The Benton-Franklin County Bar Association 11th Annual Federal Civil Trial Practice Seminar

May 12, 2017

8:00am–4:15pm

(APPROVED FOR 6 CLE CREDITS, INCLUDING 1 ETHICS CREDIT)

U.S. Courthouse and Federal Building Public Auditorium

825 Jadwin Avenue Richland, WA 99352

SCHEDULE (Click on the highlighted links below to go directly to materials for specific session)

8:00am: Check-In 8:20am: Welcome 8:30am: Cases and Rules Update

Judge Edward F. Shea and Staff Attorneys 9:15am: Employment Law Panel

Moderated by Magistrate Jude Mary K. Dimke, with Sarah Wixson, Brian Davis and Sandra Kent

10:15am: Break 10:30am: Swearing In of New Attorneys

Courtroom 10:45am: Voir Dire

John Nelson and Kristi McKennon 11:30am: Travel to Red Lion Richland Hanford House

802 George Washington Way, Richland, WA 12:15pm: Lunch Presentation

Ninth Circuit/Federal Bar Geana Van Dessel and Brendan Monahan

12:45pm: Return to Federal Courthouse 1:00pm: Ethics Key Note Presentation

Professor Brooks Holland 2:00pm: Bankruptcy Panel

Gary Dyer and George Jacobs

3:00pm: Cookie Break 3:15pm “Ask the Judges” Panel

Moderated by Erika Hartliep, with Judge Rosanna Malouf Peterson, Judge Stan Bastian and Magistrate Judge John Rodgers

4:15pm: Adjournment

IMMEDIATELY FOLLOWING THE CLE, PLEASE JOIN US FOR A RECEPTION HOSTED BY WALKER HEYE MEEHAN & EISINGER, PLLC AND TELQUIST ZIOBRO MCMILLEN CLARE, PLLC IN THE LOUNGE AREA AT THE RED LION HOTEL RICHLAND HANFORD HOUSE.

Cases and Rules Update

Honorable Edward F. Shea and Staff Attorneys

United States District Court for the Eastern District of Washington

The Benton-Franklin County Bar Association 11th Annual Federal Civil Trial Practice Seminar

May 12, 2017

Attorney Fee Awards —— EDWA –— 2016–2017

Below is a summary of several attorney fee awards in the Eastern District of Washington in the last twelve months.

See Brophy v. JP Morgan Chase Bank, 2:16-CV-0053-TOR, where the Court awarded attorney fees and imposed a sanction under Federal Rule of Civil Procedure 11(b).

See Salazar v. Monaco Enterprises, Inc., 2:12-CV-0186-LRS, where the Court imposed sanctions based on violations of Rule 26 and failure to disclose a material affidavit during discovery.

Supreme Court and

Ninth Circuit

Case Law Update

By: John Schroeder

ABOUT THE PRESENTER

John grew up in Yakima before attending Arizona State University and earning a B.S. in Justice Studies.

In 2014, John graduated with honors from the Sandra Day O’Connor College of Law and went on to

clerk for the Honorable Margaret H. Downie at the Arizona Court of Appeals, Division One. John

currently lives in Richland and serves as term law clerk to Senior Judge Edward F. Shea.

Sup

rem

e C

ou

rt a

nd

Nin

th C

ircu

it C

ase

Law

Up

dat

e

1

Practice Pointers

1. When litigating multiple lawsuits that involve similar issues or evidence, be mindful that inconsistent disclosure can create the impression of impropriety; ensure that any discrepancy is justified.

2. When seeking a fee award as a sanction for an opposing party’s misconduct, frame the issue as one of compensation rather than punishment.

3. Keeping detailed billing records makes it easier to establish the requisite causal connection between fees incurred and the opposing party’s misconduct.

Goodyear Tire & Rubber Co. v. Haeger 137 S. Ct. 1178 (2017)

Issue:

What are the limits to a federal court’s inherent power to sanction bad-faith conduct by ordering the violating party to pay the other side’s legal fees?

Holding:

When a court uses its inherent authority to sanction bad faith conduct by ordering payment of fees, “such an order is limited to the fees the innocent party incurred solely because of the misconduct — or put another way, to the fees that party would not have incurred but for the bad faith.”

Background:

Four members of the Haeger family were injured in a motorhome accident. The Haegers sued the Goodyear Tire & Rubber Company, alleging that the failure of a Goodyear G159 tire caused the accident. The Haegers requested “all test records for the G159 tires.” Goodyear produced certain test results and, throughout numerous discovery disputes, repeatedly assured the court that it had produced all requested test results in its possession. Eventually, the case settled.

After the Haegers discovered that Goodyear had disclosed additional tests in another lawsuit involving the G159, they sought sanctions for discovery fraud. The District Court for the District of Arizona found that from near the beginning of the case, Goodyear and its counsel had been “making materially false and misleading statements in court and withholding documents they knew to be responsive to discovery requests.” The court found that the Haegers had incurred $2.7 million in legal fees and costs since Goodyear began its “years-long course” of bad-faith behavior. The court therefore invoked its inherent ability to sanction litigation misconduct to award the Haegers $2.7 million.

A divided Ninth Circuit panel affirmed the award. The Supreme Court reversed that decision. The Supreme Court held that when a court sanctions misconduct under its inherent authority, there must be a but-for causal connection between the conduct being sanctioned and any fees being awarded.

Sup

rem

e C

ou

rt a

nd

Nin

th C

ircu

it C

ase

Law

Up

dat

e

2

Takeaways:

1. A federal court possesses certain “inherent powers” that are not based in rule or statute but allow the court to manage the parties and better dispose of cases in an orderly and expeditious manner. If a party abuses the judicial process, a court’s authority includes “the ability to fashion an appropriate sanction,” such as ordering the offending party to reimburse the other side for resulting legal fees and costs. Goodyear Tire & Rubber Co.

v. Haeger, 137 S. Ct. 1178, 1182 (2017).

2. When imposed pursuant to civil procedures, the amount of fees awarded may not be more than required to redress the aggrieved party for losses caused by the misconduct; that is, the aggrieved party may recover only those fees that would not have been incurred but for the misconduct. This causation requirement is necessary to ensure that the sanction is wholly compensatory in nature. Punitive sanctions require the court to provide procedural guarantees of due process similar to those applicable in criminal cases, such as a jury trial and requiring proof “beyond a reasonable doubt.” Id. at 1186.

3. “This but-for causation standard generally demands that a district court assess and

allocate specific litigation expenses — yet still allows it to exercise discretion and judgment.” Id. at 1187. The district court may take into account “its overall sense of a suit,” use estimates in its calculations, and rule on particular categories of expenses together as a group. The primary goal is “to do rough justice, not to achieve auditing perfection.” Id.

4. In rare cases, the but-for standard permits an award of all a party’s fees. For instance, a plaintiff who brings a claim in complete bad faith from the start could be ordered to pay the entirety of the opposing party’s fees, as could a defendant whose every action was part of a scheme to defeat a valid claim. Id. at 1187–88.

5. “[I]f a court finds that a lawsuit, absent litigation misconduct, would have settled at a

specific time — for example, when a party was legally required to disclose evidence fatal to its position — then the court may grant all fees incurred from that moment on.” Id. at 1188. If, however, it is unclear whether the lawsuit would have settled at a particular time, this type of temporal measurement is inappropriate because the but-for causation element has not been met.

Sup

rem

e C

ou

rt a

nd

Nin

th C

ircu

it C

ase

Law

Up

dat

e

3

Practice Pointers (applicable beyond patent law)

1. Laches is a defense that principally applies to equitable claims if there is no governing statute of limitations.

2. Even if not available as a complete defense, an opposing party’s delay may nonetheless be a factor when considering appropriate relief.

3. Estoppel may still be available where laches is not. In contrast to laches — for which timeliness is the essential element — estoppel requires misleading and resulting loss; delay may be a factor in estoppel, but is not required.

SCA Hygiene Prod. Aktiebolag et al. v.

First Quality Baby Prod., LLC et al 137 S. Ct. 954 (2017)

Issue:

Can a defendant assert laches as a shield against liability even though the alleged infringement took place within the Patent Act’s six-year limitations period?

Holding:

Laches cannot serve as a defense to claims for infringement that occurred within the six-year period prescribed by § 286 of the Patent Act.

Background:

Section 286 of the Patent Act states: “Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.”

Three years after receiving a certificate confirming the validity of a patent for certain adult incontinence products, SCA Hygiene Products filed a patent infringement suit against its competitor, First Quality Baby Products. The District Court for the Western District of Kentucky granted summary judgment for First Quality on the grounds of laches and equitable estoppel.

The Federal Circuit concluded that in enacting the Patent Act, Congress had codified laches as a defense. The Federal Circuit therefore held that laches could be asserted to defend against claims for damages incurred within the six-year period set out in the Patent Act.

The Supreme Court vacated the judgment in part and remanded the case for further proceedings because it viewed the language in § 286 of the Patent Act as a statute of limitations, and therefore a proclamation by Congress that a claim filed within the statutory period cannot be dismissed on timeliness grounds.

Sup

rem

e C

ou

rt a

nd

Nin

th C

ircu

it C

ase

Law

Up

dat

e

4

Takeaways:

1. “Patent law is governed by the same common-law principles, methods of statutory interpretation, and procedural rules as other areas of civil litigation.” SCA Hygiene Prod.

Aktiebolag v. First Quality Baby Prod., LLC, 137 S. Ct. 954, 964 (2017) (citation omitted).

2. The Supreme Court reiterated, and relied heavily upon, its prior decision and reasoning in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014). In that case, the Court looked at separation-of-powers principles and the traditional role of laches in equity to hold that laches cannot preclude a claim for damages incurred within the Copyright Act’s three-year limitations period, reasoning that laches cannot be invoked to bar legal relief “in the face of a statute of limitations enacted by Congress.” Id. at 1974.

3. As a general rule, laches is a “gap-filling doctrine.” If a statute of limitations governs,

there is no gap to fill because laches — like statutes of limitations — is meant to shield a defendant against untimely claims. Thus, by enacting a statute of limitations, Congress has spoken directly to the issue of whether a claim is sufficiently timely to permit relief.

4. “In light of the general rule regarding the relationship between laches and statutes of

limitations,” the Supreme Court rejected the notion that that the Patent Act “codifies a very different patent-law-specific rule.” SCA Hygiene Prod., 137 S. Ct. at 964.

Sup

rem

e C

ou

rt a

nd

Nin

th C

ircu

it C

ase

Law

Up

dat

e

5

Practice Pointers

1. Under at least some statutory schemes, “reckless disregard of the statutory language” can render a violation “willful” as a matter of law.

2. Under the FCRA, consumer report disclosures under § 1681b(b)(2)(A) must be provided in a separate document, free from any other terms or waivers.

3. Under the FCRA, authorization to procure a consumer report under § 1681b(b)(2)(A) may still be made on the same document as the disclosure.

Syed v. M-I, LLC 853 F.3d 492 (9th Cir. 2017)

Issue:

When procuring a consumer report for employment purposes, does a prospective employer satisfy the disclosure requirements of the Fair Credit Reporting Act (FCRA) if it includes a liability waiver in the disclosure document?

Holding:

When a prospective employer includes additional terms in a § 1681b(b)(2)(A) disclosure document and then procures a consumer report, the employer has committed a willful violation of the FCRA.

Background:

The FCRA requires that before procuring a consumer report for employment purposes, a consumer must give authorization in writing after being provided “a clear and conspicuous disclosure … in a document that consists solely of the disclosure . . . .” 15 U.S.C. § 1681b(b)(2)(A).

When Plaintiff Syed applied for a job, Defendant M-I gave him a document to sign that both authorized M-I to procure his consumer report for employment purposes and waived Syed’s rights to sue M-I for any violations of FCRA. Syed brought an action, alleging that M-I violated the FCRA by including a liability waiver in same document as the statutorily mandated disclosure. The U.S. District Court for the Eastern District of California, granted M-I’s motion to dismiss for failure to state a claim. The Court of Appeals for the Ninth Circuit reversed the district court’s dismissal and remanded the case for further proceedings, holding that M-I had willfully violated the FCRA by procuring Syed’s consumer report without providing the requisite disclosure in a form that consisted solely of that disclosure.

Sup

rem

e C

ou

rt a

nd

Nin

th C

ircu

it C

ase

Law

Up

dat

e

6

Takeaways:

1. The FCRA’s authorization requirement “creates a right to privacy by enabling applicants to withhold permission to obtain the report from the prospective employer, and a concrete injury when applicants are deprived of their ability to meaningfully authorize the credit check.”

2. A plaintiff who successfully brings such an action under the FCRA is entitled to actual

damages for a negligent violation, see 15 U.S.C. § 1681o, or punitive damages and attorney fees for a willful violation, see 15 U.S.C. § 1681n.

3. The Supreme Court has extended “willfulness” under the FCRA to reach actions taken

in “reckless disregard of statutory duty,” as well as those actions “known to violate the Act.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 56–57 (2007). Thus, the Ninth Circuit decided that because the statute was unambiguous, M-I’s subjective interpretation of the FCRA was immaterial to whether M-I had committed a willful violation by acting in “reckless disregard of the statutory language.”

4. A prospective employer does not violate the FCRA when it issues an improper

disclosure document, but instead only if and when the prospective employer then procures a consumer report about the job applicant.

Ninth Circuit

Case Law Update

By: Gillian Schroff

ABOUT THE PRESENTER

Gillian graduated magna cum laude from Lewis & Clark Law School in 2016. Originally from Vancouver,

Washington, she received a B.S. in Economics with a Mathematics Minor and a B.A. in Foreign

Language and International Affairs with a Hispanic Studies Minor from the University of Puget Sound in

2013. Gillian serves as term law clerk to Senior Judge Edward F. Shea. Beginning in October 2017, she

will join the Business and Tort Litigation Practice Group at Jones Day in Atlanta, Georgia.

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

1

Practice Pointers

1. General jurisdiction over a foreign corporation may be established by the in-state activities of a subsidiary if the subsidiary is an “alter ego” of the parent corporation.

2. Specific jurisdiction over a foreign corporation may be established by the actions of a subsidiary of the foreign corporation if the subsidiary is acting as an agent of the parent corporation.

Williams et al. v. Yamaha Motor Co. et al. 851 F.3d 1015 (2017)

Issue:

Did a California district court have personal jurisdiction over Yamaha Motor Company (YMC), based in Japan?

Holding:

There was no general personal jurisdiction over YMC because the plaintiffs did not plead a prima facie case that YMC and the California-based Yamaha Motor Corporation, U.S.A. (YMUS) were “alter egos” so that YMUS’s contacts could be imputed to YMC. There was no specific personal jurisdiction because the plaintiffs did not demonstrate that YMUS was acting as an agent of YMC.

Background:

This action in federal court stemmed from a product defect in YMC first-generation four stroke outboard motors, manufactured between 2000 and 2004. Named plaintiffs, a group of 20 individuals who purchased the motors, brought suit against YMC, which designed and manufactured the motors in Japan, and YMC’s wholly-owned subsidiary, YMUS ,which imported and marketed the motors in California. The plaintiffs alleged that the motors had an inherent design defect that caused corrosion in the dry exhaust system. YMC filed a motion to dismiss for lack of personal jurisdiction, and the district court granted that motion on August 19, 2014. The plaintiffs appealed, and the Ninth Circuit affirmed.

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

2

Principles:

1. General jurisdiction over a foreign corporation can be established through the in-state actions of a subsidiary that qualifies as an “alter ego” of the foreign parent corporation.

2. To establish that a subsidiary is an alter ego of a parent corporation, the Ninth Circuit requires that a plaintiff make out a prima facie case that (1) there is a unity of interest and ownership such that the separate personalities of the subsidiary and parent no longer exist, and (2) failure to disregard the separate identities would result in fraud or injustice.

3. The Court held that the plaintiffs failed to demonstrate that YMUS was an alter ego of YMC, such that YMUS’s contacts could be imputed to YMC, because the plaintiffs did not submit evidence of the nature of parent–subsidiary relationship.

4. A subsidiary’s actions can be imputed to a parent corporation for specific jurisdiction purposes if the subsidiary is acting as an agent of the parent. The Ninth Circuit test for whether an agency relationship exists is whether an agent acts on the principal’s behalf and is subject to the principal’s control.

5. The Ninth Circuit held that the plaintiffs failed to make out a prima facie case of an agency relationship between YMC and YMUS because the plaintiffs did not allege or demonstrate that YMC had the right to control YMUS’s activities. Accordingly, the exercise of specific jurisdiction could not be justified based on YMUS’s activities in California.

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

3

Practice Pointers

1. “Special” statutes of limitations under state law do not apply to claims under 42 U.S.C. § 1983.

2. Standard tolling provisions under state law do apply to claims under 42 U.S.C. § 1983.

3. RCW 4.96.020 is a special statute of limitations that does not result in the tolling of § 1983 claims. Accordingly, the statute of limitations for § 1983 claims continues to be governed by RCW 4.16.080(2).

Boston v. Kitsap County et al.

No. 15-35296, __F.3d__ (2017)

Issue:

Does RCW 4.96.020 apply to toll actions under 42 U.S.C. § 1983?

Holding:

RCW 4.96.020 is a special statute of limitations that does not operate to toll Washington’s general limitations period, which is applicable to § 1983 actions.

Background:

The plaintiff was injured while housed at Kitsap County Jail in January and February 2011. On January 3, 2014, he submitted a tort claim to Kitsap County pursuant to RCW 4.96.020. That statute provides as follows:

(4) No action subject to the claim filing requirements of this section shall be commenced against any local governmental entity, or against any local governmental entity’s officers, employees, or volunteers, acting in such capacity, for damages arising out of tortious conduct until sixty calendar days have elapsed after the claim has first been presented to the agent of the governing body thereof. The applicable period of limitations within which an action must be commenced shall be tolled during the sixty calendar day period. For the purposes of the applicable period of limitations, an action commenced within five court days after the sixty calendar day period has elapsed is deemed to have been presented on the first day after the sixty calendar day period elapsed.

On March 10, 2014, the plaintiff filed an action under 42 U.S.C. § 1983 in federal district court. The defendants moved to dismiss the § 1983 claims as time barred due to the Washington three-year statute of limitations under RCW 4.16.080(2), which applies to federal civil rights claims. The district court denied the motion to dismiss, finding that the § 1983 statute of

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

4

limitations was tolled for 60 days because the plaintiff submitted a claim to Kitsap County under RCW 4.96.020(4).

The district court granted the defendant’s motion for an interlocutory appeal on the question of whether RCW 4.96.020 tolls the § 1983 statute of limitations. The Ninth Circuit reversed, holding that the § 1983 statute of limitations is not tolled based on compliance with RCW 4.96.020

Principles:

1. Statutes of limitations for claims under 42 U.S.C. § 1983 are determined by state law. Under Washington law, the three-year statute of limitations “for any other injury to the person or rights of another” under RCW 4.16.080(2) applies to § 1983 claims. State tolling provisions also apply, but special statutes of limitations related to nuances of state law do not apply to § 1983 claims.

2. A provision that modifies a general statute of limitations is not a standard tolling

provision if the plaintiff is able to unilaterally determine whether the provision applies. 3. A provision that modifies a statute of limitations in the same way for every plaintiff is not

a standard tolling provision because such a provision effectively creates a new statute of limitations, rather than tolling an existing statute of limitations. See Silva v. Crain, 169 F.3d 608 (9th Cir. 1999).

4. In regard to § 1983 claims, RCW 4.96.020 is not a standard tolling provision, and is

instead a special statute of limitations, because filing a claim under the statute is not mandatory when a plaintiff is filing a claim under § 1983, meaning a plaintiff would be able to unilaterally decide whether or not to invoke the 60-day extension under the statute. In addition, RCW 4.96.020 is not a standard tolling provision because the 60-day extension effectively creates a new statute of limitations, rather than tolling the general limitations period. Accordingly, RCW 4.96.020 does not apply to modify the § 1983 statute of limitations.

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

5

Practice Pointers

1. Even if a factoring agreement does not transfer the risk of non-payment, it can remove accounts receivable from a PACA trust without constituting a breach by the trustee.

2. If accounts receivable are so removed from a PACA trust, the purchaser of the accounts receivable will not be liable to growers.

3. This is an issue to watch at the Ninth Circuit, as there is a circuit split and judges have called for the Ninth Circuit to reconsider this issue.

S & H Packing & Sales Co., Inc. et al. v. Tanimura Distributing, Inc. et al.

850 F.3d 446 (2017)

Issue:

Does a factoring agreement remove accounts receivable from a Perishable Agricultural Commodities Act (PACA) trust without constituting a breach by the trustee, even if there is no transfer of risk under the agreement?

Holding:

A factoring agreement need not transfer the risk of non-payment in order to constitute a commercially reasonable, true sale that removes accounts receivable from a PACA trust. Growers are therefore unable to obtain relief for non-payment from the purchaser of accounts receivable in such a situation.

Eight Circuit Judge Melloy, sitting by designation, argued in his concurrence, which was joined by Judge Gould, that the Ninth Circuit should reconsider its precedent regarding transfer of risk.

Background:

PACA was enacted to prevent unfair business practices in the produce industry. Under PACA, when a grower sells products on credit to a distributor, a trust is created that holds the products and any proceeds from the products. The distributor is the trustee of this trust, and the grower is the beneficiary. When a distributor then sells products from the trust on credit, the account receivable requiring payment for the products becomes a trust asset. In 1984, PACA was amended to provide against financial agreements that gave lenders security interests in trust accounts receivable superior to grower interests in those accounts.

Under Ninth Circuit law, however, a special situation exists when a distributor sells accounts receivable under a commercially reasonable factoring agreement. When this occurs, the accounts receivable are removed from the PACA trust without constituting a breach by the

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

6

distributor–trustee, and growers no longer have an interest in the accounts receivable.

In this case, produce growers sold perishable agricultural products on credit to Tanimura Distributing, Inc. Tanimura sold the products on credit to third parties and later sold the resulting accounts receivable to Agricap Financial through a factoring agreement. The Tanimura business later collapsed, and the growers did not receive payment for their products. The growers sued Agricap and claimed, among other things, that (1) Tanimura’s accounts receivable continued to be trust property under PACA, and (2) the factoring agreement was not a true sale, and therefore did not transfer the accounts receivable, because there was no transfer of risk of non-payment. The district court granted summary judgment in favor of the Agricap. The Ninth Circuit affirmed.

Principles:

1. In. Boulder Fruit Express & Heger Organic Farm Sales v. Trans. Factoring, Inc., 251 F.3d 1268 (9th Cir. 2001), the Ninth Circuit held that a PACA trustee could engage in a commercially reasonable factoring agreement removing accounts receivable from the PACA trust without committing a breach of trust.

2. A transfer-of-risk test has been adopted by other circuits to determine if a factoring agreement is a true sale or is instead a secured lending relationship. Under this test, if the agreement does not transfer a risk of nonpayment, then it is likely to be a secured lending relationship, whereas if risk of nonpayment is transferred, the agreement is more likely to be a true sale. Only a true sale removes accounts receivable from the PACA trust.

3. In Boulder Fruit, the Ninth Circuit did not expressly address whether a factoring agreement that did not transfer the risk of non-payment could constitute a true sale. The factoring agreement in Boulder Fruit did not, however, include a transfer of risk and the Ninth Circuit held that the agreement was commercially reasonable and that the accounts receivable had therefore been removed from the PACA trust without a breach on the part of the trustee. Here, in S&H Packing, the Ninth Circuit clarified that the Court in Boulder

Fruit had implicitly held that a factoring agreement need not include a transfer of risk of non-payment.

4. Based on the precedent in Boulder Fruit, the Ninth Circuit held that the factoring agreement entered into by Tanimura and Agricap was a commercially reasonable sale. The sale therefore removed the accounts receivable from the PACA trust, and that removal was not a breach of the trust. Thus, growers could not seek relief from Agricap, the purchaser of the accounts receivable.

5. Judge Melloy, joined by Judge Gould, argued that Boulder Fruit should be overturned. The Second, Fourth, and Fifth Circuits have held that a factoring agreement must include

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

7

a transfer of risk in order for the agreement to remove accounts receivable from a PACA trust. Endico Potatoes, Inc. v. CIT Group/Factoring, Inc., 67 F.3d 1063 (2d Cir. 1995); Nickey Gregory Co., v. Agricap, LLC, 597 F.3d 591 (4th Cir. 2010); Reaves Brokerage

Co., Inc. v. Sunbelt Fruit & Vegetable Co., Inc., 336 F.3d 410, 414 (5th Cir. 2003). These holdings are in direct conflict with the Ninth Circuit’s holdings in Boulder Fruit and S & H Packing. Judge Melloy argued that the Ninth Circuit should adopt a transfer of risk test to better reflect the purpose of protecting beneficiaries underlying PACA.

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

8

Practice Pointers

1. When a defendant in an employment discrimination case presents evidence of a nondiscriminatory explanation for termination, a plaintiff can defeat a motion for summary judgment by presenting evidence that the explanation is pretextual.

2. At trial, pretext can be proven through direct evidence of discrimination or through indirect evidence that shows that the defendant’s explanation is internally inconsistent or unbelievable.

3. Although the district court will not weigh credibility at the summary judgment stage, this type of direct or indirect evidence will defeat a motion for summary judgment.

Mayes et al. v. WinCo Holdings, Inc.

846 F.3d 1251 (2017)

Issue:

Was there sufficient evidence of gender discrimination to support a denial of the defendant’s summary judgment motion when the plaintiff presented direct and indirect evidence of discrimination and evidence that the reason she was fired was pretextual?

Holding:

There was sufficient evidence of gender discrimination to support a denial of summary judgment, and the district court therefore erred by granting summary judgment in favor of the defendant.

Background:

The plaintiff worked at a WinCo in Idaho Falls for 12 years, advancing to the position of Person in Charge and supervising employees on the night-shift freight crew. She was fired in 2011 for taking a stale cake from the store bakery to the break room to share with other employees and then telling a loss prevention investigator that she had permission to take the cake. The plaintiff claimed that she was fired based on gender discrimination.

The plaintiff testified that she had been given permission by members of the management team to take cakes in order to motivate employees to stay past the end of their shifts when necessary. The plaintiff testified that this was a common practice and that assistant managers sometimes participated. Other employees, including the other Person in Charge for the freight crew, gave sworn statements that this practice was common and accepted. The plaintiff also presented evidence that she was replaced by a male employee who had worked at the store for only three weeks.

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

9

The plaintiff testified that she began have difficulties with a general manager, Dana Steen, a woman, in 2011. The plaintiff had served as chair of the safety committee and Steen replaced her with a man. According to the plaintiff, Steen said that “a male would be better in that position.” The plaintiff testified that another employee told her that Steen did not like that “a girl” was running the freight crew. The plaintiff also said that Steen criticized the plaintiff because she could not stay late or come in on her days off due to her need to care for her children, and that Steen did not criticize a male employee for similar scheduling constraints based on childcare.

It was disputed whether Steen was involved in firing the plaintiff, but there was some evidence that Steen was involved in the decision.

WinCo moved for summary judgment based on evidence of a legitimate, nondiscriminatory reason for terminating the plaintiff. The district court granted WinCo’s motion for summary judgment, finding that the plaintiff had not presented sufficient evidence that the proffered reason for termination was pretextual. The Ninth Circuit reversed.

Principles:

1. At trial, “[a]n employee can prove pretext either: (1) ‘directly, by showing that unlawful discrimination more likely motivated the employer’; or (2) ‘indirectly, by showing that the employer’s proffered explanation is unworthy of credence because it is internally inconsistent or otherwise not believable.’’ Fonseca v. Sysco Food Servs. of Ariz., Inc., 374 F.3d 840 (9th Cir. 2004). Such direct or indirect evidence will defeat a motion for summary judgment.

2. The Ninth Circuit held that the plaintiff presented direct evidence of discriminatory intent by introducing evidence of (1) Steen’s alleged comment that a man would be better to lead the safety committee, (2) Steen’s alleged comment that she did not like that “a girl” was running the freight crew, (3) Steen’s criticism of the plaintiff, but not a male employee, for schedule restrictions based on childcare. The Court indicated that this evidence, alone, was sufficient to defeat summary judgment.

3. The Ninth Circuit noted that it did not matter whether Steen made the ultimate decision to terminate the plaintiff as long as Steen “influenced or participated in the decisionmaking process.” The Court also clarified that long-standing precedent establishes that it is immaterial whether the alleged discriminator and victim are of the same sex. See Oncale

v. Sundowner Offshore Servs., Inc., 523 U.S. 75 (1998).

4. The Court explained that there was also circumstantial evidence supporting a denial of the motion for summary judgment because multiple employees testified that taking cake was a common and accepted practice and the plaintiff presented evidence that she was replaced by a less qualified male employee, and this evidence constituted “specific and substantial evidence challenging the credibility of the employer’s motive.”

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

10

Practice Pointers

1. Federal Rule of Civil Procedure 60(b)(1) provides for relief of judgment based on excusable neglect.

2. When a minor, unintentional error results in the entry of judgment, the Rule 60(b)(1) factors may weigh in favor granting reconsideration.

M.D. v. Newport-Mesa Unified School District et al.

840 F.3d 640 (2016)

Issue:

Did the district court properly deny the plaintiffs’ motion for relief from judgment under Federal Rule of Civil Procedure 60(b)(1) based on excusable neglect, after the plaintiff missed the filing deadline for an amended complaint by two days and the district court dismissed the case?

Holding:

The district court should have granted the motion for relief from judgment because the delay was short, there was no prejudice to defendants, there was no evidence of bad faith, and the explanation for the delay was reasonable.

Background:

A fifth-grade student and her mother asserted a First Amendment retaliation claim under 42 U.S.C. § 1983 based on alleged retaliation experienced by the student after her mother complained to the school principal. The district court issued an order dismissing the First Amendment claim for failure to state a claim, but gave the plaintiffs 30 days to file an amended complaint. The order was initially docketed incorrectly, and a corrected order was re-docketed two days later.

The plaintiffs failed to meet the 30-day deadline for filing the amended complaint, and the school district filed a proposed judgment of dismissal one day after the deadline. Two days after the deadline, the plaintiffs filed an amended complaint. The district court dismissed the case based on the plaintiffs’ failure to file the amended complaint within the time period allowed.

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

11

The plaintiffs moved for relief from judgment under Federal Rule of Civil Procedure 60(b)(1) based on excusable neglect. The plaintiffs’ counsel explained that he had miscalculated the deadline for filing the amended complaint by calculating the deadline from the re-docketing of the order, rather than from the initial docketing. The plaintiffs’ counsel noted that it was only his second case in federal court and he therefore had little experience with the federal electronic case management system.

The district court denied the plaintiffs’ motion, finding that counsel’s neglect was “not an excuse for missing [an] unambiguous deadline.” The Ninth Circuit reversed.

Principles:

1. When determining the question of excusable neglect under Rule 60(b)(1), a court must consider “all relevant circumstances,” including “(1) the danger of prejudice to the opposing part; (2) the length of the delay and its potential impact on the proceedings; (3) the reason for the delay; and (4) whether the movant acted in good faith.” Bateman v. U.S. Postal Serv., 231 F.3d 1220, 1223–24 (9th Cir. 2000).

2. The Ninth Circuit held that the district court abused its discretion by denying the motion for reconsideration because the factors weighed in favor of granting the motion. The defendants were not prejudiced, the length of the delay and impact on the proceedings was minimal, there was no evidence of bad faith (“A lack of familiarity with CM/ECF may be a poor excuse but it doesn’t show bad faith.”), and the reason for delay was a calendaring error “that is sometimes committed even by sophisticated law firms.”

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

12

Practice Pointers

1. Claims under the FTCA cannot be based on injuries suffered outside of the United States.

2. “Suffered” means “where the harm first ‘impinge[s]’ upon the body, even if it is later diagnosed elsewhere.”

S.H. by Holt v. United States.

No. 15-15000, __F.3d __ (2017)

Issue:

Were the plaintiffs entitled to bring an action against the United States under the Federal Tort Claims Act (FTCA) based on injuries stemming from S.H.’s birth in Spain?

Holding:

The plaintiff’s claims were barred by the FTCA’s foreign country exception because the claims arose in Spain.

Background:

William Holt, a Master sergeant in the United States Air Force, and his family were stationed at a base in Spain. A daughter, S.H., was born prematurely and suffered injuries in Spain. After the family returned to the United States, S.H. was diagnosed with cerebral palsy.

The Holts sued the Government, arguing that (1) Air Force officials negligently approved the family’s request for travel to a base in Spain that was not equipped to deal with Mrs. Holt’s medical needs, and (2) S.H.’s injury occurred upon the family’s return to the United States. The district court found that the injury occurred after the family’s return to the United States. At a bench trial, the court found that Air Force officials were negligent and awarded $10,409,700 in damages.

The Government appealed, and the Ninth Circuit reversed, finding that the injury to S.H. occurred in Spain and that recovery was therefore barred by the FTCA’s foreign country exception.

Nin

th C

ircu

it

Cas

e La

w U

pd

ate

13

Principles:

1. Under the FTCA, the United States Government has waived its sovereign immunity for certain tort claims.

2. The FTCA excludes“[a]ny claim arising in a foreign country” from the general waiver of sovereign immunity. 28 U.S.C. § 2680(k).

3. The Supreme Court has held that the foreign country exception to the FTCA “bars all claims based on any injury suffered in a foreign country.” Sosa v. Alvarez-Machain, 542 U.S. 692, 712 (2004).

4. In S.H. by Holt, the Ninth Circuit clarified that suffered means “where the harm first ‘impinge[s]’ upon the body, even if it is later diagnosed elsewhere.” The Court based this holding on the conflict of laws principle that “[t]he place of wrong is . . . where the last event necessary to make an actor liable for an alleged tort takes place.” Restatement (First) of Conflict of Laws § 377. The Court also noted that “the question of when a claim accrues for statute of limitations purposes is analytically distinct from the question of where a claim arises under the foreign country exception.”

Case Law Update

By: Jeremy Lieb

ABOUT THE PRESENTER

Jeremy graduated from the University of Washington School of Law in 2013, and he earned a B.A. in Geography from Central Washington University in 2006. Prior to joining Judge Mendoza’s chambers as a career law clerk, Jeremy was an associate at Meyer Fluegge & Tenney in Yakima. He also previously clerked for Judge Morgan Christen of the U.S. Court of Appeals for the Ninth Circuit and Chief Justice Craig Stowers of the Alaska Supreme Court.

Case

Law

Upd

ate

Dolgencorp Inc. v. Mississippi Band of Choctaw Indians 746 F.3d 167 (5th Cir. 2014), aff’d by Dollar General Corp. v. Mississippi Band of Choctaw Indians, 136 S. Ct. 2159 (2016) Issue:

Whether a non-Indian business located on an Indian reservation is subject to tribal court jurisdiction for tort claims by an intern placed through a tribal program.

Holding:

By operating on the reservation and participating in a voluntary program for placement of tribal members in internships, a business engages in a consensual relationship with the tribe and therefore submits to tribal court jurisdiction over tort claims connected to that relationship.

The Supreme Court affirmed in a one-line, 4-4 split, per curiam decision.

Background:

Factual Background Dollar General Corporation operates a store within the Choctaw Indian reservation and located on tribal trust land. The store’s manager, Dale Townsend, agreed on behalf of Dollar General to participate in the tribe’s Youth Opportunity Program, which places young tribe members in short-term unpaid positions. John Doe, a thirteen-year-old tribe member was assigned to an internship at the store. Doe alleges that Townsend sexually molested him while he was working at the store. Procedural history Doe brought tort claims against Dollar General and Townsend in tribal court. He alleges that Dollar General is vicariously

Practice Pointers

1. Tribal courts will often have civil jurisdiction over non-members engaged in business relationships with the tribe or its members on tribal land. This includes jurisdiction over certain tort claims.

2. The boundaries of this jurisdiction remain fuzzy and are likely to continue shifting.

3. In determining whether these issues could be relevant in your practice, consider whether you have clients who:

a. Operate a business physically located on reservation land

b. Provide goods or services on a reservation

c. Engage in transactions directly with a tribe.

4. Be prepared for the

possibility of litigation in tribal court—have some familiarity with tribal court rules and the requirements for attorney admission.

1

Ca

se L

aw U

pdat

e

liable for Townsend’s actions, and that it negligently hired, trained, or supervised Townsend. Dollar General and Townsend moved to dismiss for lack of jurisdiction. The trial court, and subsequently the Choctaw Supreme Court held that the Choctaw courts had subject matter jurisdiction over the claims against both defendants. Dollar General and Townsend then filed an action in federal court seeking to enjoin the prosecution of Doe’s suit in tribal court. The district court granted Townsend’s motion for temporary restraining order and permanent injunction, but denied Dollar General’s motion. The district court subsequently denied Dollar General’s motion for summary judgment and granted summary judgment in favor of the tribal defendants, holding that the tribal court had jurisdiction over Doe’s tort claims against Dollar General.

Principles:

1. Generally, Indian tribes lack authority to regulate the activities of nonmembers. However, “Indian tribes retain inherent sovereign power to exercise some forms of civil jurisdiction over non-Indians on their reservation. . . . A tribe may regulate, through taxation, licensing, or other means, the activities of nonmembers who enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements.” Montana v. United States, 450 U.S. 544, 565 (1981). This is referred to as the consensual relationship exception.

2. Where a tribe possesses regulatory authority under the Montana consensual relationship exception, its courts will also generally have jurisdiction. Strate v. A-1 Contractors, 520 U.S. 438, 453 (1997) (“[W]here tribes possess authority to regulate the activities of nonmembers, civil jurisdiction over disputes arising out of such activities presumptively lies in the tribal courts.”).

3. A tribe may exercise its regulatory authority by enforcing tort law. Dolgencorp, Inc., 746 F.3d at 174 (citing Attorney’s Process & Investigation Servs., Inc. v. Sac & Fox Tribe, 609 F.3d 927, 938 (9th Cir. 2010)) (“The fact that the regulation takes the form of a tort duty that may be vindicated by individual tribe members in tribal court makes no difference.”).

4. The tribe’s exercise of regulatory authority must have a nexus to the consensual relationship itself. Atkinson Trading Co. Inc. v. Shirley, 532 U.S. 645, 656 (2001). That nexus exists between a voluntarily agreement to place a tribal member in a position of quasi-employment and the tribe’s authority to impose regulations relating to the health and safety and working conditions of tribal members. Dolgencorp, Inc., 746 F.3d at 173–75

5. The consensual relationship test does not require a showing that a specific relationship intrudes on the internal relations of a tribe or threatens self-rule. Instead, it is sufficient that a general area of regulatory authority implicates tribal governance and internal relations. A tribe may therefore generally regulate the working conditions of tribe members employed on the reservation. Dolgencorp, Inc., 746 F.3d at 174–75.

2

 

  

 

 

Case Law Update  

By: Miguel A. Gradilla  

 

 

 

 

 

 

ABOUT THE PRESENTER

Miguel graduated from Columbia Law School in 2014. Originally from Los Angeles, CA, he earned a B.A. in History with a Minor in Latin American Studies from Stanford University in 2007. Miguel serves as term law clerk to Judge Salvador Mendoza, Jr. Prior to joining Judge Mendoza’s chambers, Miguel was a litigation associate at Cooley LLP in the firm’s San Francisco office. Beginning in August 2017, he will serve as a term law clerk to Judge Mary H. Murguia of the U.S. Court of Appeals for the Ninth Circuit in Phoenix, AZ.   

 

  

 

 

 

Case Law Update 

1 

Practice Pointers 1. When asserting causes of

action based on statutory violations, as in all instances, Plaintiffs must meet constitutional standing requirements.

2. The Supreme Court did not draw a bright line regarding what constitutes a “concrete” harm and left it to the Ninth Circuit to determine whether the harms alleged here are “concrete.” Parties should be prepared to argue why the asserted harm in a respective case is or is not “concrete.”

 

Robinsv.Spokeo,Inc.No.11‐56843(pendingbeforethe9thCir.) Issue:

Do “the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement” for standing under Article III?

Background:

Brief factual background Spokeo is a California company that aggregates data about consumers from many sources, organizes that information, and presents it to users online. Thomas Robins is a resident of Virginia. Robins sued Spokeo alleging, among other things, that the company violated the Fair Credit Reporting Act by disseminating inaccurate information about him. The alleged inaccuracies include an incorrect picture of Robins, reports that he is married, has children, is employed in a technical field, holds a graduate degree, and is in strong economic health. None of these statements are true. He is pursuing this case as a class action. Brief procedural background In 2011, the Central District of California dismissed the complaint for lack of standing. The Ninth Circuit reversed in 2014. Two years later, the Supreme Court vacated the Ninth Circuit’s decision and remanded the case. Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). The case is presently before the Ninth Circuit. The panel (Judges O’Scannlain, Graber, and Bea) heard arguments on December 13, 2016, and has yet to issue a ruling. Principles & Misc.:

1. Standing and separation of powers concerns. To have standing to sue in federal court, a plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial

 

 

 

 

 

 

Cas

e La

w U

pdat

e

2 

decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992); Spokeo, 136 S. Ct. at 1547.

2. Injury in fact. This is a constitutional requirement; Congress cannot supersede or infringe upon it via statute. Spokeo, 136 S. Ct. at 1547–48. To establish that a plaintiff has been injured in fact, she must show that she “suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical.” Id. at 1548 (citing Lujan, 504 U.S. at 560) (emphasis added and quotation marks omitted).

3. Concrete and Particularized. The Supreme Court remanded the case to the Ninth Circuit because the Ninth Circuit collapsed the “concrete” and “particularized” analysis. Courts need to analyze both of these factors when determining whether an injury in fact took place. Id. at 1548. Here, whether Robin’s injury was “particularized,” is uncontested. Id. (stating that the Ninth Circuit concluded that Robins alleged particularized injury because his statutory rights were purportedly violated and his interest in handling his credit information is individualized).

4. Concreteness. This is the heart of the case. The Ninth Circuit must determine whether Robins alleges a “concrete” and “particularize” injury. A “concrete” injury is one that actually exists and is not abstract. Spokeo, 136 S. Ct. at 1548.

a. A concrete harm need not be “tangible.” Intangible harms, like free

speech violations or reputational harms, can be concrete. b. To determine whether an intangible harm constitutes an injury in fact

both (1) history and (2) Congress’s judgment are important. i. History. Courts look to intangible harms that have historically

provided the basis for lawsuits in English and American courts, such as reputational harms.

ii. Congress’s judgment. Congress can choose to provide a cause of action through statute and give plaintiffs access to federal courts where none previously existed. Id. at 1549.

5. Statutory violations and standing. Where a plaintiff has suffered a “bare procedural

violation” without any concrete harm, she cannot satisfy the injury in fact requirement. However, a statutory violation alone can be sufficiently concrete. Id. (“In other words, a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.”) The bottom line is that Plaintiffs seeking redress in federal court must always meet constitutional standing requirements. Where the alleged harm is a statutory violation, such a violation may or may not require alleging additional harm, depending on the circumstances in an individual case.

 

  

 

 

 

Case Law Update 

3 

Practice Pointers 1. The date on which an

employee gives notice of his or her resignation will determine when the 45-day limitations period for contacting an EEO counselor begins to run.

2. Determining when, exactly, notice of resignation is given, however, is a highly factual and case specific question.

Greenv.Brennan 

136 S. Ct. 1769 (2016)  

Issue:

In Title VII discrimination lawsuits where federal employees assert constructive-discharge claims, when does the 45-day limitations period to contact an Equal Employment Opportunity (EEO) counselor begin to run?

Holding:

The 45-day clock for a constructive-discharge claim, as set by 29 CFR § 1614.105(a)(1), begins to run only after an employee resigns. Moreover, a constructive-discharge claim accrues, and the limitations period begins to run, when the employee gives notice of his resignation, not on the effective date.

Background:

The plaintiff, Marvin Green, worked for the U.S. Postal Service for 35 years. In 2008, he was postmaster for Englewood, Colorado and applied for the postmaster position in Boulder. He did not get the position. After not being selected, Green, who is black, complained that he was denied the promotion because of his race.

Conditions at work deteriorated quickly for Green. His supervisors accused him of intentionally delaying the mail, which is a criminal offense. The Postal Service’s Office of Inspector General (OIG) investigated the charge against Green and he was placed on off-duty status pending resolution of the investigation. Green’s supervisors continued to represent that the OIG was investigating even after the OIG concluded that no further investigation was warranted.

On December 16, 2009, Green and the Postal Service signed an agreement whereby Green would leave Englewood in exchange for the Postal Service promising to drop any criminal charges. Green also had a choice, retire or relocate and work in Wyoming. He chose to retire and submitted his resignation on February 9, 2010, effective March 31, 2010.

 

 

 

 

 

 

Cas

e La

w U

pdat

e

4 

Green did not contact an EEO counselor until March 22, 2010. He later filed suit and alleged, among other things, constructive discharge. The District Court of Colorado granted the Postal Service’s summary judgment motion, in relevant part, because Green failed to timely contact an EEO counselor. The Tenth Circuit affirmed. The Supreme Court took the case, vacated the Tenth Circuit’s judgment, and remanded the case.

Principles & Misc.:

1. For purposes of a constructive-discharge claim, the phrase “the matter alleged to be discriminatory,” as used in the relevant regulation, includes the employee’s resignation. This means that the 45-day limitations period during which a plaintiff must contact an EEO counselor starts to run when an employee resigns.

2. The “standard rule.” In reaching its decision, the Supreme Court relied on the “standard rule” for limitations periods. Under this rule, a limitations period ordinarily starts when a plaintiff has a “complete and present cause of action.” Green, 136 S. Ct. at 1776. But a cause of action does not become “complete and present” until the plaintiff can file suit. Id. Although this default rule can be displaced, since the text of the limitations period at issue here did not indicate that the standard rule does not apply, the rule applies.

3. Notice rule. The Court extended the notice rule in “ordinary wrongful-discharge” claims to constructive-discharge claims. Id. at 1782 (“Likewise, here, we hold that a constructive-discharge claim accrues—and the limitations period beings to run—when the employee gives notice of his resignation, not on the effective date of that resignation.”)

4. The Tenth Circuit’s ruling on remand. On remand, the Tenth Circuit held that Green gave

notice of his resignation on February 9, 2010, and his constructive-discharge claim was therefore timely. Green v. Brennan, No. 13-1096, 2016 WL 6155932 at *1 (10th Cir. 2016). The court explained that the settlement Green signed with the Postal Service gave him the choice to either continue working in Wyoming or retire. Accordingly, he did not provide notice of his resignation until he submitted his retirement paperwork. Id. The court vacated the portion of its prior opinion related to the constructive-discharge claim, affirmed dismissal of all other claims, and remanded for further proceedings.

 

  

 

 

 

Case Law Update 

5 

Practice Pointers 1. Unlike in other contexts,

defendants in Equal Pay Act cases have the burden of proving that pay disparities resulting from their decision-making in setting salaries have a legitimate business purpose.

2. Although the burden is not on plaintiffs to show that defendants’ asserted business justifications are pretextual or otherwise improper, they should nevertheless be ready to rebut defendants’ affirmative defenses.

3. Given the circuit split on the issue presented in Rizo, parties should be aware of the different approaches courts have taken and be prepared to address them.

4. Be mindful of state laws that may prohibit using prior pay to justify a pay differential.

Rizov.Yovino 

No. 16‐15372, ___ F. 3d. ___ (9th Cir. 2017)  

Issue:

Under the federal Equal Pay Act, can an employer’s use of an employee’s prior salary alone ever be a “factor other than sex” sufficient to be a permissible affirmative defense against a prima facie showing of gender-based pay disparity?

Holding:

Yes. An employer can maintain a pay differential based solely on prior salary, or any other facially gender-neutral factor, but only if (1) the employer shows that the factor effectuates some business policy and (2) the employer uses the factor reasonably in the context of the employer’s stated purpose and its other practices.

Background:

Defendant, the Fresno County Superintendent of Schools, hired the Plaintiff, Aileen Rizo, as a math consultant in 2009. At that time, the County used a salary schedule—Standard Operation Procedure 1440—to determine starting salaries for management-level employees, such as Plaintiff. New math consultants were hired at “Level 1” but, depending on a new hire’s most recent salary history, a new employee was placed on a “Step” within Level 1 and given an additional 5% increase. Level 1, Step 1, the lowest level, set an annual salary of $62,133. Since Rizo’s last job paid $51,830, below the lowest level on the County’s scale, she was hired at Level 1, Step 1, and given an additional $600 stipend for her master’s degree.

In 2012, Plaintiff learned that the County set a newly hired male math consultant’s starting salary at Level 1, Step 9. She subsequently learned that the County paid the other math consultants, all male, more than her. She complained to the County and, unsatisfied with their answer, sued.

After the County moved for summary judgment arguing Rizo’s salary was lower because of factors other than sex, the district court found for the Plaintiff. In so holding, the district court stated that “a pay structure based exclusively on prior wages is so inherently fraught with risk” that it will

 

 

 

 

 

 

Cas

e La

w U

pdat

e

6 

perpetuate gender pay disparity. Rizo v. Yovino, No. 16-15372, 2017 WL 1505068 at *2 (9th Cir. 2017).

Relying on Kouba v. Allstate Ins. Co., 691 F.2d 873 (9th Cir. 1982), the Ninth Circuit panel vacated the district court’s decision and remanded the case. Specifically, the panel instructed the district court to consider the four business reasons the County offered for using Standard Operation Procedure 1440 in setting a new employee’s salaries. On remand, the district court is to evaluate whether the four reasons effectuate a business policy and determine whether the County uses these factors reasonably “in light of the [County’s] stated purpose as well as its other practices.” Id. at 3.

Principles & Misc.:

1. Circuit split. The Tenth and Eleventh Circuits are at odds with the Seventh, Eighth, and Ninth Circuit on this issue. See, e.g., Irby v. Bittick, 44 F.3d 949 (11th Cir. 1995); Angove v. Williams-Sonoma, Inc., 70 Fed. App’x 500 (10th Cir. 2003). In those Circuits, prior salary alone cannot justify a pay disparity. In contrast, the Seventh and Eighth Circuits do not reject the use of salary history alone as an affirmative defense to the Equal Pay Act. See, e.g., Covington v. Southern Illinois Univ., 816 F.2d 317 (7th Cir. 1987); Taylor v. White, 321 F.3d 710 (8th Cir. 2003). The Ninth Circuit’s approach, however, differs from that of the Seventh and Eighth Circuits in that those Circuits do not require the factor other than sex to be business related or related to a position’s particular requirements. Wersing v. Dep’t of Human Servs., State of Illinois, 427 F.3d 466, 469–70 (7th Cir. 2005).

2. This is not the McDonnell Douglas burden-shifting test. Though the district court must evaluate the County’s four stated business reasons for the pay disparity, the County has the burden of persuasion. The Plaintiff is, of course, free to introduce evidence of pretext or any other information that challenges the County’s affirmative defense.

3. To be continued? This is unlikely to be the last word regarding whether, under the

Equal Pay Act, prior salary alone can ever be a “factor other than sex” in setting a person’s salary. In the Ninth Circuit, however, Kouba as reaffirmed in Rizo, is binding.

Employment Law Panel

Magistrate Judge Mary K. Dimke United States District Court

for the Eastern District of Washington with Sarah Wixson, Brian Davis

and Sandra Kent

The Benton-Franklin County Bar Association 11th Annual Federal Civil Trial Practice Seminar

May 12, 2017

11th Annual Federal Civil Trial Practice

Seminar

Sarah L. Wixson

Stokes Lawrence P.S.

Sandra H. Kent

Mission Support Alliance LLC

Brian G. Davis

Leavy Schultz Davis, P.S.

Screening Employment Cases

From Perspective of Plaintiff’s Counsel, Defense Counsel, In-house Counsel

Managing Risk of Litigation

Sample Scenario

Current Issues in Employment Law

Wage Loss Law

Social Media and Employee Policies

Recent Employment Cases

Assistant Screening

Conflict – Facts – Salary - Benefits

Client Consultation

Evaluating Damages

Evaluating Emotional Damages

Evaluating the Client

Employer Evaluation

Federal Jurisdiction v. State Jurisdiction

Public or Private Entity

Is there Pretext?

Are these options available? Jurisdiction: Which Employers are Subject to an Investigation?

HRC: 8 or more employees under WLAD EEOC: 15 or more under Title VII EEOC: 20 or more for Age Discrimination

Timing: When can you timely file? HRC: 6 months from discriminatory act EEOC: 300 days - because Washington State law prohibits the same

type of discrimination as the Federal law.

Duel Filing between EEOC and HRC HRC is a “Fair Employment Practice Agency” (FEPA) If there is concurrent jurisdiction – then both Agencies file with

each other.

Human Rights Commission Employment Discrimination

Housing & Real Estate Discrimination

Places of Public Accommodation

Credit and Insurance Discrimination

Procedures set by W.A.C. § 162 et. seq.

Equal Employment Opportunity Commission Title VII of the Civil Rights Act of 1964

The Equal Pay Act of 1963 (EPA)

Age Discrimination in Employment Act of 1967 (ADEA)

Title I of the Americans with Disabilities Act of 1990 (ADA)

Genetic Information Nondiscrimination Act of 2008 (GINA)

Dual File with Human Rights Committee

Why?

More Access to Investigators

Often local with a passion for their service

Benefit of Public Record Request

Wade’s Eastside Gun Shop, Inc. v. Dep’t of Labor & Indus., 185 Wn.2d 270 (2016)

The value of a well-drafted complaint

Option for Administrative Transfer to EEOC

Alternative Dispute Resolution Process

Paid Mediation

Facts Are we the good guys? How do we prove we’re the good guys? If we’re not the good guys, how fast can we settle?

Parties Plaintiff and Counsel ($$ or Justice) Reputation

What’s really at stake? Money Other Ramifications Industry-wide Changes

Jurisdiction – federal, state, agency

Initial Considerations

Has Plaintiff made a prima facie case?

Were all internal policies/procedures followed?

In addressing known complaints

Prior to taking adverse action

Are key witnesses available?

Will they be able to support legal activities?

Strategic Considerations

Is early ADR appropriate?

Process defects, cost, potential damage to reputation, negative media

Will discovery be lengthy and/or disruptive?

Are key witnesses available?

Cost

Joe has worked for the company for 10 years. Except for last year, Joe was consistently given raises and positive performance reviews. One year ago, Joe went through a divorce and his performance began to slip. A Performance Improvement Plan was issued noting his problems and his divorce. In six (6) months, it appeared Joe corrected his performance and was doing better. Joe then slipped and fell on ice while working. He filed an L&I claim and exercised his FMLA rights. Prior to his accident, management verbally discussed terminating his position and releasing Joe. Joe came back and his performance was adequate.

WHAT ARE THE OPTIONS?

Fair Labor Standards Act (FLSA)

Does not require lunch or rest breaks.

Short breaks (5 -20 min.) are compensable work hours.

Washington State Law - two different regulations for meal and rest breaks

WAC § 296-126-092

WAC § 296-131-020

Demetrio v. Sakuma, 355 P.3d 258, 183 Wash. 2d 649 (2015)

Helde v. Knight Transportation, Inc., No. C12-0904RSL, 2016 WL 1687961, (W.D. Wash. Apr. 26, 2016)

Carranza v. Dovex, 16-CV-00054-SMJ (2017)

Changed the Face of Law

Power to Create – Influence – Destroy

Affected all aspects of legal practice

Has attained credibility and recognition

Guidelines and Best Practices for Social Media Use in Washington State

National Labor Relations Board Fact Sheet: The NLRB and Social Media

RCW § 49.44.200

Kirby v. Employment Security Dep’t, 185 Wn. App. 706 (2014)

NLRB & Chipotle

Arbitration Agreements Mohamed v. Uber Technologies, 848 F.3d 1201 (9th Cir. 2016)

(finding arbitration clause that delegated questions of arbitrability to the arbitrator was valid and enforceable).

Independent Contractor/Employee Classification Numerous lawsuits alleging Uber misclassified its drivers

as independent contractors in litigation related to drivers seeking tips, expense reimbursements, overtime, etc.

Ninth Circuit has consolidated four class actions to address Uber’s claim that the Court should decertify the class and enforce arbitration agreement with class action waivers. (Argument scheduled for fall 2017).

Equal Pay

Rizo v. Yovino, --- F.3d ---, 2017 WL 1505068 (9th Cir. April 27, 2017) (finding that under the Equal Pay Act, salary history is a “factor other than sex” and concluding that employers may pay men and women differently based on salary history if employer shows that the use effectuates a business policy and is reasonable).

Whistleblower

Somers v. Digital Trust Inc., 850 F.3d 1045 (9th Cir. 2017) (joining the Second Circuit in construing DFA’s “whistleblower” protections to include those who make internal disclosures).

(Split with Fifth Circuit)

Title VII Protected Class

Hively v. Ivy Tech., 853 F.3d 339 (7th Cir. 2017) (en banc) (Title VII precludes discrimination based on sexual orientation) (generating a Circuit Split).

Voir Dire

John Nelson and Kristi McKennon

The Benton-Franklin County Bar Association 11th Annual Federal Civil Trial Practice Seminar

May 12, 2017

1

11th Annual Federal Civil Trial Practice Seminar

May 12, 2017, Richland Washington

An Overview of Strategic and Legal Considerations in Voir Dire

John Nelson, Foster Pepper, PLLC Kristina L. J. McKennon, Flynn Merriman McKennon, P.S.

1. Strategic Approaches and Objectives in Voir Dire, Generally

A. Use voir dire to identify jurors hostile to your case.

Although it is often referred to as "picking a jury," all trial lawyers know the best you can do in voir dire is "deselect" the potential jurors you don't like.

B. Use voir dire for “conditioning and commitment.”

Although it is often referred to as "picking a jury," all trial lawyers know the best you can do in voir dire is "deselect" the potential jurors you don't like.2

“Ask a trial judge the purpose of voir dire and the answer will be short. “In my opinion, the purpose of jury selection is to assure that the jury is fair and unbiased,” says Hon. John G. Koeltl, New York City, member of the ABA Section of Litigation’s Federal Practice Task Force. “It is not to use the process to slant the jurors to your side,” he adds.

Ask a trial lawyer the purpose of voir dire and the answer will be different. “The lawyers are interested in a partial jury. I do not want an impartial jury. I want a jury that is in my favor from the beginning, and you can quote me on that,” says Paul Mark Sandler, Baltimore, cochair of the Section of Litigation’s Institute for Trial Training and chair of the Special Committee on Voir Dire for the Maryland State Bar Association. “I do believe that cases are won and lost with the selection of the jury,” he opines.”1

Voir dire is the first time the jurors meet the lawyers and hear about the case, which means voir dire is the first opportunity to condition the jury, introduce them to potential trial themes, and diffuse potential negative aspects of the case. …

Aside from the jurors’ first introduction to the case, voir dire should be used to secure commitments from the jurors to be fair, impartial, and to follow the law even if they may not like the consequences or find the applicable law distasteful. This provides an anchor and reference point at the close of the case, as jurors can be reminded of the personal commitment they made during voir dire to adhere to the law even if they do not like the result.3

2

2. Deselecting Jurors – “For Cause” Challenges and Peremptory Strikes A. Use voir dire to develop grounds to challenge “for cause.”

i. Statutory inability to serve: 28 U.S.C. §1865 (not a citizen, 18 years old, residence one year in district; illiteracy or non-English speaking; mental or physical infirmity to render satisfactory service; charge or conviction of crime punishable by imprisonment for more than one year, civil rights not restored).

ii. Bias. The law allows a “for cause” challenge when there is proof of “a

bias that is so strong as to interfere with his/her ability to properly consider evidence or follow the law.”4 Executing a challenge for cause requires you to develop sufficient information to demonstrate to the court that a prospective juror would be “substantially impaired” from following the law. Wainwright v. Witt, 496 U.S. 412 (1985).

B. Use peremptory challenges to deselect unfavorable jurors for whom you cannot establish “cause”.

i. Identify deliberation leaders – strike absent 80% confidence

ii. Unlikely leaders are less critical

“Bias can be shown either by the juror’s own admission of bias or by proof of specific facts which show the juror has such a close connection to the parties, or the facts at trial, that bias can be presumed.” When making a challenge for cause due to bias, the “burden of showing partiality on the part of jurors is upon the challenger. To meet this burden, [the challenger] must show that particular jurors actually hold opinions raising a presumption of partiality.”4

“it is our responsibility to identify and deselect from the panel those jurors who are most ‘dangerous’ and who are incapable of hearing the evidence impartially, if not favorably to our case. In other words, our goal is to minimize the risk.”5

Studies have demonstrated that the most influential jurors tend to be extroverted, agreeable, conscientious, and emotionally stable. See, e.g., D. K. Marcus, P. M. Lyons, and M. R. Guyton, Studying Perceptions of Juror Influence in Vivo: A Social Relations Analysis, 24 Law & Hum.Behav. 173 (2000). Equally important to know is which jurors will be receptive to persuasion and influence. In other words, who will be the leaders and who will be the followers? This research confirms that even today men are perceived to be more influential than women. The Selecting and Deselecting Jurors v Wolfe v 519 research also indicates that conscientious people (those willing to consider all opinions before deciding) and people generally less “open” are the ones who are most likely influenced by others.9

3

3. Use voir dire (sparingly) to introduce case themes, negative issues.

A. Use case themes to help jurors hear and retain your evidence consistent with their values and experiences.

B. Use voir dire to “pre-condition” jurors to your case themes and negative issues.

i. Caveat: Be cautious and sparing – if the Judge decides that you are giving an opening statement or arguing your case, your voir dire will likely come to an abrupt end.

“There are two key ingredients to persuasive voir dire: make your questions about the themes and principles of your case, not the facts, and design your questions so that your jurors’ answers are what persuades them.”6 Ex. Do not ask “do you wear a seatbelt when you drive?” Instead, ask “what precautions do you take to make sure you are keeping yourself and others as safe as possible?”

What is a “case theme”? James McElhaney – The Big Idea – the single, unifying idea that convinces the

judge or jury what happened, who is responsible, and why your result is just, in accordance with their values and sensibilities – “this is how the world works.”

Harry Plotkin – Explains what the evidence means, how the evidence should be

judged, what they should do about it, and why they should believe it is fair. “If it doesn’t fit, you must acquit.”

“Corporate greed does not trump the sanctity of a human life.”

4

C. Inoculate jurors to negative issues by addressing bad facts with opponent’s theme.

4. Styles and Strategies for Conducting Voir Dire.

A. Nuts and Bolts Of Good Voir Dire. i. Be honest, about yourself, your client, your objective, and your biases ii. Ask open ended questions

iii. Experience, then attitudes – explores foils: opposite experience, opposing views

iv. Have a conversation v. Respect, attention, manners

B. Secret to Successful Voir Dire – Establish a Human Connection.

“One effective tactic that you may consider is to take a preemptive strike and steal opposing counsel’s thunder by asking one or more of his or her questions on your subsequent rounds of questioning prospective jurors. This not only allow you to inoculate prospective jurors against the indoctrination attempts by opposing counsel, but it lets you take more direct control of the voir dire process and dictate the course of questioning.”7

Jury selection is an odd process and it is one fraught with discomfort on all sides. The ultimate goal, however, should be to overcome the discomfort and to start a relationship with these important people who will ultimately decide your client’s case. When you approach voir dire, it is useful to remember the feeling you experienced before you walked into your first day of high school or as you awaited a blind date. Voir dire is very simply about getting to know people—but it’s nerve-wracking. It is about encouraging them to share with you by letting them know it is a safe place. The struggle, as we all know, is in how to go about accomplishing this goal. We have all seen and conducted voir dires where the panel was silent other than occasional shakes of the head or audible affirmations that they can be fair. This is a bad voir dire. To avoid this undesirable outcome, your mindset as the attorney, should be that of someone who is making friends and engaged in listening. If it is, you will then earn credibility which will result in people on the panel who want to share with you.

5

C. Remembering How to Be “Human”

i. Be Vulnerable: The worst voir dires involve solely questions about what people watch on television and simply asking them to agree to follow the judge’s instructions. Good voir dire, however, delve into deeply held and important concepts of bias. If your client is not English-speaking, for example, a voir dire must address with the panel what this fact implies to them about your client. You must ask them to share their views and, often, you must be “brutally honest” with them yourself (these are the words of successful California trial lawyer Nick Rowley in his book Trial by Human).

ii. Be Empathetic: It helps to remember what this panel has gone through today before ever seeing you. This is not an average day for a member of the panel. We, attorneys, are used to trials and courtrooms—most jurors are not. We must remember that they likely missed work. They likely had to find alternate child care and then were placed in a room with 40 strangers. There they sat with bad coffee and only a day-old newspaper to read. They waited and waited to be divided into groups and marched to courtrooms with no idea what would happen next. They then are looking at you, anxiously awaiting your questions on potentially sensitive topics.

iii. Encourage Sharing: With this in mind, go easy and thank them for sharing with you no matter how much you disdain the substance of their comments. Use open ended questions and ask for volunteers first before directing questions to specific jurors. When one juror shares, after thanking them, invite others to weigh-in by saying something like: “How about that?” or “What do we think of what Mr. Jones shared?” or

“Who feels this way?” or “Please talk to me, this only works if we all share.”

Do not be afraid of a bit of silence. Silence can be powerful. While we have limited time, allowing the panel to think about their views and opinions is

If you are vulnerable with the panel, they will share with you. This might as simple for the attorney as saying:

“I’m nervous this morning as this is the most uncomfortable part of a trial for me; but it’s also the most important. This is my only chance to talk with you and listen to you.”

This statement affirms what the panel is feeling and tells them that you are human too. It helps to psychologically create a scenario where you are all feeling the same emotion together.

6

important. Do not talk over the panel. As lawyers, we all have a tendency to do this. Slow down your mind and listen, really listen to what they share. iv. Be Honest: Credibility is such an important concept with a jury. We must remember that we start with zero credibility and we must earn it. In trial, we hope to earn it quickly and voir dire is our first opportunity to do so. Once we earn credibility, however, we have an obligation to maintain it throughout the trial. In voir dire, we need to remember not to over promise or attempt to oversell our case. We can begin to introduce themes and theories but we should not go too far into arguing our case.

v. Be Confident: This goes for every stage of a trial, but so much of speaking to a panel is about knowing yourself, your own idiosyncrasies, your failures in the past and your successes. A jury can sense your own discomfort with yourself. So, spend some time getting to know how you present, how you appear and don’t try to be anyone other than you. Some lawyers spend too much time trying to appear to be polished when they are truly folksy. And, conversely, some

While voir dire is truly a “de-selection,” as we discussed above, make the jurors feel as though you are building a team and that you simply want the right members on that team. For instance, when a juror shares that she doesn’t like a system that awards money for pain you might say:

“Thank you, Ms. Smith, many members of my own family might agree with you. In this case, however, the judge will be instructing you to award money to compensate my client for her pain. It’s important that you feel comfortable with this concept and it appears that you might not be. Maybe you would be better suited as a juror in a different kind of case. What do you think about that?”

Then, again, after the response no matter how brutal it is:

“Thank you. It is not easy to share these feelings in a room like this with people you don’t know. But it’s so important and I appreciate your willingness to tell me how you feel. This process only works if we all promise to talk to each other. Can we all promise that? Can be promise to be as brave as Ms. Smith? (look for visual affirmations) Is there anyone else who feels like Ms. Smith?”

At this point, either Ms. Smith is going to remove herself from the case by admitting she cannot award money for pain or you are likely to use a peremptory challenge. The point is to let the remaining members of the panel see that you respected her views and appreciated her sharing. This will encourage others to share as well.

7

naturally polished lawyers spend too much time trying to be folksy. Just be you. Despite what CLEs and books say, there is no guide for knowing yourself. No one can tell you what it means. If you are a fancy suit lawyer, be that. If you are a simple sport coat or dress lawyer, own that and be yourself. Gerry Spence talks a lot about this concept of learning to be comfortable “in your own skin” before you can effectively relate to the jury.

vi. Prepare and Practice: The best practice for jury selection is to learn to be a social creature. Attend a new advance sheet lunch group where you are the new guy and talk to people. Say yes to the cocktail party and meet new people outside of the law; talk to these people too. The more you are comfortable making friends and listening in your daily life, the more successful you will be at voir dire. Jury selection is not so much about the law as it is about people. Turn off your lawyer mind, for a time, and just be a person who listens and relates.

Secondly, prepare for voir dire. As lawyers, we (1) write our opening statements and practice our slide show on PowerPoint, (2) we prep our witnesses, (3) we prepare our jury instructions, (4) we design elaborate exhibit boards and animations, (5) we create exhibit notebooks, (6) we ready our client to take the stand and (7) we outline our arguments for motions in limine. But we often forget to truly prepare for voir dire.

B. Identifying Stealth Jurors:

The solution to circumventing juror lies and omissions is simple: ask open-ended questions. When you ask a question like “do you have any negative feelings about trucking companies?” or “do you have any concerns about awarding money for pain?”, it’s very easy for a juror to lie by simply saying “no.” It’s much more difficult—and impossible for 99% of people—to convincingly lie when one has to explain themselves with an open-ended response. So when it comes to your most important voir dire questions searching for the most dangerous juror attitudes, make sure to ask questions in the “how do you feel about…” format. Open-ended questions not only encourage honest answers, but they make it much easier for an untrained eye to detect lies and the circumstantial evidence of lies: the hesitations, the evasively vague responses, and the unconvincing tone of someone who doesn’t seem to have conviction in what they’re saying. But asking open-ended questions is only half the battle; you’ll then need to battle a little more to make sure your jurors give you open-ended answers.9

I’ve often heard lawyers say, “you can’t prepare for jury selection; you just do it.” This is untrue. Preparing for voir dire is essential. Take the time to think about bias and make notes on issues you need to delve into in this case. Read articles on voir dire the night before the trial to refresh your recollection of the items listed here. Practice the order in which you will present these issues of bias. Make a short list of items you plan to cover and read it several times. Then leave it on counsel table and just go talk to people—confidently, truthfully and empathetically. It is that simple.

8

Characteristics associated with being a stealth juror may include, inter alia, the following:10

1. Obsequious behavior. Prospective jurors who are overly deferential to authority figures, such as the lawyers and the judge, may be particularly dangerous.

2. Just-world orientation. Prospective jurors who exhibit a tendency to want to “right

the wrongs of the world” may often end up being stealth jurors. 3. Overly eager to serve. 4. Extremely inconsistent and incompatible profile characteristics. Prospective jurors

who exhibit stark contrasting juror profiles or have ostensibly incompatible characteristics are often very risky jurors for either side, e.g., the taxi driver with a Ph.D.

For a thorough discussion of the law regarding challenges to a verdict for juror deceit during voir dire, see Judge Lasnik’s opinion, and subsequent treatment, Barabin v. AstenJohnson, Inc., No. C07-1454 RSL, 2010 WL 5137898, at *1 (W.D. Wash. Dec. 10, 2010), vacated and remanded, 700 F.3d 428 (9th Cir. 2012), on reh'g en banc sub nom. Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457 (9th Cir. 2014), and vacated and remanded sub nom. Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457 (9th Cir. 2014).

5. Consider requesting a more thorough, case specific juror questionnaire.

A case specific questionnaire may be appropriate in highly complex and/or multi-party cases, cases in which there has been significant pre-trial publicity, or when your case involves highly emotional or embarrassing (“sensitive bias” cases), or issues in which public voir dire may be highly prejudicial (“tainting” cases).

If possible, work with opposing counsel to submit for consideration a joint proposal, or, at least, to submit a proposed process for submission of respective proposed questionnaires. Avoid argument in the questionnaire, and consider a “rating” system (e.g. 1 = strongly disagree, 5 = strongly agree). Develop a questionnaire to persuasively support your argument that it will

28 U.S.C § 1864: … The clerk or jury commission shall mail to every person whose name is drawn from the master wheel a juror qualification form accompanied by instructions to fill out and return the form, duly signed and sworn, to the clerk or jury commission by mail within ten days. …

“if you are worried about a bias on your jury that is particularly sensitive, controversial, embarrassing, or want to ask a question in voir dire that you think will be hard to get honest answers from your jury, you’ll benefit from a questionnaire.”8

9

save time in side-bar or chambers conferences with prospective jurors. Ask about specific, biasing experiences, rather than attitudes.

6. Strategic Considerations Regarding Peremptory Strikes

A. Know your “worry range” – 8 plus 6 plus for cause excusals.

i. Consider panel members out of the worry range for conditioning or offensive questions

B. Always remember that “deselecting” one juror in the box “selects” the next juror

in line – weigh your options as to experience, expertise, opinions and likely influence, and take account of opposing counsel’s strikes

C. Consider use of a jury book

Top Five Tips To Pick A Bad Jury

1. Not Knowing the Actual LAW of Jury Selection.

E.g., make a “for cause” challenge without ever using the statutory language. 2. Arguing the Case In Voir Dire: Trying to Get Agreement Instead of Information.

That correct job during jury selection is to UNCOVER INFORMATION (sometimes seducing it) SO THAT WE CAN MAKE SUCCESSFUL CAUSE CHALLENGES AND INTELLIGENT PEREMPTORY ONES. If you’re one of the 90% of lawyers who ask voir dire questions that begin, “But wouldn’t you agree that…”, please stop. Stop now. 3. Talking Like A Lawyer in Front of Laypeople. Don’t say “Have you ever seen?” -- say “Heretofore, have you had occasion to observe?” That shows jurors that you are smarter than they are, building their trust and respect. 4. Arguing With the Data Instead Of Listening To It.

If you get bad information about a juror, trust it. 5. The Trap of the Similarly Situated Juror (or Not Understanding Your Juror Profile).

Don’t make the mistake of thinking that someone who shares a trait or experience with your client will consequently like your client. Explore experience, and then attitudes. “[T]he psychological phenomenon called defensive attribution makes us attribute what happened to ourselves to bad circumstances, but what happens to others is bad character. “Hey, what happened to me was a pure accident; you, in contrast, are a reckless dumbass.”11

10

7. Be aware of, and prepared to make or defend, Batson challenges.

The U.S. Supreme Court has limited the use of peremptories with respect to race. In Batson v. Kentucky, 476 U.S. 79 (1986), the court prohibited prosecutors from striking prospective jurors based on race, holding that such strikes violate the equal protection rights of the accused. The court subsequently broadened that justification and held that race peremptories also violate the equal protection rights of ex-jurors. On that basis, in Edmonson v. Leesville Concrete Co., the high court extended Batson to prohibit race-based peremptories in civil litigation. 111 S.Ct. 2077 (1991) at page 2083.

Batson held: “When systematic exclusion occurs, not only is the defendant harmed, but

the excluded jurors are harmed and the community is harmed because the public confidence in the fairness of our system of justice is undermined. These principles underlying the right to a racially neutral jury have been consistently reaffirmed by the high court. Powers v. Ohio 499 U.S. 400 (1991); Georgia v. McCollum 505 U.S. 42 (1992) (defense counsel are state actors under Batson when they use peremptories that are racially motivated); J.E.B v. Alabama ex rel. T.B. 511 U.S. (1994) (“individual jurors themselves have a right to nondiscriminatory jury selection procedures”).

The Ninth Circuit has not been silent on this issue. Both the U.S. Supreme Court and the

Ninth Circuit have recognized that there is an incurable tension between the principle of equal protection - which says you have to give reasons for treating people differently - and the peremptory challenge, which says you don't. Thus, Batson laid down certain criteria - which is exactly what the honorable Judge Edward Dean Price did before he made his decision, and for that reason no “clear error” appears in order to reverse Judge Price. Batson-McCollum instruct a three prong test, as follows:

1. First, the objecting party is required to make a prima facie showing that another

party has used challenges on the basis of race. 2. Second, assuming the objecting party has made its showing, the burden shifts to

the challenging party to state race neutral reasons for excusing the prospective juror. 3. Third, the Court must determine if the objecting party has proven purposeful

discrimination. See Montiel v. City of Los Angeles, 2 F3 335 (9th Cir. 1993). In the Ninth Circuit, the substantive law with respect to the above elements and criteria is now quite well settled. In reviewing a trial court's findings, the reviewing court “must consider all relevant circumstances,” including any pattern of peremptory challenges against minority jurors and the questions and statements made during voir dire. Batson at 96-97.

11

APPENDICES Appendix A – Bibliography

1. Voir Dire: Don’t Let the Judge Cut you Out. Mark A. Drummond, ABA Litigation News, Spring 2012 https://apps.americanbar.org/litigation/litigationnews/articles-print/050412-practice-points-spring12.html

2. Voir Dire: It’s Not Jury Selection. ABA Young Lawyers Division Audio Download, October 18, 2010 http://www.americanbar.org/groups/young_lawyers/initiatives/listen/voir_dire.html 3. The Importance of Voir Dire: Essential Techniques for Choosing Finders of Fact. Michael D. Mulvaney, John A. Little, Jr., American Journal of Trial Advocacy, 39:313 (2017) http://www.americanbar.org/content/dam/aba/administrative/litigation/materials/2017_insurance_coverage/written_materials/2_the_importance_of_voir_dire_essential_techniques_for_choosing_finders_of_facts_mulvaney.authcheckdam.pdf 4. Federal Trial Handbook Civil, § 21:1 (4th ed. 2015). 5. Voir Dire, The Art of Jury Deselection Brynda Rodriguez Insley, Aynsley Meredith Harro, DRI Trial Tactics 2012 http://dri.org/docs/default-source/dri-online/course-materials/2012/trial-tactics/2012-trial-tactics---08-voir-dire---the-art-of-jury-deselection.pdf?sfvrsn=4 6. July 2015 Jury Tip: “Persuasion in voir dire that actually works” Harry Plotkin, Jury Consultant https://media.wix.com/ugd/a98d13_8cd7b495aead43789e64dc1c3c4d6229.pdf 7. Selecting and Deselecting Jurors Daniel Wolfe, Ph.D., TrialGraphix 2011 http://dri.org/docs/default-source/dri-online/course-materials/2011/product-liability/2011-product-liability---27-selecting-and-deselecting-jurors.pdf?sfvrsn=4 8. July 2016 Jury Tip: “How and when to best use questionnaires in jury selection” Harry Plotkin, Jury Consultant https://media.wix.com/ugd/a98d13_425f5b771f0548ab88218a7aeb95b863.pdf 9. September 2016 Jury Tip: “How do you know when a juror is lying in voir dire?” Harry Plotkin, Jury Consultant https://media.wix.com/ugd/a98d13_40d76fe8e4bb4065bbe628a3a1164399.pdf

12

10. Selecting and Deselecting Jurors Daniel Wolfe, Ph.D., TrialGraphix 2011 http://dri.org/docs/default-source/dri-online/course-materials/2011/product-liability/2011-product-liability---27-selecting-and-deselecting-jurors.pdf?sfvrsn=4 11. 5 Mistakes Just About All Trial Attorneys Make Ins Jury Selection (yep, maybe you, too) Juryology: Art & Science of Jury Persuasion (July 27, 2015) https://juryology.com/2015/07/27/5-mistakes-just-about-all-trial-attorneys-make-in-jury-selection-yep-maybe-you-too/ 12. Brutal Honesty: Telling the Human Story from Voir Dire Through Opening Statement, Nicholas C. Rowley, The Advocate Magazine, Feb. 2013, p. 34-40. http://www.nathanlawoffices.com/library/BrutalHonesty_by_Nick_Rowley.pdf 13. Trial by Human, Nick Rowley and Steven Halteman, Trial Guides (2013). 14. Win Your Case: How to Present, Persuade, and Prevail—Every Place, Every Time, Chap. 1, The Power of discovering the Self and Chap. 11 Preparing the Decision Makers to Embrace Us—The Voir Dire Gerry Spence, 2005

13

Appendix B – A Handy Collection of Civil Rules and Statutes A. The Rules

Rule 47. Selecting Jurors

(a) EXAMINING JURORS. The court may permit the parties or their attorneys to examine prospective jurors or may itself do so. If the court examines the jurors, it must permit the parties or their attorneys to make any further inquiry it considers proper, or must itself ask any of their additional questions it considers proper.

(b) PEREMPTORY CHALLENGES. The court must allow the number of peremptory challenges provided by 28 U.S.C. §1870.

(c) EXCUSING A JUROR. During trial or deliberation, the court may excuse a juror for good cause.

NOTES OF ADVISORY COMMITTEE ON RULES—1991 AMENDMENT

Subdivision (b). The former provision for alternate jurors is stricken and the institution of the alternate juror abolished.

The former rule reflected the long-standing assumption that a jury would consist of exactly twelve members. It provided for additional jurors to be used as substitutes for jurors who are for any reason excused or disqualified from service after the commencement of the trial. Additional jurors were traditionally designated at the outset of the trial, and excused at the close of the evidence if they had not been promoted to full service on account of the elimination of one of the original jurors.

The use of alternate jurors has been a source of dissatisfaction with the jury system because of the burden it places on alternates who are required to listen to the evidence but denied the satisfaction of participating in its evaluation.

Subdivision (c). This provision makes it clear that the court may in appropriate circumstances excuse a juror during the jury deliberations without causing a mistrial. Sickness, family emergency or juror misconduct that might occasion a mistrial are examples of appropriate grounds for excusing a juror. It is not grounds for the dismissal of a juror that the juror refuses to join with fellow jurors in reaching a unanimous verdict.

14

Rule 48. Number of Jurors; Verdict; Polling

(a) NUMBER OF JURORS. A jury must begin with at least 6 and no more than 12 members, and each juror must participate in the verdict unless excused under Rule 47(c).

(b) VERDICT. Unless the parties stipulate otherwise, the verdict must be unanimous and must be returned by a jury of at least 6 members.

(c) POLLING. After a verdict is returned but before the jury is discharged, the court must on a party's request, or may on its own, poll the jurors individually. If the poll reveals a lack of unanimity or lack of assent by the number of jurors that the parties stipulated to, the court may direct the jury to deliberate further or may order a new trial.

NOTES OF ADVISORY COMMITTEE ON RULES—1991 AMENDMENT

The former rule was rendered obsolete by the adoption in many districts of local rules establishing six as the standard size for a civil jury.

It appears that the minimum size of a jury consistent with the Seventh Amendment is six. Cf. Ballew v. Georgia, 435 U.S. 223 (1978) (holding that a conviction based on a jury of less than six is a denial of due process of law). If the parties agree to trial before a smaller jury, a verdict can be taken, but the parties should not other than in exceptional circumstances be encouraged to waive the right to a jury of six, not only because of the constitutional stature of the right, but also because smaller juries are more erratic and less effective in serving to distribute responsibility for the exercise of judicial power.

Because the institution of the alternate juror has been abolished by the proposed revision of Rule 47, it will ordinarily be prudent and necessary, in order to provide for sickness or disability among jurors, to seat more than six jurors. The use of jurors in excess of six increases the representativeness of the jury and harms no interest of a party. Ray v. Parkside Surgery Center, 13 F.R. Serv. 585 (6th cir. 1989).

If the court takes the precaution of seating a jury larger than six, an illness occurring during the deliberation period will not result in a mistrial, as it did formerly, because all seated jurors will participate in the verdict and a sufficient number will remain to render a unanimous verdict of six or more.

In exceptional circumstances, as where a jury suffers depletions during trial and deliberation that are greater than can reasonably be expected, the parties may agree to be bound by a verdict rendered by fewer than six jurors. The court should not, however, rely upon the availability of such an agreement, for the use of juries smaller than six is problematic for reasons fully explained in Ballew v. Georgia, supra.

COMMITTEE NOTES ON RULES—2009 AMENDMENT

Jury polling is added as new subdivision (c), which is drawn from Criminal Rule 31(d) with minor revisions to reflect Civil Rules Style and the parties’ opportunity to stipulate to a nonunanimous verdict.

15

B. Statutory provisions for qualifying, drawing, and challenging jurors (emphasis supplied):

28 U.S.C. § 1861 – Declaration of Policy It is the policy of the United States that all litigants in Federal courts entitled to trial by

jury shall have the right to grand and petit juries selected at random from a fair cross section of the community in the district or division wherein the court convenes. It is further the policy of the United States that all citizens shall have the opportunity to be considered for service on grand and petit juries in the district courts of the United States, and shall have an obligation to serve as jurors when summoned for that purpose.

28 U.S.C. § 1862 – Discrimination Prohibited No citizen shall be excluded from service as a grand or petit juror in the district courts of

the United States or in the Court of International Trade on account of race, color, religion, sex, national origin, or economic status.

28 U.S.C. § 1863 – Plan for random jury selection

(a) Each United States district court shall devise and place into operation a written plan for random selection of grand and petit jurors that shall be designed to achieve the objectives of sections 1861 and 1862 of this title, and that shall otherwise comply with the provisions of this title. The plan shall be placed into operation after approval by a reviewing panel consisting of the members of the judicial council of the circuit and either the chief judge of the district whose plan is being reviewed or such other active district judge of that district as the chief judge of the district may designate. The panel shall examine the plan to ascertain that it complies with the provisions of this title. If the reviewing panel finds that the plan does not comply, the panel shall state the particulars in which the plan fails to comply and direct the district court to present within a reasonable time an alternative plan remedying the defect or defects. Separate plans may be adopted for each division or combination of divisions within a judicial district. The district court may modify a plan at any time and it shall modify the plan when so directed by the reviewing panel. The district court shall promptly notify the panel, the Administrative Office of the United States Courts, and the Attorney General of the United States, of the initial adoption and future modifications of the plan by filing copies therewith. Modifications of the plan made at the instance of the district court shall become effective after approval by the panel. Each district court shall submit a report on the jury selection process within its jurisdiction to the Administrative Office of the United States Courts in such form and at such times as the Judicial Conference of the United States may specify. The Judicial Conference of the United States may, from time to time, adopt rules and regulations governing the provisions and the operation of the plans formulated under this title. (b)Among other things, such plan shall—

(1) either establish a jury commission, or authorize the clerk of the court, to manage the jury selection process. If the plan establishes a jury commission, the district court shall appoint one citizen to serve with the clerk of the court as the jury commission: Provided, however, That

16

the plan for the District of Columbia may establish a jury commission consisting of three citizens. The citizen jury commissioner shall not belong to the same political party as the clerk serving with him. The clerk or the jury commission, as the case may be, shall act under the supervision and control of the chief judge of the district court or such other judge of the district court as the plan may provide. Each jury commissioner shall, during his tenure in office, reside in the judicial district or division for which he is appointed. Each citizen jury commissioner shall receive compensation to be fixed by the district court plan at a rate not to exceed $50 per day for each day necessarily employed in the performance of his duties, plus reimbursement for travel, subsistence, and other necessary expenses incurred by him in the performance of such duties. The Judicial Conference of the United States may establish standards for allowance of travel, subsistence, and other necessary expenses incurred by jury commissioners.

(2) specify whether the names of prospective jurors shall be selected from the voter registration lists or the lists of actual voters of the political subdivisions within the district or division. The plan shall prescribe some other source or sources of names in addition to voter lists where necessary to foster the policy and protect the rights secured by sections 1861 and 1862 of this title. The plan for the District of Columbia may require the names of prospective jurors to be selected from the city directory rather than from voter lists. The plans for the districts of Puerto Rico and the Canal Zone may prescribe some other source or sources of names of prospective jurors in lieu of voter lists, the use of which shall be consistent with the policies declared and rights secured by sections 1861 and 1862 of this title. The plan for the district of Massachusetts may require the names of prospective jurors to be selected from the resident list provided for in chapter 234A, Massachusetts General Laws, or comparable authority, rather than from voter lists.

(3) specify detailed procedures to be followed by the jury commission or clerk in selecting names from the sources specified in paragraph (2) of this subsection. These procedures shall be designed to ensure the random selection of a fair cross section of the persons residing in the community in the district or division wherein the court convenes. They shall ensure that names of persons residing in each of the counties, parishes, or similar political subdivisions within the judicial district or division are placed in a master jury wheel; and shall ensure that each county, parish, or similar political subdivision within the district or division is substantially proportionally represented in the master jury wheel for that judicial district, division, or combination of divisions. For the purposes of determining proportional representation in the master jury wheel, either the number of actual voters at the last general election in each county, parish, or similar political subdivision, or the number of registered voters if registration of voters is uniformly required throughout the district or division, may be used.

(4) provide for a master jury wheel (or a device similar in purpose and function) into which the names of those randomly selected shall be placed. The plan shall fix a minimum number of names to be placed initially in the master jury wheel, which shall be at least one-half of 1 per centum of the total number of persons on the lists used as a source of names for the district or division; but if this number of names is believed to be cumbersome and unnecessary, the plan may fix a smaller number of names to be placed in the master wheel, but in no event less than one thousand. The chief judge of the district court, or such other district court judge as the plan may provide, may order additional names to be placed in the master jury wheel from time to time as necessary. The plan shall provide for periodic emptying and refilling of the master jury wheel at specified times, the interval for which shall not exceed four years.

17

(5) (A) except as provided in subparagraph (B), specify those groups of persons or occupational classes whose members shall, on individual request therefor, be excused from jury service. Such groups or classes shall be excused only if the district court finds, and the plan states, that jury service by such class or group would entail undue hardship or extreme inconvenience to the members thereof, and excuse of members thereof would not be inconsistent with sections 1861 and1862 of this title.

(B) specify that volunteer safety personnel, upon individual request, shall be excused from jury service. For purposes of this subparagraph, the term “volunteer safety personnel” means individuals serving a public agency (as defined in section 1203(6) of title I of the Omnibus Crime Control and Safe Streets Act of 1968 [1]) in an official capacity, without compensation, as firefighters or members of a rescue squad or ambulance crew. (6) specify that the following persons are barred from jury service on the ground that

they are exempt: (A) members in active service in the Armed Forces of the United States; (B) members of the fire or police departments of any State, the District of Columbia, any territory or possession of the United States, or any subdivision of a State, the District of Columbia, or such territory or possession; (C) public officers in the executive, legislative, or judicial branches of the Government of the United States, or of any State, the District of Columbia, any territory or possession of the United States, or any subdivision of a State, the District of Columbia, or such territory or possession, who are actively engaged in the performance of official duties.

(7) fix the time when the names drawn from the qualified jury wheel shall be disclosed to parties and to the public. If the plan permits these names to be made public, it may nevertheless permit the chief judge of the district court, or such other district court judge as the plan may provide, to keep these names confidential in any case where the interests of justice so require.

(8) specify the procedures to be followed by the clerk or jury commission in assigning persons whose names have been drawn from the qualified jury wheel to grand and petit jury panels. (c) The initial plan shall be devised by each district court and transmitted to the reviewing panel specified in subsection (a) of this section within one hundred and twenty days of the date of enactment of the Jury Selection and Service Act of 1968. The panel shall approve or direct the modification of each plan so submitted within sixty days thereafter. Each plan or modification made at the direction of the panel shall become effective after approval at such time thereafter as the panel directs, in no event to exceed ninety days from the date of approval. Modifications made at the instance of the district court under subsection (a) of this section shall be effective at such time thereafter as the panel directs, in no event to exceed ninety days from the date of modification. (d) State, local, and Federal officials having custody, possession, or control of voter registration lists, lists of actual voters, or other appropriate records shall make such lists and records available to the jury commission or clerks for inspection, reproduction, and copying at all reasonable times as the commission or clerk may deem necessary and proper for the performance of duties under this title. The district courts shall have jurisdiction upon application by the Attorney General of the United States to compel compliance with this subsection by appropriate process.

18

28 U.S.C. § 1864 – Drawing of names from the master jury wheel; completion of juror qualification form

(a) From time to time as directed by the district court, the clerk or a district judge shall draw at random from the master jury wheel the names of as many persons as may be required for jury service. The clerk or jury commission shall post a general notice for public review in the clerk’s office and on the court’s website explaining the process by which names are periodically and randomly drawn. The clerk or jury commission may, upon order of the court, prepare an alphabetical list of the names drawn from the master jury wheel. Any list so prepared shall not be disclosed to any person except pursuant to the district court plan or pursuant to section1867 or 1868 of this title. The clerk or jury commission shall mail to every person whose name is drawn from the master wheel a juror qualification form accompanied by instructions to fill out and return the form, duly signed and sworn, to the clerk or jury commission by mail within ten days. If the person is unable to fill out the form, another shall do it for him, and shall indicate that he has done so and the reason therefor. In any case in which it appears that there is an omission, ambiguity, or error in a form, the clerk or jury commission shall return the form with instructions to the person to make such additions or corrections as may be necessary and to return the form to the clerk or jury commission within ten days. Any person who fails to return a completed juror qualification form as instructed may be summoned by the clerk or jury commission forthwith to appear before the clerk or jury commission to fill out a juror qualification form. A person summoned to appear because of failure to return a juror qualification form as instructed who personally appears and executes a juror qualification form before the clerk or jury commission may, at the discretion of the district court, except where his prior failure to execute and mail such form was willful, be entitled to receive for such appearance the same fees and travel allowances paid to jurors under section 1871 of this title. At the time of his appearance for jury service, any person may be required to fill out another juror qualification form in the presence of the jury commission or the clerk or the court, at which time, in such cases as it appears warranted, the person may be questioned, but only with regard to his responses to questions contained on the form. Any information thus acquired by the clerk or jury commission may be noted on the juror qualification form and transmitted to the chief judge or such district court judge as the plan may provide. (b) Any person summoned pursuant to subsection (a) of this section who fails to appear as directed shall be ordered by the district court forthwith to appear and show cause for his failure to comply with the summons. Any person who fails to appear pursuant to such order or who fails to show good cause for noncompliance with the summons may be fined not more than $1,000, imprisoned not more than three days, ordered to perform community service, or any combination thereof. Any person who willfully misrepresents a material fact on a juror qualification form for the purpose of avoiding or securing service as a juror may be fined not more than $1,000, imprisoned not more than three days, ordered to perform community service, or any combination thereof. 28 U.S.C. § 1865 – Qualifications for jury service (a) The chief judge of the district court, or such other district court judge as the plan may provide, on his initiative or upon recommendation of the clerk or jury commission, or the clerk under supervision of the court if the court’s jury selection plan so authorizes, shall determine

19

solely on the basis of information provided on the juror qualification form and other competent evidence whether a person is unqualified for, or exempt, or to be excused from jury service. The clerk shall enter such determination in the space provided on the juror qualification form and in any alphabetical list of names drawn from the master jury wheel. If a person did not appear in response to a summons, such fact shall be noted on said list. (b) In making such determination the chief judge of the district court, or such other district court judge as the plan may provide, or the clerk if the court’s jury selection plan so provides, shall deem any person qualified to serve on grand and petit juries in the district court unless he—

(1) is not a citizen of the United States eighteen years old who has resided for a period of one year within the judicial district;

(2) is unable to read, write, and understand the English language with a degree of proficiency sufficient to fill out satisfactorily the juror qualification form;

(3) is unable to speak the English language; (4) is incapable, by reason of mental or physical infirmity, to render satisfactory

jury service; or (5) has a charge pending against him for the commission of, or has been convicted

in a State or Federal court of record of, a crime punishable by imprisonment for more than one year and his civil rights have not been restored. 28 U.S.C. § 1866 – Selection and summoning of jurors (a) The jury commission, or in the absence thereof the clerk, shall maintain a qualified jury wheel and shall place in such wheel names of all persons drawn from the master jury wheel who are determined to be qualified as jurors and not exempt or excused pursuant to the district court plan. From time to time, the jury commission or the clerk shall draw at random from the qualified jury wheel such number of names of persons as may be required for assignment to grand and petit jury panels. The clerk or jury commission shall post a general notice for public review in the clerk’s office and on the court’s website explaining the process by which names are periodically and randomly drawn. The jury commission or the clerk shall prepare a separate list of names of persons assigned to each grand and petit jury panel. (b) When the court orders a grand or petit jury to be drawn, the clerk or jury commission or their duly designated deputies shall issue summonses for the required number of jurors. Each person drawn for jury service may be served personally, or by registered, certified, or first-class mail addressed to such person at his usual residence or business address.

If such service is made personally, the summons shall be delivered by the clerk or the jury commission or their duly designated deputies to the marshal who shall make such service.

If such service is made by mail, the summons may be served by the marshal or by the clerk, the jury commission or their duly designated deputies, who shall make affidavit of service and shall attach thereto any receipt from the addressee for a registered or certified summons. (c) Except as provided in section 1865 of this title or in any jury selection plan provision adopted pursuant to paragraph (5) or (6) of section 1863(b) of this title, no person or class of persons shall be disqualified, excluded, excused, or exempt from service as jurors: Provided, That any person summoned for jury service may be (1) excused by the court, or by the clerk under supervision of the court if the court’s jury selection plan so authorizes, upon a showing of

20

undue hardship or extreme inconvenience, for such period as the court deems necessary, at the conclusion of which such person either shall be summoned again for jury service under subsections (b) and (c) of this section or, if the court’s jury selection plan so provides, the name of such person shall be reinserted into the qualified jury wheel for selection pursuant to subsection (a) of this section, or (2) excluded by the court on the ground that such person may be unable to render impartial jury service or that his service as a juror would be likely to disrupt the proceedings, or (3) excluded upon peremptory challenge as provided by law, or (4) excluded pursuant to the procedure specified by law upon a challenge by any party for good cause shown, or (5) excluded upon determination by the court that his service as a juror would be likely to threaten the secrecy of the proceedings, or otherwise adversely affect the integrity of jury deliberations. No person shall be excluded under clause (5) of this subsection unless the judge, in open court, determines that such is warranted and that exclusion of the person will not be inconsistent with sections 1861 and 1862 of this title. The number of persons excluded under clause (5) of this subsection shall not exceed one per centum of the number of persons who return executed jury qualification forms during the period, specified in the plan, between two consecutive fillings of the master jury wheel. The names of persons excluded under clause (5) of this subsection, together with detailed explanations for the exclusions, shall be forwarded immediately to the judicial council of the circuit, which shall have the power to make any appropriate order, prospective or retroactive, to redress any misapplication of clause (5) of this subsection, but otherwise exclusions effectuated under such clause shall not be subject to challenge under the provisions of this title. Any person excluded from a particular jury under clause (2), (3), or (4) of this subsection shall be eligible to sit on another jury if the basis for his initial exclusion would not be relevant to his ability to serve on such other jury. (d) Whenever a person is disqualified, excused, exempt, or excluded from jury service, the jury commission or clerk shall note in the space provided on his juror qualification form or on the juror’s card drawn from the qualified jury wheel the specific reason therefor. (e) In any two-year period, no person shall be required to (1) serve or attend court for prospective service as a petit juror for a total of more than thirty days, except when necessary to complete service in a particular case, or (2) serve on more than one grand jury, or (3) serve as both a grand and petit juror. (f) When there is an unanticipated shortage of available petit jurors drawn from the qualified jury wheel, the court may require the marshal to summon a sufficient number of petit jurors selected at random from the voter registration lists, lists of actual voters, or other lists specified in the plan, in a manner ordered by the court consistent with sections 1861 and 1862 of this title. (g) Any person summoned for jury service who fails to appear as directed may be ordered by the district court to appear forthwith and show cause for failure to comply with the summons. Any person who fails to show good cause for noncompliance with a summons may be fined not more than $1,000, imprisoned not more than three days, ordered to perform community service, or any combination thereof. 28 U.S.C. §1867 – Challenging compliance with selection procedures (a) In criminal cases, before the voir dire examination begins, or within seven days after the defendant discovered or could have discovered, by the exercise of diligence, the grounds therefor, whichever is earlier, the defendant may move to dismiss the indictment or stay the

21

proceedings against him on the ground of substantial failure to comply with the provisions of this title in selecting the grand or petit jury. (b) In criminal cases, before the voir dire examination begins, or within seven days after the Attorney General of the United States discovered or could have discovered, by the exercise of diligence, the grounds therefor, whichever is earlier, the Attorney General may move to dismiss the indictment or stay the proceedings on the ground of substantial failure to comply with the provisions of this title in selecting the grand or petit jury. (c) In civil cases, before the voir dire examination begins, or within seven days after the party discovered or could have discovered, by the exercise of diligence, the grounds therefor, whichever is earlier, any party may move to stay the proceedings on the ground of substantial failure to comply with the provisions of this title in selecting the petit jury. (d) Upon motion filed under subsection (a), (b), or (c) of this section, containing a sworn statement of facts which, if true, would constitute a substantial failure to comply with the provisions of this title, the moving party shall be entitled to present in support of such motion the testimony of the jury commission or clerk, if available, any relevant records and papers not public or otherwise available used by the jury commissioner or clerk, and any other relevant evidence. If the court determines that there has been a substantial failure to comply with the provisions of this title in selecting the grand jury, the court shall stay the proceedings pending the selection of a grand jury in conformity with this title or dismiss the indictment, whichever is appropriate. If the court determines that there has been a substantial failure to comply with the provisions of this title in selecting the petit jury, the court shall stay the proceedings pending the selection of a petit jury in conformity with this title. (e) The procedures prescribed by this section shall be the exclusive means by which a person accused of a Federal crime, the Attorney General of the United States or a party in a civil case may challenge any jury on the ground that such jury was not selected in conformity with the provisions of this title. Nothing in this section shall preclude any person or the United States from pursuing any other remedy, civil or criminal, which may be available for the vindication or enforcement of any law prohibiting discrimination on account of race, color, religion, sex, national origin or economic status in the selection of persons for service on grand or petit juries. (f) The contents of records or papers used by the jury commission or clerk in connection with the jury selection process shall not be disclosed, except pursuant to the district court plan or as may be necessary in the preparation or presentation of a motion under subsection (a), (b), or (c) of this section, until after the master jury wheel has been emptied and refilled pursuant to section 1863(b)(4) of this title and all persons selected to serve as jurors before the master wheel was emptied have completed such service. The parties in a case shall be allowed to inspect, reproduce, and copy such records or papers at all reasonable times during the preparation and pendency of such a motion. Any person who discloses the contents of any record or paper in violation of this subsection may be fined not more than $1,000 or imprisoned not more than one year, or both. 28 U.S.C. § 1868 – Maintenance and inspection of records After the master jury wheel is emptied and refilled pursuant to section 1863(b)(4) of this title, and after all persons selected to serve as jurors before the master wheel was emptied have completed such service, all records and papers compiled and maintained by the jury commission or clerk before the master wheel was emptied shall be preserved in the custody of the clerk for

22

four years or for such longer period as may be ordered by a court, and shall be available for public inspection for the purpose of determining the validity of the selection of any jury. 28 U.S.C. § 1869 – Definitions For purposes of this chapter— (a) “clerk” and “clerk of the court” shall mean the clerk of the district court of the United States, any authorized deputy clerk, and any other person authorized by the court to assist the clerk in the performance of functions under this chapter; (b) “chief judge” shall mean the chief judge of any district court of the United States; (c) “voter registration lists” shall mean the official records maintained by State or local election officials of persons registered to vote in either the most recent State or the most recent Federal general election, or, in the case of a State or political subdivision thereof that does not require registration as a prerequisite to voting, other official lists of persons qualified to vote in such election. The term shall also include the list of eligible voters maintained by any Federal examiner pursuant to the Voting Rights Act of 1965 where the names on such list have not been included on the official registration lists or other official lists maintained by the appropriate State or local officials. With respect to the districts of Guam and the Virgin Islands, “voter registration lists” shall mean the official records maintained by territorial election officials of persons registered to vote in the most recent territorial general election; (d) “lists of actual voters” shall mean the official lists of persons actually voting in either the most recent State or the most recent Federal general election; (e) “division” shall mean: (1) one or more statutory divisions of a judicial district; or (2) in statutory divisions that contain more than one place of holding court, or in judicial districts where there are no statutory divisions, such counties, parishes, or similar political subdivisions surrounding the places where court is held as the district court plan shall determine: Provided, That each county, parish, or similar political subdivision shall be included in some such division; (f) “district court of the United States”, “district court”, and “court” shall mean any district court established by chapter 5 of this title, and any court which is created by Act of Congress in a territory and is invested with any jurisdiction of a district court established by chapter 5 of this title; (g) “jury wheel” shall include any device or system similar in purpose or function, such as a properly programed electronic data processing system or device; (h) “juror qualification form” shall mean a form prescribed by the Administrative Office of the United States Courts and approved by the Judicial Conference of the United States, which shall elicit the name, address, age, race, occupation, education, length of residence within the judicial district, distance from residence to place of holding court, prior jury service, and citizenship of a potential juror, and whether he should be excused or exempted from jury service, has any physical or mental infirmity impairing his capacity to serve as juror, is able to read, write, speak, and understand the English language, has pending against him any charge for the commission of a State or Federal criminal offense punishable by imprisonment for more than one year, or has been convicted in any State or Federal court of record of a crime punishable by imprisonment for more than one year and has not had his civil rights restored. The form shall request, but not require, any other information not inconsistent with the provisions of this title and required by the district court plan in the interests of the sound administration of justice. The form shall also elicit the sworn statement that his responses are true to the best of his knowledge. Notarization

23

shall not be required. The form shall contain words clearly informing the person that the furnishing of any information with respect to his religion, national origin, or economic status is not a prerequisite to his qualification for jury service, that such information need not be furnished if the person finds it objectionable to do so, and that information concerning race is required solely to enforce nondiscrimination in jury selection and has no bearing on an individual’s qualification for jury service. (i) “public officer” shall mean a person who is either elected to public office or who is directly appointed by a person elected to public office; (j) “undue hardship or extreme inconvenience”, as a basis for excuse from immediate jury service under section 1866(c)(1) of this chapter, shall mean great distance, either in miles or traveltime, from the place of holding court, grave illness in the family or any other emergency which outweighs in immediacy and urgency the obligation to serve as a juror when summoned, or any other factor which the court determines to constitute an undue hardship or to create an extreme inconvenience to the juror; and in addition, in situations where it is anticipated that a trial or grand jury proceeding may require more than thirty days of service, the court may consider, as a further basis for temporary excuse, severe economic hardship to an employer which would result from the absence of a key employee during the period of such service; and (k) “jury summons” shall mean a summons issued by a clerk of court, jury commission, or their duly designated deputies, containing either a preprinted or stamped seal of court, and containing the name of the issuing clerk imprinted in preprinted, type, or facsimile manner on the summons or the envelopes transmitting the summons. 28 U.S.C. § 1870 – Challenges

In civil cases, each party shall be entitled to three peremptory challenges. Several defendants or several plaintiffs may be considered as a single party for the purposes of making challenges, or the court may allow additional peremptory challenges and permit them to be exercised separately or jointly.

All challenges for cause or favor, whether to the array or panel or to individual jurors, shall be determined by the court.

28 U.S.C. §1871 – Fees (a) Grand and petit jurors in district courts appearing pursuant to this chapter shall be paid the fees and allowances provided by this section. The requisite fees and allowances shall be disbursed on the certificate of the clerk of court in accordance with the procedure established by the Director of the Administrative Office of the United States Courts. Attendance fees for extended service under subsection (b) of this section shall be certified by the clerk only upon the order of a district judge. (b)

(1) A juror shall be paid an attendance fee of $40 per day for actual attendance at the place of trial or hearing. A juror shall also be paid the attendance fee for the time necessarily occupied in going to and returning from such place at the beginning and end of such service or at any time during such service.

24

(2) A petit juror required to attend more than ten days in hearing one case may be paid, in the discretion of the trial judge, an additional fee, not exceeding $10 more than the attendance fee, for each day in excess of ten days on which he is required to hear such case. (3) A grand juror required to attend more than forty-five days of actual service may be paid, in the discretion of the district judge in charge of the particular grand jury, an additional fee, not exceeding $10 more than the attendance fee, for each day in excess of forty-five days of actual service.

(4) A grand or petit juror required to attend more than ten days of actual service may be paid, in the discretion of the judge, the appropriate fees at the end of the first ten days and at the end of every ten days of service thereafter.

(5) Certification of additional attendance fees may be ordered by the judge to be made effective commencing on the first day of extended service, without reference to the date of such certification. (c)

(1) A travel allowance not to exceed the maximum rate per mile that the Director of the Administrative Office of the United States Courts has prescribed pursuant to section 604(a)(7) of this title for payment to supporting court personnel in travel status using privately owned automobiles shall be paid to each juror, regardless of the mode of transportation actually employed. The prescribed rate shall be paid for the distance necessarily traveled to and from a juror’s residence by the shortest practical route in going to and returning from the place of service. Actual mileage in full at the prescribed rate is payable at the beginning and at the end of a juror’s term of service.

(2) The Director shall promulgate rules regulating interim travel allowances to jurors. Distances traveled to and from court should coincide with the shortest practical route.

(3) Toll charges for toll roads, bridges, tunnels, and ferries shall be paid in full to the juror incurring such charges. In the discretion of the court, reasonable parking fees may be paid to the juror incurring such fees upon presentation of a valid parking receipt. Parking fees shall not be included in any tabulation of mileage cost allowances.

(4) Any juror who travels to district court pursuant to summons in an area outside of the contiguous forty-eight States of the United States shall be paid the travel expenses provided under this section, or actual reasonable transportation expenses subject to the discretion of the district judge or clerk of court as circumstances indicate, exercising due regard for the mode of transportation, the availability of alternative modes, and the shortest practical route between residence and court.

(5) A grand juror who travels to district court pursuant to a summons may be paid the travel expenses provided under this section or, under guidelines established by the Judicial Conference, the actual reasonable costs of travel by aircraft when travel by other means is not feasible and when certified by the chief judge of the district court in which the grand juror serves. (d)

(1) A subsistence allowance covering meals and lodging of jurors shall be established from time to time by the Director of the Administrative Office of the United States Courts pursuant to section 604(a)(7) of this title, except that such allowance shall not exceed the allowance for supporting court personnel in travel status in the same geographical area. Claims for such allowance shall not require itemization.

25

(2) A subsistence allowance shall be paid to a juror when an overnight stay is required at the place of holding court, and for the time necessarily spent in traveling to and from the place of attendance if an overnight stay is required.

(3) A subsistence allowance for jurors serving in district courts outside of the contiguous forty-eight States of the United States shall be allowed at a rate not to exceed that per diem allowance which is paid to supporting court personnel in travel status in those areas where the Director of the Administrative Office of the United States Courts has prescribed an increased per diem fee pursuant to section 604(a)(7) of this title. (e) During any period in which a jury is ordered to be kept together and not to separate, the actual cost of subsistence shall be paid upon the order of the court in lieu of the subsistence allowances payable under subsection (d) of this section. Such allowance for the jurors ordered to be kept separate or sequestered shall include the cost of meals, lodging, and other expenditures ordered in the discretion of the court for their convenience and comfort. (f) A juror who must necessarily use public transportation in traveling to and from court, the full cost of which is not met by the transportation expenses allowable under subsection (c) of this section on account of the short distance traveled in miles, may be paid, in the discretion of the court, the actual reasonable expense of such public transportation, pursuant to the methods of payment provided by this section. Jurors who are required to remain at the court beyond the normal business closing hour for deliberation or for any other reason may be transported to their homes, or to temporary lodgings where such lodgings are ordered by the court, in a manner directed by the clerk and paid from funds authorized under this section. (g) The Director of the Administrative Office of the United States Courts shall promulgate such regulations as may be necessary to carry out his authority under this section. 28 U.S.C. § 1875 – Protection of jurors’ employment (a) No employer shall discharge, threaten to discharge, intimidate, or coerce any permanent employee by reason of such employee’s jury service, or the attendance or scheduled attendance in connection with such service, in any court of the United States. (b)Any employer who violates the provisions of this section—

(1) shall be liable for damages for any loss of wages or other benefits suffered by an employee by reason of such violation;

(2) may be enjoined from further violations of this section and ordered to provide other appropriate relief, including but not limited to the reinstatement of any employee discharged by reason of his jury service; and

(3) shall be subject to a civil penalty of not more than $5,000 for each violation as to each employee, and may be ordered to perform community service. (c) Any individual who is reinstated to a position of employment in accordance with the provisions of this section shall be considered as having been on furlough or leave of absence during his period of jury service, shall be reinstated to his position of employment without loss of seniority, and shall be entitled to participate in insurance or other benefits offered by the employer pursuant to established rules and practices relating to employees on furlough or leave of absence in effect with the employer at the time such individual entered upon jury service. (d)

26

(1) An individual claiming that his employer has violated the provisions of this section may make application to the district court for the district in which such employer maintains a place of business and the court shall, upon finding probable merit in such claim, appoint counsel to represent such individual in any action in the district court necessary to the resolution of such claim. Such counsel shall be compensated and necessary expenses repaid to the extent provided by section 3006A of title 18, United States Code.

(2) In any action or proceeding under this section, the court may award a prevailing employee who brings such action by retained counsel a reasonable attorney’s fee as part of the costs. The court may tax a defendant employer, as costs payable to the court, the attorney fees and expenses incurred on behalf of a prevailing employee, where such costs were expended by the court pursuant to paragraph (1) of this subsection. The court may award a prevailing employer a reasonable attorney’s fee as part of the costs only if the court finds that the action is frivolous, vexatious, or brought in bad faith.

Keynote Presentation: Legal Ethics & Technology

Professor Brooks Holland Curran Family Chair in

Legal Ethics & Professionalism Gonzaga University School of Law

The Benton-Franklin County Bar Association 11th Annual Federal Civil Trial Practice Seminar

May 12, 2017

LEGAL ETHICS & TECHNOLOGY 2.0

Evolving and Emerging Issues from the 2016 Washington RPC Amendments

May 12th, 2017 United States Courthouse, Richland, WA

Presenter:

Prof. Brooks Holland Curran Family Chair in Legal Ethics & Professionalism

GONZAGA UNIVERSITY SCHOOL OF LAW

INTRODUCTION:

Technology, including the use of social media, has become a high-profile issue in both legal practice and legal ethics. The issue has become high-profile in legal practice because of the opportunities these technologies offer to enhance lawyers’ competent and diligent representation of clients. The issue has become high-profile in legal ethics because of the risks these technologies present for lawyers to cross ethical lines, particularly when many ethical rules were written long before these technologies developed. This presentation employs hypothetical problems to engage several of these issues in light of important recent developments.1 In September 2016, the Washington Supreme Court amended eighteen Rules of Professional Conduct (“RPC”) to track the “20/20 amendments” to the American Bar Association’s Model Rules of Professional Conduct.2 Many of these amendments relate to lawyers’ use of technology, and this presentation will touch on several of these amendments. In addition, Washington and several other States have promulgated technology-related bar opinions and practice guides for lawyers to supplement their RPC. This presentation will highlight some of these helpful resources that lawyers should keep handy.

DISCUSSION PROBLEM:

Lawyer Danova ran a small but successful general litigation practice, handling various civil and criminal matters. Danova was a solo practitioner, but she employed a full-time officer manager and a part-time paralegal who both had worked for Danova for five years. One day, Geoff Spicoli contacted Danova about representing him. Spicoli explained that he had been served with a complaint alleging that Spicoli injured Arnold Hand in an automobile accident. Danova reviewed the complaint, and it alleged that Spicoli t-boned Hand at an intersection with a stop sign that Spicoli ran at high speed. The complaint further averred that Spicoli appeared to be very high or drunk at the accident scene, and that Spicoli departed the scene abruptly after Hand questioned his sobriety. Spicoli explained to Danova that he did not run the stop sign. Rather, Spiocoli claimed that Hand shot through the stop sign after Spicoli stopped completely, or at least came to a California-stop. Spicoli did admit that he was in a hurry to get a pizza. Spicoli further acknowledged that he “may” have been smoking marijuana earlier that day when he was surfing, and he “maybe” had a beer. But Spicoli denied having anything more than a “cool buzz.” When Danova asked about more serious drugs, Spicoli responded, “People on ‘ludes should not drive.” Danova agreed to defend Spicoli against this claim. Danova’s settlement discussions with Hand’s lawyer, however, were not productive. Hand’s lawyer also said that she had forwarded the civil complaint to the prosecutor’s office to investigate potential criminal offenses. 1 These hypotheticals draw on hypotheticals used in the 2017 Gonzaga Clarke Prize in Legal Ethics Conference, held on April 27, 2017 at Gonzaga University School of Law. 2 The full slate of 2016 amendments to the Washington RPC can be found at this link.

Social Media and the Client When meeting with Spicoli, Danova noticed that Spicoli was constantly on his smart phone. Danova was not very social media-savvy. But Danova’s paralegal was active on Facebook, so Danova asked him to contact Spicoli about “cleaning up Spicoli’s social media sites.” When the paralegal asked for further instructions, Spicoli replied, “You know more about this stuff than I do. Just make sure Spicoli isn’t putting any incriminating evidence on the internet.” The paralegal researched Spicoli on the internet, and found that he had both a Facebook account and an Instagram account. Both accounts were public. In each account, Spicoli made a regular practice of documenting his partying ways, with ubiquitous photos of him drinking alcohol, smoking marijuana, and acting irresponsible while intoxicated. In particular, on the date of the accident, Spicoli posted a photo of himself at the beach posing with his surfboard, with the caption, “Aloha, Buds! The water is blue and the grass is green. Let’s party!” The paralegal contacted Spicoli and said that if he wanted Danvoa to represent him, Danova needed his social media passwords to “sanitize” his accounts. Spicoli reluctantly agreed. The paralegal also asked, “Do you have any photos from the day of the accident that make you look responsible? Sober?” Spicoli emailed photos from the morning of the accident, before Spicoli went surfing, when Spicoli was at his brother Curtis’ high school graduation. The photos showed Spicoli in a suit looking sober and posing happily with his brother and family. The paralegal logged into Spicoli’s Facebook and Instagram accounts and reset his preferences to the highest level of privacy. The paralegal instructed Spicoli not to accept any new friend requests without Danova’s approval. The paralegal also deleted numerous posts from Spicoli’s accounts, including the beach post from the day of the accident. Before deleting the posts, the paralegal saved copies to the firm’s Google account. The paralegal was not sure where to store the photos, so he uploaded them to the Photos app. The paralegal also posted the graduation photo to both accounts, adding the caption, “Feeling blessed for family and a productive future.” Is Danova subject to discipline? Relevant Washington Rules of Professional Conduct (RPC): Preamble & Scope; RPC 1.1 (competence); RPC 1.2 (decision-making authority); RPC 1.3 (diligence); RPC 1.4 (communication); RPC 1.6 (confidentiality); RPC 1.15A (client property); RPC 3.3 (candor to tribunal); RPC 3.4 (duty to opposing party); RPC 4.1 (truthfulness); RPC 5.1 (supervision of non-lawyers); RPC 8.4 (misconduct). Other Relevant Authority: Professional Ethics Opinion of the Florida Bar 14-1 (2015). New York Social Media Ethics Guidelines (2015), Guidelines 1, 5.A, 5.B, and 5.C. Pennsylvania Bar Association Formal Opinion 2014-300 (2014). WSBA Advisory Ethics Opinions 201601 (2016) and 2215 (2012). In re Murray (Va. Bar Assoc. 2013). Thurmond v. Bowman, 2016 WL 1295957 (W.D. N.Y. 2016).

Investigating the Opposing Party and Witnesses Danova was impressed with her paralegal’s efficiency and efficacy in managing Spicoli’s social media presence. Danova said to the paralegal: “Let’s look into Hand’s social media presence. Maybe we’ll find some useful dirt.” The paralegal also knew of several witnesses listed in police reports that Danova had obtained. The paralegal decided he would look into the witness’ social media presence as well. Hand had a public LinkedIn account. Using Danova’s professional LinkedIn account, the paralegal accessed and reviewed Hand’s account The paralegal did not find any information, except for a number of cliché motivational quotes. Hand also had a Facebook account, but it was set to private. The paralegal was not sure about sending a friend request to Hand, so he contacted Spicoli. The paralegal instructed Spicoli to create an alternative Facebook account for himself from which to send a friend request to Hand. Hand accepted the request, and the paralegal sat with Spicoli as Spicoli reviewed Hand’s Facebook profile. The paralegal instructed Spicoli to copy and email several posts from Hand’s account. The paralegal further directed Spicoli to send Hand a private message with scripted content seeking to talk about the accident. Hand responded, “Thank you for reaching out. I’m really sorry for what happened. I know you’re not completely responsible, but you were not careful and I was hurt pretty seriously. Let’s allow the lawyers to figure it out.” The paralegal also reviewed public Facebook profiles for the witnesses listed in the police report. For witnesses with private Facebook accounts, the paralegal used his personal Facebook account to send friend requests. In sending the friend requests, the paralegal did not give any information about himself. Some of the witnesses accepted, and the paralegal reviewed their Facebook profiles and used Facebook messaging to send informational requests about the accident. Is Danova subject to discipline? Relevant Washington Rules of Professional Conduct (RPC): Preamble & Scope; RPC 1.1 (competence); RPC 1.3 (diligence); RPC 1.4 (communication); RPC 4.1 (truthfulness); RPC 4.2 (communicating with represented persons); RPC 4.3 (communicating with unrepresented persons); RPC 4.4 (respecting third party rights); RPC 5.1 (supervision of non-lawyers); RPC 8.4 (misconduct). Other Relevant Authority: Robertelli v. New Jersey Office of Attorney Ethics, 134 A.2d 963 (N.J. 2016). New York Social Media Ethics Guidelines (2015), Guidelines 1, 4.A, 4.B, 4.C, 4.D, and 5.D. American Bar Association Formal Opinion 461 (2011).

Investigating Jurors and the Trial Judge Spicoli’s case proceeded to trial. Danova did not like to leave anything to chance, and she wanted to know everything she could about the Judge and the prospective jurors. With the paralegal’s assistance, Danova sent a Facebook friend request to the Judge, who maintained a professional Facebook account for campaigning and public information purposes. Danova sent the request from her professional Facebook account. The Judge accepted the request, and Danova reviewed the Judge’s Facebook profile for any information that might give Danova an edge in advocating effectively in the Judge’s courtroom. Danova also “liked” several of the Judge’s Facebook posts, especially the posts that involved cats. Danova additionally directed her paralegal to investigate prospective jurors. The paralegal sat in the courtroom during voir dire using an iPad to investigate individual jurors’ social media profiles. Some jurors had public LinkedIn accounts, which the paralegal reviewed. The paralegal also reviewed public Facebook and Instagram profiles for jurors. For jurors with private accounts, the paralegal sent friend requests from his personal Facebook account. The paralegal was careful not to include any misleading information in the friend requests. Is Danova subject to discipline? Relevant Washington Rules of Professional Conduct (RPC): Preamble & Scope; RPC 1.1 (competence); RPC 1.3 (diligence); RPC 1.7 (conflicts of interest); RPC 3.3 (candor to the tribunal); RPC 3.5 (impartiality and decorum of the tribunal); RPC 5.1 (supervision of non-lawyers); RPC 8.4 (misconduct). Other Relevant Authority: American Bar Association Formal Opinion 466 (2014). N.Y.C. Bar Association Formal Opinion 2012-2 (2012). New York Social Media Ethics Guidelines (2015), Guidelines 1, 6.A, 6.B, 6.C, 6.D, 6.E, and 7.

Bankruptcy Panel

Gary Dyer and George Jacobs

The Benton-Franklin County Bar Association 11th Annual Federal Civil Trial Practice Seminar

May 12, 2017

BANKRUPTCY AND

BANKRUPTCY FRAUD

Gary W. Dyer

Assistant U.S. Trustee

U.S. Trustee’s Office

Spokane, WA

DISCLAIMER

• These materials and the opinions I

express are not necessarily the position of

the U.S. Department of Justice, and

cannot be used against the U.S.

Department of Justice or Office of the U.S.

Trustee.

Why important to you?

• Clients blame the lawyer when criminal

issues arise

– Think about how to document the information

you receive and advice you give

• Competent advice – perhaps written form

– 727 complaints are similar to criminal issues

– Appropriate advice when the client’s

testimony may be incriminating

– Advisability to file if involved in a criminal

activity

Why do criminals file

bankruptcy?

Bankruptcy is based on debtors telling the truth

• Consequently, the system is custom made for

debtors to falsify their bankruptcy filings in an

effort to conceal their assets from creditors

The beginning

• Tips, informants and referrals-sources:

– Trustees

– The court

– USTP Internet hotline

– Anonymous – neighbors, co-workers

– Ex’s – spouse, business partners,

– Creditors

– Tax agencies

FINDING FACTS

• Bank records

• Tax returns and records

• General ledger and accounts

• Depreciation schedules

• Computer disks

• Thumb drives

• Craigslist, Ebay or internet sales

• Credit applications

• Social media

Common Fraud Schemes• False Statement

• Concealment

• Identity Theft/False SSNs

• Real Estate/Mortgage Fraud

• Bustouts (Credit Card/Corporate)

• Tax evasion

“In contemplation of bankruptcy”

• Jury instructions quoting the pertinent

provision of the statute [18 U.S.C. § 152]

and explaining its terms are sufficient. The

terms of the statute itself are quite easily

comprehended. U.S. v. Weinstein, 834

F.2d 1454 (9th Cir. 1987).

False Statements & Concealment Schemes

• Omitting/failing to list assets

• Undervaluing assets

• Mischaracterizing assets– Old furniture vs. valuable antiques

• Over-encumbering assets

• Pre & Post-Petition transferring assets

Concealing and Transferring

Assets

Ways assets or income may be concealed• Cash may be diverted to another entity

• Inventory may be shipped to an off-site location

• Assets or income may be shifted to another

entity controlled by the debtor

• Sales may not be reported properly

• Payment may be made to fictitious persons

10

Concealing and Transferring

AssetsIndicators of Concealment

– Transfers of property or large payments to related

parties or individuals, such as insiders,

shareholders, or relatives.

– Frequent and unusual transfers between bank

accounts, particularly between business and

personal accounts.

– Numerous transactions made in cash that normally

are made on account (sales, purchases, etc.)

– Unusually large and unexplainable payments to

vendors.11

Concealing and Transferring

AssetsIndicators of Concealment

– Unusual or rapid reductions in assets.

– Increases in operating losses that are not

explained by economic factors.

– Inconsistencies between financial statements

or tax returns and the official forms filed for the

bankruptcy or records filed in divorce cases.

– Travel to offshore tax havens or locations that

allow secret bank accounts.

– Missing, inaccurate, or damaged records.12

“Conceal”

• Means not only to hide or secrete, but also

to prevent discovery or withhold

knowledge of an asset. In addition,

preventing disclosure or recognition of an

asset is to conceal it. It may include

transferring property to a third party or

entity, destroying the property, withholding

knowledge about the property’s existence

or location or doing anything else that

hinders, unreasonably delays or defrauds

creditors.

Duty to answer

• The person who files the case has an

affirmative duty to identify all the debtor’s

assets in the bankruptcy schedules and

answer all questions in the bankruptcy

statement of financial affairs fully,

completely and honestly. In re Retz, 606

F.3d 1189 (9th Cir. 2010). U.S. v. Antoinette-Bates, 359 Fed. Appx. 845 (9th

Cir. 2009).

Undervalued Assets

• Value on the date of filing

• Must show the debtor knew the value

• Business or LLC’s value

– Balance sheets

– Income

– Recent transfers (bleed out assets)

– Recent bonuses (bleed out cash)

Pre-petition transfers

• Transferee

–“use this for awhile” or “hold this until the

bankruptcy is over”

Consideration?

Who controls it?

Documentation?

Common defenses

• It was a mistake

• It was my attorney’s fault

• I did not read the bankruptcy documents

• I gave the asset away

• I sold the asset

• I was keeping it for ________

• The asset had no value

False statements

• Oral statements – under oath

– 341(a) meeting

– 2004 examination

– Other testimony given under oath

• Written statement – penalty of perjury

– Petition, schedules, SOFA

– Chapter 11 monthly operating reports

– Declarations submitted to the court

Materiality

• Does the statement have the capacity or

potential to influence the trustee, creditors

or court?

• Does not require damage or harm to

creditors or the trustee

• Omissions are very common and material

Filing Bankruptcy Is Often

The Last Act . . .

• Health care fraud

• Securities fraud

• Bank fraud

• Investment fraud

• Mail/wire fraud

• Money laundering

• Fraud against the government

Presented by George J.C. Jacobs, IIIAssistant United States Attorney

Criminal Health Care Fraud CoordinatorEastern District of Washington

5/5/2017 2

USTP - committed to working w/ USAO and LE agencies to detect, investigate, and prosecute abuses of the bankruptcy system

Mission is to promote system integrity

USTP refers possible criminal conduct to LE (e.g., IRS, FBI) and USAO

Target Letter - Pre-indictment Resolution – Waive Indictment

Bankruptcy Fraud is often the last act in a series of criminal acts, e.g., tax fraud

IRS Criminal Investigation Willful Failure to Pay Trust Fund Taxes, in

violation of 26 U.S.C. 7202 Defendant – President of a company Convicted a trial

5/5/2017 3

Company President and spouse filed joint petition for Chapter 7 bankruptcy relief

SOFA Line 10 - truthfully declare “all other property, other than property transferred in the ordinary course of the business or financial affairs of the debtor, transferred either absolutely or as security within two years immediately preceding the commencement of” bankruptcy case

5/5/2017 4

Spouse executed a Promissory Note loaning the Company $70,000

In lieu of cash payment, the Company agreed to pay $70,000 of Spouse’s personal expenses directly or through one of the Company’s business credit card accounts

Spouse subsequently executed second Promissory Note agreeing to retroactively pay the Company up to $55,000 for personal expenditures Spouse incurred using the Company credit card during a four-month period

5/5/2017 5

Bankruptcy trustee appointed to administer the bankruptcy estate concluded, based in part upon the information provided in petitioners’ schedules and SOFA, that petitioners had no assets that could be used to benefit creditors

Granted discharge of debts

Spouse fraudulently concealed from the bankruptcy court, trustee and unsecured creditors $125,00 in assets

5/5/2017 6

Defendant filed petition for Chapter 7 bankruptcy relief

SOFA Line 2 - requires petitioner to truthfully declare the amount of income, other than from employment, trade, profession, or operation of debtor’s business, received during the 2 years immediately preceding commencement of bankruptcy case

Petitioner received $108,400 as part of divorce settlement from ex-husband’s IRA/Deferred Variable Annuity pursuant to divorce decree entered in another state

Petitioner sought to discharge $22,000 debt from creditors

Bankruptcy Court entered default judgment denying discharge

5/5/2017 7

Petitioner filed Chapter 7 SOFA reported petitioner sold a Thunderjet boat for

$15,000 Trustee subsequently learned petitioner had not

sold boat but transferred it for no consideration Creditors Meeting – learned boat sold to another

person for $39,000 $9,000 + $30,000 (nominee account)

5/5/2017 8

Each Defendant waived indictment by a Grand Jury and plead guilty to 152(3)

5/5/2017 9

Making False Declaration under Penalty of Perjury in Relation to a Bankruptcy Case

Class D Felony 5-year term of imprisonment $250,000 fine 3-year term of supervised release Payment of restitution $100 SPA

5/5/2017 10

(1) a bankruptcy proceeding existed(2)Defendant made a declaration under

penalty of perjury(3) declaration was false(4)declaration was to a material matter(5)the false declaration was knowingly and

fraudulently made

5/5/2017 11

False statements are not limited to affirmative misrepresentations but include knowing omissions

U.S. v. Lindholm, 24 F.3d 1078, 1084 (9th Cir. 1994) (“an omission is the equivalent of a false statement”)

5/5/2017 12

18 U.S.C. 3553(a) factorsNature/circumstance of offenseHistory/ characteristics of defendantNeed for sentence to reflect seriousness, promote respect for law, provide just punishmentAfford adequate deterrence to criminal conduct

5/5/2017 13

Protect public from further crimes of defendant

Provide defendant with needed educational/vocational treatment, medical care, or other correctional treatment

Kinds of sentences available

Kinds of sentence and sentencing Guidelines range

Avoid unwarranted disparities among defendant w/ similar records

Need to provide restitution to victims 5/5/2017 14

USSG 2B1.1 2B1.1(b)(1) - Specific offense characteristics (loss

thresholds) 2B1.1(b)(2) – 10 or more victims USSG 3B1.1 – Aggravating Role USSG 3B1.2 – Mitigating Role USSG 3E1.1 - AOR

5/5/2017 15

These materials and the opinions are not necessarily the position of the U.S. Department of Justice, and cannot be used against the U.S. Department of Justice

5/5/2017 16

THANK YOU FOR YOUR PARTICIPATION IN TODAY’S CLE!

Now please join us for a reception in the lounge area at the

Red Lion Hotel Richland Hanford House hosted by

Walker Heye Meehan & Eisinger, PLLC and

Telquist Ziobro McMillen Clare, PLLC