Archive for September, 2011

COURT OF APPEALS MAJORITY REDEFINES JEFFERSON COUNTY SCHOOL LAW REGARDING ATTENDANCE AT NEIGHBORHOOD SCHOOL. JUDGE SARA COMBS DISSENTS

Friday, September 30th, 2011

COURT OF APPEALS MAJORITY REDEFINES JEFFERSON COUNTY SCHOOL LAW REGARDING ATTENDANCE AT NEIGHBORHOOD SCHOOL.   JUDGE SARA COMBS DISSENTS

 This case defines the term “enroll” in KRS 159.070.  The decision is likely to make significant changes in school busing in Jefferson County.

 The Jefferson County School Board has indicated that they will appeal the ruling by Judges Thompson and Caperton.

“KRS  159.070 Attendance districts — Enrollment permitted in school nearest home.

Each school district shall constitute a separate attendance district unless two (2) or more contiguous school districts, with the approval of the Kentucky Board of Education, unite to form one (1) attendance district. Controversies arising in attendance districts relating to attendance matters shall be submitted to the Kentucky Board of Education for settlement. In case an agreement suitable to all parties cannot be reached, the Kentucky Board of Education may dissolve a united district. In case of dissolution, each school district involved may unite with other contiguous school districts in forming a united attendance district or may act as a separate attendance district. Within the appropriate school district attendance area, parents or legal guardians shall be permitted to ENROLL their children in the public school nearest their home.”

 

Judge Sara Combs in her dissent says:  The legislature had previously deleted the work “attendance” which modified the word enroll”.  “This  now undoubtedly connotes the mere act of registering at a neighborhood school without the mandate, assurance, or even the implication that attendance at that same school should be guaranteed.”

 

SYNOPSIS BY STAN BILLINGSLEY               Sept. 30, 2011

2010-CA-001830  Click to read full text of case

TO BE PUBLISHED

JEFFERSON

FELL, CHRIS, ET AL.

VS.

JEFFERSON COUNTY BOARD OF EDUCATION, ET AL.

OPINION REVERSING AND REMANDING

THOMPSON (PRESIDING JUDGE) CAPERTON (CONCURS

OPINION REVERSING AND REMANDING

** ** ** ** **

BEFORE: CAPERTON, COMBS AND THOMPSON, JUDGES.

THOMPSON, JUDGE: This is a challenge to the Jefferson County Public School’s (JCPS) student assignment plan filed by thirteen parents after their children received 2010-2011 school year assignments to schools other than schools nearest their homes.1

 The issue is narrowly framed: Does the involuntary assignment of a student to a school other than that nearest the student’s home violate Kentucky Revised Statutes (KRS) 159.070? Thus, the resolution of this appeal requires that we construe the language used in that statute…

Within the appropriate school district attendance area, parents or legal guardians shall be permitted to enroll their children in the public school nearest their home.

 

we comment that we do not believe Judge Heyburn nor the United States Supreme Court engaged in judicial tyranny when they ruled the quota system unconstitutional in violation of the equal protection clause.

When the application is submitted, elementary students can also

request assignment to an elementary magnet school or to a school other than the student’s resides school that offers a magnet program or an optional program. For attendance at the majority of the system’s magnet schools, the application process is open to any student at an elementary grade level and, unlike cluster schools, magnet schools are countywide.

JCPS filed a motion to dismiss, alleging that under Kentucky law, a parent or legal guardian has no right for his or her child to attend the school geographically nearest his or her residence.

Thus, eleven years after the Federal Court dissolved the desegregation decree, JCPS still maintained the unusual legal position that it had the authority to mandate busing.

However, presumably because the dispute is confined only to the construction of KRS 159.070, JCPS did not offer statistical data to support its view that student diversity has a positive effect on education.

The circuit court concluded that the term enroll means to “register” and not to attend the school. Our focus shifts to the issue presented.

The provision originally provided that “within the appropriate school district attendance area, parents or legal guardians shall be permitted to enroll their children for attendance in the public school nearest their home.” Immediately, the neighborhood school system mandated in KRS 159.070 was challenged as an unconstitutional exercise of state power as applied to JCPS.

In Newburg Area Council, Inc. v. Board of Education of Jefferson

County, 583 F.2d 827 (6th Cir. 1978), the Court affirmed the District Court’s holding that the amendment was unconstitutional insofar as it permitted the parents of children in Jefferson County to enroll their children in the public school nearest their home.

We stress that we are not asked to scrutinize whether JCPS’s 2010-2011 student assignment plan is constitutional, arbitrary or reasonable. We are only asked to construe the statute.

JCPS argues that the plain meaning of “enroll” is equivalent to “register” and is not interchangeable with the term “attendance.”

Jefferson County was exempted from compliance from the statute only because it operated under the federal desegregation decree. Newburg Area Council, Inc., 583 F.2d at 829. Logically, if KRS 159.070 still requires that parents and legal guardians have the right to choose for their children to attend their neighborhood school, JCPS, no longer being under federal supervision and direction to desegregate, must comply with the statute.

The contention that “enroll” as used in KRS 159.070 merely confers a right to register a child in the JCPS system defies logic.

Thus, “enroll in,” in the context now discussed, reasonably means to become a student at the school nearest the child’s home.

the legislature has declared the right of every parent or legal guardian to enroll his or her child in the school nearest his or her home.

Conclusion

JCPS is the largest school district in the Commonwealth and for the past thirty-five years has developed a complex system to rid itself of the vestiges of de jure segregation; it is to be commended.

 However, the history of segregation  by itself cannot justify a judicial exemption from the statutory mandate. The day when involuntary busing was justifiable and necessary, based on the federal court’s

mandate to desegregate, ended in 2000 when the desegregation decree was dissolved. JCPS is no longer supervised by the federal courts but is once again operated by state and local authorities.

our holding requires that JCPS develop a new student assignment plan for the 2012-2013 school year that is reasonably consistent with KRS 159.070 and this Court’s opinion.

JCPS and all school districts retain the discretion to establish attendance areas and implement transportation plans limited only by reasonable compliance with constitutional and statutory law.

However, until the legislature declares otherwise, JCPS and all school districts in this Commonwealth must comply with KRS 159.070.

Based on the foregoing, the order of the Jefferson Circuit Court is

reversed and the case remanded for proceedings consistent with this opinion.

CAPERTON, JUDGE, CONCURS AND FILES SEPARATE

OPINION.

COMBS, JUDGE, DISSENTS AND FILES SEPARATE OPINION

COMBS, JUDGE, DISSENTING: This case involves only one issue

on appeal: the proper construction of KRS 159.070. Although a bevy of issues erupted at oral argument, the case remains focused on that one issue alone. The significant sentence from KRS 159.070 is the last sentence:

Within the appropriate school district attendance area, parents or legal guardians shall be permitted to enroll their children in the public school nearest their home. (Emphasis added.)

Much discussion occurred in an attempt to construe the word “enroll.”

The circuit court had concluded that the term enroll means “to register” – not to attend school. The majority disagrees and essentially holds that enroll should – as a matter of public policy rather than definition – encompass attendance as well as

the act of registration. However, as aptly noted by the appellees’ brief, ample caselaw demonstrates otherwise.

It is significant that the version of the statute in effect prior to its

amendment in 1990 contained the phrase, “for attendance,” providing as follows:

Within the appropriate school district attendance area, parents or legal guardians shall be permitted to enroll their children for attendance in the public school nearest their home.

(Emphasis added). The General Assembly undertook a massive overhaul of all school statutes in Kentucky after they were declared unconstitutional by the Kentucky Supreme Court in Rose v. Council for Better Education, Inc., 790 S.W.2d 186 (Ky. 1989). Although the Rose case and Section 183 of the Kentucky Constitution (upon which Rose was premised) were discussed at some length during oral arguments, Rose has absolutely no bearing on the case before us as to public policy issues. To reiterate, this is solely a case of statutory construction.

Rose was merely the vehicle for causing the statutory amendments to be rewritten by the General Assembly.

we are left to construe the language of KRS 159.070 as amended, which now leaves the term enroll stripped of the modifying prepositional phrase for attendance. Without that modifying phrase, enroll now undoubtedly connotes the mere act of registering at a neighborhood school without the mandate, assurance, or even the implication that attendance at that same school should be guaranteed.

We have no choice but to construe this statute as it is presently written and in light of the guidance provided by the 1990 amendment deleting “for attendance.”

 

Accordingly, I file this dissent. I would affirm the well-reasoned

opinion of Judge Irv Maze of the Jefferson Circuit Court.

BRIEF FOR APPELLANTS:

Teddy B. Gordon

Louisville, Kentucky

J. Bruce Miller

Norma Miller

Louisville, Kentucky

Sheila P. Hiestand

Louisville, Kentucky

ORAL ARGUMENT FOR

APPELLANTS:

Teddy B. Gordon

Louisville, Kentucky

J. Bruce Miller

Louisville, Kentucky

Sheila P. Hiestand

Louisville, Kentucky

BRIEF FOR APPELLEES:

Lisa C. DeJaco

Byron E. Leet

Louisville, Kentucky

ORAL ARGUMENT FOR

APPELLEES:

Byron E. Leet

Louisville, Kentucky

Christian County Family Court Judge Jason Shea Fleming appointed to national, state committees on families and children

Friday, September 30th, 2011

 

FRANKFORT, Ky., Sept. 27, 2011 – Christian County Family Court Judge Jason Shea Fleming has been appointed to a national committee and a state committee on families and children. Judge Fleming was named in August as an advisory member of the National Council of Juvenile and Family Court Judges’ Military Committee and as a member of the Kentucky Bar Association’s Child Protection and Domestic Violence Committee.   

“These appointments give Christian County a voice on issues that affect families and children in Kentucky and nationally,” Judge Fleming said. “My role on the Military Committee will help me better serve our military families stationed right here at Fort Campbell. It is an honor to be selected for these important committees.”

The NCJFCJ Military Committee works to better understand issues common to military families and their children in the areas of delinquency, dependency, domestic violence and family law. The committee aims to identify and define issues that the NCJFCJ can help address through collaboration and the creation of effective strategies and protocols. The group is also charged with developing and implementing training and educational tools for judges and court personnel.

The KBA Child Protection and Domestic Violence Committee reviews the various legal aspects surrounding juvenile issues. The committee’s work has included publication of a handbook on children’s rights.

Judge Fleming

Judge Fleming was elected in November 2006 to serve as the Family Court judge for Christian County. Prior to his judicial career, Judge Fleming was assistant Christian County attorney from 1998 to 2006 and served as the director of Christian County Juvenile Services and as a volunteer for Christian County Juvenile Drug Court from 2000 to 2006. He was in private practice with Thomas, Arvin & Fleming in Hopkinsville from 1997 to 2000 and had a solo practice from 2000 to 2003.

Judge Fleming holds a bachelor’s degree from the University of Kentucky and a juris doctor from the University of Kentucky College of Law, where he graduated cum laude and was a member of the Order of the Coif. He was articles editor for the Kentucky Law Journal and chair of the Hearing Committee on the UK College of Law Honor Council from 1996 to 1997.

Judge Fleming is the 2011 recipient of the KBA’s Outstanding Young Lawyer Award. He previously received the KBA’s Continuing Legal Education Recognition Award and has been the recipient of the KBA’s Pro Bono Award multiple times. He is the only prosecutor to receive the Kentucky Public Advocate Award, presented to him in 2006 by the Department of Public Advocacy. He also received the Advocate for Children Award from the Christian County Child Abuse Council in 2010 and the 2007 Meritorious Service Award from Christian County Juvenile Drug Court.

He has authored numerous journal articles and been a presenter at conferences for Kentucky prosecutors and county attorneys at continuing legal education seminars statewide and for the KBA Convention. He serves as a member of the state Circuit Judges Education Committee and the Education Oversight Committee for the Administrative Office of the Courts. Judge Fleming has also been a part-time instructor for Brown-Mackie College.

He is a past president of the Hopkinsville-Christian County Jaycees and Big Brothers-Big Sisters of the Southern Pennyrile. Judge Fleming is a past vice president of the Kentucky State Jaycees and was the organization’s legal counsel for six years. He is a past chairman for the boards of the Housing Authority of Hopkinsville and Westwood Senior Homes.

HAS THE JUDICIAL RETIREMENT SYSTEM PLACED ALL OF ITS INVESTMENT EGGS IN ONE BASKET?

Monday, September 26th, 2011

It has been reported to LawReader that the Judicial Retirement System is secretive, and there is a suggestion that the Judicial Retirement System has put all of its investment eggs in one basket.

 We would invite comments from anyone who knows anything about the following statement.

 ”Kentucky Judicial and Legislative Retirement  Systems have over  $300 million but are one of the most secretive plans in the country . no competitive bidding for any services ever.

While the larger Kentucky Public Plans (KRS and KTRS) have over 50 investment managers  from around the world Judicial & Legislative have one  (Hilliard Lyons) from Kentucky

While KRS and KTRS managers trade through over 50 different brokers around the globe   Judicial & Legislative have one  (Lexington Investments)

While KRS and KTRS managers have independent investment consultants     Judicial & Legislative have none. 

Judicial & Legislative had enough clout to escape scrutiny under both recent Governors Pension studies.”

 See:

http://www.lexinvest.com/contactus.html

http://hilliardlyons.com/site/our-financial-consultants/

Shelly Chappell sent this interesting quote about the colonial Supreme Court to LawReader:

Sunday, September 25th, 2011

1789: The First Supreme Court

The Judiciary Act of 1789 is passed by Congress and signed by President George Washington, establishing the Supreme Court of the United States as a tribunal made up of six justices who were to serve on the court until death or retirement. That day, President Washington nominated John Jay to preside as chief justice, and John Rutledge, William Cushing, John Blair, Robert Harrison, and James Wilson to be associate justices. On September 26, all six appointments were confirmed by the U.S. Senate.

The U.S. Supreme Court was established by Article 3 of the U.S. Constitution. The Constitution granted the Supreme Court ultimate jurisdiction over all laws, especially those in which their constitutionality was at issue. The high court was also designated to oversee cases concerning treaties of the United States, foreign diplomats, admiralty practice, and maritime jurisdiction. On February 1, 1790, the first session of the U.S. Supreme Court was held in New York City’s Royal Exchange Building.

The U.S. Supreme Court grew into the most important judicial body in the world in terms of its central place in the American political order. According to the Constitution, the size of the court is set by Congress, and the number of justices varied during the 19th century before stabilizing in 1869 at nine. In times of constitutional crisis, the nation’s highest court has always played a definitive role in resolving, for better or worse, the great issues of the time.

Kentucky judge reprimanded for touting Rand Paul’s Senate campaign

Friday, September 23rd, 2011

By Jack Brammer — jbrammer@herald-leader.com

Posted: 12:00am on Sep 20, 2011; Modified: 3:50am on Sep 20, 2011

FRANKFORT — A circuit court judge for McCreary and Whitley counties has been publicly reprimanded for sending campaign materials via email to all Kentucky circuit court judges last year touting Republican Rand Paul’s bid for the U.S. Senate.

The state Judicial Conduct Commission dismissed two other judicial misconduct charges against Daniel L. Ballou of Williamsburg for allegedly contributing $562 to U.S. Sen. John McCain’s 2008 presidential campaign.

The commission said Ballou violated the state judicial conduct code by publicly endorsing Paul for public office and by engaging in political activity. Ballou agreed to the commission’s order.

Ballou sent an email in January 2010 about Paul’s stance on the Second Amendment dealing with the right to bear arms.

The judicial canons, which govern judicial conduct, say a judge “shall refrain from inappropriate political activity.” According to the canons, political activity includes soliciting money or making contributions to a political organization or candidate. The canons also say a judge cannot publicly endorse or oppose a candidate for public office.

Ballou denied all the allegations in a motion filed with the Judicial Conduct Commission on Jan. 21.

Ballou said the campaign donation to McCain occurred while Ballou was deployed on military duty in Iraq. He said he bought several items that included McCain’s likeness via the Internet. At the time, he did not know that those purchases would be considered a political donation, he said in court documents.

The email regarding Paul’s Second Amendment stance was not intended as an endorsement or to take a political position, he said.

Ballou said in documents that he had “forwarded an email from his personal computer to a limited number of fellow judges, none of whom could be reasonably expected to be subject to improper political persuasion or influence.”

Read more: http://www.kentucky.com/2011/09/20/1889145/judge-reprimanded-for-touting.html#ixzz1YUEyTyLN

THE KBA ETHICS PROSECUTION AGAINST ERIC DETERS RESULTS IN FIFTEEN COUNTS BEING DISMISSED, AND 4 MINOR CHARGES SUSTAINED.

Saturday, September 17th, 2011

On Friday Sept. 16, 2011, the KBA Board of Governors heard oral arguments by Eric Deters and his attorney Larry Forgy.  The KBA Bar counsel’s office was represented by Sarah Coker.

The  KBA was prosecuting Deters for l9 counts, but l5 counts were dismissed by the Board of Governors.

The four remaining charges included a claim that he had called a daughter of a client concerning potential representation.  His client had asked him to call her daughter.

Three other charges will be clarified as soon as LawReader  receives confirmation.

The KBA sought a 2 year suspension of Deters, but the Board recommended a sanction of a 61 day suspension and remedial education.

Deters notified LawReader that he would exercise his right to appeal the four counts on which the Board upheld the ruling of the Trial Commissioner.

One of the remaining issues is the action of the Board of Governors over Deters motion to  send the case back for a new hearing due to the alleged conflict of interest of the Trial Commissioner Frank Doheny.  Doheny is a partner ins Dismore and Shohl of Louisville.  At the hearing it was disclosed by Doheny that his law partner Ms. Ash from the Cincinnati office of Dinsmore and Shohl was representing the client who filed a complaint against Deters.

Attorney Ash received a fee for completing the case Deters had originally handled.  She received $25,000.   Deters had allegedly billed the client $1500 and the Trial Commissioner ruled that his fee was exhorbitant.

Deters sought the recusal of the Trial Commissioner, but the Chief Justice refused to consider his motion for recusal.   At this point it does not appear that the Board of Governors made a finding on the recusal conflict of the Trial Commissioner.

The Board’s  dismissal of most of the charges filed against Deters dealt a serious blow to the Bar Counsel’s office.

Deters posted the following comments on his blog:

A very biased Trial Commissioner had recommended 181 day (6 months) suspension. I was charged with 19 violations of the lawyer ethical code on 6 cases. Yesterday, they found me guilty of only 4 of 19 violations. Rather than 181 days, they recommended the much smaller time of 61. I will appeal these four to the Kentucky Supreme Court. I’m confident of complete exoneration. We have countless winning issues.

 This won’t affect me at all in Ohio either.

 I violated no ethical rules. The Board found me guilty of the following: improper termination of a client (no idea why); saying something false about a judge (the judge admitted everything I said was true at my hearing) improper contact with a prospective client (this man lied and I proved it) and lack of candor to a tribunal (I’ll have to read the Order when they send it.)

 Even the false accusations did not include criminal conduct, theft, morality or other terrible things you have and read about on the news by lawyers. This unethical and lieing Bar Counsel and Trial Commissioner charged and found me guilty of 19 violations. Even the biased Board tossed 15 of them! So I had to defend for over 5 years baseless bar charges. I will appeal these four to the Kentucky Supreme Court.

FEDERAL JUDGE RULES AGAINST ANGELA FORD AND ALLOWS U.S. ATTORNEY TO REVIEW ACCOUNTING K RE: HER HANDLING OF CLIENT FUNDS

Friday, September 16th, 2011

  Lexington Attorney Angela Ford was ordered by Federal Judge Danny Reeves to provide an accounting to the court reporting her handling of some $42 million dollars seized from the Fen Phen defendants .

 The U.S. Attorney sought the accounting.   Upon receiving the accounting Judge Reeves ordered that the document be sealed.   Then the attorney for Stan Chesley and the U.S. Attorneys’ office both filed a motion seeking a right to view the accounting.   In the following order the Federal Judge denied Stan Chesley access but he granted access to the U.S. Attorney.

 The U.S. Attorney’s office had previously plead that Angela Ford had not been  cooperative with the government in determining how she had handled the $42 million dollars.     Rumors persist that she had distributed funds to her clients and has paid herself a fee of $13 million.

 The Boone Circuit Court civil case summary judgment against Gallion and Cunningham was appealed to the Ky. Court of Appeals.  The Court of Appeals set aside the summary judgment and remanded the case for a new trial.  Therefore there is currently no final civil judgment supporting a judgment against the Fen Phen defendants.

 Nevertheless Ford has argued that she can continue to collect or hold the $42 million dollars.   Others argue that since the only existing court order is a restitution order obtained by the U.S. Attorney’s office, that Angela Ford is not entitled to any fee at all, and that 100% of the seized monies should go to the victims as determined in the Federal Criminal case.

 The Federal Judge notes that Ford is now arguing that even if it is found that any money she has distributed is not supported by a judgment, that she and her clients will not have to return the money to the defendants.

 See the following quote from Judge Reeves order:

 Ford also maintains that even if the civil judgment is reversed, the defendants will not be

able to recover Ford’s contingency fee through an action for restitution. She maintains that an attorney may not be held liable in restitution for fees collected in good faith to satisfy a judgment that is later reversed. [Record No. 1286, pp. 18-19 (citing Restatement (First) of Restitution § 74 cmt. h (1937))] The United States counters that even if this is the general rule, it may not apply in cases involving contingent fee agreements.”

The Kentucky Bar Association cannot be ignorant of this battle going on between the U.S. Attorney’s office and Angela Ford.  Yet we have seen no evidence that they have done anything to protect Ms. Fords clients.  

 

Ms. Ford  argues above that her contingency fee need not to be returned.   One must wonder how many attorneys have lost their law license for not returning fees which were not supported by a favorable judgment of a court.

 

When this all plays out, it may be that Ms. Ford legally gets to keep her $13 million in fees, but if the U.S. Attorney’s Office apparent fears are realized, then we may see the KBA being asked by the media, “Why did you stand by and let this happen”

 

The following excepts from Judge Danny Reeves order of Sept. 9, 2011:

 

 

:

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

NORTHERN DIVISION

(at Covington)

UNITED STATES OF AMERICA,

Plaintiff,

V.

WILLIAM J. GALLION, et al.,

Defendants.

))))))))))

Criminal Action No. 2: 07-39-DCR

MEMORANDUM OPINION AND ORDER

*** *** *** ***

On February 4, 2011, the Kentucky Court of Appeals reversed the grant of summary

judgment in the civil case. After the reversal, a dispute arose between the United States and Ford about whether Ford should be required to submit to the United States information about the locations and amounts of funds recovered pursuant to the civil judgment in the Abbott case.

Upon motion by the United States, the Court ordered Ford to provide a full accounting. [Record No. 1284]. Ford objected, moving to alter, amend, or vacate the order. [Record No. 1286] The Court then amended its order and directed Ford to submit the information under seal to the Court for determination of whether it must be provided to the United States following a hearing.

[Record No. 1288] The hearing on Ford’s motion to alter, amend, or vacate was held on

September 7, 2011.

After Ford submitted her accounting under seal, the United States filed a motion for a

partial lift of the seal so that it could access the information. [Record No. 1293] James M. Gary, attorney for Stanley M. Chesley in the Abbott case, has also filed a motion for leave to intervene and to unseal the records filed with the Court. [Record No. 1292] For the reasons explained below, the Court will deny Ford’s motion and grant the motion of the United States for a partial lift of the seal. Gary’s motion will be denied. Finally, if Ford fails provides a full and complete accounting to the United States in accordance with its original motion, the government may obtain that information through discovery or by other means.2

I. Motion to Alter, Amend, or Vacate

Angela Ford has moved the Court to set aside its June 29, 2011 Order requiring her to

provide an accounting. [Record No. 1286] In support of her motion, Ford argues that: (1) an

accounting is unnecessary; (2) the Court lacks jurisdiction to order her to provide such an

accounting; and (3) the Court should abstain from deciding this issue to avoid interfering with an ongoing state proceeding. She has pointed to no controlling authority that would require thisCourt to grant her motion, however, and her arguments are unpersuasive.

A. Need for Accounting

Ford maintains that an accounting of funds is unnecessary. Her argument is twofold.

First, she argues that she has already provided the United States with a full accounting. Second, she argues that the government has no need for the information. The United States counters that an accounting is necessary so that it can put mechanisms in place to protect the victims in the event that the state civil judgment is overturned and Ford is ordered to return the funds –potentially including her contingency fee – to the defendants. Ford contends that there is no danger of the funds being returned to the defendants and that under no circumstances will her fee be subject to return.

At the outset, the Court rejects Ford’s contention that she has already given the United

States a full accounting. The distribution grids she provided previously contained no

information that would enable the government to enforce an order of restitution if necessary.

Regarding the government’s need for the accounting, Ford first contends that a large portion of the funds will not be returned to the defendants because $15 million was collected pursuant to the judgment against the Kentucky Fund for Healthy Living, Inc. and that judgment was not appealed. However, the United States is asking for an accounting in the event that any of the funds revert back to the defendants; the percentage at stake is irrelevant. Next, Ford argues that the Abbott judgment remains in force during the motion for discretionary review to the Kentucky Supreme Court. While this may be correct, the fact remains that the judgment may eventually be reversed. Moreover, this argument ignores the possibility that the reversal affected the priority of the judgments, which would entitle the United States to the accounting regardless of the final outcome of the state case. Ford further asserts that even if the Kentucky Supreme Court denies discretionary review, the Boone Circuit Court “would likely again enter partial summary judgment in favor of Abbott,” and it is “unlikely” that the state court would grant the defendants restitution from the victims. [Record No. 1286, pp. 10-11] Both assertions are pure conjecture

at this point and neither supports a decision to alter or revoke the Court’s June 29th Order.

Ford’s final argument, raised at the hearing, is that federal law prevents the defendants from

arguing to the state court that they are entitled to a return of their funds. [Record No. 1300, pp. 4-5 (citing 18 U.S.C. 3664(l))] However, in addition to ignoring the issue of judgment priority, this argument is based on the prediction that the federal criminal convictions will not be reversed on appeal, an outcome that not an absolute certainty at this point.

Ford also maintains that even if the civil judgment is reversed, the defendants will not be

able to recover Ford’s contingency fee through an action for restitution. She maintains that an attorney may not be held liable in restitution for fees collected in good faith to satisfy a judgment that is later reversed. [Record No. 1286, pp. 18-19 (citing Restatement (First) of Restitution § 74 cmt. h (1937))] The United States counters that even if this is the general rule, it may not

apply in cases involving contingent fee agreements. [Record No. 1293, pp. 2-3 (citing Mohamed v. Kerr, 91 F.3d 1124, 1126 (8th Cir. 1996))] Ford correctly points out that there is no Kentucky caselaw directly on point regarding the return of contingency fees after a reversal.

Again, it should be noted that it is unclear at this point what the outcome of the state civil

case will be. Neither Ford nor the United States has shown with any reasonable certainty

whether the funds collected by Ford might be subject to return by the defendants. However,

Ford has the burden on this motion, and she has failed to foreclose the possibility that an

accounting may become necessary. All of the potential events that led the United States to

express concern about the security of the funds are still possibilities. Therefore, the accounting sought by the United States is appropriate, and the Court will not set aside its June 29th Order.3

B. Jurisdiction

Ford also argues that the Court lacks jurisdiction to require her to provide an accounting.

She claims that, because she is a non-party, the Court has no general authority over her and may only exercise its jurisdiction “in accordance with the statutory procedures in the Mandatory Victims Restitution Act.” [Record No. 1286, p. 8] She cites United States v. Curtis for the premise that the court has no general authority over non-parties. [Record No. 1286, p. 8 (citing United States v. Curtis, No. 99-5574, 2000 U.S. App. LEXIS 1477, at *2-3 (6th Cir. Feb. 1, 2000))]‘

As United States points out, however, the present case is factually distinguishable from

Curtis. In Curtis, the defendant pleaded guilty to wire fraud and was ordered to pay restitution 3 Additionally, although neither party has addressed the issue, the Court notes that the Kentucky Court of Appeals’ reversal may affect the priority of the judgments. If the restitution order now has priority over the civil judgment, then the accounting is necessary to enable the United States to enforce the restitution

Ford now represents 407 individuals in the civil action. A total of 421 victims were identified in

this criminal action and are subject to receive restitution from Defendants Gallion and Cunningham. While the Court has raised the potential conflict of interest presented by recent developments, it will not take action at this time to remove Ford as the designated victims’ advocate. This determination does not foreclose further inquiry or prevent the issue from being raised in the future.

Angela Ford has moved the Court to set aside its June 29, 2011 Order requiring her to

provide an accounting. [Record No. 1286] In support of her motion, Ford argues that: (1) an

accounting is unnecessary; (2) the Court lacks jurisdiction to order her to provide such an

accounting; and (3) the Court should abstain from deciding this issue to avoid interfering with an ongoing state proceeding. She has pointed to no controlling authority that would require this Court to grant her motion, however, and her arguments are unpersuasive.

Ford maintains that an accounting of funds is unnecessary. Her argument is twofold.

First, she argues that she has already provided the United States with a full accounting. Second, she argues that the government has no need for the information. The United States counters that an accounting is necessary so that it can put mechanisms in place to protect the victims in the event that the state civil judgment is overturned and Ford is ordered to return the funds –potentially including her contingency fee – to the defendants. Ford contends that there is no danger of the funds being returned to the defendants and that under no circumstances will her fee be subject to return.

At the outset, the Court rejects Ford’s contention that she has already given the United

States a full accounting. The distribution grids she provided previously contained no

information that would enable the government to enforce an order of restitution if necessary.

Regarding the government’s need for the accounting, Ford first contends that a large portion of the funds will not be returned to the defendants because $15 million was collected pursuant to the judgment against the Kentucky Fund for Healthy Living, Inc. and that judgment was not appealed. However, the United States is asking for an accounting in the event that any of the funds revert back to the defendants; the percentage at stake is irrelevant. Next, Ford argues that the Abbott judgment remains in force during the motion for discretionary review to the Kentucky Supreme Court. While this may be correct, the fact remains that the judgment may eventually be reversed. Moreover, this argument ignores the possibility that the reversal affected the priority of the judgments, which would entitle the United States to the accounting regardless of the final outcome of the state case. Ford further asserts that even if the Kentucky Supreme Court denies discretionary review, the Boone Circuit Court “would likely again enter partial summary judgment in favor of Abbott,” and it is “unlikely” that the state court would grant the defendants restitution from the victims. [Record No. 1286, pp. 10-11] Both assertions are pure conjecture at this point and neither supports a decision to alter or revoke the Court’s June 29th Order

Ford’s final argument, raised at the hearing, is that federal law prevents the defendants from

arguing to the state court that they are entitled to a return of their funds. [Record No. 1300, pp. 4-5 (citing 18 U.S.C. 3664(l))] However, in addition to ignoring the issue of judgment priority, this argument is based on the prediction that the federal criminal convictions will not be reversed on appeal, an outcome that not an absolute certainty at this point.

Ford also maintains that even if the civil judgment is reversed, the defendants will not be able to recover Ford’s contingency fee through an action for restitution. She maintains that an attorney may not be held liable in restitution for fees collected in good faith to satisfy a judgment that is later reversed. [Record No. 1286, pp. 18-19 (citing Restatement (First) of Restitution § 74 cmt. h (1937))] The United States counters that even if this is the general rule, it may not apply in cases involving contingent fee agreements. [Record No. 1293, pp. 2-3 (citing Mohamed

 

v. Kerr, 91 F.3d 1124, 1126 (8th Cir. 1996))] Ford correctly points out that there is no Kentucky caselaw directly on point regarding the return of contingency fees after a reversal.

Again, it should be noted that it is unclear at this point what the outcome of the state civil

case will be. Neither Ford nor the United States has shown with any reasonable certainty

whether the funds collected by Ford might be subject to return by the defendants. However,

Ford has the burden on this motion, and she has failed to foreclose the possibility that an

accounting may become necessary. All of the potential events that led the United States to

express concern about the security of the funds are still possibilities. Therefore, the accounting sought by the United States is appropriate, and the Court will not set aside its June 29th Order. 

B. Jurisdiction

Ford also argues that the Court lacks jurisdiction to require her to provide an accounting.

She claims that, because she is a non-party, the Court has no general authority over her and may Additionally, although neither party has addressed the issue, the Court notes that the Kentucky Court of Appeals’ reversal may affect the priority of the judgments. If the restitution order now has priority over the civil judgment, then the accounting is necessary to enable the United States to enforce the restitution order. to the victim, American Express. 2000 U.S. App. LEXIS 1477, at *2-3. Later, American Express sold the outstanding debt to another finance company, which began charging a higher interest rate on the debt. Id. The Sixth Circuit upheld the district court’s decision not to enjoin that finance company from charging the higher interest rate, finding that the company was never a party to the criminal case. Id. at *3.

Curtis is not applicable here.

While Ford is not a party to the criminal case, she is certainly more related to the action than was the unnamed finance company in Curtis. Unlike the finance company, whose only connection to the criminal case was through a purchase of the resulting debt years after the judgment, Ford has been an active participant in this case. She was

appointed as the crime victims’ legal representative pursuant to the Crime Victims’ Rights Act (CVRA), 18 U.S.C. § 3771. [Record No. 54] And, in her capacity as advocate, she petitioned the Court to obtain funds previously held by the United States Marshals Service. [Record No.1249]

It is illogical that she would now attempt to invoke “non-party status” to avoid providing

the United States with an accounting of those funds.

Next, Ford claims that even if the Court has proper jurisdiction over her, it can exercise

that jurisdiction “only in accordance with the statutory procedures in the Mandatory Victims

Restitution Act (MVRA).” [Record No. 1286, pp. 8-9 (citing 18 U.S.C. § 3664)] She correctly indicates that the MVRA sets forth the exclusive procedures for enforcing a restitution order.

However, even if an order for an accounting constitutes an enforcement action under the statute, the MVRA provides that an order of restitution may be enforced by any method laid out in several specified sections of Title 18, as well as “by all other available and reasonable means.”

18 U.S.C. § 3664(m)(1)(A)(ii).

Under circumstances involving significant sums of money and

hundreds of victims, an order for an accounting could hardly be deemed unreasonable.

C. Abstention

Finally, Ford argues that the Court should abstain pursuant to the Colorado River

abstention doctrine because, she contends, this Court’s involvement will interfere with the

ongoing state court proceedings. See Colo. River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). Ford maintains that abstention is appropriate because the Boone Circuit Court exercised its jurisdiction first and, therefore, the current federal proceedings involve “piecemeal litigation that amounts to an unnecessary waste of judicial resources.” [Record No. 1286, p. 21] However, Ford’s argument is misplaced.

Colorado River counsels abstention in limited contexts such as the adjudication of

property rights where multiple cases in state and federal court would present the danger of

piecemeal litigation. See id. at 819 (“Only the clearest of justifications will warrant dismissal.”). The case involved the adjudication of water rights in a river system, a complicated issue “best conducted in unified proceedings.” Id. at 819 (noting a federal policy which recognized “the availability of comprehensive state systems for adjudication of water rights”). As a result, Colorado River carved out an exception to the general rule that “the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction.” Id. at 817. The issues at stake in Colorado River are simply not present here. This Court is deciding an entirely different issue from that decided by the state court and there is no danger of piecemeal litigation resulting from the separate judgments. Abstention, therefore, is not appropriate in this case.

 

II. Motions to Unseal

There are two motions before the Court to unseal the accounting filed by Angela Ford.

James Gary has moved to intervene in this matter “for the limited purpose of moving the Court to unseal and make public” that accounting. [Record No. 1292] Conversely, the United States asks that the accounting be unsealed only as to itself and not otherwise made public. [Record No. 1293]

The decision to seal judicial records is within the discretion of the district court. In re

Knoxville News-Sentinel Co., 723 F.2d 470, 474 (6th Cir. 1983). There is a presumption of

openness where the information has historically been open to the general public. Press-

Enterprise Co. v. Superior Court, 464 U.S. 501, 510 (1984). However, that presumption can be overcome by an “overriding interest based on findings that closure is essential to preserve higher values.” Id. Title 18 of the United States Code, Section 3664, which sets forth the procedure for enforcing an order of restitution, requires that the “privacy of any records filed . . . pursuant to this section shall be maintained to the greatest extent possible, and such records may be filed . . . in camera.” 18 U.S.C. § 3664(d)(4). Therefore, a district court in a restitution proceeding may seal a record if it finds an overriding interest in maintaining the privacy of the records.

As argued earlier in its Motion for Order of Accounting, the United States claims that it

needs the information in the accounting to protect the victims in the event that the state court

judgment is overturned and Ford is ordered to return the funds to the defendants. Ford’s

response is similarly limited to arguments presented in her Motion to Alter, Amend, or Vacate.

For the same reasons discussed above (i.e., that Ford is required to provide an accounting to the government), the United States should be able to access the information she has provided in camera.

Gary’s argument that the records should be unsealed is based on the public right of access

to criminal trials and records. He argues that there is no overriding interest here that would

overcome the presumption of openness and that making the information public would not

jeopardize the parties or victims in any way. Ford counters that there is no public interest at

stake and that the records at issue are more akin to discovery than a public filing. She argues that she submitted the records with the Court to determine their discoverability, and she cites several cases discussing the right of access to sealed discovery documents to support her claim that there is no presumption of openness with regard to such documents. She further asserts that she has relied on the Court’s order permitting her to submit the accounting under seal so that only “extraordinary circumstances” will warrant lifting the seal. [Record No. 1294, p. 7 (citing Knoxville News-Sentinel, 723 F.2d at 478)] Finally, she claims that unsealing the records will violate her own and others’ privacy interests in financial account information.

The Court does not need a showing of extraordinary circumstances to modify the Order

sealing the accounting because Ford’s “reliance” on the Court’s order does not rise to the level contemplated in Knoxville News-Sentinel. In that case, two newspapers intervened in a lawsuit by a bank against the FDIC in an attempt to have the district court’s order sealing several exhibits vacated. 723 F.2d at 472. However, because the bank had made the decision to file suit in reliance on the district court’s grant of that protective order, the Sixth Circuit denied the newspapers’ petition. Id. at 470, 478 (noting the bank’s assertion that the “cause of action . . .was initiated ‘only after’ they obtained the protective order needed to safeguard the stability of the bank and privacy interests of its customers”); see also Martindell v. Int’l Tel. & Tel. Corp., 594 F.2d 291, 296 (2d Cir. 1979) (holding that a protective order may not be modified absent a showing of extraordinary circumstances where a witness relied on that order in deciding to testify).

Here, Ford merely complied with a court order. Her knowledge that the records would initially be under seal does not constitute reliance such that their confidentiality must be maintained absent a showing of extraordinary circumstances.

Nevertheless, the record need not be unsealed as to the general public, as Gary proposes.

As previously explained, Section 3664 of Title 18 of the United States Code directs the Court

to maintain the privacy of records filed pursuant to orders of restitution “to the greatest extent possible.” 18 U.S.C. § 3664(d)(4). And to maintain the privacy of the information contained in these records, the accounting will remain sealed as to the general public.

III. CONCLUSION

Ford has not demonstrated that this Court’s original order directing her to provide a full

and complete accounting to the United States was inappropriate. Likewise, Gary has not

demonstrated that the information provided under seal should be made available to the public.

Accordingly, it is hereby ORDERED as follows:

(1) Angela Ford’s Motion to Alter, Amend, or Vacate the Court’s June 29, 2011

Order Granting the United States’ Motion [Record No. 1286] is DENIED.

(2) The Motion of James M. Gary, Pro Se, for leave to Intervene and to Unseal

Certain Records Filed withe the Court [Record No. 1292] is DENIED.

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Case: 2:07-cr-00039-DCR Doc #: 1303 Filed: 09/09/11 Page: 10 of 11 – Page ID#:

24045

(3) The Motion for Partial Lift of Seal of Accounting as to United States [Record No.

1293] is GRANTED. The Clerk of Court shall make Ford’s previous sealed filing available to

the United States. However, it shall not be available to any other party to this proceeding and

it shall not be available to the general public.

This 9th day of September, 2011.

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only exercise its jurisdiction “in accordance with the statutory procedures in the Mandatory

Victims Restitution Act.” [Record No. 1286, p. 8] She cites United States v. Curtis for the

premise that the court has no general authority over non-parties. [Record No. 1286, p. 8 (citing United States v. Curtis, No. 99-5574, 2000 U.S. App. LEXIS 1477, at *2-3 (6th Cir. Feb. 1,2000))]

As United States points out, however, the present case is factually distinguishable from Curtis. In Curtis, the defendant pleaded guilty to wire fraud and was ordered to pay restitution to the victim, American Express. 2000 U.S. App. LEXIS 1477, at *2-3. Later, AmericanExpress sold the outstanding debt to another finance company, which began charging a higher interest rate on the debt. Id. The Sixth Circuit upheld the district court’s decision not to enjointhat finance company from charging the higher interest rate…,