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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When the police find a plastic baggie full of suspected drugs attached to a man’s penis, does it violate the Fourth Amendment for the police to cut it off with a knife? “Yes,” according to a 2-1 vote of the Fourth Circuit. Judge Keenan wrote the majority opinion in United States v. Edwards, in which Judge Motz joined. Judge Diaz authored a dissent.

Some snippets from the majority opinion:

As they were looking inside Edwards’ underwear, the officers saw that there was a plastic sandwich baggie tied in a knot around Edwards’ penis. From Bailey’s vantage point and with the assistance of the flashlight beam, Bailey could also see that the sandwich baggie contained smaller blue ziplock baggies, which contained “a white rock-like substance.” Based on his training and experience, Bailey concluded that the baggie and its contents were consistent with the packaging or distribution of a controlled substance.

Upon discovering the sandwich baggie tied around Edwards’ penis, another officer held Edwards’ pants and underwear open while Bailey put on gloves, took a knife that he had in his possession, and cut the sandwich baggie off Edwards’ penis with the knife. After Bailey cut the baggie,  he reached into Edwards’ underwear and removed the baggie and its contents. During this procedure, Edwards remained in handcuffs with his hands secured behind his back.

* * *

We conclude that Bailey’s use of a knife in cutting the sandwich baggie off Edwards’ penis posed a significant and an unnecessary risk of injury to Edwards, transgressing well-settled standards of reasonableness. The fortuity that Edwards was not injured in the course of this action does not substantiate its safety.

* * *

Manifestly, in the present case, there were several alternatives available to the officers for removing the baggie from Edwards’ penis, which neither would have compromised the officers’ safety nor the safety of Edwards. These alternatives included untying the baggie, removing it by hand, tearing the baggie, requesting that blunt scissors be brought to the scene  to remove the baggie, or removing the baggie by other non-dangerous means in any private, well-lit area. Thus, we conclude that, 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.

A cut from Judge Diaz’s dissent:

The majority does not suggest that the officers should have allowed Edwards to remove the contraband himself. But while it posits certain alternatives for seizing it, I fail to see  how the majority’s suggestions are any more reasonable than the method chosen by the officers. The first three suggestions—untying, removing, or tearing the baggie—would require that officers physically touch Edwards’ penis. In my view, however, 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. The majority next suggests that officers should have arranged for blunt scissors to be brought to the scene to remove the baggie. But this assumes that the knife actually used was not blunt, whereas the record offers no evidence as to its characteristics. Finally, the majority’s catch-all suggestion that officers should have used “other non-dangerous means in any private, well-lit area,” Maj. Op. at 14, does not specify a method of removal, but instead relies on the location of the search—a Bell factor that the majority explicitly declines to adopt as a basis for its decision. Thus, while criticizing the officers’ use of the knife as unreasonable, the majority has failed to articulate a method of removal that is any more reasonable. On that issue, the majority is in good company, for even Edwards’ counsel conceded at oral argument that there was “no good option” for removal.

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Federal law does not allow indirect purchasers to pursue damages under the antitrust laws. Many states follow this rule, and many do not. The Third Circuit’s en banc decision in Sullivan v. DB Investments affirms the certification of an indirect purchaser settlement class that treats indirect purchasers who can pursue damages claims under state antitrust law identically with indirect purchasers who cannot pursue damages claims under state antitrust law. Objectors to certification and settlement challenged certification based on commonality and predominance grounds, and challenged the pro rata distribution aspect of the settlement as unfair under Rule 23(e). I agree with the dissent that there are Rule 23 problems with the certification and the settlement. The best way to think about those problems, in my view, is as a failure of typicality.

Apart from the majority opinion by Judge Rendell and the dissent by Judge Jordan, there is also a concurring opinion by Judge Scirica, a leader among federal judges in analyzing class actions. Yet there is virtually no analysis of the typicality requirement in any of the opinions. This is an important omission from the analysis, because it is the typicality requirement that specifically calls for a claim to claim comparison. See Rule 23(a)(3) (requiring an assessment whether “the claims or defenses of the representative parties are typical of the claims or defenses of the class”).

Consider the following key paragraphs from the en banc majority’s opinion:

At bottom, we can find no persuasive authority for  deeming the certification of a class for settlement purposes improper based on differences in state law. The objectors and our dissenting colleagues nevertheless insist that, despite the prevalence of the shared issues of fact and law stemming from the defendant‘s conduct common as to all class members and each class member‘s resulting injury, states‘ inconsistent treatment of indirect purchaser damages claims overwhelms the commonalities. They advocate this because approximately twenty-five states have not extended antitrust standing to indirect purchasers through Illinois Brick repealer statutes or judicial edict; likewise, some uncertain number of states do not permit an end-run around antitrust standing through claims based on consumer protection and/or unjust enrichment statutes. (See Quinn Supp. Br. on Reh‘g En Banc 21-22.) It follows then, they argue, that a large proportion of the Indirect Purchaser Class lacks any valid claims under applicable state substantive law, and, therefore, cannot “predominantly” share common issues of law or fact with those Indirect Purchasers actually possessing valid claims.

In turn, they insist that a district court must undertake a thorough review of applicable substantive law to assure itself that each class member has “at least some colorable legal claim” (Dissenting Op. at 10) or “has a valid claim” (Quinn  Supp. Br. at 16) before certifying a settlement. But this focus is misdirected. The question is not what valid claims can plaintiffs assert; rather, it is simply whether common issues of fact or law predominate. See Fed. R. Civ. P. 23(b)(3). Contrary to what the dissent and objectors principally contend, there is no “claims” or “merits” litmus test incorporated into the predominance inquiry beyond what is necessary to determine preliminarily whether certain elements will necessitate individual or common proof. Such a view misreads Rule 23 and our jurisprudence as to the inquiry a district court must conduct at the class certification stage. An analysis into the legal viability of asserted claims is properly considered through a motion to dismiss under Rule 12(b) or summary judgment pursuant to Rule 56, not as part of a Rule 23 certification process.

The problem with the majority’s analysis would have been evident if the clear divergence among the claims possessed by class members who have antitrust standing to seek damages and the claims possessed by class members who do not have antitrust standing to seek damages had been viewed through the lens of the typicality requirement.

By comparison, consider the following discussion of typicality in a Fourth Circuit opinion about a putative antitrust class action, Dieter v. Microsoft, 436 F.3d 461 (4th Cir. 2006):

The class action device, which is “designed as an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only,” Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 155, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982) (internal quotation marks omitted), allows named parties to represent absent class members when, inter alia, the representative parties’ claims are typical of the claims of every class member. To be given the trust responsibility imposed by Rule 23, “a class representative must be part of the class and possess the same interest and suffer the same injury as the class members.” Id. at 156, 102 S.Ct. 2364 (internal quotation marks omitted). That is, “the named plaintiff’s claim and the class claims [must be] so interrelated that the interests of the class members will be fairly and adequately protected in their absence.” Id. at 157 n. 13, 102 S.Ct. 2364. The essence of the typicality requirement is captured by the notion that “as goes the claim of the named plaintiff, so go the claims of the class.” Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331, 340 (4th Cir.1998) (quoting Sprague v. Gen. Motors Corp., 133 F.3d 388, 399 (6th Cir.1998) (internal quotation marks omitted)).

The typicality requirement goes to the heart of a representative parties’ ability to represent a class, particularly as it tends to merge with the commonality and adequacy-of-representation requirements. See Amchem, 521 U.S. at 626 n. 20, 117 S.Ct. 2231Gen. Tel., 457 U.S. at 157 n. 13, 102 S.Ct. 2364. The representative party’s interest in prosecuting his own case must simultaneously tend to advance the interests of the absent class members. For that essential reason, plaintiff’s claim cannot be so different from the claims of 467*467 absent class members that their claims will not be advanced by plaintiff’s proof of his own individual claim. That is not to say that typicality requires that the plaintiff’s claim and the claims of class members be perfectly identical or perfectly aligned. But when the variation in claims strikes at the heart of the respective causes of actions, we have readily denied class certification. See, e.g.,Broussard, 155 F.3d at 340-44 (holding that plaintiffs could not sustain a class action based on a theory of collective breach of contract because variations in the claims undermined typicality); Boley v. Brown, 10 F.3d 218, 223 (4th Cir.1993) (affirming the district court’s denial of class certification when the resulting harm was dependent on considerations of each class member’s unique circumstances). In the language of the Rule, therefore, the representative party may proceed to represent the class only if the plaintiff establishes that his claims or defenses are “typical of the claims or defenses of the class.” Fed.R.Civ.P. 23(a)(3) (emphasis added).

Thus, it follows that the appropriate analysis of typicality must involve a comparison of the plaintiffs’ claims or defenses with those of the absent class members. To conduct that analysis, we begin with a review of the elements of plaintiffs’ prima facie case and the facts on which the plaintiff would necessarily rely to prove it. We then determine the extent to which those facts would also prove the claims of the absent class members.

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In Sullivan v. DB Investments, Inc., the en banc Third Circuit has affirmed the approval of a nationwide class settlement that includes people with no viable claim.

De Beers allegedly broke federal and state antitrust laws in its marketing of diamonds. After a long period of ignoring litigation in the United States, De Beers orchestrated a nationwide class settlement of the claims against it. After receiving district court approval, that settlement was thrown out by the Third Circuit. But now the Third Circuit, sitting en banc, has decided that the class and the class settlement comport with Rule 23.

I need to sit down with the opinions and examine them more closely, but my initial reaction is that the Third Circuit has erred significantly–and not simply by rejecting arguments advanced by Howard Bashman (which is a mark, but not a criterion, of infirmity).

The federal judiciary has no business overseeing conduct that does not involve a claim upon which relief can be granted. And it is hard to see how a federal court could have evaluated the fairness of a settlement that involved parties with no colorable claim to settle. But these are just initial reactions.

My overriding impression in going over the en banc opinion was that it was a throwback to an earlier era (not too long ago) when federal courts were much less careful than they should have been about Rule 23.

(The sense of a throwback was heightened when I saw the appellate court approvingly cite the district court opinion in McCoy v. Health Net, Inc., 569 F. Supp. 2d 448 (D.N.J. 2008), which approved the settlement of a class action previously vacated by the Third Circuit in Wachtel v. Guardian Life Ins. Co. of Am., 453 F.3d 179 (3rd Cir. 2006). While the two cases are different in many respects, it is worth noting that Judge Smith opposed class treatment in both the De Beers case and the Health Net case. Although the Third Circuit’s decision in Wachtel sounded in Rule 23(c), that may have reflected a compromise among the panelists, as there were serious predominance questions in the underlying class as well.)

[UPDATE: Welcome, readers of “How Appealing.” See here for another post on the DeBeers case, contending that a class that contains indirect purchasers with damages claims and indirect purchasers without damages claims fails under the typicality requirement of Rule 23(a)(3).)]

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Eric Posner addresses Newt Gingrich’s attacks on the judiciary in a Slate article confusingly titled “Newt and His Surprising Liberal Allies.”

The title of the piece comes from Posner’s assertion that “Gingrich enjoys another set of surprising allies, though these people probably would disclaim the allegiance: a group of mostly liberal law professors who have criticized judicial supremacy and have tried to resurrect various forms of popular sovereignty.” The reason the title is confusing is that there are many conservative law professors who have criticized judicial supremacy (as Posner appears to acknowledge in passing in the next paragraph).

Another confusing aspect of the piece is Posner’s assertion that Gingrich’s “embrace of departmentalism or popular sovereignty” (two different concepts), “which gives people the right to settle constitutional disputes through their elected representatives” (sort of, but not exactly), “contradicts his jurisprudential originalism, which requires judges to enforce popular constitutional understandings circa 1789” (entirely compatible with departmentalism, and not true with respect to the Bill of Rights (1791) and later amendments, such as the 14th (1868)).

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The Fourth Circuit’s opinion today in United States v. Summers contains a lengthy Confrontation Clause analysis stemming from the government’s introduction of the testimony and report of a DNA lab supervisor who testified and prepared his report on the basis of tests performed by others in the lab (who were not present to testify). Judge King wrote the opinion, which was joined in by Judge Shedd. Judge Floyd concurred in the judgment.

Judge King’s analysis discusses Melendez-Diaz v. Massachusetts and Bullcoming v. New Mexico, among other opinions.

Judge Floyd contends that the majority should not have reached the Confrontation Clause issues because any error was harmless. The majority agreed that the error was harmless, but only as an alternative holding after concluding that there was no error. The majority does, however, question the wisdom of the prosecution’s introduction of the DNA evidence. The point of introducing the evidence was to link a black NorthFace jacket to the defendant. The defendant was allegedly wearing the jacket before running from police. When they apprehended him, he was not wearing any jacket, but the police found a jacket (containing a handgun and lots of crack cocaine in its pockets) on the roof of a residence along the defendant’s flight path. Here’s what the majority says about the need for the DNA evidence:

[W]e cannot help but note that the government’s decision to introduce DNA evidence derived from the jacket had the unintended collateral effect of rendering a straightforward case significantly more complex. With respect to proving ownership of the jacket, the evidence introduced through Shea was scarcely more than the thin glaze on a dense cake baked to doneness by the officers’ largely unshakable testimony that: (1) Summers was wearing the jacket before he ran; (2) he was not wearing the jacket when he was caught; and (3) the jacket was found in the immediate vicinity of his flight path. Although we suppose that the jury could have been impressed that Quantico weighed in on the issue, we hardly think that the government needed to rely on the FBI’s star power to prevail in its open-and-shut case. Even had the district court’s admission of Shea’s report constituted error, it would surely be harmless beyond a reasonable doubt.

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The Fourth Circuit issued an opinion today unanimously affirming the district court in United States v. McKenzie-Gude. Judge Motz wrote the opinion, which was joined in by Judge King and Judge Duncan. The appeal focused on the legality of a search of a residence where the defendant, 18 years old at the time, allegedly possessed an AK-47 and explosive chemicals. The police obtained a warrant and ultimately seized from the defendant’s bedroom “several weapons, assorted gun parts, two bullet-proof vests, hundreds of rounds of ammunition, chemicals and other materials that could be used to make explosive devices, and instructions for making such devices.”

The problem with the search is that the affidavit in support of the warrant never linked the address of the residence to be searched (which was in the affidavit) with the defendant (who was linked in the affidavit with past possession of an AK-47 and explosive chemicals). The residence to be searched was the defendant’s residence, but the affidavit never said so. At the same time, uncontroverted information known to the police indicated that the defendant resided at the address to be searched.

The government conceded that the affidavit lacked the necessary connection between the defendant and the residence to be searched, but argued under Leon that the officers executing the warrant “harbored an objectively reasonable belief in the existence” of the link between the defendant’s alleged criminal activity and the residence to be searched. If the officers were entitled to rely not only on the affidavit but also additional evidence known to them, the answer to that question is obviously yes. According to the Fourth Circuit, then, “the question before us is whether, in determining an officer’s good faith, a court may properly look beyond the facts stated in the affidavit and consider uncontroverted facts known to the officers but inadvertently not disclosed to the magistrate.” The court answered that question in the affirmative, stating that “[w]e have consistently rejected the notion that reviewing courts may not look outside the four corners of a deficient affidavit when determining, in light of all the circumstances, whether an officer’s reliance on the issuing warrant was objectively reasonable.”

The court notes in a footnote that the Sixth Circuit and Ninth Circuit have held that Leon good faith reliance can be measured only by what is in an officer’s affidavit. By contrast, the Seventh, Eighth, and Eleventh Circuits have adopted the rule followed by the Fourth Circuit.

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The Fourth Circuit’s unanimous published opinion in F.C. Wheat Maritime Corp. v. United States, released today, provides insight into the valuation of yachts and the difference between “allision” and “collision.” In the opinion, the court of appeals affirms an award of lower damages than sought by the owner of a docked yacht that was smashed up by an Army Corps of Engineers vessel whose captain fell asleep at the helm. Judge Duncan wrote the opinion, which was joined in by Judge Shedd and Judge Osteen (MDNC, sitting by designation).

The first footnote of the opinion reads as follows:

“An allision is a collision between a moving vessel and a stationary object.” Evergreen Int’l., S.A. v. Norfolk Dredging Co., 531 F.3d 302, 304 n.1 (4th Cir. 2008) (quoting Thomas J. Schoenbaum, Admiralty & Maritime Law § 5-2 n.1 (4th ed. 2004)). See also Black’s Law Dictionary 88 (9th ed. 2009) (defining an allision as  [t]he contact of a vessel with a stationary object such as an anchored vessel or a pier”). The Marquessa was stationary at the time of the incident in this case.

Black’s explains, however, that “collision” is often used where “allision” was once the preferred term. Black’s Law Dictionary at 88. And as the Fifth Circuit has noted, “[i]n modern practice, courts generally use the term ‘collision’ as opposed to ‘allision’ when describing contact between vessels that gives rise to a suit.” Apache Corp. v. Global Santa Fe Drilling Co., No. 10-30795, 2011 WL 2747575, at *1 n.1 (5th Cir. Jul. 13, 2011)(unpublished). Indeed, the district court here used the term collision.

We adhere to the more precise usage, and are particularly mindful that admiralty law draws a distinction (albeit not one relevant to this appeal) between allisions and collisions. See Bessemer & Lake Erie R.R. Co. v. Seaway Marine Transp., 596 F.3d 357, 362 (6th Cir. 2010) (noting that admiralty law establishes a rebuttable presumption that in an allision, the moving object is at fault).

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The Fourth Circuit held today that SunTrust Mortgage did not violate TILA when, in the course of extending additional credit to an existing creditor in a refinancing, it used a disclosure form derived from Model Form H-8 in the Appendix to Regulation Z, rather than a form derived from Model Form H-9. Judge Niemeyer wrote the majority opinion for a split Fourth Circuit panel in Watkins v. SunTrust Mortgage, Inc. Judge Diaz joined Judge Niemeyer’s opinion. Judge Wynn dissented.

Judge Niemeyer’s opinion begins as follows:

The issue presented is whether a lender violates the Truth in Lending Act, 15 U.S.C. § 1601 et seq. (“TILA”), in providing notice to a borrower who is refinancing his mortgage of the right to rescind the transaction, using a form of notice substantially similar to Model Form H-8 in the Appendix to Regulation Z, 12 C.F.R. pt. 226, rather than using Model Form H-9, which was designed for refinancing transactions.

The district court dismissed the borrower’s complaint for failure to state a claim upon which relief could be granted, concluding that although Model Form H-8 is somewhat different from Model Form H-9, the use of Model Form H-8 in a refinancing transaction did not amount to a TILA violation.

We agree. Model Form H-8 includes all of the information required by TILA and Regulation Z to advise borrowers of the right to rescind a consumer credit transaction, including a refinancing transaction, and accordingly we affirm.

In dissent, Judge Wynn accuses the majority of ignoring binding circuit authority requiring strict conformity with TILA:

Whereas the majority holds that the notice provided by Form H-8 is close enough to meet the disclosure requirements of the Truth in Lending Act, this Court in Mars v. Spartanburg Chrysler Plymouth, Inc., 713 F.2d 65, 67 (4th Cir. 1983), made it plain that the Truth in Lending Act requires strict compliance. But, tellingly, the majority ignores our binding and controlling decision in Mars by not even citing to it.

Judge Wynn argues that the majority should not have looked for substantial similarity, for once SunTrust Mortgage decided to comply by relying on the appropriate model form, it needed to pick the right model form:

Here, SunTrust chose to use the “appropriate model form in Appendix H” disclosure method rather than to devise its own form to provide “substantially similar notice” required under the Truth In Lending Act. Thus, the dispositive issue on appeal is whether a lender that chooses to use the “appropriate model form in Appendix H” must use the appropriate form to comply with the Truth in Lending Act. Certainly yes. As it is undisputed that SunTrust did not use the appropriate model form, it follows that SunTrust was not in compliance with the Truth in Lending Act. It is a simple and straightforward result that is readily understood by both the lender and borrower. In  short, the intervention of courts should end when it is determined that a lender who chose to use the appropriate model disclosure form method used the wrong form.

Judge Wynn also twice suggests that the majority’s holding results from a failure to exercise “judicial restraint.”

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In Man and the State (1951), Maritain discusses the relationship between the people and the State:

As concerns furthermore the very notion of the people, I would say that the modern concept of the people  has a long history and stems from a singular diversity of meanings which have fused together. But considering only the political significance of the word, suffice it to say that the people are the multitude of human persons who, united under just laws, by mutual friendship, and for the common good of their human existence, constitute a political society or body politic. The notion of body politic means the whole unit composed of the people. The notion of the people means the members organically united who compose the body politic. Thus what I have said concerning either Body Politic and Nation or Body Politic and State holds good for either People and Nation or People and State. Nay more, since the people are human persons who not only form a body politic, but who have each one a spiritual soul and a supratemporal destiny, the concept of the people is the highest and noblest concept among the basic concepts that we are analyzing. The people are the very substance, the living and free substance, of the body politic. The people are above the State, the people are not for the State, the State is for the people.

I should finally like to point out that the people have a special need of the State, precisely because the State is a particular agency specializing in the care of the whole, and thus has normally to defend and protect the people, their rights, and the improvement of their lives against the selfishness and particularism of privileged groups or classes. In ancient France the people and the King relied upon each other, somewhat ambiguously, in their struggle against the supremacy of the great feudal lords or the nobility. In modern times it has been the same with the people and the State in regard to the struggle for social justice. Yet, as we have seen, this normal process, if it becomes corrupted by the absolutism of the totalitarian State, which raises itself to the supreme rule of good and evil, leads to the misfortune and enslavement of the people; and it is impaired and jeopardized if the people surrender themselves to a State, which, as good as it may be, has not been freed from the notion of its so-called sovereignty, as well as from the factual deficiencies of the body politic itself. In order both to maintain and make fruitful the movement for social improvement supported by the State, and to bring the State back to its true nature, it is necessary that many functions now exercised by the State should be distributed among the various autonomous organs of a pluralistically structured body politic–either after a period of State capitalism or of State socialism, or, as is to be hoped, in the very process of the present evolution. It is also necessary that the people have the will, and the means to assert their own control over the State.

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In answering the Republican claim that jurisdiction over the murder committed by Thomas Nash (aka Jonathan Robbins) against a foreign citizen on a British ship was established by arraignments in a federal court in Trenton, Congressman John Marshall argued:

It has also been contended that the question of jurisdiction was decided at Trenton, by receiving indictments against persons there arraigned for the same offence, and by retaining them for trial after the return of the habeas corpus.

Every person in the slightest degree acquainted with judicial proceedings, knows that an indictment is no evidence of jurisdiction; and that, in criminal cases, the question of jurisdiction will seldom be made but by arrest of judgment after conviction.

The proceedings, after the return of the habeas corpus, only prove that the case was not such a case as to induce the Judge immediately to decide against his jurisdiction. The question was not free from doubt, and, therefore, might very properly be postponed until its decision should become necessary.

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After President Adams extradited Thomas Nash (aka Jonathan Robbins), whom the British then executed, Republicans criticized the President on the grounds that he had usurped judicial authority because extradition was regulated by treaty, and “the Constitution of the United States declares that the Judiciary power shall extend to all questions arising under the Constitution, laws, and treaties, of the United States.” 10 Annals of Congress 533 (1800) (quoting a Republican resolution for censuring the President).

Congressman John Marshall’s defense of the Administration’s actions includes a penetrating discussion of the limited power of the federal judiciary. Marshall argued that the decision whether to extradite Nash “was a case for Executive and not Judicial decision.” 10 Annals of Congress 605 (1800). The report of his floor speech continues:

He [Marshall] admitted implicitly the divisions of powers, stated by the gentleman from New York [who had offered the resolution censuring the President], and that it was the duty of each department to resist the encroachment of the others.

This being established, the inquiry was, to what department was the power in question allotted?

The gentleman from New York had relied on the second section of the third article of the Constitution, which enumerates the cases to which the Judicial power of the United States extends, as expressly including that now under consideration. Before he examined that section, it would not be improper to notice a very material misstatement of it made in the resolutions, offered by the gentleman from New York. By the Constitution, the Judicial power of the United States is extended to all cases in law and equity, arising under the Constitution, laws, and treaties of the United States; but the resolutions declare that Judicial power to extend to all questions arising under the Constitution, treaties, and laws of the United States. The difference between the Constitution and the resolutions was material and apparent. A case in law or equity was a term well understood, and of limited signification. It was a controversy between parties which had taken a shape for judicial decision. If the Judicial power extended to every question under the Constitution, it would involve almost every subject proper for Legislative discussion and decision; if, to every question under the laws and treaties of the United States, it would involve almost every subject on which the Executive could act. The division of power which the gentleman had stated, could exist no longer, and the other departments would be swallowed up by the Judiciary. But it was apparent that the resolutions had essentially misrepresented the Constitution. He did not charge the gentleman from New York with intentional misrepresentation; he would not attribute to him such an artifice in any case, much less in a case where detection was so easy and so certain. Yet this substantial departure from the Constitution, in resolutions affecting substantially to unite it, was not less worthy of remark for being unintentional. It manifested the course of reasoning by which the gentleman had himself been misled, and his judgment betrayed into the opinions those resolutions expressed. By extending the Judicial power to all cases in law and equity, the Constitution had never been understood to confer on that department any political power whatsoever. To come within this description, a question must assume a legal form for forensic litigation and judicial decision. There must be parties to come into court, who can be reached by its process, and bound by its power; whose rights admit of ultimate decision by a tribunal to which they are bound to submit.

A case in law or equity proper for judicial decision may arise under a treaty, where the rights of individuals acquired or secured by a treaty are to be asserted or defended in court. As under the fourth or sixth article of the Treaty of Peace with Great Britain, or under those articles of our late treaties with France, Prussia, and other nations, which secure to the subjects of those nations their property within the United States; or, as would be an article, which, instead of stipulating to deliver up an offender, should stipulate his punishment, provided the case was punishable by the laws and in the courts of the United States. But the Judicial power cannot extend to political compacts; as the establishment of the boundary line between the American and British dominions; the case of the late guarantee in our Treaty with France, or the case of the delivery of a murderer under the twenty-seventh Article of our present Treaty with Britain.

The gentleman from New York has asked, triumphantly asked, what power exists in our courts to deliver up an individual to a foreign government? Permit me, said Mr. M., but not triumphantly, to retort the question. By what authority can any court render such a judgment? What power does a court possess to seize any individual and determine that he shall be adjudged by a foreign tribunal, yet they must possess it, if this article of the treaty is to be executed by the courts.

(1o Annals of Congress 606-07 (1800) (emphasis added))

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The federal government has had difficulty beating back suppression motions in the Fourth Circuit this past year. Last week, however, a panel unanimously affirmed the denial of a suppression motion. Judge Wilkinson wrote the opinion in United States v. Glover, which was joined in by Judge King and Judge Diaz. (Attentive readers may also have noted that Judge Wilkinson authored the majority opinion in United States v. Braxton a couple of weeks ago, also affirming denial of a suppression motion–that time, over the dissent of Judge Wynn.)

The opinion begins as follows:

Paul Glover entered a conditional plea of guilty to being a felon in possession of a firearm in violation of 18 U.S.C. § 922(g)(1). He now appeals the denial of his motion to suppress evidence obtained during a stop-and-frisk in a deserted gas station parking lot in the wee hours of the morning. For the reasons that follow, we affirm the district court’s denial of Glover’s suppression motion.

The stop-and-frisk here occurred after officers observed the defendant lurking outside of the range of the closed circuit cameras at a 24-hour service station at around 4:40 a.m. Judge Wilkinson writes that the circumstances facing the officers were far different than those in United States v. Foster, 634 F.3d 243 (4th Cir. 2011), which “concerned the stop of  a driver believed to be involved in drug activity in the middle of the day in a low-crime area.”

With respect to police reliance on nervous behavior, which the Fourth Circuit criticized in United States v. Massenburg, 654 F.3d 480 (4th Cir. 2011), Judge Wilkinson wrote:

While it is important not to overplay a suspect’s nervous behavior in situations where citizens would normally be expected to be upset, see United States v. Massenburg, 654 F.3d 480, 490 (4th Cir. 2011), Glover was furtively watching the attendant from a location outside the range of surveillance cameras, glancing around the corner, and pulling his head back well before Officers Skipper and Archer stopped the patrol car. Such conduct is far more like the casing of the store in Terry than the case of nerves a citizen might ordinarily exhibit in interactions with police.

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In Integral Humanism (1936, first U.S. edition in translation 1968), Jacques Maritain writes as follows in his first chapter on the Historical Ideal of New Christendom:

The world will not soon be done with the ultimate phase of materialistic imperialism, which invokes the dictatorship of the proletariat or reacts against it, and there will be necessary perhaps upheavals of world dimensions, if it is true that it is a question of liquidating a whole age of civilization.

Howsoever this may be, by a remarkable dialectical process, the Christian absolutism (at least Christian in appearance) which succeeded the mediaeval world has been ejected by an anti-Christian liberalism, and the latter having been evacuated in its turn by the sole fact of its success, the place is ready for a new absolutism, this time materialistic (with an avowed materialism or with a disguised materialism) and more enemy than ever of Christianity.

All along the course of this evolution, even and especially during the liberal and individualist democratic period, something has constantly increased and magnified its claims: the State, the sovereign machine in which political power takes flesh, and which imprints its anonymous countenance on the social community and on the obeying multitude.

While awaiting the results of the full ascension of promises, and without taking account of its own responsibilities, rationalism laments that the youth of the entire world manifests for the moment a lively appetite for collective forms and spiritual standardization, in despair of the unity which is lost. It sees with astonishment a romantic distress which could find no reason for living succeeded by a joy in command and the fascinations of a bravado which satisfy themselves with the most superficial reasons for living. It realizes too late that only a faith superior to reason, vivifying the intellectual and effective activities, can assure among men a unity founded not on constraint, but on interior assent, and make of joy in existence, which is certainly natural, but which nature itself alone cannot safeguard (pagan wisdom held that the best fortune were never to have been born), an intelligent delight.

I would be grateful for any pointers about whom Maritain had in mind as having held that “the best fortune were never to have been born.”

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The Fourth Circuit issued a published opinion today that addresses “the circumstances under which a bankruptcy court may approve nondebtor release, injunction, and exculpation provisions as part of a final plan of reorganization under Chapter 11 of the Bankruptcy Code.” The opinion also contains a discussion of the equitable mootness doctrine. Judge Diaz wrote the opinion in Behrmann v. National Heritage Foundation, in which Chief Judge Traxler and Judge Agee joined.

The court held that equitable relief provisions like those at issue in the case are permissible under certain circumstances, but that the bankruptcy court must make specific findings before ordering such relief (which was not done here). The court further held that the appeal was not equitably moot.

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The Supreme Court heard oral argument last week in First American Financial Corp. v. Edwards. The case calls on the Supreme Court to address the relationship between Article III standing and federal causes of action for statutory damages. The Federalist Society recently posted my post-argument podcast on the case.

I don’t have a confident prediction about how the Supreme Court will decide the case. But with four Justices virtually certain to find standing (Breyer, Ginsburg, Kagan, and Sotomayor), the challenge for petitioners is to gain the votes of all of the remaining five Justices. (In this sense, the case is like the upcoming health care cases, and many others.)

The decision will depend on whether all five Justices that petitioners need are persuaded that the interest protected by the statute is sufficiently distinct from the interests protected by well-established causes of action that do not require the plaintiff to show consequential harm.

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The Fourth Circuit issued two published opinions in argued cases today. Judge Wynn authored both opinions, which were unanimous.

At issue in Creekmore v. Maryview Hospital was the admissibility, under Virginia Code § 8.01-581.20, of the testimony of an OB-GYN about the standard of care for a nurse’s postpartum monitoring of a high-risk patient with preeclampsia. The district court admitted the testimony and the court of appeals affirmed. The panel deciding the appeal consisted of Judge Wilkinson, Judge Wynn, and Judge Floyd.

In CGM, LLC v. BellSouth Telecommunications, the Court of Appeals held that a billing agent for competitive LECs lacked statutory standing to bring an action for declaratory relief against an incumbent LEC regarding the claim that the ILEC failed to pass on to CLECs the full value of discounts offered by the ILEC to its customers. No CLECs were parties in the case. Some key language:

CGM has no interconnection agreement with BellSouth. CGM has not brought this suit pursuant to any interconnection agreement. And no party to an interconnection agreement is a plaintiff in CGM’s suit. Because Section 251(c)’s resale duties and the related 47 C.F.R. § 51.613 are not free-standing but exist, to the extent that they do at all (given parties’ freedom to contract around them), only as embodied in interconnection agreements, CGM has no rights, and BellSouth no duties, under the circumstances of this case.

Although decided on statutory standing grounds, this case has some echoes of the Fourth Circuit’s decision on Article III standing in Neese v. Johanns:

In this case, any claim to a specific sum of money must flow from the contractual relationship between the Secretary and the producer. See 7 U.S.C. § 518b(a) (“The Secretary shall offer to enter into a contract . . . under which the producer of quota tobacco shall be entitled to receive payments under this section. . . .”) (emphasis added). Appellants, however, cannot maintain such a claim. After accepting the Secretary’s offer of payment contracts without reservation and entering into those contracts, they transferred all their rights under those contracts to third parties. Quite simply, appellants have no rights left to invoke and, therefore, lack standing to pursue further contracts or payments from the Secretary.

Procedure buffs may be interested in noting the court’s conclusion that a motion to dismiss for lack of statutory standing is properly brought under FRCP 12(b)(6) rather than FRCP 12(b)(1). It is also worth noting how easily the court dispatched the attempt to rely on the Declaratory Judgment Act as a free-standing cause of action.

The panel deciding CGM consisted of Judge Shedd, Judge Wynn, and Senior Sixth Circuit Judge Keith.

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The Fourth Circuit yesterday rejected constitutional and other challenges to various changes made to the Black Lung Benefits Act by the Patient Protection and Affordable Care (“PPACA” or “Affordable Care Act” or “ACA” or “Obamacare” and so on). Judge Wilkinson wrote the opinion in West Virginia CWP Fund v. Stacy, which was joined in by Chief Judge Traxler and Judge Wynn.

The principal constitutional challenges were substantive due process and Takings Clause claims regarding a statutory provision that extended certain benefits to claims that were filed after January 1, 2005 and pending on or after the date of the ACA’s enactment (March 23, 2010). The challengers sought to distinguish Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976), in which the Supreme Court rejected a due process challenge to the Black Lung Benefits Act. The challengers sought to analogize their challenge to Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), in which five Justices voted to hold unconstitutional a certain retroactive imposition of liability in the coal industry. The five Justices in the Eastern Enterprises majority did not agree on a theory of unconstitutionality. Four found a violation of the Takings Clause, while one (Justice Kennedy) found a substantive due process violation. (The remaining four found no constitutional flaw.)

Judge Wilkinson’s opinion applies Usery v. Turner Elkhorn Mining, distinguishes Eastern Enterprises, and in the course of doing so, also reiterates the Fourth Circuit’s view that the rejection of a Takings Clause theory by five Justices–on the ground that a simple obligation to pay does not amount to a taking–“is more authoritative than the plurality’s conclusion” that the imposition of such an obligation could amount to a taking.

The opinion contains two interesting passages regarding the Affordable Care Act more generally. First, Judge Wilkinson concludes in a footnote that the BLBA amendments in the ACA would survive as severable even if the Supreme Court were to hold the individual mandate unconstitutional (as it has been asked to do). Second, Judge Wilkinson resoundingly rejects, because it threatens the separation of powers, the challengers’ argument that the BLBA amendments only passed due to their inclusion in massive and unwieldy ACA:

[P]etitioner’s argument that the BLBA amendments only passed due to their “inclusion . . . in approximately 2,700 pages of healthcare legislation,” Petitioner’s Reply Br. at 27-28, threatens the separation of powers by inviting courts to scrutinize the process by which a coordinate branch of government goes about its business. Likewise, it invites every loser in a legislative fight to contest not only the constitutionality of Congress’s final product, but the way that Congress went about enacting it. Such a plunge into the depths of Capitol Hill should be undertaken—if at all—only in the most extraordinary of circumstances, circumstances that are plainly not presented here. In sum, the difficulties with petitioner’s view are evident and legion.

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The Fourth Circuit yesterday issued a published opinion in United States v. Wellman affirming convictions on three offenses related to child pornography possession along with a ten-year sentence on one of the counts. Judge Keenan wrote the opinion, which was joined in by Judge Wynn and Senior Judge Hamilton.

In disposing of the defendant’s Fourth Amendment claim, Judge Keenan assumed without deciding that the content of the warrant application was insufficient to find probable cause, but held that the evidence was not subject to suppression because the West Virginia State Police relied in good faith on the issued search warrant. Although the structure of this reasoning does not yield clear guidance about what must be included in a warrant application, the panel did “decline to impose a requirement that a search warrant application involving child pornography must include an image of the alleged pornography.”

The opinion rejects the defendant’s statutory argument as an impermissible “attempt to graft a subjective, fact-based knowledge requirement onto an objective legal standard.”

The Eighth Amendment proportionality analysis concludes easily that Congress acted “well within its authority” in providing for a ten-year sentence for recidivist possessors of child pornography. In the lead-up to the analysis, Judge Keenan quotes a First Circuit decision stating that the instances of disproportionate sentences invalid under the Eighth Amendment should be “hen’s-teeth rare.” This suburbanite does not know what that means based on any experience with hens, but I suppose the number of such sentences is not much more than a goose egg.


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