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Posts Tagged ‘#Ninth Circuit’

Split in the Circuits May Force SCOTUS to Revisit Kingsley

Posted on: March 14th, 2019

By: Ali Sabzevari 

In Kingsley v. Hendrickson, 135 S. Ct. 2466 (2015), the Supreme Court held that a pretrial detainee may prevail on a § 1983 excessive force claim if he or she shows that the force used was objectively unreasonable, regardless of whether the officer had a subjective intent to cause the detainee harm. In reaching this decision, the Court granted more protection to pretrial detainees under the Fourteenth Amendment’s Due Process Clause than is given to convicted prisoners under the Eighth Amendment, which still requires proof of a subjective intent to cause harm before there is a constitutional violation. This make sense because a pretrial detainee is innocent until proven guilty, and so the detainee cannot be subjected to any form of punishment. On the other hand, it is well-settled that a convicted prisoner may be punished so long as the punishment is not “cruel and unusual” under the Eighth Amendment.

Recently, we have seen an uptick in cases whereby pretrial detainees are contending that the holding in Kingsley applies to any and all § 1983 claims, not just those founded on allegations of excessive force. But this is not the holding in Kingsley. Nevertheless, the Ninth Circuit in Castro v. County of Los Angeles, 833 F.3d 1060 (9th Cir. 2016) applied such an interpretation, opening the door for this creative argument. Other circuits, such as the Eleventh Circuit, have denied such an extension despite recent opportunities to do so. Johnson v. Bessemer, 741 F. App’x 694, 699 n.5 (11th Cir. 2018).

The fact remains that the Supreme Court has not ruled on whether to extend this objective reasonableness standard of review to cases of pretrial detainees which do not involve the use of excessive force, e.g., cases challenging medical treatment or conditions of confinement. The current circuit split could mean that the issue might be back in front of the Supreme Court at any time.

If you have any questions or would like more information, please contact Ali Sabzevari at [email protected].

 

The Supreme Court Sets Groundwater Pollution in its Sights

Posted on: February 20th, 2019

By: Ze’eva Kushner

Yesterday, the United States Supreme Court decided to hear an appeal from the Ninth Circuit’s decision in Hawai’i Wildlife Fund et al. v. County of Maui, 886 F.3d 737 (9th Cir. 2018). The Supreme Court will be hearing this case in the Fall to resolve a circuit split regarding whether discharging pollution that travels underground before emerging into an ocean, river or other major waterway requires a permit under the Clean Water Act.

Congress passed the Clean Water Act in 1972. The goal of the Clean Water Act is “to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.” 33 U.S.C. § 1251(a). One of the primary provisions of the statute makes it unlawful for anyone to discharge a pollutant, meaning adding pollution, to the waters of the United States, including the territorial seas. 33 U.S.C. §§ 1362(12), (7).

The provisions of the Clean Water Act have been interpreted by a number of courts over the years, with the coverage of groundwater pollution being a thorny issue for some time. In February 2018, the Ninth Circuit held that Maui County had to comply with the permitting requirement of the Clean Water Act in order to continue to dispose treated water through underground wells after it was shown that the treated water made its way into the Pacific Ocean through fissures in the ocean floor.

The Fourth Circuit made a similar finding a few months later in a case involving a gasoline pipeline spill in South Carolina when it determined that the Clean Water Act covered claims that the spill contaminated nearby creeks and wetlands after traveling through groundwater.

However, in September 2018, the Sixth Circuit changed direction when it ruled on two cases involving the pollutants released by coal ash ponds, holding that the Clean Water Act cannot be used to regulate pollution that travels through groundwater before reaching navigable waters such as a river or ocean.

Thus, it is up to the Supreme Court to resolve the debate regarding how direct of a connection there must be between a source of pollution and the waters that get polluted. Whether a pollutant that goes underground before making its way into a major waterway is subject to the Clean Water Act will have a major impact on industries across the country.

If you have any questions or would like more information, please contact Ze’eva Kushner at [email protected].

Ninth Circuit Tightens FCRA Disclosure Requirements

Posted on: February 12th, 2019

By: Matthew Foree

Ninth Circuit Holds Combining State and Federal Disclosures Violates FCRA’s Standalone and Clarity Requirements

The Court of Appeals for the Ninth Circuit recently issued a decision regarding the disclosure requirements under the Fair Credit Reporting Act (“FCRA”).  The FCRA includes certain requirements for employers prior to obtaining a consumer report on a job applicant. For example, employers must provide the applicant a “clear and conspicuous disclosure” that they may obtain such a report “in a document that consists solely of the disclosure.”

The Ninth Circuit took the FCRA’s language literally, prohibiting the employer from including any superfluous information in the disclosure document.  The case at issue, Gilberg v. California Check Cashing Stores, LLC, involved a class action filed by Desiree Gilberg, a former employee of CheckSmart Financial, LLC (“CheckSmart”). Before she began working with CheckSmart, Gilbert signed a disclosure regarding background information, which provided that CheckSmart could obtain her background report and that she had the right to request a copy of the report. The form also included information regarding her right to obtain a copy of the report under various state laws. Gilberg alleged that the disclosure violated the FCRA and California’s state law disclosure statute. The Ninth Circuit agreed and reversed the District Court’s grant of summary judgment to CheckSmart.

The Ninth Circuit interpreted the statute literally by holding that providing other state disclosure information in the disclosure form violated the FCRA’s stand-alone document requirement. The Court held that such “extraneous information is as likely to confuse as it is to inform” and, therefore, does not further the FCRA’s purpose.

The court also held that the disclosure, although conspicuous, was not clear. The court focused on the following language of the disclosure at issue:

The scope of this notice and authorization is all-encompassing; however, allowing CheckSmart financial, LLC to obtain from any outside organization all manner of consumer reports and investigative consumer reports now and, if you are hired, throughout the course of your employment to the extent permitted by law.

Among other things, the court recognized the lack of clarity in the first part of the sentence and the typographical error in the second part of the sentence, which lacked a subject and was incomplete. Therefore, it determined that this provision contained “language that a reasonable person would not understand.” The court also held that the disclosure would confuse a reasonable reader because it combined federal and state disclosures.

According to the Gilberg decision, employers in the Ninth Circuit cannot include disclosures required by other state laws in the same document that contains the FCRA disclosure. The obvious result of the decision will be the increase in documentation driven by separate disclosure statements. Although it is unclear whether other courts will adopt the Ninth Circuit’s holdings, employers would do well to revisit their forms to ensure compliance. Given the court’s position that language that would confuse a “reasonable person” would violate the clear and conspicuous requirement, employers should also ensure that their disclosures are clear.

If you have any questions or would like more information, please contact Matthew Foree at (770) 818-4245 or [email protected].

Federal Securities Laws: Has the 9th Circuit Gone Rogue Again?

Posted on: February 4th, 2019

By: John Goselin

On January 4, 2019, the United States Supreme Court decided to hear an appeal from the Ninth Circuit’s April 20, 2018 decision in Varjabedian v. Emulex Corporation, 888 F.3d 399 (9th Cir. 2018). The Supreme Court is hearing this case to resolve a circuit split regarding whether a claim under Section 14(e) of the Securities Exchange Act of 1934 requires the plaintiff to plead a strong inference that the defendants acted with scienter (i.e. intent to defraud) or whether Section 14(e) merely requires an allegation that the defendants were negligent. Section 14(e) is a provision of the Securities Exchange Act of 1934 that prohibits a company involved in a tender offer from making a material misstatement or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading or to engage in any fraudulent, deceptive or manipulative acts or practices in connection with a tender offer.

Prior to the 9th Circuit’s April 20, 2018 opinion, no Circuit split had existed. Over the course of the forty-five preceding years, the Second, Third, Fifth, Sixth and Eleventh Circuits had uniformly held that Section 14(e) required a plaintiff to plead scienter when stating a claim pursuant to Section 14(e). Despite four and half decades of consensus, the 9th Circuit concluded that every Circuit Court to address this particular issue previously had simply gotten it wrong and that if the Supreme Court considered the issue, the Supreme Court would conclude that Section 14(e) only required the plaintiff to plead negligence.

Until recently, plaintiffs had historically chosen to challenge tender offers in state court, most often Delaware state court, pursuant to state law disclosure obligations. Challenging tender offers is big business as almost every tender offer conducted results in multiple state court class action lawsuits seeking injunctions to halt the tender offers until so-called disclosure deficiencies are rectified. The cases are high profile, high risk and involve significant legal defense costs that D&O carriers often end up paying pursuant to the provisions of D&O insurance policies.  The plaintiff’s lawyers have historically been successful in playing the role of the troll under the bridge collecting hefty tolls (a.k.a legal fees) for “improving” disclosures in tender offers as the tender offer participants seek to avoid the risk of a potential injunction that could halt the tender offer.

Recently, however, the Delaware state courts where the majority of these cases have been pursued have been clamping down on these “disclosure claims” making the state court forum less lucrative for the plaintiff’s bar. Hence, the plaintiff’s bar has been turning increasingly to Section 14(e) of the Securities Exchange Act of 1934 as an alternative cause of action in a federal forum in an effort to continue collecting their attorney fee tolls. The problem, however, is that if Section 14(e) requires the plaintiff to plead “scienter” and the plaintiff wants to bring a class action to put maximum pressure on the company, the plaintiff would have to comply with the heightened pleading requirements of the Private Securities Litigation Reform Act of 1995 and plead facts, not conclusory statements, sufficient to support a “strong inference” of scienter. The plaintiff’s bar would very much like to avoid this particular pleading, and burden of proof, hurdle.

So, the 9th Circuit’s decision adopting a mere negligence standard is a very big deal creating a window through which the plaintiff’s bar hopes to continue their troll under the bridge strategy at least out West and provides the plaintiff’s bar a new opportunity to challenge the prior holdings in the other Circuit Courts. The Supreme Court, however, has taken the opportunity to decide the issue and will either shut this particular door quickly or swing it wide open by deciding the issue of negligence or scienter for Section 14(e) claims.  Every securities lawyer in America will be watching closely.

If you have any questions or would like more information, please contact John Goselin at [email protected].

Ninth Circuit’s Decision Upholding Arbitration Clause Enables Uber To Sidestep Substantive Issues Regarding Misclassification

Posted on: October 10th, 2018

By: Laura Flynn

In O’Connor v. Uber, a case in which California Uber drivers assert they should be categorized as employees rather than independent contractors, the Ninth Circuit Court of Appeals recently issued an order reversing the district court’s denial of Uber’s motions to compel arbitration. The Court rejected Plaintiffs’ assertion Uber’s arbitration agreements were unenforceable. The Court’s decision reversing the order denying arbitration was based on Mohamed v. Uber, 848 F.3d 1201 (9th Cir.  2016) wherein the Court found the relevant provisions delegated the threshold question of arbitrability to the arbitrator, that the delegation provisions were not adhesive and were therefore not procedurally unconscionable, and that the provisions allowing drivers to opt-out of arbitrations were not illusory. The Court rejected Plaintiffs’ additional argument the arbitration agreements were unenforceable because they contained class action waivers that violate the National Labor Relations Act of 1935 pointing to the recent Supreme Court decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018). As the class certification by the district court was premised on its determination the arbitration agreements were unenforceable, the order certifying a class of approximately 160,000 Uber drivers was also reversed.

Based on the Court’s decision, it appears Uber drivers will have to purse their misclassification claims individually through arbitration. The limited pool of arbitrators, the amount of time it takes to arbitrate an individual claim, the smaller payout for attorneys, and lack of precedential value associated with arbitrations will likely discourage some drivers from pursuing their claims.

If you have any questions or would like more information, please contact Laura Flynn at [email protected].

 

For further reading, see our blogs discussing this matter: