KELSEY ELECTED TO SUPREME COURT
[Posted January 21, 2015] The General Assembly has elected Court of Appeals Judge Arthur Kelsey to a seat on the Supreme Court of Virginia. According to this story from the Richmond Times-Dispatch, the vote was unanimous. Judge Kelsey received very high ratings from statewide bar groups and enjoyed broad legislative support for the new position, which arose as a result of Chief Justice Cynthia Kinser's retirement at the end of last year.
I don't have details on a date for an investiture, but the effective date for the election is February 1. I'm confident that the court's newest member will be installed and fully up to speed when the Supreme Court's next session begins on February 23.
The General Assembly also filled three vacancies on the Court of Appeals, including one that arose from Judge Kelsey's elevation to the SCV. Judges Mary Grace O'Brien and Rick AtLee, Jr. and Richmond attorney Wes Russell have been selected to begin new terms on the court, also effective February 1.
IMPORTANT APPEALABILITY RULING FROM
[Posted January 14, 2015]
Leave it to the Big Supremes to upstage my tenth anniversary with a significant
decision on an appellate-procedure topic. But today, the US Supreme Court hands
down Jennings v. Stephens, which
addresses the obligation of an appellee to appeal issues that he loses below.
This is a habeas proceeding
in a death-sentence case. Jennings asserted
three separate grounds for habeas relief in US District Court after being
sentenced in Texas
state court. The district court refused the petition on one of the grounds,
involving improper closing argument by Jennings’s
own lawyer; but it granted the petition as to two other grounds, relating to
the lawyer’s failure to obtain and adduce mitigating evidence. The district
judge gave the state 120 days within which to give Jennings a new sentencing hearing, commute
his sentence, or (gulp!) release him.
Well, don’t worry about this
last part; the sovereign State of Texas
is not about to let a murderer just walk. The state appealed to the Fifth
Circuit. On appeal, Jennings
defended the issuance of the writ on the two successful counts, but he also
urged affirmance on the third ground, on which he had lost below.
Now, here’s the twist that
makes this an interesting procedural case: Jennings hadn’t noted an appeal. Nor had he
obtained a certificate of appealability for the one issue on which he lost.
The Fifth found this to be a
fatal deficit. It reversed on the two evidentiary issues, and found that it
didn’t have jurisdiction to consider the closing-argument issue. That means
is back on death row. But the Supreme Court granted certiorari to review the
Today, by a vote of 6-3, the
Court reverses the judgment and directs the Fifth Circuit to address the
closing-argument issue. The majority comprises some unusual bedfellows: Justice
Scalia writes the opinion of the Court, joined by the Chief Justice and the
four members of the Court’s liberal wing – Justices Ginsburg, Breyer,
Sotomayor, and Kagan. (If you’ve been paying careful attention, you’ll know
that Justice Scalia, one of the Court’s most prominent conservatives, has been
voting in favor of criminal defendants quite a lot lately.)
Relying on a 90-year-old
decision that’s still good law, the majority notes that the relief that
Jennings sought in the third count is exactly the same as the relief he sought
elsewhere in the petition – resentencing, commutation, or release. In such
situations, an appellee may “urge in support of a decree any matter appearing
before the record, although his argument may involve an attack upon the
reasoning of the lower court,” even where he doesn’t press a cross-appeal.
This sounds much like the
right-for-the-wrong-reason approach that’s employed by appellate courts
everywhere. But Texas
makes it interesting with a novel argument. The state points out that if Jennings succeeds in
getting a new sentencing based on the argument issue, then the new hearing will
have to take place without the contested argument. That's relief that he
wouldn’t have received based on the two evidentiary issues. The majority
answers that appellate courts don’t review lower courts’ opinions; they review
lower courts’ judgments. Federal courts don’t have unlimited “supervisory
authority over state trial courts.”
The state’s argument fails
because by adding the extra ground in his argument, Jennings wasn’t expanding on his rights; nor
was he asking the court to impose any additional obligations on the state. But
that leaves the issue of a certificate of appealability, which Jennings certainly didn’t get. Normally that
certificate is an essential jurisdictional requirement for appealing the denial
of a habeas petition. But the majority dodges this problem by noting that Jennings wasn’t appealing
to the circuit court. The state was. The justices specifically hold that “the
defense of an appealed judgment on alternative grounds” is not itself an
The Court sends the case
back to the Fifth Circuit, to consider the merits of the closing-argument
issue. Keep in mind that this may turn out to be an empty victory for Jennings; the reasonably
sympathetic district court has already rejected it, and the Fifth hasn’t seemed
too receptive to his position up to now. But his appeal is still alive.
For the rest of us, we get
an important ruling on which issues a partially successful litigant must
cross-appeal in a federal case.
VANA AT THE TEN-YEAR MARK
[Posted January 14, 2015]
I’m not ashamed to admit it. I was scared.
Somewhere around mid-2003, I
was becoming perfectly miserable as a trial lawyer. I grew to dread trial dates
– unlike oral argument dates, when I couldn’t wait to get to the lectern. One
day, when my alarm clock went off on the morning of a jury trial, I reached
over to turn it off and thought to myself, “Gee, maybe one of the witnesses
will be ill and they’ll have to continue the case…”
This is what’s called “a
sign.” It was a message from myself, to myself, telling me that I needed to
find a way out of trial practice. I loved appellate work, but I’d always been
told, by sensible older lawyers who advised me in my legal youth and
adolescence, that a purely appellate practice was impossible. I had never
questioned their judgment before. But this idea offered me a glimmer of hope as
to how I could come to enjoy the practice of law again.
I studied. I planned. I
interviewed five generous lawyers whom I esteemed – each a worthy AV – and got
valuable advice from each of them. I still have that advice in a book that I
consult from time to time. I hired a media consultant – Dave Rourk, who’s been
with me for over ten years now – and have long regarded that as one of the
smartest things I've ever done for the development of my career. I developed a
sensible business plan that had every chance of working.
And still, I was scared. As
far as I knew, no one had ever done this before in Virginia. But I was ready to try. I had to try.
I made one dumb mistake: I
didn't do it ten years earlier. The earliest published appellate decision in
one of my cases goes back to 1989 – CUNA
Mutual Insurance v. Norman, 237 Va. 33, if you want to
know. But I date the beginning of my practice’s appellate focus to ten years
ago today, January 14, 2005, when I launched this website with analysis of that
day’s Supreme Court opinions. I continued to handle some trial work for another
two years before I gave it up and became 100% appellate as of January 1, 2007.
Now, that was a red-letter day. But
the January 14 date has always been magic to me, since it’s when I started to
make myself happy in my career.
Much has happened in the
appellate world in the last decade. Let’s start with the turnover on the
Supreme Court of Virginia. Of the court’s seven members in January 2005, only
one remains on active status today – the court’s newest chief justice, Donald
Lemons. In 2005, the SCV took in 2,697 new cases, granted 182 writs, and issued
105 opinions. In 2013, the last year for which I currently have numbers, those
numbers were 2,050, 112, and 64, respectively.
One important development
that’s worth noting is the court’s docket pace. Several years ago, the Supreme
Court was so backlogged that it took almost a year and a half to get from
circuit-court judgment to Supreme Court opinion in a granted case. But the
court has been proactive about moving things along, and nowadays, that gap is
on the order of ten or eleven months.
The Court of Appeals of Virginia has seen the
retirements of several long-tenured judges over the years, including Chief
Judge Walter Felton and Judge Robert Frank just two weeks ago. Those two
vacancies, plus one on the Supreme Court, will be filled in the next month or
so by the General Assembly. In October, the CAV elected Judge Glen Huff of Virginia Beach as its
newest chief judge. If you want to compare caseloads at this level, the 2005 Court
of Appeals took in 3,184 new cases and decided 924 cases on the merits. 2013
saw just 2,471 new filings and 752 decisions on the merits. (It’s looking like
this may not be much of a growth industry.)
The Fourth Circuit was, at
one point, down five judges from its allotment of 15. It’s now up to full
strength, in part by having purloined two of its judges – Agee and Keenan –
from the Supreme Court of Virginia. As for a caseload comparison: In 2005,
5,307 new cases arrived at the Fourth, and it took, on average, 8.0 months to
get from the filing of the notice of appeal to final appellate decision. That
eight-month gap was the shortest for any circuit in the nation. In 2013, the
court took in 5,061 new cases and again led the nation with a median disposition
time of just 5.0 months.
We’ve seen technological
changes, too. Now all three courts post online the audio recordings of oral
argument. Very recently, iPads were unwelcome in the appellate courts; now
technophiles can approach the lectern carrying the entire record, plus all of
the briefs and all of the caselaw, in one hand, in a tablet computer. It's still a three-ring binder for me. I've never had a battery die or a screen freeze on my three-ring binder.
Most important, we’ve seen
the rise of an appellate bar in Virginia – a
welcome change that can only help the development of Virginia’s jurisprudence. A better-prepared
advocate makes the jurists’ job easier and leads to sounder results. (At least,
that’s the theory. Don’t ask any losing litigants for their opinions on this.)
Change has come to this
website, too. My earliest opinion-day analysis is still available on the
archive pages. I smile a little, and cringe a little, when I go back to review
it and consider how scant was my first coverage of that day’s batch of
opinions. Since then, I’m confident that I’ve posted well over a million words
of commentary. I covered my sixty-first SCV opinion day last week, and have
posted perhaps 200 essays and appellate updates, most of which are still
available in the archives.
I’ve heard your suggestions,
too. A few years ago I added a word-search feature, so if you want to find my
analysis of the seminal Cowznofski
decision from several years ago, you can do that without even knowing the
decision date. Several of you have suggested an RSS feed. If I can figure out
how to do that without giving you a false ping every time I go in to correct a
typo, I’ll do that.
I’ve had more than one
request for more coverage of important SCOTUS decisions. I do rarely venture
across the Potomac, but I’d need another life
to do that on a consistent basis. Besides, SCOTUSblog does a fabulous job of
covering the court, and I don’t propose to regularly post analysis that’s based
on my relative unfamiliarity with that court.
I’ve heard your views about
your favorite essays. “What Not to Say,” from way back in 2006, seems to be one
of the favorites, or at least the most useful. I’m probably proudest of “On
Professionalism” from 2009. So far no one has written to tell me that my prose
needs polish, or that my advice is all wet. That’s reassuring.
I’ve received questions, too
– a lot of them. As you know, I occasionally compile some of them into a “FAQs”
post. Probably the most frequent question about the site itself is, “How do you
find time to write as much as you do?” [I budget the time in advance.]
Five years ago today, in
another milestone essay, I noted that I had no plans to charge a subscription
fee or accept advertising. That’s still true today, as is my 2010 report that “I plan to keep this up as long as I enjoy
it, which I emphatically do right now.”
One last point here, and it
relates to something that you’ve probably overlooked. On every page on this
site, consistently since Day One, the word benignitas
has appeared in the left margin, just under the navigation box. Maybe you
thought that was the name of the company that built the website. If you saw it,
you shrugged and glanced away.
is a treasured word for me, and it was important for me to ensure that the
website features it, as a sort of motto. It’s the Latin word for kindness,
which I consider to be one of the two most important human qualities.
I am grateful for your
continued kindness to me over the past ten years. Thank you for making this
website a success.
ANALYSIS OF JANUARY 8, 2015 SUPREME COURT OPINIONS
[Posted January 8, 2015] The Supreme Court today hands down eight published opinions and two published orders in appeals that were argued in the October session. But this batch implicates Sherlock Holmes's famous "dog that did not bark in the night," as perhaps the most eagerly awaited decision from the last session, the significant First Amendment challenge in Yelp, Inc. v. Hadeed Carpet, is held over for later decision, presumably at the conclusion of the February session. Let's dig into the batch that did come down today.
When I read the assignments of error in Department of Health v. Kepa, Inc
., my eyebrows rose. Kepa operates a hookah lounge in Blacksburg, but it also serves food in the same space. The key question is whether Virginia's Indoor Clean Air Act, which prohibits smoking in restaurants, applies here. If it does, that might spell doom for the lounge; after all, smoking is the primary -- perhaps only -- purpose of such an establishment.
The case wended its way through two administrative hearings within the Health Department, then review in circuit court. All three of those ended badly for the lounge. It then appealed to the Court of Appeals, which initially affirmed by a vote of 2-1. But the CAV granted rehearing en banc, and for the first time, the sun broke through the clouds; the en banc CAV reversed, 6-3.
That made the Department the appellant in today's appeal. The issue is whether the exemption in the Act for a restaurant "located on the premises of any manufacturer of tobacco products" applies to allow the lounge and restaurant to coexist.
If your eye caught on the word manufacturer, go to the head of the class. Another provision prohibits the regulation of smoking "in retail tobacco stores, tobacco warehouses, or tobacco manufacturing facilities." This law exempts three types of facilities -- as today's opinion describes them, three tiers within the tobacco industry -- from the Act's provisions. But that troublesome prohibition of smoking in restaurants is still there.
Today, by a margin of 6-1, the justices reverse the Court of Appeals and rule in favor of the Department. The majority rules that this is a restaurant -- despite the fact that most of the site's income comes from tobacco sales, not food -- so the Act applies here. And since there's no exemption for restaurants in tobacco retail stores, that exemption doesn't help.
Based on my initial reading, I was concerned that this would doom the business to close. But the legislature has already ridden to the rescue; the statute permits smoking in restaurants where the smoking area is physically separated and there are separate ventilation systems. So Kepa can continue to operate the lounge, after it hires a construction contractor to do a little work.
Hyundai Motor Company v. Duncan
involves a $14 million judgment against a manufacturer, based on an air bag that didn't deploy in a single-vehicle collision, resulting in traumatic brain injuries to the driver. He sued Hyundai on a breach-of-warranty theory, claiming that the design of the system was flawed. Specifically, he asserted that while the bag itself was fine, Hyundai had placed the sensor -- the unit that triggers deployment at the first sign of a crash -- in a location that rendered the car unsafe, since the bag wouldn't deploy when it was needed.
This appeal focuses on the admissibility of testimony from the driver's air-bag expert, and on that witness's conclusion that the sensor was placed in the wrong location. The expert hadn't conducted any independent testing; he relied on the manufacturer's own sensor-location study, back when the car was designed. He also performed something called a crash-severity analysis, and compared the severity of this crash with the manufacturer's unquestioned desire for bag deployment at a significantly lower impact speed.
Today, a majority of the court rules that this evidence was inadmissible, because neither the expert nor the manufacturer had tested the precise location that the expert had indicated would be best. The court also holds that this testimony failed to establish that another sensor location would have produced deployment and prevented the brain injury. Since the driver's evidence on causation depended on that expert testimony, the court reverses and enters final judgment for the manufacturer.
Justice Powell dissents. She notes that the majority's reasoning focuses only on the manufacturer's cross-examination of the expert, not on his direct examination, which was much more favorable. Since the driver prevailed below, she believes that the evidence should have been viewed in a light most favorable to him. And in a footnote, she cautions,
. . . the majority opinion could potentially lead to parties purposefully asking opposing experts about untested alternative theories that relate to the subject matter at issue and then using this testimony as a means of disqualifying the experts.
Keep that tactic in mind when you start your jury trial next Tuesday. In the end, Justice Powell still would have voted to reverse, based on a jury instruction on vehicle-safety standards. But the majority's decision ends the litigation instead of leading to a retrial.
It can be pretty lonely being a minority corporate shareholder. The appellants in Fisher v. Tails, Inc
., owned just 21% of a company that operated a real-estate-brokerage franchise. When the company undertook a complex reorganization operation, the minority owners didn't like what they saw, so they asked a trial court to order that they were entitled to appraisal rights under Virginia's corporation law.
The four steps in this process matter, so I'll describe them briefly here. First, the corporation would be reincorporated in Delaware. Second, the company would merge with another Delaware company, and would be owned by a holding company. Third, the transferred company would amend and restate its operating agreement. And fourth, the holding company would sell off the transferred company.
If that sounds complicated, it is. But there was a method to the majority's madness: Once the first step was taken, Delaware law applied. And Delaware law, unlike Virginia law, doesn't give appraisal rights to minority shareholders.
The minority holders duly voted against this whole process in a shareholder meeting, but unsurprisingly were outvoted. They sued, but the trial court sustained a demurrer and dismissed the case with prejudice. The Supreme Court agreed to review the case, probably in significant part because of the paucity of Virginia interpretive case law in this area.
The court today unanimously holds that the whole process is completely legal. The General Assembly has listed five circumstances that trigger appraisal rights, and reincorporation isn't one of those. So with the first step deemed legit, there's no avenue of relief for the shareholders under the Delaware statutes.
But wait; they aren't done yet. The minority argued that the trial court should have applied something called the "step transaction doctrine" to look past the technical legal analysis, and see the whole complex transaction for what it really -- and from what I can see, unquestionably -- was. And Delaware law does recognize this doctrine, so perhaps there's a ray of hope here.
Alas for the minority owners, this approach gets them nowhere. The justices today assume without deciding that Virginia law would allow the step-transaction doctrine. But the reincorporation step -- that was way back at Step 1 -- has "independent legal significance," so it cannot be disregarded, as the minority had asked. Delaware law recognizes that "a transaction effected pursuant to a statute will be subject to the requirements an consequences of that statute alone," and may not be overridden by equitable principles. Accordingly, the trial court properly sustained the demurrer.
We venture into the land of 4-3dom in Powell v. Commonwealth
, a prosecution for selling an imitation controlled substance. Powell had the misfortune to sell a bag, containing a "white rock-like substance" to an undercover police officer. When Powell had beckoned the officer over in what the officer described as "an open-air drug market," he was given an order for "a four." In street parlance, that means $40 worth of cocaine.
I didn't know that, and from now on, I plan to be very careful with my numerical language. In any event, Powell went into a house and came back with a baggie containing that rock-like substance. The officer handed over the cash and drove off.
A state laboratory analyzed the substance and found that it wasn't cocaine at all; it was merely an oblong pill that had been cut in half. Since cocaine generally doesn't come in oblong pills, this is bound to be something else. And it was: a prescription pill used as an antidepressant and to treat schizophrenia. Technically, it was a controlled substance, although it was way down at the more-benign end of the controlled-substances scale, at Schedule VI.
Powell was indicted for selling an imitation controlled substance. At trial, he argued that he couldn't be convicted of this crime, because he really did sell a controlled substance. Since selling a Schedule VI substance is a misdemeanor, that's all he could have been convicted of. The trial court was having none of that; it allowed the prosecution to go forward, and Powell was convicted. The Court of Appeals stamped that conviction as "approved," bringing us to today's opinion.
A bare majority of the court votes to affirm. The chief justice writes the majority opinion, which holds that one can be found guilty of selling an imitation controlled substance even if the stuff really is a lower grade of forbidden fruit. The key, under the current wording of the statute, is whether the material sold has "the potential for abuse," and in this case, the antidepressant wasn't specifically listed as such -- that's why it was listed in Schedule VI. This, the court finds, means that the pill that Powell actually delivered was not "a controlled substance subject to abuse," so it was, in fact, an imitation.
Justice Millette dissents, and he's joined by Justice Goodwyn and Senior Justice Lacy. The dissent notes that Schedule VI includes drugs that are and are not subject to abuse, so the mere classification of the antidepressant in Schedule VI isn't sufficient to answer the question the way the majority answers it. The problem, in the dissent's view, is that the listing on Schedule VI was the prosecution's only evidence on "subject to abuse," so there's no proof of this essential element.
When a trial court orders
the equitable remedy of rescission, the purpose is to put the parties back in
the positions they were before. In two opinions handed down today, both under
the caption Devine v. Buki, the
justices explore one thorny aspect of a rescinded real-estate contract.
Specifically, where sellers own property jointly, and a court orders rescission
because of fraud by only one of the sellers, what kind of relief can it
fashion? The answer is trickier than you might think. There are lots of goodies
in here for the property lawyers among us, so this case is definitely worth a
In my many travels across
the Commonwealth, I’ve found few regions as beautiful as the Northern Neck. It
birthplace, the gorgeous resort known as The Tides Inn, and even a small town
called Emmerton. I still haven’t found a connection between the town name and
any ancestor, but I haven’t given up hope.
Because the Neck was among
the first areas of Virginia
to be settled in the 17th Century, it also has its share of old
estates. One of those is a place called Rock Hall, a structure that dates back
over 200 years. A husband and wife acquired the home in 2005, and set about the
process of making substantial renovations.
After making a number of
repairs, the couple engaged an agent, who listed the property as “completely
renovated and restored … from the brick foundations to the roof and chimney.”
The ads also contained a disclaimer that this information “was deemed accurate,
but it was not guaranteed.”
The ads soon produced a
purchaser. The parties signed a contract of sale. As every dirt lawyer knows
well, the sellers had the option of providing a disclosure of known conditions
on the property, or a disclaimer that basically told the buyer, “You’re on your
own to check out the condition of what you’re buying.” The sellers chose the
latter route, telling the buyers that the property would be conveyed “as is.”
The buyers sensibly hired a
couple of inspectors. Those professionals each identified some minor concerns,
but neither one found anything that was significant enough to warn the buyers
away from the contract. The buyers asked for and got some specific repairs,
after which the parties closed on the sale, and the buyers moved in to their
It didn't take long for
problems to arrive. The first signs of trouble were leakage due to wind-driven rain, and water dripping from the living-room ceiling. Since these were decidedly bad
signs, the new homeowners hired two contractors to find and fix the problem.
They found it, all right:
structural problems with the foundation that “significantly compromised” the
integrity of the house. Recalling the listing that specifically mentioned that
the sellers had “completely restored” the foundation, the buyers figured that
they’d been had. They sued to rescind the contract of sale, for compensatory
damages, and for a Consumer Protection Act violation.
The case had a complex
procedural history in the trial court, including referral to a commissioner in
chancery and some exceptions to the commissioner’s report. Rather than recount
those, I’ll get to the bottom line.
The trial court found that
the husband had defrauded the buyers, but the wife’s only involvement was in
signing the contract and the deed. The court ordered rescission of the
contract, directing the sellers – that would be both of them – to repay the
$590,000 purchase price, at which time the buyers were to reconvey title by
deed. The court also entered judgment for damages against the husband only, for
$135,000, plus almost $100,000 in attorney’s fees.
The husband and wife
appealed separately, and today we get two separate published opinions. In husband’s appeal, the court affirms in
part and reverses in part, remanding the case for further proceedings. The
court first turns aside a jurisdictional challenge based on the old distinction
between law and chancery, holding that the trial court did have equitable
jurisdiction over husband. There was, the justices find, no indication that the
relief sought “was a pretext to bring an action at law in a court of chancery.”
And now we get to the tricky
part, the one that will intrigue the dirt lawyers. Remember, the trial court
had ordered rescission against both sellers, even though it found no fraudulent
conduct by the wife. How does a court of equity order relief against a party
who has done nothing wrong? And if it can’t order relief against the wife, how
does it have jurisdiction to order relief against the husband alone? This part
of the opinion gets into the weeds of unitary tenancies – specifically a
tenancy by the entireties – and considers the doctrines of equitable conversion
and merger when evaluating the relief available.
Today’s majority holds that
the equitable-conversion doctrine extinguished the sellers’ tenancy by the
entireties as soon as the parties fully executed the contract. It also holds
that the rescission of the contract doesn’t automatically restore that tenancy;
that’s why the trial court ordered reconveyance by deed, after the repayment of the purchase price. The court notes that
once the sellers delivered the original deed, the contract merged into it.
The court holds that trial
courts have substantial discretion in fashioning an appropriate remedy to
eliminate or minimize hardship caused by fraudulent conduct. That includes
ordering relief against the wife, while ensuring that the husband alone is
responsible for refunding the purchase price.
The court next rules that
the “as is” language in the contract didn’t insulate the husband from
liability. That’s because, under preexisting law, you can’t commit fraud and
then hide behind a disclaimer. The court distinguishes between fraudulent
inducement to sign the contract, and fraudulent inducement to close – the
latter is the only theory on which the buyers sued – and holds that the latter
is indeed a valid claim in Virginia, because “regardless of when the
concealment occurs (i.e., before or after the contract has been entered into),
the wrong is still the same.” Because the husband concealed the condition of
the foundation, the trial court was right to order rescission.
Having done that, the court
then reverses the award of monetary damages, though it affirms the
attorney’s-fee award. The damages were for fees paid to others – things like
real-estate taxes, mortgage interest, and the contractors’ fees. But caselaw
establishes that any restitution award is limited to the benefit that has been
received by the defendant. Here, because the buyers didn't pay that money to
the sellers, their sole relief against those sellers is return of the purchase
Next, in the wife’s appeal, the court takes up the
question noted above: Can a court of equity order equitable relief against a
party who has done nothing wrong? Remember, there were no damages awarded
against the wife, so that aspect of the first opinion isn’t present here.
This one turns out to be
straight-forward. In the absence of liability, a court can’t “be made the
subject of a remedial decree,” so the trial court was powerless to order the
wife to repay the purchase price. That part of the decree is reversed.
Well, what about that
tenancy-by-the-entireties issue? If the parties are really to be restored to
the status quo ante, don’t you have
to include the wife in the decree? If that’s been troubling you, you have
company. Justice McClanahan files a dissent in each appeal, arguing that the
doctrine of equitable conversion doesn’t really destroy the unitary tenancy,
and they even hold the sale proceeds by that tenancy. Justice McClanahan thus
thinks that since the deed was conveyed by two persons acting as one, who
received the money as one, then the court must treat them as one when ordering
rescission. And that, in turn, means that the wife should be included in the
obligation to repay the purchase price.
This is, you will
appreciate, a tough call, with competing equitable considerations, all based on
viable caselaw. In the end, sometimes a trial court has to be creative in doing
what’s right, a primary goal of courts of equity. Today’s decision indicates
that there are indeed limits to what those courts can do.
If you don’t handle tax
work, then The Nielsen Company v.
Arlington County is going to seem at first like it’s written in a foreign
language. But really, Justice Millette does a good job of setting out the
court’s unanimous resolution of the case. It isn’t all that painful; why don’t
you come along?
This appeal is about BPOL
taxes. Nielsen is the familiar provider of marketing surveys. Its job it to
tell advertisers what viewers are watching and what products they’re buying. It
has offices in 18 states; its sole Virginia
location was in Arlington.
The county has imposed a
BPOL tax that covers Nielsen’s business. But it can be difficult or impossible
to calculate just what income the company received that’s attributable to any
one office. Arlington can only tax the company’s
receipts that are attributable to its Virginia
operations. So how much does the county get to tax?
State law provides a
solution for this problem. Companies like this are permitted to apportion the
nationwide company’s business to individual sites by a sort of interpolation.
The method is reasonably simple: You take the Virginia office’s payroll, divide it by the
nationwide payroll. You then multiply the quotient by the company’s gross
receipts. That becomes the Virginia-taxable portion.
Nationwide, Nielsen made
about $100 million in the relevant tax year, 2007. Its Virginia payroll was about 24% of its total
payroll. That means that the county can tax about $24 million in receipts. And
if that’s all there were, we wouldn’t have much of a Supreme Court opinion.
But there is more. The tax laws also allow the
company a deduction for:
receipts attributable to business conducted in another state or foreign country
in which the taxpayer (or its shareholders, partners[,] or members in lieu of
the taxpayer) is liable for an income or other tax based upon income.
The real dispute in this
appeal is how that deduction is calculated. The county argued that it must be
added up individually, a laborious process that seems likely to dissuade any
business from even trying to claim the deduction. The company responded that it
was permissible to perform another round of interpolation.
Here’s the bottom line: the
Supreme Court sides with the taxpayer here, ruling that receipts that are
created by business occurring elsewhere can be deducted using an interpolation
process approved by the State Tax Commissioner. That means that the taxpayer
can calculate the deduction without hiring an army of CPAs to do all the math.
There’s an important
subordinate legal issue in today’s opinion that will apply to non-tax
litigation. The Tax Commissioner had ruled in favor of Nielsen, and the question
is what weight or deference should be given to his determination. According to
something called the rule of practical construction, when there’s a close
interpretive call on a legal issue, courts often give credence to the
construction that’s been consistently employed by officials who are charged
with administering the law in that field.
But as today’s opinion
recognize that our decisions have been less than clear about a distinction in
terminology, as we have sometimes conflated "deference" with
"weight." … However, a review of our precedent underscores that we
have distinguished "deference" from "weight." "Deference"
refers to a court's acquiescence to an agency's position without stringent,
independent evaluation of the issue. "Weight" refers to the degree of
consideration a court will give an agency's position in the course of the
court's wholly independent assessment of an issue.
[Citations omitted] The
court resolves this confusion by holding that courts never defer to
administrative agencies on the interpretation of statutes, though it can
sometimes “afford greater weight than normal to an agency’s position.” In cases
of ambiguity, that weight can tip the balance, but it’s never binding on
courts, which have the primary duty to determine the meaning of statutes.
the rule of practical construction applies in a host of legal contexts, this
ruling deserves attention even from those lawyers who would never dream of
practicing in the field of taxation.
[Posted January 7, 2015]
Opinion day comes a day early this week; the Supreme Court of Virginia will
hand down tomorrow the decisions from the appeals that were argued in October.
This is an instance of troublesome timing for me; for only about the fifth time
in the nearly ten years that I’ve published this website, the clerk has
scheduled me to argue an appeal on opinion day.
Now, I love oral argument,
but on opinion day, I’d far prefer to be here at my desk, reading the new
opinions and posting analysis for you. Life intrudes sometimes, and I’ll adapt,
as I’ve done on the four previous occasions.
Tomorrow also marks the
investiture of Justice Lemons as the chief justice. I’ll be privileged to
attend that ceremony, and will drive home afterward, tomorrow evening. This
means that while I’ll be able analyze a few opinions tomorrow between the time
of my argument and the time of the investiture, I’ll have to post most of my
analysis on Friday.
THE PASSING OF AN APPELLATE GIANT
[Posted December 30, 2014]
The sad news reached me this morning of the passing of Judge Ruggero Aldisert,
at the age of 95. Judge Aldisert was a Senior U.S. Circuit Judge of the Third
Circuit Court of Appeals, and had retired this past summer.
I never got to meet Judge
Aldisert, but he helped me on numerous occasions, through his wonderful book, Winning on Appeal, one of the NITA
Practical Guide Series. If you’re an appellate lawyer, you have to read it; I
keep my copy (2nd edition, 2003) in a small bookcase that’s right by
my elbow, for easy reference.
Judge Aldisert wrote other
books about the law and judging, but for me, Winning on Appeal is the next-best thing to an owner’s manual for a
successful appellate practice. It offers excellent practical advice on
briefwriting and oral advocacy. Sometimes I disagree with what’s in there; for
example, I believe that his advice to “Preserve the issue [in the trial court]
at all costs” is too broad, and there may be instances in which you may
intentionally sacrifice an appellate issue in order to win the trial. But as a
whole, the advice is dynamite.
I’ve often told the story
that there’s an easy way to tell whether you’re hiring the right appellate
lawyer: Go to his office and ask if you can borrow his copy of Aldisert. You’ll
get two possible responses. The first is, “What’s an Aldisert?” If that’s what
you hear, look at your watch and make a polite excuse before leaving. The only
other possible response is, “No, you can’t borrow it; but I’ll let you look
through my copy here in my office, while
I keep an eye on you.” That’s your guy.
I can’t conclude this essay
without quoting my favorite passage from the book. It’s part of a “litmus test”
that reflects what appellate jurists think about a brief, based on how many
issues are contained in it. The list, which Aldisert describes as “purely
subjective guidelines for civil cases,” begins with three issues, and indicates
that the judge’s reaction to such a focused brief is, “Presumably arguable
points. The lawyer is primo.”
As the number of issues
rises, the judge’s reaction correspondingly worsens. By six issues, the
reaction is, “Probably no arguable points. The lawyer has not made a favorable
initial impression.” But it goes on, to seven issues: “Presumptively, no
arguable points. The lawyer is at an extreme disadvantage, with an uphill
battle all the way.”
The list concludes with
eight or more issues: “Strong presumption that no point is worthwhile.” The
first edition of the book contained this irresistible bon mot, which has for some unfortunate reason been excised from
the second edition: “To the lawyer: Go home. Do not collect $200.”
Think about that the next
time you think you just have to list
seventeen assignments of error.
In pace requiescat, your Honor. Thanks for making me a better lawyer.
FOURTH ISSUES THREE IMPORTANT RULINGS
[Posted December 22, 2014]
Do you handle federal appeals? If so, I need to take a few minutes of your time
to go over three decisions from the past week. Right now would be a good idea, for reasons that will be quite clear
to you very soon.
On Wednesday, December 17, a
panel of the Fourth Circuit handed down Hudson
v. Pittsylvania County, a thou-shalt-read, no-excuses-allowed, published
opinion that addresses when a judgment is final and appealable.
On Friday, the same court
issued Whiteside v. US, a §2255
proceeding. Friday’s opinion comes after an en banc rehearing, something that’s
always important to consider. But the lesson – and I think it’s appropriate to
describe it as a painful lesson – should carry over to other appellate
Ignore these decisions at
the peril of your malpractice carrier.
In addition, today another
panel rules that North Carolina’s
ultrasound statute violates the First Amendment by compelling speech by
abortion providers. The decision is Stuart
v. Camnitz. It emphatically is not a slow news week at 1100 East Main.
Hudson is a challenge to Pittsylvania
County’s practice of
beginning its semi-monthly Board of Supervisors’ meetings with an invocation.
As the opinion describes it, “This opening invocation was usually explicitly
Christian in nature, and the Board asked the audience to stand for the prayers.”
Hudson, who is identified only as “a non-Christian resident of Pittsylvania County who has attended nearly every
Board meeting since late 2008,” objected to what she saw as an establishment of
religion. She filed a civil-rights action in US District Court.
In March 2013, the district
court entered summary judgment in her favor, permanently enjoining the county “from
repeatedly opening its meetings with prayers associated with any one religion,”
and retained jurisdiction to consider a §1988 fee petition. Five months later,
the court awarded $53,000 in fees and costs. The county appealed within 30 days
after entry of this order.
Earlier this year, while the
appeal was pending, SCOTUS handed down Town
of Greece v. Galloway, a sharply divided decision that upheld that New York town’s practice
of beginning its meetings with prayers. That seemed to portend a reversal here.
turning to the merits, however, we must first address the threshold
jurisdictional issue presented by [Hudson’s]
motion to dismiss.
What’s this? A dismissal
asked the Fourth not to reach the merits because, she claimed, the notice of
appeal had been filed too late. She argued that the county had to note the
appeal within 30 days of the March judgment order; it wasn’t allowed to wait
until entry of the fee order in August.
If you’ve ever received a
motion like this, you know well the hot feeling it engenders in the pit of your
stomach. Your head reels as you contemplate the awful possibility that the Bad
Guys might be right, and you’ve screwed up the appeal by missing a
Alas, that dreadful
sensation can only grow for the county’s lawyers, as the panel unanimously
concludes that the appeal is untimely. When a district court enters judgment on
the merits of a claim, and retains the case solely to consider an award of
statutory fees and costs, the clock starts ticking immediately for an appeal of
the underlying judgment. That means that the notice of appeal had to be filed
in April, not September. Accordingly, the appellate court is without
jurisdiction over the case, so it never reaches the merits of the primary
There is a saving provision
that might have salvaged the county’s appeal: FRAP 58(e) allows tolling of the
running of the appeal period to allow the district court to adjudicate
post-trial motions, and this fee petition likely would qualify for that. But
the tolling provision doesn’t apply automatically; it only applies when the
court invokes it, presumably in response to a motion. Since the county never
made that motion, the rule doesn’t help.
I invite my loyal readers –
and what the heck; even those of you who have only arrived on this scene
recently – to note that this result is almost certainly different from what
would prevail in state courts. There, where a circuit court enters what would
normally be a final order adjudicating the merits, but “retains jurisdiction”
to consider ancillary relief such as fees or sanctions, that order is not final
and cannot be appealed.
There’s a denouement to the
story. The panel does take up the county’s appeal of the fee award, since the
notice of appeal was timely as to that decision. But this challenge fails on
the merits, as the Fourth finds that the fee award was within the district
The en banc decision in Whiteside v. US will raise some
eyebrows. Whiteside pleaded guilty in 2010 to a drug-distribution offense.
Because he had two previous drug-distribution convictions, he was classified as
a career offender under then-current Fourth Circuit caselaw. The district court
sentenced him to 210 months in prison. I’ll do the math for you; that’s about
One year and twelve days
later, the Fourth Circuit handed down US
v. Simmons, in which the court acknowledged that a recent decision from
SCOTUS meant that that preexisting career-offender caselaw from the Fourth was incorrect.
With this new arrow in his quiver, Whiteside filed a §2255 action in which he
sought resentencing. He pointed out that without the erroneous sentencing
enhancement, he might only be looking at nine years in prison, not 17.
The district court denied
the petition, noting that it was untimely filed. Earlier this year, a Fourth
Circuit panel reversed that decision and sent the case back for a hearing on
the merits. But the court chose to rehear the case en banc, leading to Friday’s
By a vote of 12-3, the
Fourth votes to affirm the denial of the petition as untimely. Such petitions
have to be filed within one year, and Whiteside missed that deadline. He argued
that the Simmons case from 2011
constituted a new “fact” that restarted the clock for him. But adopting the
uniform view of other circuits, the majority notes that Simmons was a change of law, not a new fact, so that won’t work.
Whiteside’s next tack
produces the “3” in the 12-3 ruling. He argues that the statute of limitations
should be equitably tolled. As the majority opinion notes,
tolling of petitions for collateral review is available only when a defendant
demonstrates “(1) that he has been pursuing his rights diligently, and (2) that
some extraordinary circumstance stood in his way and prevented timely filing.” Holland v. Florida, 560 U.S.
631, 649 (2010) (internal quotation marks omitted). Under this court’s
precedent, equitable tolling is appropriate in those “rare instances where – due
to circumstances external to the party’s own conduct – it would be
unconscionable to enforce the limitation period against the party and gross
injustice would result.”
The question becomes, then, whether the Fourth Circuit’s incorrect caselaw, once uncovered and corrected in
Simmons, is an extraordinary
The majority holds that
Whiteside had not, in fact, “been pursuing his rights diligently.” He could
have filed a petition within a year, but he didn’t. In response to his argument
that the prior caselaw made that futile, the court cites SCOTUS precedent for
the premise “that alleged futility cannot serve as ‘cause’ for a procedural
default in the context of collateral review.” That is, you have to exercise
your right to sue even though it would be objectively futile to do so under the
current state of the law.
The majority also looks to
practical considerations. It holds that opening the courthouse doors to
Whiteside would essentially open a floodgate of claims, all time-barred but
subject to ex post facto review based on subsequent changes in law – it would
“foreshadow a tectonic shift of resources from trial and direct appeal to
repetitive rounds of collateral review."
There are two dissenting
opinions. Both Judge Gregory (writing for Senior Judge Davis) and Judge Wynn channel their inner
John McEnroe, fairly shouting, “You cannot
be serious!” The dissents note that
the origin of Whiteside’s predicament is the Fourth Circuit itself, which got
the interpretation of the sentencing parameters wrong in the first place. When
the court corrected that error in 2011 – after a gentle prod from the Supreme
Court – it should, the dissenters feel, have afforded some succor to those who
suffered because of the court's mistake.
There are plenty of
appellate bons mots in the dissents. The authors have, you will see, been
boning up on their Scalia-isms.
Judge Gregory notes that the
court has the SCOTUS-given authority to grant equitable tolling, observing that
the Supreme Court caselaw provides that there is a presumption in favor of doing
so. But “[r]ather than heed the Supreme Court, the majority constructs for
itself and then hides behind false barriers to doing what is right.” While he
acknowledges that the perceived futility of a motion doesn’t forgive a failure
to make that motion, he notes the irony implicit in the majority’s holding: “I
find it glaringly inconsistent of the majority to warn against ‘invit[ing]
additional collateral attacks,’ … while simultaneously penalizing Whiteside for
not bringing a meritless petition in the time before Simmons was decided …” He derides the majority’s deference to “the
holy principle of finality” – now, there’s a phrase that will make its way into
future appellate briefs – and criticizes “the majority’s hyperbolic tendencies”
when it forecasts a collateral-review deluge.
Here’s his concluding
paragraph, which is worth quoting in full:
point is that the statistical deck was stacked against Deangelo Whiteside from
the beginning. Then, our mistake in casting him a career offender relegated him
to an even longer term of imprisonment. In the face of this mistake, it is
ironic that our branch of government is the one dragging its feet on the road
towards equal justice under the law. Rather than take the slightest step in
defense of a citizen’s liberty, we throw up our hands and say, “too little, too
late.” And for what reason? To avoid the chaos that would befall society if criminals
were imprisoned according to a correct understanding of the law?
Not to be outdone, Judge
Wynn takes up the cat-o-nine-tails and resumes the process of scourging the
majority. He starts by quoting Judge Wilkinson – not even remotely
coincidentally, the author of the majority opinion:
majority opinion will, without a doubt, “drive citizens to rub their eyes and
scratch their heads.” United States v.
Foster, 674 F.3d 391, 395 (4th Cir. 2012) (Wilkinson, J., concurring in
denial of rehearing en banc). “If one were to inquire of an objectively
reasonable person on the street whether” a court should allow the correction of
a sentencing mistake caused solely by its own error—an error that will likely cost
a man eight years of freedom—no doubt the citizen’s “response would be ‘Of
course. Why do you ask?’” Id.
majority opinion spills considerable ink explaining why the judiciary should
not bear the burden of its own mistake. Those who were wrongly (over-)sentenced
will surely sleep easier knowing that the courts are not being overworked by
too many “tickets to being resentenced.” Ante at 16. The prison staff that must
look after wrongly-imprisoned defendants—not to mention the taxpayers who foot
the hefty bill for their (wrongful) incarceration—might, however, take issue
with the majority’s calculus.
Time for an aside: For those
of us who make our livings by reading appellate opinions – usually exceedingly
dry stuff – vituperative prose like this is fascinating, in a morbid kind of
way. It’s like an appellate auto crash: you can’t avert your eyes, even though
you know that, in the interest of civility, decorum, and respect for the
institution, you should. I will readily admit that you’re a better person than
I am if you can turn away from this series of highly entertaining bench-slaps.
Now, where were we? Oh, yes;
Judge Wynn’s vigorous dissent. He next cites a Seventh Circuit decision, which
held that “justice requires the ability to rectify substantial uncontroverted judicial
errors that cause significant injury. This is why in our anthropomorphization
of Justice, she is wearing a blindfold, and not running shoes.” Finally, he
returns to his starting point:
appellate judges are endowed with brains in the hope and expectation that they
will be used to obvious purpose.” Foster,
674 F.3d at 394 (Wilkinson, J., concurring in denial of rehearing en banc). If
rectifying a mistake of our own creation—one that will cost a man eight years
of his freedom—does not constitute an “obvious purpose,” I do not know what does.
I really do commend to you
the task of reading the full opinion – plus dissents, of course – to get a
sense for where the Fourth is on this issue.
Finally, today’s decision in
Stuart v. Camnitz is unanimous; Judge
Wilkinson writes for Chief Judge Traxler and Judge Duncan. The court holds that
ultrasound statute cannot be squared with the First Amendment. In doing so, it
affirms a district judge’s order granting summary judgment and enjoining
enforcement of the statute.
The Tar Heelers’ act
required doctors or technicians to perform and narrate an ultrasound before an
abortion can be performed, even if the patient doesn’t want to see or hear it.
“The woman, however, may ‘avert her eyes from the displayed images’ and ‘refus[e]
to hear the simultaneous explanation and medical description’ by presumably
covering her eyes and ears.”
This, you will immediately
appreciate, is not a requirement that finds its direct inspiration in
Hippocrates. It’s unquestionably an attempt by opponents of abortion to make it
tougher for pregnant women to go through with the procedure, by conscripting
physicians to provide arguments to dissuade the patient.
The threshold issue is what
level of scrutiny should be applied to the statute. The state understandably
urged rational-basis review, while the challengers argued that the court should
apply strict scrutiny.
The court notes that
compelled speech is fully within the First Amendment. (“[T]he First Amendment .
. . includes both the right to speak freely and the right to refrain from
speaking at all.”) Finding this “quintessential compelled speech,” the court
observes that a content-based speech regulation typically gets strict scrutiny;
but the state countered that this is a regulation of the practice of medicine,
and that leads to rational-basis analysis. So, how does a court resolve these
Easy: heightened scrutiny. The
Fourth Circuit affirms the district court's decision to follow the middle path
of intermediate scrutiny. In doing so, it parts company with the Fifth and
Eighth Circuits, each of which had applied the more-forgiving rational-basis
review. The Fourth finds that those decisions rely on a misreading of the
relevant SCOTUS decision.
Using the middle-ground
approach, the court notes that protecting fetal life and health are indeed
valid governmental interests. But it finds that this statute goes far beyond a
reasonable means of addressing that interest:
statutory provision interferes with the physician’s right to free speech beyond
the extent permitted for reasonable regulation of the medical profession, while
simultaneously threatening harm to the patient’s psychological health, interfering
with the physician’s professional judgment, and compromising the doctor-patient
The court concludes that
this statute imposes “an extraordinary burden on expressive rights,” and thus
affirms the district court’s injunction.
In answer to the question
that has already occurred to you, I’m not certain what this ruling portends for
parallel statute. I doubt that our statute contains the exact provisions at
issue here, so today’s ruling may not be on all fours with the Virginia act.