Archive for June, 2007


Friday, June 29th, 2007

(Frankfort, KY) June 29, 2007


  The state constitutional officer races will not be the only races that many Kentuckians see on the ballot this fall.  Special elections for judicial positions, such as those that were created by House Bill 382, as enacted by the 2006 General Assembly, will also appear on the 2007 ballots.  Secretary of State Trey Grayson announced that as of today there will be six additional circuit judge positions appearing on the ballot due to judicial vacancies, and there is a short window for candidates to get their names on the ballot.

“With so many other high profile races on the ballot this fall, it might be easy to overlook special elections to fill judicial vacancies,� noted Secretary Grayson.  “I would encourage all interested and eligible citizens to contact our office as soon as possible for a candidate filing packet if they are interested in filing for one of these races.�

The effective date of the vacancies requires candidates to file for the office with the Secretary of State no later than August 14, 2007, 4:00 p.m., EDT, for placement on the 2007 general election ballot.

The Office of the Secretary of State has received notification from Chief Justice Joseph Lambert of vacancies in office in the following judicial circuits:

     Counties of:             Clay                 Circuit Judge
                                    Jackson            41st Judicial Circuit
                                    Leslie               1st Division

     County of:               Daviess            Circuit Judge
                                                            6th Judicial Circuit
                                                            1st Division

     County of:               Hardin              Circuit Judge
                                                            9th Judicial Circuit
                                                            2nd Division

     County of:               Henderson        Circuit Judge
                                                            51st Judicial Circuit
                                                            1st Division

     County of:               Jefferson           Circuit Judge
                                                            30th Judicial Circuit
                                                            7th Division

     County of:               Kenton             Circuit Judge
                                                            16th Judicial Circuit
                                                            1st Division

Some of the qualifications for a circuit judge include: U.S. citizenship, a resident of both the Commonwealth and of the district from which he is elected for 2 years next preceding his taking office, licensed to practice law in the courts of the Commonwealth, and a licensed attorney for at least 8 years.  Candidates must file with the Office of the Secretary of State and must provide a $200 filing fee when submitting their judicial nominating petition.  Judges elected to these judgeships will serve the remainder of the term with next elections to be held for the circuit judgeships in 2014.
Candidate filing packets can be obtained by calling the Election Division in the Office of Secretary of State at (502) 564-3490.  Also available is a candidate filing guide, “Declaring Your Candidacy.�  This publication focuses primarily on candidate filing procedures, sample candidate filing forms for attaining ballot access, qualifications for each elective office, and other important and pertinent election information that will directly or indirectly affect candidacy.  The guide is available online at
“Our office stands ready to help any potential candidate with questions he or she may have, and we hope to see spirited interest in these positions,� remarked Secretary Grayson.
# # #


Friday, June 29th, 2007

The U.S. Court of Appeals for the District of Columbia, has ruled that the Government was in error in attempting to seize legally obtained profits, along with ill gotten gains in RICO cases.  The appeals court also noted other limits and restrictions on using the equitable theory of disgorgement to seize even “ill gotten� profits under several other conditions.   The U.S. Supreme Court denied certiori to the Government on their appeal.
The court noted that the Carson test for permissible disgorgement required that a disgorgement action must be designed so that it will “prevent and restrain” future violations.
This case limits the power of the Government to order disgorgement of profits in a number of situations.  It is not clear that this ruling would apply to State Courts, but it does provide limits to the use of disgorgement orders in Federal courts.

See excerpts:
U.S. v. Philip Morris USA Inc., 396 F.3d 1190 (D.C. Cir.), cert. denied, 126 S. Ct. 478 (2005
The United States also claimed that Appellants engaged in a criminal enterprise to effect this cover-up, and sought equitable relief under RICO, including injunctive relief and disgorgement of proceeds from Appellants’ allegedly unlawful activities. The Government sought this relief under 18 U.S.C. § 1964(a), which gives the District Court jurisdiction
        to prevent and restrain violations of [RICO] by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the future activities or investments of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate or foreign commerce; or ordering dissolution or reorganization of any enterprise….
        18 U.S.C. § 1964(a).
        Appellants moved to dismiss the complaint in 2000. The District Court did dismiss the MCRA and MSP claims, but allowed the RICO claim to stand. United States v. Philip Morris, Inc., 116 F.Supp.2d 131, 134 (D.D.C.2000).
        Section 1964(a) conferred jurisdiction on the District Court only to enter orders “to prevent and restrain violations of the statute.” In considering wither disgorgement came within this jurisdictional grant, the court relied on a decision of the Second Circuit, the only circuit then to have considered “whether … disgorgements … are designed to `prevent and restrain’ future conduct rather than to punish past conduct.” United States v. Carson, 52 F.3d 1173, 1182 (2d Cir.1995) (emphasis in original).

After noting that “RICO has a broad purpose [and] the legislative history of § 1964 indicates that the equitable relief available under RICO is intended to be `broad enough to do all that is necessary,’” id. at 1181, the Carson court went on to observe that it did not see how it could “serve[ ] any civil RICO purpose to order disgorgement of gains ill-gotten long ago….” Id. at 1882. The portion of Carson relied upon by the District Court in the present controversy suggested that disgorgement might “serve the goal of `preventing
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and restraining’ future violations,” but flatly held that the remedy would not do so “unless there is a finding that the gains are being used to fund or promote the illegal conduct, or constitute capital available for that purpose.”1 Id. at 1182.

 The Second Circuit went on to caution that disgorgement would be better justified under this analysis where the “gains [were] ill-gotten relatively recently.” Id.

The District Court accepted the Second Circuit’s suggested holding that the appropriateness of disgorgement depends on whether the proceeds are available for the continuing of the criminal enterprise, but ruled that the question was premature, and denied the motion for dismissal on the RICO-disgorgement claim. Philip Morris, 116 F.Supp.2d at 151-52. Neither party sought leave to file an interlocutory appeal of that ruling.
        The case proceeded, and the Government sought disgorgement of $280 billion that it traced to proceeds from Appellants’ cigarette sales to the “youth addicted population” between 1971 and 2001. This population includes all smokers who became addicted before the age of 21, as measured by those who were smoking at least 5 cigarettes a day at that age.
        After discovery, Appellants moved for summary judgment on the disgorgement claim arguing that

(1) disgorgement is not an available remedy under § 1964(a),

 (2) even if disgorgement were available, the Government’s model fails the Carson test for permissible disgorgement that will “prevent and restrain” future violations, and

(3) even if disgorgement were available, the Government’s proposed model is impermissible because it includes both legally and illegally obtained profits in violation of SEC v. First City Financial Corp., 890 F.2d 1215 (D.C.Cir.1989).

 The District Court denied this motion in a memorandum order designated “# 550.” United States v. Philip Morris USA, Inc., 321 F.Supp.2d 72 (D.D.C.2004).

On motion of the defendants, the District Court certified Order # 550 for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). That section provides for interlocutory appeal where a district judge has certified that “an order not otherwise appealable … involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of litigation….” Under § 1292(b), the Court of Appeals may then decide whether to permit the appeal to be taken from such order. In the present case, we allowed the appeal.

II. Analysis
        A. Scope of Review
        At the outset, the Government urges that our review should be limited to the narrow question of whether the disgorgement it seeks is consistent with the standards of Carson, not whether disgorgement vel non is an available remedy under civil RICO. The Government bases this argument on the theory
Page 1194
that the order on appeal-that is the memorandum order denying “defendants’ motion for partial summary judgment dismissing the Government’s disgorgement claim”-was reiterating a prior order on the general question of availability of disgorgement Further, the Government argues, the order spoke anew only to the measure of disgorgement, assuming such disgorgement to be otherwise available. In support of its proposed limitation of our review, the Government relies upon Yamaha Motor Corp., USA v. Calhoun, 516 U.S. 199, 116 S.Ct. 619, 133 L.Ed.2d 578 (1996). In Yamaha, the Supreme Court dealt with the breadth of review properly conducted by a court of appeals under 28 U.S.C. § 1292(b). Id. at 204, 116 S.Ct. 619. The Government selectively quotes from Yamaha the sentence that, “The court of appeals may not reach beyond the certified order to address others made in the case.” Id. at 205, 116 S.Ct. 619. Based on this sentence, the Government then argues that because the first order denying a motion to dismiss had dealt with the question of the availability of disgorgement, this certified interlocutory review of the subsequent summary judgment order is restricted to the new theory considered by the court on that occasion-that the disgorgement the Government pursued exceeded the standard available for such disgorgement as set by the Second Circuit in Carson.
        Unfortunately for the Government’s position, the Yamaha opinion did not end with the sentence upon which the Government relies. The Supreme Court went on to say in the same paragraph: “But the appellate court may address any issue fairly included within the certified order because `it is the order that is appealable, and not the controlling question identified by the district court.’” Id. (emphasis in original) (quoting 9 J. MOORE & B. WARD, MOORE’S FEDERAL PRACTICE § 110.25[1] at 300 (2d ed.1995) and citing 16 C. Wright, A. Miller, E. Cooper, & E. Greshman, Federal Practice & Procedure § 3929 at 144-45 (1977)). Appellants’ motion below was for “Summary Judgment Dismissing the Government’s Disgorgement Claim,” and granting this motion would have resulted in complete dismissal of the Government’s claim for disgorgement with prejudice. See Appellee’s App. at 19, 79. Thus the District Court’s denial was on the question of whether disgorgement would be allowed at all, and we may review it as such regardless of the grounds the District Court gave for its decision.

In the memorandum accompanying its denial of this motion, evidencing an accurate understanding of the summary judgment standard provided by Rule 56 of the Federal Rules of Civil Procedure, the District Court noted that “summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Philip Morris, 321 F.Supp.2d at 74 (citing Fed. R. Civ. P. 56(c)).

 Significantly, the court further noted that “Defendants argue that any disgorgement which might be ordered upon a finding of liability must be limited by both the text of Section 1964(a) itself and the holding in United States v. Carson … interpreting that section.” Philip Morris, 321 F.Supp.2d at 74 (emphasis added). Thus the court clearly implied the possibility that none might be ordered, and that statutory issues outside Carson were before the court.

 B. The Availability of Disgorgement
        The Government argues that § 1964 contains a grant of equitable jurisdiction that must be read broadly to permit disgorgement in light of Porter v. Warner Holding Co., 328 U.S. 395, 66 S.Ct. 1086, 90 L.Ed. 1332 (1946), and its progeny. The Porter Court considered reimbursement awards under the Emergency Price Control Act of 1942 (“EPCA”) and concluded that where a statute grants general equitable jurisdiction to a court, “all the inherent equitable powers … are available for the proper and complete exercise of that jurisdiction.” Porter, 328 U.S. at 398, 66 S.Ct. 1086. This grant is only to be limited when “a statute in so many words, or by a necessary and inescapable inference, restricts the court’s jurisdiction.” Id. In this case the text and structure of the statute provide just such a restriction.
        As the Supreme Court has repeatedly observed: “Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree.” Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) (citations omitted).

Reading Porter in light of this limited jurisdiction we must not take it as a license to arrogate to ourselves unlimited equitable power. We will not expand upon our equitable jurisdiction if, as here, we are restricted by the statutory language, but may only assume broad equitable powers when the statutory or Constitutional grant of power is equally broad.
        As our dissenting colleague correctly notes, the Court in Porter was considering whether a district court acting under the authority granted in the EPCA had the authority to order restitution for overcharges. The implication of broad equitable authority in Porter came from a statute which empowered the district court to grant “a permanent or temporary injunction, restraining order, or other order.” EPCA § 205(a), 56 Stat. 23, 33 (1942). The action before the Court in Porter was brought under a section providing that “the Administrator” could bring action against persons engaged in overcharges for “an order enjoining such acts or practices, or for an order enforcing compliance
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with such provision, and upon a showing by the Administrator that such person has engaged or is about to engage in any such acts or practices a permanent or temporary injunction, restraining order, or other order shall be granted without bond.” Id.
        The Supreme Court did not have to make much of a stretch to determine that the phrase “enforcing compliance with such provision,” and expressly referring to “a permanent or temporary injunction, restraining order, or other order,” would include restitution for amounts collected exceeding the ceilings determined under the statute.

The Government in the present case asks us to work a far greater expansion of the statutory grant enabling the District Court in a civil RICO action brought by the Government under § 1964(a). We further note that the Court in Porter was ordering restitution, under a statute designed to combat inflation. Restitution of overcharge works a direct remedy of past inflation, directly effecting the goal of the statute.

The Court in Porter set forth two theories under which “[a]n order for the recovery and restitution of illegal rents may be considered a proper `other order’” under the applicable statute. 328 U.S. at 399, 66 S.Ct. 1086. First, the recovery of the illegal payment by the victim tenant “may be considered as an equitable adjunct to the injunction decree,” as it effects “the recovery of that which has been illegally acquired and which has given rise to the necessity for injunctive relief.” Id. (noting that “such a recovery could not be obtained through an independent suit in equity if an adequate legal remedy were available.”).

The equitable jurisdiction of the Court having been properly invoked, the Court then had the power “to decide all relevant matters in dispute and to award complete relief….” Id. Also, and more to the point, the Court was authorized “in its discretion, to decree restitution of excessive charges in order to give effect of the policy of Congress.” Id. at 400, 66 S.Ct. 1086. The policy of Congress under the EPCA was to prevent overcharges with inflationary effect. The goal of the RICO section under which the government seeks disgorgement here is to prevent or restrain future violations. We therefore must consider the forward-looking nature of the remedy in a way not applicable to a different remedy in Porter for the accomplishment of a different goal under a different statute.
        Section 1964(a) provides jurisdiction to issue a variety of orders “to prevent and restrain” RICO violations. This language indicates that the jurisdiction is limited to forward-looking remedies that are aimed at future violations. The examples given in the text bear this out. Divestment, injunctions against persons’ future involvement in the activities in which the RICO enterprise had been engaged, and dissolution of the enterprise are all aimed at separating the RICO criminal from the enterprise so that he cannot commit violations in the future. Disgorgement, on the other hand, is a quintessentially backward-looking remedy focused on remedying the effects of past conduct to restore the status quo. See, e.g., Tull v. United States, 481 U.S. 412, 424, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987). It is measured by the amount of prior unlawful gains and is awarded without respect to whether the defendant will act unlawfully in the future. Thus it is both aimed at and measured by past conduct.
        The Government would have us interpret § 1964(a) instead to be a plenary grant of equitable jurisdiction, effectively ignoring the words “to prevent and restrain” altogether. This not only nullifies the plain meaning of the terms and violates our canon of statutory construction that we should strive to give meaning to every word, see, e.g., Murphy Explor. &
Page 1199
Production Co. v. United States Dept. of the Interior, 252 F.3d 473, 481 (D.C.Cir.2001), but also neglects Supreme Court precedent. Meghrig v. KFC Western, Inc., 516 U.S. 479, 488, 116 S.Ct. 1251, 134 L.Ed.2d 121 (1996), the Court held that compensation for past environmental cleanup was ruled out by the plain language of the Resource Conservation and Recovery Act which authorized actions “to restrain” persons who were improperly disposing of hazardous waste. If “restrain” is only aimed at future actions, “prevent” is even more so.
        Mitchell v. DeMario Jewelry, 361 U.S. 288, 80 S.Ct. 332, 4 L.Ed.2d 323 (1960), relied on by the Government, is not to the contrary. The Mitchell case was brought under the Fair Labor Standards Act of 1938, 29 U.S.C. § 215, 52 Stat. 1060 (1938) (“FLSA”). In that action, the Government was invoking the court’s jurisdiction to restrain violations of a section making it unlawful for a covered employer to discharge or discriminate against employees who had filed complaints or instituted actions under the FLSA. The Court reviewed the whole breadth of that broad Act to conclude that the available remedies included not only injunction against further discrimination and mandatory injunctions of reinstatement, but also a “make whole” reimbursement for lost wages because of the discriminatory discharge. As in Porter, the Court reiterated that in equitable jurisdiction “[u]nless otherwise provided by statute, all the inherent equitable powers of the District Court are available for the proper and complete exercise of that jurisdiction.” Mitchell, 361 U.S. at 291, 80 S.Ct. 332 (quoting Porter, 328 U.S. at 398, 66 S.Ct. 1086). In the RICO Act, Congress provided a statute granting jurisdiction defined with the sort of limitations not present in the FLSA or the EPCA. The statute under which the Government sued Appellants, 18 U.S.C. § 1964(a), granted only the jurisdiction which we set forth above. The District Court, so far as is relevant to actions under that section, has jurisdiction only
        to prevent and restrain violations of [RICO] by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the future activities or investments of any person, including but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate commerce; or ordering dissolution or reorganization of any enterprise….
        18 U.S.C. § 1964(a) (emphasis added). The order of disgorgement is not within the terms of that statutory grant, nor any necessary implication of the language of the statute.
        In considering the broad language from Porter upon which our dissenting colleague relies for the proposition that we should find disgorgement available because Congress has not taken it away, we note that the Supreme Court considered a similar argument in Meghrig. The High Court nonetheless limited the available remedies under CERCLA to those provided in the statute, declaring that
        where Congress has provided “elaborate enforcement provisions” for remedying the violation of a federal statute, as Congress has done with RCRA and CERCLA, “it cannot be assumed that Congress intended to authorize by implication additional judicial remedies….”
        516 U.S. at 487-88, 116 S.Ct. 1251 (quoting Middlesex County Sewerage Auth. v. Nat’l Sea Clammers Ass’n, 453 U.S. 1, 14, 101 S.Ct. 2615, 69 L.Ed.2d 435 (1981)).
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        In RICO, as in RCRA and in CERCLA, Congress has laid out elaborate enforcement proceedings. One of those proceedings is a government action brought under § 1964(a). That one does not provide for disgorgement. That one provides only for orders which “prevent or restrain” future violations. Disgorgement does not do that.
        It is true, as the Government points out, that disgorgement may act to “prevent and restrain” future violations by general deterrence insofar as it makes RICO violations unprofitable. However, as the Second Circuit also observed, this argument goes too far. “If this were adequate justification, the phrase `prevent and restrain’ would read `prevent, restrain, and discourage,’ and would allow any remedy that inflicts pain.” Carson, 52 F.3d at 1182.
        The remedies available under § 1964(a) are also limited by those explicitly included in the statute. The words “including, but not limited to” introduce a non-exhaustive list that sets out specific examples of a general principle. See Dong v. Smithsonian Inst., 125 F.3d 877, 880 (D.C.Cir.1997). Applying the canons of noscitur a sociis and ejusdem generis, we will expand on the remedies explicitly included in the statute only with remedies similar in nature to those enumerated. See Wash. State Dep’t of Soc. & Health Servs. v. Guardianship Estate of Keffeler, 537 U.S. 371, 384, 123 S.Ct. 1017, 154 L.Ed.2d 972 (2003). The remedies explicitly granted in § 1964(a) are all directed toward future conduct and separating the criminal from the RICO enterprise to prevent future violations. Disgorgement is a very different type of remedy aimed at separating the criminal from his prior ill-gotten gains and thus may not be properly inferred from § 1964(a).
        The structure of RICO similarly limits courts’ ability to fashion equitable remedies. Where a statute has a “comprehensive and reticulated” remedial scheme, we are reluctant to authorize additional remedies; Congress’ care in formulating such a “carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) (quoting Mertens v. Hewitt Associates, 508 U.S. 248, 251, 254, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993)) (internal quotations omitted) (emphasis in original). RICO already provides for a comprehensive set of remedies.

When Congress intended to award remedies that addressed past harms as well as those that offered prospective relief, it said as much. In a criminal RICO action the defendant must forfeit his interest in the RICO enterprise and unlawfully acquired proceeds, and may be punished with fines, imprisonment for up to twenty years, or both. 18 U.S.C. § 1963(a). In a civil case the Government may request limited equitable relief under § 1964(a). Individual plaintiffs are made whole and defendants punished through treble damages under 18 U.S.C. § 1964(c). This “comprehensive and reticulated” scheme, along with the plain meaning of the words themselves, serves to raise a “necessary and inescapable inference,” sufficient under Porter, 328 U.S. at 398, 66 S.Ct. 1086, that Congress intended to limit relief under § 1964(a) to forward-looking orders, ruling out disgorgement.
        Congress’ intent when it drafted RICO’s remedies would be circumvented by the Government’s broad reading of its § 1964(a) remedies. The disgorgement requested here is similar in effect to the relief mandated under the criminal forfeiture provision, § 1963(a), without requiring the inconvenience of meeting the additional
Page 1201
procedural safeguards that attend criminal charges, including a five-year statute of limitations, 18 U.S.C. § 3282, notice requirements, 18 U.S.C. § 1963(l), and general criminal procedural protections including proof beyond a reasonable doubt.

 Further, on the Government’s view it can collect sums paralleling-perhaps exactly-the damages available to individual victims under § 1964(c). Not only would the resulting overlap allow the Government to escape a statute of limitations that would restrict private parties seeking essentially identical remedies, Agency Holding Corp. v. Malley-Duff & Assoc., Inc., 483 U.S. 143, 156, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987), but it raises issues of duplicative recovery of exactly the sort that the Supreme Court said Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 269, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992), constituted a basis for refusing to infer a cause of action not specified by the statute. Permitting disgorgement under § 1964(a) would therefore thwart Congress’ intent in creating RICO’s elaborate remedial scheme.
        A note appended to the statute stating that RICO “shall be liberally construed to effectuate its remedial purposes” does not effect this structural inference. Organized Crime Control Act of 1970, Pub.L. No. 91-452, § 904(a), 84 Stat. 947 (codified in a note following 18 U.S.C. § 1961). This clause may warn us against taking an overly narrow view of the statute, but “it is not an invitation to apply RICO to new purposes that Congress never intended.” Reves v. Ernst & Young, 507 U.S. 170, 183, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993). The text and structure of RICO indicate that those remedial purposes do not extend to disgorgement in civil cases.
        The Second Circuit in Carson has interpreted “prevent and restrain” not to eliminate the possibility of disgorgement altogether, but to limit it to cases where there is a finding “that the gains are being used to fund or promote the illegal conduct, or constitute capital available for that purpose.” Carson, 52 F.3d at 1182.

The Fifth Circuit adopted this interpretation in a case holding that disgorgement after the defendant had ceased production of an allegedly defective product would be inappropriately punitive rather than directed toward future violations. See Richard v. Hoechst Celanese Chemical Group, 355 F.3d 345, 355 (5th Cir.2003).

 While we avoid creating circuit splits when possible, in this case we can find no justification for considering any order of disgorgement to be forward-looking as required by § 1964(a). The language of the statute explicitly provides three alternative ways to deprive RICO defendants of control over the enterprise and protect against future violations: divestment, injunction, and dissolution. We need not twist the language to create a new remedy not contemplated by the statute.
        Our colleague reminds us that the Supreme Court has instructed “[i]f a precedent of this Court has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to this Court the prerogative of overruling its own decisions.” Dissent at 1220 (quoting Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989)). This would be most devastating to one side of the case or the other if we were in fact attempting to overrule a Supreme Court precedent. That is, if there were a Supreme Court case that had direct application to the facts before us, we would be required to follow it, and that would be the end of the matter. We would not need to consider any other line of cases. However, the Rodriguez de Quijas language is not particularly helpful
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when no precedent of the Supreme Court “has direct application,” as in the present case. There is not a Supreme Court case dealing with the jurisdiction of a district court to order disgorgement under RICO § 1964(a). There is not a Supreme Court case discussing that question. There is, in short, no Supreme Court case having direct application. With no Supreme Court case having direct application, it is our duty to construe the statute. That is what we have done.
III. Conclusion
        Because we hold that the District Court erred when it found that disgorgement was an available remedy under 18 U.S.C. § 1964(a), we reverse the District Court and grant summary judgment in favor of Appellants as to the Government’s disgorgement claim.


Friday, June 29th, 2007

WASHINGTON, June 28 — Striking down an antitrust rule nearly a century old, the Supreme Court ruled on Thursday that it was not automatically unlawful for manufacturers and distributors to agree on minimum retail prices.

 See:  Supreme Court’s Decision

The decision will give producers significantly more, though not unlimited, power to dictate retail prices and to restrict the flexibility of discounters.

Five justices, agreeing with the nation’s major manufacturers, said the new rule could in some instances lead to more competition and better service. But four dissenting justices agreed with 37 states and some consumer groups that abandoning the old rule could result in significantly higher prices and less competition for consumer and other goods.
The court struck down the 96-year-old rule that resale price maintenance agreements were an automatic, or per se, violation of the Sherman Antitrust Act. In its place, the court instructed judges considering such agreements for possible antitrust violations to apply a case-by-case approach, known as a “rule of reason,� to assess their impact on competition. The new rule is considerably more favorable to defendants.

The decision was handed down on the last day of the court’s term, which has been notable for overturning precedents and for victories for big businesses and antitrust defendants. It was also the latest of a series of antitrust decisions in recent years rejecting per se rules that had prohibited various marketing agreements between companies.

The Bush administration, along with economists of the Chicago school, had argued that the blanket prohibition against resale price maintenance agreements was archaic and counterproductive because, they said, some resale price agreements actually promote competition.

For example, they said, such agreements can make it easier for a new producer by assuring retailers that they will be able to recoup their investments in helping to market the product. And some distributors would be unfairly harmed by others, like Internet-based retailers, which could offer discounts because they would not have the expense of product demonstrations or other specialized consumer services.

A majority of the court agreed that the flat ban on price agreements discouraged these services and other marketing practices that could promote competition.

“In sum, it is a flawed antitrust doctrine that serves the interests of lawyers — by creating legal distinctions that operate as traps for the unaware — more than the interests of consumers — by requiring manufacturers to choose second-best options to achieve sound business objectives,� the court said in an opinion written by Justice Anthony M. Kennedy and signed by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr.

But in his dissent, portions of which he read from the bench, Justice Stephen G. Breyer said that there was no compelling reason to overturn a century’s worth of Supreme Court decisions that had affirmed the prohibition on resale maintenance agreements.

“The only safe predictions to make about today’s decision are that it will likely raise the price of goods at retail and that it will create considerable legal turbulence as lower courts seek to develop workable principles,� he wrote. “I do not believe that the majority has shown new or changed conditions sufficient to warrant overruling a decision of such long standing.�

During a 38-year period from 1937 to 1975 that Congress permitted the states to adopt laws allowing retail price fixing, economists estimated that such agreements covered about 10 percent of consumer good purchases. In today’s dollars, Justice Breyer estimated that the agreements translated to a higher annual average bill for a family of four of about $750 to $1,000.

The dissent was signed by Justices John Paul Stevens, David H. Souter and Ruth Bader Ginsburg.

The case involved an appeal of a judgment of $1.2 million against Leegin Creative Leather Products after it cut off Kay’s Kloset, a suburban Dallas shop, for refusing to honor Leegin’s no-discount policy. The judgment was automatically tripled under antitrust law.

Leegin’s marketing strategy for finding a niche in the highly competitive world of small leather goods was to sell its “Brighton� line of fashion accessories through small boutiques that could offer personalized service. Retailers were required to accept a no-discounting policy.

After the United States Court of Appeals for the Fifth Circuit, in New Orleans, upheld the judgment and said it was bound by Supreme Court precedent, Leegin took the case to the Supreme Court. Unless it is settled, the case, Leegin Creative Leather Products v. PSK Inc., will now be sent down to a lower court to apply the new standard.
The Supreme Court adopted the flat ban on resale price agreements between manufacturers and retailers in 1911, when it found that the Dr. Miles Medical Company had violated the Sherman act. The company had sought to sell medicine only to distributors who agreed to resell them at set prices. The court said such agreements benefit only the distributors, not consumers, and set a per se rule making such agreements unlawful.

Justice Kennedy said Thursday that the court was not bound by the 1911 precedent because of the “widespread agreement� among economists that resale price maintenance agreements can promote competition.

“Vertical agreements establishing minimum resale prices can have either pro-competitive or anticompetitive effects, depending upon the circumstances in which they are formed,� he wrote.

But Justice Breyer said in his dissent that the court had failed to justify the overturning of the rule, or that there was significant evidence to show that price agreements would often benefit consumers. He said courts would have a difficult time sorting out the price agreements that help consumers from those that harm them.

“The upshot is, as many economists suggest, sometimes resale price maintenance can prove harmful, sometimes it can bring benefits,� he wrote. “But before concluding that courts should consequently apply a rule of reason, I would ask such questions as, how often are harms or benefits likely to occur? How easy is it to separate the beneficial sheep from the antitrust goats?�

“My own answer,� he concluded, “is not very easily.�

Supreme Court limits use of race in Louisville school admissions case

Thursday, June 28th, 2007

Louisville Attorney Teddy Gordon claims win in his first trip to the U.S. Supreme Court.

Read full text of decision:  Parents Involved in Community Schools v. Seattle School Dist. No. 1

WASHINGTON – The Supreme Court on Thursday rejected school diversity plans that take account of students’ race in two major public school districts.

The decision in cases affecting schools in Louisville, Ky., and Seattle could imperil similar plans in hundreds of districts nationwide, and it leaves public school systems with a limited arsenal to maintain racial diversity.
The court split, 5-4, with Chief Justice John Roberts announcing the court’s judgment. Justice Stephen Breyer wrote a dissent that was joined by the court’s other three liberals.
Justice Anthony Kennedy wrote a concurring opinion in which he said race may be a component of school district plans designed to achieve diversity.
But he agreed with Roberts that the plans in Louisville and Seattle went too far.
LawReader presents the following comments from a prior story on NPR regarding the Louisville case.

Louisville’s schools, with 97,000 students, encompass both city and suburban areas, and have a racial composition of about two-thirds white and one-third black.
The school system, once segregated by law, remained segregated 20 years after the Supreme Court’s landmark Brown v. Board of Education decision. In 1975 there finally was a legal reckoning when a federal judge ordered implementation of a desegregation plan just weeks before school was to begin.
Carole Haddad, a white parent, remembers the chaos of that time. “There were fires in the streets,” she recalls. “We had to put monitors and police on buses because bricks were being thrown at students going into certain areas. Over at the school behind my home, they brought in the National Guard, and used it for a bomb squad.”
Haddad was so infuriated by the plan that she decided to run for the school board. “I ran to oppose it,” she says, adding with a smile that she now finds herself on the other side of the argument.
“I’ve come a long way and taken a big turn since then,” Haddad says. Such a big turn that, still on the school board, she is a staunch advocate for continuing a race-conscious system of assigning children to schools, even though Louisville is no longer under any legal requirement to do so. “The parents really like it,” she says simply.
In Louisville, School Choice
Not so, says Crystal Meredith, a white mother who sued the Louisville School Board over her son’s assignment. She has taken her case all the way to the Supreme Court, she says, because the school board assigned her son to a school “because of his race.”
The school board’s program is based on a combination of neighborhood school assignment, choice and racial balancing. In elementary school, each child is assigned to a neighborhood school. If a parent wants a child to go to another school, the parent can choose among as many as 10 schools in an assigned cluster scattered throughout the greater metropolitan area, and transportation is guaranteed.
Meredith’s neighborhood school and first choice for her five-year-old son Josh was a year-round school. It had begun classes seven weeks before she registered for school and it was already full. Her second choice was close to her home, but not within her designated cluster. So she was assigned to another school, which was in her cluster, but farther from her house.
Meredith’s application for a transfer was denied in a letter that stated: “The office of student services has disapproved your transfer request” because it would “have an adverse effect on desegregation compliance.”
Under the county guidelines, with a few exceptions, each school must have no less than 15 percent and no more than 50 percent minority students.
‘We’ve Color Coded Children’
More than 90 percent of all students get their first or second choice. But since Meredith did not appeal immediately, her son remained at the assigned school. When she finally did appeal two years later, the transfer was granted.
Her lawyer, Teddy Gordon, says that does not change the fact that the school board’s race-conscious student assignment plan is unconstitutional. He claims it “is a pure quota,” adding, “We’ve color coded children.”
The school board hotly disputes that characterization. Pat Todd, Louisville’s student assignment director, readily admits that “race is one of several criteria used.” But only one, she says. Others include trying to keep siblings together, accommodating daycare pick up schedules, and other special circumstances.
Todd points to Meredith’s successful appeal as a prime example of how the system accommodates special needs. The 15-to-50 percent minority enrollment guideline is so broad and has so many exceptions, she says, that it is hardly an inflexible quota. But Sharon Browne of the conservative Pacific Legal Foundation contends it is, arguing that “if you’re the wrong color of skin, your transfer application is denied.”
The quota question is more than semantics. The Supreme Court has said repeatedly that fixed numerical quotas are unconstitutional race discrimination. In the higher education context, however, the court three years ago affirmed that race can be one factor in deciding who gets into elite state institutions because the state has a compelling interest in fostering diversity in higher education. The question in this case is whether a similar rationale applies to primary and secondary schools where attendance is compulsory but no child is denied a place.
Louisville Plan’s Backers Cite Diversity
To supporters of the Louisville plan, diversity is more important in early grades than it is in college. Opponents counter that there are other race-neutral ways of achieving diversity — such as assignment by socio-economic status. In school surveys, however, Louisville parents have rejected that approach as too intrusive, since it would require that families supply the school board with personal information.
What the parents want is important, the school board says. It points to the fact that white students were fleeing the Louisville public schools by the thousands until the board adopted a plan in the mid-1980s that combined race-conscious student assignment with choice. Suddenly, school attendance stabilized.
Indeed, racial concentration in Louisville’s public schools has decreased, in contrast to a rise nationally. A survey conducted by the University of Kentucky found 77 percent of Louisville parents favoring the guidelines, even though it means that a majority of the children are bused, often from one end of the sprawling school district to the other. The reason for the guidelines’ popularity, says PTA President Paula Wolf, is that there are so many different programs and approaches to educating children offered throughout the district.
To cite just one example, a parent can choose a strict traditional approach or an “open classroom” approach. Wolf explains with a laugh, “I have one child who would do well in traditional, another who’d probably have been removed…. He doesn’t just think outside the box, he doesn’t acknowledge there is one there.”
PTA board member Mary Myers says the race-conscious assignment plan has also equalized school resources. “My children do not have to sit next to a white child to learn,” she says, “but they need the resources of that school,” and under this system, “they all get the same resources.”
What’s more, she says, diversity is more than a word: “I just like to see that ’cause I’m 48 years old, and came from a segregated school system.”
Haddad, the school board member, echoes that sentiment. “Children see other children differently than they saw back in 1975…” she says. “They like all the kids. They don’t differentiate between them, and I think that is really, really important as they grow up into the real world.”
A fervent advocate of local control of the schools, Haddad resents the idea that the Supreme Court could tell her school system to abandon such a successful local program. She notes that public approval of the student assignment program is so high that school board members are routinely re-elected by high margins and that Gordon, the lawyer who is challenging the program, came in dead last in a field of four when he ran on a neighborhood school platform to represent a predominantly white area.
The Bush administration and its former solicitor general, Ted Olson, point out though, that before 1954, racially segregated schools were highly popular too. “To deny people opportunities on the basis of race because you’ve been re-elected by a high popular vote just won’t cut it under the Constitution,” Olson says.
The Constitution, he adds, requires that the government be colorblind. It cannot discriminate to offset societal discrimination. Frank Mellen, the school board’s lawyer, says that’s simplistic since the Louisville plan is an evolution of what the federal courts ordered until just six years ago.
“It would be odd,” he says, “if what was legally required one day by a desegregation decree becomes forbidden another day when the court dissolves the decree.”


Thursday, June 28th, 2007

By LINDA GREENHOUSE    June 28, 2007 New York Times
WASHINGTON, June 27 — It’s not every day that one Supreme Court justice, even one as rhetorically unrestrained as Justice Antonin Scalia, characterizes another justice, let alone the chief justice of the United States, as a wimp and a hypocrite.
Yet Justice Scalia did something very close to that, not once but twice, in separate opinions on Monday. As a result, he has served to lift the curtain a bit on the differences within the powerful five-justice conservative bloc that has marched in lock step through much of the term, bent on reshaping the law and, in several important areas, well on the way toward doing so.
In the campaign finance case, he accused Chief Justice John G. Roberts Jr. of “faux judicial modesty� for writing an opinion that in Justice Scalia’s view effectively overturned the court’s 2003 campaign finance decision “without saying so.� The clear implication was that the chief justice lacked the courage or honesty to overturn the precedent openly as Justice Scalia himself would have done.
“This faux judicial restraint is judicial obfuscation,� he said.
And Justice Scalia was scathing in his criticism of an opinion signed by Chief Justice Roberts that limited, but did not completely abolish, the right of taxpayers to go to court to challenge government expenditures that promote religion. Justice Scalia would have gone on to shut the courthouse door completely, not simply limiting but overturning the precedent that the new ruling invoked.
“Minimalism is an admirable judicial trait,� Justice Scalia said, “but not when it comes at the cost of meaningless and disingenuous distinctions.�
It made no difference that Justice Samuel A. Alito Jr., another reliable member of the conservative bloc, was the author of that opinion that Chief Justice Roberts joined. Justice Scalia was clearly taking aim at the chief justice, openly mocking his much publicized goal of lowering the court’s temperature through unanimous and jurisprudentially modest decisions.
Justice Scalia is, of course, well known for his verbal barbs. Few colleagues during his 21 years on the court have escaped his insults, not even Chief Justice William H. Rehnquist. He once accused Justice Sandra Day O’Connor of holding “irrational� views that “cannot be taken seriously.� A book published in 2004 under the title “Scalia Dissents� celebrated what it called the justice’s “unique communication skills.�
But what was notable about his attacks on Chief Justice Roberts this week was that the two were on the same side. They were in dispute not over outcomes, but over how far and how fast to move the law. As Prof. Jack M. Balkin of Yale Law School wrote on his blog, Balkinization, “It is the difference between bomb throwing and dismantling.�
Liberals are quick to point out that this may well prove to be a distinction without a difference, because throughout the term, these two justices have been arriving at the same bottom-line conclusions. Prof. Erwin Chemerinsky of Duke Law School observed that Chief Justice Roberts, who has taken the conservative position in every ideologically divided case this term, could hardly be described as less conservative than Justice Scalia.
Prof. Mark Tushnet of Harvard Law School, whose recent book, “A Court Divided,� explored the differences among Republican-appointed members of the Rehnquist court, said that “a consolidated conservative majority, not a divided conservative majority,� was now in charge.
But Justice Scalia has never been a particularly patient man, and at 71, with the conservative ascendancy at the court perhaps at its peak for the foreseeable future if Republicans lose the White House next year, he sees little to gain from incrementalism or its appearance. And even liberals who do not share his agenda concede his point that if a precedent is going to be overruled in all but name, it is better for all concerned to acknowledge the overruling as a fact.
“It’s neither minimalist nor restrained to overrule cases while pretending you are not,� Walter E. Dellinger III, who served as acting solicitor general in the Clinton administration, said in an online conversation on Slate. Mr. Dellinger’s point was that “there can also be a significant cost to the coherence of the system� if lower courts are in the dark as to which precedents they must still rely on.
Chief Justice Roberts, operating on a long timeline at 52, may be responding to a different imperative. Openly overturning numerous precedents early in his tenure would invite criticism that the Roberts court has an agenda to “radically shift American law,� said Thomas C. Goldstein, a student of the court who argues there often.
The conservative alliance at the court may be fractious but not fragile, strong enough to withstand Justice Scalia’s “tweaking and needling,� as Prof. Richard W. Garnett of Notre Dame Law School describes it.
“I look at it as a bit of a kabuki dance,� said Professor Garnett, who clerked for Chief Justice Rehnquist and is close to the court’s conservatives. He said he had no doubt that Justice Scalia had “huge respect for the new chief as a person and as a lawyer.�
What is visible now, he said, is the latest iteration of the endless struggle between the need for stability in the law and the desire to correct previous mistakes.
“Different people who call themselves conservatives resolve that tension in different ways,� Professor Garnett said, adding that Justice Scalia was “laying down markers, making sure the arguments are out there to be used in later cases.�


Thursday, June 28th, 2007

Fairness dictates that all parties involved in a multi-defendant liability action must be notified when any one of them reaches a high-low agreement with the plaintiffs to cap their exposure in the event of an adverse award ruling, the New York Court of Appeals determined Wednesday.

Garlock Sealing Technologies was “deprived of its right to a fair trial” because it did not know its co-defendant in an asbestos exposure case, Niagara Insulations Inc., had reached a high-low agreement with the plaintiff, the court ruled unanimously in Matter of Eighth Judicial District Asbestos Litigation, 89. The court ordered a new trial for Garlock.

“To ensure that all parties to a litigation are treated fairly, we hold that whenever a plaintiff and a defendant enter into a high-low agreement in a multi-defendant action which required the agreeing defendant to remain a party to the litigation, the parties must disclose the existence of that agreement and its terms to the court and the non-agreeing defendant(s),” Judge Eugene F. Pigott Jr. wrote for the court.

Disclosure “strikes a proper balance between this State’s public policy of encouraging the expeditious settlement of claims” and the need for all parties to be apprised of the “true posture of the litigation so they may tailor their strategy accordingly,” the court ruled.

The high-low agreement in question guaranteed plaintiff Donald H. Reynolds and his wife, Nancy H. Reynolds, $155,000 if a jury’s award was that amount or less, and $185,000 if the award was that amount or more. The couple would get the exact amount if the award was between $155,000 and $185,000.

The agreement proved to be a bargain for Niagara Insulates when the jury returned a verdict of $3.75 million (later reduced to $2.7 million) and apportioned 60 percent of the liability to Garlock and 40 percent to Niagara Insulates. The Reynoldses got the high payment from Niagara Insulates of $185,000.

Mr. Reynolds brought the suit after contracting mesothelioma he blamed on the asbestos he was exposed to while working at the Ashland Oil Refinery in Tonawanda from 1942 to 1987.

The Reynoldses entered into the high-low agreement two weeks before the trial in early 2005. The Supreme Court justice presiding over the trial knew about the agreement, though not the amounts involved, but Garlock was not notified. The jury also was not told, according to Wednesday’s ruling.

Michael J. Hutter of Powers & Santola in Albany, Garlock’s appellate attorney, said Garlock did not find out about the agreement until mention of it was made off-handedly during a post-trial hearing.

Both the Supreme Court and the Appellate Division, 4th Department, denied Garlock’s subsequent appeal of the verdict. In Matter of Eighth Judicial District Asbestos Litigation, 32 AD3d 1268 (2006), a 3-1 4th Department panel said there was no collusion between Niagara Insulates and the Reynoldses to disadvantage Garlock and that Garlock failed to show how the high-low agreement “realigned loyalties so as to prejudice” the company.

In reversing the 4th Department, the Court of Appeals took pains to praise Niagara County Supreme Court Justice James B. Kane for the “admirable” job he did brokering pretrial settlements of many claims in the “complex” litigation. Garlock and Niagara were the final two defendants in a case that once had included 19 defendants.


“Nonetheless, we are constrained to agree with Garlock that the court’s failure to disclose the existence of the high-low agreement rendered impossible a fair determination of Garlock’s rights and liabilities,” Judge Pigott wrote.

Garlock’s attorneys might have picked different jurors, employed different strategies and sought to have the agreement, and perhaps its provisions, made known to the jury, had Garlock known about the deal, the court found.

“Instead, Garlock was compelled to proceed blindly to trial without any meaningful opportunity to defend itself from the deleterious effects that the secret agreement may have had on Garlock’s defense,” Pigott wrote.

Hutter called the court’s finding a “very fair and just result.” He said Wednesday he had been frustrated that the lower courts had taken a no-harm, no-foul stance toward Garlock having been in the dark about the agreement.

Only Garlock will return to court. The high-low agreement settles the Reynoldses’ case against Niagara Insulates, the plaintiffs attorney, John N. Lipsitz of Lipsitz & Ponterio in Buffalo, said Wednesday.


Thursday, June 28th, 2007

Editorial by Retired Judge Stan Billingsley


The personal attack by Larry Forgy and Marty Ryall, on retired Franklin Circuit Judge William Graham is off base, and untrue in every respect. 


One of the finest graduates of the UK College of Law class of l971 was William Graham.  He served a long and honored career as the Franklin Circuit Judge.  Judge Graham had a reputation as an outstanding student of the law while in law school, and was one of the first members of our class (I too was in the class of l971) to be elected to the Judiciary. The UK law school class of l971, also produced Sheryl Snyder, the attorney chosen by Gov. Fletcher to represent him before the Supreme Court. 


 In all of my years of knowing Judge Graham I never knew what his political persuasion was.  It was never an issue.  He has always been recognized as one of the states finest jurists. He served as an example for the rest of us who were privileged to have made our careers in the judiciary.  As Franklin Circuit Judge he had jurisdiction over the many lawsuits involving state government operations. Never, during his entire judicial career has any decision of his been charged as being politically motivated until now.    We believe that any charge of bias against a judge should be analyzed and examined.   Any such examination of Judge Graham’s entire career will come up empty of any legitimate charge of political bias.


Now that he has been retired for a year, he has been attacked by Larry Forgy and Marty Ryall for being a “witch hunt judge� for having made rulings in support of the Franklin County Grand Jury which investigated the actions of Governor Fletcher and his administration in the merit system scandal.  We know of no rule, law or precedent that holds that a judge upon his retirement becomes politically neutered.


Forgy and Rayall, both Fletcher partisans, have added 1 and 1 to come up with 4. Their conclusion that a judge who has been retired for a year cannot properly announce his support for a candidate for Governor is wrong in many ways.  They reason that Graham’s support of Steve Beshear, a year after his retirement from the bench, is proof that his rulings regarding Gov. Fletcher were politically motivated.


We note that Steve Beshear had nothing to do with the merit system investigation. We note that the Attorney General started the Grand Jury investigation, not Judge Graham. How does support for Beshear in 2007, by a retired judge, reflect on decisions made by Judge Graham in 2006, when  Beshear wasn’t even  an announced candidate against Gov. Fletcher?  


As the Franklin Circuit Judge, the Franklin County Grand Jury investigation fell into his lap.  He did not solicit this investigation.  The allegation that ex-judge Graham has for all time forfeited his right to work for any candidate he chooses is ridiculous.  Judge Graham has the constitutional right to support any candidate he wishes.  And this in no way impugns his prior decisions as a judge.


The outrageous claims of Forgy and Ryall raise the question of political interference with the integrity of the judicial system.  Therefore let us examine the acts of Graham and Fletcher regarding their conduct regarding respect for the impartiality and integrity of the judiciary. 


The only political act alleged against Judge Graham, is that a year after he retired he decided to work for a candidate of his choice.  A candidate who was not even on the political radar as a candidate at the time of Judge Graham’s rulings.
On the other hand, let’s look at the acts of Gov. Fletcher regarding his attempts to influence the judiciary for his own self-interest:


1. Governor Fletcher appointed Special Justices Jeffrey Burdette and Ronald Green to fill the vacancies caused by the recusal of Justices Lambert and Roach, to hear his own case in the Supreme Court.  We have never heard of a defendant being able to pick two of the Supreme Court members to hear his own case.  Any person truly concerned about the impartiality of the judiciary, and the appearance of impartiality, would have allowed some other party to make these appointments.  (Judge Burdette recognizing the appearance of impropriety of his own appointment, had the foresight and integrity  to refuse the appointment.)


2.   Governor Fletcher vetoed a law that funded the offices of nine new judge positions so that he could prevent them from standing election thus allowing him to make the appointments instead.  So much for allowing the people who would be served by these nine judges to have a voice in their selection.


3. Governor Fletcher issued a blanket pardon against named and unnamed defendants for any acts they had taken which might have violated the Penal Code.  We quote the decision in: Fletcher v. Graham, 2005-SC-1009-MR (Ky. 5/18/2006) (Ky., 2006)  May 18, 2006:
“…on August 29, 2005, Governor Fletcher issued Executive Order 2005-924,…
 “I ,ERNIE FLETCHER, Governor of the Commonwealth of Kentucky, do hereby grant a full, complete, and unconditional pardon to James L. Adams, Darrell D. Brock, Jr., Danny G. Druen, Tim Hazlette, Charles W. Nighbert, Cory W. Meadows, Richard L. Murgatroyd, Basil W. Turbyfill, Robert W. Wilson, Jr., and any and all persons who have committed, or may be accused of committing, any offense up to and including the date hereof, relating in any way to the current merit system investigation being conducted by the special grand jury presently sitting in Franklin County, Kentucky and the Office of the Attorney General….


   Never in the entire history of this Commonwealth has a governor exercised the pardon power is such a naked attempt to cover up alleged criminal acts to protect himself and his administration from prosecution.  While the Governor did not pardon himself, his reservation of that option played a significant role in the plea agreement he was able to negotiate with the Attorney General to seek dismissal of the charges for which he had been indicted by the Franklin County Grand Jury. 


Forgy and Ryall, have chosen to ignore the actions of their candidate regarding questionable acts involving the judiciary and the rule of law, yet now present themselves as legitimate critics of a Judge who served honorably, with great distinction, and with an entire career demonstrating respect for the law.


There is a disease that is rampant in this country today.  It affects the reasoning of otherwise intelligent men and women. I would call it Malignant  Narcissism.  It causes the victim to reason that any failure they have can only be explained by the acts of third parties.  This disease prevents them from ever looking in the mirror and examining their own actions.  It causes them to assume that there is a vast conspiracy against them…and therefore they reason, they are freed of adherence to any moral conduct on their part, in order to justify their baseless attacks on others.


The Courier Journal in an editorial published on June 28, 2007 discusses the charges of Forgy and Ryall against Judge Graham, and they get it right.

Fletcher’s cauldron of bile           

Courier-Journal Editorial June 28, 2007


If Gov. Ernie Fletcher had any pride left, he would fire his campaign manager, Marty Ryall, for lying.
Mr. Ryall says the fact that a retired Franklin Circuit judge is making a civic contribution, by volunteering in Steve Beshear’s gubernatorial campaign, shows the probe into political hiring by the Fletcher administration was “nothing more than a political witch hunt.”
He name-calls the distinguished former jurist, William Graham, a “witch hunt judge.” Mr. Ryall knows this is not true. His boss, Ernie Fletcher, says so.
The Governor signed an agreement admitting that the investigation, conducted by a grand jury in Mr. Graham’s jurisdiction, was necessary, proper and beneficial to the state.
Q.E.D., no witch-hunt.
Gov. Fletcher himself agreed to have the grand jury’s scathing condemnation of his conduct, and that of his co-conspirators, released to the public.
He agreed to have his four appointees on the Personnel Board replaced by members nominated by the very man whom he now tries to accuse of conducting a “witch hunt,” Attorney General Greg Stumbo.
Failed gubernatorial wannabe Larry Forgy, a marginal Republican figure on whom reporters can always count for a meaningless but attention-getting quote, on deadline, said that the former judge’s decision to work for Mr. Beshear’s election “stinks to high heaven.”
Few have a nose for rot like Mr. Forgy’s, but in this instance it couldn’t have led him further in the wrong direction.
Mr. Graham devoted a long, distinguished career to the pursuit of truth in the courts. It makes sense he would devote some time, in retirement, to opposing the re-election of a governor who flouts the law, breaks promises and tells lies.
Gov. Fletcher’s hand-picked state Republican chairman, Steve Robertson, now is calling Mr. Stumbo the “Mike Nifong of Kentucky” — a reference to the North Carolina prosecutor whose conduct in the Duke University rape case led to the loss of his law license.
That dog won’t hunt.
Mr. Nifong, in the face of overwhelming evidence to the contrary, rigged his case to try to convict people who clearly were innocent.
Mr. Stumbo’s office did just the opposite: He presented overwhelming evidence to the grand jury that Ernie Fletcher and his co-conspirators were guilty and should be indicted. Mr. Stumbo’s only error was letting the Governor off the hook with a plea bargain.

The original attack article on Judge Graham:

Judge in hiring probe volunteers for Beshear

Larry Forgy says setup ‘stinks’

From Staff and AP Dispatches
FRANKFORT, Ky. — The former judge who authorized a special grand jury to investigate the hiring practices of Gov. Ernie Fletcher’s administration is now a volunteer for Fletcher’s Democratic challenger, a campaign spokesman said.
William Graham, a retired Franklin County circuit judge, has been serving as an unpaid volunteer on the campaign of Democratic challenger Steve Beshear, said spokesman Robert Kellar.
The grand jury indicted Fletcher on misdemeanor charges last year in connection with an alleged scheme to reward political supporters with protected merit system state jobs.
The indictment was dismissed last August in a negotiated settlement with prosecutors.
Fletcher has maintained that the grand jury’s investigation was politically motivated.
Fletcher supporter Larry Forgy, a Lexington attorney, said Graham’s association with the Beshear campaign raises questions about the grand jury investigation.
“It stinks to high heaven,” Forgy said.
Kellar said that Graham has been a volunteer with the campaign since before the primary election, but that he has no “official position.”
Graham, who retired a year ago, said in a telephone interview that he has known Beshear for 30 years and has been volunteering with the campaign in his spare time.
That, he said, shouldn’t cast a shadow on the grand jury’s work.
“That’s laughable,” he said.
The Fletcher campaign issued a press release yesterday calling Graham a “witch-hunt judge” and claiming that his actions were politically motivated.
“This is further proof that the hiring investigation was nothing more than a political witch hunt,” said Marty Ryall, Fletcher’s campaign manager. “The attorney general who launched the investigation proved his motivation was for higher political office. Now the judge who authorized the grand jury is openly supporting and working for Steve Beshear.”

Charges fly that Carl Rove arranged Prosecution of former Alabama Governor Siegelman by pulling strings in Justice Department

Wednesday, June 27th, 2007

The shakiness of the federal case against Mr. Siegelman had forced prosecutors to “adopt the garbage-can theory of RICO,� said G. Robert Blakey, a law professor at the University of Notre Dame and former prosecutor, …   The Government is asking trial judge to consider the 25 counts against Siegelman for which he was acquitted by a jury in the sentencing process.


By ADAM NOSSITER    New York Times   June 27, 2007
MONTGOMERY, Ala., June 26 — The convicted former governor of Alabama, Don E. Siegelman, faced prosecutors who urged a long prison sentence here on Tuesday in a federal corruption case that has unexpectedly transcended the confines of this sleepy state capital.

The talk in the courtroom was of local things — dubious warehouses, a landfill, a lucrative hospital. But as he emerged from court today, Mr. Siegelman, a Democrat, tried to paint a bigger picture, saying he was a victim of Karl Rove, the senior political adviser in the White House.

“The origins of this case are political,� Mr. Siegelman said. “There’s no question that Karl Rove’s fingerprints are all over this case, from the inception.�

His words, in turn, have been fueled by an affidavit that seems to link his prosecution to high government circles, which has given the case a serious jolt.

Mr. Siegelman was convicted of bribery, conspiracy and mail fraud last year after being accused of persuading Richard M. Scrushy, then the chairman of the HealthSouth Corporation, to pay off $500,000 in debt from a lottery campaign the governor had initiated, in exchange for a seat on a state hospital licensing board. Mr. Scrushy was also convicted.

It was a small part of a voluminous Justice Department bribery-and-racketeering case, most of which — 25 out of 32 counts — was dismissed by the jury. Nonetheless the government is urging a sentence of 30 years and is asking Judge Mark Fuller of Federal District Court to even weigh charges on which Mr. Siegelman was acquitted.

That incomplete government victory, in turn, loomed in the background of the arguments of Mr. Siegelman’s lawyers Tuesday as they urged Mr. Fuller, an appointee of President Bush, to go easy on their client, who was sitting in the dock with Mr. Scrushy.

Supporters, some wearing Siegelman campaign buttons, packed the courtroom for the former governor, an Alabama fixture whose career stretches back a quarter-century here, to the George Wallace era. His start in politics came as George McGovern’s Alabama campaign manager in the 1972 presidential election.

The shakiness of the federal case against Mr. Siegelman had forced prosecutors to “adopt the garbage-can theory of RICO,� said G. Robert Blakey, a law professor at the University of Notre Dame and former prosecutor, referring to the Racketeer Influenced and Corrupt Organization Act. Professor Blakey suggested that the charges against Mr. Siegelman had been indiscriminate from the outset.

The government’s only limited success was very much on the mind of the former governor, once the brightest light in Democratic politics here, after a morning in court. “This conviction is based on a whole arena of things — the government overreaching,� Mr. Siegelman said, hurrying from the courtroom on a break.

Mr. Siegelman repeated his assertion about Mr. Rove’s involvement three times. The evidence is slight, but it has charged the atmosphere of a case that had seemed parochial, for all its partisan, hard-edged Alabama undertones.

In particular, Mr. Siegelman and his backers refer to the affidavit of a Republican lawyer, released this month, that appears to implicate Mr. Rove. The lawyer, Jill Simpson, claims to have heard a top Alabama Republican operative with longstanding links to Mr. Rove boast over the phone in 2002 that Mr. Siegelman’s political career would soon be scuttled.
The operative, Bill Canary, was speaking with the son of Mr. Siegelman’s Republican rival, Bob Riley, now the state’s governor: “William ‘Bill’ Canary told him not to worry, that he had already gotten it worked out with Karl and Karl had spoken with the Department of Justice and the Department of Justice was already pursuing Don Siegelman,� Ms. Simpson said in the affidavit.

Earlier, Mr. Canary had reassured the younger Riley, according to Ms. Simpson, that “his girls would take care of� Mr. Siegelman: Mr. Canary was referring to his wife, Leura G. Canary, the United States attorney in Montgomery, and Alice Martin, her counterpart in Birmingham.
The White House, the Canarys, and Ms. Martin have all rejected Ms. Simpson’s assertions, and the assistant United States attorney who handled the case after Ms. Canary recused herself, Louis Franklin, vigorously rejects any assertion that politics played a role in the case.

Politics did not come up in the intricate court calibrations of the defendants’ relative culpability on Tuesday, all with an eye to assessing how long they might spend in jail. Nonetheless, the idea that the government had plunged forward heedlessly with a grab-bag of charges against Mr. Siegelman, and was still trying to convict him of it, fueled his lawyers’ arguments.

“The government is asking that he be penalized for every single thing he was charged with, whether he was acquitted or not,� said Susan James, a Siegelman lawyer. “The government drastically lost the case,� she said. “We strongly object to the court considering acquitted conduct.�
The prosecutors, on the other hand, repeatedly depicted the former governor as the nexus of a web of corruption, the orchestrator of “pay-to-play,� as they called it.

“Siegelman is the one who defrauded the citizens by engaging in this pay-for-play,� said J. B. Perrine, assistant United States attorney. “The underlying offense they are trying to cover up is Don Siegelman’s criminal activity.�

In Mr. Siegelman’s large crew of lawyers, the idea that he did anything criminal is vigorously disputed. Giving Mr. Scrushy a seat on the hospital board was a routine political act, they say, repeated a hundred times over in Washington and state capitals across the country.

“It’s a joke,� Professor Blakey said. “A guy walks in, gives a contribution, and gets an appointment? Until Congress reforms this, this is the system we live under. They are criminalizing this contribution.�

Furthermore, Mr. Blakey derided the prosecutors’ racketeering case against Mr. Siegelman. “It’s the worst-drafted RICO I’ve ever seen,� said the professor, whose career at the Justice Department began in 1960. “You find as much trash as you can, then you dump it in.�


High-court rulings are wins for GOP, president

Wednesday, June 27th, 2007

Seattle Times article June 27, 2007 

Major rulings on Campaign ads, Faith-based programs, Speech, Endangered species, reveals conservative strength on Supreme Court with Justice Kennedy as the swing man. 

WASHINGTON — In two important victories for President Bush and Republican interests, the Supreme Court on Monday cleared the way for corporate-funded broadcast ads before next year’s election and shielded the White House’s “faith-based initiative” from challenge in the courts. 

Both came in 5-4 rulings led by new Chief Justice John Roberts, appointed by Bush in 2005. 

The first decision will allow corporate and union money to play a bigger role in political campaigns, and the second will allow federal money to continue to flow to church groups and religious organizations that do charitable work or provide social services. 

The first case involved the McCain-Feingold Act passed by Congress five years ago. Part of the law banned pre-election “issue ads” that mention a candidate’s name if they were paid for with corporate or union money. The court’s decision Monday went a long way toward striking down that ban. 

Although unusual alliances lined up on each side, the ruling is expected to benefit Republican causes because more campaign-advertising money, generally speaking, is spent to support the GOP. 

While labor unions and their Democratic allies also will benefit from the ruling, Republicans and business interests led the challenge to the restrictions on pre-election broadcast ads. 

Critics of the decision said it will encourage a financial race between well-heeled special-interest groups. 

Monday’s Supreme Court rulings


Campaign ads: Loosened restrictions on corporate- and union-funded political advertising close to elections. 

“Faith-based” programs: Ruled that ordinary taxpayers cannot challenge a White House initiative that helps religious charities get a share of federal money. 

Speech: Said schools can regulate student speech that advocates use of illegal drugs. 

Endangered species: Sided with the Bush administration and developers in limiting the reach of the Endangered Species Act. 

“This is a big win for big money,” League of Women Voters President Mary Wilson said in a statement. “Chief Justice Roberts has reopened the door to corruption.” 

Justice David Souter, in writing for the minority, said: “After today, the ban on contributions by corporations and unions, and the limitation on their corrosive spending when they enter the political arena, are open to easy circumvention.” 

The McCain-Feingold Act originally had been strongly opposed by the Republican National Committee, but President Bush reluctantly signed it into law. He, too, had questioned whether it was constitutional. 

The portion of the law in question says corporate entities cannot use money from their general treasuries to broadcast ads that run 30 days before a primary or 60 days before a general election, and mention a federal candidate by name. 

Forbidding the naming of candidates was seen by authors of the law as a restriction to do away with “sham” issue ads that purport to be about a controversy but amount to an attack on a candidate. 

The Supreme Court in 2003 said the “vast majority” of such issue ads fell into the category of electioneering and upheld the restriction as constitutional. But last year, the justices ruled that groups could challenge the law based on specific applications. 

The case decided Monday involves a group called Wisconsin Right to Life, which was restricted by the Federal Election Commission (FEC) from running ads in 2004 that urged listeners to call the state’s two senators and tell them not to block President Bush’s judicial nominees. 

One of the senators — Sen. Russ Feingold, D-Wisc., one of the sponsors of the law — was up for re-election at the time and had been targeted for defeat by the anti-abortion group. 

The court’s majority rejected the argument of the law’s defenders that the intent of the organization should be considered and said the important aspect of the ad was whether or not it advocated the election or defeat of a specific candidate. 

Roberts was joined by Justices Samuel Alito and Anthony Kennedy. Justices Antonin Scalia and Clarence Thomas agreed. 

Parties from across the political spectrum, including the American Civil Liberties Union, the AFL-CIO and the U.S. Chamber of Commerce, fought the ban. 

A first test of the impact of the court’s opinion could come as early as December, a month before presidential caucuses and primaries in Iowa, Nevada, New Hampshire and South Carolina open the nomination process. 

The decision means the FEC likely will have to step in and write specific rules about advertising that reflect the court’s opinion. The commission may face pressure to act before the end of the year. 

Faith-based programs 

In the second decision, the court also backed Bush’s faith-based programs from challenge by those who say they want to keep church and state separate. 

Taxpayers lack the legal standing necessary to take Bush’s Office of Faith-Based and Community Initiatives to court, justices ruled. It’s a technical ruling but still a pronounced victory for the Bush administration and its church allies. 

Bush established the faith-based office in January 2001 as one of his first steps as president. The stated goal was to assist faith-based organizations in competing for federal funding. Bush also established faith-based centers in federal agencies such as the Agriculture Department and Labor Department. 

White House officials began holding conferences and making speeches in support of religious organizations. Federal dollars began flowing in new directions. 

In Fresno, Calif., for instance, a faith-based group called Stone Soup deploys federal dollars to serve Hmong refugees. In Dallas, Crossroads Community Services received help in providing food and clothing to the poor. In Clearwater, Fla., faith-based workers assist ex-cons in making the transition out of prison. 

The number of federal grants to faith-based organizations increased 38 percent between 2003 and 2005, and the dollar amount increased by 21 percent, according to the Government Accountability Office. 

The Wisconsin-based Freedom from Religion Foundation challenged the White House office, contending that the faith-based federal actions violate the First Amendment’s Establishment Clause. 

This provision states that “Congress shall make no law respecting the establishment of religion.” The White House uses money provided by Congress to operate the government’s faith-based offices and to finance grants to faith-based groups. 

Alito, speaking for the majority, said Bush’s program did not involve a congressional appropriation that was targeted to further religion. Instead, it involved federal officials urging church groups and others to participate in charitable work that was funded by the government. 

In these circumstances, taxpayers do not have standing to object, Alito said. 

Roberts and Kennedy joined him. Scalia and Thomas said they would go further and forbid taxpayers from challenging religious spending in all circumstances. 



Tuesday, June 26th, 2007

The Kentucky Supreme Court issued an opinion on June 21, 2007 that details the suggested procedures for the court and the defense attorney in dealing with clients who intend to offer false testimony.


This opinions suggests that the attorney should NOT leave the courtroom, as that telegraphs a problem to the jury.  A great deal of discretion is left to the trial judge.


In this decision the court discusses two Rules for Professional Conduct that apply.

See: SCR 3.130(3.3) Candor toward the tribunal  -    SCR 3.130(3.3) Candor toward the tribunal
To read full text click case number.   2005-SC-000078-DG.pdf


LawReader Synopsis of  BROWN V. COMMONWEALTH:
When the question of a client’s imminent perjured testimony arises during trial, the attorney must comply with Rule 3.3 by bringing the existence of a
potential conflict to the court’s attention 
See: SCR 3.130(3.3) Candor toward the tribunal
Under Rule 3.3.2 a lawyer is prohibited from offering evidence known to be false, may refuse to offer evidence that she reasonably believes to be false, and shall inform the tribunal of all material facts known to her so that the tribunal can make an informed decision whether the facts are adverse .
Once the trial court is made aware of the potential for perjury, the court must evaluate the situation and instruct counsel on how to proceed .
… Rule 1 .63 creates a duty of confidentiality that prohibits a lawyer from revealing information related to the representation of a client.
Under Kentucky’s Version of Rule 3.3, she must state “all material acts” necessary to establish the adversity between her and the client. This does not, however, require a detailed evidentiary statement of the disagreement
It is a denial of counsel to completely deprive a defendant of representation on matters not involving the alleged perjury. Because the defendant has
made a knowing waiver of counsel as to any perjured testimony, there is no actual or prejudicial conflict between him and his attorney
By completely leaving the courtroom, in the presence of the jury, counsel telegraphed a problem to the jury. This was improper absent a knowing and voluntary waiver of counsel by Appellant as to representation beyond the perjured testimony. Counsel should have remained to assist when he could, since only counsel knew what he
believed to be a proper question or an improper one

Appellant Karlos Brown was convicted of possession of a controlled substance in the first degree, operating a motor vehicle on a learner’s permit without a licensed operator, and being a persistent felony offender in the first degree. He was sentenced to eighteen years’ imprisonment.

Prior to the presentation of the defense’s case, defense counsel told the trial court he had an ethical conflict with his client and implied that his client intended to offer perjured testimony. Defense counsel was then allowed to withdraw and leave the courtroom while his client testified by way of a narrative statement, was cross-examined by the prosecution, and made his own closing statement.

The Court of Appeals affirmed the conviction. Despite the ethical dilemma that defense counsel faced, because his withdrawal and exit from the courtroom amounted to a denial of Appellant’s right to counsel, the judgment of the Court of Appeals is reversed .

…defense counsel informed the court that after several discussions with his client, he had concluded that a conflict had arisen which he wanted to address to the court outside the presence of the prosecution .


The court allowed the ex pane discussion, during which defense counsel informed the court that the Appellant wanted to present through his testimony a theory that was not consistent with counsel’s investigation of the case. Counsel told the court that his client wanted to testify, and had the right to do so, but that counsel felt his ethical limitations created a conflict with the client.

Appellant was brought to the bench, and the trial court conducted a lengthy and thorough colloquy with him, setting forth the situation and presenting options, and directing him to consult further with his attorney before making a final decision on how he was going to proceed

At no point during these discussions were specific statements as to the nature of the alleged perjury put on the record . In fact, the most that was disclosed was that Appellant was prepared to testify in a manner inconsistent with defense counsel’s investigation, and that he was about to proceed on a theory of the case that was not in his best interest.

At no point during these discussions were specific statements as to the nature of the alleged perjury put on the record .
Appellant then testified in narrative fashion to his version of events and was cross-examined by the prosecution. He was the only defense witness. He gave his own closing argument, and was found guilty by the jury. Defense counsel returned and
represented Appellant in the sentencing phase of the trial . The trial court subsequently entered a judgment of conviction and sentence of imprisonment.

Appellant now argues that he was unconstitutionally forced to proceed without counsel during his testimony and in closing argument.

Fortunately, the scenario presented by this case does not happen frequently, but this also means that the correct procedures are not well-settled by court decisions.

Under Rule 3.3 a lawyer is prohibited from offering evidence known to be false,
may refuse to offer evidence that she reasonably believes to be false, and shall inform the tribunal of all material facts known to her so that the tribunal can make an informed decision whether the facts are adverse .   See: SCR 3.130(3.3) Candor toward the tribunal


 The plain language of this rule contemplates that a lawyer will not advance false testimony of any witness, and that she will inform the court if such testimony is imminent and what facts support that belief. However, Rule 1 .63 creates a duty of confidentiality that prohibits a lawyer from revealing information related to the representation of a client.   See SCR 3.130(1.6) Confidentiality of information


Moreover, the client has a right to testify in his own defense and a right to counsel. This creates an apparent conflict when an attorney knows that a client intends to offer false testimony. (No such conflict exists when the witness is not a client.)

As the Commentary to Rule 1 .6 points out, the duty of confidentiality is not absolute and other provisions of the Rules of Professional Conduct, such as Rule 3.3, require a lawyer to disclose information relating to the representation in some circumstances.

The third solution is that the lawyer reveal that her client is about to commit perjury, and the substance of what she believes the perjury to be, because no client has the right to assistance of counsel in committing perjury. Permitting perjured testimony
undermines the fundamental purpose of finding the truth. This solution is what is generally contemplated by Kentucky’s version of Rule 3 .3 .

While there are differences in specific language between the Massachusetts rule and Kentucky’s version of Rule 3 .3, the procedure laid down in Mitchell is coherent and adequately addresses the competing interests at play under the circumstances of the present and similar cases.

When the question of a client’s imminent perjured testimony arises during trial, the attorney must comply with Rule 3.3 by bringing the existence of a potential conflict to the court’s attention .

Under Kentucky’s Version of Rule 3.3, she must state “all material acts” necessary to establish the adversity between her and the client. This does not, however, require a detailed evidentiary statement of the disagreement. A clear statement of the nature of the problem will suffice .

Once the trial court is made aware of the potential for perjury, the court must evaluate the situation and instruct counsel on how to proceed . It is consistent with Kentucky’s Rule 3 .3 for the court not to conduct an evidentiary hearing during trial because even though the Rule requires disclosure, it does not say it must be made with specific detail during trial.

For reasons of judicial economy, it is appropriate to reserve specific disclosure of the basis of the attorney’s belief until a motion for new trial is
made by the defendant; he could be acquitted, or the motion never made . It is also not necessary for the court to appoint an independent attorney or question the defendant about his testimony.

 However, the court should engage in a colloquy with the defendant, like that in this case, about the importance of truthful testimony and the attorney’s ethical obligations and to generally educate the defendant about the nature of the situation, thus giving the defendant a chance to further consider any possible course of action. “If the defendant, now informed, moves for appointment of new counsel (and, concomitantly, a mistrial), the judge should deny the motions unless the defendant can demonstrate that such motion must be allowed to prevent a miscarriage of justice .” Mitchell , 781 N.E .2d at 1251 .

It is a denial of counsel to completely deprive a defendant of representation on matters not involving the alleged perjury. Because the defendant has made a knowing waiver of counsel as to any perjured testimony, there is no actual or prejudicial conflict between him and his attorney. An attorney may thus continue to represent her client on all parts of the trial not connected to the alleged perjury. If on a motion for new trial a court determines that there was not a good faith basis for the attorney’s belief and the attorney’s actions prejudiced the client, then a new trial can be granted with new counsel.

…the court did err in advising Appellant and counsel that counsel could leave the courtroom during the narrative testimony. They either chose this option
together or defense counsel chose his preference the record does not disclose which.

By completely leaving the courtroom, in the presence of the jury, counsel telegraphed a problem to the jury. This was improper absent a knowing and voluntary waiver of counsel by Appellant as to representation beyond the perjured testimony. Counsel should have remained to assist when he could, since only counsel knew what he believed to be a proper question or an improper one.

It remains unknown whether counsel had a good faith, firm factual basis to believe the testimony would be perjury.

Had counsel remained and assisted when he could, the need for specific findings would not have arisen until a motion for a new trial was filed.

Although valiantly trying, the court did not properly balance all the competing interests in this trial as the process set forth above would have required . Given the complexity of the issues, and the lack of time inherent in the trial process, this is understandable .


Nonetheless, reversal is required.

Consequently, the judgment of the Court of Appeals is reversed, and this case is remanded to the Jefferson Circuit Court for a new trial.

Lambert, C.J . ; Cunningham and Minton, JJ ., concur. Cunningham, J ., concurs by separate opinion in which Lambert, C.J.; Minton and Noble, JJ., join. Scott, J ., dissents by separate opinion in which McAnulty, J., joins. Schroder, J., not sitting .

SCR 3.130(1.6) Confidentiality of information
(a) A lawyer shall not reveal information relating to representation of a client unless the
client consents after consultation, except for disclosures that are impliedly authorized in order to
carry out the representation, and except as stated in paragraph (b).
(b) A lawyer may reveal such information to the extent the lawyer reasonably believes
(1) To prevent the client from committing a criminal act that the lawyer believes is likely to
result in imminent death or substantial bodily harm; or
(2) To establish a claim or defense on behalf of the lawyer in a controversy between the
lawyer and the client, to establish a defense to a criminal charge or civil claim against the
lawyer based upon conduct in which the client was involved, or to respond to allegations
in any proceeding concerning the lawyer’s representation of the client; or
(3) To comply with other law or a court order.
HISTORY: Adopted by Order 89-1, eff. 1-1-90
Supreme Court
[1] The lawyer is part of a judicial system charged with upholding the law. One of the
lawyer’s functions is to advise clients so that they avoid any violation of the law in the proper
exercise of their rights.
[2] The observance of the ethical obligation of a lawyer to hold inviolate confidential
information of the client not only facilitates the full development of facts essential to proper
representation of the client but also encourages people to seek early legal assistance.
[3] Almost without exception, clients come to lawyers in order to determine what their
rights are and what is, in the maze of laws and regulations, deemed to be legal and correct. The
common law recognizes that the client’s confidences must be protected from disclosure. Based
upon experience, lawyers know that almost all clients follow the advice given, and the law is
[4] A fundamental principle in the client-lawyer relationship is that the lawyer maintain
confidentiality of information relating to the representation. The client is thereby encouraged to
communicate fully and frankly with the lawyer even as to embarrassing or legally damaging
subject matter.
[5] The principle of confidentiality is given effect in two related bodies of law, the attorneyclient
privilege (which includes the work product doctrine) in the law of evidence and the rule of
confidentiality established in professional ethics. The attorney-client privilege applies in judicial
and other proceedings in which a lawyer may be called as a witness or otherwise required to
produce evidence concerning a client. The rule of client-lawyer confidentiality applies in
situations other than those where evidence is sought from the lawyer through compulsion of law.
The confidentiality rule applies not merely to matters communicated in confidence by the client
but also to all information relating to the representation, whatever its source. A lawyer may not
disclose such information except as authorized or required by the Rules of Professional Conduct
or other law. See also Scope.
[6] The requirement of maintaining confidentiality of information relating to representation
applies to government lawyers who may disagree with the policy goals that their representation is
designed to advance.
Authorized Disclosure
[7] A lawyer is impliedly authorized to make disclosures about a client when appropriate
in carrying out the representation, except to the extent that the client’s instructions or special
circumstances limit that authority. In litigation, for example, a lawyer may disclose information by
admitting a fact that cannot properly be disputed, or in negotiation by making a disclosure that
facilitates a satisfactory conclusion.
[8] Lawyers in a firm may, in the course of the firm’s practice, disclose to each other
information relating to a client of the firm, unless the client has instructed that particular
information be confined to specified lawyers.
Disclosure Adverse to Client
[9] The confidentiality rule is subject to limited exceptions. In becoming privy to
information about a client, a lawyer may foresee that the client intends serious harm to another
person. However, to the extent a lawyer is required or permitted to disclose a client’s purposes,
the client will be inhibited from revealing facts which would enable the lawyer to counsel against a
wrongful course of action. The public is better protected if full and open communication by the
client is encouraged than if it is inhibited.
[10] Several situations must be distinguished.
[11] First, the lawyer may not counsel or assist a client in conduct that is criminal or
fraudulent. See Rule 1.2(d). Similarly, a lawyer has a duty under Rule 3.3(a)(4) not to use false
evidence. This duty is essentially a special instance of the duty prescribed in Rule 1.2(d) to avoid
assisting a client in criminal or fraudulent conduct.
[12] Second, the lawyer may have been innocently involved in past conduct by the client
that was criminal or fraudulent. In such a situation the lawyer has not violated Rule 1.2(d),
because to “counsel or assist” criminal or fraudulent conduct requires knowing that the conduct is
of that character.
[13] Third, the lawyer may learn that a client intends prospective conduct that is criminal
and likely to result in imminent death or substantial bodily harm. As stated in paragraph (b)(1),
the lawyer has professional discretion to reveal information in order to prevent such
consequences. The lawyer may make a disclosure in order to prevent homicide or serious bodily
injury which the lawyer reasonably believes is intended by a client. It is very difficult for a lawyer
to “know” when such a heinous purpose will actually be carried out, for the client may have a
change of mind.
[14] The lawyer’s exercise of discretion requires consideration of such factors as the
nature of the lawyer’s relationship with the client and with those who might be injured by the
client, the lawyer’s own involvement in the transaction and factors that may extenuate the
conduct in question. Where practical, the lawyer should seek to persuade the client to take
suitable action. In any case, a disclosure adverse to the client’s interest should be no greater
than the lawyer reasonably believes is necessary to the purpose. A lawyer’s decision not to take
preventive action permitted by paragraph (b)(1) does not violate this Rule.
[15] If the lawyer’s services will be used by the client in materially furthering a course of
criminal or fraudulent conduct, the lawyer must withdraw, as stated in Rule 1.16(a)(1).
[16] After withdrawal the lawyer is required to refrain from making disclosure of the
clients’ confidences, except as otherwise provided in Rule 1.6. Neither this rule nor Rule 1.8(b)
nor Rule 1.16(d) prevents the lawyer from giving notice of the fact of withdrawal, and upon
withdrawal the lawyer may also withdraw or disaffirm any opinion, document, affirmation, or the
[17] Where the client is an organization, the lawyer may be in doubt whether
contemplated conduct will actually be carried out by the organization. Where necessary to guide
conduct in connection with this Rule, the lawyer may make inquiry within the organization as
indicated in Rule 1.13(b).
Dispute Concerning Lawyer’s Conduct
[18] Where a legal claim or disciplinary charge alleges complicity of the lawyer in a
client’s conduct or other misconduct of the lawyer involving representation of the client, the lawyer
may respond to the extent the lawyer reasonably believes necessary to establish a defense. The
same is true with respect to a claim involving the conduct or representation of a former client.
The lawyer’s right to respond arises when an assertion of such complicity has been made.
Paragraph (b)(2) does not require the lawyer to await the commencement of an action or
proceeding that charges such complicity, so that the defense may be established by responding
directly to a third party who has made such an assertion. The right to defend, of course, applies
where a proceeding has been commenced. Where practicable and not prejudicial to the lawyer’s
ability to establish the defense, the lawyer should advise the client of the third party’s assertion
and request that the client respond appropriately. In any event, disclosure should be no greater
than the lawyer reasonably believes is necessary to vindicate innocence, the disclosure should
be made in a manner which limits access to the information to the tribunal or other persons
having a need to know it, and appropriate protective orders or other arrangements should be
sought by the lawyer to the fullest extent practicable.
[19] If the lawyer is charged with wrongdoing in which the client’s conduct is implicated,
the rule of confidentiality should not prevent the lawyer from defending against the charge. Such
a charge can arise in a civil, criminal or professional disciplinary proceeding, and can be based
on a wrong allegedly committed by the lawyer against the client, or on a wrong alleged by a third
person; for example, a person claiming to have been defrauded by the lawyer and client acting
together. A lawyer entitled to a fee is permitted by paragraph (b)(2) to prove the services
rendered in an action to collect it. This aspect of the rule expresses the principle that the
beneficiary of a fiduciary relationship may not exploit it to the detriment of the fiduciary. As stated
above, the lawyer must make every effort practicable to avoid unnecessary disclosure of
information relating to a representation, to limit disclosure to those having the need to know it,
and to obtain protective orders or make other arrangements minimizing the risk of disclosure.
Disclosures Otherwise Required or Authorized
[20] The attorney-client privilege is differently defined in various jurisdictions. If a lawyer
is called as a witness to give testimony concerning a client, absent waiver by the client,
paragraph (a) requires the lawyer to invoke the privilege when it is applicable. The lawyer must
comply with the final orders of a court or other tribunal of competent jurisdiction requiring the
lawyer to give information about the client.
[21] The Rules of Professional Conduct in various circumstances permit or require a
lawyer to disclose information relating to the representation. See Rules 2.2, 2.3, 3.3 and 4.1. In
addition to these provisions, a lawyer may be obligated or permitted by other provisions of law to
give information about a client. Whether another provision of law supersedes Rule 1.6 is a matter
of interpretation beyond the scope of these Rules, but a presumption should exist against such a
[22] Paragraph (b)(4) gives the lawyer professional discretion to reveal such information
as the lawyer reasonably believes is necessary to comply with a court order.
Former Client
[23] The duty of confidentiality continues after the client-lawyer relationship has
SCR 3.130(3.3) Candor toward the tribunal
(a) A lawyer shall not knowingly:
(1) Make a false statement of material fact or law to a tribunal;
(2) Fail to disclose a material fact to the tribunal when disclosure is necessary to avoid a fraud being perpetrated upon the tribunal;
(3) Offer evidence that the lawyer knows to be false. If a lawyer has offered material evidence and comes to know of its falsity, the lawyer shall take reasonable remedial measures.
(b) The duties stated in paragraph (a) continue to the conclusion of the proceeding, and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6.
(c) A lawyer may refuse to offer evidence that the lawyer reasonably believes is false.
(d) In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer which will enable the tribunal to make an informed decision, whether or not the facts are adverse.
(e) The obligation of the advocate under these rules is subordinate to such constitutional requirements as may be announced by the courts.
HISTORY: Adopted by Order 89-1, eff. 1-1-90
Supreme Court
[1] The advocate’s task is to present the client’s case with persuasive force. Performance of that duty while maintaining confidences of the client is qualified by the advocate’s duty of candor to the tribunal. However, an advocate does not vouch for the evidence submitted in a cause; the tribunal is responsible for assessing its probative value.
Representations by a Lawyer
[2] An advocate is responsible for pleadings and other documents prepared for litigation, but is usually not required to have personal knowledge of matters asserted therein, for litigation documents ordinarily present assertions by the client, or by someone on the client’s behalf, and not assertions by the lawyer. Compare Rule 3.1. However, an assertion purporting to be on the lawyer’s own knowledge, as in an affidavit by the lawyer or in a statement in open court, may properly be made only when the lawyer knows the assertion is true or believes it to be true on the basis of a reasonably diligent inquiry. There are circumstances where failure to make a disclosure is the equivalent of an affirmative misrepresentation. The obligation prescribed in Rule 1.2(d) not to counsel a client to commit or assist the client in committing a fraud applies in litigation. Regarding compliance with Rule 1.2(d), see the Comment to that Rule. See also the Comment to Rule 8.4(b).
Misleading Legal Argument
[3] Legal argument based on a knowingly false representation of law constitutes dishonesty toward the tribunal. A lawyer is not required to make a disinterested exposition of the law, but must recognize the existence of pertinent legal authorities.
False Evidence
[4] When evidence that a lawyer knows to be false is provided by a person who is not the client, the lawyer must refuse to offer it regardless of the client’s wishes.
[5] When false evidence is offered by the client, however, a conflict may arise between the lawyer’s duty to keep the client’s revelations confidential and the duty of candor to the court. Upon ascertaining that material evidence is false, the lawyer should seek to persuade the client that the evidence should not be offered or, if it has been offered, that its false character should immediately be disclosed. If the persuasion is ineffective, the lawyer must take reasonable remedial measures.
[6] Except in the defense of a criminal accused, the rule generally recognized is that, if necessary to rectify the situation, an advocate must disclose the existence of the client’s deception to the court or to the other party. Such a disclosure can result in grave consequences to the client, including not only a sense of betrayal but also loss of the case and perhaps a prosecution for perjury. But the alternative is that the lawyer cooperate in deceiving the court, thereby subverting the truth-finding process which the adversary system is designed to implement. See Rule 1.2(d). Furthermore, unless it is clearly understood that the lawyer will act upon the duty to disclose the existence of false evidence, the client can simply reject the lawyer’s advice to reveal the false evidence and insist that the lawyer keep silent. Thus the client could in effect coerce the lawyer into being a party to fraud on the court.
Perjury by a Criminal Defendant
[7] Whether an advocate for a criminally accused has the same duty of disclosure has been intensely debated. While it is agreed that the lawyer should seek to persuade the client to refrain from perjurious testimony, there has been dispute concerning the lawyer’s duty when that persuasion fails. If the confrontation with the client occurs before trial, the lawyer ordinarily can withdraw. Withdrawal before trial may not be possible, however, either because trial is imminent, or because the confrontation with the client does not take place until the trial itself, or because no other counsel is available.
[8] The most difficult situation, therefore, arises in a criminal case where the accused insists on testifying when the lawyer knows that the testimony is perjurious. The lawyer’s effort to rectify the situation can increase the likelihood of the client’s being convicted as well as opening the possibility of a prosecution for perjury. On the other hand, if the lawyer does not exercise control over the proof, the lawyer participates, although in a merely passive way, in deception of the court.
[9] Three resolutions of this dilemma have been proposed. One is to permit the accused to testify by a narrative without guidance through the lawyer’s questioning. This compromises both contending principles; it exempts the lawyer from the duty to disclose false evidence but subjects the client to an implicit disclosure of information imparted to counsel. Another suggested resolution, of relatively recent origin, is that the advocate be entirely excused from the duty to reveal perjury if the perjury is that of the client. This is a coherent solution but makes the advocate a knowing instrument of perjury.
[10] The other resolution of the dilemma is that the lawyer must reveal the client’s perjury if necessary to rectify the situation. A criminal accused has a right to the assistance of an advocate, a right to testify and a right of confidential communication with counsel. However, an accused should not have a right to assistance of counsel in committing perjury. Furthermore, an advocate has an obligation, not only in professional ethics but under the law as well, to avoid implication in the commission of perjury or other falsification of evidence. See Rule 1.2(d).
Remedial Measures
[11] If perjured testimony or false evidence has been offered, the advocate’s proper course ordinarily is to remonstrate with the client confidentially. If that fails, the advocate should seek to
withdraw if that will remedy the situation. If withdrawal will not remedy the situation or is impossible, the advocate should make disclosure to the court. It is for the court then to determine what should be done–making a statement about the matter to the trier of fact, ordering a mistrial or perhaps nothing. If the false testimony was that of the client, the client may controvert the lawyer’s version of their communication when the lawyer discloses the situation to the court. If there is an issue whether the client has committed perjury, the lawyer cannot represent the client in resolution of the issue, and a mistrial may be unavoidable. An unscrupulous client might in this way attempt to produce a series of mistrials and thus escape prosecution. However, a second such encounter could be construed as a deliberate abuse of the right to counsel and as such a waiver of the right to further representation.
Constitutional Requirements
[12] The general rule–that an advocate must disclose the existence of perjury with respect to a material fact, even that of a client–applies to defense counsel in criminal cases, as well as in other instances. However, the definition of the lawyer’s ethical duty in such a situation may be qualified by constitutional provisions for due process and the right to counsel in criminal cases. In some jurisdictions these provisions have been construed to require that counsel present an accused as a witness if the accused wishes to testify, even if counsel knows the testimony will be false. The obligation of the advocate under these Rules is subordinate to such a constitutional requirement.
Duration of Obligation
[13] A practical time limit on the obligation to rectify the presentation of false evidence has to be established. The conclusion of the proceeding is a reasonably definite point for the termination of the obligation.
Refusing to Offer Proof Believed to be False
[14] Generally speaking, a lawyer has authority to refuse to offer testimony or other proof that the lawyer believes is untrustworthy. Offering such proof may reflect adversely on the lawyer’s ability to discriminate in the quality of evidence and thus impair the lawyer’s effectiveness as an advocate. In criminal cases, however, a lawyer may, in some jurisdictions, be denied this authority by constitutional requirements governing the right to counsel.
Ex Parte Proceedings
[15] Ordinarily, an advocate has the limited responsibility of presenting one side of the matters that a tribunal should consider in reaching a decision; the conflicting position is expected to be presented by the opposing party. However, in an ex parte proceeding, such as an application for a temporary restraining order, there is no balance of presentation by opposing advocates. The object of an ex parte proceeding is nevertheless to yield a substantially just result. The judge has an affirmative responsibility to accord the absent party just consideration. The lawyer for the represented party has the correlative duty to make disclosures of material facts known to the lawyer and that the lawyer reasonably believes are necessary to an informed decision

Constitutional & Regulatory Taking of Land In Kentucky

Tuesday, June 26th, 2007

An Uncommon Wealth:  Taking and Regulating the Beautiful Land of Kentucky

                                                   By Stephan Bates


Editor’s note:  Stephan Bates is a third year law student.  His father is Grant Circuit Judge Steve Bates.


I.                   Introduction



Kentucky has long been recognized as a state with a rich abundance of natural resources, diverse environments, and a citizenry proud of both.[1]  The first stories of Kentucky to reach the east coast settlements of America referenced the “rich meadows� and “broad and forested limestone uplands�.[2]  Kentucky’s natural abundance made the acres within its borders very sought after land.[3]  Settlers, including Daniel Boone, who many credit for the exploration and settlement of Kentucky[4], lost land to which they were rightfully entitled because of legal technicalities.[5]   It would seem that from the beginning of Kentucky’s existence there has been a conflict as to the use of the land, for while the Indians thought to preserve its natural abundance, the settlers sought to harness its natural wealth.[6]  The conflict that existed in the early 18th century still exists in the Kentucky of the 21st century.  But, now we often look to the law to preserve the natural resources, while increased populations continually seek new ways of procuring its natural wealth.

Kentucky had an estimated state population in July 2006 of over 4.2 million.[7]  In 1920, two years before the Supreme Court’s ruling in Pennsylvania Coal Co. v. Mahon et al,[8] the population of Kentucky was estimated at 2.4 million.[9]  In 1990, two years before the Supreme Court’s ruling in Lucas v. South Carolina Coastal Council,[10] the population of Kentucky had risen to 3.6 million.[11]  These populations occupy an area of over 40, 000 square miles sharing numerous natural resources.[12] 

Attempting to preserve the beauty and richness of its land while the population continues to grow, the Commonwealth enforces regulation through the Kentucky Department of Natural Resources and Environmental Protection.[13]  One of the express duties of this department is to maximize environmental benefits while minimizing less desirable environmental conditions.[14]  Such regulation has generally found support through the Commonwealth’s police power[15] and given broad interpretation by the Supreme Court of Kentucky.[16]  

The United States Supreme Court has interpreted and defined the regulation of land use in the cases of Pennsylvania Coal v. Mahon[17] and Lucas v. South Carolina Coastal.[18]  These cases represent the law of regulatory takings. Regulatory takings means a law or zoning regulation can be so excessive that it amounts to a taking of property.[19]  Consequently, the latest opinion regarding the status of regulatory takings may shed light on the progression future environmental regulations.[20] 
This note will analyze how Kentucky law has been affected over the years since Pennsylvania Coal
[21] by comparing those Supreme Court rulings in the area of regulatory takings with similar decisions in Kentucky.  First, this note will analyze the constitutional language of the Takings Clauses of both the Constitution of the United States and the Constitution of the Commonwealth of Kentucky, including relevant statutory language.  Second, an analysis will explore the landmark land use and takings cases of the United States Supreme Court and the Kentucky Courts.  Finally, the note will conclude with a prospective of where Kentucky environmental protection law may go in the future.

II.                Constitutional Takings:  Constitutional Law in Practice


The ability of the government to take private land was a concern for the drafters of the 5th Amendment to the United States Constitution because at the time of its drafting England had no “public use� requirement.[22]  No Constitutional provision grants governmental bodies the right to take land for a “public use�, but rather the Constitutional provisions in the United States do limit on how the government may take such action.[23]  The phrase “public use� created a debate as to its meaning.[24]  The two competing and leading theories of its meaning included a “narrow� and a “broad� view.  The “narrow� view stated that property taken must afford the public the opportunity to use the land or the land must be put to a public use.[25]  The “broad� view stated that property must only go to the general welfare of the public.[26]   The U.S. Supreme Court adopted the “broad� view, allowing for Congress or a state to determine a rational reason for the “public use�.[27] 
The Constitution of the United States and the Constitution of the Commonwealth of Kentucky require public agencies to pay compensation for land they have physically occupied for public use.
[28]   When governments physically take private land for a public use, they exercise the power of eminent domain.[29]  Furthermore, this exercise of the power of eminent domain by a governmental body for a public purpose constitutes a “taking�.[30]
Governments exercise eminent domain through a process known as condemnation.
[31]  In the early years of the country, the federal government sought condemnation proceedings primarily through state court systems to avoid any state rights issues.[32]  In modern times, federal statutes have given federal agencies the authority to seek condemnation proceedings in either federal or state courts.[33]  Kentucky has liberally construed its Constitutional provisions allowing compensation to the property owner not only in instances where land is properly condemned and appropriated, but also when land is inadvertently damaged or destroyed.[34]
While it is generally easy to identify a physical taking of property by a governmental entity, property owners use the remedy of inverse condemnation when a government has failed to bring formal condemnation proceedings.
[35]  Inverse condemnation proceedings can be used when a direct occupation of land exists[36], but have also been used for takings resulting from actions that indirectly affect a piece of property.[37]  The use of inverse condemnation proceedings in Kentucky are generally favored[38] unless the government’s actions were protected by sovereign immunity for a proper governmental function.[39]
Short of condemnation proceedings, the federal and state governments have the ability to regulate property under the police power.
[40]  The police power is often used to regulate land for harm avoidance to the public, while the power of eminent domain is used to take land because it is useful to the public.[41]  The area between governmental actions requiring compensation to the landowner and those actions, which are valid exercises of the police power, are the boundaries of future environmental regulation.[42]

The United States Supreme Court in Mugler v. Kansas[43]stated the following regarding the police power:

“It belongs to that department [Legislature] to exert what are known as the police powers of the State, and to determine, primarily, what measures are appropriate or needful for the protection of the public morals, the public health, or the public safety.�[44] 


Chief Justice Lambert recently described with stronger language the police powers of Kentucky in the case of Lexington Fayette County Food & Bev. Ass’n v. Lexington-Fayette Urban County Gov’t[45]:

“The fact that an exercise of police power impinges upon private interest does not restrict reasonable regulation.  As noted earlier, among the police powers of the government, the power to promote and safeguard public health ranks at the top. If the right of an individual runs afoul of the exercise of this power, the right of the individual must yield.  There is perhaps no broader field of police power than that of public health.  It is thus apparent that, insofar as public health is concerned, private property may become of public interest and the constitutional limitations upon the exercise of that power of regulation come down to a question of ‘reasonability’.  The real issue is whether the public health regulation is reasonable. In this case, we must conclude that it is. Both federal and state courts have determined numerous times that where public interest is involved it is to be preferred over property interests even to the extent of destruction if necessary.â€?[46]


The U.S. Supreme Court had quietly proposed, with case law leading up to and including Mugler, that police power could be used unchecked by the Takings Clause of the Fifth Amendment.[47]  The cases to follow will demonstrate what both the federal and state courts could have done to address the relationship between the police power and Takings Clause.


III.             Takings Law Through the Years: A Brief Exploration


            A. The Pennsylvania Coal Approach
            The “Great Dissenter�, Oliver Wendell Holmes Jr.,
[48] delivered the opinion of the court in Pennsylvania Coal Co. v. Mahon putting a limit to the police power in the regulation of land.  The case involved a coal company property owner, who sold the surface estate to Mahon while reserving the mineral rights to remove the subsurface coal.[49]  Subsequent to the land transfer, the state of Pennsylvania enacted a statute prohibiting the removal of any coal that would cause the subsidence of a dwelling.[50]  Holmes reasoned that by making it commercially impracticable for the coal company to remove the coal, the statute had gone “too far�.[51]  The court did not specify a test to be used, but made a point to emphasize the fact specific nature of the takings inquiry.[52]  Additionally, Holmes emphasized the boundaries of the doctrine by stating that all property is held under an implied limitation of the police power and those limits may diminish the value of the land without affecting a taking of the property.[53]
            The decision of the U.S. Supreme Court in Pennsylvania Coal introduced the concept of a regulatory taking under what has become known as the “diminution of value� test.
[54]  Using this precedent, the Kentucky Court of Appeals decided a similar issue using the Pennsylvania Coal precedent in Department for Natural Resources and Environmental Protection v. No. 8 Limited of Virginia.[55]  The case involved the application of a statute to be administered by the Environmental Protection Cabinet regarding strip mining[56].  The statute, KY. REV. STAT. § 350.060, stated that all strip-mining activities had to be permitted by the Kentucky Department of Environmental Protection.[57]  The application for a permit required the applicant to obtain letters of consent from those landowners whose land would be subject to strip mining where the mining company owned the mineral rights, but not the surface estate.[58]  The court paid particular attention to the requirement of obtaining consent from the surface owners as it related to the conservation measures that were purported purpose of the legislation.[59]  Interpreting the statute, the court acknowledged the language from Pennsylvania Coal and sought to balance the Constitutional Takings Clauses with those valid exercises of the state police power.[60]
            The “gut issue�
[61] was whether the legislation could be justified as a legitimate exercise of the police power or whether it was a taking.[62]  The statute as applied could not stand as an environmental conservation measure because[63] it was shown it lacked a “rational relationship� between the environmental objectives sought by the statute and the means by which the statute regulated land use.[64]  The problem with the statute was the manner in which it required the procurement of consent by surface owners thereby putting the surface owners in a position to enforce the statute by either granting or denying the request.[65]  The court rejected the statute as a conservation method, but suggested in dictum that the police power was still valid.[66]  In other words, the purpose of environmental conservation as a valid exercise of police power was not an issue for the court; rather the method by which the statute attempted to achieve environmental conservation was faulty.[67]
            The No. 8 Limited of Virginia case is useful for our inquiry into Kentucky Takings cases, since it shows that the law did not attempt to dissuade the use of police power in environmental regulation as long as the methods to achieve the environmental performance were correct.
B.  The Application of Penn Central
            In 1978, the U.S. Supreme Court decided another case dealing with land use and state regulations of private property in Penn Central Transportation Co. v. City of New York.
[68]  While the decision did not involve an environmental regulation, the decision and factors the court chose to weigh in deciding the takings issue are germane to environmental land use law.[69]

            Penn Central involved a designation by New York City of Grand Central Terminal as an historic landmark under its historic landmarks preservation law.[70]  Penn Central Transportation, the owner’s of Grand Central Terminal, had proposed a plan to construct an office building on top of the terminal.[71]  The designation of Grand Central Terminal as an historic landmark stopped Penn Central from constructing an office building atop of the existing structure.[72]   In turn, this led Penn Central to seek compensation for a regulatory taking.[73]  The U.S. Supreme Court determined that there had not been a taking of Penn Central’s property and in so doing articulated three factors that should be used in making such a determination.[74]  The factors included the impact of the regulation on the claimant, the extent to which the regulation has interfered with distinct investment-backed expectations, and the character of the governmental action.[75]  Applying these three factors, the court stated the economic impact had been minimal since the regulation had allowed property owner’s to get “transfer development rights� if the designation prevented them from developing the property to the fullest extent.[76]  Furthermore, the court concluded that the “investment-backed expectations� of Penn Central were not frustrated because it was shown that Grand Central Terminal was earning a reasonable return.[77]  Finally, the court reasoned that the character of the governmental action had been within the police power of the state because it went to the general welfare of the community and did not significantly diminish the value of Grand Central Terminal.[78]

            There has been some debate as to the usefulness and applicability of the Penn Central case to other harder takings cases,[79] but in 1984 the Kentucky Supreme Court adopted the test of Penn Central in the case of Commonwealth, Natural Resources & Environmental Protection Cabinet v. Stearns Coal & Lumber Co.[80] 

            Stearns Coal & Lumber involved the Wild Rivers Act of 1972[81], which was an environmental conservation law meant to protect and enhance the stream areas of Kentucky.[82]  The law was to be administered by the Kentucky Environmental and Public Protection Cabinet.[83] 

            The Wild Rivers Act provided that the Department of Natural Resources would develop boundary maps, but by 1973 the Department had only developed imprecise boundary maps.[84]  The statutory requirements involving the boundary maps and the designation of boundaries was one of the issues involved in the Commonwealth, Dept. of Natural Resources & Environmental Protection v. Stephens,[85] which preceded the Stearns Coal & Lumber decision and in many ways allowed the Stearns landowner to make the takings claim.[86]  As part of the Wild Rivers Act, the Department circulated informational material that described the prohibited activities, placed signs welcoming the public to the protected areas, and conducted inspections.[87]  Following the decision in Stephens, the Department made several amendments to the Wild Rivers Act that became effective on June 19, 1976.[88]  The Commonwealth formally published the maps designating the boundaries of the Wild Rivers Act on July 22, 1976.[89]

            Prior to June 19, 1976, the Department received a letter from the Chairman of Stearns Coal & Lumber Co., which stated that the company was to begin a large-scale land development that would entail every activity prohibited in the Wild Rivers Area.[90]  The Department acted to prohibit this land development, but Stearns took commiserate action and was granted a temporary injunction against the Commonwealth [specifically the Department] which enjoined them from interfering with any activities of Stearns.[91]

            In 1981, the trial judge found a taking of Stearns property had occurred on June 25, 1975.[92]  However on appeal to the Kentucky Supreme Court this decision was reversed.[93]  The court reasoned that there could not have been a taking of Stearns property until the boundary maps were published on July 22, 1976, because the Stephens decision held that until the streams were designated, the Commonwealth could not enforce the prohibitions of the Wild Rivers Act.[94]

            The Kentucky Supreme Court, after citing the holding in Penn Central, stated that had the Wild Rivers Act been fully implemented at the time that Stearns made his claim, it might have been a taking.[95]  The court reasoned had the Act been implemented and enforced on Stearns property, the company might have experienced an impairment of its financial interests.[96]  Furthermore, the court stated that the economic impact had been minimal and the “investment-backed expectations� were not frustrated since Stearns had continued timber operations, had executed oil and public-use leases, and had sold a significant portion of the property to the federal government since making the takings claim.[97]  Additionally, Justice Wintersheimer stated in the opinion that the Wild Rivers Act was within the police power of the Commonwealth.[98]

            The Stearns decision left many questions as to what would constitute a taking in environmental regulation.   The holding would suggest that Stearns had a valid takings claim but for the timing of the implementation and the judicial intervention on their behalf.[99]

C.  The Lucas Decision


            The U.S. Supreme Court ventured into the Takings arena again in 1992 when they heard the case of Lucas v. South Carolina Coastal Council.[100]  Some have viewed the impact of Lucas as providing landowners and governments with a basis for determining what a state may or may not do at a given time to property.[101]  While the historical precedent is still being discovered on Lucas, some scholars contend that the impact of the decision may well clarify the foundation for finding a compensable taking and promote new government regulation.[102]

            In 1986 David Lucas paid $975,000 for two coastal lots on which he planned to build homes.[103]  Two years later, South Carolina enacted the Beachfront Management Act that in effect prohibited Lucas from building any permanent habitable structures on the lots.[104]  A state court determined that the Act rendered Lucas’ property valueless.[105]  Thus, the issue to be resolved by the U.S. Supreme Court was whether the economic effect of the Act constituted a compensable taking.[106] 

            The distinction making the Lucas decision different from Penn Central and Pennsylvania Coal was what Justice Scalia termed “the logically antecedent inquiry�.[107]  This threshold question would simply ask whether the owner’s proscribed use of the land was within the “bundle of rights� obtained when the land was purchased.[108]

            The court recognized two instances in which a taking will have been deemed to occur without a case specific inquiry:  physical invasions and regulations that deny all economically valuable use.[109]  The Lucas decision carved out a new exception to the denial of all economically valuable use based on the state’s law of property and nuisance, which may or can be in place at the time property is purchased.[110]  The idea was that a landowner owns his property as he finds it and expects the government to regulate the land based on the nature of the land itself in accord with the legitimate use of the police power.[111]

            In finding and explaining this exception, the Court remanded the case to the South Carolina Supreme Court, but did add that the nuisance and property law of the state would likely not have provided a justification for the regulation since nuisance law usually does not prohibit the “essential use� of the land.[112] 

Scholarly debate has centered on the effect Lucas will have on environmental regulation, since it establishes guidelines for governmental regulation upon state common law nuisance principles.[113]

While Kentucky has not generated an entirely analogous case to Lucas, there is a case whose opinion cites Lucas and also harkens back to No. 8 Limited of Virginia and Stearns Lumber & Coal.  In 1993, the Kentucky Supreme Court decided the case of Ward v. Harding,[114] in which the court was asked to interpret the rights of the parties to a “broad form deed�.[115]  The Ward v. Harding case is also illustrative of the Lucas holding relating to state common law property rights.
The Hardings, owners of the mineral estate, had attempted to enter the surface estate owned by the Wards and conduct strip mining to remove the coal from the land.
[116]  In so doing, the Wards contended that the Hardings’ rights under the deed did not include the right to strip mining.[117]  The Constitution of Kentucky § 19(2) had redefined the rights of the parties to a deed which separated the mineral estate and the surface estate.[118] Furthermore, the Constitution had stated that in such a conveyance the methods of extraction must be commonly known to be in use in Kentucky or expressly stated otherwise.[119]  The Hardings had argued that the Constitution of Kentucky § 19(2) violated Article 1, Section 10 of the Constitution of the United States, the Contract Clause[120], and also the 5th Amendment to the Constitution of the United States[121], in so much as the Kentucky Constitutional Amendment acts as a Taking of their estate.[122]

The court first decided the rights of the parties under the “broad form deed�.  In so doing the court overturned precedent and held that the rights under a broad form deed of the mineral estate owner did not receive the right to strip-mine the property.[123]  The reasoning of the court involved two cases from the Kentucky Supreme Court:  Buchanan v. Watson[124] and Akers v. Baldwin[125].            
The Buchanan decision involved two issues:  whether a mineral owner could use strip mining to remove coal and in so doing destroy the surface estate and whether that mineral owner was liable for damages to the surface estate for having done so.
[126]  The court in Buchanan had reasoned that the right to strip mine was incidental to the right to remove the coal by any feasible means.[127]   Furthermore, the Buchanan court postulated what they termed “two fundamental rules for deed construction�, which included that a deed will be interpreted strictly by its language and that ambiguity in the deed language will be construed most strongly against the grantor both upon the grant of the property and the rights and privileges flowing from it.[128]

The Akers v. Baldwin decision once again delved into the rights of a mineral estate owner to the surface estate owner under a broad form deed.  The Akers case was a consolidation of two cases.  The first case involved the Secretary of the Natural Resources and Environmental Protection Cabinet, Baldwin, and whether in her capacity as secretary she could issue permits to strip mine land if the deed did not specify the means of extracting the coal.[129]   The second case involved the applicability of the Ky. Rev. Stat. § 381.930 as it pertained to the rights of the mineral and surface owners.[130] Ky. Rev. Stat. § 381.930 codified a rule of construction for mineral deeds relating to coal extraction such that it would relate back to the intention of the parties at the time of the conveyance.[131]  The court in Akers found the statute to be unconstitutional because Ky. Rev. Stat. § 381.930 sought to determine the intentions of the parties to a deed, which the court felt was a judicial power.[132]

In resolving the permit issue, the Akers court affirmed the right of the mineral estate owner to extract coal by whatever feasible means necessary.[133]  The court did reject the portion of Buchanan that had not allowed for the mineral estate owner to be liable for damages.[134] 

After a careful examination of the opinions in Buchanan and Akers, the Ward court overturned precedent and held that the rights of the mineral estate owner in the conveyance under a broad form deed did not receive the right to strip mine the property.[135]

The court quickly dismissed the Appellee’s Contracts Clause[136] claim and explained that the intention of the parties to the contract, in the original conveyance, could not have included any substantial disturbance of the surface.[137]  The court resolved the Contracts Clause issue asserting that the appellee’s right to strip mine had not been created by the deed rather, by reliance on a decision by the Kentucky Supreme Court fifty years after the conveyance.[138]

When the court arrived at the final issue concerning the Takings of the Appellee’s mineral estate, they found difficulty in its applicability to the case.[139]  The court reasoned that since the Constitutional Amendment did not involve a land-use restriction, but was rather a rule of contract construction, there was no takings claim.[140]  The court did cite to Lucas[141] and reviewed the holding of that case before explaining why it was inapplicable in the Ward litigation. 

While the first point the court made was to distinguish the Constitutional Amendment from a land-use regulation, it further explained that the Lucas holding when applied to the case at bar would allow the Hardings to claim a common law property right to the extraction of coal in the mineral estate, since the court’s prior decisions regarding such a property conveyance would have upheld such a right.[142]  In further explaining the inapplicability, the court stated property rights acquired by a deed were a matter of state law and that the Constitutional Amendment had not affected the Appellee’s property rights under the deed.[143] 

In dismissing the appellee’s takings claim, the majority opinion reasoned that the right had been extinguished with the overturning of precedent which interpreted past broad form deeds to give mineral estate owners a right to strip mine.  The dissenting opinion of Ward took exception to this reasoning and cited the decision in Pennsylvania Coal v. Mahon.[144]  Justice Leibson, writing the dissent, stated that there exists a symbiotic relationship between the Contracts Clause and the Takings Clause.[145]  In his explanation, the relationship often masks a Contracts Clause issue within Takings cases, because the contractual implications are incidental to the regulatory law analysis.[146]  Furthermore, the dissenting opinion cited the following passage to Pennsylvania Coal v. Mahon: 

“As said in a Pennsylvania case, “For practical purposes, the right to coal consists in the right to mine it.” Commonwealth v. Clearview Coal Co., 256 Pa. St. 328, 331. What makes the right to mine coal valuable is that it can be exercised with profit.  To make it commercially impracticable to mine certain coal has very nearly the same effect for constitutional purposes as appropriating or destroying it.â€?[147]

            Justice Leibson explained that if the Hardings were unable to extract the coal from their mineral estate by no other commercially practicable means, besides strip mining, then there had been a taking.[148]  In conclusion, the dissent tied in the Lucas decision by showing the majority avoided the takings issue by stating no common law right existed and that the broad form deed contained no such right, even though the court’s earlier precedent had held otherwise.[149]


IV.              The Future of Regulatory Takings in Kentucky


Generally, the Kentucky Supreme Court has cited and applied those U.S. Supreme Court Takings decisions where applicable.  The No. 8 Limited of Virginia case demonstrated Kentucky’s willingness to use environmental regulations that did not go “too far� and were within the police power of the state.  The Stearns Lumber & Coal case further defined the boundaries, under the police power of the state, by looking at the economic impact of the regulation on the party claiming a regulatory taking.  Lastly, the Kentucky Supreme Court has cited the Lucas case when deciding purported takings claims and specifically the common law property rights of the party at the time of the conveyance.  The last section of this note will explore where Kentucky environmental regulation may go in the future within the Lucas framework of Kentucky nuisance and property law.[150]
A. Kentucky Nuisance Law
The definition of nuisance is varied and often inadvertently confused with anything that is harmful, annoying, or offensive.
[151]  Kentucky has defined nuisance as ““that class of wrongs which arises from the unreasonable, unwarrantable, or unlawful use by a person of his own property and produces such material annoyance, inconvenience, discomfort, or hurt that the law will presume a consequent damage.”[152]  Additionally, even if the activity creating the nuisance is lawful, Kentucky law generally holds that unreasonable uses of the property, which cause annoyance, inconvenience, or discomfort, will constitute a nuisance.[153]

Furthermore, the Kentucky Supreme Court has made a distinction between permanent and temporary nuisances in the case of Lynn Mining Co. v. Kelly.[154]  Lynn Mining Co. v. Kelly involved the expulsion of excessive amounts of coal dust in the town of Combs, KY.[155]  The court defined a permanent nuisance as those involving a permanent condition or structure that is properly constructed and properly operated.[156]  The temporary nuisance was defined as one in which the condition or structure is negligently constructed and negligently operated.[157]  The distinction is most important when the statute of limitations for such actions is involved.[158]

Within the rubric of permanent and temporary nuisance, Kentucky also recognizes public and private nuisances.[159]  A public nuisance is an unreasonable interference with a right common to the general public.[160]  A private nuisance is a nontrespassory invasion of another’s interest in the private use and enjoyment of land.[161]




B.      A Brief Case Study of Nuisance and Environmental Regulation
These differing aspects of nuisance were illustrated in the Kentucky case of Rockwell Int’l Corp. v. Wilhite.
[162]  Rockwell Int’l Corp involved a claim for a permanent nuisance by landowners in Logan County, KY.  The complaint stated that Rockwell International Corporation had deposited on the landowner’s property polychlorinated biphenyls (“PCBsâ€?).[163]  The court concluded that the minute quantities of PCBs, which were discharged onto the adjacent property, did not amount to a nuisance since it had not affected the landowner’s use and enjoyment of the land.[164]  The opinion did leave open the possibility that if no scientific evidence of a hazardous material or substance were present on the property, unpleasant odors or sounds that were offensive to humans could still create an action for nuisance.[165]

This litigation is useful for the analysis of this note because separate and apart from the landowners’ claims, the Natural Resources and Environmental Protection Cabinet (“the Cabinet�) brought action against Rockwell International Corp. for illegal release of PCBs into the environment.[166]

The Cabinet inspected the Rockwell facility in 1985; ten years after Rockwell apparently stopped using a PCB-based hydraulic fluid and converted to a non-PCB based fluid.[167]  Subsequent to the inspection, the Cabinet conducted additional testing and investigation and found PCBs in sediments, creeks, and rivers surrounding the Rockwell facility.[168]

The Cabinet issued a warning concerning fish in two rivers that were contaminated by PCBs from the Rockwell facility.[169]  Rockwell contended that the exposure assessments conducted by The Cabinet were unrealistic and that those assessments conducted by Rockwell should have been accepted for the purpose of adopting remedial measures.[170]  In 1986, the Cabinet filed a complaint seeking to enforce the clean up of the PCBs by Rockwell.[171] 
At trial, Rockwell was found to have released a reportable quantity of PCBs under Ky. Rev. Stat. § 224.01-400(4) and 40 C.F.R. Part 302 and to have violated Ky. Rev. Stat. § 224.01-400(18), which states that anyone who releases a contaminant to the environment has the choice to either demonstrate that no remedial action is necessary, manage the release to minimize environmental harm, or restore the environment through removal of the contaminant.

Comparing these two cases, within the framework of the Lucas decision, we have a unique vantage of comparing Kentucky nuisance law with a Kentucky environmental regulation.  In Rockwell Int’l Corp. v. Wilhite the Kentucky Court of Appeals spoke of the quantity of PCBs that might be considered a nuisance under state law.[173]  Specifically the Rockwell Int’l Corp. v. Wilhite court referred to the minute quantities of PCBs that did not diminish the plaintiff’s use and enjoyment of the land.[174]
 The Court of Appeals in Rockwell Int’l Corp. reviewed the applicability of Ky. Rev. Stat. § 224.01-400(18) and specifically the reportable quantities of PCBs found by The Cabinet.[175]  The Cabinets enforcement of the statute was necessary to minimize the environmental impact, which included not only the plaintiff’s property from the Rockwell Int’l Corp. v. Wilhite litigation, but presumably anyone who might use the lands, creeks, and rivers surrounding the Rockwell facility.[176]


C.     A Hypothetical Taking
The enforcement of the environmental regulation in Rockwell Int’l Corp. v. Commonwealth was a more stringent standard than that standard employed for nuisance in Rockwell Int’l Corp. v. Wilhite.
[177]  If one is to attempt to predict the future of environmental regulation, one must now look at the facts of the Rockwell cases and ask:  What if the environmental regulation had been enacted after Rockwell purchased the land and began operations?  What if Rockwell claimed that the regulation went “too far� and that the site assessments, clean-ups, and remedial measures proposed by The Cabinet had taken all economic value from the Rockwell land? 

The Lucas decision would tell us to look back to that “bundle of rightsâ€? Rockwell received when they purchased the land.[178]  The exception of Lucas would apply only if Kentucky nuisance law did not prohibit Rockwell from releasing “minute quantitiesâ€? of PCBs on its own land and that of other adjacent landowners.[179]  The exception was found in Rockwell Int’l Corp. v. Wilhite, but only to the use and enjoyment of the plaintiffs for a private permanent nuisance.[180]  In my opinion an action in public nuisance would have shown an unreasonable interference with a right common to the general public, therefore not creating the Lucas exception.[181]

Applying the Ward holding to this hypothetical, a look to Kentucky nuisance law is necessary, such as the Kentucky Court of Appeals did in Rockwell Int’l Corp. v. Wilhite.  Furthermore, the Kentucky Supreme Court’s deference to regulation using the police power for public health would imply that enforcement of the regulation in the hypothetical above would be likely.  Considering the Chief Justice’s strong opinion in Lexington Fayette County Food & Bev. Ass’n v. Lexington-Fayette Urban County Gov’t, the future of environmental regulations in Kentucky looks very promising.  Future landowners and business owners looking to the Commonwealth for new business or expansion, need only review the Kentucky Supreme Courts’ deference to the police power of the state and local governments.  The Kentucky Supreme Court recognizes the land will be regulated, sometimes to the point when all economic value is destroyed.

V.                 Conclusion


The conundrum for an evolving and growing democratic society is often found in resolving the difference in the interests of the individual versus the interests of the general population.  The elected government often is assigned the duty of resolving this conflict and uses the police power of the government to enforce regulations.  The conflict is inevitable, as is the inevitability that the conflict will extend to property.  When the use of property by a landowner either interferes with his neighbor or the general public, the law of nuisance and the regulation of land use becomes needed.
How far the government may go to regulate land-use has been addressed throughout the legal history of the United States and Kentucky.  Kentucky citizens have a great affinity for the beauty and heritage of the Commonwealth that goes back to the first settlers of the state.  Population growth in Kentucky has meant more contact between the citizens and in turn, more conflict concerning how those citizens will use their land. 
Environmental legislation cannot be a fixed set of rules, but must evolve with the times.  Certainly, the Kentucky seen through the eyes of Daniel Boone was vastly different than the Kentucky seen through the eyes of the modern-day inhabitant.  The Kentucky General Assembly has enacted rules and regulations to preserve the beauty, but those rules cannot and should not be static.  The Lucas decision was viewed as an attempt to make the promulgation of land-use regulation static, but Kentucky decisions in the area show otherwise.  A review of Kentucky law in the land-use and environmental conservation arenas demonstrates that the Commonwealth remains a state proud of its land and resources but willing to place the public use and enjoyment of land above that of the individual.

Attorney General Stumbo Issues Immigration Law Alert & GUIDELINES FOR HANDLING ALIENS DETAINED BY THE COURTS

Tuesday, June 26th, 2007
June 26, 2007
Attorney General Greg Stumbo today issued to prosecutors and law enforcement across the state a “Law Advisory Regarding Immigration.� The advisory provides essential information for spotting and handling immigration issues.
Click here to read the advisory (240kb PDF).
“My office receives questions every week regarding Kentucky law and how it relates to our immigrant community,� said Attorney General Stumbo. “Judges inquire about bail for foreign nationals charged with crimes. Law enforcement officers often have questions about arrest of foreign nationals who may have violated state law. Human rights groups aiding immigrants call with concerns about victimization of immigrants in our communities.�
Stumbo continued, “With the debate and gridlock going on in Washington over immigration policy, Kentucky’s state and local law enforcement officers and the Commonwealth’s prosecutors are caught in the middle. For that reason, I am issuing a statement of the law to address pressing immigration issues, so that our legal system is not left in the dark while the public debate continues.�
The guidelines set out in the Law Enforcement Advisory fall into four categories:

  1. Arrests of Foreign-Nationals: Provides clarification of federal law authorizing arrest of a foreign national where violation of state or local law is established, and the foreign national has been deported or left the U.S. after a previous felony conviction, and the foreign national is confirmed to have an illegal status. The advisory also identifies federal resources available to state and local law enforcement in need of assistance:

·                       Automated Status Check: The officer should contact NLETS (the National Law Enforcement Telecommunications System) to conduct an immediate search of federal databases to determine the status of the arrested person. This will determine whether or not the individual is in the country legally. All Kentucky officers can access the national system through the computer in their patrol car.
·                       ICE Contact: If the individual has an illegal status, the officer should contact the Immigration and Customs Enforcement (ICE) field office in their area. (The advisory provides a list of ICE offices in Kentucky.)
·                       Consular Notification: Law enforcement officers must remember that no matter what the resident status, all foreign nationals must be advised of their right to have their consulate notified. (The advisory provides a notification statement that may be read by the officer or given to the arrested person.)

  1. Federal Detainers: Local and state law enforcement should notify the appropriate field office of ICE in the case of an illegal foreign national who has been arrested on a state charge. Only ICE has requisite federal authority to file an immigration detainer. Under federal law, only the U.S. Attorney General has the discretion to detain a foreign national pending decision regarding deportation.
  2. Bail: Everyone in Kentucky who is arrested has a right to bail, unless charged with a death penalty offense.
  3. Interpreters: Any arrested individual who cannot speak English has a right to an interpreter.

In the law advisory regarding immigration, Attorney General Stumbo also discusses common crimes against Kentucky’s immigrant community. “Certain crimes and predatory practices target our immigrant population,� said Attorney General Stumbo. “Immigrants who confront cultural and language differences are often unfamiliar with local law and may be reluctant to report a crime for fear of deportation. As a result, many immigrants are particularly vulnerable to predatory practices, criminal discrimination, fraud and abuse.�
Examples provided in the law advisory include:

  1. “Notorio� Fraud – In Spanish, “notorio� means “qualified legal expert.� Many immigrants assume “notorio� and “notary public� are the same. When immigrant are seeking temporary workers status, for example, they should be wary of persons who use their title of “notary public� to attempt to help them when they likely lack the necessary training to provide legitimate immigration assistance.
  2. Human Trafficking – This form of modern-day slavery can include forced labor, domestic servitude or exploitation within the illegal sex trade. This year the General Assembly enacted Senate Bill 43, effective today (June 26, 2007.) It provides severe criminal penalties for human trafficking. Stumbo encourages local law enforcement to be aware that SB 43 guarantees the following protections for victims of human trafficking:

·                       Freedom from Incarceration
·                       Right to Victims Counseling
·                       Right to an Interpreter
“Today’s Law Advisory is a first step to ensure enforcement of this important new law,� Stumbo added.
The Attorney General seeks to aid Kentucky law enforcement by providing them with the tools they require to work with the Commonwealth’s diverse population. “It is my sincere hope that his Law Advisory will also help immigrants in our communities who have been vulnerable to predatory practices and discrimination.�
The Advisory provides phone numbers for state and federal immigration offices that can provide information and support services.


Tuesday, June 26th, 2007
The Courier Journal published a story (see below) about the difficulties of an employer (garnishee) who received a garnishment notice and disregarded it.


The law imposes on an employer (or other person holding property of a debtor) that allows a person who has obtained a judgment against the debtor to demand payment by the employer or any person holding property of the debtor.

The procedures for garnishments is set out in Chapter 425 of the Ky. Revised Statutes.

 If a person receives a garnishment notice they are required by law to respond to the court.  A failure to respond then creates a situation where the employer or garnishee can be held in contempt of court and can be held liable for any funds of the debtor they gave to the debtor instead of to the creditor.

Under Chapter 425, a judgment creditor may issue a garnishment by going to the Circuit Clerk’s office and filling out the form.  The form is then served on the employer (garnishee) who is believed to employ the debtor.

The employer (garnishee) must complete and return the form served on him. If he no longer employs the debtor and returns his form, this should end his involvement.  If he fails to return the form, then a petition must be filed by the creditor and the garnishee is directed to appear before the court for a contempt hearing.

More than a few employers ignore the garnishment notice.  They do so at their peril.  The court will almost certainly hold them in contempt and make them liable for any funds they are found to have held for the debtor at the time of the issuance of the garnishment notice.

The attached article details a story where the District court ordered a man to pay the entire $12,000 debt of the debtor.  The procedure followed in that case is questionable on many issues, but the result was a great deal of pain for the employer.  He could have avoided all the trouble by simply returning the completed garnishment notice with the statement that the debtor no longer worked for him.

We have heard  cases where a major corporation would return a garnishment notice with a statement like “we don’t do garnishments�.   Nothing will make the Judge receiving such a letter more angry.  Everybody does garnishments, and there is no exception.

The law limits the liability of the employer to the amount of garnished funds plus court costs.  While the law is not clear, we opine that after the court has held a hearing and ordered a specific amount to be paid by the employer (due to his failure to withhold funds as ordered) that interest at the legal rate (12%) should be applied and collected from the employer.

There are some exemptions from the type of funds that are subject to a garnishment.       If that defense exists the debtor should file a pleading with the court to have the garnishment dismissed.  The employer filling out the form is guided as to the type of funds and the amounts that are subject to the garnishment order.

Judge removes man’s $60,000 cloud  News article about garnishee who did not answer garnishment order and was adjudged to owe entire debt of debtor

The following statutes govern garnishment procedures:

               KY. GARNISHMENT LAWS
·KRS 425  .501   Proceedings for obtaining order of garnishment.
· KRS 425    .506   Attachment or garnishment of earnings — Priority — Order.
· KRS 425   .511   Appearance of garnishee — Failure to appear.
· KRS 425   .516   Payment by garnishee — Costs.
· KRS 425   .521   Procedure if garnishee indebted to defendant.
· KRS 425   .526   Action by plaintiff against garnishee — Attachment
This rule is at bottom of this page



KRS 425.511 Appearance of garnishee — Failure to appear.
(1) Each garnishee summoned shall appear. The appearance may be in person; or by the affidavit of the garnishee, served and filed in the manner and at the time
required for an answer by the Rules of Civil Procedure, disclosing truly the sum
owing by him to the defendant, whether due or not, and the property of the
defendant in the possession or under the control of the garnishee; and, in the case of a corporation, any shares of stocks therein held by or for the benefit of the
defendant, at or after the service of the order of attachment.
(2) If such garnishee or officer make default, by not appearing, the court may, on the motion of the plaintiff, compel him to appear in person for examination, by process as in cases of contempt; or it may hear proof of any debt owing or property held by the garnishee to or for the defendant, and make such order in relation thereto as if what is so proved had appeared on the examination of the garnishee or officer.
History: Created 1976 Ky. Acts ch. 91, sec. 32.

KRS 425.516 Payment by garnishee — Costs.
The garnishee may pay the money owing to the defendant by him, not exceeding the plaintiff’s claim and costs, to the sheriff having in his hands the order of attachment, or into the court or to such person as the court may direct in accordance with the Rules of Civil Procedure; and to that extent he shall be discharged from liability to the defendant.
He shall not be subjected to costs beyond those caused by his resistance of the claim against him; and, if he discloses the property of the defendant in his hands, or the true sum owing by him, and delivers or pays the same to the sheriff, or according to the order of the court, he shall be allowed his costs.
Effective: July 13, 1984
History: Amended 1984 Ky. Acts ch. 158, sec. 9, effective July 13, 1984. — Created
1976 Ky. Acts ch. 91, sec. 33.

KRS 425.526 Action by plaintiff against garnishee — Attachment.
If a garnishee fails to make a disclosure satisfactory to the plaintiff, the latter may bring an action against him, by petition or amended petition, in the same manner, and the proceedings therein shall be the same as in other actions; and the plaintiff may procure an order of attachment in the same manner, and the proceedings thereupon shall be the same, as is hereinbefore and hereinafter authorized concerning attachments–except that the plaintiff’s affidavit shall state, in addition to the facts required to be stated in KRS
425.301(3), the sum which the defendant owes to the plaintiff’s debtor; and the plaintiff shall not be entitled to attach for or recover more than that sum and costs nor more than the amount of the plaintiff’s claim against his debtor and costs.
History: Created 1976 Ky. Acts ch. 91, sec. 35.


KRS 425.521 Procedure if garnishee indebted to defendant.
If a garnishee, or officer of a corporation summoned as a garnishee, appear in person, he may be examined on oath; and, if it be discovered on such examination that, at the service of the order of attachment upon him, he or the corporation was possessed of any property of the defendant, or was indebted to him, the court may order the delivery of such property, and the payment, or security for the payment, of the sum owing by the garnishee, into court, or to such person as it may direct–who shall give bond, with
security, for the same; or the court may permit the garnishee to retain the property or the sum owing upon the execution of a bond with one (1) or more sufficient sureties, to the effect that the sum shall be paid, or the property be forthcoming, as the court may direct.
Performance of such bonds, for the forthcoming of property, may be enforced, as in cases of contempt; upon such bonds for payment of money, execution may be issued as upon replevin bonds.
History: Created 1976 Ky. Acts ch. 91, sec. 34.


     (1) Service of post-judgment orders of attachment or garnishment upon third-party garnishees, such as employers and financial institutions, shall be served as prescribed in
Rule 4 or, at the option of the plaintiff, may be directed by the plaintiff to the garnishee by regular first class or certified mail, or may be personally served by any person authorized to serve a subpoena pursuant to Rule 45.03. Expenses shall be recoverable as costs.
     (2) Upon receiving a post-judgment order of garnishment, the garnishee shall answer within the time required by Rule 12.01, and unless otherwise ordered by the court shall make payments directly to the attorney for the party in whose behalf the order of garnishment was issued. If such party has no attorney of record, as, for example, in the instance of a “small claim,” payments by the garnishee shall be made to the clerk of the court.
     Except for child support arrearages, where wages are garnisheed, the attorney for the party in whose behalf the order of wage garnishment was issued, or the clerk of the court if such party has no attorney of record, shall safely hold the garnisheed funds in escrow for a period of fifteen (15) days from the issuance date of the employer’s garnishment check. If the debtor files an objection within that period, the funds shall continue to be held until the court rules upon the objection. If an exemption is asserted and a hearing held, the attorney or clerk of the court shall disburse the garnisheed funds as ordered by the court. If no exemption is asserted the attorney or clerk of the court shall after the fifteen (15) day period disburse the funds to the party in whose behalf the order of garnishment was issued.
[Amended by Order 88-4, eff. 1-1-89; adopted eff. 6-1-78]
Judge removes man’s $60,000 cloud
Employer faced garnishment fight
By Jason Riley  The Courier-Journal  June 26, 2007
A little more than a year ago, Rocky Cisney was told he owed $60,000 for a 1992 blue Ford F-150 pickup that he didn’t own and had never seen.
“I thought they must have me mixed up with somebody else,” Cisney said in an interview yesterday. “It was like getting hit by a meteorite or something; I just couldn’t believe it.”
Fortunately for Cisney, a Jefferson Circuit Court judge has ruled that a past court order finding him responsible for paying off a former employee’s debt on the vehicle was “unreasonable.”
Judge Mary Shaw’s order Friday ends an ordeal for Cisney that hinged on a state law regarding an employer’s responsibility to garnish wages of workers for debts they owe.
Cisney’s troubles began in 1998 when he received a court order telling him to garnish the wages of an employee of his delivery service for the $9,000 she owed on the truck.
But Cisney threw the order away because the worker had quit a few weeks earlier, he said.
When he didn’t respond to the garnishment order and failed to appear for a contempt hearing in 1999, a judge declared him liable for the debt — and last year, Instant Auto Credit began collecting.
But on Friday, Shaw ruled that Instant Auto waited too long to begin collecting from Cisney — sitting on the judgment for seven years until the debt had ballooned to about $60,000 from annual interest of nearly 26 percent.
“I felt all along this was a miscarriage of justice. It simply wasn’t right,” Cisney said.
Now Cisney wants to know if he will get back the money that Instant Auto Credit took from him and his business — about $500 — as well as $1,000 in attorney fees.
“Am I going to get 26 percent interest on the money they’ve owed me for two years?” he asked. “This turned my life upside down.”
While fighting the order, Cisney said, he stopped running his delivery service out of his Okolona home, in part because he was worried Instant Auto Credit would continue to take his income.
Instant Auto hasn’t been collecting while the case was on appeal, according to court records. Cisney has been receiving a pension and disability checks, and his wife works, he said.
Keith Stonecipher, the attorney for Instant Auto Credit, did not return a phone call seeking comment.
In a past interview, Stonecipher said the company was following state law after Cisney didn’t respond to repeated calls and didn’t show up for the court hearing about the garnishment.
Instant Auto Credit went after Cisney only when it couldn’t find the worker, he said.
In Shaw’s order, she agreed that Cisney was properly served the garnishment order and notice of the court hearing.
But the damages owed were excessive and Cisney should have to pay only the amount he was supposed to garnish from Sullivan when she worked for him, according to the order.
And that amount, according to Cisney’s attorney, Tom Merrill, is nothing because Sullivan quit working for Cisney before the garnishment order.
Merrill said he will request the court to order that the money taken from Cisney be refunded.
Cisney said he is contemplating a suit against Instant Auto Credit. “Turnabout is fair play,” he said.


Tuesday, June 26th, 2007

Published: June 26, 2007 

The Supreme Court hit the trifecta yesterday: Three cases involving the First Amendment. Three dismaying decisions by Chief Justice John Roberts’s new conservative majority.

Chief Justice Roberts and the four others in his ascendant bloc used the next-to-last decision day of this term to reopen the political system to a new flood of special-interest money, to weaken protection of student expression and to make it harder for citizens to challenge government violations of the separation of church and state. In the process, the reconfigured court extended its noxious habit of casting aside precedents without acknowledging it — insincere judicial modesty scored by Justice Antonin Scalia in a concurring opinion.

First, campaign finance. Four years ago, a differently constituted court upheld sensible provisions of the McCain-Feingold Act designed to prevent corporations and labor unions from circumventing the ban on their spending in federal campaigns by bankrolling phony “issue ads.� These ads purport to just educate voters about a policy issue, but are really aimed at a particular candidate.

The 2003 ruling correctly found that the bogus issue ads were the functional equivalent of campaign ads and upheld the Congressional restrictions on corporate and union money. Yet the Roberts court shifted course in response to sham issue ads run on radio and TV by a group called Wisconsin Right to Life with major funding from corporations opposed to Senator Russell Feingold, the Democrat who co-authored the act.

It opened a big new loophole in time to do mischief in the 2008 elections. The exact extent of the damage is unclear. But the four dissenters were correct in warning that the court’s hazy new standard for assessing these ads is bound to invite evasion and fresh public cynicism about big money and politics.

The decision contained a lot of pious language about protecting free speech. But magnifying the voice of wealthy corporations and unions over the voice of candidates and private citizens is hardly a free speech victory. Moreover, the professed devotion to the First Amendment did not extend to allowing taxpayers to challenge White House aid to faith-based organizations as a violation of church-state separation. The controlling opinion by Justice Samuel Alito offers a cockeyed reading of precedent and flimsy distinctions between executive branch initiatives and Congressionally authorized spending to deny private citizens standing to sue. That permits the White House to escape accountability when it improperly spends tax money for religious purposes.

Nor did the court’s concern for free speech extend to actually allowing free speech in the oddball case of an Alaska student who was suspended from high school in 2002 after he unfurled a banner reading “Bong Hits 4 Jesus� while the Olympic torch passed. The ruling by Chief Justice Roberts said public officials did not violate the student’s rights by punishing him for words that promote a drug message at an off-campus event. This oblique reference to drugs hardly justifies such mangling of sound precedent and the First Amendment.



U.S. Sup. Court Bars Suits Against Faith-Based Initiatives

Monday, June 25th, 2007

By William Branigin   Washington Post June 25, 2007;
“”the payment of taxes is generally not enough to establish standing to challenge an action taken by the federal government.”  

“…most church-state lawsuits can (still) proceed “
The Supreme Court today handed President Bush’s faith-based initiatives program a victory, ruling that federal taxpayers cannot challenge the constitutionality of the White House’s efforts to help religious groups obtain government funding for their social programs.
In a 5-4 decision, the court blocked a lawsuit by a Wisconsin-based group of atheists and agnostics against officials of the Bush administration, including the head of the White House Office of Faith-Based and Community Initiatives.

The court ruled that the suit, by the Freedom From Religion Foundation and three of its taxpaying members, could not go forward because ordinary taxpayers do not have standing to challenge the expenditures at issue. The ruling reversed a 2-1 decision in favor of the foundation by a three-judge panel of the U.S. Court of Appeals for the 7th Circuit in January 2006.
Liberal groups blasted the court’s decision in Hein v. Freedom From Religion Foundation as a setback for the First Amendment and a paean to the religious right, while the White House and religious conservatives hailed it as a major triumph for the faith-based initiative.
The foundation had complained that parts of the faith-based initiatives program favored religious groups over secular ones, violating the Establishment Clause of the Constitution’s First Amendment, which says in part that “Congress shall make no law respecting an establishment of religion.”
In its suit, filed in 2004, the foundation claimed that the faith-based initiatives office, formed by Bush in January 2001 through an executive order, unfairly used taxpayer money to provide an edge to religious groups seeking federal funding, and effectively endorsed “religious belief over non-belief.”
The administration argued that the foundation’s taxpayer plaintiffs lacked standing to sue because the faith-based initiatives office was not specifically funded by Congress. At issue before the Supreme Court was only the question of whether taxpayers may challenge an executive branch program not created by Congress. The White House official named in the case is Jay F. Hein, who was appointed deputy assistant to the president and director of the faith-based initiatives office in August 2006.
In an opinion joined by Chief Justice John G. Roberts Jr. and Justice Anthony M. Kennedy, Justice Samuel A. Alito Jr. wrote that “the payment of taxes is generally not enough to establish standing to challenge an action taken by the federal government.”
Given the size of the federal budget, “it is a complete fiction to argue that an unconstitutional federal expenditure causes an individual federal taxpayer any measurable economic harm,” Alito said. “And if every federal taxpayer could sue to challenge any government expenditure, the federal courts would cease to function as courts of law and would be cast in the role of general complaint bureaus.”
He noted that “Congress did not specifically authorize the use of federal funds to pay for the conferences or speeches that the plaintiffs challenged.” Rather, those activities were funded from “general Executive Branch appropriations,” he wrote.
Alito’s opinion stopped short of repudiating a 1968 Supreme Court ruling in Flast v. Cohen, in which the court recognized a narrow exception to the general rule against federal taxpayer standing in an Establishment Clause case.
While denouncing today’s ruling, groups supporting the separation of church and state took heart that only two justices — Antonin Scalia and Clarence Thomas — came out in favor of overturning Flast. This means that most church-state lawsuits can proceed, they said.

Scalia filed an opinion concurring in the judgment, in which Thomas joined. Scalia denounced “utterly meaningless distinctions” between the case at hand and “precedents that have come out differently” under Flast. Arguing that the Flast ruling should be repudiated, he said the court’s taxpayer-standing decisions in Establishment Clause cases “are notoriously inconsistent.”
In a dissenting opinion, Justice David H. Souter wrote that today’s ruling “closes the door on these taxpayers because the Executive Branch, and not the Legislative Branch, caused their injury.” He added, “I see no basis for this distinction in either logic or precedent. . . .”

In this case, “there is no dispute that taxpayer money in identifiable amounts is funding conferences, and these are alleged to have the purpose of promoting religion,” Souter wrote. “When executive agencies spend identifiable sums of tax money for religious purposes, no less than when Congress authorizes the same thing, taxpayers suffer injury.”
His opinion that the plaintiffs did indeed have standing to sue was joined by Justices John Paul Stevens, Ruth Bader Ginsburg and Stephen G. Breyer.
A White House spokeswoman, Emily A. Lawrimore, said the decision “marks a substantial victory for efforts by Americans to more effectively aid our neighbors in need of help.” It allows the faith-based initiative to “remain focused on strengthening America’s armies of compassion and expanding their good works.” Similar efforts by governors and mayors nationwide “can also continue to advance,” she said.
“This ruling is a win for the thousands of community and faith-based nonprofits all across the country that have partnered with government at all levels to serve their neighbors” Lawrimore said. “Most importantly, it is a win for the many whose lives have been lifted by the caring touch and compassionate hearts of these organizations.”
The American Center for Law and Justice, a conservative public interest law firm founded by evangelist Pat Robertson, welcomed the decision as “a very significant victory.”
The ruling “sends a powerful message that atheists and others antagonistic to religion do not get an automatic free pass to bring Establishment Clause lawsuits,” Jay Sekulow, the center’s chief counsel, said in a statement.
But Ralph G. Neas, president of the liberal advocacy group People for the American Way, said, “It’s a bad day for the First Amendment. The Supreme Court just put a big dent in the wall of separation between church and state. . . .”
Neas said in a statement that the ruling “will make it more difficult for citizens whose tax dollars are being unlawfully spent to subsidize religion to bring a complaint in court.”
Another group, Americans United for Separation of Church and State, called the decision “disappointing” but said it would not affect most legal challenges to the faith-based initiative.
Today’s ruling “applies to only a few situations,” said Rev. Barry W. Lynn, the group’s executive director. “Most church-state lawsuits, including those that challenge congressional appropriations for faith-based programs, will not be affected.”
J. Brent Walker, director of the Baptist Joint Committee for Religious Liberty, said the “good news” in the ruling was that seven justices backed Flast v. Cohen.
“It will be more difficult to challenge discretionary executive branch spending under the Establishment Clause” as a result of today’s decision, Walker said. However, the majority’s embrace of Flast means that “nothing has changed when it comes to challenging the exercise of Congress’s taxing and spending powers to promote religion,” he said

High Court Ruling Just Says No to Big Business Extremism

Monday, June 25th, 2007

Not even Justices Antonin Scalia or Samuel Alito wanted a test as tough as the government proposed. They wrote that shareholders should have to show only that it was more likely than not that the defendants meant to cheat, given the facts alleged
By Ann Woolner
June 25 (Bloomberg) — The chief executive says product demand is high when it’s low. He says a new product is ready for delivery when it’s not. His financial reports and future guidance turn out to be far rosier than reality.
When the truth comes out, the share price drops from a high of $67 to a low of $16, and shareholders sue. Whether their lawsuit lasts beyond opening skirmishes depends on the answers to this question:
Did he mean to mislead investors, or were those honest mistakes?
How can you tell?
The U.S. Supreme Court last week came up with a test for assessing intent to defraud that makes it harder for shareholders to show that accused executives knew they were misleading investors. If they can’t show it, their lawsuits die an early death.
It’s a tougher test than in the past, but it’s not nearly as tough as it would have been if the justices had done what the Bush administration urged.
The 8-1 ruling is “very much a compromise decision,” says John Coffee, professor of securities law at Columbia University. “It’s just about midway between the positions of plaintiffs and the defendants.”
Under the circumstances, midway is about all plaintiffs could have rationally hoped for. This is a pro-business court interpreting a pro-business law, containing two justices nominated by a pro-business president.
Center of Road
In the face of all that, last week’s decision showed the court can land in the center-of-the-road as the business lobby and the Bush administration plead for it to come to their side.
This makes it at least possible that another type of shareholder lawsuit might not get eviscerated when the court considers the matter in a different case in October.
That case will say whether investors can sue third parties, such as investment banks, accounting firms and lawyers, who help companies cheat shareholders.
In the case the court decided late last week, the justices had little choice but to toughen the rule about showing intent to defraud. Congress intended just that when it passed a 1995 law to rein in shareholder suits. The only question was how tough would the justices be.
The 1995 law says that shareholder suits should be tossed out at an early stage unless the executives’ alleged conduct showed a “strong inference” that they meant to defraud shareholders.
How can you tell a strong inference from a weak one? Congress left that up to the courts to figure out.
Measuring Intent
Judges across the country have disagreed on the point, devising various yardsticks to apply to the suits before them.
That’s the debate the Supreme Court stopped last week in a suit investors brought against a maker of fiber-optic network equipment, Tellabs Inc. They allege that Richard Notebaert, chief executive officer of Tellabs at the time, misled them in the ways this column describes in the opening paragraph.
Tellabs, based in Naperville, Illinois, and Notebaert have maintained they never meant to defraud. Notebaert didn’t profit by selling stock at artificially high prices, indicating he didn’t know the share price was inflated. Offering innocent explanations, the defense asked the courts to dismiss the suit before it went any further.
The federal appeals court in Chicago that got the case established a fairly easy test and said the Tellabs shareholders had passed it. To show a strong inference of bad intent, the conduct needed only be bad enough that a reasonable person could conclude that it was intentional, the court ruled.
In other words, to get the lawsuit past that early hurdle, investors had only to show that it makes sense to assume bad intent under this ruling.
Too Easy
That was too easy a test to satisfy the Bush administration. Shareholders should have to show a “substantial probability” that the executives intentionally lied to avoid an early dismissal, the U.S. solicitor general said in a brief representing the views of the Justice Department and the Securities and Exchange Commission.
Not even Justices Antonin Scalia or Samuel Alito wanted a test as tough as the government proposed. They wrote that shareholders should have to show only that it was more likely than not that the defendants meant to cheat, given the facts alleged.
Hang on, Reader
This may seem like mind-numbing word play, a ridiculous attempt to draw subtle shades of distinctions that can’t possibly quantify the degree of certainty some judge can reach when trying to plumb a person’s state of mind.
But variations in meaning count when it comes to deciding which companies are going to have to pay shareholders for cheating them, and which ones aren’t.
A majority of justices didn’t like any of those interpretations. Picking a middle course, they said that an intent to defraud must be “at least as compelling” an interpretation of the facts “as any opposing inference of nonfraudulent intent.”
In other words, a sinister motive must be as likely as an innocent one. It doesn’t have to be more likely.
Only one justice, Justice John Paul Stevens, said that test was too strict. He was the sole dissenter, as Scalia and Alito joined the majority opinion.
Bush’s Justices
It’s worth noting that neither of Bush’s two appointees, Alito and Chief Justice John Roberts, signed on to the extreme position the Justice Department was pushing.
Was the decision pro-business? It was. Four times in recent months, the court has been asked by the Bush administration and businesses to limit shareholder suits, and for the fourth time, it did.
But it didn’t do it by much. It was a compromise decision that won backing from the court’s conservatives and all but its most-liberal justice.
Says Coffee, “The plaintiffs’ bar across the country will read this decision and give a sigh of relief that, `We dodged a bullet.”’
(Ann Woolner is a Bloomberg news columnist. The opinions expressed are her own.)

Duke Prosecutor Nifong condemned. Nancy Grace gets her own TV show.

Monday, June 25th, 2007

Grace condemned in numerous cases of prosecutorial abuse. Her “controversial career .. shows how prosecutors can routinely push the envelope without fear of any professional consequences.�

Michael Gaynor  June 25, 2007

George Washington University Law School Professor Jonathan Turley, in a Washington Post article entitled “Lots of Prosecutors Go Too Far. Most Get Away With It,” described the decline and fall of suspended Durham County District Attorney Michael B. Nifong at his ethics trial this way: “It was an extraordinary scene when Michael B. Nifong, the district attorney in Durham, N.C. took the stand to defend his law license after his failed crusade to convict innocent Duke University lacrosse players of gang rape. He had no more success with his own defense. After being disbarred for ‘dishonesty, fraud, deceit and misrepresentation,’ he was suspended from his job last week and now faces a possible lawsuit in civil court.”

Mr. Nifong also faces possible criminal contempt and should face other criminal charges, but fair enough.

Professor Turley: “What’s most remarkable about the whole scene, though, is how rare it is. Nifong’s misconduct was hardly unusual: Some of the most high-profile cases in history have involved strikingly similar acts of prosecutorial abuse. But instead of being punished, the worst violators are often lionized for their aggressive styles — maybe even rewarded with a cable television show.”

Professor Turley had in mind Nancy Grace (a diehard Nifong supporter until continued support would have suggested she be incarcerated for her own protection).

Professor Turley:

“Consider the career of Nancy Grace. Before becoming a CNN and Court TV anchor, she was a notorious prosecutor in Alabama. In a blistering 2005 federal appeals opinion, Judge William H. Pryor Jr., a conservative former Alabama attorney general, found that Grace had ‘played fast and loose’ with core ethical rules in a 1990 triple-murder case. Like Nifong, Grace was accused of not disclosing critical evidence (the existence of other suspects) as well as knowingly permitting a detective to testify falsely under oath. The Georgia Supreme Court also reprimanded her for withholding evidence and for making improper statements in a 1997 arson and murder case. The court overturned the conviction in that case and found that Grace’s behavior ‘demonstrated her disregard of the notions of due process and fairness and was inexcusable.’ She faced similar claims in other cases.”

Professor Turley appears on television as an expert legal analyst, but he’s not a feisty blonde with his own show and he’s plainly upset with how anchors like Ms. Grace are chosen:

Professor Turley:

“You might have expected Grace to suffer the same fate as Nifong. Instead, she has her own show on CNN, and the network celebrates her as ‘one of television’s most respected legal analysts.’ On TV, she displays the same style she had in the courtroom. (In the Duke case, her presumed-guilty approach was evident early on, when she declared: ‘I’m so glad they didn’t miss a lacrosse game over a little thing like gang rape.’)

“The Grace effect is not lost on aspiring young prosecutors who struggle to outdo one another as camera-ready, take-no-prisoners avengers of justice. Grace’s controversial career also shows how prosecutors can routinely push the envelope without fear of any professional consequences. Often this does not mean violating an ethics rule, but using legally valid charges toward unjust ends.”

Professor Turley’s objections are well founded, to be sure, but what was “most extraordinary about the scene” was that Mr. Nifong was held to account for misconduct that constituted egretgious societal abuse as well as attempted railroading of three innocent young men. Mr. Nifong calculated, correctly, that the only way to win a three-way Democrat primary to keep his job against a white woman outpolling him big time and a black man who could be expected to garner a significant share of the black vote was to do what he did and he proceeded to do it.

Mr. Nifong did not just exploit the power with which he had been entrusted at the expense of the members of the 2005-2006 Duke University Men’s Lacrosse Team, both indicted and unindicted (but threatened with possible prosecution for imaginary aiding and abetting and telling the truth instead of lying for the prosecution), and their families.

Mr. Nifong manipulated gullible black Democrat voters and showed in Durham, North Carolina well-to-do to wealthy white folks could be persecuted as well as relatively poor blkack folks (like honest cab driver Moaz Elmostafa).

The North Carolina NAACP disgraced itself, even demanding a gag order (received from an accommodating Judge Kenneth Titus.

North Carolina Central State University Law Professor Irving Joyner, who wrote the book on North Carolina criminal procedure, showed that he was no James Coleman, the Duke Law Professor who wrote the identification guidelines, demands due process regardless of color and soon agreed with the bold Reade Seligmann defense lawyer, the late Kirk Osborn, that Mr. Nifong should not be prosecuting the Duke case. [Note: both professors happen to be black.

]Professor Turley: “Nifong is a classic example of the corrosive effect of high-profile cases on a prosecutor’s judgment and sense of decency. Even before the players were indicted, the district attorney had played to the passions surrounding a black stripper’s allegations that she had been raped by affluent white college boys. Nifong called the Duke players ‘a bunch of hooligans” and promised that he would not allow ‘Durham in the mind of the world to be a bunch of lacrosse players from Duke raping a black girl in Durham.’”

True. But Professor Turley omitted a bigger point: Nifong is a classic example of the liberal white (Democrat) politician willing to do virtually anything to win black support by playing the race card when it can be the key to victory and it took more than nine months to force him to give up the case (AFTER he used it to win the Democrat primary and the general election in Democrat-dominated Durham County). During that time Democrat Governor Michael Easley kept it secret that Mr. Nifong had promised him not to run for election and then broken that promise, and Democrat Attorney General Roy Cooper did nothing until others forced Mr. Nifong to ask to be replaced.

Professor Turley: “But [Mr. Nifong] had a problem. The accuser kept changing her story, and there was no evidence of a gang rape. In addition to his prejudicial comments, Nifong was accused of withholding test results showing that DNA found on the woman’s body and underwear came from at least four unknown males — but none of the 46 lacrosse team members.”

First, there was no evidence of ANY rape.

Second, Mr. Nifong was not merely accused of withholding. He actually withheld and strongly opposed defense efforts to obtain the underlying documentation.

Professor Turley: “Nifong isn’t the first prosecutor who, in his words, ‘got carried away’ in the glare of television lights. In 1921, the silent-film star Roscoe ‘Fatty’ Arbuckle was tried for the alleged rape and murder of a 30-year-old showgirl named Virginia Rappe during a party in a hotel suite….”

NO! Mr. Nifong was not “carried away” by “the glare of television lights.” He was “carried away” by personal ambition and a desire to maximize his pension. The media gave him a platform from which to manipulate gullible voters. The television lights did not corrupt a good man.

Like the defendants in the Duke case, the defendant in the Arbuckle case was innocent, but at least the reprehensible prosecutor in the Arbuckle case did not exploit racial tensions and encourage and engender racial hatred.

Professor Turley: “Nifong’s disbarment may deter some prosecutorial abuse, but until less visible cases are subjected to more scrutiny, it may prove to be an isolated event — driven by the same publicity that led to the abuse in the first place. If the case hadn’t been so high-profile, it’s doubtful that Nifong would have been charged, let alone disbarred, for his misconduct. The Duke case should teach us that a truly fair criminal justice system must strive to protect the rights of the accused as vigorously as it does those of the accuser.”

Exactly. The proof that Mr. Nifong had covered up exculpatory evidence, combined with the intense interest in the case, meant Mr. Nifong had to be disbarred and removed from office.

Also, the Duke case should teach us that racism begets racism, black racism is as pernmicious and debilitating as white racism, the Democrat black bloc vote was too tempting to Mr. Nifong, racial pandering worked for Mr. Nifong and justice in the Duke case was long delayed because Mr. Nifong was not the only one playing racial politics or the only on

When Prosecutors are Blinded by the law.

Sunday, June 24th, 2007

“we need to stop gauging our criminal justice system’s effectiveness by how many people it puts in jail. We need to measure it by how well it metes out justiceâ€?

By Radley Balko   June 24, 2007 Chicago Tribune
Earlier this month, a Georgia judge threw out the 10-year prison sentence of 21-year-old Genarlow Wilson. Wilson had been convicted of molestation for engaging in consensual oral sex with a 15-year-old girl at a New Year’s Eve party. He was 17 at the time. Wilson was convicted under a Georgia statute (since revised) that, strangely, would have resulted in only a misdemeanor charge had Wilson and the girl engaged in vaginal sex. The sentence generated outrage across the country, including from such unconventional sources as ESPN magazine (Wilson was a high school athlete) and former President Jimmy Carter.

But one person was more outraged by the revocation of Wilson’s sentence than by the sentence itself. He is Georgia Atty. Gen. Thurbert Baker. And his opinion, unfortunately, is one of the few that really matter.
Writing in the Atlanta Journal-Constitution, Baker explained that he would appeal the judge’s decision, not because he thought Wilson’s sentence was just but because the girl was under the age of consent of 16, and, “It is my responsibility to follow the laws of Georgia as they are written, not how some may wish they were written.”

In other words, as the Charles Dickens character Mr. Bumble famously proclaimed in “Oliver Twist,” “the law is a ass.” And it’s Thurbert Baker’s job to slavishly follow that ass wherever it may lead.

That, unfortunately, is an increasingly common sentiment among many prosecutors—”I don’t make the laws, I just enforce them.” It’s also not entirely honest.

Prosecutors have enormous discretion in when and how and against whom they bring charges. They can overcharge and pressure the defendant to plea bargain. They can undercharge if they feel there are mitigating circumstances associated with the crime. Or they can determine that despite the fact that a crime has been committed, in the interest of justice, charges ought not be brought at all.

What’s more, every prosecutor’s office battles with limited resources. A prosecutor can’t possibly enforce each law against each person who breaks it. So prosecutors set priorities. And in choosing which laws they will enforce vigorously and which laws they will let slide, they make public policy.

It’s entirely appropriate, then, for citizens to question those policies.

So why were the charges against Wilson brought in the first place? Why would Wilson’s prosecutors choose to pursue a charge of “aggravated child molestation”—a law clearly aimed at pedophiles—against a teenage boy who had consensual oral sex with a teenage girl? And why would Georgia’s attorney general continue to expend taxpayer resources to ensure that Wilson stays in prison?

Part of the answer may lie in the crime’s sexual nature. Whether because of latent Puritanism, moral panic or the media’s infatuation with them, prosecutors seem particularly aggressive in prosecuting sex crimes. This, of course, is what we want when talking about actual sexual predators. But that clearly is not the case here. And there has been a rash of stories of late about similar overreaches.

In one of the more egregious examples, in February, the tech news site CNET reported a case in Florida in which a 16-year-old girl and 17-year-old boy were prosecuted for producing and distributing photographs depicting the sexual exploitation of a child. The two had photographed themselves having sex. The distribution charge came when the two e-mailed the photos from the girl’s computer to the boy’s. Inexplicably, a state appeals court upheld the conviction.

From silly anti-sodomy laws, to prostitution stings, to prosecutions of consenting minors, sex seems particularly adept at clouding a prosecutor’s judgment.

More generally, after 40 years of “get tough on crime” rhetoric, many prosecutors and politicians have unfortunately come to measure success in our criminal justice system by the number of people they put in jail. Criminal laws—particularly those pertaining to drug and sex crimes—are increasingly written with extraordinary breadth and reach. Police officers typically are rewarded for arrests, not for preventing crimes. Prosecutors tend to be promoted or re-elected based on their ability to win convictions, not their fairness or sense of justice. Appeals courts, meanwhile, generally focus on constitutional and procedural issues. Only in extreme cases will an appellate court review the appropriateness of a verdict.

From the writing of laws to their enforcement and prosecution, our system has evolved to the point where justice, mercy and fairness often go overlooked. It’s no surprise that the U.S. leads the world in its rate of incarceration, and by a wide margin.

Polls show that most Americans think our criminal justice system usually gets things right. Yet we’re finding through the use of DNA evidence just how alarmingly often it doesn’t. Sometimes the culprit is incompetence. Sometimes it’s malfeasance or corruption among forensics experts, police officers, DNA lab technicians and other criminal justice gatekeepers.

But as the Wilson case shows, even when there is no corruption, no lying and no shortcuts taken—even when everything is done by the book—you can still get a result that’s far from just.

Traditionally, that is why we grant executives the power to issue pardons and clemency. It’s why the Founders gave those powers to the president. As Alexander Hamilton explained in Federalist No. 74, “The criminal code of every country partakes so much of necessary severity, that without an easy access to exceptions in favor of unfortunate guilt, justice would wear a countenance too sanguinary and cruel.”

Unfortunately, we’ve drifted from that notion. Today, governors (and the president), loath to appear soft on crime, tend to be stingy with their pardon power, using it more for political patronage or to bestow mercy and forgiveness on repentant lawbreakers than to seek out and correct real injustices. (Georgia’s pardons are granted by an appointed pardons board, not the governor.)

That makes it essential that prosecutors choose cases in which there is a clear demonstration of guilt, where the crime caused real harm to another person and where the potential punishment is proportional to the crime. The ability to secure a conviction isn’t enough.

In the Genarlow Wilson case, there was no question of the teen’s guilt. Yet the jury’s forewoman shed tears as she read the verdict. Other jurors expressed regret after the trial, outraged that they weren’t told their verdict would result in a 10-year sentence. The point here is that the prosecutors should have shown the good judgment never to have brought the molestation charge in the first place.

Prosecutors need to be more than inveterate slaves to the (often poorly written) law. And more broadly, we need to stop gauging our criminal justice system’s effectiveness by how many people it puts in jail. We need to measure it by how well it metes out justice.


Saturday, June 23rd, 2007

  As of June 22, 2007 LawReader counts 644 lobbyists who have formally registered with the Kentucky Legislative Ethics Commission. These agents represent some 648 employers who are also required to register. (Agent Employer registration fees generate $162,000 of income to the Legislative Ethics Commission overseeing their conduct.)

 There are only 138 members of the legislature. 

This means that there are 4.66 registered lobbyists for each member of the legislature.   This number does not count the individuals who represent themselves and who may write or speak to a legislator concerning legislation.  These additional “lobbyists� are unregistered but may act very much like a registered lobbying.
See: Links to statutes regarding Legislative Lobbying:
Each agent is authorized by KRS 6.811 to spend up to $100 per legislator during any calendar year for “food and beverages�.  If each registered agent spent this sum on each legislator, the expenditure would total $8,887,200 per year.

Lobbyists represent companies, associations, unions, business groups, special interest groups, public causes, corporations, and individuals.  They typically present information either for or against legislation.

They are called lobbyists since they usually congregate in the hallways and lobbies of the legislative buildings, and corral legislators on their way to the House and Senate, pushing their thoughts on how the legislator should vote on pending or proposed legislation.

If a person whose actions qualify them as a Lobbyist (registered legislative agent) and each company employing a legislative agent, and “intentionally� fails to register, they are subject to prosecution and punishment of a Class D felony pursuant to Section (8) of KRS 6.807. (1 to 5 years imprisonment plus a fine)

  krs 6.611   Definitions for code.
 12) “Employer” means any person who engages a legislative agent and in the case of a
business other than a sole proprietorship or self-employed individual, it means the
business entity, and not an individual officer, director, or employee thereof, except
when an officer, director, or employee makes an expenditure for which he is
reimbursed by the business entity;
(13) “Engage” means to make any arrangement, and “engagement” means any
arrangement, by which an individual is employed or retained for compensation to
act for or on behalf of an employer to lobby;

(21) “Legislation” means bills, resolutions, amendments, nominations, and any other
matter pending before the General Assembly or any of its interim committees, or the
executive approval or veto of any bill acted upon by the General Assembly;
(22) (a) “Legislative agent” means any individual who is engaged:
1. During at least a portion of his time to lobby as one (1) of his official
responsibilities; or
2. In lobbying activities as a legislative liaison of an association, coalition,
or public interest entity formed for the purpose of promoting or
otherwise influencing legislation.
(b) “Legislative agent” does not include:
1. Any person who limits his lobbying activities to appearing before public
meetings of legislative committees, subcommittees, or task forces, or
public hearings or meetings of public agencies;
2. A private citizen who receives no compensation for lobbying and who
expresses a personal opinion; or
3. A public servant acting in his fiduciary capacity as a representative of
his agency, college, university, or city, county, urban-county, or charter
county government, except persons engaged by a de jure municipal
corporation, such as the Kentucky Lottery Corporation or the Kentucky
Housing Corporation, institutions of higher education, or local
governments, whose primary responsibility during sessions of the
General Assembly is to lobby;
(23) “Legislative interest” means a substantial economic interest, distinct from that of the
general public, in one (1) or more legislative matters;
(24) “Legislative matter” means any bill, resolution, nomination, or other issue or
proposal pending before the General Assembly or any interim committee,
committee, subcommittee, task force, or commission of the General Assembly;

     Each employer of a legislative agent is required to pay a registration fee of $250. These employer registration fees generate $162,000 of income to the Commission.

 KRS 6.809 Registration fee — Trust and agency account.
(1) Each employer of one (1) or more legislative agents shall pay a registration fee of two hundred fifty dollars ($250) to the commission.
(2) All fees collected by the commission under the provisions of this section shall be deposited in the State Treasury in a trust and agency fund account to the credit of the commission. These agency funds shall be used to supplement general fund appropriations to the commission.
Effective: September 16, 1993
History: Created 1993 (1st Extra. Sess.) Ky. Acts ch. 4, sec. 28, effective September

The statute regarding conduct of lobbyists is:
 KRS 6.807 Registration statements for legislative agents — Penalties.
(1) Each legislative agent and employer, within seven (7) days following engagement of
a legislative agent, shall file with the commission an initial registration statement
listing the following:
(a) The name, business address and telephone number, and occupation of the
legislative agent;
(b) The name, brief description of the nature of the business, nature and identity
of the organized association, coalition, or public interest entity, business
address and telephone number of the employer, and the real party in interest
on whose behalf the legislative agent is lobbying, if it is different from the
employer. For the purposes of this section, if a trade association or other
charitable or fraternal organization that is exempt from federal income
taxation under Section 501(c) of the Internal Revenue Code is the employer,
the statement shall not list the names and addresses of each member of the
association or organization, if the association or organization itself is listed;
(c) The name, bill number, or a brief description of the legislative action for
which the legislative agent is or will be engaged in lobbying on behalf of their
employer or as a representative of the organized association, coalition, or
public interest entity;
(d) The date on which the legislative agent was engaged; and
(e) Certification by the employer and legislative agent that the information
contained in the registration statement is complete and accurate.
(2) The registration shall be valid through the next thirty-first day of December of an
odd-numbered year, unless previously terminated.
(3) (a) In addition to the initial registration statement required by subsection (1) of
this section, each legislative agent and employer shall file an updated
registration statement with the commission to be received by the commission,
not later than 4 p.m. on the fifteenth day of January, February, March, April,
May, and September of each year, for the period since the end of the period
covered by the previous report until the last day of the month preceding the
filing date. The commission may grant a reasonable extension of time for
filing the updated registration statement for good cause shown.
(b) The updated registration statement shall confirm the continuing existence of
each engagement described in an initial registration statement, and list the
specific bills or resolutions on which the agent lobbied under that engagement
during the period covered by the updated statement. Any statement of
expenditures required to be filed by KRS 6.821 and any details of financial
transactions required to be filed by KRS 6.824 shall be filed with the updated
registration statement.
(4) If a legislative agent is engaged by more than one employer, the agent shall file a
separate initial and updated registration statement for each engagement. If an
employer engages more than one (1) legislative agent, the employer shall file only
one (1) updated registration statement under subsection (3) of this section, which
shall contain the information required by subsection (3) of this section regarding all
legislative agents engaged by the employer.
(5) (a) A change in any information required by subsection (1)(a), (b), or (c) of this
section shall be reflected in the next updated registration statement filed under
subsection (3) of this section.
(b) Within thirty (30) days after the termination of an engagement, the legislative
agent who was employed under the engagement shall file written notice of the
termination with the commission.
(c) If the termination of a legislative agent leaves an employer without the
engagement of any legislative agents, within thirty (30) days after the
termination, the employer shall file written notice with the commission of its
intent to terminate its current registration.
(6) Upon registration pursuant to subsection (1) of this section, the legislative agent
shall be issued a card by the commission, showing that the legislative agent is
registered. The registration card shall be valid from the date of its issuance through
the next thirty-first day of December of an odd-numbered year.
(7) Any legislative agent or employer who fails to file the initial registration statement
or updated registration statement, or who fails to remedy a deficiency in any filing
in a timely manner, may be fined by the commission an amount not to exceed one
hundred dollars ($100) per day, up to a maximum total fine of one thousand dollars
($1,000) without the necessity of a complaint being filed, notwithstanding KRS
6.686(1)(a), but only after notice has been given to the alleged violator of the intent
of the commission to impose a fine, including the amount of the fine, and an
opportunity has been afforded the alleged violator to appear before the commission
or otherwise offer evidence as he may choose in mitigation of the imposition of the
(8) Any legislative agent or employer who intentionally fails to register shall be guilty
of a Class D felony.
Effective: March 20, 2001
History: Amended 2001 Ky. Acts ch. 140, sec. 1, effective March 20, 2001. –
Amended 2000 Ky. Acts ch. 493, sec. 7, effective July 14, 2000. — Amended 1996
Ky. Acts ch. 211, sec. 6, effective July 15, 1996. — Created 1993 (1st Extra. Sess.)
Ky. Acts ch. 4, sec. 27, effective September 16, 1993.

Duties of Legislative Agents:

KRS 6.811 Prohibitions against certain conduct by legislative agents and their
employers — Penalties.
(1) A legislative agent or employer shall not knowingly fail to register, as required under KRS 6.807.
(2) A legislative agent or employer shall not knowingly fail to keep a receipt or maintain a record which KRS 6.821 requires the person to keep or maintain.
(3) A person shall not knowingly fail to file a statement that KRS 6.807, 6.821, or 6.824 requires the person to file.
(4) A legislative agent or employer shall not knowingly offer, give, or agree to give anything of value to a legislator, his spouse, or child.
(5) A legislative agent shall not serve as a campaign treasurer, or as a fundraiser as set forth in KRS 121.170(2) for a candidate or legislator.
(6) A legislative agent shall not make a campaign contribution to a legislator, a candidate, or his campaign committee.
(7) (a) A legislative agent or agents and their employer shall not collectively spend
more than one hundred dollars ($100) in a calendar year on the purchase of food and beverages consumed on the premises for each legislator and his immediate family, collectively.
(b) A legislative agent shall not spend more than one hundred dollars ($100) in a calendar year on the purchase of food and beverages consumed on the premises for each legislator and member of a legislator’s immediate family, collectively. This provision shall apply regardless of the number of employers by whom the legislative agent is engaged.
(8) An employer shall not knowingly employ, appoint, or retain a serving legislator or former legislator as a legislative agent until at least two (2) years have elapsed from the date on which he vacated his office.
(9) No person shall engage any person to lobby in exchange for compensation that is contingent in any way upon the passage, modification, or defeat of any legislation. No person shall accept any engagement to lobby in exchange for compensation that
is contingent in any way upon the passage, modification, or defeat of any legislation. Violation of this provision is a Class D felony.
(10) A legislative agent or other lobbyist shall not go upon the floor of either house of the General Assembly while the house is in session, except upon invitation of that house. Violation of this provision is a Class B misdemeanor.
(11) If any legislative agent or employer violates any provision in subsections (4) to (8) of this section, he shall for the first violation be guilty of ethical misconduct. For the second and each subsequent violation, he shall be guilty of a Class D felony.
Effective: September 16, 1993
History: Created 1993 (1st Extra. Sess.) Ky. Acts ch. 4, sec. 26, effective September
16, 1993.

Links to statutes regarding Legislative Lobbying:

krs 6.611   Definitions for code.
KRS 6 .801   Legislative findings and declarations relating to legislative lobbying.
· KRS 6  .805   Repealed, 1993.
· KRS 6  .807   Registration statements for legislative agents — Penalties.
· KRS 6   .809   Registration fee — Trust and agency account.
· KRS 6  .811   Prohibitions against certain conduct by legislative agents and their employers — Penalties.
· KRS 6 .821   Statements of expenditures — Penalties.
·  KRS 6 .824   Statements of financial transactions — Penalties.
·  .825   Renumbered as KRS 6.631, effective September 16, 1993.
·  .827   Dispute resolution with respect to statements of expenditures and statements of financial transactions — Civil liability for false information.
·  .829   Commission’s duties with respect to legislative lobbying.
·  .849   [Number not yet utilized.]

Will Federal Criminal Trial of Fen Phen Defendants, Knock Attorney Angela Ford out of Attorneys Fee in Boone Civil Case?

Friday, June 22nd, 2007

Senior Federal District Judge William O. Bertelsman yesterday set the criminal trial of Shirley Cunningham, Jr., William Gallion, and Melbourne Mills in the Fen Phen criminal case, for October 15, 2007.  They were indicted last week on claims that they had illegally withheld funds from their clients in a class action which was settled for $200,000,000 in 2005.

 A civil case was filed by Lexington Attorney Angela Ford in 2005 seeking the return of fees earned by the attorneys in their settlement in behalf of 440 class action plaintiffs who claimed injuries related to their use of the diet drug Fen Phen.

 The Associated Press reported that the Federal prosecutors want the men to forfeit any assets they have necessary to pay restitution to their former clients.  The restitution that may be ordered if the three are convicted, may range from as little as $30 million up to $100 million depending on who you are listening too.

This raises an interesting legal question if the three lawyers are convicted and restitution for the claimed overpayments is collected by the Federal Government. 
If the Federal Prosecutors seize the assets of the three defendants, on what basis can Ms. Ford bill her clients for the customary contingent fee on any sums paid to her clients? 

 If the Federal Government seizes the assets, it places in doubt  Ms. Ford’s ability to fulfill her duties under the contingent fee contract which we presume she has with her clients.

 It would be hard to justify a contingent fee on funds she didn’t collect.  All the heavy lifting would have been done by the U.S. Government.  Most fee contracts in this type of case provides for a contingent fee of at least 33 1/3%, to be paid to the attorney only if the funds are collected by the attorney and paid to the client.  Why should Ms. Ford’s clients pay her $10 million or perhaps $33 million for work done by the U.S. Attorney and the Federal Court?  The Government will not charge a fee for collecting these funds and turning them over to the clients if the defendants are convicted. 

 Ms. Ford has argued in her pleadings and in the press that the attorneys who paid Ms. Ford’s clients $76 million dollars should not even be credited with a contingent fee on the funds actually paid to the class action clients.  She has convinced her clients that they have been overcharged for legal work. We can’t imagine that she would feel comfortable if placed in a situation where she was accused of overcharging for legal fees in violation of the standard terms of a contingent fee contract.  But perhaps she had enough foresight to obtain a contract based on an hourly fee with her 410 clients.

  The civil action filed by Ms. Ford in 2005 has been transferred from Fayette County to Woodford County and then to Boone County where it is now pending.  It is not uncommon for a pending civil action to be stayed when a criminal action is pending over the same factual situations. 

While the Boone Circuit Court may not be forced to delay its trial of the issues raised by Ms. Ford, it will be impossible for the defendants to be in both court rooms at the same time. Typically then, the state civil action would be delayed particularly in light of the fact that the Federal Criminal action is set for Oct 15, and the Speedy Trial rights of the defendants might be effected if it is delayed.

By Jeffrey McMurray  Associated Press  June 22, 2007
COVINGTON, Ky. — Three attorneys pleaded not guilty yesterday to charges that they conspired to defraud clients in a multimillion-dollar lawsuit involving the diet-drug combination fen-phen.
Shirley Cunningham Jr. and William Gallion, were indicted last week by a federal grand jury investigating the settlement of a lawsuit over the diet drug.
The three were already found in a civil case to have defrauded more than 400 clients in the $200 million fen-phen settlement. The judge in that case found that Cunningham, Gallion and Mills paid themselves millions more than they were owed.
The 440 plaintiffs collected about $74 million of the $200 million settlement.
Yesterday, U.S. District Judge William O. Bertelsman entered not guilty pleas on the men’s behalf and ordered them to surrender their passports and not travel outside their home states before their trial, which was set for Oct. 15.
The defendants attended the arraignment, but declined to comment on the charges.
Federal prosecutors want the men to forfeit any assets they have to pay restitution to their former clients.
Bertelsman read a list of assets that could be forfeited..… the assets consisted of a list of checking accounts and certificates of deposits…