D.C. Superior Court Opinions

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E.g., January 16, 2018
E.g., January 16, 2018
Format: XXX-DWLR-XXXX
  • FAMILY LAW 

     

    RECONSIDERATION OF PATERNITY ACKNOWLEDGEMENT

     

    Abstract: One of the increasingly frequent issues in the area of paternity and support law is that of “revisiting” or “disestablishing” the voluntary acknowledgement of paternity by the putative father made without having had a DNA test or the adjudication of same at a later date with the legal father presenting DNA evidence showing conclusively that he could not be the biological father. Until July 2008, the relevant D.C. statute did not expressly address this issue. This Memorandum Opinion by the current Presiding Judge of the D.C. Family Court rules on the question of when a challenge to a voluntary acknowledgment of paternity may be made. The factual and procedural backgrounds to the case are summarized as follows: Facts. (1) The child in this case was born on July 7, 2008, soon after which the Respondent signed the birth certificate. (2) Three days later, he also signed a voluntary acknowledgment of paternity which, under the pertinent statute, created a “conclusive presumption” of paternity. Proceedings. (1) On January 14, 2009, the District of Columbia filed a petition against the Respondent to require him to provide financial support for the child. (2) A hearing was held on January 27, 2009, presided over by a Magistrate Judge. The self-acknowledged father was not present but the mother of the child acknowledged that, because she had had sexual relations with another man around the time of the child’s conception, she harbored reservations as to whether the Respondent was, in fact, the biological father. (3) The Government argued that, in light of the “conclusive presumption” which attaches under the statute to a voluntary adjudication of paternity, such “test results are irrelevant.” (4) Nevertheless, the Court sua sponte ordered that all parties undergo DNA paternity testing to resolve the issue scientifically. (5) On May 21, 2012, the test results, which biologically excluded the Respondent as the father of the child, were returned to the Court. (6) The Court thereupon dismissed with prejudice the petition against the Respondent. (7) The pertinent statute and Family Court rule provide that a final judgment of a Magistrate Judge may be reviewed, on proper petition, by an associate Judge of the Superior Court. The Government filed a petition for review in this case and this memorandum opinion ensued. Rulings. The Superior Court that ruled on the issues presented as follows: (A) Standards. (1) If appeal is sought from any final judgment or order of a Superior Court Magistrate Judge, the decision must first be reviewed by an Associate Judge of the Court; that ruling then becomes a final order of the Superior Court, subject to appeal to the Court of Appeals. (2) An Associate Judge of the Superior Court reviewing a Magistrate Judge’s final decision applies the same standard of review used by the Court of Appeals on appeal from a judgment or other order of the Superior Court. (3) Accordingly, a Magistrate Judge’s decision “may not be set aside except for errors of law unless it appears that the judgment or order is plainly wrong, without evidence to support it, or an abuse of discretion.” (4) The final order of a Magistrate Judge may be affirmed, reversed, modified, or remanded, in whole or in part. (B) The Statutes. (1) Several statutes (cited in Editor’s Note hereto) taken together, provide for the establishment of paternity by two means, as follows: (a) Voluntary Acknowledgement. (i) After a putative father has been given both oral and written notice of the alternatives to, legal consequences of, and the rights and responsibilities that arise from signing an acknowledgment of paternity, (ii) and then signs such an acknowledgment, complete all relevant information required therein, (iii) a “conclusive presumption” of paternity obtains. (b) Genetic Testing. (i) A second means of establishing paternity is by test results from a qualified laboratory recognized as such by regulations set forth by the U.S. Department of Health and Human Services, (ii) showing a probability of paternity of 99% or more, (iii) a result which also establishes a “conclusive presumption” of paternity. (2) The same statutes provide for the withdrawal or attempt to revoke an acknowledgment or adjudication of paternity, as follows: (a) Voluntary. (i) A signatory to a voluntary acknowledgement of paternity may rescind same within the earlier period of 60 days or the date of an administrative or judicial proceeding relating to the child in which the signatory is a party. (ii) Beyond that period, a voluntary signatory may file a motion pursuant to Domestic Relations Rule 60(b) on the basis of fraud, duress, or material mistake of fact, on which the movant has the burden of proof. (b) Testing. Genetic test results of less than a 99% probability of paternity will preclude any adjudication and conclusive presumption of same. (3) A proceeding to rebut the presumption of paternity must be commenced not later than two years after the birth of the child, after which time the presumption becomes conclusive. (4) In any such timely disestablishment proceeding, the movant must prove by “clear and convincing” evidence that the presumed father is not the child’s biological parent. (5) Nevertheless, even if evidence shows that the presumed father is not the biological parent, the Court may still find him to be the presumed father when (a) the conduct of the parties precludes the presumed parent from denying parentage; (b) it is in the child’s “best interest” to presumed paternity; and (c) the duration and stability of the child’s relationship with the presume father and the genetic parent require the presumption to continue. (6) These premises also apply, where pertinent, to proving the maternity of a child. (D) As Applied. The Reviewing Court (1) found that there was no evidence that the Respondent had attempted to rescind his voluntary acknowledgment of paternity executed in July 2008, within the 60 days permitted and therefore (2) held that the Magistrate Judge was without authority at the hearing in May 2012, beyond the two-year statutory limit to submit countervailing genetic test results, to order or make a final judgment based on subsequent DNA paternity testing, even though it conclusively excluded the Respondent. Conclusions. Accordingly, the Reviewing Court vacated the Magistrate Judge’s order and remanded the case “for further proceedings.”

  • D.C. FAMILY MEDICAL LEAVE ACT

     

    D.C. WAGE PAYMENT COLLECTION ACT

     

    Abstract: This is a case of first impression under the D.C. Family Medical Leave Act (FMLA) and the D.C. Wage Payment Claim Act (WPCA) determining whether someone who does not meet the formal requirements is entitled to the protection of either. The factual and procedural backgrounds to the case are summarized as follows: Facts. (1) In December 2010, the Plaintiff was employed as the Director of a senior care and rehabilitation facility located at Thomas Circle in northwest D.C. (2) In early June of the next year, she informed her superior that she was approximately six months pregnant. (3) Two months later, on August 8, 2011, when she was eight months pregnant, she informed her superior that she would need to take six weeks maternity leave following the birth of her child. (4) Eight days later, she informed the facility’s Human Resource Director that she had asked her doctor to complete the documentation for a FMLA leave request. (5) The next day, August 17, 2011, she was terminated, the employer expressly stating that the work limitation due to her pregnancy was a reason for so doing. (6) She had been employed with the Defendant for eight months and two days. Proceedings. (1) Plaintiff filed this suit containing multiple counts, two of which were: (a) wrongful termination by retaliation in violation of the rights granted by the FMLA and (b) failure to pay her for accrued leave time in violation of the WPCA. (2) The defenses on these counts were that: (a) under the FMLA (i) the Plaintiff did not meet the statute’s definition of an “employee” eligible for its benefits and (ii) therefore her actions were not protected by the statute; and (b) (i) under the WPCA there was a bona fide dispute as to the amount allegedly due and (ii) the Defendant’s personnel manual expressly provided that employees who are involuntarily terminated are not to be paid for unused personal time off. (3) The Plaintiff countered that (a) (i) where a retaliation allegation is made under the FMLA, the cause of action is proper because the statute does not contain limiting language on that issue and (ii) the Defendant was estopped from making that argument because the statute does require that an employer give at least five days’ notice that an employee is not eligible for FMLA leave, which was not done here; and (b) the Defendant’s internal operating procedures cannot trump the statutory obligation to pay wages and benefits due under the  WPCA. (4) On the grounds stated, the Defendant filed a Rule 12(b)(6) motion to dismiss these two counts because neither stated a claim upon which relief could be lawfully granted. Rulings. The Court ruled on the issues presented as follows: (A) Standards. (1) As of 2011, the Court had adopted the federal standards for Rule 12(b)(6) motions under the Twombly (2007) and Iqbal (2009) rulings of the U.S. Supreme Court. (2) To survive such a motion under those standards the complaint “must contain sufficient factual matter, [when] accepted as true, to state a claim that is plausible on its face,” not just possible. (3) To be deemed plausible, a complaint “must provide more than just labels and conclusions, and a formulaic recitation of the elements” of any claim. (4) Rather, a plaintiff “must plead factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” (B) The FMLA. (1) Employee Definition. (a) The statute makes it unlawful for “any person to interfere with, restrain, or deny the exercise of, or the attempt to exercise, any right provided” therein. (b) To establish a prima facie case, for retaliation under the statute, a plaintiff must demonstrate that (i) s/he was engaged in a protected activity; (ii) the employer took an adverse employment action; and (iii) there was a causal connection between the two. (c) The statute defines “employee” as “any individual who has been employed by the same employer for [at least] one year without a break in service … and has worked at least 1,000 hours during the 12-month period immediately preceding the request for family or medical leave.” (d) The Plaintiff conceded that she did not meet this definition. She argued, however, that the statute nonetheless protects “the attempt to exercise” the right against retaliation, without limiting that protection to formal “employees.” (2) As Applied. (a) Noting that there was no local case law on the retaliation issue presented, the Court followed the well-settled principle that where, as here, there is a parallel federal statute “enacted for the same policy reasons,” it may look to that statute’s regulations and case law “as persuasive authority.” (b) In so doing it found a division among the federal courts. Two Circuits have held that (i) a plaintiff who does not meet the statutory definition of “eligible employee” cannot state a claim for retaliation under the federal statute and (ii) such a person also is not covered by the “attempt to exercise” a right which s/he did not have in the first place. (c) The Trial Court rejected the federal authorities cited by the Plaintiff, finding that the facts in each of those cases were afield from those here. (d) Accordingly, it ruled “that the anti-retaliation provision of the local statute “does not protect an ineligible employee such as Plaintiff, who was not entitled to any rights under the statute at the time of her leave request and would not have been entitled to such rights at the time her leave would have commenced.” (C) Estoppel. (1) The pertinent FMLA regulation requires that when an employee requests leave thereunder, “or when an employer acquires knowledge that an employee’s leave may be for a … qualifying reason” under the statute, should the employer determine that the employee is not eligible it must give the employee notice with five days after the employee makes the request or the employer receives knowledge of the possibility for same. (2) In this case it was undisputed that the Plaintiff informed her supervisor on August 8, 2011, that she would be following her doctor’s advice to take maternity leave. The statutory deadline for a qualifying employee under those circumstances would have been five days later, or August 13th. (3) It is also undisputed that the employer did not terminate the Plaintiff until August 17th, without ever having informed her of her ineligibility. (4) Plaintiff argued, therefore, that the Defendant was estopped from terminating her beyond the statutory deadline for notification. (5) The Defendant countered by arguing that the Plaintiff’s August 8th comments did not constitute a formal request for leave that would have triggered the ineligibility notice but that it was her August 16th statement that she had asked her doctor to fill out the FMLA leave application that did so – thus making the five-day notification no later than August 21st. Perforce, it argued, its termination four days earlier was timely – even if she qualified for the right, which it did not concede. (6) The Court addressed the issue of timeliness first. It found that “the plain language” of the pertinent regulation “indicates that an actual request for …. leave, rather than a mere indication of intent to request such leave, must be made by the employee before the employer’s duty to provide notice of eligibility is triggered.” (7) Nevertheless, the Court also found, the regulation does not define the term “request,” nor does it set out any specific procedure for making same. (8) The Court concluded, however, that “when the need for leave is foreseeable, employees are required to notify their employer of their intent … [to do so] before the employee wishes the leave to begin.” (9) It ruled that “to satisfy the notice requirement, employees do not need to expressly state that they are requesting … leave [under the FMLA], but they must provide enough information about the reason for the requested leave to allow the employer to determine whether it qualifies as … [FMLA] leave.” (10) The Court found it “unclear” whether the Plaintiff’s August 8th statement regarding her expected need for maternity leave was a “request,” although it indicated that it appeared to “suggest that … [her] statement may have been sufficient to trigger …. [the Defendant’s] duty to notify, because she provided enough information for … [Defendant] to determine that her leave was for … [FMLA]-qualifying reason.” (11) The Court decided, however, that it need not reach that issue because, even if it was sufficient, “Plaintiff must also demonstrate that equitable estoppel is an appropriate remedy for Defendant’s allege failure to timely notify her of ineligibility for … [FMLA] leave.” (12) As with the eligibility issue, the Court found that the authorities cited by the Plaintiff on the estoppel issue were inapposite, ruling that the Plaintiff’s concession that she was not eligible for FMLA leave could not be transformed into detrimental reliance on the failure to notify her of ineligibility. (13) Accordingly, the Court found that the Defendant was “not estopped from contesting Plaintiff’s eligibility” for leave. (D) The  WPCA. (1) The wage payment statute requires that an employer pay an employee’s wages due not later than the working day following a discharge. (2) The term “wages” means “monetary compensation after lawful deductions, owed by an employer for labor or services rendered,” which has been held to include “vacation pay” where that is an benefit provided as a benefit of employment. (3) The statute also provides, however, that “in the case of a bona fide dispute concerning the amount of wages due,” an employer must give written notice to the employee of the amount which is admitted to be due and shall pay that amount “without condition,” but that the employee’s acceptance of that amount “shall not constitute a release as to the balance of … [the] claim.” (4) Although the statute does not define the term “bona fide dispute,” the Court observed that it “suggests that the dispute as to the amount of wages owed must be genuine and in good faith.” (5) It pointed out, however, that the U.S. District Court here (Sullivan, J.) has held that where an employer has timely paid the amount of wages due, “the employee does not retain any claims under the statute regarding the disputed wages” under the  WPCA but that s/he could seek a remedy for the disputed balance under a breach of contract theory. (6) Although the Plaintiff did not deny that she had received full payment for her last week of wages, technically speaking, even the regular wages had not been paid by the end of the next day after termination, as the statute requires, but 15 days later. (7) The only exception to the next-day rule is where a collective bargaining agreement (CBA) is involved. (8) The Court therefore found that the Defendant was “not relieved of liability for Plaintiff’s unused personal leave” due to its untimely compliance with the  WPCA. It then turned to consider what effect, if any, the terms of the Defendant’s personnel manual had on any unpaid leave time due. (E) Personnel Manual. (1) Citing this internal source, the Defendants argued that they genuinely believed that there was a “bona fide dispute” as to whether the Plaintiff was owed compensation for “leave time” because it expressly provides that no such compensation will be paid upon involuntary termination. (2) Because the Court was thus urged to consider materials outside the pleadings under the rubric of a Rule 12 dismissal motion, it treated the Defendant’s motion on this issue as a motion for summary judgment, pursuant to Rule 12(d). (3) The Plaintiff did not deny that she had received a copy of the personnel manual or contend that she had failed to read it. Rather, she argued that it could not control over the WPCA statute because the statute expressly states that “except as herein provided no provision of this chapter shall in any way be contravened or set aside by private agreement.” (4) What appears to be the lone case on the issue held that “in the absence of an agreement to the contrary, the fact that an employee was discharged for cause cannot operate to deprive him of earned vacation pay rights.” (5) These competing phrases – “except as herein provided” and “in the absence of an agreement to the contrary” – when superimposed, appear to allow for an employee to agree, upon appropriate circumstances, to an exception for the non-payment of leave time, the Trial Court ruled. (6) Pointing out that the  WPCA statute does not require that an employer provide paid leave, but it must deliver on it if offered as a benefit of employment, the Court found that the personnel manual constituted such an agreement to which the Plaintiff submitted herself on accepting employment with the Defendant. (7) It reasoned that, although an employer is not required to provide paid leave, if it does so it may establish reasonable conditions on when it will be paid and when it will not. (8) “It would be incongruous,” the Court concluded, “to allow an employee to recover vacation pay under the statute if she would not be entitled to such pay under a breach of contract theory.” (9) Finding that the Defendant had met its burden to demonstrate that there was an agreement that restricted the Plaintiff’s ability to recover pay for accrued leave, the Court also found that there was no genuine issue of material fact on this count and granted the Defendant summary judgment as a matter of law, as interpreted herein. Conclusions. Accordingly, the Court ruled against the Plaintiff on both these counts, eliminating them from the case, but permitted her to proceed on the remaining counts.

  • D.C. FALSE CLAIMS ACT / QUI TAM SUIT

     

    PUBLIC DISCLOSURE BAR / “DIRECT KNOWLEDGE” AND “ORIGINAL SOURCE” DOCTRINES DISTINGUISHED / STATUTE OF LIMITATIONS / FAILURE TO STATE A VALID CLAIM / CONSPIRACY TO FRAUDULENTLY OBTAIN FUNDS FROM THE DISTRICT / STATUTORY INTERPRETATION / FAILURE TO PLEAD FRAUD WITH PARTICULARITY

     

    Abstract: The Trial Judge in this case wrote a careful, methodical, and detailed memorandum order which thoroughly treats the various arcane issues that arise in both commercial paper and qui tam litigation. The factual and procedural backgrounds to the case are summarized as follows: Facts. (1) The assignment and sale of securities instruments, such as mortgages and deeds of trust, is a common commercial practice, covered by Article 9 of the U.C.C. Traditionally, every such assignment or sale had to be individually filed in the local office of land records. As land sales increased dramatically, so did the escalation of filing costs to mortgage lenders, as did the number of errors in the records. (2) In 1994, the Defendant Company created an electronic recording system for mortgages and other commercial paper which enables such dealers to file the necessary documents more easily and to keep track of them as they may change hands. A comparatively modest fee (e.g. $50-$75) is charged for each filing. (3) In a questionable practice, for each transaction, the system designated the Company as the mortgagee of record or beneficiary, as nominee for the lender, on the original mortgage or deed of trust, thus giving it “naked title.” (4) The Relator, a resident of Nevada, has worked in the mortgage industry for nearly 40 years, with a focus on loan processing and chain of title analysis. In early 2009, he concluded that the system’s naming the Company as the mortgagee of record or nominated beneficiary for the lender was a false statement and that public recordation of such a document constituted a fraud, indented to avoid the recording of sequential assignments of interest each time a note changed hands. (5) In due course, he focused on the practice as an alleged fraud and filed qui tam suits in at least four other jurisdictions, all of which were dismissed (6) On or about April 30, 2010, he notified the Office of the D.C. Attorney General of his information “under seal,” according to him. (7) Ten days later, he filed this suit under the terms of the D.C. False Claims Act (FCA), which permits a private party, if s/he is an “original source” of the information at issue, rather than deriving it from information already in the public domain, to file a qui tam fraud suit as a relator for the benefit of the District, which then becomes the real party in interest if it pursues the cause of action.  Such a relator becomes eligible for a portion of the recovery if the suit is successful. (8) This cause of action has a statute of limitations of (a) not more than six years after which the violation is committee, or (b) more than three years after the date when material facts are known, or reasonably should have been known, by the D.C. Attorney General’s Office, but (c) in no event longer than nine years after the date on which the violation is committed, whichever occurs first. Proceedings. (1) This action was filed on May 10, 2010, followed by two Amended Complaints during the next nine months. (2) On March 14, 2011, the D.C. Attorney General declined to exercise the statutory right to intervene and prosecute the action. (3) After service of process, the Defendants moved to dismiss on the grounds that (a) the Court lacked subject matter jurisdiction over the allegations because they had already been publicly disclosed prior to the filing of the suit and the Relator was therefore not the “original source” thereof; (b) the statute of limitations had already expired on the matter; (c) therefore, the suit did not set forth a claim upon which relief could properly be granted; and (d) fraud had not been pled with the particularity required by Rule 9(b). (4) The Relator opposed all these contentions, responding on the merits, and alternatively requested leave to amend for the third time. Rulings: The Court ruled on the issues presented as follows: (A) Standards. (1) Where a defendant challenges the court’s subject matter jurisdiction under Civil Rule 12(b)(1), the plaintiff has the burden of establishing same. (2) In making its determination, the court may consider facts and materials outside the pleadings without converting the motion into one for summary judgment. (3) Moreover, unlike dismissal motions on other grounds, the facts are not construed in favor of the plaintiff. (4) Although Rule 8(a) only requires a “short and plain statement of the claim showing that the pleader is entitled to relief,” that is simply a baseline requirement. (5) To survive a motion to dismiss, “a complaint must state a claim to relief that is plausible on its face,” not merely possible, which obtains “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” (6) Mere legal conclusions are insufficient, but a court should not dismiss a case simply because it does not believe that the plaintiff can prevail. The Court applied these standards to the four reasons that the Defendants’ advanced for dismissal of the suit, as follows: (B) Public Disclosure Bar. (1) To the Defendants’ contention that the Court lacked subject matter jurisdiction because the information in the complaint did not originally derive from the Relator, but was already in the public domain, the Relator responded that (a) there was no public disclosure, and, even if there had been, he was the original source for its publication, and/or (b) the Trial Court should declare a new and broader approach to such claims which, presumably, would be affirmed on appeal. (2) The Court examined the aspects of this defense as follows: (a) Generally. (i) The general rule is that “a qui tam action cannot be sustained where all the material elements of the fraudulent transaction are already in the public domain and the qui tam relator only comes forward with additional evidence incriminating the defendant.” (ii) It is insufficient that the relator supplies more detail than is already in the public domain; nor is it dispositive that a relator may have the ability to recognize the legal consequences of a publicly disclosed fraudulent transaction or merely uses his or her unique expertise or training to conclude that the material elements already in the public domain constitute a false claim. (iii) The key is “whether the public disclosure at issue is sufficient to set the government on the trail of the alleged fraud without the relator’s assistance.” (iv) The “public domain” includes (a) the general news media, (b) scholarly, scientific, and technical periodicals, and (c) trade journals, inter alia. (b) Particularly. (i) On this public disclosure score, the Defendants set forth in their motion scores of exhibits from public forums, including court decisions, newspaper, magazine, and journal articles, government reports, congressional testimony, and Internet sites on the subject, arguing that they demonstrate that this issue had long since been in the public domain and that the Relator could claim no incipient credit for the information. (ii) The Relator responded that most of this information, particularly the unregulated Internet, was simply not verifiable and was simply not information on which the court, or any other authority, could rely. (c) Rulings. (i) The Court rejected this argument, cleaving to the tradition of making a “broad” construction of the term to include all the foregoing sources, finding what it deemed the “sheer volume” of which, including the Internet sites, to be persuasive on the public disclosure front. (ii) It ruled that the controlling issue in this regard was not the “reliability” of these sources, but “whether the allegations were actually placed into the public domain and that the District would reasonably have had the information necessary to seek its own remedy pursuant to the False Claims Act.” (iii) The Court went through all seven of the Relator’s allegations, citing the number of publications regarding each, seriatim, as follows: (a) The formation of the Defendants’ system was motivated by financial self-interest (11 public sources); (b) Defendants’ misrepresentation of their role (8 public sources); (c) Defendant’s improperly assuming the role of nominee or beneficiary of the mortgages et al. (28 public sources); (d) Same with regard to assuming the role of beneficiary (8 public sources); (e) Defendants’ use of those designations to avoid recording assignments of interest as property changed hands (12 public sources); (f) Defendants’ utilization of these designations to profit from avoiding the payment of substantial sums in recordation fees (12 public sources); (g) A major negative result of such practices has been the creation of numerous difficulties in establishing a clear chain of tittle at the time of foreclosure (6 public sources); (h) Defendants initiated and conducted non-judicial foreclosures (8 public sources); and (i) Defendants designated non-company employees as officers to sign documents on its behalf (5 public sources). (iv) The Court found, although with some skepticism, that the Relator had informed the District of this alleged fraud in April 2010, prior to filing suit the next month. (v) The Court made a finite distinction between “direct and independent knowledge” by a relator and “original source” of the information. (vi) It found that, based upon his years of experience in this field and his realization of the alleged fraud, the Relator qualified as one having “direct and independent knowledge.” (vii) But it also pointed out that in order to be an “original source,” a relator “must show that s/he “did more than apply … expertise to [already] publicly disclosed information.” (viii) The Court further found, “as a matter of logic,” that the public disclosures of the information at issue had not been based on the Relator’s information because his first realization of the alleged fraud was “shortly after” January 2009 and he did not disclose it to the D.C. Attorney General’s Office until April 2010. (ix) On this basis, the Court ruled that the Relator “is not an original source of the allegations in the … complaint pursuant to the” FCA, which defines that term as [a] “an individual who has direct and independent knowledge of the information on which the allegations are based, [b] who voluntarily provided the information to the District before filing an action based on the information, and [c] whose information provided the basis or catalyst for the investigation, report, hearing, audit, or media disclosure which led to the public disclosure.” (x) Accordingly, the Court ruled that the Relator “cannot take shelter in the ‘original source’ exception to the jurisdictional public disclosure bar.” (xi) The Court also roundly rejected what it deemed the Relator’s “rather perplexing argument” that it “should ignore the precedent of its supervisory Court and strike its own path” in disregarding the surfeit of publications extant prior to the filing of this suit. (xii) Therefore, the Court concluded that it lacked subject matter jurisdiction to hear this matter because of the public disclosure doctrine. (C) Statute of Limitations. (1) The FCA prohibits the filing of a qui tam action (a) more than six years after the date on which the violation was committee or (b) more than three years after the date when material facts are known, or reasonably should behave been known, by the Office of the D.C. Attorney General, but (c) in no event longer than nine years after the date on which the violation is committed, whichever occurs first. (2) Since the Defendant Company began operating in 1996, and early reports of the Defendants’ practices had been published during 1994-97, the Court concluded that the District (and the Relator himself) “reasonably should have known” from these public disclosures that an FCA suit was actionable no later than 2008, even under the full nine-year limitations period, but he did not do so until 2010. (3) The Court found that, although the number of such putatively fraudulent transactions during that period may not be known, the material facts underlying this practice “do not depend on specific mortgage documents.” (4) It also rejected the Relator’s argument that the time period should have been tolled because the Defendants had “affirmatively concealed their fraudulent conduct.” (5) The Court found this concept inapplicable under the fraudulent concealment rule. (i) Under this rule, the limitations period is suspended when a defendant has “employed affirmative acts to … fraudulently concealed either the existence of the claim or facts causing the basis of a cause of action.” (ii) However, if the plaintiff “knew, or by the exercise of due diligence could have known, that s/he may have had a cause of action” the time will not be tolled. (iii) The Court could not find, it said, that the District (as the true plaintiff in interest) could not have known, upon exercising due diligence, that it may have had a cause of action despite to any concealment by the Defendants. (iv) The Court therefore concluded that the FCA statute of limitations “nonetheless bars this action,” thus depriving it of subject matter jurisdiction. (D) Failure to State a Claim. The Court analyzed this contention as to whether the Defendants’ statements or actions constituted a false statement, as follows: (1) The Defendants argued that styling themselves as a mortgagee, nominee, or beneficiary did not constitute a “false statement” under the FCA. (2) Although the weight of persuasive case law holds that the Defendants were correct on this score, at this stage of the case, the Court found that, drawing inferences in favor of the Relator, a sufficiently pled “colorable claim” had been made. (3) However, the Court found that, although all changes of title and interest were required to be publicly recorded, the Defendants can be deemed “lenders” under the common usage of the trade, and qualified for the “lender-to-lender” exception to the requirement to pay fees for “secondary market transactions.” (4) Moreover, the Court found, the transfers between members of the Defendants’ database “do not convey an economic interest in real property” and “are not the same as deeds denoting a transfer of an economic interest” therein. (5) Therefore, neither their self-designation nor their actions could be denominated as false or fraudulent, and accordingly the Relator’s complaint on this count “does not state a claim upon which relief may be granted, as a matter of law.” (E) Conspiracy/Continuing False Claims. (1) Although the Relator did not oppose the Defendants’ argument on the conspiracy and continuing false claims counts, the Court acceded to the stated preference of the Court of Appeals in such matters that, rather than simply dismissing them, a trial court should decide the case on the merits, rather than the “procedural missteps of the parties.” (2) Accordingly, the Court addressed the final two counts in the complaint, as follows: (a) The pertinent statute penalizes any person who “conspires to defraud the District by getting a false claim allowed or paid by the District, or (b) who “is a beneficiary of [even] an inadvertent submission of a false claim to the District, [who] subsequently discovers the falsity of the claim, and fails to disclose” same to the District. (3) The statue defines “claim” as “a request or demand for money, property, or service made to any employee, officer, or agent of the District, or to any contractor, grantee, or other recipient, whether under contract or not, if any portion of … [same] was provided by … the District, or if the District will reimburse such … [entity] or other recipient for any portion of the money or property which is requested or demanded.” (4) Noting that the foregoing makes illegal a “false claim” via a “demand or request for money, property, or services” from the District, the Court carefully pointed out that no such allegation was made by the Relator. Rather, the complaint asserts “the concealment of an alleged obligation to pay funds to the District. (5) It was clear to the Court that this particular statute did “not facially impose penalties for participation in a conspiracy to conceal an obligation to pay … or failing to disclose a later-discovered inadvertent concealment of an obligation to pay” fees or other funds to the District. (6) The Court interpreted this statute on the basis of what it did not say as much as on its express terms. “When the drafter of a statute includes particular language in one section … but omits it in another,” the Court ruled, “it is presumed that the drafter acts intentionally and purposely in the disparate inclusion or exclusion,” otherwise known as inclusio unius est exclusio alterius. (7) Accordingly, the Court found that these counts “must fail as a matter of law, as the cited provisions do not impose liability for the actions alleged …, even presuming the truth of those allegations.” (F) Pleading Fraud with Particularity. (1) Finally, the Court addressed the Relator’s claim that the specificity pleading requirement for fraud in Rule 9(b) should be relaxed in cases, such as this one, with “hypernumerous instances” of same. (2) The Court noted that the uniform holding under that rule is that false claims and anti-fraud statutes require that “complaints brought [there]under … must comply with Rule 9(b).” (3) Indeed, under D.C. law, “fraud is never presumed and must be particularly pleaded” with the “time, place, and content … of the fraud.” (4) At the same time, however, the Court agreed with the Relator that he “need not describe … the particular circumstances of each individual false claim [that ever took place] under this rubric. To hold a relator or plaintiff to this standard, the Court observed, “would make the filing of a qui tam complaint alleging pervasive and systemic false claims over a period of years, as in this case, so unwieldy and burdensome as to contravene the purpose of the False Claims Act.” (5) It concluded that Rule 9(b), therefore, “does not require a detailed description of each and every false claim where the fraud takes place over many years, involves numerous false claims, and the alleged scheme is sufficiently complex.” (6) Having said that, however, the Court also found that the Relator had made only “general allegations,” but had made “few distinctions between the acts of the various Defendants” and it therefore “cannot find that … [he] has set forth with particularity facts which would provide the Court and the Defendants with Rule 9(b) notice of the allegations … with respect to their various roles in the alleged fraudulent submissions, conspiracy, and continuing false claims.” The lapses, the Court pointed out, were that (a) he had not set forth which of the entities actually recorded the documents which reflect the false claims; (b) whether the Defendants (or which Defendants) were involved in the secondary mortgage market transactions; and, (c) perhaps most crucially, any substantial distinction between the roles of the Defendants in the alleged transactions resulting in the allegations of false claims. (7) Accordingly, the Court stated, it “would dismiss this action based on a failure to plead with particularity pursuant to … [Rule] 9(b).” (G) Leave to Amend.  In view of the fact that the Court had ruled against the Relator on every argument advanced by the Defendants, resulting in a finding of lack of subject matter jurisdiction, it denied what it called his “rather unorthodox request” that he be granted leave to amend for the third time in this case,” which would be his fourth opportunity to set forth a proper complaint. (H) Conclusions. The Court’s conclusions were as follows: (1) The allegations in the Second Amended Complaint were “substantially similar or identical to those previously publicly disclosed and thus barred by the “public disclosure” doctrine applicable to the D.C. False Claims Act. (2) Although the Court found that the Relator qualified as a person with “independent knowledge” of the alleged fraud, it also found that he does not qualify as an “original source” under the statute. (3) This action was filed after the expiration of the FCA’s most expansive statutory limitation period. (4) The most recent complaint fails to state a valid claim upon which relief may be legally granted on all counts. (5) Moreover, it does not plead fraud with the requisite particularity under Rule 9(b). (6) Finally, the foregoing means that the Court does not have subject matter jurisdiction and the case must be dismissed with prejudice.

  • CRIMINAL LAW AND PROCEDURE

     

    D.C. INNOCENCE PROTECTION ACT / STANDARDS / SECTION 23-110 INEFFECTIVE ASSISTANCE OF COUNSEL MOTION / STRICKLAND STANDARD / CONTEMPORARY STANDARDS AT THE TIME OF TRIAL / RECANTATION / BRADY EXCULPATORY ISSUES / MATERIALITY

     

    Abstract: In one of the most notorious and brutal local murder cases in the last part of the 20th Century, recent motions to re-open the case based on various grounds, demonstrated the finest efforts each of defense lawyers zealously advocating their clients’ interests, prosecutors even-handedly defending the convictions, and a wise Judge who refused to have judicial integrity subsumed by the passionate arguments of the hour, instead methodically applying the elements of the legal principles at issue. The factual and procedural backgrounds to this case are summarized as follows: Facts. (1) At around 4:00 p.m. on the rainy afternoon of October 1, 1984, Catherine Fuller, a diminutive 38-year-old mother of six, who lived near the intersections of 8th and H Streets, N.E., made the fatal decision to go out to purchase groceries for her family. She carried $50 cash, which she folded into one of her inner garments for safekeeping. (2) She made the mistake of walking past what was then a park (now a large drug store) on the southeast corner of 8th and H Streets. A dozen or so males were “hanging out” at the park, talking about “getting paid,” a slang term for robbery.  (3) As Mrs. Fuller walked past them, they quickly decided to rob her.  They broke up into two groups and pursued her. As she turned onto 8th Street, one group followed up behind her and coerced her into an alley, while the other moved ahead to cut her off in a pincer movement at the 9th Street end of the alley. (4) Five members of the pursuing group began to punch and kick her and one of them felled her with a blow to the head with a wooden plank. (5) They carried her to the front of an abandoned garage in the alley, where the beating continued. Her garments were partially torn away and her money stolen before she fell into unconsciousness. (6) They dragged her into the garage, where one took a ring from her finger and the rest of her clothes were torn off. (7) Two of them held her legs apart while another took a length of discarded pipe and shoved it approximately a foot into her rectum, also shattering her liver. (8) They left her on the concrete floor of the garage where, after two hours of trauma and exposure, she died, according to the autopsy report, of multiple broken bones, the anal intrusion, and internal bleeding. Her body was discovered that same evening by a street vendor who had gone into the alley to relieve himself. (9) Numerous eyewitnesses placed the Defendants at the crime scene in the alley and they were later arrested and indicted. Proceedings. (1) One of the Defendants (Yarborough) gave two inculpatory statements, one written and one videotaped. His trial lawyer filed a motion to suppress, both on grounds of violation of the Miranda
    rule and coercion, which included physical violence. (2) The Trial Court denied the motion, but only the written statement – which the Court ordered redacted as to any references to other co-defendants – was used at trial, and the jury was instructed that it could only be used against the declarant. (3) After a lengthy trial in December 1985, in which the Government relied heavily on co-operating witnesses from the group who had pled guilty to lesser charges, eight of the ten accused were convicted of, inter alia, kidnapping, robbery, and felony murder. (4) In 1988, all convictions were affirmed on appeal, the Court finding that the evidence against the Appellants was “overwhelming.” (5) The Trial Judge died in 1992, and all further matters in the case were assigned to other Judges. Seven years after the trial, in 1995, Defendant Yarborough, acting pro se, filed a post-trial Section 23-110 motion alleging ineffective assistance of trial counsel during the pre-trial suppression hearing, arguing that counsel had not called to the attention of the Trial Court his very low intelligence and educational level. The motion was denied, with the successor Judge expressly ruling that he had failed to show the requisite prejudice under the Strickland rule (1984). (6) During the 25 years since the trial, one of the Defendants died in prison and another was paroled; the remaining Defendants are still serving their sentences. (7) In December 2011, they filed a motion under the D.C. Innocence Protection Act (IPA), asserting that they were actually innocent of the crimes, and contending that (a) before trial the police had literally beaten confessions and inculpatory statements out of certain witnesses; (b) at the time of trial, the Government deliberately failed to convey this and other materially exculpatory evidence to the collective defense lawyers, in violation of the Brady rule; and, finally, (c) one Defendant raised a Section 23-110 claim anew, based on ineffective assistance of counsel during the pre-trial motions stage of the original case. (8) Further, their affirmative evidence consisted of advancing the contention that the erstwhile co-defendants who testified against them during the trial (a) were coerced by the police to lie and (b) have now recanted their testimony as false, and was based entirely on news reports rumors, and information fed to them by the Government. (10) This motion was assigned to the author of this opinion, who, after having served 34 years, was by then the most senior active Judge on the Superior Court. He held a 23-day evidentiary hearing from late April to mid-May 2012, at which the Court took testimony regarding all of the Defendants’ claims. Rulings: The Court set forth three basic rubrics in making its rulings: (1) the linchpin of the entire matter would depend on whether the Court believed the recantations of the former Government co-operating witnesses; (2) certain decisions would be made on the basis of standards relevant to the time period of the trial; and (3) issues that had already been fully litigated would not be reconsidered. It then ruled on the issues presented as follows: (A) Ineffective Assistance. (1) The Court began with a review of the lone ineffective assistance of counsel claim. At the outset, it pointed out that a person convicted of a crime is afforded only one Section 23-110 motion, in which all claims must be made. This is due to the practice of conserving judicial resources so as not to allow seriatim piecemeal claims to be raised by those who have been convicted, known as the “abuse of the writ” doctrine. (2) To this Defendant’s claim that his unsuccessful motion before another Judge seven years earlier had been pro se, without counsel, and the ironic product of the very subject thereof, i.e., his limited intelligence and education, the Court pointed out that there are no exceptions to the general one-motion rule in this regard. (3) However, the Court ruled, although ordinarily it would decline to consider a successive 23-110 motion, because “the question was not entirely free from doubt,” it decided to address the issue de novo. (4) Under the well-known Strickland standard (1984), to succeed on such a motion a defendant must show (a) counsel’s performance was so deficient that it fell below an objective standard of reasonableness, and (b) the deficient performance was so prejudicial that, but for counsel’s errors, the result of the proceeding would probably have been different. (5) The threshold rule is that counsel should be given “sufficient latitude to make tactical decisions and strategic judgments involving the exercise of professional abilities.” (6) In so doing, a court should “strongly presume” that counsel “rendered adequate assistance and made all significant decisions in the exercise of professional judgment,” without second-guessing counsel’s conduct. (7) The rule is that “a reasonable tactical decision will not support a claim of ineffective assistance of counsel.” (8) Thus, “a new trial should not be ordered because the court or another attorney, with hindsight, might have chosen a different course.” (9) To establish the prejudice to the case in a Strickland analysis, the defendant must demonstrate “a reasonable probability that, but for counsel’s unprofessional errors, the result of the proceeding would have been different.” (10) In turn, a “reasonable probability” is one “sufficient to undermine confidence in the outcome” and requires a “’substantial,’ not just ‘conceivable,’ likelihood of a different result.” (11) In the context of this issue, which involved counsel’s conduct in prosecuting a suppression motion, the defendant’s burden to show prejudice is to demonstrate “that the motion, if properly litigated, would have been granted and, had the evidence been suppressed, it is probable that the outcome of the trial would have been different.” (12) To support his claim, this Defendant presented the testimony of two Ph.D. psychologists. (a) One had examined him and determined that his IQ was approximately 70, which put him in the bottom one percent, meaning that he is more suggestible than 99% of the population. (b) The other, who was also a J.D. and an expert in criminology as well, testified that, although a relatively small number of confessions are false, they prove that false confessions do occur. Their common features include harsh interrogation techniques, threats or promises of leniency or other reward to produce a confession, all of which are particularly effective on the mentally retarded. He concluded that “there is a heightened risk of a false confession” in this case. (13) The Court, however, concluded that “a heightened risk of a false confession is not the same as a likelihood that the confession is false.” It found that, other than the latter expert’s “own intuition,” he had produced no evidence that this had occurred with regard to this Defendant. (14) The Court ruled that “reasonably competent representation in 1985 did not require every defense attorney to develop the kind of sophisticated psychological testimony … [on which this Defendant] now relies …, much less the largely inadmissible expert testimony on false confessions.” (15) Moreover, even assuming that this additional evidence of the Defendant’s “low intellectual functioning and educational level might have marginally aided the presentation of the motion,” the Court ruled that “it cannot be said that an otherwise competent defense attorney in 1985 was performing below the constitutional minimum standard by focusing on … heavy handed police interrogation techniques rather than on his client’s individual vulnerability.” (16) The Court also found that such evidence would not have changed the outcome on the motion to suppress because, although Yarborough did lie about certain things in his statement to the police, he did not lie about being present at the scene of the murder; indeed, the evidence “overwhelmingly put him there,” the Court pointed out. His falsehoods were that he did not participate in the attack, robbery, and murder of the victim, but that he was only an observer. (17) Such a self-serving lie, the Court observed, “was not the statement of a helpless mentally vulnerable young man being fed facts by the police and parroting them back to please his interrogators.” Rather, “it was the voluntary admission of a conniving youthful offender trying to distance himself as far as possible from the crime while not denying that he was there, which he [also consciously] assumed the police already knew,” the Court concluded. (18) In view of that deviousness, the Court was confident that “no amount of psychological testing or social science research was likely to convince the [trial] court that this false exculpatory statement should be suppressed, particularly where the Judge did not believe the Defendant’s claim about physical coercion in the first place.” (19) The capstone for this conclusion was the reviewing Court’s observation of Yarborough’s testimony pursuant to his current motion, which it found self-contradictory, filled with “extraordinary claims,” particularly regarding the alleged police violence perpetrated upon him prior to his statement, contained other “outlandish allegations” that were contradicted by the testimony of police witnesses who had been present at the interrogation, and overall, was “patently incredible.” (20) Finally, the Court noted that “all of this was litigated at the trial in 1985,” and the Trial Judge had ruled that a valid Miranda waiver had been obtained – a ruling which the Court of Appeals affirmed. (21) Finding that his testimony at the hearing on this motion “cannot be credited” and that “the type of evidence he now faults his lawyer for not putting on [at the original suppression hearing] would not have changed the outcome of the motion … or the outcome of the trial,” the Court concluded that Defendant Yarbrough “has not shown either deficient performance or prejudice under the Strickland standard,” and his Section 23-110 motion was denied anew. (B) The IPA Claim. (1) As the title of the statute indicates, the goal of a movant thereunder is to prove his or her innocence, which may be done in one of two ways: (a) to have a conviction vacated, a movant must prove “actual innocence” by the clear and convincing evidence standard, or (b) to obtain a new trial, the movant must prove by a preponderance of the evidence that s/he is actually innocent. (2) The court may consider “any relevant evidence,” but it must consider the following: (a) the new evidence; (b) how it demonstrates actual innocence; (c) why it is not cumulative or merely impeaching; and (d) if the conviction resulted from a trial, and if the movant asserted a theory of defense inconsistent with the current claim of innocence, the specific reason s/he asserted an inconsistent theory at trial. (3) At the outset of its consideration of the IPA motion, the Court noted that the Movants did not actually present any “new” evidence; rather, they were relying entirely on the recantation of the testimonial evidence by four Government witnesses, Messers. A-D. The Court considered them as follows: (4) Witnesses A and B. (a) With regard to the first two, the Court noted that in order to accept their current assertions ostensibly in favor of the Movants, it “must begin by suspending … disbelief” that both of them had pleaded guilty to lesser, but still serious, charges, and had accepted lengthy sentences as the result of police coercion, but are now making truthful assertions to the contrary. (b) Moreover, implicit in their current positions is the premise that each is “a witness who has demonstrated a willingness to lie under oath,” leaving the court to determine which of their version of events is the lie. (c) It is for this reason, the Court pointed out, that “courts are uniformly skeptical of witnesses who come forward long after their testimony to say that everything they previously said under oath is a lie.” Because “witnesses offering recantations are often facing radically different pressures than they were at the time of the ... trial,” to do so “upsets society’s interests in the finality of convictions, is very often unreliable and given for suspect motives, and most often serves merely to impeach cumulative evidence, rather than to undermine confidence in the accuracy of the conviction.” (d) Against this backdrop of traditional skepticism, the Court noted its ability to have seen firsthand the testimony and demeanor of A and B at the hearing on the IPA motion and to compare them with their videotaped interrogations 27 years earlier, as well as having the opportunity to compare it with the completed record testimony of other trial witnesses who had placed some or all of them at the scene of the murder. (e) It found their current assertions that (i) they were not there and (ii) that they had been forced by the police to name others as the perpetrators, to be “nothing short of preposterous.” Not only was their presence corroborated by “too many other witnesses,” but both were also “extensively cross-examined at trial by ten seasoned defense counsel over the course of several days” and they never deviated from their original versions of events. (f) The Court found that “it is exceedingly unlikely that any juror would have concluded that … [they] were not on the scene or that they were not accurately reporting at least most of what they saw, heard, and did that day.” (g) Although they were both currently out of prison and the motives for their 180-degree turn on their previous testimony “cannot be known,” the Court concluded that “whatever their current motivation may be,” it did “not credit their recantations,” which therefore did not help the Movants in proving their actual innocence. (5) Witness C. (a) The Court found that the testimony of this witness was “even less helpful” to the Movants because of her frequent assertions of lack of memory on key facts, including several regarding the savage anal assault on the victim. At the IPA hearing, she repeatedly asserted simply that she had lied at the trial but could not remember anything else. (b) Again, the Court noted that although her motives for trying now to help the Movants were “unclear,” the fact of her repeated contentions of lack of memory “makes her current testimony relatively useless and adds nothing to … [the Movant’s] claims of innocence.” (6) Witness D.  (a) The Court noted with surprise that the testimony of the final recanting witness at the IPA hearing, far from benefitting the Movants, “actually supported the Government.”  (b) This was because, instead of recanting his trial testimony, he actually recanted a June 2009 affidavit which he had given defense counsel in which he had recanted same. Instead, at the hearing he affirmed his original trial version that he specifically remembered seeing several of the Defendants near the park which the victim had passed that afternoon and saw them watching her cross the street, then pursue her. (c) Whatever else could be said of his putative “recantation,” the Court concluded, “it certainly cannot be said that his testimony helps” the Movants meet their burden of proving “actual innocence. (7) After considering all of the foregoing, the Court concluded that the Movants had “not come close to demonstrating actual innocence.” It ruled that “they have not proved by clear and convincing evidence that they are actually innocent, and just as surely they have not established their innocence by a preponderance of the evidence” so as to merit a new trial. Accordingly, they were “not entitled to relief under the Innocence Protection Act.” (C) The Brady Issues. (1) In the final category of Movants’ claims, the Court addressed the Brady issue.  In comparison to the Section 23-110 and IPA claims, the Court noted that the claim that the Government had withheld exculpatory evidence was “not so easily dismissed.” (2) To begin with, in terms of the Government’s obligation to disclose exculpatory evidence in this particular case, the Court pointed out that it was not just “any murder.” In addition to the notorious brutality of the case, which “inflamed the passions of the entire community,” it involved a team of nine police detectives and other officers, interviews with more than 400 witnesses, the arrests of 17 people, 13 indictments, and ten co-defendants at trial, which it took two Assistant U.S. Attorneys to prosecute. (3) The Court pointed out that, with the benefit of hindsight, one could go back through Government files in any criminal case and find materials that could arguably be defined as Brady and that “in an investigation this complex and extensive, it is almost inconceivable that mistakes would not be made.” (4) The Court also noted that “information that would be disclosed today under Justice Department guidelines and relatively recent caselaw would not have been routinely turned over to the defense in 1985.” (5) The elements of a valid Brady claim are that the information at issue must (a) have been withheld by the prosecution; (b) be favorable to the defendant; and (c) be material to guilt or punishment. (6) Such evidence is “material” if “there is a reasonable probability that, had … [it] been disclosed to the defense, the result of the proceeding would have been different.” (7) Materiality is shown “if, in the context of the entire case, the non-disclosure undermines the court’s confidence in the outcome of the trial.” (8) The Court addressed the undisclosed Brady issues seriatim, as follows: (a) A woman reported to the police that she had witnessed a male friend, who lived adjacent to the alley at the time, acting alone, abduct and murder the victim. Two weeks prior to trial, the male friend shot and killed her. This information was not disclosed by the Government. (b) Three witnesses who were in the alley shortly after the murder saw two men acting suspiciously and reported that observation to the police shortly after they arrived on the scene, after which the two men fled. Both were identified and one of the two men had recently been charged with two purse snatchings in the neighborhood. The Government did not disclose either the names of the two men or the witnesses who had seen them. (9) At the 2012 hearing, the Defense argued that the information about these three men could have provide a “counter-narrative” at trial for the argument that the victim had been killed by one or a combination of these men, rather than a mob composed of the Defendants. (10) The Court’s appraisal of this non-disclosed evidence was as follows: (a) As to the woman’s report that her male friend committed the murder, the Court found that: (i) There was “little question” that it was favorable to the Defense and had not been disclosed. (ii) At the hearing, the Government conceded that at a trial today, it would have done so. (iii) The Court ruled, however, that the third Brady element, i.e., that had it been introduced at trial, there was no “reasonable probability that … the result of the proceeding would have been different.” (iv) Moreover, the Court found not only was her testimony “riddled” with internal inconsistencies, but also that her accusation against her friend had been “thoroughly discredited” in that the jury would have had “to believe that …, acting alone, [he] attacked and murdered Mrs. Fuller, in the face of numerous eyewitness accounts [among hundreds] and other evidence proving that [the] crimes were committed by a large group of young men acting in concert.” (v) The Court concluded that even had this witness lived to tell her story, “any reasonable jury, in light of all the evidence, would surely have rejected it. (vi) For these reasons, it ruled that this testimony failed the “materiality” aspect of the Brady rule and therefore did “not undermine the Court’s confidence in the outcome of the trial.” (b) (i) As to the second undisclosed Brady witness, although three eyewitnesses at the scene of the murder identified him as also being present, no other witness identified him via subsequent photo spreads. (ii) The Court did not find this “identification” any more persuasive than that of the first Brady witness. Indeed, it likewise found it to be immaterial but also “arguably not even favorable to the accused.”  Although this suspect lived near the alley, no other witness put him near the scene of the murder. Moreover, even if he was there, he could have been a bystander, and his presence would prove nothing as to the innocence of the Movants. (iii) This evidence, the Court also concluded, “does not override the overwhelming evidence of the guilt” of the Movants or undermine its confidence in the guilty verdicts. (c) The Court also came to the same conclusions as to numerous other “subsidiary Brady claims” advanced by the Movants, including putative lies to the police, drug use, lack of recall, and eyewitnesses present in the park who did not mention seeing any of the accused. (D) Conclusions. (1) Having heard and reviewed all of the testimony, the putative recantations of Government trial witnesses, and the theories and arguments from the various Defense Counsel at the hearing in this matter, the Court was “convinced that the totality of evidence pointing to the guilt of … [the Movants herein] in the abduction and murder of Catherine Fuller … remains … ‘overwhelming.’” (2) Because one Defendant, Mr. Yarborough, was ruled not to be entitled to post-conviction relief on ineffective assistance of counsel grounds, the Court ruled that he was also not entitled to the relief sought by the others on separate grounds, either. (3) In addition to that, although it is clear that his statement could not have been used against the other Defendants at trial on a Bruton basis, in the context of this hearing for purposes of the comparison of relevant evidence, his statement actually provides corroborative evidence of the Movants’ collective guilt, which is buttressed by that provided by at least 10 other witnesses. (4) In any event, it certainly does nothing to help prove their “actual innocence,” the Court found. (5) By the same token, although the Government “should have disclosed certain pieces of information back in 1985 that were arguably favorable to the accused,” the Court ruled that “none of the undisclosed information was material under Brady … because none of it – viewed separately or cumulatively – would have made any difference in the outcome of the trial.” (6) This is because, the Court ruled, “it is not enough to show that the Defendants could have used the undisclosed evidence to construct … counter-narratives.” Rather, the materiality element of Brady requires that they show a “reasonable probability” that the undisclosed evidence would have produced a different verdict.” (7) Under that standard, the Court’s ultimate conclusion was that, “based on the entire voluminous record in this case, … [the Movants’] Brady claims, like their innocence claims, must fail.”

  • TORT LAW / WRONGFUL DEATH 

     

    PHARMACIST MALPRACTICE / DUTY TO WARN / LEARNED INTERMEDIARY DOCTRINE DEFENSE HELD INAPPLICABLE 

     

    Abstract: The factual and procedural backgrounds to this case are summarized as follows: Facts. (1) The Plaintiff in this case is the estate of the decedent who, for the last year of his life, had done business with a Drugstore which was part of a well-known chain operating in the District. (2) During that year, his physician had prescribed two drugs for him, one for depression and the other for attention deficit hyperactivity disorder (ADHD), both of which he repeatedly filled at the Drugstore. (3) These drugs, when taken together, however, are “contraindicated,” i.e., known to cause serious adverse effects in some patients. The Drugstore used a computerized system that informs the pharmacists of the customer’s prescription history. In this case, it also alerted to the facts that both these contraindicated prescriptions were being filled simultaneously and that they should not be filled without first contacting the customer’s physician to confirm the prescriptions. No such inquiry was ever made, however. (4) After the customer took the drugs together for several months, he died of sudden heart failure in January 2011. Proceeding. (1) The estate filed this suit against the physician, his clinic, and the Drugstore, asserting a duty to warn. (2) The Drugstore contended that (a) it had no duty to warn and (b) in line with the District’s recognition of the “learned intermediary” doctrine (i.e., in this case as the party between the drug manufacturer and the physician), that duty rested with the latter. It therefore moved to dismiss under Rule 12(b)(6). (3) The Plaintiff countered that there is a duty to warn in the face of a known contraindication, and that the Drugstore may not rely to the doctrine as a defense. Rulings. The Court ruled on the issues presented as follows: (A) Standards. (1) Because a motion to dismiss challenges the legal sufficiency of a claim, the court must examine the complaint to determine if it sets forth sufficient information that would permit inferences to be drawn that indicate that the necessary elements of the claim have been properly set forth. (2) In that regard, Civil Rule 8(a) requires only that a complaint set forth a “short and plain” statement of the facts relied upon. (3) The court is required to accept the facts set forth in the complaint as true, construing all the facts and inferences in favor of the plaintiff. (4) At the same time, however, a complaint must include “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Thus, “naked assertions devoid of further factual enhancement will not suffice, and the court is not bound to accept as true a legal conclusion couched as a factual allegation.” (5) Rather, to survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face,” not merely possible. (6) A claim is deemed to have facial plausibility “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” (7) A court may not dismiss a complaint simply because it does not believe that the plaintiff will prevail on the claim. (8) Dismissal for failure to state a claim is warranted “only when it appears beyond a doubt that the plaintiff can prove no set of facts in support of the claim.” (B) Duty to Warn. (1) Where pharmacists are concerned, the majority of jurisdictions do not impose a general duty to warn customers of the potential adverse effects of their medications. Various jurisdictions do not even impose such a duty as to pregnant women, warnings of side effects, or adverse reactions. (2) Those jurisdictions with partial requirements obligate the pharmacist to warn the customer or notify the prescribing physician only under certain circumstances, such as when the patient’s medical history or current medicine regime shows that a prescribed drug is contraindicated, inadequacies in instructions, or prescriptions in obviously lethal doses. (3) Generally, however, case law holds that a pharmacist has a duty to exercise the degree of “ordinary care, skill, thoughtfulness, and diligence” that “a reasonable, prudent person” would in the performance of duties which “ordinarily characterizes the profession.” (C) Learned Intermediary Doctrine. (1) This doctrine acts, in certain circumstances, to insulate an intermediary distributor from liability to a purchaser that should be applied to the manufacturer or the provider, in this case to insulate a pharmacy from liability to a customer that should lie with the drug manufacturer or the physician. (2) In general, courts are reluctant to hold pharmacies liable for injuries caused by drugs that were accurately dispensed according to the terms of a facially valid prescription. (3) Rather, according to persuasive case law from other jurisdictions, “it is only the physician who can relate the propensities of the drug to the physical idiosyncrasies of the patient.” The consensus opinion is that “to impose a general duty to warn on pharmacists would encourage … [them] to ‘second-guess’ the prescribing physician’s decisions” and “would intrude … [the pharmacist] into the doctor-patient relationship.” (4) Although the D.C. Court of Appeals recognized the doctrine in the Payne case (1985), applying it to certain products liability cases, it has never applied it to pharmacists. Its observation was that “the adequacy of the manufacturer’s warnings must be evaluated in relation to” the service provider, not the customer/plaintiff. (5) The Court’s rationale was that where “advertising did not induce purchase of the product, but the product was recommended by an intermediary who is a [learned] professional, the adequacy of the instructions must be judged in relationship to the professional.” Again, however, the Court has never applied that rationale to pharmacists. (6) Because there is no binding D.C. precedent and the general rule throughout the nation is that a pharmacist has no duty to warn a customer of the potential risks of a given medication, the Trial Court herein was “not convinced that that a pharmacy fits within the [defensive] framework of the learned intermediary doctrine” as locally recognized. (7) In this case, taking the allegations as true, as it was required to do at this stage, the Court found that the Plaintiff had adequately pled that the pharmacy knew through its computer system that there could be a serious adverse interaction between the two drugs that had been prescribed to the decedent. (8) It further found a basis to believe that it therefore had a duty to warn him, or to notify his physician, of the contraindication suggesting “a specific, defined, and foreseeable harm about which the pharmacists knew or should have known.” (9) The Court therefore declined to extend the defense of the learned intermediary doctrine to pharmacies, finding “it inappropriate to apply the doctrine to the instant case (at this stage) because the sound policy reasons underlying the doctrine do not appear …. to pertain to this case and should not be applied.” (D) Conclusion. Accordingly, the Defendants’ motion to dismiss was denied. 

  • CIVIL PROCEDURE / PERSONAL JURISDICTION / LONG-ARM STATUTE / APPLICABILITY TO CORPORATE DIRECTORS / “FIDUCIARY SHIELD” DOCTRINE / “MORE THAN AN EMPLOYEE” EXCEPTION / “SPECIAL INTEREST” STANDING / “DERIVATIVE CLAIM” STANDING / FAILURE TO STATE A CLAIM UNDER RULE 12(b)(6) 

     

    BREACH OF FIDUCIARY DUTY / BREACH OF CONTRACT / PROMISSORY ESTOPPEL / UNJUST ENRICHMENT 


     

    Abstract: This Memorandum Opinion even-handedly addresses a bewildering maze of civil procedure, personal jurisdiction, corporate law, trust law, and civil procedure, breach of contract and fiduciary duty, and various other issues swirling around one of the more controversial institutions in the world, the Unification Church. It is a tour d’ force of legal reasoning which applies neutral precepts of law to a heated dispute among persons and entities who managed to find their way into the judicial system of the District of Columbia from places as far away as South Korea and Japan. The factual and procedural backgrounds to the case are summarized as follows: Facts. (1) The Unification Church, founded in South Korea, by the Rev. Sun Myung Moon in 1954, has since become a complex international organization, with divisions and offices in various cities, including the District of Columbia. (2) The central tenet of the Church is what it calls the “Divine Principle,” a theological belief in “returning resurrection,” which posits that departed souls can expiate their sins and achieve spiritual salvation by returning to earth and cooperating with living people to do good deeds, citing Hebrews 11:40 (“God having provided some better thing for us, that they without us should not be made perfect.”). (3) In 1971, Rev. Moon moved to the United Sates to develop the Church here. Five years later, he directed the opening of a Church bank account in the District to be used for the benefit of its activities. (4) In 1977, Rev. Moon directed that a non-profit corporation be established in the District to implement the purposes of the Church. From the establishment of the corporation to 2006, hundreds of millions of dollars were deposited into the account and those funds were used pursuant to the directives of the corporation’s board of directors. (5) In 2006, the Rev. Moon designed his son Preston as a Director of the Church and of the corporation. (6) Two years later, Rev. Moon, then 86, designated another son, Sean, as the new leader of the Church. Shortly after that appointment, Preston, allegedly disappointed at having been passed over, began to take steps to re-organize the trust. (7) Members of the board of directors of the corporation, including the individual Plaintiffs, were voted out of office and replaced with others loyal to Preston. The reconstituted board then amended the articles of incorporation to remove all references to the Church and its mission to disseminate the Divine Principle. Properties were purchased with trust funds and titled in the names of other corporations that were wholly owned by Preston and payments for “consulting” services were similarly paid out to one of his subsidiaries. Proceedings. (1) In May 2011, the Plaintiffs, two persons acting as officers on behalf of several entities – termed “providential organizations” -- that are closely associated with the Church and which are putative beneficiaries of the trust fund, filed this suit to gain control of the corporation and the bank account and wrest it away from Preston Moon and five other Church officials on the grounds of breach of fiduciary duty, ultra vires acts, breach of contract, breach of fiduciary duty, breach of trust, and unjust enrichment. They also sought injunctive relief against further dissipation of assets and disgorgement of the proceeds of previous actions. (2) The Defendants’ responses were that all actions had been approved by a duly-elected board of directors which took the necessary steps to deal with modern issues facing the Church. They also asserted that the Plaintiffs have no standing to challenge how the corporation is run or how its donations are distributed, because the corporation was originally established “without owners,” i.e., no person, group, or entity has an ownership interest in it, thus leaving it self-governing by its board. (3) Based on these premises, in July 2011, the Defendants filed a Motion to Dismiss pursuant to Rule 12(b)(1), challenging the Court’s personal jurisdiction, and Rule 12(b)(6), challenging the sufficiency of the claim. Rulings: The Court ruled on the issues presented as follows: (A) Standards. (1) The plaintiff bears the burden of proving that the court may assert personal jurisdiction over the defendant. (2) Where multiple non-resident defendants are named, personal jurisdiction must be shown as to each. (3) In so doing, “bare allegations and conclusory statements are insufficient” and the plaintiff must allege “specific facts connecting the defendant with the forum.” (4) The District’s long-arm statute allows the court to exercise personal jurisdiction over a non-resident if that person has, inter alia, “transacted any business” here. (5) That concept is coincident with the maximum authority allowed under the Due Process Clause of the Fifth Amendment. (6) The business transacted need not be “extensive” to subject the defendant to personal jurisdiction here; in fact, a non-resident need not even have been present in the District to fall under that provision. (7) The critical inquiry is “whether the business transacted within the District … can be reached jurisdictionally without offending due process.” (8) That determination is made by showing “that a defendant has sufficient minimum contacts with the forum so that the exercise of personal jurisdiction would not offend traditional notions of fair play and substantial justice.” (9) A defendant must have “purposely directed” its activities at the forum state’s residents, such that it would “reasonably anticipate being hauled into court there.” (10) Thus, “the minimum contacts principle requires … [the court] to examine the quality and nature of the non-resident defendant’s contacts with the District and whether those contacts are voluntary and deliberate or only random, fortuitous, tenuous, and accidental.” (11) Where individual officers, directors, and employees of a corporation are concerned, the court does not automatically have personal jurisdiction over them simply because of that status or because it has jurisdiction over the corporation itself. (12) Under the “fiduciary shield doctrine,” where there are no allegations that a non-resident defendant’s contacts were for the purpose of transacting business individually, but only in that person’s official capacity in order to perpetuate a corporation’s business, such a defendant cannot be sued individually under the “transacting business” section of the long-arm statute. (13) This principle, however, is not absolute or a per se rule, but simply holds that “an individual’s role as a corporate officer, without more, is not a sufficient basis for exercising personal jurisdiction over the officer in his [or her] individual capacity.” (14) But if the non-resident defendant is found to be “more than an employee” of the corporation, s/he may not be protected by the “fiduciary shield,” as where s/he “set company policies and procures, was active in day-to-day operations, and maintained active involvement and supervision of all aspects of the company.” (15) Thus, if a court finds the “more than an employee” exception applies, it can impute the corporation’s contact with the District to the individual defendants who control the corporation, even if those defendants are not personally transacting any business here. (16) Although the D.C. Court of Appeals has never formally adopted the “more than an employee” exception, it has favorably referenced it in several opinions and has been applied by the U.S. District Court here. (17) Pleadings are construed “so as to do substantial justice.” (B) Personal Jurisdiction. (1) The Court found that it had jurisdiction over the corporation because it was organized under D.C. law. (2) Because, however, none of the individual Defendants was a resident of the District, the Court could exercise personal jurisdiction over them under the “transacting business” section and the “causing harm” section of the District’s long-arm statute. (3) As directors of the corporation, they had participated in business transactions by filing amended articles of incorporation, managing and selling properties, and operating or managing other businesses here, as well as engaging in conduct which the Plaintiffs alleged caused injury to them and to the corporation in the District. (4) Similarly, the Plaintiffs alleged that the individual Defendants “subverted the mission” of the Church by changing the articles of incorporation and personally participated in a “scheme to dissipate” the Church’s assets, all of which occurred in the District of Columbia. (5) By voluntarily becoming members of a D.C. non-profit corporation, they accepted all the rights, obligations, and protections that local laws provide. (6) The Court therefore ruled “that Plaintiffs have alleged sufficient facts to demonstrate that the individual Defendants have ‘purposely availed’ themselves of the laws of the District of Columbia and should, therefore, be subject to this Court’s jurisdiction” under the long-arm statute. (C) Standing. Having found jurisdiction over the Defendants, the Court then addressed the standing of the Plaintiffs to sue them, addressing two types of standing pertinent to this case, as follows: (1) Special Interest Standing. (a) A charitable trust is formed for the benefit of the public, and persons who administer such a trust are conduits through whom such benefits flow and do not derive any personal benefit from the trust assets. (b) Ordinarily, therefore, only a state official, such as the Attorney General, has standing to bring an action to enforce its terms to ensure that the trust property is put to proper use for the community at large. (c) This is because the designated communal beneficiaries consist of a large and constantly shifting class and allowing individual members to bring justiciable claims would result in recurring burdens on the trust res and multiple and vexatious law suits. (d) There is, however, a “special interest exception” to this rule where performance of the trust for the benefit of an individual is distinguishable from that for the public at large. (e) Such a “special interest” must be vindicated on behalf of “a clearly identified intended beneficiary,” not merely a possible beneficiary. (f) Also to be taken into consideration is “the nature of the challenge to the trustee’s acts.” (g) That determination turns on whether the claim flows from either (i) “an ordinary exercise of discretion” by the trustee, which is not actionable by a special interest beneficiary or (ii) an action by the trustee which constitutes a “basic change affecting the interests of the entire class” of affected beneficiaries, which may not be brought by a special interest beneficiary. (h) Put another way a beneficiary who is identified with “particularity” may sue, but one who is only identified “categorically” may not. (i) On the same “particularity” theory, more than one beneficiary may sue if its members are limited in number and they are challenging “an extraordinary measure threatening the existence of the trust.” (j) Here, the Court found that the Plaintiffs are not “members of a class of potential beneficiaries that is sharply defined and limited in number.” Rather, their complaint sounds in generalized terms, summed up in the allegation that the trustees are not acting to perpetuate the dissemination of the Divine Principle. This contention, the Court found, opens the class of beneficiaries to an “extremely broad” group. (k) Nevertheless, taking into consideration the “extraordinary measure” taken by the trustees which arguably “threatens the existence of the trust” which, without oversight, “could amount to a complete overhaul” thereof and “subvert all of its originally intended purposes,” the Court concluded that the Plaintiffs herein “individually and collectively are exactly the type of parties for which ‘special interest’ standing is reserved.” (l) The Court ruled that because the Plaintiffs are not merely members of the Church, but “are entities and individuals that have … a significant interest in … [the Church]’s dealings,” noting that they included the primary donor to the trust, principal intended beneficiaries, allegedly wrongly-ousted officers and directors, they qualified for the “special interest” exception, distinguishable from the public at large, for standing purposes. (2) Derivative Claim Standing. (a) A stockholder derivative suit is one in which one or more shareholders sue in the name of the corporation to enforce a legal right or prevent a wrong to the corporation, typically at the hands of its officers, because it has refused to do so. (b) The D.C. Nonprofit Corporation Act provides that only “members” of such a corporation have standing to bring a derivative suit and, because the corporation at issue here was organized as a non-member corporation, only the Attorney General could bring a derivative suit. (c) Further, Civil Rule 23.1 requires that a plaintiff seeking derivative standing must allege that s/he was a shareholder or member at the time of the challenged transaction. (d) In this case, none of the Plaintiff alleged that they were shareholders or members of the corporation. (e) Their argument, however, was that their cause of action was not a traditional derivative claim but a “quasi-derivative” one. (f) The threshold qualification for such a claim is that a plaintiff has a “special interest” in the governance of the corporation which gives it standing as the corporation’s “legal representative.” (g) The D.C. Nonprofit Corporation Act does not specifically identify those individuals and entities that have standing to bring a derivative claim as a “legal representative.” Although the statute does not define that term, case law requires that a “broad definition” be applied. (h) The Court, however, distinguished between a derivative action, which is brought on behalf of the corporation itself, and a person with “special interest standing,” who is seeking to secure an “individualized interest,” principles which it found to be contradictory. (i) The Court therefore ruled that Plaintiffs lack standing to bring a derivative action on the Church’s behalf and it was dismissed from the suit as a Plaintiff. (D) Contract Standing. (1) One of the Plaintiffs was the Japan-based church entity which was the largest contributor to the trust. Its cause of action was a breach of contract, alleging that the Defendants had misappropriated the funds in the trust. (2) The defense was that, absent denomination as a “restricted gift” with rights reserved, a contributor has no standing to sue over the disposition of donated funds and that only the Attorney General may sue to enforce conditions placed on a charitable trust. The Plaintiffs responded that these donations were, in fact, “restricted” to perpetuating the genuine work of the Church. (3) The Court pointed out that the relevant D.C. statute “explicitly provides settlors and persons with special interest standing to enforce the purpose of a charitable trust.” (4) Accordingly, the Court ruled that the contract-based claims “should not be dismissed on the ground that the … [major contributor] lacks standing to bring such claims.” (E) Rule 12(b)(6) Dismissal. (1) Such a motion challenges the legal sufficiency of a complaint; it is to be construed liberally so as to do “substantial justice.” (2) The only requirement under Rule 8(a) is that a “short and plain statement” of the facts alleged be set forth. (3) Although detailed allegations are not required, a complaint must set forth “more than an unadorned, ‘the-defendant-unlawfully-harmed-me’ accusation. Thus, “naked assertions devoid of further factual enhancement will not suffice. (4) The court must accept the well-pleaded allegations of the complaint as true and construe all facts and inferences in favor of the plaintiff. (5) At the same time, however, the court is not required to accept as true a mere legal conclusion couched as a factual allegation. (6) The factual allegations “must raise a right to relief above a speculative level” to that which “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” (7) A Rule 12(b)(6) motion should be granted “only when it appears beyond a doubt that the plaintiff can prove no set of facts in support of its claim.” The Court applied these premises to the remaining claims as follows: (F) Breach of Trust. (1) The Plaintiffs alleged that Rev. Moon had created an “oral charitable trust” for the benefit of the Church and that the Japanese entity had become a settlor of the trust by means of its major contributions thereto.  (2) Defendants argued that there were insufficient allegations to show even the intent to create a trust, let alone to determine the distribution of the funds therein. (3) The Court relied on the Restatement (Second) on Trusts, which defines a trust as a “fiduciary relationship with respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it.” (4) Under D.C. law, a trust is created only if (a) the settlor has the capacity to create a trust; (b) the settlor indicates an intention to create the trust; (c) the trust has (i) a definite beneficiary or (ii) is a charitable trust; (d) the trustee has duties to perform; and (e) the same person is not the sole trustee and the sole beneficiary. (5) There is no requirement that the trust be evidenced by a written instrument, but the creation of an oral trust, as well as its terms, must ultimately be established by clear and convincing evidence. (6) The sole challenge under these requirements was to Rev. Moon’s intent in creating the bank account and the Defendants contend that the evidence of any such intent was “wholly inadequate” in that there was no allegation of specific words or terms to that effect and that the mere creation of a bank account does not constitute the creation of a trust,
    i.e.
    , that this was merely an unacceptable “legal conclusion” by the Plaintiffs. (7) The Court rejected the Defendants’ contentions in this regard, noting that at this stage of the case, the Plaintiffs were not required to meet the “clear and convincing evidence” standard, but merely to have alleged “sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.” (8) Moreover, a trust can be evidenced by written or spoken language “or by conduct, in light of all the surrounding circumstances.” (9) Among the circumstances that may be considered are (a) the imperative, as distinguished from the precatory, nature of the words used by the settlor to create a trust; (b) the definiteness of the trust property; (c) the certainty of the identity of the trust beneficiaries; (d) the relationship between, and financial positions of, the parties; (e) the motives which may reasonably be supposed to have influenced the settlor in making the disposition, and (f) whether the result reached in construing the transaction as a trust would be such as a person in the situation of the settlor would naturally desire to produce. (10) The Court found that Rev. Moon opened the bank account in the name of the Church, rather than in his own or another person’s name, and that the “reasonable inference” was that he did so with the intent to create a “fiduciary relationship” with respect thereto for the benefit of Church activities. (11) To the Defendants’ argument that there was no evidence that Preston Moon ever accepted the role of trustee in the first place, the Court pointed out that the pertinent D.C. statute provides that “a person designated as trustee accepts the trusteeship … if the terms of the trust do not provide a method [for doing so] … by accepting delivery of the trust property, exercising powers, or performing duties as trustee, or otherwise indicating acceptance of the trusteeship.” (12) The Court therefore concluded that the Plaintiffs had pled sufficient facts from which it could “reasonably infer” that the Rev. Moon had intended to form a trust.  Although, it noted, this might not be sufficient to carry the day at trial, it was adequate at this stage of the case when allegations in the complaint and inferences drawn therefrom must be accepted as true. (G) Breach of Fiduciary Duty/Ultra Vires. (1) Plaintiffs alleged that the Defendants, as members of the Church’s board of directors, owed duties of obedience, loyalty, and care and a further duty not to take any action in contravention of its established mission and purpose, and that they breached those duties by (a) amending the articles of incorporation; (b) violating the Church’s long-standing custom and practice as to the appointment and removal of directors; (c) engaging in self-dealing by diverting assets away from that established purpose and to their personal pursuits; and (d) ceasing to use the Church’s assets to support its mission and activities. (2) The Defendants responded that this count should be dismissed because the complaint did not allege facts sufficient to establish that they owed any fiduciary duty to the Plaintiffs themselves, rather than to the Church. (3) They further argued that, by definition, ultra vires acts are those taken without authorization, whereas all those set forth in the complaint were ratified by the existing board of directors. (4) Plaintiffs responded that these actions had harmed them in their personal capacities, in addition to their interests in the corporation, because they were taken outside the authorization of the original articles of incorporation. (5) Moreover, where a charitable corporation is concerned, they argued, individual defendants may be held liable for breaches of their duty of loyalty to administer the trust in the interests of the beneficiaries. (6) The Court found that at this point is that the Plaintiffs had made sufficient allegations in the complaint, which clearly set forth the contentions that (a) the Defendants owed Plaintiffs a fiduciary duty; (b) they breached that duty; and (c) the breach proximately caused that injury. (7) The Court further found that the Plaintiffs had sufficiently pled at least one ultra vires act, which ostensibly violated a local statute which provides that no loans shall be made by a corporation to its directors or officers and those directors who vote to approve such a transaction shall be jointly and severally liable to the corporation for the amount thereof. (8) The Court’s conclusion was that the Plaintiffs therefore had legal standing to bring this claim. (H) Breach of Duty as Agent. (1) The lead Plaintiff in the case, the Family Federation, is the administrative religious entity that directs the Church worldwide, including the appointment and removal of leaders of the “providential organizations.” The Plaintiffs contended that Preston Moon was an agent of the Federation and that by acting in contravention of the purposes of the Church he had breached his fiduciary duty as an agent to the Federation as well. (2) The Defendants denied any such agency and, again, argued that the complaint did not sufficiently demonstrate same and that Preston had never consented to be such an agent. (3) Once again the Court pointed out that under D.C. law there is a two-fold test for determining the existence of an agency relationship: (a) the parties’ consent to establish it and (b) whether the activities of the agent are subject to the principal’s control. (4) Factors relevant to this two-part test are: (a) the selection and engagement of the servant; (b) the payment of wages; (c) the power to discharge; (d) the power to control the servant’s conduct; and (e) whether the work is part of the regular business of the employer.  Of these factors, the element of control is the most important. (5) A court will also look both at the terms of any contract and the actual course of dealings between the parties in which “conduct or words by a person which cause the other reasonably to believe that the person desires him to act on his account and subject to his control are sufficient to establish such authority.” (6) The Court found that the “course of dealings” showed that the heads of all the Church’s providential organizations were subject to appointment and removal by the head of the Federation, a hierarchical structure that had been in place for decades, thus making him “well aware” that he served it in an agency capacity. (7) Although acknowledging that this was “an extremely close call,” the Court concluded that, however the evidence might turn out at trial, “it is undeniable that Plaintiffs have pled facts to indicate that” the Church and the providential heads “operated in accordance with … directives” from Rev. Moon and the Federation, plus bringing them, Preston Moon included, knowingly and voluntarily under the implied control thereof, and thereby making them agents subject to trial on this count of the complaint. (I) Breach of Contract. (1) Plaintiffs also alleged that Preston Moon’s violation of the original articles of incorporation breached a contractual promise in not applying the donations to the purposes for which the Church was established but diverting them to his own interests. (2) The well-settled elements for a breach of contract claim are (a) the existence of a valid contract, meaning lawful subject matter and agreement on all material terms, between the parties; (b) consideration; (c) intent to be bound by an obligation or duty arising out of the contract; (d) a breach of the contract; and (e) damages caused by the breach. (3) The Court found the Plaintiffs’ allegations on this issue were less than precise, but presumed in a light most favorable to them that they were alleging an “implied-in-fact” contract based on the long-standing course of dealings between the parties and memorialized by various correspondence between their representatives. (4) An implied-in-fact contract is a valid contract, “differing from other contracts only in that it has not been committed to writing or stated orally in express terms, but rather is inferred from the conduct of the parties in the milieu in which they dealt.” (5) Noting that the nature of the contract was “not necessarily important,” the Court found that the question on this count was whether elements of a contract and breach had been properly pled. It found that, “at this stage,” such an agreement, its violation, and resulting damages satisfactorily showed, if proven, the Plaintiffs’ entitlement to relief. (J) Promissory Estoppel. (1) The elements of promissory estoppel are (a) a plaintiff suffered an injury; (b) in reliance to its detriment on a promise by a defendant; and (c) enforcement of the promise is necessary to prevent injustice. (2) The defense was that there could be no damage to a contributor to the trust because such contributions did not carry any implication of control over them but, indeed, an abandonment of any right to reclaim them. Therefore, there could be no injustice involved. (3) The Court found that the Defendants’ argument that damages are not available under this theory to be “misplaced,” concluding that there had been “a promise which reasonably leads the promisee to rely on it to his detriment” with unavoidable injustice.  (4) It concluded that “at this stage of the proceeding … that Plaintiffs have set forth facts by which the Court can infer each element of … a claim for promissory estoppel.” (K) Unjust Enrichment. (1) Under D.C. law, unjust enrichment occurs when (a) the plaintiff conferred a benefit on the defendant; (b) the defendant retained the benefit; and (c) under the circumstances, the defendant’s retention of the benefit is unjust. (2) On this count, the Plaintiffs alleged that the Defendants had retained funds for their own benefit “which in justice and equity belong to another.” (3) The Defendants repeated their argument that the contributors relinquished all claims and control over the donations and therefore they could not be deemed to have retained a monetary benefit that rightfully belongs to the Plaintiffs. (4) The Court, however, found that all the circumstances sufficiently indicated that the Church had used the trust money to fund its religious endeavors and that allegations of the misdirection of those funds, resulting in harm to the Plaintiffs, were sufficient to give rise to an entitlement to relief on a claim of unjust enrichment. (L) Conclusions. (1) The Court ruled that it had personal jurisdiction over the corporation at issue herein because it was a D.C. corporation. (2) It also ruled that it had personal jurisdiction over the Defendants under the long-arm statute. (3) It further ruled that the Plaintiffs had “special interest” standing to sue regarding the trust and also had standing under the contract claim. (4) The assertion of standing to sue under a “quasi-derivative” corporate claim, however, was disallowed. (5) The Court denied the Defendants’ motion to dismiss, finding that, at this point in the case, there was a sufficient pleading to support the establishment of a trust and one of the Defendants as the trustee, and that breach of that trust had been properly pled as well. (6) It ruled that both agency and breach of duty thereunder had been well-pled. (7) It also declined to dismiss the counts on ultra
    vires
    , breach of contract, promissory estoppel, and unjust enrichment. 

  • DOMESTIC RELATIONS / DIVORCE AND CHILD CUSTODY 

     

    ATTORNEY’S FEES / “NECESSARIES” EXCEPTION TO AMERICAN RULE / EFFECT OF BANKRUPTCY / CONSIDERATIONS FOR AWARD 

     

    Abstract: This Memorandum Opinion by the Trial Court is perhaps the last chapter in a long and unnecessarily contentious child custody and divorce case that dragged on for more than three years. The factual and procedural backgrounds to the case are summarized as follows:  Facts: (A) Custody. (1) After being married for only about a year, the parties in this case became the parents of a son born in the District of Columbia in 2008. (2) Four months later, however, the Mother absconded with the infant to Florida. There, she refused any access by the Father and filed false ex
    parte
    claims of domestic violence against him in local courts which kept him from seeing his son for more than 17 months. (3) When the Father filed an independent suit in D.C. Superior Court, the Mother, herself a member of the Bar here, with the aid of retained counsel, mounted a lengthy, but unsuccessful, challenge to the Court’s jurisdiction. (4) When this Court issue pendente
    lite
    child visitation orders (five of them over the course of 13 months) on behalf of the Father, the Mother never complied with any of them. (5) After her intrinsic fraud on the Florida courts was discovered, the D.C. case became the sole remaining litigation. In November 2011, based on extensive lay and expert testimony, the Court awarded permanent custody to the Father in the child’s best interests. Limited visitation was granted to the Mother, confined to the District of Columbia. (B) Divorce. (1) The parties’ divorce case ensued at the conclusion of which all financial, property, alimony, and child support matters were resolve in April 2012.  (2) The Court took under advisement the Father’s request for $700,000 in attorney’s fees. (C) Attorney’s Fees. (1) The “American Rule” is that each party in litigation bears his or her own attorney’s fees, expenses, and costs, but common law, statutory law, and case law provide exceptions that require one party to pay all or part of such financial burdens incurred by the other. (2) The Father pressed this request on any of three theories: (a) the “necessaries” rule; (b) the “bad faith” litigation rule; and (c) the pendente
    lite
    “suit money” statutory provision. (3) The Mother argued that these principles applied only to cases wherein a prior child custody decision had been rendered and child custody and support issues were considered in a later separate proceeding. (D) Bankruptcy. (1) Just as the Trial Court was about to issue its attorney’s fees ruling, the Mother filed for bankruptcy in Florida, where she retained residence. (2) Initially, she argued that the automatic stay applied to any of the Father’s claims against her in this case. (3) The parties later agreed that bankruptcy proceeding had no effect on the Court’s authority to determine those claims – although the practical effect of her ability to pay anything remained. Rulings: The Court ruled on the issues presented as follows: (A) Necessaries Rule. (1) Factors. (a) Finding that the Mother’s “conduct through the litigation … provides compelling factual support,” the Court determined that the Father should be awarded reasonable attorney’s fees and costs under the “necessaries” exception to the American Rule. (b) This is a narrow common law exception which provides for the award of attorney’s fees and costs in situations where child custody has been previously determined through a court decree and later one party necessarily incurs counsel fees to enforce or defend the terms of that order. (c) The Mother advanced three arguments against the application of this exception against her: (i) It applies only to situations wherein there was a prior, not a contemporaneous, issuance of a custody decree and that to impose such a requirement in cases such as this one would create a virtually automatic fee-shifting rule, inasmuch as the best interests of the child is a central issue in every custody dispute. (ii) The Father failed to identify with sufficient specificity those fees and costs associated with the custody dispute, as distinguished from other issues in the bifurcated case. (iii) She is unemployed and has no assets that would enable her to pay any such award. (2) Applicability. The Court addressed these arguments respectively, as follows: (a) Although the exception originated in the Paine case (1970), wherein there was a prior custody order, the Court of Appeals held therein that generally it could be applied “when the court finds that the engagement of counsel by the … [moving party] was necessary to protect the interest and welfare of the children.” (b) The Court cited three major local appellate cases in the 40 years since Paine, in which there had been no court order, contract, or settlement as between the parties regarding child custody as a predicate, all of which allowed for the award of attorney’s fees and costs under a range of circumstances pursuant to the necessaries rule on behalf of the best interests of the child. (c) More significantly, the Court pointed out that “there was nothing ordinary about this case,” noting that the Mother’s actions had unilaterally separated the Father from their child more nearly a year-and-a-half of his infant life, had caused him to have to fight totally unfounded and fraudulent court actions in Florida, and had deliberately disobeyed its own orders for child visitation. (C) Billing Specifics. (1) The Court also rejected the Mother’s contention that the Father had failed to set forth a particularized billing request limited to the child custody issue. (2) The case law holds that such an award “is within the broad discretion of the trial court” and “no mathematic computation of time consumed multiplied by some hourly rate” is required. Not only that, the amount the Father was requesting was conspicuously less than the total amount of the legal fees and costs that he had incurred in the case overall. (D) Impecuniousness. (1) To begin with, the Court ruled that the Mother’s present ability to pay any such award “is not an essential element of the necessaries exception.” (2) Beyond that, it found that her current financial status is unclear at best. Heretofore, when she was seeking sole custody of the child, she had asserted that, as a practicing lawyer, she was earning $300,000 a year and was therefore fully capable of providing for the child. By the time of the divorce trial, however, she asserted that she was unemployed, with little or no prospect for significant income in the near future, followed by a bankruptcy filing. (3) As to her indebtedness, she testified at the divorce trial that she had received loans and monetary gifts from family and friends to pay the attorney’s fees and collateral expenses of the litigation, but had no legal obligation to repay any of it. The Court also noted that in her round-trip flights between Florida and the District, she always stayed at a four-star hotel here for each three-to-four-night visit, even though she owns a furnished condominium in the District. (4) Moreover, she has “essentially unlimited” use of her twin sister’s credit cards and lives rent-free with her sister and brother-in-law in a ten-room mansion fronting on Tampa Bay. (5) Yet, she averred that she was unable to pay the $982 monthly child support ordered by the Court. (6) Its conclusion was that she “certainly does not live like a person facing great financial pressure.” (E) Award Considerations. Once a court has determined that the necessaries exception applies, it must consider certain factors set forth by statute and case law, as follows: (1) Litigation Results. The Court found that the Father had “clearly and ambiguously prevailed in the custody litigation,” inasmuch as every local ruling was in his favor. The Father’s total request for fees and costs was more than $737,000, and the Court found that “a large majority of the total fees, and virtually all of the costs, were incurred preparing for and presenting … [the Father]’s positions” during the child custody litigation. (2) Case Difficulty. This factor includes the nature and quality of the legal services rendered and the skills of counsel. The Court repeatedly found this to have been an “unusually complex and hotly contested case” during which the Father’s lawyer “handled everything that came her way with an admirable level of efficiency, skill, and (mostly) good humor.” Her fees were both “eminently reasonable” and “substantially less” than those incurred by the Mother in the same litigation, when she had “teams of lawyers” working for her. (3) Ability to Pay. The Court must also consider the parties’ respective abilities to pay.  Having already discussed the Mother’s financial situation in terms of her asserted inability to pay any award, the Court found that the Father earned approximately $145,000 annually but had debts exceeding $1.1 million, consisting mostly of loans from family members to fund the litigation. (4) Oppressiveness. In addition to considering the complexity of the litigation, a court must also consider whether either or both parties conducted it in an oppressive and burdensome manner. It repeated that the Mother’s “outrageous conduct and bad faith litigation tactics” had caused it to be “exceptionally expensive and burdensome” for the Father, resulting in total expenses to him of more than $1 million. The Court concluded that “[t]his case never would have been anywhere near as expensive or psychologically draining for … [the Father] had … [the Mother] not absconded … with the child and then behaved as she did.” (5) Child’s Best Interests. The entire basis of the award under the necessaries exception was the Court’s repeated findings that the assistance of counsel to the Father had been necessary in the best interests of the child. (F) Award. Taking all the foregoing facts and the common law, statutory law, and case law factors into consideration, the Court (1) found the Mother’s claims of inability to pay to be “unpersuasive” in light of her contrary prior testimony and (2) concluded that the same considerations entitled the Father to an award of $350,000, which was about one-half of his original request. This award, the Court pointed out, would still leave him with nearly $390,000 in fees and costs for the remainder of the overall case in the District and at least $780,000 more for the Florida litigation. [And, although the Court did not say so, this “loss” of well over $2 million consumed by these cases also drained what would have been a tremendous financial asset for the child, had these funds, or any significant part thereof, been more productively invested for his future.] The Court also noted that whatever defenses, if any, the Mother may have to this indebtedness in the bankruptcy case would be left to that Court. (G) Conclusion. The Court ordered the Mother to pay $350,000 for attorney’s fees and costs to the Father no later than August 31, 2012. 

  • CIVIL PROCEDURE

    STANDING / D.C. CONSUMER PROTECTION PROCEDURES ACT

     

    Précis: (1) In a qui tam manner, the D.C. Consumer Protection Procedures Act (CPPA) was amended in 2000, to allow “a person, whether acting for the interest of itself, its members, or the general public, to bring an action … seeking relief from the use by any person, of a trade practice in violation of a law of the District of Columbia.” (2) The amended “broad and inclusive” language does not per se require direct actual injury, but affords standing to any consumer seeking to bring an action for a violation of the law so long as that person is a member of a group that has been deprived of any statutory consumer right. (3) Nevertheless, in 2011, the D.C. Court of Appeals ruled that this amendment did “not evidence an intent … to override or disturb our constitutional standing requirement.” (4) The template for the civil procedure concept of “standing” to sue is the requirement in Article III § 2 of the U.S. Constitution that in order for a matter is to be justiciable by a court it must be a genuine “case and controversy.” (5) This means that a plaintiff must have (a) suffered some direct and immediate personal, economic, or other injury or disadvantage, commonly known as “injury in fact,” (b) that is reasonably attributable to the defendant, and (c) can likely be remedied by a favorable judicial decision. (6) Those requirements are attributable to Article III federal courts, while the D.C. Court system was set up under Article I as a “legislative court” system, established by act of Congress. (7) Technically, the D.C. Court system is not bound by the Article III “case and controversy” requirements, but throughout its history, the system has held, and operated on the premise, that this requirement is applicable to all cases at the trial level. (8) In 2011, the D.C. Court of Appeals ruled that the CPPA amendments did “not evidence an intent … to override or disturb our constitutional standing requirement.” (9) The “injury” element can be manifested in one of two ways: (a) by an actual injury of some type (“injury in fact”) or (b) by virtue of a statute creating legal rights which have been invaded (“statutory standing”). (10) To show the injury-in-fact element for standing purposes, a plaintiff “must produce evidence sufficient to withstand summary judgment that she ‘suffered actual damages because of the misrepresentations or omissions claimed to violate’” the pertinent statute. (11) Failing such a showing, a plaintiff does not have injury-in-fact standing. (12) The 2000 amendments to the CPPA do not expressly state that they apply retroactively. The traditional rule on statutory retroactivity is that a statute does not operate retroactively unless there is “clear … [legislative] intent favoring such a result.” (13) The test set forth in the case law is to “ask whether the new provision attaches new legal consequences to events completed before its enactment.” (14) If so, the new legal right does not apply retroactively. (15) If, on the other hand, as Plaintiff herein argued, the amendments “merely provide an additional remedy” to enforcement of existing rights, they do apply retroactively. (16) A trial court is not necessarily bound by an earlier ruling in a case denying the defendant’s Rule 12(b)(6) motion to dismiss for failure to state a valid claim, because at that stage of the case the court is required to construe the complaint liberally and give all reasonable inferences to the Plaintiff,” whereas on the merits the requirement is that the plaintiff must demonstrate that it was harmed (i.e., “suffered actual damages.” (17) In a CPPA case, simply asserting that the plaintiff suffered loss by paying the purchase price for the merchandise is insufficient to establish a “concrete injury” for purposes of showing standing to sue. (18) This is because “without alleging that a product failed to perform as advertised, a plaintiff has received the benefit of … [the] bargain and has no basis to recover purchase costs,” according to controlling case law.  (19) Thus, a plaintiff in such a case “could not for standing purposes ‘recast their [CPPA] product liability claim in the language of contract law’” because “she suffered no harm from any misrepresentation or omission.” (20) Such a plaintiff lacks injury-in-fact standing. (21) Whether a plaintiff has “statutory standing” depends on the scope of the statute, i.e., whether it is limited to the jurisdictional boundaries of the District of Columbia. (22) Where a statute does not expressly define its “territorial reach.” Under these circumstances, if the “court cannot find from the language structure, and history of the statute a legislative intent as to … [its] territorial reach, the court must resort to judge-made choice-of-law principles, as a stand-in for statutory construction.” (23) The Restatement on Conflict of Laws sets forth four factors for determination of the situs of an injury: (a) where the injury occurs; (b) where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation, and place of business of the parties; and (d) where the relationship is centered. (24) Territoriality is a vital element in consumer protection laws; otherwise, a resident of the District of Columbia who purchased a consumer item in any of the other 50 U.S. Jurisdictions would have standing to sue here for violation of the CPPA, even though nothing occurred in the District. (25) To hold otherwise “would open our courts to any person from anywhere who decides to lodge a complaint labeled as a ‘representative action’ under the CPPA, even though that person has suffered no injury in fact related to a District of Columbia merchant’s unlawful trade practice.” (26) A plaintiff “cannot predicate her own standing on what misrepresentations and omissions other District residents received.” (27) Such a plaintiff does not have “statutory standing” under the CPPA. (28) The tort of “unjust enrichment” occurs when a person retains a benefit (typically money) which legally or equitably belongs to another, for which the equitable remedy is restitution. (29) Disgorgement of profits from a consumer purchase based on the sole allegation of “unlawful conduct” of the merchant therein, does not constitute recoverable damages under the CPPA. (30) Such a plaintiff must also show standing to bring such a suit.

     

     

    Abstract: The Plaintiff in this case brought a “representative action” on behalf of herself and the general public against certain cell phone manufacturers and wireless service providers, alleging unfair trade practices under the D.C. Consumer Protection Procedures Act (CPPA). After all but one Defendant were dismissed on other grounds, the remaining Defendant, Motorola, moved for dismissal contending that the Plaintiff lacked standing to sue. The Trial Court agreed, ruling that she lacked standing due to failure to sustain any injury in fact and failure to qualify for standing under the terms of the statute.  Facts: The factual and procedural backgrounds to the case are summarized as follows: (1) The Phone Purchases. The Plaintiff brought this suit under the CPPA, based on her purchase of three cell phones, two in 1999 and one in 2005, the underlying facts of which, considered in a light most favorable to her, are set forth respectively in the following sub-topics: (a) 1999 Purchases. She purchased two phones, at some point in 1999, the situs of which she does not remember. One was a Motorola brand but she does not remember the brand of the second and no records exist showing same. In March of that year, Verizon, the wireless service, provided her with a phone at no cost. She does not identify any problem with the service associated with any of the phones purchased in 1999. (b) 2000 Purchase. Verizon sold her an Audiovox brand phone from its store in the District in August 2000. (c) 2005 Purchase. It also sold her a Motorola brand phone from its store associated with a foreign car dealership in Bethesda, Maryland, in July 2005. On each purchase, she relied on information provided at the point of sale, but does not remember what that information was or reading it. (2) The Lawsuit. In 2002, she filed a “representative action” against the cell phone manufacturers and service providers, contending that (1) she was part of the protected consumer class and had suffered financial injury due to having paid the purchase price of the phones and (2) the Defendants had been unjustly enriched by the violative trade practices.  Motorola, the sole remaining Defendant, moved to dismiss for lack of subject matter jurisdiction, contending that the Plaintiff lacked standing to bring the suit. Rulings: The Trial Court ruled on the issues presented as follows: (A) Standards. (1) Nothing in the current version of the CPPA evidences an intent to override or disturb the constitutional requirement for standing to sue in the D.C. Courts. (2) Standing can be manifested in one of two ways: (a) by an actual injury of some type (“injury in fact”) or (b) by virtue of a statute creating legal rights which have been invaded (“statutory standing”). (3) To show the injury-in-fact element for standing purposes, a plaintiff “must produce evidence sufficient to withstand summary judgment that she ‘suffered actual damages because of the misrepresentations or omissions claimed to violate’” the pertinent statute. (4) Failing such a showing, a plaintiff does not have injury-in-fact standing. (5) The traditional rule on statutory retroactivity is that a statute does not operate retroactively unless there is “clear … [legislative] intent favoring such a result.” (6) The test is to “ask whether the new provision attaches new legal consequences to events completed before its enactment.” (7) If so, the new legal right does not apply retroactively. (8) If, on the other hand, the amendments “merely provide an additional remedy” to enforcement of existing rights, they do apply retroactively. (9) A trial court is not necessarily bound by an earlier ruling in a case denying the defendant’s Rule 12(b)(6) motion to dismiss for failure to state a valid claim, because at that stage of the case the court is required to construe the complaint liberally and give all reasonable inferences to the Plaintiff,” whereas on the merits the requirement is that the plaintiff must demonstrate that it was harmed (i.e., “suffered actual damages.” (10) Put another way, a plaintiff in such a case “could not for standing purposes ‘recast their [CPPA] product liability claim in the language of contract law’” because “she suffered no harm from any misrepresentation or omission.” (11) Such a plaintiff lacks injury-in-fact standing. (12) Territoriality is a vital element in consumer protection laws. Whether a plaintiff has “statutory standing” depends on the scope of the statute, i.e., whether it is limited to the jurisdictional boundaries of the District of Columbia. (13) Where a statute does not expressly define its “territorial reach.” Under these circumstances, if the “court cannot find from the language structure, and history of the statute a legislative intent as to … [its] territorial reach, the court must resort to judge-made choice-of-law principles, as a stand-in for statutory construction.” (14) The Restatement on Conflict of Laws sets forth four factors for determination of the situs of an injury: (a) where the injury occurs; (b) where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation, and place of business of the parties; and (d) where the relationship is centered. (15) A plaintiff “cannot predicate her own standing on what misrepresentations and omissions other District residents received.” (16) Such a plaintiff does not have “statutory standing” under the CPPA. (17) The tort of “unjust enrichment” occurs when a person retains a benefit (typically money) which legally or equitably belongs to another, for which the equitable remedy is restitution. (18) Disgorgement of profits from a consumer purchase based on the sole allegation of “unlawful conduct” of the merchant therein, does not constitute recoverable damages under the CPPA. (19) Such a plaintiff must also show standing to bring such a suit. (B) Standing. (1) In General. The template for this concept in civil procedure is the requirement in Article III § 2 of the U.S. Constitution that in order for a matter is to be justiciable by a court it must be a genuine “case and controversy.” This means that a plaintiff must have “standing” to bring the complaint, i.e., that (a) s/he has suffered some direct and immediate personal, economic, or other injury or disadvantage, commonly known as “injury in fact,” (b) that is reasonably attributable to the defendant, and (c) can likely be remedied by a favorable judicial decision. Those requirements are attributable to Article III federal courts, while the D.C. Court system was set up under Article I as a “legislative court” system, established by act of Congress. Technically, it is not bound by the Article III “case and controversy” requirements, but throughout its history, the system has held, and operated on the premise, that this requirement is applicable to all cases at the trial level. (2) In Particular. The “injury” element can be manifested in one of two ways: (a) by an actual injury of some type (“injury in fact”) or (b) by virtue of a statute creating legal rights which have been invaded (“statutory standing”). (C) The CPPA. (1) The Amendments. The version of the CPPA in effect at the time of this case allowed “any consumer who [actually] suffers any damage a result of” an unlawful trade practice to file suit against the accused. In 2000, that language was removed from the statute, leaving the question of what constitutes “standing” to bring such a suit.  This language had required “actual injury” to a plaintiff. The substituted language allows “a person, whether acting for the interest of itself, its members, or the general public, to bring an action … seeking relief from the use by any person, of a trade practice in violation of a law of the District of Columbia.” The amended “broad and inclusive” language does not per se require direct actual injury, but affords standing to any consumer seeking to bring an action for a violation of the law so long as that person is part of a group that has been deprived of any statutory consumer right. Nevertheless, in 2011, the D.C. Court of Appeals ruled that this amendment did “not evidence an intent … to override or disturb our constitutional standing requirement.” The Plaintiff herein argued that, despite having sustained no injury to herself, she still had standing to “assure compliance with the law.” (2) Retroactivity. This brought the Trial Court’s focus to that issue in this case. Although the 2000 amendment was held to grant plaintiffs such as the one in this case “statutory standing,” several of the events on which she relied for her suit occurred prior thereto, in 1999. The question thus became whether there was any legislative intent to make the amendment retroactive. The traditional rule is that a statute does not operate retroactively unless there is “clear … [legislative] intent favoring such a result.” In this instance, the 2000 amendments to the CPPA do not expressly state that they do so. The test set forth in the case law is to “ask whether the new provision attaches new legal consequences to events completed before its enactment.” If so, the new legal right does not apply retroactively. If, on the other hand, as Plaintiff herein argued, the amendments “merely provide an additional remedy” to enforcement of existing rights, they do apply retroactively. Here, the Court viewed the amendments allowing a private party acting on behalf of a new class to bring what amounts to a qui tam suit as expanding the ability to enforce existing rights and thus had a retroactive effect. Nevertheless, it was equally clear that there was nothing in the legislation that “evidenced a clear intent” favoring retroactive application. (D) Bases for Standing. As noted above, standing may be shown by either an injury in fact or by asserting standing provided by statute. The Court addressed these bases separately as follows: (1) Injury in Fact. To show this vital element for standing purposes, a plaintiff “must produce evidence sufficient to withstand summary judgment that she ‘suffered actual damages because of the misrepresentations or omissions claimed to violate’” the pertinent statute. The Defendant argued that she had produced no evidence that any of the phones she purchased failed to function properly. The Plaintiff responded by asserting that she is not required to prove non-functionability; she suffered loss, she contended, in simply purchasing the phones – a concept on which she relied based on the Trial Court’s earlier ruling denying the collective Defendants’ Rule 12(b)(6) motion to dismiss in the case in July 2010, which had received a good deal of attention in the area of communications law. In the instant memorandum opinion, however, the Court reversed itself, stating that it had “concluded, after further consideration and research, that its previous reasoning and result were faulty.” Noting that the previous ruling had been in response to a motion to dismiss, in which “the court was required to construe the complaint liberally and give all reasonable inferences to the Plaintiff,” it went on to say that the correct conclusion on the merits is that such plaintiffs must “demonstrate that they were harmed [i.e., ‘suffered actual damages’] by … alleged [material] misrepresentation” in violation of the CPPA.  Simply asserting that she suffered loss by paying the purchase prices for the phones, the Court concluded, was insufficient to establish a “concrete injury” for purposes of showing standing to sue. This is because “without alleging that a product failed to perform as advertised, a plaintiff has received the benefit of … [the] bargain and has no basis to recover purchase costs,” according to controlling case law. Put another way, plaintiffs such as the one if this case, “could not for standing purposes ‘recast their [CPPA] product liability claim in the language of contract law’” because “she suffered no harm from any misrepresentation or omission.” On these settled principles, the Court concluded, the Plaintiff lacked injury-in-fact standing. (2) Statutory Standing. Whether the Plaintiff herein had statutory standing depends on the scope of the statute, i.e., whether it is limited to the jurisdictional boundaries of the District of Columbia. The Defendant argue that the record is bereft of any proof that the Plaintiff purchased any of its phones in the District.; the most she could say was that she did not remember where she purchased any of them. The Trial Court found similar local case law to be persuasive on the scope of statutory relief, but “not on all fours” with the instant case. The more refined inquiry, it found, was whether the Plaintiff herein was “within the class of individuals protected by the CPPA” because, perforce, if a plaintiff did not engage in a consumer transaction within the meaning of that statute, s/he could not have suffered any injury-in fact and was not deprived of anything to which s/he was entitled under it. Consequently, such a plaintiff lacked standing to sue.  In this regard, the Court noted that the CPPA does not limit the definition of “person” to a resident of the District; nor does it provide that a “trade practice” must occur here.  Indeed, the problem is that the statute does not expressly define its “territorial reach.” Under these circumstances, the Court was frank to say that when a “court cannot find from the language structure, and history of the statute a legislative intent as to … [its] territorial reach, the court must resort to judge-made choice-of-law principles, as a stand-in for statutory construction.” (a) Situs. The Court found a “strong clue” in the statute’s statement of purpose to “promote, through effective enforcement, fair business practices throughout the community.” Still, what constitutes the D.C. “community” is a vague term, allowing of those who are residents of the District, those who have “ties” to it, or perhaps those with a “governmental interest” here. The Court reviewed the Restatement on Conflict of Laws, which set forth four factors for determination of the situs of an injury: (i) where the injury occurs; (ii) where the conduct causing the injury occurred; (iii) the domicile, residence, nationality, place of incorporation, and place of business of the parties; and (iv) where the relationship is centered. (b) As Applied. Although the Plaintiff is a resident of, and works in, the District and used her cell phones here, the Court found that it was neither the place of the injury nor where the conduct causing it occurred. The only specific place set forth in the record for a purchase of a Motorola phone was in Maryland in 2005; the Plaintiff could not recall the sites of any of the other Motorola purchases. No Defendant’s principal place of business was located in the District and although Motorola does business in the District, it also does so nationwide. Therefore, the relationship was not centered here, the Court found. It concluded that the Plaintiff’s residence and use of her phone here “did not outweigh the factors favoring application of the law of another jurisdiction.” Further, the Court postulated that if a District resident vacationing in Hawaii, for example, purchased a phone there which ended up with difficulties, whether functional or legal, it would be too much of a stretch to argue that the phone company had violated the CPPA, even though nothing occurred in the District. To hold otherwise “would open our courts to any person from anywhere who decides to lodge a complaint labeled as a ‘representative action’ under the CPPA, even though that person has suffered no injury in fact related to a District of Columbia merchant’s unlawful trade practice,” the Court reasoned. The Plaintiff “cannot predicate her own standing on what misrepresentations and omissions other District residents received,” it ruled, and the record is devoid of any evidence that she herself received any such material omissions or misrepresentations from any dealer here, it found. Accordingly, it ruled that she does not have “statutory standing,” either. (E) Unjust Enrichment. This tort occurs when a person retains a benefit (typically money) which legally or equitably belongs to another, for which the equitable remedy is restitution. The Plaintiff sought restitution in the disgorgement of profits based on her sole allegation of “unlawful conduct” in the phone sales.  Noting that her unjust enrichment claim was based exclusively on the same alleged violations that it had held she had no standing to assert, the Court came to the same conclusion as to that claim. (F) Conclusions. The Court held that the Plaintiff lacked either injury-in-fact standing or statutory standing to bring both the unfair trade practices claim under the CPPA and the unjust enrichment claim in equity.  It therefore entered judgment for the remaining Defendant.

  • PROBATE LAW / ADULT INTERVENTION PROCEEDINGS

    POLICY OF PROBATE DIVISION FOR ATTORNEY TRAVEL EXPENSES

     

     

    Précis: (1) Under the inherent duty of Judges in the Probate Division of the Superior Court to preserve the assets of a ward of the Court, or taxpayer funds, for the purpose of compensation of court-appointed attorneys for travel time, the Court has the duty to insist upon recordation of the actual time involved, not estimates derived from map sites on the Internet or elsewhere. (2) It is the general consensus that payment of fees and costs for court-appointed lawyers should be consistent across all Divisions of the D.C. Superior Court. (3) Accordingly, expenses for travel time (a) will be allowed within the Washington Metropolitan Area, meaning the District of Columbia and its contiguous counties in Virginia (Arlington and Fairfax) and Maryland (Montgomery and Prince George’s) except to or from the courthouse, at full applicable hourly rates; (b) requests for travel time must be separately stated as to precisely where to and from, when, time involved, distance, and if not otherwise apparent, purpose; (c) application of such principles in particular cases necessarily remain subject to judicial discretion and determination of reasonableness in each case. (4) Parking fees at court are not allowed. 

     

    Abstract: This Memorandum Order, applied in three Probate Division “Adult Intervention” cases, stems from an opinion by the author’s colleague, Judge Ronald P. Wertheim, in December 2011, regarding the compensation by the Superior Court for attorneys’ travel time, aligning the policies in the Probate Division with those under the Criminal Justice Act (CJA) in the Criminal Division and those under the Council for Child Abuse and Neglect (CCAN) in Family Court. Facts: The same attorney petitioned for payment in each case -- in one as guardian, in another as counsel, and in another as successor conservator. The Judge processing his cases instructed him to renew each petition and separately state his travel time, which was otherwise melded into his time billing statements for various billed tasks. The attorney responded by attaching MapQuest printouts showing mileage and typical travel time between what turned out to be his home office and various destinations relevant to each case. Rulings: The Court ruled that it had the duty to insist on actual time, and not MapQuest estimates, under an earlier 1993 decision by the same Judge. Then, using his own technology (iPhone Maps), the Judge discovered the attorney’s home office is located in Howard County, Maryland, roughly midway between Baltimore and the District, which is located in the Baltimore-Towson Metropolitan Area. Not being within one of the contiguous counties to Washington, the home office (from which almost all the travel time was estimated) was therefore not within the Washington Metropolitan Area as defined by the CJA Plan under which travel time is allowed. Out of 158 attorneys on the Court’s March 2011 list of those available for probate appointments, 48 (30%) showed office addresses outside the District of Columbia. Only three of those (one of whom was petitioner) were outside the Washington Metropolitan Area. The Court determined that, consistent with CJA and CCAN, all Petitioner’s travel time should therefore be disallowed. It found that these attorneys “have elected to make themselves available for D.C. probate appointments even though they are far enough away from Washington to be outside its defined and/or recognized metropolitan area.” There is nothing wrong with this, the Court noted; “it is just that lines have been identified beyond which these lawyers must be responsible for their own travel time and expense, and it is not fair or reasonable to charge an estate or the Guardianship Fund for it.” Indeed, the Court pointed out that it had disallowed travel time in two recent fee petitions where the lawyers had offices in the District of Columbia, but sought compensation for travel to/from satellite offices in Anne Arundel County, Maryland, also outside the Washington Metropolitan Area. The CJA Plan permits pre-approval for travel destinations outside the metropolitan area. However, the Court concluded that the Plan does not reasonably contemplate the situation here where almost all the repeated travel segments begin or end outside the metropolitan area (thus requiring extended travel within the metropolitan area) simply because that is where counsel has his office.” Conclusions: (1) In the Matthews case herein, $1,332 in travel time (55% of the total fee request, for 12 guardian visits to the subject from the attorney’s home office) was disallowed. (2) In the Parker case, $96 in round-trip travel from the home office to the now-deceased subject (9% of the total claim for a month-and-a-half as counsel) was disallowed. (3) In the Cooper case, 41.1 hours’ travel time was disallowed ($11,302.50 at $275 per hour -- 20% of the total claim from the subject’s complicated estate). (4) The Court also ordered that no further pending fee petitions by the attorney shall be paid until he files a supplement in each case that eliminates any and all travel to/from his home office, and “stating he has complied with this order.”

  • PROBATE LAW

    METHOD OF COMPENSATION FOR COURT-APPOINTED ATTORNEYS

     

     

    Précis: (1) There is nothing improper in a Judge’s making rulings on routine motions via handwritten notes in the margins thereof, rather than issuing a formal order. (2) It is a lawyer’s responsibility to know, or to look up, the law controlling the subject matter of a submission to the Court. (3) Where the submission is for payment for court-appointed work, case law dating back to 1993, holds that rounding of time in fee requests greater than one-tenth of an hour will result in reduction of compensation and will not be reversed. (4) The controlling case also applies to the attorney’s selection of software for billing purposes. (5) The lack of a party’s objections to fee petitions in the Probate Division is of no import, as the subject is usually impaired, and lawyers are loath to object to another’s fees. (6) This is especially so when the fees are sought from the taxpayers where the Guardianship Fund is the source of payment and there is little incentive to object.  (7) A Judge is required to approve fees, opposed or not, and that is meaningless unless it also implies the ability to reduce unreasonable fees. (8) It is not the Court’s obligation to justify each dollar or hour deducted from the total submitted by counsel, but counsel’s burden to prove and establish the reasonableness of each dollar and each hour, above zero, requested. (9) This is a part of the function of approving (or disapproving) fees, since fairness requires comparison and consistency with the myriad of other fee requests a Judge sees. (10) Reduction in fees requested can include work actually performed but which is exaggerated or unnecessary: One can spend more time with a subject than is necessary; one can overly prepare for a simple court hearing; one can review or research law that should already be known; and one can review records in more detail than is necessary. (11) A Judge who sees an attorney “prepare” exactly two hours for any and every court hearing, or visit a subject for exactly one hour every time, can justly be suspicious that recording is inaccurate or that “padding” is occurring. (12) Probate Judges will continue to be vigilant about billing for what is deemed secretarial overhead, which also often manifests itself in inappropriate billing for paralegal time. (13) Making copies, stuffing envelopes, and traveling to the Post Office or nearest mailbox are all clearly administrative overhead which is included in the significant hourly rate (even $90 from the Guardianship Fund) that attorneys charge and are paid. (14) This is true whether the Fund is the source of payment, or the subject’s estate, which the intervention statute requires should be preserved as much as possible. (15) Travel time to and from court and parking fees at court are not allowed.

     

    Abstract: A Trial Judge whose opinion on sentencing to jail a pregnant cocaine addict has been used to teach whole law school classes, United States v. Vaughn, 117 D.W.L.R. 441 (Mar. 7, 1989), thoroughly explains in this case how a Judge evaluates attorney fee petitions. Facts: The factual background to the case is summarized as follows: An attorney whose fees as Guardian Ad Litem were reduced by the Court in two Probate Division intervention cases (by $540 and $388.80 respectively) filed motions to reconsider. In a textbook demonstration of how not to confront a Judge’s rulings that he wanted to change, he complained that the Judge “scribbled” his reasons on the original orders rather than write a “multiple page, detailed memorandum” that “was more instructional than critical.” He also complained about travel time inconsistencies among Probate Judges “regarding what the lawyers on the panel can bill for and what we cannot bill for,” and he requested guidance because he and “numerous lawyers ... complain and grumble about the process in the shadows and amongst themselves.” He added, in complaining about cuts for what were essentially secretarial or administrative functions, that “[m]aking copies, stuffing envelopes and traveling to the Post Office or nearest mailbox are all work done on behalf of the client to initiate [or conclude] the case.” Finally, the attorney complained that “[n]ot a single interested party to [each] case objected to [the attorney’s] Petition for Compensation. Why should the right to object by interested parties be replaced by a Judge who is looking at the case from a distance and is not actually involved in the case?” In the second case, where the motion for reconsideration was filed six days later than the first, the attorney apparently discovered two dispositive earlier rulings by the same Judge. He complained that the Judge did not cite them in his “scribbling,” and says that one ruling is “arbitrary and capricious and should be reversed,” adding that “my billing software rounds off and bills in 10 minute increments.” Rulings: (A) Marginal Notes. The Court made no apology for explaining its rulings by handwriting in the margins. With dozens of fee petitions per week that the Probate Motions Judge has to handle, there is simply not enough time to write a full and complete Memorandum Order for every petition for compensation that requires cutting. (B) Responsibility to Know Settled Law. It is a lawyer’s responsibility to know, or to look up, the law, as the attorney apparently eventually did by the time of his second motion for reconsideration. Where this type of billing is concerned, case law dating back to 1993, holds that rounding of time in fee requests greater than one-tenth of an hour will result in reduction of compensation and will not be “reversed.” The controlling case has been reliably followed by the vast majority of attorneys and Judges for many years, and has been in the D.C. Code annotations under § 21-2060 for almost two decades. That decision also dismisses the attorney’s selection of software, and the reasoning will not be repeated. (C) Lack of Objections. The lack of objections to fee petitions is of no import, as the subject is usually impaired, potentially opposing court-appointed counsel have no more time to object than a Judge does to write, and lawyers are loath to object to another’s fees. This is especially so when the fees are sought from the taxpayers where the Guardianship Fund is the source of payment -- there is little incentive to object. A Judge is required to approve fees, opposed or not, and that is meaningless unless it implies, also, the ability to reduce unreasonable fees. Citing cases, the Court ruled it is not the Court’s obligation to justify each dollar or hour deducted from the total submitted by counsel, but counsel’s burden to prove and establish the reasonableness of each dollar, each hour, above zero. (D) Viewing the Case “From a Distance.” It is a part of the function of approving (or disapproving) fees, since fairness requires comparison and consistency with the myriad other fee requests a Judge sees. That can include an attorney who does the work he bills for, but the work is exaggerated or unnecessary: One can spend more time with a subject than is necessary; one can overly prepare for a simple court hearing; one can review or research law that should already be known; and one can review records in more detail than is necessary. A Judge who sees an attorney “prepare” exactly two hours for any and every court hearing, or visit a subject for exactly one hour every time, can justly be suspicious that recording is inaccurate or that “padding” is occurring. (E) Secretarial Work. Probate Judges will continue to be vigilant about billing for what used to be secretarial overhead. It often manifests itself in inappropriate billing for paralegal time. “Making copies, stuffing envelopes, and traveling to the Post Office or nearest mailbox” are all clearly administrative overhead that is included in the significant hourly rate (even $90 from the Guardianship Fund) that attorneys charge and are paid. This is true whether the Fund is the source of payment, or the subject’s estate, which the intervention statute requires should be preserved as much as possible. (F) Travel Time. The Judge cited a 2011 opinion by a colleague in the Probate Division, suggesting that it provides guidance for petitioners and “the numerous [other] lawyers” whom he says “complain and grumble in the shadows.” In any case, a 1992 opinion has long held that travel time to and from court and parking fees at court are not allowed. (G) Conclusion. The Court, having deliberated at length, granted the motions to reconsider, but denied the additional payments requested from the Guardianship Fund.

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