Court Cases

When was the last time you read Rule 41(A)(1)?

Tuesday, June 15th, 2010

The Ohio Supreme Court issued a brief decision last week in Morgan Stanley Dean Witter v. Sutula, 2010-Ohio-2468 [PDF] which I initially overlooked. The decision reverses the Eighth District’s grant of a writ of prohibition, but there’s an interesting nugget in here that affects all litigators.

That nugget is the parsing of Rule 41(A). The Court notes that “Civ.R. 41(A)[1] allows for a dismissal of all claims against particular defendants, and not individual claims.” In other words, a party cannot utilize Rule 41(A)(1) to dismiss part of its claim — the text of the rule actually states that 41(A)(1) is all or nothing.

There are certainly other attorneys who have had a few more trips around the block than yours truly, but in my two years as a law clerk and one year in practice, I have never seen this distinction made by a practicing attorney. It is absolutely standard procedure to dismiss some but not all claims via a Rule 41(A)(1) notice of dismissal.

Instead, it appears, if a party wants to dismiss only some of its claim, it must obtain an order of the court under Rule 41(A)(2). That rule provides that, “[e]xcept as provided in division (A)(1) of this rule, a claim shall not be dismissed at the plaintiff’s insistence except upon order of the court and upon such terms and conditions as the court deems proper.” In other words, the partial dismissal must come from the court, not the plaintiff, and a court can place conditions upon a partial dismissal.

I could be wrong, but this seems like an awfully important distinction, no? Think about it — how many partial dismissals have you filed in the last year? As it turns out, all of those claims are still pending. Or better yet, how many partial dismissals of claims against your client have been filed? You might have to defend those yet.

Posted in Court Cases, Procedure | No Comments »

Ohio Supreme Court: yes to personal jurisdiction over out-of-state internet defamation

Friday, June 11th, 2010

In Kauffman Racing Equipment, LLC v. Roberts, 2010-Ohio-2251 [PDF], the Court examined whether Ohio had personal jurisdiction over an alleged defamer who made internet postings from his home in Virginia.

Personal jurisdiction, of course, is a two-part analysis. A court first must examine whether the Ohio long-arm statute and Civil Rule regarding service, R.C. 2307.382 and Rule 4.3, respectively, permit the exercise of jurisdiction. Analogizing to the technology of yesteryear–letter writing–the Court explained the allegedly defamatory statemetns were “published” in Ohio by virtue of their actual receipt by several individuals in Ohio. That fact brings the case within R.C. 2307.382(A)(3) and Rule 4.3(A)(3), which confer jurisdiction over allegedly tortious acts committed in Ohio.

This, of course, is something of a legal fiction, as the postings were certainly not created within Ohio. As a fall-back position, the Court cites R.C. 2307.382(A)(9) and Rule 4.3(A)(6), which create jurisdiction over allegedly tortious acts committed outside Ohio where the alleged tortfeasor might reasonably expect that someone in Ohio would be injured by the acts. The Court’s fall-back seems to be the stronger position and probably should have been the primary holding. It will be interesting to see whether the Court’s holding that the publication actually occurred in Ohio by virtue of its receipt in Ohio has any unexpected consequences in the future. (Though to be fair, this is simply an extension of existing precedent, not new doctrine, so perhaps the concern is misplaced.)

Having established that the long-arm statute and Civil Rule are satisfied, the second part of the personal-jurisdiction analysis comes under the due process clause of the Fourteenth Amendment. As relevant here, due process requires that the exercise of jurisdiction arise out of the defendant’s contacts with Ohio. The defendant must have purposely availed itself of the privilege of acting in Ohio, and must have reasonably anticipated that it may be haled into court in Ohio; the defendant’s contacts with Ohio must not be random, fortuitous, or attenuated.

Employing the well-known Calder “effects test,” the Court held that the defendant’s allegedly tortious conduct was not simply “untargeted negligence,” but rather purposeful activity directed at a resident of Ohio. The defendant therefore should have assumed that the effects of his actions should be felt in Ohio, and as a result he could reasonably anticipate being haled into court in Ohio.

Kauffman is not a landmark decision. It is well-supported by existing law on both personal jurisdiction and defamation. But it is another example of courts’ willingness to engage with technology and to fit current doctrine into the new world order. Let’s hope that Ohio continues down its path of reasonableness in this regard.

As a side note, Kauffman is now officially my favorite opinion of 2010, thanks to the explanatory parenthetical in ¶13 of “(emoticons omitted).”

Posted in Court Cases, Defamation, Procedure, Torts | No Comments »

Ohio Supreme Court invalidates part of sex offender reclassification

Thursday, June 3rd, 2010

Two weeks ago we wrote that the Ohio Supreme Court’s decision in State v. Clayborn may be a preview as to the Court’s willingness to strike down the Adam Walsh Act on ex post facto grounds.

Posted in Constitutional Law, Court Cases, Procedure | No Comments »

Federal Court Issues Injunction Barring FEC From Enforcing Contribution Limits Against SpeechNow.org and its Donors

Thursday, June 3rd, 2010

Yesterday, the U.S. District Court for the District of Columbia issued an injunction prohibiting the Federal Election Commission from enforcing contribution limits against SpeechNow.org and its donors.

The ruling essentially means that the group–which describes itself as “an independent speech group of individuals dedicated to promoting and protecting our First Amendment rights to free speech and for the freedom to assemble”–may accept unlimited donations to support its efforts to protect the First Amendment at the ballot box.

The injunction comes on the heels of a March ruling by the U.S. Court of Appeals for the D.C. Circuit in SpeechNow.org v. Federal Election Commission. In that decision, an en banc court unanimously struck down a ceiling on contributions to independent political groups that desire to spend money directly to support or oppose candidates in federal elections. That ruling was the first to apply and expand the U.S. Supreme Court’s recent decision in Citizens United v. Federal Election Commission, which struck down limits on corporate expenditures in federal campaigns.

A press release issued by the Center for Competitive Politics and describing the impact of the decision is available here.

Posted in Court Cases | No Comments »

Ohio Supreme Court tips hand on sex offender classification law?

Thursday, May 20th, 2010

Today’s ruling from the Ohio Supreme Court in State v. Clayborn, 2010-Ohio-2123 [PDF] may offer some insight into whether the Court will strike down the Adam Walsh Act, which reclassified sex offenders and in many cases extended indefinitely their reporting or registration requirements.

The issue in Clayborn was simply the amount of time in which an offender who is classified under the Adam Walsh Act has to appeal. Appellate Rule 4 states that in a criminal case, a party has 30 days after entry of judgment to appeal. But in a civil case, a party has up to 30 days after being served with notice of the entry of judgment. In other words, in a civil case if the clerk fails to serve notice of the judgment under Civ.R. 58(B), the appeal time is extended, but in a civil case it’s not. The Court held that sex offender classifications under the Adam Walsh Act can only be appealed under the more stringent criminal rule, not the more lenient civil rule.

What does this have to do with the validity of the Act itself? Good question. The Adam Walsh Act, also known as R.C. Chapter 2950, required the state to re-classify all existing sex offenders into one of three new tiers. The reporting requirements for each tier were significantly more stringent than the prior reporting requirements. For example, an offender who had been convicted of a sexual battery may have been previously classified as a sexual offender and ordered to register annually for ten years. Under the Adam Walsh Act, that person (so long as they were still within that ten-year notification period) would be classified as a Tier III offender and would have to register every 90 days for life.

Many offenders have challenged the law as unconstitutional. A variety of theories are usually trotted out, including the separation of powers doctrine, equal protection, double jeopardy, and plea-bargain-as-contract. Particularly relevant here, though, is that the petitioners usually argue that the Adam Walsh Act violates the prohibition on retroactive laws in the Ohio Constitution (Article II, Section 28) or the ex post facto clause in the U.S. Constitution (Article I, Sections 9-10).

To my knowledge, all Ohio appellate courts have rejected these arguments to date. They tend to rely on the 1998 Ohio Supreme Court case of State v. Cook (83 Ohio St.3d 404), in which the Court approved the sex offender classification law enacted in 1997, known as Megan’s Law. The Cook Court held, among other things, that the sex offender law was a “merely remedial” law, and not a “substantive” law. The Court explained that “the General Assembly’s purpose behind R.C. Chapter 2950 is to promote public safety and bolster the public’s confidence in Ohio’s criminal and mental health systems,” and further found that “[t]he statute is absolutely devoid of any language indicating an intent to punish.” As directly and bluntly as possible, the Court said that “R.C. Chapter 2950, on its face, clearly is not punitive.”

“Merely remedial” and “not punitive” are other ways of saying “civil, not criminal.” In other words, the Cook Court’s approval of the classification system is based on a finding that the sex offender registration was a civil statute, not a criminal statute.

The significance of the Clayborn holding should be evident: the Court has now said, at least for purposes of protecting appellate rights, that the Adam Walsh Act must be treated as a criminal statute, not a civil statute.

Challenges to the Adam Walsh Act are pending before the Court right now. In November, for example, the Court heard argument in In re: Darian J. Smith, in which the petitioner contested the validity of the Adam Walsh Act on ex post facto and retroactivity grounds (docket available here). The decision in Clayton may indicate a tendency to strike down the Adam Walsh Act, or at least its retroactive application.

Posted in Constitutional Law, Court Cases | 7 Comments »

2010 A Year of Change: Healthcare Reform & Employment Law - How Will Recent Changes Affect Your Business in 2010-2011

Thursday, May 20th, 2010

June 9th 7:45 – 9:00am at the Queen City Club in downtown Cincinnati

Please join us for an informative discussion about the new health care reform acts and recent changes in employment law. Make sure your business is ready and prepared for these changes. You will walk away with valuable information you need to have your Employee Handbook compliant for 2010-2011 and a feel for how the healthcare reform acts will affect your business.

Speakers:

Karen Mueller, CBA with HORAN

Peter Saba, Esq. with Finney Stagnaro Saba & Patterson Co. LPA

LOCATION: Queen City Club 31 East Fourth St. Cincinnati OH 45202 FREE PARKING on site

RSVP to Peggy Gruenke at peg@fssp-law.com or 513-533-2732

Posted in Client Education Series, Court Cases, Events, Twitter | 1 Comment »

Sixth Circuit: Victoria's Secret trademark "tarnished" by association with sex

Thursday, May 20th, 2010

The Enquirer reports that the Sixth Circuit has ruled against the proprietor of a sex shop formerly named Victor’s Secret in a trademark tarnishment case brought by lingerie boutique Victoria’s Secret. The court found that the similarity of the names was likely to lead to “unfavorable sexual associations” for Victoria’s Secret. I’m not joking.

The case has an interesting procedural history. A man saw an ad for Victor’s Secret in a local paper, “was offended by what he perceived to be an attempt to use a reputable company’s trademark to promote the sale of unwholesome, tawdry merchandise,” and sent a copy of the ad to Victoria’s Secret. Litigation ensued, and the Supreme Court in 2006 determined that the lower courts had applied the incorrect standard of review in addressing whether Victoria’s Secret had been harmed. (Specifically, the Court held that only actual dilution by tarnishment was actionable under the Federal Trademark Dilution Act of 1995.)

While the case was still pending, Congress updated the trademark law to overrule the Supreme Court, adding a new claim under which a trademark owner could recover for likelihood of dilution by tarnishment. Under this new cause of action, the owner of a trademark can obtain an injunction or damages if it is likely that a new mark will harm the reputation of a senior mark, and the two marks are associated with each other due to their similarity.

The case was remanded to the district court, which held that it was indeed likely that people would associate Victor’s Secret with Victoria’s Secret due to their similarity, and that Victoria’s Secret’s reputation would be harmed as a result. The grounds for the ruling was that the association with Victor’s Secret was likely to cross that fine line between “sexy and playful” (as Victoria’s Secret described itself) and “sexually explicit” (as Victor’s Secret concededly was).

Yesterday the court of appeals affirmed, holding that “the [updated trademark] Act creates a kind of rebuttable presumption, or at least a very strong inference, that a new mark used to sell sex related products is likely to tarnish a famous mark if there is a clear semantic association between the two,” and that Victor’s Secret failed to rebut that presumption in this case. One judge concurred in the judgment but disagreed that the updated trademark act created a presumption — instead, he would call it simply an “inference.” The third judge dissented, observing that the updated act contains no language at all regarding any presumptions, and would have held that the single incident of association is not sufficient to create a cause of action.

Aside from the obvious problem of the Sixth Circuit creating a presumption where a statute contains none (actually, query whether it is indeed a presumption or an inference; how will district courts interpret this holding?), isn’t this a difficult decision to justify based simply on common sense? If Victoria’s Secret can obtain an injunction because of an association with sex, where will it end? Could a burger joint named McDuffy’s be enjoined if its food was too fatty, or its service too slow? This decision seems to create a slippery slope for courts with respect to the rights of junior mark holders.

On the other hand, perhaps this is a lesson in lawyering. Both the district court and the court of appeals based their decisions in part on the fact that Victor’s Secret failed to present any evidence that the two marks were not associated, or that Victoria’s Secret would not be harmed. Maybe the take-away in this case is simply that even when a claim appears absurd on its face, it still must be defended aggressively.

The Sixth Circuit decision is here [PDF]; the district court’s decision can be found here.

Victor’s Secret, for what it’s worth, plans to seek an en banc rehearing or to petition the Supreme Court for certiorari.

Posted in Court Cases, Intellectual property, Torts | No Comments »

Attorneys' Fees to be Paid in Federal Lawsuit Striking Down Ohio's "Revolving Door" Lobbying Statute

Wednesday, May 12th, 2010

Cincinnati Enquirer Politics Extra Blog: “The Ohio Controlling Board agreed without comment Monday to pay court-ordered attorneys’ fees and costs totaling $134,418 in a federal lawsuit that struck down a rule preventing former Ohio House and Senate members and staff from lobbying for one year after leaving their state government jobs. The suit against legislative leaders was won by former state Rep. Tom Brinkman Jr., a Republican from Mount Lookout, and the Coalition Opposed to Additional Spending and Taxes. The attorneys representing Brinkman and COAST were Christopher P. Finney of Anderson Township and Curt C. Hartman of Amelia.” More…

Additional coverage from today’s Cincinnati Enquirer is available here.

And click here for our previous coverage of this case, which paved the way for Ohio legislators who leave office to immediately begin exercising their core political speech rights, rather than waiting 12 months to do so.

DISCLOSURE: The author of this post served as Plaintiffs’ co-counsel in this case.

Posted in Constitutional Law, Court Cases | 1 Comment »

First District upholds contempt sanctions for violation of non-compete agreement

Thursday, May 6th, 2010

In yesterday’s decision in Mitchell’s Salon & Day Spa v. Bustle, 2010-Ohio-1880 [PDF], the First District affirmed a trial court’s imposition of sanctions for violation of a non-compete clause and a court order which essentially incorporated that non-compete. Interstingly, a majority of the panel approved both a disgorgement of profits and an extension of the non-compete term.

When Michael Bustle started working as a hairstylist at Michael’s in 1995, he signed an agreement which included a one-year non-compete clause. He left in August 2007 and rented a booth at a competing salon. Michaels sued Bustle several months later, after noticing that his clients did not return. The parties agreed to a settlement under which Bustle would not provide any hair styling or hair care treatment for one year — that is, Bustle essentially agreed to abide by his non-compete clause — and the trial court journalized an entry incorporating their agreement.

After Bustle’s customers still did not return, Michaels hired a private investigator to determine whether Bustle was violating the court’s order. After a seven-month investigation the PI determined that Bustle was still providing the prohibited services, and Michaels filed a motion for contempt.

At the contempt hearing, Bustle admitted to providing prohibited services to 180 former Michaels clients and had profited over $37,000 in nine months of doing so. Testimony from Michaels revealted that its lost profits for the same work would have been about twice as much, and that it had incurred about $15,000 in attorney’s fees and about $52,000 in PI fees. The trial court found Bustle in contempt, awarded damages and costs totaling about $140,000 to Michaels, and enjoined Bustle from competing for an additional 11 months.

On appeal, the First District rejected Bustle’s arguments that the agreed order did not comply with Rule 65 (because Bustle agreed to it, he had no cause to complain — somewhat similar to invited error, if any error) and that Michaels waited too long to pursue its contempt motion (the court found the time to be reasonable due to the necessary investigation).

On the issue of whether Michaels was awarded a double recovery by virtue of a disgorgement of profits and an extended non-compete term, the court explained that in a contempt case, the court has power to both coerce compliance with the court’s order, and to compensate the the party injured by the contempt. By disgorging the profits and awarding the costs to Michaels in addition to extending the non-compete term, the First District said, the parties were merely put back in the position that they would have been in if there had been no contempt. As a result, there was no double recovery.

Judge Hendon disagreed on the double recovery issue. Because the non-compete period has now expired, however, and cannot be undone, she concurred in the judgment.

Posted in Contracts, Court Cases, Procedure, Torts | No Comments »

First District on Iqbal/Twombly

Friday, April 9th, 2010

We have covered Iqbal and Twombly several times in this space (see here, here, here, and here). Briefly, those decisions impose a “plausibility” standard on allegations in a complaint; if the facts pleaded are not plausible, the complaint is subject to dismissal under Civ.R. 12(b)(6). This is more onerous than the long-standing possibility or conceivability standard.

Earlier this week the First District cited Iqbal and Twombly [PDF] for what appears to be the first time, putting it in line with the Eighth and Ninth Districts as Ohio appellate courts which have adopted the heightened standard. To be sure, Ohio courts have consistently looked to federal case law for guidance in the interpretation of analogous rules, but Iqbal and Twombly were enough of a game changer to lead some to speculate that Ohio courts may demurr and retain the old standard.

Posted in Court Cases, Procedure | No Comments »

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