultimately conveying the message that Smith had been shot and was dead.”  When the police arrived, Lespier was covered in blood and incoherent.  After securing the crime scene, the police began their investigation and soon determined that the crime scene ‘had been cleaned up.’  In addition, they found the revolver under Smith’s body, several holes bullet holes located in the walls of the home, a single oxycodone pill, in a plastic baggie, and an unloaded shotgun with a fresh crack in the wooden stock.  In the days and months following the murder, Lespier gave authorities several exculpatory versions of the events of that night that conflicted with each other.  Witnesses and friends of Smith and Lespier also provided information to law enforcement about Lespier’s long history of threats and physical violence against Smith and their young son.  Prior to trial, prosecutors notified Lespier’s lawyers that they intended to present evidence, under Federal Rules of Evidence 404(b), of Lespier’s prior threats and physical violence against Smith.  Lespier opposed use of any of this evidence and the district court excluded certain prior bad acts and reserved judgment on others.  Ultimately, the court allowed the evidentiary use of certain threats and physical violence by Lespier against Smith.  The court also addressed the issue of a psychology expert Lespier intended to call to offer testimony to explain the inconsistencies in statements made by Lespier.  The court decided to exclude the testimony because it would have invaded the province of the jury.  At the conclusion of the prosecution’s evidence and at the close of all evidence, Lespier sought judgments of acquittal.  The district court denied both motions.  Finally, the court turned to the issue of jury instructions.  Lespier initially opposed an instruction that would permit the jury to convict him on the lesser-included offense of second-degree murder.  Specifically, Lespier asserted that he was not asking for a second-degree charge and argued that the government was trying “to change the rules.”  Over the government’s continued objections, the court held that a trial court may decline to instruct on a lesser-included offense when the defendant objects and only instructed the jury on the elements of first-degree murder.  The jury found Lespier guilty of first-degree murder and that he used a firearm during and in relation to a crime of violence and Lespier appealed.

Lespier raised three contentions on appeal.  First, he challenged the district court’s denial of judgments of acquittal.  The Fourth Circuit held that there was substantial evidence to support the guilty verdict and the district court properly denied the judgments of acquittal.  Next, Lespier argued that the district court abused its discretion in permitting the introduction of the Rule 404(b) evidence and precluding his psychology expert’s testimony.  With regards to the Rule 404(b) evidence, the court analyzed the district court’s decision under the four-part test set forth in United States v. Queen, 132 F.3d 991, and held that the district court did not abuse its discretion admitting the evidence because it was relevant to show Lespier’s intent and absence of mistake.  The Fourth Circuit then took up the challenge to the district court’s decision to exclude the testimony of the psychology expert.  The Fourth Circuit agreed with the trial court that the expert testimony would have intruded on the jury’s role in assessing the credibility of witnesses, namely Lespier himself, and therefore the court did not abuse its discretion.  Finally, the Fourth Circuit addressed Lespier’s argument that the district court erred in declining the prosecutor’s requests for instruction on the lesser-included offense of second-degree murder.  Though Lespier argued against such an instruction, on appeal he contended that an exception to the “invited error doctrine” applied in this case.  The court acknowledged that the district court erred when it declined to instruct on the lesser-included offense.  In addition, the Fourth Circuit agreed that there was a potential exception to the invited error doctrine to preserve the integrity of the judicial process or prevent the miscarriage of justice.  However, the Fourth Circuit ultimately held that the instructional error committed by the district court was not a basis for disturbing Lespier’s convictions because Lespier opposed the second-degree murder instruction as a matter of sound trial strategy and that there was no indication that this failed strategy would undermine the justice system,

Full Opinion

– John G. Tamasitis

Decided: July 31, 2013

The Fourth Circuit affirmed the decision of the Benefits Review Board, awarding benefits to the estate of Dallas Owens.

Before developing a severe breathing disorder, Owens worked in West Virginia coalmines for nearly 30 years, the last ten of which he spent as an electrician for Mingo Logan Coal Company (“Mingo”). In 2003, as his condition worsened, Owens was forced to quit work. Subsequently, in 2008, Owens filed a claim under the Black Lung Benefits Act. Finding that Owens was eligible for benefits, the claims examiner ordered Mingo to pay him $1,048.10 a month. Mingo contested the award and requested a formal hearing. Following a formal hearing, the Administrative Law Judge (“ALJ”) awarded benefits to Owens, finding that the rebuttable presumption that he was totally disabled due to pneumoconiosis arose pursuant to 30 U.S.C. § 921(c)(4) and that Mingo failed to rebut the presumption. The Benefits Review Board (“Board”) affirmed, concluding that the ALJ’s findings were supported by substantial evidence and that the ALJ properly explained her findings. Mingo appealed and, before this appeal was heard, Owens died. Owens’ widow continued to pursue his claim on behalf of his estate.

On appeal, Mingo first argued as a preliminary matter that the Board improperly applied to it the rebuttal limitations of § 921(c)(4)—“The Secretary may rebut such presumption only by establishing that (A) such miner does not, or did not, have pneumoconiosis, or that (B) his respiratory or pulmonary impairment did not arise out of, or in connection with, employment in a coal mine”—even though the plain text shows that those limitations apply only when the “Secretary” seeks to rebut the presumption. Turning to the merits, Mingo contended that the ALJ failed to consider the medical evidence in its entirety and failed to provide an adequate rationale in support of her conclusions.

Addressing Mingo’s first contention, the Fourth Circuit concluded that, although the Board purported to subject Mingo to the rebuttal methods applicable to the Secretary in § 921(c)(4), it concluded in substance that no aspect of the presumption was rebutted. Accordingly, because the court found the record showed that § 921(c)(4)’s two methods of rebuttal did not affect the Board’s disposition of the case, it did not address Mingo’s claim that restricting employers to those methods improperly raised its burden on rebuttal. Next, the court addressed Mingo’s contention that the ALJ failed to consider the evidence in its entirety and to provide an adequate rationale in support of her conclusion. Rejecting this contention, the Fourth Circuit found that the ALJ considered all of the evidence that Mingo offered and gave appropriate consideration to the conflicting opinions. Additionally, where expert opinions were in conflict, the court found that the ALJ judge properly explained her decision to give more weight to certain experts over others based on their qualifications and her judgment.

Full Opinion

-W. Ryan Nichols

Decided: July 31, 2013

The Fourth Circuit Court considered a former employer’s challenges to attorneys’ fees and other related fees awarded under the Black Lung Benefits Act (the BLBA), 30 U.S.C § 901 through 945. The court affirmed the attorneys’ fee awards entered in this case and modified the fees awarded for legal assistant services.

In 2005, the claimant filed a claim for benefits under the BLBA against his former employee, Eastern Associated Coal Corporation (Eastern). The claimant, who was a coal miner for seventeen years, had developed a mass on his right lung that required medical treatment. In 2010, the Administrative Law Judge (ALJ) found that the claimant suffered from complicated coal workers’ pneumoconiosis and awarded him benefits under the BLBA. The law firm representing the claimant later filed a petition for attorneys’ fees from work relating to the proceedings before the ALJ. The firm stated the years of experience and the hourly rates of the various attorneys who had worked on the case. Claimant’s counsel stated that few other firms accept new black lung cases and that few black lung claimants are ultimately awarded benefits. Claimant’s counsel also submitted a list of twenty-one prior fee awards issued in black lung cases handled by claimant’s counsel, as well as the hourly rates for attorneys with varying degrees of experience in the South Atlantic and Middle Atlantic regions. In the petition, claimant’s counsel similarly sought fees for work done by certain legal assistants at an hourly rate of $100. However, although counsel stated that $100 per hour was the firm’s “customary billing rate,” in black lung cases, they did not provide any information regarding market rates for legal assistants, as they did for attorneys’ fees.  Eastern raised two challenges to the fee awards: (1) that claimant’s counsel did not provide sufficient market-based evidence of an hourly rate, which was necessary for calculation of an applicable lodestar figure; and (2) that claimant’s counsel requested an excessive number of hours as a result of its practice of quarter-hour billing.

The court noted that an award of attorneys’ fees and related fees under the BLBA will be upheld unless they are “arbitrary, capricious, [or] an abuse of discretion, or contrary to law.” Counsel for a successful black lung claimant is entitled to an award of attorneys’ fees under the BLBA. An award of attorneys’ fees is “mandatory” in such cases. Here, the claimant was successful and the attorney was therefore entitled to reasonable fees. The party seeking attorneys’ fees has the burden of proving reasonableness. The “lodestar” analysis is the starting point for calculating an award of reasonable attorneys’ fees, determined by multiplying “a reasonable hourly rate” by “the number of hours reasonably expended on the litigation.” After the lodestar amount is calculated, however, the court may adjust that figure based on consideration of other factors provided by the Department of Labor for black lung benefits cases. The BLBA also allows for legal assistant fees, which claimant’s counsel also has the burden of proving. The regulations provide that the rate awarded by the BRB for such services “shall be based on what is reasonable and customary in the area where the services were rendered for a person of that particular professional status.”

The court then addressed Eastern’s challenge to the first element of the lodestar amount, the reasonableness of the hourly rates. The court concluded that the agency adjudicators properly determined reasonable hourly rates for claimant’s counsel. Although Eastern challenged the reliability of prior fee awards as evidence of a prevailing market rate, the court’s precedent plainly permits consideration of such documentation. Although prior fee awards do not themselves actually set the market rate, they do provide inferential evidence of the prevailing market rate. However, the court also concluded that the agency adjudicators abused their discretion by determining a prevailing market rate of $100 per hour for the services rendered by the legal assistants. While claimant’s counsel provided evidence of the legal assistants’ training, education, and experience, counsel did not submit any evidence to support a prevailing market rate for the work of those legal assistance, nor the hourly rates that were awarded to legal assistants in those prior cases. Because the court was left only with the evidence of an hourly rate of $50 provided by Eastern, it reduced the hourly rate for the legal assistants from $100 to $50 per hour. The court then addressed Eastern’s challenge to the second element of the lodestar amount, the number of hours reasonably expended. The court found that Eastern failed to cite any contrary authority prohibiting the use of quarter-hour billing in black lung cases. However, the use of quarter-hour billing does not relieve agency adjudicators of their obligation under the lodestar method to ensure that “excessive, redundant, or otherwise unnecessary” fees are not awarded. Even so, the court found that Eastern’s argument that the present fee awards were excessive lacked merit because, essentially, it was grounded on Eastern’s blanket objection that “there was no proof that it took fifteen minutes to perform each and every task alleged.” Such a requirement improperly would escalate a fee applicant’s present burden to show that the rate claimed and the hours worked were reasonable. Further, it would create a disincentive for attorneys to participate in black lung cases.

Full Opinion

– Sarah Bishop

Decided:  July 25, 2013

The Fourth Circuit affirmed the order of the United States District Court of the District of Maryland denying Defendant Terrence Smith’s ineffective assistance of counsel motion finding that under a more lenient “harmless-error standard,” the error contained within the jury instruction in his underlying trial for witness tampering did not “have a substantial and injurious effect or influence in determining the jury’s verdict.”  As such, the Fourth Circuit agreed that the error was harmless and denied the motion.

In January 2005, Smith, a leader of the Bloods gang in the Harwood neighborhood of Baltimore, Maryland, called a meeting of the gang’s membership at his home and instructed them that he wanted to “firebomb” the victim’s house in retaliation for her repeated contacts with the police regarding drug activity in the neighborhood.  The members of the gang subsequently carried out the attack, using gasoline-filled beer bottles.  Smith and other gang members were later indicted and convicted for their roles in the attack.  Among the five counts on which Smith was convicted, three included federal witness tampering.  At the close of the prosecution’s case, Smith filed a motion for acquittal, arguing that the government had not established the federal nexus that was required to convict him under the federal witness tampering statutes because the government had failed to show that the victim contacted federal authorities or was likely to do so, as required by the statute.  The government argued that such drug trafficking, about which the victim had complained to the local authorities, was a federal offense and, thus, the nexus was established.  The district court denied Smith’s motion and allowed the government to reopen its case to present additional evidence on the matter.  The government offered evidence from the local Drug Enforcement Administration (“DEA”) field office that explained its close relationship with local law enforcement offices in the area and that through these associations, the victim’s reporting would have ultimately been provided to federal law enforcement agents through groups established by federal and local law enforcement agencies, identified as joint task forces, to combat trafficking narcotics.  At the close of the evidence, the district court instructed the jury on the intent element for witness tampering, indicating that the government had to prove that Smith “acted knowingly and with the unlawful intent to induce [the victim] to hinder, delay, or prevent the communication of information to a law enforcement officer of the United States.”  The court further instructed that the government needed only to show that there was “a possibility or likelihood” that the information provided by the victim would be communicated to federal law enforcement authorities to satisfy the intent element.  The jury convicted Smith on all counts and Smith appealed arguing that the court misinstructed the jury on the witness tampering counts.

The Fourth Circuit initially rejected Smith’s arguments and affirmed his convictions, but remanded the case to fix a sentencing error, which was later affirmed.  In April 2011, Smith filed a motion under 28 U.S.C. § 2255, raising several issues regarding the effectiveness of his trial counsel.  After his decision to file the § 2255 motion, the U.S. Supreme Court rejected the “possibility” of a federal communication as an appropriate standard for establishing the federal nexus element in Fowler v. United States, 131 S. Ct. 2045 (2011), and held that the government had to prove a “reasonable likelihood” of the communication.  Smith filed a supplement to his § 2255 motion.  The district court deciding the § 2255 motion concluded that even though the standard applied at trial was incorrect it was, nonetheless, harmless error.  Smith again filed a timely notice of appeal.

The Fourth Circuit began its opinion by agreeing with Smith and the district court that Fowler changed the standard upon which the government must prove federal nexus in witness tampering and that it was retroactively applicable to cases on collateral review.  As a result, the district court’s jury instruction at trial was erroneous.  Smith’s first argument was that this instruction error was not reviewable under the harmless error review doctrine because it was ‘a fundamental error in the proceedings,’ and warranted automatic reversal because it was, in essence, a structural error in the trial.  The Fourth Circuit rejected this argument holding that the instructional error “did not taint the trial ‘from beginning to end,’” as is required to show a structural error.  Smith also contended that even under the harmless error analysis, the district court should have applied the standard of review for direct appeals as provided in Chapman v. California, 386 U.S. 18 (1967), rather than the standard for collateral appeals as set forth in Brecht v. Abrahamson, 507 U.S. 619 (1993).  The standard on direct appeal, under Chapman, requires the government to show the error was harmless only if it was “clear beyond a reasonable doubt that a rational jury would have found the defendant guilty absent the error.”  The standard for collateral appeals, under Brecht, only requires the government to show that error did not have a “substantial and injurious effect or influence in determining the jury’s verdict.”  The court indicated that the Brecht standard has been held to apply in § 2254 habeas petition cases, but the U.S. Supreme Court and the Fourth Circuit had yet to decide whether it applies to § 2255 cases.  Upon an analysis of the Brecht decision and review of other sister circuits, the Fourth Circuit held that because the structural nature of collateral review is the same for both § 2254 and § 2255 cases, society has the same interest in the finality of federal convictions as it does in state convictions, and “the risk of degradation of the write is present in both federal § 2255 cases as in state-habeas § 2254 cases,” the less stringent Brecht standard should apply to § 2255 cases.  After determining the applicable standard of review for Smith’s challenge, the court held, under a Brecht analysis, that the jury instructional error in this case did not have “substantial and injurious effect or influence in determining the jury’s verdict.”

Full Opinion

– John G. Tamasitis

Decided:  July 25, 2013

The Fourth Circuit held that the Town of Nags Head, North Carolina (“the town”) did not violate the due process or equal protection rights of the owners of six beachfront cottages (“the owners”) by deeming the cottages public nuisances and imposing fines on the owners, and that the owners’ takings claim was ripe for review.  The Fourth Circuit therefore affirmed the ruling of the United States District Court for the Eastern District of North Carolina in part, reversed the ruling in part, and remanded the case back to the district court.

On November 12, 2009, a major storm damaged the owners’ cottages.  The town declared the cottages to be public nuisances under its nuisance ordinance on November 30, and informed the owners that, if they did not abate the nuisance within eighteen days, the town would impose civil fines.  The owners did not take the actions required to abate the nuisance, and the town began imposing fines in late January 2010.  The owners did not pay the fines.  In May 2010, the owners sued the town in state court.  The town removed the case to the federal district court; after removal, the owners filed an amended complaint asserting, inter alia, violation of their due process and equal protection rights, as well as a takings claim under the Fifth Amendment.  The district court granted the town summary judgment on the owners’ due process and equal protection claims, and declared the owners’ takings claim unripe for review under the state-litigation requirement of Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172.  On appeal to the Fourth Circuit, the owners asserted that the town violated their procedural due process rights by taking their money and depriving them of the use and enjoyment of their property without a pre-deprivation process; that the town violated their equal protection rights by deeming their cottages nuisances, but failing to declare fourteen other cottages in the town’s alleged public trust area as nuisances; and that the district court erroneously dismissed their takings claim.

The Fourth Circuit found that, while the owners asserted two constitutionally protected property interests, the government never actually deprived the owners of these interests:  The owners never paid the fines, and their property rights did not include the ability to use the properties in a manner contrary to law.  With regard to the equal protection claim, the Fourth Circuit concluded that the town had a rational basis for treating the owners’ properties differently than the fourteen other cottages, as the owners’ cottages were closer to the ocean than the other cottages.  Lastly, the Fourth Circuit found the state-litigation requirement inapplicable.  The Fourth Circuit noted that, under this requirement, plaintiffs must seek compensation through state procedures before a takings claim against the state or its subdivisions can be ripe in federal court.  However, plaintiffs may bring a takings claim in state court without a prior denial of compensation by the state, as long as the takings claim accompanies a claim for just compensation under state law.  In this case, the owners filed a takings claim alongside an inverse condemnation claim in state court; thus, allowing the town to invoke the state litigation requirement after removing the case to federal court would deny the owners a forum for their claim, constituting manipulation of the litigation.  Furthermore, while the state-litigation requirement is based on the state courts’ experiential advantage in adjudicating cases involving zoning and land-use issues, the Fourth Circuit noted that federal courts can also handle these cases competently—and that the town implicitly agreed with this conclusion by removing the case to federal court.

Full Opinion

– Stephen Sutherland

Decided:  July 23, 2013

The Fourth Circuit held that, under the Supremacy Clause, the Lowcountry Immigration Coalition (“the Coalition”) had an implied right of action allowing them to seek enjoinment of South Carolina’s Act 69 (“the Act”) on the grounds of federal preemption; that the United States District Court for the District of South Carolina properly chose not to abstain from hearing the case; and that the district court properly enjoined certain sections of the Act a in a pre-enforcement challenge.  The Fourth Circuit therefore affirmed the decision of the district court.

The governor of South Carolina signed the Act in 2011, thereby approving certain state immigration laws and regulations.  Subsections 4(A) and (C) provide that unlawfully present immigrants commit a state felony if, inter alia, they allow themselves to be either transported within the state, or to be harbored or concealed to avoid detection, with the intent to further their unlawful entry into the country or to avoid apprehension or detection.  Under subsections 4(B) and 4(D), it is a state felony for a person to conduct the transportation or concealment offenses listed in Subsections 4(A) and (C).  Under Section 5, it is a state misdemeanor for a person over seventeen years old to fail to carry certain alien registration materials issued to the person under 8 U.S.C. § 1304.  Subsection 6(B)(2) forbids the display or possession of counterfeit or false identification “for the purpose of offering proof of the person’s lawful presence in the United States”; a first violation of this subsection is a misdemeanor, and a second violation is a felony.

The United States and the Lowcountry Immigration Coalition (“the Coalition”) challenged certain sections of the Act in two separate actions.  The district court consolidated the cases, and found that Sections 4, 5, 6(B)(2), and other subsections of Section 6 were preempted by federal law.  The district court issued a preliminary injunction, and South Carolina appealed.  The Fourth Circuit remanded the case to the district court for reconsideration due to the Supreme Court’s decision in Arizona v. United States, 132 S. Ct. 2492.  On remand, the district court let its injunction of Sections 4, 5, and 6(B)(2) stand, and dissolved its injunction of the other subsections of Section 6.  On an interlocutory appeal to the Fourth Circuit, South Carolina argued that the Coalition did not have a right of action under the Supremacy Clause or 42 U.S.C. § 1983, citing Chief Justice Roberts’s dissent in Douglas v. Independent Living Center of Southern California, Inc., 132 S. Ct. 1204, as support for its Supremacy Clause argument; asserted that the district court should have abstained from hearing the case under Younger v. Harris, 401 U.S. 37; and challenged the district court’s preliminary injunction.

The Fourth Circuit found that the Douglas dissent did not disturb prior Supreme Court and circuit court holdings allowing parties to seek injunctive relief on the grounds of federal preemption.  The Fourth Circuit also found Younger abstention inapplicable, as South Carolina had not actually commenced criminal proceedings under the Act.  Lastly, the Fourth Circuit concluded that federal law preempted all of the disputed sections of the Act.  The Fourth Circuit found that Subsections 4(A) and (C) criminalized mere unlawful presence, in contradiction of federal laws defining unlawful presence as a civil offense; that Subsections 4(B) and (D) infringed on a field occupied by the Immigration and Naturalization Act, which defines, inter alia, certain harboring and transportation offenses; that Section 5 infringed on the federal government’s regulation of alien registration; and that Subsection 6(B)(2) was preempted by both field preemption and conflict preemption, as Congress passed multiple laws regarding fraudulent immigration documents, and enforcement of these federal statutes would conflict with enforcement of Subsection 6(B)(2).

Full Opinion

– Stephen Sutherland

Decided: July 23, 2013

The Fourth Circuit affirmed the District Court for the Eastern District of Virginia’s Order dismissing Plaintiffs’ complaint for failure to state a claim because the alleged injuries arose out of or in the course of activity incident to military service.

Alleging they were victims of rape and sexual misconduct by fellow servicemembers during their military careers, twenty-eight current and former members of the U.S. Armed Forces (“Plaintiffs”) brought suit against two former Secretaries of Defense, Donald Rumsfeld and Robert Gates (“Defendants”), seeking money damages pursuant to Bivens v. Six Unknown Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971). The complaint alleged that the acts and omissions of Defendants, in their official capacities, contributed to a military culture of tolerance for the sexual crimes perpetrated against them. Based on factual assertions set forth in the complaint, Plaintiffs alleged that the Defendants violated their Fifth Amendment rights to due process and equal protection, their First Amendment rights to free speech, and their Seventh Amendment rights to trial by jury. After a hearing on Defendant’s Rule 12(b)(6) motion, the District Court issued an order dismissing the complaint. In its order, the District Court noted that a Bivens-type remedy was not appropriate in this situation given the unique disciplinary structure of the military establishment and further observed that the Supreme Court has counseled against the exercise of judicial authority in the military context. This appeal followed.

Before beginning its analysis, the Fourth Circuit first provided a backdrop of Bivens actions and the constitutional basis upon which such actions rely. In conclusion, the court noted that Bivens suits are never permitted for constitutional violations arising from military service, no matter how severe the injury or how egregious the rights infringement. Next, applying the “incident to service” rule, the court explained that the Plaintiffs’ alleged injuries clearly arose out of or in the course of activity incident to service. Consequently, the court affirmed the district court, holding that the Plaintiffs were not entitled to a Bivens-type remedy. In so holding, the court relied heavily on Supreme Court precedent which, at its core, draws on the Separation of Powers doctrine and seeks to refrain from allowing the civilian court system to second-guess military decisions.

Full Opinion

– W. Ryan Nichols

Decided: July 22, 2013

The Fourth Circuit reversed the district court’s judgment granting Defendant’s petition on his claim of ineffective assistance based on his counsel’s failure to call an expert in eyewitness identification, and affirmed the portion of the district court’s judgment rejecting Defendant’s other claims of ineffective assistance.

On April 23, 2007, a North Carolina jury convicted Thomas Moore, Jr. (“Defendant”) of first-degree burglary and assault with a deadly weapon with intent to kill inflicting serious injury. Richard and Helen Overton identified Moore as the assailant before the jury. However, the Overtons had also falsely accused Moore and his brother of armed robbery back in 2003. The Overtons saw and testified against the brothers in the earlier case, but those charges were dismissed. In 2007, Helen Overton confirmed that she had identified Moore from the photographic lineup based on his involvement in the 2006 incident, not because she had seen Moore in court during the 2004 proceedings. The state also presented into evidence a revolver recovered several miles from the Ovetons’ home, which was connected neither to Moore nor to the incident at the Overtons’ home. Further, Richard Overton’s testimony identifying both “Moore boys,” rather than just Defendant, was significantly impeached by evidence that Linwood Moore was incarcerated on the night of the assault and could not have been present. The jury nonetheless convicted Defendant of both charges.

After Moore exhausted his direct appeals and state post-conviction remedies, he petitioned the district court for a federal writ of habeas corpus under 28 U.S.C. § 2254. The district court granted the writ. The State of North Carolina then sought reversal of the district court’s order granting Moore’s writ. Moore cross-appealed from the district court’s denial of one of the additional claims of ineffective assistance he asserted below, that his trial counsel was ineffective for stipulating to irrelevant and prejudicial evidence.

The Fourth Circuit first addressed the district court’s conclusion that, under § 2254 (d)(1), the MAR court unreasonably applied the Supreme Court’s precedent in Strickland. The court reviewed the claim through the strictures of the Antiterrorism and Effective Death Penalty Act of 1996 (“the AEDPA”). Under AEDPA, a writ of habeas corpus “shall not be granted with respect to any claim that was adjudicated on the merits in State court proceedings unless the adjudication: (1) resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established Federal law…or (2) resulted in a decision that was based on an unreasonable determination of the facts in light of the evidence presented in the State court proceeding.” The Court also reviewed the claim through the lens of Strickland and its progeny. Stricklandsets forth a two part standard: First, the petitioner must show that “counsel’s representation fell below an objective standard of reasonableness. Second, the petitioner must also show “a reasonable probability that, but for counsel’s unprofessional errors, the result of the proceeding would have been different.” In two recent Supreme Court Cases, the Court emphasized that when state prisoners present ineffective assistance of counsel claims under the AEDPA, the “pivotal question is whether the state court’s application of the Strickland standard was unreasonable.” Under the AEDPA standard, “a state court’s determination that a claim lacks merit precludes federal habeas relief so long as ‘fair-minded jurists could disagree on the correctness of the state court’s decision.” In other words, a writ may issue only “where there is no possibility fair-minded jurists could disagree that the state court’s decision conflicts with the Court’s precedents.” The court concluded that there was at least a reasonable argument that Moore’s counsel satisfied Strickland’s deferential standard, and therefore reversed the district court’s order granting Moore the writ. The court noted that expert testimony on eyewitness identifications is not automatically admitted and, when allowed, its admissibility is generally at the court’s discretion, both under federal and North Carolina law. The court declined to hold that by failing to call a witness whose testimony the state trial court had full discretion to exclude, Moore’s counsel rendered constitutionally deficient performance.

The Court of Appeals then addressed the district court’s holding that the MAR court “reached its decision based upon an unreasonable determination of the facts,” in light of the evidence presented in the state court proceeding, in violation of § 2254 (d)(2). A determination on a factual issue made by a State court shall be presumed correct and the burden is on the petitioner to rebut this presumption by clear and convincing evidence. Here, the state found there was no evidence to justify or require an expert on identification. The state court considered Moore’s submission and reached a conclusion with which “fair-minded jurists could disagree.” Therefore, the Fourth Circuit Court of Appeals found that Moore failed to meet his burden under § 2254 (d)(2).

The Court of Appeals then addressed Moore’s cross-appeal, in which he contested the district court’s rejection of his ineffective assistance of counsel claim based on his trial counsel’s failure to object to the admission of the firearm and forensic report. In addressing this issue, the court asked whether, had Moore’s counsel objected to the evidence in question, “fair-minded jurists could disagree” as to whether that objection would have created a reasonable probability of affecting the outcome of Moore’s trial. The court declined to find plain error because it could not conclude that “absent the error the jury probably would have reached a different verdict.” Counsel successfully demonstrated through cross-examination that the admitted firearm and forensic report were connected neither to Moore nor to the crime against the Overtons. As “reasonable jurists” could disagree as to whether the admission of the evidence ultimately prejudiced Moore, the court affirmed the district’ court’s denial of the writ on that ground.

Full Opinion

– Sarah Bishop

Decided: July 22, 2013

 The Fourth Circuit held that the district court lacked subject matter jurisdiction to consider a petition brought by a detained ship and its owner for release because the United States Coast Guard’s decision to detain the ship was subject to agency discretion alone. Therefore, the decision to detain was not appealable to the district court.

 The United States Coast Guard (“Coast Guard”), acting through the Department of Homeland Security, detained the Antonis G. Pappadakis (“the ship”), a bulk cargo carrier owned by Angelex, Ltd. (“Angelex”) at port in Norfolk, Virginia under suspicion that the ship had likely been discharging pollution and failed to keep adequate records under federal and international law. After several days of negotiation, the Coast Guard agreed to release the ship upon the posting of a $2.5 million bond and complying with a number of non-monetary obligations to ensure the cooperation of crewmembers and officials in its ongoing investigation. Angelex refused to pay the required $2.5 million bond and filed a petition in the Eastern District of Virginia seeking release of the ship or imposition of an appropriate bond for release. The district court asserted jurisdiction based on the Administrative Procedure Act (“APA”), or, in the alternative, admiralty jurisdiction. The district court granted the petition, finding that the bond was excessive and exceeded the Coast Guard’s authority, and set a new bond at $1.5 million. The United States of America, the Coast Guard, and the United States Customs and Border Protection Agency (collectively the “Government”) appealed the district court’s order on the grounds that the district court lacked subject matter jurisdiction to consider Angelex’s petition.

The Fourth Circuit held that the district court lacked subject matter jurisdiction to hear Angelex’s petition under both the APA and admiralty jurisdiction. The APA allows a court to set aside agency action that are found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” The APA provides to exceptions to judicial review of agency action: (1) where the “statute precludes judicial review,” or (2) “when agency action is committed to agency discretion.” In the present case, the Fourth Circuit found that the Coast Guard’s decision to detain the ship was a decision that fell within the latter exception, and was thus, not reviewable. Under the applicable law, the Coast Guard has the authority to determine the amount of the bond required to avoid detainment, or it may determine that it will not accept a bond at all. Thus, the Coast Guard has near complete discretion and the court may not question the reasonableness of the Coast Guard’s decision. In fact, the Fourth Circuit described the Coast Guard’s discretion to deny departure clearance as “limitless.”

The Fourth Circuit further held that the court could not hear the case under admiralty jurisdiction. The district court determined that the withholding of the ship was “tantamount to an arrest of the ship,” which is a dispute that falls within the court’s admiralty jurisdiction. The Fourth Circuit disagreed, finding that the denial of departure clearance was not sufficiently analogous to “arrest of the ship” to confer admiralty jurisdiction. The court also held that the denial of departure clearance was not sufficiently similar to an admiralty lien to confer jurisdiction. Therefore, the court found that the Coast Guard’s decision to detain the ship was squarely within its congressionally conferred discretion and was not subject to review in the district court.

Full Opinion

– Wesley B. Lambert

Decided:  July 19, 2013

The Fourth Circuit reversed Defendant Joe Lanning’s (“Defendant”) conviction and remanded for a judgment of acquittal as a result of his involvement in a sting operation targeting gay men.  The Defendant was convicted for disorderly conduct under 36 C.F.R. § 2.34, which prohibits conduct considered “obscene,” “physically threatening or menacing,” or “likely to inflict injury or incite an immediate breach of the peace.”  The court held that the term “obscene” was unconstitutionally vague and determined that no rational finder of fact could find beyond a reasonable doubt that Defendant’s conduct was “physically threatening or menacing” or “likely to inflict injury or incite an immediate breach of the peace.”

The National Park Service and the U.S. Forest Service set up a joint operation that was designed to enable officers to identify and arrest men who were involved in sexual solicitation and activity with other men in the Sleep Gap Overlook area of the Blue Ridge Parkway in Buncombe County, North Carolina.  In November 2009, a thirty-three year old, two hundred pound park ranger participated in the operation as an undercover operation.  During the course of his duties, he came upon Defendant, a sixty-two year old retiree, on a nearby trail.  When the undercover officer walked past, Defendant grabbed his groin and continued walking.  A few moments later, after walking around the area, the undercover officer went looking for Defendant and found him standing by himself.  The undercover officer engaged Defendant in conversation for a few minutes then commented, “Asheville was ‘an open community,’ accepting of a homosexual lifestyle.”  Defendant then indicated he wanted to engage in sexual relations with the undercover officer.  The undercover officer indicated that he was wiling to participate.  Defendant then turned around and backed up to the undercover officer and “touched [the officer’s] fully-clothed crotch.”  The undercover officer characterized the touch as ‘a fairly firm grasp’ that lasted until the officer stated:  ‘Police officer, you’re under arrest.’  Defendant was subsequently charged with disorderly conduct in violation of 36 C.F.R. § 2.34(a)(2).  Defendant unsuccessfully moved to dismiss the case and the magistrate judge found him guilty of disorderly conduct, providing no specific reasons for the decision and was sentenced to 15 days’ imprisonment, a $1,000 fine, and a two-year ban on visiting government forests and parks.  Defendant appealed to the district court, which affirmed the conviction concluding that there was enough evidence that indicated Defendant’s “conduct was obscene and physically threatening and/or menacing.”  However, the district court vacated and remanded his sentence because the magistrate judge did not have the authority to ban Defendant from government parks.  The magistrate judge subsequently dropped the ban and reduced the fine to $500 upon which the district court affirmed.  Defendant appealed to the Fourth Circuit.

On appeal, the Fourth Circuit found that the “obscene” standard encapsulated in the regulation was unconstitutionally vague based on a common understanding of the word’s definition.  The court held that the Section 2.349a)(2) did not provide Defendant, nor would it provide any other person of ordinary intelligence, with “notice” that such conduct was obscene.  Moreover, the court held that the facts of the case illustrated “the real risk that the provision may be ‘arbitrarily and discriminatorily enforced.”  The court highlighted the fact that the sting operation “was aimed not generally at sexual activity in the Blue Ridge Parkway; rather, it specifically targeted gay men” and presented a “real threat of anti-gay discrimination.”  The court cautioned that its decision was limited to Defendant’s conduct at issue and did not mean that the statute was impermissibly vague per se.  The court also held that the regulation’s second element, whether Defendant’s conduct was “physically threatening or menacing” was not satisfied.  The court held that “no rational fact finder could conclude that a reasonable person would feel physically threatened or menaced by Defendant’s conduct,” under the facts presented.  Because neither prong could serve as a basis for Defendant’s conviction, the court turned to the final prong of the regulations second element:  “conduct ‘done in a manner that is likely to inflict injury or incite an immediate breach of peace.’”  Again, the court agreed with Defendant that the government had failed to provide enough evidence to support his conviction for disorderly conduct because no rational finder of fact would conclude that the undercover officer likely would have reacted violently to Defendant’s “fleeting touch.”

Full Opinion

– John G. Tamasitis

Decided:  July 19, 2013

The Fourth Circuit held that the United States District Court for the Eastern District of Virginia (“the district court”) improperly granted a qualified reporter’s privilege to James Risen (“Risen”) under the First Amendment, thereby preventing the government from uncovering the identify of a source who allegedly leaked national security information in violation of the Espionage Act, 18 U.S.C. § 793(d)–(e); that the district court improperly struck two government witnesses to sanction the government’s violation of a discovery order; and that the district court properly ordered disclosure of the names of certain government witnesses—specifically, current or former operatives for the Central Intelligence Agency (“CIA”)—to defendant Jeffrey Alexander Sterling (“Sterling”) and his attorney, but improperly ordered disclosure of these names to the jurors.  The Fourth Circuit therefore affirmed the decision of the district court in part, reversed the decision in part, and remanded the case.

In 1993, the CIA hired Sterling as a case officer and granted him top-secret security clearance.  In 1998, the CIA assigned Sterling to a classified program designed to encumber Iran’s acquisition or development of nuclear weapons (“the CIA program”).  Sterling was reassigned from the CIA program in May 2000.  In August 2000, Sterling filed an equal opportunity complaint, alleging the CIA denied him assignments on the basis of race.  He later filed a federal lawsuit against the CIA, seeking compensation for racial discrimination.  Sterling was removed from service in October 2001, and terminated from the CIA in January 2002; his federal lawsuit was subsequently dismissed.  Sterling also filed a second civil suit against the CIA in March 2003, claiming that the CIA had infringed upon his right to publish his memoirs after the CIA’s Publications Review Board edited portions of the memoirs.  The suit was later dismissed by stipulation of the parties.  In 2006, Risen published a book titled State of War:  The Secret History of the CIA and the Bush Administration, which contained classified details about the CIA program.  Risen did not reveal his sources for the classified details.  In December 2010, Sterling was indicted by a federal grand jury for, inter alia, violations of the Espionage Act—specifically, the unauthorized retention and disclosure of national security information.  The grand jury made a probable cause determination that Sterling illegally disclosed classified information to Risen, and that he may have done so to retaliate against the CIA for terminating him and interfering with his memoirs.

In May 2011, the government obtained authorization to issue a trial subpoena seeking, inter alia, testimony from Risen regarding his source of information on the CIA program.  The government asked the court to admit the testimony through a motion in limine.  Claiming the First Amendment or, in the alternative, a federal common-law reporter’s privilege protected him from compelled testimony, Risen moved to quash the subpoena.  The district court quashed the subpoena and denied the government’s motion in limine.  The district court found that Risen had a qualified reporter’s privilege under the First Amendment, and the government did not meet the three-part test established in LaRouche v. National Broadcasting Co., 780 F.2d 1134, thereby failing to overcome the privilege.

The parties consented to a discovery order prior to trial, in which the government agreed to a schedule for disclosing evidence tending to impeach a prosecution witness, per Giglio v. United States, 405 U.S. 150.  Under this schedule, the government had to provide all Giglio materials to Sterling no later than five days prior to the trial’s commencement.  As the disclosure deadline approached, the government discovered impeachment materials in the personnel files of certain CIA witnesses; the government did not disclose these materials to Sterling until the day after the discovery period’s expiration.  Sterling objected to the late disclosure at a pre-trial hearing, and the district court sanctioned the government by striking two of its witnesses.

The government also moved for a protective order prior to trial, under the Classified Information Procedures Act (“CIPA”), 18 U.S.C. app. 3 § 6.  Seeking to protect the identities of certain witnesses—specifically, current or former CIA operatives—the government asked the court to, inter alia, allow the witnesses to use their last initials instead of their full names.  At a pre-trial hearing, the court agreed to allow the witnesses to use pseudonyms while testifying, but ordered the government to provide a key with the witnesses’ actual names (“the witness key”) to Sterling, his counsel, and the jury.

On appeal, the Fourth Circuit found that the First Amendment reporter’s privilege claimed by Risen—involving testimony in a criminal proceeding regarding criminal conduct the reporter personally observed or participated in—had been rejected by the Supreme Court in Branzburg v. Hayes, 408 U.S. 665.  Furthermore, the Fourth Circuit found that the subpoena was not issued in bad faith or for purposes of harassment.  The court also rejected Risen’s claim to a common-law reporter’s privilege, noting that the Branzburg Court failed to recognize such a privilege, and finding that the Supreme Court’s interpretation of Federal Rule of Evidence 501 in Jaffee v. Redmond, 518 U.S. 1—which established a psychotherapist-patient privilege—did not overrule Branzburg or allow federal courts to recognize a reporter’s privilege under the common law.  With regard to the sanction for the government’s late Giglio disclosure, the Fourth Circuit found that the Giglio violation was not made in bad faith; that Sterling’s trial preparations were not irreparably damaged by the late disclosure; and that a less severe sanction—specifically, a continuance—would have remedied any prejudice from the brief delay.  Lastly, with regard to the district court’s CIPA ruling, the Fourth Circuit noted that Sterling already knew or may know some of the witnesses, and asserted that depriving Sterling of the witness key could infringe upon his Confrontation Clause rights; furthermore, the court noted that the government made no showing that Sterling or his counsel posed an actual threat to the witnesses’ safety.  However, the Fourth Circuit also noted that the jurors could remember the names on the witness key; that the actual names of the witnesses would not help the jury understand the facts and legal issues of the case, and that disclosure of the witness key to jurors was therefore not worth the risk; and that a proper jury instruction could alleviate any prejudice to Sterling.

Full Opinion

-Stephen Sutherland

Decided: July 17, 2013

Finding that the district court’s criminal sentence was neither procedurally nor substantively unreasonable, the Fourth Circuit affirmed.

Yooho Weon (“Weon”) was charged with five counts of willfully evading corporate income tax returns from 2004 to 2008. With the assistance of counsel, and a CPA, Weon entered into a written plea agreement, admitting all charges. The plea agreement stipulated that, for the purposes of the plea agreement and sentencing, the total tax loss was approximately 2.4 million dollars. Subsequently, the district court held a Rule 11 hearing to determine whether the guilty plea was entered into knowingly and voluntarily. During the hearing, Weon confirmed, under oath, that he had reviewed the factual stipulation and that those facts were true and correct. Still, following a six-month postponement, two weeks prior to the sentencing hearing, he informed opposing counsel that, according to his newly obtained forensic accountant, the actual tax loss was $40,000 rather than $2.4 million. The district court, however, held that Weon was bound by his stipulation for purposes of the sentencing hearing. Consequently, Weon moved to withdraw his guilty plea, arguing that it was entered into involuntarily because he was under the mistaken belief that the tax revenue loss figure was accurate when he agreed to the plea agreement’s terms. Finding the report of Weon’s forensic accountant “highly unpersuasive and riddled with holes,” the court disagreed.  Following its ruling on Weon’s motion to withdraw his plea, the court conducted his sentencing hearing. Without considering any evidence or argument that the tax revenue loss was materially lower than $2.4 million, the court imposed concurrent sentences of 30 months imprisonment, a sentence below the guidelines range, 33 to 41 months, found by the court. Weon appealed.

On appeal, the Fourth Circuit first addressed whether Weon waived his right to appeal pursuant to the plea agreement’s waiver provision. Finding that the provision was ambiguous as applied to Weon, the court declined to construe the waiver provision as barring Weon’s right to appeal. Turning to the merits, the court considered Weon’s challenges regarding the reasonableness of his sentence and found that: (1) procedurally, the district court did not abuse its discretion in prohibiting Weon from arguing that the tax revenue loss was materially less than $2.4 million because Weon knowingly and voluntarily stipulated to that amount in his plea agreement; and (2) Weon’s below-guidelines sentence of 30 months’ imprisonment was not substantively unreasonable.

Full Opinion

-W. Ryan Nichols

Decided:  July 17, 2013

The Fourth Circuit held that the United States District Court for the Eastern District of North Carolina properly considered the government’s motion for an upward departure under section 4A1.3 of the United States Sentencing Guidelines (“Sentencing Guidelines”), after the Fourth Circuit remanded the case of defendant Lewis Alston (“Alston”) to the district court; that the district court erred by not retroactively applying the Fair Sentencing Act (“FSA”) to Alston’s case, but that the error was harmless; and that the sentence applied by the district court was not substantively unreasonable.  The Fourth Circuit therefore affirmed the judgment of the district court.

Alston pleaded guilty to two cocaine-related offenses.  The district court determined the applicable Sentencing Guidelines range in accordance with United States v. Harp, 406 F.3d 242.  The government moved for an upward departure under section 4A1.3 of the Sentencing Guidelines, but the district court denied the government’s motion, issuing a prison sentence of 150 months.  Alston appealed.  While his appeal was pending, the Fourth Circuit overruled Harp in United States v. Simmons, 649 F.3d 237.  The Fourth Circuit therefore vacated Alston’s sentence and remanded his case for resentencing in United States v. Alston, 447 F. App’x 498 (Alston I).  On remand, the government again moved for an upward departure under section 4A1.3; over Alston’s objection, the district court granted the motion.  The district court issued a prison sentence of 120 months.  At the end of the sentencing hearing, Alston asked the court to retroactively apply the FSA, which had been enacted after Alston’s conviction but before resentencing.  The district court found that the FSA could not be applied to Alston’s case retroactively.  Additionally, after the district court determined Alston’s sentence under 18 U.S.C. § 3553(a), the court described the purposes of the sentence, stating that, inter alia, it “provide[s] the needed treatment of care in the most effective manner possible.”  On appeal, Alston asserted that the district court violated the mandate rule by granting the upward departure motion; that the district court should have retroactively applied the FSA; and that his sentence was substantively unreasonable, as district courts cannot lengthen prison terms for purposes of criminal rehabilitation.

The Fourth Circuit found that the district court did not violate the mandate rule.  The Fourth Circuit vacated Alston’s sentence in its entirety and remanded his case for de novo resentencing; furthermore, the Fourth Circuit’s mandate in Alston I did not relate to the district court’s consideration of a departure under section 4A1.3.  The Fourth Circuit also found that the district court erroneously failed to apply the FSA retroactively; however, the Fourth Circuit deemed this error harmless, as the 120-month sentence was within the applicable FSA range.  Lastly, the Fourth Circuit found that the district court did not lengthen Alston’s prison term for purposes of rehabilitation; rather, the district court was simply reiterating the sentencing factors contained in § 3553(a)(2) and discussing how Alston’s sentence met these factors.

Full Opinion

-Stephen Sutherland

Decided: July 17, 2013

The Fourth Circuit denied the National Labor Relations Board’s (the “NLRB”) application for enforcement of two bargaining orders because it found that the Obama Administration’s recess appointments to the NLRB violated the Constitution and, as such, the NLRB’s orders were invalid.

The Fourth Circuit consolidated two cases that involved labor disputes with Enterprise Leasing Company, LLC and Huntington Ingalls, Inc. (the “Companies”).  In both cases, the NLRB rejected the Companies’ substantive arguments regarding bargaining agreements with their respective labor unions and ordered both to comply with two bargaining orders issued.  The Companies challenged enforcement of the order first on substantive grounds and, in the alternative, arguing that the NLRB did not have a quorum to decide the issue.  The basis of their quorum challenge was that the Obama Administration, in appointing three of the current NLRB members on January 4, 2012, violated the Constitution’s Recess Appointments Clause, which provides that the President “shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.”   The Companies argued that the Administration’s decision to appoint three NLRB members during an “intrasession” recess violated the Recess Appointment Clause.  According to the court, Senate recesses can be classified into two categories: “intersession recesses–or, recesses that occur between two sessions of Congress–and intrasession recesses–or recesses that occur within one particular session of Congress.”  The NLRB filed an application for enforcement of its orders to the Fourth Circuit.

The Fourth Circuit first addressed the case on statutory grounds.  The court held that, under the applicable substantive laws, the NLRB’s orders were valid.  The court then turned to the Companies’ constitutional challenge – whether the President’s three recess appointments on January 4, 2012 were valid under the Recess Appointment Clause.  The court first pointed out that the Recess Appointment Clause has two important functions.  The first is to ensure that the government remains in operation during the times when the Senate would be unable to advise and consent to a nomination.  The second, and more important, function was to prevent the President from exercising his appointment power unilaterally, thereby preserving the separation of powers between the Executive and Legislative branches.  The court noted that there is a current split of opinion between the circuits regarding what the term “the Recess” means under the Clause.  Indeed, the Companies argued that the more narrow definition, adopted by the D.C. and Third Circuits, of “the Recess” limits the President’s recess appointment power to only intersession recesses.  On the opposite side, the NLRB argued that the Eleventh Circuit’s definition of a broader reading of the term to allow for intrasession recess appointments.  The court then discussed, at length, the different cases giving rise to the difference of opinions among the circuits and rationale for both arguments.  After an extensive examination of the text of the Recess Appointment Clause and a recognition of the historical understanding of the clause up until the 1920s, the Fourth Circuit agreed with both the D.C. Circuit and Third Circuit that the Recess Appointment Clause only applies to “intersession” recesses of the Senate and rejected the interpretation of the clause as allowing for intrasession appointments under the “unavailable for business” definition proposed by the NLRB and supported by the Eleventh Circuit.  As a result, the President’s January 4, 2012 appointments violated the Constitution and the bargaining orders were invalid because the NLRB did not have a quorum to decide the issues.

Full Opinion

– John G. Tamasitis

Decided: July 17, 2013

American Home Realty Network (“AHRN”) and Metropolitan Regional Information Systems, Inc. (“MRIS”) both operate an online multiple listing service (“MLS”). MRIS brought suit against AHRN, arguing that AHRN’s unauthorized use of photographs on its MLS constituted infringement under the Copyright Act. The district court entered an injunction prohibiting AHRN from displaying MRIS’s photographs on its website. AHRN appealed the injunction, but the Fourth Circuit affirmed the district court.

MRIS operates an online MLS where it compiles property listings into a database for real estate brokers and agent subscribers. By paying an online subscription fee and assenting to terms of use, subscribers may upload their real estate listings to the MRIS database. If the listing contains photographs, subscribers must agree to irrevocably assign to MRIS the copyrights in each photograph by clicking a button to agree. In exchange, subscribers have access to all of the listings in the database and have a nonexclusive license to display those listing on their own brokerage or agency websites. MRIS affixes its mark and copyright notice to all photographs in the database. MRIS registers its copyrights to the photographs in quarterly registrations of the database as a compilation. AHRN, on the other hand, is a California real estate broker that operates a national real estate search engine. In the operation of its site, AHRN displayed listings containing copyrighted photographs from the MRIS database. The district court enjoined AHRN’s use of MRIS photographs only, and not the use of any textual elements that are considered part of the compilation. AHRN appealed the injunction.

On appeal, AHRN that the district court erred in granting a preliminary injunction for two reasons: (1) MRIS failed to properly register copyrights on the individual photographs when registering its database; and (2) MRIS does not possess a copyright interest in the photographs because MRIS’s electronic terms of use failed to adequately transfer the copyrights of the photograph from the subscribers to MRIS. The Fourth Circuit disagreed with AHRN’s first argument, finding that the registration of the database as a whole was sufficient to register the photographs contained in the compilation. The Fourth Circuit stated that courts have disagreed as to whether the failure to include the individual authors of the photographs in the copyright registration when the photographs are part of a collective work defeats copyright protection. The Fourth Circuit ultimately sided with those courts holding that the registration of a collective work is sufficient to permit an infringement action on behalf of the component works “as long as the registrant owns the rights to the component as well.” The court found that it would be “absurd and inefficient” to require the registrant of a collective work to list each author for “an extremely large number of component works.” Furthermore, the Copyright Act’s specific goal is to ease the burden on group registration.

Next, AHRN argued that MRIS failed to establish ownership in a valid copyright because the terms of use that a subscriber must assent to by clicking does not operate as a valid assignment of rights under the Copyright Act. The Fourth Circuit agreed with MRIS, however, finding that the E-Sign Act, which affirms the validity of electronic agreements, makes the click-through agreement a valid assignment, notwithstanding its electronic form. As a preliminary matter, the court noted that where, as in the present situation, the copyright author and the assignee have no dispute as to the validity of the assignment, courts typically do not allow a third party infringer to object to the validity of the assignment under the copyright act. More importantly, the court held that, under the E-Sign Act, “clicking yes” to terms of use that assign the copyrights to MRIS satisfies the assignment requirements under the Copyright Act. Although the E-Sign Act has several narrow limitations, none apply in the present case. Therefore, the court held that electronic agreements to assign copyrights are valid, and thus, MRIS is likely to succeed in establishing its ownership of copyright interests in the copied photographs.

Full Opinion

– Wesley B. Lambert

Decided: July 17, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s judgment entered in favor of Plaintiff Richard Bunn, who slipped and fell on Defendant’s ship, under § 5(b) of the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 905 (b) (the “Act”).

On February 16, 2007, longshoreman Richard Bunn (“Bunn”), who worked for the stevedore, CNX Marine Terminals Inc. (“CNX”), slipped on ice and injured himself while loading coal onto Oldendorff’s ship (“the ship”). That night, the CNX shift supervisor informed the chief officer that CNX employees intended to start loading operations, but could not do so until ice had been cleared from the path. The chief officer responded that the ship’s crew would salt and sand the path. Once Bunn was informed that the paths had been cleared, he boarded the ship and began loading coal. When loading hatch number three, Bunn slipped on ice and fell. Bunn’s co-worker told the chief officer that the ship was icy and needed to be salted. The chief officer responded that the salt supply was limited. When Bunn’s co-worker returned to load coal into hatch number three, he noticed that it was still icy. At the close of Bunn’s case, and again at the conclusion of all the evidence, Oldendorff moved for judgment as a matter of law, which the district court denied. The jury found Oldendorff negligent, whereupon Oldendorff renewed its motion and moved alternatively for a new trial, which the court also denied.

On appeal, Oldendorff raised two principal assignments of error: (1) the district court erred in denying the motions for judgment as a matter of law and (2) the district court misinformed the jury about the applicable law, and therefore erred in denying the motion for new trial.

Oldendorff based its appeal of denial on the motion for judgment as a matter of law on the fact that the icy deck was an open and obvious danger, and that Oldendorff only had a responsibility to warn of hidden dangers. The Court of Appeals found that while this was a correct statement of the law, liability did not depend on the duty to warn, as this was a simple case of primary negligence. Section 5(b) of the Act permits a longshoreman to “seek damages in a third-party negligence action against the owner of the vessel on which he was injured.” In Scindia, the Supreme Court outlined the three general duties ship owners owe to longshoremen, one of which is the “turnover duty,” which was at issue in this case. The turnover duty relates to the condition of the ship upon the commencement of stevedoring operations. The turnover duty has two components: (1) the duty to exercise ordinary care under the circumstances to have the ship and its equipment in such condition that an experienced stevedore could carry on its cargo operations with reasonable safety and (2) the duty to warn the stevedore of hazards that are known or should be known by the vessel, are likely to be encountered by the stevedore, and are not known by the stevedore and would not be obvious to or anticipated by him. In other words, the ship owner has a duty to warn only of latent hazards. However, the argument turned not on the openness or obviousness of the danger, but on the circumstances surrounding it. The district court did not dispute the validity of the open and obvious rule or its applicability to ice on the deck under general circumstances. The district court reasoned that while ice on the deck may have been open and obvious, it was not obvious that the ship owner would promise to take care of the hazard, and then not do so. The Court of Appeals found no error in the district court’s reasoning holding that a ship owner may still be liable for promising, but failing, to remedy a dangerous condition and that principle comports with accepted principles of tort law. This liability also comports with a well-settled principle of the turnover duty: the scope of that duty depends on the circumstances of each particular case. When the circumstances include a promise to remedy a dangerous situation, the ship owner may fail to exercise reasonable care if it does not fulfill its promise.

With regards to its second challenge that the district court misinformed the jury about the applicable law, Oldendorff reasoned that the court’s refusal to give the company’s requested open and obvious instruction deprived the jury of a full and accurate understanding of the law. The Fourth Circuit reviewed the trial court’s jury instructions from an abuse-of-discretion standard. The court held that Oldendorff failed to preserve a challenge to the jury instructions, as the company provided no record of an objection to the district court. Oldendorff provided only its requested instructions, and those that the court ultimately gave the jury, which does not preserve error for appeal. Further, the court indicated that even if it were to reach the issue, it would find it meritless, as the district court properly informed the jury of the open and obvious law.

Full Opinion

– Sarah Bishop

Decided: July 12, 2013

Finding that the district court did not err in finding Mohammad Saaili Shibin (“Shibin”) guilty of all 15 charges relating to his involvement in the piracy and ransom of two ships on the high seas, the Fourth Circuit affirmed.

On May 8, 2010, the Marida Maruerite (“Marida”), a German Merchant ship was seized by Somali pirates on the high seas and transported to Somalia. While docked in Somalia, Shibin boarded the vessel and, over the course of seven months, participated in ransom negotiations and torture of the crew. In December 2010, Shibin completed a five million dollar ransom deal for the Marida’s crew. Several months later, the Quest, an American sailing vessel was also hijacked by a group of Somali pirates and four Americans were taken hostage. While en route to Somalia, the US Navy learned of the hijacked ship and established radio communications with the pirates. Through the course of the communications, the pirates represented that Shibin was the individual with the authority to negotiate and provided the Navy with his cell phone number. On February 22, 2011, as the Quest was nearing Somalia waters, the Navy advised the pirates to stop. When they did not comply, the Navy attempted to cut the Quest off, prompting the pirates to initiate hostilities. As Navy vessels began to close in, but before they reached the Quest, the pirates killed all four American hostages on board. Thereafter, on April 4, 2011, acting in cooperation with local authorities, the FBI arrested Shibin in Somalia. While in custody in Somalia, with the assistance of an interpreter, FBI agents questioned Shibin several times over three days. It was confirmed that his cell phone number matched the number provided to the Navy during communications with the Quest hijackers. Shibin admitted involvement in the Marida ransom negotiations, but denied any involvement in the Quest hijacking despite admitting to conducting various searches on his cell phone related to the Quest hijacking and its crew. Searches of Shibin’s bank records and phone records uncovered a sizable amount of damning evidence indicating his involvement in the Quest hijacking. In April 2011, after obtaining custody of Shibin, the FBI transported him to the Oceana Naval Air Station in Virginia Beach, Virginia, where he was “found” for jurisdictional purposes. Shibin was indicted on 15 counts relating to his involvement in the two piracies. Counts 1 through 6 (the “Marida Charges”), were based on his involvement in the Marida piracy, and counts 7 through 15, were based on his involvement in the Quest piracy and killing of the American hostages. Following a ten-day trial, Shibin was convicted on all counts. This appeal followed.

On appeal, Shibin contended that the district court erred by refusing (1) to dismiss the piracy charges on the ground that Shibin himself did not act on the high seas and therefore the court lacked subject-matter jurisdiction; (2) to dismiss all counts for lack of personal jurisdiction because he was forcibly seized in Somalia and involuntarily removed to the U.S.; (3) to dismiss certain alleged “non-piracy charges” contained within the Marida Charges—charges 2 through 6—because “universal jurisdiction” did not extend to justify the U.S. government’s prosecution of those crimes; and (4) to exclude FBI Agent Kevin Coughlin’s testimony about prior statements made by a Somali-speaking witness through an interpreter because the interpreter was not present in court.

Rejecting Shibin’s first contention, the Fourth Circuit affirmed Shibin’s piracy convictions because the court found he intentionally facilitated two piracies on the high seas, even though his conduct took place in Somalia and its territorial waters. Next, the court rejected Shibin’s second contention, and found that, although Shibin was brought into the U.S. involuntarily, the personal jurisdiction requirement, as contained in 18 U.S.C. §§ 1651, 1203, and 2280, was satisfied. In so concluding, the court noted that generally, under the Ker-Frisbie doctrine, the manner in which the defendant is captured and brought to court is generally irrelevant to the court’s personal jurisdiction over him. The court next rejected Shibin’s third argument, finding that counts 2 through 6 were based on a statute that Congress validly applied to extraterritorial conduct rather than “universal jurisdiction.” Lastly, the court addressed Shibin’s contention that the district court abused its discretion in allowing Agent Coughlin to testify regarding statements made by a Somali interpreter during the interrogations of a Shibin witness, Salad Ali, because the interpreter was an out of court declarant. Finding that (1) Agent Coughlin’s statements were admissible testimony of prior inconsistent statements made by Salad Ali and (2) that the absence of the interpreter did not render the statements inadmissible as hearsay because the interpreter was not the declarant, but only a language conduit, the Fourth Circuit held that the district court did not commit plain error in its evidentiary ruling.

Full Opinion

-W. Ryan Nichols

Decided: July 12, 2013

The Fourth Circuit dismissed the appeal of Pfizer Inc., Roerig, and Greenstone, LLC (“Appellants”), finding that the court lacked jurisdiction to review the district court’s decision to remand the case to state trial court in West Virginia.

Nineteen families (“Families”) brought products liability and negligence claims against Appellants alleging that the prescription anti-depressant “Zoloft” caused birth defects when the mother ingested Zoloft during pregnancy. Pursuant to West Virginia Rule of Civil Procedure 3(a), the clerk of court docketed each family separately, resulting in nineteen distinct actions. Although they did not share a civil action number, the Families were allowed to file a single complaint. Believing that nineteen separate actions existed, Appellants removed eighteen of the Families into federal court on the basis of diversity of citizenship, leaving one non-diverse Family at the state court level. The Families challenged the removal, arguing that they were part of a single case, and that the Appellants could not split the claims for diversity jurisdiction purposes. The district court examined the purpose of Rule 3(a) and held that the Rule was not intended to create multiple distinct cases for the purposes of determining diversity of citizenship. The district court then disposed of Appellants’ alternative argument that the non-diverse Family was fraudulently joined. The court found that at the claims were “logically related” to those of the other Families and that the claims shared “common questions of law or fact.” The district court then granted the Families’ motion to remand the case to the state court of West Virginia. Appellants appealed the court’s decision to remand.

On appeal, the Fourth Circuit first established the narrow circumstances when a court may review a district court’s decision to remand. The court explained that review of a remand order is barred if it falls within the scope of 28 U.S.C. § 1447(c), which gives the district court authority to remand on the basis of lack of subject matter jurisdiction or any “other defect” in removal. Appellants argued that the district court’s decision to consider the citizenship of “nonparties” fell beyond the scope of § 1447(c), giving the Fourth Circuit the ability to hear the case. The court disagreed, finding that the district court’s decision to remand the case was firmly based on a lack of subject matter jurisdiction. The court stated that it could not review rulings that “are simply the necessary legal underpinning to the court’s determination that the case was not properly removed.” Moreover, the court dismissed Appellants’ alternative argument that an exception applied that allowed the court to review a “collateral decision that is severable from the remand order.” The court found that the district court’s determination that the non-diverse Family was actually a party was not a “collateral decision” that was severable from the determination of a lack of subject matter jurisdiction. The court said that a review in this case would “overstrain” the exception and “open up for review any legal or factual analysis that a district court takes to determine whether to remand an action.” Therefore, the Fourth Circuit dismissed the appeal.

Full Opinion

– Wesley B. Lambert

Decided: July 11, 2013

Upon remand from the U.S. Supreme Court, the Fourth Circuit affirmed the judgment of the district court to dismiss Liberty University and certain individuals’ (the “Plaintiffs”) action challenging the constitutionality of the employer and individual mandates of the Patient Protection and Affordable Care Act (the “Act” or the “ACA”) on religious freedom grounds.  Notably, and maybe more importantly, the Fourth Circuit also held that the Anti-Injunction Act (the “AIA”) does not bar a pre-enforcement challenge to the employer mandate and rejected the federal government’s arguments that the Plaintiffs did not have standing to challenge the mandates and, in the alternative, that the Fourth Circuit should delay its decision because the enforcement of the employer mandate has been delayed until 2015.

In a second amended complaint, the individual plaintiffs challenged the individual mandate asserting, inter alia, that they held certain Christian religious beliefs regarding abortion that should not force them to participate in the mandate because doing so would require them to facilitate, fund, and support abortions.  Liberty University also challenged the employer mandate asserting that if the federal government’s definition of “minimum essential coverage” finds the University to offer coverage insufficient under the law it would be subject to significant penalties in violation of various constitutional provisions restricting Congress’s authority.  Also, like the individual plaintiffs, Liberty University argued that, as a Christian educational institution with certain held religious beliefs that abortion constitutes “murder and [is] morally repugnant,” it should not be forced to facilitate, fund, or support abortions under the employer mandate because doing so would violate its constitutional rights.  The Plaintiffs, collectively, asserted that the mandates exceed Congress’s authority under the Commerce Clause and violated the Tenth Amendment, the Establishment and Free Exercise Clause of the First Amendment, the Religious Freedom of Restoration Act (the “RFRA”), the Fifth Amendment, the right to free speech and free association under the First Amendment, the Article I, Section 9 prohibition against unapportioned capitation or direct taxes, and the Guarantee Clause.  The Secretary of the Treasury moved to dismiss the claims for lack of jurisdiction, arguing that the Plaintiffs lacked standing and that the AIA barred the suit.  In the alternative, the Secretary moved to dismiss the complaint for failure to state a claim upon which relief could be granted.  When the Fourth Circuit first took the case up on appeal it refused to reach the merits of the case because it concluded that the AIA deprived the court of jurisdiction.  The U.S. Supreme Court vacated that judgment after its decision in NFIB v. Sebelius and directed the court to give further consideration to the case in light of that decision.

The Fourth Circuit first addressed whether the AIA barred this pre-enforcement suit to the employer mandate and whether the Plaintiffs had standing to challenge the constitutionality of the mandates.  With regards to the AIA, the Fourth Circuit noted the Supreme Court, in NFIB, “made clear that the AIA does not apply to every exaction that functions as a tax or even to every exaction that passes muster as a tax for constitutional purposes.”  Instead, the AIA applies only in situations where Congress intended for it to apply.  Similar to the Supreme Court’s reasoning in NFIB, the Fourth Circuit noted that the language of the employer mandate does not consistently refer to the mandate exaction as a “tax.”  Actually, the court identified that the ACA refers to the exaction as a “tax” only twice, yet refers to the exaction as an “assessable payment” seven other times.  The court also indicated that when the ACA does refer to the exaction as a “tax” it is inconsistent in how it cross-references that language with the Internal Revenue Code (“IRC”).  In addition to the textual inconsistencies with the Secretary’s argument, the court noted that adopting such a position would lead to an “anomalous result” as compared with the Supreme Court’s decision in NFIB to allow pre-enforcement challenges to the individual mandate provision.  As such, the Fourth Circuit held that the AIA does not bar this type of pre-enforcement action against the employer mandate.  The court next addressed the second jurisdiction issue raised by the Secretary – standing.  The court went through the obligatory explanation of the standing doctrine and focused its analysis on the Secretary’s contention that the Plaintiffs lacked standing because they failed to allege any actual or imminent injury.  For Liberty University, the Fourth Circuit held that because the university “could” be subject to an assessable payment under the employer mandate and that payment could result in negative effects on the university by increasing the cost of providing health insurance coverage, it established the requisite plausible “general factual allegations of injury” to satisfy the standing doctrine.  Moreover, the court held that such injury was imminent even though the mandate would not go into effect until 2015 because Liberty University would have to take measure to ensure compliance in advance of that date.  With respect to the individual plaintiffs, the court also held that they satisfied the requirement of establishing “general factual allegations of injury” to satisfy the doctrine and, thus, had standing to challenge the individual mandate’s enforcement.  As a result, the Fourth Circuit agreed with the Plaintiffs that they had standing to challenge the ACA and rejected the Secretary’s standing arguments and its contention that the court should delay any decision with regards to the employer mandate even though it had been delayed for a year until 2015.

The Fourth Circuit then turned to the Plaintiffs’ constitutional challenges to the mandates.   First, the court addressed Liberty University’s argument that the employer mandate exceeds Congress’s authority under Commerce Clause of the Constitution.  Even though the Supreme Court in NFIB called into question the previously identified “expansive” authority of Congress under the Commerce Clause, it did not disturb the historical understanding of Congress’s ability to regulate activity with “substantial effects on interstate commerce.”  The court noted that, by their very nature, employers are engaged in economic activity and its decision to provide health insurance to its employees is no different.  Because employers are “active in commerce” already, the Fourth Circuit held that “Congress had a rational basis for finding that employers’ provision of health insurance coverage substantially affects interstate commerce,” and, thus, the ACA’s employer mandate is a valid exercise of Congress’s authority under the Commerce Clause.

The court next quickly addressed the Plaintiffs’ argument that the employer mandate is outside Congress’s authority under the Taxing and Spending or General Welfare Clause.  The Fourth Circuit relied heavily on the Supreme Court’s rationale in NFIB upholding the individual mandate as a tax in asserting that the “essential feature” or, in the alternative, “other functional characteristics” of the employer mandate penalty establish the penalty as a tax and, as such, falls within Congress’s authority under the Taxing and Spending Clause of the Constitution.

Lastly, the Fourth Circuit addressed the Plaintiffs’ challenge to the ACA on various religious grounds.  First, with respect to the Plaintiffs’ Free Exercise Clause argument, the court held that the ACA is a “neutral law of general applicability.”  As a result, it does not violate the Clause and the court rejected the Plaintiffs’ arguments.  The court also rejected the Plaintiffs’ RFRA claims under the theory that the ACA does not “substantially burden religious practice,” as is the requirement under the RFRA in order for the court to apply strict scrutiny to the legislation.  The court then took up the Plaintiffs allegation that two religious exemptions contained within the Act violate the Establishment Clause and their Fifth Amendment equal protection rights.  The first exemption at issue was the individual mandate’s religious conscience exemption.  The court held that this exemption passed the Lemon test because it had a secular purpose and did not “advance nor inhibit” religion.  The second individual mandate exemption challenged by the Plaintiffs dealt with the health care sharing ministry exemption.  The Plaintiffs argued that the exemption unconstitutionally selected an arbitrary formation date as the eligibility cutoff.  Again, the court rejected the argument under the Lemon test.  Finally, the court addressed the Plaintiffs’ Fifth Amendment equal protection rights argument.  Because the distinctions between different groups was “rationally related to the Government’s legitimate interest in accommodating religious practice while limited interference in the Act’s overriding purposes,” the Plaintiffs failed to state a plausible claim that the Fifth Amendment provided a basis for relief.

In addition, the Fourth Circuit quickly addressed the Plaintiffs’ claims in their post-remand briefs that certain regulations implementing the Act that required group health plans to cover all FDA-approved contraceptive methods violated their religious rights.  Because these regulations were not addressed in the Plaintiffs’ amended complaints, nor were they challenged in district court, their first appeal to the Fourth Circuit, or their Supreme Court briefs, the Fourth Circuit declined to take up the issue.  The court noted that these regulations were promulgated while this case was pending and several other sister circuits are currently considering such cases that had been filed after the regulations were promulgated.  As a result, the court did not believe the Plaintiffs’ reasoning for addressing these issues some three years after the action had commenced warranted consideration by the Fourth Circuit at this time.

Full Opinion

– John G. Tamasitis

Decided: July 10, 2013

The Fourth Circuit Court of Appeals reversed the district court’s grant of the defendant corporation’s motion to dismiss the plaintiff landowners’ nuisance action. The court held that the discovery rule articulated in § 9658 of the Comprehensive Environmental Response, Liability, and Compensation Act (CERCLA), 42 U.S.C. § § 9601-9675, preempts North Carolina’s ten-year limitation on the accrual of real property claims.

From 1959 to 1985, the defendant, CTS Corporation (CTS), operated the Mills Gap Road Electroplating Facility (the Facility) in Asheville, North Carolina. The Facility manufactured and disposed of electronics and electronic parts. In 1987, CTS sold the Facility, promising realtors that the property had been rendered in an environmentally clean condition. Portions of the land were eventually sold to the plaintiff landowners, who learned subsequent to their purchase that their land was contaminated. In 2009, they learned that their well water contained concentrated levels of trichloroethylene (TCE) and cis-1, 2-dichloroethane (DCE), both solvents that have carcinogenic effects. The landowners joined together and brought a nuisance claim.

In North Carolina, claims become nonexistent once ten years have passed since a defendant’s last tortious act, regardless of whether a claimant had knowledge of his harm within the ten-year window. This window is classified under state law as a statute of repose, which limits the time that a plaintiff has to bring a claim, based entirely on when the defendant acted. In this case, the last act or omission of CTS occurred in 1987, when it sold the Facility. Thus, when the landowners filed their nuisance action in 2011, CTS moved to dismiss, maintaining that North Carolina’s ten-year limitation on the accrual of real property actions barred the claim. The landowners countered, citing § 9658 of CERCLA as preemptive of North Carolina’s limitation. The court rejected the landowners’ argument, reasoning that the ten-year limitation is a statute of repose and that because § 9658 mentions only statutes of limitations, it is inapplicable here and recommended dismissal. Thus, in reviewing the district court’s dismissal, the Fourth Circuit addressed whether § 9658 preempts state statues of repose.

The court sought to interpret the statute in light of Congress’ intent. Therefore, the court first examined the text of the statute. The court found that the text of § 9658 was capable of at least two interpretations: (1) it is limited only to statutes of limitations and (2) it applies to both statutes of limitations and statutes of repose. Therefore, the court concluded that the statute was ambiguous. Further, even if the text were plain and unambiguous, the historically inconsistent use of the terms “statutes of limitations” and “statutes of repose” rendered sufficient ambiguity. Therefore, the court then examined the legislative history of the statute. Because CERCLA is a remedial statute, it should be given a broad interpretation to effect its ameliorative goals. Therefore, the court adopted the interpretation which makes § 9658 applicable to both statutes of limitations and statutes of repose, such as North Carolina’s ten-year limitation. The court held that the federally required commencement date in § 9658 preempts North Carolina’s ten-year limitation on the accrual of real property claims.

Full Opinion

– Sarah Bishop

Decided:  July 5, 2013

The Fourth Circuit held that the United States District Court for the Eastern District of North Carolina did not commit clear error by ordering civil commitment of Mikel Bolander (“Bolander”) as a “sexually dangerous person” under the Adam Walsh Act, 18 U.S.C. § 4248 (“section 4828”); that section 4828 did not deprive Bolander of equal protection, and did not impose an unconstitutional criminal punishment on him; that the length of time between Bolander’s projected release from prison and the evidentiary hearing regarding civil commitment did not violate Bolander’s due process rights; and that the district court did not commit error by denying Bolander’s December 6, 2011 motion in limine, in which Bolander argued that evidence relating to disclosures he made during participation in a Sex Offender Treatment Program (“SOTP”) should be excluded under the psychotherapist-patient privilege.  The Fourth Circuit therefore affirmed the rulings of the district court.

Bolander began experiencing attraction to prepubescent boys at the age of twelve.  In December 1988, when Bolander was twenty-four years old, he was charged with multiple sexual offenses in San Diego, California after molesting an eleven-year-old boy over a six-month period.  Bolander was sentenced to six years’ imprisonment in April 1989.  Bolander was paroled in 1992; however, a parole officer subsequently discovered child pornography and other lewd materials in a search of Bolander’s residence.  Bolander was arrested in 1996, and later pled guilty to federal charges for distribution of child pornography.  Bolander participated in a SOTP while serving a sentence in federal prison.  Bolander was released in 1998, and was subsequently sentenced to prison for federal child pornography violations on two separate occasions.  Bolander’s projected release date for the most recent prison term was February 9, 2007; however, on that day, the Federal Bureau of Prisons certified that Bolander was a “sexually dangerous person” pursuant to section 4248(a), thereby staying Bolander’s release in anticipation of an evidentiary hearing.

The hearing took place on January 19, 2012, nearly five years after Bolander’s projected release date.  Prior to the hearing, on December 6, 2011, Bolander moved in limine to exclude the evidence related to disclosures he made as a participant in the SOTP, claiming the protection of the psychotherapist-patient privilege.  The district court denied Bolander’s motion.  At the January 19 hearing, the district court heard testimony from three psychologists, who had evaluated Bolander and prepared expert reports; a former director of the SOTP, who directed the program while Bolander was enrolled in it; and Bolander himself.  The district court concluded that the government had proven Bolander was a “sexually dangerous person” by clear and convincing evidence, as the government proved that Bolander had engaged in an act of child molestation in the past, Bolander suffered from serious mental disorders, and Bolander “would have serious difficulty in refraining from . . . child molestation if released” due to his mental disorders.  Of these three conclusions, Bolander appealed only the third.

The Fourth Circuit found that there was evidence in the record to support the district court’s finding of “serious difficulty”; furthermore, as a result of the reasonable explanations offered by one of the government’s psychologists, the district court had the liberty to reject Bolander’s alternative arguments.  The Fourth Circuit also noted that Bolander’s equal protection argument, as well as his assertion that section 4828 imposed an unconstitutional criminal punishment, were foreclosed by the court’s decision in United States v. Timms, 664 F.3d 436.  With regard to the delayed hearing, the Fourth Circuit found that the government’s justification for the delay satisfied due process requirements:  The court listed Bolander’s own pretrial requests and decisions, as well as the constitutional uncertainty surrounding United States v. Comstock, 130 S. Ct. 1949, as reasons for the delay.  Lastly, with regard to Bolander’s motion in limine regarding the SOTP evidence, the Fourth Circuit found that Bolander waived any potential psychotherapist-patient privilege by failing to properly assert the privilege in a timely manner.

Full Opinion

– Stephen Sutherland

Decided: July 5, 2013

Finding that the Maryland offense of resisting arrest constitutes a crime of violence under U.S.S.G. § 2L1.2, the Fourth Circuit affirmed the District Court for the District of Maryland’s application of the “crime of violence enhancement” in the sentencing of Marcel Aparicio-Soria (“Aparicio-Soria”).

In April 2012, Aparicio-Soria pleaded guilty to illegally reentering the U.S. after having been previously deported following a conviction for aggravated felony. With respect to the sentencing determination, the main issue before the district court concerned another prior state conviction for resisting arrest. The question before the district court was whether Maryland’s resisting arrest offense qualifies as a “crime of violence,” under U.S.S.G. § 2L1.2(b)(1)(A)(ii), for the purposes of applying a significant sentencing enhancement for any defendant convicted of illegally reentering or staying in the country after previously being convicted for a felony that is a crime of violence. There was no dispute that resisting arrest did not fall under any of the enumerated offenses, however, the issue was whether resisting arrest fell under the residual “force clause.” The district court first employed the so-called “categorical approach” for determining the applicability of the sentencing enhancement. However, the court found that the type of force required to sustain a conviction for resisting arrest under Maryland law was insufficient to trigger the enhancement as a general matter. The court then turned to the “modified categorical approach,” examining the factual statement incorporated into the charging document to determine whether the underling charge involved a sufficient element of force and concluded that the type of force involved was sufficient to render his resisting arrest conviction a crime of violence. This resulted in raising the advisory guidelines range from between 24 and 30 months to between 54 and 71 months. Ultimately, after granting a downward variance based on the factors in 18 U.S.C. § 3553(a), Aparicio-Soria was sentenced to 36 months of incarceration. Aparicio-Soria appealed, challenging the district court’s application of the crime of violence enhancement.

In appealing his sentence, Aparicio-Soria argued that the district court erred in applying the crime of violence enhancement to his sentence by (1) proceeding beyond the categorical approach and purporting to apply the modified categorical approach; (2) by incorrectly focusing on concrete facts underlying his crime rather than elements required for conviction in its application of the modified categorical approach; and (3) by incorrectly concluding that the conduct described in the charging document was sufficient to demonstrate the necessary level of force.

Noting its authority to affirm the district court’s judgment based on any ground supported by the record, the Fourth Circuit affirmed the judgment on the basis of a categorical analysis without reaching the other issues presented. As a preliminary matter, in addressing Aparicio-Soria’s sentencing enhancement under the categorical approach, the court observed that the approach requires a comparison of (1) the elements of the offense category contained in the force clause of the crime of violence enhancement and (2) the elements of the offense of resisting arrest under Maryland law. After finding that force was an element of the Maryland crime of resisting arrest at the time of Aparicio-Soria’s conviction, the court then analyzed whether such force satisfied the standards of the crime of violence enhancement. Noting that the categorical approach requires an elements-based rather than a conduct-based methodology, the court found overwhelming evidence that Maryland law requires violent force against the person of another in order to justify a charge of resisting arrest, and therefore held that Aparicio-Soria’s conviction fell within the force clause of the crime of violence enhancement.

Full Opinion

-W. Ryan Nichols

Decided: July 5, 2013

The Fourth Circuit affirmed the district court’s determination that the City of Lexington’s decision to restrict the presentation of flags on city property was not unconstitutional nor was it a violation of a prior consent decree between the City of Lexington (the “City”) and the Sons of Confederate Veterans (the “SCV”) regarding the display of Confederate flags.

In 2010, SCV began planning a parade in honor of Robert E. Lee and Stonewall Jackson. Two months before the scheduled parade, the SCV sought permission from the Lexington City Council to display the Confederate flag on city light poles along the street during the parade. The City Council granted the request. After the parade took place in January 2011, the City Council received negative feedback about the display of the Confederate flag, leading the City Council to adopt an ordinance that only allowed the American Flag, the Virginia Flag, or the town flag to be flown on City light poles. After adopting the ordinance, the SCV sued the City for first amendment violations and for violations of a consent decree which the City and SCV entered into in 1993 whereby the City agreed not to abridge the rights of the SCV or its members to “wear, carry, display or show…the Confederate flag or other banners, emblems, icons or visual depictions to bring into public notice any logo of ‘stars and bars’ that ever was used as a national or battle flag of the Confederacy.” The district court determined that the light poles as “designated public forums” and dismissed the SCV’s claims. SCV appealed.

On appeal, the SCV first argued that the district court erred in determining that, the City’s motivation for closing the designated public forum was immaterial. The court disagreed, finding that, because the ordinance was facially neutral, the City’s motivation was not relevant. The court began by identifying the nature of the form at issue. The court explained that public forums, like sidewalks, receive the greatest first amendment protection while nonpublic forums, such as polling places, are not entitled to as much protection. The Fourth Circuit determined that the light poles at issue in this case fell into a third category called “designated public forums” that is a “nonpublic government site that has been made public and ‘generally accessible to all speakers.’” As a designated public forum, the City was free to close the forum at any time, regardless of motivation. Furthermore, the city did not prohibit individuals from displaying Confederate flags on private property or from carrying flags in public. The court also dismissed the SCV’s argument that the ordinance violated the 1993 consent decree. The court held that because there was no constitutional violation in passing the ordinance, there could similarly be no violation of the consent decree. The decree merely stipulated that the City would not deny the SCV the right to display the Confederate flag at any “place or event which is to any extent given over to private expressive activity.” By constitutionally closing the designated public forum, the City abolished “private expressive activity” from its flag standards. Furthermore, the court rejected the argument that the City could not close its flag standard since they were previously given over to private expressive activity.

Full Opinion

– Wesley B. Lambert

Decided July 3, 2013

The Fourth Circuit Court of Appeals reversed the district court’s denial of the parties’ cross-motions for summary judgment. A minor brought this class action to challenge South Carolina’s reduction of monthly adoption assistance benefits asserting that its conduct violated the Adoption Assistance and Child Welfare Act, 42 U.S.C. § 670 et seq. (2006) (“the Act”).

The South Carolina Department of Social Services (“DSS”) provides adoption assistance subsidies and foster care maintenance payments pursuant to federal funding authorized by the Act. To receive funding under the Act, a state must develop a plan for a subsidy and maintenance program and must obtain approval of that plan by the United States Secretary of Health and Human Services. The Act sets forth specific requirements governing foster care maintenance payments and adoption assistance payments. For adoption assistance payments, a state with an approved plan “shall enter into adoption assistance agreements with the adoptive parents of children with special needs.” The adoption assistance payments are determined by the particular circumstances, but in no case may the amount exceed the foster care maintenance payment, which would have been made had the child been in a foster family home.

In 1997, BLH, a minor child, was placed in foster care. The foster parents received monthly foster care maintenance payments of $675, which included an upward adjustment because BLH was a special needs child. In 1999, the foster parents applied to be BLH”s adoptive parents. They sought to convert the foster care maintenance payment into an adoption assistance subsidy. The foster parents entered into an Adoption Subsidy Agreement under which DSS agreed to furnish them monthly adoption assistance payments of $675. Two months later, a state court declared them the adoptive parents of BLH. They received the monthly $675 payments for three years. In 2002, DSS began reducing by twenty dollars all monthly foster care maintenance payments and adoption assistance subsidies. In 2004, DSS rescinded the twenty-dollar reduction to foster care maintenance payments, but did not rescind the reduction to adoption assistance subsidies. Thus, for BLH, the payments remained at $655 per month.  BLH filed in state court a class action against Lillian Koller, individually and in her official capacity as director of DSS. Koller removed the caseto federal court. BLH added former directors of DSS to their complaint (collectively, with Koller, “the Directors”). The district court denied the Directors’ motion for summary judgment.

On appeal, the Directors asserted qualified immunity from suit. The qualified immunity inquiry asks (1) whether an official violated a federal right, and (2) whether that right was clearly established at the time the official acted.

Here, the Fourth Circuit determined whether § 673 (a)(3) creates a privately enforceable right to parental concurrence, which the Directors may have violated. The Supreme Court in Blessing v. Freestone laid out a three-factor test to determine whether a particular statutory provision gives rise to a federal right privately enforceable under 42 U.S.C. § 1983. For the first-factor, the court addressed whether Congress intended § 673 (a)(3) to benefit the plaintiff. Because the Act provides that the adoption assistance payments are determined through agreement and may be readjusted periodically, it does apply to the plaintiff. For the second factor, the court addressed whether the asserted right is not “so vague and amorphous that its enforcement would strain judicial competence.” The court found that the term “concurrence” was not too vague. § 673 (a)(3)’s requirement that a state may not readjust an adoption assistance payment amount without an adoptive parent’s “concurrence,” clearly means agreement or assent. For the third factor, the court addressed whether the statute unambiguously imposes a binding obligation on the States, which is demonstrated by mandatory, rather than precatory terms. The court found that there was no ambiguity as to what statues must do under § 673 (a)(3) as a condition of receiving federal funding under the Act. Therefore, § 673 (a)(3) does give rise to a privately enforceable federal right; however, only violations provide for recovery. The language of the statute prohibits adoption assistance subsidies that exceed foster care maintenance payments. As a result, § 673 (a)(3) establishes a right to parental concurrence in subsidy readjustment determinations except when the subsidy must be reduced due to reductions in foster care maintenance payments. Here, the subsidy had to be reduced due to South Carolina’s reduction in all foster care maintenance payments. The State’s failure to do so would have violated federal law. For, under § 673 (a)(3), a failure to reduce BLH’s adoption assistance payment would have resulted in a payment “exceeding the foster care maintenance payment” she would have received had she remained in foster care. Therefore, the plaintiffs cannot establish that the Directors violated the plaintiffs’ rights under the Act and the Directors are entitled to qualified immunity.

Full Opinion

– Sarah Bishop

Decided: July 3, 2013

A majority of the Fourth Circuit, sitting en banc, vacated the judgment of the district court, which granted summary judgment to Plaintiffs Greater Baltimore Center for Pregnancy Concerns, Inc., St. Bridgid’s Roman Catholic Congregation and its Archbishop and permanently enjoined the enforcement of a City of Baltimore Ordinance.   The Ordinance at issued required limited-service pregnancy centers to post disclaimers that the center does not provide or make referrals for abortions or certain birth-control services.  The Plaintiffs argued that the Ordinance was facially invalid under the Free Speech Clause of the First Amendment.  The decision, according to the majority, was based on what it deemed was a summary judgment decision “laden with error, in that the court denied the defendants essential discovery and otherwise disregarded basic rules of civil procedure.”  In addition, the majority affirmed the district court’s ruling that the St. Bridgid’s Roman Catholic Congregation, Inc. lacked standing to be co-plaintiffs with the Greater Baltimore Center for Pregnancy Concerns.

The Ordinance at issue was passed by the City of Baltimore City Council (“the City”) in November 2009 and required pregnancy centers that did not offer abortions or birth control to display signs that indicated as such and post them in a conspicuous place in the center’s waiting room or other waiting area. The City offered a rationale that such centers had provided misleading information and the City had a vested interest in protecting the public health by ensuring honest advertising of services and that the limited-service pregnancy centers pose a threat to the public health.  The Ordinance vests enforcement power with the City Health Commissioner who can issue violation notices and if the center fails to comply with the notice, the Commissioner can issue a civil citation.  The Commissioner is also given the authority to pursue criminal or civil remedies against the violating center.  The constitutionality of the Ordinance was challenged by the Greater Baltimore Center for Pregnancy Concerns (the “Center”), which qualifies under the Ordinance as a limited-service pregnancy center, and the St. Bridgid’s Roman Catholic Congregation and its Archbishop.  The plaintiffs shared religious beliefs that caused them to oppose abortion and certain forms of birth control and their Complaint alleged that the Ordinance violated their First Amendment rights of free speech, free assembly, and the free exercise of religion, plus the Fourteenth Amendment’s guarantee of equal protection and Maryland’s statutory “conscience clause.”

According to the majority, before the City had answered the Complaint, while still having four days left to do so, the plaintiffs filed a motion for partial summary judgment under FRCP 56.  The plaintiffs asserted that the strict scrutiny standard applies and cannot be satisfied because the Ordinance fosters “viewpoint discrimination” against “pro-life pregnancy centers” and compels those centers to engage in government-mandated speech.  A few days later, the City filed a motion to dismiss the Complaint pursuant to FRCP 12(b)(6) or, in the alternative, to dismiss the claims of St. Brigid’s and the Archbishop for lack of standing.   After the district court issued a Scheduling Order, the plaintiffs filed a response to the City’s motion to dismiss and the City submitted a reply concerning its dismissal motion, combined with a response of plaintiffs’ motion for summary judgment.  The City asserted in its response to plaintiffs’ motion for summary judgment that the summary judgment request was premature and that it needed more time to engage in further discovery to fully develop its claims and rebut the plaintiffs’ assertions.

At a motions hearing, the plaintiffs argued that there challenge to the Ordinance was a “facial challenge” and, as such, no further discovery was needed.  The district court agreed that further discovery was unnecessary for a facial review of the Ordinance, though it allowed the City to enter the Ordinance’s entire legislative record into evidence.  The district court promised the City that discovery would be authorized before the court engaged in any “as-applied” analysis of the Ordinance.  After review of the record, the court issued its summary judgment decision and permanent injunction without allowing the City any further discovery.  In its decision, the district court determined that because the City had submitted materials beyond the plaintiffs’ Complaint – i.e., the legislative record – it was correct to treat the City’s motion to dismiss as a cross motion for summary judgment and it rejected the City’s arguments that rational basis scrutiny should apply because the Ordinance was directed at misleading commercial speech.  In applying the strict scrutiny standard, the district court had no issue striking down the Ordinance as unconstitutional on First Amendment grounds.  Notably, the district court also ruled early in its decision that St. Brigid’s and the Archbishop lacked standing to be co-plaintiffs in the case because they could not make the required showing of “the existence of concrete and particularized injury in fact.”

First, the Fourth Circuit summarily agreed with the district court that St. Bridgid’s and the Archbishop lacked standing to be co-plaintiffs.  Next, and more importantly, a majority of the Fourth Circuit vacated the district court’s decision on largely procedural grounds.  The court pointed to several procedural mistakes made by the district court as the court, in the words of the majority, “rushed to summary judgment.”  The court found serious errors with the district court’s denial to the City of necessary discovery, its refusal to view in the City’s favor the evidence presented, and its “verboten factual findings, many premised on nothing more than its own supposition.”  The majority of its decision was focused on the district court’s refusal to afford adequate discovery to the City and rejected the district court’s theory that because it was ruling on a facial challenge to the Ordinance, then greater discovery was not warranted.  The majority also held that the district court “flouted the well-known and time-tested summary judgment standard” when it did not afford all justifiable inferences in the City’s favor, especially with respect to the City’s commercial speech and rational basis theory and that the court engaged in findings based on its own assumptions about the facts.  As a result, the Fourth Circuit vacated the district court’s grant of summary judgment and the permanent injunction against enforcement of the Ordinance and remanded the case back to the district court for further proceedings in line with the Federal Rules of Civil Procedure.

Full Opinion

– John G. Tamasitis

Decided:  July 5, 2013

The Fourth Circuit affirmed the judgment of the Department of Labor (“DOL”) Benefits Review Board (the “Board”) awarding automatic survivors’ benefits to miners’ dependents when the miner, at the time of death, was eligible to receive benefits under the Black Lung Benefits Act (“BLBA”), even though each claimant previously sought such benefits in unsuccessful prior claims.

In 2010, the Patient Protection and Affordable Care Act (“ACA”) reinstated the BLBA’s automatic survivors’ benefits for claims filed after Jan. 1, 2005, that were pending on or after the ACA’s Mar. 23, 2010 enactment date.  Accordingly, survivors no longer need to show that the miner’s death was caused by pneumoconiosis (“Black Lung”); they need only show the miner was eligible for BLBA benefits at the time of his death.  Respondent survivors in this action both applied for and were denied survivors’ benefits under the BLBA before the ACA amendment.  Both Respondents filed subsequent claims after Jan. 1, 2005 which were either pending during the ACA amendment or filed after the amendment.  Though neither claimant alleged new factual evidence since the denial of their original claims, Administrative Law Judges granted each survivors’ benefits, and in each case the Board affirmed.

The Fourth Circuit considered de novo whether a final decision denying benefits on a prior claim bars a survivor from receiving benefits through a subsequent claim where there have been no new factual developments.  The Fourth Circuit found that the survivors’ subsequent claims do not implicate res judicata because entitlement under the amended BLBA does not require relitigation of the prior findings that the miners’ deaths were not due to Black Lung.  The court determined that Congress created a “new condition of entitlement” which in turn created a “new cause of action” for purposes of res judicata.  The Fourth Circuit went on to note that res judicata does not bar claims that did not exist at the time of the prior litigation.  While acknowledging that new causes of action arise typically due to new factual development, the court stated that changes in the law can create the same effect.  The Fourth circuit differentiated the Respondents’ previous and subsequent claims; the former turned on whether the deceased miners died of Black Lung and the latter turned on the entirely unrelated factual issue of whether the deceased miners were eligible for black lung benefits at the time of their deaths.

Full opinion

– E. Leary McKenzie

Decided:  July 5, 2013

The Fourth Circuit affirmed the judgment of the Secretary of the U.S. Department of Housing and Urban Development (“HUD”) and rejected Corey’s challenges to the Secretary’s order, which found him in violation the Fair Housing Act (“FHA”) by discriminating on the basis of disability.

Corey, a landlord, violated the FHA when he made written and oral statements with respect to the rental of a dwelling indicating a preference based on disability.  When Ms. Walker informed Corey that her brother and potential co-habitant, Mr. Walker had “severe autism,” Corey insisted Ms. Walker obtain a bond to protect the property and issued three other written preconditions for rental:  1) a note from the disabled’s doctor indicating he did not pose a liability threat, 2) a rental insurance policy with $1M in liability coverage, and 3) assumption of responsibility for any damage Mr. Walker might cause to the property.  Even though Ms. Walker never submitted the required rental application, HUD filed a charge of discrimination against Corey, which was heard by an Administrative Law Judge (“ALJ”).  The ALJ originally found that Corey’s rental requirements were reasonable requests for additional information and not in violation of the FHA.  However, the Secretary reversed the ALJ’s decision on each charged violation and remanded the case for a hearing on damages.  After the damages award, both parties petitioned for Secretarial Review of the ALJ’s remand decision.  In a Final Agency Order (“the Order”), the Secretary denied Corey’s petition as untimely, granted in part the Department’s petition, and imposed a steeper damages award and a civil penalty.

The Fourth Circuit took up Corey’s challenge to the Final Agency Order and HUD’s Cross-Application for Enforcement of the Order.  Pursuant to the Administrative Procedures Act, federal courts may overturn agency decisions if they are arbitrary and capricious and unsupported by substantial evidence.  The Fourth Circuit first applied the “ordinary listener” standard to Corey’s oral and written statements and found direct evidence that Corey violated the FHA by making statements that an ordinary listener would deem reflected a “preference or limitation” against the Walkers based on Mr. Walker’s disability.  Furthermore, the Fourth Circuit found by direct evidence that Corey violated the FHA by imposing more burdensome application procedures and generally discouraging the potential tenants’ application because of a disability.  Finally, the Fourth Circuit determined that the “direct threat” exception to the FHA does not apply because Corey provided no objective evidence that Mr. Walker posed a direct threat to persons or property, as is required to trigger the exception.

Full opinion

– E. Leary McKenzie

Decided: July 3, 2013

The Court of Appeals recently affirmed the district court’s decision to preliminarily enjoin enforcement of the second statement of a Montgomery County Resolution requiring limited service pregnancy resource centers to post signs disclosing a lack of licensed medical professionals on staff and encouraging patients to consult with licensed heath care providers.  Reviewing the decision for an abuse of discretion, the Court found that the district court in no way erred, for it applied the correct preliminary injunction standard, made no clearly erroneous findings of material fact, and demonstrated a firm grasp of the legal principles pertinent to the matter.

In early 2010, the Montgomery County Council passed a resolution requiring the postage of a sign in limited pregnancy resource centers, such as Centro Tepeyak, that read: (1) “the Center does not have a licensed medical professional on staff,” and (2) “the Montgomery County Health Officer encourages women who are or may be pregnant to  consult with a licensed health care provider.”  The sign had to be easily readable, written in English and Spanish, and present in all center waiting rooms.  Tepeyak alleged that the Resolution discriminatorily “aimed at pro-life pregnancy resource centers” and unconstitutionally limited its speech.  Accordingly, Tepeyak sought a preliminary and permanent injunction barring enforcement of the Resolution.  The district court found the first compelled statement of the Resolution was not unconstitutional; however, the second statement was unconstitutional and was to be severed. Both parties appealed.

In finding that the trial court committed no error, the Court of Appeals first noted that the lower court appropriately employed the preliminary injunction standard recently spelled out in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008). Under the Winter standard, the movant “must establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.”  The Court then analyzed the district court’s handling of each factor.  Because the Resolution required Tepeyac “to say something it might not otherwise say,” the mandate constituted a content-based regulation of speech.  Furthermore, the lower court determined that the speech was neither commercial nor professional. After applying strict scrutiny, the district court found the second prong was not narrowly tailored to promote the County’s compelling interest. As for the first compelled statement in the disclaimer, the court explained that it did not require any other specific message and “in neutral language states the truth.”  As such, it could stand.  The Fourth Circuit found that no abuse of discretion occurred and applauded the district court’s analysis.  In concluding, the Court aptly noted that “[w]here a preliminary injunction is under an interlocutory examination, determining whether the district court abused its discretion ‘is the extent of our appellate inquiry.’”

Full Opinion

-Kara S. Grevey

Decided:  July 1, 2013

The Fourth Circuit held that a bankruptcy court’s denial of confirmation of a debtor’s debt adjustment plan under Chapter 13 of the Bankruptcy Code (“Chapter 13”), 11 U.S.C. §§ 1301–30, and a district court’s affirmance of that denial, can constitute final orders for purposes of appeal; that Social Security income is excluded from the calculation of “projected disposable income” under 11 U.S.C. § 1325(b)(1)(B); and that, when a debtor intends to use Social Security income to fund a debt adjustment plan, the bankruptcy court must include this income in its feasibility analysis under 11 U.S.C. § 1325(a)(6).  The Fourth Circuit therefore vacated the order of the United States District Court for the Eastern District of Virginia and remanded the case with instructions to remand to the bankruptcy court.

Robert D. Mort Ranta (“Mort Ranta”) voluntarily petitioned for bankruptcy under Chapter 13, seeking the adjustment of certain debts.  When Mort Ranta proposed a debt adjustment plan (“plan”), the Trustee objected to it.  The Trustee asserted that Mort Ranta’s recorded expenses were overstated, and that Mort Ranta therefore had not dedicated all of his “projected disposable income” to unsecured creditors as mandated by 11 U.S.C. § 1325(b)(1)(B)—which applies when, inter alia, a Trustee objects to a debt adjustment plan.  In a bankruptcy court hearing, Mort Ranta conceded some overstatement of expenses.  However, Mort Ranta asserted that that Social Security income is excluded from “disposable income” calculations, and that his disposable income would therefore still be negative after downward adjustment of his expenses; thus, Mort Ranta contended that he should not have to make payments to unsecured creditors.  Despite Mort Ranta’s arguments, the bankruptcy court took the Social Security income into account and found that Mort Ranta could make larger payments.  However, because Mort Ranta did not include his Social Security benefits as income, the bankruptcy court did not take the Social Security benefits into account when evaluating the feasibility of his plan.  The court therefore concluded that his plan was not feasible.  The bankruptcy court then issued an order denying confirmation of Mort Ranta’s plan, ordering dismissal of the case in 21 days unless Mort Ranta took an enumerated action under the court’s local bankruptcy rules.  The district court affirmed the denial of confirmation.  Mort Ranta appealed, arguing that the Bankruptcy Code excludes Social Security income from projected disposable income calculations, and that—taking his Social Security income into account—his plan was a feasible one.

The Fourth Circuit first determined that bankruptcy proceedings entail a “relaxed rule of appealability,” in which the concept of finality is applied in a more pragmatic way.  Thus, for purposes of appeal, the Fourth Circuit concluded that a denial of confirmation can constitute a final order even though the case has not been dismissed.  Second, the Fourth Circuit noted that, under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Pub. L. No. 109–8, 119 Stat. 23 (2005), the definition of “current monthly income” used to calculate disposable income explicitly excludes Social Security benefits.  Furthermore, per the United States Supreme Court’s decision in Hamilton v. Lanning, 130 S. Ct. 2464, “projected disposable income” is based on “disposable income,” plus any alterations necessary to account for foreseeable income changes.  Thus, because Social Security income is excluded from calculations of disposable income, it must also be excluded from calculations of projected disposable income. Lastly, the Fourth Circuit found that income not counted under the definition of “disposable income” can still be considered as income for purposes of a Chapter 13 debt adjustment plan.  Thus, when it is included in a debtor’s debt adjustment plan, Social Security income must be considered by bankruptcy courts for purposes of analyzing feasibility.

Full Opinion

– Stephen Sutherland

Decided: June 27, 2013

The Fourth Circuit held that the District Court for the Western District of North Carolina failed to properly analyze the Appellant’s claims under the First Amendment standing framework and therefore vacated its order dismissing the Appellant’s complaint, and remanded for consideration on the merits.

Early in 2009 the Appellant (“Cooksey”) was diagnosed with Type II diabetes and advised, by licensed dietitians, to maintain a diet low in fat and high in carbohydrates. However, after forming his independent conclusion, Cooksey began following the inverse diet, commonly referred to as the “Paleolithic diet.” Soon thereafter, according to Cooksey, he lost 78 pounds, his blood sugar normalized and he was able to stop using insulin as well as other diabetic medications. In January 2010, Cooksey launched a website, www.diabetes-warrior.net, wherein he discussed his lifestyle changes and various topics concerning diets and meal plans. The website contained a disclaimer noting that Cooksey was not a licensed medical professional or dietician. Relevant to this appeal, the website had three main components: (1) an advice column, wherein he answered visitor’s questions; (2) a free “Personal Dietary Monitoring;” and (3) a fee-based “Diabetes Support Life-Coaching” service. Following a nutritional seminar for diabetics in which Cooksey expressed his opinion that a Paleolithic diet is best for diabetics, someone reported him to the North Carolina Board of Dietetics/Nutrition (“State Board” or “Board”). Cooksey was subsequently contacted by the Executive Director of the State Board and informed that his website was under investigation for the unlicensed practice of dietetics/nutrition in violation of the North Carolina’s Dietetics/Nutrition Practice Act (the “Act”). Although reluctantly, Cooksey complied with the directors requests that several changes be made to the website, including eliminating the fee-based diabetic support service because he feared potential civil and criminal penalties under the Act. Several weeks later, Cooksey received a letter from the Executive Director informing him that, as a result of the changes made, the website was in substantial compliance with the act; therefore the complaint filed was being closed. Importantly however, Cooksey was informed that the Board reserved the right to continue to monitor the situation. On May 29, 2012, seeking a declaration that the Act and attendant regulations were unconstitutional, Cooksey filed suit, alleging violations of his First Amendment rights. The district court, citing a failure to demonstrate an injury-in-fact, dismissed the suit for lack of standing. This appeal followed.

On appeal, the Fourth Circuit found that, because the injury-in-fact element in First Amendment cases is commonly satisfied by a sufficient showing of self-censorship, Cooksey made a sufficient showing that he had experienced an objectively reasonable chilling effect of his speech due to the actions of the State Board. Additionally, citing the Executive Director’s communication that she had the “statutory authority” to seek an injunction against him, the court found that the Board’s actions would be likely to deter a person of ordinary firmness from the exercise of First Amendment rights. Thus the court had “no trouble deciding that Cooksey’s speech was sufficiently chilled by the actions of the State Board to show a First Amendment injury-in-fact.” Further, because Cooksey was subject to a credible threat of prosecution under the Act, the court found this provided another independent basis for a sufficient showing of injury. Next, the court addressed the Board’s contention that the First Amendment standing principles did not apply because the Act is a professional regulation that does not abridge the freedom of speech protected under the First Amendment. The court however declined to consider this contention at the standing stage, as any determination would have improperly went to the merits of the case. Lastly, the court found that, because Cooksey desires a clarification of the conduct that he can engage in without the threat of penalty under the Act, his claims are ripe. Therefore, the Fourth Circuit remanded the case back to the Western District of North Carolina for consideration on the merits.

Full Opinion

– W. Ryan Nichols

Decided: June 26, 2013

The Fourth Circuit affirmed the 105 month sentence imposed on Timothy Harris after he pleaded guilty to two counts of possession of firearms by a felon after the district court applied U.S.S.G. § 2K2.1(b)(4)(B).  The court upheld the four-level enhancement for when a firearm “had an altered or obliterated serial number,” even though the firearms possessed by Harris had been gouged and scratched, “rendering it less legible, but arguably not illegible.”

Harris was arrested in Raleigh, North Carolina after he used a gun to threaten a woman during the course of an argument.  The police recovered a .25 caliber handgun from him after the arrest and described the condition of the serial number on the gun as having “numerous deep gouges and scratches across the width of the alpha numerics” and that it appeared these marks were done “with some sort of tool.”  However, the police report indicated that the serial number was nonetheless legible.  Harris subsequently pleaded guilty to illegal firearms possession and the presentence report recommended a four-level enhancement based on the condition of the serial number.  Harris objected because the serial number was still legible.  At the sentencing hearing, the district court overruled Harris’ objection and, after considering the police report and examining the handgun itself, ruled that enhancement should be applied even though no evidence was offered to prove that Harris made the marks on the firearm.

On appeal, the Fourth Circuit addressed the single question, “whether the serial number on Harris’ handgun, which was marked with gouges and scratches that the district court found made it less legible, was ‘altered,’ within the meaning of U.S.S.G. § 2K2.1(b)(4)(B).”  Harris’ main argument was that a serial number should not be considered “altered” when it otherwise remains legible.  The Fourth Circuit first noted that it had yet to address this question, though other circuits had.  The Fourth Circuit then discussed the Gun Control Act of 1968 which makes it a crime to “possess or receive any firearm which has had the importer’s or manufacturer’s serial number removed, obliterated, or altered,” even though Harris was not charged with a violation of its provisions.  However, according to the court, the applicable Sentencing Guidelines mimic the Gun Control Act’s provision in its language.  After analyzing the policy behind the statute and the generally accepted meaning of the words “altered” and “obliterated,” the Fourth Circuit rejected Harris’ arguments.  Instead, the Fourth Circuit agreed with the majority of courts and held that a firearm’s “serial number is ‘altered or obliterated’ when it is materially changed in a way that makes accurate information less accessible.”  As a result, the Fourth Circuit agreed that the district court’s findings that the gouges and scratches on the serial number made it more difficult to read the numbers accurately and the fact that there were no other markings on the gun, indicating that the scratches and gouges were intentional, was enough to warrant the district court’s decision.  Therefore, the Fourth Circuit concluded that the district court did not err in applying the four-level enhancement because the evidence supported the conclusion that the serial number had been “altered” by making it less legible.

Full Opinion

– John G. Tamasitis

Decided: June 26, 2013

The Fourth Circuit Court of Appeals reversed and remanded with instructions to quash the writ of garnishment filed by the Carpenters Pension Fund of Baltimore, Maryland (“the Fund”) against the Maryland Department of Mental Health and Mental Hygiene (the “Department”). The court concluded that a federal proceeding that seeks to attach the property of a state to satisfy a debt, whether styled as a garnishment action or an analogous common law writ, violates the Eleventh Amendment.

In May 2007, the Fund filed suit against Tao Construction Company, Inc. (“Tao”) alleging deficient employer contributions. Tao failed to answer and the district court entered a default judgment against Tao. The Fund filed an enforcement action to collect on the judgment. When the Fund could not locate any assets owed by Tao, it discovered that Tao’s CEO had contracted with the Department to perform construction work. The district court issued a writ of garnishment against the Department for amounts due to Tao. The Department moved to quash the writ on grounds of sovereign immunity and Maryland public policy.

The Fourth Circuit of Appeals addressed whether the jurisdictional shield of the Eleventh Amendment insulates a state from a writ of garnishment under Federal Rule of Civil Procedure 69(a).  Because the Eleventh Amendment gives the states immunity from “suit,” the court first considered whether a writ of garnishment constituted a “suit” against the state. The court followed the test in the Supreme Court case Central Virginia Community College v. Katz, and examined whether the procedural means and substantive end of the instant writ of garnishment involve the compulsory exercise of federal jurisdiction over the state of Maryland. The procedural inquiry measures the degree of coercion exercised by the federal court in compelling the state to attend. The substantive inquiry measures whether the proceeding demands something from the state by the institution of process in a court of justice. In this case, the garnishment proceeding procedurally resembled a conventional “suit.” It was essentially a suit by the debtor against the garnishee for the use and benefit of the attaching creditor. A garnishee who fails to file an answer to the writ risks default judgment. A proceeding that encumbers the property of a sovereign unless it participates amounts to, what the Fourth Circuit deemend, unconstitutional “coercion exercised by the federal court in compelling the state to attend.” It is immaterial that the Department was in fact indebted to Tao because the Eleventh Amendment is a matter of jurisdiction, not liability. Therefore, the court concluded the garnishment action was a “suit” in the procedural sense.

The court also found that the garnishment action satisfies the substantive criteria of a “suit” because it demanded recovery from the state treasury. Courts have upheld this principle to prevent the disruption on government functions that would attend the garnishment of public funds held in the Treasury. Even though the relevant cases mostly concern the immunity of the federal government from post-judgment attachment, the court found no reason why a state should not enjoy this immunity as well. The court also rejected the Fund’s characterization of its garnishment action as an in rem proceeding. The court also went on to say that the characterization was immaterial, so long as the action was ultimately seeking recovery from the Maryland treasury. Therefore, the court concluded the garnishment action was also a suit in the substantive sense. Because the garnishment action was a “suit” under the Eleventh Amendment, the Department was entitled to sovereign immunity. Therefore, the court quashed the Fund’s writ of garnishment.

Full Opinion

– Sarah Bishop

Decided: June 24, 2013

The Fourth Circuit vacated Zavier Marquis Davis’ consolidated sentence for multiple violations of North Carolina state law and remanded the case for resentencing holding that a consolidated sentence under North Carolina law is a single sentence for the purposes of the career offender enhancement under the U.S. Sentencing Guidelines.

In July 2004, Davis was arrested and indicted in state court for using a handgun to rob a Burger King in Charlotte, North Carolina.  In February 2005, he also used a gun to rob a McDonald’s in Charlotte and, a day prior to that robbery, used a gun to assault an individual and rob another.  Davis was indicted for the February 2005 robberies and charged with five counts of robbery with a dangerous weapon, among other offenses.  Davis pled guilty in state court to six counts of robbery with a dangerous weapon, one count for the 2004 robbery and five counts for the 2005 robberies.  Pursuant to a plea arrangement, the charges were consolidated for judgment as one and sentenced as a class D felony.  On July 31, 2010, Davis again used a handgun to rob a Wendy’s Restaurant in Charlotte.  In district court, Davis pled guilty to three counts:  Hobbs Act robbery; use of a firearm in furtherance of a violent crime; and possession of a firearm by a convicted felon.  A Presentence Investigation Report (“PSR”) indicated that Davis qualified for “career offender enhancement” under the U.S. Sentencing Guidelines because he was at least 18 years old when he committed the robbery and had two prior state robbery offenses.  A federal probation officer then recommended that the court sentence Davis as a career offender increasing the base offense level from twenty-six to thirty-two.  At the sentencing hearing, Davis objected to the career offender enhancement arguing that he had received a “consolidated sentence” for his prior state offenses and, therefore, he did not have “at least two prior felony convictions” as required by the Sentencing Guidelines.  The district court denied Davis’ objection and applied the enhancement and sentenced him to a within-Guidelines sentence of 276 months.  Davis appealed the sentence.

The Fourth Circuit indicated that the sole issue on appeal was “whether Davis’ prior state robbery offenses qualif[ied] as ‘two prior felony convictions’ as defined by the Guidelines.”  The Fourth Circuit first noted that, according to the Sentencing Guidelines, the “existence of two prior felony convictions alone is not dispositive; the defendant must also have at least two prior sentences for those convictions” that are counted separately.   The Fourth Circuit found that when the North Carolina court consolidated Davis’ 2004 and 2005 offenses, he received a single judgment and, consequently, he came before the federal court with just one consolidated sentence.  The Fourth Circuit also provided that there was no published authority on whether a North Carolina consolidated sentence is considered a single sentence or multiple sentences under the Sentencing Guidelines that would guide the court in disregarding the plaint meaning of the Sentencing Guidelines.  The Fourth Circuit rejected the Government’s contention that the court had already decided the issue by distinguishing the cases presented by the Government.  Instead, the court provided that the language of the Sentencing Guidelines is plain and requires that there be more than one prior sentence for the career offender enhancement to apply.  As a result, the Fourth Circuit held that “where a defendant receives a ‘consolidated sentence’ . . . under North Carolina law, it is one sentence and absent another qualifying sentence, the [career offender] enhancement is inapplicable.”

Full Opinion

– John G. Tamasitis

Decided: June 20, 2013

The Fourth Circuit held that the United States District Court for the District of South Carolina properly applied the offense level of attempted second-degree murder to James Ashford’s conviction of illegal possession of a firearm, via an applicable “cross reference” under section 2K2.1(c) of the United States Sentencing Guidelines (“USSG”).

In April 2011, James Ashford (“Ashford”), Marcus Chaplin (“Chaplin”), and the respective girlfriends of the two men became embroiled in a dispute at an apartment complex.  After the parties seemingly had resolved the dispute, Ashford retrieved a revolver that, as a convicted felon, he possessed illegally.  Ashford told “a couple of people” at the apartment complex “that the gun was for [Chaplin].”  When Ashford went to a store, Chaplin and his cousin confronted him in an alleyway, supposedly to resolve the dispute.  Ashford drew his gun, Chaplin retreated to the apartment complex with his cousin, and Ashford pursued Chaplin.  At the apartment complex, Chaplin tried to retrieve a gun from a vehicle, but failed to do so; he told Ashford he was unarmed.  However, Ashford said “I should kill you” and fired three shots, two of which hit Chaplin.  Ashford said he was “not angry” when he shot Chaplin; rather, he was “scared.”  Ashford was subsequently arrested, and pled guilty to illegal possession of a firearm as a convicted felon under 18 U.S.C. §§ 922(g)(1), 924(a)(2).

USSG § 2K2.1(c) allows a district court to substitute the offense level for a criminal offense committed or attempted in connection with such firearm possession, so long as the “cross-referenced” criminal offense qualifies as “relevant conduct” under USSG § 1B1.3(a).  This latter guideline provides four bases for determining the applicability of a cross-reference.  The first basis, USSG § 1B1.3(a)(1), applies to acts or omissions occurring “during the commission of the offense of conviction.”  The second basis, USSG § 1B1.3(a)(2), applies to certain certain acts and omissions “that were part of the same course of conduct or common scheme or plan as the offense of conviction”; however, this subsection only applies to “offenses of a character for which § 3D1.2(d) would require grouping of multiple counts.”  Under USSG § 3D1.2(d), crimes against the person are excluded from grouping.  After a hearing, the district court substituted the offense level of attempted second-degree murder.  On appeal, Ashford argued that all four bases listed in USSG § 1B1.3(a) must be satisfied for a cross-reference to apply, and since USSG § 3D1.2(d) prohibits the grouping of crimes against the person, cross-referencing attempted second-degree murder was improper under USSG § 1B1.3(a)(2); Ashford also asserted that, even if a cross-reference did apply, the facts stated in the presentence investigation report (“PSR”) did not establish the elements of attempted second-degree murder.

The Fourth Circuit concluded that the four bases for cross-referencing under USSG § 1B1.3(a) should be read disjunctively.  Thus, even though Ashford’s substituted offense could not be grouped, attempted second-degree murder could still be substituted under USSG § 1B1.3(a)(1), as the substituted offense occurred during Ashford’s illegal possession of a firearm.  The Fourth Circuit also concluded that the PSR stated a sufficient basis for attempted second-degree murder, as Ashford reinitiated the dispute by retrieving the revolver and telling neighbors about his intentions, Ashford told Chaplin “I should kill you” before shooting him, and Ashford was “not angry” or in danger when he drew the gun and chased Chaplin—indicating “the wanton behavior that warranted an inference of malice.”

Full Opinion

-Stephen Sutherland

Decided: June 20, 2013

The Fourth Circuit, holding that the doctrine of res judicata did not bar the Plaintiffs from pursing their claims under the Foreign Sovereign Immunities Act (the “FSIA”), reversed and remanded the decision of District Court for the Eastern District of Virginia.

In 2004, following the October 12, 2000 bombing of the U.S.S. Cole, carried out by Al Qaeda operatives, the families of the victims (the “Plaintiffs”) filed suit against the Republic of Sudan (“Sudan”) under the Death on the High Seas Act (“DOHSA”). In Rux v. Republic of Sudan, the district court found Sudan liable and ordered it to pay damages. Thereafter, Congress passed the National Defense Authorization Act for Fiscal Year 2008 (the “NDAA”). Most relevant to this appeal was NDAA § 1083. Section 1083(a) enacted a private cause of action under 28 U.S.C. § 1605A for certain torts committed by foreign states. Additionally, with respect to pending or decided cases, Section 1083(c) details the circumstances where retroactive application of the newly enacted private cause of action is appropriate. In 2010, the Plaintiffs, joined by four others not party to the 2004 Rux complaint, commenced a new action against Sudan invoking Section 1605A’s private cause of action. Concluding that the doctrine of res judicata precluded the Plaintiffs’ claims, the district court found that there was “no question” that this case arose out of the same transaction as that at issue in Rux and therefore denied the Plaintiffs’ motion for default judgment. Plaintiffs appealed.

On appeal, the Fourth Circuit first addressed the Plaintiffs’ contention that the district court mistakenly applied the limitations period under NDAA § 1083(c). Noting that the various provisions of Section 1083(c) govern how to apply Section 1605A retroactively to pending and previous actions, the court agreed with the Plaintiffs, holding that Section 1083(c) was inapplicable because the Plaintiffs filed this new action directly under Section 1605A. Next, the court turned to consider the res judicata doctrine. First, considering whether the district court erred in considering res judicata sua sponte, the court found that the case presented a “special circumstance,” consistent with Supreme Court precedent; therefore, the district court did not abuse its discretion by considering res judicata sua sponte. Finally, the court considered the district court’s application of the res judicata doctrine. Recognizing that the application of res judicata turns on the existence of three factors, one of which is an identity of the cause of action in both the earlier and the later suit, the Fourth Circuit held that the Plaintiffs’ claims under Section 1605A were not barred. In so holding, the court cited three independent reasons for its conclusion that the earlier and later suits did not share the same identity: (1) the change in statutory law along with substantial public policy concerns at issue in terrorism cases brought under Section 1605A justify an exception; (2) one of the “core values” of the res judicata doctrine—freeing people from the uncertain prospect of litigation—would be ill served in this case by barring the Plaintiffs’ claims, particularly where Sudan failed to appear in the terrorism action filed against it; and (3) applying the res judicata doctrine to claims brought under Section 1605A would effectively shield state sponsors of terrorism and would undermine the congressional purpose for enacting Section 1605A in the first place. Accordingly, the court reversed and remanded to the district court for further proceedings.

Full Opinion

-W. Ryan Nichols

Decided: June 19, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s order granting, in part, the defendant’s motion for a sentence reduction under 18 U.S.C. § 3582(c)(2).

In September 1996, Smalls was found guilty of conspiracy to import cocaine and sentenced to life in prison. In February 2008, Smalls filed a motion for reduction, based on the 2007 crack cocaine amendments to the Sentencing Guidelines, which reduced his guideline range to 324 to 405 months. The district court granted the motion and reduced Smalls’ sentence from life to 405 months. In November 2011, Smalls filed a second motion for reduction, based on Amendment 750, which reduced his guideline range to 262 to 327 months. The district court again reduced his sentence to 327 months, the maximum sentence in the range. The district court used a form document to rule on Smalls’ motion, indicating that it granted the motion by considering the factors set forth in 18 U.S.C. § 3582(c)(2). Smalls appealed, arguing that the court erred in failing to provide an individualized explanation.

The Fourth Circuit Court of Appeals addressed whether a court ruling on a § 3582(c)(2) motion must provide an individualized explanation. The court cited to United States v. Legree for the presumption that a court deciding such a motion has considered the pertinent factors, unless evidence suggests otherwise. Consideration is implicit in the court’s ultimate ruling. A full explanation for its decision is not necessary.  However, Smalls contended the district court did err in his case for three reasons. First, Smalls argued that Legree did not address the question of whether a district court must provide some reasoning in support of its grant or denial of a § 3582(c)(2) motion. However, the Court of Appeals concluded that Legree addressed that exact issue and did not find that the district court erred even though it provided no individualized explanation.

Second, Smalls argued that the facts of his case overcame the Legree presumption that the district court considered all relevant factors in ruling on his motion. However, the court concluded that, like Legree, Smalls failed to offer any new mitigating circumstances to rebut the presumption. As in Legree, the same district judge presided over Smalls’ original sentencing and his § 3582(c)(2) proceeding. Therefore, he was familiar with the mitigating factors set forth at the time. Further, it did not matter that fifteen years elapsed between Small’s original sentencing and his motion, in comparison to four years in Legree. Smalls filed, and the same district judge addressed, several motions during the fifteen-year period, suggesting that the judge remained familiar with the facts of Smalls’ case. Further, it did not matter that Smalls had no opportunity to submit evidence of his exemplary post-sentencing conduct by way of a reply brief before the court decided his motion. The court concluded that new arguments cannot be raised in a reply brief and, therefore, the district court did not fail to consider all relevant factors properly before it. And finally, the court rejected Smalls’ argument that his case resembles not Legree, but another case where the defendant and the government jointly recommended a sentence reduction and the district court refused to adopt that agreed-upon reduction or explain its refusal to do so. In Smalls’ case, the Government never agreed to the extent of the reduction he requested. The Government requested a reduction only to the top of the amended guideline range, and the district court granted that request.

Third, Small argued that Legree is no longer good law because of the Supreme Court’s decisions in Gall v. United States and Dillon v. United States. The Court of Appeals concluded that while Gall makes clear that a sentencing court must explain its reasoning when initially sentencing a defendant, it says nothing about § 3582(c)(2) proceedings. In Gall, the district court was required to explain its reasoning on the basis of 18 U.S.C. § 3553(c), a provision which does not apply to § 3582(c)(2) proceedings and applies at the time of sentencing, not at the time of sentence modification. The Court of Appeals also concluded that while Dillon did note that courts deciding § 3582(c)(2) motions are to consider applicable § 3553(a) factors, Dillon did not create that requirement. Rather, § 3582(c)(2) itself instructs courts to consider the § 3553(a) factors. Courts do not necessarily have to consider those factors on the record. Because Legree governs and the facts of Smalls’ case fail to overcome its presumption, the court held the district court’s explanation sufficient and affirmed the judgment

Full Opinion

– Sarah Bishop

Decided: June 19, 2013

The Fourth Circuit affirmed the conviction of Okechukwo Ebo Otuya on one count of conspiracy to commit bank fraud, two counts of substantive bank fraud, and one count of aggravated identify theft for his role in a scheme defrauding Bank of America of hundreds of thousands of dollars.  Otuya was sentenced to a 96-month prison sentence, which he appealed on several grounds to include his conviction and, in the alternative, his sentence.

In 2007, Otuya and several coconspirators were involved in an elaborate scheme to defraud Bank of the America through the use of stolen checks. Otuya and his partners would drive through affluent residential neighborhoods and steal mail out of roadside mailboxes searching for credit card convenience checks.  The conspirators would then pay local college students for access to their bank accounts and ATM cards so that they could process the stolen checks and then deposit the checks into the purchased student accounts and withdraw the funds.  Otuya and four co-defendants were indicted in September 2010.  Three of the co-defendants plead guilty and the fourth was convicted by jury trial.  A jury returned a verdict convicting Otuya on all counts charged and the district court, during sentencing, began its guidelines range calculation by noting that the base offense level for Otuya’s crimes was seven.  The district court then considered three enhancements relevant to the appeal before the Fourth Circuit.  The first was a twelve-level enhancement that the district court applied because it found that the intended amount of loss from the fraud exceeded $200,000.  The second enhancement was a four-level enhancement because the offense involved 50 or more victims.  The last enhancement was a three-level on the grounds that Otuya was a manager or supervisor in an offense involving five or more participants.  These enhancements coupled with Otuya’s criminal history category resulted in a guidelines range of 63 to 78 months for the bank fraud conspiracy and substantive bank fraud counts.  The court selected a within-guidelines range of 72 months for these counts, to run concurrently.  The court also imposed a sentence of 24 months for the aggravated identify theft count, which resulted in a total sentence of 96 months.   Otuya appealed the sentence.

Otuya also appealed his conviction on two separate grounds.  Prior to trial, the government moved to admit evidence that was discovered in Otuya’s backpack at the time of his arrest.  The government filed its motion pursuant to FRE 404(b)(2) to introduce of other bad acts.  Specifically, the government sought to introduce evidence found within the backpack that provided further evidence related to a modified version of the fraud.  The court admitted the evidence because the contents of the backpack “arose out of the ‘same series of transactions as the charged offenses’” and related to the on-going conspiracy.  In the alternative, the government asserted that the evidence was admissible because it went to show identity rather than character evidence through other bad acts.  Otuya renewed his objection to this evidence when it was brought up at trial.  Otuya also challenged his conviction for aggravated identity theft.  Otuya asserted that 18 U.S.C. § 1028A(a)(1), which supplies the law for the charge, imposes a mandatory consecutive two-year prison sentence against one who “during and in relation to any felony violation enumerated in subsection (c) [including bank fraud], knowingly . . . uses, without lawful authority, a means of identification of another person.”  Otuya argued that the use of the phrase “without lawful authority” means that a defendant must use another person’s identification without the person’s consent and Otuya had consent to use the college students’ identification.

The Fourth Circuit first rejected Otuya’s objection to the evidence in the backpack.  The court held that evidence was admissible because the government sustained its burden and proved (1) the evidence concerned acts “intrinsic to the alleged crime” or, in the alternative, (2) it was offered for non-character purpose to prove identity.  The Fourth Circuit also summarily rejected Otuya’s challenge to the aggravated identity theft conviction.  The court succinctly held that “no amount of consent from a coconspirator can constitute ‘lawful authority’ to engage in the kind of deplorable conduct that Otuya engaged in.”  Finally, the Fourth Circuit addressed Otuya’s several challenges to the sentence.

First, Otuya challenged the twelve-level enhancement on the ground that Otuya’s offense involved an intended loss amount in excess of $200,000.  The Fourth Circuit upheld the district court’s calculation because the court made a “reasonable estimate” that the intended loss reasonably foreseeable to Otuya was in excess of $200,000.  Next, the court took up Otuya’s challenge to the four-level enhancement for a crime having fifty victims or more.  The main argument Otuya made was that the district court counted as victims several individual account holders whose losses the bank reimbursed and, as such, they should not be considered victims because they did not suffer any actual loss.  The district court, in its decision, noted the circuit split on this issue and then decided that those who were reimburse were, nonetheless, victims.  However, the Fourth Circuit chose to address the issue on an alternative basis and relied on the fact that Otuya’s conduct created several other victims, pursuant to U.S.S.G. § 2B1.1 cmt. n.4(C) that provides an additional definition for victim that includes those who had undelivered mail taken and were the intended recipient of undelivered U.S. mail.  As a result, the Fourth Circuit upheld the district court’s decision by identifying a number of individuals who were victims of Otuya’s stealing mail from mailboxes.  Finally, the Fourth Circuit addressed Otuya’s imposition of the three-level enhancement for his role as a manager or supervisor in the offense.  The Fourth Circuit held that, given the facts presented at trial, enough evidence was available to prove that Otuya was intimately involved in the planning and directing of the scheme.

Full Opinion

-John G. Tamasitis

Decided:  June 19, 2013

The Fourth Circuit held that the United States District Court for the Western District of North Carolina properly granted summary judgment to the Federal Deposit Insurance Corporation (“FDIC”) in its action to recover the balance owed on a promissory note (“Note”) executed by Avery T. Cashion, III (“Cashion”), as the FDIC proved it was the holder of the note, the district court did not abuse its discretion by granting the FDIC’s motion to strike Cashion’s surreply and an affidavit from his business partner, and the Internal Revenue Service (“IRS”) Form 1099-C (“the 1099-C Form” or “the Form”) offered by Cashion was insufficient evidence of cancellation or assignment of the Note.

In August 2006, Cashion signed a Note payable to The Bank of Asheville (“the Bank”).  Originally, the Note was secured by three additional promissory notes; in 2010, another promissory note was added as collateral.  In September 2010, the Bank filed an action in state court alleging that, as the holder of the Note, it was entitled to full payment plus interest because Cashion had failed to make payments on the Note and had therefore defaulted.  However, the Bank closed before the case reached trial and the FDIC was then substituted as the real party in interest.  The FDIC removed the case to the federal court and moved for summary judgment.  Cashion countered that there were two issues of material fact:  Whether the FDIC had proven that it was the holder of the Note, and whether the Note had been cancelled or assigned.  With regard to the first issue, Cashion noted that the FDIC had not produced the original Note; with regard to the second, Cashion included the 1099-C Form with an affidavit, arguing that the Form—labeled “Cancellation of Debt” and filled out with information on the Note—constituted evidence of the Note’s discharge.  The FDIC then attached a supplemental affidavit from a “Resolutions and Receiverships Specialist” who asserted that, inter alia, the copy of the original Note provided by the FDIC was “true and correct.”  Furthermore, the FDIC asserted that the 1099-C Form did not constitute competent evidence of cancellation.  In response, Cashion filed a surreply challenging the FDIC’s interpretation of the 1099-C Form.  Cashion also attached an affidavit from his business partner, in which the partner gave his interpretation of the 1099-C Form’s impact on the Note.  The district court granted the FDIC’s motion to strike the surreply and attached affidavit, and granted summary judgment to the FDIC.  Cashion appealed, challenging the summary judgment and the court’s decision to strike the surreply and affidavit.

The Fourth Circuit found that, though the FDIC did not produce the original Note, the copy of the Note and the specialist’s affidavit sufficiently proved that the FDIC was the holder of the Note under North Carolina law.  With regard to the surreply, the Fourth Circuit noted that such reply briefs are usually not permitted under the local rules of the district court and the briefing schedule did not authorize surreplies; additionally, Cashion’s surreply responded to his own arguments and evidence rather than presenting new matters.  Furthermore, the testimony from Cashion’s business partner did not reflect the partner’s “personal knowledge” of the 1099-C Form, in violation of the requirements stated in Federal Rule of Civil Procedure 56(c)(4).  Lastly, the Fourth Circuit found that the 1099-C Form constituted an IRS reporting requirement rather than a way to discharge a debt.  The court noted that, in combination with other evidence regarding its filing, a 1099-C Form could be properly considered as evidence of the Note’s status; on its own, however, a 1099-C Form cannot constitute sufficient evidence of cancellation.

Full Opinion

-Stephen Sutherland

Date Decided: June 14, 2013

The Fourth Circuit affirmed the district court’s ruling that a rule promulgated by the National Labor Relations Board (the “NLRB”) requiring employers to notify employees of their rights under the National Labor Relations Act (the “NLRA”) exceeded the statutory authority granted by the NLRA. The Fourth Circuit held that the powers granted to the NLRB by the NRLA are primarily reactive and thus, because Congress did not explicitly grant the NLRB authority to promulgate notice-posting rules, the NLRB did not have the authority to promulgate the challenged rule.

On August 30, 2011, the NLRB promulgated a rule comprised of three subparts. Subpart A provides that “all employers subject to the NLRA must post notices to employees, in conspicuous places, informing them of their NLRA rights, together with the [NLRB] contact information and information concerning basic enforcement procedures.” Subpart B makes the failure to post the employee notice an “Unfair Labor Practice” (“ULP”) under the NLRA. Furthermore, under the rule, if the NLRB found that the employer failed to post the required notice, the NLRB could require the employer to post notice and toll of the statute of limitations for any employee ULP complaints. Subpart C allowed the board to “consider a knowing and willful refusal to comply with the requirement to post the employee notice as evidence of unlawful motive” in other proceedings. The NLRB passed the rule primarily based on the finding that “American workers are largely ignorant of their rights under the NLRA,” citing the “changing nature of the American Workforce” and “the overwhelming majority of private sector employees…not represented by unions” as the reasons for the employees’ ignorance of their rights under the NLRA. Before the rule went into effect, the Chamber of Commerce for the United States and for South Carolina (collectively, “Chamber”) filed a complaint in the District Court for the District of South Carolina for injunctive relief against the rule. The district court granted summary judgment to the Chamber.

On appeal, the NLRB first argues that the notice-posting rule should be analyzed under the deferential standard set forth in Mourning v. Family Publications Service, Inc. According to the court in Mourning, the NLRB’s rules should be upheld if they are “reasonably related” to the purposes granted under the NLRA. The Fourth Circuit disagreed, siding with the Chamber that the rule should be analyzed under the more common two-step approach laid out by the Supreme Court in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. The court found that Mourning only applies where “Congress delegated appropriate authority” under the board to make the rule. In this case, the court found that Congress did not specifically grant the NLRB the power to make notice-posting rules, and thus, the deferential standard did not apply.

Second, the NLRB argued that the court should uphold the rule “unless Congress expressly withheld the authority” to make the rule. The Chamber argued, on the other than, that the court should invalidate the rule unless the court found “that Congress intended to delegate to the [NLRB] the power to issue it.” The Fourth Circuit again agreed with the Chamber. The court found that in other contexts, such as the Food and Drug Administration, the court “deemed the question of whether Congress intended to grant authority” the appropriate consideration for determining rulemaking authority. The court further struck down the NLRB’s argument, finding that the NLRB had not been legislatively granted authority to promulgate a notice-posting rule. The court concluded instead that the NLRB’s power was specifically limited by congress to two functions: addressing ULP charges and conducting representation elections.

After resolving these two preliminary issues, the court analyzed the rule under the Chevron framework. First, in addressing the issue of “whether Congress has directly spoken to the issue,” the court applied traditional rules of statutory construction and found that the NLRA was unambiguous in requiring explicit or implicit authority to issue a rule. Thus, the court held that because the NLRA does not charge the NLRB to inform employees of their rights under the NLRA, the NLRB did not have the power to promulgate the notice-posting rule. Furthermore, the court found that the NLRA made clear that the NLRB is a “reactive entity,” and thus, does not have the power to affirmatively require employers to post notice without a finding of an ULP. Second, the court found that the NLRA’s structure does not provide the NLRB with the authority to promulgate notice-posting rules. Most importantly, the court held that the notice-posting rules are not “necessary to carry out” the NLRB’s responsibilities under the NLRA. The Fourth Circuit said that “the [NLRB] may not justify an expansion of its role to include proactive regulation of employers’ conduct by noting its reactive role under the [NLRA].” Third, the court held that the history of the NLRA “provides no countervailing evidence of an intent to bestow the [NLRB] with the power to enact the challenged regulation.” The court found that the history indicates that the NLRB was designed to serve a reactive role, limited to the functions expressly delegated by the NLRA. Finally, the court noted that Congress expressly provided for notice provisions in other labor laws, indicating that Congress would have expressly delegated notice-posting authority to the NLRB if it intended the NLRB to have such authority. Therefore, the court affirmed the district court’s holding that the NLRB did not have the authority to promulgate a notice-posting rule.

Full Opinion

– Wesley B. Lambert

Decided: June 13, 2013

The Fourth Circuit affirmed the District Court for the Eastern District of Virginia’s decision rejecting Baker’s motion to vacate, set aside, or correct his sentence on the ground that his counsel was unconstitutionally ineffective.

On March 3, 2008, a police officer stopped a vehicle that had a broken taillight and an expired license plate. Mario Baker (“Baker”) was operating the vehicle and Dashawn Brown (“Brown”) was in the front passenger seat. Upon checking Baker’s driver’s license, the officer learned that he had an outstanding federal arrest warrant. He then summoned back-up and, upon another officer’s arrival, arrested Baker. Thereafter, the arresting officer turned Baker over to another officer and focused his attention on Brown. Upon the officer’s command, Brown exited the vehicle but then began to walk away. The officer then commanded Brown to put his hands on the vehicle and a search was performed, uncovering a handgun. Brown then attempted to reenter the vehicle, claiming that he wanted to retrieve his cellphone—which was on the passenger-side floorboard. A struggle ensued and the officer wrestled Brown to the ground, arresting him for possessing the firearm. He then searched Brown incident to the arrest, finding multiple narcotics, a large amount of cash, and a digital scale on his person. After securing Brown in the police car, the officer then searched the passenger compartment of Baker’s vehicle, where he found 20.6 grams of heroin, .24 grams of crack cocaine, 12.2 grams of methadone, and a burnt marijuana joint. He also found another handgun in the glove box. Based on the evidence uncovered during the search of the vehicle, Baker was convicted of various federal firearm and drug offenses. Although Baker’s lawyer filed several motions prior to trial, he never filed a suppression motion challenging the search of Baker’s vehicle. Following his conviction, Baker appealed to the Fourth Circuit. After Baker filed his opening brief, the day before the government filed its response brief, the Supreme Court decided Arizona v. Gant, which held that, under the Fourth Amendment, the “[p]olice may search a vehicle incident to a recent occupant’s arrest only if the arrestee is within reaching distance of the passenger compartment at the time of the search or it is reasonable to believe the vehicle contains evidence of the offense of arrest.” Baker’s convictions and sentence were affirmed on August 7, 2009. At no point did Baker’s counsel argue that the search of Baker’s vehicle violated the Fourth Amendment under Gant. Baker, proceeding pro se, subsequently filed a motion to vacate, set aside, or correct his sentence, asserting four claims for relief—all of which the district court rejected—denying a certificate of appealability on all claims. The Fourth Circuit, however, granted a partial certificate of appealability to consider the question of whether Baker’s lawyer was ineffective in failing to raise a Gant argument on direct appeal.

On appeal, before conducting its analysis on Baker’s ineffective assistance of counsel claim, the Fourth Circuit addressed the Supreme Court’s decision in Gant and its effect upon searches incident to an arrest as it relates to vehicle searches. Importantly, the court noted that Gant left unaltered other exceptions that might authorize police to search a vehicle without a warrant even when an arrestee is secured beyond reaching distance of the passenger compartment and it is unreasonable to expect to find any evidence of the crime of arrest in the vehicle. Most relevant to this appeal was the so-called automobile exception, which permits a warrantless search of a vehicle when there is probable cause to believe the vehicle contains contraband or other evidence of criminal activity. Next, the court addressed Baker’s contention that his lawyer was unconstitutionally ineffective in failing to challenge the search of his vehicle under Gant on direct appeal. Under the first prong of the Strickland test, the Fourth Circuit found that Baker’s lawyer was not deficient in failing to challenge the evidence because the search was plainly justified under the automobile exception as there was probable cause to search the vehicle following the officer’s finding a gun, drugs, and a digital scale on Brown’s person. Lastly, the court rejected Baker’s argument under the second prong of Strickland, finding that the alleged deficiency did not prejudice Baker because the evidence obtained during the search was not subject to suppression, pursuant to the Fourth Amendment exclusionary rule’s good-faith exception, as the officers were following the law as it existed at the time the search was conducted.

Full Opinion

– W. Ryan Nichols

Decided June 13, 2013

The Fourth Circuit Court of Appeals affirmed the defendant’s convictions of various firearm and drug crimes. The court held that the Speedy Trial Act precludes dismissal of an untimely indictment when a defendant fails to move for dismissal prior to trial. The court also held that although the district judge’s comments to the jury were erroneous, they did not rise to the level of plain error.

On March 9, 2010, police officers pulled over Lamont Jordan’s vehicle, in which defendant Marco Cherry was a passenger. Cherry attempted to push one of the officers, a struggle ensued, and Cherry attempted to flee. The officer activated a Taser on Cherry and recovered Ecstasy bills and a nine-millimeter pistol from the ground as Cherry stood up. Cherry was charged with various firearm and drug crimes on July 12, 2010 and released from jail on April 1, 2011 after completing his state sentence. On April 6, 2011, the U.S. District Court in Norfolk held a detention hearing and ordered that Cherry be detained pending further proceedings. On May 4, 2011, the grand jury issued an indictment charging Cherry with the crimes set forth in the complaint. The district court set the case for trial on June 30, 2011. However, prior to trial, Cherry’s court-appointed attorney filed a motion to withdraw, which the court granted and appointed another attorney. Cherry then filed a motion to suppress, which the court denied, and a motion to continue his trial, which the court granted. No motions were filed under the Speedy Trial Act. The court ultimately held the trial on September 20, 2011. The trial lasted for two days and when the jury finished deliberating, the judge thanked the jury and, in doing so, alluded to the existence of inadmissible evidence. The defense counsel subsequently polled the jury and each juror replied in the affirmative that it was their verdict.

Cherry argued for reversal of the verdict on the basis of (1) the district court should have dismissed the indictment as untimely under the Speedy Trial Act, notwithstanding his failure to move for its dismissal prior to trial and (2) the district court’s comments to the jury revealing his criminal history before the jury could be polled constituted plain error.

First, the court explained that the Speedy Trial Act requires that a defendant be indicted within thirty days of arrest and tried within seventy days from the later of the filling of the information or indictment or the defendant’s initial appearance before a judicial officer. The “Sanctions” section of the Speedy Trial Act states that failure to timely bring a defendant to trial constitutes a waiver of the right to dismissal under this section. The court rejected Cherry’s argument that because the waiver clause is included only in § 3162(a)(2)—the speedy trial provision of the “Sanctions” section—and not § 3162(a)(1)—the speedy indictment provision.  As such, there is no requirement that a motion under the speedy indictment provision of the Act be filed before trial. The court found the waiver clause applies to “this section”—i.e., § 3162, which governs both the speedy trial right and the speedy indictment right. Thus, a defendant who fails to move for dismissal prior to trial on the basis of an untimely indictment waives his right to move for dismissal under the speedy indictment provision of the Speedy Trial Act.

Next, the court addressed the district court’s comments to the jury.  According to the court, the Federal Rule of Criminal Procedure 31(d) provides that “after a verdict is returned but before the jury is discharged, the court must on a party’s request, or may on its own, poll the juror’s individually.” Because Cherry did not object after the court revealed his criminal history, the court reviewed the lower court’s action for plain error, under which the defendant must demonstrate an error occurred, that was plain, and affected his substantial rights. The court found that the judge’s injection of remarks that might influence juror’s decisions before they may be polled individually is thus improper. Nonetheless, the court found that Cherry could not prove the error affected the outcome of the trial or probably influenced the verdicts against him. The evidence against him was overwhelming and the circumstances surrounding the erroneous remarks were strong indicia that the jury had reached a unanimous guilty verdict.

Full Opinion

– Sarah Bishop

Decided: June 12, 2013

The Fourth Circuit affirmed Appellant Al Sabahi’s conviction on four courts for knowingly possessing firearms while unlawfully present in the United States, in violation of 18 U.S.C. §§ 922(g)(5)(a) and 924(a)(2).  Al Sabahi appealed alleging that (1) he was not illegally or unlawfully present in the United States; (2) the district court committed a Confrontation Clause violation; and (3) the evidence was insufficient to support his conviction.

Al Sabahi, a Yemeni citizen, entered the U.S. on November 12, 1997.  His visa expired in May 1998.  Al Sabahi remained in the U.S. after his visa expired.  On January 10, 2003, he voluntarily registered with the National Security Entry-Exit Registration System (NSEERS).  Immigrations and Customs Enforcement then placed Al Sabahi in removal proceedings for overstaying his visa.  Al Sabahi married a U.S. citizen in August 2003.  Thereafter, he filed an I-485 application to legalize his presence in the U.S.  Al Sabahi worked at a convenience store in Littleton, North Carolina during the relevant time period.  On February 15, 2007, a Pepsi employee went to the store to remove a Pepsi cooler.  Al Sabahi placed a .9-millimeter pistol on the store’s counter during the visit and would not turn over the cooler.  The Pepsi employee called his supervisor who came to the store, saw the gun, realized Al Sabahi would not release the cooler, and called the chief of the Littleton Police Department.  Two months later, Al Sabahi was stopped at a traffic checkpoint – conducted by the police chief and other officers – while driving a gold Toyota Camry.  The car belonged to Ali Saleh, the owner of the convenience store, but Al Sabahi frequently borrowed it.  An officer saw part of a pistol grip on the car’s floorboard.  A .9-millimeter pistol was retrieved from the vehicle.  The police chief instructed that Al Sabahi be charged with carrying a concealed weapon. On May 9, 2007, another individual went to the convenience store to sell a .380 caliber handgun to Al Saleh.  Saleh was not present at the store.  Al Sabahi took cash from the register and purchased the firearm.  The seller wrote a receipt in Al Sabahi’s name.  When Saleh learned Al Sabahi had bought the gun, he informed the seller that Al Sabahi was an illegal and should not have purchased the gun.  Lee later prepared a second receipt naming Saleh as the purchaser.  Saleh testified that, on September 7, 2007, he went home and found Al Sabahi drunk, carrying the .380 caliber handgun and claiming it belonged to him.  Al Sabahi then left with the firearm.  Saleh reported the theft to the police.  The police retrieved the firearm from one of Saleh’s relatives.  These four incidents made up the facts of the four specific counts leveled against Al Sabahi.  A jur convicted Al Sabahi on all counts.

The court first addressed Al Sabahi’s argument that the district court improperly found he was unlawfully present in the U.S.  The court noted that federal regulations recognize that illegal aliens include nonimmigrants whose authorized period of stay has expired.  The court cited case law for the proposition that an alien becomes unlawfully present in the U.S., for the purposes of the statute, upon commission of a status violation.  Moreover, the court cited case law indicating that an alien who has acquired unlawful or illegal status cannot relinquish that status until his application for adjustment of status is approved.  The court concluded Al Sabahi was unlawfully in the United States at the time he possessed the firearms in question, since he remained in the country after his visa expired and his request for adjustment of status has not been approved.  Al Sabahi argued that he was “in effect ‘paroled’ via 8 U.S.C. §1182(d) when he registered through NSEERS, since federal regulations provide that aliens are not unlawfully in the United States if they are in valid parole status.  The court noted that parole is only granted to aliens who have not yet entered the U.S.  Also, the court observed that the U.S. Code authorizes the Attorney General to parole aliens into the United States temporarily for urgent humanitarian reasons or significant public benefit.  The court rejected Al Sabahi’s argument after finding that he was already present in the U.S. when registering with NSEERS, and that he had not shown any humanitarian reasons or significant public benefit warranting his parole.  Al Sabahi also argued that he was not illegally in the United States due to his I-485 application and cited a Tenth Circuit decision suggesting, in dicta, that a defendant who received a pistol after filing an amnesty application would not be illegally in the U.S. for purposes of the statute.  The court noted that while some courts had favorably cited the dicta, the Fourth Circuit has held “that the mere filing of an application for adjustment of status does not legalize the alien’s presence in the United States, and it is still a crime under § 922(g)(5), for that individual to possess a firearm.”

For this reason, the court found Al Sabahi’s argument lacked support and concluded that the pendency of his application did not alter his unlawful status at the time he possessed the firearms.

Al Sabahi also contended that the district court erred in allowing the case to proceed without waiting for an immigration judge to decide whether Al Sahabi was removable.   Al Sabahi cited 8 U.S.C. § 1229(a)(1), which states: “[a]n immigration judge shall conduct proceedings for deciding the admissibility or deportability of an alien.”  However, the court stated that this provision does not divest district courts of the ability to decide whether aliens are unlawfully present for purposes of the statute.  Therefore, the court determined that Al Sabahi’s argument lacked merit.

In addition, Al Sabahi contended that the district court violated his Confrontation Clause rights by not allowing his counsel to question government witness regarding his pending I-485 application and NSEERS participation.  The district court permitted cross-examination of the witness, but declined to permit questioning on NSEERS and the I-485 application on the basis that it was irrelevant.  The court declined to find any Sixth Amendment violation, since Al Sabah was permitted to cross-examine and had given no reason how this exclusion of testimony violated his confrontation right.

Lastly, Al Sabahi contended that the evidence was insufficient to support the jury verdict.  The court held that the substantial evidence supported the jury’s verdict for each conviction.

Full Opinion

– A. Hadden Lucas

Filed:  June 10, 2013

The Fourth Circuit denied Faisal Hashime’s petition for a hearing en banc.  However, Judge Gregory wrote a concurring opinion to voice his support for revision of the Fourth Circuit’s Eighth Amendment jurisprudence.

Hashime was convicted of several crimes involving child pornography.  On appeal, he alleged a violation of his Miranda rights and challenged his sentence under the Eighth Amendment.  Hashime also asked the full Fourth Circuit to “review and correct” its Eighth Amendment jurisprudence before hearing his appeal.  His petition was circulated to the full court; however, none of the judges requested a poll pursuant to Rule 35 of the Federal Rules of Appellate Procedure, resulting in a denial of the petition.

Judge Gregory concurred in the Fourth Circuit’s initial denial of a hearing en banc, but only for purposes of efficiency.  He noted that resolution of the Miranda matter would moot Hashime’s Eighth Amendment argument—an argument Judge Gregory found meritorious.  Unlike other circuit courts, the Fourth Circuit does not provide Eighth Amendment proportionality review for sentences less than life imprisonment without parole.  Judge Gregory asserted that this anomalous stance is also contrary to the Supreme Court’s Eighth Amendment jurisprudence.  He noted that, inter alia, the Supreme Court has never stated that term-of-years sentences will survive the proportionality analysis per se, and that the Court “has strongly suggested that Eighth Amendment proportionality review applies equally to both life and term-of-years sentences.”  Thus, without taking a stance on the merits of Hashime’s appeal, Judge Gregory called on the Fourth Circuit to revise its Eighth Amendment jurisprudence when prudentially appropriate.

Full Opinion

– Stephen Sutherland

Decided: June 10, 2013

The Fourth Circuit vacated and remanded the United States District Court for the Eastern District of Virginia’s decision to allow the government to forcibly medicate Chatmon in order to restore his competency to stand trial.

Chatmon was arrested and charged with conspiracy to distribute large amounts of crack cocaine and heroin. Before he could be tried, however, his attorney filed a motion requesting a formal competency evaluation. The motion was granted and the evaluation revealed that Chatmon suffered from Schizophrenia, a mental disease that rendered him “unable to understand the nature and consequences of the proceedings against him.” Consequently, Chatmon was deemed incompetent to stand trial. Thereafter, he was hospitalized and treatment was initiated to determine whether he might be restored to competency such that the criminal proceedings could go forward. Beginning in September 2011, a competency restoration evaluation was undertaken. On December 9, 2011, a final report was produced (“December Report”) confirming Chatmon’s initial diagnosis; however, the report also indicated that, although he remained incompetent to stand trial, there was a substantial probability that a period of treatment with an antipsychotic medication, known as haloperidol decanoate, could restore his competency. Following the competency restoration report, Chatmon was transferred from a restrictive movement unit to an open population unit within the treatment facility. While in the open unit, Chatmon demonstrated notable improvement in his behavior although no additional competency evaluation was undertaken. On January 10, 2012, the December Report was submitted to the parties and the district court. Based on the December Report, the government filed a motion to forcibly medicate. The motion was heard on August 29, 2011. Following the hearing, the district court issued an order permitting the government to forcibly medicate Chatmon against his will. This appeal followed.

In its review, the Fourth Circuit employed the four-part analysis provided by Sell v. United States, 539 U.S. 166 (2003). The court first addressed Chatmon’s contention that the first prong of Sell was not met because the district court incorrectly deemed his drug trafficking charge a “serious” crime. Rejecting this argument, the Fourth Circuit observed that the central consideration when determining whether a particular crime is serious enough to satisfy this factor is the maximum penalty authorized by statute. Here, because Chatmon was potentially facing life imprisonment, the court held that it was clear his drug trafficking charge was a “serious” crime under the Sell framework. Next, the court addressed Chatmon’s challenge relating to the third Sell factor, the existence of less intrusive means for restoring competency. Vacating and remanding the district court’s decision, the Fourth Circuit found that the lower court erred in its analysis of the third Sell factor. Specifically, in its analysis, the district court not only failed to actually consider less intrusive means offered by Chatmon; it also failed to recognize Sell’s specific requirement that the court “must consider” less intrusive means for administering the medication such as a court order backed by contempt sanctions.

Full Opinion

-W. Ryan Nichols

Decided: June 10, 2013

The Fourth Circuit affirmed the district court’s ruling that a diversionary disposition, in which a court sentences a criminal defendant but does not formally enter judgment against him, is a predicate conviction for the purposes of a sentencing enhancement under the United States Sentencing Guidelines (the “USSG”).

Ever Enrique Medina, a citizen of El Salvador, pled guilty to possession of a concealed weapon and possession of Marijuana in 2004. In that case, the judge issued a “probation before judgment” diversionary disposition, sentencing Medina to eighteen months of probation without entering judgment. In 2007, Medina was convicted for driving under the influence, triggering his deportation to El Salvador. Subsequently, Medina illegally reentered the United States, and was arrested in September of 2008 for driving without a valid license. He was sentenced to sixty days in jail. In 2010, Medina pled guilty to second-degree assault, stemming from an altercation in a bar where Medina alleged threatened a security officer with a knife. After sentencing on the assault charge, Immigration and Customs Enforcement Detained Medina, and a federal grand jury indicted Medina for unlawful reentry after removal under the Untied States Code. Although Medina did not contest the finding, he argued that his 2004 probation-before-judgment disposition was not a “conviction,” and thus, did not trigger a sentencing enhancement under the USSG. The district court rejected Medina’s argument, and sentenced him to thirty months in prison.

On appeal, Medina argued that the district court erred in applying the enhancement because under Maryland law, a diversionary disposition is not a conviction. The Fourth Circuit disagreed, holding that federal law applied absent a clear indication in the USSG that state law should apply. Under federal law, the court called it “beyond dispute” that the term “conviction” under the USSG includes guilty pleas followed by an entry of judgment. The court found that by not entering judgment, Medina’s 2004 guilty plea was not transformed into something other than a conviction for the purposes of the USSG. Furthermore, other immigration laws under the United States code provide that a conviction includes diversionary dispositions where “adjudication of guilty has been withheld.” Finally, the Fourth Circuit noted that its decision was consistent with all other circuits facing the issue. Therefore, the Fourth Circuit affirmed the district court’s sentence of thirty months in prison.

Full Opinion

– Wesley B. Lambert

Decided June 7, 2013

The Fourth Circuit Court of Appeals reversed the portion of the district court’s judgment in favor of CSX Transportation Inc. (CSX) on its claimed liability limitation of $25,000. The court concluded that the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 11706, subjected CSX to full liability for the shipment, and that the parties did not modify CSX’s level of liability by written agreement as permitted in that statute.

In March 2006, rail carrier CSX transported an electrical transformer worth about $1.3 million from shipper ABB Inc.’s plant in St. Louis, Missouri to a customer in Pittsburgh, Pennsylvania. ABB filed a complaint in the district court alleging the transformer was damaged in transit and that CSX was liable for over $550,000 – the full amount of the damage. CSX denied full liability, and alternatively contended that even if the court found CSX liable for the cargo damage, the parties had agreed in the bill of lading to limit CSX’s liability to a maximum of $25,000. The Fourth Circuit disagreed.

The court discussed the history of interstate freight shipments. Congress enacted the Interstate Commerce Act in 1887 to regulate the transportation industry. Until 1995, carriers were required to file their rates, or “tariffs”, publicly with the ICC. In 1995 this requirement was abolished to ease regulatory burdens on the transportation industry. The Carmack Amendment “creates a national scheme of carrier liability for goods damaged or lost during interstate shipment under a valid bill of lading.” In other words, the Carmack Amendment constrains carriers’ ability to limit liability by contract. All rail carriers remain fully liable for damage caused to its freight unless the shipper has agreed otherwise in writing. However, the Carmack Amendment has an exception allowing for limited liability, which is a very narrow exception to the general rule imposing full liability on the carrier. The court’s analysis centered on the requirements of this exception to the Carmack Amendment to exempt a carrier from liability.

The court analyzed two documents: (1) the bill of lading governing the March 2006 shipment and (2) the CSX Price List 4605. The bill of lading (“BOL”) was a partially completed copy of ABB’s standardized bill of lading. Although the BOL included general information about the shipment, it did not include a price for the shipment or indicate the level of liability assumed by CSX for lost or damaged cargo. The Price List was “issued” by CSX on November 18, 2005 and became “effective” on December 14, 2005. The section of Price List 4605 titled “Price Restrictions” listed 18 provisionary rules, one of which required the shipper to negotiate directly with the carrier to receive coverage for full liability. Although no direct negotiation occurred, none of ABB’s representatives were aware of Price List 4605 prior to the March 2006 shipment.

However, the Fourth Circuit decision really turned on the BOL because, as the court recognized, the Carmack Amendment imposes the burden of securing limited liability on the carrier, CSX, not on the shipper, ABB. On its face, the BOL governing the March 2006 shipment was silent regarding the extent of CSX’s liability. The space on the BOL labeled “rate authority,” where a notation regarding rate and liability normally would be listed, was left blank. Moreover, the BOL did not contain any references to an identifiable classification, a rate authority code, a price list, or any other indication that the carrier assumed only limited liability. The court rejected CSX’s argument that the Price List 4605 is incorporated by reference into the BOL through standardized language appearing on the BOL, indicating that the shipper agreed to the terms and conditions in “the classification or tariff which governs the transportation of this shipment.”  The court subsequently found the BOL was an insufficient writing to constitute exemption from the Carmack Amendment and to limit CSX’s (the carrier) liability. The court believed its ruling will encourage parties to employ precise bills of lading, which reflect fully and specifically the parties’ choice of liability terms, and to memorialize these terms in writing as Congress intended by passage of the Carmack Amendment.

Full Opinion

– Sarah Bishop

Decided:  May 29, 2013

The Fourth Circuit affirmed the judgment of the U.S. District Court for the Eastern District of Virginia and rejected Hasan’s challenges to his conviction of various offenses related to the trafficking of contraband cigarettes.

Hasan was involved in the trafficking and distribution of contraband black market cigarettes across interstate lines in violation of the federal Contraband Cigarette Trafficking Act (“CCTA”), which prohibits the trafficking of tobacco products to avoid payment of state taxes.  Hasan was caught up in an undercover investigation led by agents with the Federal Bureau of Alcohol, Tobacco, and Firearms (“ATF”).  The ATF alleged that Hasan was involved in a conspiracy that resulted in the purchase of nearly 40,000 cartons of untaxed cigarettes from undercover agents over a period of approximately two years.  In 2011, Hasan was indicted on six separate counts.  Prior to his trial, Hasan filed a motion to dismiss the indictment or, in the alternative, to exclude evidence collected against him on the basis that the undercover sales “constituted government conduct so outrageous as to violate his due process rights.”  The district court denied the motion.  Hasan then proceeded to agree to a bench trial, preserving his due process challenge, and was found guilty of the offenses charged, sentenced to twenty-four months of incarceration, and adopted the government’s proposed civil forfeiture order in the amount of $604,220.  Hasan appealed both the denial of his due process challenge and the court’s civil forfeiture order, asserting that the court miscalculated the amount.

The Fourth Circuit first took up Hasan’s challenge to his conviction that the undercover agents’ conduct was so outrageous that it violated fundamental notions of fairness.  The Fourth Circuit articulated the “outrageous conduct” doctrine, as set forth by the U.S. Supreme Court,  requires that in order to find a due process violation, the government conduct as issue must be ‘outrageous, not merely offensive.’  However, the Court held that this doctrine is “highly circumscribed” and the Court has never held in a specific case that the government violated the defendant’s due process rights only through outrageous conduct.  To satisfy this high standard, the court adopted the Osborne test from the Ninth Circuit which established that in order for the government conduct to be so outrageous as to offend due process it must be ‘shocking,’ or ‘offensive to traditional notions of fundamental fairness.’  The Fourth Circuit then rejected Hasan’s first contention that the multiple sales of cigarettes to him by the ATF, anticipating he would then later sell them without payment of state taxes is outrageous, per se, because ATF agents were basically distributing “contraband cigarettes.”  The court found support for its decision in both the CCTA and in Congress’ general authorization to federal law enforcement to engage in commercial endeavors in the context of undercover investigations and then use the proceeds to offset the cost of these undercover operations.  The court also summarily rejected Hasan’s claim that the ATF agents were engaged in behavior that was ‘offensive to traditional notions of fundamental fairness.’

The court next took up Hasan’s challenge to the civil forfeiture amount arguing that the court miscalculated by calculating the sum based on gross proceeds, rather than by profits realized from the scheme.  The court again rejected Hasan’s argument that the “contraband cigarettes” were a good or service that is not inherently illegal, but is sold or provided in an illegal manner and, thus, the defendant is only required to forfeit the profit gained.  The court held, for the first time to its knowledge, that “contraband cigarettes” do constitute “illegal goods” under the federal forfeiture statue 18 U.S.C. § 981, and thus triggers § 981(a)(2)(A) definition of proceeds meaning “property of any kind obtained directly or indirectly, as a result of the commission of the offense giving rise to forfeiture . . . and is not limited to the net gain or profit realized from the offense.”

Full opinion

John G. Tamasitis

Decided:  June 6, 2013

The Fourth Circuit held that the federal Petroleum Marketing Practices Act (“PMPA”) and Energy Policy Act of 2005 (“Energy Policy Act” or “federal renewable fuel program”) did not preempt North Carolina’s Ethanol Blending Statute (“the Blending Statute”), and that the question of whether the federal Lanham Act preempted the “splash blending” practice required by the Blending Statute constituted an issue of material fact.  The Fourth Circuit therefore affirmed the summary judgment of the United States District Court for the Eastern District of North Carolina with regard to the plaintiffs’ preemption claims under the PMPA and federal renewable fuel program, vacated the summary judgment with regard to the plaintiffs’ preemption claims under the Lanham Act, and remanded the case.

In furtherance of the Energy Policy Act, 42 U.S.C. § 7545(o), Congress authorized the Environmental Protection Agency (“EPA”) to require gasoline “suppliers”—i.e., parties that import pure gasoline to sell to “retailers,” who then deliver ethanol to consumers or final market vendors—to offer certain renewable fuels for sale, including ethanol.  As a practical matter, suppliers can blend ethanol with gasoline before its eventual sale to retailers (“inline blending”); conversely, retailers can purchase unblended gasoline and blend it themselves (“splash blending”).  Under the Blending Statute, N.C. Gen. Stat. § 75-90 (2008), suppliers must offer unblended gasoline to retailers—giving retailers the chance to partake in splash blending.  The plaintiffs—two trade organizations representing, inter alia, suppliers that import gasoline into North Carolina—filed a complaint against the State of North Caroline in 2008, concerned with splash blending’s alleged susceptibility to error.  The plaintiffs alleged that, inter alia, the federal renewable fuel program preempted the Blending Statute.  The plaintiffs also contended that the Blending Statute was preempted by two other federal statutes:  The PMPA, 15 U.S.C. §§ 2801–41, which governs the relationship between suppliers and retailers, and the Lanham Act, 15 U.S.C. §§ 1051–1113, which protects the quality-control rights of trademark holders.  The district court granted summary judgment to the defendants on the plaintiffs’ facial challenges to the Blending Statute, and subsequently granted summary judgment to the defendants with regard to the plaintiffs’ as-applied preemption challenges.  The plaintiffs appealed, reiterating their preemption challenges under each statute.

The Fourth Circuit noted that the PMPA’s preemptive scope was substantially narrowed by two 1994 amendments, which granted more deference to state laws governing supplier-retailer franchise arrangements – 15 U.S.C. §§ 2801(13)(C), 2802(b)(2)(A); § 2805(f)(1)(B).  Furthermore, the Fourth Circuit found that splash blending did not constitute “willful adulteration” warranting termination of a franchise agreement under the PMPA, as this term connoted “misbranding” or similar trademark violations rather than adulteration of fuel content; indeed, the court noted that ethanol blending is required and incentivized by Congress.  With regard to the federal renewable fuel program, the Fourth Circuit noted that, under the EPA’s regulatory regime, retailers were recognized as potential ethanol blenders.  Lastly, with regard to the Lanham Act preemption claim, the Fourth Circuit found that issues of material fact existed as to whether the splash blending process unlawfully interfered with the plaintiffs’ ability to control the quality of their trademarked goods.

Full Opinion

– Stephen Sutherland

Decided: June 4, 2013

The Fourth Circuit affirmed the Administrative Law Judge’s (“ALJ”) decision to award black lung benefits under the Black Lung Benefits Act (the “Act”) to Cochran, a former Westmoreland Coal Company (“Westmoreland”) employee, finding that there was sufficient evidence to find that Cochran suffered from “legal pneumoconiosis.”

Plaintiff, Jarrell Cochran worked for the Westmoreland in West Virginia for at least sixteen years. Cochran also smoked cigarettes, consuming about a pack of cigarettes every week. In February of 2008, Cochran filed a claim for black lung benefits under the Act. The Department of Labor awarded benefits, which were affirmed by the ALJ. Under the Act, former coal miners are able to claim benefits by showing that they suffer from the lung disease called pneumoconiosis. One can prove pneumoconiosis by establishing either “legal” or “clinical” pneumoconiosis. “Legal pneumoconiosis” is broader than “clinical pneumoconiosis” and requires a showing of “any chronic lung disease or impairment…arising out of coal mine employment…includ[ing]…any chronic restrictive or obstructive pulmonary disease.” Westmoreland and Cochran presented competing experts at the hearing before the ALJ. The ALJ ultimately sided with Cochran’s expert, finding that his testimony established that Cochran suffered from legal pneumoconiosis.

On appeal, Westmoreland first argued that the expert’s testimony was insufficient to support the ALJ’s finding of legal pneumoconiosis, claiming that his testimony merely established the possibility that coal mine dust contributed to Cochran’s pneumoconiosis. The Fourth Circuit disagreed, finding that the expert’s testimony established that both coal dust and cigarette smoke were causes of pneumoconiosis, supporting the ALJ’s finding of legal pneumoconiosis. Second, Westmoreland argued that the ALJ erred by improperly discounting the testimony of its competing experts based on the court’s reliance on the Act’s preamble. The Fourth Circuit again affirmed the ALJ’s decision, finding that the preamble of the Act was an appropriate consideration. Furthermore, the Fourth Circuit emphasized that the preamble was only one of a number of factors that the ALJ considered in making his decision. The ALJ most heavily discounted Westmoreland’s experts because they failed to address legal pneumoconiosis in their analysis. The court concluded that at its core, the case was simply a battle of the experts, and after thoughtful and reasoned analysis, the ALJ was justified in finding Cochran’s expert more believable. Finally, Westmoreland argued that the ALJ erred by placing the burden of proof on Westmoreland to “rule out coal mine dust as a cause of Cochran’s respiratory impairment.” The Fourth Circuit disagreed, finding that Westmoreland’s reliance on the ALJ’s statement that “it is not established that coal dust did not aggravate [Cochran’s] asthma” was taken out of context. The court found that it was simply a part of the ALJ’s broader analysis and the ALJ properly placed the burden of proof on Cochran to establish the existence of legal pneumoconiosis. Therefore, the Fourth Circuit affirmed the ALJ’s conclusion that Cochran suffered from legal pneumoconiosis.

Full Opinion

– Wesley B. Lambert

Decided: June 4, 2013

The Fourth Circuit affirmed the District Court for the District of Maryland, which affirmed the bankruptcy court’s finding of fraud and entry of a non-dischargeable judgment in favor of the Appellee, SG Homes Associates, LP (“SG Homes”).

Marinucci was the president and, along with Munnikhuysen, a fifty percent shareholder of Chesapeake Site Contracting, Inc. (“Chesapeake”). On January 28, 2008, SG Homes accepted Chesapeake’s bid for site work on a building project at Crabbs Branch Way in Montgomery County Maryland (“The Project”) and requested, among other things, a performance and payment bond (the “P&P Bond”). Almost immediately after SG Homes accepted the bid, before any formal written contract was signed, Chesapeake hired subcontractors and suppliers and began work on The Project.  Soon thereafter Marinucci completed a bond request form and informed Randall, SG Homes’ procurement vice president, that Chesapeake was pursing the P&P Bond. However, by mid-March, Marinucci had decided not to obtain the P&B Bond because his wife refused to sign a personal guaranty as required by the bonding company. Nonetheless, on March 26, 2008, Munnikhuysen copied Marinucci on an email sent to SG Homes’ procurement manager, DeVerger, indicating that his office had advised him that SG Homes should see the P&P Bond by the end of the next week. Meanwhile, work continued on The Project and Chesapeake submitted monthly payment application to SG Homes containing a certification that the work covered by the application had been completed in accordance with the contract documents and all amounts previously paid to Chesapeake under the contract had been used to pay Chesapeake’s costs for labor, materials, and other obligations. Marinucci reviewed each application and directed an employee to sign each certification. Chesapeake deposited each payment into a common fund from which it paid some of its subcontractors and suppliers on The Project as well as other creditors who did not provide services or supplies for The Project. A written contract (“the Contract”) governing The Project was executed on May 12, 2008. The Contract was ambiguous as to whether SG Homes required the P&B Bond. Consequently, Munnikhuysen sent an email on May 14, 2008 informing DeVerger that the P&B Bond had been canceled because Chesapeake assumed SG Homes no longer wanted it. However, DeVerger insisted that there must have been a communication breakdown because SG Homes still wanted the P&B Bond. Subsequently, Marinucci was copied on several email exchanges between Munnikhuysen and DeVerger regarding the status of the P&B Bond, including one that indicated Marinucci was handling the issue. Thereafter, beginning in September 2008, multiple subcontractors and suppliers informed SG Homes that they were not receiving payment from Chesapeake. On October 29, 2008 Randall informed Marinucci that other subcontractors and suppliers had reported nonpayment and indicated that SG Homes would pay them directly with funds due to Chesapeake. After the subcontractors and suppliers were paid, SG Homes’ calculations indicated that no money was due to Chesapeake. The Contract was subsequently terminated. Thereafter, in February of 2009, SG Homes sued Chesapeake and Marinucci. While the case was pending, Marinucci filed chapter 7 bankruptcy and the suit was stayed against Marinucci, but preceded against Chesapeake. A default judgment was entered against Chesapeake and a final judgment was entered in favor of SG Homes in the amount of $208,806.89. Four days later, SG Homes filed an adversary proceeding against Marinucci in bankruptcy court, seeking a declaration that Marinucci’s debt was non-dischargeable under 11 U.S.C. §523(a)(2)(A). SG Homes asserted that the debt was non-dischargeable because Marinucci committed fraud when he falsely represented that Chesapeake would obtain a payment bond and when he falsely certified that Chesapeake was paying its subcontractors and suppliers in the monthly payment applications. The case went to trial in the bankruptcy court, and the court found that SG Homes had proven fraud by Marinucci on both theories, finding each ground as an independent basis for judgment against Marinucci for fraud, the amount of damages, and the non-dischargeability of the debt. On appeal, the district court affirmed that bankruptcy court’s findings and subsequently Marinucci appealed to the Fourth Circuit.

Reviewing the bankruptcy court’s decision independently, the Fourth Circuit first addressed Marinucci’s contention that the bankruptcy court erred in entering a non-dischargeable judgment against him because SG Homes failed to prove two of the elements of fraud: reliance and damages. Rejecting this argument, the Fourth Circuit found that the bankruptcy court relied on solid evidence, which indicated that SG Homes justifiably relied on Marinucci’s false certifications in the monthly payment applications and was therefore damaged because SG Homes would not have otherwise continued to pay Chesapeake had it known Chesapeake was making false certifications. Next, the court addressed the bankruptcy court’s finding that SG Homes incurred $208,806.89 in damages—the amount SG Homes double paid for work completed and material furnished by Chesapeake’s subcontractors and suppliers—as a result of Marinucci’s fraud. Rejecting this argument, the court found that Marinucci’s unsupported testimony was not sufficient to rebut SG Homes’ prima facie case of damages. Lastly, because SG Homes obtained a judgment based on the fraud after having shown (1) fraud; (2) reliance on the fraud; and (3) damages attributable to the fraud, the court concluded that the bankruptcy court did not err in determining that the judgment debt was non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(A).

Full Opinion

-W. Ryan Nichols

Decided May 31, 2013

The Fourth Circuit Court of Appeals denied the North Carolina State Board of Dental Examiners’ (the Board) petition for review of the Federal Trade Commission (FTC) order finding that the Board violated the FTC Act, 15 U.S.C. § 45, by engaging in unfair competition in the market for teeth-whitening services in North Carolina.

Dentists started providing whitening services throughout North Carolina in 1990. By 2003, non-dentists also started offering the same services, often at a significantly lower price than dentists. After receiving complaints from dentists, the Board opened an investigation into teeth-whitening services performed by non-dentists. As a result of the investigations, the Board issued at least 47 cease-and-desist letters to 29 non-dentist teeth-whitening providers. The Board ultimately expelled all non-dentist providers from the North Carolina teeth-whitening market. On June 17, 2010, the FTC issued an administrative complaint against the Board, charging it with violating 15 U.S.C. § 45, the FTC Act, by excluding non-dentist teeth whiteners from the market. The Board moved to dismiss the complaint, arguing that the FTC lacked jurisdiction over it and, alternatively, that it was exempt from the federal antitrust laws under the “state action” doctrine. Ultimately the Board petitioned the Court of Appeals for review of the FTC’s final order, raising 3 arguments: (1) that it is exempt from the antitrust laws under the state action doctrine; (2) that it did not engage in concerted action under § 1 of the Sherman Act; and (3) that its activities did not unreasonably restrain trade under § 1.

First, the court addressed whether the Board is exempt from the antitrust laws under the state action doctrine. The state action doctrine is where the antitrust laws do “not apply to anticompetitive restraints imposed by the States ‘as an act of government.’” The court then discussed the three ways by which a party may invoke the state action doctrine: (1) a state’s own actions “ipso facto are exempt” from the antitrust laws; (2) private parties acting pursuant to a “clearly articulated and affirmatively expressed as state policy” and their behavior is “actively supervised by the State itself;” and (3) municipalities and substate governmental entities acting pursuant to state policy to displace competition with regulation or monopoly public service. Unlike private parties, municipalities are not required to show active supervision. Further, even in these three circumstances, state-action immunity is disfavored and only recognized when it is clear that the challenged anticompetitive conduct is undertaken pursuant to a regulatory scheme that “is the State’s own.” In this case, the FTC found that the Board was a private party and could not show it was actively supervised by North Carolina. The FTC rejected that the Board was a substate governmental entity not subject to the active supervision requirement. While state agencies such as the Board may in some instances qualify as a substate governmental entity, the FTC found the “Court has been explicit in applying the antitrust laws to public/private hybrid entities, such as regulatory bodies consisting of market participants” like the Board. The operative factor is a tribunal’s degree of confidence that the entity’s decision-making process is sufficiently independent from the interests of those being regulated. Because a decisive majority of the Board was elected by dentists, the Board qualifies as a private party and is required to meet the active-supervision requirement. The Court of Appeals agreed the Board is a “private” actor required to prove active supervision, and also that the Board did not meet the supervision requirement. Because the cease-and-desist letters were sent without state oversight and without the required judicial authorization, it operated without sufficient supervision.

Next, the court addressed whether the FTC properly found that the Board’s behavior violated the FTC Act. The FTC’s factual findings are conclusive if supported by substantial evidence. The FTC Act makes unlawful “unfair methods of competition.” In this case, the FTC determined that the Board’s conduct violated the FTC Act because it was a violation of § 1 of the Sherman Act. Section 1 of the Sherman Antitrust Act prohibits “every contract, combination, or conspiracy, in restraint of trade.” To establish a § 1 violation, a plaintiff must prove (1) a contract, combination, or conspiracy that (2) imposed an unreasonable restraint of trade. Concerted action is satisfied when an agreement exists between “separate economic actors” such that any agreement “deprives the marketplace of independent centers of decision making.” The Board members’ serve on the Board while they remain “separate economic actors” with a separate financial interest in the practice of teeth whitening. Thus, any agreement between the Board members deprives the market of an independent center of decision making. However, to be concerted action, the parties must also have a conscious commitment to a common scheme designed to achieve an unlawful objective. In this case, the sending letters and cease-and-desist orders is suggestive of coordinated action. The Court of Appeals agreed with the FTC that the Board engaged in a combination or conspiracy under § 1.

Finally, the court addressed whether the Board’s actions amounted to an unreasonable restraint of trade under § 1. There are three forms of analysis for determining if conduct violates § 1: (1) per se; (2) quick-look; and (3) rule of reason. The FTC determined the Board’s conduct violated § 1 under both a quick-look analysis and a rule of reason, and the Court of Appeals agreed. Group boycotts are amenable to the quick look approach where “an observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and markets.” In this case, the court found it was not difficult to understand that forcing low-cost teeth-whitening providers from the market has a tendency to increase a consumer’s price for that service.  As a result, the Board’s petition for review was denied.

Full Opinion

– Sarah Bishop

Decided: May 29, 2013

The Fourth Circuit affirmed the judgment of the district court that Castellanos failed to prove he had a legitimate expectation of privacy in a vehicle that was holding cocaine in its gas tank and being transported on a commercial car carrier.

On September 20, 2010, Captain Kevin Roberts of the Reeves County, Texas, Sheriff’s Department was conducted a routine patrol in Pecos, Texas when he observed a Direct Auto Shippers (“DAS”) commercial car carrier at a gas station. Captain Roberts first became suspicious of a Ford Explorer (“the Explorer”) that was being transported on the DAS carrier  when he noticed that it bore a dealership plate rather than a traditional license plate.  After questioning the DAS driver, Roberts was provided the shipping documents that identified the owner of the Explorer as Wilmer Castenada.  The documents also provided that the trip origin was in California with a final destination in North Carolina.  Roberts attempted to contact Castenada with no luck.  He also attempted to verify the origin and destination of the vehicle by contacting the locations on the shipping documents, but both locations were not associated with Castenada nor were the business representatives that answered the phone aware of the delivery.  Without being able to contact Castenada, Roberts asked the DAS driver if he could search the vehicle; to which the driver acquiesced.  The initial search revealed several abnormalities and caused Roberts to insert a fiber optic scope into the vehicle’s gas tank, which revealed several blue bags floating in the tank.  Roberts then requested to take custody of the vehicle and a more in-depth search revealed “23 kilogram-sized bricks of cocaine with a street value of approximately $3 million.”    After the search, DAS informed Roberts that someone claiming to be Castenada had contacted DAS and was asking about the delivery of the Explorer.  Roberts then lured the caller by telling him that the driver of the DAS carrier had been arrested and the Explorer had been impounded.  A few days later, Roberts was told that someone identified as Castellanos had arrived in the area and was waiting for a ride to pick up the Explorer from the impound lot.  Police subsequently detained Castellanos, who had, inter alia, the title to the Explorer in his possession, the DAS tracking number for the vehicle, and other documentation linking him to the Explorer.  He initially waived his Miranda rights and told Roberts he was in the process of purchasing the vehicle from Castenada, who lived in North Carolina, and that he was instructed to pick up the vehicle and drive it to North Carolina.  After Roberts challenged the story, Castellanos discontinued the interview.  Police also seized circumstantial evidence from a co-conspirator that linked Castellanos to the vehicle.  Castellanos was indicted in the Middle District of North Carolina on one count of conspiracy to distribute cocaine hydrochloride.  Prior to trial, he attempted to suppress the search of the cocaine found in the gas tank.  The district court fueled that Castellanos had not introduced any evidence to show that he owned the Explorer and, as a result, could not object to the search of the vehicle because he had no reasonable expectation of privacy to its contents.  Castellanos entered into a conditional plea agreement and pled guilty to the sole count of the indictment, but reserved his right to appeal the district court’s decision to deny his motion to suppress the evidence.

The Fourth Circuit only addressed the issue that Castellanos could not challenge the search because he could not show that he had a reasonable expectation of privacy in the Explorer’s gas tank.  The Fourth Circuit reviewed the district court’s legal conclusions de novo because the district court had made no finding of fact.  The Fourth Circuit agreed with the Government that Castellanos “failed to demonstrate by a preponderance of the evidence that, at the time of the search, the evidence showed that he had a legitimate expectation of privacy in the Explorer.”  Though Castellanos asserted that he was purchasing the Explorer from Castenada, there was no evidence entered into the record to prove that fact.  Rather, Castellanos did not enter the title of the Explorer into evidence nor did he provide any bill of sale.  He also failed to show that anyone had give him permission to use the vehicle or any other right with respect to the vehicle.  In the end, Castellanos failure to provide any evidence definitively linking him to the Explorer forced the court to hold that Castellanos failed to support a conclusion that he “had anything more than a distantly attenuated connection to the Explorer” and, as such, had no reasonable expectation of privacy in its contents.  Therefore, he could not challenge the warrantless search on those grounds.

Full opinion

– John G. Tamasitis

Date:  May 2, 2013

The Fourth Circuit vacated the decision and order of the Benefits Review Board (“BRB”) awarding permanent partial disability benefits to Marine Repair Services, Inc.’s (“Marine”) former employee under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”).

On October 26, 2007, Christopher Fifer suffered a shoulder, arm, and back injuries in an on-the-job car accident when he worked for Marine as a physically repairman of large shipping containers.  The job was physically demanding and the injuries he sustained precluded him from being able to work for Marine ever again.  Fifer was initially diagnosed with chronic lumbosacral strain, sciatica, and disc protrusion and herniation.  His first functional capacity evaluation (“FCE”) in June 2008 found that he did not meet the physical demands of the job he held at Marine.  The evaluator concluded that Fifer should limit himself to jobs within “medium” work parameters that would limit him to lifting twenty-five pounds or less on an “occasional basis.”  In order to prepare himself to go back to work, Fifer completed a round of work-hardening and was reevaluated in September 2008.  That evaluator found that he had ‘full time tolerance with the lower parameters of heavy work, with limitations in bending and material handling.’  He then saw his doctor for a release back to work; however it only resulted in more work restrictions.  As a result, Marine would not re-employ him and Fifer went to work for his family’s restaurant where he earned significantly less than he did at Marine.  In August 2009 Fifer underwent a second FCE that showed reduced lifting ability, but also showed that he could walk and stand without much hindrance at a slow pace.  His restrictions remained the same and Marine would still not hire him back.  Significantly, during an October 2009 deposition with the case, Fifer’s doctor clarified that based on the result of Fifer’s most recent FCE, he would have revised the September 2008 restrictions.  Marine then discontinued temporary payments in January 2009 and Fifer filed his claim for permanent disability benefits under LHWCA. The administrative law judge (“ALJ) conducted a hearing on October 29, 2009 where Marine presented evidence of alternative employment for Fifer in the geographic area.  Marine’s vocational rehabilitation specialist provided three labor market studies he prepared that showed alternative employment opportunities.  However, the ALJ concluded that Fifer met his burden establishing a prima facie case of total disability since he could not return to his former position at Marine and that Marine’s studies about alternative employment provided inadequate levels of detail to shift the burden back to Fifer.  As a result, the ALJ awarded permanent partial disability benefits to Fifer and the BRB affirmed the decision.

The Fourth Circuit held that Marine did, in fact, present suitable alternative employment options and that the ALJ’s conclusion and the BRB’s affirmation was erroneous.  The Fourth Circuit explained that because (1) the ALJ made findings of fact as to Fifer’s physical limitations which were unsupported because they were did not show any evidence that Fifer’s medications interfered with him finding work and (2) ALJ faulted Marine for failing to address the restrictions provided by Fifer’s doctor which were unavailable to Marine when it conducted its evaluation of alternative employment, the ALJ imposed too heavy a legal burden under the LHWCA’s burden-shifting scheme.  Therefore, the BRB’s order was vacated and remanded for further consideration.

Full opinion

John G. Tamasitis

Decided: May 17, 2013

The Fourth Circuit affirmed the United States District Court for the Western District of Virginia.

In his youth, Wilson suffered a detached retina in his right eye causing permanent blindness in that eye. Years later, in September 2009, he began working night shift at one of Dollar General’s distribution centers, processing inventory and loading merchandize for transportation. Unfortunately, in February of 2010, Wilson developed a serious inflammatory condition in his left eye and was diagnosed with Iritis—a medical condition characterized by inflammation of the iris. Initially he was prescribed eye drops, which as a side effect limited his abilities to perform his job by blurring his vision. Following the onset of this medical condition, Wilson took leave from work and underwent treatment. He was granted a total of eight weeks of leave, six weeks pursuant to Dollar General’s medical leave policy plus an additional two weeks. At the conclusion of his treatment, on April 6, 2010, Wilson was again prescribed eye drops and cleared to return to work that night though his vision did not fully return before he was supposed to report to work. As a result, Dollar General granted him an additional day of leave and permitted him to return to work on April 7 however his condition worsened and he was forced to seek additional treatment. After receiving treatment on April 7, Wilson informed his manager that he would be unable to return to work that evening as he had previously indicated. He further indicated that he had additional upcoming medical appointments at Duke Medical Center. At that point, according to Wilson, he was then offered an ultimatum, return to work that evening; or be terminated and reapply after his condition improved. Following his termination, Wilson contacted the Equal Employment Opportunities Commission (“EEOC”) and inquired about his option for legal recourse and filed a charge of discrimination. Soon thereafter, he filed for Chapter 13 bankruptcy. In March of 2011, the EEOC issued Wilson a notice of his right to sue Dollar General and on June 15, 2011, this suit was filed. Wilson alleged Dollar General had unlawfully discriminated against him by failing to provide a reasonable accommodation for his disability, resulting in his discharge, in violation of the American’s with Disabilities Act (“ADA”). In the district court, Dollar General moved for summary judgment, asserting that (1) Wilson lacked standing as a result of his status as a Chapter 13 debtor; and (2) Wilson failed to establish genuine issues of material fact as to his underlying claim. With respect to standing, Dollar General’s motion was denied; however, with respect to the underlying ADA claim, the motion was granted. This appeal followed.

On appeal, the Fourth Circuit first addressed the standing issue and, in conformance with all of other circuit courts that had considered the issue, affirmed the district court, finding that Chapter 13 debtors, unlike Chapter 7 debtors, have standing to bring causes of action in their own name on behalf of the estate. Next, the court addressed the merits of Wilson’s ADA claim that Dollar General discriminated against him by failing to make “reasonable accommodations” for him as required under the ADA. Affirming the district court, the Fourth Circuit found that Wilson was not a “qualified individual” as he was not able to show that “with reasonable accommodation he could perform the essential functions of the position.” In so holding, the court noted that Wilson was not able to identify a possible reasonable accommodation, other than leave, that would have enabled him to perform the essential functions of his position; nor was he able to produce evidence that had he been granted such leave, he could have performed the essential functions of his position on his requested return date.

Full Opinion

– W. Ryan Nichols

Decided: May 30, 2013

The Fourth Circuit affirmed the judgment of the United States District Court for the Western District of North Carolina in its grant of summary judgment to Stephanie Crockett’s (“Crockett”) former employer on her hostile work environment claim under Title VII of the Civil Rights Act of 1963, 42 U.S.C. § 2000e (“Title VII”).

Crockett was employed as a radiologic technologist at Mission Hospital, Inc. (“Mission”) in February 2008 when she was reassigned and Harry Kemp (“Kemp”) became her supervisor; however he was unable to fire her.  Kemp remained in that position until his death in March 2010.  In December 2009, Crockett was initially counseled for her a lack of initiative based on her work history and concerns expressed by her co-workers.  In January 2010, she was cited again for violating an administrative policy that prohibited the use of cellular phones and misrepresenting facts to Mission representatives.  Finally, in February 2010, she was given a final warning for the use of a cellular phone while working and not on break.  Crockett was required to sign the final warning and the warning provided that any further misconduct would result in termination of her employment.  Kemp was not involved in the final warning.  Shortly following the final warning, Kemp was allegedly involved in an incident with Crockett that included him accusing her of complaining about her performance evaluation that he authored and making unwanted sexual advances towards her which included physical touching.  Crockett did not contact anyone in the Human Resources (HR) department after the incident.  Following the incident, Crockett took leave pursuant to the Family Medical Leave Act for approximately one week; during which time she retained an attorney.   When she returned to work, she met with HR and was informed that Kemp had reported continued misuse by Crockett of her cell phone and accused her of ‘flashing’ him to persuade him not to report her.  At this point, Crockett told HR that Kemp had done something “horrific” to her, but refused to elaborate, stating that her attorney had instructed her not to do so.  Crockett was subsequently placed on suspension pending the conclusion of an investigation.  Kemp was later approached by HR with Crockett’s allegation, as was Crockett.  Crockett, again, refused to provide details.  During the second meeting with Crockett, HR provided her with a copy of the company’s sexual harassment policy and information on how to report a claim of harassment.  HR continued its investigation and had another meeting with Crockett during which they told her to return to work and that their investigation had failed to validate Kemp’s claims against her.  During the process, Crockett filed an Equal Employment Opportunity Commission (“EEOC”) charge against Kemp; however Kemp continue to deny anything inappropriate occurred.  Finally, in March 2010, Crockett filed a formal complaint to report the incident with Kemp; however it only referenced her EEOC charge and provided no details of the incident.  Later in the month, Crockett met with HR representatives and disclosed she had surreptitiously recording a conversation with Kemp.  HR met with Kemp again where he again denied any wrongdoing.  Kemp subsequently left work and committed suicide.  Following Kemp’s suicide, Crockett played the tape recording she made which also recorded conversations she was having with patients while she was treating them and statements made by her patients.  Crockett’s employment was terminated for tape recording interactions with her patients in violation of the Health Insurance Portability and Accountability Act (“HIPAA”).  Crocket filed an action against Mission in state court alleging claims for employment discrimination in the form of hostile work environment and retaliatory discharge in violation of Title VII, as well as a state law claim for intentional infliction of emotional distress.  Mission removed the action to federal court where Crockett agreed to dismiss the retaliatory discharge and intentional infliction of emotional distress claims.  Mission moved for summary judgment on the remaining hostile work environment claim and the district court granted the motion.  The district court held that Crockett could not establish that she incurred “tangible employment action” as a result of her claims and that Mission was entitled to an affirmative defense to defeat liability because it exercised reasonable care in dealing with the sexual harassment claims.  Crockett appealed.

The Fourth Circuit explained that in order to establish a claim for a hostile work environment based on sexual harassment, the plaintiff must prove “(1) the conduct was unwelcome; (2) it was based on the plaintiff’s sex; (3) it was sufficiently severe or pervasive to alter the plaintiff’s conditions of employment and to create an abusive work environment; and (4) it was imputable on some factual basis to the employer.”  If the claim is against the employee’s supervisor, the company is subject to vicarious liability, but if the plaintiff did not “suffer a tangible employment action,” the employer can assert an affirmative defense that can protect it from liability.  The district court and the Fourth Circuit focused their decisions on the fourth element of the claim and the fact that Crockett did not suffer a tangible employment action.  Such an action requires a significant change in the employee’s employment status, such as ‘hiring, firing, failing to promote, and reassignment with significantly different responsibility, or a decision causing a significant change in benefits.’  Crockett did not argue that her firing constituted tangible employment action because she was fired appropriately for violating HIPAA.  Rather, Crockett challenged her seven-day suspension and argued that Kemp’s harassing conduct was not limited to the single incident and his false reporting led to her suspension that altered her condition of employment.  The Fourth Circuit agreed with the district court that Crockett was unable to prove her suspension was caused by Kemp’s sexual harassment for three main reasons.  First, when she was suspended, Crockett had yet to tell anyone that Kemp had sexually harassed her.  Second, at the time of her suspension, Crockett had been given a final warning regarding the use of cell phones.  Lastly, though Crockett asserted she had suffered tangible employment action because she had been suspended without pay, she could not prove she suffered any pecuniary loss because she could not prove that she had paid time off available to cover the suspension.   In addition, the Fourth Circuit addressed the district court’s finding that Mission could raise an affirmative defense.  The Fourth Circuit held taht Mission proved it exercised reasonable care to ‘prevent and correct promptly any sexually harassing behavior’ and Crockett failed to take advantage of any of the preventative or corrective opportunities provided to her.   As a result, Mission was able to meets its burden to assert its affirmative defense.

Full Opinion

– John G. Tamasitis

Decided:  May 29, 2013

Affirming the United States District Court for the Eastern District of Virginia, the Fourth Circuit held that the district court properly admitted certain hearsay statements made by the defendant’s cousin and uncle over prison telephone calls, properly impaneled a juror with alleged ideological biases, properly grouped only one of the defendant’s two witness tampering counts with his aiding and abetting false claims counts, and properly calculated the total loss wrought by the defendant’s fraudulent scheme.

Jermar Jones, a former Navy serviceman, orchestrated fraudulent marriages involving several of his shipmates.  Between 2006 and 2008, Jones and a codefendant would arrange marriages between the sailors and foreign nationals.  As a result of these fraudulent arrangements, the sailor would receive a monthly stipend to support his spouse, the foreign national would gain the opportunity to become a permanent U.S. resident, and Jones would receive a fee from the foreign spouse or “back pay” from sailor—that is, funds received during the period between the marriage and the stipend’s commencement.  After the Naval Criminal Investigative Service (NCIS) began investigating the marriages, Jones intimidated other participants in the scheme, urging them not to cooperate with the investigation.

A grand jury issued an eleven-count indictment against Jones, including with three counts of aiding and abetting false claims to the U.S. Navy and two counts of witness tampering.  During jury selection, one of the jurors revealed that she hosted a conservative talk radio show that discussed immigration issues; though the juror admitted that her show was ideologically conservative, she also stated that she could approach the case impartially.  Jones moved to strike the juror for cause, and the district court denied the motion.  At trial, the government introduced jailhouse phone conversations involving Jones, his cousin Otis Jones, and, in one instance, Jones’s uncle Austin Jones.  The district court admitted statements of Otis and Austin over the Jones’s objection.  A federal jury convicted Jones on every count.  At the sentencing phase, Jones raised an objection to the presentence report, which only grouped one of the witness tampering counts with the aiding and abetting false claims counts.  The district court overruled the objection, sentencing Jones to serve concurrent fifty-two month sentences on each count, and ordering him to pay $134,702.39 in restitution for the monthly stipend fraud.

On appeal, the Fourth Circuit held that the district court properly impaneled the juror with an alleged conservative bias toward illegal immigration.  Jones argued that, because his criminal activity involved facilitating illegal immigration, the juror could not have determined Jones’s guilt impartially.  However, the Fourth Circuit noted the each juror’s mind need not be a “tabula rasa,” and that jurors must simply be able to put aside biases in order to reach a determination based on the evidence presented; furthermore, the juror asserted she could decide the case impartially, and Jones failed to sufficiently challenge her assurances.  The Fourth Circuit also held that the district court properly admitted the statements made by Otis and Austin.  On appeal, Jones argued that admission of these statements violated the Confrontation Clause, characterizing the statements as testimonial and asserting that he had no opportunity to cross-examine the declarants at or before trial.  However, the Fourth Circuit found these statements were not testimonial, characterizing them as “casual conversations.”  With regard to the first sentencing issue, the Fourth Circuit noted that, when a defendant is convicted of both the underlying offense and an obstruction of justice offense—like witness tampering—the obstruction offense is grouped with the underlying offense under the Federal Sentencing Guidelines, with a resulting increase in offense level.  However, where there are multiple obstruction offenses, the Sentencing Guidelines advise the district court to group only the most serious obstruction count.  Thus, the district court properly grouped only one of the two witness tampering counts—specifically, the more serious one.  With regard to the other sentencing issue, Jones asserted that his restitutionary payments should be reduced, as some of the participants in the fraudulent scheme received stipend payments after making confessions to the NCIS.  Jones argued that these losses were not reasonably foreseeable, as required by the Sentencing Guidelines; however, the Fourth Circuit rejected this argument, finding it “entirely foreseeable that losses caused by a fraudulent scheme will not cease the moment that coconspirators confess to the fraud.”

Full Opinion

– Stephen Sutherland

Decided: May 24, 2013

The Fourth Circuit affirmed the United States District Court for the Eastern district of Virginia.

In May 2009, Malcom White (“Mr. White”) and Soudabeh White (“Ms. White”) were married in Switzerland. Soon thereafter, they had a son. Unfortunately, in June 2010 they were separated and legal proceedings regarding custody rights were initiated. In October 2010, the Swiss Court of First Instance of Geneva (“Swiss Court”) granted full custody of the child to Ms. White (“2010 Order”). Mr. White was granted visitation rights. This action stemmed from Ms. White’s subsequent decision to leave Switzerland for the United States with the minor child in April 2011. Mr. White was not notified prior to the day of departure, instead Ms. White notified him via voicemail three days later. The voicemail indicated that Ms. White had taken their son on a “holiday” in the United States, although Ms. White subsequently claimed that she came to the United States to visit her sister and to seek medical care for her son. At the time of the departure, court-appointed psychologists in Switzerland were conducting an analysis of the parties and the child to assess custody arrangements. In a preliminary report issued in July 2011—three months after the departure—it was suggested that Ms. White suffered from psychological problems, which affected her ability to properly care for her son, and that the court should transfer custody of their son to Mr. White if her condition did not improve within six months. Subsequently, in September 2011 the Swiss Court issued an emergency ruling prohibiting Ms. White from leaving Switzerland with the child; however, in December 2011, the same court found that it did not have jurisdiction because Switzerland was no longer Ms. White’s usual place of residence. In February 2012, the Swiss tutelary court in Geneva also found that it lacked jurisdiction but noted that Ms. White had sole custody at the time of departure and could therefore remove the child from Switzerland without authorization. On April 6, 2012, Mr. White filed this petition for return under the Hague Convention on the Civil Aspects of International Child Abduction (“Convention”) and the International Child Abduction Remedies Act. The district court denied the petition for return and Mr. White appealed. Following oral argument, Mr. White filed an order of the Swiss Court dated March 15, 2013 (“2013 Order”). In that order, the Swiss Court related that an appellate court had found that Geneva courts did in fact have jurisdiction to rule on protective measures for the child and, although Ms. White remained in the United States, adjusted its earlier custody arrangements to grant Mr. White custody of and parental authority over the child.

In conformance with the Convention, because Switzerland was the child’s habitual residence before his removal, Swiss law governed the determination of the legal issues presented. In his amended appellate brief, Mr. White offered three reasons why the district court erred in refusing to find that Ms. White wrongfully removed the child in violation of the Convention. Addressing Mr. White’s first contention, the Fourth Circuit found that his parental authority rights alone did not provide a basis for a wrongful removal action under the Convention as the Swiss Supreme court has held that a parent who holds exclusive custody is entitled to move abroad with the children without having to obtain authorization of the other parent. Next the court addressed Mr. White’s second contention that the removal was intended to compromise his relationship with the child and threatened the child’s well being, constituting an abuse of rights under Swiss law. The court found that, because the record indicated that Ms. White had legitimate reasons for leaving Switzerland, including seeking medical treatment for the child in the United States, the removal did not constitute an abuse of her rights under Swiss law. Lastly the court found that Mr. White’s reliance on the 2013 Order was misguided as the 2010 Order controlled the case because it was in effect at the time of removal controlled. Therefore, because Ms. White had sole custody over the child pursuant to the 2010 Order, she was free remove the child unilaterally under Swiss law.

Full Opinion

-W. Ryan Nichols

Decided:  May 24, 2013

The Fourth Circuit held that the United States District Court for the Eastern District of Virginia properly stayed the appellants’ action in light of a parallel state lawsuit filed earlier by the appellees, finding that the appellants’ action was based on “procedural gamesmanship.”

HomeAway, Inc. operates websites facilitating the rental of private residences by vacationers who choose such residences over hotel rooms.  HomeAway’s websites post rental advertisements by homeowners who wish to be contacted for reservations.  However, many localities have discovered that, whether out of ignorance or intentional evasion, homeowners often fail to pay local taxes assessed on room rentals.  Eye Street Solutions LLC (“Eye Street”) developed computer software to combat this problem:  The software purportedly identifies homeowners who fail to pay taxes after renting their homes.  Eye Street licensed its software to VRCompliance LLC, which conducts investigations for localities such as the Colorado Association of Ski Towns (“CAST”).  HomeAway, in the belief that the Eye Street software was impermissibly accessing its websites, wrote a letter to CAST and Eye Street on December 10, 2010, telling CAST members to stop using the software and alleging violations of state and federal law.  HomeAway wrote another round of letters to CAST, Eye Street, and VRCompliance on September 29, 2011, and filed suit against these parties on October 3 in the District Court of Travis County, Texas.  Eye Street made no attempt to remove the Texas suit to federal court; instead, Eye Street filed a separate action against HomeAway and its subsidiaries on October 6 in the U.S. District Court for the Eastern District of Virginia, stating claims for both declaratory and non-declaratory relief.  HomeAway moved to either dismiss this action for improper venue or transfer it to the relevant federal district court in Texas.  The district court stayed the action pending the resolution of the Texas suit, and Eye Street appealed, challenging the stay.

The Fourth Circuit noted that the parties heavily debated the proper standard governing stays of “mixed actions”—that is, actions involving declaratory and non-declaratory claims.  On the one hand, Colorado River Water Conservation District v. United States, 424 U.S. 800, aims to ensure that parties have access to a federal forum when this forum is available, allowing stays only in “exceptional circumstances”; on the other hand, Brillhart v. Excess Insurance Co. of America, 316 U.S. 491, and Wilton v. Seven Falls Co., 515 U.S. 277, give district courts broad discretion to stay declaratory actions pending resolution of parallel state proceedings.  However, the Fourth Circuit held that a stay was warranted in this case, regardless of the standard used.  The court found that, by filing a new action in the Virginia district court instead of trying to remove HomeAway’s suit to a federal court in Texas, Eye Street had engaged in “procedural gamesmanship”—in other words, Eye Street had attempted to gain advantage in the suit by shopping for a strategically favorable forum.  Furthermore, HomeAway indicated it would not resist removal of its lawsuit.  Thus, the Fourth Circuit found the concerns underlying the stricter Colorado River standard to be ameliorated here, as Eye Street could have simply removed the original suit to federal court in Texas.  The Fourth Circuit also found that the district court, which proceeded under the Brillhart/Wilton framework, properly weighed the factors relevant to this standard due to Eye Street’s “procedural gamesmanship,” however, the district court could have properly proceeded under Colorado River as well.

Full Opinion

-Stephen Sutherland

Decided: May 24, 2013

The Fourth Circuit affirmed the United States District Court for the Distrct of Maryland’s decision to dismiss the complaint under Federal Rule of Civil Procedure (FRCP) 12(b)(6) by Painter’s Mill Grille, LLC (“Painter’s Mill Grille”), the owner and operator of the restaurant, and its principals in an action against the restaurant’s landlord.

Painter’s Mill Grille operated a restaurant known as Cibo’s Bar & Grill.  The premises were leased from a company identified as 100 Painters Mill.  The lease began in 2002 and provided that Painter’s Mill Grille could not assign the leasehold without 100 Painters Mill’s consent.  According to the facts, Painter’s Mill Grille continually failed to make rent payments that resulted in 100 Painters Mill obtaining multiple judgments.  In October 2008, Painter’s Mill Grille entered into an agreement with another company who had agreed to purchase Painter’s Mill Grille’s interest in the restaurant; however the deal was never completed.  Painter’s Mill Grille and its principals subsequently filed a complaint against 100 Painters Mill’s parent company and three attorney-employees of the company for damages.  Their complaint alleged that the defendants’ actions, which they argued were racially motivated, interfered with the business and with the contract between Painter’s Mill Grille and its potential buyer.  The complaint alleged that throughout the course of the lease the restaurants clientele’s racial make-up changes and became predominantly African-American.  The plaintiffs asserted that as the racial make-up changed, the defendants became increasingly hostile towards the plaintiffs.  Moreover, the plaintiffs alleged that 100 Painters Mill, inter alia, “arbitrarily charged rent, common area maintenance fees, and attorneys’ fees and that it unreasonably refused to allow the restaurant to use the patio and to install proper signage to advertise the business.”  As a result of this “constant harassment,” Painter’s Mill Grille decided to sell its restaurant and entered into an agreement with another company to purchase the business.  Painter’s Mill Grille asserted that this conduct resulted in a breach of the contract with 100 Painters Mill.  Plaintiffs made multiple claims including seven counts alleging violations of 42 U.S.C. §§ 1981, 1982, 1985(3), and Maryland state claims for tortious interference with contracts and economic relationships.  The defendants filed a motion to dismiss for failure to state a claim under FRCP 12(b)(6).  The district court dismissed with prejudice all claims against 100 Painters Mill’s employees holding that they were acting within the scope of their legal relationship with the company and were not individually liable. The district court also dismissed Painter’s Mill Grille’s owner and principals as improper plaintiffs.  The court also dismissed without prejudice the plaintiffs’ claims of racial discrimination holding that it failed to plausibly allege enough facts to show that defendants were liable under the applicable statutes.  The district court dismissed the § 1985(3) conspiracy claim with prejudice by relying on the fact that “agents of a corporation who are acting in that capacity cannot conspire with each other or with their corporate principal.”  Finally, with regards to the state law claims, the district court dismissed the tortuous interference with contract claims with prejudice and dismissed, without prejudice, the claim of tortious interference with economic relationships on the ground that plaintiffs failed to allege specific wrongful acts committed by the defendants.  The plaintiffs filed an appeal.  The defendants moved to dismiss the appeal under the theory that it was an interlocutory appeal because the district court had dismissed several of plaintiffs’ claims without prejudice.  The plaintiffs argued that by electing to stand on the complaint rather than to amend it, an appeal is not considered interlocutory and become immediately appealable.

First, the Fourth Circuit held that the district court was correct in dismissing the owner and principals of Painter’s Mill Grille as plaintiffs and holding that only Painter’s Mill Grille itself could be a proper plaintiff.  The Fourth Circuit relied on the principals of corporate and agency law to highlight the fact that the owner and principals elected to incorporate their business as a limited liability company (“LLC”) and, in doing so, were exposed to no personal liability under the LLC’s contracts.  As a result, plaintiffs’ claims under §§ 1981 and 1982 had to be dismissed because the plaintiffs could not identify injuries that flowed directly from a motivated breach of their own personal contractual relationships with the defendant.  Rather, their claims flowed directly from the LLC’s contractual relationship with the defendant.  With regards to the principals’ conspiracy claim under § 1985(3), the court held that they were based on the alleged violations of the §§ 1981 and 1982 claims and, as such, had to fail as well.  Finally, also with respect the principals, the court held that, for similar reasons, the plaintiffs did not have valid claims under state law for tortious interference with their contract and economic relationships when they were not individual parties to the contract.

The court next turned to the LLC’s claims.  First, the court addressed Painter’s Mill Grille’s claim for interference with a contract based on racial animus under § 1981.  The Fourth Circuit held that Painter’s Mill Grille’s complaint only contained “conclusory and speculative allegations” and failed to set forth facts that would support a plausible claim.  Similarly, the court held that Painter’s Mill Grille’s § 1982 claim failed because they failed to present any facts as to “how Painter’s Mill Grille was driven out of business.”  Next, the Fourth Circuit took up Painter’s Mill Grille’s claim that the defendants interfered with the LLC’s contractual right to sell the restaurant and assign its leasehold.  Here, the court stated that the initial allegation that defendants withheld consent could possibly state a claim and that the complaint did, in fact, allege the defendants interfered with the LLC’s contract to sell the restaurant, with racial animus, by unreasonably withholding its consent.  However, the court found that Painter’s Mill Grille had “abandoned this basis for its § 1981 claim” by representing to the court, both in its brief and at oral arguments, that the landlord actually did give its consent for the lease assignment prior to the meeting in question.  The Fourth Circuit also held that the district court was correct in dismissing Painter’s Mill Grille’s claim of conspiracy to deprive it of equal protection under § 1985(3) under the intracorporate conspiracy doctrine.  The court’s analysis under the doctrine found that both exceptions to the doctrine that a corporation cannot conspire with its agents when its agents acted in furtherance of the corporation were inapplicable. In addition, the court held that the three state law claims for tortious interference with contract and economic relationships had to fail the same way their federal counterparts did.  Finally, the Fourth Circuit upheld the district court’s decision to deny the plaintiffs’ request for leave to amend their complaint because the plaintiffs elected to stand on their original complaint in order to appeal and could not challenge their own election.

Full Opinion

– John G. Tamasitis

Decided: May 24, 2013

The Fourth Circuit affirmed the district court’s grant of summary judgment in favor of the defendants following the bankruptcy and collapse of an alleged Ponzi scheme. The court held that the bankruptcy trustee was not entitled to recover securities transfers, cash transfers, nor commissions, fees, and margin interest payments paid to the defendants as fraudulent conveyances under the Bankruptcy code, 11 U.S.C. §§ 544 and 548. The court also dismissed the debtor’s tort claims under the doctrine of in pari delicto.

The trustee’s claims stem from a “stock-loan program” whereby customers transferred stock to the debtor in exchange for three-year non-recourse loans worth ninety percent of the stocks’ market value. The customers of the “stock-loan program” transferred their stocks into the defendants’ brokerage accounts (“Customer Transfers”). The debtor, instead of managing the stocks, directed the defendants to liquidate the stock and used the proceeds to fund its own ventures (“Cash Transfers”).  When the loans matured, customers could either repay the principal loan amount with interest or refinance the loan for an additional term. As a result, the debtor could not meet the obligation to return their customers’ stock when the loans matured, forcing the debtor to file for Bankruptcy. The bankruptcy trustee sought to recover three categories of transactions with the defendant: (1) the Customer Transfers, (2) the Cash Transfers, and (3) certain commissions, fees, and margin interest paid to the defendants. Defendants moved for summary judgment. The bankruptcy court granted summary judgment and the district court affirmed.

On appeal, the trustee first argued that the district court erred in affirming the bankruptcy court’s determination that the Customer Transfers were not “transfers of debtor property” that the trustee could recover under the Bankruptcy code. The Fourth Circuit disagreed. The court found that the debtor’s customers transferred stock directly from their personal accounts into the brokerage accounts of the defendants to be managed by the debtor. Although the debtor directed the customers to make the transfer, the debtor acquired no property right to the customers’ stock when transferred to the defendants. Therefore, the trustee could not recover the customer transfers.

Second, the trustee contended that the district court erred in affirming the bankruptcy court’s grant of summary judgment for defendants on the Cash Transfers claim.  The Fourth Circuit affirmed the lower court’s decision because the defendants were not the “initial transferee” as required by the Bankruptcy Code. The Fourth Circuit applied the “dominion and control” test to determine whether the defendants were an initial transferee.” Under that test, an initial transferee must have legal dominion and control over the property and exercise this legal dominion and control. The court held that, regardless of whether the defendants had the requisite dominion and control over the property, the defendants could not be initial transferees because they exercised no control over the property. Each time the defendant made a Cash Transfer, it acted at the direction and with the consent of the account holder.

Third, the trustee argued that the district court erred in affirming the bankruptcy court’s determination that the defendants’ commissions and fees were protected as “settlement payments” under 11 U.S.C. § 546(e). The trustee submitted that § 546(e) did not protect commissions and, even if it did, the defendants’ commissions were too uncommonly low to be protected. The court disagreed. Congress’ amendments to the Bankruptcy Code in 2006 explicitly cover settlement payments “made to or for the benefit of stockbrokers.” While the court acknowledged that § 546(e) might not protect all commissions, the court found that the commissions in this case qualified as “settlement payments” made to brokers as part of a regular securities transaction. Furthermore, the court found that it was not unusual for defendants to offer steep discounts to customers, such as the debtor, that provided a great deal of business. Therefore, the commissions and fees paid in this case were protected by § 546(e). Additionally, the court held that the margin interest payments to the defendants were protected “margin payments.” The court also rejected the trustee’s argument that the court should adopt an exception under § 546(e) for fraudulent transfers.

Finally, the trustee contended that the district court and the bankruptcy court erred in dismissing its tort claims under the doctrine of in pari delicto.  The Fourth Circuit disagreed. The court defined in pari delicto as “an affirmative defense that precludes a plaintiff who participated in the same wrongdoing as the defendant from recovering damages from that wrongdoing.” As the bankruptcy trustee, the trustee could only assert tort claims that the debtor could bring. Thus, standing in the shoes of the debtor, the trustees claimed were barred by their wrongdoing under the doctrine of in pari delicto. Furthermore, the trustee could not claim the “adverse interest exception” to in pari delicto because the trustee was the debtor’s “sole actor.”

Full Opinion

– Wesley B. Lambert

Decided May 24, 2013

The Fourth Circuit reversed the district court’s denial of accidental death and dismemberment (“AD & D”) benefits to the insured’s widow through group policies issued by American United Life Insurance Company (“AUL”). By construing the policy language against the drafting party, AUL, the court found that the insured’s drunk-driving death could be considered an “accident” under the policy and, therefore, awarded such benefits to the insured’s widow under the Employee Retirement Income Security Act (“ERISA”).

The insured, Richard Johnson (“Richard”) participated in an employee welfare benefit plan (“the Plan”) that provided him a standard AD & D and life insurance benefits of $25,000 through a policy paid for by Richard’s employer, and a voluntary AD & D and life insurance benefits of $100,000 through a policy paid for by Richard. When Richard died in a drunk-driving accident, his widow Angela Johnson (“Johnson”) received life insurance benefits, but AUL refused to pay AD & D benefits, concluding that Richard’s death was not the result of an “accident” under the Plan. Under the AD & D provision in the policies, AUL pays benefits “[i]f a Person has an accident while insured under the policy which results in a [covered] loss.” The policies do not explicitly define the term “accident,” however; the AD & D provision contains a limitations clause expressly excluding the payment of benefits in various circumstances. Drunk driving is not listed as a specific circumstance for such exclusion. However, drunk driving is expressly set forth as a limitation to the Seat Belt benefit under the employee-paid policy. In any event, AUL concluded that Richard’s drunk-driving death was not accidental due to the fact that he should have foreseen the widely known consequences of drinking excessive amounts of alcohol. As such, AUL issued a denial letter from which Johnson appealed under ERISA.

The Fourth Circuit sought to determine whether Richard’s crash qualified as an “accident” under the AUL policies. The court analyzed the policies as ERISA plans and, as a result, according to contract principles. Where a contract is ambiguous, the rule of contra proferentum requires strict construction of such terms in favor of the insured and in accordance with his or her reasonable expectations. Richard’s policy was ambiguous because the term “accident” was not defined and drunk-driving was not specifically listed in the limitations clause. Therefore, the court chose to construe the policy against the drafter, AUL, who had the ability to eliminate the ambiguity, but failed to do so. The court also addressed the issue of using North Carolina state law to define “accident.” The North Carolina statute defines an accident in terms of an accidental result rather than accidental means. Therefore, an accident can still occur where the insured intentionally acted, yet did not intend the injury that resulted from that act. In this case, the court found that although the insured became voluntarily intoxicated, he did not necessarily intend the car crash. Specifically, the court found that driving with a BAC of .289 is not substantially certain to result in death or severe injury. Therefore, according to principles of construction and the governing statute, the court found Richard’s death to be an “accident” and that AUL owed benefits under the AD & D provisions.

Full Opinion

– Sarah Bishop

Decided May 17, 2013

The Fourth Circuit affirmed the district court’s denial of plaintiffs’ requested disability accommodation to their homeowners’ association policy (the HOA). The court also affirmed the district court’s denial of defendant’s request for attorneys’ fees and costs. However, the court vacated the district court’s ruling on the plaintiffs’ requested modification to their HOA, finding that the claim was not ripe.

Dan and Debbie Scoggins live with their disabled 22-year-old son in Lee’s Crossing. All residents of Lee’s Crossing are subject to the rules of the HOA as well as the restrictive covenants. However, because the Scoggins’ son is partially paralyzed and confined to a wheelchair, they requested they be able to make certain modifications to their property and that their son be permitted to use transportation ordinarily prohibited in the neighborhood. Specifically, the plaintiffs requested permission to build a wheelchair ramp without the board approval required by the HOA policy. In addition, they sought permission for their son to use an ATV in the streets even though the restrictive covenants ordinarily prohibit these vehicles.  Debbie Scoggins sent an email to HOA representatives regarding this ATV request in May 2009, but it remained dormant until August of 2010 at which time Debbie Scoggins renewed the request. In September of 2010, the HOA representatives replied, seeking additional information to which plaintiffs did not respond. At this time plaintiffs also submitted their request for the wheelchair ramp. Although the review board is permitted 30 days to respond to such requests, the plaintiffs did not wait for a denial or for the expiration of the 30 days. Instead, the plaintiffs filed a complaint in district court on October 13, 2010 under the federal Fair Housing Act Amendments (“FHAA”). In their complaint, the plaintiffs alleged (1) the defendants’ failure to allow a reasonable modification of the plaintiffs’ home to add the front ramp violated the FHAA and (2) the defendants’ refusal to permit a reasonable accommodation allowing their son to operate an ATV violated the FHAA.  The district court never reached the merits of (1) the plaintiffs’ ramp request claim, finding that it was not ripe for review. The district court granted the defendants’ motion for summary judgment on (2) the plaintiffs’ ATV request claim. The defendants’ subsequently filed a motion seeking attorneys’ fees and costs, which the district court denied on the basis that the plaintiffs’ lawsuit was not frivolous and, therefore, an award of attorneys’ fees and costs was not required under the FHAA.

The court first addressed the plaintiffs’ ramp request claim and whether the district court erred in concluding this claim was premature. An issue becomes ripe for adjudication under the FHAA when a disabled resident first is denied a reasonable and necessary modification or accommodation. Because the plaintiffs did not wait for their ramp request to be denied, it was not yet ripe for adjudication. As such, the court vacated the district court’s holding on the merits of the modification request for the wheelchair access ramp, because that claim was not ripe. The court next addressed the plaintiff’s ATV request claim and whether the district court erred in awarding summary judgment to the defendants.  The court found that the HOA’s failure to take any action for such an extended period operated as a constructive denial of the ATV request. However, for the denial to violate the FHAA, the proposed accommodation must be reasonable and necessary to afford handicapped persons equal opportunity to use and enjoy housing. The court focused on the reasonableness prong of the proposed ATV accommodation. The potential for injury is a relevant consideration in examining reasonableness, as well as the health and safety of others. In this light, the court found that although the ATV would be of great benefit to the plaintiffs’ son, that benefit is outweighed substantially by the potential danger an ATV could cause to residents of the community. As such, the court did not find the ATV request claim was reasonable or that the defendants’ denial was in violation of the FHAA. The court last addressed the defendants’ contention on cross-appeal that the district court erred in declining to award them attorneys’ fees and certain additional costs incurred in defending this matter. The U.S. Supreme Court has held that when an action involves a civil rights matter, and the prevailing party is a defendant, attorneys’ fees may be awarded by a district court only upon a finding that the plaintiff’s action was frivolous. However, the court found that the plaintiffs’ claims were not frivolous. In fact, the court found that a plaintiff filing a lawsuit under the FHAA acts to effectuate the intent of Congress vindicated the policies underlying that Act. As such, attorney’s fees were not available to the defendants.

Full Opinion

– Sarah Bishop

Decided: May 29, 2013

Affirming the District Court for the Eastern District of Virginia, the Fourth Circuit held that petitioners had standing to challenge the constitutionality of a residency requirement for petitions and also held that the residency requirement is unconstitutional.

The Libertarian Party of Virginia (LPVA) circulated petitions in Virginia with the hope to collect enough signatures to place its national candidate for President of the United States on the ballot in November 2012.  Virginia law requires 10,000 signatures from qualified Virginia voters, with at least 400 signatures from each of Virginia’s eleven congressional districts.  Virginia law also requires the candidate personally or a Virginia resident who can vote to witness the signatures.  In May 2012, the LPVA and Darryl Bonner, a Pennsylvania Libertarian and professional petition circulator, filed suit seeking injunctive and declarative relief alleging that the “witness residency requirement impermissibly burdens their rights to free speech and free association under the First Amendment.”  The Virginia State Board of Elections (Board) contested the standing of the LPVA and Bonner.  The district court rejected the Board’s standing argument and declared the witness residency requirement unconstitutional.  The Board appealed.

The Fourth Circuit addressed the standing issue first.  The Court held that the encumbrance on the LVPA’s ability to circulate petitions constitutes an injury in fact for standing purposes.  The Court also examined standing for Bonner.  The Board challenged Bonner’s standing because he was currently injured and thus would not be able to petition signatures; Bonner was suffering from a right knee injury which had “scotched his immediate plans to circulate petitions for the LPVA.”   The Court stated that his legal injury “related more closely to his asserted injury than does his physical infirmity,” the residency requirement would impair his ability to petition in 2016, and he still could have sat on a street corner and petitioned people for signatures.  Thus, the Fourth Circuit held that both LPVA and Bonner had standing to challenge the residency requirement.

The Fourth Circuit then addressed the merits of the LPVA’s and Bonner’s argument.  The Court followed other circuits by applying strict scrutiny analysis to petitioning restrictions like the residency requirement.  The Board argued its compelling interest was in preventing election fraud, which the Court and the parties agreed was a compelling interest.  The Board argued that the “integrity of the petitioning process depends on ‘state election officials access to the one person who can attest to the authenticity of potentially thousands of signatures, . . . access made more difficult, perhaps, if the witness resides beyond the subpoena power of the state.”  The LVPA and Bonner argued that the Board could make out-of-state witnesses sign a binding legal agreement to comply with any civil or criminal subpoena the Board may issue.  The Court agreed that this was a less intrusive alternative, and the Board introduced no meaningful evidence to rebut this alternative.  Thus, the Fourth Circuit held that the witness residency requirement is unconstitutional.

Full opinion

Jeffrey K. Gurney

Decided: May 16, 2013

The Fourth Circuit affirmed the decision of the United States District Court for the Western District of Virginia concerning an insured party’s ability to stack Uninsured/Underinsured Motorist (“UM/UIM”) coverage. The district court’s decision that Petitioner Dooley’s 2008 policy prohibited him from stacking the UM/UIM coverage for each insured vehicle was not error.  Accordingly, the Court held Dooley was not entitled to recover from Hartford under the policy’s UM/UIM coverage.

Dooley initially obtained automobile insurance from Hartford in 2003 and paid two separate premiums for coverage of his two vehicles.  He later added a third vehicle and renewed his policy in 2008.  While the 2008 policy was in effect, Dooley was severely injured in an automobile accident while driving a vehicle insured under the policy. As a result of this collision with Wilmer Phillips, he incurred medical and related expenses that exceeded the liability coverage provided under Phillips’ automobile insurance policy. He contended that Phillips was an underinsured motorist within the meaning of Virginia’s statute and sought payment from Hartford based on the UM/UIM provision in his 2008 policy.  The UM/UIM endorsement did not state the amount of UM/UIM coverage available but simply referred the reader to the “Declarations” section of the policy, which likewise did not contain any specified amount of such coverage. Despite this complete omission of any stated coverage limits, Hartford agreed that it remained obligated under Virginia Code § 38.2-2206(A) to provide UM/UIM coverage “equal” to the policy’s general liability limits.  However, based on the anti-stacking clause of the policy, Hartford maintained that the limit for UM/UIM coverage for each person was $100,000.

The issue before the court ultimately was reduced to whether the anti-stacking clause prevented Dooley from stacking the UM/UIM coverage of $100,000 per person provided in the policy for each of the three insured vehicles.  Dooley maintained that the omissions on the declarations page of any stated amount of UM/UIM coverage rendered the anti-stacking provision ambiguous and unenforceable. As such, he alleged that he was entitled to coverage of $100,000 for each of the three covered vehicles, for a total amount of up to $300,000.  The court was not persuaded.  Relying on established principles of insurance policy interpretation and Virginia Supreme Court precedent, the Fourth Circuit reasoned that the fact that the amount of UM/UIM coverage was not separately “shown in the declarations” section of the 2008 policy was not determinative.  Because Virginia Code § 38.2-2206(A) mandated that UM/UIM coverage “shall equal” the general liability coverage, the provision by operation of law provided Dooley an equal amount of UM/UIM coverage under the Hartford policy. Accordingly, the anti-stacking provision in Dooley’s policy unambiguously prevented the stacking of UM/UIM coverage, leading the court to affirm the district court’s award of summary judgment in favor of Hartford.

Full Opinion

-Kara S. Grevey

Decided: May 10, 2013

The Fourth Circuit dismissed an appeal of a preliminary injunction granted by the United States District Court for the Eastern District of North Carolina against the Piedmont Behavioral Healthcare (“PBH”) and the director of PBH.  The preliminary injunction ordered the defendants to reinstate plaintiffs’ Medicaid services and provide the plaintiffs’ with notice and an opportunity for a hearing.  The Fourth Circuit dismissed the appeal primarily because the Secretary of the North Carolina Department of Health and Human Services (“the Secretary” or “the NCDHHS”), a co-defendant in the case decided by the district court, had failed to join in the appeal.

The class plaintiffs in the case were North Carolina Medicaid recipients who suffered from chronic disabilities that could qualify for institutional placement, but the plaintiffs were able to live in certain community environments with the help of certain services.  Plaintiffs received these services through a type of Medicaid known as “managed care Medicaid.”  Under this Medicaid program, the state contracts with a managed care organization (“MCO”) that supervises the delivery of medical services to the beneficiaries.  For this case, the PBH was the MCO for the plaintiffs’ services and had contracted with the NCDHHS to provide such services.  As part of the process, PBH set annual budgets for each beneficiary.  However, due to budget shortfalls and increased demand, PBH designed a new system to develop the annual budgets.  This new system resulted in significant reductions in annual budget amounts for certain Medicaid beneficiaries.  The plaintiffs in this case all received letters from PBH indicating that their annual budget for services would be reduced in graduated steps.   In July 2011, plaintiffs filed a class action against the NCDHHS and PBH.  The plaintiffs sought preliminary and permanent injunctions to restore their services to previous levels and enjoin the defendants from reducing these services without providing notice and hearing as required by the Medicaid statute and the Fourteenth Amendment.  The district court ruled in favor of the plaintiffs on the motion for a preliminary injunction because it found that the defendants had taken “action,” as defined by the Medicaid regulations thus entitling plaintiffs to notice and an appeal.  Defendant PBH and its director filed a timely notice of an interlocutory appeal of the district court’s order.  Critically, NCDHHS and its Secretary did not join in this notice.

The Fourth Circuit rejected PBH’s initial argument that the question before the court was whether the budget letters sent to the plaintiffs constituted agency action as defined by the applicable regulations.  Rather, before reaching that decision, the court addressed whether PBH could even litigate the appeal given that NCDHHS had not decided to appeal.  The Fourth Circuit explained that the relevant provisions of the Medicaid statute and regulations establish that each state must ‘provide for the establishment or designation of a single State agency to administer or supervise the administration’ of its program.  The court identified this principle as the ‘single state agency requirement.’  The requirement, in turn, creates two important values espoused by the rules and regulations:  “an efficiency rationale and an accountability rationale.”  The efficiency rationale ensures that the final decision making authority rests with a single agency and avoids confusion.  The accountability rationale guards against states attempting to evade federal requirements by “passing the buck” to other agencies.  The court generally held that because North Carolina had decided to vest all the administration of its Medicaid program within NCDHHS, then PBH was bound by its decision not to appeal.  The court’s decision was based on two main reasons.  First, the court held that because NCDHHS had contracted with and delegated certain authority to PBH, as it is authorized to do, then PBH became a de facto agent of NCDHHS with respect to the administration of the State’s Medicaid program.  Therefore, pursuant to Federal Rules of Civil Procedure (FRCP) 65(d)(2), an injunction is binding not only on NCDHHS, but also on its ‘agents’ and any one who is in ‘active concert or participation’ with it.  PBH argued that the decision to appeal does not seek to change an “administrative decision” by NCDHHS and therefore the agency relationship did not exist in the litigation context.  The court disagreed and held that litigation decisions are not “categorically precluded” as an “administrative decision” and a decision not to appeal an injunction order is tantamount to a policy decision.  The court also ruled against PBH because, even if PBH was successful on the merits of the case, it would still not receive the redress it sought because it would still be bound by the NCDHHS decision not to appeal.  The court rejected PBH’s argument that a favorable decision on the merits would automatically release NCDHHS from the injunction. Rather, the court held that that basic appellate practice requires a party to actually seek an appeal in order for a judgment against them to be altered in their favor and NCDHHS’s decision not to appeal left the court with no option but to uphold the preliminary injunction against the state agency

Finally, the Fourth Circuit took up a separate issue dealing with NCDHHS’s motion after oral argument seeking leave to file a ‘Memorandum in Response to Questions Raised at Oral Argument.’  The Secretary of NCDHHS requested the court’s consent to clarify its position with respect to its decision not to appeal.  The motion was filed under Rule 2 of the Federal Rules of Appellate Procedure, which allows a court to ‘suspend any provision of the Rules for good cause.’  The court held that no “good cause” existed because NCDHHS did nothing in its motion to show good cause.  The court asserted that NCDHHS’s failure, as a sophisticated state agency, to simply sign a joint notice with PBH before the deadline was inexcusable and it would not grant the leave that NCDHHS requested.

Full Opinion

– John G. Tamasitis

Decided:  May 19, 2013

The Fourth Circuit held that prison inmate Jerome Williams had no clearly established constitutional right to visitation, therefore granting Warden Willie Eagleton qualified immunity from monetary damages for suspending Williams’s visitation privileges; that Williams’s claim for injunctive relief was mooted by the restoration of his visitation privileges; that Williams’s complaint did not raise a claim for declaratory relief; and that Williams’s challenge to a federal jury verdict and claim of ineffective assistance of counsel lacked merit.  The Fourth Circuit therefore dismissed Williams’s claim for injunctive relief, and affirmed the judgment of the United States District Court for the District of South Carolina on the other aspects of his case.

Jerome Williams, an inmate serving a life sentence at a South Carolina prison, met with a visitor named Marilyn Massey on March 31, 2007.  The two met in a prison visitation room monitored by Officer Johnson.  After observing activities indicating that Massey had given marijuana to Williams, and that Williams had then placed the marijuana in his pants, Officer Johnson and other officers confronted Williams and strip-searched him.  However, the strip search did not reveal any contraband; a later search of Williams’s excrement also did not reveal evidence of marijuana use.  Though he was not charged with a disciplinary offense, Williams was subsequently held in disciplinary confinement for over two months.  On April 4, 2007, Warden Eagleton informed Williams that his visitation privileges would be suspended for two years—from March 31, 2007, to March 20, 2009—because he “was observed receiving contraband from [his] visitor and placing it in [his] pants.”  Williams filed a pro se complaint in a South Carolina state court in December 2008 under 42 U.S.C. § 1983.  Williams claimed, inter alia, that Warden Eagleton had unconstitutionally deprived of his visitation privileges and that Officer Johnson had used excessive force against him.  Williams sought monetary relief, restoration of his visitation privileges, and “any other relief that seems just and proper.”  The defendants removed the case to federal court.  The federal district court denied the defendants’ motion for summary judgment regarding the excessive force claim, but granted them summary judgment on all other claims; a jury then ruled in favor of Officer Johnson on the excessive force claim.  The district court entered a judgment in favor of the defendants, and Williams appealed.

Dismissing Williams’s initial contention that the case had to be remanded for further discovery on prison policies, the Fourth Circuit then determined that Warden Eagleton was shielded from monetary damages by the doctrine of qualified immunity.  The court noted that qualified immunity can only apply if the violated right was “clearly established” when the official’s conduct occurred.  As Williams cited no cases from the Supreme Court, the Fourth Circuit, or the Supreme Court of South Carolina that identify visitation as a “clearly established” right, he did not prove that the Warden violated such a right by suspending his visitation.  The Fourth Circuit then held that Williams’s claim for injunctive relief was moot, as the visitation privileges requested in his complaint had already been restored.  Furthermore, the case was not “capable of repetition yet evading review,” as Williams did not demonstrate that his visitation privileges would be suspended in the future.  According to the court, Williams’s invocation of the mootness exception “rest[ed] either on mere speculation, or on the possibility that he will violate prison rules in the future”—neither of which can be used to invoke the capable-of-repetition doctrine.  The court also ruled that, even construed liberally, Williams’s complaint did not raise a claim for declaratory relief; furthermore, his desire to obtain “any other relief that seems just and proper” was too much of a “fleeting reference[]” to constitute a claim for declaratory relief.  Lastly, the Fourth Circuit found Williams’s challenge to the jury verdict on the excessive force claim too conclusory to meet the “burden of demonstrating a substantial question warranting the production of a transcript at government expense”; additionally, the court rejected his claim of ineffective assistance of counsel, as counsel is not constitutionally required in § 1983 suits.

Full Opinion

– Stephen Sutherland

Decided: May 15, 2013

The Fourth Circuit affirmed the United States District Court for the Southern District of West Virginia.

Four Environmental groups (collectively, the “Environmentalists”) commenced this action, against the U.S. Army Corps of Engineers (the “Corps”), in connection with a proposed surface coal mine adjacent to a stream known as Reylas Fork. The action stemmed from the Corps issuance of a fill permit under CWA § 404, authorizing the mining company to place rock overburden into the adjacent valley of Reylas Fork as part of the mining process. Finding that the fill would not have a substantial cumulative impact on the water quality in the relevant watershed, the Corps issued the permit without issuing an accompanying environmental impact statement (“EIS”). Under the EPA guidelines, the Corps could only issue a § 404 permit after concluding that the mining activity would not cause or contribute to violations of the State’s water-quality standards. The National Environmental Policy Act (“NEPA”) generally requires federal agencies to prepare an EIS for major federal actions that significantly affect the quality of the human environment. However, in this instance, the Corps found that the proposed mine would have no significant impact. Thus, the Corps did not issue an EIS with its conclusion. Before the district court, the Environmentalists proposed two arguments. First contending that the Corps “materially misapprehended” the baseline conditions in the relevant watershed, thus corrupting its analysis of the cumulative impact that the mine would have on the streams in the watershed. Second, the Environmentalists alleged that the Corps acted arbitrarily and capriciously in determining that the valley fill would not have a significant cumulative impact on the water quality in the relevant watershed. Ruling on a motion for summary judgment, the district court found in favor of the Corps on both claims.  This appeal followed.

The Fourth Circuit first addressed the Environmentalists claim that the Corps “materially misapprehended” the baseline conditions of the relevant watershed in its analysis. Affirming the district court’s decision, the court found that the Corps considered the relevant data about baseline conditions and properly assessed them as evidenced by the fact that the Corps (1) analyzed the conditions at the fill site itself; and (2) recognized and analyzed the impaired conditions of the streams in the relevant watershed. According to the court, the Corps conclusion was a contextual judgment made after considering relevant data from both the impact site and the entire watershed. Next, the court addressed the Environmentalists contention that the Corps acted arbitrarily and capriciously in concluding that the cumulative effect of the proposed mine would be insignificant and the Corps failed to take a “hard look” at potential environmental consequences because the decision document was “not supported by any reasoned analysis of, or expert opinion about, the science on conductivity and stream impairment.” Once again affirming the district court, the Fourth Circuit found that the Corps grappled with the issue extensively, rationally finding that (1) the connection between conductivity and stream impairment was not strong enough to preclude a permit and (2) the compromise measures agreed to by the EPA and the mining company would successfully mitigate the potential for adverse effects. In so holding, the court noted that the Corps judgment in this case was based on facts and recommendations, adduced during a lengthy consultation between the Corps, the mining company, the EPA, and the West Virginia Department of Environmental Protection. Thus, the Corps decision-making process satisfied the NEPA’s “hard look” procedural requirement.

Full Opinion

-W. Ryan Nichols

Date Decided: May 13, 2013

The Fourth Circuit vacated the Board of Immigration Appeals’ (BIA) final order of removal of Ali Sina Karimi with instructions to reinstate Karimi’s asylee status.

Karimi is a citizen of Afghanistan who entered the United States in 1990. Karimi was granted asylum in 1999. In October of 2007, Karimi was arrested in Maryland for driving under the influence of alcohol. When the arresting officer admitted Karimi to prison, Karimi became “belligerent and somewhat out of control.” The arresting officer claims to have laid her hand down next to Karimi and told him to quiet down. Then, the officer alleges, that Karimi grabbed the officer’s hand, spat on her arm, and acted as if he was going to strike her. As a result of the incident, Karimi pled guilty to driving under the influence and to a misdemeanor second-degree assault for the altercation with the officer. Karimi served four months in prison. In 2008 the Department of Homeland Security moved to terminate Karimi’s asylum on the basis that he was convicted of a “crime of violence” that qualified as an aggravated felony. In January 2009, an Immigration Judge held that the second-degree assault conviction was an aggravated felony and terminated his asylee status. Karimi’s filed a motion to reconsider, which was denied. Karimi then appealed to the BIA, challenging the ruling that the second-degree assault conviction was an aggravated felony. The BIA dismissed the appeal finding that Karimi was convicted of a “crime of violence.”

On appeal, Karimi argued that the BIA erred in determining that his second-degree assault conviction was a “crime of violence.” The Fourth Circuit agreed. A “crime of violence” is defined in the United States Code as either, “an offense that has an element the use, attempted use, or threatened use of physical force against the person or property of another,” or “any other offense that is a felony and that, by its nature, involves a substantial risk that physical force against the person property of another may be used in the course of committing the offense.” There are two approaches to determining whether a conviction was a crime of violence. First, courts generally follow the “categorical approach” that examines the statutory definition of the crime charged and the fact of conviction to determine whether the defendant’s conviction was a crime of violence. Second, where the crime under which the defendant was convicted has phrases that may or may not constitute violence, courts follow a “modified categorical approach” that allows the court to consider, in addition to the statutory elements of the crime charged, the terms of a charging document, a plea agreement, a transcript of colloquy between judge and defendant or other judicial record that reveals the “factual basis for the plea.” The court held that under either approach, the BIA erred in determining that Karimi committed an aggravated felony. The court concluded that Karimi prevailed under the categorical approach because the second-degree assault statute encompasses both violent and nonviolent touching. In addition, Karimi prevails under the modified categorical approach because “grabbing” the officer’s hand was the only conduct which Karimi admitted to, and “grabbing” in and of itself did not rise to the level of physical force necessary to constitute a crime of violence. Therefore, the Fourth Circuit held that Karimi’s second-degree assault conviction did not qualify as a “crime of violence” and remanded to the BIA with instructions to reinstate Karimi’s asylee status.

Full Opinion

– Wesley B. Lambert

Decided: May 10, 2013

The Fourth Circuit Court of Appeals affirmed the bankruptcy court’s confirmation orders stripping off junior liens against debtors’ residences. The Chapter 13 bankruptcy trustee (the “Trustee”) challenged the confirmation orders. However, the court rejected the Trustee’s argument that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) creates a per se rule barring lien-stripping in so-called “Chapter 20” cases. The court agreed with the debtors that because BAPCPA left intact the operative lien-stripping provisions of the Code, Congress did not intend to alter the ability of bankruptcy courts to enter lien-stripping orders in Chapter 13 cases.

On June 7, 2008, Bryan Davis and Carla Bracey-Davis filed a Chapter 7 bankruptcy petition with the United States Bankruptcy Court for the District of Maryland. At the time they ran a large monthly deficit and Mrs. Davis was unemployed. Although Chapter 7 prohibits lien-stripping, the Davises nevertheless proceeded under Chapter 7 because they were ineligible to convert to a Chapter 13 case. On September 17, 2008, they received a Chapter 7 discharge. Later the Davises obtained gainful employment but still had no savings and a large mortgage in arrears. On September 4, 2009, they filed a Chapter 13 petition and on March 30, 2011, the bankruptcy judge stripped off all three liens on their property. Both the Trustee and the holder of the third-priority lien against the Davises’ home, TD Bank, N.A., appealed to the district court, which affirmed.

On February 1, 2010, Marquita Moore filed a Chapter 7 petition and received discharge on October 20, 2010. One week later she filed a Chapter 13 petition. On January 5, 2011 the bankruptcy court granted Moore’s motion to strip off the second lien on her home and the Trustee appealed the lien-stripping component of the confirmation order.

The issue in this case was whether the BAPCPA precludes the stripping off of valueless liens by Chapter 20 debtors ineligible for a discharge.  Before reaching the main issue, the court addressed the question of whether a bankruptcy court may strip off a valueless lien in a typical Chapter 13 proceeding. Citing sections 506 and 1322(b) of the Bankruptcy Code, the court found that a bankruptcy court may provide such relief. Under 506, the status of a creditor’s claim as secured or unsecured by a lien depends on the value of the collateral. Section 506(a) classifies valueless liens as unsecured claims. Under section 1322(b)(2), a Chapter 13 bankruptcy plan may modify the rights of secured claim holders other than principle residences, as well as the rights of unsecured claim holder. The court found that these two sections together permit a bankruptcy court, in a Chapter 13 case, to strip off a lien against a primary residence with no value. However, the court recognized this applies only to completely valueless liens and not partially secured liens.

The court then addressed the main issue of whether a debtor may strip off liens in a Chapter 20 case. The court cited to its holding in Bateman that a Chapter 13 debtor need not be eligible for a discharge in order to take advantage of the protections afforded by Chapter 13. According to that holding, the court concluded that if the Bankruptcy Code provides a mechanism for stripping off worthless liens absent a discharge, a debtor may avail himself of that relief. As previously discussed, the court found that sections 506(a) and 1322(b) provide such a mechanism.  However, because the sections work in tandem, the court must evaluate the claim under both sections and not under either section alone. The court noted that this mechanism permitting lien-stripping in Chapter 20 cases does not create an end-run around Dewsup’s bar to such relief in Chapter 7 cases. It also noted that the unavailability of a discharge in the Chapter 20 context is not determinative. While bankruptcy discharge alters in personam rights, lien-stripping orders at issue here alter in rem liability where the creditor’s lien has no value. Therefore, lien-stripping orders become permanent, even in the absence of a discharge.

The court concluded that although BAPCPA clearly tipped the bankruptcy scales back in the direction of creditors, it found nothing in the Act to suggest that Congress intended to bar lien-stripping of worthless liens in Chapter 20 proceedings. The judgment of the district court was affirmed.

Full Opinion

– Sarah Bishop

Decided:  May 9, 2013

The Fourth Circuit vacated the decision of the United States District Court for the Eastern District of Virginia, finding that the court abused its discretion by ordering Nicole Grant to adhere to a special condition on her probationary restitution payments without first determining the effects of the condition on Grant’s financial circumstances.

In 2009, Grant pled guilty to a count of theft of government property in excess of $1,000 in the Northern District of Florida.  Grant had received Supplementary Security Income (“SSI”) from the Social Security Administration (“SSA”) after her eligibility for SSI had ended.  On October 28, 2009, the district court sentenced Grant to a probationary sentence.  The court required that, inter alia, Grant pay $42,152 in restitution to the SSA in monthly installments and provide the probation office with requested financial data.  In January 2010, the district court transferred jurisdiction of the case to the Eastern District of Virginia.  In 2010 and 2011, Grant received tax refunds totaling around $2,900 and $3,300, respectively.  In November 2011, Grant’s new probation officer asked the district court to apply a special condition to Grant’s probation, under which Grant would have to “apply monies received from income tax refunds . . . to the outstanding court ordered financial obligations.”  In a subsequent hearing before the Eastern District of Virginia, Grant argued that the special condition would be improper, as her financial conditions had not improved materially.  The government characterized the tax refunds as windfall benefits that created a material change in Grant’s financial circumstances.  The government also noted that, if the court later determined that Grant could not afford her restitution obligations, it could adjust her payment amounts.  Without deciding whether a material change in Grant’s financial circumstances had occurred, the district court ruled in favor of the government, and Grant appealed.

The Fourth Circuit discussed the history of criminal restitution and relevant probationary conditions, noting that under the Mandatory Victims Restitution Act of 1996 (MVRA), criminal defendants convicted of certain offenses—including offenses against property—must be ordered to pay restitution under 18 U.S.C. § 3664.  Under § 3664(f)(2), the court must take the defendant’s financial circumstances into account when determining the manner and schedule of restitutionary payments.  Furthermore, under § 2664(k), the restitution order must require the defendant to “notify the court and the Attorney General of any material change in the defendant’s economic circumstance that might affect the defendant’s ability to pay restitution.”  The Court may then proceed to adjust the payment schedule under certain circumstances.  In this case, the Fourth Circuit noted that the district court ordered Grant to adhere to a special condition without determining the effect it would have on her financial circumstances.  The Fourth Circuit rejected the government’s characterization of tax refunds as windfall benefits, noting that “[m]illions of Americans living paycheck to paycheck rely on tax refunds every year to catch up on their bills and pay for or save for other one-time expenses.”  The Fourth Circuit also dismissed the government’s argument that the court could simply change the amount of restitutionary payments in the future if it found them inappropriate, noting that this “has no bearing on whether the challenged order was authorized in the first place.”

Full Opinion

– Stephen Sutherland

Decided: May 6, 2013

The Fourth Circuit affirmed the United States District Court for the Middle District of North Carolina.

Baldwin began working for the City of Greensboro (the “City”) as the Solid Waste Division Manager in February of 2001. In August of 2002, he informed his supervisors, Covington and Johnson, that at some point in the near future he would be called up to active duty with the United States Coast Guard. After revealing this information, Baldwin alleged that his employment relationship changed and he “began receiving harassment” from Covington. Further, he claimed that, after informing Johnson of the alleged harassment, he was informed that he would be subject to a reduction-in-force (“RIF”), to be effective upon his reporting to active duty. Baldwin was activated by the military soon thereafter and on January 23, he and Johnson signed an agreement, in which Baldwin agreed to receive various benefits in lieu of continued employment with the City following his release from active duty. Notably, the agreement further stated, “Mr. Baldwin agrees that this arrangement was made at his request and waives his right to any claims against the City of Greensboro.” On July 13, 2006 Baldwin filed a claim with the Department of Labor (“DOL”) under the Uniform Services Employment and Reemployment Rights Act of 1994 (“USERRA”). The DOL investigated his case until March of 2007, at which point the case was closed at Baldwin’s request. Subsequently, the DOL reopened his file in December of 2008 and again Baldwin asked the DOL to close his file in January of 2009. Thereafter, Baldwin filed his first complaint with the district court on September 29, 2009 alleging USERRA violations. An amended complaint was filed on February 1, 2011. On May 7, 2012, the district court granted the City’s motion for summary judgment and dismissed the case because the statute of limitations had run.

On appeal, Baldwin argued that the four-year statute of limitations set forth in 28 U.S.C. § 1658(a) did not apply to his claims because (1) USERRA did not “arise under” an act of Congress enacted after December 1, 1990 as it simply clarified the Veteran’s Reemployment Rights Act of 1974 (the “VRRA”); (2) USERRA falls into the “otherwise provided by law” exception to § 1658(a); and (3) the Veterans Benefit and Improvement Act of 2008 (“VBIA”), which eliminated the statute of limitations for USERRA claims, should apply retroactively to bar all time limitations on his claims. Rejecting Baldwin’s first contention, the Fourth Circuit found that, because USERRA established additional rights and liabilities that did not exist under the VRRA, Baldwin’s USERRA claims did “arise under” a post-1990 congressional enactment. Next, the court found that the exception to § 1658(a) did not apply as “Congress expressed no desire for USERRA claims to be immune from § 1658(a)’s limitations period.” Finally, the court addressed Baldwin’s argument that VBIA should apply retroactively to bar all time limitations on his claims, declining to do so because of the presumption against retroactivity and the fact that there was no congressional intent to revive otherwise stale claims by extending the VBIA’s elimination of the statute of limitations on Baldwin’s USERRA claims.

Having decided that the four-year statute of limitations did apply to Baldwin’s claims, the court turned to his argument that the limitations time was tolled—both legally and equitably—such that he timely filed his USERRA claims. In rejecting this argument, the court first observed that Baldwin’s action accrued on January 23, 2003 and noted that, absent tolling; the statute of limitations would have expired on January 23, 2007. Because the court found that, as a result of legal tolling, Baldwin’s claims would have expired on March 24, 2008 and that the record lacked any evidence to warrant equitable tolling, his claims were barred as he did not file his claim until September 29, 2009.

Full Opinion

-W. Ryan Nichols

Date Decided: May 3, 2013

The Fourth Circuit affirmed the district court’s dismissal of a complaint against four banks located outside the United States for lack of personal jurisdiction.

Plaintiff John Doe, a Virginia resident, purchased prescription drugs online from a business called “Canadian Pharmacy” with his Visa debit card. After not receiving the drugs, Doe tried to contact Canadian Pharmacy with no success. After several unsuccessful attempts to get in tough with Canadian Pharmacy, plaintiff canceled the transaction at his bank and the bank issued the plaintiff a new debit card. Once he cancelled the order, Doe alleges that Canadian Pharmacy inundated him with spam email. A second plaintiff, engaged in the business to track and combat spam emails, joined the action. Plaintiffs collectively filed a complaint against two “pharmacists” that run Canadian Pharmacy and six foreign banks, alleging that all defendants participated in a global conspiracy to sell illegal prescription drugs and violated various state and federal computer crimes laws. Plaintiffs argue that by processing the pharmacists’ transaction on the Visa network, the banks are coconspirators in a global prescription-drug conspiracy. The district court dismissed all banks for lack of jurisdiction, finding that the plaintiffs failed to establish the requisite “minimum contacts” with Virginia to satisfy the Due Process Clause.

On appeal, the plaintiffs first argued that the district court erred in dismissing the claim for lack of personal jurisdiction because the banks were part of a “global conspiracy,” and thus the minimum contacts of the pharmacists, subjecting them to personal jurisdiction in Virginia, were sufficient to subject the banks to personal jurisdiction in Virginia. The Fourth Circuit disagreed. Plaintiffs acknowledged that they could not link Doe’s particular purchase to any one of the defendant banks nor could they link any of the banks with the spam email solicitations. The court found that the banks’ involvement was speculative, and did not constitute sufficient minimum contacts to satisfy the Due Process Clause for the court to exercise jurisdiction. The Fourth Circuit concluded that none of the banks directed business to Virginia or aimed commercial efforts at Virginia. Moreover, even if the banks had actually processed Doe’s prescription drug transaction through the international Visa network, that transaction was too remote to subject the bank to jurisdiction. Plaintiffs also argued that personal jurisdiction was appropriate under Federal Rule of Civil Procedure 4(k)(2), allowing a court to exercise jurisdiction in cases “arising under federal law when the defendant is not subject to personal jurisdiction in a state court but has contacts with the United States as a whole.” The Fourth Circuit again disagreed, emphasizing that the banks’ minimal and indeterminate role in the drug transaction was not enough to satisfy the Due Process Clause.

Full Opinion

– Wesley B. Lambert

Decided May 1, 2013

The Fourth Circuit Court of Appeals reversed the district court’s order requiring the defendant to pay restitution for all property stolen and damaged as a result of his house burglary.

On March 23, 2009, the defendant, Jervis Ricky Davis (“Davis”), broke into a home and stole a handgun, bag of ammunition, and several pieces of jewelry.  The police recovered all of the stolen items except for the firearm. Davis entered into a plea agreement in which he pled guilty to possession of a stolen firearm and agreed to make restitution to all victims. The United States Probation Office conducted a presentence investigation to determine the amount of restitution the defendant owed. Its presentence investigation report (“PSR”) noted the homeowner’s total requested restitution of $685.00 to cover window damage and the unrecovered firearm’s insurance deductible. However, the PSR also noted the restitution was non-compensable. Under the Victim and Witness Protection Act as interpreted by the Supreme Court in Hughey v. United States, restitution is limited to the count of conviction unless specifically agreed upon by both parties in the plea agreement. Because the homeowner was not specifically identified as the victim in the plea agreement nor associated with Davis’ count of conviction, the district court had no authority to compensate the homeowner. As such, the PSR noted that the requested restitution of $685.00 was non-compensable.  However, the court disregarded that portion of the PSR and amended its judgment to order Davis to pay the $685.00 restitution. Davis appealed the restitution order although he did not previously object to it in the district court.

Davis challenged the restitution order on the basis that the order required repayment of losses that were not caused by the conduct underlying the offense of conviction or consented to in the plea agreement. Under the Victim and Witness Protection Act, a district court may order restitution to a victim that has been proximately harmed by the defendant’s criminal commission or to any other person recognized by the parties in the plea agreement.  First, the court analyzed whether Davis’ underlying conduct for committing the offense proximately caused the homeowner’s loss. The court followed the analysis set forth in United States v. Blake, where owners of stolen credit cards were denied compensation. The credit card thief was convicted of fraudulent use of unauthorized access devices, an offense for which actual theft is not required. Therefore, the losses incurred by the card owners as a result of the defendant’s theft, rather than his fraudulent use of such cards, did not represent harms proximately caused by the convicted conduct. Likewise, the Fourth Circuit denied the homeowner victim status in this case. The court noted that the offense of possessing a stolen firearm did not require an element of theft and, as such, the court did not find the homeowner was a victim entitled to compensation under the Act’s proximate causation prong.  Next, the court analyzed whether Davis consented to repayment in his plea agreement.  Under applicable law, a person who is not a proximately harmed victim may still be entitled to restitution where the parties have specifically granted this right in the plea agreement. The court searched for such a provision in Davis’ plea agreement and, in light of governing contract principles, found no provision specifically identifying the homeowner as the victim or person to whom money is owed. Therefore, the court held the district court erred in ordering restitution. Lastly, the court analyzed whether the district court’s error affected the parties’ substantial rights. Because Davis failed to object to the restitution order in the district court, the appellate court can only reverse where there has been plain error. The court did, in fact, find plain error where the restitution order was not authorized by case law or either prong of the Act and, therefore, affected Davis’ substantial rights. Therefore, the court reversed the restitution order.

Full Opinion

– Sarah Bishop

Decided: April 29, 2013

The Fourth Circuit affirmed the U.S. District Court for the Eastern District of North Carolina that found that Springer was ineligible for civil commitment because the government had failed to prove that he suffered from a serious mental illness under the Walsh Act.

Springer, a thirty-four year old male, had been convicted of six sex offenses between 1997 and 2004.  Four of those offenses involved victims who were thirteen years or younger.  In 2010, Springer was sentenced to 37-months in prison and a lifetime of supervised release following his failure to comply with the federal Sex Offender Registration and Notification Act after he moved from New York to North Carolina.  Approximately six months before his scheduled release, the government classified Springer as “sexually dangerous” and moved to have him civilly committed pursuant to the Walsh Act.  The district court held an evidentiary hearing to determine if Springer qualified under the Walsh Act commitment criteria.  Both parties stipulated that Springer satisfied the “conduct prong” and so the evidence focused on whether he satisfied the “serious mental illness” and “volitional control” prongs.  The district court – finding that Springer’s expert’s testimony more persuasive than the government’s experts – determined that the government failed to meet its burden under.  Springer was released from prison and the government appealed.  Prior to the appeal, the U.S. District Court for the Northern District of New York determined that Springer violated the conditions of his supervised release by failing to spend the required amount of time at his group residence and by engaging in a “consensual intimate relationship” with another adult who was also a convicted sex offender.  Because of these violations, Springer was sentenced to another 13 months in prison and the Bureau of Prisons again certified Springer as meeting the criteria for civil commitment.

The Fourth Circuit first addressed whether Springer’s most recent arrest and imprisonment rendered the case moot because, regardless of their decision, Springer was going to remain in prison until the district court decided the second civil commitment case.  The court concluded that Springer’s re-incarceration did not preclude the court from providing “effectual relief” in the current case because Springer’s current sentence, if he met the criteria for civil commitment, could be extended past the 13 months he now faced in prison.  In the alternative, the court held that because the Bureau of Prisons attempted to civilly commit Springer a second time after the district court’s initial ruling and during the pendency of appeal fell into an exception to the mootness doctrine for “wrongs ‘capable of repetition, yet evading review.’”  Next, the court took up whether it should remand the case in light Springer’s recent violation.  The court stated that it generally orders a remand for consideration of new evidence when there is a basis for doing so in a rule or statute; however the Walsh Act has no provisions for when remand is appropriate and the federal courts had not yet had an opportunity to confront the issue.  The court held that Springer’s violation of his supervised release was not material to the issue of whether Springer currently suffers from a serious mental illness – in this case pedophilia – and, therefore, did not require the Fourth Circuit to remand the case back to the district court.  After concluding that the case was ripe for review, the court then turned its attention to the actual merits of the appeal.  The government argued that the district court’s erred in its decision that Springer did not have a serious mental illness because its findings were contrary to the diagnostic criteria for pedophilia provided by the Diagnostic and Statistical Manual of Mental Disorders (“DSM”).  The government also argued that the district court incorrectly concluded that Springer no longer suffered from pedophilia, gave too much credit to Springer’s testimony that he was no longer attracted to prepubescent children, and improperly relied on Springer’s medical expert because the expert failed to consider pertinent conflicting evidence.  The Fourth Circuit held that it was within the district court’s discretion to not follow the DSM in deciding whether Springer suffered from a serious mental illness and provided great deference to the district court’s determination regarding the credibility of Springer’s expert.  Lastly, the court held that the record showed that Springer’s expert did not fail to consider the contested evidence in making his determination and, therefore, the district court did not commit error in holding that Springer did not suffer from a serious mental illness.

Full Opinion

– John G. Tamasitis

May 2, 2013

Reversing the District Court for the Eastern District of Virginia, the Fourth Circuit held that administrative remedies had been constructively exhausted under the Freedom of Information Act (FOIA) when the Drug Enforcement Administration (DEA) did not respond to Coleman’s FOIA request for over four months.

Coleman, a researcher and author, sent a FOIA request to the DEA seeking documents about carisoprodol on February 29, 2008.  Coleman offered to reimburse the government up to $1,000 for searching and reproducing the requested documents.  The DEA received this request on March 4, 2008.  Without communicating with Coleman since his request, on July 14, 2009, the DEA denied the FOIA request because the $1,000 promise was insufficient to cover the costs, and the DEA required $1,640 to begin the search.  On July 31, 2009, Coleman appealed the fee assessment to the Office of Information Policy (OIP), and he raised, for the first time, an argument that he was not a commercial requester and requested that his fees be waived because of the excessive delay.  The OIP received the appeal on August 18, 2009.  On March 29, 2010, the OIP ruled for Coleman, stating that the DEA’s action was not consistent with its own regulations, and the OIP sent its opinion to the DEA.  To ensure that the DEA met his request, Coleman resubmitted his FOIA request on April 22, 2010.  In this resubmitted FOIA request, Coleman reiterated that he was not a commercial requester.  After four more months of waiting, Coleman filed this suit against the DEA.  A day before answering the complaint, the DEA denied his FOIA request.

The District Court granted summary judgment to the DEA because Coleman had not exhausted his administrative remedies and because he did not pay the necessary processing fees.  Coleman appealed to the Fourth Circuit.  The Fourth Circuit addressed two issues.

The first issue was whether Coleman had exhausted his administrative remedies. The Fourth Circuit held that when an agency does not act within the timeframe provided by the FOIA (20 days), the requester has constructively exhausted administrative remedies.  Because the DEA waited over four months on the last request, Coleman constructively exhausted his administrative remedies.  The Court further held that the DEA could not prevent constructive exhaustion by denying his request after the suit was filed, rather an agency can only defeat a potential suit by ruling on the FOIA request prior to the suit is initiated.

The second issue was whether judicial review is inappropriate because Coleman failed to pay the $1,640 partial search fee assessed by the DEA.  The Fourth Circuit distinguished this case from Pollack v. Department of Justice, 49 F.3d 115 (4th Cir. 1995) because Coleman had not refused to pay any fee at all, which is what Pollack had done.  Since Coleman is challenging the substance of the agency’s fee and requesting a bona fide fee waiver, judicial review is appropriate in this case.  The Fourth Circuit remanded the case to the District Court to determine what fee category applies and whether Coleman is eligible for a fee waiver.

Full Opinion

– Jeffrey K. Gurney

Decided: May 1, 2013

Reversing and remanding the decision of the United States District Court for the District of Maryland, the Fourth Circuit Court of Appeals held that the district court erred in failing to apply the heightened deference owed to a citizen plaintiff seeking suit in her home forum, as is necessary in a proper forum non conveniens inquiry.  The Fourth Circuit also ruled that when conducting the private and public factor analysis relevant to forum non conveniens, the fear and emotional trauma of the plaintiff may be considered in certain situations.

On the evening of September 20^th, 2008, Albert DiFederico was serving as a civilian contractor for the State Department in Pakistan.  A large dump truck containing explosives tried unsuccessfully to ram through the gate barrier of the Marriott Islamabad Hotel. Though initially ineffective, the truck’s driver proceeded to detonate an explosion inside the cab of the vehicle that eventually ignited the explosives in the back of the truck.  A large blast ensued and a fire engulfed the Marriott, killing 56 and wounding over 250, including DiFrederico.  His widow and their three sons brought a wrongful death action and survivorship claim alleging that Marriott International (“Marriott”) was liable for its failure to adequately secure its franchise hotel. The DiFedericos brought their suit in the forum of Marriott’s principal place of business, the District of Maryland. The district court granted Marriott’s motion to dismiss on the basis of forum non conveniens, finding that Pakistan was an available, adequate, and far more convenient forum to hear the case.

At the time of the suit, Pakistan’s one year statute of limitations on the claim had run.  An expired statute of limitations is usually dispositive in a forum non conveniens analysis; however, an exception exists where it can be shown the plaintiff made a deliberate and tactical decision to run the statute of limitations for the purpose of avoiding dismissal in her preferred forum. (Compania Naviera, 569 F.3d at 202-03). Because the district court failed to point to any evidence substantiating its determination that the DiFedericos made a deliberate and tactical decision to let the statute of limitations run in Pakistan to avoid dismissal, the Fourth Circuit held it was error to conclude the Pakistani forum was available.  The Fourth Circuit then reviewed the district court’s analysis of the public and private factors relevant to a forum non conveniens analysis, noting that a citizen plaintiff’s choice of forum is entitled to even greater deference when the plaintiff chooses her “home forum.”  The court found that the district court’s failure to consider this heightened standard when conducting its analysis was an abuse of discretion.  The appellants’ main argument for convenience and justice was the avoidance of fear and emotional trauma associated with pursuing their case in Pakistan. The Fourth Circuit adopted the Second Circuit’s reasoning in Guidi, finding that the fear and emotional trauma involved in travel for a trial concerning such a politically charged event would give rise to myriad logistical complexities and expenses.  The court noted that fear and emotional trauma should be given less consideration if a plaintiff’s fear has no relationship to the events giving rise to the claim, if the level of security threat present is low, and if an alternate, third forum is available.  The Fourth Circuit additionally found that the district court mistakenly analyzed several other public and private factors, including the location of the sources of proof, the availability of compulsory process for attendance of unwilling witnesses, and the difficulty in applying foreign law.

Full Opinion

-Kara S. Grevey

 Decided April 23, 2013

The Fourth Circuit Court of Appeals affirms the district court’s convictions of an interventional cardiologist for health care fraud and making false statements in connection with the delivery of or payment for health services.

This case involved an interventional cardiologist, John McLean  (“McLean”), practiced privately at Peninsula Regional Medical Center (“PRMC”), where he performed cardiac catheterizations and coronary stent procedures. PRMC began investigating McLean in 2006 after a quality control review revealed McLean had performed inappropriate stent procedures in 13 cases. PRMC then conducted its own review, which confirmed that McLean had performed inappropriate stents in approximately half of 25 randomly selected cases, after which McLean resigned on account of an alleged eye condition.  In 2007 the United States subpoenaed patient files from McLean’s practice, but when FBI agents arrived at his office, they found the files stacked on McLean’s desk and a shred bin nearby.

At trial, two expert cardiologists for the government testified that coronary stents were not medically necessary until a certain threshold. One of the experts testified that McLean had grossly overstated the level of blockage in the patient files he reviewed, often over-recording stenosis for patients. In addition, testimony from PRMC staff revealed that McLean overstated the stenosis shown in angiograms. Patients testified that McLean had recorded symptoms in medical records that the patients had never experienced. The government also offered peer comparison data which showed that the patients McLean chose to stent received nearly twice as many stents on average as the patients of his peers and these stent reimbursement claims increased dramatically in the same year that McLean purchased a 1.7 million dollar condominium.

On appeal, McLean challenged his convictions on the basis that (1) the health care fraud statute was unconstitutionally vague as applied to him; (2) that the evidence was insufficient to support his convictions on all counts; (3) and that his trial was prejudiced by the government’s failure to disclose impeachment evidence and certain erroneous evidentiary rulings committed by the district court.  First, the court analyzed whether the statute was unconstitutionally vague on the basis of whether an ordinary person would understand that the health care fraud statute prohibited McLean’s charged conduct. The court did not find it unconstitutionally vague, recognizing that it is a simple fraud statute and not a medical malpractice statute. Therefore, although the statute does not enumerate every possible fraud scheme, an average person would understand that this kind of conduct is prohibited.  Second, the court analyzed whether the jury’s verdict was supported by “substantial evidence” on the basis of whether evidence existed that a reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant’s guilt beyond a reasonable doubt. The court evaluated the evidence supporting the health care fraud charge and then the evidence supporting the false statement charge. For both charges, the specific intent to defraud could be inferred from the totality of the circumstances and did not need to be proven by direct evidence. In addition, sufficient evidence existed to rule out non-criminal explanations for the overstatements such as McLean’s expertise, the fact that his eye condition did not affect his central vision, and the fact that the cases at issue were not borderline cases.  In rebutting this evidence, McLean argued that the government’s pattern evidence was not probative of fraud because a study existed where the average error rate was not much lower than his own. However, the court found that the import of the pattern evidence was not simply that McLean repeatedly performed medically unnecessary stents, but rather that he repeatedly overstated blockage by a wide margin. For the false statement charge, the court again found that sufficient evidence existed on account of the sheer disparity between the stenosis McLean recorded and what the angiograms showed, as well as the other evidence of fraud previously discussed.  Third, the court analyzed whether the trial was prejudiced by failure to produce impeachment evidence to McLean on the basis of whether such evidence was favorable to the accused, suppressed by the government, or material. The court found that PRMC’s settlement with the government had little impeachment value, no witnesses in McLean’s case were parties to the settlement, and that disclosure of such settlement would not likely have altered the jury’s verdict. Although McLean also challenged the government’s permission to conduct voir dire on his expert, the court found it was proper on account of the fact that McLean did not respond with an appropriate written summary under Rule 16 for any expert testimony that will be used at trial. McLean also challenged the government’s objections to several aspects of his expert testimony; however, the court again finds no abuse of discretion because McLean did not provide appropriate notice and the expert’s personal observations were not admissible under Federal Rule of Evidence 702. Finally, the court analyzed McLean’s challenge of the procedural reasonableness of his sentence and how the amount of loss was established. In calculating the loss, the district court considered factors such as the reimbursement received not only for the unnecessary stent procedures, but also the follow up tests, as well as how much the hospital repaid to federal programs in connection with the settlement. The Fourth Circuit found that both were properly included as losses from relevant conduct, because neither the follow-up tests nor the hospital’s losses would have occurred but for the medically unnecessary stents McLean performed.

Full Opinion

– Sarah Bishop

Decided:  April 29, 2013

Affirming the United States District Court for the Eastern District of North Carolina, the Fourth Circuit held that the federal taxation-of-costs statute, 28 U.S.C. § 1920, allowed E. & J. Gallo Winery (“Gallo”) to recover discovery expenses for the limited purposes of converting electronically stored information (“ESI”) to non-editable formats and burning the ESI onto discs, thus prohibiting a more extensive recovery for ESI processing expenses.  The Fourth Circuit also ruled that these processing charges did not constitute taxable “fees for exemplification” under this statute.

In 2005, the winery Bodegas Esmeralda designated The Country Vintner of North Carolina, LLC (“Country Vintner”) the exclusive North Carolina wholesaler of a certain Argentinian wine.  In 2009, however, Gallo began supplying this wine to North Carolina wholesalers, not including Country Vintner.  Country Vintner sued Gallo under the North Carolina Wine Distribution Agreements Act and the North Carolina Unfair and Deceptive Trade Practices Act.  Gallo prevailed on these claims and subsequently filed a bill of costs in the district court, aiming to recover $111,047.75 from Country Vintner for expenses involving the processing and production of ESI.  Gallo’s expenses included the cost of decompressing container files, extracting metadata, converting documents to a TIFF or PDF format, burning images onto a CD or DVD, and various other ESI-related expenses.  The district court determined that § 1920(4), under which a prevailing party may recover “[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case[,]” allowed Gallo to recover expenses for copying or duplicating the ESI, but not for the underlying ESI processing.  Gallo appealed, arguing that some of its ESI processing expenses could be considered “costs of making copies” and “fees for exemplification” under § 1920(4).

The Fourth Circuit first discussed the history of § 1920, noting that, in 2002, a committee of the Judicial Conference of the United States rejected a proposal to extend this statute’s reach to ESI processing expenses.  After rejecting Country Vintner’s assertion that § 1920(4) only covers the costs of materials in dispositive motions or materials produced at trial, the Fourth Circuit considered Gallo’s contention that its ESI processing constitutes “making copies” under this provision.  The court construed “making copies” to mean “producing imitations or reproductions of original works.”  The court also noted that, according to the Supreme Court, the provisions of § 1920 are “modest in scope” and “limited to relatively minor, incidental expenses.”  The court then adopted the Third Circuit’s reasoning in Race Tires America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158, concluding that while the act of actually copying ESI is taxable, the underlying process leading up to such copying is not.  Thus, Gallo could recover the costs of converting files to TIFF and PDF formats, and for burning these files onto CDs—but not the costs of the underlying ESI processing.  The Fourth Circuit also found that Gallo’s ESI processing expenses were not “[f]ees for exemplification” under § 1920(4), as these expenses did not involve authentication of public records or demonstrative aids.

Full Opinion

– Stephen Sutherland

Decided: April 29, 2013

The Fourth Circuit affirmed the United States District Court for the Eastern District of Virginia on all issues arising out of a dispute over an interconnection agreement entered into by nineteen incumbent local exchange carriers (collectively “CenturyLink”) and Sprint Communications Company of Virginia, Inc., and Sprint Company L.P. (collectively “Sprint”) under the Telecommunications Act of 1996 (the “1996 Act”).

In April 2004, when the interconnection agreements (“ICAs”) at issue in this case were entered into, both the CenturyLink Plaintiffs and Sprint were wholly owned subsidiaries of Sprint Corporation. In 2006, Sprint Corporation spun off the CenturyLink Plaintiffs, which then formed a separate company that was ultimately acquired by CenturyTel, Inc. in July 2009. The resulting entity began doing business as “CenturyLink.” The parties did business together for several years in accordance with the terms of the ICA’s. However, beginning in June 2009, Sprint began filing written disputes with CenturyLink, ultimately leading to their unilaterally reducing rates and demanding that CenturyLink remit previous payments made by Sprint, which Sprint deemed to be in excess of what it should have paid. In November 2009, CenturyLink filed a breach of contract claim against Sprint. Sprint moved to dismiss and counterclaimed alleging that CenturyLink breached the North Carolina ICA (the “NC ICA”) by billing Sprint for local traffic not subject to access charges. In two separate bench trials, the district court found in favor of the CenturyLink Plaintiffs for both the breach of contract claim and Sprint’s counterclaim. Following the completion of both bench trials, while preparing his financial disclosure for the financial year of 2010, the presiding judge discovered that he had owned eighty shares of CenturyLink in a managed IRA during the time he presided over the trials. After alerting the parties and considering a briefing between the parties, the judge determined that the circumstances did not require recusal or vacatur. Sprint appealed.

On appeal, Sprint argued that the district court should not have gotten to the merits of the case because its role is limited to reviewing a State commission’s determination and no such determination occurred here. However, the Fourth Circuit, supported by the FCC’s amicus brief, held that neither the text nor structure of the 1996 Act supported Sprint’s position that the Act contains a statutory exhaustion requirement. In so holding, the Fourth Circuit reasoned that, although other circuits have interpreted the 1996 Act to confer authority upon State commissions to interpret and enforce an ICA, nothing in the text grants State commissions such authority; thus it follows that, likewise, nothing grants State commissions the exclusive authority to do so in the first instance. Similarly, the court did not find it necessary to impose such a requirement as a prudential matter. Sprint further contended that the district court should not have gotten to the merits of the case because the district judge should have recused himself and vacated all orders and judgments issued in the case. The Fourth Circuit did not agree, citing to the judicial recusal statute’s definition of “financial interest,” which specifically carves out an exemption for ownership of securities in a common investment fund over which a judge exercises no management responsibilities.

Having concluded that the district court properly reached the merits of the case, the Fourth Circuit addressed Sprint’s alternative arguments on the merits. First, Sprint maintained that the district court misconstrued the ICAs as applying to long distance calls that are transmitted via the Internet or a private IP network, known as VoIP traffic. Because the court found that the ICAs were ambiguous as to whether it applied to VoIP traffic, it looked to the previous course of dealings between the parties and noted that Sprint drafted the ICAs at issue. Therefore, the court was compelled to reject this argument. Second, Sprint contended that CenturyLink improperly billed Sprint for local calls under the NC ICA. Sprint alleged that CenturyLink improperly identified calls as intrastate long distance, in violation of the terms of the NC ICA, using an impermissible method—the Billing Telephone Number (“BTN”) method, rather than the Calling Party Number (“CPN”) method. However, the Fourth Circuit found that the NC ICA did not specifically establish a method for identifying local traffic. Therefore, because the BPN method is an acceptable identification method used in the industry, Sprint’s counterclaim was rejected.

Full Opinion

– W. Ryan Nichols

Decided: April 29, 2013

Adley H. Abdulwahab appealed his conviction and sentence for several crimes related to a fraudulent investment scheme. The Fourth Circuit reversed Abdulwahab’s conviction for money laundering, but affirmed the conviction on all other counts.

Abdulwahab’s conviction stemmed from a fraudulent investment scheme where Abdulwahab and two co-conspirators sold interests in life insurance polices through their company A&O. Abdulwahab joined A&O in 2005 as the main salesperson for the fraudulent securities, and with his co-conspirators, misrepresented numerous critical facts about the company and misappropriated in excess of one-hundred million dollars, personally receiving in excess of eight million dollars. In addition, Abdulwahab misrepresented several important facts about his past on documents relating to the sale of securities, including falsely stating that he held an economics degree from Louisiana State University and failing to disclose a 2004 guilty plea for the felony forgery of a commercial instrument. In late 2006, state regulators began to investigate A&O under suspicion that it was selling unregistered securities. To shield the company from investigation, A&O undertook a sham sale to a company partially owned by Abdulwahab. In 2010, Abdulwahab was convicted of: (1) money laundering, (2) conspiracy to commit money laundering, (3) mail fraud, (4) conspiracy to commit mail fraud, and (5) securities fraud. The court sentenced Abdulwahab to 720 months imprisonment. Abdulwahab appealed all convictions and the length of the sentence.

On appeal, Abdulwahab first argued that the district court erred in denying his motion for acquittal relating to the money laundering conviction. The Fourth Circuit agreed, finding that certain counts of money laundering were barred by the “merger problem” identified by the Supreme Court in United States v. Santos. A conviction for money laundering may be based only on the “proceeds” of the illegal activity, which the Fourth Circuit defined as the “net profits” of the fraudulent scheme. Thus, certain expenses and payments made to carry out the fraud, while serving as evidence of the fraud, do not constitute money laundering because they are not “net profits.” In particular, the Fourth Circuit held that district court erred in determining that commission payments to sales agents were “proceeds,” finding instead that they were part of the “essential expenses” of the illegal activity. Since the Fourth Circuit reversed the money laundering conviction, and the error was not harmless, the court remanded Abdulwahab’s case for resentencing.

Second, Abdulwahab argued that his conviction for conspiracy to commit money laundering also suffers from the same “merger problem” as the substantive money laundering conviction. The Fourth Circuit, reviewing for plain error, rejected his argument. The court found that Abdulwahab’s sham sale of A&O provided sufficient evidence for a rational jury to conclude that the transactions were intended to promote the continuation of the fraudulent investment scheme. Furthermore, there was no “merger problem” because the payments Abdulwahab received from the sham sale were not included in the “essential expenses” of the scheme, but rather were part of the general plan of deception to defraud investors.

Third, Abdulwahab argued that the district court erred in denying his motion for acquittal regarding the convictions for mail fraud, conspiracy to commit mail fraud, and securities fraud because the evidence was insufficient for a jury to conclude that he knew of and intended to participate in a scheme to defraud. The Fourth circuit disagreed, citing the numerous misrepresentations Abdulwahab made to investors personally. In addition, Abdulwahab’s extensive participation in the sham sale provided evidence that was “well beyond what was necessary to support his convictions.”

Finally, Abdulwahab argued that the district court erred in holding him responsible at sentencing for losses of funds that were invested with A&O before he became an equity partner. The Fourth Circuit disagreed, finding that the Abdulwahab became a part of the conspiracy when he joined the company as a salesperson and agreed to make false representations to induce investors to invest their money with A&O. The court emphasized that as a salesperson, Abdulwahab knew that investor funds were being procured by fraud and in concert with his co-conspirators to continue the scheme.

Full Opinion

– Wesley B. Lambert

Decided:  April 26, 2013

In this federal suit for forfeiture in rem against certain properties the government believed to be derived from health care fraud and involved in money laundering, the Fourth Circuit held that the United States District Court for the Eastern District of Virginia properly denied various motions by the claimants in interest, properly granted an evidentiary motion by the government, and properly rejected certain jury instructions proposed by the claimants.  The Fourth Circuit thus upheld a jury finding that the properties were subject to civil forfeiture.

In April 2005, the Federal Bureau of Investigation (“FBI”) began investigating Dr. Mert Kivanc, a physician, for overprescribing controlled substances.  In October 2006, the FBI uncovered evidence that Dr. Kivanc had conducted a health care fraud scheme involving the drug Remicade.  An FBI forensic accountant traced $701,507 in fraudulent payments to Dr. Kivanc’s business account at Wachovia Bank.  Dr. Kivanc fled the country for Turkey in November 2007.  He was indicted for distributing and conspiring to distribute controlled substances in October 2010.  Meanwhile, Dr. Kivanc’s parents, the claimants, bought a residential property in Fairfax, Virginia in 1993.  In September 2005, Kivanc’s parents transferred the property to Dr. Kivanc.  Dr. Kivanc began renovating the property in February 2007, but transferred the property back his parents in May 2007.  However, Dr. Kivanc continued to pay for renovations until late October 2007:  After the deed transferring the property to back to his parents was recorded, Dr. Kivanc paid about $430,000 for renovations from his Wachovia business account.  Dr. Kivanc also wrote four checks to his dad between November 2006 and May 2007; one of these checks was traced to his bank account at PNC Bank, which was seized by the government in July 2011.  On June 15, 2011, the government filed a complaint for forfeiture in rem against the residential property, claiming it was subject to forfeiture as property derived from health care fraud and involved in money laundering. Kivanc’s parents then filed a claim of interest for both properties.  The jury issued a verdict in favor of the government, and claimants appealed.

On appeal, the parents argued that the district court erred on the following matters:  Denying the claimants’ motion to dismiss based on the relevant statute of limitations; denying their motion to allow Turan Kivanc and Dr. Kivanc to testify remotely from Turkey, due to Turan’s health and Dr. Kivanc’s unwillingness to return to the United States; admitting certain hearsay statements against interest made by Dr. Kivanc but refusing to admit, under Federal Rule of Evidence 106, an affidavit filed by Dr. Kivanc and a letter he wrote to his attorney; rejecting the claimants’ proportionality instruction with regard to the money laundering issue, and rejecting the claimants’ theory of the case instruction; and denying claimants’ motion for judgment as a matter of law, on the grounds that the government failed to offer enough evidence that Dr. Kivanc committed health care fraud and money laundering.  The Fourth Circuit rejected all of these arguments.

First, the court noted that the government had five years from the discovery of the alleged offense to initiate a suit.  Though the FBI began investigating Dr. Kivanc for overprescribing controlled substances in April 2005—which fell outside the five-year statute—the government did not discover the Remicade fraud until October 18, 2006.  Second, the court concluded that, due to conflicting expert analyses of Turan Kivanc’s ability to travel, the district court did not err in denying his parent’s motion for remote testimony; furthermore, to allow Dr. Kivanc to testify remotely would “make a mockery of our system of justice.”  Third, the court ruled that the challenged statements against interest were properly admitted.  Some of them were not actually hearsay, and the rest were corroborated by certain circumstances indicating trustworthiness:  Dr. Kivanc made the statements while at his office discussing work-related matters with his employees, some of the statements involved Dr. Kivanc’s then-existing plans, and the statements exposed him to criminal liability.  The court also ruled Federal Rule of Evidence 106 inapplicable to Dr. Kivanc’s affidavit and letter:  While this Rule covers partially-produced writings or recorded statements, Dr. Kivanc’s documents involved witness testimony and conversations.  Fourth, the court found the parents’ proportionality instruction a misstatement of the law as to money laundering, as legitimate funds commingled with funds involved with laundering money are also subject to forfeiture.  Furthermore, the parents’ theory of the case also included an incorrect proportionality instruction, as well as the prejudicial assertion that “the [g]overnment has not met is burden on tracing the [PNC Bank] funds.”  Lastly, the court concluded that the government proved, by a preponderance of the evidence, that “Dr. Kivanc knowingly and willfully committed or conspired to commit health care fraud,” and that he had the specific intent to conceal illegal acts through money laundering.  Thus, the district court properly denied the parents’ motion for a judgment as a matter of law.

Full Opinion

– Stephen Sutherland

Decided April 26, 2013

The Fourth Circuit Court of Appeals affirmed the plaintiff’s conviction of conspiracy to possess crack cocaine with the intent to distribute, finding substantial supporting evidence and no error in its pretrial evidentiary rules. However, the Court of Appeals vacated the plaintiff’s sentence and remanded for resentencing in accordance with the Fair Sentencing Act, which applies to all sentences imposed after its enactment, regardless of the fact that plaintiff’s underlying crime was committed before its enactment.

In June 2010, the defendant, Raymond Allen (“Allen”), was convicted of conspiring to possess fifty grams or more of cocaine base with intent to distribute and sentenced to ten years’ imprisonment. Allen was one of eleven defendants named in a fifteen-count indictment. Evidence at trial showed that street dealers bought from three suppliers, who bought from Chrissawn Folston, who would then buy in bulk from another supplier or from Allen. On May 17-18, 2010, Folston drove twice to Ashville in order to make a purchase from Allen. Folston was driven both times by his girlfriend, who was a government informant, and had first-hand knowledge of both transactions.  As such, Allen does not dispute the fact that these two buy-sell transactions occurred; he only disputes the evidence regarding his knowledge of the conspiracy. To this the government responded with evidence indicating Allen’s awareness of the drug distribution network. While Allen was detained awaiting trial, he had a conversation with a street dealer wherein he admitted they would all “be partying” if the others had kept their mouths shut and had not told on everyone.

On appeal, Allen challenged his conviction on the basis that (1) there was insufficient evidence to support his knowledge of the drug rink, (2) the court erred in denying his pretrial motions, and (3) the court erred in imposing the ten-year mandatory minimum sentence given that Congress passed the Fair Sentencing Act of 2010 prior to his sentencing. First, the court analyzed the factors for finding a defendant guilty of conspiracy. The court recognized that a conspiracy may be proven wholly by circumstantial evidence and even a defendant’s minimal involvement is sufficient. Although the court agreed with Allen that evidence of a single sale is insufficient on its own to infer knowledge of a conspiracy,  it did recognize that it was relevant on the conspiracy issue. Therefore, considering that the sale and the fact that it involved 3.5 ounces of crack cocaine, which is enough to produce over 1,000 “crack rocks”, the court held that a reasonable juror could infer that when Allen sold Folston such a substantial quantity of crack cocaine over the course of two days he knew the drug was going to be further distributed. This inference is further buttressed by Allen’s jailhouse conversation where he indicated at least some awareness of “others” in the scheme.  On the second issue, the court reviewed the district court’s denial of Allen’s two pretrial motions. In the first, Allen moved to see his codefendants’ Presence Reports (PSR) and sealed sentencing memorandum. The court recognized that PSR’s have always been jealously guarded by the federal courts and customarily requires the court to first perform an in camera review before granting a defendant’s request to view it. However, the court need only perform the review once the defendant plainly articulates how the information contained in the PSR will be both material and favorable to his defense. When Allen requested the PSR’s, he referenced the fact that one codefendant was responsible for 361.1 grams of crack cocaine but was only sentenced in the memorandum for at least 1.4 grams of crack cocaine but less than 2.8 grams, which led to a reduction in his sentence. However, the court affirmed the district court’s reasons for denying the request. Although evidence of a “sweetheart deal” is relevant to a witness’s credibility, it does not mean that a defendant can go on a fishing expedition every time a codefendant pleads guilty. In the second motion, Allen moved to call a criminal defense expert to help explain the potential significance of all of the indicted codefendants reaching plea agreements with the government. However, the court again affirmed the district court’s denial of the motion on the basis that expert testimony introduced solely for the purpose of undermining the credibility of the codefendant witnesses is not the function of an expert. This is not the type of expert testimony required under Rule 702 of the Federal Rules of Evidence of scientific or technical expertise.  Finally, the court vacated the district court’s application of the ten-year mandatory minimum sentence for offenses involving fifty or more grams of crack cocaine. Although the district court was correct in recognizing the fact that the Fair Sentencing Act does not apply retroactively, it failed to incorporate the reasoning of the recent Supreme Court decision in Dorsey v. United States. In that case the Supreme Court held that the Fair Sentencing Act applies to all sentences imposed after its enactment, regardless of when the underlying crime was committed. Therefore, because the Act was passed before Allen was sentenced and he did not possess 280 grams of crack cocaine necessary for the ten-year mandatory minimum sentence to apply under the Fair Sentencing Act, the district court erred by sentencing Allen to the mandatory minimum.

Full Opinion

– Sarah Bishop

Decided:  April 26, 2013

The Fourth Circuit granted South Carolina’s petition for review and remanded the case to allow the Secretary of the U.S. Department of Education (“USDOE”) to provide South Carolina with notice and an opportunity for a hearing before making a final decision on South Carolina’s waiver for reducing its financial support for special education below the preceding fiscal year in order to receive federal funding under the Individuals with Disabilities Education Act (“IDEA”).

IDEA provides for grants of federal funding to States for the education of disabled children.  In order to be eligible, States cannot reduce the amount of its own funding for special education below the amount that was provided by the State the previous year.  If a State fails to meet this “maintenance-of-effort” condition, as it has been defined, then the Secretary of USDOE has to reduce the level of federal funding for subsequent years by the amount of the shortfall.  In 2011, South Carolina requested a wavier of its “maintenance-of-effort condition” under the IDEA for approximately $67.4 million for the fiscal year ending in 2010.  The Secretary of USDOE granted a partial waiver and denied it “to the extent of $36.2 million.”  South Carolina then sought a hearing on the decision, but was advised by the USDOE that IDEA does not provide for such a hearing because such a hearing was only limited to situations where the USDOE rejected eligibility of a State for funding or the withholding of funds – neither of which occurred here.  South Carolina then filed a petition for review to the Fourth Circuit challenging the denial of the request for a full waiver and requesting a full hearing.  The USDOE filed a motion to dismiss and asserted that the Fourth Circuit did not have jurisdiction to consider the petition because the waiver determination was “a final agency action” and “subject to review only in the district court” pursuant to the Administrative Procedure Act (APA).

The Fourth Circuit first addressed the issue of whether it had jurisdiction to consider the petition.  South Carolina argued that IDEA’s provisions allows a State to file a petition for review in the court of appeals when the State is arguing an issue with respect to eligibility of the State to receive funding under IDEA.  The USDOE asserted that South Carolina was challenging was a USDOE action that did not involve an issue of “eligibility,” but rather death with an issue regarding South Carolina’s “compliance” under the statute.  The court held that the language of the statute indicates that conditions on eligibility deal with forward-looking consequences of fund reductions, whereas a condition of non-compliance requires an evaluation of past performance.  In this case, the court held that South Carolina’s petition for review of a full waiver of the “maintenance-of-effort” is an “action with respect to eligibility” because it results in the loss of future funding.  The court further asserted that a State does not have to be found “completely” ineligible for funding for the court to have jurisdiction.  It is enough that the action was based on a partial reduction of funding based on a failure to satisfy an eligibility condition like the “maintenance-of-effort” condition.  The court next turned to whether South Carolina was entitled to notice and an opportunity for a hearing.  On this second issue, the USDOE again argued that South Carolina’s waiver request was not an eligibility determination and did not involve a withholding and, as such, the statute did not require notice and a hearing.  Based largely on its prior reasoning, the court held that the partial denial of the maintenance-of-effort waiver does constitute an eligibility action and, therefore, South Carolina is entitled to notice and a hearing.  The court’s logic focused on the fact that “[w]hen the USDOE decided that South Carolina was only entitled to partial wavier . . . it made a determination that the ‘State was not eligible’ for the funding it otherwise would have received.”  Therefore, South Carolina was entitled to notice and a hearing.

Full Opinion

– John G. Tamasitis

Decided: April 25, 2013

Affirming the United States District Court for the Eastern District of Virginia, the Fourth Circuit held that it did not have subject-matter jurisdiction to review the National Geospatial-Intelligence Agency’s (“NGA”) security clearance decision.

In January of 2010, after obtaining the necessary top-secret security clearance, Hegab began working for the NGA—a member of the U.S. Intelligence Community and a Department of Defense Combat Support Agency—as a financial/budget analyst. Soon thereafter, Hegab notified the NGA that, following his security clearance investigation, he married Nusairat. Thus prompting the NGA to reinvestigate their initial decision. On November 2, 2010, Hegab was notified that a preliminary decision had been made to revoke his security clearance effective November 18, 2010. On January 7, 2011, he was placed on unpaid administrative leave. The proposed revocation was based on information about Nusairat, as well as earlier information provided during Hegab’s initial investigation. Specifically, the NGA provided Hegab with a Statement of Reasons listing seven facts on which their decision was based. In a detailed response to the NGA’s file supporting their decision, Hegab attempted to explain the evidence. Nonetheless, on March 4, 2011 a final decision was issued revoking his security clearance. The decision informed Hegab that, while his response had mitigated some of the NGA’s concerns, it failed to mitigate his wife’s current affiliation with one or more groups organized largely around their non-United States origin and/or their advocacy of or involvement in foreign political issues; thus raising the potential for conflicts of interest. Subsequently, Hegab unsuccessfully appealed the decision to the NGA Personnel Security Appeals Board. Seeking review of the Board’s decision, this action was commenced against the NGA and its Director, Letitia Long, in her official capacity. In six counts, Hegab alleged that his constitutional rights were violated. However, the District Court found that, though framed as constitutional violations, Hegab’s claims went to the merits of the NGA’s decision to revoke his security clearance. Therefore, the District court dismissed for lack of subject-matter jurisdiction.

On appeal, the Fourth Circuit was faced with the issue of where to draw the line between the political question of reviewing the merits of a security clearance decision and the judicial question of whether an Executive Branch agency violated an individual’s constitutional rights when revoking or denying said individuals security clearance. Harkening to separation of powers concerns, the court noted that federal courts are generally without subject-matter jurisdiction to review an agency’s security clearance decision. However, the court went on to say that, where an individual presents a colorable claim that his constitutional rights have been violated by an agency’s security clearance decision, judicial review might be available although the courts have not yet resolved this question. Nonetheless, in affirming the District Court, the Fourth Circuit concluded that it was unnecessary to decide where to draw the line in this case because Hegab’s conclusory constitutional claims were merely unsuccessful attempts to challenge the merits of the NGA’s decision. In so holding, the court emphasized the fact that Hegab did not allege any facts to support a claim that anyone at the NGA held the hypothesized bias; rather, the alleged bias was the speculative product of an ambivalent allegation in the complaint that the NGA security staff either failed to take the time or effort to review the available information or were biased against Islam.

Full Opinion

– W. Ryan Nichols

Decided: April 24, 2013

The Fourth Circuit affirmed the Board of Immigration Appeals’ (BIA) denial of Suarez-Valenzuela’s application for withholding of removal under the Convention Against Torture (CAT).  The Fourth Circuit held that the BIA applied the appropriate standard when evaluating Suarez-Valenzuela’s case, and that the BIA’s conclusions were supported by substantial evidence.

Suarez-Valenzuela is a Peruvian citizen that illegally entered the United States in January of 1999. Suarez-Valenzuela left Peru following a series of altercations and threats stemming from a talk show appearance in 1997. Suarez-Valenzuela and the show’s investigator threatened to report the show’s host to a rival television network when Suarez-Valenzuela did not receive items that he was promised in exchange for his appearance. Shortly thereafter, uniformed police officers approached Suarez-Valenzuela and the show’s investigator and threatened them. One of the officers, who Suarez-Valenzuela recognized as working for the talk show host, shot him in the foot and hit the show’s investigator with a gun, killing the investigator instantly. Although the officer was convicted for the killing, he only served three months of a fifteen-year sentence. Subsequently, the officer retained his job with the police and continued intimidating Suarez-Valenzuela and his family. Fearing for his safety, Suarez-Valenzuela fled to the United States in January of 1999. In February 2010, Suarez-Valenzuela was convicted of misdemeanor petit larceny. Based on the conviction and his immigration status, the Department of Homeland Security (DHS) issued an Administrative Order of Removal. DHS referred Suarez-Valenzuela’s case to an immigration judge who found that, under CAT, it was not feasible for Suarez-Valenzuela to relocate to Peru because Suarez-Valenzuela reasonably feared that he would be subjected to torture. DHS appealed the immigration judge’s order to the Board of Immigration Appeals (BIA), who reversed the immigration judge. Suarez-Valenzuela filed a petition for review of the BIA Order.

On appeal, Suarez-Valenzuela first argued that the BIA wrongfully applied the “willful acceptance” rather than the “willful blindness” standard to satisfy the CAT requirement that torture is committed with the “acquiescence of a public official.” Under the “willful acceptance” standard, the applicant must demonstrate that government officials had actual knowledge of his or her torture to satisfy CAT. On the other hand, under the “willful blindness” standard the applicant satisfies the acquiescence requirement by showing actual knowledge or that government officials “turn a blind eye to torture.” The Fourth Circuit agreed with Suarez-Valenzuela that “willful blindness” could satisfy CAT’s acquiescence requirement, but held that the BIA did not impose the actual knowledge requirement of the “willful acceptance” standard as argued by Suarez-Valenzuela.

Suarez-Valenzuela’s next argued that the BIA’s denial of CAT protection was not supported by substantial evidence. The Fourth Circuit disagreed. The Fourth Circuit first concluded that the BIA reasonably relied on State Department reports showing that country conditions and human rights violations have improved in Peru. Next, the Court found that BIA was justified in finding that the Peruvian government did not acquiesce to any torture committed by the officer.  The Court determined that based on the officer’s considerable efforts to prevent Suarez-Valenzuela from testifying and the officer’s ultimate conviction, the BIA could reasonably conclude that the government did not acquiesce in Suarez-Valenzuela’s past torture. Finally, the Fourth Circuit concluded that Suarez-Valenzuela failed to appeal the final determination that he could safely relocate within Peru, waiving his right to challenge the BIA’s determination on that ground. Therefore, the Fourth Circuit affirmed the BIA’s denial of Suarez-Valenzuela’s petition for review.

Full Opinion

– Wesley B. Lambert

Decided:  April 19, 2013

The Fourth Circuit affirmed the decision of the district court to dismiss the Appellants’ lawsuit for failure to state a claim upon which relief could be granted.  Appellants asserted five separate claims against Wells Fargo Bank (“Wells Fargo”) after Wells Fargo denied the Appellants’ application for a mortgage modification under the Home Affordable Modification Program (“HAMP”).

The Appellants, after falling on difficult financial times and failing to keep up with their mortgage payments, submitted a “hardship letter” to Wells Fargo explaining their financial difficulties.  The Appellants included two weekly pay stubs with their mortgage modification application.  After receiving the letter, Wells Fargo responded and requested additional proof of income, specifically requesting two additional weekly pay stubs.  The letter from Wells Fargo stated that if the information requested was not received within ten days, the modification request would be considered cancelled.  The Appellants submitted the additional proof of income eleven days past the deadline.  Wells Fargo subsequently sent a delinquency notice.  Three months later, Wells Fargo sent a second HAMP introduction letter and application packet and additional delinquency notices along with a “Notice of Intent to Foreclose.”  Later, Wells Fargo sent Appellants a denial of their HAMP application, citing failure to provide requested documentation within the specified time period.  Appellants continued to apply for a mortgage modification and were denied each time.  Approximately a year after the initial denial, Appellants filed suit against Wells Fargo alleging five counts:  breach of an implied-in-fact contract, negligence, violations of the Maryland Consumer Protection Act (“MPCA”), negligent misrepresentation, and common law fraud.  Wells Fargo subsequently removed the action to federal court.   The district court dismissed the complaint in its entirety citing the absence of a Trial Period Plan (“TPP”) agreement.  Without such an agreement, there was no privity of contract and the suit seeking enforcement of the HAMP guidelines would have to fail without such an agreement.  The TPP agreement is implemented after the bank determines a borrower is eligible for mortgage modification.

The Fourth Circuit affirmed the district court’s decision.  With regards to the breach of an implied-in-fact contract claim, the Appellants asserted there was sufficient consideration given on their side by submitting an application to give rise to an implied-in-fact contract.  Moreover, the Appellants argued that Wells Fargo “bound itself to comply with the applicable ‘standard of care’” for the following reasons: Wells Fargo entered into an agreement with the U.S. Treasury to participate in HAMP and consented to being publicly listed as a HAMP participant, Wells Fargo promise in the foreclosure notice that if the Appellants were eligible for HAMP then Wells Fargo would look into the Appellants’ financial situation and determine an affordable payment plan, and finally, Wells Fargo regularly sent “HAMP Starter Kits” that stated if Appellants provided the required documentation, then Wells Fargo would determine if they qualified for the TPP.  The Fourth Circuit held that none of this conduct was “sufficient to constitute a ‘meeting of the minds’” to create an implied-in-fact contract.  More specifically, the court asserted that Wells Fargo’s offer “to process an application under HAMP” only required to Wells Fargo to process the application, which they actually did, and required them to do nothing more.  With respect to the negligence claim, the Fourth Circuit held that the evidence showed that Wells Fargo owed no duty to the Appellants.  Without “special circumstances,” that did not exist here, “banks typically do not have a fiduciary duty to their customers.”  Because no contractual privity between the parties had been pled or otherwise proven, then no duty existed.  For the MPCA claim, Appellants alleged that Wells Fargo made a misrepresentation when it requested more proof of income information and cited the failure to provide the required information as a reason for rejecting their HAMP application.  According to the Appellants, Wells Fargo had enough information when the original two pay stubs were sent with their “hardship letter.”  The court rejected this claim because the MPCA claim “sounds in fraud” and is therefore subject to heightened pleading standards and Appellants failed to show that Wells Fargo’s statements were made with the “purpose of defrauding” the Appellants.  Moreover, Appellants could not prove that Wells Fargo actually made any false statements.  Regarding the negligent misrepresentation claim, the court held that Appellants had failed to establish that any of the statements made by Wells Fargo were false and that Appellants “took action in reliance on the alleged false statements.”  Finally, the court held Appellants failed to satisfy any of the elements of their common law fraud claim for many of the reasons stated before.  Specifically, the court asserted that Appellants could not show that Wells Fargo actually made any false representations nor did Appellants satisfy the heighted pleading standards associated with a common law fraud claim.

Full Opinion

– John G. Tamasitis

Decided:  April 18, 2013

The Fourth Circuit held that the United States District Court for the District of Maryland properly applied a sixteen-level sentencing enhancement to Trino Medina-Campo’s prison term, as his felony conviction under an Oregon statute proscribing unlawful delivery of a controlled substance qualified as a “drug trafficking offense” warranting such enhancement.

After he was deported to Mexico in 2005, Medina-Campo returned to the United States.  On April 1, 2011, he was arrested for driving under the influence.  Medina-Campo subsequently pled guilty to a charge of illegal entry after deportation, and the district court sentenced him to fifty months in prison.  Section 2L1.2 of the federal Sentencing Guidelines (“Guidelines”), titled “Unlawfully Entering or Remaining in the United States,” provides for a sixteen-level sentencing enhancement if the defendant reentered the United States unlawfully after a felony conviction for “a drug trafficking offense for which the sentence imposed exceeded 13 months.”  In 2001, Medina-Campo pled guilty to unlawful delivery of a controlled substance in Oregon, after which he was sentenced to a twenty-four month prison term.  The district court therefore applied the sixteen-level sentencing enhancement to Medina-Campo’s offense level.  Medina-Campo appealed, arguing that his Oregon felony conviction did not constitute a “drug trafficking offense.”

On appeal, Medina-Campo argued that the Oregon felony of unlawful delivery of a controlled substance did not, categorically speaking, constitute a “drug trafficking offense” for purposes of sentence enhancements for prior convictions.  Medina-Campo asserted that the relevant statute penalized solicitation, attempted delivery, and actual delivery of controlled substances; that solicitation is a separate crime from attempted delivery or actual delivery; and that, because the statute covered separate crimes, the court had to apply the modified categorical approach to the review of his prior conviction.  Medina-Campo maintained that the documents relevant under this approach—i.e., the indictment and the petition and order evincing his guilty plea—lacked details necessary for the court to determine whether he committed solicitation, attempted delivery, or actual delivery.  Medina-Campo then noted that, though an Application Note to § 2L1.2 noted that the statute “includes[s] aiding and abetting, conspiring . . . and attempting . . . to commit [a drug trafficking offense],” it did not mention solicitation; furthermore, though the term “include” indicates a non-exhaustive list, the crime of solicitation was insufficiently similar to the enumerated offenses to be covered by the Application Note.  Thus, according to Medina-Campo, solicitation cannot be considered a “drug trafficking offense” under § 2L1.2, rendering the documents related to his conviction too indeterminate for a sentence enhancement.

The Fourth Circuit rejected Medina-Campo’s arguments, stating that solicitation, aiding and abetting, conspiracy, and attempt are “simply different ways to commit the broad, unitary offense of drug trafficking described in the Guidelines.”  The court therefore applied the categorical approach to the Oregon statute, concluding that unlawful delivery of a controlled substance constitutes a drug trafficking offense—even if the defendant merely committed solicitation.

Full Opinion

– Stephen Sutherland

Decided: April 15, 2013

The Fourth Circuit affirmed the district court’s dismissal of plaintiffs’ complaint under the Administrative Procedures Act (APA) for lack of subject matter jurisdiction because the U.S. Army Corps of Engineers (“Corps”) failed to take “final agency action” that is subject to judicial review under the APA. The Fourth Circuit also affirmed the dismissal of plaintiff’s breach of contract action, finding that the letters at issue did not create a contract that would justify the exercise of admiralty jurisdiction.

In the 1980s and 1990s, the Corps advanced proposals to widen and deepen the 37-mile channel in Cape Fear that allows access to the deep-water port in Wilmington, North Carolina. Before beginning construction in 2000, the Corps discovered rock at the bottom of the channel, requiring the Corps to revise its original harbor project. Plaintiff contended that the revisions would cause ecological damage to its beaches. After exchanging letters, the Corps adopted a plan agreeable to the plaintiff. The plan included semi-yearly maintenance programs designed to replenish sand on the plaintiff’s beaches. The Corps completed the harbor project in 2002. In the winter of 2011, the Corps informed the plaintiff that it had to curtail the maintenance program for budgetary reasons. Plaintiff filed a complaint against the Corps alleging breach of the maintenance plan, seeking specific performance. The district court dismissed the complaint for lack of subject-matter jurisdiction, holding that the claims under the APA were not “final agency action” that was subject judicial review, and that the court lacked admiralty jurisdiction over the remaining claims. Plaintiff appealed on both counts.

On appeal, plaintiff first argued that its APA claims constitute “final agency action” subject to judicial review either as “physical activities in the field,” or, in the alternative, as a reviewable “failure to act.” The Fourth Circuit disagreed, holding that performance of the maintenance plan failed to meet the definition of “agency action,” much less “final agency action” under the APA. The court determined that “agency action” under the APA concerns project approval rather than the project performance, which the plaintiff challenged in this case. Additionally, the Corps’ performance in maintaining the plaintiff’s beaches could not be “agency action” because it was ongoing and not “circumscribed and discrete” as required by the APA. The court said that injecting itself into the Corps’ maintenance plan would place itself into “the role of monitoring whether the Corps had complied with vague, undefined corrective measures,” which was far from a discrete agency action. Furthermore, even assuming that the Corps’ maintenance plan constituted agency action, the court held that it still failed to rise to the level of “final agency action,” finding that the final action occurred when the Corps approved the plan in 2000, and not when the Corps implemented the maintenance plan. Similarly, the court held that the failure to comply with the maintenance plan was not a reviewable “failure to act” because failing to perform the maintenance plan did not equate to a failure to take a discrete “agency action.” The court found that the plan was only a projection of its performance, and thus, not a binding commitment to the plaintiff.

Plaintiff also argued on appeal that the district court erred in holding that it did not have admiralty jurisdiction over the contract that the plaintiff alleges was created in the the letters between itself and the Corp. The Fourth Circuit disagreed, finding that the alleged contract concerned the maintenance of beaches, rather than the required “maritime commerce” that gives rise to admiralty jurisdiction. While the harbor project as a whole constituted “maritime commerce,” the letters expressed concerns about the preservation of the plaintiff’s recreational and aesthetic interests. Moreover, the court reiterated its earlier holding that the letters did not create binding commitments on the Corps that gave rise to an enforceable contract.

Full Opinion

– Wesley B. Lambert

Decided: April 15, 2013

Consolidating appeals from a joint-criminal trial, the Fourth Circuit affirmed the District Court for the Eastern District of Virginia with respect to the district court’s evidentiary rulings and one defendant’s argument that a conviction on a particular count was not supported by sufficient evidence. Based on the facts of the case, with respect to both defendants, the court vacated the district court’s decision regarding conspiracy convictions that were prosecuted on a theory of “material alteration” and further vacated a conviction on a particular count, with respect to one defendant, based on insufficient evidence. Based on the vacation of several counts of conviction, the Fourth Circuit remanded for sentencing.

Co-defendants, Zhao and Cone, were married immigrants from China, living and working in the United States. They formed JDC Networking, Inc. (“JDC”), a licensed distributor of products made by and for Cisco. JDC conducted frequent business with a Hong Kong based company, allegedly operated by members of Zhao’s family, known as Han Tong. As a Cisco “registered partner,” JDC was prohibited from purchasing Cisco products for resale from outside the US. Yet, trial records reflect that, from 2004 through 2010, JDC frequently imported shipments from Han Tong containing both genuine Cisco products and fake imitations. During that time frame, as evidenced by emails introduced at trial, several JDC customers returned products because they believed that they were counterfeit Cisco products. Also during that time frame, Zhao filed income tax returns indicating that JDC was struggling and that she was only earning a small salary; however, to the contrary, JDC was thriving by purchasing Cisco products (or purported Cisco products) in China for resale at rates considerably below the expected market price. Beginning in 2006, U.S. Customs and Border Patrol (“CBP”) began intercepting shipments, however, that investigation went cold until 2010. In 2007, Zhao and Cone’s marriage began to deteriorate. Upset with their faltering marriage, Cone sent a series of emails to Zhao implicating both defendants in the counterfeiting conspiracy at issue. In 2010, CBP got a new lead in their investigation leading them to Zhao. CBP agents, along with Immigration and Customs Enforcement agents, executed a search warrant at Zhao’s residence and a storage unit maintained by her, which resulted in a wealth of evidence. During a post-arrest interview, Zhao eventually confessed to selling “fake” Cisco products. Subsequently, Cone was interviewed and arrested after confessing that JDC received and resold both real and counterfeit Cisco products from Han Tong. With respect to “authentic” Cisco products, Cone further admitted that he and Zhao altered the products, representing that they were higher end products than they actually were. Following their joint-trial, the jury returned a mixed verdict, convicting Cone of conspiracy, convicting Zhao of conspiracy along with several other charges. Cone was sentenced to 30 months imprisonment. Zhao was sentenced to 60 months imprisonment. Both Zhao and Cone appealed several of the district court’s rulings; the Fourth Circuit consolidated the appeals.

The Fourth Circuit held that “material alteration”—one of the three theories of conspiracy, which the prosecution relied on to support criminal liability under the federal counterfeiting statute—is not a crime as defined by the statute. In so holding, the court found that Zhao and Cones’ acts of obtaining a genuine Cisco product bearing a genuine mark and altering the product, but not the mark, was not a criminal act as defined under the statute. The court was not persuaded by the fact that, in the context of civil cases, courts have found liability based on a material alteration theory under the Lanham Act. Zhao’s conviction for money laundering was also vacated because the court found that the “material alteration” theory may have formed the basis for her money laundering convictions. Similarly, because the court found that the district court may have utilized some of the acts under the material alteration theory in arriving at the sentences, the Fourth Circuit vacated and remanded the sentences with respect to both Zhao and Cone. Zhao and Cone, also challenged the introduction of JDC customer emails complaining that JDC products were “fake.” The Fourth Circuit found that the evidence was properly introduced, as non-hearsay, to prove that the defendants were on notice that their products may be fraudulent, but that the district court committed error by not issuing a limiting instruction to the jury. However, in light of the context of a twelve-day jury trial in which the government adduced overwhelming evidence of guilt, the court held that his was harmless error.

The Fourth Circuit also addressed several of Zhao’s individual challenges. First, she challenged the sufficiency of the evidence, with respect to two counts, upon which she was convicted. The court quickly concluded the jury had ample evidence on which to convict her on with respect to one count. However, with respect to the other count, the court found that testimony from a client that packaging was not genuine, standing alone, was not sufficient to sustain a conviction under the statute for a counterfeit mark on the goods in the package. Next, the court addressed Zhao’s argument that the district court committed reversible error by admitting Cone’s out-of-court statements against her in violation of the Confrontation Clause. Applying Fourth Circuit precedent, the court held that the substitution of Zhao’s name with “another individual” was sufficient to protect her rights under the Confrontation Clause.  Addressing Cones’ individual challenge to his conviction for conspiracy to import misdeclared goods, the court found that, because the record reflects Cones’ active participation in the overall scheme, the government adduced sufficient evidence to support a conviction

Full Opinion

– W. Ryan Nichols

Decided April 12, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of the plaintiff’s claims challenging sections 9.1–900 et seq. and 18.2-370.5 of the Virginia Code, as well as the policy of the Spotsylvania County School Board (“the Board”) for implementing the Code, on the basis that the claims were not justiciable.

The plaintiff, Jane Doe (“Doe”), had a sexual relationship with a minor child who was a student under her supervision. For this Doe was convicted in 1993 of the felony of having carnal knowledge of a minor, without the use of force. Under the Virginia Code at that time, Doe was required to publicly register as a sex offender, but could after a certain period of time petition a Virginia circuit court for removal from the Registry. However, in 2008, an amendment reclassified Doe’s conviction as a “sexually violent offense.” Sexually violent offenders cannot petition for removal from the Registry and, therefore, remain on it for life. In addition, sexually violent offenders are forbidden from accessing any school property without a successful petition from both (1) a circuit court and (2) a school board or owner of a private daycare. Therefore, under this classification, Doe must first successfully petition a school to access any school property, specifically that of her eleven-year-old stepson and two biological children nearing school age. Without a petition, Doe cannot attend parent-teacher conferences or other school functions, nor can she drop off or pick up her kids from school. Doe contended that this would force her to home school the children. Although she did not actually attempt to petition the school, Doe challenged this requirement on the basis that she could not acquire such a petition without revealing her identity and thereby tarnishing her family’s reputation.

Rather than petitioning either a circuit court or the school board, Doe instead brought a complaint against the Superintendent of the Department and the Board, alleging violations of her substantive due process, procedural due process, associational, and free exercise rights. Most notably, Doe alleged that the defendants infringed upon her fundamental right to raise and educate her children and that the Board violated her right to procedural due process by failing to provide her with a procedure by which she may anonymously petition to enter school property. She petitioned the court to declare the reclassification and, therefore, its registration and petition requirements unconstitutional and to order the Board to implement an anonymous petition procedure.

The Court of Appeals reviewed de novo the district court’s dismissal of Doe’s claims for lack of ripeness and standing. To have Article III standing, Doe must have an (1) actual injury, (2) that is traceable to the conduct, and (3) likely to be redressed. Because Doe has not yet attempted to petition, the court found that the injury arising from the Board’s lack of an anonymous procedure was only hypothetical, rather than “actual or imminent.” The court did, however, recognize an actual injury to Doe as a result of the Superintendent’s making her reclassification publicly available in the Registry without affording her a challenging procedure. Therefore, the court did find the requisite injury for standing in Doe’s procedural due process claim against the Superintendent but not in her substantive due process claim against the Board. The court then addressed the standing requirements of traceability and redressability. Both prongs become problematic when third persons not party to the litigation must act in order for an injury to arise or be cured. Because the Virginia statute allows for third parties to grant her permission to enter the school properties, the court found that Doe could not establish either prong. Doe’s right to access school property depends on the school, rather than the court. Where she has not petitioned the school, which is the entity with final authority over the matter, the court’s relief might not redress Doe’s injury. Regarding the claim against the Board for lack of an anonymous petition procedure, the court also declined to find redressability. Even if such a procedure were implemented, the statute still requires court approval for a successful petition and, therefore, the Court of Appeals declined to find redressability where relief was dependent on an additional party. However, the court did recognize traceability and redressability where Doe’s injury was the reclassification itself.

The court then addressed the ripeness requirement, which is determined by balancing the fitness of the issues for judicial decision with the hardship to the parties of withholding court consideration. Because Doe had not yet petitioned, the court found that the issues were not fit for judicial decision. The court also found that the Virginia law would not cause her undue hardship. However, again the court did recognize ripeness of Doe’s procedural due process claim, where her injury arose from the reclassification itself, rather than a speculative petition process. But, even though the court recognized standing and ripeness of Doe’s procedural due process claim, it did not withstand Federal Rule of Civil Procedure 12(b)(6). The court cited to the Supreme Court’s holding in Conn. Dep’t of Pub. Safety v. Doe requiring the registry information for all sex offenders to be publicly disclosed- whether the offenders have been proven dangerous or not.

Full Opinion

– Sarah Bishop

Decided:  April 11, 2013

The Fourth Circuit affirmed the decision of the district court and held that (1) the employees’ union had adequately consented to the notice of removal of the action to federal court; (2) that temporary employees who brought the action failed to state a claim for relief; and (3) the district court did not err granting a motion to strike the temporary employees’ motion for reconsideration.

Five current or former Temporary Employees of the Board of Education of Prince George’s County, Maryland (the “School Board”) filed a class action complaint in state court against the School Board and the employees’ labor union (the “Union) asserting employee-compensation claims.  The Temporary Employees claimed that, even though a collective bargaining agreement (“CBA”) excluded “temporary employees” from the “bargaining unit,” they nonetheless should have been entitled to benefits of an arbitration award.  The arbitration award at issue was based on a grievance filed by the Union against the School Board.  The Union asserted that the School Board’s practice of hiring temporary or substitute employees and retaining them in the same position for more than 60 days was in violation of the CBA.  The arbitrator decided the School Board’s conduct did, in fact, violate the CBA and issued a decision that directed, inter alia, the Union and School Board to reach a settlement agreement.  Under the settlement agreement, the School Board agreed to pay over $1 million in back-pay and agreed to hire an additional number of full-time “bargaining unit employees.”  The Temporary Employees subsequently filed a class action seeking a declaratory judgment that the arbitration award applied to their class as well as the permanent employees.  They also claimed that the Union “breached its duty of fair representation by fraudulently misleading” the Temporary Employees about the arbitration decision and accepting a payoff from the School Board.  The Temporary Employees also asserted that, based on being employed by the School Board for more than 60 days in the same position, should be considered third-party beneficiaries under the CBA and therefore entitled to the same compensation and benefits as full time employees.

The School Board filed a notice of removal, pursuant to 28 U.S.C. § 1441, in which they stated that the Union had been consulted and consented to the removal of the action to federal court.  Shortly after the case was removed, the Union filed a motion to dismiss the complaint for failure to state a claim.  The Temporary Employees opposed the motion to dismiss and filed a motion to remand the case back to state court.  They argued that the Union’s should have been required to file its own notice of removal and, as a result, the removal was “defective.”  The motion to remand was denied by the district court and it also dismissed all claims under Rule 12(b)(6).  The Temporary Employees then filed notice of appeal and, several weeks later, filed a motion in the district court requesting reconsideration on the order dismissing the complaint.  The School Board filed a motion to strike the motion for reconsideration on the grounds that it was untimely.  The district court granted the School Board’s motion to strike.  On appeal, the Temporary Employees asserted, inter alia, (1) that the Union’s consent to removal was inadequate; (2) that the district court incorrectly concluded the Union did not owe the temporary employees a duty of fair representation and they were not entitled to the arbitration award; (3) that the district court erred in dismissing the claim for breach of the CBA under the “third-party beneficiary theory”; and (4) that the district court abused its discretion by striking its motion for reconsideration.

First, the Fourth Circuit tackled the challenge to the removal petition.  The court noted that it had not yet addressed the precise issue of what constituted adequate notice of removal for multiple defendants.  The Temporary Employees asserted that because the Union had not signed the notice of removal nor did it file its own notice in a timely manner or provide written consent to the School Board’s notice, the removal was defective and should be remanded back to state court.  The court admitted that the text of 28 U.S.C. § 1446, which provides the requirements for removal, “does not address how a case involving multiple defendants is to be removed or how the defendants must coordinate removal, if coordination is required.”  Based on Supreme Court precedent, the only requirement was that of “unanimous consent” which requires all defendants to consent to removal.  However, binding precedent had yet to specify, “how [multiple] defendants are to give their ‘consent’ to removal.”  According to the court, some circuits have adopted a “formal approach” that requires a signature from all defendants to constitute a proper petition for removal.  Other circuits have adopted a “less formal process” which is akin to what the defendants in this case did.  The Fourth Circuit adopted the “less formal process” and concluded that, “a notice of removal signed and filed by an attorney for one defendant representing unambiguously that the other defendants consent to the removal satisfies the requirement of unanimous consent for purposes of removal.”  Next the Fourth Circuit took up the Temporary Employees’ allegation that the Union breached its “duty of fair representation.”  The Fourth Circuit affirmed the district court’s decision to dismiss the claim because it agreed with the lower court that the Union owed no duty to the Temporary Employees because the arbitrator’s decision limited the award only to “permanent employees” and expressly rejected including temporary employees who were not identified in the CBA as being part of the “bargaining unit.”  In addition, the Fourth Circuit upheld the district court’s dismissal of the Temporary Employees’ “third-party beneficiaries” theory.  The court again relied on the expressed language in the CBA that excluded Temporary Employees from the bargaining unit and, as a result, rejected the theory as against the plain language of the CBA.  Finally, the Fourth Circuit agreed with the district court and affirmed its decision to grant the School Board’s motion to strike the motion to reconsider the court’s order dismissing the complaint.  Though the district court did not provide any rationale for its decision on this issue, the Fourth Circuit surmised that it could have been decided based upon the fact that the Temporary Employees’ motion was filed after the 28-day period as governed by Rule 59(e) and, “more importantly,” the Temporary Employees did not advance a new argument that would require the district court to alter its judgment.

Full Opinion

– John G. Tamasitis

Decided: March 29, 2013

Price pled guilty to accessing the Internet with the intent to view child pornography, in violation of 18 U.S.C. §§ 2252A(a)(5)(B) and (b)(2). The district court found that Price’s offense involved more than 600 images of child pornography, and thus imposed a five-level sentencing enhancement pursuant to 2G2.2(b)(7)(D). On appeal, Price challenged the five-level enhancement, arguing that duplicate images should not be counted when applying 2G2.2(b)(7). In the alternative, Price argued that sending the same image multiple times via email does not constitute duplication. The Court of Appeals rejected Price’s arguments and affirmed his sentence.

First, the Court of Appeals held that any image should be counted when applying the 2G2.2(b)(7) enhancement without regard to its originality so long as the image depicts child pornography and is relevant to the underlying conviction.

Next, the Court of Appeals noted that reproducing pornographic images with the click of a send button as opposed to the use of a photocopier still has the effect of increasing the number of images of child pornography, and thus held that where the same image is emailed multiple times, every image sent to every person should be counted when applying the number of images enhancement.

In summary, the Court of Appeals affirmed Price’s sentence, finding that the district court correctly counted each image in each email separately without regard to the uniqueness of the image when it applied the five-level enhancement under 2G2.2(b)(7)(D).

Full Opinion

– Kassandra Moore

Decided:  March 29, 2013

William Leonard Graham appealed his conviction of one count of conspiracy to distribute more than five kilograms of cocaine, in violation of 21 U.S.C. § 846.  On appeal, Graham asserted reversible error on three bases:  (1) an alleged violation of the Court Reporter Act, 28 U.S.C. § 753(b); (2) the admission of statements by coconspirators recorded during wiretapped conversations; and (3) a life sentence that allegedly contravenes the Constitution.  The Fourth Circuit rejected Graham’s three contentions and affirmed the district court’s judgment.

Graham’s first argument on appeal is based on the fact that the Government introduced numerous recordings of wiretap conversations among Graham’s codefendants in which Graham was not a participant.  On appeal, the Fourth Circuit appointed appellate counsel for Graham, and because none of the recordings played during trial were recorded or transcribed by the court reporter during their presentation to the jury, the appointed counsel was concerned that he had incomplete knowledge of the trial record that could impede his representation of Graham on appeal.  Therefore, the Fourth Circuit granted a consent motion to rescind the briefing order, and the district court subsequently held an evidentiary hearing to determine which of the recordings were originally played for the jury during Graham’s trial.  Despite the district court’s conclusion identifying the recordings that were played at trial, Graham argued that the court reporter’s failure to transcribe the contents of the wiretap conversations played to the jury during trial constituted a violation of the Court Reporter Act (“CRA”), 28 U.S.C. § 753(b).  The Fourth Circuit reviewed the district court’s compliance with the CRA de novo and concluded that it did not need to resolve the issue because Graham could not satisfy the elements needed to obtain a new trial based on transcript errors, as described in its decision in United States v. Brown.  Specifically, the Court found that the district court’s findings with respect to the recordings “were amply supported by the evidence presented at the [evidentiary] hearing and enabled Graham to ‘perfect [his] appeal.’”  Therefore, Graham could not establish the prejudice necessary to substantiate his claim under the CRA.

Next, “Graham ague[d] that the district court erred in admitting the wiretap conversations of his coconspirators under Federal Rule of Evidence … 801(d)(2)(E) because the tapes merely captured ‘idle chatter’ between them about Graham’s past debt for marijuana, and because the conversations were not in the course, or in furtherance, of a conspiracy.  The Court reviewed the district court’s admission of the statements for abuse of discretion and noted that the “existence of the three prongs of admissibility for coconspirator statements … must be supported by a preponderance of the evidence.”  (citation omitted).  On this issue, the Court first addressed Graham’s contention “that the district court erred by not making explicit findings on the existence of a conspiracy prior to admitting the statements.”  The Court dismissed this argument, finding that “a trial court is not required to hold a hearing to determine whether a conspiracy exists before admitting statements under the rule, and the court need not explain the reasoning behind the evidentiary ruling.”  (citation omitted).  Second, the Court assessed Graham’s argument “that each of the five recordings played for the jury was nothing more than ‘profanity laden conversation’ about collecting a debt from Graham” and that the conversations could not constitute coconspirator statements.  The Court found that even though Graham was not captured in any of the calls between the coconspirators that were recorded during the Government’s investigation leading up to the case, “and even though there was adversity between Graham and his coconspirators, each call played at trial contained discussions that rendered them ‘in furtherance’ of the overall conspiracy.”  Therefore, the Court ultimately found the district court’s admission of the statements to be neither erroneous nor an abuse of discretion.

Finally, Graham challenged his mandatory life sentence imposed by the district court judge after the Government informed the judge that Graham faced a mandatory life sentence because it had filed an information under 21 U.S.C. § 851 based on Graham’s three prior felony offenses.  Graham argued that his life sentence contravenes the Constitution.  The Court rejected this argument, finding that it was bound by the Supreme Court’s decision in Almendarez-Torres v. United States, which holds that Graham’s argument cannot be sustained.

Full Opinion

– Allison Hite

Decided: March 25, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of Washington Gas Light Company’s (Washington Gas) claim and grant of summary judgment in favor of Prince George’s County (the County).  The Court held dismissal of a mandatory referral claim was proper under the abstention rules of Burford and that summary judgment was proper because the two laws alleged did not preempt county zoning ordinances.

Washington Gas operates a natural gas substation in Prince George’s County, Maryland.  In 2004, Washington Gas sought to expand the substation to include liquefied natural gas storage.  Washington Gas requested approval for the expansion from the County, which denied it based on recently enacted county zoning plans that prohibited industrial use in the area of the substation.  After the denial, Washington Gas filed a federal action against the County seeking a declaration that the County erroneously denied the company permission to proceed under Maryland’s mandatory referral statute; a declaration that the National Gas Pipeline Safety Act (PSA), Natural Gas Act (NGA), and state law preempt county zoning regulations; and, finally, an injunction prohibiting enforcement of the zoning plans.  In an order dated February 9, 2009, the district court first dismissed the mandatory referral claim for failure to state a claim upon which relief could be granted and on Burford abstention grounds.  The court stated that the mandatory referral law did not provide a state law cause of action or federal question, and federal adjudication of the issue would frustrate state efforts to establish coherent policies regarding zoning.  On March 9, 2012, the district court granted summary judgment on the preemption claims and thus denied the request for an injunction.  The court concluded that the PSA only applied to safety standards, so the County Zoning Plans were not preempted.  Also, the NGA does not preempt because Washington Gas is a local distributor exempt from NGA regulation. Washington Gas appealed the dismissal based on Burford and the ruling that the PSA and NGFA do not preempt county zoning laws.

The Fourth Circuit first stated that Burford abstention is allowed where the federal forum would frustrate and intrude on a state’s complex administrative system.  Maryland’s mandatory referral statute allowed for certain privately owned utilities to be exempt from zoning, but the County had ruled this did not apply to Washington Gas.  Plaintiff argued the question was one of straightforward statutory construction.  The Fourth Circuit disagreed, pointing out that it certified a question regarding the language in the statute to the Maryland Court of Appeals previously.  The Court held that abstention is proper   where plaintiffs’ federal claims stem solely from construction of state or local land use or zoning law, not involving the constitutional validity of the same and absent exceptional circumstances.  When turning to preemption, the Court noted that the PSA seeks to prevent harm from underground pipelines, and that the PSA preempts state laws with regards to safety.  However, the county zoning plans are not safety regulations.  Furthermore, since Washington Gas could comply with both the PSA and zoning laws, the PSA does not preempt.  Finally, the Court looked to provisions of the NGA that stated gas companies that deal in interstate commerce are subject to the NGA, while local distributors are subject to local regulations.  Even though Washington Gas technically provides service to customers in numerous states, the NGA allows the Federal Energy Regulatory Commission to make a determination about companies whose service areas straddle stat lines.  Here, the FERC had determined that Washington Gas was still a local provider.  Therefore, Washington Gas is subject to local, not federal, regulation.

Full Opinion

-Jonathan Riddle

Decided: March 25, 2013

Charlotte McCauley appealed the district court’s dismissal of her state law claims against Home Loan Investment Bank, F.S.B. (Home Loan) and Deutsche Bank National Trust Company (Deutsche Bank). The district court held that McCauley’s claims were preempted by the Home Owners’ Loan Act (“HOLA”). The Fourth Circuit Court of Appeals affirmed in part, revered in part, and remanded for further proceedings.

In 2001, McCauley bought a home in West Virginia under an installment sales contract. In 2006, McCauley paid off the installment sales contract with financing from Ocean Bank, F.S.B. (Ocean Bank). According to McCauley, the Ocean Bank appraiser falsely represented the value of the home as $51,000 or more, when it was actually worth approximately $35,700. Based on its assessment, Ocean Bank loaned McCauley $51,000. McCauley further alleged that during the loan closing, she received inadequate explanation of the closing documents. McCauley’s initial interest rate was 9.4 percent, but the loan was actually an adjustable rate mortgage that allowed the interest rate to “explode” to 15.49 percent. Because of the high interest rate, McCauley struggled with her loan payments and ultimately declared bankruptcy in 2010. Subsequently, McCauley sued Home Loan, the successor in interest to Ocean Bank, in West Virginia state court on the grounds of unconscionability and fraud. McCauley argued that the mortgage contract was unconscionable for the following reasons: the closing was hurried and conducted with inadequate explanation, the loan was induced by an inflated appraisal, and the loan’s terms were substantively unfair. Also, McCauley argued that Ocean Bank committed fraud by misrepresenting the market value of her property for the purpose of inducing her into the mortgage contract. At trial, the district court dismissed McCauley’s claims on the ground that they were preempted by HOLA. McCauley then filed a timely appeal.

The Fourth Circuit explained that under HOLA’s implementing regulation, certain types of laws are specifically preempted. The district court analyzed each aspect of McCauley’s unconscionability claim—the hurried closing, the inducement by inflated appraisal, the disparity between the size of the loan, and the value of the home—and found that each was of the nature of the laws specifically preempted under HOLA. McCauley argued that if the district court had analyzed her unconscionability claim as a whole instead in pieces, it would have determined that it was not preempted under HOLA. The Fourth Circuit disagreed and held that HOLA’s framework requires an analysis of each component of a plaintiff’s claim. Therefore, the court found that McCauley’s unconscionability allegations were specifically preempted.

Despite its ruling on the unconscionable claim, the court found that McCauley’s fraud claim was not preempted under HOLA.  The court first found that intentional misrepresentation is not specifically preempted. Under the HOLA framework, however, a law can still be preempted if it “affects lending.” The court held that intentional misrepresentation only incidentally affects lending, and therefore, it reversed the district court’s dismissal of McCauley’s fraud claim.

Full Opinion

-Graham Mitchell

Decided: March 25, 2013

From 2002 until 2006 Candice Hardwick was a student who first attended Latta Middle School and then attended Latta High School in Latta, South Carolina.  During this time, Hardwick repeatedly wore to school various shirts that displayed the Confederate flag.  School officials routinely forced Hardwick to change out of these shirts and prohibited her from wearing this type of clothing.  In one incident, Hardwick was briefly suspended for refusing to change out of a shirt that displayed a picture of Robert E. Lee and the Confederate flag.  Hardwick also wore—and was subsequently forced to remove—so-called “protest shirts”—shirts that displayed words and imagery in protest of the school’s dress code policy.

After several unsuccessful attempts to persuade officials from the Latta School District to reconsider the schools’ position against Hardwick’s apparel, Hardwick’s parents (on behalf of Hardwick) filed a lawsuit against the two schools’ principals and the school district’s board of trustees.  Hardwick claimed under 42 U.S.C. § 1983 that the schools’ actions had violated her First Amendment right to free speech and expression.  In addition, Hardwick alleged that the schools’ dress code policies were overbroad and vague and that their enforcement was in violation of her Fourteenth Amendment right to due process.   The U.S. District Court for the District of South Carolina granted the defendants’ motion for summary judgment on each of Hardwick’s claims.

On appeal, the Fourth Circuit first considered the First Amendment claim.  The court stated that there was clear evidence in the record indicating that “school officials could reasonably forecast that all of these Confederate flag shirts ‘would materially and substantially disrupt the work and discipline of the school.’”  The court discussed the history and demographics of the town of Latta, including past racial tension and incidents specifically associated with the Confederate flag.  Although the community and its schools had made “progress in race relations, [they were] not immune from incidents of racial conflict.”  And because of the “vastly different views among students about the meaning of the Confederate flag,” the schools were justified in determining that a prohibition on Confederate flag shirts was necessary to prevent a disruption.  Thus, the court held that the Latta school officials did not violate Hardwick’s First Amendment right.

With respect to Hardwick’s due process claim, the court examined the language of the school district’s dress code, which provided in part: “‘Generally, student dress is considered appropriate as long as it does not distract others, interfere with the instructional programs, or otherwise cause disruption.’”  Moreover, the dress code proscribes “‘[s]hirts with obscene/derogatory sayings’” and clothing that is “‘deemed to be offensive.’”   According to the Fourth Circuit, the school district’s dress code was neither overbroad nor vague.  The court stated that the dress code policy was clear enough for a student to be able to “conform her speech to the required standards,” further pointing out that Hardwick was explicitly aware that Confederate flag apparel was not permitted under the terms of the dress code.  Thus, the court held that Hardwick’s Fourteenth Amendment right to due process had not been violated.

Full Opinion

-John C. Bruton, III

Decided: March 21, 2013

The Fourth Circuit reversed the judgment of district court, which permanently enjoined enforcement of § 5-306(a)(5)(ii) of the Public Safety Article of the Maryland Code which conditions carrying a handgun in public on having “good and substantial reason to do so.”  The Fourth Circuit held that the good-and-substantial-reason requirement was constitutional, and thus did not have to address the district court’s “trailblazing pronouncement that the Second Amendment right to keep and bear arms for the purpose of self-defense extends outside the home.”

Four primary categories of applicants demonstrate “good and substantial reason[s]” to obtain a handgun permit: (1) business activities, (2) regulated professions, (3) “assumed risk” professions, and (4) personal protection.  For personal protection, the Permit Unit considers whether the applicant needs a handgun permit as a safeguard against “apprehended danger.”   On July 20, 2010, Raymond Wollard and the Second Amendment Foundation, Inc., initiated this action asserting that Maryland’s good-and-substantial-reason requirement for obtaining a handgun permit contravenes the Second Amendment.  Wollard was attacked in his home by his son-in-law and restored order with his personal guns.  Wollard subsequently applied for a handgun permit and was denied.

The case is decided under the two-part Chester inquiry: (1) whether the challenged law imposes a burden on conduct within the scope of the Second Amendment’s guarantee, and (2) application of an appropriate form of means-ends scrutiny.  Courts are not obliged to impart a definitive ruling under the first step, and many courts instead resolve post-Heller challenges under the second step.  The Fourth Circuit applies intermediate scrutiny and holds that the State has satisfied the standard as the good-and-substantial-reason requirement for obtaining a Maryland handgun permit is reasonably adapted to a substantial governmental interest.

Full Opinion

-Jenna Hendricks

Decided: March 21, 2013

The Fourth Circuit Court of Appeals affirmed the judgment of the district court in dismissing Trail’s complaint for failure to state a claim under the Labor-Management Reporting and Disclosure Act (LMRDA).

Melissa Trail was employed by General Dynamics until she was suspended on March 26, 2009. Trail belonged to Local 2850 of UAW/United Defense Workers of America (“Local 2850”). Trail was suspended after the plant’s unionized employees went on strike, and Trail was charged with felony identity theft for taking part in publishing the salaries and Social Security numbers of the facility’s salaried employees.  Although the charges were ultimately dismissed against Trail, she was fired on September 15, 2009. After Trail was suspended, but before she was fired, Trail witnessed the Union’s President and Vice President viewing pornographic images on a work computer. After this incident, Trail claims that the company began to retaliate against her.  As a result of this retaliation Trail brought an action claiming the company violated the LMRDA. The district court concluded that Trail failed to state a claim and granted the defendants’ motion to dismiss.

Trail argued on appeal that it is not necessary that she allege that she was formally “discipline[d]” within the meaning of the Act in order to have a viable retaliation claim under LMRDA. The court of appeals stated that in this instance the district court did go too far in curtailing an employee’s free-speech rights under the Act. In deciding whether or not a union member’s speech falls within the Act, the court adopted the test set forth in the Eighth Circuit which analogizes the rights of union members to the First Amendment rights of government employees.  In order for the speech to be protected it must be of “union concern.” The court held here that Trail did not speak on a matter of union concern when she reported the alleged pornography incident, therefore affirming the judgment of the district court.

Full Opinion

-Samantha James

Decided on: March 21, 2013

Glynn brought a False Claims Act retaliation action, alleging that Defendant Impact Science & Technology (IST) and its parent company, EDO Corporation (EDO), fired Glynn because he reported IST to the government for what he believed to be fraudulent conduct. The Fourth Circuit agreed with the district court that Glynn was not engaged in activity that qualified him for protection under the FCA and affirmed the grant of summary judgment to the defendants.

IST hired Glynn as an engineer in 2004 to work in a department that produced devices that jammed frequencies used to detonate IEDs often employed in Afghanistan and Iraq. In May 2006, Glynn was told to conduct testing on a module to see if they performed adequately at 85 degrees Celsius. Glynn passed the modules despite the fact that they did not meet the threshold. After further testing, IST placed a corrective component into the units still in stock, but did not recall 800 units in the field. Glynn asked that the units be recalled, but his superiors did not comply. On September 13, 2006, Glynn contacted AUSA Philip Halpern and said he thought IST was shipping goods that would put the troops in jeopardy. Several days later, Glynn told a superior that he had reported to officials, and that manager alerted others. IST decided to terminate Glynn’s employment on October 13, and officially terminated him on December 14. Glynn sued for unlawful retaliation. The district court granted the defendants’ motion for summary judgment and Glynn appealed.

The FCA is designed to discourage contractor fraud against the federal government and includes an anti-retaliation provision to protect whistleblowers. Pursuant to Zahodnick v. Int’l Bus. Mach. Corp., 135 F.3d 911, 914 (4th Cir. 1997), an employee bringing a retaliation claim under the FCA must prove that: (1) he engaged in “protected activity” by acting in furtherance of a qui tam suit; (2) his employer knew of these acts; and (3) his employer took adverse action against him as a result of those acts. The district court found that Glynn failed to satisfy all three elements, which provided the basis for its grant of summary judgment to the defendants. The Fourth Circuit disposes of the case on the first element. Glynn puts forth three theories under which he argues that he was engaged in a protected activity: (1) he investigated and opposed IST’s provision of defective devices to the government customer; (2) he investigated and opposed IST’s false certification of compliance with the contract; and (3) he initiated government investigations of IST’s fraudulent conduct. The Fourth Circuit held that none of these actions raised a possibility of a viable FCA action and were not protected. Accordingly, the Fourth Circuit upheld the district court’s decision to grant summary judgment in favor of defendants.

Full Opinion

-Michelle Theret

Decided: March 18, 2013

The Fourth Circuit Court of Appeals reversed the dismissal of a qui tam action that the district court held was barred by the statute of limitations and the first-to-file bar under the False Claims Act (“FCA”).  Carter brought a qui tam action against Halliburton Company, KBR, Inc., Kellogg, Brown, & Root Services, Inc. (collectively “KBR”) for alleged fraudulent billing of the United States for services provided to the military serving in Iraq.  KBR provided logistical support to the United States military in Iraq under a government contract; Carter worked for KBR in a water purification unit.  Carter alleged that no water purification took place for over four months when KBR represented it was and was billing the government during that time, and further, that employees were instructed to submit time sheets for 12 hour days, 7 days per week when that time was not actually worked.  Carter’s action was originally filed February 1, 2006; the complex procedural history of his complaint involved his lawsuit being dismissed twice and this action was re-filed on June 2, 2011.  The district court held his action was barred by the statute of limitations, but Carter alleged, and the Fourth Circuit agreed, that the Wartime Suspension of Limitations Act (“WLSA”) tolled the statute of limitations.

Under the WSLA, the running of the statute of limitations is tolled for actions involving fraud against the United States until three years after the termination of hostilities as proclaimed by the President.  The question presented to the court was what the term “at war” means for the purposes of the WSLA.  The Fourth Circuit determined that the term does not require a declaration of war, and the “at war” status ceases at the time of a Presidential proclamation.  Therefore, the WLSA governs the relevant time period in this action.  Next, the Court interpreted the term “offense” in the WLSA to include civil actions like this one and rejected KBR’s argument that it applies only to criminal cases.  The Court also concluded that the WLSA does apply only to cases that are brought by a relator, and not to cases where the United States is a party as KBR alleged.

Next, the Court considered whether Carter’s action was barred by the first-to-file rule under the FCA.  The Court adopted the “material elements” test which states that a later suit is barred if it is based upon “the same material elements of fraud” as the earlier suit even if the allegations include somewhat different details.  The two other lawsuits that barred Carter’s suit were both dismissed; therefore, those lawsuits cannot have a preclusive effect on Carter’s suit.  KBR argued in the alternative that the Court should affirm the dismissal on the alternative ground of the public disclosure bar.  The FCA’s public disclosure bar removes subject matter jurisdiction for FCA claims that are based upon matters that have been disclosed publicly unless the relator was the original source of the allegations.  The Court declined to address this issue for the first time on appeal.  The case was reversed and remanded to the district court.

Judge Wynn wrote separately in concurrence to respond to the dissent and emphasize the reasoning why the Court held that the WLSA applied to the instant case.  Judge Agee wrote separately concurring in part and dissenting in part.  Judge Agee agreed with the majority that the first-to-file bar did not bar this case, but did not agree that the WLSA applied to toll the statute of limitations.

Full Opinion

-Jennifer B. Routh

Decided: March 18, 2013

Woods was convicted of numerous charges arising from a tax fraud scheme. On appeal, he argued that his trial was prejudiced by three errors: (1) that the district court improperly restricted his constitutional right to testify in his own defense, (2) that the prosecutor committed reversible error by making an improper statement during closing argument, and (3) that the district court’s instructions to the jury were improper. The Court of Appeals found that, while two errors occurred during the Woods’ trial, neither constituted reversible error. As such, the Court affirmed Woods’ convictions.

Woods first argued that he was effectively denied his constitutional right to testify in his own defense because the district court repeatedly sustained the government’s objections during his testimony and otherwise limited his presentation of evidence. The Court of Appeals reviewed the entire record and concluded that the district court did not abuse its discretion in its evidentiary rulings, did not act arbitrarily, and did not impose limitations on Woods’ testimony that were disproportionate to the legitimate evidentiary and trial management concerns. As such, the Court held that the district court did not deprive Woods of his constitutional right to testify in his own defense.

Woods also alleged that he was prejudiced by an improper statement that the prosecutor made during closing argument; specifically, by the prosecutor’s argument that Woods had lied under oath. The Court first noted that since Woods did not object to the prosecutor’s statement at trial, plain error review applied, under which Woods must show that the district court committed plain error and that the error affected his substantial rights thereby impacting the outcome of the trial. The Court then reviewed the record and found that, in light of the volume of evidence of Woods’ guilt, the one improper statement by the prosecutor did not violate Woods’ substantial rights and thus did not warrant reversal of his convictions.

Woods also contested the jury charge on the grounds that the district court improperly declined to include his requested character evidence instruction and improperly instructed the jury on the statutory elements of an offense. The Court of Appeals rejected these arguments finding that, in light of the strength of the government’s case in comparison to the defense evidence, the jury would have returned guilty verdicts with or without the requested character instruction, and that, considering the jury charge as a whole, the instructions accurately stated the statutory elements of the offense at issue.

Finally, Woods argued that his convictions should be vacated because the cumulative effect of the alleged errors prejudiced the outcome of his trial. The Court of Appeals rejected this argument holding that it could not conclude that the two errors that occurred during Woods’ trial prejudiced his case so as to justify the unusual remedy of reversal based on cumulative error.

In summary, the Court of Appeals found that Woods’ trial was affected by two errors, but held that those errors, when considered both individually and cumulatively, do not warrant reversal of Woods’ convictions.

Full Opinion

– Kassandra Moore

Decided: March 15, 2013

In this case, a daycare center located in the City of Fredericksburg, Virginia, filed a lawsuit against the city after the city council had denied the center’s application to extend its daycare program to disabled children.  The plaintiff asserted a number of claims arising under federal law, but the U.S. District Court granted the defendant’s motion to dismiss the complaint.  Following this dismissal, the plaintiff filed a “Motion for Leave to File Amended Complaint” under Federal Rule of Civil Procedure 15.  The district court denied this motion without undertaking any Rule 15 analysis to determine whether to accept an amended complaint.

On appeal, the Fourth Circuit held that the district court had properly denied the plaintiff’s motion to amend their complaint.  The court stated: “We have repeatedly held that a motion to amend filed after a judgment of dismissal has been entered cannot be considered until the judgment is vacated.”  Because the plaintiff had waited until after its complaint had been dismissed by a final judgment to file its motion, there was no longer an existing complaint able to be amended.  Thus, Rule 15’s liberal standard for allowing pleading amendment was inapplicable.  Instead, at this point, the plaintiff’s options were either to appeal the decision to dismiss or to move to open or vacate the judgment under Federal Rule of Procedure 60(b)—none of which had been done.

Full Opinion

-John C. Bruton, III

Decided:  March 15, 2013

Karen Balas appealed the district court’s denial of relief on her claims of discrimination, retaliation, and hostile work environment, brought under Title VII of the Civil Rights Act of 1964 (“Title VII”), as well as her claims of wrongful discharge, assault, and battery, brought under Virginia state law, against Huntington Ingalls Industries, Inc., (“Huntington Ingalls”) the successor to Balas’s former employer, Northrup Grumman Corporation.  For the following reasons, the Fourth Circuit affirmed the district court’s decision.

This case began after Balas was fired for falsifying some of her time records while employed by Northrup Grumman.  Shortly after she was fired, Balas began the administrative process with the Equal Employment Opportunity Commission (the “EEOC”), which ultimately concluded with the EEOC’s dismissal of her charge and its issuance of her right to sue letter.  Balas subsequently filed a pro se action in the district court, alleging the Title VII and state law claims listed above.  In response, Huntington Ingalls filed a motion for judgment on the pleadings, and the district court granted this motion in part.

On appeal, the Fourth Circuit first addressed “Balas’s argument that the district court erred in considering only her amended EEOC charge, and not the contents of her intake questionnaire or the two letters she submitted to the EEOC.”  The Court noted that Balas’s argument depends on Fourth Circuit precedent establishing “the fact that federal courts lack subject matter jurisdiction over Title VII claims for which a plaintiff has failed to exhaust administrative remedies,” and it reviewed this subject matter jurisdiction claim de novo.  After reviewing the procedural steps undertaken by Balas at the EEOC, the Court noted that “[i]n any subsequent lawsuit alleging unlawful employment practices under Title VII, a federal court may only consider those allegations included in the EEOC charge.”  (citation omitted).  Following this directive, the Court stated that it was “not at liberty to read into administrative charges allegations they do not contain” and agreed with the district court in concluding that “[t]he intake questionnaire and the letters Balas submitted to the EEOC cannot be read as part of her formal discrimination charge without contravening the purposes of Title VII.”  Accordingly, the Court affirmed the district court’s refusal to consider any allegations not included in Balas’s EEOC charge.

Next, the Court considered the district court’s denial of leave for Balas to amend her complaint.  While acknowledging Rule 15(a)’s (Fed. R. Civ. Pro.) instruction that “[l]eave to amend a pleading should be freely given ‘when justice so requires,’” the Court agreed with the district court’s determination that “Balas’s proposed amendments would be futile.”  Therefore, citing to Fourth Circuit precedent holding that “[l]eave to amend a pleading should be denied only when … the amendment would be futile,” the Court found that the district court did not abuse its discretion in denying Balas’s leave to amend her complaint.

Third, the Court looked at “Balas’s Title VII claim of retaliatory discharge” and reviewed the district court’s summary judgment grant in favor of Huntingon Ingalls de novo.  The Court began by listing the elements required to be satisfied in order to establish a prima facie case of retaliation.  Ultimately, the Court found that Balas could not establish her claim because she failed to present evidence showing the requisite causal connection between her employment termination and her alleged protected actions (i.e., her alleged complaints of discrimination to her former supervisor).  Therefore, the Court affirmed the district court’s grant of summary judgment to Huntington Ingalls on the retaliatory discharge claim.

Finally, the Court considered the district court’s grant of summary judgment in favor of Hungtington Ingalls on the assault and battery claims.  With respect to the battery claim, the Court found that Balas had failed to raise a genuine question of material fact “as to whether the hug [the alleged battery] was objectively offensive.”  Therefore, the Court found that Balas’s claim failed to satisfy the state law’s requirement that the alleged act be objectively offensive in order to be considered battery.  With respect to the assault claim, the Court found that “Balas presented no evidence that the hug was harmful or offensive, or that [her supervisor] intended the hug to involve any contact beyond the hug itself or intended to make Balas think that it would.”  Therefore, the Court found that Balas had failed to establish the necessary elements of an assault claim and affirmed the district court’s summary judgment grant as to the assault and battery claims.

Full Opinion

– Allison Hite

Decided: March 14, 2013

The Fourth Circuit Court of Appeals reverse the district court’s ruling that vacated a jury verdict in favor of Georgia-Pacific and awarded judgment to Von Drehle based on a preclusion defense.  The Court found the district court was in error because Von Drehle waived the preclusion defenses and the district court erred by considering the defenses sua sponte.

The original dispute in this appeal was a contributory trademark infringement case brought by Georgia-Pacific in 2005 involving its automatic paper towel dispensers and the paper towels used in those dispensers.  The Fourth Circuit originally heard an appeal from the district court’s granting of summary judgment for Von Drehle.  See Georgia-Pacific Consumer Products, LP v. Von Drehle Corp., 618 F.3d 441 (4th Cir. 2010).  In August of 2010, The Fourth Circuit remanded the case for a jury determination of whether Von Drehle was liable for contributory copyright infringement.  Three months after the Fourth Circuit’s decision, Von Drehle sought to amend its answer to include the affirmative defenses of claim and issue preclusion.  These defenses were based on the supposedly preclusive effect of a federal district court in Arkansas’s ruling in favor of a Von Drehle distributor.  More than 480 days had elapsed since the Arkansas court’s ruling and Von Drehle’s motion to amend.  The district court denied the request to amend, ruling that Von Drehle did not assert the defenses in a timely matter, and that the change was prejudicial to Georgia-Pacific.  At trial, the jury issued a verdict in favor of Georgia-Pacific.  The district court then ordered a judgment vacating the judgment and awarding judgment in Von Drehle’s favor, based on the preclusive effect of the Arkansas ruling.  Georgia-Pacific appealed from that judgment.

The Fourth Circuit ruled that the district court erred in vacating the jury verdict and by applying the preclusive defenses sua sponte.  The Court noted that issue and claim preclusion are affirmative defenses that must be plead or they will be waived. Even if the defenses are not available at the outset of litigation, a party can waive them if they wait too long to assert them.  Von Drehle did not raise these defenses at the first reasonable opportunity and allowed three significant opportunities conclude before asserting them: the time between the Arkansas decision and the grant of summary judgment, the 12 month period that the 4^th Circuit maintained jurisdiction in the original appeal, and the three months from the Court’s decision and Von Drehle’s motion.  Also, the district court should not have applied the defenses sua sponte, because this is only allowed in “special circumstances.”  One such special circumstance is when a certain defense is not known to a court during trial.  Here, this was not the case and Von Drehle did not prove any other special circumstances.

Full Opinion

-Jonathan M. Riddle

Decided: March 12, 2013

William Scott MacDonald challenged the district’s court denial of his writ of habeas corpus. The Fourth Circuit Court of Appeals vacated the district court’s judgment and remand for an award of habeas corpus. The court held that MacDonald had been prosecuted under a facially unconstitutional statute.

On the evening of September 23, 2004, MacDonald met with a seventeen year old girl. At one point during the evening, MacDonald asked the girl to perform a sexual favor on him. MacDonald also asked the girl to have sex. The girl refused both requests, and she then drove MacDonald home. Nearly three months later, MacDonald accused the girl of sexually assaulting him. Detectives interviewed the girl, and she gave a very different version of events. The detectives credited the girl’s version of events and charged MacDonald, with, among other things, felony criminal solicitation. At trial, McDonald asked the Virginia circuit court to dismiss the solicitation offense on the ground that the predicate felony —an anti-sodomy provision — was unconstitutional. MacDonald argued that under Lawrence v. Texas, all state statutes that prohibit “consensual sodomy between individuals with the capacity to consent” are facially invalid. On July 25, 2005, the circuit court denied MacDonald’s motion to dismiss. The following day, the court found MacDonald guilty of solicitation (via the anti-sodomy provision). Thereafter, MacDonald appealed his conviction through the Virginia state court system, but he was unsuccessful. On September 16, 2009, MacDonald filed a habeas corpus petition in the Eastern District of Virginia. The court denied his petition, and MacDonald filed a timely appeal to the Fourth Circuit.

On appeal, MacDonald argued that Lawrence v. Texas compelled the facial invalidation of the anti-sodomy provision under the Fourteenth Amendment. The Fourth Circuit agreed. The court stated, “[W]e adhere to the Supreme Court’s holding in Lawrence by concluding that the anti-sodomy provision, prohibiting sodomy between two persons without any qualification, is facially unconstitutional.” Therefore, the court reversed the district court’s judgment and remanded for an award of habeas corpus relief.

Full Opinion

-Graham Mitchell

Decided: March 8, 2013

The Fourth Circuit Court of Appeals affirmed the judgment of the district court in holding that appellants were not “customers” of Raymond James Financial Services (“RJFS”), and therefore the arbitration agreement was not binding on RJFS.

The appellants are several Inofin investors who sustained losses after acquiring unregistered promissory notes. Appellants met with David Affeldt, a tax attorney, to discuss the investment opportunity. Affeldt recommended that the appellants invest in these promissory notes. Affeldt was acting for Kevin Keough, who claimed to be an RJFS representative, at the time. Inofin ultimately filed for bankruptcy and the appellants brought an action against RJFS alleging violations of various state securities laws.  Appellants sought arbitration of their claims under an arbitration clause that requires RJFS to arbitrate disputes “between a customer and a member or associated person of a member.” The issue disputed was whether or not the appellants were customers of RJFS. The district court ultimately found that the relationship between RJFS and appellants was “insufficient” to bring the dispute within the scope of the arbitration agreement.

Appellants argued on appeal that their claims were subject to arbitration because Affeldt had connections with Keough who was a representative of RJFS. The court of appeals declined to find a customer relationship in the present case because the appellants made their decision to invest independently of any recommendation of RJFS.  Appellants argued that any ambiguities in the meaning of the word “customer” should be resolved in favor of arbitration because there is strong public policy favoring arbitration.  The court, however, affirmed the district court’s judgment and held that the appellants were not customers of RJFS and therefore had no right to arbitration.

Full Opinion

-Samantha James

Decided: March 7, 2013

The Fourth Circuit held that convictions under Tennessee’s statutory rape statute, which sets the age of consent at eighteen, do not categorically qualify for the crime-of-violence sentencing enhancement established at U.S.S.G. § 2L1.2(b)(1)(A)(ii).

At the age of fifteen the defendant, who was born in Mexico, settled illegally in Tennessee.  In April 2009, Rangel was convicted in Tennessee state court of “aggravated statutory rape” for having sex with his then sixteen-year-old girlfriend, who was twelve years his junior.  The victim stated that she willingly participated in the relationship and that Rangel thought she was eighteen.  Rangel received a suspended two-year prison sentence.  Rangel was subsequently convicted of illegal reentry in federal district court and again deported to Mexico in September 2009.  Once more Rangel returned to the United States unlawfully, this time settling in North Carolina.  In 2010, he was convicted in state court of driving while impaired and failing to register as a sex offender.  Rangel was then indicted in federal court for one count of illegal reentry by an alien who was removed after an aggravated felony conviction.  He pleaded guilty in June 2011.  At a sentencing hearing, the district court held that Rangel’s Tennessee statutory rape conviction constituted a “crime of violence” pursuant to the sentencing enhancement codified at U.S.S.G. § 2L1.2(b)(1)(A)(ii).

In Taylor v. United States, the Supreme Court held that where Congress has not indicated how a prior offense enumerated in a sentencing enhancement statute is to be interpreted, it should be understood to refer to the “generic, contemporary meaning” of the crime.  The age of consent is central to the conception of statutory rape in every jurisdiction.  The majority of American jurisdictions set the general age of consent at sixteen years old, while Tennessee sets the age of consent at eighteen years old.  The Fourth Circuit concluded that the “generic, contemporary meaning” of the term “statutory rape” in U.S..S.G.. § 2L1.2 is sixteen.   Tennessee’s higher age of consent is overbroad and thus does not qualify for the crime-of-violence sentencing enhancement.  The Fourth Circuit also refused to affirm the sentencing enhancement on the alternative basis that a statutory rape conviction constitutes a “forcible sex offense” or an “aggravated-felony” under the Tennessee statute.

Full Opinion

-Jenna Hendricks

Decided: March 7, 2013

The Francises appealed a decision by the district court finding that diversity jurisdiction existed and granting summary judgment to Allstate on its claim that the Francises’ insurance policy did not provide coverage for the claims asserted in the underlying action. The Fourth Circuit upheld both decisions by the district court and affirmed.

In March 2008, Troy Towers, an employee at the Maryland School for the Deaf, sued the Francises, alleging that they made false statements claiming sexual abuse by Towers. At the time, the Francises were insured under a California Renters Policy issued by Allstate. The Francises filed suit against Allstate, contending that Allstate had a duty to defend them against Towers’ suit pursuant to the policy. By the time a final judgment in favor of the Francises was rendered in the underlying suit, the Francises had incurred $66,347 in attorney’s fees and costs. Allstate removed and filed a motion for summary judgment, contending that the insurance policy did not provide coverage for the claims asserted in the underlying action. The Francises moved to remand on the ground that the amount in controversy did not exceed $75,000. The Francises also opposed Allstate’s motion on the merits. The district court granted Allstate’s motion for summary judgment. The Francises appealed.

When Allstate filed its Notice of Removal, the object of the litigation was the Francises’ request that Allstate defend them in the underlying action, which cost $66,347, so the Francises argued that the amount in controversy was not satisfied. Allstate countered that the requirement was satisfied when attorney’s fees were added. Attorney’s fees are not generally included in the amount in controversy calculation, except where the fees were provided for by contract or are permitted by statute. Allstate brought its action under a suit that permitted recovery of attorney’s fees and thus satisfied the amount in controversy requirement. Next, the Francises challenged the merits of the district court’s coverage determination. The Fourth Circuit found that Maryland choice of law provisions applied, and, under those provisions, California law controlled whether Allstate had a duty to defend the Francises in the underlying action. Under California law, the Francises had to establish that the underlying action arose from an accident. The Fourth Circuit found that the Francises’ behavior was not an accident because it was calculated and deliberate—they clearly intended to make the statements at issue. Accordingly, the Fourth Circuit affirmed the district court’s ruling.

Full Opinion

-Michelle Theret

Decided: March 6, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s judgment awarding Francine Helton retroactive pension plan payments for a time period where she was eligible for benefits, but was unaware that she was eligible.  Francine Helton worked for AT&T from 1980 until 1997; she left AT&T to begin a restaurant and for a period of time was on an unpaid leave of absence before finally resigning on May 30, 1997.  In August 1997, AT&T amended its pension plan and allowed certain participants to elect benefits at age fifty-five without benefit reduction; Helton was in this category and eligible to receive benefits in October 2001 when she turned fifty-five.  Two letters were mailed to plan recipients notifying them of the change, but Helton never received any communication about the change.  When Helton was approaching her sixty-fifth birthday, she contacted the pension plan about her benefits and was mailed some information.  Helton discovered, through this information, that she was eligible to receive benefits immediately even though she was not sixty-five.  Helton requested payments back-dated to when she was fifty-five but her request was denied.  Helton appealed the decision to the AT&T Employee Benefits Committee and her appeal was denied; she then filed suit under ERISA.  After a bench trial, the district court awarded her back benefits in the amount of $121,563.90 plus interest.

AT&T appealed challenging the district court’s findings of fact and conclusions of law underlying the judgment.  AT&T alleged that court erred in relying on evidence outside the administrative record; it erred in holding that AT&T’s denial of Helton’s claim was not reasonable; it should have remanded the case to AT&T for reconsideration after finding that AT&T abused its discretion in denying Helton’s claim; and it was precluded under the terms of the plan from awarding Helton retroactive benefits.  First, AT&T claimed that the court was barred from considering evidence outside the administrative record.  The Fourth Circuit distinguished the precedent relied on by AT&T and stated the proper inquiry is whether the evidence was known by the plan administrator at the time of the decision.  Second, the Fourth Circuit examined AT&T’s claim that the court erred in holding Helton’s claim was not reasonable by looking at the eight Booth factors and determined that AT&T did abuse its discretion in denying Helton’s claim.  Third, AT&T did not raise the issue of remand at trial, and therefore, this issue was reviewed under a plain error standard.  The Court concluded that because remand is not required, this did not constitute plain error or a miscarriage of justice.  Finally, the Court concluded that AT&T was not precluded from awarding retroactive benefits under the plan.  The Court also considered AT&T’s claim that the court incorrectly held that AT&T violated the reporting and disclosure requirements of ERISA by not properly notifying Helton.  Though there was conflicting evidence on this issue, the holding was properly supported by various testimony and therefore did not constitute an abuse of discretion.

Full Opinion

-Jennifer B. Routh

Decided: March 5, 2013

Thirteen North Carolina residents brought suit after a statutory change imposing stricter eligibility requirements for in-home personal care services (“PCS”) eliminated their access to in-home PCS. The residents (“the PCS recipients”) contended that the new restrictions on the PCS program violated the Social Security Act, the Americans with Disabilities Act, and the Rehabilitation Act. Additionally, the PCS recipients alleged that the boilerplate termination letters they received did not meet the Fourteenth Amendment’s due process requirements. The district court granted the PCS recipients’ motion for a preliminary injunction and motion for class certification. Delia, Acting Secretary of the North Carolina Department of Health and Human Services (“DHHS”), appealed.

On appeal, DHHS contends that: (1) the district court lacked subject matter jurisdiction; (2) the district court erred in granting the motion for class certification; (3) the injunction qualifies as a mandatory preliminary injunction which necessitates a heightened standard of review; (4) the PCS recipients failed to make a case for a preliminary injunction; and (5) the district court’s order does not satisfy Rule 65 of the FRCP. The Court of Appeals found that a preliminary injunction was appropriate in this case, but that the district court’s order failed to comply with Rule 65. As such, the Court remanded the case to allow the district court to revise the order.

The Court of Appeals rejected DHHS’ first contention—that the controversy is moot and not ripe for review such that the district court lacked subject matter jurisdiction—finding that it lacked merit. Next, the Court addressed DHHS’ argument regarding class certification, noting that, pursuant to 28 U.S.C. § 1292(a)(1), it could not review the district court’s class certification decision on appeal unless the class certification issue was inextricably bound up with the injunction. The Court found that the class certification was distinct from the preliminary injunction, and thus the issue was not properly before the Court on appeal. The Court also rejected DHHS’ argument that the injunction qualifies as a mandatory preliminary injunction—which necessitates a heightened standard of review—finding that when the PCS recipients filed their motion for a preliminary injunction, the injunction sought to prohibit implementation of the new policy regarding in-home PCS, and thus was prohibitory rather than mandatory.

The Court of Appeals then turned to DHHS’ argument that the preliminary injunction was improperly granted. The Court found that the district court misapplied the Winter factors, but nonetheless affirmed the court’s judgment in favor of the PCS recipients on the issue, applying a different line of reasoning to find that the pubic interest prong of the Winter test was satisfied. The Court then addressed DHHS’ final argument and agreed that the district court’s order failed to comply with Rule 65. However, the Court decided to remand the case without vacating the order, instead allowing the district court to revise the order to such that it complies with Rule 65.

In summary, the Court of Appeals found that a preliminary injunction was appropriate, but that the district court’s order failed to comply with Rule 65. As such, the Court remanded the case to allow the district court to revise the order.

Judge Agee, in dissent, found the district court’s grant of a preliminary injunction to be an abuse of discretion and would have vacated the district court’s order and remanded for further proceedings.

Full Opinion

– Kassandra Moore

Decided:  March 4, 2013

The Government appealed the district court’s decision to reduce the Defendant’s sentence under 18 U.S.C. § 3582(c)(2), contending that the district court erred in its interpretation of its original sentencing ruling and that the district court could have made additional findings in its resentencing determination.  The Fourth Circuit found that the district court judge, who also presided at the Defendant’s original trial and sentencing, was entitled to deference in his sentence reduction analysis, and the Court found that the judge’s interpretation of his original ruling was reasonable in light of the record.  Additionally, the Court found that the district court judge was not obligated to make any new findings at the resentencing hearing and that he did not error in exercising the discretion afforded to him under § 3582(c)(2) by not making any such additional findings.  Based on these determinations, the Court affirmed the district court’s decision.

This case was based on the Defendant’s motion for a sentence reduction in light of the United States Sentencing Commission’s 2011 amendments to the Sentencing Guidelines that were originally used by the district court to sentence the Defendant to 252 months’ imprisonment for his jury conviction of one count of possession with intent to distribute cocaine base and one count of distribution of cocaine, both in violation of 21 U.S.C. § 841(a)(1) (2006).  At the time of these amendments, the Defendant had been serving his sentence for approximately thirteen years, and his motion relied on these amendments, which retroactively lowered the penalties for crack cocaine offenses by raising the minimum crack cocaine quantity necessary to justify the base offense level that the Defendant was sentenced under.

The Fourth Circuit reviewed the district court’s decision to reduce a sentence under § 3582(c)(2) for abuse of discretion, the district court’s ruling as to the scope of its legal authority under § 3582(c)(2) de novo, and the district court’s factual determinations at the resentencing hearing for clear error.  The Court first found that while the record of the sentencing hearing was not clear, precedent required the Court to “defer to the sentencing judge’s reasonable understanding of the record—and particularly his interpretation of his own earlier findings.”  (citation omitted).  Affording the district court judge the deference due, the Court concluded that “the district court’s interpretation was reasonable in light of the record.”

Next, the Court addressed the Government’s argument “that the district court could have made additional findings as to drug amounts, consistent with its original findings, in making its resentencing determination.”  After noting that it had not addressed this contention in a published opinion, the Court followed its sister courts’ decisions “that additional findings lie within a sentencing court’s discretion.”  (citations omitted).  Accordingly, the Court concluded that the district court “did not err in exercising its discretion not to make additional findings more than a decade after the original sentencing.”

Finally, the Court applied § 3582(c)(2) to the facts of the case and found that the district court “did not abuse its discretion in concluding that Mann was eligible for a sentence reduction.”  Based on these findings and conclusions, the Court affirmed the district court’s decision to reduce the Defendant’s sentence.

Full Opinion

– Allison Hite

Decided: March 4, 2013

In this case, the Fourth Circuit held that the Employee Retirement Income Security Act of 1974 (ERISA) does not preempt the enforceability of a state law waiver that was entered into by a beneficiary of certain retirement and life insurance plans.  The ex-husband of the decedent claimed that he was the rightful owner of the proceeds from the decedent’s ERISA plans because, although the decedent and he had obtained a divorce decree and marital settlement agreement, the decedent had failed to remove him as the named beneficiary of the plans.  Despite this oversight on the decedent’s behalf, the terms of the marital settlement agreement provided that the ex-husband waived any interest in the wife’s retirement plan and that he released and relinquished any future rights as a beneficiary under the decedent’s life insurance policy.  The court stated that the ERISA provision which commands the plan administrator to “distribute benefits to the beneficiary named in the plan” did not preempt the enforcement of the ex-husband’s wavier to the decedent’s property.  Thus, the court concluded that the ERISA plan administrator was to pay out the proceeds to the ex-husband as beneficiary, but that in accordance with a prior state court order, the ex-husband was to waive his rights and distribute the money back to the decedent’s estate.

Full Opinion

-John C. Bruton, III

Decided: March 1, 2013

The Fourth Circuit Court of Appeals reversed and vacated the defendant’s conviction of a carjacking and remanded the case for a new trial.  The Fourth Circuit ruled that the district court abused its discretion when it denied a new trial based on newly discovered evidence. The district court improperly ruled that the defendant did not meet the materiality prong of the Chavis test.

In November of 20007, Donald Roarty was carjacked by a man holding a revolver in Baltimore, Maryland.  Roarty could not see the suspects face, and only noticed his eyes and dreadlocks.  The suspect was also carrying a revolver.  Three days later, undercover detectives conducted a drug buy with a man named Larry Pollin.  Pollin was driving a Jeep that turned out to belong to Roarty.  Pollin was not arrested for the drug buy or suspected carjacking, but was arrested and booked in December for an unrelated crime. Four days after the drug buy, an officer stopped a man who was a known drug dealer.  This man pulled out a key which belonged to a Jeep that turned out to be Roarty’s.  Shortly after that, the officer obser4ved the defendant, Tyrone Moore, another known gang member, walk by.  Due to the defendant wearing a Baltimore Orioles shirt and an Orioles cap being found in the Jeep, the officer questioned Moore about the carjacking.  Moore denied any involvement, and the other man was arrested for the carjacking.  The police then prepared a photo lien-up for Roarty, including a photo of Moore.  Roarty picked out Moore due to the eyes and the fact that he had dreadlocks.  At trial, Moore attempted to prove Pollin committed the carjacking, and that Pollin had dreadlocks at the time.  The prosecution provided a booking photo of Pollin dated December 31, 2007, in which Pollin had short hair.  The prosecution also provided a picture of Pollin with dreadlocks, which was undated.  At trial, an officer involved in the drug buy stated that Pollin had short hair during the drug buy.  These testimonies, along with the dated photograph of Pollin with short hair, lead the jury to convict Moore.  After the trial, Moore’s attorney contacted Pollin’s attorney who had a booking picture of Pollin from December 2007 where Pollin had dreadlocks.  The error occurred due to a police department procedure where a defendant who changes his looks drastically will have a new photo put on file with the original booking date.  The short hair picture, while dated December 31, 2007, was actually taken in January of 2009.  Based on this evidence, Moore moved for a new trial based on the five prong Chavis test.  The district court stated Moore met the first three prongs, dealing with evidence discovered after trial, due diligence, and the evidence not being cumulative. However, the court stated that Moore could not meet the materiality prong because Moore had presented two other disingenuous defenses and that placing the blame on Pollin was tangentially related to these defenses.  The court did not reach the issue of whether the new evidence was likely to result in an acquittal.  From this ruling, Moore appealed.  Moore also appealed the introduction of witness testimony stating that Moore owned a revolver, and physical evidence showing Moore owned a semi-automatic pistol. Moore appealed the introduction of this evidence as improper propensity evidence.

The Fourth Circuit first looked to the five prongs of the Chavis test.  The Court stated that Moore not only met the first three prongs, but that materiality was met because proving that Pollin was the likely carjacker was the main part of Moore’s defense.  The identity of the carjacker was the main issue involved, thus the new photo was material to the issues involved in the trial.  Without explaining its reasoning, the Court also held that Moore met the fifth prong of Chavis.  Finally, while it was not dispositive, the Court ruled on the introduction of witness testimony and physical evidence of Moore’s gun ownership.  The Court allowed the witness testimony of Moore owning a revolver, because it was relevant an necessary to proving his guilt.  However, the evidence showing Moore owned a semi-automatic pistol was merely used to prove that Moore had a certain character and acted in accordance with this character.  Thus it is improper propensity evidence under FRE 404(b).

Full Opinion

-Jonathan M. Riddle

Decided: March 1, 2013

The Municipal Association of South Carolina (the “MASC”) sought a declaration in district court that South Carolina municipalities are entitled to assess “municipal business taxes” against insurance companies. The taxes are measured by the total flood insurance premiums collected in the particular municipality by insurance companies under an arrangement with the Federal Emergency Management Agency (“FEMA”). Various insurance companies filed motions for summary judgment challenging the declaratory judgment. The district court denied the motions. On appeal, the Fourth Circuit Court of Appeals held that the taxes violated principles of sovereign immunity.  Therefore, the court reversed the district’s court’s decision.

The MASC consists of almost all of the municipalities in South Carolina, and one of its primary duties is to collects business license taxes from insurance companies that conduct business within the participating municipalities. The business license tax imposed on each insurance company is two percent of the gross premiums received by the insurance company in the prior calendar year in a particular municipality. The party-insurance companies write and sell policies in South Carolina, and they offer and collect premiums on Standard Flood Insurance Policies (“SFIPs”) pursuant to the FEMA National Flood Insurance Program (the “NFIP”).  At the district court proceedings, the insurance companies argued that the municipal business taxes would violate principles of sovereign immunity and preemption because the flood insurance premiums were federal property. The district court disagreed, and the insurance companies appealed.

On appeal, the Fourth Circuit held that the flood insurance premiums collected by the insurance companies were federal property and therefore could not be taxed by the state of South Carolina. The court also held that since the insurance companies participated in the NFIP, they are federal instrumentalities are therefore immune from taxation. Therefore, the court reversed the district court’s denial of the insurance companies’ summary judgment motions.

Full Opinion

-Graham Mitchell

Decided: March 1, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s award of summary judgment by the bankruptcy court to The Hanover Insurance Co. (“Hanover”).  The court found that ESA’s transfer of money to Hanover within 90 days of ESA’s filing for bankruptcy did not constitute an avoidable preference under the bankruptcy code.

ESA performed construction projects for the federal government and was required to obtain surety bonds before contracts were awarded. In 2006, Hanover issued bonds on behalf of ESA prior to the government awarding eight contracts. Additionally ESA took out a $12.2 million loan from Prospect Capital Corp. (“Prospect”).  ESA also received money from Prospect to put into a CD. In 2007 ESA was awarded additional contracts, however filed for bankruptcy on August 1, 2007. The bankruptcy court sold all of ESA’s assets to Prospect. The bankruptcy trustee filed an adversarial proceeding against Hanover, because it claimed that Hanover was an indirect beneficiary of ESA’s transfer of its loan proceeds into a CD. The bankruptcy court ultimately granted Hanover’s motion for summary judgment.

The court of appeals held that the bankruptcy court erred in holding that the earmarking defense applied to Hanover. The court noted that the funds in this case were not used to pay an antecedent debt which is a crucial element of the defense.  The court of appeals held, however, that the bankruptcy court correctly held that Hanover proved all of the necessary elements to establish the new-value defense under § 547(c)(1) of the bankruptcy code. The court determined that there was no error by the bankruptcy court in concluding that the earmarking defense applied because the new-value defense did apply.

Judge Traxler dissented stating that Hanover was not entitled to summary judgment because it did not have a valid new-value defense. He argued that a receipt of a conditional promise for payment in the future does not constitute “new value.”

Full Opinion

-Samantha James

Decided: February 28, 2013

The Fourth Circuit affirmed Deffenbaugh’s conviction for conspiracy to cause a false distress call to be communicated to the U.S. Coast Guard, and causing a false distress call to be communicated to the U.S. Coast Guard, in violation of federal law.  The Fourth Circuit also affirmed Deffenbaugh’s eighty-four month sentence.

Deffenbaugh designed a plan to fake his death with the assistance of his girlfriend in order to avoid a state probation violation hearing.  Deffenbaugh went boating with his brother in Virginia, and when his brother wasn’t looking he jumped off the boat.  Deffenbaugh swam to shore where his girlfriend was waiting for him, and they fled to Texas.  The U.S. Coast Guard searched for Deffenbaugh for fifteen hours, which cost $220,940.  Deffenbaugh was not declared dead and was subsequently arrested in Texas.

Deffenbaugh argued that there was no conspiracy to cause a false distress call to be made to the U.S. Coast Guard because his girlfriend did not have knowledge and intent that the recipient of the false distress call would be the U.S. Coast Guard.  The Fourth Circuit rejects this argument, citing United States v. Yermian, 468 U.S. 63 (1984) in which the United States Supreme Court “held that the federal nature of a crime need not be in the mind of the perpetrator.”  The Fourth Circuit also confirmed the reasonableness of Deffenbaugh’s eighty-four month sentence.

Full Opinion

-Jenna Hendricks

Decided on: February 28, 2013

Michael Defonte Bernard appealed the district court’s decision to allow him to represent himself at trial, despite his questionable mental capacity. Bernard argued that Indiana v. Edwards, 554 U.S. 164 (2008), required that, where a borderline competent defendant seeks to represent himself at trial, the court must conduct an additional inquiry and hold the defendant to a higher standard of competency. The Fourth Circuit disagreed and affirmed the district court’s decision.

Bernard suffered from a long history of mental illness and drug abuse. A grand jury indicted Bernard on various charges. After a court-ordered evaluation, a government psychologist recommended that Bernard be found incompetent to stand trial because of his schizophrenia, paranoid delusions, and disorganized thought processes. Subsequently, a second psychologist recommended that Bernard be found competent to stand trial because his medications enabled him to understand the proceedings and assist his counsel. Bernard then made a request to proceed pro se, which the court granted, provided that Bernard have standby counsel. At trial, Bernard made no objections during the Government’s case-in-chief, failed to question two witnesses, and failed to call witnesses on his own behalf. The jury deliberated for only 12 minutes before finding Bernard guilty. At sentencing, Bernard was fully represented by former standby counsel, and was ultimately sentenced to 180 months imprisonment.

Bernard raised several arguments for the first time on appeal, thus the Fourth Circuit reviewed for plain error. Bernard could waive his right to counsel and represent himself, provided that certain requirements were met, but the right to self-representation must be weighed against the government’s interest in ensuring integrity and efficacy at trial. In Edwards, 554 U.S. at 177, the court recognized that the trial court is in the best position to assess mental competency. Edwards held that “the Constitution permits States to insist upon representation by counsel for those competent enough to stand trial…but who still suffer from severe mental illness to the point where they are not competent to conduct trial proceedings by themselves.” Id. at 175–76. Edwards does not compel the State to insist Bernard proceed with counsel, but rather outlines a permissive rule. Bernard argued that the court knew of his “severe mental illness,” and thus should have acted, pursuant to Edwards, to deny him the right to proceed pro se. However, the Fourth Circuit noted that the district court satisfied itself at the start of and throughout trial that Bernard was competent, and thus did not commit plain error. Accordingly, the Fourth Circuit affirmed the district court’s decision.

Circuit Judge Diaz dissented on the grounds that the district court was unaware of the discretion afforded by Edwards to apply a higher mental competency standard when deciding whether Bernard could waive his right to counsel. The district court thus abused its discretion by reaching a permissible result it believed to be mandatory.

Full Opinion

-Michelle Theret

Decided: February 26, 2013

A juvenile defendant-appellant appealed part of his sentence that required him to register under the Sex Offender Registration and Notification Act (“SORNA”).  Appellant claimed that requiring him to register contravened his confidentiality protection under the Federal Juvenile Delinquency Act (“FJDA”) and violated the Eighth Amendment’s prohibition on cruel and unusual punishment.  The Fourth Circuit Court of Appeals held that the District Court did not err for imposing this condition of his sentence.

The defendant-appellant admitted to sexually abusing his two half-sisters, ages ten and six at the time.  He was charged with a one-count Information filed under seal in the District of South Carolina; the Information alleged that he was a juvenile under the age of eighteen and had committed an act of juvenile delinquency, aggravated sexual abuse.  He was sentenced to incarceration and juvenile delinquent supervision; he was also required to comply with the mandatory reporting requirements of SORNA.

The Fourth Circuit considered the conflict between the FJDA, requiring juvenile information to be kept confidential, and the mandatory reporting requirements of SORNA which requires typically confidential information about juveniles to be made public.  When two statutes conflict, a more specific statute controls over a more generalized provision; therefore, the Court concluded that the specific provision of SORNA which provides that juvenile sex offenders over the age of fourteen register controlled the outcome of this conflict.  This was further supported by Congressional intent where the legislative history showed in balancing between juvenile confidentiality and public safety, the policy choice was made to protect the public and potential victims by requiring minors to register.  The court also noted that the later in time statute should rule, and SORNA was enacted later than the FJDA.

The Court also considered the defendant-appellant’s argument that the SORNA reporting requirement violated the Eighth Amendment.  To determine whether SORNA’s requirements rose to the level of punishment, the court must consider whether the civil regulatory scheme is punitive in purpose or effect.  The court considered the seven factors from Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168-69 (1963).  The court concluded that SORNA was a civil, nonpunitive regulatory scheme in purpose and effect, and therefore did not violate the Eighth amendment.  Therefore, the district court’s judgment was affirmed.

Full Opinion

-Jennifer B. Routh

Decided: February 26, 2013

In a putative class action, prospective luxury home buyers brought suit against a real estate development company and several of its subsidiaries (collectively “Toll Brothers”), alleging that Toll Brothers unlawfully refused to return deposits when the prospective buyers were unable to obtain mortgage financing. The Agreement of Sale used by Toll Brothers included an arbitration provision, but the district court denied Toll Brothers’ motion to dismiss or stay the suit pending arbitration, finding that the arbitration provision lacked mutuality of consideration under Maryland law since it required the buyer, but not the seller, to submit disputes to arbitration.  Toll Brothers appealed. The Court of Appeals held that the appeal was properly brought before the Court, and that the arbitration provision is unenforceable for lack of mutual consideration under Maryland law.

On appeal, the plaintiffs argued that the Court of Appeals lacked jurisdiction over the interlocutory appeal. However, the Court of Appeals noted that, under an exception to the final judgment rule established by the Federal Arbitration Act, a party may appeal the denial of a motion to stay an action concerning a matter that a written agreement has committed to arbitration.

The Court then addressed whether the lower court erred in holding that the arbitration provision was unenforceable for lack of mutual consideration. The Court held that, under Maryland law, an arbitration provision must be supported by consideration independent of the contract underlying it. Since the arbitration provision binds only the plaintiffs to arbitration, the Court held that it lacks mutuality of consideration. Furthermore, the Court of Appeals found that there were no ambiguities in the provision, thus rejecting Toll Brothers’ argument and that lower court failed to resolves all ambiguities in favor of arbitration. The Court also declined to distinguish Cheek v. United Healthcare of Mid-Atlantic, Inc., which sets forth the current articulation of Maryland law regarding the validity of arbitration agreements. Finally, the Court rejected Toll Brothers’ argument that, under AT&T Mobility LLC v. Concepcion, the Cheek rule is preempted by the Federal Arbitration Act. Noting that the United States Supreme Court has never held that Congress intended the Federal Arbitration Act to preempt states from requiring mutual consideration in an arbitration provision, the Court of Appeals declined to so hold. The Court further noted that Toll Brothers could have avoided implicating this serious constitutional question by simply binding itself to arbitration as it contends it intended to all along.

In summary, the Court of Appeals held that it had jurisdiction over the Toll Brothers’ appeal, and affirmed the district court’s holding, finding that the arbitration provision is unenforceable for lack of mutual consideration.

Full Opinion

– Kassandra Moore

Decided: February 26, 2013

In this case, a psychic and spiritual counselor in Chesterfield County, Virginia, brought an action in federal court challenging the county’s ordinance regulating the activities of “fortune tellers”—a statutorily defined term that encompassed the plaintiff’s profession.  The plaintiff alleged that the county’s regulatory scheme violated her First Amendment rights to free speech and free exercise of religion, her rights under the Religious Land Use and Institutionalized Persons Act (“RLUIPA”), 42 U.S.C. § 2000cc et seq., and her rights under the Fourteenth Amendment’s Equal Protection Clause.  The district court granted summary judgment for the defendant on each claim.

On appeal, the Fourth Circuit stated that fortune telling activity was an exercise of speech entitled to some degree of First Amendment protection; however, the court, applying the “professional speech doctrine” derived from the Supreme Court, concluded that the county’s regulation of the fortunate telling occupation did not violate the plaintiff’s constitutional right to free speech.  The Fourth Circuit also concluded that the plaintiff’s set of beliefs more closely resembled a philosophical “way of life” as opposed to a religious faith.  Thus, the court affirmed the district court’s determination that the county had not violated the plaintiff’s right to freely exercise her religion under the First Amendment or the RLUIPA.  And finally, the court ruled that the county had not abridged the plaintiff’s right to equal protection under the law. Under a rational basis analysis, the court held that the plaintiff failed to overcome the presumption that the licensing and zoning ordinances applicable to fortune tellers were reasonably related to the county’s interest in regulating that particular profession.

Full Opinion

-John C. Bruton, III

Decided:  February 26, 2013

The Fourth Circuit affirmed the district court’s award of summary judgment in favor of Defendants, Lennar Corporation, Lennar Carolinas, LLC, and Drafting & Design, Inc., concluding that the Plaintiff, Building Graphics, Inc., lacked sufficient evidence to support a prima facie case of copyright infringement.

Plaintiff alleged that Defendants infringed on three home plans that Plaintiff created and obtained copyrights for, and Plaintiff sought damages and injunctive relief against Defendants.  Defendants subsequently filed motions for summary judgment, which the district court granted after “concluding there was insufficient evidence on critical elements of [Plaintiff’s] infringement claim.”  The Fourth Circuit reviewed the district court’s decision de novo and stated that in order “‘[t]o establish a claim for copyright infringement, a plaintiff must prove that it owned a valid copyright and that the defendant copied the original elements of that copyright.’”  (citation omitted).  Because the Court found that it was clear that Plaintiff held valid copyrights to the three plans at issue, it determined the question on appeal to be “whether Lennar copied Building Graphics’ house plans.”  After noting that “[c]opying can be proved through direct or circumstantial evidence” and that direct evidence in copyright infringement claims is often hard to establish, the court focused on whether the Plaintiff had successfully relied on circumstantial evidence in its infringement claim.

To establish a copyright claim based on circumstantial evidence, the Court found that Plaintiff needed to satisfy two elements: (1) “that it is reasonably possible that Lennar had access to the Building Graphics plans,” and (2) “‘that the defendant’s work is ‘substantially similar’ to the protected material.’”  (citation omitted).  In order to satisfy the first element, the Court stated that Plaintiff must “demonstrat[e] that the infringer had an opportunity to view or to copy the protected material” and “must establish more than a ‘mere possibility that such an opportunity could have arisen” such that it is “‘reasonably possible that the paths of the infringer and the infringed work crossed.’”  (citation omitted).  After reviewing precedent cases, the Court concluded that Plaintiff “has not shown a chain of events or wide dissemination sufficient to show a reasonable possibility that Lennar had access to [its] plans.”  It found that the facts and circumstances of the case “amount[ed] to inferences built upon inferences” which “do not give rise to more than a mere possibility of access.”  Thus, the Court held that the Plaintiff had failed to establish the first element required to substantiate its copyright claim, and it affirmed the district court’s grant of summary judgment in favor of the Defendants.

Full Opinion

– Allison Hite

Decided: April 5, 2013

Consolidating two cases, the Fourth Circuit Court of Appeals affirmed the district court’s dismissal of Southern Walk’s declaratory judgment action, as well as OpenBand’s request for attorneys’ fees. However, to the extent that Southern Walk’s declaration request was dismissed with prejudice, the Fourth Circuit vacated and remanded with instructions to dismiss without prejudice.

In 2001, OpenBand, a wire-based video service provider, contracted with Southern Walk securing the exclusive right to provide wire-based video services to Southern Walk homeowners. Seeking a declaratory judgment, Southern Walk alleged that the 2007 Exclusivity Order issued by the FCC rendered the 2001 contract “null and void.” Based on lack of standing, the district court dismissed Southern Walk’s claim with prejudice. Subsequently, OpenBand moved for attorneys’ fees pursuant to a fee-shifting provision in the 2001 contract. That claim was also dismissed. On appeal, the two cases were consolidated.

The Fourth Circuit first addressed the standing issue, noting that Southern Walk had the opportunity to establish standing in its own right or as a representative of its members. The court first examined Southern Walk’s claim that it had standing in its own right and found that its alleged injury was non-redressable because it did not demonstrate personal harm that was traceable to the challenged contract or redresssable by the court. Specifically, Southern Walk claimed that it was harmed personally by a provision in the contract that required it to pay for all services from OpenBand for which its member households fail to pay. However, the court reasoned that regardless of the challenged exclusivity arrangement, the bulk billing provisions of the 2001 contract would still require payment. Thus Southern Walk would still be required to pay for OpenBand’s services regardless of the outcome of the case. Consequently, Southern Walk did not allege any economic injury to itself caused by the exclusivity arrangement.

Next, the Fourth Circuit examined Southern Walk’s standing as a representative of its members and found insufficient standing because Southern Walk failed to identify a single specific member. Citing a Supreme Court decision, the court noted that an organization must make specific allegations establishing that at least one identified member had suffered or would suffer harm in order to establish standing as a representative of its members. The court rejected Southern Walk’s contention that the identification requirement only applied to large, diverse advocacy groups with voluntary membership refusing to create an exception for smaller groups with mandatory membership, like homeowners’ associations. Similarly, Southern Walk’s alternative contention that it satisfied the identification requirement by alleging that each of its members were harmed by the exclusivity arrangement was also rejected because the complaint only alleged that the homeowners’ association was being harmed, not any of its individual members.

Finally, the court addressed OpenBand’s challenge to the district court’s refusal to grant attorneys’ fees pursuant to the fee-shifting provision in the 2001 contract. The fee-shifting provision authorized the prevailing party, in any litigation commenced in connection with the contract, to recover attorneys’ fees. Because a dismissal for lack of standing does not constitute a determination on the merits, the court held that OpenBand was not a “prevailing party.”

Full Opinion

– W. Ryan Nichols

Decided: April 4, 2013

The Fourth Circuit affirmed the District Court on all issues arising out of a dispute for cleanup of hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”).

At the center of this dispute is a forty-three-acre piece of property located in Charleston, South Carolina (“Property”). From 1884 until 1972, the Property housed several fertilizer manufacturers that, as a by-product of fertilizer production, contaminated the soil with hazardous waste. The case concerns two of the fertilizer producing companies: Ross Development Corporation (“Ross”) whose predecessor company manufactured fertilizer at the site from 1906 to 1966, and PCS Nitrogen, Inc. (“PCS”) whose predecessor company manufactured fertilizer at the site from 1966 until 1972. Following 1972, the property was no longer used for fertilizer manufacturing. In 1985, the property was purchased by two private parties (“Holcombe and Fair”), divided into three parts, and between 1987 and 2003, sold to Allwaste Tank Cleaning, Inc. (“Allwaste”), Robin Hood Container Express (“RHCE”) and Ashley II of Charleston LLC (“Ashley”). Ashley currently owns the largest share of the property. Since purchasing the property, Ashley spent $194,000 investigating and remediating the contamination of the Property. In 2005, Ashley filed a declaratory judgment action arguing that PCS was jointly and severally liable for these costs as a “potentially responsible person” under CERCLA. The district court bifurcated the trial. In the first trial, the district court determined that PCS was liable as a “potentially responsible person.” In the second trial, the court determined that many of the other owners of the Property were also liable as “potentially responsible persons” and allocated a percentage of the liability for remediation costs to each “potentially responsible person.” Four issues were appealed.

First, the Fourth Circuit affirmed the determination that PCS was a “potentially responsible person” under CERLCA. The court stated that PCS would only be liable if the predecessor was acquired through a stock sale rather than an asset sale. The Fourth Circuit first looked to the plain language of the acquisition agreement to determine whether the parties intended to engage in a stock sale or an asset sale, and found that the agreement was ambiguous. Finding ambiguity, the Fourth Circuit moved to the extrinsic evidence surrounding the agreement. The parties agreed that the successor in interest would acquire “all of [predecessor in interest] that was not specifically retained or sold to another entity.” Also, the predecessor discounted its asking price by $5 million, provided that the business and assets were taken “as is.” Furthermore, two other agreements executed at the same time as the acquisition agreement provided that “substantially all” of the predecessor company was acquired in the sale. Looking at the extrinsic evidence, the Fourth Circuit found that the district court did not commit plain error in its determination that the extrinsic evidence established that a stock sale occurred, making PCS a “potentially responsible person.”

Second, the Fourth Circuit affirmed the district court’s finding that many of the other companies were also potentially responsible persons under CERCLA. Given that PCS was liable as a potentially responsible person, PCS was jointly and severally liable. Thus, under CERCLA, it was PCS’s burden to show that others were also potentially responsible persons and thus liable for a portion of the remediation costs. First, Holcombe and Fair argued that PCS did not carry its burden in showing that they were potentially responsible persons because PCS had no direct evidence that they contributed to the hazardous waste problem. The Fourth Circuit disagreed, following the Second Circuit’s determination that “CERCLA does not require a smoking gun.” The evidence in the case established that Holcombe and Fair affected “at least 27.9%” of the Property through construction and grading, giving the district court sufficient justification to find that Holcombe and Fair qualified as potentially responsible persons. Second, RHCE argued that they were not a potentially responsible person because their interest was not a part of the “facility” affected by Ashley’s declaratory judgment action. The Fourth Circuit disagreed, finding that CERCLA defined “facility” broadly and that fertilizer and construction activities which contributed to the contamination on the Property included that part of the property occupied by RHCE. Third, Ashley argued that they were not a potentially responsible person because they were a “bona fide prospective purchaser” under CERCLA. The Fourth Circuit again disagreed, concluding that Ashley did not meet the “appropriate care” requirement of the bona fide prospective purchaser defense by failing to fill contaminated sumps that even Ashley’s expert conceded should have been filled a year before Ashley did so.

Third, the Fourth Circuit affirmed the district court’s denial of apportionment of harm on the Property. The court found that PCS failed to show that liability could be effectively apportioned because of the difficultly differentiating in the amount of harm caused by the fertilizer producing companies and that amount of harm caused by construction and development of the Property by the non-fertilizer producing companies. In addition, the court rejected RHCE’s argument that its portion of the harm should be apportioned because no disposal of hazardous waste occurred during its operation of the facility. The court stated that RHCE’s argument would undermine the clear liability that CERCLA places on a current owner or operator, regardless of whether the current owner or operator disposed of any hazardous waste on the property.

Finally, the Fourth Circuit affirmed the percentage of the harm allocated to each potentially responsible person, finding that the district court did not abuse its discretion in its allocation of liability. Noting that the “record might have supported a different allocation,” the Fourth Circuit held that the district court’s allocation was supported by the evidence.

Full Opinion

– Wesley B. Lambert

Decided:  April 1, 2013

The Fourth Circuit reversed the judgment of the district court and held that a Drug Enforcement Agency (“DEA”) officer’s misconduct – deliberately lying on an affidavit for a search warrant that produced the sole basis for a search of the defendant’s home where evidence was uncovered that provided the foundation for the criminal charge – rendered defendant’s guilty plea involuntary and violated his due process rights.

Mark Lunsford, a Baltimore City DEA Task Force Officer, applied for a warrant to search Cortez Fisher’s residence and vehicle for evidence of a crime.  Lunsford provided the sole affidavit to accompany the application for the warrant.  The affidavit provided that Lunsford first became aware of Fisher after a confidential informant indicated that Fisher was distributing narcotics and had a handgun in his residence.  On the basis of this lone affidavit, Lunsford obtained the warrant and executed a search on Fisher’s vehicle and residence.   The search resulted in the discovery and seizure of crack cocaine and a loaded handgun.  Defendant was later charged with possession with intent to distribute cocaine base in violation of 21 U.S.C. § 841 and one count of possession of a firearm by a convicted felon in violation of 18 U.S.C. § 922(g).  Defendant entered into a plea agreement where he plead guilty to the illegal firearm charge and was sentenced to ten years in prison.  Over a year later, Lunsford was charged with various offenses, including “falsely attributing information to a confidential informant with whom he was splitting reward money.”  Lunsford later admitted that the confidential informant that he identified in his affidavit to search Fisher’s residence and vehicle “had no connection to the case” and that someone else was the actual informant.  Following his guilt plea, Fisher filed a pro se motion seeking to have his guilt plea vacated. The district court denied Fisher’s motion to vacate under the reasoning that Fisher did not deny he had, in fact, unlawfully possessed a firearm regardless of Lunsford’s conduct.

On appeal, Fisher argued that Lunsford’s deliberate misrepresentations in the affidavit, which was the sole basis for obtaining the search warrant, “induced” the guilty plea and, as a result, rendered his plea involuntary and invalid under the standard set forth in Brady v. United States, 397 U.S. 742 (1970).  The Fourth Circuit agreed and expanded the application of Brady v. United States as a bar against involuntary pleas to include, not only “prosecutorial promises designed to elicit a guilt plea,” but also “affirmative government misrepresentation” that results in defendant’s misapprehension of the strength of the government’s case and, therefore, affects the defendant’s decision to accept the plea of guilt in order to secure leniency in sentencing.  The Fourth Circuit rejected the government’s good faith prosecution argument and recognized that both parties did not dispute the fact that the evidence presented to Fisher and his counsel during plea deliberations were obtained through a search warrant that was issued solely on the basis of intentional misrepresentation by law enforcement.  As a result, the Fourth Circuit maintained that Fisher was successful in proving that 1) “impermissible government conduct” resulted in the government securing a search warrant that led to collection of evidence against him, and 2) that there was “a reasonable probability” that, but for that misconduct, Fisher would not have plead guilty.  Lastly, the Fourth Circuit held that its decision to vacate Fisher’s plea was supported by the important interest of deterring police misconduct and ensuring public confidence in the judicial system.

Full Opinion

– John G. Tamasitis

Decided April 1, 2013

The Fourth Circuit Court of Appeals reversed the district court’s holding that it could not compel arbitration based on the unconscionability of three provisions in the parties’ franchise agreement.  The Fourth Circuit did not find these contractual provisions unconscionable and, therefore, vacated the district court’s judgment and remanded the case for entry of an order compelling arbitration.

The plaintiff, Samuel Muriithi, brought suit based on the franchise agreement he signed as part of his employment with the defendant taxicab service, Shuttle Express, Inc (“Shuttle Express”).  Muriithi claims that Shuttle Express induced him to sign a Unit Franchise Agreement that improperly classified him as an “independent contractor,” rather than an “employee” and thereby afforded him lesser compensation. Muriithi asserted claims against Shuttle Express based on the Fair Labor Standards Act and Maryland state law. Shuttle Express moved to dismiss the complaint or to compel arbitration.  Shuttle Express based its motion to compel arbitration on the Arbitration Clause included in the parties’ Franchise Agreement.  The district court held that because Muriithi’s claims “arise out of” the Franchise Agreement, they were within the scope of the Arbitration Clause.  However, the district court concluded that the Arbitration Clause was not enforceable based on three unconscionable provisions in the Franchise Agreement: (1) the fee-splitting provision, (2) the class action waiver, and (3) the one-year limitations provision.

The Fourth Circuit first addressed the enforceability of the class action waiver. The district court held that the class action waiver prevented Muriithi from fully vindicating his statutory rights and thereby rendered the Arbitration Clause unconscionable.  On appeal, Shuttle Express cited the Supreme Court’s recent decision in Concepcion, which held that “[r]equiring the availability of class-wide arbitration interferes with the fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.” Although Muriithi tried to argue that the Supreme Court’s holding is limited in scope to the FAA’s preemption of state law on this issue, the Fourth Circuit disagreed and concluded that the Supreme Court’s holding was not merely an assertion of federal preemption, but also plainly prohibited application of the general contract defense of unconscionability to invalidate an otherwise valid arbitration agreement under these circumstances.

The Fourth Circuit next addressed the enforceability of the fee-splitting provision.  The district court held that this provision imposed prohibitive arbitration costs on Muriithi and thereby rendered the Arbitration Clause unconscionable.  However, the Fourth Circuit indicated that the party seeking to invalidate an arbitration agreement based on prohibitive costs bears the “substantial” burden of showing a likelihood of incurring such costs. The Fourth Circuit concluded that Muriithi did not meet this burden because he merely alleged the likelihood of incurring prohibitive costs, rather than establishing the likelihood with firm proof. Muriithi also failed to provide evidence about the value of his claim. Further, Shuttle Express agreed to pay all arbitration costs if this case is referred to arbitration.  Therefore, the Fourth Circuit concluded that Muriithi has not carried his burden of showing that he likely would incur prohibitive costs as a result of arbitration subject to the fee-splitting provision.

Finally, the Fourth Circuit addressed the enforceability of the one-year limitations provision, which the district court found unconscionable because it unreasonably restricted Muriithi’s ability to arbitrate “employment-related statutory claims.”  Because the one-year limitations provision is not referenced in the Arbitration Clause, but is only applicable generally to the Franchise Agreement, the Fourth Circuit concluded that it was not properly considered by the court in a motion to compel.

Full Opinion

– Sarah Bishop

Decided: February 25, 2013

The Fourth Circuit Court of Appeals reversed and vacated the district court’s denial of a motion to suppress a firearm obtained during an improper Terry stop.  The Fourth Circuit ruled that the defendant was seized without particularized reasonable suspicion.

In June of 2010, two Charlotte-Mecklenburg officers were patrolling the Eastway Division of Charlotte.  They observed a man, later identified as Dior Troupe, sitting alone in a vehicle at a gas pump.  Troupe did not pump gas or leave the car, which the officers felt was indicative of a drug transaction.  Later, Troupe drove to a parking lot between two apartment complexes the officers knew were high crime areas.  Troupe walked up to a group of five men sitting in the parking lot.  Neither officer observed any illegal activity, but decided to call for backup and voluntarily contact the men.  After a total of six officers arrived, they approached the men.  Troupe indicated that he was carrying a firearm openly, which is generally legal in North Carolina.  The officers secured the firearm and ran Troupe’s identification.  While the officers approached the other men, Defendant Nathaniel Black offered his ID and stated he did not live in the apartment complexes and was just visiting friends.  The officers found Black to be “overly cooperative,” which they found unusual.  The officers questioned the other men, who were not cooperative.  The officers were looking for other firearms, due to a “one-plus” departmental rule.  This rule was a presumption that when there is one firearm, there will be more.  While questioning the other men, Black began to leave.  The officers told him he could not leave and tried to block his path, eventually grabbing his bicep and feeling an incredibly fast pulse rate.  Black began to run, and one officer tackled him.  The officers found a firearm and eventually learned that Black was a convicted felon. Black was charged under § 922(g)(1). Black moved to suppress the firearm, arguing that he was seized when told he could not leave, and the seizure was not supported by reasonable articulable suspicion.  The government argued that Black was not seized until the officers grabbed his bicep and certain indicia of suspiciousness supported the stop.  When his motion was denied, Black plead guilty and was sentenced to 180 months.

The Fourth Circuit first looked to when Black was seized for Fourth Amendment purposes.  In view of all the circumstances, Black was seized before he was told he could not leave.  This is due to factors such as the collective show of authority by the police, the fact that Troupe could not leave, officers were frisking other men indicating they would frisk others, and the officers had pinned Black’s ID to his uniform.  These factors lead to a decision that a reasonable person would not have felt free to leave.  Furthermore, all of Blacks interactions with the police before his bicep was grabbed were not consensual.  The Court then looked to Terry to see if the seizure was reasonable, which requires a reasonably and articulable suspicion particularized for the person in question. The Court held that the officers relied on indicia of suspiciousness that were not particular to Black being involved in criminal activity.  The officers tried to use reasonable suspicion as to the other men to Black.  The Court felt that some of the factors that led to reasonable suspicion Troupe was engaged in criminal activity was suspect as well.  Finally, Black’s cooperation and the “one plus” rule were not sufficient to establish a particular suspicion of Black engaging in criminal activity.  For these reasons, the Court vacated the ruling of the district court and remanded the case.

Full Opinion

-Jonathan M. Riddle

Decided: February 25, 2013

Larry Junior Copeland pleaded guilty to distributing five or more grams of crack cocaine, in violation of 21 U.S.C.§ 841(a)(1). Copeland waived his right to appeal in his plea agreement. However, Copeland appealed his sentence. On appeal, Copeland argued that the district court incorrectly calculated his sentence range under the Sentencing Guidelines and imposed an “illegal” and substantively unreasonable sentence. Copeland also argued that the district court abused its discretion by denying his motion to continue his sentencing hearing. The Fourth Circuit Court of Appeals dismissed the sentencing issues and affirmed the continuance issue.

In early 2010, Copeland sold 28.7 grams of cocaine and 39.2 grams of crack cocaine to a confidential informant. Based on this evidence, the government charged Copeland with one count of distributing five or more grams of cocaine (Count One) and one count of distributing five or more grams of crack cocaine (Count Two), both in violation of 21 U.S.C. § 841(a)(1). On June 28, 2010, the government notified Copeland that it was seeking an enhanced sentence based on Copeland’s prior felony drug offenses. On February 22, 2011, Copeland pleaded guilty to Count Two, and the government dismissed Count One. As part of the plea agreement, Copeland waived his right to appeal. The plea agreement also set out the statutory sentencing ranges mandated by §841(b)(1)(b), which is a five- to forty-year term that can be increased to ten years to life by the statutory enhancement. The plea agreement made clear that Copeland could not withdraw his guilty plea even if the court imposed the maximum. Copeland also acknowledged to the district court that he understood the terms of the plea agreement. Therefore, the court found that Copeland’s guilty plea was entered into freely and voluntarily.

The Fourth Circuit first examined whether Copeland entered into a valid waiver. The court explained that “[a] defendant may waive the right to appeal his conviction and sentence so long as the waiver is knowing and voluntary.” The court found that Copeland knowingly and intelligently waived his right to appeal because he affirmed to the district court that he had read and discussed the entire plea agreement with his lawyer. Nevertheless, Copeland argued that his sentencing challenge did not fall within the scope of the waiver. The court disagreed and held that Copeland’s sentencing challenge fell within the scope of the waiver. Finally, the court held that the district court did not abuse its discretion in denying Copeland’s motion to continue his sentencing hearing. The court explained that Copeland’s sentencing hearing had been scheduled for over three months and that Copeland therefore had adequate time to prepare.

Full Opinion

– Graham Mitchell

Decided on: February 21, 2013

The Fourth Circuit addressed whether a “biological opinion” (“BiOp”) issued by the National Marine Fisheries Service (“the Service”) to the Environmental Protection Agency (“EPA”) is arbitrary and capricious under the Administrative Procedure Act. The BiOp concluded that pesticides in question would jeopardize several endangered species and their habitats and therefore could not be reregistered without substantial restriction. The Fourth Circuit held that the BiOp was in fact arbitrary and capricious.

Dow AgroSciences and other manufacturers (“Manufacturers”) hold EPA registrations for various pesticides. The Manufacturers’ pesticides had to be reregistered. If the proposed action is likely to affect an endangered species, the agency must consult with the Secretary of the Interior to obtain an opinion evaluating the agency’s action under the Endangered Species Act. The Service agency issued a BiOp that explains whether the proposed action will jeopardize the continued existence of endangered species or their habitats. In reregistering, the Manufacturers agreed to voluntarily take measures to reduce the impact of their products on the environment, but the EPA did not consult with the Secretary of the Interior to obtain a BiOp, prompting several environmental groups to file suit. After several years, the Service issued a draft BiOp, which the EPA, the Manufacturers, several states, and others criticized. After the Service revised the BiOp, the Manufacturers commenced an action under the Administrative Procedure Act, alleging that the BiOp was arbitrary and capricious. The district court dismissed the complaint on the ground that the BiOp was judicially reviewable only after the EPA issued a final reregistration order. On appeal, the Fourth Circuit reversed and remanded. On remand, the district court granted summary judgment to the Service.

On appeal, the Manufacturers argued that the district court erred in permitting the Service to supplement the record and the BiOp with post hoc justifications. In reviewing the Service’s decision, a court can only consider the record before the agency at the time it acted and contemporaneous justifications. The district court concluded that the record before the service was inadequate on certain points and inappropriately admitted new evidence and permitted post hoc justifications. The Manufacturers also argued that the BiOp was arbitrary and capricious, namely in: (1) failing to provide support for its use of a 96-hour modeling assumption; (2) relying on a U.S. Geological Survey’s water monitoring study; and (3) failing to justify uniform buffers. The Fourth Circuit agreed with the Manufacturers as to all of these arguments, stating that the Service may have had satisfactory explanations for the choices it made, but failed to adequately reflect those explanations in the BiOp. Accordingly, the Fourth Circuit reversed.

Full Opinion

-Michelle Theret

Decided: February 21, 2013

The issue in the case was whether a municipal ordinance, which prohibits individuals form soliciting immediate donations near two streets that run through the Downtown Mall in Charlottesville, Virginia, unconstitutionally restrict the free speech of individuals who regularly beg on the Downtown Mall.  The Fourth Circuit held that the district court erred by resolving this issue at the pleadings stage, and reversed and remanded for further proceedings.

The Court first finds that appellants have standing to bring the First Amendment challenge to the Ordinance.  The Supreme Court has held that solicitation of “charitable contributions” is protected speech under the First Amendment.  The appellants complaint generally alleges that Appellants regularly beg on the Downtown Mall and the Ordinance may constitute a cognizable injury to Appellants merely by interfering with or creating the “need to plan the substance and placement of” their speech.  The Court then finds that the Downtown Mall is a traditional public forum.  “Because Appellants seek to engage in protected speech in a traditional public forum, the government’s power to regulate that speech is limited, though not foreclosed.  The government may impose reasonable content-neutral time, place and manner restrictions that are narrowly tailored to serve a significant government interest and leave open ample alternative channels of communication.”

The ordinance plainly prohibits solicitations that request immediate donations of things of value, but based on the record, the Court cannot determine the government’s reasons for enacting the Ordinance or assess the strength of its underlying concerns.  The Fourth Circuit also notes that the district court erred by impermissible reaching outside the pleadings by watching video archives at the pleadings stage in order to make findings of fact.

Full Opinion

-Jenna Hendricks

Decided:  February 15, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s decision to exclude evidence that was obtained during a warrantless search.  The government argued that the exigent circumstances exception applied to render the evidence admissible, but the Fourth Circuit disagreed noting that the officer’s behavior at the time of the search contradicted the idea that exigent circumstances existed.

On December 31, 2011, police responded to a 911 call regarding a domestic dispute at the home of Joseph Robert Yengel, Jr. (“Yengel”) between Yengel and his wife.  Shortly after arriving on the scene, Yengel was arrested and removed from the scene.  Sargeant Staton then interviewed Yengel’s wife and Yengel’s mother.  Staton learned that Yengel kept a large number of firearms and a “grenade” inside the house.  Staton also learned that Yengel’s young son was sleeping inside the house.  Staton asked where the “grenade” was, and Yengel’s wife collected a variety of firearms strewn about the master bedroom and asked Staton to remove them.  Staton again asked about the location of the grenade; Mrs. Yengel showed Staton a closet inside the guest bedroom that was locked with a combination keypad and thumbprint scanner.  Mrs. Yengel did not have the combination lock but told Staton the grenade was inside.  Mrs. Yengel gave Staton permission to kick open the door or do whatever he needed to get inside.  Staton was able to pry the door open with a screwdriver.  Once inside the closet, Staton identified military equipment including gun safes, camouflage, and other weapons.  Only after the entry into the closet, Staton ordered the evacuation of the house and surrounding residences.  He requested the assistance of an explosive ordnance disposal team.  Once the team arrived, they discovered, not a grenade, but a container of smokeless shotgun powder and a partially assembled explosive device attached to a kitchen timer.

Yengel was charged with possession of an unregistered firearm.  He moved to suppress the evidence gained from the warrantless search of the locked closet.  The district court granted his motion to suppress the evidence, and the Government appealed following an unsuccessful motion for reconsideration.  Searches without warrants are presumptively unconstitutional, but the touchstone for a warrantless search inquiry is “reasonableness.”  Therefore, there are certain exceptions that will render warrantless evidence admissible in court.  However, the court determined that there were no circumstances that would constitute an exigency sufficient to justify the warrantless search of private property.  The information available to the officer was limited to what Mrs. Yengel told him and this did not justify a reasonable belief that the grenade was live or could detonate at any moment.  Further, the location of the grenade diminished the scope of any possible emergency.  Finally, the officer did not evacuate the sleeping son or surrounding area until after the closet had been entered which provides evidence that the officers did not actually think there were emergent circumstances such to justify a warrantless entry.

Full Opinion

-Jennifer B. Routh

Decided: February 11, 2013

After a jury trial, Holness was convicted of interstate domestic violence and attempted witness intimidation. On appeal, Holness alleged that the district court erred in denying his motion to suppress certain evidence flowing from jail cell conversations Holness had with Stephen McGrath. Holness alleged that this evidence was obtained in deprivation of his Sixth Amendment right to the assistance of counsel.

McGrath was Holness’s cell mate when Holness was incarcerated in connection with a state murder charge. Holness contended that McGrath became an agent of the police as of August 31, 2009, when McGrath met with Sergeant Hall of the Maryland State Police homicide unit. Since Holness had retained the services of a public defender in connection with the state murder charge, he argued that his subsequent conversations with McGrath— which his lawyer was not present for—amounted to police interrogation in contravention of the Sixth Amendment. Subsequent to McGrath’s meeting with Hall, the state court charges were dismissed when the US Attorney charged Holness with interstate domestic violence, attempted witness intimidation, and two other counts that were ultimately dismissed. At that time, Holness moved to suppress all statements he made to McGrath and any evidence obtained as a result of those statements.

The Court of Appeals concluded that, since there was no involvement by the federal government in advance of the August 31, 2009 meeting between McGrath and Hall, no actions imputable to the state deprived Holness of his Sixth Amendment right to counsel with respect to the federal charges of which he was convicted. However, the Court went on to address whether those actions contravened Holness’s Fifth Amendment rights, noting that “although the Sixth Amendment right to counsel is offense-specific, the similar right derived from the Fifth Amendment is not.”

The Court presumed that the relevant evidence was obtained in contravention of the Fifth Amendment, but found that the evidence of Holness’s guilt went “far beyond mere sufficiency,” such that the lower court’s judgment could not have been substantially swayed by the improperly obtained evidence. Thus, the Court held that, under the circumstances of the case, any Fifth Amendment error was harmless beyond a reasonable doubt.

In summary, the Court of Appeals found that the underlying facts failed to sustain Holness’s Sixth Amendment theory, but noted that the facts indicate a potential violation of Holness’s Fifth Amendment privilege against self-incrimination and right to counsel. However, the Court held that remand to further develop the record was unnecessary since any Fifth Amendment error was harmless beyond a reasonable doubt. Thus, the Court affirmed Holness’s convictions.

Full Opinion

– Kassandra Moore

Decided: February 8, 2013

This case involved a sea vessel chartering company’s attempt to reach the assets of two shipping companies—entities claimed to be controlled by the corporate owner of a certain vessel that had been the cause of an oil spill in the country of Estonia—in an effort to satisfy an outstanding judgment that the chartering company had recovered against the vessel owner in an English court.

In 2000, the plaintiff, Vitol, S.A., was chartering the Capri Marine-owned vessel, ALAMBRA, when the ship caused marine pollution in an Estonian port.  Vitol subsequently sued Capri Marine in England for breach of the warranty of seaworthiness; Vitol went on to recover a judgment for $6.1 million.  The English judgment was never paid off by Capri Marine, however, and at the time that this case reached the Fourth Circuit, with interest still accruing, the judgment totaled over $9 million.  In 2009, Vitol filed suit in the U.S. District Court for the District of Maryland against Spartacus Navigation Corp. and Primerose Shipping Company (collectively “S&P”)—two entities that Vitol claimed to be the corporate alter ego of Capri Marine.  Thus, Vitol requested that the district court pierce the corporate veil of Capri Marine and hold S&P liable for Vitol’s outstanding English judgment.  The district court granted Vitol’s motion for a maritime attachment of a Spartacus vessel that was then docked in the Baltimore harbor; however, S&P submitted to the court’s jurisdiction on a restricted basis and the court released the attachment in exchange for S&P posting $9 million as collateral.  In its 2010 order, although it ruled that it had competent jurisdiction to hear the dispute, the district court nonetheless granted S&P’s motion to dismiss for failure to state a claim.

On appeal, the Fourth Circuit first considered whether the district court had properly asserted subject matter jurisdiction over the case.  In answering that question, the court had to determine whether the plaintiff’s complaint “sound[ed] in admiralty so as to invoke the district court’s admiralty jurisdiction under [28 U.S.C.] § 1333.”  The court noted that it was well established that U.S. federal courts had admiralty jurisdiction to enforce the judgments of foreign admiralty courts.  The court rejected the argument by S&P that because the admiralty judgment was rendered in the English Commercial Court—and not the English Admiralty Court—that the claim lacked the “admiralty character” necessary to invoke the admiralty jurisdiction of the U.S. District Court.  The court pointed out that both parties’ expert witnesses on English law stated that there was overlap between those two English jurisdictions and that admiralty claims were occasionally brought in the Commercial Court.  The Fourth Circuit held, “[i]nasmuch as the English Commercial Court exercised jurisdiction over a maritime claim, we agree with the district court’s conclusion that ‘the Commercial Court was an admiralty court with respect to the English Judgment.’”

After resolving that jurisdictional question, the Fourth Circuit turned to the district court’s dismissal of Vitol’s alter ego claim.  The court was forced to determine whether Vitol had pled facts sufficient to state a claim for piercing the corporate veil of Capri Marine and thus exposing S&P to liability on the English judgment.  The court examined at depth the factual contentions in Vitol’s complaint concerning the ownership and operations of Capri Marine, focusing on the relationship between the entity that controlled Capri Marine (and its network of affiliates) and S&P.  In determining whether the alleged facts suggested that the defendants were the alter ego of Capri Marine, the court analyzed various factors including, the corporate formalities, transfers of money, comingling of funds, and corporate structures.  The court ultimately concluded that while the plaintiff had alleged a close business relationship, “there [was] nothing in the allegations of interconnectness [sic] that plausibly suggests the sort of dominion, control, failure to observe corporate formalities, or fundamental unfairness needed to state a claim for alter ego status.”  And under the pleading standards required by Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the complaint’s “bald allegations” and “legal conclusions couched as factual allegations” were insufficient to show that the plaintiff was entitled to relief.  Thus, the Fourth Circuit affirmed the trial court’s dismissal for failure to state a claim.

Full Opinion

-John C. Bruton, III

Decided:  February 8, 2013

Petitioner Bruce C. Bereano appealed the district court’s denial of his petition for a writ of coram nobis in which Bereano sought coram nobis relief to vacate his seven mail fraud convictions and to secure repayment of a fine imposed as part of his sentencing.  Bereano’s petition relied on the Supreme Court’s decisions in Skilling v. United States that limited the application of the “honest services fraud” theory, one of the two theories considered by the jury that convicted Bereano of mail fraud.  The Fourth Circuit agreed with the district court’s denial of Bereano’s petition and affirmed the lower court’s decision.

The basis of Bereano’s petition arose out of the trial judge’s instructions to the jury during Bereano’s trial for his mail fraud charges.  The judge’s instructions stated that the jury could convict Bereano if it found him guilty under the “pecuniary fraud” or “honest services fraud” theories.  Because the jury returned a general verdict on each count of fraud, there was no indication as to which theory Bereano was convicted under, and the Fourth Circuit recognized that Bereano was convicted and prosecuted under both theories.

In light of the Supreme Court’s subsequent decision in Skilling, in which the Court circumscribed the honest services fraud theory and limited it to cases involving actual bribery and kickbacks, Bereano appealed, contending that a constitutional error occurred at trial “when the district court erroneously instructed the jury that it could convict Bereano on the honest services fraud theory.”  While recognizing that Bereano’s honest services fraud scheme did not involve the bribery or kickbacks required under Skilling, the district court nonetheless denied Bereano’s petition, reasoning that Bereano’s fraudulent actions implicated the pecuniary fraud theory, which was not affected by Skilling, and therefore, despite the existence of a constitution error under Skilling, the error was “harmless beyond a reasonable doubt.”

To analyze the district court’s denial of Bereano’s petition, the Fourth Circuit applied the harmless error review prescribed by the Supreme Court in Neder v. United States for cases involving constitutional errors brought about through “a failure to properly instruct on an element of an offense.”  The court additional relied on its decision in United States v. Jefferson in which it “ratified the Neder harmless error standard as the law of this Circuit with respect to Skilling error,” and it applied the harmless error test described in Jefferson to the facts of the present case.  Applying this test, the court concluded that there was sufficient evidence that Bereano had committed “pecuniary fraud” and that this pecuniary fraud was “necessarily accepted by the jury.”  Furthermore, the court found that “no reasonable jury could have acquitted Bereano of pecuniary fraud for falsely billing his clients, but convicted him of honest services fraud for the same false billing scheme.”  Therefore, despite the instructional error on the honest services fraud theory, Bereano had failed to establish the fourth prerequisite for coram nobis relief: “identification of ‘an error of the most fundamental character.’”  Therefore, the court refused to grant the “‘extraordinary’ remedy of coram nobis relief” and affirmed the district court’s decision.

Full Opinion

– Allison Hite

Decided: January 18, 2013

Center for Individual Freedom (CFIF) and West Virginians for Life (WVFL), both organizations that engage in election-related speech, and a West Virginian resident, Zane Lawhorn, who wants to receive WVFL’s communications, brought suit against West Virginia’s secretary of state, members of the West Virginia State Election Commission, and a class of West Virginia’s prosecuting attorneys. The suit alleged that West Virginia’s campaign finance statutes were constitutionally impermissible. The district court struck down some provisions, but upheld others. On appeal, the court affirmed in part, reversed in part, and remanded for further proceedings.

The appellate court first considered WVFL and Lawhorn’s contention that the district court erred in concluding that W.Va. Code § 3-8-1a(12)(C), which defines “expressly advocating” as “any communication that . . . [i]s susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate,” is unconstitutionally vague. The court found that the holding in The Real Truth About Abortion, Inc. v. FEC—specifying that “a court should find that an ad is the functional equivalent of express advocacy only if the ad is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate—was controlling and thus held that subsection (C) of the statute was not unconstitutionally vague. The court also found that the subsection was not overbroad. As such, the court reversed the district court’s decision with respect to its conclusion that W.Va. Code § 3-8-1a(12)(C) is unconstitutional.

The court then considered CFIF’s contention that the district court erred in holding that the inclusion of periodicals in its definition of “electioneering communication” rendered the definition overbroad, and its decision to sever the statute’s reference to materials “published in any newspaper, magazine or other periodical.” The court agreed with CFIF’s argument, that even if the government could demonstrate a sufficiently important interest, the “legislature’s failure to empirically justify the statute’s application to periodicals renders it overbroad and prevents it from bearing a substantial relation to West Virginia’s stated interests.” As such, the court affirmed the district court’s decision to sever the statute’s reference to materials “published in any newspaper, magazine or other periodical.”

Next, the court addressed CFIF’s argument that the district court erred in its decisions regarding three exemptions to the “electioneering communication” definition. Specifically, the district court: (1) upheld the “grassroots lobbying” exemption, (2) declined to address the merits of CFIF’s challenge to the “bona fide news account” exemption, and (3) upheld a provision exempting communications by § 501(c)(3) organizations. The appellate court affirmed the district court’s decision to uphold the grassroots lobbying exemption and its decision to decline to consider the merits of CFIF’s challenge to the bone fide news account exemption, but reversed its decision with respect to its choice to uphold the § 501(c)(3) exemption.

The court then reviewed the district court’s conclusion that the reporting requirement for electioneering communications was ambiguous as written, and its decision to restrict the reporting requirement to “individuals who respond to a solicitation for electioneering communications or earmark their contributions for such use.” The court found that McConnell v. FEC controls and necessitates reversal of the lower court’s conclusion that the electioneering communication reporting requirement is unconstitutionally vague and its application of a limiting construction.

Finally, the court addressed WVFL and Lawhorn’s contention that the district court should have vacated two earlier injunctions as moot rather than barring prosecutions for violations that occurred when the injunctions were in effect. The appellate court found no abuse of discretion in the lower court’s decision to dissolve the injunctions at issue rather than vacate them as moot.

In summary, the appellate court affirmed the district court’s decisions to: (1) sever the statute’s reference to materials “published in any newspaper, magazine or other periodical,” (2) uphold the grassroots lobbying exemption, (3) decline to consider the merits of CFIF’s challenge to the bone fide news account exemption, and (4) prohibit prosecutions for violations that occurred while the earlier injunctions were in effect rather than vacating the injunctions as moot. The appellate court reversed the district court’s decision with respect to: (1) its conclusion that W.Va. Code § 3-8-1a(12)(C) is unconstitutionally vague, (2) its choice to uphold the § 501(c)(3) exemption, and (3) its conclusion that the electioneering communication reporting requirement is unconstitutionally vague such that a limiting construction must be applied.

Full Opinion

– Kassandra Moore

Decided:  January 16, 2013

Defendant Irvin Bumpers appealed the district court’s denial of his pre-trial motion to suppress the firearm that served as the basis of his conviction of being a felon in possession of a firearm and ammunition in violation of 18 U.S.C. § 922(g)(1).  Bumpers argued that the firearm and ammunition were taken as a result of an unlawful seizure.  The Fourth Circuit dismissed Bumpers’ argument and upheld the district court judge’s ruling, finding that the police officer’s retrieval of these goods was the result of a lawful stop and arrest.  The court further articulated its belief that appellate courts should “uphold[] a district court’s Terry ruling when it is objectively reasonable in light of the record … [in order to] best achieve in the aggregate the very equipoise between individual liberty and public safety that the Fourth Amendment commands.”

The facts revealed that Bumpers was arrested in a high crime area when a police officer, who was patrolling the area, noticed Bumpers acting suspiciously and suspected that Bumpers and a companion were trespassing upon property.  After the officer stopped Bumpers to question him, the officer’s search of computer records revealed an outstanding warrant for Bumpers.  Consequently, the officer arrested Bumpers and conducted a search incident to this arrest which revealed that Bumpers was carrying the firearm and ammunition at issue on appeal.

In its analysis of this case, the majority focused on numerous factors surrounding the officer’s arrest of Bumpers.  After stating that “[t]he touchstone of the Fourth Amendment inquiry is one of simple reasonableness” and citing to the Supreme Court’s decision regarding police investigatory stops in Terry v. Ohio, the court concluded that in cases involving police stops an individual’s “liberty interest” must be balanced with the “weighty interest on the other side of the balance:  the community’s interest in basic public safety.”  The court then defended its decision to defer to the trial judge’s factual findings and inferences regarding the circumstances surrounding Bumpers’ arrest, stating that “[t]e most precise instrument that the judiciary possesses for ensuring the proper balance between the interests that undergird the Fourth Amendment is the on-the-ground assessment of district courts.”  Ultimately, the court was convinced that the trial judge rightfully considered the totality of the factors surrounding the officer’s stop and concluded that the district court correctly determined that the officer had the reasonable suspicion necessary to conduct the stop in question.  Therefore, the court upheld the district court’s denial of Bumpers’ motion to suppress.

Full Opinion

– Allison Hite

Decided: January 16, 2013

In this case, the parents of an eighth grade student suffering from Attention Deficit Hyperactivity Disorder (“ADHD”) brought suit against the Baltimore City Board of School Commissioner (“BCBSC”) in federal district court.  The parents alleged that, due to his learning disorder, the student was qualified for special education services under Section 504 of the federal Rehabilitation Act of 1973, 29 U.S.C. § 794.  However, because the student was enrolled in a private religious school, the BCBSC had denied the student’s request to receive these education services.  The BCBSC had informed the parents that their child would have to enroll in a Maryland public school in order to be eligible for the Section 504 assistance.  The district court granted the BCBSC’s motion for summary judgment, and the parents appealed to the Fourth Circuit.

On appeal, the Fourth Circuit reviewed Section 504 and the regulations promulgated under it which require public schools to provide a Free Appropriate Public Education (“FAPE”) to “‘each qualified handicapped person who is in the recipient’s jurisdiction.’”  A FAPE requires the “‘provision of regular or special education and related aids and services that…are designed to meet individual educational needs of handicapped persons….’”  However, under the law, a FAPE does not require that the public school system “pay for a child’s education in a private school.”

After considering the relevant administrative guidance, statutory purposes, legal precedent, and public policy, the court concluded that nonpublic school students were not entitled to receive Section 504 services.  Thus, the court held that the BCBSC’s policy to deny this special assistance to private school students was not invalid under the statute.  According to the court, the public school district was required only to make these special services available to students enrolled in public school.  The court also held that this section of the Rehabilitation Act was not an unconstitutional burden on the parents’ right to direct the education of their child.  Although the BCBSC’s policy would make it more expensive for the parents to provide their child with a private religious education, the parents “retain[ed] full discretion over which school D.L. attends.”

Full Opinion

-John C. Bruton, III

Decided: January 14, 2013

The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of all claims against Bank of America brought by representatives of a putative class of plaintiffs.  The plaintiffs were participants in a Pension Plan and 401(k) plan and brought breach of fiduciary duty claims against the bank under ERISA.

The plans in question were two ERISA benefit plans sponsored by Bank of America: a Pension Plan and a 401(k) Plan.  The Pension plan is a defined benefits plan where a participant’s benefits are based on compensation and investment credits.  The 401(k) Plan is a defined contribution plan where participants contribute pre-tax earnings and the Ban matches the contribution.  Plaintiffs alleged that the Bank and individual members of the Bank’s Corporate Benefits Committee breached their fiduciary duties under ERISA by selecting and maintaining Bank-affiliated mutual funds in the investment menu for the Plans.

Plaintiffs originally made claims regarding breach of fiduciary duties and engaging in prohibited transactions regarding both plans in their Second Amended Complaint.  The district court accepted the magistrate’s recommendation that the claims with regard to the Pension Plan be dismissed due to lack of Article III standing due to the failure by plaintiffs to allege an injury in fact.  In their Third Amended Complaint, plaintiff’s asserted numerous claims on behalf of the 401(k) Plan on the part of two classes: the “Removal Class” (consisting of 401(k) Plan participants who invested in certain mutual funds between August 7, 2000, and December 31, 2007) and the “Selection Class” (consisting of 401(k) Plan participants who invested in certain mutual funds between July 1, 2000 and December 31, 2007).  The claims dealt with standards for removing and including Bank sponsored mutual funds.  The Bank moved for summary judgment on the issue of limitations and the district court agreed, stating that the only transaction that caused injury occurred more than 6 years before the case was filed, thus time-barring the claim under ERISA.  The court refused to allow the plaintiffs to file a Fourth Amended Complaint and dismissed the claims with prejudice.  The plaintiffs’’ appeal followed.

The Fourth Circuit agreed  that the plaintiffs did not have Article II standing with regards to the Pension plan because even though ERISA requires claims to be filed on behalf of the plan as a whole, plaintiffs have to show a direct injury and not just the risk that a plan will be underfunded.  Furthermore, the plaintiffs do not have standing as assignees, since no contractual assignment was involved, under trust law, or due to a deprivation of statutory rights.  In regards to the limitations issue, ERISA requires all claims to be brought within 6 years, or 3 years if the plaintiff had actual knowledge of the breach.  This period begins immediately upon the last action which constituted a part of the breach or violation.  Here, the section of the Bank sponsored funds was the last action which constituted a part of the breach.  The failure of the Bank or the CBC to remove the funds does not qualify as a transaction under ERISA.  Therefore, the omission or failure to act by the bank cannot be an action to start or re-start the limitations period. With regards to the selection class, who were not able to participate in the bank sponsored funds until August of 2000, the original selection of the funds in 1999 constituted the breach.  Finally, the Court held that the district court did not abuse its discretion by dismissing the case with prejudice because it was apparent that the district court dismissed with prejudice because plaintiffs did not move to amend the Third Amended Complain, and because plaintiffs had already filed four complaints in this matter.

Full Opinion

–Jonathan M. Riddle

Decided: January 14, 2013

The bankruptcy trustee (the “Trustee’) for debtor Total Realty Management Company (“TRM”) appealed the district court’s dismissal of his adversary action against R.A. North Development, Inc. and R.A. North Development I, Inc. (collectively, “R.A. North”). In his complaint, the Trustee sought contribution from R.A. North for TRM’s liabilities under the Land Sales Full Disclosure Act (the “Disclosure Act”). The Disclosure Act prohibits developers from making fraudulent and misleading statements to real estate buyers, and the Trustee alleged that TRM and R.A North had jointly sold properties at artificially inflated prices in North and South Carolina. The Court of Appeals held that TRM was not entitled to contribution as a matter of law because it had failed to make payments to aggrieved purchasers stemming from its violations of the Disclosure Act.

According to the Trustee, TRM and R.A. North engaged in a real estate fraud scheme in 2006 and 2007. TRM would purchase a number of subdivision parcels from R.A. North at fair market value and would then, hours later, resell the parcels to individual purchasers at substantially above fair market value. TRM then used the proceeds from the sales to finance its purchases from R.A. North, and R.A. North and TRM would keep the differences in value as profit. To attract purchasers, TRM held seminars for potential investors. During these seminars, R.A. North and TRM representatives made several false and misleading representations regarding the investment potential of the properties. Subsequently, one group of aggrieved purchasers sued TRM and R.A. North under the Disclosure Act in the U.S. District Court for the Eastern District of Virginia. That group then put TRM into involuntary bankruptcy in 2009. On April 19, 2011, the Trustee brought an adversary proceeding against R.A. North in bankruptcy court. R.A. North then successfully moved the Trustee’s action to district court in Virginia. Thereafter, R.A. North moved to dismiss the Trustee’s action under Federal Rule of Civil Procedure 12(b)(6). The district court granted R.A. North’s motion, and the Trustee appealed.

The Fourth Circuit explained that in order to state a claim for contribution under the Disclosure Act, a complaint must allege the following: (1) the plaintiff is liable under the statute; (2) the defendant is independently liable for the same conduct; and (3) the plaintiff is entitled to “contribution” from the defendant. The court assumed without deciding that TRM was liable to the property purchasers, so the case turned on the second two requirements of the Disclosure Act. The Trustee argued that R.A. North was independently liable because it participated in the marketing and sale of the properties. R.A. North, on the other hand, argued that under the Disclosure Act, purchasers are required to look to the developer from whom they purchased the lot. Since TRM was the developer, R.A. North reasoned that TRM alone was liable to the purchasers. The court noted that the issue of whether liability under the Disclosure Act extends to entities that were not actually involved in the challenged real estate transaction was one of first impression in the Fourth Circuit. By examining the Disclosure Act’s plain language, Congressional intent, and precedent in other circuits, the court held that the Disclosure Act’s fraud provision encompassed an entity that was ultimately not a party to the transaction. However, despite holding that R.A. North was potentially liable to the purchasers for its role in TRM’s sales, the court held that TRM was not entitled to contribution from R.A. North. The court explained that Congress intended to draw precedent from the 1933 Securities Act in drafting the Disclosure Act, and the contribution provision of the Securities Act had consistently been interpreted as requiring payment by a potentially liable party as a precondition from a jointly liable party. Therefore, the court held that a party liable under the Contribution Act is not entitled to contribution until it has actually made payment to the aggrieved parties.

Full Opinion

-Graham Mitchell

Decided: January 11, 2013

The Fourth Circuit Court of Appeals affirmed the decision of the district court to dismiss relator’s action under the False Claims Act. The court of appeals found that the district court did not abuse its discretion.

Noah Nathan (Relator) is a sales manager for Takeda Pharmaceuticals (Takeda) and brought this action against his employer under the False Claims Act. Relator claimed that certain types of drugs that have not been approved by the Food and Drug Administration (FDA) are not reimbursable under federal health insurance programs. Relator claimed that since these drugs were not reimbursable, presenting a claim for payment for these drugs was a violation of the False Claims Act. The Act prohibits anyone from knowingly “caus[ing] to be presented” to the government false claims for payment or approval. The district court dismissed the case on two grounds: (1) the complaint did not allege the “presentment” of a false claim to the government for payment; and (2) the complaint also failed to adequately allege causation.