Defending the Right of Private Property Owners to Forbid Political Activity on their Premises
In this case, the plaintiff, Steven M. Glovsky, an attorney, while seeking to run for election to the Massachusetts Governor’s Council in 2012, sought permission to solicit nominating signatures at a Roche Brother’s supermarket situated on a private 5-acre lot in Westwood, Massachusetts. The store, which has a policy against such solicitations, denied him permission. Glovsky later brought this pro se suit, alleging that Roche Brothers had violated his constitutional rights. He cites the Massachusetts Supreme Judicial Court’s decision Batchelder v. Allied Stores Int’l, Inc., 388 Mass. 83 (1983). In Batchelder the SJC held that the owners of the huge, 84-acre Northshore Mall had violated Batchelder’s rights under Article 9 (freedom and equality of elections) of the Massachusetts Declaration of Rights, when they prevented him from using certain common areas of the mall as a place to collect signatures to get himself put on the ballot for legislative office.
NELF, together with six co-amici, filed an amicus brief in support of Roche Brothers, arguing that the narrow holding in Batchelder does not apply to the modest property at issue in this case and its small, purely utilitarian common area (the parking lot and front entry way of the supermarket). NELF pointed out that crucial to the Court’s decision in Batchelder was its factual finding that large shopping malls, with their spacious common areas and numerous amenities intended to induce people to linger and congregate, sometimes may assume some of the functions of a traditional public downtown and therefore be deemed dedicated to the public as a practical matter. Nothing could be further from the facts of this case, where the property bears no resemblance to a “downtown,” lacks the scale of a place intended to draw the public to congregate and socialize, and possesses a common area that is a small utilitarian space completely devoted to facilitating shopping.
Especially concerning to NELF is Glovsky’s request that the Court extent Batchelder to any commercial property that is, allegedly, the “best” place to gather signatures. NELF argues that such a view is inconsistent with the text and reasoning of Batchelder and would lead to absurd or unworkable results. NELF also rebutted two false distinctions made by Glovsky in his attempt to deflect the fatal reasoning of Batchelder from his own case. NELF argued that his distinction between inviting the public into a commercial establishment and allowing the public there is completely spurious under Massachusetts tort law. NELF also argued that the Batchelder court did not apply a more accommodating standard than that applied in the seminal precedent Robins v. Pruneyard Shopping Center, 592 P.2d 341 (Cal. 1979); Glovsky’s distinction between a free speech issue in that case and a free elections issue in Batchelder is belied by the undisputed facts of both cases.
Opposing a Local Zoning Board’s Attempt to Block a Comprehensive Permit for Affordable Housing Based on a Misinterpretation of the Rules Governing Appeals to the Housing Appeals Committee
This case concerns a developer’s attempt to secure a comprehensive permit under c. 40B for a multi-unit dwelling in Scituate that would include affordable housing units. After protracted hearings, the local zoning board (“board”) denied a permit on the ground that a very small patch of the project site was defined as wetlands under the town’s regulations, and that local concerns therefore outweighed the regional need for affordable housing. The developer appealed to the Housing Appeals Committee (“HAC”), where the case was largely fought out over highly factual issues. The developer won the appeal and obtained its permit, but the board appealed the HAC’s decision to the Land Court, where the developer won again.
The board has now appealed to the Appeals Court and makes two legal arguments. Of these, NELF’s amicus brief concentrates on refuting the board’s view of what a developer must do to make out a prima facie case in an appeal to the HAC. The applicable regulation, 760 C.M.R. 56.07(2)(a)(2), states that an appellant establishes a prima facie case by proving “that its proposal complies [with] the federal or state statutes or regulations, or with generally recognized standards as to matters of health, safety, the environment, design, open space, or other matters of Local Concern.” The board contends that developers must prove compliance with restrictive local regulations as part of the prima facie case, not just with State and Federal law dealing with the same local concerns. NELF argues that, in making this argument, the board has misread the plain language of the regulation. Compliance with local regulations is not mentioned. In fact, compliance with restrictive local regulations is deliberately omitted from the developer’s prima facie case because the validity of such local concerns is precisely what is put into question by c. 40B as a matter of law. Because there is a history of towns using restrictive local rules as a means to keep affordable housing from being built within in their boundaries, the reasonableness of local rules and the validity of the local concerns they address are matters that must be established by a town as part of its case, before the developer can be required to accommodate the local rules.
The board’s approach would, in effect, present a great obstacle to developers seeking to construct housing that includes affordable units. In its brief, NELF focuses on construing the plain language of the regulation and explaining the public policy rationale for the regulation and why the board’s reading is in sharp conflict with the purposes of c. 40B. NELF expresses its view that the board’s reading, if affirmed, could have a disastrous effect on most developers’ ability to stay in the HAC and get a full review of a permit denial.
In a March 2014 decision, the Appeals Court agreed with NELF that the approach advocated by Scituate was inconsistent with the rationale of the comprehensive permit scheme and the role of the HAC in that scheme.
Opposing the Imposition of Personal Jurisdiction in an Intentional Tort Case Where the Defendant Did Not Intend to Harm the Plaintiffs in the Forum State
At issue in this case, before the Supreme Court on the merits, was whether the Due Process Clause of the Fourteenth Amendment permits a court of the forum state (i.e., where the plaintiff has sued) to exercise long-arm personal jurisdiction over a nonresident defendant who has allegedly injured the plaintiff in another jurisdiction, simply because the defendant knew that the plaintiff had connections to the forum state, and the plaintiff allegedly experienced harm in the forum state. This case will also decide the related issue whether the judicial district where the plaintiff allegedly suffered injury is a district “in which a substantial part of the events or omissions giving rise to the claim occurred” for purposes of establishing venue under the general venue statute, 28 U.S.C. § 1391(b)(2), even if the defendant’s alleged misconduct occurred in another district altogether.
In the decision below, a sharply divided panel of the Ninth Circuit held that the federal court for the District of Nevada had personal jurisdiction over the defendant, a federal DEA agent acting in Atlanta, Georgia, who confiscated the $97,000 gambling earnings of plaintiffs, professional gamblers who were passing through the Atlanta airport, en route from Puerto Rico to Nevada. The agent (wrongfully) suspected that the money was connected to illicit drug activity. The agent then initiated forfeiture proceedings by preparing an allegedly false affidavit against the plaintiffs. The plaintiffs sued the DEA agent in the District of Nevada in a Bivens action (an implied right of action under the Fourth Amendment against a federal official, akin to a § 1983 claim against a state actor). The money was eventually restored in full to the plaintiffs (but without interest) approximately seven months after the DEA agent seized it. The plaintiffs allege that long-arm personal jurisdiction over the DEA agent exists in Nevada because, although the agent’s actions took place in Atlanta, the damages that resulted from those actions affected the plaintiffs in Nevada.
NELF filed an amicus brief in this case in support of petitioner, arguing that, under well-settled Supreme Court precedent, no personal jurisdiction) can lie against an out-of-state defendant accused of an intentional tort unless he has “expressly aimed” the injury at the forum state by intending to harm the plaintiff in the forum state when he committed the alleged tort. See Calder v. Jones, Calder v. Jones, 465 U.S. 783 (1984) (Hollywood entertainer Shirley Jones had personal jurisdiction to sue Florida-based National Enquirer journalist and editor in California for defamation: defendants intended to harm plaintiff in California by “expressly aiming” content of false and harmful article at that state). NELF argued that, under Calder v. Jones, it is insufficient simply to show that the defendant knew that the plaintiff had connections to the forum state at the time of the alleged misconduct (although petitioner apparently did not even know about plaintiffs’ Nevada connections when he seized their money), and that the harm may be foreseeable in the forum state. Foreseeability is not enough to create personal jurisdiction. Instead, the defendant must “expressly aim” the harm at the forum state by intending to harm the plaintiff there. The facts here fall far short of this standard of proof and, therefore, NELF argued the Ninth’s Circuit’s jurisdictional ruling is incorrect and must be reversed. (Such reversal, of course, would not, of course, preclude the plaintiffs from suing the petitioner in Georgia, the state in which the alleged tort took place.)
On February 25, 2014, in a unanimous opinion very similar to NELF and AIM’s brief, the U.S. Supreme Court in Walden v. Fiore reversed the Ninth Circuit and held that due process bars the exercise of specific personal jurisdiction in Nevada over the petitioner, a DEA agent at the Atlanta airport who had seized the respondents’ gambling-related money there and had drafted an affidavit in support of forfeiture there, based on his belief at the time that the large sums of money were drug-related. The Court’s unanimous decision is an important victory for businesses, who would otherwise have been exposed to the risk of personal jurisdiction in unanticipated and remote fora whenever they were sued for such common intentional torts as fraud, breach of fiduciary duty, misappropriation of trade secrets, unfair competition, or tortious interference with business relations. In reversing the Ninth Circuit’s decision, the Court has preserved the notice and fairness protections guaranteed under the Due Process Clause to a defendant sued for intentional torts. Due process continues to ensure that the defendant cannot be sued in a forum where s/he has established no meaningful contacts.
As NELF had argued in its brief, the Court held today that, to serve the essential notice function under the Due Process Clause, the minimum contacts requirement must focus on the defendant’s purposeful contacts with the forum State, and not on the defendant’s contacts with the plaintiff who happens to reside in the forum state. That is, the minimum contacts inquiry determines whether the defendant has established direct and meaningful contacts with the forum state. Due process does not permit the exercise of personal jurisdiction where, as here, the defendant has established contacts with the plaintiffs who happen to reside in the forum state. The Court agreed with us that the Ninth Circuit had lost sight of this key constitutional focus in effectively attributing all of the plaintiffs’ Nevada contacts to the defendant, thereby defeating the defendant’s reasonable expectations on where he might be sued for his conduct in Atlanta.
As NELF’s brief also discussed, the Court distinguished this case from its key precedent in Calder v. Jones, 465 U.S. 783 (1984) (personal jurisdiction in California over Florida-based National Enquirer journalists because defendants had “expressly aimed” their defamatory article about Hollywood star at California itself and had made it the focal point by harming actress’s reputation there). Unlike in Calder v. Jones, where the defendants deliberately targeted and harmed the plaintiff Shirley Jone’s reputation in California, the defendant’s conduct in this case occurred entirely in Atlanta—i.e., seizing the plaintiffs’ money there and drafting an allegedly false and misleading affidavit there. The defendant here did not target his alleged tortious conduct at Nevada in any way.
Fighting a State’s Unconstitutional Taking of Privately Owned Funds In Order To Use Them to Reduce the State’s Deficit
The plaintiff beverage distributors in this case sought declaratory and monetary relief because of the state’s seizure of discrete funds of money owned by them. The money represents so-called “unclaimed” bottle-return “deposits.” “Deposits” is actually a misnomer. In 1980, when the state first required the distributors to pay five cents for each bottle returned to them by retailers, they chose to cover the additional expense by adding five cents to the selling price. The “deposits” that come into their hands, therefore, are simply an undifferentiated part of the sales revenues they receive from retailers, not from consumers; the funds were not segregated in any way, were taxable to the distributors, and were acknowledged by the state environmental agency to belong to them if they remain “unclaimed” because some bottles sold to retailers are not later returned for redemption.
In late 2008, in response to a severe budget deficit, the legislature passed a law mandating the use of separate accounts to hold all incoming and outgoing “deposits.” The legislative history is unequivocal that the purpose of the law was solely to assist that body in determining the volume of money in question so that it could decide whether it might be worthwhile to pass a law escheating the sum for the purpose of reducing the state’s alarming deficit. After only three months of segregated accounts being used, and before the first report on account balances was due, in early 2009 an escheat law was hastily passed redefining property rights in the “unclaimed deposits” and requiring the plaintiffs to surrender money from the segregated accounts to the state. The 2009 law required the plaintiffs to pay over not only the quarterly balances in these accounts from the effective date of the statute, but also balances held there by the plaintiffs in the three preceding months. The bottlers objected to the latter demand, claiming it effected a taking of funds that had always been regarded, even by the state, as their property, right up to the effective date of the 2009 law.
The trial judge found for the distributors, but in an appeal in which NELF filed a brief supporting the distributors, the Connecticut Supreme Court adopted the state’s theory that the bottlers simply had no property interest in the first quarter’s funds. Declining to inquire into the background history of “deposit” funds before the 2008 law, the Court held that the segregation of funds mandated by that law was proof enough that the bottlers did not own the money and that there could be no taking.
In late 2013, the distributors filed a Petition for Certiorari in the U.S. Supreme Court renewing the takings arguments they had made to the state high court. NELF, together with three co-amici, filed a brief in support. NELF argued that the seizure of the money, motivated, as the Attorney General freely admitted, by a severe budgetary crisis, was a classic instance of government unjustly imposing on a few persons an economic burden that should be borne by the public at large. Review, NELF argued, is all the more warranted because all three branches of state government were involved in the taking of the distributors’ established property rights, and distributors have been left without a state remedy for violation of their federal constitutional rights.
NELF pointed out that the state court reached its decision without proper examination of the history of the Bottle Bill and its implementation, despite the fact that distributors had based their defense of their rights on these sources. The analysis the court performed demonstrate that the distributors indeed lacked “incidents of ownership” under the 2008 law is perfunctory and fatally flawed, NELF contends. The 2008 law did not even purport to divest them of any established rights. It was enacted to facilitate legislative fact-finding about the economics of the Bottle Bill, i.e., as an aid to deciding later whether to escheat some or all of the “unclaimed deposits.” NELF pointed out that the distributors’ established property rights had been acknowledged by the state agency charged with administering the Bottle Bill and that the state court, in denying these rights, had to adopt a forced and unnatural reading of the agency’s admission.
Finally, aware of the split among the U.S. Supreme Court justices over the applicability to a case like this of the doctrine of “judicial taking” versus substantive due process, NELF asked them not be dissuaded from granting the petition by this lack of consensus. The state high court’s decision, NELF noted, cannot survive review under either doctrine.
Unfortunately, on March 24, 2014 the Supreme Court denied the petition.
Arguing that the Doctrine of Laches Should Be Applicable to Bar Stale Claims Brought Against a Business Under the Copyright Act’s “Rolling” Statute of Limitations.
The question before the Supreme Court in this case was whether a laches defense can bar a claim of continuing copyright infringement that began several years before the three-year limitations period provided in the Copyright Act’s statute of limitations (in this case, 18 years), where the plaintiff knew about her claim from the outset, and her unreasonable delay caused the defendant to suffer economic and evidentiary prejudice. The issue of laches arises because many lower federal courts, including the Ninth Circuit in this case, have interpreted the statute of limitations as restarting with each new act of infringement, even though it is the same defendant repeatedly exploiting the same allegedly infringing work for many years. Thus, the Ninth Circuit, along with many other circuit courts, has recognized the availability of the laches defense to bar an ostensibly timely claim of copyright infringement that, in fact, first accrued several years before the three-year limitations period and has recurred repeatedly ever since.
The case is an unusually colorful one for us because the petitioner, Paula Petrella, alleges that MGM’s 1980 film Raging Bull has infringed her inherited copyright in her late father’s 1963 screenplay about former boxer Jake LaMotta, the subject of the film. In 1976, Ms. Petrella’s father had actually assigned all of his rights in the 1963 screenplay, including renewal rights, to a film production company that, in turn, assigned the motion picture rights to United Artists (an MGM subsidiary). Therefore, when Raging Bull was produced and released in 1980, United Artists had the undisputed right to borrow as much as it wanted from the 1963 screenplay. (MGM has argued compellingly below, on summary judgment, that the film in fact borrows no protectable elements from the 1963 screenplay. The lower courts did not reach this issue, instead dismissing Ms. Petrella’s stale claim on laches grounds.)
However, by operation of a quirk of copyright law, due to Mr. Petrella’s death in 1981, ten years before the start of the 1963 screenplay’s renewal period, his 1976 assignment of renewal rights was voided. As a result, the renewal rights reverted to his statutory heirs, including his daughter, the petitioner. Thus, in 1991, Raging Bull “became” a potentially infringing work. It is undisputed that Ms. Petrella knew about her claim in 1991. Indeed, she hired an attorney at that point to perfect her renewal rights in her father's screenplay. It is also undisputed that she delayed so long in filing suit because Raging Bull had not yielded a profit for many years. Thus, instead of suing MGM at the time when she first knew about her claim (1991), she waited until 2009, when the film generated profits, to sue for infringement.
The Ninth Circuit in this case held that that respondent MGM had proven its laches defense. The lower court reasoned that Ms. Petrella’s unreasonable, 18-year delay before filing suit in 2009 resulted in economic harm to MGM. During those 18 years, MGM invested substantial capital to exploit the movie. The long passage of time also has resulted in the death or incapacity of witnesses who are essential to MGM’s case.
Seeking reversal of the Ninth Circuits decision, Ms. Petrella argued that laches should not be available to bar a timely claim of copyright infringement under the three-year statute of limitations. She, and the amici who support her, argue that where, as here, Congress has enacted a statute of limitations, the courts do not have the equitable power to truncate that congressional time period with a laches defense.
In its amicus brief, filed in support of MGM, NELF argued that the laches defense is a crucial equitable safeguard in a case of continuous copyright infringement, such as this one, where the plaintiff has an indefinite right to sue on the same recurring claim of copyright infringement. In such a case, the plaintiff has been on notice of her claim from the outset but has delayed filing suit for many years, thereby allowing the defendant to continue exploiting the same allegedly infringing work. But the statute of limitations cannot bar the plaintiff’s stale claim, because many lower federal courts have held that a new claim accrues with each new act of infringement. Thus, the plaintiff has a “rolling,” three-year right to sue on the same recurring claim of copyright infringement.
Laches is a necessary defense in such a case to prevent the plaintiff from abusing this rolling limitations period, to the evidentiary and economic detriment of the defendant. Without the laches defense, the plaintiff can stand by and allow the same claim of copyright infringement to reaccrue repeatedly over a long period of time. And with each foreseeable recurrence of the same claim, the plaintiff’s potential share of the defendant’s profits accumulates. She is thus free to delay filing suit indefinitely and strategically on a claim that first accrued many years before the limitations period, which is generally when the defendant created and first exploited the work.
NELF also argued that the Court has, in effect, already decided the issue in this case in the respondents’ favor: laches is available to prevent a plaintiff from abusing a rolling limitations period by delaying unreasonably in filing her otherwise timely claim, and thereby causing the defendant evidentiary harm. See Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101 (2002). In Morgan, as in this case, the federal statutory claim continues to accrue under the applicable statute of limitations with each repeated and related act of the defendant. Thus, the plaintiff in each case has a virtually indefinite right of action in the same ongoing claim, allowing the plaintiff to delay filing suit. When such a plaintiff does eventually decide to sue, it is therefore likely that the claim will have arisen from facts occurring long before the applicable limitations period, and that the plaintiff will have long been aware of those ancient operative facts. As a result, the plaintiff’s unreasonable delay will have caused the loss of evidence that is essential to the defendant’s case. Therefore, laches becomes necessary to prevent irreparable evidentiary harm to the defendant in claims that are subject to a rolling limitations period.
In fact, the evidentiary prejudice identified in Morgan is even more pronounced in cases of ongoing copyright infringement, because the statutory term of the plaintiff’s copyright is often quite long. As in this case, the evidence necessary to defend the infringement claim would have arisen from facts and events that occurred long ago, when the defendant created the allegedly infringing work. And, as in this case, the defendant’s key evidence could be irretrievably lost, due to the plaintiff’s permissible delay under a rolling limitations period. Witnesses who are necessary for defending the claim may die or otherwise become unavailable, and memories may fade. The longer the plaintiff delays filing suit after her claim first accrues, the more likely the defendant will suffer irreparable evidentiary harm, as this case pointedly illustrates.
A long-delayed claim of copyright infringement is also likely to inflict economic harm on the defendant. Without the laches defense, the plaintiff is free to lie in wait for several years while the defendant invests substantial capital to exploit what it believes in good faith to be its own original work to exploit. And then, when the defendant’s money and efforts have borne fruit and have thus made a lawsuit worth the plaintiff’s while, she can choose to sue and seek recovery of her share of three years’ worth of the defendant’s highest profits.
Without the laches defense, then, the plaintiff in a case of continuous copyright infringement could abuse the rolling limitations period without any judicial oversight. Recognition of the laches defense in such cases is therefore necessary to fulfill the gatekeeping function of a statute of limitations: to protect the defendant from having to defend a stale claim.
On May 19, 2014, in a disappointing 6-3 decision, the Court reversed the Ninth Circuit and held that laches is not available to bar a timely claim for monetary relief under the Copyright Act. The Court stated that Congress had already decided how much delay a plaintiff can exercise in bringing suit and that the judiciary has no place to cut short that statutory limitations period. The majority did not deem applicable its decision in Morgan, which recognized the availability of laches to bar a timely federal statutory claim for damages (hostile work environment claims under Title VII). Unlike in this case, the majority stated that the laches recognized in Morgan applied only to a single timely claim (of workplace harassment) that continued to accumulate over time with each new offending act, where some of the constituent acts that comprise the single claim may have occurred long before the limitations period. According to the majority, this case aligns instead with the discrete, separately accruing harms discussed in Morgan in non-harassment claims of employment discrimination, where each separate act of the defendant is actionable and warrants its own limitations period. The majority also minimized the evidentiary and economic prejudice that the defendant argued here. However, the Court did recognize that laches could apply under extraordinary circumstances to bar equitable relief, such as a plaintiff’s request to destroy the allegedly infringing work (such as a building) or copies of the allegedly infringing work (such as copies of a book that have already been printed and distributed)). The Court also held that the equitable defense of estoppel could apply to bar a claim for copyright infringement altogether, if the defendant could show that the plaintiff intentionally misrepresented that it would abstain from suit, to the defendant’s detrimental reliance.
In a strongly worded dissent, Justice Breyer, joined by Chief Justice Roberts and Justice Kennedy, embraced the availability of laches in a case of continuous copyright infringement such as this one, to prevent a plaintiff from sitting on her rights strategically for 18 years and allow the defendant to reproduce and otherwise exploit the same allegedly infringing work, and then jump in to sue to collect three years’ of MGM’s highest profits. The dissent also recognized that, as NELF had argued, MGM raised several fact- and witness-dependent affirmative defenses that are now impossible to prove, due to the death or unavailability of witnesses. Finally, the dissent agreed with NELF that Morgan should apply here because that case did in fact hold that laches can bar a timely federal statutory claim for monetary relief.
Arguing That Sarbanes Oxley’s Protection for Whistleblowers Only Covers Employees of Public Companies and Does Not Cover Employees of Private Companies With Whom a Public Company May Have a Contractual Relationship
In this case, which was before the Supreme Court on the merits, NELF, joined by Associated Industries of Massachusetts, filed an amicus brief supporting FMR. The issue was whether the Sarbanes-Oxley (SOX) whistleblower anti-retaliation provision applies to employees of a privately owned company that manages the FMR family of mutual funds, pursuant to a contractual relationship.
The case arises in the unusual, and perhaps unique context of the mutual fund industry, where mutual funds, which are public companies under the SOX definitions, have no employees of their own, but are managed pursuant to contractual agreement, by privately held management companies (in this case FMR and its subsidiaries). The case was brought by two former employees of FMR LLC and its subsidiaries (all of which are private companies) who sued under the SOX whistleblower protection provision, alleging that FMR unlawfully discharged them in retaliation for raising concerns about alleged inaccuracies in a draft SEC registration statement and alleged improper cost accounting methodologies with regard to the funds. Although the SOX provision is captioned “Whistleblower protection for employees of publicly traded companies,”(emphasis added), the plaintiffs argue that they are still covered as former employees of a private company because the statute, in its text states: [n]o [public] company. . ., or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee [who engages in protected whistleblowing activity].” Plaintiffs prevailed in Federal District Court, which ruled that the italicized language above meant that Congress intended to protect employees of private companies that contract with public companies. The First Circuit, reversed, in a thorough opinion by Chief Judge Lynch, who disagreed that the language expanded the provision beyond protecting employees of public companies.
NELF’s amicus brief bolstered Judge Lynch’s reasoning, by demonstrating through close textual analysis that, in fact, the SOX whistleblower provision does not protect the employees of a public company’s contractors or subcontractors, because those entities are included in the statute solely in their capacity as representatives of the public company and not as employers in their own right. Thus, while contractors and subcontractors cannot threaten or harass the whistleblowing employees of a public company, the provision does not protect the contractors’ and subcontractors’ own employees, such as petitioners here. This interpretation is compelled by the clear context of those key statutory terms. Contractors and subcontractors are included in a list of a public company’s traditional representatives and agents--“any officer, employee, contractor, subcontractor, or agent of such [public] company.” 18 U.S.C. § 1514A(a) (emphasis added). Under the basic canon of statutory construction, noscitur a sociis (“it is known from its associates”), a statutory term should be limited to a meaning that is consistent with its neighboring terms, to achieve a unified list of terms sharing a common purpose. Conversely, the noscitur a sociis canon counsels against interpreting a statutory term broadly, in isolation from its accompanying terms. Contractors and subcontractors should therefore be interpreted solely as representatives of the public company, consistently with the function of their neighboring terms--officers, employees, and agents of a public company.
NELF argued that, while contractors and subcontractors are indeed separate entities from the public company, they also resemble a public company’s officers, employees, and agents because they are contractually bound to serve the public company’s interests. In fact, SOX was enacted precisely to prevent the accounting and reporting abuses that apparently arose from the contractual relationship between certain prominent publicly traded companies and their accounting firms. Hence it is not surprising that Congress has protected a public company’s whistleblowing employee from the potential adverse actions of both his employer and the employer’s contractor.
In this connection, it should be noted that the SOX whistleblower provision is not limited to the employer’s tangible employment actions and instead covers all kinds of threats or harassment against the whistleblowing employee, actions that could be committed as much by a third-party contractor as by a representative of the employer.
NELF argued further that it should have been no surprise to Congress that many employees of the mutual fund industry, i.e., the employees of private investment advisors, would effectively fall outside the scope of the SOX whistleblower provision. Congress knew for several decades that mutual funds, which are considered public companies under the whistleblower provision, typically have no employees of their own. Instead, mutual funds generally rely on the contractual services of their investment advisers, many of which are private companies, as in this case. In fact, the Investment Company Act of 1940 was enacted precisely to regulate and prevent the potential abuses arising from this unique contractual relationship between mutual funds and their investment advisers. Significantly, the 1940 Act defines an “investment adviser” as one “who pursuant to contract with such [investment] company regularly furnishes advice to such company . . . .” 15 U.S.C. § 80a-2(20) (emphasis added). And Congress is presumed to know the state of existing law when it enacts a new statute. Thus, the SOX whistleblower provision’s effective omission of many employees of the mutual fund industry could hardly have been an oversight and may be interpreted as a deliberate policy choice.
Finally, NELF argued that, while the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) amended the SOX whistleblower provision in certain respects, Dodd-Frank made no changes whatsoever to the provision’s disputed “any officer” clause, which contains the only reference to contractors and subcontractors. Therefore, in amici’s view, Congress has yet to include the employees of private investment advisers within the scope of the SOX whistleblower provision. A decision in this case should therefore not be limited to claims arising under the SOX whistleblower provision before it was amended by Dodd-Frank in 2010. Instead, the Court’s decision should apply equally to claims arising after Dodd-Frank’s effective date, unless and until Congress provides otherwise.
On March 4, 2014, the Court, in a 6-3 opinion, decided against FMR. The majority held that whistleblower protection under SOX extends to employees of private contractors and subcontractors serving public companies. The majority concluded that the plain language and the underlying purpose of the statue supported this reading. The Court noted, for example, that the prohibited retaliatory actions under SOX—discharge, demotion, suspension, threats, harassment, or discrimination in employment terms and conditions—are actions that an employer takes against its own employees. The Court also observed that the statute’s enforcement procedures and remedies apply to the powers of an employer over its own employees. The Court also noted that the legislative record indicates Congress’ awareness that outside, contracting professionals, such as accounting and law firms, played a role in reporting fraud in the Enron scandal. Thus, fear of retaliation can deter reporting by the employees of Enron's contractors. Finally, the majority noted that its interpretation avoided insulating the entire mutual fund industry from liability under the whistleblower provision. The Court’s ruling therefore protects the employees of investment advisors, who are often the only witnesses to potential fraud involving mutual funds.
Successfully Arguing that Massachusetts Should Adopt a Balanced Approach to the Enforcement of Easements
In this case the plaintiff (Martin) owns a vacant lot that is only accessible via an easement (Way A) over property owned by the defendant (Simmons). Simmons’s property abuts and surrounds Martin’s property, and is burdened by Way A. (The technical terms are that, with respect to his easement, Martin is the dominant and Simmons is the servient property owner.) Simmons’s and Martin’s properties, and Martin’s easement, are all registered with the Massachusetts Land Court. In August, 2007, Martin brought an action against Simmons in the Land Court, alleging that Simmons had “interfered with his right of way by …placing encroachments in, parking on, and improperly placing fill within” Way A. Martin requested that Simmons be ordered to remove all such alleged encroachments from Way A. After an extensive hearing and the submission of much evidence, the Land Court denied Martin’s request for relief and entered judgment in Simmons’s favor, noting among other things that Martin himself had conceded that none of the alleged encroachments had ever had any adverse impact on his ability to use Way A.
Martin appealed to the Massachusetts Appeals Court, which reversed the Land Court’s decision with regard to Way A, primarily on the ground that Martin’s easement was registered with the Land Court, and therefore in the Appeals Court’s eyes was inviolable. Simmons then sought further appellate review from the Supreme Judicial Court, which granted Simmons application.
NELF filed an amicus brief in support of Simmons, in which NAIOP joined as co-amicus. In its brief, NELF called the Court’s attention to its own 2004 decision, M.P.M. Builders, LLC v. Dwyer, 442 Mass. 87, in which the Court adopted §4.8(3) of the Restatement (Third) of Property (Servitudes), which states:
Unless expressly denied by the terms of an easement, as defined in § 1.2, the owner of the servient estate is entitled to make reasonable changes in the location or dimensions of an easement, at the servient owner's expense, to permit normal use or development of the servient estate, but only if the changes do not (a) significantly lessen the utility of the easement, (b) increase the burdens on the owner of the easement in its use and enjoyment, or (c) frustrate the purpose for which the easement was created.
442 Mass. at 91. While M.P.M. dealt with recorded (not registered) land, NELF argued that this difference in status has to do with the validity of title and therefore not with any issue relevant to the application of the Supreme Judicial Court’s adoption of the Restatement section in M.P.M. (As both Simmons and NELF pointed out, no party in this case is questioning Martin’s title to his easement over Simmons land.)
Rather, NELF argued, what is important is the principal, recognized by the Court in M.P.M., that an appropriate balance must be struck between the rights and interests of dominant and servient property owners. As the SJC stated in M.P.M., “an easement is created to serve a particular objective, not to grant the easement holder the power to veto other uses of the servient estate that do not interfere with that purpose.” M.P.M., 442 Mass. at 92.
NELF argued, in support of Simmons, that, under §4.8(3) of the Restatement and in light of the Land Court’s findings and Martin’s admission that Way A has not been unreasonably burdened and he has never been inconvenienced in any way by Simmons’s actions. In accordance with the policy behind § 4.8(3), the land of the servient owner should be permitted to attain its highest and best use when to do so does not adversely affect the dominant owner’s use of his easement. NELF urged the SJC to reject the Appeals Court’s distinction based on the registered nature of the easement.
In a victory for both Simmons and NELF, the SJC, on January 16, 2014, reversed the Appeals Court and affirmed the judgment of the Land Court. Agreeing with NELF, the SJC concluded that the fact that the land and easement in this case were registered with the Land Court made no difference to the analysis. The SJC expressly confirmed and expounded upon its adoption in M.P.M. of § 4.8(3) of the Restatement (Third) of Property (Servitudes) and agreed with the Land Court “that the width of the easement property may be reduced as the defendant has done here, since the plaintiff does not dispute that at all times he has been able to use the remaining unobstructed portion of the easement for the purpose of travel to and from his parcel.”
Supporting Compensation of Landowners For Property That Has Been Taken Pursuant to Congress’s “Rails to Trails” Legislation
This case, the latest installment in the “rails to trails” litigation saga, deals with who owns thousands of miles of abandoned railroad rights of way located all across the country. These are strips of land only a few hundred feet wide that were granted to railroads out of public land by the Federal Government under the General Railroad Right-of-Way Act of 1875 (“1875 Act”). Private property owners like the Brandts claim that the railroads received only easements and that, upon abandonment, the land occupied by the easement reverts to the exclusive use and possession of the fee owner of the underlying land, who is now often a private party like the Brandts.
Indeed, that was the position vigorously advocated by the Government in Great Northern Ry. Co. v. United States, 315 U.S. 262 (1942), where the Supreme Court agreed that these rights of way are easements and not limited fees with an implied reversionary interest in the United States. In more recent times, however, Congress has laid claim to these strips of land in order to convert them into public recreational trials. As a result, the United States flip-flopped, and its position now is that these rights of way were granted to railroads as limited fees for the purpose of operating a railroad. On this view, the grant was entirely distinct from any grant of the fee interest in the abutting lands received from the United States by homesteaders or other private parties. On abandonment of use for railroad purposes, the Government now contends, the land reverts to the United States, which may then freely convert it to what use it chooses.
In 1976, the Brandts were granted fee simple title to public land in Montana. Across the land ran a right of way granted under the 1875 Act. When the right of way was declared abandoned on 2003, a dispute arose between the Brandts, who claim ownership of the strip of land as an abandoned easement, and the United States, which denies their ownership and claims the land for itself. After the federal district court found for the Government, the case went to the U.S. Court of Appeals for the Tenth Circuit. That court, in conflict with the Federal Circuit and the Seventh Circuit, accepted the Government’s (current) legal and historical analysis and affirmed the lower court’s judgment. It found Great Northern to be not exactly on point. The Brandts timely petitioned the U.S. Supreme Court for certiorari, and the petition was granted, the United States agreeing that review of the tangled legal history of these rights of way was needed.
NELF has previously been involved in “rails to trails” litigation. In 1996, NELF represented similarly situated property owners from Vermont. See Preseault v. United States, 100 F.3d 1525 (Fed. Cir. 1996). In that case, NELF argued that the rights of ways were easements and the United States must pay if it wishes to take them for use as trails. In the present case, NELF filed a brief in which it undertook to rebut the Government’s assertion that the exclusive control formerly exercised by the railroads over the rights of way demonstrates that the rights of way could not have been easements but must have been fee interests. NELF reviewed legal authorities from around the time of the 1875 Act and showed that they generally recognized that, under certain circumstances, the holder of an easement could sometimes exercise exclusive control, especially in the case of a dangerous instrumentality like railroad. NELF then rebutted the Government’s assertion that, in the debate on the 1875 Act, key House members had acknowledged that the Government would retain a reversionary interest in the rights of way. Conducting a close reading of the text of the debate, NELF showed that the debate actually revealed the members’ acknowledgement that the Act would depart from the prior practice of granting railroads fee interests and instead grant easements, just as the Brandts argue.
In March 2014 the Court, in an 8-1 decision written by Chief Justice Roberts, ruled in favor of the Brandts. Against the view taken by the Tenth Circuit and by the Solicitor General, the Court ruled that Great Northern disposes of the dispute in its entirety; the Court declined to open legal and historical questions settled in that case seventy years ago. Still pending in the U.S. Court of Claims is the Brandts’ claim against the United States for just compensation. That action had been stayed until the issue of ownership could be decided by the Supreme Court. It remains to be seen whether the Government’s keenness for trails remains strong, now that it has to pay people like the Brandts for each right of way converted to a trail.
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