New England Biz Law Update
Below are summaries of important opinions affecting in-house
attorneys issued by the U.S. Supreme Court, 1st and 2nd Circuits and Delaware
Court of Chancery from late January 2004 through early April 2004. Readers can
access the full text of the opinions at www.newenglandbizlawupdate.com.
U.S. Supreme Court
Age Discrimination
Workers In Their 40s Can’t Sue Employer For ‘Reverse
Discrimination’ Under ADEA
A group of workers in their 40s can’t sue their employer for
“reverse discrimination” under the ADEA for offering a better retirement
package to workers 50 and older.
General Dynamics Land Systems Inc. v. Cline. Docket
No. 02-1080. Decided Feb. 25, 2004.
Bankruptcy
Objection To Discharge Not Time-Barred Despite Filing Past
Deadline
A
creditor’s objection to a debtor’s discharge in bankruptcy is not time-barred,
even though he didn’t request an extension of time to object before the
deadline for filing had passed.
Kontrick v. Ryan. Docket No. 02-819. Decided Jan.14,
2004.
Environmental Law
EPA Can Invalidate State Regulation Under Clean Air Act
The Clean Air Act authorizes the EPA to invalidate a
permitting decision made by the state of Alaska when it finds that the
authority’s “best available control technology” determination is unreasonable
in light of federal guidelines.
Alaska Department of Environmental Conservation v. EPA.
Docket No. 02-658. Decided Jan. 21, 2004.
A “point source,” as defined by
the Clean Water Act, isn’t exempt from permit requirements merely because it
does not itself add pollutants but rather transfers them from elsewhere.
South Florida Water Management District v.
Miccosukee Tribe of Indians. Docket No. 02-626. Decided March 23, 2004.
Telecommunications
The
Telecommunications Act does not preempt a state law that bars municipalities
from providing telecommunications services.
Nixon v. Missouri Municipal League. Docket No. 02-1238. Decided
March 24, 2004.
1st U.S. Circuit Court of Appeals
Bankruptcy
Chapter 11 Debtor Didn’t Have To Cure A Nonmonetary Default
Before Assuming A Lease
Section 365(b)(2)(D) of the Bankruptcy Code permits a
debtor-in-possession to assume an unexpired lease without first curing
non-monetary defaults.
In re BankVest Capital
Corp. Docket No. 03-9006. Decided March 15, 2004.
Civil Practice
Foreign Auditing Firm Can’t Sue In Belgium To Avoid Document
Production
A U.S. District Court judge acted permissibly in enjoining a
defendant foreign auditing firm from seeking relief in the Belgian courts from
an order requiring the defendant to produce certain documents allegedly
relevant to a number of American securities fraud cases.
Quaak, et al. v.
Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren. Docket No. 03-2074.
Decided March 8, 2004.
Corporate
Limits Set On Corporation Purchaser’s Burden Of Proof In Fraud
Case
The female defendant in a fraud and breach of fiduciary duty
case didn’t have to prove that the male plaintiff’s sale of his corporation to
her was fair and reasonable to him.
Jernberg v. Mann.
Docket No. 03-1303. Decided Feb. 19, 2004.
Employment
Employees Need Not be Paid For Time Spent Changing Clothes
The time that employees spend donning and doffing
non-required gear is not compensable work time under the Fair Labor Standards
Act.
Tum, et al. v. Barber
Foods, Inc. Docket Nos. 02-1679 and 02-1739. Decided March 10, 2004.
Employee’s Alcoholism Not A Disability
A defendant employer was correctly awarded summary judgment
on a plaintiff employee’s claim that the defendant had engaged in handicap
discrimination in violation of the Americans with Disabilities Act by firing
him because of his alcoholism, as the plaintiff proved neither (1) that his
alcoholism substantially interfered with his ability to work nor (2) that the
defendant regarded him as “disabled” within the meaning of the ADA.
Sullivan v. The Neiman
Marcus Group, Inc. Docket No. 03-1606. Decided Feb. 13, 2004.
Question On Alleged Misinformation Supplied By Co-Worker Defeats
Summary Judgment For Employer In Age Bias Case
Where a defendant corporate employer was awarded summary
judgment on a plaintiff employee’s age discrimination claim, the judgment must
be vacated and the matter remanded, as a determination is required as to
whether the termination was the result of misinformation supplied to the
defendant’s decision makers by a co-worker who harbored a discriminatory animus
against the plaintiff.
Cariglia v. Hertz
Equipment Corporation, et al. Docket No. 02-2199. Decided April 5, 2004.
Products Liability
Class Action Settlement Bars Out-Of-State Suit
A complaint, filed by plaintiffs seeking damages for
allegedly defective windows manufactured by the defendant, should be dismissed
under the doctrine of res judicata in light of a prior settlement of a class
action in Minnesota.
Reppert, et al. v.
Marvin Lumber and Cedar Co., Inc. Docket No. 03-2234. Decided Feb. 27,
2004.
Tort
False Claims Act Complaint Must Allege Fraud Under
‘Particularity Pleading’ Rule
The particularity pleading requirements of Federal Rule of
Civil Procedure 9(b) for averments in fraud apply to complaints alleging
violations of the False Claims Act.
United States v.
Melrose-Wakefield Hospital. Docket No. 03-1901. Decided Feb. 23, 2004.
Insurance
Suit Against Carrier For Breach Of Life Annuity Contract Timely
A breach of contract action – brought in federal court in
Massachusetts against an insurance company that had issued a life annuity
contract – was timely where the suit was filed within two years of the date on
which the insurance company stopped making monthly payments.
Foisy v. Royal Maccabees Life Insurance Co., et al.
Docket No. 03-1382. Decided Jan. 22, 2004.
2nd U.S. Circuit Court Of Appeals
Bankruptcy
Prepetition Attorneys’ Fees Subject To Discharge
A law firm is not entitled to recoupment of the fees and
expenses incurred while representing a Chapter 11 debtor prior to the
involuntary conversion of the debtor’s case to Chapter 7, as those fees and
costs are dischargeable pursuant to 11 U.S.C. §727.
In Re Fickling.
Docket No. 03-5018. Decided March 3, 2004.
Civil Practice
‘Loose Factual Connection’ Permits Supplemental Jurisdiction
Over Permissive Counterclaims
Permissive counterclaims asserted by a defendant credit
company in a class action should not be dismissed absent “truly compelling
circumstances that militate against exercising jurisdiction.”
Jones, et al. v. Ford Motor Credit Co. Docket No.
03-7398. Decided Feb. 25, 2004.
Federal Judge Properly Awarded Preliminary Injunction To
Registrar Of Internet Domain Names
A federal judge committed no abuse of discretion in granting
a plaintiff registrar of Internet domain names a preliminary injunction
prohibiting a defendant from (1) employing the plaintiff’s mark in
communications with prospective customers, (2) accessing plaintiff’s computers
by use of software programs performing multiple automated successive queries
and (3) employing contact information relating to recent registrants of
Internet domain names obtained from the plaintiff’s computers for mass
solicitation.
Register.com, Inc. v.
Verio, Inc. Docket No. 00-9596. Decided Jan. 23, 2004.
Commercial
Agreement To Payment Period Beyond 30 Days Ends PACA Protections
If a corporate seller of produce agrees – orally or in
writing – to a payment period exceeding 30 days, it forfeits trust protection
under the Perishable Agricultural Commodities Act.
American Banana
Company, Inc., et al. v. Republic National Bank of New York, N.A. Docket
Nos. 02-9442(L) and 02-9504(XAP). Decided March 11, 2004.
Constitutional
Permit Denial Not A Prerequisite To Challenging Sign Ordinance
In order to have standing to challenge the facial
constitutionality of a community’s sign ordinance, an outdoor advertising
company need not first seek and be denied sign permits.
Lamar Advertising of Penn, LLC v. Town of Orchard Park,
N.Y. Docket No. 03-7287(l), 03-7336(SAP). Decided Feb. 2, 2004.
Damages
Airlines Are Immune From Liability For Mental Injuries
Airline passengers may not hold carriers liable in accordance
with the Warsaw Convention for mental injuries that accompany, but are not
caused by, bodily injuries.
Ehrlich, et al. v.
American Airlines, Inc., et al. Docket No. 02-9462. Decided March 8, 2003.
Environmental
EPA Regulation On Withdrawing Cooling Water A Reasonable
Interpretation Of Legislation
An Environmental Protection Agency regulation designed to
protect fish and other wildlife from harm by structures that withdraw cooling
water from the nation’s water bodies is in large part based on a reasonable
interpretation of the applicable statute and sufficiently supported by the
factual record, but does contain certain provisions (allowing compliance
through “restoration measures”) that contradict Congress’s clearly expressed
intent.
Riverkeeper, Inc., et al. v. United States Environmental
Protection Agency. Docket Nos. 02-4005, 02-4047, 02-4057, 02-4093, 02-4153
and 02-4163. Decided Feb. 3, 2004.
Negligence
Airline Properly Found Not Liable For Harm Suffered By Baggage
Handler
Summary judgment was properly entered for the defendant
airline in a case in which a plaintiff baggage handler suffered injuries upon
examining a suitcase which was emitting smoke and which was, unknown to him,
carrying unlabelled and unreported chemicals, as it was not unreasonable for
the defendant to have failed to x-ray or search every bag before it was placed
on the baggage carousel.
DiBenedetto, et al. v.
Pan Am World Service, Inc., et al. Docket No. 03-7031. Decided Feb. 27,
2004.
Patent And Trademark
Restaurant Bearing Family Name Not Entitled To Preliminary
Injunction In Trademark Case
In a trademark action, a New Orleans corporation owning a
restaurant having as its name a family last name is not entitled to a
preliminary injunction barring a New York restaurant company from using the
same last name, where (1) there is minimal evidence of actual confusion in the
public’s mind, (2) the New York corporation has added a first name to its
restaurant’s title to prevent confusion, (3) the relevant consumer market is
sophisticated and (4) a substantial geographic distance (more than 1,000 miles)
separates the two restaurants.
Brennan’s, Inc. v.
Brennan’s Restaurant, L.L.C. et al. Docket No. 03-7382. Decided Feb. 26,
2004.
Products Liability
Expert Evidence Excluded In Auto Rollover Case
In a products liability case growing out of a motor vehicle
rollover, a District Court judge properly excluded, under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (10093),
as unreliable the proffered testimony of the plaintiffs’ experts that an
alternative automobile design would have reduced the injuries that the
plaintiffs suffered.
Zaremba, et al. v.
General Motors Corporation, et al. Docket No. 03-7565. Decided Feb. 13,
2004.
RICO
Foreign Nations Precluded By
‘Revenue Rule’ From Suing American Tobacco Companies Under RICO
A complaint filed by the European Community and by certain
departments of the Republic of Colombia alleging that American tobacco
companies violated RICO by “smuggling” cigarettes into the complainants’
territories, must be dismissed because such claims are foreclosed by Attorney
General of Canada v. R.J. Reynolds Tobacco Holdings, Inc., 268 F.3d 103 (2d
Cir. 2001), which held that the common law revenue rule bars RICO suits brought
by foreign sovereigns to enforce their tax laws.
The European Community, et al. v. RJR Nabisco, Inc., et
al. Docket Nos. 02-7325 (L), 02-733o (CON) and 02-7323. Decided Jan. 14,
2004.
‘Reasonable Reliance’ Must Be Proved In Civil RICO Actions Based
On Fraud
In order to prevail in a civil RICO action predicated on any
type of fraud, including bank fraud, a plaintiff must establish “reasonable
reliance” on the defendants’ purported misrepresentations or omissions.
Bank of China, New
York Branch v. NBM, LLC, et al. Docket No. 02-9267. Decided Feb. 17, 2004.
Securities
Heightened Pleading Standard Applicable To Securities Fraud
Claims
The heightened pleading standard of Rule 9(b) of the Federal
Rules of Civil Procedure applies to fraud claims brought under §§11 and
12(a)(2) of the Securities Act.
Rombach, et al. v. Chang, et al. Docket Nos. 02-7997
(L) and 02-7933 (XAP). Decided Jan. 20, 2004.
Tort
Fuel Company Found Jointly And Severally Liable With Independent
Contractor For Injuries Caused By Fire
Where two men were injured in a fire resulting from an
independent contractor’s negligent transfer of fuel from a barge to a truck, a
fuel company could be held jointly and severally liable with the independent
contractor because the fuel company itself was negligent in selecting the
subject independent contractor to perform the transfer work.
Becker, et al. v.
Poling Transportation Corporation, et al. Docket Nos. 02-7707, 02-7713,
02-7767 and 02-7773. Decided Feb. 27, 2004.
