Federal Circuit Creates Split Re Reviewability of Remand Orders Based on Rejection of Supplemental Jurisdiction

Per U.S. Law Week Volume 76 Number 20, Tuesday, November 27, 2007:

An order remanding a removed case in which the district court declined to exercise supplemental jurisdiction over state claims is not reviewable in federal appeals court, the U.S. Court of Appeals for the Federal Circuit held Nov. 13 (HIF Bio Inc. v. Yung Shin Pharmaceuticals Industrial Co., Fed. Cir., No. 2006-1522, 11/13/07).

Opening up a circuit split, Judge Arthur J. Gajarsa said that recent U.S. Supreme Court pronouncements on remands undercut other circuits' view that remands based on supplemental jurisdiction are distinguishable from those based on lack of subject matter jurisdiction and therefore fall outside the jurisdictional bar of 28 U.S.C. § 1447(d).

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Seventh Circuit Notes Split Re Whether there is a Due Process Right of an Adult Child to Associate with Parent

Per Struck v. Cook County Public Guardian, --- F.3d ----, 2007 WL 4145845 (7th Cir. Nov. 26, 2007):

The plaintiff appeals from the dismissal of his suit, which the district court held was outside its jurisdiction. The complaint alleged that an Illinois state court had appointed a guardian for the plaintiff's mother because she was incompetent to manage her own affairs, and that the plaintiff had asked the court to revoke the guardianship because the guardian was abusing his mother, refusing to let him visit her, and denying him access to her records, mail, and assets. Turned down by the state court, he brought this suit in federal district court against the Cook County Public Guardian, the public official who had designated the guardian of the plaintiff's mother. The suit charges violations of both the plaintiff's and his mother's federal constitutional rights.

. . .

[T]he plaintiff does have a claim on his own behalf-that the guardian is preventing him from seeing his mother and by doing so is depriving him of liberty protected by the due process clause of the Fourteenth Amendment, liberty that he argues includes the right of an adult child to associate with his parent. Whether the argument has merit has split the circuits, as explained in Robertson v. Hecksel, 420 F.3d 1254, 1258-60 (11th Cir.2005), but remains an open question in this circuit. Jones v. Brennan, 465 F.3d 304, 308 (7th Cir.2006); Russ v. Watts, 414 F.3d 783, 790 (7th Cir.2005). We need not try to answer it in this case. For the preliminary question is whether the suit is barred by the doctrine that excepts from federal jurisdiction certain probate and domestic-relations cases, such as will contests, custody battles, and suits for divorce; and we think it is barred.


Fourth Circuit Notes Split within the Ninth Circuit Re whether the FLSA Preempts Duplicative State Law Claims

Per Anderson v. Sara Lee Corp., --- F.3d ----, 2007 WL 4098229 (4th Cir. Nov. 19, 2007):

The Ninth Circuit has suggested, without deciding, that “[c]laims that are directly covered by the FLSA (such as overtime and retaliation disputes) must be brought under the FLSA.” Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1154 (9th Cir.2000). In the wake of Williamson, district courts in the Ninth Circuit have split over whether the FLSA preempts duplicative state law claims. Compare Takacs v. A.G. Edwards & Sons, Inc., 444 F.Supp.2d 1100, 1116-18 (S.D.Cal.2006) (concluding that state claim was not preempted by FLSA), and Bahramipour v. Citigroup Global Mkts., Inc., No. C 04-4440, 2006 WL 449132, at *4-7 (N.D.Cal. Feb. 22, 2006) (same), with Flores v. Albertson's Inc., No. CV 01-00515, 2003 WL 24216269, at *5-6 (C.D.Cal. Dec. 9, 2003) (deeming state claims to be preempted by FLSA).


4th Circuit Notes Split Re Effect of Statutory Provisions Authorizing Recidivism-Based Sentencing Enhancements

Per UNITED STATES v. WILLIAMS, --- F.3d ----, 2007 WL 3379689 (4th Cir. Nov. 15, 2007):

In Baseem Shakir Williams, we did not consider the effect of statutory provisions authorizing sentencing enhancements based solely on recidivism in determining the maximum sentence prescribed by law for a predicate offense. Our sister circuits have split on the question. Compare United States v. Henton, 374 F.3d 467, 469 (7th Cir.2004) (distinguish-ing Baseem Shakir Williams, and holding that a violation of an Illinois statute that provided “that possession of less than a gram of cocaine with the intent to deliver is a Class 2 felony” carrying a statutory maximum of seven years but also permitting “any person convicted of a second or subsequent offense ... [to] be sentenced to imprisonment for a term up to twice the maximum term otherwise authorized” qualified as a “serious drug offense” if the offender was eligible for the enhancement (internal quotation marks omitted)), with United States v. Rodriquez, 464 F.3d 1072, 1080 (9th Cir.2006) (“For federal sentencing enhancement pur-poses, when we consider the prison term imposed for a prior offense, we must consider the sentence available for the crime itself, without considering separate recidivist sentencing enhancements.” (internal quotation marks omitted)).


Sixth Circuit Notes Split Re Interpretation of Tax Reform Act of 1986

Per Estate of Gerson v. C.I.R.,--- F.3d ----, 2007 WL 3307024 (6th Cir. Nov. 09, 2007):

The Code defines “generation-skipping transfer” to include “(1) a taxable distribution, (2) a taxable termination, and (3) a direct skip.” I.R.C. § 2611(a). In this case the facts evidence a direct skip, “a transfer subject to a tax imposed by chapter 11 or 12 of an interest in property to a skip person.” Id. § 2612(c)(1). The Estate thus meets the criteria under the provision's first clause.

The next step in the analysis, then, is to decide whether the “transfer is not made out of corpus added to the trust after September 25, 1985.” Tax Reform Act of 1986 § 1433(b)(2)(A).

The parties' dispute on this second clause brings to this court a question that divides three of our sister circuits and the Tax Court below. Compare Bachler v. United States, 281 F.3d 1078 (9th Cir.2002), and Simpson v. United States, 183 F.3d 812 (8th Cir.1999) (grandfathering transfer), with E. Norman Peterson Marital Trust v. Comm'r, 78 F.3d 795 (2d Cir.1996) (finding grandfather clause inapplicable). See also Gerson, 127 T.C. at 152.


Fifth Circuit Notes Split Re whether § 1997e(e) Bars Recovery for Nominal and Punitive Damages

Per Brown v. Sudduth, Slip Copy, 2007 WL 3283777 (5th Cir. Nov. 7, 2007):

This court has not addressed the issue of whether § 1997e(e) bars a claim for nominal and punitive damages absent an allegation of physical injury. We need not do so today because the issue of damages is premature given that there has been no determination of whether Brown has even suffered a constitutional violation in the first place.FN4

FN4. We do note, however, that the issue has divided our sister circuits. See, e.g., Thompson v. Carter, 284 F.3d 411, 418 (2d Cir.2002) (holding that § 1997e(e) does not bar recovery for nominal and punitive damages); Allah v. Al-Hafeez, 226 F.3d 247, 251-52 (3d Cir.2000) (same); Calhoun v. Detella, 319 F.3d 936, 940 (7th Cir.2003) (same); Munn v. Toney, 433 F.3d 1087, 1089 (8th Cir.2006) (same); Canell v. Lightner, 143 F.3d 1210, 1213 (9th Cir.1998) (same); Searles v. Van Bebber, 251 F.3d 869, 880-81 (10th Cir.2001) (same); but see Harris v. Garner, 190 F.3d 1279, 1282, 1287-88 & n. 9 (11th Cir.1999), vacated & reh'g en banc granted by 197 F.3d 1059, reinstated in pertinent part by 216 F.3d 970 (2000) (holding that § 1997e(e) bars recovery for punitive damages, but reserving issue of whether it also barred nominal damages); Davis v. District of Columbia, 158 F.3d 1342, 1348-49 (D.C.Cir.1998) (same).


Fourth Circuit Weighs in on Split Re Meaning of Lopez-Mendoza the "Identity Statement"

Per UNITED STATES v. RAUL MESA OSCAR-TORRES, --- F.3d ----, 2007 WL 3293266 (4th Cir. Nov. 08, 2007):

The meaning of the Lopez-Mendoza “identity statement” has bedeviled and divided our sister circuits. Compare United States v. Olivares-Rangel, 458 F.3d 1104, 1106 (10th Cir.2006) (interpreting Lopez-Mendoza as merely reiterating long-standing jurisdictional rule), and United States v. Guevara-Martinez, 262 F.3d 751, 754-55 (8th Cir.2001) (same), with United States v. Bowley, 435 F.3d 426, 430-31 (3d Cir.2006) (interpreting Lopez-Mendoza as barring sup-pression of evidence of identity), United States v. Navarro-Diaz, 420 F.3d 581, 588 (6th Cir.2005) (same), and United States v. Roque-Villanueva, 175 F.3d 345, 346 (5th Cir.1999) (same). We now turn to this question.

Close examination of Lopez-Mendoza itself, as well as other Supreme Court precedent, persuades us that Lopez-Mendoza does not prohibit suppression of evidence of a defendant's identity.


S.D. Texas Notes Split Re the Meaning of "Full and Fair Review" Under ERISA Regulations

Per Boldt v. Dow Chemical Co. Voluntary Group Acc. Ins. Plan, Slip Copy, 2007 WL 2329873 (S.D. Tex. Aug 15, 2007) (NO. 6:06-CV-25):

The Eighth Circuit found one of the core requirements of "full and fair review" is providing the claimant an opportunity to engage in "meaningful dialogue" with the administrator. Id. While this court agrees that the claimant is entitled to know what evidence was relied upon by the administrator and respond to that evidence, there is a distinction between Abram and the present case. Unlike Abram, the claimant in this case did not attempt at all during the administrative proceeding to engage in any dialogue with the administrator. In addition to not presenting any evidence to refute AIG's initial denial, the Plaintiff did not even request Dr. Hubbard's report until three months after the final decision had been rendered. It appears to the court that the Plaintiff was not interested in meaningfully participating in the administrative process, but only now seeks to use this technical violation as a means to reopen her case.

Further, the Tenth Circuit also recently addressed this issue and came to the opposite conclusion. In Metzger v. UNUM Life Ins. Co. of Am., 476 F.3d 1161 (10th Cir.2007), the court addressed whether the administrator violated ERISA regulations by "failing to make [the] reviewers' reports available prior to a final decision on appeal." Id. at 1162. Similar to the present case, the administrator sent claimant's complete file for review to two medical professionals who had not been involved in the original denial of benefits. Id. at 1163. The reports analyzed the new medical evidence submitted on appeal, but "they contained no new factual information and recommended denial on the same grounds as the initial claim determination." Id. The court found that reports generated during the appeals process did not have to be disclosed to a claimant until after the conclusion of the administrative appeal. Id. at 1166. In support of its decision, the court noted that in subsection (h)(3)(iii) of the applicable regulations, an administrator is required to consult with a health care professional in "deciding an appeal of any adverse benefit determination that is based in whole or in part on a medical judgment." 29 C.F.R. § 2560.503-1. Because this regulation mandates consultation with a health care professional on appeal, the court concluded that "[p]ermitting a claimant to receive and rebut medical opinion reports generated in the course of administrative appeal-even when those reports contain no new factual information and deny benefits on the same basis as the initial decision-would set up an unnecessary cycle of submission, review, re-submission, and re-review." Id. Further, the court relied on the Department of Labor's description of the disclosure regulation. The Department stated it believed the disclosure of the relevant documents would "serve the interests of both claimants and plans by providing clarity as to the plans' disclosure obligations, while providing claimants with adequate access to the information necessary to determine whether to pursue further appeal." Id. at 1167 (citing ERISA Claims Procedure, 65 Fed.Reg. 70,246, 70,252 (Nov. 21, 2000) (emphasis added)). The court reasoned that requiring reports generated on appeal to be disclosed prior to the final decision would belie the Department's description because access to these documents "would not aid claimants in determining 'whether to pursue further appeal,' because claimants would not yet know if they faced an adverse decision." Id. The court held "[s]o long as appeal-level reports analyze evidence already known to the claimant and contain no new factual information" disclosing an appeal-level report after the final decision is consistent with full and fair review. Id.

As there seems to be a split in circuit reasoning, this court is not inclined to adopt the hard and fast rule established in Abram without further guidance from the Fifth Circuit. Further, while the Fifth Circuit has not addressed this issue directly, it has more generally held that despite technical noncompliance with ERISA procedural requirements, if the purpose of ERISA section 1133 is fulfilled then only substantial compliance with the regulations is required. Lacy v. Fulbright & Jaworski, 405 F.3d 254, 256 (5th Cir.2005); Robinson v. Aetna Life Ins. Co., 443 F.3d 389, 392 (5th Cir.2006) ("Challenges to ERISA procedures are evaluated under the substantial compliance standard."). Under § 1133(2), "full and fair review" has been interpreted to mean that the claimant should know what evidence the decision-maker relied upon, have an opportunity to address the accuracy and reliability of the evidence, and have the decision-maker consider the evidence presented by both parties prior to reaching and rendering its decision. Sweatman v. Commercial Union Ins. Co., 39 F.3d 594, 598 (5th Cir.1994).


W.D.N.Y. Mentions Split Re Point at which Government Agents Become Agents Acting on Behalf of the Prosecution

Per Afrika v. Herbert, Slip Copy, 2007 WL 2323500 (W.D.N.Y . Aug 10, 2007) (NO. 02-CV-458):

Here, the Court need not attempt to settle that question. The state court in Afrika's case rejected the theory that the prosecutor had constructive knowledge of the two narcotics convictions at issue because they were not prosecuted by the district attorney's office handling Afrika's case. Furthermore, the state court found that the prosecutor did not have constructive possession of the complete NYSIIS because that document was not generated by the district attorney's office but rather originated from the DCJS, which was not an agency acting on the prosecutor's behalf. The Supreme Court has not clearly established the precise point at which government agents become agents acting on behalf of the prosecution. See United States v. Zagari, 111 F.3d 307, 320 n. 13 (2d Cir.1997) ("The extent to which knowledge may be imputed from one federal investigative agency to another for Brady purposes is as yet unclear."); accord Daniels v. Hollins (citing Smith v. Secretary of New Mexico Dept. of Corrections, 50 F.3d 801, 825 n. 36 (10th Cir.1995) ("In the absence of actual knowledge ... the circuits are somewhat split as to the precise contours of when knowledge by an arm of the State will be imputed to the prosecution."). The Supreme Court has directed that, in the wake of AEDPA, the Court's review is limited to whether the state court's decision was contrary to or an unreasonable application of clearly established federal law. See Williams v. Taylor, 529 U.S. at 405-07. Guided by this deferential standard, the Court cannot find, on the facts of this case, that the state court's holding regarding the element of "suppression" was contrary to, or an unreasonable application of Brady and its progeny.


Fifth Circuit Notes Split Re Whether a District Court Has the Power to Award Attorneys' Fees as Costs Pursuant to FRAP 7 and 39(e).

Per Vaughn v. American Honda Motor Company Inc., --- F.3d ----, 2007 WL 3172068 (5th Cir. Oct. 31, 2007):

The district court did not affirmatively assess attorney's fees against the objectors, conditionally or otherwise, pursuant to a fee-shifting statute. We note in this regard that there is a split among the federal circuit courts as to whether a district court has the power to award attorneys' fees as costs pursuant to Rules 7 and 39(e) of the rules of appellate procedure when an underlying statute provides that attorneys' fees may be included as costs.FN12 That issue is not before us today.

FN12. Compare In re Cardizem CD Antitrust Litig., 391 F.3d 812, 817 (6th Cir.2004) (determining whether attorneys' fees are included in “costs” by reference to the state statute that formed the basis of the suit), Pedraza v. United Guar. Corp., 313 F.3d 1323, 1333 (11th Cir.2002) (“[T]he meaning of ‘costs,’ as used in Rule 7, should be derived from the definition of costs contained in the statutory fee shifting provision that attends the plaintiff's underlying cause of action.”), and Adsani v. Miller, 139 F.3d 67, 75 (2d Cir.1998) ( “Adsani's argument that Rule 7 costs cannot include attorney's fees is also unavailing because the Copyright Act in section 505 of Title 17 allows attorney's fees to be levied ‘as part of the costs.’ ”), with Hirschensohn v. Lawyers Title Ins. Corp., No. 96-7312, 1997 WL 307777 *3 (3d Cir. June 10, 1997) (“[W]e conclude that Rule 7 does not authorize a bond to cover estimated costs of attorneys' fees.”), and In re Am. President Lines, Inc., 779 F.2d 714, 716 (D.C.Cir.1985) (“The costs referred to [in Rule 7] are simply those that may be taxed against an unsuccessful litigant under Federal Appellate Rule 39, and do not include attorneys' fees that may be assessed on appeal.”).


Sixth Circuit Discusses Split Re Availability of Laches in Cases Involving Statutes with Limitations Provisions

Per Chirco v. Crosswinds Communities, Inc., 474 F.3d 227 (6th Cir. 2007) [This is a case from earlier this year but I thought it was worth posting about it now for reader's information]:

The Sixth Circuit has carved out a middle ground between the Fourth Circuit's strict prohibition on application of the laches doctrine in cases involving a statute with an explicit limitations provision and the somewhat more expansive application of the doctrine by the Ninth Circuit. . . . [I]n numerous decisions, not involving claims made pursuant to the Copyright Act, we have affirmed the rule that if the “statute of limitation has not elapsed, there is a strong presumption that plaintiff's delay in bringing the suit for monetary relief is reasonable. Only rarely should laches bar a case before the ... statute has run.” . . .

We have not, however, ruled out invocation of the equitable doctrine when an applicable statute otherwise references an explicit limitations period. Although we have sought to restrict such use to the most compelling of cases, we have explicitly recognized that the doctrine of laches can be applied in copyright infringement cases. In Hoste v. Radio Corporation of America, 654 F.2d 11, 12 (6th Cir.1981), for example, even when we reversed a district court ruling that barred recovery for the plaintiff by application of laches within the statute of limitations period, we did not rule that the laches doctrine was always inapplicable in such a situation. Rather, the panel simply noted that “[t]he defendants filed no affidavits in support of their motion for summary judgment. Thus there was no evidence of prejudice to them by reason of the plaintiff's delay in filing this action.” Id. The court therefore remanded the matter for further development of the salient issues. Additionally, in Broadcast Music, Inc. v. Roger Miller Music, Inc., 396 F.3d 762, 783 n. 13 (6th Cir.), cert. denied, --- U.S. ----, 126 S.Ct. 374, 163 L.Ed.2d 162 (2005), we noted, “Although circuits are split as to whether laches is available as a defense under the Copyright Act, laches is available as an affirmative defense in a copyright action in the Sixth Circuit.” (Citations omitted.)

The plaintiffs urge us to reject that proposition, arguing that in Broadcast Music, the statement is mere dicta. Perhaps so, but in this instance, it constitutes dicta that is fated to be followed. As has the Seventh Circuit, we conclude that a flat proscription such as that invoked by the Fourth Circuit against the defense of laches in cases involving a federal statutory claim is both unnecessary and unwise. The Seventh Circuit, presented with a claim pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461, reasoned that “just as various tolling doctrines can be used to lengthen the period for suit specified in a statute of limitations, so laches can be used to contract it.” Teamsters & Employers Welfare Trust of Illinois v. Gorman Bros. Ready Mix, 283 F.3d 877, 881 (7th Cir.2002). Indeed, laches can be argued “regardless of whether the suit is at law or in equity, because, as with many equitable defenses, the defense of laches is equally available in suits at law.” Id. We have little hesitation in adopting the Seventh Circuit's philosophy as the sounder approach.

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