Arkansas Business Litigation Blog : Arkansas Business Litigation Lawyer & Attorney : Allen Law Firm : Serving Little Rock, Fort Smith, North Little Rock

The Eighth Circuit affirmed summary judgment in American Boat Co., Inc. v. Unknown Sunken Barge, No. 08-2166 (6/4/09).

 

The district court granted summary judgment to the United States. Plaintiffs failed to timely appeal because they claim not to have received the ECF notice of the summary judgment. An evidentiary hearing was held, and both parties had a computer forensics expert investigate the computer of Plaintiffs' counsel. Plaintiffs' expert was unable to provide an opinion as to why the notice failed to reach plaintiffs.

 

Although there was no evidence of the notice on Plaintiffs' counsel's server, there was evidence that Plaintiffs' counsel used a POP account to remotely check email. The court affirmed summary judgment, holding that denial of receipt cannot overcome the presumption that an ECF notice is received.

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The Arkansas Supreme Court reversed a judgment based on emotional distress in Rees v. Smith, No. 08-293 (4/2/09).

 

Smith alleged that Rees represented her in a lawsuit, demanded sexual favors for continued representation, and that she engaged in sex with Rees based on these demands. Smith alleged this conduct was a breach of fiduciary duty, and the jury returned a verdict of $10,000 for emotional distress.

 

The supreme court reversed, holding that emotional distress cannot form the basis of a breach of fiduciary duty claim. This claim must be supported by an economic loss. The case is not over; the court also reversed the grant of summary judgment to Rees on Smith's outrage claim for the same alleged conduct.

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A case that has been in litigation since 1996 has finally come to an end. Kearney v. City of Little Rock, No. 07-1317 (Ark.App. 2/25/09).

 

The city determined that Kearney's house was unfit for human habitation. The home was in such disarray and had so many code violations that it posed an immediate fire hazard. Kearney never made the appropriate repairs. Before the house could be razed, Kearney filed this lawsuit. The trial court granted summary judgment to the city, and the court of appeals affirmed. Under their police power, cities have the right to raze structures that have become detrimental to public welfare.

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The Arkansas Supreme Court issued two opinions in Terry v. White, the lawsuit involving Mitch Mustain (most recently posted here 8/21/07).

 

In Case No. 07-1096, the court dismissed the appeal as moot because John White has resigned as chancellor of the University of Arkansas. In Case No. 07-1143, the court affirmed an order finding plaintiff's attorney in contempt. After the trial court stayed discovery, plaintiff's attorney obtained extensive discovery from nonparties, then released this evidence to the Arkansas Democrat-Gazette and various other individuals. The court affirmed an award of $1,000 attorney's fees against plaintiff's attorney.

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The Arkansas Supreme Court affirmed summary judgment in Gray v. Mitchell, No. 07-858 (5/29/08). This case involves the much-publicized termination of Dr. Roy Brooks, former superintendent of the Little Rock School District. As part of the termination, the school board payed Dr. Brooks $650,000 in severance pay. This lawsuit argued that payment to a school employee to "not work" violates the Arkansas Constitution, Article 14 § 3(b). The trial court granted summary judgment to the defendants.

 

The supreme court pointed out the flaw in the lawsuit's reasoning--paying severance to Dr. Brooks permitted the school board to replace him with what they would consider a better superintendent. This is immediately and directly connected with the maintenance of the school system, which satisfies the constitutional mandate.

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The Eighth Circuit affirmed dismissal of claims based on the Arkansas Securities Act and fraud in Benton v. Merrill Lynch & Co., Inc., No. 07-2224 (5/5/08).

 

In 2001 and 2002, David Howell fraudulently obtained money from various investors. He then set up an institutional account at Merrill Lynch. By summer 2002 he had lost all the money in the account, and he committed suicide shortly thereafter. Plaintiffs filed suit against Merrill Lynch under a theory that it aided and abetted Howell's fraud. The district court dismissed for failure to state a claim.

 

The Eighth Circuit affirmed because the fraud occurred only when Howell took money from investors. Merrill Lynch never took part in taking the money and had no communications with the investors. Merrill Lynch simply cannot be liable for events that occurred before its relationship with Howell.

 

 

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Chief Justice Jim Hannah's concurrence in Despain v. Bradburn is also a ringing dissent from the United States Supreme Court's holding in Riegel v. Medtronic. Chief Justice Hannah's concurrence is consistent with but, perhaps, more vigorous than Justice Ginsburg's Medtronic dissent, which expressed concern that the majority's decision "cut[s] deeply into a domain historically occupied by state law."

The Chief Justice writes:

I am . . . compelled to express my dismay at the summary abandonment of venerable principles of state common law that have been developed over many generations. By a conclusory and incomplete analysis, our law is dismissed. In the place of well-reasoned judicial decisions reaching back to the England of Blackstone, injured plaintiffs are told that instead of looking to their common law for redress they must look to a regulatory agency that has no power to grant them any redress.

Further, the MDA, which was enacted to protect the public against defective and unsafe medical devices through federal regulation, is now turned on its head and instead grants immunity to the providers of medical devices. I believe that the United States Congress will step in to amend the MDA and heal the injury caused in this case; however, the injury done to the common law and principles of federalism will not be so easily healed.

Justice Robert L. Brown joined the Chief's concurrence.

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The Arkansas Supreme Court reversed itself in light of a recent decision of the United States Supreme Court in Despain v. Bradburn, No. 07-714. The Court held in an earlier decision that "that the Medical Device Amendment (MDA) to the federal Food, Drug, and Cosmetic Act did not preempt a state-law tort claim filed against the manufacturer of a medical device."

Today, recognizing that the United States Supreme Court held "precisely the opposite" in its recent decision, Riegel v. Medtronic, the Court reversed itself on a petition for rehearing filed by Soundtec, one of the defendants in the case. Justice Glaze, who wrote the Court's original Despain opinion wrote today's decision.

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The Arkansas Supreme Court affirmed summary judgment in Gallas v. Alexander, No. 06-956 (9/27/07).

 

The law at issue is codified at A.C.A. § 23-113-101, et seq. This law sets forth procedures for permitting gambling on electronic games of skill. Any city or county that already has horse racing or greyhound racing can hold a local election. Presently only Oaklawn Jockey Club in Hot Springs and Southland Racing Corporation in West Memphis have such legal operations in Arkansas. The racetrack itself chooses whether the election is submitted to the city or county, but the racetrack must pay all expenses associated with the election. The Arkansas Racing Commission (ARC) determines what games qualify as electronic games of skill.  

 

Plaintiffs are residents of Garland County but not of the city of Hot Springs. They challenged the law on three main grounds: (1) delegation of legislative authority to the racetracks; (2) delegation of legislative authority to the ARC; and (3) the law had no rational basis. The trial court  rejected these arguments and held the law is constitutional. The supreme court agreed and affirmed.

Continue Reading...

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The Eighth Circuit reversed the district court's sentencing of Tom Coughlin in U.S. v. Coughlin, No. 06-3294 (8/28/07). The details of the scandal were previously posted on April 12, 2007. The district court imposed a sentence of no imprisonment and 5 years' probation, of which 27 months is home detention. The government filed this appeal.

 

Coughlin is an obese man and suffers from a number of illnesses related to his obesity, including diabetes. Dr. Joel Carver testified at the sentencing hearing that Coughlin should not go to prison for medical reasons. A summary of the testimony is available here by the Northwest Arkansas Times.  However, Dr. Carver admitted he never visited a prison, has no idea how prisons operate, and has no knowledge of prison conditions.

 

The Eighth Circuit was not impressed with Dr. Carver's testimony and found that Coughlin does not suffer an extraordinary physical ailment. The Eighth Circuit also reversed the district court for only considering mitigating factors involving Coughlin's family ties and charitable donations. On remand, the district court must consider the seriousness of the offense, adequate deterrence, and other factors evaluating the nature of Coughlin's crimes.

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The Eighth Circuit affirmed a preliminary injunction in Doe v. South Iron R-1 Sch. Dist., 2007 WL 2363216 (8th Cir. 8/21/07).

 

The South Iron R-1 School District permitted Gideons International to distribute bibles to fifth graders. The Gideons distributed these bibles on school grounds during the school day. Parents of fifth graders filed this lawsuit alleging violation of the Establishment Clause. The district court agreed a granted a preliminary injunction to prevent further distribution of the bibles.

 

The school district then adopted a content-neutral policy for distribution of materials to students. This policy would allow the Gideons to distribute bibles and allow other groups to distribute materials. The Eighth Circuit affirmed the injunction as to the old policy, but declined to make a decision as to the constitutionality of the new policy.

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The lawsuit involving Mitch Mustain (previously posted here on 4/26/07 and here 6/05/07) has come to an end at the trial court level. Judge Lindsay dismissed the remainder of the lawsuit and, according to the Northwest Arkansas Times, stated "Quite frankly, this is none of this court's business." In addition to the dismissal, Judge Lindsay ordered the plaintiff to pay the University of Arkansas attorney's fees of $1,000.

 

The case is still not over. The plaintiff announced his intention to appeal the ruling.

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Fackrell v. Marshall is an interesting Eighth Circuit decision arising out of a garden-variety car wreck case. The Eighth Circuit affirmed the District Court's rulings on two exceptions to the "coming and going" rule of vicarious liability.

The wreck happened at a Kansas City gas station where Marshall, an software consultant, had just topped off his rental car with gas. He was on his way to the Kansas City airport, "where he was to drop off his rental car, participate in a work-related conference call an hour before his flight, and then fly to his home in South Carolina." Marshell was an independent contractor for the co-defendant, Lombardi Software, and had been working at Sprint's corporate headquarters in Overland Park, Kansas during the week and flying home on the weekends.

The plaintiff asserted vicarious liability against Lombardi as Marshell's employer, who countered that Marshell was an independent contractor. The District Court granted summary judgment on the basis that even if Marshell was an employee, he was acting outside the scope of his employment at the time of the accident. The Eighth Circuit affirmed on the basis of the so-called "coming and going" doctrine. The coming and going doctrine, under Missouri law, holds that "getting to the place of work is ordinarily a personal problem of the employee," so employers generally are not liable for accidents that occur on the way to and from work. The Court held that the "special errand" exception did not apply.
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The Arkansas Supreme Court agreed Thursday to decide the following question, which has fascinating legal and philosophical implications:

Does a child, who was created as an embryo through in vitro fertilization during his parent's marriage, but implanted into his mother's womb after the death of his father, inherit from the father under Arkansas intestacy law as a surviving child?

The case is Amy Finley on behalf of herself and W.F., a minor child, v. Michael J. Astrue, Commissioner, Social Security Administration, No. 07-627.

A clue that the answer may be "yes," is provided by Arkansas Code Annotated 28-9-209(C), which provides:

Any child conceived following artificial insemination of a married woman with the consent of her husband shall be treated as their child for all purposes of intestate succession. Consent of the husband is presumed unless the contrary is shown by clear and convincing evidence.

Last December, the Arkansas Worker's Compensation Commission found that W.F. was entitled to receive benefits under the worker's compensation statute as a dependent child of the father. The Commission cited Section 209(C), as well as decisions such as Gillett-Netting v. Barnhart, 371 F.3d 593 (2004).

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Judge Lindsay dismissed the lawsuit involving the infamous Teresa Prewett email to Mitch Mustain (the lawsuit was previously posted 4/26/07). According to the Ft. Smith Times Record, Judge Lindsay stated, "I have not been shown any reason that a state court should get involved in the administration of the football program or athletic program" (full article here). The court did give the plaintiff 20 days to amend the pleadings on two of the counts that were dismissed.

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The Arkansas Supreme Court issued the mandate to finally conclude the long-running Lake View case in Lake View Sch. Dist. No. 25 v. Huckabee, No. 01-836 (5/31/07). Public school funding is now in constitutional compliance.

 

This historic case was filed August 19, 1992 (to put in perspective, during Bill Clinton's last term as governor of Arkansas). The case achieved class action status in 1996 and produced a number of important decisions. Its significance was not lost on the Court--the opinion was signed individually by each participating justice. The Court gave its sincere thanks to the parties who had worked for so long on this case:

[W]e are now able to direct the issuance of the mandate in this case due to the hard work of the Masters, the General Assembly, and the executive branch. This court, the people of Arkansas, and the generations to come are indebted to them for their commitment to education.

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In Danner v. Discover Bank, No. CA06-1052, the Arkansas Court of Appeals adopted the reasoning of the District of Columbia Court of Appeals, and held that the trial court impermissibly required a defendant to prove that certain charges on a Discover account belonged to her, in violation of the Fair Credit Billing Act, 15 U.S.C. 1666.

Discover sued the defendant on the basis that appellant was past due on her account; she "defended by admitting that she had had Discover credit cards in the past, but that she thought she had paid them off and was surprised to have received a demand for payment of the sum sought."

As the defendant, Danner elected to hold Discover to its burden of proof at trial:

She did not expressly deny that the card and charges were hers, but simply stated that she had no recollection and put appellee to its proof. The trial court found in favor of appellee on the basis of its findings that appellant “did not say without question that these were not her charges,” and that payments had been made on the account.

The Court of Appeals agreed with the defendant/appellant that requiring her to prove that the charges were not hers violated the Fair Credit Billing Act, which "places upon the card issuer the burden of proving that any disputed use made of the card was authorized."

In this holding the Court of Appeals approved of the reasoning of the District of Columbia Court of Appeals, which issued a similar holding in Crestar Bank v. Cheevers, 744 A.2d 1043 (D.C. 2000).

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The Arkansas Supreme Court resolved an interesting point of standing in Arkansas Beverage Retailers Ass'n, Inc. v. Moore, No. 06-794 (5/3/07).

 

The Alcoholic Beverage Control Board approved a transfer of a liquor license to Sam's Club in Fayetteville. The Arkansas Beverage Retailers Association filed a complaint seeking judicial review, claiming its members would suffer financial harm if the license was transferred to Sam's. The trial court dismissed the complaint for lack of standing, concluding that financial impact could not support standing under the Administrative Procedure Act (APA).

 

The Supreme Court reversed, finding that the APA grants standing on "any person . . . who considers himself or herself injured in his or her person, business, or property by final agency action[.]" See A.C.A. § 25-15-212(a).

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Special Masters (and former Arkansas Supreme Court Justices) Bradley D. Jesson and David Newbern, appointed as special masters in the ongoing Lake View School District No. 25 v. Huckabee school-funding litigation (selective index here), have released their latest report, filed after this year's legislative session. The report is here.

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The Court of Appeals for the D.C. Circuit agreed that confidentiality agreements were too broad so as to violate labor laws in Cintas Corp. v. NLRB, 2007 WL 776875 (D.C. Cir. 3/16/07).

 

Cintas is a major corporation employing about 27,000 people. The issue in this case was sections of the handbook titled "Cintas Culture." Two sections came under scrutiny: (1) all information concerning the company is confidential; and (2) employees may be sanctioned for violating a confidence or for the unauthorized release of confidential information.

 

The union UNITE filed unfair labor practice charges with the NLRB. They claimed the policy was so broad that it violated 29 U.S.C. § 158(a)(1), which prohibits employer interference with employees' rights to discuss terms and conditions of their employment with others. The NLRB agreed and ordered Cintas to amend the language of the handbook.

 

The Court of Appeals affirmed the decision; Cintas will have to amend its handbook to make sure its confidentiality requirements do not violate federal labor law.

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Minnesota Public Utilties Commission v. FCC, No. 05-1069. The Eighth Circuit affirms the FCC's decision to preempt Minnesota's regulation of Voiceover Internet Protocol in this consolidated review. The FCC's decision was based, not on a classification of VoIP as a "telecommunications service" versus an "information provider," but on an application of the "impossibility exception" of 42 U.S.C. sec. 152(b) : the FCC determined that it was impossible or impractical to separate the intra- from the interstate aspects of VoIP.

The Eighth Circuit upheld this determination, and also held that the New York State Public Service Commission's claim that the FCC's ruling would preempt "fixed" VoIP was not ripe for review. (hat tip to the invaluable Howard Bashman)

The opinion contains a three-page, "oversimplified" description of VoIP service, which is reprinted after the jump.

 

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The question was:

Whether the conscious indifference standard announced by this court in Shepard v. Washington County, 331 Ark. 480, 962 S.W.3d 779 (1998) affords greater protection to pre-trial detainees than the federal deliberate indifference standard.

Grayson v. Ross, No. 06-946.

That, it turns out, is the wrong question:

Because we do not agree with the argument raised by Jerala Grayson that this court
has adopted the conscious-indifference standard for pretrial detainees under the Arkansas
Civil Rights Act, it is not necessary for this court to answer the precise question posed to us
of whether conscious indifference affords more protection to the pretrial detainees than the
federal standard. Conscious indifference is not the appropriate standard to be applied in the
instant case for purposes of the Arkansas Civil Rights Act.

Certified question answered.

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In Summerville v. Thrower, et al., No. 06-501, the Arkansas Supreme Court struck down a provision of the Arkansas Civil Justice Reform Act on separation of powers grounds.

The provision, Arkansas Code Annotated section 16-114-209(b), is part of Arkansas’s "tort reform" statute, the Arkansas Civil Justice Reform Act. Section 209(b) requires a medical malpractice plaintiff to file, within thirty days of the filing of the complaint, an affidavit signed by a medical expert in the same specialty as the defendant averring that the defendant breached the standard of care.

The Court struck down the provision on separation of powers grounds. The Arkansas Supreme Court has plenary authority under Amendment 80 to the Arkansas Constitution over rules of pleading, practice and procedure. ARCP 3 states that the only requirement for initiating a civil lawsuit is the filing of the complaint. The Court held that Section 209(b) added a procedural requirement (file an affidavit within 30 days) to the requirement for filing medical malpractice suits. The Court held that this addition was an impermissible legislative intrusion into the judiciary's domain.

The opinion, oddly enough, does not contain the phrase "separation of powers," although it is clearly a separation of powers holding. Also, the rest of the Civil Justice Reform act remains untouched by the decision.

The text of the statute is after the jump.

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On February 1, 2007, the Arkansas Court of Appeals issued the first two opinions written by newly-elected Judge Brian S. Miller. The first, Ward v. Hickory Springs Mfg. Co. et al., No. CA 06-515, came on appeal from the Worker's Compensation Commission. The second, James v. Arkansas Dept. of Health and Human Serv's. No. CA 06-696, was a termination-of parental-rights case on appeal from Crittenden County Circuit Court. Ward was designation for publication, while James was not.

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February 1, 2007 marked an auspicious day for newly-elected Court of Appeals Judge Sarah J. Heffley, with the issuance of her first two written opinions. The cases are Schumann v. State, No. CACR 06-603, a lesser-included offense case, and Gifford v. Tuggle, No. CA 06-601, a modification of child custody case. Both are unpublished opinions and both were decided by the same three-judge panel: Judges Heffley, Marshall, and Hart.

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