New England Biz Law Update
Below are summaries of important opinions affecting in-house attorneys issued by the U.S. Supreme Court, as well as the 1st and 2nd Circuits from mid-July 2006 through early October 2006.
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U.S. Supreme Court
Certiorari Granted
Fair Credit Reporting Act
Is a violation of the Fair Credit Reporting Act willful if it resulted from reckless disregard of a consumer’s rights under the Act, or must a plaintiff present proof that the credit entity actually knew it was acting illegally?
Safeco Insurance v. Burr. Docket No. 06-84.
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Jurisdiction
Must a U.S. District Court find it has personal jurisdiction over the parties before it may dismiss a suit on the ground of forum non conveniens?
Sinochem International v. Malaysia International Shipping Corp. Docket No. 06-102.
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Qui Tam
Is a qui tam relator an “original source” of information when he relies on his professional opinion about publicly disclosed documents to determine that nuclear facility’s engineering designs would result in the release of toxic waste?
Rockwell International v. U.S. ex rel. Stone. Docket No. 05-1272.
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1st Circuit
Arbitration
Employer forfeits right to challenge award due to inaction following ‘altered’ arbitration award
In a union’s suit to enforce an arbitration award, the employer is barred from challenging the validity of the arbitrator’s August 2004 “alteration” of a June 2004 arbitration award, because the employer failed to timely challenge the alteration.
Local 2322, International Brotherhood of Electrical Workers v. Verizon New England, Inc. Docket Nos. 06-1169 and 06-1170. Decided Sept. 28, 2006.
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Judge erred by engaging in analysis of the merits of panel’s award
A judge erred in vacating an arbitration award on the basis the arbitration panel did not adequately explain why a state wage statute was applicable to the plaintiff’s case, as the arbitration award was not in manifest disregard of the law.
McCarthy v. Citigroup Global Markets Inc. Docket No. 06-1001. Decided Sept. 19, 2006.
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Bankruptcy
Injunction violated by refusal to discharge car lien
A creditor’s refusal to discharge its lien on a debtors’ inoperable vehicle until they paid the remaining balance due on their pre-petition car loan violated Chapter 7 discharge injunction.
In Re: Pratt. Docket No. 05-2453. Decided Sept. 1, 2006.
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Civil practice
No new trial granted to tort plaintiff claiming ‘ambush’ by corporate defendant
A plaintiff, who sued a defendant company after allegedly being hit by its van, was not entitled to a new trial even though she was purportedly surprised at trial by some of the defendant’s testimony. She did not object to the defense witnesses’ testimony and she did not request a continuance in order to respond or seek any other sanction for a discovery violation.
Colon-Millin v. Sears Roebuck de Puerto Rico, Inc., et al. Docket No. 05-1693. Decided July 19, 2006.
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Commercial
Notice of right to rescind mortgage binding
A consumer’s professed lack of comprehension of a notice of right to rescind is insufficient to extend the rescission period under the Truth in Lending Act.
Palmer v. Champion Mortgage. Docket No. 06-1246. Decided Sept. 29, 2006.
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Employment
Judgment for employer upheld in ‘failure to accommodate’ bias suit
An employer was properly awarded summary judgment in a suit where the employee claimed the employer failed to accommodate the employee’s handicap (asthma) by not allowing him to work from a remote location. The employee did not prove he was capable of performing the essential functions of his job.
Mulloy v. Acushnet Company. Docket No. 05-2160. Decided Aug. 24, 2006.
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‘No damage’ award in workplace harassment case upheld
Where a jury, though finding a plaintiff had suffered workplace harassment at a defendant corporation, awarded no damages, the judgment must be affirmed because (1) the plaintiff did not timely request nominal damages, and (2) the plaintiff has waived his argument that he should have been granted punitive damages.
Azimi v. Jordan’s Meat, Inc. Docket No. 05-2602. Decided Aug. 3, 2006.
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Products Liability
Testimony properly excluded under ‘Daubert’
Summary judgment for the defendant ladder manufacturer in a suit growing out of a ladder collapse was properly granted because the trial judge acted permissibly under principles enunciated in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), in excluding testimony from the plaintiff’s alleged expert regarding material defects in the relevant ladder.
Beaudette v. Louisville Ladder, Inc. Docket No. 05-2685. Decided Sept. 6, 2006.
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Securities
Suit dismissed due to inadequate allegations of scienter
A federal judge acted permissibly in dismissing a class action filed by plaintiffs against the defendants under Sects. 10(b) and 20(a) of the Securities Exchange Act of 1934, where the amended class action complaint did not adequately allege scienter under the Private Securities Litigation Reform Act.
Ezra Charitable Trust v. Tyco International, Ltd. Docket No. 05-2762. Decided Sept. 27, 2006.
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2nd Circuit
Arbitration
Carmaker’s arbitration rights not restricted by Motor Vehicle Franchise Contract Arbitration Fairness Act
The Motor Vehicle Franchise Contract Arbitration Fairness Act of 2002 does not limit an auto manufacturer’s right to enforce its arbitration agreement with a dealership owner.
Arciniaga v. General Motors Corp. Docket No. 05-6299. Decided Aug. 8, 2006.
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Bankruptcy
Former executive’s claim against debtor subject to subordination
The claim of a former executive employee of the debtor based on the debtor’s failure to issue common stock to the executive in exchange for his stock in another company, as provided by a termination agreement, was properly subordinated as a claim “arising from” the purchase of the debtor’s stock within the meaning and purpose of 11 U.S.C. Sect. 510(b).
Rombro v. Dufrayne. Docket No. 05-6401. Decided August 25, 2006.
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Banks
Civil claims against banks survive dismissal of RICO counts
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A dismissal of RICO claims against defendant banks does not require dismissal of state-law counts against the banks, as a different showing of proximate cause – one that is often more difficult to make – must be made when bringing suit under the RICO than when bringing a common-law cause of action.
Lerner, et al. v. Fleet Bank, N.A., et al. Docket No. 05-5106. Decided Sept. 20, 2006.
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Contract
‘In pari delicto’ doctrine inapplicable in contract/fraud case
The doctrine of in pari delicto does not apply in a suit alleging breach of contract, fraud and violations of the federal securities laws, because the plaintiff’s wrongdoing (1) was far less culpable than the defendants’, and (2) was not in any meaningful respect the cause of the defendants’ fraud and misconduct.
Brandaid Marketing Corporation v. Biss. Docket No. 05-5243. Decided Aug. 31, 2006.
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Summary judgment for employer in breach-of-contract case upheld
The expiration of an employment contract’s non-compete clause did not create an affirmative contractual obligation requiring the defendant employers to provide a plaintiff the materials necessary to compete.
Thyroff v. Nationwide Mutual Insurance Company. Docket No. 05-4005. Decided Aug. 21, 2006.
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Copyright
Dismissal of copyright action overturned
A judge should not have dismissed a suit alleging company, in constructing a timber-framed house, infringed the plaintiff corporation’s architectural copyright, as genuine issues of material fact remained as to copying and substantial similarity.
T-Peg, Inc. v. Vermont Timber Works, Inc. Docket No. 05-2866. Decided Aug. 18, 2006.
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ERISA
Suit brought against trustees not ‘representative’
A former employee’s ERISA suit, alleging breach of fiduciary duty on the part of plan trustees, must be dismissed because it was not brought in a representative capacity on behalf of the plan.
Coan v. Kaufman, et al. Docket No. 04-5173. Decided July 21, 2006.
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Employment
Alleged discriminatory conduct outside U.S. not covered by 42 U.S.C. Sect. 1981
Where 42 U.S.C. Sect. 1981, by its express terms, is limited to covering “persons within the jurisdiction of the United States,” a U.S. District Court judge properly dismissed a plaintiff’s claims insofar as they alleged discrimination experienced by the plaintiff while he was living and working in South Africa after the employer transferred him there.
Ofori-Tenkorang v. American International Group, Inc. Docket No. 05-5272. Decided Aug. 15, 2006.
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Products Liability
District court erred in construing FHSA
The dismissal of a plaintiff’s state law causes of action, involving claims that a defendant retailer sold the plaintiff a wood-finishing product that emitted harmful fumes, must be vacated where the U.S. District Court erroneously construed the Federal Hazardous Substances Act and its enabling regulations.
Richards v. Home Depot, Inc. Docket No. 05-5205. Decided July 14, 2006.
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Securities
Shareholder Ballot Initiative Can Be Included in Corporate Proxy Materials
A shareholder proposal seeking to amend corporate bylaws to establish a procedure by which shareholder-nominated candidates may be included on the corporate ballot does not relate to an election within the meaning of 17 C.F.R. Sect. 240.14a-8, therefore, it cannot be excluded from corporate proxy materials under that regulation.
American Federation of State, County & Municipal Employees v. American International Group, Inc. Docket No. 05-2825. Decided Sept. 5, 2006.
