E.D. Pa. Notes Split Re Application of McMahan Test

Per Marciano v. MONY Life Ins. Co., --- F.Supp.2d ----, 2007 WL 152163 (E.D. Pa. Jan. 22, 2007):

The crux of the motion to compel arbitration is whether MONY Life is a "certain other" under the NASD [National Association of Securities Dealers] Code. Unfortunately, unlike "associated person," the NASD nowhere defines "certain other." Courts are left to fill in the gaps as to what the NASD meant when it enacted a rule that required arbitration between, inter alia, "associated persons" and "certain others." See NASD Code § 10201(a).

The Court concludes that the proper focus in determining whether a party is a "certain other" is the sufficiency of a party's immersion in the underlying dispute. This conclusion is reached by examining the Second Circuit's decision in McMahan Securities Co. L.P. v. Forum Capital Markets L.P., 35 F.3d 82 (2d Cir.1994) and the cases interpreting McMahan. . . .

(i) The proper McMahan "test"

. . .

[T]he Court must decide whether the three factors listed in the second sentence of McMahan inform the "sufficient immersion" test from the first sentence, or, rather, whether the three factors constitute the test in and of themselves. The authorities are split and the Third Circuit has not addressed the issue. Some courts look solely to the three factors. See, e.g., Variable Annuity Life Ins. Co. v. Joiner, 2006 WL 1737443, at *3 (S.D.Ga. June 23, 2006); Pruco Sec. Corp. v. Montgomery, 2003 WL 22383034, at *4 (D.N.D. Oct.15, 2003); Basil Inv. Corp. v. Hampshire Funding, Inc., 1998 WL 88399, at *4 (E.D.Pa. Feb.19, 1998) (Reed, J.) (finding "the reasoning of McMahan to be persuasive," adopting McMahan's three-part "test," and holding that the entity in question was a "certain other" under the Code). Other courts look solely to the "sufficient immersion" language. See, e.g., Parrott v. Pasadena Capital Corp., 1998 WL 91076, at *4 (S.D.N.Y. Mar.3, 1998). Still other courts look to both. See, e.g., Gates v. Veravest Invs., Inc., 2004 WL 1173145, at *7-8 (D.Or. May 25, 2004); Heller v. MC Fin. Servs. Ltd., 1998 WL 190288, at *3 (S.D.N.Y. Apr.21, 1998). However, Plaintiffs have not pointed to any case in which a court has explicitly treated McMahan as a conjunctive three-part test.

Defendants' construction supplies a reasonable explanation that gives full play to the entire thrust of the McMahan court's opinion. On the other hand, Plaintiffs' construction, by focusing exclusively on the three factors from McMahan, would read out of McMahan's definition of "certain other" the requirement that a party be "sufficient immersed" in the underlying dispute. Therefore, the Court will treat McMahan's "sufficient immersion" language as the operative "test," and the three factors listed by the McMahan court will serve to inform the "sufficient immersion" test.


E.D.N.Y. Notes Split Re Proper Rule 12 Clause for Dismissing Claims Based on Forum Selection Clauses

Per Private One of New York, LLC v. JMRL Sales & Service, Inc., Slip Copy, 2007 WL 203960 (E.D.N.Y. Jan. 24, 2007):

Although JMRL bases its motion to dismiss this action on Rule 12(b)(3) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1406(a), JMRL's argument is not literally based on these provisions but is predicated on the existence of a valid forum-selection clause. JMRL's decision to proceed under Rule 12(b)(3) appears to be based on district court cases which have applied this rule. See JMRL's Memorandum in Support of its Motion for Dismissal ("JMRL's Memo") at 4-5 (citing HongKong & Shanghai Banking Corp. v. Suveyke, 392 F.Supp.2d 489, 490-91 (E.D.N.Y.2005)); see also Person v. Google, Inc., 456 F.Supp.2d 488, 492-93 (S.D.N.Y.2006). However, while some courts in this Circuit have analyzed motions to dismiss based on a forum-selection clauses as if they were brought under Rule 12(b)(3), the Second Circuit has analyzed such motions under Rule 12(b)(1), see, e.g., AVC Nederland B.V. v. Atrium Inv. P'ship, 740 F.2d 148, 152 (2d Cir.1984), and other Circuits have used Rule 12(b)(6). See, e.g., LFC Lessors, Inc. v. Pacific Sewer Maintenance Corp., 739 F.2d 4, 7 (1st Cir.1984).

In New Moon Shipping Co. v. MAN B & W Diesel AG, 121 F.3d 24 (2d Cir.1997), the Second Circuit acknowledged this split in authority, noting that the circuits had not reached "consensus ... as to the proper procedural mechanism to request dismissal of a suit based upon a valid forum selection clause." Id. at 28. Recognizing that "there is no existing mechanism with which forum selection enforcement is a perfect fit," id. at 29, the Second Circuit "refused to pigeon-hole these claims into a particular clause of Rule 12(b)." Asoma Corp. v. SK Shipping Co., 467 F.3d 817, 822 (2d Cir.2006). Instead, it established a separate framework for analyzing these cases.

Under this framework, the moving party must first show evidence of "an apparently governing forum selection clause." Id. The burden is then on the plaintiff who brought suit in a forum other than the one designated by that clause "to make a 'strong showing' in order to overcome the presumption of enforceability." Id. (quoting New Moon Shipping, 121 F.3d at 29). That burden is "analogous to that imposed on a plaintiff to prove that the federal court has subject matter jurisdiction over his suit or personal jurisdiction over the defendant." New Moon Shipping, 121 F.3d at 29. In the early stages of litigation, such a plaintiff "need only make a prima facie showing by alleging facts which, if true, would support the court's exercise of jurisdiction." Id. (citing Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981)).


Fourth Circuit Weighs in on Split Re Meaning of "Reimbursements" in Coal Industry Retiree Health Benefit Act

Per A.T. Massey Coal Co. v. Holland, 472 F.3d 148 (4th Cir. Dec. 21, 2006):

By enactment of the Coal Industry Retiree Health Benefit Act of 1992 ("the Coal Act"), Congress established a new multiemployer benefit plan, the United Mine Workers of America Combined Benefit Fund ("Combined Fund"), to provide health care benefits to retired coal mine workers. The Combined Fund resulted from the statutorily-mandated merger of the 1950 and 1974 Benefit Plans that had been agreed to, through collective bargaining, by the United Mine Workers of America ("UMWA") and coal mine operators. It is financed by the assets of the 1950 and 1974 Benefit Plans, by "premiums" that individual coal mine operators pay to the Combined Fund, and by government benefit plans including Medicare, and it is administered by an independent Board of Trustees. The Coal Act specifies that the premiums payable by the coal operators to the Combined Fund be determined on a per-beneficiary basis by a formula that (1) begins with the sum of payments made to all beneficiaries from the 1950 Benefit Plan and the 1974 Benefit Plan for the plan year July 1, 1991, through June 30, 1992 (the base year); (2) subtracts from that sum the "reimbursements" received from Medicare and other publicly financed programs for the base year but does not subtract administrative costs; (3) divides the resulting number by the number of beneficiaries in the base year; and (4) multiplies the quotient by a cost of living factor. See 26 U.S.C. § 9704(b)(2).

The parties commenced these actions--the most recent skirmishes in a long-running fight--to resolve whether "reimbursements" as used in the formula includes the total payments that Medicare made to the 1950 and 1974 Benefit Plans for the base year ($182.3 million) or only the amount that the 1950 and 1974 Funds actually paid out in Medicare benefits to beneficiaries for the base year ($156.3 million). Interpreting Medicare "reimbursements" to be the $182.3-million figure results in lower premiums for the coal operators; interpreting "reimbursements" to be the $156.3-million figure results in higher premiums.The district court ruled that "reimbursements" unambiguously refers to the total payments ($182.3 million) that Medicare made to the 1950 and 1974 Benefit Plans in the base year, and it declined to defer under Chevron to the contrary interpretation put forth by the Commissioner of Social Security. See A.T. Massey Coal Co. v. Barnhart, 381 F.Supp.2d 469 (D.Md.2005).

Agreeing with the district court, we conclude that "reimbursements" is an unambiguous historical term of art used by Congress to refer to the total reimbursements that Medicare actually made, using a capitation method, to the 1950 and 1974 Benefit Plans during the base year. [FN2]

FN2. In reaching this conclusion, we join the Eleventh Circuit's holding in National Coal Ass'n v. Chater, 81 F.3d 1077 (11th Cir.1996), and depart from the D.C. Circuit's holding in Holland v. National Mining Ass'n, 309 F.3d 808 (D.C.Cir.2002), which had created a split between the circuits.


Ninth Circuit Clarifies that An Intra-Circuit Split Regarding the Standard of Review for Instructions on Lesser-Included Offenses Does Not Exist

Per U.S. v. Arnt, --- F.3d ----, 2007 WL 177829 (9th Jan. 25, 2007):

A defendant is entitled to an instruction on a lesser-included offense if the law and evidence satisfy a two-part test: 1) “the elements of the lesser offense are a subset of the elements of the charged offense,” Schmuck v. United States, 489 U.S. 705, 716 (1989); and 2) “the evidence would permit a jury rationally to find [the defendant] guilty of the lesser offense and acquit [her] of the greater,” Keeble v. United States, 412 U.S. 205, 208 (1973). We review the first step de novo and the second step for abuse of discretion. United States v. Naghani, 361 F.3d 1255, 1262 (9th Cir.2004).

There is an apparent split in Ninth Circuit authority regarding the standard of review for instructions on lesser-included offenses. Compare id. with United States v. Pierre, 254 F.3d 872, 875 (9th Cir.2001) (reviewing de novo). We write to make clear that there is no actual split. The first step in determining whether a lesser-included offense instruction should be given asks us to consider a legal question: Is the offense for which the instruction is sought a lesser-included offense of the charged offense? See Schmuck, 489 U.S. at 716. Therefore, the first step is subject to de novo review. The second step is a factual inquiry: Does the record contain evidence that would support conviction of the lesser offense? See Keeble, 412 U.S. at 208. The trial judge obviously is better situated than we are to make this factual determination; therefore, we review the second step for abuse of discretion. See United States v. Wagner, 834 F.2d 1474, 1487 (9th Cir.1987).


N.D. Georgia Notes Split Re: Whether Use of Pre-Arrest Silence in Government’s Case-in-Chief Violates Fifth Amendment

Per Prevatte v. French, 459 F.Supp.2d 1305 (N.D. Ga. Nov. 27, 2006):

The Court notes that the Circuits are divided on the issue of whether the use of pre-arrest silence in the government's case in chief violates the Fifth Amendment. Compare Combs v. Coyle, 205 F.3d 269, 283 (6th Cir.2000) (holding that the use of a defendant's pre-arrest silence as substantive evidence of guilt violates the Fifth Amendment's privilege against self-incrimination); United States v. Burson, 952 F.2d 1196, 1201 (10th Cir.1991) (holding that admission of testimony regarding defendant's pre-arrest failure to respond to questioning violated the Fifth Amendment); Coppola v. Powell, 878 F.2d 1562, 1568 (1st Cir.1989) (holding that testimony in case in chief regarding defendant's statements that he was not going to confess and would not answer further questions without presence of lawyer violated Fifth Amendment); United States ex rel. Savory v. Lane, 832 F.2d 1011, 1017-18 (7th Cir.1987) (finding that prosecution's use of defendant's refusal to talk to the police as substantive evidence of guilt in case in chief violates Fifth Amendment), with United States v. Oplinger, 150 F.3d 1061, 1066-67 (9th Cir.1998) ("[T]he privilege against compulsory self-incrimination is irrelevant to a citizen's decision to remain silent when he is under no official compulsion to speak."); United States v. Zanabria, 74 F.3d 590, 593 (5th Cir.1996) (holding that Fifth Amendment does not protect the defendant's prearrest silence, reasoning: "The fifth amendment protects against compelled self-incrimination but does not, as [defendant] suggests, preclude the proper evidentiary use and prosecutorial comment about every communication or lack thereof by the defendant which may give rise to an incriminating inference.").

In the Court's view, however, the reasoning applied in those cases finding that the use of pre-arrest silence does not violate the Fifth Amendment is inapplicable here. Petitioner's decision to remain silent about which the jury heard occurred in the post-arrest context. Whether or not Fifth Amendment protection attaches to pre-arrest silence, it certainly attaches to post-arrest silence during custodial interrogations. See, e.g., Jenkins, 447 U.S. at 243-44, 100 S.Ct. 2124 (Stevens, J., concurring) ("When a citizen is under no official compulsion whatever, either to speak or to remain silent, I see no reason why his voluntary decision to do one or the other should raise any issue under the Fifth Amendment. For in determining whether the privilege is applicable, the question is whether petitioner was in a position to have his testimony compelled and then asserted his privilege, not simply whether he was silent.").


8th Circuit Notes Split Re: Standard of Review for Due Process Violation When Government Unknowingly Sponsored False Testimony Leading to a Conviction

Per Evenstad v. Carlson, 470 F.3d 777 (8th Cir. Nov. 30, 2006):

The Supreme Court has not addressed the issue of whether a due process violation occurs if a conviction is based on perjured testimony which was unknown to the prosecution at the time of trial. See Jacobs v. Scott, 513 U.S. 1067, 115 S.Ct. 711, 130 L.Ed.2d 618 (1995) (Stevens, J. dissenting); Drake v. Portuondo, 321 F.3d 338, 345 n. 2 (2d Cir.2003); see also Schaff v. Snyder, 190 F.3d 513, 530 (7th Cir.1999). Furthermore, there is a circuit split regarding which standard applies in federal cases dealing with these facts. [FN6] When the federal circuits disagree as to a point of law, the law cannot be considered "clearly established" under 28 U.S.C. § 2254(d)(1). See Tunstall v. Hopkins, 306 F.3d 601, 611 (8th Cir.2002) (holding where the federal circuits disagree "it is difficult to say the [state] court's decision is contrary to, or involved an unreasonable application of, clearly established federal law").

FN6. Most circuits, including this one, absent a finding the government knowingly sponsored false testimony, require a petitioner seeking a new trial to show the jury would have "probably" or "likely" reached a different verdict had the perjury not occurred. See, e.g., United States v. Ogle, 425 F.3d 471, 472 (7th Cir.2005); United States v. Williams, 233 F.3d 592, 594 (D.C.Cir.2000); United States v. Lofton, 233 F.3d 313, 318 (4th Cir.2000) (applying "probably" standard to newly discovered evidence, but recognizing that a more lenient "might" standard would apply if the evidence is a witness recantation); United States v. Huddleston, 194 F.3d 214, 217 (1st Cir.1999); United States v. Diaz, 176 F.3d 52, 106 (2d Cir.1999); United States v. Sinclair, 109 F.3d 1527, 1531 (10th Cir.1997); United States v. Duke, 50 F.3d 571, 576-77 (8th Cir.1995); and United States v. Krasny, 607 F.2d 840, 843 (9th Cir.1979). Other circuits, like the Minnesota courts, apply a "possibility" standard granting relief whenever the discovery "might" have produced an acquittal. See, e.g., United States v. Roberts, 262 F.3d 286, 293 (4th Cir.2001); United States v. Willis, 257 F.3d 636, 643 (6th Cir.2001); and United States v. Massac, 867 F.2d 174, 178 (3d Cir.1989) (implicitly adopting Larrison).


Ninth Circuit Notes Split Re Whether CSRA Precludes Colorable Constitutional Claims Sounding in Equity

Per Stanley v. Gonzales, --- F.3d ----, 2007 WL 92667 (9th Cir. Jan. 16, 2007):

Stanley's principal argument on appeal is that the CSRA [Civil Service Reform Act] does not preclude judicial review of colorable constitutional claims for equitable relief. Essentially, she argues that "where Congress intends to preclude judicial review of constitutional claims its intent to do so must be clear." Webster v. Doe, 486 U.S. 592, 603 (1988). In Webster, the Supreme Court held that a party must demonstrate a "heightened showing" that Congress intended to eliminate judicial review when a federal statute is construed to deny any judicial forum for a colorable constitutional claim. Id.

The CSRA, enacted in 1978, created an elaborate framework for evaluating adverse personnel decisions against federal employees. See United States v. Fausto, 484 U.S. 439, 443, 452 (1988) (holding that the CSRA precluded claims for statutory relief under the Back Pay Act, 5 U.S.C. § 5596, because Congress's intent to preclude judicial relief was "fairly discernable"). The Act prescribes in great detail the protections and remedies applicable to such actions, including the availability of administrative and judicial review. Id. at 443.

. . .

After Webster, we have not directly addressed the issue whether the CSRA demonstrates the kind of heightened showing required to preclude judicial review of colorable constitutional claims where the sole remedy sought is equitable relief. One post-Webster case, Saul v. United States, 928 F.2d 829, 840 (9th Cir.1991), suggests that where a plaintiff has a remedy under the CSRA itself, he may not seek equitable relief in the federal courts. . . .

Saul does not squarely address whether the CSRA precludes colorable constitutional claims sounding in equity where the plaintiff has no other remedy. Our sister circuits are split on this issue. [FN3] We defer deciding this question. Because Stanley has not presented colorable constitutional claims, Webster's requirement of a heightened showing is not implicated in her case.

FN3. Compare Dotson v. Griesa, 398 F.3d 156, 179 (2d Cir.2005) (holding that equitable claims are precluded by the CSRA even if the plaintiff has no other remedy), Lombardi v. Small Bus. Admin., 889 F.2d 959, 961-62 (10th Cir.1989) (same), and Pinar v. Dole, 747 F.2d 899, 910-12 (4th Cir.1984) (same), with Mitchum v. Hurt, 73 F.3d 30, 35- 36 (3d Cir.1995) (holding that regardless of plaintiff's availability to seek administrative remedies, the CSRA does not preclude equitable relief for constitutional claims), and Hubbard v. EPA, 809 F.2d 1, 11 (D.C.Cir.1986) (same).


Sixth Circuit Sides With Fourth and Fifth Circuits Over Split Re: Employer’s Liability for Attorney’s Fees Under the Longshore Act

Per Pittsburgh & Conneaut Dock Co. v. Director, Office of Workers' Compensation Programs, 2007 WL 14312 (6th Cir. Jan. 04, 2007):

When a claimant employs an attorney to pursue his or her claim under the Longshore Act, § 928 provides for the employer to be liable for the claimant's attorney's fees in two particular situations that are described in subsections (a) and (b), respectively. "In all other cases any claim for legal services shall not be assessed against the employer." § 928(a).

. . .

The Ninth Circuit precedent relied upon by the BRB does support its ruling. See, e.g., Nat'l Steel, 606 F.2d at 882. However, the BRB did not adequately address the circuit split that exists on this issue. The Fifth Circuit has consistently required that each of the requirements set forth in subsection (b) be met before an employer incurs liability for attorney's fees. Pool Co. v. Cooper, 274 F.3d 173, 186 (5th Cir.2001); Staftex Staffing v. OWCP, 237 F.3d 404, 408-09 (5th Cir.2000); FMC Corp. v. Perez, 128 F.3d 908, 910 (5th Cir.1997). Two days after the BRB issued its ruling, the Fourth Circuit weighed in on this issue, agreeing with the Fifth Circuit. Edwards, 398 F.3d at 318. Whether the lack of a written recommendation (or any recommendation at all) for the disposition of the controversy precludes fee liability under subsection (b) is an issue of first impression in this circuit.

. . .

We adopt the approach taken by the Fourth and Fifth Circuits. "In all cases of statutory construction, the starting point is the language employed by Congress." Appleton v. First Nat'l Bank of Ohio, 62 F.3d 791, 801 (6th Cir.1995). "Moreover, where the statute's language is plain, the sole function of the courts is to enforce it according to its terms." Chapman v. Higbee Co., 319 F.3d 825, 829 (6th Cir.2003) (en banc) (quoting United States v. Ron Pair Enterprises, 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290(1989)). The language of subsection (b) plainly states that in order for fees to be assessed under its terms there must be a written recommendation containing a suggested disposition of the controversy.


Sixth Circuit Weighs in on Split Re Whether a Dispute over a Side Agreement Falls Within a Collective Baraining Agreement's Arbitration Clause

Per United Steelworkers of America v. Cooper Tire & Rubber Co., --- F.3d ----, 2007 WL 101990 (6th Cir. Jan. 17, 2007):

The question presented here, whether a dispute over a side agreement that does not provide for arbitration falls within the CBA's [collective bargaining agreement] arbitration clause, is one that this court has not previously addressed. There is a split among the circuits that have spoken on this issue. The Second, Fourth, and Eighth Circuits apply the "collateral" test in determining whether a dispute over a side agreement is arbitrable. Under the collateral test, courts consider the similarity of the side agreement's subject matter to the subject matter of the CBA. If the subject matter is dissimilar, the side agreement is deemed collateral to the CBA. However, where the side agreement is "integral" to the CBA, courts permit arbitration of disputes over its provisions. See, e.g., Cornell Univ. v. UAW Local 2300, 942 F.2d 138, 140 (2d Cir.1991) (holding that a "letter of understanding" was "collateral" to the CBA and therefore not governed by the CBA's arbitration clause); Adkins v. Times-World Corp., 771 F.2d 829, 830-31 (4th Cir.1985) (holding that an "addendum" to the CBA was integral to it and therefore subject to the arbitration clause); United Steelworkers v. The Duluth Clinic, Ltd., 413 F.3d 786, 788 (8th Cir.2005) ( "This court ... follows the Second Circuit's approach."). Three other circuits, the Third, Seventh, and Ninth, have adopted the "scope" test. They hold that unless the parties indicate otherwise, disputes over a side agreement are arbitrable if the subject matter of the side agreement is within the scope of the CBA's arbitration clause. See, e.g., L.O. Koven & Bro., Inc. v. Local Union No. 5767, United Steelworkers, 381 F.2d 196, 204-05 (3d Cir.1967) (concluding that a dispute over a side agreement that was silent as to arbitrability was governed by the CBA's arbitration clause because the underlying subject was one "ordinarily a matter for consideration by an arbitrator" under the CBA); Niro v. Fearn Int'l, Inc., 827 F.2d 173, 175 (7th Cir.1987) (holding that a "settlement agreement is an arbitrable subject when the underlying dispute is arbitrable"); Dutra Group, 279 F.3d at 1080 (holding that "disputes arising under a side agreement must be arbitrated if the dispute relates to a subject that is within the scope of the CBA's arbitration clause").We agree with the scope test as applied by the Ninth Circuit.


Split Widens as to Whether Non-Federal Documents are "Public Disclosures" Within the Meaning of the False Claims Act

BNA reported in U.S. Law Week (Vol. 75, No. 24, Jan. 2, 2007) on the Ninth Circuit case U.S. ex rel. Bly-Magee v. Premo, 470 F.3d 914 (9th Cir. Dec. 13, 2006), which sided with the Eighth Circuit over the Third Circuit in a split over whether a state audit report constitutes a "public disclosure" under the Act. Here is an excerpt from Judge Canby's opinion:

The question . . . arises whether disclosure in [a] report, issued by a state agency, amounts to a "public disclosure" for purposes of the False Claim Act.

Section 3730(e)(4)(A) lists the sources of public disclosure that give rise to a jurisdictional bar when the relator is not an original source of the information. The listed sources can be divided into three categories: (1) "a criminal, civil, or administrative hearing"; (2) "a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation"; and (3) "the news media." Id. The California audit report would appear to fall under category (2) as an "administrative ... report [or] audit." Some doubt arises, however, because the other sources in category (2), such as congressional reports or reports of the Government Accounting Office, refer exclusively to federal agency materials.

This court has not previously addressed whether an administrative report, audit, or investigation prepared by a state entity (as opposed to the federal government) qualifies as a source of public disclosure under the second category. Two circuits that have addressed the question have reached opposite conclusions. In United States ex rel. Dunleavy v. County of Delaware, 123 F.3d 734, 745 (3d Cir.1997), the Third Circuit applied the doctrine of a sociis and held that, because the word "administrative" is placed between "congressional" and "Government Accounting Office," when read with the word "report" it "refers only to those administrative reports that originate with the federal government." Id. In Hays v. Hoffman, 325 F.3d 982, 988 (8th Cir.2003), the Eighth Circuit rejected Dunleavy and concluded that Medicaid audits prepared by a state agency are public disclosures within the meaning of the Act. We agree with the Eighth Circuit and now hold that the second category of sources includes non-federal reports, audits, and investigations.

Even when it is read literally, the language of § 3730(e)(4)(A) does not compel a conclusion that "administrative" in category (2) means "federal administrative"--a phrase that Congress could have used but did not. The words "congressional" "administrative" and "Government Accounting Office" are separated by commas and the conjunction "or." Id. Accordingly, each word may be read as a separate modifier for the nouns that follow. See generally Flora v. United States, 362 U.S. 145, 150 (1960) (confirming that grammar can be relevant to statutory interpretation). As long as this reading of the plain language produces a reasonable interpretation consistent with the rest of the statute, it should control. See Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997) (explaining that the process of statutory interpretation ceases if the language is plain and " 'the statutory scheme is coherent and consistent' ") (citation omitted).
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Circuits Split Re Whether States Must Show Independent Compelling Interest in Defending Disadvantaged Business Enterprise Program

Per Northern Contracting, Inc. v. Illinois, --- F.3d ---, 2007 WL 38666 (7th Cir. Jan. 8, 2007):

The only question that we must answer in this appeal is whether Northern Contracting [NCI] can prove that IDOT's DBE [Disadvantaged Business Enterprise] program does not pass constitutional muster. Since the program involves racial classifications, we must employ strict scrutiny in making this determination. See Adarand Constructors v. Pena, 515 U.S. 200, 235 (1995). In order to survive strict scrutiny, a government program that uses racial classifications must be narrowly tailored to serve a compelling governmental interest.


[W]e agree with the district court that IDOT has satisfied its burden here. As a state entity implementing a congressionally mandated program, IDOT relies primarily on the federal government's compelling interest in remedying the effects of past discrimination in the national construction market. In the post-Adarand era, two other circuits have considered the question of whether a state may properly rely on the federal government's compelling interest in implementing a local DBE plan for highway construction contracting, and both have concluded that a state may properly do so. See Western States Paving Co., Inc. v. Washington State Dep't of Transp., 407 F.3d 983, 997 (9th Cir.2005) ("When Congress enacted TEA-21, it identified a compelling nationwide interest in remedying discrimination in the transportation contracting industry. Even if such discrimination does not exist in Washington, the State's implementation of TEA-21 nevertheless rests upon the compelling interest identified by Congress."), cert. denied, 126 S.Ct. 1332 (Feb. 21, 2006); Sherbrooke Turf, Inc. v. Minn. Dep't of Trans., 345 F.3d 964, 970 (8th Cir.2003) ("When the program is federal, the inquiry is (at least usually) national in scope. If Congress or the federal agency acted for a proper purpose and with a strong basis in the evidence, the program has the requisite compelling government interest nationwide, even if the evidence did not come from or apply to every State or locale in the Nation."), cert. denied, 541 U.S. 1041 (2004).

NCI has not articulated any reason for us to break ranks with our sister circuits. Indeed, prior to the Supreme Court's decision in Adarand, we considered the question of whether the federal government's interest in remedying discrimination in highway construction contracting provided sufficient justification for the state to engage in a federally mandated DBE program, and we concluded that it did. See Milwaukee County Pavers Ass'n v. Fielder, 922 F.2d 419, 423 (7th Cir.1991) ... As in Milwaukee County Pavers, NCI has not challenged the constitutionality of the applicable federal statutes and regulations on appeal. And as the more recent decisions of the Eighth and Ninth Circuits make clear, our compelling interest analysis in this context should not be altered by Adarand. Therefore, the question of compelling interest must be decided in favor of IDOT. The only question is whether IDOT's program is narrowly tailored to achieving this compelling interest.

We are convinced that IDOT has satisfied its burden of demonstrating that its program is narrowly tailored. Our holding in Milwaukee County Pavers that a state is insulated from this sort of constitutional attack, absent a showing that the state exceeded its federal authority, remains applicable. See Milwaukee County Pavers, 922 F.2d at 424-25; Tennessee Asphalt Co. v. Farris, 942 F.2d 969, 975 (6th Cir.1991) (citing Milwaukee County Pavers for the same point); see also Western States Paving, 407 F.3d at 1003-04 (McKay, J., concurring in part and dissenting in part) (noting the continuing applicability of Milwaukee County Pavers and concluding that the plaintiffs should be limited to challenging the state's adherence to its grant of federal authority). [FN5] In Adarand, the Supreme Court did not seize the opportunity to conclude that our decision in Milwaukee County Pavers, along with the Sixth Circuit's in Tennessee Asphalt, was incorrect. The Court only decided that federal programs involving racial classifications must also be subjected to strict scrutiny. See Adarand, 515 U.S. at 235. It did not invalidate our conclusion that a challenge to a state's application of a federally mandated program must be limited to the question of whether the state exceeded its authority. Here, because NCI has not challenged on appeal the district court's grant of summary judgment for the federal government, it has forfeited the opportunity to challenge the federal regulations.
FN5. The Ninth Circuit in Western States Paving concluded that a state is still susceptible to an as-applied challenge to the narrow tailoring of its DBE program. See Western States Paving, 407 F.3d at 997-98. The court concluded that our decision in Milwaukee County Pavers did not address the situation of an as-applied challenged to such a program. See id. at 998 n. 9. But as Judge McKay's separate opinion correctly observed, the majority in Western States Paving misread our decision in Milwaukee County Pavers. See id. at 1003-04. Relatedly, the Eighth Circuit, in Sherbrooke Turf, Inc. v. Minn. Dep't of Trans., 345 F.3d 964, 970 (8th Cir.2003), concluded that this portion of our decision in Milwaukee Pavers was compromised by the fact that the challenge in our prior decision occurred " [u]nder the prior law--when the ten percent federal set-aside was more mandatory ." Sherbrooke, 345 F.3d at 970. We are unconvinced by this reasoning--all recipients are still required to have compliant DBE programs in order to be eligible for federal transportation funds, however federal law makes more clear now that compliance could be achieved even with no DBE utilization if that were the result of a good faith use of the process.


Sixth Circuit Splits from D.C. Cir. Re "Presentment" Requirement of False Claims Act

BNA has noted in its U.S. Law Week that a recent Sixth Circuit case departs from a 2004 D.C. Circuit opinion regarding whether presentment of a false claim to the government is required in all FCA suits, or only in the subsection where it is explicitly noted. Below is an excerpt from Judge Gibbons' opinion in U.S. ex rel. Sandersv. Allison Engine Co., Inc., --- F.3d ---, 2006 WL 3716362 (6th Cir. Dec. 19, 2006):

. . . [D]efendants moved for judgment as a matter of law on the grounds that the lack of evidence of any false claim presented to the government meant that no reasonable jury could find a violation under the FCA. The district court accepted this argument and granted the motion. Relying on United States ex rel. Totten v. Bombardier Corp., 380 F.3d 488 (D.C.Cir.2004), cert. denied 544 U.S. 1032 (2005), the court held that liability under the FCA required a showing that a false or fraudulent claim was presented to the government, either by the defendants or by the prime contractor.

. . .

The plain language of the FCA states that actual presentment of a claim to the government is required under one, but not all, of the statute's sections. Only subsection (a)(1) of the statute makes any mention of presenting a claim to the government or Armed Forces. Subsections (a)(2) and (a)(3), which are separate bases for liability, contain no such presentment language. Subsection (a)(2) requires only that a defendant "make[ ]" or "use[ ]" a "false record or statement" in order to induce the government to pay or approve a claim. 31 U.S.C. § 3729(a)(2). Subsection (a)(3) requires a conspiracy to defraud the government to pay or allow a false claim. Id. § 3729(a)(3). The definition of "claim" in part (c) further supports the reading that presentment is not required under all sections of the statute. A claim is "any request or demand ... for money or property which is made to a contractor ... if the United States provides any portion of the money or property which is requested or demanded, or if the Government will reimburse such contractor ... for any portion of the money or property which is requested or demanded." Id. § 3729(c) (emphasis added). The focus of this language is on the money paid out by the government in response to a false statement or fraudulent request for payment. There is nothing in this language to suggest the claim must be shown to have been presented to the government, so long as it can be shown that the claim was paid with government funds.
The legislative history of the FCA . . . provide[s] strong evidence that Congress intended the 1986 amendments to overrule restrictive judicial interpretations of the FCA and increase the reach of the statute. By rewording the statute and adding subsection (c), Congress accomplished this expansion, including making the FCA applicable to cases in which the government sustains a financial loss, regardless of whether the false claim is actually presented to the government. Reading a presentment requirement into subsections (a)(2) and (a)(3) is contrary to this purpose and contradicts the plain language of the statute.

The district court, relying on the D.C. Circuit's decision in Totten, 380 F.3d 488, did just this. . . . Though the presentment language is not present in subsection (a)(2), the majority reasoned that because the two sections were previously part of the same clause, subsection (a)(2) must be read in conjunction with the presentment language in subsection (a)(1). Id. at 499-500. The court read the "by the Government" language in subsection (a)(2), which was added in 1986, as referring back to the presentment language in subsection (a)(1), id. at 499, despite the fact that these clauses are disjunctive and a litigant need only satisfy subsection (a)(1) or (a)(2) to prove an FCA claim. See 31 U.S.C. § 3729(a). The court also read this language as limiting the reach of section (c). . . .

We disagree with the Totten court's interpretation of the FCA for several reasons. One, the plain language of subsections (a)(2) and (a)(3) simply does not require that a claim must be presented to the government to be actionable. Congress could have chosen to include the presentment language of subsection (a)(1) in other parts of the FCA and did not. The Supreme Court has consistently counseled against attributing the same meaning to different language in the same statute. . . . [R]eading presentment into subsection (a)(2) would give it almost the same meaning as subsection (a)(1), rendering the latter largely superfluous.See Totten, 380 F.3d at 507 (Garland, J., dissenting). The "cardinal principle of statutory construction," however, is "to give effect, if possible, to every clause and word of a statute rather than to emasculate an entire section." Bennett v. Spear, 520 U.S. 154, 173 (1997) (internal citations, quotations, and alterations omitted). The FCA cannot be read so as to make the meanings of subsections (a)(1) and (a)(2) indistinguishable.

For the full BNA report on the case, please click here.


Federal Circuit Creates Split, Holding that Equal Access to Justice Act Allows Recovery of Paralegal Costs to Attorney, Not Market Rate

Federal Circuit Creates Split, Holding that Equal Access to Justice Act Allows Recovery of Paralegal Costs to Attorney, Not Market Rate

BNA's United States Law Week (Vol. 75, No. 25, Jan. 9, 2007) reports that a recent Federal Circuit case, Richlin Sec. Service Co. v. Chertoff, --- F.3d ---, 2006 WL 3771798 (Fed. Cir. Dec. 26, 2006), created a circuit split by holding that "paralegal fees are 'expenses' rather than 'attorney or agent fees' or general 'fees' within the meaning of the" Equal Access to Justice Act. The Federal Circuit thus departs from a 1988 Eleventh Circuit holding that paralegal services are included within "attorney's fees" under the EAJA.

Here is an excerpt from Judge Dyk's opinion:

"The question here is whether, under EAJA, amounts for paralegal services may be recovered at market rates as part of "fees" or whether they are recoverable only at cost as part of the recovery of "expenses."As a preliminary matter, we note that EAJA provides that " 'fees and expenses' includes the reasonable expenses of expert witnesses . . . and reasonable attorney or agent fees." 5 U.S.C. § 504(b)(1)(A) (emphasis added). Richlin does not appear to argue that paralegal services should be reimbursed on the theory that the statute allows recovery of any and all types of fees. Rather, Richlin argues that they are recoverable under the specific category of "attorney's fees." While Congress' use of the term "includes" does raise the possibility that Congress intended to permit reimbursement of other types of fees, we conclude that the statutory text compels a conclusion that EAJA permits only reimbursement of expert, agent, and attorney's fees.

. . .

Both EAJA and [42 U.S.C.] § 1988 [Civil Rights Attorney's Fees Awards Act] provide for the recovery of "attorney's fees," and the Supreme Court has generally stated that "fee-shifting statutes' similar language is a strong indication that they are to be interpreted alike." Indep. Fed. of Flight Attendants v. Zipes, 491 U.S. 754, 758 n. 2 (1989) (internal citations and quotation marks omitted). However, where, as here, there are differences in the surrounding language, structure and purpose of the statute, the Supreme Court has interpreted identical language in different statutes differently . . . . Here too we conclude that the different statutes require different interpretations. Initially we note that the language of the two statutes is different in important respects. Under § 1988 the effect of denying "fee" recovery for paralegal services would likely have been to deny recovery entirely. Section 1988 provides for the recovery of only attorney's fees and costs, not expenses."

Subscribers may view the full BNA article on the case by clicking here.

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