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Archive for December, 2011

The opinion line-up for United States v. Bell, a recent Fourth Circuit opinion ordering resentencing in a drug case, showcases a defection by two of the three judges. It reads as follows:

Judge Davis wrote the opinion, in which Judge Floyd and Senior Judge Hamilton joined except as to footnote 8. Senior Judge Hamilton wrote an opinion concurring in part and concurring in the judgment, in which Judge Floyd joined.

The defecting-inducing footnote states, in part:

Perhaps in some future case we might be required to decide whether a defendant in circumstances similar to Bell’s bears a burden of production as to his or her personal consumption of a validly prescribed medication. But that question is not before us; in this case, whatever burden of production Appellant Bell may have had was satisfied by the very evidence produced by the government itself, along with the drug screens and evidence of her longstanding legitimate medical needs. Thus, to the extent the concurrence purports to announce a rule imposing an “obligation” on such a defendant to produce evidence of personal consumption at sentencing, it constitutes mere dicta and, in any event, was not argued by the government.

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Judge Wilkinson wrote an opinion for a unanimous panel of the Fourth Circuit last week affirming the dismissal of an action brought by the owner of approximately 100,000 shares of Wachovia Corporation against the bank and four of its senior executives. Judge Motz and Judge Duncan joined in the opinion.

The opinion in Rivers v. Wachovia Corporation begins:

A former shareholder in Wachovia Corporation, appellant John M. Rivers, Jr. seeks to recover personally for the precipitous decline in value of his approximately 100,000 shares of Wachovia stock during the recent financial crisis. The district court, however, dismissed Rivers’s suit against Wachovia and four of its senior executives. The court concluded that Rivers’s complaint stated a claim derivative of injury to the corporation and that he was therefore barred from bringing a direct or individual cause of action against the defendants. Because Rivers’s varied attempts to recast his derivative claim as individual are unavailing, we shall affirm the judgment
The opinion ends:
In the end, Rivers has failed to articulate principled limits on the claims he seeks to press. Limiting individual suits to those who intended to sell is no limit at all; virtually every shareholder considers selling his shares at various points in time and every investor who suffers substantial monetary losses will be tempted to recall a prior intent to sell. Rivers claims his injury is unique but the number of people who may step forward with a similar tale of inducement not to sell is nigh infinite. Decisions to buy, sell, or hold shares inevitably involve a degree of risk and uncertainty. It is all too common to look back and wish one had invested differently. Investment presupposes risk—it is not the role of courts to reverse the consequences of infelicitous decisions after the fact or to allow one investor to recover losses at the expense of fellow shareholders. To the extent a shareholder wishes to litigate this sort of monetary loss due to the misrepresentations of corporate executives, his remedy lies within the framework of the derivative suit on behalf of the corporation. Because Rivers pursued a very different route, his suit was properly dismissed, and the judgment is affirmed.

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A panel of the Fourth Circuit held unanimously last week that the Maryland Wage Payment and Collection Law (“MWPCL”) does not constitutional a fundamental public policy of Maryland sufficient to defeat a choice-of-law clause choosing the law of another state. Judge Gregory wrote the opinion in Kunda v. C.R. Bard, Inc., which was joined in by Judge Motz and Judge Duncan. Some key language:

[T]he MWPCL contains no express language of legislative intent that that law is a fundamental Maryland public policy. Furthermore, the MWPCL contains no language indicating that any contractual terms contrary to its provisions are void and unenforceable, or that any provision of the MWPCL may not be waived by agreement. Thus, we find that the MWPCL is not a fundamental Maryland public policy.

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For several years, Richard Jaensch used a fake ID to get through airport security faster by giving TSA agents the impression that he was a foreign diplomat. The government eventually caught up with him, and he was convcted under 18 U.S.C. § 1028(a)(1), which criminalizes the use of a false identification document that appears to be issued by or under the authority of the federal government. He was convicted and sentenced to a $750 fine and one year of probation. On appeal, Jaensch argued, among other things, that § 1028(a)(1).

In a published opinion in United States v. Jaensch, the Fourth Circuit held unanimously that the statute was not vague as applied to Jaensch. The panel also rejected Jaensch’s other challenges and affirmed his conviction and sentence. Judge Wynn wrote the opinion, which was joined by in Judge Agee and Senior Judge Hamilton.

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Earlier this week, a split Fourth Circuit panel result two knotty jurisdictional questions. The first relates to appellate jurisdiction  in a case that has been transferred from a district court in one circuit to a district court in another circuit. The second relates to the commercial activities exception of the Foreign Sovereign Immunities Act. Judge Duncan wrote the majority opinion in Wye Oak Technology, Inc. v.  Republic of Iraq, in which Judge Osteen (M.D.N.C.) joined. Judge Shedd dissented.

Wye Oak sued the Republic of Iraq for breach of contract in the United States District Court for the Eastern District of Virginia. The underlying contract was between Wye Oak and Iraq’s Ministry of Defense. Iraq moved to dismiss for  lack of jurisdiction (both subject-matter jurisdiction and personal jurisdiction) and for improper venue. The subject-matter jurisdiction argument was based on the Foreign Sovereign Immunities Act. Wye Oak  invoked the commercial activities exception. Iraq then argued that the commercial activities exception did not apply to the claim against Iraq, because the contract was entered into by Iraq’s Ministry of Defense–a separate legal person–rather than Iraq itself. The District Court held that the commercial activities exception did apply after determining that Iraq and Iraq’s Ministry of Defense should be “treated as one and the same” for purposes of the FSIA. The District Court also held, however,  that venue was improper, and immediately transferred the case to the United States District Court for the District of Columbia. The transferee court stayed the case while the parties appealed the denial of the motion to dismiss to the Fourth Circuit.

The Fourth Circuit affirmed, holding that it possessed appellate jurisdiction notwithstanding the transfer, and that Iraq and Iraq’s Ministry of Defense were not separate legal purpose persons for purposes of the FSIA’s commercial activities exception.

Judge Shedd dissented from the holding regarding appellate jurisdiction over the now-transferred case.

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As the year draws to an end, it is necessary to do a little bit of catch-up on the Fourth Circuit’s output in argued cases. In the last two weeks of the year, the Fourth Circuit issued opinions in eleven argued cases. Six of the cases resulted in published opinions, and five in unpublished opinions.

I have already addressed (here and here) one of those opinions, United States v. Edwards, which involved a police officer’s on-the-street removal with a knife of a sandwich baggie containing crack from the genitals of an arrestee.

The next several posts will be devoted to the remaining ten opinions.

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Fourth Amendment cases sometimes raise questions that (one hopes) would otherwise never need to be asked or answered. A Fourth Circuit panel’s split decision in United States v. Edwards appears to turn on the answer to just such a question.

In the course of (what the Fourth Circuit appears to treat as) a permissible search, a Baltimore City police officer located a plastic sandwich baggie containing several packets of cocaine tied around a man’s penis. The officer proceeded to cut the baggie off with a knife. According to a Fourth Circuit panel majority consisting of Judge Keenan and Judge Motz, this action violated the Fourth Amendment and required suppression. According to Judge Keenan’s majority opinion, “in the absence of exigent circumstances, the right of the police to seize contraband from inside Edwards’ underwear did not give the officers license to employ a method creating a significant and unnecessary risk of injury.”

As Judge Diaz points out in dissent, however, the record evidence does not support the majority’s assertion about the nature of the risk posed by the police’s actions. The majority suggests that the police could have requested and used blunt-edged scissors, but the knife may have been no riskier: “the record of the suppression hearing offers little information about the knife, the manner in which it was used to remove the contraband, or how long it took to accomplish the task. The district court, moreover, made no mention of the knife in its ruling. This omission was not an oversight, but rather reflected the fact that the knife was not the focus of the parties’ evidentiary presentations.”

At points, Judge Keenan’s opinion hints at another possible rationale for the majority’s ruling–that the use of a knife in this circumstance “could only cause fear and humiliation.” But the majority does not rest on this rationale, and never undertakes a comparative assessment of the fear and humiliation involved in alternative methods of removing a baggie from this sensitive location. As Judge Diaz points out, the alternatives of untying, removing, or tearing the baggie, “would require that officers physically touch Edwards’ penis. . . . [And] a rule that directs officers to place their hands on a defendant’s genitals as a first option for seizing contraband in a baggie that the defendant has chosen to strap to his penis seems no more attractive than the careful use of a knife.”

Judge Diaz argues not only that the police did not violate the Fourth Amendment, but also that, if they did so, suppression was not the appropriate remedy.In responding to this point, the majority contends that suppression here serves the goal of deterrence. According to Judge Keenan, “Baltimore City police officers conduct searches inside the underwear of about 50 percent of arrestees, in the same general manner as the strip search performed on Edwards.” But the majority does not seek to deter such searches, only the use of a knife to remove what some of those searches reveal. And this poses a more significant problem: If the behavior to be deterred is routine, and if it poses a significant and unnecessary risk of harm, then wouldn’t the police have made a stray cut before now?

This question, and others, are raised by the panel opinion. It will be interesting to see whether, and if so, how, the case is revisited in en banc proceedings.

For those who track such things, all three judges on the panel were appointed by Democrats. Two were appointed by President Obama (Judge Keenan and Judge Diaz) and one by President Clinton (Judge Motz). Two judges are female (Judge Keenan and Judge Motz) and one judge is male (Judge Diaz).

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