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Posts Tagged ‘Sixth Circuit’

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].

The Sixth Circuit Finds Coverage For Fraudulent Wire Transfer Under Crime Policy

Posted on: September 12th, 2018

By: Allen Sattler

Business email compromise (“BEC”) claims consist of incidents where cyber criminals access or use a company’s email system to commit a crime, usually for financial gain and often including the use of trickery to convince an employee to wire transfer corporate funds to the criminal’s account.  According to statistics reported by the FBI,  BEC claims are on the rise, especially in the last three years.  In 2016, there was a 2,370% increase in email account compromise attacks, involving losses of nearly $346 million, and the frequency of BEC claims continues to rise.

Several insurers offer coverage for BEC claims, including for losses sustained as the result of fraudulent wire transfer.  In American Tooling Center, Inc. v. Travelers Casualty and Surety Co. of Am., 5:16-cv-12108 (6th Cir 2018), the Sixth Circuit became the latest federal appeals court to interpret an insurance policy that included coverage for fraudulent wire transfers.  In a decision dated July 13, 2018, the Sixth Circuit ruled that the crime policy provides coverage for the loss incurred by the insured.

American Tooling Center (“ATC”), a Michigan manufacturer in the automobile industry, hired a Chinese company to manufacture stamp dies.  To receive payment for its work, the Chinese company would send invoices to ATC, and ATC would route payment to its vendor via wire transfer.  In 2015, a person outside the company intercepted an email from ATC to its vendor.  That person impersonated an employee of the vendor and told ATC that because of an audit, ATC should wire transfer payment on its outstanding invoices to a different bank account.  ATC complied with the instructions and wired over $800,000 to the thief’s bank account.  The thief was never identified, and the money was not recovered.

ATC made a claim to its insurer pursuant to a “Computer Fraud” provision of its crime policy to recover the money lost.  The insurer denied coverage, arguing that ATC did not suffer a loss until it eventually paid the outstanding invoices to the Chinese vendors, and that ATC therefore did not suffer a “direct loss” as required by the policy wording.  The insurer also argued that the acts by ATC in changing the bank account information without verification constituted intervening acts that break the chain of causation.  The Sixth Circuit disagreed, holding that ATC immediately lost the money when it wired the money to the thief, and that the thief’s instructions to ATC directly caused the loss.  The Court also rejected an argument by the insurer that the policy required that the thief first gain access to ATC’s computer systems prior to triggering coverage, and that here, the thief did not hack into the email system to commit the fraud.  The Court ruled that the policy language was not so limited.

The insurer sought reconsideration of the ruling, which the Sixth Circuit recently denied.

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

Home Run for Analysis of Use of Force During Medical Emergencies

Posted on: October 31st, 2017

By: Kevin R. Stone and Sara E. Brochstein

I’m bad at baseball.  When I step in the batter’s box, I might as well have two strikes against me before the pitcher unleashes his first fastball.  For me, it’s no big deal; I’m destined to strike out anyway.  The Sixth Circuit, however, recognizes that’s no way to treat law enforcement officers faced with the difficult choice to use force in response to medical emergencies.

In determining whether a Fourth Amendment violation has occurred in excessive force cases, the evidence must demonstrate that the officer’s actions were “objectively reasonable” under the totality of the circumstances.  The Supreme Court has provided three over-arching factors to consider in this analysis: (1) the severity of the crime; (2) whether the suspect actively resisted or evaded arrest; and (3) whether the suspect posed an immediate threat.  (The Graham factors.)

When responding to a medical emergency, however, two of those factors usually don’t exist: no crime (strike one) and, by extension, no resisting or evading arrest (strike two).  Thus, the officer’s choice to use force may rest on a single factor, which the officer may have to assess and act on in a split second.  Acknowledging that the Graham factors are not exhaustive and that medical emergencies create unique challenges for law enforcement officers, the Sixth Circuit, in Hill v. Miracle, established a list of additional non-exhaustive factors to consider when determining whether an officer’s use of force is objectively reasonable in such situations:

(1) Was the person experiencing a medical emergency that rendered him incapable of making a rational decision under circumstances that posed an immediate threat of serious harm to himself or others?

(2) Was some degree of force reasonably necessary to ameliorate the immediate threat?

(3) Was the force used more than reasonably necessary under the circumstances (i.e., was it excessive)?

The court explains: “If the answers to the first two questions are ‘yes,’ and the answer to the third question is ‘no,’ then the officer is entitled to qualified immunity.  These questions and answers serve as a guide to assist the court in resolving the ultimate issue of whether the officers’ actions are objectively reasonable in light of the facts and circumstances confronting them.”

The Sixth Circuit’s opinion drives home the principle that rote application of the Graham factors may cause an unfair strike out.  Objective reasonableness requires an examination of the totality of the circumstances and deserves a careful, fact-specific assessment in each case.  Whether other circuits will hit home runs and also apply these new factors remains to be seen.

If you have any questions or would like more information, please contact Kevin R. Stone at [email protected] or Sara E. Brochstein at [email protected].