Fifth Circuit Joins Majority of Circuits in Holding Defendant Has Burdens of Production and Persuasion Regarding Exclusionary Provision in Sentencing

Per U.S. v. Davis, 2007 WL 259568 (5th Cir. Jan. 31, 2007):

We are called upon to construe and apply note 12 to U.S.S.G. § 2D1.1 . . .

As an initial matter, Davis argues that he has only the burden of production with regard to the exclusionary provision in the final paragraph of note 12 to section 2D1.1 of the Guidelines and that the burden of persuasion regarding the drug quantity remains with the Government. This court has not had occasion to decide this issue, although in applying the iteration of note 12 in effect before 1995, we noted a split among the circuits. [FN16] Although the Commission expressly observed in stating its reasons for amending note 12 that "[d]isputes over the interpretation of this application note have produced much litigation," interpretations of note 12 have diverged even after the amendments. At least one circuit has concluded that the defendant has only the burden of production, while other circuits have held that a defendant bears the burden of production and persuasion with respect to the exclusionary provision. [FN18]

FN16. United States v. Mora, 994 F.2d 1129, 1142 n. 15 (5th Cir.1993) (noting a circuit split on the burden of proof issue under an earlier version of note 12, but not deciding the question); see also United States v. Raven, 39 F.3d 428, 434-35 (3d Cir.1994) (the defendant bears only a burden of production regarding intent and capability); United States v. Tillman, 8 F.3d 17, 19 (11th Cir.1993) (Government bears the burden of persuasion); United States v. Rodriguez, 975 F.2d 999, 1008 (3d Cir.1992) (implicitly charging the Government with the burden of persuasion); United States v. Richardson, 939 F.2d 135, 142-43 (4th Cir.1991) (not explicitly discussing the burden of proof, but vacating the defendant's sentence because no evidence of ability in the record); United States v. Ruiz, 932 F.2d 1174, 1183-84 (7th Cir.1991) (the Government bears the burden of persuasion); United States v. Bradley, 917 F.2d 601, 605 (1st Cir.1990) (the Government bears the burden of persuasion); United States v. Smiley, 997 F.2d 475, 480-81 n. 7 (8th Cir.1993) (suggesting that the defendant bears the burden of persuasion); United States v. Barnes, 993 F.2d 680, 683-84 (9th Cir.1993) (defendant bears the burden of persuasion); United States v. Christian, 942 F.2d 363, 368 (6th Cir.1991) (defendant bears the burden of persuasion).

FN18. Compare United States v. Hazut, 140 F.3d 187, 192 (2d Cir.1998) (the defendant bears only a burden of production) with United States v. Barnes, 244 F.3d 172, 177 & n. 6 (1st Cir.2001) (defendant bears a burden of persuasion); United States v. Munoz, 233 F.3d 410, 415 (6th Cir.2000) (same); United States v. Wash, 231 F.3d 366, 373 (7th Cir.2000) (same); United States v. Maldonado, No. 99-3334, 2000 WL 825717 at *3 (10th Cir. June 26, 2000) (same); Brown v. United States, 169 F.3d 531, 534-35 (8th Cir.1999) (same); United States v. Lopes-Montes, 165 F.3d 730, 731 (9th Cir.1999) (same).

The language of note 12 states explicitly that if "the defendant establishes" he or she had no intent to provide or purchase the agreed-upon quantity of the controlled substance, the district court shall exclude the amount "that the defendant establishes that the defendant did not intend to provide or purchase." We accordingly join a majority of the circuits and conclude that the defendant bears the burden of persuasion.


N.D. Georgia Adopts Majority Position Re: Standing under § 1962(a) of RICO

Per Fuller v. Home Depot Services, LLC, 2007 WL 328815 (N.D.Ga. Jan. 31, 2007):

Under section 1962(a) it is unlawful to invest income derived from a pattern of racketeering in an enterprise. Bill Buck Chevrolet, Inc. v. GTE Florida, Inc., 54 F.Supp.2d 1127, 1132 (M.D.Fla.1999). By claiming that Home Depot's scheme violated § 1962(a), the plaintiff must allege that he has been injured as a result of Home Depot investing income derived from operating its enterprise. See Pelletier v. Zweifel, 921 F.2d 1465, 1518 (11th Cir.1991). The plaintiff's claim is that Home Depot received income from a pattern of racketeering when it processed the "damage protection" fees via credit card transactions and then invested that income back into the operation of the "damage protection" scheme. However, the plaintiff does not claim any injury resulting from Home Depot's alleged investing of the racketeering income. His only alleged injury resulted from the underlying predicate act of mail and wire fraud, i.e., the harm to the plaintiff was his being charged money. At issue, therefore, is whether the plaintiff has sufficiently pled an injury under § 1962(a).

This issue apparently has not been addressed by the Eleventh Circuit. While the injury requirement under § 1962(c) may be satisfied by alleging injury caused by the racketeering activity itself, to require the same showing under § 1962(a) would render any difference between the two sections meaningless. The majority of courts that have addressed this issue have adopted a more restrictive rule that limits standing under § 1962(a) to only allegations of an injury that results from the investment of the racketeering proceeds, not an injury resulting from the underlying racketeering activity itself. [FN2] Lockheed Martin Corp. v. Boeing Co., 357 F.Supp.2d 1350, 1369-71 (M.D.Fla.2005). Similarly, this court adopts that majority rule and holds that merely alleging reinvestment of racketeering proceeds into the enterprise is insufficient to state a claim under § 1962(a).

FN2. For a complete discussion of the circuit split regarding the different injury requirements under § 1962(a-c), see Lockheed Martin, 357 F.Supp.2d at 1368-1371 ("If plaintiff's reinvestment injury concept were accepted, almost every pattern of racketeering activity by a corporation would be actionable under § 1962(a), and distinction between § 1962(a) and § 1962(c) would be meaningless.").


E.D. Pennsylvania Notes Split Re: Who Constitutes Proper Defendant Under § 502(a)(1)(B) of ERISA

Per Sparks v. Duckrey Enterprises, Inc., 2007 WL 320260 (E.D. Pa. Jan. 30, 2007):

It is undisputed that under § 502(a)(1)(B) of ERISA (29 U.S.C. § 1132(a)(1)(B)), a plan participant may bring a civil action to recover benefits due to him under the terms of the plan. 29 U.S.C. § 1132(a)(1)(B) (2006). The circuits are split, however, as to who constitutes a proper defendant to such an action. The United States Court of Appeals for the Ninth Circuit, for example, has concluded that the plan itself constitutes the only proper defendant to an action brought under § 502(a)(1)(B). Gelardi v. Pertec Computer Corp. 761 F.2d 1323, 1324-25 (9th Cir.1985). The United States Court of Appeals for the Eighth Circuit, on the other hand, has held that the plan, as well as other entities such as the plan administrator, may be proper defendants to such an action. Hall v.. Lhaco, Inc., 140 F.3d 1190, 1196 (8th Cir.1998).

The United States Court of Appeals for the Third Circuit has never directly addressed the issue of who constitutes a proper defendant to a § 502(a)(1)(B) claim, and district courts in the circuit are divided. One set of district courts has held that the plan itself is the only proper defendant. E.g., Hall v. Glenn O. Hawbaker, Inc., No. 4:06-CV-1101, 2006 WL 3250869, at *9 (M.D.Pa. Nov. 8, 2006). The other set has held that both the plan and its fiduciaries are proper defendants. E.g., Briglia v. Horizon Healthcare Serv., Inc., No. Civ.A. 03-6033, 2005 WL 1140687, at *5 (D.N.J. May 13, 2005).

. . .

This Court need not, however, decide between these two differing viewpoints. Assuming that both the plan and its fiduciaries are proper defendants to a § 502(a)(1)(B) claim, neither HAI nor Safeco can be held liable because neither party is a fiduciary of the Duckrey Plan.


N.D. Tex. Bankruptcy Court Notes Split Re Meaning of "Transfer" in Section 727(a)(2) of the Bankruptcy Code

Per In re Schumann, Not Reported in B.R., 2005 WL 3465624 (Bkrtcy. N.D.Tex. Jan. 03, 2005):

11 U.S.C. § 727(a)(2) does not define “transfer.” Rather, the Court must look to the general definition, contained in section 101:

“transfer” means every mode, direct, or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an interest in property, including retention of title as a security interest and foreclosure of the debtor's equity of redemption.

11 U.S.C. § 101(54). Simple statutory construction leads to the conclusion that Congress did not intend that this Court interpret section 727 in the same manner as it would section 548. Had Congress desired to give these two provisions identical treatment as to the issue of the treatment of the term “transfer,” it merely had to repeat its previous definition in section 548 in section 727. Congress failed to do so, however, and instead left the decision to the courts. Roosevelt, 87 F.3d at 316.

The deference shown by Congress resulted in split rulings between circuit courts concerning whether a debtor should be denied a discharge if the transfer itself was made before, but the record of the transfer was made within, the statutory period. 6 Collier on Bankruptcy ¶ 727.02[2][c] (15th ed. rev.2004). One theory, adopted by the Third Circuit, holds that the date of recordation, rather than the date of the deed, is the proper point to measure whether the transfer occurred within one year prior to bankruptcy. Dean Witter Reynolds, Inc. v. MacQuown ( In re MacQuown ) 717 F.2d 859 (3d Cir.1983). The second theory, urged by Defendant, “deems a transfer ‘made’ for the purposes of § 727(a)(2) once it is effective between the parties to the transfer, whether or not it is valid against bona fide purchasers.” Roosevelt, 87 F.3d at 318. The Fifth Circuit has not yet addressed the issue.


7th Circuit Discusses Circuit Split Re: Definition of "Use" in § 3B1.4 of Guidelines; Sides With 3rd Circuit

Per United States v. Acosta, --- F.3d ----, 2007 WL 316812 (7th Cir. Feb. 5, 2007):

Acosta first argues that the district court erred by applying a two-level enhancement for using a minor in the commission of the offense. Section 3B1.4 of the Guidelines provides that "[i]f the defendant used or attempted to use a person less than eighteen years of age to commit the offense or assist in avoiding detection of, or apprehension for, the offense, increase by 2 levels." The first application note to that section states that " 'used or attempted to use' includes directing, commanding, encouraging, intimidating, counseling, training, procuring, recruiting, or soliciting."

The circuits are divided on the meaning of the term "use" in § 3B1.4. We have observed that a "defendant 'used minors in the commission of his crimes' if his affirmative actions involved minors in his criminal activities." United States v. Ramsey, 237 F.3d 853, 859 (7th Cir.2001) (quoting United States v. Vivit, 214 F.3d 908, 920 (7th Cir.2000)). In Ramsey, we affirmed the sentencing court's application of the enhancement for use of a minor where the defendant had directed a minor to sell crack cocaine. Id. at 860-61. Four circuits have agreed that the enhancement applies only when the defendant by some affirmative act helps to involve the minor in the criminal enterprise. See United States v. Pojilenko, 416 F.3d 243, 247 (3d Cir.2005); United States v. Suitor, 253 F.3d 1206, 1210 (10th Cir.2001); United States v. Parker, 241 F.3d 1114, 1120-21 (9th Cir.2001); United States v. Butler, 207 F.3d 839, 849 (6th Cir.2000).

In contrast, three circuits take the position that an enhancement under § 3B1.4 is warranted where, although the defendant did not personally engage a minor, he could "reasonably foresee" a co-conspirator's use of a minor. See United States v. Lewis, 386 F.3d 475, 479-80 (2d Cir.2004); United States v. McClain, 252 F.3d 1279, 1287-88 (11th Cir.2001); United States v. Patrick, 248 F.3d 11, 27-28 (1st Cir.2001). These circuits define "use" in § 3B1.4 by reference to § 1B1.3(a), a general application provision which provides: "Unless otherwise specified, ... adjustments in Chapter Three [ ] shall be determined on the basis of ... all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity." Although they do not all explicitly mention the decision, each of these cases is an extension of the Supreme Court's ruling in Pinkerton v. United States, 328 U.S. 640 (1946), in which the Court held that a defendant is liable for the reasonably foreseeable acts of his co-conspirators done in furtherance of the conspiracy.

Acosta was undeniably aware of the minors' participation, but there is no evidence that she independently directed or encouraged Quagon and Blackdeer, or that she played any role in bringing them into the criminal enterprise. Indeed, at argument, the government conceded that Acosta did not "direct[ ], command [ ], encourage[ ]," or do any other act toward the minors that is spelled out in application note one of § 3B1.4. The parties therefore agree that if we side with Acosta, who asks us to continue following the majority "affirmative act" rule, the enhancement does not apply. And if we side with the government, which urges us to adopt the minority "reasonably foreseeable" test, it does.

Among our fellow circuits taking the "affirmative act" position, only the Third has explicitly rejected the reasonably foreseeable test. . . . We find the Third Circuit's reasoning persuasive. Pinkerton liability makes no sense in the context of the individualized enhancements set out in section 3B of the Guidelines, which seek to punish the particular behavior of individual members of a conspiracy. Indeed, the section's introductory note states that the part "provides adjustments to the offense level based upon the role the defendant played in committing the offense" (emphasis added). The Government was unable to identify any case in which courts have applied Pinkerton principles to the other enhancements listed in Part B of Chapter 3 of the Guidelines. Since Acosta did not personally "use" a minor in committing the offense, the district court's decision to apply this enhancement must be vacated.


8th Circuit Notes Circuit Split Re: Whether Section 253 Creates Right Enforceable Through Section 1983 Action; Declines to Address

Per Level 3 Communications, L.L.C. v. City of St. Louis, --- F.3d ----, 2007 WL 313872 (8th Cir. Feb. 5, 2007):

This case involves a telecommunications licensing agreement that requires Level 3 Communications (Level 3) to pay fees and meet other obligations before accessing streets and rights-of-way owned or controlled by the City of St. Louis (City or St. Louis). . . . Level 3 filed suit against the City seeking a declaration that the Agreement's obligations, both fee and non-fee related, violated state law, 42 U.S.C. § 1983, and the Federal Telecommunications Act of 1996, specifically, 47 U.S.C. § 253. . . . In its amended complaint, Level 3 sought damages under section 1983, claiming that section 253 conferred rights on Level 3 as an intended beneficiary and that the City violated Level 3's rights under the statute. The district court denied summary judgment, holding that "Level 3 has not met its burden to demonstrate that the Act confers a federal right on it." Again, we review de novo a denial of a motion for summary judgment. Martin, 464 F.3d at 829.

Level 3, as a section 1983 plaintiff, bears the burden of establishing that "the claim actually involves a violation of a federal right, as opposed to a violation of a federal law." Ark. Med. Soc'y, Inc. v. Reynolds, 6 F.3d 519, 523 (8th Cir.1993). More specifically, "the plaintiff must demonstrate that the federal statute creates an individually enforceable right in the class of beneficiaries to which [it] belongs." City of Rancho Palos Verdes v. Abrams, 544 U.S. 113, 120, 125 S.Ct. 1453, 161 L.Ed.2d 316 (2005).

Circuits are split on whether section 253 creates a right enforceable through a section 1983 action. Compare Qwest Corp. v. City of Santa Fe, 380 F.3d 1258, 1265 (10th Cir.2004) (finding Congress did not intend to create a private right of action in section 253), with BellSouth Telecomms., Inc. v. Town of Palm Beach, 252 F.3d 1169, 1191 (11th Cir.2001) (finding a private right of action to seek preemption of state regulations purporting to manage public rights-of-way); TCG Detroit v. City of Dearborn, 206 F.3d 618, 624 (6th Cir.2000) (finding that section 253 creates a private right of action for parties aggrieved by a municipality's unfair rates). However, Arkansas Medical Society makes clear that the claim must involve not only an enforceable right, but also a violation of that right. 6 F.3d at 523. We refrain from joining the fray over whether section 253 creates a private right of action because, as we held above, Level 3 has shown no violation of section 253, whether or not that section creates an enforceable right. Thus, the district court did not err by denying summary judgment on the section 1983 claim.


N.D. California Discusses Circuit Split Re: Whether Later Served Defendant May Remove When Initial 30 Days Have Passed; Adopts Last-Served Rule

Per Bonner v. Fuji Photo Film, 461 F. Supp. 2d 1112 (N.D. Cal. Nov. 13, 2006):

The case thus squarely poses an unsettled question of law: may a later-served defendant remove a case even though the thirty-day removal period has already expired as to the first-served defendant? In other words, does the thirty-day period begin to run as to all defendants when it begins to run as to any of them (the "first-served rule"), or does each defendant have its own thirty-day clock (the "last-served rule")? The Ninth Circuit has not decided a case squarely on point. See United Computer Sys. v. At & T Corp., 298 F.3d 756, 763 n. 4 (9th Cir.2002) (noting a split of authority on the issue but "express[ing] no opinion today on the propriety of either rule").

The circuit courts are divided on the issue. Compare Brown v. Demco, Inc., 792 F.2d 478, 481-82 (5th Cir.1986) (applying the first-served rule), with Marano Enters. of Kan. v. Z-Teca Rests., L.P., 254 F.3d 753, 756-57 (8th Cir.2001) (applying the last-served rule); and Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 533 & n. 3 (6th Cir.1999) (applying the last-served rule); see also McKinney v. Bd. of Tr. of Md. Cmty. College, 955 F.2d 924, 927-28 (4th Cir.1992) (applying a variant of the first-served rule that allows new defendants thirty days to join an "otherwise valid" petition for removal). And district courts have come to competing conclusions, even within the Ninth Circuit. Compare McAnally Enters. Inc. v. McAnally, 107 F.Supp.2d 1223, 1227-29 (C.D.Cal.2000) (applying first-served rule), and Biggs Corp. v. Wilen, 97 F.Supp.2d 1040, 1044-46 (D.Nev.2000) (same), and Transp. Indem. v. Fin. Trust Co., 339 F.Supp. 405, 406-07 (C.D.Cal.1972) (same), with Griffith v. Am. Home Prods. Corp., 85 F.Supp.2d 995, 1000-01 (E.D.Wash.2000) (applying last-served rule). Indeed, even judges within the Northern District of California have not agreed upon the proper approach. Compare Varney v. Johns-Manville Corp., 653 F.Supp. 839, 840 (N.D.Cal.1987) (applying first-served rule), with Ford v. New United Motors Mfg., Inc., 857 F.Supp. 707, 710 (N.D.Cal.1994) (applying last-served rule).

It is not possible to discern a preferred approach to this issue among the courts that have addressed it. Several courts have described the "first-served rule" as the "majority rule." See McAnally, 107 F.Supp.2d at 1227; Wilen, 97 F.Supp.2d at 1044; see also 14C Wright et al., Federal Practice and Procedure § 3732, at 336-39 & nn. 74-75 (citing a significantly larger number of cases adopting the first-served rule). Yet the cases also indicate a trend away from that rule and in favor of the last-served rule. . . . This Court hereby adopts the last-served rule. The Court is persuaded that this rule is preferable . . . .


Sixth Circuit Notes Split Re Whether Deadline for Filing Motion to Reopen Immigration Hearings May be Equitably Estopped

Per Ajazi v. Gonzales, Slip Copy, 2007 WL 328692 (6th Cir. Feb. 2, 2007):

Petitioner argues that the BIA [Board of Immigration Appeals] abused its discretion "by misapplying the statute and the precedent case law set by this court" to deny Petitioner's Motion to Reopen. We do not agree. A motion to reopen "must be filed no later than 90 days after the date on which the final administrative decision was rendered in the proceeding sought to be reopened." 8 C.F.R. § 1003.2(c)(2) (2005). Although several circuits have held that the deadline for filing a motion to reopen immigration proceedings may be equitably tolled, see Iavorski v. INS, 232 F.3d 124, 133 (2nd Cir.2000); Socop-Gonzalez v. INS, 272 F.3d 1176, 1181 (9th Cir.2001) (en banc), this Court has never, in a controlling and published opinion, followed suit. See Scorteanu, 339 F.3d at 413 (declining to decide whether equitable tolling applies to § 242 of the Act); Harchenko v. INS, 379 F.3d 405, 409-10 (6th Cir.2004) (acknowledging unpublished cases in this Circuit that apply equitable tolling, but finding petitioners failed to raise the issue). While this Court has applied an equitable tolling inquiry in unpublished opinions, it has not-- even in those cases--found the BIA abused its discretion in dismissing untimely appeals. See Miculi v. Ashcroft, 96 F. App'x 338, 340 (6th Cir.2004) (unpublished); Ormanci v. Ashcroft, 110 F. App'x 486, 487-88 (6th Cir.2004) (unpublished); Hermiz v. INS, 86 F. App'x 44, 45 (6th Cir.2003) (unpublished).


N.D. Ohio Notes Circuit Split Re: Whether Jury Trial Applies to Both Claims Where Admiralty Claim Joined with Non-Admiralty Claim

Per Bartel v. A-C Product Liability Trust, 461 F. Supp. 2d 600 (N.D. Ohio Nov. 13, 2006):

One major difference between admiralty jurisdiction and admiralty rules of procedure, and jurisdiction in law and equity is the right to a trial by jury. A claim in law can be tried to a jury; admiralty claims historically have been tried without a jury. When an admiralty claim is joined with a non-admiralty claim, circuits are divided as to whether a jury trial applies to both claims. The seminal case of Fitzgerald v. United States Lines Co. held that, in certain situations, admiralty and civil claims must both be tried together by a jury. 374 U.S. 16, 21 (1963). The opinion in Fitzgerald is a reminder that, even if historically admiralty cases have been tried to the bench, neither the Constitution nor "any statute of Congress or Rule of Procedure, Civil or Admiralty, forbid[s] jury trials in maritime cases." Id. at 20. . . . The sea-based count, under admiralty jurisdiction and subject to federal substantive maritime law, will also be tried by the same jury. This serves judicial economy, particularly where a plaintiff attributes his underlying injury to multiple product defendants. This decision is in line with liberal rules of joinder, Supreme Court case law in support of merger, and the congressional merger of admiralty and federal procedural rules in the 1966 Amendments.


Eleventh Circuit Analyzes Circuit Split Re: Whether Railroad May Challenge State Valuation Methodologies; Sides with Fourth Circuit

Per CSX Transportation, Inc. v. State Board of Equalization, 472 F.3d 1281 (11th Cir. Dec. 19, 2006):

This appeal presents a question about state taxation of railroad properties that was expressly left open by the Supreme Court of the United States, has since divided the federal appellate courts, and involves the traditional balance of federal and state power. We are asked to decide whether section 306 of the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act or the Act), 49 U.S.C. § 11501, allows a railroad to challenge the methodology by which a state determines the true market value of railroad property for ad valorem tax purposes. . . .

Whether a railroad may challenge, under the 4-R Act, the valuation methodology of a state is a question the Supreme Court has acknowledged but not decided. When it first interpreted the 4-R Act in Burlington Northern Railroad v. Oklahoma Tax Commission, the Court held that a railroad need not prove intentional discrimination to challenge factual determinations made by a state in the application of its valuation methodology. 481 U.S. 454, 462- 63 (1987). . . . Three of our sister circuits, following Burlington Northern v. Oklahoma, have split on whether railroads may challenge state valuation methodologies. The Fourth Circuit, on the one hand, has concluded that the 4-R Act does not permit a railroad to challenge the valuation methodology of a state. That circuit concluded that the text of the Act is ambiguous, and the court was "not inclined to disregard" the general policy of noninterference in matters of state taxation contained in the Tax Injunction Act "where § 306 does not plainly authorize such an exception." Chesapeake W. Ry. v. Forst, 938 F.2d 528, 531 (4th Cir.1991); accord Richmond, Fredericksburg & Potomac R.R. Co. v. Forst, 4 F.3d 244, 250 (4th Cir.1993).

The Second and Ninth Circuits, on the other hand, have repudiated Chesapeake Western and held that railroads may challenge valuation methodologies. In Burlington Northern Railroad v. Department of Revenue, the Ninth Circuit explained that section 11501(c) of the 4-R Act provides that state law governs the burden of proof in challenges to assessed value and true market value. 23 F.3d 239, 241 (9th Cir.1994). Because determinations of property value by public officials in the State of Washington may be defeated by "clear, cogent and convincing evidence," the court reasoned that state valuation methodologies may likewise be defeated by clear, cogent, and convincing evidence. Id. In Consolidated Rail Corp. v. Town of Hyde Park, the Second Circuit held that, at least where states use a unique method to appraise railroads, the 4-R Act allows railroads to challenge valuation methodology. 47 F.3d 473, 482 (2d Cir.1995). . . .

Notwithstanding our earlier dicta to the contrary, we are persuaded that the Fourth Circuit correctly interpreted the 4-R Act as being subject to a clear statement rule. It is a well-settled principle of statutory interpretation that a statute will not be construed to burden states in the exercise of their traditional powers unless it clearly states its intent to do so. " 'If Congress intends to alter the usual constitutional balance between the States and the Federal Government, it must make its intention to do so unmistakably clear in the language of the statute.' " Gregory v. Ashcroft, 501 U.S. 452, 460-61, 111 S.Ct. 2395, 2401, 115 L.Ed.2d 410 (1991) (quoting Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 242, 105 S.Ct. 3142, 3147, 87 L.Ed.2d 171 (1985)). "This plain statement rule is nothing more than an acknowledgment that the States retain substantial sovereign powers under our constitutional scheme, powers with which Congress does not readily interfere." Id. at 461, 111 S.Ct. at 2401.


Sixth Circuit Weighs in On Circuit Split Re: Employer Fee Liability Under 33 U.S.C. § 928(b)

Per Pittsburgh & Conneaut Dock Co. v. Director, Office of Workers' Comp. Programs, 473 F.3d 253 (6th Cir. Jan. 4, 2007):

33 U.S.C. § 928(b): Subsection (b) sets forth the requirements for fee liability when an employer voluntarily pays some compensation but a dispute arises concerning additional compensation. That provision states that the following circumstances must occur in order for an employer to be liable for attorney's fees: (1) an informal conference addressing the disputed additional compensation; (2) a subsequent written recommendation suggesting a disposition of the controversy; (3) the employer's rejection of the recommendation; and (4) the claimant's use of an attorney to secure an award of compensation greater than the amount the employer was willing to pay. See § 928(b). Bordeaux claims that all of these elements were met. . . . The BRB acknowledged that in this case there was no written recommendation regarding the disposition of the controversy as required by the plain language of subsection (b). Nevertheless, the BRB went on to claim that "the absence of a written recommendation by the district director following the informal conference ... does not preclude liability." The BRB went on to note that since P & C Dock voluntarily paid compensation and Bordeaux was awarded additional compensation by the ALJ, that was sufficient to make P & C Dock liable for attorney's fees under subsection (b). The Ninth Circuit precedent relied upon by the BRB does support its ruling. See, e.g., Nat'l Steel & Shipbldg. Co. v. U.S. Dep't of Labor, Office of Workers' Comp. Programs, 606 F.2d 875, 882 (9th Cir.1979) 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. Virginia Int'l Terminals, Inc. v. Edwards, 398 F.3d 313, 318 (4th Cir.2005). 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.

The Ninth Circuit has routinely held employers liable for attorney's fees under subsection (b) even when the literal terms of the statute have not been met. This approach is based on the assessment that "[t]he purpose of the statute is to authorize the assessment of legal fees against employers in cases where the existence or extent of liability is controverted and the employee-claimant succeeds in establishing liability or obtaining increased compensation in formal proceedings in which he or she is represented by counsel." Nat'l Steel, 606 F.2d at 882. Therefore, fee liability is imposed where these general circumstances are present even if all of the specific events listed in subsection (b) have not occurred. Fee liability has been imposed where there was a recommendation after an informal conference was held, but the recommendation was not in writing. Id. The Ninth Circuit has also assessed attorney's fees under subsection (b) where there was a written recommendation, but no informal conference had been held. Matulic v. OWCP, 154 F.3d 1052, 1060 (9th Cir.1998); see also Caine v. Washington Metro. Area Transit Auth., 19 BRBS 180 (1986).

The Fourth and Fifth Circuits have rejected the approach taken by the Ninth Circuit and have strictly enforced the specific terms of subsection (b). They have emphasized that the requirements set forth in the plain language of the statute must be met. Therefore, the lack of an informal conference and the lack of a written recommendation have been held to preclude the assessment of attorney's fees under subsection (b). Edwards, 398 F.3d at 318 ("The failure to hold an informal conference or issue a written recommendation is fatal to a claim for attorney's fees under the plain terms of section 928(b)."); Pool Co., 274 F.3d at 186 (holding that where no informal conference took place "that fact poses an absolute bar to an award of attorney's fees under § 28(b)"); Staftex, 237 F.3d at 408-09; FMC Corp., 128 F.3d at 910.

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.

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