S.D.N.Y. Notes Split Re Whether CAFA Removal Provision Trumps Non-Removal Provision of Securities Act

Per New Jersey Carpenters Vacation Fund v. Harborview Mortg. Loan Trust 2006-4, Slip Copy, 2008 WL 4369840 (S.D.N.Y. Sept. 24, 2008):

This putative class action, which is rooted in the mortgage-backed securities crisis, addresses an issue of first impression in this Circuit-whether the removal provision of the Class Action Fairness Act of 2005, Pub.L. 109-2, § 4(a), 119 Stat. 9, Feb. 18, 2005 (“CAFA”), trumps the anti-removal provision of Section 22(a) of the Securities Act of 1933, 15 U.S.C. § 77a et seq. Plaintiffs filed this suit in New York State Supreme Court for violation of Sections 11, 12, and 15 of the Securities Act of 1933, 15 U.S.C. § 77a et seq. , in connection with issuance of HarborView Mortgage Loan Pass-Through Certificates (“Bonds”), alleging misrepresentations in the Prospectuses and Registration Statements of these bonds. Defendants-HarborView, the issuer, as well as depositors, investment banks, credit rating agencies-removed the case to this Court, relying on CAFA's jurisdiction and removal provisions 28 U.S.C. §§ 1332(d)(2), 1453(b).

Plaintiffs now move to remand the case back to State court, contending that it is the Plaintiffs' right to choose its forum as provided in the anti-removal provision of Section 22(a) of the Securities Act of 1933, 15 U.S.C. § 77v(a). Further, Plaintiffs cite the recent California District Court decision, affirmed by the 9th Circuit, Luther v. Countrywide Home Loans, 07cv8165, 2008 U.S. Dist. LEXIS 26534 (C.D.Cal. Feb. 28, 2008) aff'd 533 F.3d 1031 (9th Cir. Jul. 16, 2008), which held that CAFA does not trump the anti-removal provision in § 22(a) of the 1933 Act. A clear split in the Circuits is evidenced by recent holdings in this Circuit. After a review of the decisions and the legislative history, I am constrained to follow, what at least in my view, comports more closely with the decisions in this Circuit and deny the m otion.


D. Md. Notes Split Re Burden of Persuasion in FMLA Context

Per Jordan v. Radiology Imaging Associates, --- F.Supp.2d ----, 2008 WL 4286840 (D. Md. Sept. 12, 2008):

Therefore, an employer that does not restore an employee returning from FMLA [Family Medical Leave Act] leave can avoid liability by showing “that [the] employee would not otherwise have been employed at the time reinstatement is requested.” Yashenko, 446 F.3d at 549 (citing 29 C.F.R. § 825.216(a)). FN3
FN3. The Fourth Circuit has interpreted this standard to put a burden of production on the employer. Yashenko, 446 F.3d at 549. When an employee shows that she is entitled to restoration under the FMLA, the employer must “come forward with evidence that it would have discharged the employee whether or not he took FMLA leave .” Id. However, the Fourth Circuit has not resolved which party will bear the ultimate burden of persuasion. Id. (stating that an employee's claim failed because the employer had presented evidence that the plaintiff was terminated in a reorganization and the employee failed to offer evidence to “dispute the company's contention that Yashenko's position was eliminated in a legitimate reorganization”). There is currently a circuit split on the burden of proof issue. Compare Rice v. Sunrise Express, 209 F.3d 1008, 1018 (7th Cir.2000) (ultimate burden falls on employee), with Smith v. Difee Ford-Lincoln-Mercury, Inc., 298 F.3d 955, 963 (10th Cir.2002) (employer has the ultimate burden).


E.D. La. Reports Uncertainty of Whether "Actual Innocence" Exception Applies to Noncapital Sentencing Errors

Per Taylor v. Cain, 2008 WL 4186883 (E.D.La. Sep 10, 2008):

Without a showing of cause and prejudice, a petitioner's defaulted claims are procedurally barred unless the application of the bar will result in a fundamental miscarriage of justice. The fundamental miscarriage of justice exception is limited to claims of actual innocence. See Bagwell v. Dretke, 372 F.3d 748, 757 (5th Cir.2004); Lucas v. Johnson, 132 F.3d 1069, 1077 (5th Cir.1998). However, it is unclear to what extent, if any, the "actual innocence" exception is available when the defaulted claim relates merely to an alleged sentencing error in a noncapital proceeding.

In Haley v. Cockrell, 306 F.3d 257 (5th Cir.2002), the United States Fifth Circuit Court of Appeals, after noting that a split exists among the circuits on that issue, held that the "actual innocence" exception is available to petitioners in noncapital proceedings who claim they were erroneously sentenced as habitual or multiple offenders. Id. at 265-66. However, the Haley court held that, when barred claims dealt with such alleged sentencing errors, the "actual innocence" requirement is met only when the petitioner shows that "he would have not been legally eligible for the sentence he received." Id. at 264. The Supreme Court subsequently vacated the Haley decision on other grounds and remanded the case to the Fifth Circuit. Dretke v. Haley, 541 U.S. 386 (2004). In so doing, the Supreme Court declined to answer the question of whether the "actual innocence" exception applies to noncapital sentencing errors. Id. at 393-94.

This Court does not attempt to answer the question left open by the Supreme Court. Nevertheless, even if the "actual innocence" exception is available to defaulted claims regarding noncapital sentencing errors, petitioner has failed to establish that he was legally ineligible for the habitual offender sentence he received. Thus, he has not demonstrated that any miscarriage of justice will result from application of the procedural bar.


Eleventh Circuit Notes Split Re Whether Laches May Bar Copyright Infringement Claim Filed within the Statute of Limitations

Per Peter Letterese And Associates, Inc. v. World Institute Of Scientology Enterprises, 533 F.3d 1287 (11th Cir. Jul 08, 2008):

We next consider whether summary judgment for defendants was appropriate as to Count 1 on the alternate ground that PL&A's claim is barred by the defense of laches, which prevents a plaintiff who has slept on his rights from enforcing those rights against a defendant. The question whether the equitable doctrine of laches may bar a claim for copyright infringement that was filed within the statute of limitations has generated a circuit split and is a question of first impression in this circuit.

In answering the question of whether the defense of laches may be interposed in a copyright infringement suit, therefore, we cannot agree with the conclusion of the Fourth Circuit, which is an unqualified "no." See Lyons P'ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789, 798 (4th Cir.2001). Prather recognized the applicability of general equitable doctrines, and like tolling, laches falls into that category. Cf. Teamsters & Employers Welfare Trust of Ill. v. Gorman Bros. Ready Mix, 283 F.3d 877, 882 (7th Cir.2002) ("What is sauce for the goose (the plaintiff seeking to extend the statute of limitations) is sauce for the gander (the defendant seeking to contract it)."). However, we remain mindful of the Fourth Circuit's invocation of separation of powers principles which counsel against the use of "the judicially created doctrine of laches to bar a federal statutory claim that has been timely filed under an express statute of limitations." Lyons P'ship, 243 F.3d at 798. We therefore answer this question with a presumptive "no"; there is a strong presumption that a plaintiff's suit is timely if it is filed before the statute of limitations has run. Only in the most extraordinary circumstances will laches be recognized as a defense. Cf. *1321 Chirco v. Crosswinds Communities, Inc., 474 F.3d 227, 234 (6th Cir.2007) (noting the limited applicability of laches to copyright cases in "what can best be described as unusual circumstances"); Jacobsen v. Deseret Book Co., 287 F.3d 936, 951 (10th Cir.2002) ("Although it is possible, in rare cases, that a statute of limitations can be cut short by the doctrine of laches, we see no reason to supplant the statute of limitations in this case." (internal quotation marks and citation omitted)).


First Circuit Resorts to Lenity Rule, Splitting with Other Circuits Re Application of Scienter Requirement in Identity Theft Statute

Per U.S. v. Godin, 534 F.3d 51 (1st Cir. Jul 18, 2008):

The circuits are divided on the issue of whether the "knowingly" scienter requirement in § 1028A(a)(1) [an identity theft statute] extends to "of another person." The Fourth, Eighth, and Eleventh Circuits have concluded that it does not. United States v. Mendoza-Gonzalez, 520 F.3d 912, 915 (8th Cir.2008); United States v. Hurtado, 508 F.3d 603, 607 (11th Cir.2007) cert. denied, --- U.S. ----, 128 S.Ct. 2903, --- L.Ed.2d ---- (2008); United States v. Montejo, 442 F.3d 213, 214 (4th Cir.), cert. denied, --- U.S. ----, 127 S.Ct. 366, 166 L.Ed.2d 138 (2006). The D.C. Circuit recently concluded, however, that it does. United States v. Villanueva-Sotelo, 515 F.3d 1234, 1236 (D.C.Cir.2008). We review de novo "alleged jury instruction errors involving the interpretation of the elements of a statutory offense." United States v. Soto-Beniquez, 356 F.3d 1, 44-45 (1st Cir.2003).

. . .

Using all methods of statutory construction available to us, we are unable to ascertain whether Congress intended the "knowingly" mens rea requirement to extend to "of another person." The language of § 1028A is ambiguous. The ambiguity cannot be resolved by the statutory structure, the title, or the legislative history. We hold that the rule of lenity applies, and the scienter requirement must stretch to "of another person."


Ninth Circuit Sides with Seventh, Finding the Private Right of Action under the Odometer Act Limited to Mileage Fraud

Per Bodine v. Graco, Inc., 533 F.3d 1145 (9th Cir. Jul 24, 2008):

Does the Motor Vehicle Information and Cost Savings Act ("the Odometer Act" or "the Act"), 49 U.S.C. §§ 32701-32711, and its implementing regulations, 49 C.F.R. pt. 580, allow a private right of action where the fraud relates to something other than the vehicle's mileage-in this case, its accident history?

Two of our sister circuits have split on this issue. Owens v. Samkle Auto. Inc., 425 F.3d 1318, 1320 (11th Cir.2005) (per curiam) (holding that "an allegation of intent to defraud in connection with an Odometer Act violation sufficiently states a claim," even when the intent to defraud does not relate to mileage); Ioffe v. Skokie Motor Sales, Inc., 414 F.3d 708, 709 (7th Cir.2005) ("[A]n Odometer Act claim that is brought by a private party and is based on a violation of [the implementing regulations] requires proof that the vehicle's transferor intended to defraud a transferee with respect to mileage."), cert. denied, 546 U.S. 1214, 126 S.Ct. 1432, 164 L.Ed.2d 133 (2006).

Finding the reasoning in Ioffe persuasive, we conclude that the private right of action under the Odometer Act is limited to allegations of fraud relating to a vehicle's mileage.


Third Cir. Characterizes "Hybrid-Rights Theory" as Dicta in Split from Other Circuits

Per Combs v. Homer-Center School Dist., --- F.3d ----, 2008 WL 3863701 (3rd Cir. Aug 21, 2008):

Smith's hybrid-rights theory has divided our sister circuits. Some characterize the theory as dicta and others use different standards to decide whether a plaintiff has asserted a cognizable hybrid-rights claim. The United States Courts of Appeals for the Second and Sixth Circuits have concluded the hybrid-rights language in Smith is dicta. See Leebaert v. Harrington, 332 F.3d 134, 143 (2d Cir.2003) (citing Knight v. Connecticut Dep't of Pub. Health, 275 F.3d 156, 167 (2d Cir.2001)); Watchtower Bible & Tract Soc'y of New York, Inc. v. Stratton, 240 F.3d 553, 561-62 (6th Cir.2001), rev'd on other grounds, 536 U.S. 150, 122 S.Ct. 2080, 153 L.Ed.2d 205 (2002); Kissinger v. Bd. of Trs. of Ohio State Univ., Coll. of Veterinary Med., 5 F.3d 177, 180 (6th Cir.1993). Furthermore, the United States Court of Appeals for the Sixth Circuit views the hybrid-rights exception as "completely illogical," Kissinger, 5 F.3d at 180, and the United States Court of Appeals for the Second Circuit "can think of no good reason for the standard of review to vary simply with the number of constitutional rights that the plaintiff asserts have been violated," Leebaert, 332 F.3d at 144. Accordingly, when faced with a neutral law of general applicability, both appellate courts decline to allow the application of strict scrutiny to hybrid-rights claims and instead apply Smith's rational basis standard. See Leebaert, 332 F.3d at 144 (" '[A]t least until the Supreme Court holds that legal standards under the Free Exercise Clause vary depending on whether other constitutional rights are implicated, we will not use a stricter legal standard' to evaluate hybrid claims." (quoting Kissinger, 5 F.3d at 180)).

The United States Courts of Appeals for the First Circuit and District of Columbia have acknowledged that hybrid-rights claims may warrant heightened scrutiny, but have suggested that a plaintiff must meet a stringent standard: the free exercise claim must be conjoined with an independently viable companion right. See Henderson v. Kennedy, 253 F.3d 12, 19 (D.C.Cir.2001) (rejecting the "hybrid claim" argument that "the combination of two untenable claims equals a tenable one"); E.E. O.C. v. Catholic Univ. of Am., 83 F.3d 455, 467 (D.C.Cir.1996) (finding that the EEOC's violation of the Establishment Clause triggered the hybrid-rights exception); Gary S. v. Manchester Sch. Dist., 374 F.3d 15, 18-19 (1st Cir.2004) (citing Gary S. v. Manchester Sch. Dist., 241 F.Supp.2d 111, 121 (D.N.H.2003)) (affirming, for the same reasons, the district court's rejection of a hybrid-rights claim because the free exercise claim was not conjoined with an independently viable companion claim); Brown v. Hot, Sexy & Safer Prods., Inc., 68 F.3d 525, 539 (1st Cir.1995) (rejecting a hybrid-rights claim because "[plaintiff's] free exercise challenge is ... not conjoined with an independently protected constitutional protection").FN21

. . .

The United States Courts of Appeals for the Ninth and Tenth Circuits recognize hybrid rights and require a plaintiff to raise a "colorable claim that a companion right has been violated." San Jose Christian Coll. v. Morgan Hill, 360 F.3d 1024, 1032 (9th Cir.2004); see also Axson-Flynn, 356 F.3d at 1297.

. . .

Until the Supreme Court provides direction, we believe the hybrid-rights theory to be dicta.


S.D. Ohio Reports Circuit Split Re Whether Plan Administrators, as Opposed to the Plan Itself, May be Defendants in ERISA Action

Per Garringer v. Employer Ben. Services of Ohio, Inc., 2008 WL 3822311 (S.D. Ohio Aug 12, 2008):

Although the circuits are split on the issue of whether a plan is the only proper defendant in a suit to recover benefits under section 502(a)(1)(B), in the Sixth Circuit, plan administrators may be properly named as parties in an ERISA action. "[I]n the Sixth Circuit, the proper party defendant in an ERISA action concerning benefits is the party that is shown to control administration of the plan." Little v. UNUM Provident Corp., 196 F.Supp.2d 659, 672 (S.D.Ohio 2002), citing Daniel v. Eaton Corp., 839 F.2d 263, 266 (6th Cir., 1988); see also, Strickrath v. The Hartford Insurance Co., No. C-2-06-1080, 2008 WL 835686 at *6 (S.D.Oh. Mar.28, 2008).

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