Divided En Banc Court Overrules FOIA Precedent

In 1996, in Detroit Free Press v. Dept. of Justice, 73 F.3d 93 (6th Cir. 1996) (“Free Press I”), the Sixth Circuit held that the Freedom of Information Act required the release of booking photos for criminal defendants who appeared in trial. In March, twenty-two years later, the court in Detroit Free Press v. Dept. of Justice (“Free Press II”)  found this ruling to be “untenable” considering the unanticipated technological advances which make these photographs easier to access and more likely to stick around. In a 9-7 decision, the en banc Court overruled Free Press I and held that the FOIA’s Personal-Privacy Interest Exemption allows a booking photo to be protected from the public.

The Court recognized that today, unlike in 1996, a simple “idle internet search” can produce these pictures largely due to websites that are dedicated to preserving and displaying even decades-old booking photos. The Sixth Circuit reasoned that because “[a] disclosed booking photo casts a long, damaging shadow over the depicted individual,” a criminal defendant has a strong privacy interest in keeping the picture sealed. And further, these booking photos “fit squarely within the realm of embarrassing and humiliating information,” which the Personal-Privacy Exemption of the FOIA was designed to protect.

Having found that a non-trivial privacy interest existed, the Court then queried whether that privacy interest was outweighed by the public’s interest in disclosure. The Court rejected the categorical approach that requires a finding in favor of the public, and instead, adopted a case-by-case analysis method. The Court held that while the FOIA’s core purpose is to illuminate any shortcomings of government agencies, that purpose is not served by the disclosure of booking pictures, which “reveal little or nothing about an agency’s own conduct.” Thus, the privacy interest was weightier than any public interest in disclosure.

In his dissent, Judge Boggs explained that because neither public nor the criminal defendant expects that a booking photograph will remain hidden from public view, there was no cognizable privacy interest. Yet, in embracing the categorical approach that the majority rejected, the dissent would have held that even if a privacy interest existed, it was outweighed by the “public’s interest in knowing who the government is prosecuting.” The dissent focused on the necessity of a transparent prosecutorial system, and urged that the disclosure of booking photographs is central to the public’s ability to oversee that process: “Open government is too dear a cost to pay for the mirage of privacy that the majority has to offer.”

Free Press II brings the Sixth Circuit in line with the Tenth and Eleventh Circuits. Indeed, the intervening authority from those circuits appeared to be what precipitated the Sixth Circuit’s change of perspective on this issue. Thus, no longer can “straw man” requesters come to Michigan, Ohio, Kentucky, and Tennessee to obtain photos maintained in other jurisdictions, as Bernie Madoff’s booking photo was once procured.

 

Sixth Circuit Again Addresses Forum Non Conveniens

In Hefferan v. Ethicon Endo-Surgery, Inc., the Sixth Circuit upheld the Southern District of Ohio’s dismissal for forum non conveniens. This case marks the Court’s second decision of this kind in just over a week, having affirmed the Northern District of Ohio’s dismissal for forum non conveniens in Solari v. Goodyear Tire & Rubber Co., which we posted about previously. While that case involved three French plaintiffs residing in France who brought claims against Goodyear U.S., this case involves claims by Brandon Hefferan, an American, and his German wife, both residing in Germany. The Hefferans stated claims for negligence, loss of consortium, and violations of Ohio product-liability law after a surgical stapler manufactured in the United States but used in Germany allegedly malfunctioned during a surgery that Brandon underwent, resulting in twenty follow-up surgeries and severe permanent injuries.

In its decision, the Sixth Circuit engaged in the same three-step forum non conveniens analysis it used in Solari: the court first determines the degree of deference owed to the plaintiff’s choice of forum, then the defendant must establish an adequate alternative forum and show that the plaintiff’s choice of forum is unnecessarily burdensome based on public and private interests.

Here, the Sixth Circuit engaged in a more thorough analysis of the amount of deference given to a plaintiff’s choice of forum than in Solari. In that case, all three plaintiffs were French citizens living in France with no connections to the United States, and the Court easily determined that the foreign plaintiffs’ choice of forum deserved less deference and would be burdensome. Although the Hefferans reside in Germany, Mr. Hefferan is an American with more connections to the United States than any of the plaintiffs in Solari. Nevertheless, the Court employed a “sliding convenience scale” to differentiate between American plaintiffs living in the United States, for whom the choice of forum is presumptively convenient, and American plaintiffs residing in other countries, for whom the presumption of convenience applies with less force.

Next, the Court determined that Ethicon established an adequate alternative forum. Although Germany’s legal system operates differently than that of the United States, those differences “do not reveal an alternative forum that provides a remedy ‘so clearly inadequate or unsatisfactory’ that it is ‘no remedy at all.’” Additionally, although German law does not allow recovery for loss of consortium, the Court found that even if the Hefferans litigated the case in the United States, applying the “most significant relationship” test, the court would apply German law and the Hefferans would not recover for loss of consortium regardless of forum.

Finally, the Sixth Circuit held that the district court’s balancing of public- and private-interest factors was not unreasonable. Private-interest factors include the ease of access to sources of proof, availability of compulsory process, and other practical problems. Contrary to Solari, the Court seemed to give less weight to the private-interest factors. Nevertheless, the Court found that “[r]elative ease of access to sources of proof and the availability of compulsory process for proceedings abroad supports dismissal.” Public-interest factors include the local interest in deciding a local controversy, conflict of laws, and the unfairness of burdening citizens in an unrelated forum with jury duty. While the Sixth Circuit essentially disregarded the district court’s jury duty analysis as redundant, the public-interest factors still weighed in favor of dismissal because of Germany’s “strong interest in deciding a controversy involving a product purchased and used within its borders, especially because the suit will involve the application of its law to determine the parties’ rights and liabilities.”

Ultimately, as in Solari, the Court declined to hear a case when the injury occurred outside the United States and the plaintiffs had little connection to the United States, despite the plaintiff’s status as an American. While these cases are coming to the Court from the vantage points of grants of motions to dismiss (entitled to some deference), they could indicate some reticence on the Court’s part for entangling U.S. courts in resolving largely foreign disputes.

 

 

The Sixth Circuit’s Supreme Court Scorecard

With the recent close of the Supreme Court’s October 2015 term, it is a good time to review how the Sixth Circuit performed over the course of the term. The Supreme Court reviewed 87 cases this term, but took only four cases from the Sixth Circuit.  Of those four, three were reversed—an average reversal rate among the circuits in the high court (although, of course, the sample size is small).  Though there was a brief aberration of high Supreme Court reversal rates for the Sixth Circuit that was widely reported, the last two terms have seen the circuit’s reversal rate go back in line with other circuits.

The cases themselves are pretty standard fare.  We reported previously on Simmons v. Himmerlerich, where the Supreme Court affirmed the Sixth Circuit’s decision that the “judgment bar” of the FTCA does not bar a second suit after the first claim was dismissed under that statute’s “exceptions” provision.  And in Sheriff v. Gillie, the high court reversed to hold that even if special counsel appointed by the Ohio Attorney General are not “state officers,” their use of official letterhead to collect debts on the Attorney General’s behalf does not create a misrepresentation in the collections efforts.

The Supreme Court also reversed in two AEDPA cases, White v. Wheeler, which upheld courts’ ability to strike jurors that seem unwilling to apply the death penalty, and Woods v. Etherton, a per curiam opinion which essentially found that the Sixth Circuit should have been more deferential to the state courts on a factual issue.  Some have written that these cases show that the Sixth Circuit is still pushing against the limits of AEPDA, but two habeas reversals alone does not seem to support such conclusions.  The Sixth Circuit has internalized the guidance received from the Supreme Court in prior habeas cases, reflecting the fact that only two such cases were considered by the Court this term.

Sixth Circuit Upholds Forum Non Conveniens Dismissal

In Solari v. Goodyear Tire & Rubber Co., three French plaintiffs living in France brought suit against Goodyear U.S. in the Northern District of Ohio. The plaintiffs based the potential class action suit on medical conditions and the risk of future medical conditions caused by exposure to toxic substances while working at a Goodyear France factory in Amiens. The plaintiffs claimed that Goodyear U.S. manufactured toxic products in the United States, required Goodyear France to use those products, and failed to warn plaintiffs of the risks or provide them with adequate safety gear. The Sixth Circuit upheld the district court’s conditional dismissal of the case for forum non conveniens.

The Sixth Circuit reviewed the district court’s three-step forum non conveniens analysis for abuse of discretion. First, the Court found no abuse of discretion in the district court’s explanation of deference to the plaintiffs. While generally the plaintiff’s choice of forum receives a strong presumption in its favor, a foreign plaintiff’s forum choice deserves less deference because “it ‘is much less reasonable’ to presume the choice convenient.” The district court found a burdensomeness standard sufficient to support dismissal.

Second, the Sixth Circuit determined that Goodyear U.S. showed that an adequate alternative forum exists. While the plaintiffs’ expert—a French law professor—argued that under Article 42 of the French Code, a defendant’s place of incorporation has jurisdiction over disputes, the Sixth Circuit ultimately found Goodyear’s expert—a former French Supreme Court Justice—persuasive. Justice Béraudo explained that Article 46 of the French Code allows a plaintiff to sue in tort where the plaintiff suffered damage. Extensive caselaw on the matter and Goodyear’s voluntary submission to French jurisdiction also weighed in favor of dismissal. Additionally, French courts offer sufficient remedies, and France’s absence of class actions do not render French courts inadequate to hear this kind of case.

Finally, the Court affirmed that both the private and public factors weigh in favor of dismissal. France provides better access to sources of proof, witnesses in this case likely reside in France, transporting to and accommodating the witnesses in Ohio is costly, documents and witnesses likely require translation, and Goodyear U.S. agreed to make its evidence available in France. Public-interest factors include administrative difficulties, “the burden of imposing jury duty on a community which has no relation to the litigation,” and France’s local interest in deciding the case at home.

Ultimately, “the location of Goodyear U.S.’s decision making simply cannot overcome that Plaintiffs present a controversy centered in France.” This case demonstrates the reluctance of United States courts to hear foreign cases with very little connection to the United States other than its being the location of a foreign company’s corporate “grandparent.” As we near Bastille Day, the Sixth Circuit should’ve added, Vive La France!

 

   

SIXTH CIRCUIT NIXES PROVIDER ERISA SUIT

In Brown v. Blue Cross Blue Shield of Tennessee, Inc., a healthcare provider brought suit against Blue Cross Blue Shield based on ERISA and assignments of benefits that the provider obtained from participants in the relevant plans.  Although the district court dismissed the action for lack of subject matter jurisdiction because the provider lacked standing under ERISA, the Sixth Circuit found standing but nevertheless affirmed the result because the claims at issue fell outside the scope of the assignments of benefits.

The case involves a fairly routine billing dispute between payor and provider, and after an audit Blue Cross Blue Shield began recouping overpayments that were uncovered in its audit findings.  The provider responded by bringing suit under ERISA to stop the recoupment.  The Sixth Circuit made short work of the provider’s claim for direct standing under ERISA, finding such a theory at odds with not only Sixth Circuit precedent but also the precedent of virtually every other circuit.  The more nuanced question became whether the provider had derivative standing under ERISA by virtue of the assignments of benefits.  Blue Cross insisted that the assignment of benefit forms provided only for direct payment and therefore did not grant an assignment of rights sufficient to confer derivative standing.  The Sixth Circuit disagreed on this point, noting a “broad consensus” that when a patient assigns payment of insurance benefits to a provider, the provider gains standing to sue for that payment under ERISA.  In fact, the decision that the district court had relied upon to the contrary had been recently reversed by the Third Circuit.  Therefore, the Court reversed the district court’s decision that the provider lacked standing.

But that victory proved to be short-lived, however, because the Court found that the recoupment suit fell outside the scope of the assignments of benefit, and thus the provider was not entitled to any relief.  This provider had a contract with Blue Cross and the Court found that its claims were more properly contractual, rather than arising from ERISA.  In other words, the patients could not have brought a suit of the nature being pursued by the provider, and since they cannot assign greater rights to the provider than they have, the claim fails.

This case illustrates some of the pitfalls for the unwary when litigating ERISA disputes.  The parties devoted substantial time and resources to a suit that should have never been brought as an ERISA action.  Nevertheless, certain creative theories such as these are often presented in an effort to try to achieve certain benefits that may be available under ERISA but not under traditional state law, and therefore defendants in these actions should certainly insist on a rigorous evaluation of whatever ERISA rights are claimed by the plaintiff.

Sixth Circuit: Foreign Currency Scheme Doesn’t Pay

In United States v. Teadt, the Sixth Circuit affirmed the convictions of Michael Teadt, Bradford Huebner, and Charles Emmenecker for their roles in a $24 million currency fraud scheme. Huebner and Emmenecker teamed up with another man who claimed to be a foreign-currency expert and sold and marketed Iraqi dinars. The men claimed that the dinars would increase in value based on speculation of an imminent currency revaluation by the Iraqi government, and vaguely referenced a fictional statute in order to bolster their investors’ confidence. The three then established hedge funds and sold almost 1,000 “inception investors’ seats” at $750 each. Meanwhile, Teadt applied for subsidized job training benefits in order to cover costs of the hedge fund business. The defendants were convicted of assorted counts of wire fraud, mail fraud, money laundering, and structuring.

 On appeal, the Court rejected each of the defendants’ varying arguments. Using a manifest miscarriage of justice standard of review for failure to renew their motions for acquittal after the close of the evidence, the Court denied each defendant’s sufficiency of the evidence argument. Teadt’s testimony gave rise to a reasonable inference that he intended to commit mail fraud, and the record was not devoid of evidence sufficient for the jury to disbelieve Huebner’s and Emmenecker’s allegedly sincere beliefs about the revaluation of the dinar.

Next, the Court affirmed the amount of restitution ordered by the district court under the Mandatory Victims Restitution Act (“MVRA”). The Court seemingly lauded Huebner for “creatively” claiming “that since many of the purchasers do not consider themselves victims, they cannot be recognized as such under the law.” Despite the creativity of this argument, the Court nevertheless found that the MVRA does not require a victim to subjectively believe that he or she has been harmed. The Court also found that the victims suffered an actual loss because the dinars “are worth much less than the price they paid and likely always will be,” and that the district court could impose joint-and-several liability in order to fully compensate the victims.

Finally, the Court found no prosecutorial or juror misconduct. Despite the defendants’ claim that the prosecutor improperly referred to evidence of cash deposits into Emmenecker and Teadt’s accounts that was not in the record, the Court held that the prosecutor “was merely conceding that the government had no direct evidence of how Teadt or Emmenecker benefitted monetarily from the crimes.” The Sixth Circuit also concluded that the issue of sleeping jurors did not deprive Emmenecker of his Fifth Amendment due process rights or his Sixth Amendment right to an impartial jury.

 

Sixth Circuit Weighs In on Statute of Repose Circuit Split

Recently, the Sixth Circuit was compelled to take a side of the jurisdictional split on the issue of whether a statute of repose can be tolled by a pending class action certification. The split arises out of the 1974 Supreme Court decision in American Pipe& Constr. Co. v. Utah, 414 U.S. 538 (1974), which held that pending certification of a class tolled a statute of limitations for members of the purported class, preserving the individual right to file suit for a limited time after the class action ended. The Tenth Circuit extended American Pipe to allow the tolling of statutes of repose. Joseph v. Wiles, 223 F.3d 1155, 1167 (10th Cir. 2000). The Second Circuit, though, held that a judicial expansion of a statute of repose would violate the Rules Enabling Act, and refused to extend American Pipeline. See Police & Fire Ret. Sys. Of City of Detroit v. IndyMac MBS, Inc., 721 F.3d 95, 107-108 (2d Cir. 2013). 

Last month, in Stein v. Regions Morgan Keegan Select High Income Fund, Inc., the Sixth Circuit confronted the same issue. In that case, the plaintiffs-investors attempted to file suit after the Securities Act’s statute of repose had run, relying on American Pipeline to argue that the statute had been tolled while their class certification was pending. The Sixth Circuit, however, was persuaded by the Second Circuit’s reasoning and refused to extend the American Pipeline holding to a statute of repose. The Court found that because statutes of repose confer a substantive right on “defendants… to be free of liability after a certain absolute period of time” it could not endorse the contrary view that a defendant’s “potential liability should not be extinguished simply because the district court left the class certification unresolved.” (quoting Joseph).  

This decision could incentivize potential class members to opt out of a class, out of a fear that if the class is not certified, they will lose their individual claim due to the expiration of a statute of repose (or at a minimum, they should monitor class proceedings closely). It will be interesting to see if Stein will affect courts’ decisions to certify classes late in the game, knowing that plaintiffs may be unable to subsequently file individually, or if it will generally speed up the certification process.  In any event, this case again highlights the significance of the distinction between statutes of limitations and statutes of repose.

This post was written by Taylor Gamm, a summer associate in SPB’s Cincinnati office.

 

SIXTH CIRCUIT UNVEILS NEW WEBSITE

The Sixth Circuit has recently released a link to the new website that it will launch on June 27, 2016.   The new website is based on a national model template for federal court websites, which some courts are already currently using. For example, the Seventh Circuit already uses this format. The new format promises to make things easier on practitioners, especially those of us who practice in multiple different jurisdictions, by trying to include a measure of standardization between the various websites. For anyone who has comments on the website, they can be directed to CA06-Webmaster@ca6.uscourts.gov.

 

The Sixth Circuit Likes to Play Logic Games

Yesterday, the Sixth Circuit released a decision that will surely strike close to the hearts of every attorney and law school student. In Binno v. American Bar Association, the court found that the ABA was not the responsible party for the plaintiff’s harm, which allegedly resulted from his experience with the LSAT. More specifically, Angelo Binno filed suit against the ABA on grounds that, because he is blind, he is “incapable of perceiving spatial relationships or performing the necessary diagramming to successfully complete the logic-games questions….” And due to the ABA 503 Standard, which provides that a law school must require applicants to take a “valid and reliable admission test,” law schools were unwilling or unable to provide a waiver that would allow Binno to be exempt from taking the LSAT and reporting his scores.

The court first rejected Binno’s claim by determining that he could not establish Article III standing. Although the LSAT is the only “valid and reliable” test listed by the ABA, the majority reasoned that because the ABA allows schools to find an alternative to the LSAT, because it does not require a certain weight to be given to the LSAT score, and because it does not control the content of the LSAT, Binno could not demonstrate that the ABA caused his harm. The court further found that even if the ABA made Standard 503 optional, a law school could still choose to require the LSAT in their admissions process; therefore, Binno’s claim also failed the redressability prong of Article III standing.

Second, the court found that even if Binno could establish standing, his complaint nevertheless failed because he is also unable to establish a claim under the ADA. Title III of the ADA requires private entities that “offer” admissions examinations to do so with appropriate accommodations for those with disabilities. Because the ABA is unable to control the content, how, or where the exam is administered, the Court found that it is also unable to “offer” the exam. The court therefore concluded that the ABA cannot be in violation of Title III.

In light of recent successful litigation against the LSAC for claims mirroring Binno’s, the majority was “left puzzled by Binno’s failure to litigate against the LSAC.” In his concurrence, Judge Griffin, however, found that the majority’s reliance on the argument that Binno “somehow sued the wrong party” overlooks one of Binno’s critical allegations: the ABA previously permitted law schools to give individual LSAT waivers. The concurrence thus concludes that the causation and redressability elements of Article III standing were met, as this allegation makes clear that the ABA does have some control over whether Binno is required to take the LSAT and report his scores (but ultimately agreed with the majority on the merits).

 

Shipwreck Case Leads to Sanctions

The saga of a shipwreck treasure trove continues in Williamson, et al. v. Recovery Limited Partnership, et al., “yet another skirmish in the legal battle over the treasure from the S.S. Central America,” a shipwreck discovered over 130 years after it sank in September 1857. (Earlier litigation has previously been a topic of this blog, and can be found here.) In this appeal, the Sixth Circuit reviewed the imposition of sanctions against Richard Robol, the defendants’ attorney, for hampering the enforcement of a court order in bad faith. After the district court issued the contempt order in 2006, the defendants turned over to plaintiff Dispatch Printing Company an inventory of the gold that they sold to the California Gold Marketing Group from February 15 to September 1, 2000. The defendants failed to turn over any prior inventories. Counsel maintained throughout this litigation that the defendants “produced the one and only inventory that the company had.” However, in 2013, a receiver hired by Dispatch discovered another hidden treasure – this time in the form of thirty-six file cabinets full of treasure inventories – in the basement of a duplex that counsel owned and partially leased to the defendants. After this discovery, Dispatch filed a motion requesting the court to exercise its inherent powers to sanction counsel for bad-faith conduct during the litigation.

 The Sixth Circuit began its analysis with addressing the applicable law involved in a court’s inherent powers to sanction bad-faith conduct. The Court found the precedent that the district court used inapplicable. First, the three-prong Big Yank test was inapplicable because that test “contemplates a situation in which a plaintiff has filed a frivolous lawsuit.” Second, the fraud-on-the-court doctrine was inapplicable because that test “deals with courts’ inherent power to vacate their judgments.” To resolve the confusion, the Court clarified the appropriate legal test: “[W]hether Robol hampered the enforcement of a court order in bad faith.” After finding that counsel did hamper the enforcement of a court order, the Court turned to the bad-faith inquiry and examined “whether Robol knew that the defendants possessed the undisclosed inventories or was willfully blind to their existence when he made his misrepresentations to the court.” Dispatch’s evidence included a letter, admiralty litigation in Virginia, and testimony from the employee who created and maintained the inventories and the financial advisor for the receiver, all of which convinced the Court that counsel intentionally misled the district court in order to hamper the court order.

 The Court then turned to the calculation of sanctions, finding that the $224,580 awarded to Dispatch was not a windfall because the sanctions are not meant to be solely restitutive. Precedent establishes “that courts have broad discretion under their inherent powers to fashion punitive sanctions.” This case is the latest in a series of cases by the Circuit assessing the applicability of inherent authority sanctions, and the Court seemed to appreciate some lack of precision in its prior cases.  This opinion thus seeks to clarify the test and provide guidance when litigating such a sensitive issue.

 

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