2) ENVIRONMENTAL LAW: Hale v. Norton, 03-36032 (9th Cir. Feb. 9, 2006). In 2002, the Hales purchased 410 acres of land near McCarthy, Alaska. The property was completely surrounded by the Wrangle-St. Elias National Park and Preserve, which was created in 1980. They gained access to their property over what once as the 13-mile McCarthy-Green Butte Road (the "MGB road"). In 1938, the Alaska Road Commission listed the MGB road as "abandoned." All of its bridges have washed away, and the effects of vegetation and erosion have reduced it to little more than a trail. The house on the Hales' property burned down in the spring of 2003. During its rebuilding, the Hales used a bulldozer to bring in supplies over the MGB road without first seeking authorization from the National Park Service ("NPS"). Shortly thereafter, the NPS posted a public notice stating that no motorized vehicles except snow machines could use the MGB road. In July 2003, the Hales contacted the NPS superintendent to request a permanent permit to traverse the MGB road with a bulldozer and a trailer. The superintendent offered to assist the Hales in preparing the necessary applications for a right-of-way permit. In September 2003, the Hales submitted an "emergency" application for a temporary permit, asserting that they needed to transfer supplies before "freeze up." The NPS requested more information about the nature of the use and proposed bulldozer use. The Hales responded in writing, but did not provide all of the requested information. The NPS informed the Hales that an environmental assessment ("EA") would be required before it could grant a permit. It explained that it did not regard the situation as falling within the emergency exception to the requirements of the National Environmental Policy Act ("NEPA"). In a series of subsequent contacts in September and October 2003, the NPS offered to prepare an EA, waive the expense of conducting the EA, and make a decision in about nine weeks. However, the Hales still did not provide the information the NPS requested. Instead, they filed suit, seeking an injunction requiring the NPS to provide what they deemed adequate and feasible access to their property, and a declaratory judgment that the NPS was violating their right-of-way over the MGB road by requiring a permit. They also sought a declaratory judgment that issuing a permit for temporary use of the MGB road did not constitute a major federal action subject to the requirements of the NEPA. Finally, they moved for a TRO. The district court denied the motion for a TRO and dismissed the case for lack of subject matter jurisdiction. It held that even if the Hales had a valid right-of-way over the MGB road, their use of it was subject to reasonable regulation by the NPS. The Hales were thus required to apply for a permit regardless of any right-of-way they might possess. Since the NPS had not acted on the Hales' permit application, the district court held that it lacked jurisdiction under the Administrative Procedure Act ("APA") because there was no final agency action to review. The USCA affirmed, agreeing with the district court that the Hales' ability to use the MGB road within the Park was subject to reasonable regulation. It also agreed with the district court that it was without jurisdiction to reach the merits of the suit as there had been no final agency action. Goodwin, Brunetti, and W. Fletcher (author), Circuit Judges. R. Brooks of Sacramento, CA, for the plaintiffs-appellants; M. Sanders of Washington, DC, for the defendant-appellee; R. Randall of Anchorage, AK, for the intervenors. (Download the full text of this decision at www.cc9.uscourts.gov/)

3) COMMUNICATIONS LAW: Sosa v. DirectTV, Inc., 04-55036 (9th Cir. Feb. 15, 2006). DirectTV sent thousands of demand letters alleging that the recipients had accessed DirectTV's satellite TV signal illegally and would be sued if they did not quickly settle Di-rectTV's claims against them under the Federal Communications Act ("FCA"). Sosa, et al., filed this class action lawsuit on behalf of themselves and a putative class of recipients of the letters who reached settlements with DirectTV, claiming that DirectTV violated RICO by mailing the presuit demand letters. At issue on appeal was whether DirectTV was immune from liability under RICO, as interpreted in light of the Noerr-Pennington doctrine deriving from the Petition Clause of the First Amendment. The USCA held that RICO and the predicate statues at issue here did not permit the maintenance of a lawsuit for sending a pre-litigation demand to settle legal claims that do not amount to a sham. Because the demand letters at issue sought settlement of claims against Sosa under the FCA, and no sham is claimed, they cannot form the basis of liability under RICO. Because it affirmed the district court's ruling on the basis of the Noerr-Pennington doctrine, the USCA did not address the other basis for dismissal assert by the appellees below and on appeal. The USCA concluded that its decision makes clear that the Noerr-Pennington doctrine requires that, to the extent possible, it construe federal statutes so as to avoid burdens on activity arguably falling within the scope of the Petition Clause. Pre-litigation communications demanding settlement of legal claims must be afforded Noerr-Pennington protection when construing statutes asserted to regulate them. Concurring, Judge Panner thought that the majority's opinion was essentially advisory. He would file a short order stating that fact. He would reserve the extensive discussion of Noerr-Pennington and RICO for a case in which it is necessary to decide those questions. Fernandez and Berzon (author), Circuit Judges, and Panner (concurring), District Judge. J. Willens of Yorba Linda, CA, for the plaintiffs-appellants; D. Oliver of Los Angeles, CA, for the defendants-appellees. (Download the full text of this decision at www.cc9.uscourts.gov/)

4) BANKING LAW: Goldyn v. Hayes, 04-17338 (9th Cir. Feb. 1, 2006). Finding that Goldyn spent 12 years in prison for conduct that is not a crime, the USCA vacated her conviction. In 1987, Goldyn opened a checking and savings account with the Nevada Federal Credit Union ("NFCU"). The account came with a "check guarantee card." Goldyn depleted the funds in the account but continued writing checks, and merchants continued accepting them, relying on her check guarantee card. NFCU continued covering her checks, as the check guarantee card obligated it to do. Goldyn was convicted by a jury of five counts of Drawing and Passing Checks with Insufficient Funds on Deposit, in violation of Nev. Rev. Stat. 205.130. Because she had previously been convicted of three felonies and one gross misdemeanor--all fraud related-she was sentenced as a habitual criminal to five life sentences. After 12 years in prison, she was released and placed on lifetime parole. On her habeas appeal she argued that if the bank was obligated to cover them, then she could not have written bad checks. The USCA noted that the NFCU probably made a foolhardy decision when it gave Goldyn a check guarantee card. And Goldyn breached her private agreement with NFCU when she failed to repay the money it loaned her at the time she opened her account. But the state cannot remedy NFCU's error in judgment or avenge Goldyn's breach of contract, by convicting her of a crime she did not commit. The USCA thus remanded to the district court for entry of a judgment granting the petition for habeas corpus and directing the clerk to immediately issue an unconditional writ of habeas corpus vacating Goldyn's conviction and ordering expungement of all state and federal records thereof. Beezer and Kozinski (author), Circuit Judges, and Carney, District Judge. FPD F. Forsman of Las Vegas, NV, for the petitioner; DAG R. Hulse of Las Vegas, CA, for the respondent. (Download the full text of this decision at www.cc9.uscourts.gov/)

5) SECURITIES / INSIDE TRADING: USA v. Bhagat, 03-10029 (9th Cir. Feb. 8, 2006). Bhagat challenged his convictions for insider trading, for securities tipping, and for obstructing the course of an SEC investigation. Because any new factual theory referenced by the government during closing arguments was introduced for the proper purpose of impeaching Bhagat's credibility, and did not effect a constructive amendment or material variance of the indictment, the instructions conveyed all of the elements needed to obtain a conviction on the obstruction change. In addition, sufficient evidence supported Bhagat's conviction. The USCA thus affirmed the judgment of conviction. Dissenting, Judge Tashima thought this case represented a clear example of prejudicial variance from the indictment which required reversal. Schroeder, Tashima (dissenting), and Rawlinson (author), Circuit Judges. M. McNamara of San Francisco, CA, for the defendant-appellant; AUSA A. Rosen of San Jose, CA, for the plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

6) TAXATION: CIR v. Ewing, 04-73237 (9th Cir. Feb. 28, 2006). The Commissioner of Internal Revenue ("CIR") challenged a decision of the Tax Court, concluding that Ewing was entitled to relief under the "equitable innocent spouse" provision of 26 USC Sec. 6015(f). The CIR further argued that the Tax Court did not have jurisdiciton to review Ewing's petition under Sec. 6015(e). Ewing cross-appealed the Tax Court's failure to order that she be granted a refund of excess taxes paid. The USCA concluded that the Tax Court erred in holding that it had jurisdiction because there was no deficiency asserted as required by Sec. 6015(e). The USCA thus reversed the decision of the Tax Court. Farris, Tashima (author), and Callahan, Circuit Judges. T. McLaughlin of Washington, DC, for the respondent; K. Hawkins of Oakland, CA, for the petitioner. (Download the full text of this decision at www.cc9.uscourts.gov/)

7) BANKRUPTCY: In re Valdez Fisheries Development Association, Inc., 04-35319 (9th Cir. Feb. 22, 2006). At issue here was whether a bankruptcy court, which had approved a settlement agreement, had jurisdiction to interpret that agreement in an adversary proceeding between two creditors brought after the closing and dismissal of the underlying bankruptcy case. The USCA concluded that, in the circumstances of this case, the bankruptcy court lacked jurisdiction. The USCA thus reversed the district court's order. Gould and Berzon, Circuit Judges, and Schwarzer (author), District Judge. M. Schein of Seattle, WA, for the plaintiff-appellant; AAG M. Beardsley of Anchorage, AK, for the defendant-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

8) BANKRUPTCY: In re OneCast Media, Inc., 04-35324 (9th Cir. Feb. 23, 2006). OneCast Media held a lease for office space in a building owned by First Avenue West Building, LLC, later acquired by First West Building 00, LLC (the "Landlord"). The lease was secured by a substantial security deposit comprised of cash and a letter of credit. In November 2000, OneCast ceased paying rent and filed for bankruptcy. The Trustee for the estate rejected the lease. The Landlord drew down the letter of credit and retained the proceeds as a security deposit. In an adversary proceeding in bankruptcy court, the Trustee sought to recover the remaining security deposit. The court ruled that to the extent the claim sought recovery of the portion of the security deposit secured by the letter of credit, the letter of credit was not property of the bankruptcy estate and thus not within the bankruptcy court's jurisdiction. The Trustee moved for reconsideration, which the bankruptcy court denied. The Trustee then appealed to the district court. That court reversed and remanded to the bankruptcy court to permit the Trustee to pursue recovery of damages up to the full amount of the security deposit, including the letter of credit. This appeal by the Landlord from the district court's order followed. The USCA affirmed. The issue was simply the controversy between the Landlord and the Trustee over how much of the funds held by the Landlord it was entitled to retain. Following OneCast's default under the lease, the Landlord drew down the entire letter of credit as the security deposit. The Trustee now sought to recover so much of the security deposit as exceeded the Landlord's damages. The Trustee's interest in those funds was property of the estate, 11 USC Sec. 541(a)(1) (2000), and thus within the bankruptcy court's jurisdiciton. Because the bankruptcy court committed clear error in holding that it had no jurisdiction, its denial of the motion to reconsider was an abuse of discretion. Gould and Berzon, Circuit Judges, and Schwarzer (author), District Judge. J. Rizzardi of Seattle, WA, for the appellants; A. Guy of Seattle, WA, for the appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

9) ERISA: Metropolitan Life Ins. v. Parker, 03-16518 (9th Cir. Feb. 2, 2006). This case involves three claimants to an ERISA-governed life insurance policy held by the decedent, Parker: Pietrofitta, his widow, Marrero, his ex-wife, and the Estate of Scott Parker, which represents Dry, a son born to a third woman five months after Parker died. Metropolitan Life declared the policy proceeds owing, but could not identify the proper beneficiary and filed this action in interpleader in district court. The USCA narrowed the field from three to two and remanded to the district court for further findings of fact. This case involved the situation where neither the participant, nor the beneficiary designation form clearly designate the beneficiary. The USCA task was further complicated by ERISA's silence on how ERISA plan administrators are to determine the proper designee in situations where they are presented with conflicting or ambiguous designations. Parker had made an invalid beneficiary designation on his beneficiary designation form; his attempted designation thus failed and the USCA could not tell from the two plan documents in the record their effective dates or how, if at all, they govern Parker's designation. The USCA thus remanded to the district court to make a factual finding as to which plan governed at the time of Parker's death and to determine the default beneficiary. Tallman, Bybee (author), and Bea, Circuit Judges. R. Waugh, D. Haga, and C. Hunter of Phoenix, AZ, for the defendants; K. Parker of Phoenix, AZ, for defendant-appellee Dry. (Download the full text of this decision at www.cc9.uscourts.gov/)

10) ERISA / ARBITRATION: Comer v. Micor, Inc., 03-16560 (9th Cir. Feb. 1, 2006). At issue here was whether an ERISA-plan participant can be compelled to arbitrate an ERISA claim brought on behalf of the plan where the plan-but not the participant-has signed an arbitration agreement. Comer was a participant in two ERISA plans operated by Micor, Inc. The plan trustee retained Salomon Smith Barney, Inc. to provide investment advice. The relationship between Smith Barney and the trustee was governed by investment management agreements which contain arbitration clauses, pursuant to which all claims or controversies concerning or arising from any of the trustees' accounts must be submitted to binding arbitration. From 1999 through 2002, Smith Barney allegedly concentrated the plans' assets in high-tech and telecom stocks. Even after the bubble burst in early 2000, Smith Barney allegedly maintained its concentrated positions. The plans suffered heavy investment losses. Comer sued Smith Barney under ERISA for breach of fiduciary duty. Smith Barney unsuccessfully petitioned the district court to stay the proceedings against Smith Barney and compel arbitration. The USCA affirmed. Because Smith Barney's petition fell within the general rule that a non-signatory is not bound by an arbitration clause, Comer was not required to arbitrate his ERISA claim against Smith Barney. Kozinski (author) and Fernandez, Circuit Judges, and Hatter, District Judge. P. Boutin of San Francisco, CA, for the appellant; D. Feinberg of Oakland, CA, for the appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

11) WRONGFUL TERMINATION: Dias v. Elique, 04-15290 (9th Cir. Feb. 6, 2006). The district court dismissed claims brought under 42 USC Sec. 1983, with pendent state-law claims, by employees terminated by the University of Nevada, Las Vegas ("UNLV"), Department of Public Safety ("DPS") after allegedly falsifying time entries in a DPS logbook. The district court found that the appellants' wrongful termination, retaliation, and state-law claims were precluded by a determination made by a hearing officer from the Nevada State Personnel Commission that UNLV had "just cause" in terminating the appellants. The USCA found that the district court erred in applying issue preclusion to the hearing officer's determination and reversed that part of the district court's summary judgment. However, it upheld the district court's dismissal of the remaining claims under the doctrine of qualified immunity. Reinhardt and Thomas, Circuit Judges, and Restani (author), U.S. Court of Intl. Trade Judge. K. Kennedy of Las Vegas, NV, for the appellants; R. Linstrom of Las Vegas, NV, for the appellees. ((Download the full text of this decision at www.cc9.uscourts.gov/)

12) CONTRACTS: Johnson v. Columbia Properties Anchorage, LP, 04-35592 (9th Cir. Feb. 10, 2006). Johnson sued Columbia Properties Anchorage LP for breach of contract in an Alaska state court, alleging, inter alia, that Columbia failed to pay for crane services he provided in connection with the construction of the Marriott Hotel in Anchorage. After Columbia removed the case, the federal district court denied Johnson's motion to remand and granted Columbia's motion for partial summary judgment. The USCA held that the district court properly exercised jurisdiction over this case, and that it correctly held that Johnson's claims for payment for the crane services were time-bared. Finally, the USCA held that the district court did not abuse its discretion in denying attorneys' fees to Columbia. Goodwin, Brunetti, and W. Fletcher (author), Circuit Judges. H. Wade of Anchorage, AK, for the plaintiff-appellant; D. Serdahely of Anchorage, AK, for the defendant-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

13) CONTRACTS / PIPELINE SAFETY: Olympic Pipe Line v. City of Seattle, 04-35307 (9th Cir. Feb. 8, 2006). At issue here was whether Seattle can enforce specific provisions of two contracts it has with the Olympic Pipe Line Company to provide safety oversight of a hazardous liquid pipeline within Seattle's city boundaries, despite the apparent federal preemption of hazardous liquid pipeline safety regulations by the Pipeline Safety Improvement Act of 2002 ("PSA"). The district court granted Olympic's motion for a preliminary injunction, halting Seattle's effort to shut down Olympic's pipeline. It then granted summary judgment in favor of Olympic, determining that Seattle's regulatory efforts were preempted by the PSA. The USCA affirmed. It found that the PSA expressly preempts the City's attempt to impose safety regulations on the "Seattle Lateral" of the pipeline. It also found that the district court correctly con-cluded that, in requiring Olympic to comply with certain safety demands, Seattle was acting as a regulator rather than as a municipal proprietor. Finally, the USCA rejected Seattle's assertion that Olympic "waived" its right to advance a preemption argument. Preemption is a power of the federal government, not an individual right of a third party that the party can "waive." Olympic could not waive a right it did not possess. Pregerson, Graber, and Gould (author), Circuit Judges. W. Patton of Seattle, WA, for the defendant-appellant; G. Tollefson of Seattle, WA, for the plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

14) MEDICAID: Watson v. Weeks, 04-35704 (9th Cir. Feb. 8, 2006). Seven Medicaid-eligible Oregon residents and the Oregon Advocacy Center (the "plaintiffs") appealed a district court's order dismissing their action against Oregon state health officials, seeking de-claratory and injunctive relief. Their appeal presented an issue of first impression for the Ninth Circuit: Whether certain provisions of the Medicaid Act, 42 USC Secs. 1396a(a)(10) and 139a(a)(17), create individual rights enforceable under 42 USC Sec. 1983. The district court granted the Oregon Department of Human Services' motion to dismiss the complaint under Fed. R. Civ. Proc. 12(b)(6), concluding that the Medicaid Act provisions in question do not create individual rights enforceable through Sec. 1883. In dismissing the case, the court also denied the plaintiffs' leave to amend their complaint. The USCA held that Sec. 1396a(a)(10) creates an individual right enforceable under Sec. 1983. However, it held that Sec. 1396a(a)(17) does not create such an individual right. The USCA did not reach the question of the district court's denial of leave to amend. Hug (author), Graber, and Clifton, Circuit Judges. L. Saunders of Washington, DC, for the appellants; AAG J. Metcalf of Salem, OR, for the appellees. (Download the full text of this decision at www.cc9.uscourts.gov/)

15) ELECTION LAW: Prete v. Bradbury, 04-35285 (9th Cir. Feb. 22, 2006). At issue here was whether Oregon Ballot Measure 26's prohibition of payment to electoral petition signature gatherers on a piece-work or per signature basis unconstitutionally burdens core political speech. Because the district court did not clearly err in determining that the plaintiffs failed to establish that the challenged measure significantly burdens speech, the USCA could not hold that the Measure imposed a severe burden under the First Amendment. The defendant established that Measure 26 serves the important regulator interest in preventing fraud and forgery in the initiative process. Because the defendant established an important regulatory interest in support of the Measure, the plaintiffs failed to prove that the prohibition violates the First Amendment as applied. R. Fisher, Gould, and Bea (author), Circuit Judges. R. Day of Tigard, OR, for the appellant; D. Leith of Salem, OR, for the appellees; M. Olney of Portland, OR, for the intervenor-appellees. (Download the full text of this decision at www.cc9.uscourts.gov/)

16) FIRST AMENDMENT: Gathright v. City of Portland, 04-35402 (9th Cir. Feb. 24, 2006). This case concerns an intersection of two First Amendment rights: on the one hand, the classic right of an individual to speak in the town square; on the other, the interest or-ganizations have in not being compelled to communicate messages not of their choosing. Gathright is an evangelical Christian who preaches outdoors to the general public. In recent years, he had taken to doing so in various public locations in the City of Portland, including the Pioneer Courthouse Square and Waterfront Park, and often at privately sponsored, City-permitted events open to the public in those venues. Gathright himself has observed that it is "not unusual" for people hearing his jeremiads "to become upset" or "angry" when, for instance, he calls women "whores," "sluts," "Jezebels," "prostitutes," and "daughters of Babylon" or, at an event celebrating tolerance of homosexuality, he dons a T-shirt reading "Got AIDS Yet?" The Portland police have forced Gathright to leave open events on at least six occasions. The City ejected him on each occasion on the grounds that it enforces the right of permit holders sponsoring events to evict any member of the public who espouses a message contrary to what the permit hold wants as part of its event. Under Portland City Code ("PCC") 20,08.060, "it is unlawful for any person unreasonably to interfere with a permitee's use of a Park." Gathright sued, of course. The district court concluded that the City's enforcement of its permitees' demands to eject Gathright infringed Gathright's First Amendment rights because the City's policy was not narrowly tailored to serve what the court acknowledged to be the City's legitimate interest in "protecting the free speech rights of permitees." The district court granted Gathright a preliminary injunction, and, subsequently, entered a permanent injunction prohibiting the City from "removing plaintiff and others similarly situated from an area outside or inside the boundaries under the control of an event permit unless there is probable cause to believe that they have violated a duly enacted statute or ordinance." The USCA affirmed the district court's judgment but vacated and remained its modified permanent injunction for further proceedings because the City had repealed and replaced PCC 20.08.060. It instructed the district court to reconsider the appropriateness of its injunction in light of this development. Fisher (author), Gould, and Bea, Circuit Judges. H. Auerbach of Portland, OR, for the defendants-appellants; H. Grey of Beaverton, OR, for plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

17) MAGNUSON ACT: Turtle Island Restoration Network v. U.S. Dept. of Commerce, 05-15035 (9th Cir. Feb. 21, 2006). At issue here was whether this action is barred by the 30-day time limitation in 16 USC Sec. 1855(f), the judicial review provision of the Magnuson-Stevens Fishery Conservation and Management Act of 1976. Section 1855(f) provides for judicial review of regulations promulgated under the Act, but only if the petition for review is filed within 30 days. Consistent with its authority under the Act, the National Marine Fisheries Service ("NMFS") issued regulations reopening that part of the Hawaii-based longline fishery which targets swordfish. The fishery had been closed since 2002 due to its impact on endangered sea turtles. The plaintiffs filed suit against NMFS, the Department of Commerce and the Secretary of Commerce. The Hawaii Longline Association intervened as a defendant. The complaint did not reference the Magnuson Act, but instead alleged violation of the Migratory Bird Treaty Act, the National Environmental Police Act, the Endangered Species Act, and the Administrative Procedure Act. The district court denied the plaintiffs' motion for preliminary injunctive relief and dismissed the complaint for lack of jurisdiction. The USCA affirmed. It agreed with the district court that the plaintiffs' claims, although framed in terms of violation of the APA and environmental statutes were in actually challenges to the reopening of the fishery. Because the claims were appropriately characterized as an attack on the regulations reopening the fishery, the Magnuson Act's statute of limitation applies, and the petition is barred because filed beyond the 30-day time limitation. Hawkins, McKeown (author), and Clifton, Circuit Judges. P. Achitoff of Honolulu, HI, for the plaintiffs-appellants; M.A. Thurston of Washing-ton, DC, for the defendants-appellees; J. Leppo of Seattle, WA, for the defendant-intervenor. (Download the full text of this decision at www.cc9.uscourts.gov/)

18) SOCIAL SECURITY: Warre v. Commissioner of the Social Security Administration, 04-35778 (9th Cir. Feb. 17, 2006). Warre appealed from the district court's affirmance of a decision to terminate Supplemental Security Income benefits of her minor son. The USCA affirmed, holding that 1) the Commissioner of Social Security permissibly interpreted Listing 100.02A, which defines a growth impairment to be a disability, to require a continuing reduction in a child's growth velocity, rather than a mere continuation of shorter stature; and 2) substantial evidence supported the finding that the plaintiff's son had medically improved to the point where he no longer met Listing 100.02A. Dissenting, Judge Ferguson noted that without his costly medication and special diet, the son will suffer progressive brain damage of other complications of his inherited disease, isovaleric acidemia, which will lead to his death. The majority would discontinue the son's benefits without considering whether his mother could independently afford his life-saving medication. Judge Ferguson said he could not condone permitted a nine-year old boy to suffer brain damage and death. Ferguson (dissenting), Kleinfeld, and Graber (author), Circuit Judges. D. Lowry of Portland, OR, for the plaintiff-appellant; L. Wolf of Seattle, WA, for the defendant-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

19) IMMIGRATION: Acosta v. Gonzales, 04-72682 (9th Cir. Feb. 23, 2006). At issue here was whether an inadmissible alien was eligible for penalty-fee adjustment of status based on marriage to a U.S. citizen or an extreme hardship waiver, or both. The USCA concluded that the alien was eligible for a penalty-fee adjustment of status and thus reversed and remanded the BIA's decision to the contrary. It further concluded that the alien was not eligible for the extreme hardship waiver and affirmed the BIA's decision to that extent. J. Browning, D.W. Nelson, and O'Scannlain (author), Circuit Judges. J. Rotman of Portland, OR, for the petitioner; B. Pettinato of Wash-ington, DC, for the respondent. (Download the full text of this decision at www.cc9.uscourts.gov/)

20) IMMIGRATION: Lopez-Castellanos v. Gonzales, 01-71848 (9th Cir. Feb. 16, 2006). The petitioner sought review of a BIA decision finding him ineligible for relief under the Immigration and Nationality Act, Sec. 240A(b). The USCA denied relief. The petitioner entered the U.S. illegally in 1978 and in 1988 pled guilty to one count of lewd or lascivious act with a child under the age of 14, in violation of California Penal Code Sec. 288(a). At the time of his conviction, this act was not considered an "aggravated felony" under the immi-gration laws. (He had been sentenced to one day of incarceration and three years of probation.) However, the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 ("IIRIRA") amended the definition of "aggravated felony" and it clearly states that the amendment applies with respect to convictions entered before, on, or after the IIRIRA's enactment date. The petitioner's conviction thus satisfied the definition of an "aggravated felony." B. Fletcher (author) and Hawkins, Circuit Judges, and Bury, District Judge. S. Brown of Encinitas, CA, for the petitioner; S. Houser of Washington, DC, for the respondent. (Download the full text of this decision at www.cc9.uscourts.gov/)

21) IMMIGRATION: Zhou v. Gonzales, 03-74712 (9th Cir. Feb. 7, 2006). Zhou, a native and citizen of the People's Republic of China, petitioned for review of a decision of the Board of Immigration Appeals affirming an immigration judge's denial of her application for asylum, withholding of removal, and protection under Article 3 of the United Nations Convention Against Torture ("CAT"). Zhou brought newspapers articles pertaining to the Falun Gong into China when she returned from a trip abroad. She is not a member of the Falun Gong; she merely brought the articles to a friend in China who is a member. Shortly thereafter, Zhou came to the U.S. and, after learning that the police in China had arrested her friend and were looking for her, she sought asylum, withholding removal, and CAT protection. She maintained that she has a genuine, objective fear that if she is returned to China, she will be persecuted by the government on account of an imputed anti-governmental political opinion involving the Falun Gong. The USCA granted Zhou's petition for review, finding that the record established that she is entitled to withholding of removal, which the USCA granted. It also held that she is eligible for asylum and remanded that claim to the BIA for the Attorney General to exercise his discretion as to whether to grant it. The USCA denied Zhou's claim for protection under the CAT, as the persecution Zhou fears does not rise to the level of torture. B. Fletcher, Thompson (author), and Bea, Circuit Judges. D. Sieminski of Oakland, OR, for the petitioner; J. Smiley of Washington, DC, for the respondent. (Download the full text of this decision at www.cc9.uscourts.gov/)

22) IMMIGRATION: Kumar v. Gonzales, 03-70200 (9th Cir. Feb. 15, 2006). 8 CFR Sec. 1003.1(e)(4)(ii) prescribes the exact language the BIA must use when it issues a "streamlined affirmance" (i.e., affirms an immigration judge's decision without opinion). Here the BIA employed the prescribed language but added a footnote disavowing the immigration judge's ("IJ") adverse credibility finding. The USCA held that, although the footnote violated the BIA's regulations, its inclusion was nothing more than harmless surplusage. The USCA assumed that Kumar was credible and reviewed the IJ's decision directly. It concluded that substantial evidence supported the IJ's decision that Kumar had not established past persecution or a likelihood of further persecution. Dissenting, Judge Wardlaw thought that Circuit precedent precluded the majority from treating this petition as it would have had the BIA affirmed without opinion. The BIA's error in failing to comply with its own regulations was not, she thought, harmless and it did cause prejudice. The most egregious prejudice was that when the BIA disregarded its regulations, choosing instead to dispose of the petition through it summary affirmance procedures, Kumar was denied the full review at the agency level to which he is entitled. This, Judge Wardlaw thought, should have been remedied by a remand to the BIA for a determination whether, taking Kumar's testimony as true, he established past persecution. Silverman (author), Wardlaw (dissenting), and Clifton, Circuit Judges. R. Lewis of Oakland, CA, for the petitioners; D. Couvillon of Washington, DC, for the respondent. (Download the full text of this decision at www.cc9.uscourts.gov/)

23) ILLEGAL ALIEN IN POSSESSION OF A FIREARM: USA v. Lopez-Perera, 05-50102 (9th Cir. Feb. 21, 2006). Lopez-Perera appealed his conviction of violating 18 USC Sec. 922(g)(5)(A) (being an alien illegally or unlawfully in the U.S. in possession of a firearm). He assigned error to the denial of his Fed. R. Crim. Proc. 29 motion seeking a judgment of acquittal. The USCA reversed and remanded for a revised sentence. It was clear that Lopez-Perera did not, at the time and place charged, enter the United States. Because he had not yet entered the U.S., he could not have been "illegally or unlawfully in the United States." Congress has made clear that it understands the distinction between the terms "coming to" and "bringing to" the U.S. and the term "in the United States" and has chosen to use the latter in Sec. 922(g)(5)(A). The district court erred in construing Sec. 922(g)(5)(A) outside the context of immigration law and should have granted Lopez-Perera's Rule 29 motion. Schroeder, Goodwin (author), and Fisher, Circuit Judges. J. Warren of San Diego, CA, for the defendant; AUSA A. Perry of San Diego, CA, for the plaintiff. (Download the full text of this decision at www.cc9.uscourts.gov/)

24) SEARCH & SEIZURE: USA v. Napier, 04-10249 (9th Cir. Feb. 7, 2006). Napier maintained that the district court erred by refusing to unseal an attachment to a search warrant affidavit that ultimately paved the way to his arrest and conviction. The attachment detailed activity by a confidential informant. Napier argued that by sealing the attachment and by keeping it sealed, the government prevented him from making the substantial preliminary showing required by Franks v. Delaware, 438 US 154, 155-56 (1978), for an evidentiary hearing to test the validity of a search warrant affidavit. Napier maintained that this situation violated his due process rights. The USCA disagreed. Napier's interest in testing the validity of the warrant through a Franks hearing is not absolute and must be balanced with competing interests. The district court properly balanced Napier's rights with the government's competing interests in determining that the sealed portions of the search warrant affidavit should remain sealed. Moreover, the district court correctly concluded that, at the end of the day, Napier failed to make the requisite substantial preliminary showing to be entitled to a Franks hearing. Trott (author), T.G. Nelson, and Paez, Circuit Judges. D. Bergerson of San Francisco, CA, for the defendant-appellant; K. Melikian of Sacramento, CA, for the plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

25) CRIMINAL FORFEITURE: USA v. Rutledge, 05-10060 (9th Cir. Feb. 14, 2006). Rutledge was indicted for mail and wire fraud, among other crimes. The district court, on motion of the government, issued a preliminary injunction seizing the assets of, and impos-ing a receivership on a nonprofit corporation Rutledge allegedly controlled, on the ground that the corporation's assets would be subject to criminal forfeiture if Rutlege were convicted. Rutledge appealed the preliminary injunction. The USCA concluded that the corporation's assets would not be subject to criminal forfeiture if Rutledge were convicted, because those assets did not qualify as "proceeds" that were "obtained" by Rutlege as a result of his crimes, within the meaning of 18 USC Sec. 981(a)(2)(A). The USCA thus vacated the district court's injunction. Schroeder and Canby (author), Circuit Judges, and Duffy, District Judge. J. Cline of San Francisco, CA, for the appellant; AUSA P. Murphy of Washington, DC, for the appellee.(Download the full text of this decision at www.cc9.uscourts.gov/)

26) HOBBS ACT / LEGAL FIREARM POSSESSION: USA v. Lynch, 02-30216 (9th Cir. Feb. 10, 2006). This appeal arouse out of Lynch's conviction and 20 year sentence for violating the Hobbs Act, 18 USC Sec. 1951, and his conviction and 5-year consecutive sentence for using or carrying a firearm during the commission of a crime of violence in violation of 18 USC Sec. 924(c)(1)(A). The USCA noted that in USA v. Lynch, 282 F.3d 1049 (9th Cir. 2002) (Lynch I), it held that crimes directed toward an individual violate the Hobbs Act only if "the acts deplete the asserts of an individual who is directly and customarily engaged in interstate commerce; if the acts cause or create the likelihood that the individual will deplete the assets of an entity engaged in interstate commerce; or if the number of individuals victimized or the sum at stake is so large that there will be some cumulative effect on interstate commerce." Id. at 1053. Lynch I was remanded with instructions to the district court to apply the test of USA v. Collins, 40 F.3d 95, which it found that the government had met. When Lynch appealed again, however, the USCA held that the Collins test "is utilized where the defendant's conduct had no direct effect upon interstate commerce, but only an indirect effect." USA v. Lynch, 367 F.3d 1148, 1154 (9th Cir. 2004) (Lynch III). In doing so, the USCA said it drew upon its earlier decision in USA v. Atcheson, 94 F. 3d 1237 (9th Cir. 2004), which distinguished between crimes that have direct and indirect effects on interstate commerce. The USCA ordered a rehearing en banc to resolve this tension in its law. Upon rehearing, the USCA concluded that Collins test is not the exclusive means of establishing Hobbs Act jurisdiction, but that jurisdiction may be shown for a Hobbs Act prosecution of an individual by showing either that the crime had a direct effect or an indirect effect on interstate commerce. Otherwise, the USCA adopted the opinion of Lynch III. Judge Kleinfeld concurred in the result. He would not reach most of the questions the per curiam opinion attempted to resolve because, on the facts of this case, the opinion was merely advisory. This case, he said, involved a substantial and direct effect on interstate commerce. A person in Montana engaged in a commercial transaction with a person in Nevada, causing contraband to be brought to Montana. There, the Montana man killed the Nevada man in order to steal the merchandise that had been transported. Judge Kleinfeld noted that the doctrine of constitutional avoidance counsels that the court should not attempt to clarify abstruse and esoteric questions of constitutional law in cases where they will not affect the decision. Schroeder, O'Scannlain, Rymer, Kleinfeld (concurring), Thomas, Silverman, Wardlaw, W. Fletcher, Fisher, Rawlinson, and Clifton, Circuit Judges. Per Curiam. J. Clarke of Spokane, WA, for the defendant-appellant; AUSA B. Hubley of Helena, MT, for the plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

27) SEXUAL ABUSE: USA v. Sure Chief, 05-30214 (9th Cir. Feb. 17, 2006). Defendant Sure Chief challenged his conviction for aggravated sexual abuse on two grounds: 1) the district court erred by refusing to dismiss the indictment because the applicable statute of limitations had run, and 2) the district court erred by limiting the evidence that the defendant was allowed to present at trial. The USCA affirmed, holding that the statute of limitations had not expired and that the defendant suffered no prejudice from the exclusion of the proffered evidence. O'Scannlain, Graber (author), and Bea, Circuit Judge. AFD M. Donahoe of Helena, MT, for the defendant-appellant; AUSA J. Thaggard of Great Falls, MT, for the plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

28) PUBLIC AUTHORITY INSTRUCTIONS: USA v. Bear, 04-50161 (9th Cir. Feb. 24, 2006). A jury convicted Bear of conspiracy to manufacture and distribute methamphetamine. During trial, Bear asserted that she had been working for the government as a confidential informant when she engaged in the alleged illegal drug activities. She testified that she informed Deputy Hager about these activities. Hager was a Los Angeles County Sheriff's Department deputy assigned to the DEA. Bear argued that although she did not re-quest a public authority instruction at trial, that was the crux of the defense reflected in her testimony and in the closing arguments of both counsel. She argued that the district court erred in not giving the instruction sua sponte. She also maintained that the district court erred in permitting the government to call Hager as a rebuttal witness in spite of what she argued was a stipulation by the government not to call him as a witness. The USCA reversed the conviction, concluding that the district court committed plain error in not giving the jury, sua sponte, a public authority defense instruction. Because the government may retry Bear, the USCA also held that the government was not precluded from doing so, but, if it does so, the government's stipulation pertaining to Hager will bind it in any retrial so that the government may present Hager only as a rebuttal witness, and not also in its case-in-chief. Farris, Thompson (author), and Bybee, Circuit Judges. B. Coleman of San Diego, CA, for the defendant-appellant; AUSA S. Ryan of Los Angeles, CA, for the plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

29) SENTENCING: USA v. Bad Marriage, 05-30149 (9th Cir. Feb. 22, 2006). Vernon Lee Bad Marriage appealed his sentence imposed following his guilty plea to a charge of assault resulting in serious bodily injury in violation of 18 USC Secs. 113(a)(6) and 1153. Finding no error, the USCA affirmed. Dissenting, Judge Berzon thought that the district court did not accord the prior panel's opinion in USA v. Bad Marriage, 392 F.3d 1103 (9th Cir. 2004) (Bad Marriage I), the respect it is due. Instead, the district court ignored Bad Marriage I's legal rulings and analysis of the record, which it was not entitled to do. Judge Berzon observed that the majority approved of the district court's maneuver, perhaps sharing the district court's discomfort with the analysis and holding of Bad Marriage I. Whether or not that discomfort is understandable, Judge Berzon thought that it was not possible to have an orderly system of justice if such end-runs around appellate decisions in the same case are permitted. Gould and Berzon (dissenting), Circuit Judges, and Schwarzer (author), District Judge. AFD D. Ness of Great Falls, MT, for the defendant-appellant; AUSA J. Thaggard of Great Falls, MT, for the plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

30) SENTENCING: USA v. Knows His Gun, III, 04-30302 (9th Cir. Feb. 15, 2006). The defendant, Sylvester Knows His Gun, appealed the sentence imposed on him by the district court. He maintained that two sentencing enhancements violated the Sixth Amendment because the factual basis for them had not been proven to a jury or admitted by the defendant. He also sought a remand under USA v. Ameline, 409 F.3d 1073 (9th Cir. 2005) (en banc), contending that the district court imposed the sentence under a mandatory regime without adequate consideration of all of the factors listed in 18 USC Sec. 3553(a). The USCA affirmed the sentence. Gould (author) and Berzon, Circuit Judges, and Schwarzer, District Judge. A. Gallagher of Billings, MT, for the defendant-appellant; AUSA W. Mercer of Billings, MT, for the plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

31) SENTENCING: USA v. Morales-Perez, 05-10115 (9th Cir. Feb. 22, 2006). Morales-Perez appealed his 70-month sentence for unlawful reentry of a deported alien. He maintained that the district court erred in finding that his prior conviction for possession or purchase of cocaine base for purposes of sale is categorically a drug trafficking offense warranting a 16-level enhancement under Guideline Sec. 2L1.2(b)(1)(A). The USCA held that Morales-Perez's conviction for possession or purchase of cocaine base for purposes of sale, in violation of California Health & Safety Code Sec. 11351.5, is not categorically a drug trafficking offense within the meaning of Guideline Sec. 2L1.2(b)(1)(A). It thus vacated the district court's sentence and remanded for the district court to conduct a modified categorical analysis at resentencing. Dissenting, Judge Tallman thought the district court got it right. A common sense reading of the California statute leads to only one logical conclusion: Morales-Perez committed a drug trafficking offense. A defendant who completes the purchase of contraband with the intent to resell it has obtained the "right to control" or sell that contraband. He has possession. In federal court, Morales-Perez would have been convicted of either possession with intent to distribute or attempted possession with intent to distribute. Both are offenses that fall within the definition of a drug trafficking offense in the Sentencing Guidelines. Consequently, Judge Tallman thought that a conviction under California Health and Safety Code Sec. 11351.5 categorically qualifies as a predicate drug trafficking offense and the district court correctly enhanced the federal sentence by 16 levels under Guideline Sec. 2L1.2(b)(1)(A). Goodwin (author), O'Scannlain, and Tallman (dissenting), Circuit Judges. AFPD R. Valladares of Las Vegas, NV, for the defendant-appellant; AUSA R. Bork of Las Vegas, NV, for the plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

32) SENTENCING: USA v. Blandin, 05-10316 (9th Cir. Feb. 1, 2006). Blandin appealed a sentence imposed by the district court following his guilty plea for escaping from a non-secure halfway house in violation of 18 USC Sec. 751(a). He argued that the district court erred by denying him a several-level reduction for voluntary return under Guideline Sec. 2P1.1(b)(2) because he had formed the subjec-tive intent to return to custody prior to his arrest. He further argued that the district court erred by relying upon "testimonial hearsay" contained in his Pre-Sentence Investigation Report in violation of his Sixth Amendment right to confrontation. The USCA affirmed. It held that the district court did not err in denying Blandin a downward adjustment under Sec. 2P1.1(b)(2). Blandin carried the burden of showing that any alleged error was prejudicial, but he did not carry that burden because any alleged error arising from the district court's consideration of the contested statement was harmless. Even if Blandin had cooperated with the arresting officer, he nonetheless would have failed to qualify for a downward adjustment under Sec. 2P1.1(b)(2). The USCA thus did not need to reach the merits of Blandin's Confrontation Clause claim. Noonan, Tashima (author), W. Fletcher, Circuit Judges. AFPD A. Allen of Las Vegas, NV, for the defendant-appellant; AUSA C. Brown of Las Vegas, NV, for the plaintiff-appellee. (Download the full text of this decision at www.cc9.uscourts.gov/)

33) SENTENCING / BANKRUPTCY: USA v. Hagege, 04-50425 (9th Cir. Feb. 22, 2006). The government appealed the district court's sentence of Hagege for bankruptcy fraud and false representation of a social security number. The government maintained that the district court erred in refusing to increase Hagege's sentence on the basis of judicially-found facts. Hagege cross-appealed his conviction based on the following grounds: 1) the district court erred in denying Hagege's motion for an evidentiary hearing on the issue of whether the prosecutor intentionally provoked Hagege into moving for a mistrial; 2) the district court erred in denying Hagege's motion to dismiss count one of the indictment based upon the statute of limitations; 3) the district court's admission of foreign bank records violated the Confrontation Clause of the Sixth Amendment; and 4) the district court erred in denying Hagege's motion for a mistrial as to the second trial based upon the district court's reference to a jury instruction relating to prior convictions. The USCA concluded that the district court did not err in denying Hagege's motion for an evidentiary hearing to determine whether the prosecutor intended to provoke a mistrial. It also concluded that count one of the indictment was not barred by the statute of limitations. The admission of the foreign bank records did not violate Hagege's Sixth Amendment right of confrontation. Moreover, the district court did not abuse its discretion in denying the motion for a mistrial as to the second trial based upon the district court's reference to a jury instruction relating to prior convictions. The USCA affirmed the conviction, vacated the sentence, and remanded for further proceedings in light of USA v. Booker, 543 US 220. Pregerson, Cowen (author), and Thomas, Circuit Judges. AUSA E. Artson of Los Angeles, CA, for the plaintiff-appellant; S. Friedman of Los Angeles, CA, for the defendant-appellant. (Download the full text of this decision at www.cc9.uscourts.gov/)

34) DEATH PENALTY: Morales v. Hickman, 06-99002 (9th Cir. Feb. 19, 2006). Morales is a California death row inmate who was scheduled to be executed by lethal injection on Feb. 21, 2006. He brought a 42 USC Sec. 1943 action seeking to enjoin the state from executing him by lethal injection under the procedures set forth in San Quentin Operational Procedure No. 770. Specifically, he main-tained that a combination of circumstances, including the specific drugs chosen, the procedure by which the drugs are administered and the absence of medically trained personnel overseeing the execution, created a foreseeable and undue risk that he would experience unnecessary and wanton pain constituting cruel and unusual punishment under the Eighth and Fourteenth Amendments. The district court found that Morales had "raised … substantial questions" about the implementation of the No. 770 protocol. The court then proposed two alternative conditions to address the risk of an unconstitutionally cruel and painful execution. The State agreed to comply with the court' second alternative condition-having a qualified anesthesiologist present to ensure that Morales was indeed unconscious during the second and third stages of the lethal injection process. The court than issued a final order permitting the execution to proceed as scheduled. Morales appealed. The USCA concluded that the district court did not abuse its discretion in fashioning a remedy that would alleviate the substantial concerns it found with the way protocol No. 770 was being implemented. The USCA denied Morales' appeal from the district court's denial of injunctive relief. Kleinfeld, McKeown, and Fisher, Circuit Judges. Per Curiam. D. Senior of Los Angeles, CA, for the plaintiff-appellant; AAG D. Gillette of San Francisco, CA, for the defendants-appellees. (Download the full text of this decision at www.cc9.uscourts.gov/)

35) PRISONERS' RIGHTS: Roles v. Maddox, 04-35280 (9th Cir. Feb. 28, 2006). Roles, a prisoner appearing pro se, appealed the district court's dismissal of his Sec. 1983 complaint asserting First and Fourteenth Amendment claims because he failed to exhaust his administrative remedies as required by 42 USC Sec. 1997e(a), enacted by the Prison Litigation Reform Act of 1995. Because Roles failed to exhaust his claims, the USCA affirmed the district court's dismissal of his complaint without prejudice. Leavy, Rymer, and Fisher (author), Circuit Judges. R. Roles pro se; K. Naylor of Boise, ID, for the defendant-appellant. (Download the full text of this decision at www.cc9.uscourts.gov/)

36) HABEAS CORPUS: Smith v. Mitchell, 04-55831 (9th Cir. Feb. 9, 2006). After Smith's California conviction of assault on a child resulting in death was affirmed by the state courts, Smith filed this federal habeas petition claiming that her conviction violated due process because the evidence was constitutionally insufficient. On appeal, her argument focused almost exclusively on the absence of constitutionally sufficient evidence of one element of the crime-the cause of the child's death. The USCA agreed with Smith that no rational trier of fact could have found beyond a reasonable doubt that Smith caused the child's death. It also held that the state court's affirmance of Smith's conviction constituted an unreasonable application of Jackson v. Virginia, 443 US 307, 319 (1979), which established the standard for constitutional sufficiency of the evidence. See 28 USC Sec. 2254(d)(1). The USCA thus reversed and remanded with instructions to grant the writ of habeas corpus. Pregerson and Canby (author), and Reed, Circuit Judges. M. Brennan of Manhattan Beach, CA, for the petitioner; DAG R. Breen of Los Angeles, CA, for the respondent. (Download the full text of this decision at www.cc9.uscourts.gov/)

MEMORANDA
Unpublished decisions may not be cited to or by the courts of this circuit except when
relevant under the Doctrine of Law of the Case, Res Judicata, or Collateral Estoppel.
Rule 36-3

1) COPYRIGHTS / INSURANCE: Cybernet Ventures, Inc. v. Hartford Insurance Company of the Midwest, 04-55882 (9th Cir. Feb. 23, 2006) (unpublished). Beezer, T.G. Nelson, and Gould, Circuit Judges.

Cybernet Ventures appealed a district court's order granting the Hartford Insurance Company's Motion for Summary Judgment and denying Cybernet's Motion for Partial Summary Judgment. The USCA affirmed. Cal. Civ. Code Sec. 2860 provides that an insurer having a duty to defend its insured must provide its insured independent counsel ("Cumis counsel") where a conflict of interest arises between the insurer and insured. A conflict of interest exists when "an insurer reserves its rights on a given issue and the out-come of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim." Civ. Code Sec. 2860(b). The reservation of rights in the instant case did not present a conflict of interest under Sec. 2860 because: 1) insurer's counsel could not control the outcome of the coverage issue and 2) the coverage dispute related solely to damages. Section 504(c)(2) of the Copyright Act allows a plaintiff to seek an award of enhanced statutory damages upon a showing that the "infringement was committed willfully." 17 USC Sec. 504(c)(2). Cal. Ins. Code Sec. 533, in turn, provides that an "insurer is not liable for a loss caused by the willful act of the insured." Section 533, however, only precludes indemnification when liability is based on a finding of willfulness defined as a specific intent to cause harm. Mez Indus., Inc. v. Pacific Nat'l Ins. Co., 76 Cal. App. 4th 856, 874-76 (1999). A finding of willfulness under 17 USC Sec. 504(c)(2), in contrast, requires only the lesser showing of knowledge, willful blindness, or reckless disregard of infringing activity. The different standards for an award of enhanced statutory damages and application of Sec. 533 means that the coverage question will not be litigated in the underlying action and there is no conflict of interest. Gafcon, Inc. v. Ponsor & Assoc., 98 Cal. App. 4th 1388, 1422 (2002); Cal. Civ. Code Sec. 2860(b). When a reservation of rights relates only to the issue of the amount of damages, and not to the question of liability, California courts hold there is no conflict requiring independent counsel. Blanchard v. State Farm Fire & Cas. Co., 2 Cal. App. 4th 345 (1991). The issue of willfulness under 17 USC Sec. 504(c)(2) is only relevant to the issue whether an award of statutory damages can be enhanced and does not affect the question of liability or the right to statutory damages. It does not create a conflict of interest. Cf Cal. Civ. Code Sec. 2860(b). ("no conflict shall be deemed to exist as to allegations of punitive damages or be deemed to exist solely because an insured is sued for an amount in excess of the insurance policy"). Hartford's reservation of rights as to the trademark claims did not create a conflict of interest because it would have been impossible for counsel to defend against the covered copyright claim and simultaneous not defend against the trademark claims. Hartford's chosen counsel could not have controlled the outcome of the coverage issue. Independent counsel was not required. Cal. Civ. Code Sec. 2860(b). Cybernet breached the cooperation clause by failing to turn the defense of the action over to the attorneys selected by Hartford and thereby substantially prejudiced Hartford by denying it the right to defend the action. Truck Ins. Exch. v. Unigard Ins. Co., 79 Cal. App. 4th 966, 976 (2000). Cybernet's breach of the policy precluded its breach of contract claim against Hartford. A claim for breach of the covenant of good faith and fair dealing cannot be maintained where a party is barred from bringing a claim for breach of contract. Brizuela v. Calfarm Ins. Co., 116 Cal. App. 4th 575, 593094 (2004).

2) COPYRIGHTS: BNI Enterprises, Inc. v. Holmes, 04-56347 (9th Cir. Feb. 23, 2006) (unpublished). B. Fletcher, Ferguson, and Callahan, Circuit Judges.

BNI Enterprises appealed the district court's summary judgment to appellee Kelli Holmes. The USCA affirmed. BNI markets and promotes a networking system for professionals and uses copyrighted materials to implement and promote its networking and referral system. Holmes was an employee of BNI from 1990 to 1999, and her familiarity with BNI's written brochures and materials was not disputed. She left BNI's employ in December 1999 and in July 2002 started Team Referral, Inc. ("Team"), a competing networking busi-ness. BNI maintained that Holmes copied BNI's brochures as well as its concept and diagram of "contact spheres." A plaintiff bringing a claim for copyright infringement must show "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Feist Pubs, Inc. v. Rural Tel. Serv. Co., 499 US 340, 361 (1991) The first element is not at issue in this case. The only question is whether BNI can establish a triable issue of fact whether Holmes copied anything that was "original to" BNI. Feist, 499 US at 361. In order to prove copyright infringement, BNI must establish that Holmes had "access" to the plaintiff's work and that the two works are "substantially similar." See, Three Boys Music Corp. v. Bolton, 212 F.3d 477, 481 (9th Cir. 2000). In the instant case, the pur-portedly copied material is primarily factual in nature; thus, BNI must demonstrate "verbatim reproduction or very close paraphrasing before a factual work will be deemed infringed." Landsberg v. Scrabble Crossword Game Players, 736 F.2d at 485, 488 (9th Cir. 1984) (alleged infringer's Scrabble game-strategy book contained no more similarity than what must have been produced by anyone wishing to restate the unprotectable ideas in plaintiff's book). With respect to BNI's brochures and pamphlets, it is quite clear that Holmes's materials are not a verbatim copy; on the contrary, Holmes's materials embody distinctive themes and employ unique language. Whatever commonalities that did exist were no more than what "must unavoidably be produced by anyone who wishes to use and restate the unprotectable ideas contained in [BNI's] work." Three Boys Music, 212 F.3d at 489.

As regards BNI's "contact spheres" diagram, which is arguably accorded a greater degree of copyright protection, BNI could not raise a triable issues of fact on substantial similarity. First, Holmes had chosen the nomenclature "centers of influence" or "power partners." BNI, by contrast, calls its model "contact spheres." Second, unlike the BNI model, which lists examples of various professions under each industry heading, Holmes surrounded each "center of influence" (or industry) with the various "power partners" (or professionals) associated with that industry. Third, Holmes used different language to define and describe her "centers of influence" and "power partners." Finally, Holmes provided at least one "center of influence" (automobile services) not found in BNI's model and includes longer list of "power partners" associated with each industry. Although there are similarities between the two models, they are "no more than the similarity that must unavoidably be produced by anyone who wishes to use and restate the unprotectable ideas contained in [BNI's] work." Landsberg, 736 F.2d at 489.

3) TRADEMARKS: Houdini, Inc. v. Goody Baskets, LLC, 05-55858 (9th Cir. Feb. 13, 2006) (unpublished). Thompson, Trott, and Bea, Circuit Judges.

Goody Baskets appealed the district court's grant of a preliminary injunction enjoining it from using the phrase "Wine Country Gift Basket" in its domain name and advertising materials. The USCA affirmed. The district court did not clearly err in determining that there were serious questions regarding whether Houdini's mark was descriptive and had acquired second meaning. See Filipino Yellow Pages v. Asian Journal Publ'ns, 198 F.3d 1143, 1147 (9th Cir. 1999); Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1354 (9th Cir. 1984). The district court thus did not clearly err in finding that serious questions existed as to the merits of Houdini's trademark action. Goody Baskets did not appeal the district court's determination that the balance of hardships tipped strongly in Houdini's favor. The district court, therefore, did not abuse its discretion in granting the preliminary injunction. In addition, the district court did not abuse its discretion in considering hearsay and biased evidence of actual confusion because the rules of evidence do not strictly apply to preliminary injunction proceedings. Republic of the Philippines v. Marcos, 862 1355, 1363 (9th Cir. 1988); Flyntt Distrib. Co. v. Harvey, 734 F.2d 1389, 1394 (9th Cir. 1984). Finally, the district court properly determined that Houdini's evidence of consumer confusion undercut, but did not eliminate, Goody Basket's fair use defense. See KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 US 111 (2004).

4) SECURITIES: In re Aspeon, Inc. Securities Litigation, 04-55651 (9th Cir. Feb. 23, 2006) (unpublished). Beezer. T.G. Nelson, and Gould, Circuit Judges.

Appellant Eminence Capital LLC ("Eminence") as lead plaintiff brought suit against Aspeon, Inc. under Secs. 10(b) and 20(a) of the Securities Exchange Act of 1934. The district court dismissed Eminence's third amended complaint with prejudice under Fed. R. Civ. Proc. 12(b)(6). Eminence appealed. The complaint alleged that some of Aspeon's reports and accompanying press releases contained materially false and misleading information that caused its shares to trade at an artificially inflated rate. The district court dismissed the complaint on the grounds that it failed to allege facts giving rise to a strong inference that the defendants acted with deliberate or conscious recklessness. On appeal, Eminence argued that several allegations in the complaint were sufficient to raise such an inference.
The USCA affirmed. The allegations in the complaint relating to audit obstruction were not sufficiently particularized to raise a strong inference of scienter. The complaint alleged that Aspeon supplied "incomplete or inaccurate" information in response to requests from the auditors and that, according to one auditor, Aspeon's chief executive officer threw up "obstacles" to the audit. The complaint did not detail the way in which the information was inaccurate or what the alleged obstacles were. Moreover, general allegations of motive, such as that Aspeon undertook this obstruction in order to facilitate its manipulation of financial date, without specific corroborating facts were insufficient to raise a strong inference of conscious or deliberately reckless conduct. Eminence also pointed to allegations of Generally Accepted Accounting Procedures ("GAAP") violations, including improper revenue recognition, failure to write down obsolete inventory and failure to increase warranty reserves. In re Daou Systems, Inc. Securities Litigation, 411 F.3d 1006 (9th Cir. 2005), determined that "violations of GAAP standards can … provide evidence of scienter," and relied on the combination of "widespread and significant" inflation of revenue and "specific allegations of [top executives'] direct involvement in the production of false accounting statements" to find the complaint raised a strong inference of scienter. The complaint here failed to make specific allegations of the defendants' direct involvement, and instead relied on their involvement in the transactions and pre-existing knowledge of the proper way to recognize revenue. Generic allegations showing at most that the defendants engaged in a "hands on" management style within the company will not give rise to a strong inference of conscious or deliberate recklessness without particularized allegations indicating involvement in or knowledge of the fraud. The allegations in the complaint that the defendants monitored Aspeon on a day to day basis, received weekly reports from the accounting department and attended frequent meetings were more analogous to those found insufficient in In re Vantive Corp. Sec. Litig., 283 F.3d 1079, 1087 (9th Cir. 2002) (allegations that defendants interacted with corporate employees, attended management meetings and received weekly reports from the financial department insufficient to establish scienter) than to those found sufficient in Nursing Home Pension Fund v. Oracle Corp., 380 F.3d 1226, 1232-34 (9th Cir. 2004) (allegations that defendants admitted to being involved in an "awful lot" of the disputed transactions as well as monitored and utilized a worldwide database which enabled up-to-the-minute access to financial information sufficient to establish scienter). The allegations that Aspeon lacked internal controls were similarly insufficient. The complaint refers to a PowerPoint presentation and other communications to senior management indicating that the company's accounting system was "disorganized" and needed "enhancement." Eminence argued that the company's failure to implement suggestions to consolidate the accounting system were evidence of scienter. Notably, the complaint failed to present facts sufficient to show that the defendants ever received these communications, again relying on their management of the company. In addition, even assuming that the defendants received these communications, the allegations only showed that Aspeon considered, but rejected, suggestions to change the accounting system. The complaint did not create a strong inference that the defendants made this decision intending, or with deliberate recklessness to the potential, to mislead. See In re Silicon Graphics, 183 F.3d at 979 (to raise a strong inference of scienter, the complaint "must state specific facts indicating no less than a degree of recklessness that strongly suggests actual intent"). The issuance of restatements is not an admission that the defendants knew the reports were false when made. In re Ramp Networks, Inc. Sec. Litig., 201 F.Supp 2d 1051, 1065 (N.D. Cal. 2002). When re-statements have been considered evidence of scienter, the restatements were of considerably greater magnitude than those here. See In re MicroStrategy, 115 F.Supp. 2d 620, 639 (E.D. VA. 2000). The restatements here occurred over three quarters, shuffled funds amongst these quarters such that revenue for the December 1999 quarter actually increased, and, in the end, only demonstrated a revenue reduction of 1.57%. The facts do not give rise to a strong inference the original statements were issued with deliberate or conscious recklessness. The USCA also noted that Aspeon's CEO twice purchased stock during the time that Eminence alleged Aspeon was inflating revenue. While insider trading is not necessary to raise an inference of scienter, it may provide circumstantial evidence of conscious or deliberately reckless conduct. See In re Silicon Graphics, 183 F.3d at 986. Accordingly, the absence of insider trading may raise the opposite inference: a stock purchase may indicate that the corporate insider knew or believed that the issued statements were accurate. See Gompper v. VISX, Inc., 298 F.3d 893, 897 (9th Cir. 2002) ("the court must consider all reasonable inferences to be drawn from the allegations, including inferences unfavorable to the plaintiffs." The purchase of stock by Aspeon's CEO tends to negate the inference of scienter.

The totality of Eminence's allegations were insufficient under the heightened pleading standard of the Private Securities Litigation Reform Act, 15 USC Sec. 78u-4(b), to raise a strong inference that the defendants acted with deliberate or conscious recklessness in issuing the financial statements. The USCA thus affirmed the district court's judgment.

5) SECURITIES: Broderick v. Hoffman, 04-56057 (9th Cir. Feb. 23, 2006) (unpublished). Beezer. T.G. Nelson, and Gould, Circuit Judges.

The plaintiffs, a class of PHP Healthcare ("PHP") stockholders, appealed the district court's grant of a motion filed by Pricewa-terhouseCoopers ("PWC") to dismiss the third amended complaint for failure to plead with particularity as required by the Fed. R. Civ. Proc. 9(b) and 12(b)(6) and the Private Securities Litigation Reform Act of 1995 ("PSLRA"), 15 USC Sec. 78u-4(b). The USCA affirmed. The plaintiffs claim that this action should proceed to trial because PWC violated Sec. 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. To state a claim under Sec. 10(b) and Rule 10b-5, the plaintiffs must show 1) a misstatement or omission 2) of material fact 3) made with scienter 4) on which the plaintiffs relied 5) which proximately caused their injury. DSAM Global Value Fund v. Altris Soft-ware, Inc., 288 F.3d 385, 388 (9th Cir. 2002). The USCA noted that it "must determine whether particular facts in the complaint, taken as a whole, raise a strong inference that defendants intentionally or with deliberate recklessness made false or misleading statements." No. 84 Employer-Teamster Joint Council Pensions Trust Fund v. American West Holding Corp., 320 F.3d 920, 932 (9th Cir. 2003). The plaintiffs failed to allege with sufficient particularity that PWC's representations regarding PHP's contracts with Blue Cross and Blue Shield of New Jersey ("BCBSNJ") amounted to more than negligence on PWC's part. See DSAM, 288 F.3d at 389 (simple or inexcusable negligence is insufficient under the PSLRA). Identification of the transaction as a "Significant Audit Issue" might suggest the opposite of what the plaintiffs allege: that PWC was advising PHP on lawful ways to structure favorably the transactions. See Gompper v. VISX, Inc., 298 F.3d 893, 897 (9th Cir. 2002). The plaintiffs' exhibits only demonstrate PWC's involvement in determining how to treat those transactions; there is no evidence that PWC advised PHP to violate the Generally Accepted Accounting Principals ("GAAP") then signed off on PHP's financial statements as complying with the appropriate accounting and auditing standards with intent to mislead PHP stockholders. The plaintiffs failed to show that PWC knew its recommendations constituted a GAAP violation at the time they were made or to raise a strong inference that the recommendations were made with reckless disregard to the potential to mislead. See DSAM, 288 F.3d at 387, 390 (violation of GAAP without more is insufficient to plead scienter); see also Daou Sys. Inc. Sec. Litig., 411 F.3d 1006, 1016-17 (9th Cir. 2005) (inference of scienter requires GAAP violations be pleaded with sufficient particularity). Nor does PHP's letter to the SEC prove that PWC knew its representations were false when made. See Yurish v. Cal. Amplifier, 191 F.3d 983, 996-97 (9th Cir. 1999) (only a later "I knew it all along" admission is sufficient to satisfy the false when made standard). The plaintiffs failed to allege with sufficient particularity that PWC's representations regarding PHP's contracts with the District of Columbia violates the PSLRA. There was no material false or misleading statement: PHP qualified its remarks with words such as "believes," "Company's in-terpretation" and "in management's opinion." The plaintiffs did not allege that the company did not in fact hold such beliefs at the time that the statement was made. Nor would it be reasonable for an investor to materially rely on such statements of opinion. No. 84 Employer-Teamster, 320 F.3d at 935. Even if the statements were materially false or misleading, the plaintiffs offered no evidence indicating PWC possessed the required mental state. General allegations of motive and opportunity are inadequate to meet the PSLRA's stringent pleading requirements. DSAM 288 F.3d at 389. The plaintiffs failed to allege with sufficient particularity that PWC's representations regarding PHP's reporting of HIP Health Plan transactions violate the PSLRA. The documents the plaintiffs presented to prove PWC was aware of HIP's precarious financial position equally suggested that PWC and PHP believed it could lawfully operate HIP at a profit. The plaintiffs failed to prove PWC's assessment of HIP's profitability constituted "a highly unreasonable omission, involving not merely simple, or even inexcusable negligence, but an extreme departure from the standards of ordinary care. … The mere publication of inaccurate accounting figures, or a failure to follow GAAP, without more, does not establish scienter." DSAM, 288 F.3d at 389-90. The plaintiffs only point to evidence that PWC believed if PHP could not accomplish one of PWC's proposed routes to profitability, PHP's viability might be a concern. PHP's subsequent bankruptcy does not prove that PWC had knowledge or belief that PHP could not profitably operate HIP at the time it expressed its opinions. Even taken as a whole, the plaintiffs failed to detail particular evidence that PWC made materially false or misleading statements while possessing the requisite scienter. See Lipton v. Pathogenesis Corp. 284 F.3d 1027, 1038 (9th Cir. 2002) (considering whether the total of the plaintiffs' allegations creates a strong inference that the defendants acted with deliberate or conscious recklessness).

6) SECURITIES: Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Moore, 04-15678 (9th Cir. Feb. 24, 2006) (unpublished). Silverman, Graber, and Clifton, Circuit Judges.

Moore appealed a district court order denying his motion to vacate an arbitration award and granting Merrill Lynch's motion to confirm the award under the Federal Arbitration Act ("FAA"). The USCA affirmed. It rejected Moore's contention that this case did not satisfy the amount in controversy requirement for federal diversity subject matter jurisdiction because the arbitration panel awarded Merrill Lynch exactly $75,000. Under Theis Research Inc. v. Brown & Bain, decided after the present case was concluded in district court, the amount at stake in the underlying litigation, not the amount of the arbitration award, is the amount in controversy for the purposes of diversity jurisdiction. 400 F.3d 659, 662 (9th Cir. 2005). The arbitration award granted $75,000 to Merrill Lynch as well as denied various counterclaims, including Moore's claim for $2,000,000 in compensatory damages. Because the amount in controversy of the "underlying litigation" exceeded $75,000 and all other requirements for diversity jurisdiction were satisfied, the district court's exercise of federal jurisdiciton was proper. The USCA also rejected Moore's argument that Merrill Lynch "waived diversity" between itself and Moore by filing its initial complaint in Arizona Superior Court. Moore provided no authority for this proposition. Moreover, the FAA establishes a cause of action for confirming an arbitration award independent of a motion to compel arbitration. 9 USC Sec. 9. Merrill Lynch was free to file its motion to confirm in federal court. The USCA also rejected Moore's contention that complete diversity did not exist. The district court found that Dain Rauscher is a Minnesota corporation with its principal place of business in Minneapolis, a finding that Moore does not contest. The district court did not improperly allow Merrill Lynch to remove the case. Under the FAA, a motion to confirm an arbitration award is independent of any earlier proceeding to compel arbitration. Moreover, because Merrill Lynch was the plaintiff, it could not have removed the case. The district court did not abuse its discretion by refraining to engage in Colorado River abstention. See Colo River Water Conservation Dist. v. USA, 424 US 800 (1976). The district court properly held that federal court was not an inconvenient forum for the parties to litigate, exercise of federal jurisdiction would not result in piecemeal litigation, and the present dispute did not otherwise satisfy the narrow requirements of Colorado River abstention. On the merits, the district court properly granted Merrill Lynch's motion to confirm the arbitration award and denied Moore's motion to vacate. Moore argues that the arbitration panel prevented him from conducting discovery regarding Merrill Lynch's national hiring practices that was essential for establishing its violation of Arizona racketeering laws. However, the arbitration panel issued subpoenas to wit-nesses both within and without Arizona who were involved in Merrill Lynch's Arizona hiring practices. As the district court held, the arbitration panel afforded Moore with adequate opportunities to present his theories and evidence. Under the applicable standard of review, Moore had not shown that the award was "completely irrational" or constituted "manifest disregard of the law." Poweragent Inc. v. Elec. Data Sys. Corp., 358 F.3d 1187, 1193 (9th Cir. 2004).

7) TAXATION: Whitney v. Motor Cargo, 05-15546 (9th Cir. Feb. 22, 2006) (unpublished). Fernandez, Rymer, and Bybee, Circuit Judges. Whitney appealed pro se a district court's judgment dismissing his action challenging his employer's decision to withhold federal income taxes from his wages contrary to his instructions. The USCA affirmed. The district court properly dismissed Whitney's action alleging that Motor Cargo improperly withheld taxes from his wages, because Motor Cargo was required by law to do so. 26 USC Sec. 3402. Moreover, an employer is not liable to any person for the amount of tax withheld. 26 USC Sec. 3403; Bright v. Bechtel Petroleum, Inc., 780 F.2d 766, 770 (9th Cir. 1986) (holding that suits by employees against employers for tax withheld are statutorily barred.) The USCA denied Whitney's motion to supplement the record and granted Motor Cargo's motion for attorneys' fees on appeal.

8) TAXATION / UNREPORTED INCOME: Malfatti v. CIR, 05-72883 (9th Cir. Feb. 22, 2006) (unpublished). Fernandez, Rymer, and Bybee, Circuit Judges.

Malfatti appealed pro se from a Tax Court's decision, following a bench trial, in favor of the Commissioner of Internal Revenue ("CIR") in an action contesting an unreported income determination and a penalty for the years 1998 through 2001. The USCA affirmed. It found that the Tax Court properly held that the CIR's determination that Malfatti received unreported income was entitled to a presumption of correctness based on the income statements provided by his employers, their testimony at trial, and Malfatti's own admission that he received income for performing various jobs. Hardy v. CIR, 181 F.3d 1002, 1004-05 (9th Cir. 1999). Moreover, Malfatti did not rebut this presumption with credible testimony or records showing an error in the amount of unreported income assessed. Id (shifting to taxpayer the burden of showing that unreported income determination was erroneous after the CIR presents substantive evidence to establish it). The Tax Court did not abuse its discretion by imposing a $15,000 penalty pursuant to IRC Sec. 6673, as Malfatti failed to file tax returns and then repeatedly refused to participate in the judicial process or cooperate with trial counsel, objected to the admission of evidence regarding his income at trial, provided vague and uncorroborated testimony regarding his earnings, and asserted frivolous arguments such as claiming that the deficiency assessed was an excise tax.

9) BANKRUPTCY / ATTORNEYS' FEES: Travelers Casualty and Surety Company v. Pacific Gas and Electric Company, 04-15605 (9th Cir. Feb. 7, 2006) (unpublished). Reinhardt and Thomas, Circuit Judges, and Restani, Chief Judge, Court of International Trade.

Travelers Casualty and Surety Company appealed the judgment of the district court affirming the bankruptcy court's denial of attorneys' fees. The USCA affirmed. Travelers maintained that Fobian v. Western Farm Credit Bank (In re Fobian), 951 F.3d 1149 (9th Cir. 1991), does not control this case and that Fobian was incorrectly decided. However, the USCA found that the appeal raised substantially the same issues as DeRoche v. Arizona Industrial Commission (In re DeRoche), 2006 WL 91470 (9th Cir. Jan. 17, 2006) and that, for the reasons set forth in DeRoche, Travelers' argument failed. Travelers' argument was actually weaker than that asserted in DeRoche. Travelers was attempting to recover fees in bankruptcy for objections to proposed reorganization plans and related bankruptcy proceedings. Travelers' objection to the reorganization plan arose under 11 USC Sec. 1125, and that the debtor failed to provide the required "adequate information" about that plan. Specifically, Travelers sought assurance that its subrogation rights were being rendered unimpaired under 11 USC Sec. 509(a). Nothing in the federal bankruptcy proceedings required Travelers to satisfy any of the obligations assured by, or to make any payment with respect to, any of its surety bonds or indemnity agreement with the debtor. Travelers did not prevail on any claim it asserted in the bankruptcy proceedings. "A prevailing party in a bankruptcy proceeding may be entitled to an award of attorney fees in accordance with applicable state law if state law governs the substantive issues raised in the proceedings." Ford v. Baroff (In re Baroff), 105 F.3d 439, 441 (9th Cir. 1997). However, attorney fees are not recoverable in bankruptcy for litigating issues "peculiar to federal bankruptcy law." Fobian, 951 F.3d at 1153. The resolution of these proceedings was governed entirely by federal bankruptcy law. Both the bankruptcy and district courts correctly denied Travelers' claim for attorney's fees. Indeed, if unimpaired, non-prevailing creditors were authorized to obtain a fee award in bankruptcy for inquiring about the status of unimpaired inchoate and contingent claims, the system would likely be overwhelmed by fee applications, with no funds available for disbursement to impaired creditors or debtor reorganizations.

10) BANKRUPTCY / CIVIL CONTEMPT: In re Spirtos, 04-56063 (9th Cir. Feb. 23, 2006) (unpublished). Pregerson, W. Fletcher, and Bybee, Circuit Judges.

Spirtos argued that the bankruptcy court could not award compensatory civil contempt sanctions to trustee Neilson because he is not a person under 11 USC Sec. 362(h). However, the USCA found that 11 USC Sec. 105(a) provides the bankruptcy court with the power to do so. Havelock v. Taxel (In re Pace), 67 F.3d 187, 193 (9th Cir. 1995). It also held that the bankruptcy court did not err in finding that the elements of civil contempt had been established. There was clear and convincing evidence that Spirtos willfully violated a specific and definite order of the court which then acted within its discretion by holding Spirtos in civil contempt of court. In light of the complexity and the amount of work required by the trustee's lawyers to respond to the applicant's violation of the automatic stay, the $48,512 award to the trustee was also within the bankruptcy court's discretion. It did not abuse its discretion by refusing to grant Spirtos leave to sue Neilson in district court because the bankruptcy court reasonably determined that Spirtos failed to allege a prima facie case against Neilson.

11) BANKRUPTCY / STANDING: In re Kyle, 04-55616 (9th Cir. Feb. 28, 2006) (unpublished). Canby, Kleinfeld, and Berzon, Circuit Judges.

Irving, the administrator for the estate of Marie Francis Holt, appealed two distinct orders of dismissal from the Bankruptcy Appellate Panel ("BAP") arising out of a single case. The BAP dismissed one appeal because Irving lacked standing, and the other because the property had been sold and the case thus mooted pursuant to the bankruptcy mootness rule. In re Onouli-Kong Land Co., 846 F.2d 1170, 1173 (9th Cir. 1988). The BAP offered Irving a stay, but the estate failed to put up the required bond. The property was thereafter sold and the case mooted as failure to obtain a stay was fatal to this case. The USCA affirmed the BAP's dismissal of the case as moot. It also affirmed the BAP's decision in a consolidated case that the probate estate lacked standing because it neither objected to the compromise agreement between the "Cinderella Living Trust" and the bankruptcy estate nor demonstrated that it was "adversely affected pecuniarily."

12) CONTRACTS: Aguilera v. Auto-Owners Insurance Company, 05-15899 (9th Cir. Feb. 22, 2006) (unpublished). Fernandez, Rymer, and Bybee, Circuit Judges.

Aguilera appealed pro se the district court's judgment dismissing his diversity action alleging breach of contract, negligence, breach of fiduciary duty, and fraud under Arizona law. The USCA affirmed. The district court properly held that Aguilera failed to allege a breach of contract claim against Auto-Owners Insurance Company. Moreover, because Aguilera was not a party to the insurance contract between Truck Insurance Exchange ("Truck") and the homeowners' association, the district court properly dismissed Aguilera's breach of contract claim against Truck. See Maricopa County v. Barfield, 75 P.3d 714 (Ariz. Ct. App. 2003) ("in the absence of a contractual or statutory provision to the contrary, an injured person has no direct cause of action against a tortfeasor's insurance company"). Absent any showing that a contract existed between Aguilera and the defendants, the district court properly dismissed Aguilera's breach of fiduciary duty claim. See Ring v. State Farm Mut. Auto. Ins. Co., 708 P.2d 457, 461 (Ariz. Ct. App. 1985) (holding that a fiduciary relationship is created by the insurance contract between the insured and the insurer and that a plaintiff who is a stranger to this relationship enjoys no benefits from it). The district court properly dismissed Aguilera's negligence claim because the defendants owed no duty of care to Aguilera. See Ferguson v. Cash, Sullivan & Cross Ins. Agency, Inc., 831 P.2d 380, 384 (Ariz. Ct. App. 1991). The district court also properly dismissed the fraud claim because Aguilera did not allege that the defendants made a false statement. See Haish v. Allstate Ins. Co., 5 P.3d 940, 944 (Ariz. Ct. App. 2000). Finally, the district court did not abuse its discretion by denying Aguilera's motion to alter or amend the judgment because Aguilera did not satisfy any of the grounds for that relief.

13) ENVIRONMENTAL LAW: Cemex, Inc. v. Los Angeles County v. USA, 04-56050 (9th Cir. Feb. 10, 2006) (unpublished). Kozinski, Trott, and Bea, Circuit Judges.

The USCA assumed without deciding that Santa Clarita had standing to appeal the consent decree in this case regarding a mining project. Review of a consent decree is limited to ensuring that "the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement taken as a whole, is fair reasonable and adequate to all concerned. Officers for Justice v. Civil Serv. Comm'n, 688 F.2d 615, 625 (9th Cir. 1982). Cemex's suit against Los Angeles County was based on a plausible legal claim-that further Country environmental review of the project was preempted. The County, acting as the lead agency under California law, had sole authority to settle the case. At the time the parties settled, the project had undergone more than a decade of state environmental review. Rather than prolong the litigation, the parties negotiated the consent decree in good faith and at arm's length. In exchange for approving Cemex's project, the County obtained significant environmental concessions. The USCA thus found that the decree was fundamentally fair, adequate and reasonable. It did not decide whether the decree embodied precisely the relief that would have resulted, had the case been litigated to completion. The whole point of a consent decree is that the court need not adjudicate the merits. The USCA concluded only that the district court acted well within its discretion in approving the settlement. The USCA panel retained jurisdiction over all future appeals involving this project.

14) IMMIGRATION: Ahamed v. Gonzales, 03-71594 (9th Cir. Feb. 7, 2006) (unpublished). Schroeder and Leavy, Circuit Judges, and Sedwick, District Judges.

Didar, Monika, and Dishamoni Ahamed, natives of Bangladesh, appealed the BIA's decision summarily affirming an immigration judge's denial of their applications for asylum and withholding of removal. The USCA denied the petition for review. To prevail on the asylum claims under the Immigration and Nationality Act ("INA"), the petitioners had to establish that they are refugees. Gu v. Gonzales, 2005 WL 3216826 (9th Cir. Dec. 1, 2005), citing 8 USC Sec. 1158(b). A "refugee" is an alien who is unable or unwilling to return to his home country due to of persecution or a well-founded fear of persecution on account of race, religion, nationality, membership in a particular social group, or political opinion. Id. (quoting 8 USC Sec. 1101(a)(42)(A)). To establish eligibility for withholding of removal, the petitioners had to establish a "clear probability" that their "life or freedom would be threatened" upon return because of one of the five protected grounds. Thomas v. Gonzales, 409 F.3d 1177, 1182 (9th Cir. 2005) (en banc). The petitioners claimed that they are Biharis who are in essence stateless and that this was the reason for their difficulty in Bangladesh. However, statelessness alone does not warrant a grant of asylum, as the INA explicitly contemplates asylum applications with "no nationality." 8 USC Sec. 1101(a)(42)(A). Such applicants are evaluated by referring to their country of last habitual residence. Id. Petitioner Didar testified that he was beaten twice by gangsters from the refugee camp where he resided, and that on one occasion gangsters tried to break down the door of his residence, but did not come in. He testified that the gangsters targeted him because of his opposition to their criminal activities. Didar and Moniker both testified that the Bangladesh government did nothing about the gangsters. Even accepting this testimony as true, the petitioners failed to establish by compelling evidence either past persecution or a well-founded fear of persecution on account of a statutorily protected ground. The USCA thus concluded that substantial evidence supported the BIA's decision denying asylum. Because the petitioners failed to prove eligibility for asylum, they necessarily failed to meet the more stringent standard for withhold of removal. Alvarez-Santos v. INS, 332 F.3d 1245, 1255 (9th Cir. 2003).

15) IMMIGRATION: Oskoui v. Gonzales, 03-73068 (9th Cir. Feb. 21, 2006) (unpublished). Fernandez, Rymer, and Bybee, Circuit Judges.

Oskoui, a native an citizen of Iran, petitioned for review of a BIA decision that affirmed, without opinion, an immigration judge's decision denying his applications for asylum, withholding of deportation, and protection under the Convention Against Torture ("CAT"). The USCA denied the petition in part, granted it in part, and remanded. An application for asylum must be denied if the alien has firmly resettled in another country. 8 USC Sec. 1158(b)(2)(A)(vi). Substantial evidence supported the presumption that Oskoui had firmly resettled in Germany, where he lived for 19 years before entering the United States. Oskoui failed to rebut this presumption because he conceded that he could have renewed his status and applied for permanent residence in Germany. Oskoui also failed to show that the conditions of his residence in that country were so substantially and consciously restricted by the authority of the country of refuge that he was not in fact resettled. 8 CFR Sec. 1208.15(b). Oskoui could not overcome a finding of firm resettlement by showing that he was not unable to review his previous status in Germany. Vang v. INS, 146 F.3d 1114, 1117 (9th Cir. 1998). Finally, the USCA rejected the government's contention that Oskoui failed to exhaust his withholding and CAT claims because his brief before the BIA specifically challenged the IJ's findings with respect to those claims. The USCA agreed with Oskoui that the IJ failed to consider the persecution Oskoui might face in Iran as a Muslim who has converted to Christianity and is thus subject to severe punishment for apostasy. The USCA remanded the case for further proceedings on Oskoui's withholding and CAT claims. 

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