Sixth Circuit: Bank Fraud Requires … a Bank

A divided Sixth Circuit panel overturned the convictions of two alleged fraudsters because the government failed to prove that they intended to obtain property from a bank (technically, a “financial institution,” under 18 U.S.C. §1344).  Back in the heady 2000s, the defendant homebuilders in the companion cases of U.S. v. Banyan and U.S. v. Puckett used straw purchasers and fraudulent applications to induce mortgage companies to finance purchase of multiple luxury homes, to the tune of $5 million.  Mortgage payments went unmade; the mortgage companies foreclosed; and the FBI investigated.

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Bargaining from Scratch is Alright. Sometimes.

Note — This post (plus many others) arrives thanks to the hard work of Sixth Circuit Appellate Blog intern extraordinaire Barrett Block, a rising 3L at UK Law. 

In Hendrickson USA, LLC. v. National Labor Relations Board, a divided Sixth Circuit panel revisited one of the oft-litigated phrases in labor law: “bargaining from scratch.”  The majority—applying a series of Supreme Court, Sixth Circuit, and NLRB decision on the subject—determined the NLRB lacked support when it ruled the phrase, as used here, was an unlawful threat rather than lawful speech.

The dispute arose when an employer responded to the formation of a union organizing committee by sending a letter to all plant employees advocating against unionization. The letter described the disadvantages that could follow unionization and stated that “contract negotiations would begin ‘from scratch.’” An employee complained to the NLRB, which determined the letter represented an unlawful threat of a more onerous work environment and lower wages and benefits. Continue Reading

July Wrap-Up: First Amendment Arrest Edition

The Sixth Circuit wrapped up July with two decisions addressing similar protest-arrest claims under the First Amendment.  But the panel opinions and outcomes looked quite different.

Parma police parody: Anthony Novak was fed up with the Parma Police Department. So he created a “farcical Facebook account” (i.e., “meme” page) designed to look like the police department’s official page. Novak polarized his audience with posts describing, say, rehabilitated sex-offender piglet-cops. Some “thought it was ‘the funniest thing ever.’”

Others less so. The police department investigated, issued a press release, subpoenaed Facebook, obtained a search warrant, and eventually nabbed the anonymous author. It arrested Novak for impairing police functions.  Ohio Rev. Code § 2909.04(B).

Novak stood trial and was acquitted. Then he unleashed a civil complaint that any professor who’s written a First Amendment exam would envy: retaliation, prior restraint, anonymous speech, malicious prosecution, Privacy Protection Act, conspiracy, supervisory liability. The works.

The district court denied the officers’ attempt to dismiss on qualified-immunity grounds. In Novak v. City of Parma, a unanimous Sixth Circuit panel (Thapar writing; Merritt and Readler joining) affirmed in part:

Novak’s page delighted, disgusted, and confused. Not everyone understood it. But when it comes to parody, the law requires a reasonable reader standard, not a “most gullible person on Facebook” standard. The First Amendment does not depend on whether everyone is in on the joke.

The appeal implicates many fascinating First Amendment questions, and is well worth a read. Some questions are not yet squarely presented, given the motion-to-dismiss/qualified-immunity posture—such as whether public officials may delete Facebook posts (see, e.g., Morgan v. Bevin, 298 F.Supp.3d 1003 (E.D. Ky. 2018) (denying preliminary injunction)) and whether probable cause defeats a retaliation claim based solely on protected speech and/or an infrequently enforced statute.

For now, each side walks away with something: the anonymous-speech, public-censorship, and “right to receive speech” claims fail because the officers didn’t violate clearly established law, while the retaliation, prior-restraint, search-and-seizure, malicious prosecution, supervisory-liability, conspiracy, and privacy act claims survive.

Breakfast of champions (of free speech): In 2015, the Fairness Commission protested the Kentucky Farm Bureau’s ham breakfast at the State Fair in Louisville. Members wearing t-shirts enumerating allegedly discriminatory Farm Bureau policies stood up during the breakfast (outside a designated “protest zone”) and refused to leave.

As in Parma, officers arrested the protesters. But in Louisville, prosecutors dropped the charges. As in Parma, the arrested protesters sued. But in Louisville, the trial court held qualified immunity protected the arresting officers.

(But wait, there’s more!) As in Parma, the Sixth Circuit in in Hartman v. Thompson took a close look at the Supreme Court’s recent decision in Nieves v. Bartlett (probable cause to arrest (usually?) defeats a claim for First Amendment retaliation claim). But unlike the unanimous Parma decision, Hartman resulted in a fractured decision.

Judge Suhrenreich’s majority opinion affirmed the district court’s judgment on qualified-immunity and merits grounds: probable cause existed to arrest the plaintiffs for disrupting a meeting, so the § 1983 claims failed.

Judge Bush concurred in part: probable cause should take into account “all the facts and circumstances within the officers’ knowledge” to evaluate whether “a man of reasonable caution [would] believe that an offense” had been committed. Because the Fairness Campaign also had stood in protest during the 2014 breakfast, the officers had probable cause in 2015.

Judge Moore, however, dissented: because accounts of the protesters’ arrest varied, genuine issues of material fact precluded summary judgment. She also disagreed that the officers’ restriction of the Fairness Campaigners to a protest zone had properly been deemed a viewpoint-neutral time/place/manner restriction.

Mid-July Recap: Barratry(!), ERISA Preemption(!!!), the Havis Trilogy and the Times

Note — This post (plus many others) arrives thanks to the hard work of Sixth Circuit Appellate Blog intern extraordinaire Barrett Block, a rising 3L at UK Law. 

A win for the Times — Our June Court Week recap highlighted the oral argument in Carlo Croce v. New York Times, involving a “prolific” Ohio State cancer researcher’s defamation claim against the New York Times. In a speedy decision issued only 26 days after argument, the Sixth Circuit (Moore writing; Cook and Nalbandian joining) unanimously affirmed Judge Graham’s dismissal. Though the Times’ article about Croce “may be unflattering . . . [it] is a standard piece of investigative journalism that presents newsworthy allegations made by others.”

The court reasoned “that a reasonable reader would not interpret [the] article, considering it as a whole, to be defamatory.” The panel nodded to Judge Nalbandian’s concurrence in Boulger v. Woods, which supported a reasonable-person rather totality-of-the-circumstances test under Ohio’s innocent-construction defamation rule.

Havis persists: Part III United States v. Havis, a seemingly ordinary Tennessee felon-in-possession case, is the gift that keeps on giving for Sixth Circuit court watchers. It produced:

  1. four panel opinions, including a lengthy concurrence from Judge Amul Thapar challenging Auer deference,
  2. an en banc reversal, following Havis’ rehearing petition, restricting Sentencing Commission authority to establish freestanding criminal liability through the Guidelines,
  3. and now a concurrence to the denial of the government’s rehearing petition, in which Judge Jeff Sutton explained why the lawyers might’ve overlooked a way to treat Havis’ conviction as a controlled substance offense under 21 U.S.C. 841(a)(1) without running afoul of the Guidelines.

Alas, at this late stage in the proceedings that argument was no longer available. As the dust finally settles, Jeffery Havis’ drug conviction stands vacated and the Havis Trilogy has ended. (Unless, of course, the government files a cert petition.)

Back to Tennessee — Lillian Knox-Bender sued a hospital in Tennessee state court for overcharging her. Her husband’s ERISA plan covered just $100 of the $8,000 bill. But because federal courts have exclusive jurisdiction over ERISA claims, the hospital removed the case and the federal court denied her motion to remand the case back to state court. Knox-Bender appealed to the Sixth Circuit—and won.

In Knox-Bender v. Methodist Healthcare-Memphis Hospitals, a unanimous panel (Thapar writing; McKeague and Murphy joining) held that “the simple presence of an ERISA plan on the balance sheet” is not enough for federal preemption. Otherwise, whenever “an ERISA plan paid any amount, no matter how small, [it] would be enough to force a case into federal court.”

If you sued for above-menu pricing, Judge Thapar explained, you would sue the restaurant rather than your credit-card company. Similarly, suing for an overcharged medical bill amounts to a claim against the hospital, not your ERISA plan.

1st Amendment Worker’s Comp — Ohio law bars attorneys from soliciting worker’s compensation claimants. Bevan, a law firm, allegedly violated O.R.C. § 4123.88(A) when it used state Bureau of Workers Compensation information to send direct mail to claimants. Bevan’s declaratory judgment claim that § 4123.88 is unconstitutional failed at the district court but prevailed at the Sixth Circuit.

Judge John Bush wrote in another unanimous opinion (Judges Cook and Siler joining) that although “Ohio has a substantial interest in protecting claimant privacy . . . [the] total ban on solicitation [was] not designed carefully to achieve the State’s goal.” Had the law banned only in-person solicitation or the use of illegally obtained information, it may have been constitutional.  But under Central Hudson and other commercial-speech decisions, the complete ban found in this 1930s-era law suppressed too much speech.

“Lexis on Steroids”: Corpus Linguistics receives mixed reception at the Sixth Circuit

By Zak Lutz (HLS ’20; Squire Patton Boggs summer associate) and Benjamin Beaton

Sixth Circuit judges have taken an interest in “corpus linguistics.” At a recent gathering in northern Kentucky, three Sixth Circuit judges engaged in an impromptu discussion of the interpretive tool. And last week, in Wilson v. Safelite Group, two other Sixth Circuit judges wrote concurrences debating its merits.

A “corpus” is simply a collection of texts. “Corpus linguistics” is where big data meets legal interpretation: textualist jurists and scholars (most prominently at BYU) are using a vast searchable collection of texts to assess linguistic meaning(s), frequency, and change. The movement has a somewhat populist (or “ordinary meaning”) bent, with the corpus including “regular usage” texts—magazines, books, academic articles, and speeches—but not dictionaries.

Lawyers and judges can search corpora to identify how a word was used during a specific time frame; as one commentator described it, corpus linguistics is “Lexis on Steroids.” Corpus linguistics cannot alone determine a word’s meaning (the way a dictionary might), but it can provide empirical evidence to guide a judge choosing among multiple plausible or time-sensitive meanings.

In 2011, Justice Thomas Lee of the Utah Supreme Court was the first to use corpus linguistics in a judicial opinion: In re the Adoption of Baby E.Z.* Since then, the Utah Supreme Court has continued to use corpus linguistics, and in 2016 majority and dissenting opinions from the Michigan Supreme Court both embraced corpus linguistics in People v. Harris.

Now, corpus linguistics has reached the Sixth Circuit: Judge Amul Thapar relied on corpus linguistics in a concurrence—the first time (as far as we can tell) that a federal judicial opinion has done so. Continue Reading

Court Week(s): June’s Oral Arguments and one Supreme Court affirmance

If you’ve got the money, I’ve got the time (for an infringement action) — Willie Nelson made an appearance at the Sixth Circuit last month—but alas, only in the briefs. The court heard argument in Philpot v. L.M. Communications, involving a radio station website’s unauthorized use of a photo of the Red-Headed Stranger. The district court held that the infringement was not willful because no evidence showed that the station knew—actually or constructively—that Philpot had a copyright for the photo. So Philpot received $3,500, not the $150,000 plus attorney’s fees he could have received under 11 U.S.C. § 504(c)(2) if the infringement were willful. The panel (Batchelder, Griffin, Donald) is now poised to answer this question of first impression in the Sixth Circuit: whether actual knowledge is required for a finding of willful infringement. (The Second and Seventh Circuits have held it is not.)

The Times and the Buckeyes — The court also heard argument in a defamation case involving the New York Times and Dr. Carlo Croce—a “prolific” cancer researcher and professor at the Ohio State University. It all started when Croce agreed to an interview with Times writer James Glanz to discuss “the fascinating topic of microRNA.” It surely surprised Croce to later learn that his interview would become the basis for a front-page article that spanned fourteen pages and accused him and OSU of scientific misconduct and financially driven data falsification.

Croce sued the Times for defamation. The district court granted the paper’s summary judgment motion, however, concluding that the article was an “accurate and balanced report about Dr. Croce’s research.” Croce appealed, but a coalition of 41 media organizations filed an amicus brief supporting the Times.

At argument, Judge Nalbandian pressed the Times’ attorney about Ohio’s “innocent construction” rule and how the Times’ social media posts should be analyzed under it. Judge Deborah Cook asked Croce’s counsel to specifically identify the defamatory parts of the article. And Judge Karen Moore revealed very little. The case gives Judge Nalbandian his second chance just this year to address Ohio’s innocent-construction rule. His partial concurrence in Boulger v. Woods critiqued whether Ohio’s totality-of-the-circumstances test effectively distinguishes fact from opinion when a question is at issue (which, according to Nalbandian, is “like asking how tall an elephant weighs”).

SCOTUS affirms CA6: Tennessee liquor law unconstitutional — During the final week of the 2018–19 Term, the U.S. Supreme Court struck down a law that had prevented out-of-state retailers from setting up shop in Tennessee—affirming a Sixth Circuit decision from last February. Major retailer Total Wine and a mom-and-pop store challenged Tennessee’s two-year residency requirement, which they said amounted to protectionism. Judge Moore’s opinion held that this violated the “dormant” Commerce Clause. Justice Alito’s majority, for seven justices, agreed: Tennessee’s two-year residency requirement for retail license applicants was unconstitutional because it “blatantly favors the state’s residents and has little relationship to public health and safety.”

In line with the approach of Judge Sutton’s concurrence below, Justices Thomas and Gorsuch, in dissent, would have allowed Tennessee more room to regulate alcohol sales under the 21st Amendment. In addition to ending Prohibition and spawning punny bar names, the Amendment’s less celebrated second section prohibits (again?!) the “transportation or importation into any state … of intoxicating liquors, in violation of the laws thereof.” As Judge Sutton wrote, this provision “empowers States to regulate sales of alcohol within their borders.” In his view, and Justice Thomas’, this should have permitted some (though not all) of the Tennessee regulations at issue.

The Learned Sixth: “Another Giant Tortoise”

And now for something completely different.

If you’re traveling for the Fourth of July, consider a law-related podcast for the road: Malcolm Gladwell’s two-part treatment of the LSAT. Puzzle Rush and The Tortoise and the Hare kick off season 4 of Revisionist History. A decidedly non-lawyer friend recommended these episodes, which contain some great nuggets for aspiring and veteran lawyers alike.

The (Learned) Sixth Circuit hook? One of Gladwell’s protagonists is Judge Jeff Sutton, described in the podcast by Justice Scalia as one of his best clerks. And described by Gladwell as a “Giant Tortoise.” Happy listening, and happy Fourth!

June Wrap-Up: Opioid non-disclosure and Obamacare non-discrimination

The Sixth Circuit wrapped up June with two weeks of oral arguments, some of which we’ll feature later this week. And the Circuit got a pat on the back from the Supreme Court, which affirmed its decision striking down a Tennessee liquor law under the “dormant” Commerce Clause. (Stay tuned for more on the Circuit’s October Term 2018 performance, as well.)

For the month overall, the court heard 48 oral arguments, published 28 opinions, and issued 54 unpublished opinions. Here’s June in review:

Opioid data: Public or protected? An Ohio opioid MDL has attracted national media attention for its handling of lawsuits against drug manufacturers, distributors, and pharmacies by 1,300 cities, counties, tribes, and other public entities. For use in the litigation, the plaintiffs obtained years of data from the DEA’s “ARCOS” database. But—the plaintiffs being public outfits subject to state open-records laws—media companies sought the underlying data regarding buyers, doses, and much more. The district court initially had allowed this information to be filed under seal. When challenged, it agreed with the DEA that good cause existed to protect the confidential business and law-enforcement information in all present or future public records requests.

In HD Media v. DEA, the Washington Post and a West Virginia newspaper publisher (whose paper won a Pulitzer for its opioid reporting) prevailed in a divided interlocutory decision under the collateral-order doctrine. Judge Clay’s opinion, joined by Judge Griffin, held that the district court had abused its discretion in categorically denying public records requests for pharmaceutical companies’ sales data. “[S]pecific transactional data,” the court held, “has proved extremely effective and consequential in calling attention to the horrors of the opioid crisis.” On remand, the district court may consider whether “particular pieces of ARCOS data that relate to specific ongoing investigations should not be disclosed,” but may not enter a “blanket, wholesale ban.”

Judge Guy issued a separate concurrence and partial dissent. Noting the newspapers declined to file a FOIA suit directly against DEA, Judge Guy would have enforced the protective order that allowed plaintiffs access to DEA’s data—for litigation, but not for further disclosure.

Executive functioning — In Dennis v. Warden, a unanimous panel (Sutton writing; Rogers and Readler joining) held that a President’s commutation of a sentence “does not create a new executive judgment that fully replaces the judicial judgment.”

The question arose when President Obama commuted Quincy Dennis’ life sentence for various drug offenses to 30 years. Dennis filed a habeas petition arguing that he should have faced only 20 years. But the district court held that it had no authority to question the commuted sentence because it constituted an executive judgment. The Sixth Circuit, considering Dennis’ pro se appeal, disagreed: rendering a judgment is a judicial function, while carrying it into effect is an executive function. Thus the President’s commutation of the sentence had no effect on the court’s jurisdiction to hear Dennis’ appeal. Yet after all that, the panel denied the habeas petition on the merits.

Obamacare non-discrimination – Doe wanted to pick up his HIV meds at his local out-of-network pharmacy. But his insurance plan required him to receive the high-cost drugs through the mail or at a specialty pharmacy. He sued BlueCross BlueShield of Tennessee for discriminating against him on the basis of disability. In Doe v. BlueCross BlueShield of Tennessee, a unanimous panel (Sutton again writing; Guy and Nalbandian joining) determined that the Affordable Care Act’s incorporation of § 504’s non-discrimination provision under the Rehabilitation Act does not prohibit disparate-impact discrimination. It bars discrimination “solely by reason of her or his disability,” and therefore does not cover actions taken for nondiscriminatory reasons, no matter how disparate their impact.

En Banc Watch – New Decisions on Probable Cause and Sentencing Commission Authority

Good Faith and Probable Cause: In another en banc decision, Judge John Rogers and eleven others held in United States v. Christian,that probable cause existed for Grand Rapids law enforcement to search the house of Tyrone Christian. As the affidavit detailed Christian’s four previous felony drug convictions, two previous drug busts at his house, and a confidential informant’s tip that Christian was selling again, the question of probable cause was “really not even close” for the full court’s majority.

But Judge Amul Thapar—joined by Judges Nalbandian, Murphy and Readler—concurred. “[A]t the very least, the officers executed that search in good faith.” The concurrence took aim at the Sixth Circuit precedent of United States v. Laughton, which restricts “good-faith arguments . . . to the language of the affidavit.” This is too restrictive: because the Fourth Amendment protects people from police misconduct, the good-faith inquiry should also focus on police misconduct, considering “all of the circumstances,” not just the four corners of the affidavit. Thus, Judge Thapar argued overruling Laughton would better align the Sixth Circuit with Supreme Court precedent.

Judge Ronald Gilman, joined by five others, dissented. As the affidavit relied on an otherwise unrelated drug-possession arrest near Christian’s house, the majority’s approach “significantly lower[ed] the burden for the government to show probable cause in areas where drugs are prevalent.”

Sentencing Guidelines commentary: With the full force of an en banc, per curiam opinion, the Sixth Circuit held in United States v. Havis, that the commentary to the Sentencing Commission Guidelines is off-limits for establishing independent forms of criminal liability.

The Commission is tasked with issuing the Guidelines, which impose some limits on a sentencing court’s discretion. Judges can deviate, but not by much. Unlike the Guidelines themselves, however, commentary to the Guidelines never passes through congressional review or notice and comment. The commentary lacks any independent legal force. In other words, it is not the law.

One feature of the Guidelines is that they provide for sentencing enhancements based on criminal history.  In this case, a sentencing judge used the commentary to the Guidelines to increase the defendant’s sentencing level based on an attempt crime–over doubling the defendant’s sentence.

The text of the Guidelines themselves, however, says nothing about attempt crimes.  With no term in the Guidelines to bear the Commission’s construction, the en banc Sixth Circuit held that the Commission lacked the power to add an offense and was entitled to no deference for this use of the commentary. Were it otherwise, said the Court, “the institutional constraints that make the Guidelines constitutional in the first place—congressional review and notice and comment— would lose their meaning.”

Late May Wrap-up: Another First Opinion, Another En Banc, Another Cert Grant

Note — This post (plus many others) arrives thanks to the hard work of Sixth Circuit Appellate Blog intern extraordinaire Barrett Block, a rising 3L at UK Law. 

Murphy’s (first) Law — Jurisdiction is often the first topic encountered by law students; fittingly, Judge Eric Murphy confronted it in his first published opinion as a Sixth Circuit judge–In re Capital Contracting Company. Judges Sutton and Moore joined to make the decision unanimous.

“Explaining that ‘jurisdiction’ ‘is a word of many, too many, meanings,’” the court determined that a party appealing from a bankruptcy court judgment must satisfy Article III standing requirements. It’s not sufficient for “’concerned bystanders’” to vindicate ‘value interests.’” Instead, a party must demonstrate a specific, concrete, and real injury stemming from the invasion of a legally protected interest. Here, because the debtor’s failure to list an asset on a trustee’s final report would not have provided the creditor-appellant with “one more cent,” the court affirmed the district court’s dismissal.

Cert Watch: Bankruptcy Finality –The Supreme Court granted a petition for certiorari to review the Sixth Circuit’s dismissal of a bankruptcy appeal in Ritzen Group Inc. v. Jackson Masonry LLC (Thapar writing; Sutton & McKeague joining). Doing so promises to resolve a split among the circuits regarding whether an order denying relief from the automatic stay, after a Chapter 11 filing, is appealable. Courts disagree on whether an order denying relief from stay is “final.” The Sixth Circuit (and several others) follow a “blanket rule” that such orders are always appealable.

Tax-shelter guidance: unchallengeable — In CIC Services LLC v. Internal Revenue Service, Judge Clay, joined by Judge Suhrheinrich, held that the Anti-Injunction Act bars CIC Services from challenging IRS guidance that categorizes some in-house insurance companies as tax shelters, which must be disclosed.

Judge Nalbandian dissented, emphasizing the practical realities of the case. Without the opportunity to contest the guidance, a company unsure of its internal unit’s tax-shelter status can choose to report and ruin its reputation, or else risk coughing up $50,000 for each unreported transaction with that internal unit. In other words, a choice between “risk[ing] financial ruin and criminal prosecution.”

En banc watch –A short, unanimous, per curiam, en banc decision in United States v. Williams held that the en banc Sixth Circuit had already held in United States v. Burris that Ohio Revised Code §§ 2903.11 and 2923.02 (felonious assault) no longer qualified as a violent felony predicate under the Supreme Court’s (firstJohnson decision.

The most (only?) noteworthy aspect of the full court’s decision was the solo concurrence it drew from Judge John Rogers—regarding the stare decisis effect of separate opinions in prior en banc rulings. That’s a mouthful, and a topic only a fed-courts purist could love. According to the concurrence, the per curiam improperly characterized the court’s Burris precedent as having overturned binding precedent. But that portion of Burris, he explained, was mere dicta–and a patchwork of dicta at that. Yet it all came out in the wash for Judge Rogers: because the court was sitting en banc, it was free to directly overturn (once and for all) the law of the circuit.

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