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1) TERRORISM:
Al Haramain Islamic Foundation, Inc. v. U.S. Dept. of Treasury, 10-35032 (9th
Cir. Sept. 23, 2011). Plaintiff Al Haramain Islamic Foundation, Oregon ("AHIF"),
incorporated in Oregon in 1999 as a non-profit public benefit corporation, whose
stated purpose was to promote greater understanding of Islam "through operating
prayer houses, distributing religious publications, and engaging in other charitable
activities." The U.S. government suspected AHIF of supporting terrorism,
and in 2004 the Office of Foreign Assets Control ("OFAC"), a part of
the U.S. Department of the Treasury, froze AHIF's assets and designed AHIF as
a "specially designated global terrorist" pursuant to Executive Order
("EO") No. 13,224. President George W. Bush had issued EO 13224 pursuant
to the International Emergency Economic Powers Act ("IEEPA") in the
wake of the terrorist attack on the Twin Towers in New York City on September
11, 2001. AHIF filed this action, asserting that OFAC violated a variety of AHIF's
statutory and constitutional rights. Plaintiff Multicultural Association of Southern
Oregon ("MCASO"), which the government has not accused of supporting
terrorism, challenged certain laws that barred it from providing services to designated
entities such as AHIF. With the exception of one claim not at issue on appeal,
the District Court granted summary judgment to OFAC. On appeal, the USCA affirmed
in part, reversed in part, and remanded. First, it affirmed the District Court's
ruling under the Administrative Procedure Act that substantial evidence supported
OFAC's redesignation of AHIF as a specially designed global terrorist under EO
13,224 for two of the three reasons advanced by OFAC. Second, the USCA affirmed
the District Court rejection of AHIF's due process claims. OFAC may rely on classified
information to make a designation decision. OFAC, however, had violated AHIF's
Fifth Amendment right to due process by failing to provide constitutionally adequate
notice and a meaningful opportunity to respond, and by failing to mitigate the
use of classified information, by, for example, preparing and disclosing an unclassified
summary. Nevertheless, because the outcome of the designation process in this
instance would not have been altered by respecting those due process rights, the
constitutional errors were harmless and no judicial relief was available to AHIF.
Third, on February 18, 2004, federal and state officials had executed a search
warrant at AHIF's office. The search warrant concerned investigations into possible
criminal violations of tax, banking, and money-laundering laws. Agents found,
among other things, photographs and other documents related to violence in Chechnya.
The next day, February 19, 2004, OFAC issued a press release stating that it had
blocked AHIF's assets pending an investigation concerning the potential designation
of AHIF under EO 13,224. The press release did not state reasons for the investigation.
OFAC did not provide prior notice to AHIF before blocking its assets and OFAC
did not obtain a warrant to block the assets. On September 9, 2004, OFAC issued
a press release declaring in part: "The investigation shows direct links
between [AHIF] and Usama bin Laden. In addition, the affidavit alleges [AHIF}
criminally violated tax laws and engaged in other money laundering offenses. Information
shows that individuals associated with the branch tried to conceal the movement
of funds intended for Chechnya by omitting them from tax returns and mischaracterizing
their use, which they claimed was for the purchase of a prayer house in Springfield,
Missouri. Other information available to the U.S. shows that funds that were donated
to [AHIF] with the intention of supporting Checken refugees were diverted to support
mujahideen, as well as Chechen leaders affiliated with the al Qaida network."
The USCA reversed the District Court's rejection of AHIF's Fourth Amendment Claim
and remanded for the District Court to determine what judicial relief, if any,
if available. OFAC had violated AHIF's Fourth Amendment right to be free from
unreasonable seizures when it froze that domestic entity's assets without ever
obtaining a warrant. With respect to any potential remedy, because the parties
did not brief the issue and because the District Court has not ruled on it, the
USCA remanded for the District Court do consider, in the first instance, what
relief, if any, may be available to AHIF. Finally the USCA reversed the District
Court's dismissal of the plaintiffs' First Amendment claim. MCASO had a First
Amendment right to engage in the forms of coordinated advocacy that is sought,
such as holding a joint press conference with AHIF. This content-based prohibition
on MCASO's speech violated the First Amendment. D.W. Nelson, Thomas, and Graber
(author), Circuit Judges. D. Cole of Washington, DC, for the plaintiffs-appellants;
D. Letter of Washington, DC, for the defendants-appellees. (Download
the full text of this decision at www.ce9.uscourts.gov/)
3) COPYRIGHT AND TRADEMARK INFRINGEMENT: Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 10-15909 (9th Cir. Sept. 9, 2011). Louis Vuitton Malletier, S.A. (Louis Vuitton") is the sole and exclusive U.S. distributor of its merchandise, which includes a variety of luxury goods bearing its trademarks and copyrighted designs. To guard the reputation and exclusivity of its brand and to otherwise maintain its rights, Louis Vuitton polices its intellectual property, including its trademarks and copyrights, through various monitoring and enforcement strategies. In late 2006, it discovered websites selling goods that it believed infringed its copyrights and trademarks. The websites did not sell merchandise directly; instead, they listed an email address that interested parties could use to initiate a transaction. Upon further investigation Louis Vuitton discovered that the websites were using IP addresses assigned to defendants Managed Solutions Group, Inc. ("MSG") and Akanoc Solutions, Inc. ("Akanoc") MSG and Akanoc were in the web hosting business. Defendant Steven Chen managed both MSG and Akanoc, which were based in San Jose, California. According to the defendants, MSG leased servers, bandwidth, and IP addresses to Akanoc. Akanoc, in turn, operated the servers and otherwise ran the business. Akanoc leased packages of server space, bandwidth, and IP addresses to its customers. Some of Akanoc's customers were located outside the United States. According to Louis Vuitton, the customers who directly infringed the trademarks and copyrights were based in China. From 2006 to 2007, Louis Vuitton sent the defendants at least 18 Notices of Infringement ("NOIs") documenting trademark and copyright infringement occurring on numerous websites hosted by the defendants. The NOIs demanded that the defendants either remove the infringing content from their servers or require their customers to do so. Louis Vuitton received no response from the defendants. Although the defendants asserted that they took regular steps to curb any infringement by websites using their servers, the defendants were not able to identify any actions taken in response to the notices sent by Louis Vuitton, and the websites continued to operate using servers and IP addresses owned by the defendants. Louis Vuitton sued MSG and Chen for contributory copyright and trademark infringement, contending that the Defendants were liable for their role in hosting websites that directly infringed Louis Vuitton's trademarks and copyrights. Louis Vuitton maintained that the defendants had actual knowledge of the websites; activities, that the defendants knowingly avoided learning the full extent of the infringing activities and deliberately disregarded Louis Vuitton's notification, that they knowingly enabled the infringing conduct by hosting the websites and willfully permitting websites to display the products, and that Louis Vuitton suffered irreparable harm and damage as a result of the defendants' conduct. The case went to trial and the jury returned a verdict for Louis Vuitton, holding Akanoc, MSG, and Chen liable for contributory infringement of 13 Louis Vuitton's trademarks, and two Louis Vuitton's copyrights. The jury also found that the defendants acted willfully. It awarded $300,000 in statutory damages for willful copyright infringement of the copyrights against each defendant, for a total of $900,000. After the verdict, the defendants moved for judgment as a matter of law, requesting among other things that the court discard the jury verdict. The District Court granted the post-trial motion as to MSG, concluding that there was no evidence indicating that MSG sold domain names, operated the servers, or did anything more than own and lease the hardware operated by Akanoc and Chen. The District court denied the motion as to Akanoc and Chen, awarded statutory damages, and entered a permanent injunction restricting them from engaging in similar conduct. Akanoc and Chen appealed. Louis Vuitton cross-appealed the District Court's order granting judgment as a matter of law in favor of MSG. On appeal, Akanoc and Chen maintained that the District Court erred in instructing the jury and in denying their post-trial motion for judgment as a matter of law. Louis Vuitton cross-appealed the District Court's order granting judgment as a matter of law for MSG. The primary issue on appeal was whether the District Court properly instructed the jury on awarding damages as to each defendant. Concluding that there was error, the USCA vacated the damage awards and remanded to the District Court with instructions to enter an award consistent with the USCA's opinion. In all other respects, the USCA affirmed. Specifically, it affirmed the District Court on all issues of liability raised by the appeal and cross-appeal. But it vacated the judgment and remanded with instructions that the District Court award statutory damages in the amount of $10,500,000 for contributory trademark infringement and $300,000 for contributory copyright infringement, for which Akanoc and Chen shall be jointly and severally liable. Kozinski, Hawkins, and Gould (author), Circuit Judges. J.A. Coombs of Glendale, CA, for the plaintiff-appellee- cross-appellant; D. Gauntlett of Irvine, CA, for the defendants-appellants. (Download the full text of this decision at www.ce9.uscourts.gov/) 4) COPYRIGHT INFRINGEMENT: Apple Inc. v. Psystar Corp., 10-15113 (9th Cir. Sept. 28, 2011). This case concerned the doctrine of "copyright misuse" as developed in the wake of the technological revolution of the last 30 years. The plaintiff-appellee, Apple, Inc., is one of the leading producers of innovative technological hardware and software that has spurred enormous consumer demand for ever evolving technology. The defendant-appellant, Psystar Corp., is a small computer manufacturer. Apple brought this action against Psystar for copyright infringement because Psystar was using Apple's software on Psystar computers. The District Court found that Psystar was infringing Apple's federally registered copyrights in its operating software, Mac OS X, because Psystar was copying Mac OS X for use in Psystar's computers. Apple, Inc. v. Psystar Corp. (Apple I), 673 F. Supp. 2d 931, 935-40 (N.D. Cal. 2009). That finding was not challenged on appeal. The District Court also rejected Psystar's copyright misuse defense that asserted the unenforceability of Apple's Software License Agreement ("SLA"), requiring Mac OS X users to run their copies on Apple computers. Id. at 939-40. Psystar appealed that ruling, as well as the District Court's order enjoining Psystar's continuing infringement of the Apple software. Psystar also appealed seven separate orders in which the District Court granted Apple's motions to seal documents on grounds of maintaining confidentiality. Psystar's principal argument on appeal was that the District Court should have held that the license agreement constituted an unlawful attempt to extend copyright protection to products that are not copyrightable. The heart of Psystar's argument was that the Copyright Act affords Apple protection only against unauthorized copying and distribution of the operating software, but not on its use once it is purchased. Thus, because Psystar purchased unopened copies of Mac OS X and included these copies when it sold its computers, Psystar maintained that the Copyright Act was inapplicable and its alterations permissible. Psystar maintained that the Fifth Circuit's decision in Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772 (5th Cir. 1999), involves a similar situation and that the USCA should follow it. The USCA affirmed in part and remanded in part. First, in entering its injunction the District Court properly applied the Supreme Court's four eBay factors. See eBay Inc. v. MercExchange, L.L.C., 547 US 388, 391 (2006) (finding that well-established principles of equity require a plaintiff seeking injunctive relief to satisfy a four-factor test). Specifically, the District Court determined that: 1) Apple suffered an irreparable injury; 2) remedies available at law are inadequate to compensate for that injury; 3) considering the balance of hardships between Apple and Psystar, a remedy in equity is warranted; and 4) the public interest would not be disserved by a permanent injunction. The USCA affirmed the injunction. Second, the USCA agreed with Psystar that on the issue of sealing records, the USCA found no adequate basis in the record to support sealing any Apple records on grounds of confidentiality. The USCA applied the presumption in favor as access and vacated the District Court's sealing orders. Schroeder (author), Thomas, and Gould, Circuit Judges. G. Riley of San Francisco, CA, for the plaintiff-appellee; K. Camara of Houston, TX, for the defendant-appellant. (Download the full text of this decision at www.ce9.uscourts.gov/) 5) TAXATION / FRAUD ON THE COURTS: USA v. Stonehill, 10-35789 (9th Cir. Sept. 28, 2011). Harry Stonehill and Robert Brooks ("the taxpayers") appealed the District Court's denial of their Rule 60(b) motion to vacate a 1967 tax judgment against them. Based on evidence discovered through the Freedom of Information Act ("FOIA"), the taxpayers argued that the government committed fraud on the court during their 1967 suppression hearing, USA v. Stonehill, 274 F.Supp. 420 (S.D. Cal. 1967) ("Stonehill I"), and during their subsequent appeal to the USCA, USA v. Stonehill, 405 F.2d 738 (9th Cir. 1968) ("Stonehill II"). The USCA concluded that, although the evidence uncovered by the taxpayers showed misconduct on the part of the government, that misconduct was insufficient to demonstrate fraud on the court. Any misrepresentations or false statements made by government witnesses or attorneys were on largely tangential issues and did not substantially undermine the judicial process by preventing the District Court or the USCA from analyzing the case. The USCA thus rejected the taxpayers' fraud-on-the court claim. The taxpayers also argued that the judgment should be vacated under USA v. Throckmorton, 98 US 61 (1878), because William Saunders, the taxpayers' business associate who sometimes served as their attorney, gave information to the government. Because the taxpayers failed to show that Saunders was their attorney rather than their business associate at the time he informed on the taxpayers, the USCA rejected their Throckmorton claim and affirmed the judgment of the District Court. Kozinski, Reavley, and W. Fletcher (author), Circuit Judges. R. Hutter of Washington, DC, for the appellee; R. Heggestad of Washington, DC, for the respondent. (Download the full text of this decision at www.ce9.uscourts.gov/) 6) TAXATION / SECURITIES LOANS: Samueli v. CIR, 09-72457 (9th Cir. Sept. 15, 2011). At issue on this appeal was whether a "securities loan" with a fixed term of at least 250 days and possibly as long as 450 days, entered into not for the purpose of providing the borrower with access to the lent securities, but for the purpose of avoiding taxable income for the lender, qualifies for non-recognition treatment as a securities loan pursuant to 26 USC Sec. 1058. The USCA held that it does not. As a general rule, any sale or other disposition of property is a taxable event. 26 USC Sec. 1000(c). Prior to 1978, there was uncertainty regarding the application of this general rule to securities lending transactions-transactions developed in response to the needs of securities brokers who frequently faced delays in obtaining securities to deliver to purchasers and thus were forced to borrow the required securities from organizations and individuals who held such securities in their investment portfolios. In 1926, the Supreme Court had held that the passage of securities from lender to borrower pursuant to a securities lending agreement, and then back again from borrower to lender at the end of the loan term, were taxable events. Provost v. USA, 269 US 443, 459 (1926). Subsequent IRS rulings, however, declared that these transactions were not taxable events. See Rev. Rul. 57-451, 1957-2 C.B. 295, 1957 WL 11085. In 1978, Congress sought to clear up this confusion by enacting Sec. 1058, which provides that securities lending transactions will not be treated as taxable dispositions. The Senate Finance Committee recognized that these transactions are "desirable" because they reduce the chances that brokers will fail to deliver securities to purchases within the time required by the relevant market rules. Senate Report at 5, 1978 U.S.C.C.A.N. at 1291. Under Sec. 1058, when a taxpayer transfers securities under an agreement that meets certain requirements "no gain or loss shall be recognized on the exchange of such securities by the taxpayer for an obligation under such agreement or on the exchange of rights under such agreement by the taxpayer for securities identical to the securities transferred by that taxpayer." To qualify for non-recognition under Sec. 1058, an agreement must: "(1) provide for the return to the transferor of securities identical to the securities transferred; (2) require that payment shall be made to the transferor of amounts equivalent to all interest, dividends, and other distributions which the owner of the securities is entitled to receive during the period beginning with the transfer of the securities by the transferor and ending with the transfer of identical securities back to the transferor; [and] (3) not reduce the risk of loss or opportunity for gain of the transferor of the securities in the securities transferred." Sec. 1058(b). Congress' explicit goal in enacting Sec. 1058 was to encourage loans for the benefit of brokers who needed large supplies of securities on hand to deliver to purchasers, because such loans "can have a favorable impact on the liquidity of securities markets." Senate Report at 6, 1978 U.S.C.C.A.N. at 1292. It may be possible that non-recognition treatment should be given to a transaction that fails to meet all of the requirements of Sec. 1058(b), but that nonetheless is motivated by the goals that Congress had in mind when it enacted Sec. 1058. But the loan in the present case, a tax shelter marketed as such for which the borrowing broker did not pay the lender any consideration, clearly was not "the thing which the statute intended." Gregory v. Helvering, 293 US 469, 469. Even the ABA Committee Report on Securities Lending Transactions ("ABA Report), 91 Tax Notes Today 107-33 (May 15, 1991), Section IV.2, favored the position that a loan transaction must share the motivations indicated by Congress to receive non-recognition treatment: the ABA Committee suggested that Treasury issue a regulation requiring that a Sec. 1058 securities loan be entered by the borrow for the purposes which Congress intended. ABA Report, Sec. IV.2. "Exceptions to the general rule requiring the recognition of all gains and losses on property dispositions are to be "'strictly construed and do not extend either beyond the words or the underlying assumptions and purposes of the exception.'" Teruya Bros., Ltd. v. CIR, 580 F.3d at 1043 (quoting 26 CFR Sec. 1.1002-1(b). Tashima (author) and Rawlinson (concurring), Circuit Judges, and Rakoff, District Judge. R. Lipton of Chicago, IL, for the petitioners-appellants; B. Hauser of Washington, DC, for the United States. (Download the full text of this decision at www.ce9.uscourts.gov/) 7) BANKRUPTCY / TAXATION: In re Jones, 10-60000
(9th Cir. The opinion filed July 12, 2011 has been withdrawn and replaced with
the opinion filed Sept. 14 12, 2011). At issue on this bankruptcy appeal was a
tax debt owed by Jones to the California Franchise Tax Board ("FTB").
The Bankruptcy Court and the Bankruptcy Appellate Panel ("BAP") found
that the debt was not "excepted" from discharge in Jones' Chapter 7
bankruptcy proceeding. Although debts arising before a discharge order in a Chapter
7 proceeding generally are discharged, certain tax debts are excepted. 11 Secs.
727(b), 523(a)(1)(A), and 507(a)(8). A statute of limitations known as the "three-year
lookback period," carves out tax debts arising from a taxable year ending
on or before the bankruptcy petition is filed and for which the return was last
due no more than three years before the petition was filed. Sec. 507(a)(8)(A);
Young v. USA, 535 43, 46 (2002). Because Jones' tax debt arose more than
three years before she filed her Chapter 7 bankruptcy petition, it would be discharged
unless the lookback period is suspended Sec. 507(a)(8) because, as relevant here,
an automatic stay precludes the creditor from collecting on the debt. The only
automatic stay provisions potentially at issue on this appeal were those precluding
creditors from pursuing collection actions against the property of the bankruptcy
estate. See 11 USCA Secs. 362(a)(3) and (4). The FTB argued that, as a consequence
of Jones' prior Chapter 13 bankruptcy case, the lookback period was suspended
and the tax debt was not discharged. The USCA was not persuaded. When the Bankruptcy
Court confirmed Jones' Chapter 13 plan, the estate property revested in Jones
and became Jones' property, thus lifting the applicable stay provisions. Id.
Secs. 362(a)(3) and (4). Since this revesting occurred before the tax debt
came due, no stay precluded the FTB from collecting on the debt under Sec. 362.
The tax debt thus was not excepted from the Chapter 7 discharge, and the principles
of equitable tolling did not apply to extend the lookback period as the FTB was
not precluded from collecting on the tax debt and it did it actively try to protect
its claim. The USCA thus held that the debt was discharged and affirmed the BAP.
D.W. Nelson, McKeown (author), and Gould, Circuit Judges. J. Hee of Oakland,
CA, for the appellant; M. Cline of Oakland, CA, for the debtor-appellant. (Download
the full text of this decision at www.ce9.uscourts.gov/)
9) DEBT COLLECTION: Gonzales v. Arrow Financial Services, LLC, 10-55379 (9th Cir. Sept. 23, 2011). Arrow Financial Services is a debt buyer and collector. It purchases consumer debts that have been written off by the original creditor. Most debt buyers acquire debts for a fraction of the balance, and then attempt to collect the entire debt. In 2002, Arrow purchased a portfolio of debts owed to health clubs. All of these debts were more than seven years old; accordingly, pursuant to the Fair Credit Reporting Act, 15 USC Sec. 1681c(a)(4), none of these debts could be reported to a credit reporting agency. They were, to use industry parlance, "obsolete." Federal Trade Comm'n v. Gill, 265 F.3d 944, 948 (9th Cir. 2001) (citing 15 USC Sec. 1681c(a)) As a general practice, Arrow did not report obsolete debts. In 2004, Arrow attempted to collect on the health clubs portfolio of debts by sending substantially identical letters to nearly 40,000 California residents. One of those residents was Johnny Gonzales, the named plaintiff in this action. The letter informed Gonzales that he owed a "Past Due Balance" to "Holiday Spa of Calif." In bold letters, the letter instructed Gonzales to "Please see reverse side for important information." The important information was the following: "NOTICE TO CALIFORNIA RESIDENTS: As required by law, you are hereby notified that a negative credit report reflecting your credit record may be submitted to a credit reporting agency if you fail to fulfill the terms of your credit obligations." All in all, the letter referred to credit bureaus three times. It twice stated that if Arrow is reporting the debt, it will notify credit bureaus once the settlement funds clear, and also provides a notice that if a consumer fails to fulfill his credit obligations, negative information may be submitted to a credit reporting agency. On receipt of the letter, Gonzales conducted an independent investigation and determined that Arrow could not legally report the debt to any credit bureau. On January 28, 2005, he filed suit on behalf of himself and a putative class, claiming violation of the Fair Debt Collection Practices Act ("FDCPA") and California's Rosenthal Fair Debt Collection Practices Act ("Rosenthal Act"), because the letter would likely cause recipients to believe that their failure to pay the debts would result in negative credit reports. The District Court certified a class to include 39,727 similarly situated Californians, and designated Gonzales as the class representative. On June 8, 2007, the District Court granted summary judgment to Gonzales on the issue of liability under the FDCPA and Rosenthal Act. The District Court then held a jury trial to determine the amount of damages. It instructed the jury that class members could receive separate statutory damages pursuant to eh FDCPA and Rosenthal Act claims. The jury awarded Gonzales $250 on the FDCPA claim and an addition $250 on the Rosenthal Act claim. It then awarded the class members $112,500 on the FDCPA claim and $112,500 on the Rosenthal Act. The total damages awarded were $225,500. Arrow appealed. It maintained that the Rosenthal Act does not permit class actions, and that permitting class plaintiffs to recover statutory damages under both the FDCPA and Rosenthal Act violates the FDCPA. The USCA disagreed with Arrow's contentions and affirmed the District Court. It noted that in adopting the FDCPA, Congress emphasized that "means other than misrepresentation and other abusive debt collection practices are available for the effective collection of debts." 15 USC Sec. 1692(b). The USCA held that the letters misleadingly implied that Arrow had the ability to report obsolete debts to credit bureaus and impliedly threatened to make such reports. The letters thus violated Sec. 1692e(5) and e(10 of the FDCPA. The USCA recognized that the FDCPA did not pre-empt consistent state action, including cumulative recovery of statutory damages under state law. The Rosenthal Act's remedies are cumulative and available even when the FDCPA affords relief. Judge Smith dissented. He thought the plaintiffs could not obtain double statutory damages under FDCPA. He also thought that the plaintiffs could not receive duplicative statutory damages awards under California law, because the California legislature adopted provisions identical to the FDCPA when it amended the Rosenthal Act. In addition, construing adopted FDCPA remedy provisions to provide duplicative awards invites preemption because such awards will undermine the statute's protective cap on statutory damages. B. Fletcher (author) and N.R. Smith (dissenting), Circuit Judges, and J. Gwin, District Judge. D. Schultz of Chicago, IL, for the defendant-appellant; E. Arleo of Ramona, CA, for the plaintiff-appellee. (Download the full text of this decision at www.ce9.uscourts.gov/) 10 BANKRUPTCY / PUBLIC ACCESS TO LITIGATION DOCUMENTS:
In re Matter of Roman Catholic Archbishop of Portland, Oregon, 10-35206
(9th Cir. Sept. 21, 2011). Documents produced in discovery and filed in the Bankruptcy
Court contained allegations that Fathers M and D, two priests who were not parties
to the Portland Archdiocese's bankruptcy case, had sexually abused children. The
Bankruptcy Court held that the documents at issue could be disclosed to the public
because the public's interest in disclosure outweighed the priests' privacy interests
under Rule 26(c) of the Federal Rules of Civil Procedure. The Bankruptcy Court
also held that the documents could be disclosed to the public because they did
not contain "scandalous" allegations for purposes of 11 USC Sec. 107(b).
The District Court affirmed. The USCA affirmed in part and reversed in part. The
Portland Archdiocese was the subject of multiple lawsuits seeking millions of
dollars in compensatory and punitive damages for sexual abuse of children by specific
clergy members of the Archdiocese. In July 2004, while the tort claimants' lawsuits
were pending, the Archdiocese filed for Chapter 11 bankruptcy protection. The
bankruptcy case thus became the forum for many of the proceedings relating to
the tort claims. The appellees (referred to here as Appellee Claimants) were a
subset of the many tort claimants who were parties to the bankruptcy case. (There
are about two dozen Appellee Claimants out of over 140 tort claimants.) After
the Chapter 11 filing, the Bankruptcy Court scheduled mediation to give the tort
claimants and the Archdiocese and opportunity to settle the tort claims. Before
mediation commenced, the tort claimants sought discovery regarding their claims
pursuant to Rule 26 (which is made applicable to bankruptcy proceedings by Federal
Rule of Bankruptcy Procedure 7026). In order to prove that the Archdiocese had
engaged in a pattern and practice of misconduct, the tort claimants sought discovery
regarding all reports of sexual abuse by priests within the Archdiocese, not just
reports regarding the priests who were the defendants in the tort suits. The Bankruptcy
Court entered two orders governing pre-mediation discovery, both dated January
14, 2005. The first order directed the Archdiocese to produce the personnel files
of 37 accused priests identified by the Archdiocese for the "John Jay Study,"
a national study of clergy abuse commissioned by the U.S. Conference of Catholic
Bishops, and to make available four officials for deposition. Second, the Court
entered a stipulated protective order, which had been negotiated between the Archdiocese
and the tort claimants. The protective order allowed the Archdiocese to designate
"any and all documents produced pursuant to the [first discovery] order"
as confidential. Among the documents disclosed pursuant to the Bankruptcy Court's
discovery order were the personnel files of Father M and Father D. The Archdiocese
produced these files only because their names were included in the John Jan Study;
neither had been sued by the tort claimants. Father M, 72 years old, had left
Portland in 2000 or 2001, and Father D, 88 years old, had retired in 1989. Neither
was notified about the parties' negotiation of the discovery order, and neither
was notified that their files had been disclosed. Their personnel files, along
with the others, were filed under seal in the bankruptcy case. During 2007, the
Archdiocese and the tort claimants engaged in negotiations regarding both the
damage claims and the scope of disclosure of documents produced in the bankruptcy
filing. In connection with the negotiations to settle the damage claims, the Appellee
Claimants filed a memorandum on March 6, 2007, which "summarized the pattern
and practice evidence and the punitive damages evidence in support of the estimation"
of five unresolved tort claims. The memorandum included, as attachments, the clergy
personnel files of 27 priests (including Father M and Father D), plus deposition
excerpts and other documents. These documents were filed under seal pursuant to
the court's protective order. The tort claimants (including the Appellee Claimants)
settled most of the claims against the Archdiocese. While these settlement talks
were underway, the parties also negotiated the scope of release of bankruptcy
documents. Counsel for several tort claimants (but not Appellee Claimants) invoked
paragraph 7 of the protective order, notifying the Archdiocese of their intent
to release some 1,760 pages of material produced by the Archdiocese in discovery
as well as deposition transcripts. As was their right under the protective order,
the Archdiocese and nine individual priests moved the Bankruptcy Court to prevent
the release of the discovery material. The parties entered into a new round of
negotiations regarding which sealed documents would be made public. Fathers M
and D were not part of these negotiations. On May 24, 2007, counsel for the tort
claimants informed the Bankruptcy Court that the parties had agreed to a resolution.
As a result of this agreement, the Archdiocese released over 2,000 documents and
posted them to a public website. This resolution did not bind the Appellee Claimants.
On September 28, 2007, the Bankruptcy Court closed the Archdiocese's Chapter 11
case, retaining jurisdiction over any pending adversary proceedings. The conclusion
of the Archdiocese's bankruptcy proceedings did not, however, resolve whether
there would be public disclosure of documents designated as confidential or filed
under seal. The Appellee Claimants, who were not bound by the May 24, 2007 mediation
agreement, filed a motion to unseal the punitive damage estimation memorandum
and exhibits filed as part of the successful negotiations to settle the tort claims.
The Appellee Claimants also notified the Archdiocese that they intended to release
all personnel records from the clergy filed that were produced in discovery. The
Archdiocese opposed the Appellee Claimants' motion to unseal the court documents
and also sought an order preventing the disclosure of the discovery documents.
A number of priests whose filed stood to be released, including Fathers M and
D, filed similar motions. After a hearing in which counsel for Fathers M and D
participated, the Bankruptcy Court ruled in favor of the Appellee Claimants. The
Court first considered the personnel records produced in discovery. Applying Rule
26(c), it concluded that the Archdiocese had not demonstrated "good cause"
sufficient to overcome the presumption of public access to the names of and allegations
against the accused clergy, although there was good cause to redact the addresses,
social security numbers, financial information, and family information of those
priests. This ruling applied with equal force to the personnel files of Fathers
M and D. The Bankruptcy Court also considered the Appellee Claimants' motion to
make public certain deposition transcripts and attached exhibits, and held that
even if these documents were covered by the protective order, no party had opposed
the Appellee Claimants' motion or shown good cause to continue any protection.
Accordingly, the Bankruptcy Court also permitted their release. Second, it considered
whether 11 USC Sec. 107 precluded the release of attachments to the Appellee Claimants'
punitive damage estimation memorandum that had been filed with the court. The
priests argued that the personnel files attached to the memorandum contained "scandalous"
materials, and thus qualified for the exception to disclosure in Sec. 107(b).
The Bankruptcy Court rejected this argument. It defined the word "scandalous"
to mean a document that improperly casts a derogatory light on someone,"
and determined that the Appellee Claimants were not using the personnel filed
for an improper purpose. It thus ordered the release of the files. Fathers M and
D appealed the Bankruptcy Court's order to the District Court which affirmed.
Fathers M and D then appealed. The Bankruptcy Court stayed the order pending the
outcome of this this appeal. 11) REAL ESTATE FORECLOSURES: Maya v. Centex Corp., 10-55658 (9th Cir. Sept. 21, 2011). This case arose against the backdrop of the national housing crisis. Nationwide, foreclosures are increasing, construction and purchase of new homes is decreasing, and home values are plummeting. The plaintiffs are individual homeowners who purchased houses in new developments constructed by one of eight large national home-builders between 2004 and 2006. Each of them made a down payment of 20% or more of the home's purchase price. The defendants are some of the nation's largest housing developers, and include the developers' parent companies and subsidiary mortgage companies. The plaintiffs sought damages, attorneys' fees and costs, as well as the option to rescind their home purchases due to the defendants' alleged fraud, negligent misrepresentation, breach of implied covenant of good faith and fair dealing, and violations of California's Business and Professional Code ("CBPC"). They also sought an injunction prohibiting the defendants from continuing to engage in practices violating the CBPC, or providing mortgage services or financing to buyers purchasing homes from the defendants. The plaintiffs claimed that the defendants represented that they were building "stable, family neighborhoods occupied by owners of the homes." According to the plaintiffs, "implicit in this marketing scheme was that the defendants were making a good-faith effort to sell homes to buyers who they expected could afford to buy the houses and would be stable neighbors." Nevertheless, the defendants marketed houses to "unqualified buyers who posed an abnormally high risk of foreclosure." Similarly, the plaintiffs claimed that the defendants represented that they "discourage speculation …[and] intended to sell homes only to people who will occupy them" but sold homes to investors who had no intent to reside in the homes and were more likely to walk away from the homes in times of economic hardship. The plaintiffs claimed that these misrepresentations and omissions were part of a comprehensive scheme to increase the defendants' profits. They alleged that the defendants financed at least 65% of the mortgages on homes in their communities. The plaintiffs maintained that by marketing homes to high-risk buyers, and by financing buyers who may not have been able to obtain other financing, the defendants created a "buying frenzy" that artificially increased demand and home prices. They maintained that the defendants' marketing and lending practices were material information "related both to the value of their houses and the desirability of the properties." They alleged that if the defendants "had made such disclosures, Plaintiffs would not have purchases the houses from Defendants and/or would not have paid an inflated price for the house." The plaintiffs further maintained that since they purchased their homes, "as was inevitable, … these unqualified and high-foreclosure-risk buyers began to default on their loans leading to foreclosures and short sales." Their neighborhoods allegedly have had "a number of foreclosures and short sales that have resulted in a substantial loss of value to the surrounding homes." They alleged that the loss was "much greater than if their houses had been located in a neighborhood where Defendants' scheme … did not occur." The plaintiffs also maintained that the foreclosures and short sales "drastically altered" the "desirability" of their properties and neighborhoods, resulting in abandoned houses, multiple families living in one home, transient neighborhoods, and increased crime. The plaintiffs' claims fell into two categories. They alleged injuries that occurred at the time of sale: namely, that they paid more for their homes than they were actually worth at the time, and that they would not have purchased their homes had the defendants' made the proper disclosures. These claims were referred to as the plaintiffs' "overpayment" and "rescission" claims. The plaintiffs also alleged injuries that occurred after the sale: that their homes have decreased in economic value and desirability as places to live. These claims were referred to as the plaintiffs "decreased value" and "decreased desirability" claims. In some ways, the facts present in this case echo national trends, but at issue on appeal was a narrow question: whether individuals who purchased homes in new developments have standing to sue developers for injuries allegedly cause by the developers' practice of marketing neighboring homes to individuals who presented a high risk of foreclosure and abandonment of their homes, financing those high-risk buyers, concealing that information, and misrepresenting the character of the neighborhoods. The District Court held that the plaintiffs did not have standing because none of the alleged injuries amounted to a concrete, non-conjectural injury-in-fact, and that there was no sufficiently strong causal connection between any injury and the defendants' conduct. It also denied the plaintiffs leave to amend their complaints. The USCA reversed and remanded for further proceedings. It held that the District Court erred in dismissing the plaintiffs' overpayment and rescission claims for lack of Article III standing. It also held that the plaintiffs' decreased economic value and desirability were cognizable injuries. While it agreed with the District Court that, on the record, the plaintiffs had not established a sufficient causal connection between any decreased value and desirability and the defendants actions, the plaintiffs should be permitted to amend their complaint and attach expert testimony on causation. B. Fletcher (author) and Thomas, Circuit Judges, and Gertner, District Judge. A. Bierstein of New York, NY, for the plaintiffs-appellants; N. Garrett of Irvine, CA, for the defendants-appellees. (Download the full text of this decision at www.ce9.uscourts.gov/) 12) UNFAIR COMPETITION / FALSE ADVERTISING LAW: Degelmann v. Advanced Medical Optics, Inc., 10-15222 (9th Cir. Sept. 28, 2011). Alexis Degelmann and Joseph Lim represented a putative class ("the class") of purchasers of contact lens solution. They appealed the District Court's order granting summary judgment for the defendant, Advanced Medical Optics, Inc. ("AMO"). Their lawsuit alleged that AMO violated California's Unfair Competition Law ("UCL") and False Advertising Law ("FAL") by marketing Complete MoisturePlus ("MoisturePlus") as a product that cleans and disinfects lenses. The District Court ruled that Degelmann and Lin lacked standing. On appeal, AMO argued that the District Court's ruling was not error, and even if it was, the suit was properly dismissed because the class' claims were preempted under 21 USC Sec. 360k(a) of the Medical Devices Amendments of 1976 ("MDA"). The USCA affirmed. Between 2003 and 2007, AMO marketed and sold MoisturePlus. In May 2007, the Food and Drug Administration ("FDA") and U.S. Centers for Disease Control and Prevention reported an increase of a serious eye infection-Acanthamoeba keratitis ("AK")-associated with the use of MoisturePlus. AMO recalled MoisturePlus and instituted a refund program for unused product. Contact lens users who contracted AK after using MoisturePlus filed suit in various venues. Members of the plaintiffs' class in the present case were MoisturePlus users, but none had contracted AK. In addition, no class member lost money by discarding unused MoisturePlus. Rather, Degelmann and Lin filed suit under California laws that proscribe false advertising and misleading marketing practices. Degelmann and Lin alleged that AMO marketed MoisturePlus as an effective contact lens disinfectant and cleaner, but that in fact its users were seven times more likely than users of other contact lens solutions to suffer an AK infection. They also claim that AMO knew that MoisturePlus was a poor disinfectant compared to other similar products, and that the company misled consumers into believing MoisturePlus was as effective as other solutions. Degelmann and Lin maintained that but for the inaccuracy of AMO's labeling practices, they would not have purchases Moisture Plus. The District Court invited AMO to file an "early motion for summary judgment" regarding standing and preemption. It granted AMO's motion, ruling that the class does not have standing. The District Court found that the class members have not suffered an injury in fact because (1) they never contracted AK, so they suffered no harm from use of MoisturePlus, (2) they were not forced by the product recall to discard unused product, and (3) they did not lose money because if they had not bought MoisturePlus, they would have bought another lens solution. Because the District Court ruled that the class did not have standing, it did not reach the issue of whether the class' claims were preempted. The USCA affirmed. It found that while the District Court incorrectly concluded that the class of plaintiffs lacked standing, the record demonstrates that the class claims were expressly preempted by 21 USC Sec. 360. The USCA thus affirmed the summary judgment on that ground. Noonan (author) and N.R. Smith, Circuit Judges, and Collins, District Judge. J. Sagafi of San Francisco, CA, for the plaintiffs-appellants; B. Whitwell of San Francisco, CA, for the defendant-appellee. (Download the full text of this decision at www.ce9.uscourts.gov/) 13) EQUAL PROTECTION / DON'T ASK, DON'T TELL POLICY: Log Cabin Republicans v. USA, 10-56634 (9th Cir. Sept. 29, 2011). In 1993, Congress enacted the "Don't Ask, Don't Tell" policy which required that a military service member be separated from the military if he/she had engaged or attempted to engage in homosexual acts, state that he is a homosexual, or married or attempted to marry a person of the same sex. 10 USC Sec. 654(b) (repealed). The Log Cabin Republicans ("LCR"), a nonprofit corporation, brought this law suit in 204, challenging Sec. 654 and its implementing regulations as facially unconstitutional under the due process clause of the Fifth Amendment, the right to equal protection guaranteed by the Amendment, and the First Amendment right to freedom of speech. LCR sought a declaration that the policy is facially unconstitutional and an injunction barring the United States from applying the policy. The District Court dismissed the equal protection claim under Witt v. Dept. of the Air Force, 527 F.3d 806 (9th Cir. 2008) (upholding Sec. 654 against a facial equal protection challenge), but allowed the due process and First Amendment challenges to proceed to trial. After a bench trial in October 2010 the District Court ruled that Sec. 654 on its face violates due process and the First Amendment. The court permanently enjoined the government from applying Sec. 654 and its implementing regulations to anyone. The U.S. appealed; LCR cross-appealed the dismissal of its equal protection claim. While the appeal was pending, Congress enacted the Don't Ask, Don't Tell Repeal Act of 2010. It provides that Sec. 654 would be repealed 60 days after: (1) the Secretary of Defense received a report determining the impact of repealing Sec. 654 and recommending any necessary changes to military policy, and (2) the President, Secretary of Defense, and Chairman of the Joint Chiefs of Staff certify that they had considered the report's recommendations and were prepared to implement the repeal consistent with military readiness, military effectiveness, and unit cohesion. Repeal Act Sec. 2(b). The Repeal Act left Sec. 654 in effect until the prerequisites to repeal were satisfied and 60 days had then passed. The report was issued November 30, 2010, and certification occurred July 21, 2011. Section 654 was thus repealed September 20, 2011. Because Sec. 654 was repealed, the USCA had to determine whether this case was moot. "It is not enough that there may have been a live case or controversy when the case was decided by the court whose judgment" is under review. Burke v. Barnes, 479 US 361, 363 (1987). Article III of the U.S. Constitution "requires that there be a live case or controversy at the time that" a reviewing federal court decides the case." Id. Applying that limitation, the Supreme Court and the USCA have repeatedly held that a case is moot when the challenged statute is repealed, expires, or is amended to remove the challenged language. In determining whether a case has become moot on appeal, the appellate court "reviews the judgment below in light of the … statute as it now stands, not as it … did" before the District Court. Hall v. Beals, 396 US 45, 48 (1969) (per curiam); see Burke, 479 US at 363. The USCA found that the present suit became moot when the repeal of Sec. 654 took effect on September 20. If LCR filed suit today seeking a declaration that Sec. 654 is unconstitutional or an injunction against its application (or both), there would be no Article III controversy because there is no Sec. 654. The repeal gave LCR "everything" its complaint "hoped to achieve. Chem. Producers & Distribs. Ass'n v. Helliker, 463 F.3d 871, 876. There was no longer "a present, live controversy of the kind that must exist" for the USCA to reach the merits. Hall, 396 US at 48. Judge O'Scannlain fully concurred in the opinion, but wrote separately because the USCA's inability to reach the merits may leave uncertainty about the role Lawrence v. Texas, 539 US 558 (2003), may have in substantive due process challenges. Although Congress spared the USCA the need to reach the merits in this case, other such challenges will come to the courts. Because "guideposts for responsible decision-making on matters of substantive due process are "scarce and open ended," Collins v. City of Harker Heights, 503 US 115, 125 (1992), Judge O'Scannlain thought it useful to explain how courts should approach the application of Lawrence in appropriate cases. Alarcon, O'Scannlain (concurring), and Silverman, Circuit Judges. Per Curiam. H. Whitaker of Washington, DC, for the defendants-appellants / defendants-appellees; D. Woods of Los Angeles, CA, for the plaintiff-appellee / plaintiff-appellant. (Download the full text of this decision at www.ce9.uscourts.gov/) 14) ANTI-SOLICITATION LAW: Comite De Jornaleros v.
Redondo Beach, 06-55750 (9th Cir. Sept. 16, 2011). A pair of day-laborers
organizations challenge a City of Redondo Beach anti-solicitation ordinance that
bars individuals from "stand[ing] on a street or highway and solicit[ing],
or attempt[ing] to solicit, employment, business, or contributions from an occupant
of any motor vehicle." Redondo Beach Municipal Code Sec. 3-7.1601(a) ("the
Ordinance"). The USCA affirmed the District Court's ruling. It agreed with
the day laborers that the Ordinance is a facially unconstitutional restriction
on speech. The USCA's analysis was guided by well-established principles of First
Amendment law. In public places such as streets and sidewalks, "the State
[may] enforce a content-based exclusion" on speech if the "regulation
is necessary to serve a competing state interest and that it is narrowly drawn
to achieve that end." Perry Educ. Ass'n v. Perry Local Educators' Ass'n,
460 US 37, 45 (1983). For content-neutral regulations, the State may limit "the
time, place, and manner of expression" if the regulations are "narrowly
tailored to serve a significant government interest, and leave open ample alternative
channels of communications." Id. The USCA concluded that the Ordinance
failed to satisfy the narrow tailoring element of the Supreme Court's "time,
place, and manner" test. The Ordinance is not narrowly tailored because it
regulates significantly more speech than is necessary to achieve the City's purpose
of improving traffic safety and traffic flow at two major Redondo Beach intersections,
and the City could have achieved these goals through less restrictive measures,
such as the enforcement of existing traffic laws and regulations. Because the
Ordinance does not constitute a reasonable regulation of the time, place, or manner
of speaking, it is facially unconstitutional. Concurring with the judgment, Judge
Gould agreed that the City did not narrowly tailor its ordinance, nor meet its
burden to show that the Ordinance leaves open ample alternative channels of communication
for day laborers. If the City had designated a permissible area for day laborer
solicitation, in a convenient location for day laborers and potential employers
alike, Judge Gould would hold that the Ordinance was a reasonable time, place,
and manner restriction. He thought it was error to make it so hard for municipalities
to satisfy the test for reasonable restraints on time, place, and manner of speech
that these municipalities cannot achieve important public goals like traffic safety
while preserving speech. Because here the day laborers were shut out of the City
and left without any practical way to reach their intended audience with a message
of job solicitation, and because the City's goals could have been effectively
accomplished with a narrower ordinance that did not cover all streets and that
recognized permissible solicitation locations, Judge Gould concurred in the judgment.
Judge M.D. Smith, joined by Thomas, specially concurred. He agreed with the majority
that the Ordinance was not narrowly tailored but wrote separately to set forth
two additional reasons why he thought it should be declared facially invalid:
it is a content-based restriction on speech that does not withstand strict scrutiny,
and, even if it were content neutral instead, it does not leave open ample alternative
channels of communication. Judge Kozinski, joined by Judge Bea, dissented. He
thought the majority's decision was folly. He noted that for years the City has
had a serious problem with day laborers-sometimes as many as 75-crowing sidewalks
and street-corners, soliciting work from passing motorists. As might be expected
when large groups of men gather at a single location, they litter, vandalize,
urinate, block the sidewalk, damage property, and harass females. Cars and trucks
disrupt traffic as they stop to negotiate employment and load up laborers. Residents
and businesses need not suffer these harms and indignities day in and day out
for years on end, Judge Kozinski thought. It is to secure the safety, beauty,
tranquility and orderliness of neighborhoods that municipal governments are instituted
among men. Nothing in the First Amendment prevents government from ensuring that
sidewalks are reserved for walking rather than loitering; streets are used as
thoroughfares rather than open air hiring halls; and bushes serve as adornment
rather than latrines. The majority, Judge Kozinski thought, was demonstrably,
egregious, recklessly wrong. He would vacate the judgment of the District Court
and remand with instructions that it enter judgment for the defendant. Kozinski
(dissenting), Thomas, Graber, Gould (concurring), Berzon, Bybee,
Callahan, Bea, M.D. Smith (author and concurring), Ikuta, and N.R. Smith,
Circuit Judges. M. Webb of Redondo Beach, CA, for the defendant-appellant; T.
Saenz of Los Angeles, CA, and A. Padilla of San Francisco, CA, for the plaintiffs-appellees.
(Download the full
text of this decision at www.ce9.uscourts.gov/)
16) IMMIGRATION LAW: Habibi v. Holder, 06-72111 (9th Cir. Sept. 14, 2011). On November 3, 1999, petitioner Jawid Habibi a lawful permanent resident ("LPR"), was convicted of battery of a current or former significant other, a misdemeanor under California Penal Code Sec. 243(e)(1). Habibi received a 365-day suspended sentence to be served through the year 2000, which was a leap year. The Department of Homeland Security ("DHS") served Habibi with a Notice to Appear ("NTA"), charging that his California conviction made him removable under 8 USC Sec. 1227(a)(2)(E)(i), as an alien convicted of a crime of domestic violence. Habibi requested cancellation of removal. Following a hearing, the Immigration Judge ("IJ") concluded that Habibi was not eligible for cancellation of removal because his domestic violence conviction constituted an "aggravated felony" under 8 USC Sec. 1101(a)(43)(F). Habibi argued that because "aggravated felony" is defined as a "crime of violence … for which the term of imprisonment [is] at least one year," and because his 365-day sentence was completed during a leap year, which was 366 days long, his California conviction did not qualify as an "aggravated felony." The IJ rejected this argument, noting that "is it well settled that … 365 days … would be the equivalent of a legal year." The BIA affirmed and adopted the IJ's decision. The BIA noted that in Matsuk v. INS, 247 F.3d 999 (9th Cir. 2001), overruled on other grounds, Delgado v. Holder, 03-74442 (9th Cir. Aug. 19, 2011) (en banc), "the Ninth Circuit approved of the Board's interpretation of one year as commonly meaning 365 days for purposes of finding that an alien's sentence to 365 days for purposes of finding that an alien's sentence to 365 days rendered his conviction an aggravated felony." The BIA further observed that adopting Habibi's position would lead "to an inconsistent and absurd result, subjecting aliens to a different set of rules depending on whether or not they were sentenced in a leap year." Because taking the intricacies of astronomy into account would needlessly complicate this area of the law, the USCA adopted the BIA's definition. Fisher and Bybee (author), Circuit Judges, and Strom, District Judge. A. Lareybi of San Diego, CA, for the petitioner; T. Scadron of Washington, DC, for the respondent. (Download the full text of this decision at www.ce9.uscourts.gov/) 17) IMMIGRATION LAW / TERRORISM: Haile v. Holder, 06-74309 (9th Cir. Sept. 26, 2011). Haile is a native of Ethiopia and citizen of Eritrea, as she was born in the city of Asmara within Eritrea in 1956, when Eritrea was part of Ethiopia. Eritrea gained independence in 1991. She entered the U.S. with a tourist visa in 1999 but stayed beyond the authorized period. In 2000, she applied for asylum but her application was denied, and the Department of Homeland Security ("DHS") initiated removal proceedings against her on the charge that she had remained in the U.S. without authorization. 8 USC Sec. 1227(a)(1)(B). During removal proceedings, Haile conceded removability and applied for relief from removal in the form of asylum, withholding of removal, and protection under the Convention Against Torture ("CAT"). According to Haile's testimony, which the Immigration Judge ("IJ") found credible, she joined the Eritrean Liberation From ("ELF") in 1977. The ELF is an organization that fought for Eritrea's independence from Ethiopia. Haile stated that ELF used violence and employed weapons in the fight for independence and for the forcible overthrow of the Ethiopian government. Haile had "heard about" members of the ELF attempting to hijack an Ethiopian airline flight, but denied knowing about other specific ELF activities. DHS submitted a set of "incident profiles" form the website of the Memorial Institute for the Prevention of Terrorism ("MIPT") that described terrorist acts perpetrated by the ELF, including kidnappings, hijackings of aircraft shootings, and car bombings. The incident profiles were admitted over the general objection of Haile's counsel. As a member of the ELF, Haile organized women and collected funds for the ELF. Under the funds she collected, she sent provisions like sugar, cigarettes, and shoes to the ELF through a contact. Haile also collected and passed on documents, the precise contents of which she did not know, but she believed that the documents contained information about how to attack or target the enemy and that the documents would have had a negative impact on the Ethiopian government. A letter from an ELF official confirmed that Haile was "a member of the under-ground cells" in Asmara" and that she participated in collecting information regarding the enemy, gathered materials for the ELF army, and organized Eritrean women to join the organization and struggle for their emancipation. Haile testified that, in 1978, she was arrested by members of the Eritrean People's Liberation Front ("EPLF"), a rival pro-independence organization and detained for a month under poor conditions. She was arrested again in 1979, this time by agents of the Ethiopian government, and detained for about one year. She was interrogated and subjected to brutal treatment. A judge sentenced her to five years' imprisonment, and she served about three years of that sentence. Conditions in prison were poor: there were mice and rats, few bathrooms for many prisoners, and "criminals and crazy people" mixed in with political prisoners. When she returned to Asmara, the ELF "had left the area," but she remained an ELF member until 2002. Haile fled Eritrea in 1999. A local official and EPLF member, Mohammed Ibrahim, had asked to marry her and she had declined. He then showed her a list of members of the ELF who were targeted for arrest, and the list had her name on it. Haile believes that because she refused his marriage offer, if she returns to Eritrea, Ibrahim would have her killed. She testified that ELF members are arrested in Eritrea for voicing their views. She also testified that soldiers had taken her father from his home about ten months prior to the removal hearing, and the he was interrogated by local officials about Haile and her escape from the country. This account was in part corroborated by a letter from Haile's son that was admitted into evidence, although Haile blamed Ibrahim for the arrest of her father while the letter referred to "soldiers." The letter said that Haile's father died at home from pneumonia after his three-day period of detention, during which he was made to sleep on a cold cement floor. Haile's sister was also arrested, and Haile's son was taken to the police station because he accused the government of causing the death of Haile's father. Haile also submitted supportive reports and articles on conditions in Eritrea, including information on human rights abuses and treatment of political prisoners. The Immigration Judge ("IJ") denied all relief and ordered Haile removed. After reviewing all testimony and evidence, the IJ found, among other things, that the ELF fell within the definition of a terrorist organization, that Haile was a member of the ELF, and that Haile had engaged in terrorist activities. The IJ concluded that Haile was statutorily barred from eligibility for asylum, withholding of removal, and CAT protection in the form of withholding. The IJ denied CAT protection in the form of deferral of removal because Haile did not show it "more likely than not" that she would suffer torture upon removal to Eritrea." Haile appealed. The BIA dismissed her appeal, agreeing with the IJ that Haile was ineligible for asylum and withholding of removal under CAT. The BIA found no error in the IJ's finding that the ELF was a terrorist organization. While the IJ appeared to have found Haile ineligible for relief because she had engaged in terrorist activities under 8 USC Sec. 1182(a)(3)(B)(i)(I), the BIA held that the IJ properly found that Haile was ineligible based on her membership in a terrorist organization, citing Sec. 1182(a)(3)(B)(i)(VI). After Haile filed an opening brief on appeal to the USCA, the government filed a motion to reopen with the BIA. The BIA agreed sua sponte to reconsider its decision and issued a second decision supplementing its earlier decision. In its second decision, the BIA (1) reaffirmed its decision that the IJ correctly determined that the ELF was a terrorist organization; (2) affirmed the IJ's conclusion that Haile was barred from relief for engaging in terrorist activities "based on her activities with and material support of ELF'" and (3) expanded its reasoning with respect to the denial of deferral of removal under Cat. Haile petitioned for review of the second decision of the BIA. The USCA denied the petition in part, dismissed it in part, and granted it in part. Finding that the BIA's conclusions that the ELF is a terrorist organization and that Haile engaged in terrorist activities were supported by substantial evidence and that it lacked jurisdiction to address Haile's other arguments, the USCA denied in part and dismissed in part those aspects of the petitions for review. However, because the record compelled the conclusion that the petitioner has shown that it is more likely than not that upon a return to Eritrea she will be tortured by or with the acquiescence of the Eritrean government, the USC granted the relief of deferral of removal under CAT. The BIA had improperly recast corroborated evidence as "speculative." It did not give due account for record evidence supporting Haile's position or adequately explain its denial of deferral. Substantial evidence did not support the BIA's conclusion that Haile did not establish it more likely than not that she would be tortured if returned to Eritrea. Because the evidence Haile presented compels but one conclusion and was unrebutted, there was no reason to remand-the USCA found Haile entitled to deferral of removal under CAT. Gould (author) and M.D. Smith, Circuit Judges, and Marbley, District Judge. A. Mathew of Berkeley, CA, for the petitioner; P. Stone of Washington, DC, for the respondent.(Download the full text of this decision at www.ce9.uscourts.gov/) 18) IMMIGRATION LAW: Li v. Holder, 07-71027 (9th Cir. Sept. 1, 2011). Li, a native and citizen of China petitioned for review of a decision of the Board of Immigration Appeals ("BIA"). He feared persecution and torture by Chinese officials for practicing Falun Gong, a spiritual exercise. Other practitioners of Falun Gong have been beaten, interned in labor camps, and hospitalized involuntarily. Li's persecution led him to flee China in November 2004, along with his mother and older brother. They joined Li's father in Mexico. Li's father had temporary immigrant status in Mexico that allowed him to work at a restaurant there, which enabled Li to attain a visa and live with his family. However, in 2006, Li's father lost his job and, as a result, Li could no longer live in Mexico. When he inquired into obtaining asylum, Li was advised that Mexico does not grant asylum to Chinese applicants and returns them to China. He was also warned that if he attempted to walk across the border to seek asylum in the U.S., he might be deported. Li's father thus agreed to pay a smuggler $5,000 to take Li across the U.S. border. The smuggler placed Li into a small iron box that was welded to the bottom of a vehicle. Once inside the box, Li was unable to extricate himself without assistance and had no means of communicating with the driver; he could not turn over or see outside of the compartment except for occasional glances at the road below. Li remained in the box for more than 40 minutes as the driver transported him across the California desert at a time of year when temperatures often exceed 100 degrees Fahrenheit, though it was unclear from Li's testimony what time of day he was traveling. The Immigration Judge ("IJ") determined that Li was credible and granted withholding of removal and alternative relief under the Convention Against Torture ("CAT"). The IJ also found that Li was eligible for asylum, which provides greater benefits than other forms of relief, but denied asylum as an exercise of discretion because the method of Li's entry was so dangerous, "to grant asylum in this case would encourage other individuals … to enter the United States by risking their lives by cramming themselves into these boxes." The Court emphasized that because Li had received withholding of removal and alternative relief under the CAT, he would have adequate protection from persecution, even without asylum. The BIA affirmed the decision of the Immigration Judge ("IJ") denying asylum in the exercise of discretion. The BIA balanced the likelihood of persecution and its severity against negative factors in the record and agreed with the IJ that Li's method of entry into the United States-being concealed in a metal box that was welded to the bottom of a car and driven across the border in the desert heat-was so dangerous that asylum should be denied. The BIA stressed that Li had been aware that he could simply walk to the U.S. and request asylum, yet he chose to avoid detection by employing a dangerous approach. The BIA also noted that Li was young and did not have a spouse or child that might be affected by the denial of his asylum application, and found that in agreeing to be smuggled in such a dangerous manner, Li had placed himself in a more dangerous position than he would have faced if he had been deported to China. Moreover, Li was not compelled to leave Mexico, where he had never seriously pursued asylum. The BIA further reasoned that because Li had received withholding of removal, removal was not a direct consequence of the IJ's discretionary denial of asylum. The only issue on appeal before the BIA was the IJ's decision to deny asylum, which the BIA affirmed. However, because the IJ had also granted relief in the form of withholding of removal (and alternatively, the Convention Against Torture ("CAT"), the BIA remanded pursuant to 8 CFR Sec. 1003.1(d)(6) to allow the Department of Homeland Security ("DHS") to complete background checks required before withhold of removal can be granted. Li appealed the BIA's decision related to the denial of asylum. After Li filed his appeal to the USCA, the DHS successfully completed the background checks and the IJ signed and filed a one-page standardized form confirming that withholding of removal had been granted. The form also indicated that appeal from that order was waived. The USCA concluded that it had jurisdiction despite the BIA's limited remand pursuant to Sec. 1003.1(d)(6). Because the BIA properly considered the totality of the circumstances and weighed the risk of persecution against the egregious nature of Li's entry into the U.S., the USCA denied the petition for review. Fernandez, Rymer, and Tallman (author), Circuit Judges. W. Kiang of San Gabriel, CA, for the petitioner; J. Bucholtz of Washington, DC, for the respondent. (Download the full text of this decision at www.ce9.uscourts.gov/) 19) IMMIGRATION LAW: Cole v. Holder, 09-73625
(9th Cir. Sept. 22, 2011). Hubert George Cole, a 40-year old, black, former gang
member, and a citizen and national of Honduras, entered the U.S. illegally at
age 11 with his mother and two sisters. He has a lengthy criminal history in the
U.S., beginning when he was a juvenile. While in prison, he joined the Crips,
an African-American gang. While a member of the Crips, he was tattooed with gang-related
symbols and letters on his face and body. The Department of Homeland Security
("DHS") commenced removal proceedings against Cole on July 11, 2008.
The Notice to Appear charged that Cole was removable because he entered without
being admitted or paroled and was convicted on June 18, 1999, for possession of
cocaine for sale. He conceded removability and applied for asylum, withholding
of removal, and relief under CAT. After the Immigration Judge ("IJ")
denied all his claims for relief, Cole appealed only the CAT claim to the BIA,
which dismissed the appeal. Whether the BIA properly denied CAT relief was the
only issue the only issue before the USCA. Cole testified that while incarcerated,
he felt threatened by Hispanic gang members, joined the Crips for protection,
and acquired several Crips tattoos, including a teardrop under his eye, a "G"
behind his ear, and tattoos on his calves, arms and back. Once released from prison,
he said he stopped associating with the Crips and worked at a homeless services
agency. Nevertheless, rival gangs could still identify him as a Crips gang member
because of his tattoos. According to Cole, Hispanic gangs hate the Crips and kill
Crips gang members. Cole said he has not had the tattoos removed because tattoo
removal is a painful and long process. In August 2007, he was shot and seriously
injured in a drive-by shooting. He was outside a store with a friend when a car
with four or five Hispanic people drove by; the car's occupants were pointing
at him and yelling out their gang affiliation, which was "Santa Monica 13."
Cole and his friend got back into their car, but before his friend could get his
car started the other car pulled up on the passenger side, where Cole was sitting,
a started shooting. Cole was shot in the head and abdomen. Half of his liver and
part of his skull had to be removed because of the shooting. He was hospitalized
for five or six months and was still experiencing problems related to his brain
injury at the time of his testimony. In his declaration, he stated that he now
has a defective, fragile skull and that he can easily injure his brain if he is
not careful. A letter from his doctor confirmed that he as a "sizable skull
defect with no protection of his brain" and asserted that, for this reason,
incarceration could put him at a high risk of serious injury. Cole's doctor told
him he will be in pain for a long time and will likely have seizures in the future,
necessitating ongoing medical care. Cole maintained that if returned to Honduras,
he would be tortured and possibly killed by gangs, police, or death squads, because
of his race and gang tattoos. He testified that his race, his tattoos, his general
appearance, and even is accent would mark him as an outsider in Honduras, and
that he believes that, even if the police do not harm him themselves, they would
think he was a gang member and not protect him. He also said he fears that the
police will detain him and that he will be intentionally exposed to torturous
prison conditions due to his tattoos. Finally, Cole asserted that he will be intentionally
denied necessary medical care by public health officials in Honduras because of
his tattoos, and that the intention denial of medical care also qualifies as torture.
Cole supported his CAT claim with testimony from two experts. Luis Rodriguez testified
as an expert on the "structure and dynamics of U.S. and Central American
gangs, including the racial rivalries among those gangs." He explained that
Crips are viewed as enemy by Hispanic gangs. He also testified that the Hispanic
gang members brought their "anti-black culture" down to Central America
when they were deported and that someone with Crips tattoos would likely be threatened,
beaten, or killed in Central America by rival gang members. Cole's second expert,
Elmer Canales, had some nine years' experience working with gang members and former
gang members in Honduras, He testified that the two biggest gangs in Honduras
are MS-13 and 18th Street and that members of these gangs kill people with tattoos
from rival gangs such as the Crips. In his opinion, the Honduran police do not
investigate the murders of gang members or suspected gang members. He also testified
that it is illegal to be a member of a gang in Honduras and that having a gang-related
tattoo can lead to a prison sentence of six to twelve years. Canales also testified
about specific incidents in which police or prison guards killed suspected gang
members in prison. In an incident that occurred three or four years before the
hearing, 69 suspected gang members died after being shot by prison guards. The
year he testified, more than 20 suspected gang members had been killed in jail
on the first day they arrived there. He attributed the slaughter to "police
negligence." He also testified about an incident in which 104 gang members
died in a fire in their cell block. The guards blocked their escape by not opening
the gate. It was later determined that the fire was set by the police. In Canales'
opinion, based on statistics, studies, and his experience over the years, Cole
has a 90% chance of being detained by the Honduran police and a greater than 75%
chance of being killed by gang members in Honduras because of his tattoos. He
also testified about the risk Cole would face from death squads and social cleansing
aimed at eliminating gang members. According to Canales, groups of police and
other powerful citizens torture and kill those they find undesirable, including
suspected gang members. He reported that such groups act with complete impunity
in Honduras. Finally, Canales spoke about the inability of suspected gang members
to get medical care in hospitals in Honduras.
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