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December 2010 /$4
2010 Holiday Travel &Gift Guide
EARN MCLE CREDIT
Los Angeles lawyerRod S. Berman dissectsthe controversy over theprotection of hot newspage 20
SomeLikeItHot
PLUS
Recovery ofDamages underProposition 213 page 9
JudicialEstoppel inDisabilityClaimspage 13
Exhaustion ofAdministrativeRemediespage 27
E-DiscoveryCertificationpage 36
Los Angeles lawyerRod S. Berman dissectsthe controversy over theprotection of hot news
Exhaustion ofAdministrativeRemediespage 27
E-DiscoveryCertificationpage 36
2010 Holiday Travel &Gift Guide
CHAPMAN UNIVERSITY SCHOOL OF LAW
The symposium will analyze the Dodd-Frank Wall Street Reform and Consumer Protection Act. Planned panels include The Consequences and Effects of Dodd-Frank, The New Role of Watchdogs and Whistleblowers, The Future of Credit Markets and Derivatives and Dodd-Frank's Effect onCorporate Governance.
Welcome Dinner:
Thursday, January 27, 2011 � 6:30 p.m.
Symposium:
Friday, January 28, 2011 � 7:30 a.m. – 5:00 p.m.
Includes breakfast, lunch & reception following the event, plus MCLE credit.
The Chapman Law Review Proudly Presents its 2011 Symposium:
FROM WALL STREET TO MAIN STREET: THE FUTURE OF FINANCIAL REGULATION
KEYNOTE SPEAKER
Professor Steven SchwarczStanley A. Star Professor of Law and Business at Duke University
One University Drive, Orange, CA 92866 714-628-2500 � www.chapman.edu/law
To Register or for more information, contact:
Chris Lewis at [email protected] or 714-628-2605
CONFIRMED
SPEAKERS
INCLUDE:
Gary Aguirre, The Aguirre Law FirmIman Anabtawi, UCLA School of LawZ. Jill Barclift, Hamline University School of LawTimothy A. Canova, Chapman University School of LawAndré Douglas Pond Cummings, West Virginia University College of LawReza Dibadj, University of San Francisco School of LawKurt Eggert, Chapman University School of LawCassandra Jones Havard, University of Baltimore School of LawJim Hawkins, University of Houston Law CenterClaire A. Hill, University of Minnesota Law SchoolPeter H. Huang, Temple University Beasley School of LawW.H. Knight, Seattle University School of LawMark Moore, Aldrich, Bonnefin & MooreDonna M. Nagy, Indiana University Maurer School of LawStefan J. Padfield, University of Akron School of LawSteven Ramirez, Loyola University Chicago School of LawRoger Torneden, UCLA ExtensionRosalind Tyson, Los Angeles Regional Director, SEC
CMLaw LawyerAd_CMLaw10_OCLAW11 11/8/10 10:55 AM Page 1
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20 Some Like It HotBY ROD S. BERMAN
Only precisely framed state law claims for hot news misappropriation will survivefederal copyright law preemption
27 Totally ExhaustedBY MATTHEW D. TAGGART
In light of the strong presumption in favor of enforcing statutory exhaustionrequirements, exceptions have become increasingly rarePlus: Earn MCLE credit. MCLE Test No. 198 appears on page 29.
33 Special Section2010 Holiday Travel & Gift Guide
F EATU RE S
Los Angeles Lawyer
the magazine of
the Los Angeles County
Bar Association
December 2010
Volume 33, No.9
COVER PHOTO: TOM KELLER
12.10
8 Barristers TipsHow to start and run a thriving small practiceBY SAM YEBRI
9 Practice TipsThe expansive reach of Proposition 213BY ROBERT GLASSMAN
13 Practice TipsApplying judicial estoppel to disabilitydiscrimination claims BY AMY K. JENSEN AND MATTHEW T. GLAVIN
36 Closing ArgumentThe need for an e-discovery certificationprogramBY DOUGLASS MITCHELL
34 Classifieds
34 Index to Advertisers
35 CLE Preview
DE PARTM E NTS
LOS ANGELES LAWYER (ISSN 0162-2900) is published monthly,except for a combined issue in July/August, by the Los AngelesCounty Bar Association, 1055 West 7th Street, Suite 2700,Los Angeles, CA 90017 (213) 896-6503. Periodicals postage paidat Los Angeles, CA and additional mailing offices. Annual sub-scription price of $14 included in the Association membershipdues. Nonmember subscriptions: $28 annually; single copyprice: $4 plus handling. Address changes must be submittedsix weeks in advance of next issue date. POSTMASTER: AddressService Requested. Send address changes to Los AngelesLawyer, P. O. Box 55020, Los Angeles CA 90055.
4 Los Angeles Lawyer December 2010
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Copyright © 2010 by the Los Angeles County Bar Association. All rightsreserved. Reproduction in whole or in part without permission is prohibited.Printed by R. R. Donnelley, Liberty, MO. Member Business PublicationsAudit of Circulation (BPA).
The opinions and positions stated in signed material are those of theauthors and not by the fact of publication necessarily those of the Associationor its members. All manuscripts are carefully considered by the EditorialBoard. Letters to the editor are subject to editing.
GREG DAVID DERIN - MEDIATOR & ARBITRATOR
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AREAS OF EXPERTISE:
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UCLA Extension Public Policy Program 25th Annual
LAND USE LAW & PLANNING CONFERENCE January 21, 2011
This unique conference offers a big-picture view of land use law and planning practice, with
knowledgeable speakers providing provocative updates on core state and federal case law
and legislation, as well as practice.
Millennium Biltmore Hotel 506 South Grand Avenue
Los Angeles, CA $450/$495 Reg # V9336
For information or
to enroll visit www.uclaextension.edu/landuse
or call (310) 825-7885 MCLE and AICP (CM)
Credit Programs This year’s topics include:
! CEQA Update ! SB 375 ! Quick Hits
! Planning, Zoning, & Development Law Update Ethics & Land Use
Los Angeles Lawyer December 2010 5
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See our complete listing of courses and dates at:
INTRODUCTION TO A CAREER IN MEDIATION Online via Live Interactive Webinar • with Lee Jay Berman
Saturday, December 11, 2010 9:00am-12:00pm
MEDIATING AND NEGOTIATING COMMERCIAL CASES—with Lee Jay Berman—
Tuesday-Saturday • January 25-29Meets the 40-hour Court Requirement – 30 MCLE Hours
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6 Los Angeles Lawyer December 2010
propositions not expressly considered, Alameida v. State Personnel Board, 120 Cal.App. 4th 46, 58 (2004). And “[w]e presume that all courts will obey and follow thelaw as interpreted by higher courts, as they are required to do.” Lezama v. JusticeCourt, 190 Cal. App. 3d 15, 21 (1987) (citing Auto Equity Sales, Inc. v. Superior Court,57 Cal. 2d 450 (1962)). For these reasons, “[w]e believe the law is predictable andprovides litigants and counsel a reasonable degree of certainty. True, but not always.”Burlage v. Superior Court, 178 Cal. App. 4th 524 (2009) (review denied).
As Chief Justice William Rehnquist put it several years ago, the law is purposelyvague in some areas so that there is “play in the joints.” Locke v. Davey, 540 U.S.712, 718 (2004). Perhaps more vividly, the California Court of Appeal in FarmersInsurance Exchange v. Smith, 71 Cal. App. 4th 660, 668-69 (1999), explained whysometimes there is no good reason for habitually cutting the ends off a meatloaf beforebaking it. (Spoiler alert: When asked why the sacred family recipe that had beenhanded down from mother to daughter through generations required the ends to becut off, the matriarch of the family responded that she “didn’t have a serving traybig enough to accommodate the meatloaf, and wrote the recipe down that way.”Id.) And with the slash of (both ends of) a meatloaf, the Farmers court justified notbecoming the next in a line of decisions to reach the same conclusion as the courtbefore it. This is but a more flavorful variant of one of my favorite maxims of jurispru-dence: “Superfluity does not vitiate.” California Civil Code Section 3537.
Of course, state and federal courts differ in their adherence to the principle ofstare decisis. See Benjamin Shatz, “What Every Lawyer Should Know about StareDecisis,” County Bar Update, April 2008, http://www.lacba.org/showpage.cfm?pageid=9375. And there is “play in the joints” even regarding the strictness with which staredecisis is applied. “[I]n constitutional cases, the doctrine carries such persuasive forcethat [the U.S. Supreme Court has] always required a departure from precedent tobe supported by some ‘special justification.’” United States v. IBM Corporation, 517U.S. 843, 856 (1996) (quoting Payne v. Tennessee, 501 U.S. 808, 842 (1991)(Souter, J., concurring) (quoting Arizona v. Rumsey, 467 U.S. 203, 212 (1984)).
Less rigor is applied when courts overturn statutory, regulatory, or judge-madelaw. Courts have repeated time and again that when it suits them, “[s]tare decisisis not an inexorable command; rather, it ‘is a principle of policy and not a mechan-ical formula of adherence to the latest decision.’ This is particularly true in consti-tutional cases, because in such cases ‘correction through legislative action is prac-tically impossible.’” Payne, 501 U.S. at 828 (citations omitted).
Rule 11 of the Federal Rules of Civil Procedure expressly contemplates that attor-neys will craft arguments for “extending, modifying, or reversing existing law or forestablishing new law.” So does California Code of Civil Procedure Section 128.7.But while arguments for changing the law are statutorily permitted when a client’slife or livelihood is on the line, the pages of Los Angeles Lawyer offer a substan-tially less perilous venue in which to explore the limits of the law. I invite you to sub-mit articles that explore these bounds for publication in Los Angeles Lawyer. n
Ah, stare decisis. Those two Latin words are so loadedin their pedigree and so malleable in their applica-tion. It is often repeated that decisions are author-
ity “for the points actually involved and actually decided,”Santisas v. Goodin, 17 Cal. 4th 599, 620 (1998), but not for
Michael A. Geibelson is a business trial lawyer with Robins, Kaplan, Miller & Ciresi L.L.P., wherehe handles unfair competition, trade secret, and class actions. He is the 2010-11 chair of theLos Angeles Lawyer Editorial Board.
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ECONOMIC REALITIES and entrepreneurial impulses are driving anunprecedented number of new attorneys to launch their own prac-tices. Solo and small legal practices present new attorneys a host ofopportunities—to gain experience, to take control of their careers, tobuild a book of business, and to have real work-life balance. However,the challenges can be daunting. Unlike being an associate at a law firmor a junior attorney at a nonprofit organization or public agency, soloand small firm attorneys must not only perform the legal work butfind clients and run a business all at the same time.
Fortunately, these attorneys do not have to learn how to do all thisby themselves. Books and resources withpractical and strategic advice abound. JayG. Foonberg’s How to Start and Build aLaw Practice is especially helpful. The bestadvice, however, comes directly from soloand small firm practitioners who are facingthe challenges of building a law practice.They concur on the following points.
First, reconnect with your contacts.Your first business development step should be getting in touch withall your past and present contacts. Arrange lunch or coffee dates tocatch up with friends, classmates, colleagues, relatives, and evenacquaintances. If you inspire them to feel connected to your newendeavor, they will remember you when they have a matter to refer.One attorney recounts that those initial meetings in the first fewmonths of practice garnered several significant referrals, including theattorney’s biggest client to date. However, even when starting up, itpays to be judicious in taking cases. You will be eager to gain as manynew clients and cases as possible, but you build a successful law prac-tice not by the cases you take but by the cases you do not take.
In addition to looking up old friends, you will need to make newones. Networking is your key to success. You will not survive in LosAngeles’s competitive legal market unless you practice networking.Become active in multiple organizations and groups. Put in the effortto meet as many people as you can. Your ability to connect with otherprofessionals as part of a larger network will be the key to your long-term success.
Once cases come in, it will be easy but wrong to ignore the busi-ness side. Before you take clients, do your homework. Try to get asense of what other attorneys in your field charge and request forretainers. Research malpractice insurance and the best business struc-ture for your practice. Other small business owners—not just lawyers—can be extremely valuable resources.
Servicing your clients is business development. Your currentclients could be your best sources of future business. Giving extra atten-tion to your current clients will reap rewards beyond what you canimmediately see. That is, giving a current client more time (withoutcompensation) will help the client appreciate you as good counsel, alistener, and an attorney to whom they will want to refer otherclients. That give-and-take is important for business development.
Do not be afraid to call experienced attorneys with questions. Evensimple questions—such as, Where should I park for a particularcourthouse? or, What information should I jot down on my businesscard for the clerk?—are worth asking. You will quickly realize youdid not learn anything about the actual practice of law in law school.As soon as you lose this apprehension to ask questions, each day willgo more smoothly. Remember, all lawyers were in your shoes withthe same empty feeling of just not knowing—so ask.
While developing clients and running a business, take some timeto predict the future. As a lawyer starting your own practice, you are
now competing in a highly hierarchical industry. Your clients have theoption of working with attorneys with decades more experience. Tokeep up and get ahead, you will need to aggressively develop your corearea of practice. Track the business trends, case law, and legislationin your area. Be ready to advise clients on how they can plan for thefuture.
When you work for yourself, the boss is the client. Keep your clientshappy, and your practice will flourish. Believe in your ability tobuild a successful practice. Clients want attorneys who are confidentin their abilities. Clients also want attorneys who are responsive—andin the era of Blackberries and text messaging, they expect hyper-respon-siveness. Failure to return calls is the basis for most grievances againstattorneys with their state bar associations.
Finally, remember whether you are solo or have several partners,you are not alone in this endeavor. Should you start your own prac-tice, you will join a growing community of ambitious young attor-neys in Los Angeles. They are not your competitors but colleaguesin your new endeavor, and you will be practicing law in this city fora long time. For example, I regularly consult some of the brightyoung lights in the Los Angeles legal community—Ori Blumenfeld,Adam Gauthier, Arash Khorsandi, Daren Schlecter, David Soffer,Jonathan Yagoubzadeh, and Raymond Zolekhian—when a com-plex legal issue, a thorny ethical dilemma, a business developmentopportunity, or a basic practical question arises.
Once you start your own practice, do not forget that there is a com-munity of solo and small firm practitioners—including the Association’sSmall Firm and Solo Practitioner Section—who are eager to share whatthey know of the best (and worst) practices. n
How to Start and Run a Thriving Small Practice
Sam Yebri is a founding partner of Merino Yebri, LLP, a boutique litigationfirm in Century City.
8 Los Angeles Lawyer December 2010
barristers tips BY SAM YEBRI
When you work for yourself, the boss is the client. Keep your
clients happy, and your practice will flourish.
ON NOVEMBER 5, 1996, California voters passed Proposition 213, thePersonal Responsibility Act of 1996. The measure was designed toprohibit the recovery of noneconomic losses—such as pain, suffer-ing, physical impairment, and disfigurement—resulting from caraccidents under certain situations while still allowing the victims ofthose accidents to pursue economic losses—including lost wages,medical expenses, and property damage.
Proposition 213 was particularly aimed at drivers subsequently con-victed of driving under the influence as well as uninsured drivers.Neither drunk nor uninsured motorists are permitted to bring an actionfor noneconomic losses against another driver at fault for an accidentarising out of the operation or use of a motor vehicle. The law alsoprohibits a person convicted of a felony from suing to recover anylosses suffered while committing the crime or fleeing from the crimescene if those losses resulted from another person’s negligence. Anexception to these restrictions is that if an uninsured driver is injuredby a driver subsequently convicted of a DUI, the uninsured driver maystill recover noneconomic losses.1
Since its enactment, Proposition 213 has evolved from a legisla-tive effort to increase the number of insured drivers into a practicallyall-encompassing prohibition of noneconomic damages in casesinvolving an injured plaintiff without car insurance. In light of the ever-expanding number of scenarios to which courts are applyingProposition 213, plaintiffs’ lawyers should know the pitfalls beforefiling cases on behalf of uninsured motorists.
Chude v. Jack in the Box, Inc., a case decided this year, is illus-trative. Teckla Chude suffered second-degree burns and skin discol-oration to her buttock and thigh after being handed a cup of hot cof-fee with an unsecured lid at a local Jack in the Box drive-throughwindow. Her injuries prevented her from working, sitting, or drivingfor nearly two weeks.
Thereafter, Chude sued Jack in the Box for negligence and soughtboth economic and noneconomic damages. The trial court grantedJack in the Box’s motion for summary adjudication on Chude’snoneconomic damages claim. On appeal, the Second District Courtof Appeal affirmed the lower court’s decision, holding that Chude wasbarred from recovering noneconomic damages for one reason alone:She had no car insurance at the time of the incident.2
Lawsuits challenging Proposition 213’s constitutionality werefiled almost immediately following its passage. On December 17, 1996,the Congress of California Seniors and other groups representing con-sumers, taxpayers, and citizens as well as three individuals broughtan action in state court for an injunction and for declaratory reliefagainst Charles Quackenbush, California’s insurance commissionerat the time. The plaintiffs alleged that Proposition 213 violated equalprotection and due process rights under the U.S. and CaliforniaConstitutions, burdened the right to travel, and denied the targeteddrivers the First Amendment right to petition government for redressof grievances.3 The court held that the law had a rational basis forclassifications among personal injury plaintiffs and found that the
insurance related-penalties were constitutionally permissible travel reg-ulations.4 Later cases also held that the law did not violate dueprocess or equal protection rights.5
Courts also began interpreting Proposition 213’s operative pro-visions. Upon its passage, Proposition 213 was codified as CivilCode Sections 3333.3 and 3333.4. Unlike other statutes, however, thesesections do not define certain key words and phrases contained in theirprovisions. Courts thus found themselves with the responsibility ofinterpreting critical words in the statute such as “operation” and “use”and “arising out of.” The result has been an ever-growing expansionof the law’s applicability. Indeed, while the law may have once beendeemed a measure “remedying an imbalance in the justice system thatresulted in unfairness when an accident occurred between twomotorists-one insured and the other not,”6 it has since become a pro-tective mechanism utilized by a variety of defendants other thaninsured motorists.
Broad Interpretations
This progression is attributable to the courts’ broad interpretationsof the words “operation” and “use.” In particular, courts faced withthe question of whether an injured and uninsured plaintiff’s lawsuitis an “action to recover damages arising out of the operation or useof a motor vehicle” under Section 3333.4(a) have typically held that“operation” and “use” encompass more situations than simply dri-ving the car. For example, the court in Cabral v. Los Angeles CountyMetropolitan Transportation Authority7 found that “operation”does not require that the vehicle be in motion or even that its enginebe running, and “use” in the context of automobiles extends to anyactivity utilizing the vehicle. Therefore, according to the Cabralcourt, an uninsured motorist’s act of opening the door of a parkedvehicle to exit was “operation” or “use” of a motor vehicle withinthe meaning of the statute.
Similarly, courts have liberally construed “arising out of” so thatthe phrase is not limited to injuries stemming from accidents occur-ring between two motorists. In Harris v. Lammers, an extreme exam-ple, an uninsured motorist was struck in a parking lot while she wasstanding outside her vehicle and handing balloons to her children insidethe vehicle. Her resulting personal injury action was determined tobe one “arising out of the use of a motor vehicle,” within the mean-ing of Section 3333.4,8 and thus she was precluded from recovery.
These expansive definitions for Proposition 213’s language haveled to the denial of recovery for uninsured plaintiff motorists incases extending far beyond accidents occurring between two motorists.Cases involving dangerous conditions are prime examples. Plaintiffssuffering injuries attributed to negligently maintained or designed road-ways have not been compensated if they were uninsured while oper-
Los Angeles Lawyer December 2010 9
BY AUTHOR
The Expansive Reach of Proposition 213
practice tips BY ROBERT GLASSMAN
Robert Glassman is an attorney at Panish Shea & Boyle LLP, where he focuseshis practice on litigating large and complex personal injury and productdefect cases on behalf of plaintiffs.
ating their vehicles. For example, in Day v.City of Fontana,9 an uninsured motorcyclistsued a city and county regarding overgrownvegetation near an intersection where thecollision occurred in which the motorcyclistwas injured. The motorcyclist, alleging thatthe vegetation was a nuisance and a danger-ous condition of public property, sought torecover damages “arising out of the operationor use” of the motorcycle. The court held thatProposition 213 prevented recovery forinjured owners of uninsured vehicles, includ-ing the uninsured motorcyclist, from recov-ering noneconomic damages against the cityand county.
Some courts have even precluded aninsured spouse from recovering noneconomicdamages for loss of consortium of an unin-sured spouse under Proposition 213. Forexample, in Honsickle v. Superior Court, thehusband owned and insured his vehicle, butat the time of the accident the car was beingdriven by his wife, who was excluded fromthe insurance policy. The court concludedthat the husband was the owner of an unin-sured vehicle for the purposes of the accidentand the case arising from it.10 Under CivilCode Section 3333.4, an “owner” of a vehi-cle is a person having or exercising the inci-dents of ownership—dominion, control, right,interest, and title.11
When the Second District Court of Appealin Chude decided that Proposition 213 alsoapplied when a motorist without car insur-ance was burned by hot coffee in a fast fooddrive-through, it first discussed many of theprior cases applying Proposition 213. Afterthis review, the court concluded that “Chudewould not have been in the drive-throughlane purchasing coffee but for her vehicle.”Moreover, the plaintiff’s “‘action to recoverdamages ar[ose] out of the operation or useof a motor vehicle’ and so [Section]3333.4,subdivision (a) applies to bar her recovery ofnon-economic damages.” Her injuries, thecourt contended, were caused and exacer-bated by the vehicle: “Had she been standingat the take-out counter, presumably the cof-fee might have spilled on her shoe, but shewould not have been forced to sit in a pud-dle of hot liquid as she tried to extricate her-self from a seatbelt.”12
Surviving Remedies and Theories
Based on the decisions of courts regarding thereach of Proposition 213, uninsured driverswill find it exceedingly difficult to recovernoneconomic damages from any classificationof defendant—motorist or not. Nevertheless,plaintiffs’ lawyers working on contingencyshould not turn away a client simply becausethe potential plaintiff did not have car insur-ance at the time he or she was injured. Indeed,a case involving catastrophic injuries, such as
quadriplegia, will offer plaintiffs damagesthat will be sufficiently substantial, notwith-standing the inability to recover noneconomicdamages. Moreover, uninsured drivers arenot prohibited from recovering noneconomicdamages in products liability cases.13 Forinstance, if Chude had pursued a claim forproducts liability against the coffee cup man-ufacturer—much like the plaintiff in the infa-mous 1994 products liability case, Liebick v.McDonald’s,14 who sued McDonald’s claim-ing that the coffee served by the fast foodentity was “defective” because it was toohot—her case would most likely be charac-terized as something other than an exampleof the harsh application of Proposition 213.
Plaintiffs’ lawyers also can pursue noneco-nomic damages for uninsured clients in avariety of other circumstances. For example,Proposition 213 does not preclude an unin-sured driver involved in a car accident fromrecovering punitive damages against a reck-less defendant.15 Plaintiffs also may recovernoneconomic damages in wrongful deathcases in which the decedent was the uninsuredoperator of a vehicle involved in an acci-dent.16 Further, the state legislature hasexempted employees involved in an accidentwhile driving their employers’ vehicles fromhaving to establish proof of financial respon-sibility. Therefore, these employees may allegeclaims for noneconomic damages.17
The court in Goodson v. Perfect Fit Enter-prises, Inc. held that Section 3333.4 doesnot apply to injuries sustained in an acci-dent by an uninsured vehicle owner whenthe driver of the car at the time of the acci-dent was the owner’s daughter-in-law, whowas covered by a liability policy that wasapplicable to her operation of the owner’svehicle.18 Finally, an uninsured owner ofmobile machinery who was injured in theprocess of transporting the device from oneplace to another could recover noneconomicdamages once the device was removed fromthe road and placed as freight for trans-portation to another site.19
Plaintiffs’ lawyers should not relent in theface of Proposition 213 and refrain from tak-ing cases involving an uninsured driver.Rather, practitioners should carefully deter-mine at the outset of a case if it contains aproducts liability component. If so, a prod-ucts liability claim should be pursued, becausethe uninsured status of the driver will have nobearing on his or her ultimate recovery fromthe defendant responsible for the defectiveproduct. Other fact patterns may also offeravenues for seeking significant recoveries fornoneconomic damages in cases involving anuninsured plaintiff motorist. n
1 See Nakamura v. Superior Court, 83 Cal. App. 4th825, 833 (2000).
10 Los Angeles Lawyer December 2010
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2 Chude v. Jack in the Box, Inc., 185 Cal. App. 4th 37(2010).3 Quackenbush v. Superior Court (Congress ofCalifornia Seniors), 60 Cal. App. 4th 454 (1997),modified on denial of rehearing, review denied, cert.denied, 525 U.S. 826.4 Id. at 466, 469.5 See Yoshioka v. Superior Court, 58 Cal. App. 4th 972,989 (1997) (Due process did not require that an unin-sured driver be given a hearing before being deniedrecovery for noneconomic damages in an action aris-ing out of the use of a motor vehicle.). The Yoshiokacourt noted that potential culpability was not at issue.The driver could have avoided the penalty by simplychoosing alternative forms of transportation or if he hadmade any attempt to buy insurance. See also Honsicklev. Superior Court, 69 Cal. App. 4th 756, 763 (1999).The Honsickle court found that the interest in restor-ing balance to the judicial system and in reducing costsof mandatory automobile insurance were legitimate.The court also ruled that it was not arbitrary to dis-tinguish between those who obey the law, buy auto-mobile insurance, drive sober, and commit no vehicle-related felonies and those who are disfavored becausethey do not. Even retroactive application of Civil Code§3333.4 was held to be constitutional. Nakamura, 83Cal. App. 4th at 829.6 See Hodges v. Superior Court, 21 Cal. 4th 109, 116(1999).7 Cabral v. Los Angeles County Metro. Transp. Auth.,66 Cal. App. 4th 907, 914 (1998).8 Harris v. Lammers, 84 Cal. App. 4th 1072, 1076(2000).9 Day v. City of Fontana, 25 Cal. 4th 268, 280 (2001);see also Allen v. Sully-Miller Contracting Co., 28 Cal.4th 222, 229 (2002) (An action to recover damages aris-ing out of an accident caused by a private constructioncompany’s negligent creation or maintenance of a dan-gerous road condition—an unmarked, elevated buspad—was an “action to recover damages arising outof the operation or use of a motor vehicle” within themeaning of Proposition 213. Thus the uninsured motor-cyclist could not recover noneconomic losses.).10 Honsickle, 69 Cal. App. 4th at 767.11 Ieremia v. Hilmar United Sch. Dist., 166 Cal. App.4th 324, 331 (2008); see also Savnik v. Hall, 74 Cal.App. 4th 733, 743 (1999) (Whether passenger in unin-sured vehicle was the vehicle’s “owner,” for purposesof Civil Code §3333.4, was a jury question in anaction arising from an accident involving the vehicle.Passenger did not contribute any funds to buy thevehicle, never drove it, and had no knowledge that hername was listed on the registration.).12 Chude v. Jack in the Box, Inc., 185 Cal. App. 4th 37,45 (2010).13 See, e.g., Hodges v. Superior Court, 21 Cal. 4th109, 112 (1999) (Civil Code §3333.4 does not applyto a products liability action brought by an uninsuredmotorist against a vehicle manufacturer.).14 Liebeck v. McDonald’s Restaurants, P.T.S., Inc.,No. D-202 CV-93-02419, 1995 WL 360309 (BernalilloCounty, N.M. Dist. Ct. Aug. 18, 1994).15 See Nakamura v. Superior Court, 83 Cal. App. 4th825, 839 (2000) (The defendant was not convicted ofviolating Vehicle Code §23152 or §23153, so the excep-tion in Civil Code §3333.4(c) did not apply. Thus theplaintiffs could recover punitive damages but werebarred from recovering noneconomic damages.).16 See Horwich v. Superior Court, 21 Cal. 4th 272, 280(1999).17 See Montes v. Gibbens, 71 Cal. App. 4th 982, 987(1999).18 Goodson v. Perfect Fit Enters., Inc., 67 Cal. App. 4th508, 515 (1998).19 See Garcia v. Superior Court, 137 Cal. App. 4th 342,348 (2006).
12 Los Angeles Lawyer December 2010
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TO MANY ATTORNEYS, the concepts of estoppel and res judicatamay seem like arcana from their law school days. These two concepts,however, may have very practical applications for employers in dis-ability discrimination claims. The Americans with Disabilities Act(ADA), the Family and Medical Leave Act, California’s correspond-ing Family Rights Act, and other related provisions such as thePregnancy Disability Leave Law have created ways for employees toqualify for protected leaves from work when they have some physi-cal or mental health issue. These, in turn, provide employees with var-ious mechanisms to sue employers for disability discrimination, fail-ure to accommodate, and failure to engage in the interactive process.Judicial estoppel and res judicata come into play, however, whenemployees who make claims of disability discrimination confront theissue of whether they are too disabled to work.
Employment disability claims typically arise after an employee isterminated from his or her position for being unable to return to workfollowing medical leave. In order to prevail on a disability discrimi-nation claim, an employee must establish that he or she was an“individual with a disability within the meaning of the statute[,]…thatthe employer had notice of the disability[,]…that he or she could per-form the essential functions of the job[,]…and…the employer refusedto make reasonable accommodation.”1
In ADA cases, employees have the burden to establish that theycould perform the essential functions of their job, with or without rea-sonable accommodation.2 The California Supreme Court held thatplaintiffs have the same burden under the California Fair Employmentand Housing Act, stating, “We see no statutory basis for construingthe FEHA any differently than the ADA with regard to a plaintiff’sburden of proof.3 Ultimately, the only way an employee can prevailon a disability discrimination claim is if he or she shows that he orshe is a qualified individual who can perform the job with or with-out accommodation.4 A qualified individual is an employee whocan perform the essential functions of the job with or without rea-sonable accommodation.5 “Essential functions” are the fundamen-tal job duties of the plaintiff’s position.6
The supreme court explained it best in Green v. State of California:“Indeed, the Legislature has never indicated the intent to compel anemployer to employ such a person who could not perform the essen-tial job duties with or without reasonable accommodation. To do sowould defy logic and establish a poor public policy in employmentmatters.”7 Placing the burden on employees arms employers with anexcellent mechanism, judicial estoppel, to defeat disability discrimi-nation claims. After all, how can an employee present a certificate froma doctor saying he or she is totally disabled and unable to work, andthen, as a part of a later disability discrimination claim, allege thathe or she could have performed the essential functions of the job?
Asserting a judicial estoppel claim is straightforward and, in cer-tain circumstances, extremely effective. Judicial estoppel “providesthat a party who prevails on one ground in a prior proceeding can-not turn around and deny that ground in a subsequent one.”8
The seminal decision applying judicial estoppel in an employmentdisability claim in California is Drain v. Betz Laboratories.9 In Drain,the employee sued his employer, claiming that he was wrongfully ter-minated due to his disability and that he could perform the essentialfunctions of his job with or without reasonable accommodation.10
The employee argued that even though he had a disability, he couldwork, and that the only reason he could not work was because theemployer refused to let him.
The employer, however, had an important piece of evidence in itsarsenal—a physician’s certificate that the employee had providedthe employer indicating that the employee was totally disabled andunable to work. In short, the employee was arguing that he was totallydisabled and unable to work and that the employer could have madereasonable accommodations to allow him to work. Confronted withsuch an argument, a trial lawyer could reasonably be expected to askof the employee (and his doctor), was he lying then, or is he lying now?
practice tips BY AMY K. JENSEN AND MATTHEW T. GLAVIN
Applying Judicial Estoppel to Disability Discrimination Claims
Amy K. Jensen is a partner in the Los Angeles office of Hinshaw & CulbertsonLLP. Matthew T. Glavin is an associate in the firm’s Chicago office. Both focustheir practice in the area of employment law.RI
CHA
RD E
WIN
G
In Drain, the employer made just thatpoint, arguing that the employee’s statementon his disability paperwork that he could notperform his regular work was inconsistentwith his position in litigation. The trial andappellate courts agreed with the employer.11
Because the employee was seeking disabilitybenefits based on his “total inability to per-form any of his job functions or any otheroccupation,” his inconsistent positions in hisdiscrimination lawsuit and his disability claim“support[ed] the…application of judicialestoppel.…”12
Limitations
Judicial estoppel, however, is not a guarantee.For example, in Cleveland v. Policy Man-agement Systems Corporation, the U.S.Supreme Court held that a plaintiff’s receiptof Social Security Disability Insurance bene-fits did not automatically entitle the defendantemployer to summary judgment in a claimseeking reasonable accommodations underthe ADA.13 SSDI is issued under the SocialSecurity Act to any person who is unable toengage in gainful activity due to a physical ormental impairment.14 The impairment mustbe so severe that the person is unable to per-form work in his or her prior field and unableto perform “any other kind of substantialgainful work which exists in the nationaleconomy, regardless of whether such workexists in the immediate area in which he lives,or whether a specific job vacancy exists forhim, or whether he would be hired if he ap-plied for work.”15
After suffering a stroke, the plaintiff inCleveland applied for SSDI benefits butreturned to work before her application wasconsidered.16 The Social Security Admin-istration denied her application once theylearned she had returned to work, and shewas fired four days later. Cleveland reap-plied for disability and was awarded SSDIbenefits. Cleveland then filed suit against heremployer under the ADA. The district courtgranted the employer’s motion for summaryjudgment, finding the plaintiff had madeinconsistent statements by representing her-self as totally disabled in order to receiveSocial Security benefits and later claiming tobe a “qualified individual” who is able toperform the “essential functions” of her jobin order to state a claim under the ADA.17
Reasoning that the ADA and the SocialSecurity Act were aimed at different pur-poses and that the ADA’s definition of a“qualified individual with a disability” ismeant to take reasonable accommodationsinto account, the Court held that the plain-tiff’s claim could survive a summary judgmentmotion if inconsistent statements about herdisability were sufficiently explained. To besufficient, an explanation must “warrant a
14 Los Angeles Lawyer December 2010
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reasonable juror concluding that, assumingthe truth of, or the Plaintiff’s good-faith beliefin, the earlier statement, the plaintiff couldnonetheless ‘perform the essential functions’of her job, with, or without ‘reasonableaccommodations.’”18 While Clevelandinvolved SSDI claims, the court’s analysiswill likely be applied to other cases in whichan employee seeks disability benefits undersimilar circumstances.
While filing for disability benefits andbringing ADA claims are not always mutuallyexclusive, a “plaintiff’s sworn assertion inapplication for disability benefits that she is,for example, ‘unable to work’ will appear tonegate an essential element of her ADA case—at least if she does not offer a sufficient expla-nation.”19 The Seventh Circuit, in Butler v.Village of Round Lake Police Department,appears to allow employees little leeway, stat-ing, “[A] person who applied for disabilitybenefits must live with the factual represen-tations made to obtain them, and if theseshow inability to do the job then an ADAclaim may be rejected without furtherinquiry.”20 In Butler, a police officer suffer-ing from chronic obstructive pulmonary dis-ease filed an application for a disability pen-sion.21 To support his position that he wasunable to work, Butler presented the pen-sion board with certificates of disability fromthree physicians, including one which statedthat Butler was “permanently disabled frompolice service.…”22 The pension board foundthat Butler qualified as disabled and awardedhim benefits.23
While collecting his pension, Butler fileda claim under the ADA, stating that theRound Lake Police Department failed tomake reasonable accommodations for hisdisability. The Seventh Circuit found thatButler was estopped from bringing his ADAclaim, based on his testimony and evidencepresented to the pension board. The courtstated, “Round Lake needs police officersthat can protect the community, and Butlerproved that he could not meet those expec-tations in order to get his pension. He cannotturn around and say ‘But I really can!’ for thepurpose of this lawsuit.”24
Outside California
While California courts have been receptiveto this defense, recently, courts in other juris-dictions have evaluated similar circumstancesand have, in some cases, made contrary hold-ings. For example, the Second Circuit heldthat an employee was not judicially estoppedfrom arguing that he could fulfill the essen-tial job functions of his job with reasonableaccommodations, even after he applied for,and was granted, Social Security DisabilityInsurance.25 In DeRosa v. National EnvelopeCorporation, an employee suffered from
Los Angeles Lawyer December 2010 15
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venous insufficiency and was instructed by hisdoctor to “limit the dependency of his rightleg…avoid sitting or standing for prolongedperiods of time…and…elevate his leg abovehis heart at regular intervals.”26 For twoyears, to accommodate his disability hisemployer allowed him to work from home.Then a new chief executive officer informedDeRosa that he would have to return to thecorporate facilities or be terminated. DeRosainformed his supervisor that he could notwork from the corporate facility, and he wasterminated.27 DeRosa then filed for SocialSecurity Disability Insurance. In his claim, hestated that “I became unable to work becauseof my disabling condition on October 13,2004,” and “I am still disabled.” In his appli-cation, “DeRosa answered the question,‘[h]ow do your illnesses injuries or condi-tions limit your ability to work?’ He replied,‘[c]an’t write, type, sit, stand, walk & lift,reach, grab, bend.’” DeRosa also explainedthat his disability caused a change in his jobduties in that he “‘could no longer commute,had to work from home.’”28 DeRosa thensued his employer alleging that his termina-tion violated the ADA.29
The district court granted summary judg-ment in the employer’s favor, holding thatDeRosa was judicially estopped from claim-ing that he was able to perform the essentialfunctions of his position, and therefore, couldnot satisfy an essential element of his ADAclaim. However, the Second Circuit over-turned the district court, holding, “The state-ment ‘I am disabled’ on an SSDI applicationshould generally be taken as a statement that‘I am disabled for the purpose of the SocialSecurity Act. The Social Security Act does notconcern itself with reasonable accommoda-tion.’”30
Furthermore, New Jersey courts haveheld that simply filing a claim for permanentdisability may not be sufficient for a court togrant summary judgment on the basis ofjudicial estoppel, if no decision has beenmade on the employee’s claim.31 The SuperiorCourt of New Jersey held in Marshall v.Township of Galloway, “An essential ele-ment of the doctrine of judicial estoppel inNew Jersey is that the position alleged to beinconsistent in the present litigation was suc-cessfully advanced in the earlier litigation.”The court held that the doctrine of judicialestoppel could not be used if the employee’sclaims for permanent disability were notsuccessful.
These decisions may infuriate employers,but they offer some insight into how to file asuccessful defense under judicial estoppel.First, the employer’s attorney should reviewprior paperwork provided by the employee todetermine whether it contains an unequivo-cal statement that the employee could not
16 Los Angeles Lawyer December 2010
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work. With some courts offering employeesmore latitude, a statement that illustratesthat the employee could not work with orwithout reasonable accommodations is best.The closer the statement comes to this, andthe less equivocal it is, the better. Next, deter-mine to whom the document was submittedand if there is any indication that the physi-cian reviewed the employee’s job descriptionor was aware of what constituted the employ-ee’s regular and customary work before mak-ing the statement. Additionally, determinewhat benefits the employee received by virtueof the initial statement. An employee’s merefiling for disability may not be enough. Theclaim must have been adjudicated, and theemployee must have succeeded on the claim.
Employers must be made aware that doc-umentation is the key to prevailing on thedefense of estoppel. When employees taketime off of work or take leaves of absence formedical reasons, employers must ensure thatthey receive documentation that is sufficientlycomplete. Employers should keep an eye outfor documentation relating to unemploymentand state disability claims. These documentsshould be maintained in a separate file relat-ing to the employee’s request for leave ortime off and should be kept for at least threeyears after the employee has resigned or beenterminated. n
1 Americans with Disability Act of 1990, §102, 42U.S.C.A. §12112.2 Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795,806 (1999).3 Green v. State of Cal., 42 Cal. 4th 254, 264 (2007).4 Id. at 266.5 Id. at 260.6 See GOV’T CODE §12926(f).7 Green, 42 Cal. 4th at 266.8 Butler v. Village of Round Lake Police Dep’t, 585 F.3d 1020, 1022 (7th Cir. 2009).9 Drain v. Betz Labs., 69 Cal. App. 4th 950 (1999).10 Id. at 953.11 Id.12 Id. at 961.13 Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795(1999).14 42 U.S.C.A §423(a)(1).15 42 U.S.C.A. §423(d)(2)(A).16 Cleveland, 526 U.S. 795.17 Id.18 Id. at 807.19 Id. at 806.20 Butler v. Village of Round Lake Police Dep’t, 585 F.3d 1020, 1024 (7th Cir. 2009).21 Id.22 Id. at 1022.23 Id.24 Id. at 1024.25 DeRosa v. National Envelope Corp., 595 F. 3d 99(2d Cir. 2010).26 Id.27 Id. at 101.28 Id.29 Id.30 Id. at 102.31 Marshall v. Township of Galloway, 2010 WL1658418, at *3 (N.J. Super. A.D. Apr. 26, 2010).
Los Angeles Lawyer December 2010 17
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20 Los Angeles Lawyer December 201020 Los Angeles Lawyer December 2010
EVERY MORNING news outlets clamor toalert consumers regarding what may be thehottest stocks to purchase at the moment. Fora few hundred dollars a year, Theflyonthewall.com offers its wares in this competitive envi-ronment. Theflyonthewall.com is a sub-scription service that gathers current stockresearch from public sources and reports theinformation, including headlines of broker-age research reports as well as their upgradesand downgrades. The Web site, frequentlyreferred to as TheFly or simply Fly, has acrucial pitch for its potential subscribers: Itprovides its information before the New YorkStock Exchange opens, which enables its sub-scribers to follow the advice of many of the
large financial institutions such as Barclays,Merrill Lynch, and Morgan Stanley. TheFlydoes not provide brokerage services or invest-ment advice. It only reports the news, with 80percent of its recommendation headlinesposted before the financial markets open.
A term currently in circulation describes thelongstanding phenomenon of up-to-the-minutetime-sensitive information: “hot news.” Othernews services provided hot news about the rec-ommendations of traditional brokeragehouses, but Barclays decided to proceedagainst TheFly. It did so in the SouthernDistrict of New York on a variety of theoriesin Barclays Capital Inc. v. Theflyonthewall.com,1 the most significant being the misap-
propriation of hot news. The district courtissued an injunction against TheFly, andTheFly has appealed to the Second CircuitCourt of Appeals. The ultimate disposition ofthis case is garnering significant attentionand commentary among practitioners andothers affected by the hot news phenomenon.
In Barclays, the district court summarizedTheFly’s appeal to its subscribers: “Empha-sizing the timeliness of its reporting, [TheFly]
Rod S. Berman is a partner at Jeffer, Mangels,Butler & Mitchell LLP, where he is chairperson ofthe Intellectual Property Group. He focuses hispractice on patent, trademark, copyright, tradesecret, and Internet law.
HOTSOME LIKE IT
Digital technology has raised questions about thereach of the tort of the misappropriation of hot news
by Rod S. Berman
KEN
CO
RRA
L
HOT
asserts that, as the ‘fastest news feed on theweb,’ it delivers to its customers ‘actionable,equity news in a concise & timely manner.’In the words of TheFly’s website, ‘[o]ur quickto the point news is a valuable resource forany investment decision.’”2 In marketing itsservices, TheFly points to “its quick and com-prehensive access to Recommendations madeby Wall Street research analysts….Fly assertsthat ‘[h]aving a membership with the Fly islike having a seat at Wall Street’s best housesand learning what they know when theyknow it….’ [I]t allows its subscribers to be a‘fly on the wall’ inside the investment firms’research departments.”3
Barclays, a major financial institution,provides wealth and asset management ser-vices, brokerage services, and investmentadvice. It spends hundreds of millions of dol-lars a year in stock research to develop stockreports. It does not sell its reports in the tra-ditional sense; rather, it provides them as a ser-vice to its clients in order to encourage themto invest with Barclays. It employs sophisti-cated, password-protected Internet platformsto minimize the chances that investors whoare not clients of Barclays will gain access toits recommendations before the New YorkStock Exchange opens.
Barclays regularly monitors the list ofrecipients entitled to receive its reports. Thereports also include prohibitions on redistrib-ution. Barclays’s customers include businessesof every size—including private equity firmsand money managers, as well as families andindividuals. Barclays markets its brokerageservices to provide its customers paying thehighest commissions—typically large institu-tional and wealthy individual investors—anedge in equity buying.
In its opinion, the district court in Barclaysnoted that the development and marketing ofequity research is a “critical component” ofBarclays’s business model.4 Barclays uses itsequity research to enhance its reputation for“creating reliable and valuable advisoryreports” and recommendations that, if fol-lowed, are more likely to enable customers toreap significant monetary benefits from timelytrades in the financial markets.5
TheFly, after extensive searching on theInternet and other public records, might finda Barclays equity research report on the nearterm (meaning within hours) projection for astock price. These reports, as described inthe opinion, typically “range from a singlepage to hundreds of pages in length.”6 They“may include projections of future stockprices, judgments about how a company willperform relative to its peers, and conclusionsabout whether investors should buy, sell, orhold stock in a given company.”7 A Barclaysreport may “indicate whether analysts believethe price of a stock is likely to increase,
decrease, or remain relatively steady.”8
According to the Barclays district court,the majority of key “actionable” reports are“issued between midnight and 7:00 A.M.[They] may move the market price of a stocksignificantly, particularly when a well-respected analyst makes a strong Recom-mendation. Such market movement usuallyhappens quickly, often within hours of themarket opening following the Recom-mendation’s release to clients. Thus, timelyaccess to Recommendations is a valuablebenefit to each [of Barclays’s] clients, becausethe Recommendations can provide them anearly informational advantage.”9 Barclaysprovides a personalized service to its key cus-tomers—“short horizon” investors—to dis-cuss its exclusive “Recommendations” andsolicit business before the financial marketsopen and when the recommendations aremost timely and valuable.
TheFly was aware that Barclays’s reports1) were generated confidentially, 2) wereissued before the NYSE opened, 3) couldmaterially impact stock prices, and 4) wereintended for Barclays’s most private clients.Nevertheless, TheFly allegedly was able tolocate some of Barclays’s equity reports with-out breaching any confidentiality agreementsor Web security employed by Barclays—although proof of “its actual source of anyparticular Recommendations was limited.”10
These actions, according to Barclays, con-stituted elements of a claim for the misap-propriation of hot news.
INS and NBA
Hot news misappropriation is a tort basedupon a seminal U.S. Supreme Court decision,International News Service v. AssociatedPress,11 a 1918 case. The INS—an entity asso-ciated with the infamous newspaper publisherWilliam Randolph Hearst—lifted news reportsfrom the Associated Press about military andpolitical developments during World War I.The INS did this in lieu of spending the com-pany’s own resources employing reporterscovering the battlefields of Europe. Whenthe AP posted it news reports on the EastCoast on bulletin boards and early editionsof newspapers—the hot news of the day—theINS would reword the information, formu-late its own copy, and telegraph the para-phrased reports to the West Coast, wherethey were published in Hearst newspapers.
Copyright infringement was not at issue inINS. Instead, the Supreme Court found thatthe hot news at issue in the case was quasiproperty and permanently enjoined the INSfrom engaging in its practices involving theAP’s hot news reports. Justice Mahlon Pitney,writing for the majority, wrote that “the defen-dant has reaped where it has not sown.”12
The INS relied on the First Amendment
for its argument that once the news reportswere made public, the information con-tained in those reports was free for anyoneto use and publish. Moreover, the INSargued that even though the reports weredeveloped at great expense by the AP, theycould be freely used by others. Justice LouisBrandeis, writing for the dissent, agreed:“The general rule of law is, that the noblestof human productions—knowledge, truthsascertained, conceptions, and ideas—become, after voluntary communication toothers, free as the air to common use.”13
Thus to Justice Brandeis, the means by whichthe INS obtained the news, whether frompublic sources or the open market, werenot an issue for redress by the Court. WhileJustice Brandeis thought that perhaps someremedy for the INS’s conduct might be inorder, he nevertheless opined that the courtswere ill-equipped to make that decision.Indeed, he wrote that the issue of news gath-ering conduct was one for Congress toaddress. Notwithstanding Justice Brandeis’ssensible approach, Congress has not takenaction on hot news misappropriation in allthe years since INS was decided. But courtshave continued to address the topic.
In 1997, in National Basketball Assoc-iation v. Motorola, Inc.,14 the NBA sued themaker of a handheld pager that displayedreal-time information regarding scores andstatistics about professional basketball gameswhile they were in the process of being played.Although the Second Circuit declined to findMotorola liable, the court articulated thenow fairly well-established elements of aclaim for hot news misappropriation:
• A plaintiff generates or gathers informationat a cost.
• The information is time-sensitive.
• A defendant’s use of the information con-stitutes free riding on the plaintiff’s efforts.
• The defendant is in direct competition witha product or service offered by the plaintiff.
• The ability of other parties to free ride onthe efforts of the plaintiff would so reduce theincentive to produce the plaintiff’s product orservice that its existence or quality would besubstantially threatened.
The NBA court emphasized that a hotnews misappropriation claim “is about theprotection of property rights in time-sensitiveinformation.”15
One of the defenses urged by the defen-dants in hot news misappropriation cases isthat the federal Copyright Act preempts statelaw claims for hot news misappropriation.However, this defense has been confrontedand rejected, at least by the Second Circuit.In NBA, the Second Circuit held that the ele-ments that it found to constitute a hot newsmisappropriation claim “allow [the] claim to sur-vive preemption” by the Copyright Act.16
22 Los Angeles Lawyer December 2010
Nevertheless, after noting that “olderNew York misappropriation cases involvingradio broadcasts…considerably broadenedINS,” the NBA court concluded its analysisby holding that “only a narrow ‘hot-news’misappropriation claim survives preemp-tion….”17 However, in June 2010, a Mary-land district court in Agora Financial, LLCv. Samler18 further refined the preemptionconclusion in NBA by holding that if thealleged misappropriated information is notmere facts but is copyrightable, then the hotnews misappropriation tort is preempted bythe Copyright Act.19 A review of the infor-mation that TheFly is alleged to have mis-appropriated suggests that some of it may becopyrightable, and thus Barclays’s claimsregarding this information may be pre-empted.
The Ninth Circuit recognizes the tort ofhot news misappropriation and applies theNBA test. In X17, Inc. v. Lavandeira,20 forexample, a district court in the Central Districtof California stated that “California law rec-ognizes the misappropriation tort in the broadsense, of which the ‘hot news’ tort is a sub-set, and acknowledges that it survives pre-emption when accompanied by additionalelements distinguishing it from a copyrightinfringement cause of action.”21
In another recent application of hot newsmisappropriation theory, on July 14, 2010, adistrict court for the Southern District ofNew York in Banxcorp v. Costco WholesaleCorporation22 issued a decision denyingCostco’s motion to dismiss Banxcorp’s hotnews misappropriation claim for failure tostate a claim under Rule 12(b) of the FederalRules of Civil Procedure. Banxcorp allegedthat Costco obtained database compilationsand market research performance indices,known as BanxQuote Indices,23 fromBanxcorp. This information includes selectedbanking, mortgage, and loan data that “arefrequently used as original benchmarks tomeasure the rates and performance of theU.S. banking and mortgage markets.”Banxcorp claimed that Costco distributedthe BanxQuote Indices in “direct mail, printadvertisements, newspaper advertisements,websites, and marketing presentations.”24
Moreover, according to Banxcorp, theBanxQuote Indices published by Costco con-tained information that was highly time-sen-sitive and subject to change by the plaintiffssince the data in the compilation and indicesare intricately intertwined with, and based on,thousands of variable interest rates that arealso subject to change at any time. Indeed, inat least one example, Costco allegedly mis-appropriated continuously updated hot infor-mation. Thus BanxQuote was able to suffi-ciently allege not only that the news wastime-sensitive when it was gathered but that
it was time-sensitive when it was misap-propriated.
District Court Injunction and TheFly’sAppeal
The Barclays suit was tried in district courtin March 2010. This was after both sideswaived their claims for damages to the extentthat the claims entitled either party to a jurytrial, and after the district court denied sum-mary judgment motions by both parties. Inapplying New York law, the district courtreadily found that Barclays generated itsinvestment reports at great expense and thatthe stock recommendation information wasvery time-sensitive. Moreover, even thoughTheFly used significant efforts to gather thehot information from public records and thatothers used the public information just likeTheFly did, the court still found TheFly to befree riding. The fact that TheFly may haveobtained some of its information from thepublic domain was not significant to thecourt: “[E]ven if true, it is not a defense tomisappropriation that a Recommendation isalready in the public domain by the time Flyreports it.”25
The district court found that TheFly wasin direct competition with Barclays eventhough Barclays did not sell its reports. Thecourt reasoned that TheFly aligned itself withdiscount brokers who were in competitionwith Barclays. Also, even though the courtfound that TheFly constituted a tiny com-
petitor, the subscription services provided byTheFly “substantially threatened” the eco-nomic viability of Barclays’s research reports.The court notably did not consider any proofby Barclays of this substantial harm, nor didit comment on whether Barclays factoredinto its brokerage fees the risk of leakedinformation affecting market price.
As a result of its findings, the district courtissued an order enjoining TheFly from dis-tributing reports released by Barclays at theclose of the New York financial markets untilhalf an hour after the financial marketsopened the next day or at 10 A.M., whichevercame later. Further, for reports that Barclaysissues when the markets open, TheFly mustwait two hours after Barclays’s recommen-dations are released by financial firms beforedistributing headlines from the recommen-dations.
In formulating the terms of the injunction,the district court tried to balance the incen-tive for financial institutions to create equityresearch and spread the benefits of thatresearch against the “ordinary presumptionin favor of the free flow of information.”26
The court pointed out the Supreme Court’sadmonition in INS: An injunction againstdissemination of hot news should only last“until its commercial value as news to thecomplainant and all of its members has passedaway.”27 However, the court held that TheFlywould not be held in contempt of the injunc-tion if it engaged in the actual analysis of mar-
Los Angeles Lawyer December 2010 23
ket movements and referred occasionally toa recommendation in the context of its ownindependent analytical reporting on significantmarket activity that had already taken place.
Although not stated explicitly by the dis-trict court, it is likely that the court would notfind TheFly in contempt if the information itreports is not time-sensitive. But how time-sensitive must information be for its misap-propriation to be actionable under a hotnews claim? In Financial Information, Inc. v.Moody’s Investors Services, Inc.,28 the SecondCircuit required “immediacy of distribu-tion…to sustain a ‘hot news’ claim,” findingthat this requirement was not met when “theinformation [the defendant] published wouldhave been at least ten days old.”
The district court awarded hardly anystatutory damages to the plaintiffs for TheFly’scopyright violations—and other than affect-ing the defendant’s credibility, the findingthat copyrights were violated did not guide thecourt’s ruling on the hot news claim. Still, thecourt awarded attorney’s fees of $200,000 tothe plaintiff.
The appeal in Barclays was filed with theSecond Circuit on April 9, 2010.29 At therequest of TheFly, on May 19 the impositionof the district court’s order was delayed by theSecond Circuit pending the appeal (althoughits request for a stay was denied by the dis-trict court), and the appeal has been expe-dited. The issues on appeal include whetherBarclays and TheFly are really competitorsand whether TheFly’s alleged free riding hasactually threatened the viability of Barclays’sequity research model.
Google Inc., Twitter, Inc., and StreetAc-count LLC are among the many companiesfiling amicus curiae briefs in the case. Googleand Twitter argue that reversal is requiredbecause after INS, the Supreme Court rejectedthe “sweat of the brow” theory for protect-ing facts.30 They are concerned that the rul-ing could have a significant impact on the tra-ditional way that television and radio stationsbroadcast information obtained from news-papers. For Google and Twitter, the issue ishow long they have to refrain from dissemi-nating breaking news that they have acquiredbut not developed as a result of their ownnews gathering efforts.31 Google and Twitterargue that delay in reporting news deprives“the public of important, time-sensitive, fac-tual information”32 and suggest that issuingan injunction on news gathering is an abuseof the First Amendment. They contend thatBarclays should be required to enter into lessconstitutionally intrusive confidentiality agree-ments, and those agreements could then beenforced against those who disclose confi-dential information.
Not surprisingly, the Securities Industryand Financial Markets Association (SIFMA)
24 Los Angeles Lawyer December 2010
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urges in its amicus curiae brief that the SecondCircuit affirm the district court’s order toremedy what SIFMA deems an industry-wideproblem affecting many of its members.33
Even the district court noted that in light ofTheFly’s lead, other companies are reportingon the recommendations of financial institu-tions before and shortly after the financialmarkets open. SIFMA argues that an injunc-tion is critical so that financial institutions willstill have the economic incentive to produceequity research. The injunction, accordingto the brief, will also protect the exclusivityof analysis provided by financial institutionsto their key investors. Indeed, according toSIFMA, the exclusivity of time-sensitive newsprovided by financial institutions must beprotected from misappropriation by the insti-tutions’ competitors. SIFMA contends thataffirmance of the injunctive order is necessarynot only to deter TheFly but also the otherentities engaged in activities similar toTheFly’s. SIFMA notes that timely analystinformation facilitates efficient markets—and “efficient markets serve the critical pub-lic interest of promoting the effective use ofsociety’s limited resources.”34
SIFMA does not mention Justice Brandeis’sdissent in INS. Nor does SIFMA discuss whatthe First Amendment should preclude in aworld of instantaneous transmission of infor-mation via handheld devices. It does notaddress whether a court should provide amonopoly on public information to SIFMAmembers and enjoin the dissemination offacts in the public interest even if those factsare obtained by misappropriation.
Several companies have submitted amicuscuriae briefs that do not support either party,including Dow Jones and Company, Inc.; theAssociated Press; Gannett Company, Inc.;the New York Times Company; and theWashington Post Company. These entitieshave expressed their views regarding newsgathering but have not taken a position in theoutcome of the Barclays dispute. Dow Jones,for example, urges the court to take “care andsurgical precision” in applying the hot newstort to ensure a balance between the FirstAmendment and the “proprietary interests atstake.”35 According to Dow Jones, “If injunc-tions containing these restraints were tobecome the norm in hot-news cases, theywould interfere with legitimate journalisticactivity and pose a serious conflict with theFirst Amendment.”36
So the Second Circuit must perform aclassic balancing act. Should it follow JusticePitney writing for the majority in INS andconfirm that TheFly has not sown what it hasreaped and thus the district court was rightto issue its injunction? Or should it take theposition of Justice Brandeis’s dissent in INSand reverse the lower court decision in
Los Angeles Lawyer December 2010 25
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Barclays, finding it in conflict with the FirstAmendment right to gather and publish facts?Most likely, in line with its NBA decision, theSecond Circuit will find that the FirstAmendment precludes the district court’sbroad injunction.
But the Second Circuit must also makesense of TheFly’s incomprehensible decisionto waive its First Amendment defense at trial.Will the Second Circuit nevertheless considerthe defense even though it was only first artic-ulated in TheFly’s reply to Barclays’s oppo-sition to TheFly’s motion to stay the injunc-tion? Will the Second Circuit—and thepublic—be deprived of the opportunity torevisit whether INS is inconsistent with theFirst Amendment? Perhaps the district court’sdecision will be limited to its facts because theprincipal witness for TheFly “was not a reli-able reporter of facts….He frequently con-tradicted himself. His unreliability appearedattributable to his motive to escape liabil-ity.”37 Would the district court’s decision beany different if New York law did notapply?38
The Second Circuit’s answers to thesequestions are clearly not just of interest tothe disputants in Barclays. Practitioners andjudges as well as those in the financial andnews gathering industries are all interestedflies on the wall, awaiting the decision.
However, no matter how the Second Circuitrules, the ultimate arbiter of these issuesremains the Supreme Court. The real break-ing news regarding this issue will be whetherBarclays becomes the vehicle for the Courtto reevaluate the viability of the scope ofinjunctive relief in hot news misappropria-tion cases. n
1 Barclays Capital Inc. v. Theflyonthewall.com, 700 F.Supp. 2d 310 (S.D. N.Y. 2010).2 Id. at 322.3 Id. at 323.4 Id. at 315.5 Id.6 Id.7 Id.8 Id. at 315-16.9 Id. at 316.10 Id. at 326.11 International News Serv. v. Associated Press, 248 U.S.215 (1918).12 Id. at 239.13 Id. at 250 (Brandeis, J., dissenting).14 National Basketball Ass’n v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997).15 Id. at 853.16 Id.17 Id. at 852.18 Agora Fin., LLC v. Samler, __ F. Supp. 2d ___, No.WDQ-09-1200 (D. Md. June 17, 2010).19 See id., Report and Recommendation at 15.20 X17, Inc. v. Lavandeira, 563 F. Supp. 2d 1102,1107 (C.D. Cal. 2007) (The court denied the plain-tiff’s request for a preliminary injunction when the
plaintiff failed to provide sufficient evidence that thedefendant’s use of the photographs in question threat-ened the existence of the service the plaintiff pro-vides.).21 See also Pollstar v. Gigmania Ltd., 170 F. Supp. 2d974 (E.D. Cal. 2000) (hot news tort adequately pled).22 BanxCorp d/b/a BanxQuote v. Costco WholesaleCorp., __ F. Supp. 2d ____, No. 09-cv-1783 (S.D. N.Y.July 13, 2010).23 Id.24 Id.25 Barclays Capital Inc. v. Theflyonthewall.com, 700F. Supp. 2d 310, 337 (S.D. N.Y. 2010).26 Id. at 344.27 International News Serv. v. Associated Press, 248U.S. 215, 245 (1918).28 Financial Info., Inc. v. Moody’s Investors Servs.,Inc., 808 F. 2d 204, 209 (2d Cir. 1986).29 Barclays Capital Inc. v. Theflyonthewall.com, No.10-1372 (2d Cir., filed Apr. 9, 2010).30 Id., Brief of Amici Curiae Google Inc. and Twitter,Inc., at 2-3 (citing Feist Publ’ns, Inc. v. Rural Tel. Serv.Co., 499 U.S. 340, 349 (1991)).31 Id. at 3.32 Id.33 Id., No. 10-1372, Brief of Amicus Curiae theSecurities Industry and Financial Markets Association(SIFMA).34 Id. at 26.35 Id., No. 10-1372, Brief of Amicus Curiae DowJones & Company, Inc., at 1.36 Id. at 2.37 Barclays Capital Inc. v. Theflyonthewall.com, 700F. Supp. 2d 310, 327 n.25 (S.D. N.Y. 2010).38 See Associated Press v. All Headline News Corp.,608 F. Supp. 2d 454, 460 (S.D. N.Y. 2009)(suggest-ing Florida may not recognize a hot news tort).
26 Los Angeles Lawyer December 2010
Los Angeles Lawyer December 2010 27
Administrative procedure plays an essentialrole in federal appellate practice, particularlyin the Ninth Circuit Court of Appeals.According to the Ninth Circuit’s most recentpublished statistics, appeals from adminis-trative agency decisions accounted for 6,040of 14,636 total appeals filed in 2006, or morethan 40 percent.1 This represents a significantincrease from 2001, when appeals fromadministrative agencies represented approx-imately 10 percent of all appeals (1,150 outof 10,342). Of the 6,387 cases decided on themerits in 2006, the greatest number by far,1,974, were agency appeals.
Judicial review of an agency decision isavailable only if it is not precluded by statuteand a “meaningful basis for review” exists.For those seeking this type of review, themost important procedure with which theymust comply is the exhaustion of adminis-trative remedies. Counsel should be aware ofthe basic constitutional underpinnings of theexhaustion doctrine, including the leadingU.S. Supreme Court precedents, and devisecareful strategies based on how the exhaus-tion doctrine works in practice.
Federal courts are courts of limited juris-diction.2 The doctrine of exhaustion of admin-istrative remedies,3 like the related timingdoctrine of primary jurisdiction,4 is a thresh-old issue that protects federal jurisdiction.Just as the related doctrines of standing,ripeness, and mootness serve as barriers toentry in federal court for cases and contro-versies not ready for adjudication, the exhaus-tion doctrine ensures the integrity of admin-istrative agency review and “assure[s] that[agencies have] an opportunity to resolveissues over which they have primary respon-sibility.”5
Although case law has established a pre-sumption in favor of the right to judicial
Matthew D. Taggart is a senior associate with thelaw firm Robins, Kaplan, Miller & Ciresi L.L.P. inCentury City, where he handles a range of complexcommercial litigation involving media, entertain-ment, antitrust, intellectual property, real estate,and constitutional law. In 2007, through the NinthCircuit’s Pro Bono Program,Taggart and Jesse Crippsof Gibson, Dunn & Crutcher, LLP, represented ManikAhmed in Ahmed v. Holder.
MCLE ARTICLE AND SELF-ASSESSMENT TEST
By reading this article and answering the accompanying test questions, you can earn one MCLE credit.
To apply for credit, please follow the instructions on the test answer sheet on page 29.
EXHAUSTEDTOTALLYThe doctrine of exhaustion of remedies
involves the interplay between
administrative and appellate lawby MATTHEW D. TAGGART
review of administrative agency decisions,6
review is nonetheless quite limited. Consistentwith Article III of the U.S. Constitution, theNinth Circuit has jurisdiction to reviewagency decisions only to the extent providedby various statutes; and since there is no gen-eral statute empowering the Ninth Circuitto review agency decisions, the scope ofreview is delineated by those individualstatutes.7 In circumstances not governed bya specific judicial review statute, a party mayseek review under the Administrative Proce-dure Act, but the scope of review under theAPA is largely the same as provided by otherstatutes.8 The APA is clear that only finalagency action is subject to judicial review.Thus exhaustion may be seen as the flip sideof the finality coin. An agency decision isnot “final” regarding the issues raised onappeal until a party challenging the decisionhas exhausted all of his or her available reme-dies at the agency level.9
The basic rule of exhaustion is that fail-ure to raise an issue with the tribunal belowresults in waiver of that issue on appeal.10 Therule applies not just in direct appeals from fed-eral district court decisions11 and adminis-trative agency decisions12 but also in othersubstantive arenas. Bankruptcy appeals re-quire exhaustion,13 although the rule isapplied much more flexibly given the respon-sibility of trustees and debtors in possessionto raise certain issues and the bankruptcycourt’s duty to adjudicate those issues“whether or not they are specifically put indispute.”14 Tax court decisions also man-date exhaustion before appeal. Appellatecourts review these decisions “in the samemanner and to the same extent as decisionsof the district courts in civil actions triedwithout a jury….”15 Under the Immigrationand Nationality Act, the U.S. Court ofAppeals may review a final order of removalonly if “the alien has exhausted all adminis-trative remedies available to the alien as ofright.”16
Most attorneys know that they cannotchallenge nonfinal agency actions. Never-theless, determining whether a petitioner haspursued the agency review process to its finalconclusion requires careful analysis. More-over, counsel must craft strategies dependingon whether the petitioner has raised the legaland factual issues during the agency reviewprocess that are most likely to obtain therelief sought on appeal, such as obtaining ahearing before the relevant governmentagency, restoration of essential benefits, orcancellation of deportation.
Exhaustion is simple in theory but com-plicated in practice. Early precedents under-line that the doctrine resists strict mechanicalapplication. Many exhaustion precedentsinvolve balancing the harm to the agency if
exhaustion is not found versus the harm to thepetitioner if exhaustion is strictly enforced.Litigators devising an effective strategy in agiven case must understand how strictenforcement of the doctrine will either furtheror undermine the policy goals underlying thedoctrine.
Balancing Act from the Vietnam Era
One of the leading cases in the area of exhaus-tion is McKart v. United States,17 a 1969 de-cision. The U.S. Supreme Court reversed theindictment of a draftee during the VietnamWar for willfully and knowingly failing toreport for induction into the Army. After his18th birthday, McKart dutifully reported tohis local Selective Service Board (commonlyreferred to as a draft board), and the boardinitially classified him as fit for service, or I-A, in February 1963. While McKart took noofficial steps to change this classification, heinsisted that he was eligible for a “sole sur-viving son” exemption on his written classi-fication questionnaire. The draft boardgranted the exemption after receiving fur-ther information from McKart and reclassi-fied him as IV-A. However, after the death ofMcKart’s mother, who had been his soleremaining parent, the military returned himto I-A status. McKart did not challenge hisreclassification; he merely refused to report forduty and was charged as a result.
On appeal, the Army moved to barMcKart’s exemption defense on the ground of exhaustion. According to the Army, McKarthad failed to exhaust his administrative reme-dies because he did not challenge his classifi-cation to the local board—a prerequisite underthe Code of Federal Regulations to furtherappeals.
In a majority opinion by Justice ThurgoodMarshall, the Supreme Court held thatMcKart was not required to exhaust theadministrative appeals process. The Courtstated its aim to balance the competing inter-ests of the agency and the petitioner. In doingso, according to the opinion, the Court foundthat judicial review of McKart’s claim wouldnot impair the administrative process applic-able to the draft, but McKart would sufferirreparable harm if the exemption defensewere disallowed.18 The majority reasonedthat “such a result should not be toleratedunless the interests underlying the exhaustionrule clearly outweigh the severe burdenimposed upon the registrant if he is deniedjudicial review.”19
For exhaustion to apply, the Court heldthat administrative discretion or expertisemust actually contribute to the decision-mak-ing process. In McKart, however, the issue wassimply whether the sole surviving son exemp-tion to the draft applied once the son was thelast surviving member of the family. The
majority deemed the issue one of pure statu-tory interpretation and concluded that theCourt was just as competent to resolve it asthe Selective Service Boards that composed theSelective Service System—the agency chargedby Congress with administering the U.S. pro-gram for military conscription and pre-paredness. The Court rejected the govern-ment’s argument that failure to strictlyenforce the exhaustion requirement wouldencourage draftees to flout the inductionsystem and emphasized that the strict crim-inal penalties for draft dodging—up to fiveyears in prison—should be more than enoughof a deterrent to most individuals contem-plating draft evasion.
Nevertheless, the Court20 reached theexact opposite conclusion just two years laterin another significant exhaustion case address-ing facts almost identical to those in McKart.McGee v. United States21 also involved aVietnam draftee’s failure to exhaust admin-istrative remedies in the Selective ServiceSystem’s induction process. This time, how-ever, the majority held that the draftee waivedhis defense of incorrect classification becausehe had failed to renew his conscientious objec-tor (CO) status after his student defermentlapsed.
In February 1966, while attending theUniversity of Rochester, McGee applied to theSelective Service for CO status. The draftboard continued his existing classification—a student deferment—and advised him thathis CO claim would be decided when hisstudent status was no longer applicable. InApril 1967, McGee wrote to PresidentLyndon Johnson, sending him the charredremnants of his draft cards and declaring hemust “sever every link with violence andwar.”22 The letter stated that he had alreadybeen accepted for graduate study in a programin which he would qualify for theologicaldeferment. A copy of the letter was forwardedto the local draft board, which continuedclassifying McGee’s status with a studentdeferment.
McGee graduated from college in June1967, and the board requested updated infor-mation, including any information regardingMcGee’s future educational plans and anyother facts that he thought relevant to his clas-sification. McGee returned his SelectiveService questionnaire unanswered with acover letter stating that he would adhere toa policy of noncooperation with the draftsystem. In September 1967, the boardreviewed McGee’s file and rejected the COclaim that had been pending since prior toMcGee’s graduation from college. The major-ity noted that in response to his reclassifica-tion, McGee sought neither a personal appear-ance nor review by an appeal board (justlike McKart). Instead, McGee returned
28 Los Angeles Lawyer December 2010
Los Angeles Lawyer December 2010 29
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1. nn True nn False
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1. The U.S. Constitution requires exhaustion of admin-istrative remedies for all appeals.
True.False.
2. In accord with Article III of the U.S. Constitution,federal appellate courts have jurisdiction to reviewagency actions only to the extent provided by statute.
True.False.
3. Exhaustion promotes and protects the limited juris-diction of federal courts.
True.False.
4. Judicial review of administrative agency decisions isalways available under the due process clause of theFifth Amendment.
True.False.
5. If a federal court has proper jurisdiction over anadministrative agency decision, the scope of review isbroad.
True.False.
6. If a statute or regulation does not provide for reviewper se, review still may be available under the Admin-istrative Procedure Act.
True.False.
7. The failure to raise an issue before an administrativeagency generally results in waiver of that issue onappeal.
True.False.
8. Exhaustion applies not only to federal agencies butalso to proceedings in bankruptcy and tax courts.
True.False.
9. Whether an issue has been sufficiently exhaustedis readily discernable by looking at the certified admin-istrative record.
True.False.
10. Exhaustion does not apply to constitutional chal-lenges to administrative agency actions, becauseagencies lack jurisdiction to address constitutionalquestions.
True.False.
11. Whether a court will deem an issue to be exhaustedmay depend upon seemingly collateral issues, such asbalancing the equities and determining if the agencyacted competently.
True.False.
12. Exceptions to the exhaustion requirement includeirreparable injury, futility, and the inadequacy of admin-istrative remedies.
True.False.
13. The exception to exhaustion for constitutional chal-lenges is limited to procedural errors that could not havebeen corrected by the agency.
True.False.
14. The district court in Marella v. Terhune found thata prison inmate bringing a civil rights challenge under42 USC Section 1983 had waived the challenge by notfiling a grievance within the 15-day period required bythe California Code of Regulations.
True.False.
15. The Ninth Circuit reversed the district court inMarella, finding that the lower court erred as a matterof law in concluding there was no exception for thetimely filing requirement.
True.False.
16. In Ahmed v. Holder, the Ninth Circuit held that theimmigration judge abused her discretion by failing togrant the requested six-month continuance of removalproceedings, even though the regulations provide thatIJs have discretion to grant continuances for “goodcause.”
True.False.
17. The Ninth Circuit in Socop-Gonzales v. INS heldthat an immigration petitioner did not satisfy theexhaustion requirement because he never invoked theterm “exhaustion” in his briefs.
True.False.
18. In a dissent, Justice William O. Douglas wrote thatthe Supreme Court in McGee v. United States shouldhave reached exactly the same result as the Court’s deci-sion in McKart v. United States.
True.False.
19. The Ahmed court held that the so-called Bairesfactors are mandatory, not discretionary.
True.False.
20. The Supreme Court established the concept of pri-mary jurisdiction in McCarthy v. Madigan.
True.False.
unopened the letter from the Selective Servicenotifying him of his reclassification and of hisright to appeal. McGee did respond to anorder to appear for induction in January1968, but he refused to submit for induc-tion and was convicted under the MilitaryService Act. McGee was sentenced to twoyears in prison.23
The Supreme Court majority, led onceagain by Justice Marshall, sought to distin-guish its decision in McKart by emphasizingthat McGee’s claim to exemption dependedupon careful factual analysis, which theSelective Service was uniquely qualified toperform.24 The Court claimed that unlikeMcKart, McGee’s case did not simply involvestatutory interpretation—for example,McGee’s eligibility for CO status was morecomplex than McKart’s eligibility for a solesurviving son exemption.25 By contrast,McKart’s failure to exhaust did not impair therecord on appeal, according to the Court,because all the relevant facts regardingMcKart’s eligibility for sole surviving sonstatus had been available.26 The majority inMcGee observed that “McGee’s claims toexempt status, as a ministerial student or aconscientious objector, depended upon theapplication of expertise by administrativebodies resolving underlying issues of fact.” Inaddition, McGee made “no effort to invokeadministrative processes for factfinding,” andhe neither requested classification as a min-isterial student “nor submitted the informa-tion that would have been pertinent to sucha claim.”27
Finally, Justice Marshall’s majority opin-ion asserted that the failure to strictly applyexhaustion under these facts would have hada harmful effect on the Selective Service. Thiswas because McGee, unlike McKart, did notsimply fail to reapply for CO status butadopted a policy of noncooperation againstall military personnel.28
Justice William O. Douglas wrote a sear-ing dissent to Justice Marshall’s majorityopinion, arguing that McGee could not havebeen found to have exhausted his adminis-trative remedies when the Selective ServiceBoard in fact never considered his CO claimon the merits. He noted that there was no fac-tual dispute that McGee was a conscientiousobjector—he was enrolled as a student atUnion Theological Seminary and was study-ing to be a priest.29
The central issue in the case, according toJustice Douglas, was whether the SelectiveService Board in 1966 actually “consider[ed]”and rejected McGee’s CO claim. The districtcourt and court of appeal both found that theboard acted on the claim. The majorityrefused to consider McGee’s assertion that theboard did not actually resolve the CO claim,but Justice Douglas wrote that anyone who
read the factual record would necessarilyfind that the conclusion that the board tookaction on the CO claim in 1966 was clearlyerroneous. In March 1966, the board wroteto McGee: “We wish to advise that yourclaim as conscientious objector will be con-sidered when you no longer qualify for stu-dent classification.” Justice Douglas empha-sized that the letter expressly said that adecision on the “claim as conscientious objec-tor” would be decided later. Then, in 1967,the board reclassified McGee as 1A not merelybecause McGee had finished college, as thechairman of the board testified, but becausethe board specifically [and erroneously]claimed that CO status had been previouslydenied.30
Justice Douglas noted that it was the draftboard that had defaulted, not McGee, becausefederal regulations explicitly required theboard to “receive and consider all informa-tion, pertinent to the classification of a reg-istrant, presented to it.”31 Douglas concludedthat since the board did not “consider” theclaim of CO status and then reject it butrather deferred decision until 1966 and thenin 1967 said that the 1966 deferment was infact a decision “on the merits,” there was noway McGee could have timely appealed to theboard.
Douglas wrote that the McGee Courtshould have reached exactly the same resultas the McKart Court:
[W]e should conclude that cases wherethe local board does not “consider” theconscientious objector claim must befew and far between. Moreover, theterm “consider” is a key part of a Reg-ulation and just as much a question oflaw as the phrase in issue in McKart.Men should not go to prison becauseboards are either derelict or vindic-tive.32
Considered together, McKart and McGeeillustrate how unpredictable courts can bewhen facing exhaustion issues. Outcomesare driven not just by whether an issue wasbroached in the tribunal below but ratherthe judges’ own inherent sense of fairness, thebalance of equities, and whether the admin-istrative agency in question acted with appro-priate diligence and competence.
How Exhaustion Works in the NinthCircuit
Whether an issue has been exhausted at theagency level may prove dispositive in a dis-trict court action and on appeal. For trialand appellate counsel, this analysis is crucial.Resolving the issue of exhaustion is frequentlymore complicated than whether the peti-tioner—often an unsophisticated party actingin pro per—has squarely presented his or herclaim to the agency.
In a perfect world, a petitioner appealingfrom an administrative agency decision willhave clearly raised the issues that form thebasis for his or her appeal, or petition forreview,33 in the proceedings below. Precisionis important, as the Ninth Circuit has clari-fied regarding immigration proceedings that“[a] petitioner cannot satisfy the exhaustionrequirement by making a general challenge tothe [immigration judge’s] decision, but, rather,must specify which issues form the basis forthe appeal.”34
Exhaustion is primarily a statutory issue.Courts consider exhaustion because statutesrequire it, not because prudence dictatesdoing so.35
The Ninth Circuit has held that exhaus-tion must not be mechanically applied. Inthe immigration context, for example, thecourt looks to “whether the issue was beforethe BIA [Board of Immigration Appeals] suchthat it had the opportunity to correct itserror.”36 As the Ninth Circuit clarified in its2009 en banc decision in Abebe v. Mukasey,if the notice of appeal mentions the groundsfor relief and the petitioner does not file abrief, as is permitted before the BIA under 8Code of Federal Regulations Section1003.38(f), the issues raised in the noticewill be deemed exhausted.37 However, if thepetitioner does elect to file a brief, Abebeholds that only those issues actually raised andargued in the brief will be deemed ex-hausted.38
Petitioners are not required to employprecise legal language to exhaust an issue, butthey must identify the problem on appealwith sufficient clarity. Thus in Socop-Gonzalesv. INS, the Ninth Circuit held that an immi-gration petitioner sufficiently exhausted theissue of equitable tolling in his briefs beforethe BIA even though he never actually invokedthe phrase.39
The amount of administrative or judicialattention necessary for an issue to be deemedexhausted by the lower tribunal in a givencase depends first upon the statute or regu-lation in question and then its judicial inter-pretation.40 The statute at issue may includeone or more exceptions to exhaustion. Indeed,numerous exceptions have evolved over theyears, although their successful application israre in light of the strong presumption infavor of the exhaustion requirement.41
Settled exceptions include the statutoryexceptions42 as well as assertions of:
• Irreparable injury.43
• Futility.44
• Inadequacy of administrative remedies.45
• Constitutional challenges.46
• Voidness regarding the administrative pro-ceedings.47
• Purely legal issues.48
• Challenges of bias.49
30 Los Angeles Lawyer December 2010
• Unreasonable delay.50
• Express or implied waiver.51
• Judicial discretion.52
Practitioners should be leery of the excep-tion for constitutional challenges which, as inother appellate circumstances, is actuallyquite narrow. The Ninth Circuit made clearin Liu v. Waters that review is limited to pro-
cedural errors that are not correctable by theagency itself: “The key is to distinguish theprocedural errors, constitutional or other-wise, that are correctable by the administra-tive tribunal, from those that lie outside the[agency’s] ken.”53
The Ninth Circuit’s 2009 decision in thecase of Marella v. Terhune54 provides a goodexample of how the exceptions are applied inpractice. In Marella, the Ninth Circuitreversed and remanded a district court deci-sion dismissing a state prison inmate’s Section1983 claim on the ground that he had failedto exhaust his administrative remedies beforethe California Department of Corrections.55
The inmate brought a lawsuit against prisonofficials under 42 USC Section 1983 allegingviolations of his constitutional rights duringa knife attack by fellow inmates at CalipatriaState Prison. Prior to filing his complaint infederal court, Marella had filed a grievancewithin the prison system. The grievance wasrejected as untimely because it was filed out-side the 15-day period mandated by theCalifornia Code of Regulations.56
The Ninth Circuit agreed that Marellawas unable to file his grievance on timebecause he did not have access to the neces-sary forms and did not have the ability tocomplete them in the 15-day period.Following the knife attack, Marella spenttwo days in the hospital, was subsequentlymoved to an infirmary, and then was placedin administrative segregation.57 When he wasreleased, 33 days after the attack, Marellaimmediately filed his grievance, even thoughhe did so after the administratively prescribedtimetable.
The Ninth Circuit overruled the magis-trate judge who had found Marella failed toexhaust his remedies and the district courtthat adopted the magistrate judge’s recom-mendation. According to the Ninth Circuit,both the magistrate judge and district courterred as a matter of law by concluding thatno exceptions to the timely filing require-
ment existed. As a practical matter, withouta finding of appropriate exceptions, theinmate would have had no administrativeremedy.
Exhaustion Arguments in a RemovalChallenge
A recent immigration case is illustrative ofhow the doctrine of exhaustion of adminis-trative remedies works for parties and theinterplay of administrative and appellate law.A Bangladeshi alien, Manik Ahmed, waschallenging his removal on the ground that hehad been arbitrarily denied a continuance ofremoval proceedings.58
The facts, and the need for appellate relief,seemed relatively straightforward. Ahmedwas in the process of seeking to adjust his sta-tus to that of permanent resident on the basisof his employment. He had already com-pleted the first step of obtaining a labor cer-tification from the Department of Labor(Form ETA 750). Although his request for analien worker visa (I-140) had been deniedby the Department of Homeland Security atthe threshold of the appeal, Ahmed had filedan internal agency appeal to the Admin-istrative Appeals Office as he was required todo to preserve his right to challenge the deniallater on.
After Ahmed received an initial continu-ance of removal proceedings from the immi-gration judge (IJ) in Los Angeles, Ahmedrequested a second six-month continuance ata removal hearing on February 1, 2005,which the IJ summarily denied. The IJ stated,“I’m not keeping this on my calendar for hisappeal pending on the I-140.”
Ahmed’s Opening Brief argued that 1)the IJ abused her discretion by failing to con-sider certain factors required by the NinthCircuit concerning whether a continuanceshould be granted, 2) the IJ abused her dis-cretion by failing to provide a rational expla-nation for her decision, 3) the BIA’s holdingthat a visa was not “immediately available”
to Ahmed was clear legal error, and 4) the IJ’sdecision violated Ahmed’s due process rightto a full and fair hearing.59
From Ahmed’s perspective, exhaustion ofthese issues was noncontroversial. The IJ’s fail-ure to consider the so-called Baires factors60
was manifest in the hearing transcript and herfinal written order of removal. The IJ simplydid not mention any of them. The lack of areasoned explanation for the denial of thecontinuance was likewise manifest in the textof the transcript and final order, as the IJsaid nothing more than “I’m not keepingthis on my calendar.” The BIA’s decisionaffirming the IJ clearly stated that the denialof the continuance was not an abuse of dis-cretion. According to the BIA, Ahmed wasineligible for adjustment of status in anyevent because no visa was “immediately avail-able” as required by the INA.61 Also, depri-vation of the constitutional right to a fulland fair hearing is exempt from the exhaus-tion requirement.
Nevertheless, exhaustion of remedieswas the thrust of the government’s Oppos-ition Brief. The first, and main, argument bythe Department of Justice was that Ahmedfailed to exhaust any of the four issues in hisOpening Brief before the BIA.62 The DOJstated, “In his brief to the BIA, Ahmedargued only that a further continuanceshould not have been denied ‘solely because[an I-140] petition had not been ap-proved.’”63 Further, the DOJ asserted that“Ahmed did not argue to the BIA that theimmigration judge had failed to considerfactors set forth by this court, or that theimmigration judge’s decision had failed to set
Los Angeles Lawyer December 2010 31
The amount of administrative or judicial attention
necessary for an issue to be deemed exhausted by
the lower tribunal in a given case depends first
upon the statute or regulation in question and
then its judicial interpretation.
forth adequate grounds, or that he had a visapetition ‘immediately available,’ or that hehad been denied due process.”64 The DOJeven cited to Liu for the proposition that“procedural due process issues must beexhausted before the BIA because the BIAhas jurisdiction to address such issues.”65
In Ahmed v. Holder, a unanimous pub-lished decision in Ahmed’s favor on June 24,2009, the Ninth Circuit rejected the govern-ment’s arguments.66 The court held that theclaims addressed on the merits by the BIA aredeemed exhausted and may be raised onappeal even though the petitioner did notspecifically raise the issue in his briefs beforethe BIA.
While the BIA’s decision neither men-tioned the Baires factors per se, nor dis-cussed the adequacy of the IJ’s explanationfor her denial of the continuance, the BIAdecision had generally acknowledged that“[Ahmed] argues that the [IJ] erred in deny-ing his request for a continuance pendingapproval of an [I-140].”67 The Ninth Circuitfound this was sufficient for exhaustion,stating, “Here, the BIA specifically addressedthe question whether the IJ abused her dis-cretion by denying Ahmed’s request for acontinuance.”68 As to the due process vio-lation, the Ninth Circuit held, “The BIA alsodetermined that Ahmed was not deprivedof a full and fair hearing,”69 and therefore theissue was exhausted.
Ahmed confirms the vitality of exhaustionissues in immigration and other agencyappeals and underscores that whether a givenissue is exhausted may be more complicatedthan the record itself reflects. It also stands forthe important proposition that, in immigra-tion matters, an issue is exhausted if addressedby the BIA, even if absent from the petition-er’s notice of appeal and his or her briefingbelow. n
1 U.S. Court of Appeals, Judicial Caseload Profile,http://www.ce9.uscourts.gov/statistics/appeals_court.pdf.2 U.S. CONST. art. III, §§1, 2.3 See generally ERWIN CHEMERINSKY, CONSTITUTIONAL
LAW: POLICIES AND PRINCIPLES §2.3, at 46 (1997).4 According to the concept of primary jurisdiction,even when courts and agencies share equal jurisdiction,courts should defer if the agency has primary author-ity over the matter in question to avoid unnecessary con-flicts. The concept of primary jurisdiction derives fromthe Supreme Court’s decision in Texas & PacificRailway Company v. Abilene Cotton Oil Company,which involved the reasonableness of freight ratescharged by railroad companies subject to the approvalof the Interstate Commerce Commission. Texas &Pac. Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426(1907). The court reasoned that permitting federalcourts to decide the reasonableness of freight rateswould undermine the regulatory authority of the ICCand prevent it from achieving its goal of maintaininguniformity of freight rates. Parties injured were requiredto seek redress from the agency over allegedly unrea-sonable rates, lest conflicts over ratemaking develop
between courts and the agency.5 CHARLES ALAN WRIGHT, FEDERAL PRACTICE AND
PROCEDURE §8397, at 395 (2006).6 NLRB v. United Food & Commercial Workers Union,Local 23, AFL-CIO, 484 U.S. 112, 123-28 (2007).7 Longview Fibre Co. v. Rasmussen, 980 F. 2d 1307,1309 (9th Cir. 1992).8 5 U.S.C. §§702, 704.9 McKart v. United States, 395 U.S. 195 (1969).10 Sims v. Apfel, 530 U.S. 103, 108-09 (2000).11 Reiter v. Cooper, 507 U.S. 248, 269 (1993).12 See, e.g., Barron v. Ashcroft, 358 F. 3d 674, 677-78(9th Cir. 2004).13 Beck v. Pace Int’l Union, 427 F. 3d 668, 674 (9th Cir.2005) (Case law regarding preservation of issues fromdistrict court judgment also controls appeals frombankruptcy proceedings.).14 In re Perez, 30 F. 3d 1209, 1213 (9th Cir. 1994).15 26 U.S.C. §7482(a)(1).16 8 U.S.C. §1252(d)(1).17 McKart v. United States, 395 U.S. 195 (1969).18 Id. at 195.19 Id. at 197.20 The Court underwent a significant change betweenMay 26, 1969, when McKart was decided, and May17, 1971, when McGee was decided. First and foremostwas the end of the Warren Court. Chief Justice WarrenBurger was appointed by Richard Nixon in 1969 andwas sworn in on June 23, 1969 (following formerChief Justice Earl Warren’s retirement). Justice AbeFortas, a Johnson appointee, suddenly resigned inscandal in 1969 after he was accused of arranging fora presidential pardon for a friend and former client inexchange for $20,000 per year for the rest of his life.Fortas’s seat remained vacant for the entire 1969-70term, until Harry Blackmun was sworn in on June 9,1970.21 McGee v. United States, 402 U.S. 479 (1971).22 Id. at 481.23 Id. at 482.24 Id. at 487-88.25 Id. at 485.26 Id.27 Id. at 486.28 Id. at 491.29 Id. at 492 (Douglas, J., dissenting).30 Id. at 493 (Douglas, J., dissenting).31 32 C.F.R. §1622.1(c).32 McGee, 402 U.S. at 492 (Douglas, J., dissenting).33 FED. R. APP. P. 15(a)(1): “Review of an agency orderis commenced by filing, within the time prescribed bylaw [i.e., usually 30 to 60 days], a petition for reviewwith the clerk of a court of appeals authorized toreview the agency order.” Rules 15 through 20 of theFederal Rules of Appellate Procedure generally setforth the procedures for filing an appeal from anadministrative agency decision.34 Zara v. Ashcroft, 383 F. 3d 927, 930 (9th Cir.2004). See also Rendon v. Mukasey, 520 F. 3d 967, 972(9th Cir. 2008) (no jurisdiction over claim challengingcertain conviction when brief submitted to BIA madeno mention of conviction and made only general chal-lenge to IJ’s decision concerning removability).35 See Castro Cortez v. INS, 239 F. 3d 1037, 1047 (9thCir. 2001).36 Figueroa v. Mukasey, 543 F. 3d 487, 492 (9th Cir.2008).37 Abebe v. Mukasey, 554 F. 3d 1203, 1208 (9th Cir.2009) (per curiam) (en banc).38 Id.39 Socop-Gonzales v. INS, 272 F. 3d 1176, 1183-84 (9thCir. 2001) (en banc).40 See, e.g., Castillo-Villagra v. INS, 972 F. 2d 1017(1992).41 Board of Trs. of Constr. Laborers Pension Trustfor S. Cal. v. M.M. Sundt Constr. Co., 37 F. 3d 1419,
1421 (9th Cir. 1994).42 Sims v. Apfel, 530 U.S. 103 (2000).43 New York v. Sullivan, 906 F. 2d 910 (2d Cir.1990).44 McCarthy v. Madigan, 503 U.S. 140 (1992).45 Id. (not necessary when there is “some doubt as towhether the agency was empowered to grant effectiverelief”).46 Rashtabadi v. INS, 23 F. 3d 1562, 1567 (9th Cir1994) (“An exception to the exhaustion requirementhas been carved out for constitutional challenges to theImmigration and Naturalization Act and INS proce-dures.”); American-Arab Anti-Discrimination Comm.v. Reno, 70 F. 3d 1045, 1058 (9th Cir. 1995).47 Laing v. Aschcroft, 370 F. 3d 994, 1000-01 (9th Cir.2004).48 Xiao v. Barr, 979 F. 2d 151 (9th Cir. 1992). But seeVargas v. INS, 831 F. 2d 906 (9th Cir. 1987) (“[A] peti-tioner cannot obtain review of procedural errors in theadministrative process that were not raised before theagency merely by alleging that every such error violatesdue process.”).49 McCarthy, 503 U.S. 140.50 Smith v. Illinois Bell Tel. Co., 270 U.S. 587 (1926);Southwestern Bell Tel. Co. v. FCC, 138 F. 3d 746, 750(8th Cir. 1998).51 Johnson v. Shalala, 2 F. 3d 918, 923 (9th Cir. 1993).52 Bowen v. New York, 476 U.S. 467 (1986) (sug-gesting that district court could make ad hoc determi-nation that fairness justified waiver of exhaustionrequirement, similar to equitable tolling).53 Liu v. Waters, 55 F. 3d 421, 426 (9th Cir. 1995).54 Marella v. Terhune, 568 F. 3d 1025 (9th Cir. 2009).55 Id. at 1032.56 Id. at 1027 (citing CAL. CODE REGS. tit. 15,§§3084.6(c), 3084.3(c)(6)).57 Id. at 1026.58 Ahmed v. Holder, No. 06-71631, 569 F. 3d 1009(2009).59 Id. at 1012; Opening Brief of Petitioner ManikAhmed, No. 06-71631, Aug. 17, 2007, at 9-24.60 Baires v. INS, 856 F. 2d 89 (1988). In Baires, thecourt had indicated that in reviewing an IJ’s denial ofa continuance, it should consider 1) the nature of theevidence excluded as a result of the denial of the con-tinuance, 2) the reasonableness of the immigrant’sconduct, 3) the inconvenience to the court, and 4) thenumber of continuances previously granted. 856 F.2d at 92-93. Because the regulations merely provide thatan IJ may grant a continuance for “good cause,” butdo not define the term, it was not clear prior to Ahmedwhether the factors enumerated by the Baires court weredicta or holding. The government argued in its brief inAhmed that “Baires does not indicate any intention toset forth mandated factors that [IJs] must expressly con-sider and address in every case.” Ahmed, Brief forRespondent, No. 06-71631, Oct. 16, 2007, at 17.Ahmed holds that the factors are indeed mandatory.Ahmed, 569 F. 3d 1009.61 In re Manik Ahmed, No. A76-613-636, Mar. 1,2006 (“Without an approved Form I-140 and a cur-rent priority date, a visa is not immediately availableand the respondent cannot establish prima facie eligi-bility for adjustment of status.”) (citing 8 U.S.C.§1255).62 Brief for Respondent, No. 06-71631, Oct. 16, 2007,at 8.63 Id. at 9.64 Id. at 9-10.65 Id. at 10.66 Ahmed v. Holder, No. 06-71631, 569 F. 3d 1009(2009).67 In re Manik Ahmed, No. A76-613-636, Mar. 1,2006.68 Ahmed, 569 F. 3d at 1012.69 Id.
32 Los Angeles Lawyer December 2010
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only a quality CLE product but at a truly unheard ofprice. Just $249 for LACBA members and $299 fornonmembers. The box includes 25 hours of audioCDs of programming, all your required specialtycredits, and all necessary paperwork for document-ing CLE credit. To order by phone call (213) 896-6560 or Internet at www.lacba.org.
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© 2010 Thomson Reuters L-364213/11-10 iPhone, iPad, and iPod touch are trademarks of Apple, Inc. Thomson Reuters and the Kinesis logo are trademarks of Thomson Reuters.
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Los Angeles Lawyer December 2010 35
ON FRIDAY, DECEMBER 3, the International Law, Family Law, ImmigrationLaw, and Taxation Law Sections will host a program concerning the tax andimmigration consequences of transborder divorce. Speakers QiangBjornbak, Albert S. Golbert, James Stewart, and Peter M. Walzer willdiscuss how an international divorce can implicate taxes, enforcement,and custody under two different legal systems. International divorce alsohas consequences for immigration status. However, there are options foralien spouses to get permanent resident status after divorce or annulment.The program will take place at the Los Angeles County Bar Association,1055 West 7th Street, 27th floor, Downtown. Parking is available at 1055West 7th and nearby parking lots. On-site registration will begin at 11:30A.M., with the program beginning at noon and continuing until 2 P.M. Thisprogram is also available as a live Webcast. The registration code numberis 011109. The prices below include lunch.$25—CLE+PLUS member$55—sponsoring or cosponsoring section member$65—LACBA member$75—all others$85—at-the-door registrants2 CLE hours
Transborder Divorce
The Los Angeles County Bar Association is a State Bar of California MCLE approved provider. To register for the programs listed on this page, please call the Member Service Department at (213) 896-6560 or visit the Association Web site at http://calendar.lacba.org/where you will find a full listing of this month’s Association programs.
ON WEDNESDAY, DECEMBER 8, the Environmental Law Section, Real PropertySection, and the Land Use Planning and Environmental Law Subsection willsponsor a program, led by speakers Frank P. Angel and Timothy A. Tosta,covering recent CEQA cases as well as the climate-related changes to CEQAguidelines implemented earlier this year. The program will take place at theLos Angeles County Bar Association, 1055 West 7th Street, 27th floor,Downtown. Parking is available at 1055 West 7th and nearby parking lots. On-site registration and lunch will begin at noon, with the program continuingfrom 12:30 to 1:30 P.M. This program is also available as a live Webcast.Registration for the Webcast closes on Friday, December 3. The registrationcode number is 011056. The prices below include lunch.$20—CLE+PLUS member$45—sponsoring or cosponsoring section member$55—LACBA member$65—all others$75—audio conference and Webcast, LACBA member1 CLE hour
IntroductoryTAP (i-TAP)Trial Advocacy and the Litigation Section will
host the introductory Trial Advocacy Project on
January 4, 6, 11, 13, 18, and 20 (Tuesday and
Thursday evenings from 5:30 P.M. to 8:30 P.M.).
This is one in a series of courses offered in
LACBA’s acclaimed TAP program, in which
attorneys can get trial experience quickly.
Designed specifically for attorneys who
have little or no trial experience, this six-
evening course provides introductory trial
advocacy instruction, emphasizing participant
mock trial performance and constructive
feedback. Participants will learn basic trial
skills, inlcuding how to mark exhibits, lay
evidentiary foundation, deliver opening
statements, conduct witness direct and cross
exam, and deliver closing arguments.
Offered up to four times a year, this is a
three-week course. Successful completion of
this course meets the prerequisites for
admission to the five-week Traditional TAP
course taught annually in the fall. Completion
and certification from Traditional TAP qualifies
participants for a pro bono practicum with a
local prosecutorial agency trying criminal
cases. The program will take place at the Los
Angeles County Bar Association, 1055 West 7th
Street, 27th floor, Downtown. Parking is
available at 1055 West 7th and nearby parking
lots. The registration code number is 011070.
Cancellations cannot be accepted after
December 20, 2010.
$995—LACBA member
$1,095—all others
16.5 CLE hours, including 1 in ethics and 2 in
prevention of substance abuse
CEQA Update
36 Los Angeles Lawyer December 2010
LIKE IT OR NOT, society is undergoing a digital transformation. Thedigitization of conduct and communications is steadily expanding intoalmost every aspect of life, and, as it does, the evidence of what hap-pened and what was said is also becoming increasingly digital.Indeed, the University of California at Berkeley School of InformationManagement estimates that 92 percent of all new information cre-ated during 2002 was stored in a digital format on devices such ascomputer hard drives. Each year, the percentage and volume of newinformation being digitally created and stored has accelerated, withno slowdown in sight.
This transformation has important impli-cations for lawyers. After all, many of us spendmuch of our professional lives looking for evi-dence of what people did or said. A search thatonce involved bankers’ boxes and filing cabi-nets, now involves e-mail accounts, file servers,smart phones, thumb drives, and dozens ofother devices. Best practices that served uswell when paper predominated no longer workefficiently or effectively. And, while the policies underlying discoveryrules remain largely the same, even brief exposure to disputes involv-ing electronically stored information confirms that digital is different.
These differences present new challenges that require new, moresophisticated skills. Today, lawyers must be familiar with more thanthe facts and law relating to their case. They must also be familiar withinformation technology and know what digital evidence might exist,where it could be located, and how it can be collected and reviewed.The staff and vendors who support lawyers can no longer narrowlylimit themselves to technical expertise. Instead, they must under-stand the interrelationship between technological capabilities and themost recent e-discovery case law.
The transition to evidence that is digitally created, communi-cated, and stored has resulted in problems of competency in thelegal community. For lawyers, learning curves in highly technical areascan be steep, and the time available for climbing them can be short.Technologies change rapidly, and judges seem to impose new require-ments with increasing frequency. As a result, lawyers find it necessaryto rely heavily on nonlawyers, including support staff and vendors,to perform e-discovery work, stay abreast of new e-discovery require-ments, and ensure their work complies with those obligations.
However, very few people really understand how to handle elec-tronically stored information. Lawyers too frequently lack the exper-tise or time to know what constitutes e-discovery competency, let alonewhether a particular individual is, in fact, competent. Formal e-dis-covery training programs are almost nonexistent. Lawyers and non-lawyers alike are often self-taught. Consequently, locating competentsupport staff and vendors is fraught with uncertainty.
With so much riding on those who collect, cull, and distill largevolumes of electronically stored information, lawyers should not beforced to find support staff and vendors through trial and error or
word of mouth. Lawyers need an effective and efficient way to iden-tify people who possess the skills and qualifications necessary tomeet the e-discovery obligations in contemporary litigation.
Many professions use certification programs to identify people withthe training or experience necessary to perform specific jobs or tasks.Given the technically sophisticated, rapidly evolving issues affectinge-discovery, the time has come for the legal profession to follow suitand adopt an e-discovery certification program. A rigorous, objectivecertification program administered by an independent, reputableorganization that is recognized profession wide would benefit every-
one who participates in providing legal services involving electroni-cally stored information.
The legal system would benefit. A professionally meaningful cer-tification program would encourage more people to develop theinterdisciplinary skills needed to perform e-discovery work. As morepeople become qualified to handle electronically stored information,the quality of work will also increase.
Lawyers would benefit. E-discovery certifications would helpidentify staff and vendors who are qualified to perform needed tasks.Lawyers could then be more confident that work assigned to thosepeople will be done effectively, efficiently, and accurately.
Certification holders would benefit. Certifications would makeholders more marketable and give those who earned them credibil-ity by assuring potential employers or clients that the holder is qual-ified to perform the job or task for which he or she is being hired.
Clients would benefit. Overall, e-discovery costs would generallybe lower, and the quality of work would be higher. Expensive or prej-udicial mistakes would be fewer. And unnecessary discovery dis-putes could be avoided.
A legal profession that seeks to serve a digital society does not servesociety well when its practitioners use paper-based skills. In the nearfuture, lawyers will find it more difficult to meet their client’s needsunless they employ people who are qualified to handle e-discovery.An e-discovery certification program recognized profession wide andadministered by an independent organization is essential to ensuringthat those who provide legal services are qualified to handle today’sand tomorrow’s digitally created evidence. n
closing argument BY DOUGLASS MITCHELL
The Need for an E-Discovery Certification Program
A legal profession that seeks to serve a digital society does not
serve society well when its practitioners use paper-based skills.
Douglass Mitchell, a partner and litigator in the Las Vegas office of Boies,Schiller & Flexner, LLP, chairs the board of governors of the Organization ofLegal Professionals.
January 28 & 29, 2011
January 28 & 29, 2011
Examine the current trends and future possibilities in the area
of Alternative Dispute Resolution (ADR). Topics will range
from new ethical challenges in ADR to how neuroscience and
technology are having an impact in the field.
Attend this exciting forum for dialogue and exchange with
leading academics and practitioners in the field.
REGISTER TODAY at http://law.laverne.edu/adr-symposium or by calling 909-460-2018
HON. STEPHEN E. HABERFELD (RET.)Neutral for JAMs and former Assistant Watergate Special Prosecutor
THOMAS J. STIPANOWICHAcademic Director of the Straus Institute for Dispute Resolution at Pepperdine University and noted scholar in the field of ADR
7 MCLE credits available (1.25 are ethics credits).
SARA AND MICHAEL ABRAHAM CAMPUS CENTER, UNIVERSITY OF LA VERNELocated at 2000 C Street, La Verne, California 91750.
For more information visit: http://law.laverne.edu/adr-symposium
© 2010 Thomson Reuters L-360258/6-10
Thomson Reuters and the Kinesis logo are trademarks of Thomson Reuters.
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