News & Case Summaries

Case Summaries

Tax Law

[03/10] Hesse v. Sprint Corp.
In a class action alleging that defendant Sprint Corp. unlawfully collected a Washington state tax from Washington customers, summary judgment for defendant is vacated and remanded where a prior class action settlement challenged Sprint's billing of customers for certain federal regulatory fees, and the Washington plaintiffs' interests were not adequately represented in that litigation.

[03/05] Mike v. Franchise Tax Bd.
In an action by the Franchise Tax Board (FTB) to collect income tax from petitioner, an American Indian, for receiving more than $385,000 as her per capita distribution from her tribe's gaming operations on their reservation, trial court's entry of judgment in favor of FTB is affirmed as, the State of California may impose income tax on income received by an enrolled member of a tribe from his or her tribe's reservation activities when that member resides on the reservation of a different tribe.

[03/04] New York v. Golden Feather Smoke Shop, Inc.
In defendants' appeal from a preliminary injunction prohibiting the sale of untaxed cigarettes other than to members of the Unkechauge Nation for their personal use, the Second Circuit certifies the following questions to the New York Court of Appeals: 1) Does N.Y. Tax Law section 471-e, either by itself or in combination with the provisions of section 471, impose a tax on cigarettes sold on Native American reservations when some or all of those cigarettes may be sold to persons other than members of the reservation's nation or tribe?; 2) If the answer to Question 1 is "no," does N.Y. Tax Law section 471 alone impose a tax on cigarettes sold on Native American reservations when some or all of those cigarettes may be sold to persons other than members of the reservation's nation or tribe?

[03/03] Byers v. Intuit, Inc.
In plaintiff's putative class action on behalf of U.S. taxpayers against the IRS and a consortium of companies in the electronic tax preparation and filing industry (FFA) claiming violations of the Independent Offices Appropriations Act (IOAA) in the charging of fees in exchange for providing e-filing services, as well as a violation of section 1 of the Sherman Antitrust Act, dismissal of both claims is affirmed where: 1) the district court was correct in holding that the IOAA does not apply to the FFA members, as it only applies to a government agency and none of the exceptions in Thomas v. Network Solutions, Inc., 176 F.3d 500 (D.C. Cir. 1999) apply; and 2) the district court did not err in dismissing the Sherman Act claim as the FFA members are entitled to conduct-based implied antitrust immunity with respect to the anti-competitive action taken pursuant to the Ceiling Provisions of the 2005 Agreement with the IRS.

[02/26] US v. Bright
In defendants' appeal from the district court's order enforcing IRS summonses requiring production of documents, including those relating to offshore accounts, and finding defendants in contempt, the orders are affirmed in part where: 1) a taxpayer cannot refuse to produce a privilege log or documents for in camera review in response to an order to show cause and then protest an insufficient opportunity to present a claim of privilege; and 2) defendants were in contempt based on their failure to produce documents related to the two previously identified offshore accounts named in the summons. However, the order is modified where the district court's application of the foregone conclusion exception to records of two additional credit cards not named during the enforcement proceeding was clear error.

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Corporation & Enterprise Law

[03/10] Citigroup Global Markets, Inc. v. VCG Special Opportunities Master Fund Ltd.
In an appeal from a district court's order granting plaintiff's motion for a preliminary injunction and enjoining defendant from proceeding with an arbitration initiated against plaintiff before the Financial Industry Regulatory Authority, the order is affirmed where the "serious questions" standard for assessing a movant's likelihood of success on the merits remains valid in the wake of recent Supreme Court cases, and neither the district court's assessment of the facts nor its application of the law supported a finding of abuse of discretion.

[03/09] In re: Omnicom Group, Inc. Secs. Litig.
In a securities class action alleging that defendants fraudulently accounted for a transaction, summary judgment for defendants is affirmed where: 1) plaintiffs failed to prove loss causation because their expert's testimony did not suffice to draw the requisite causal connection between the information in the article at issue and the fraud alleged in the complaint; and 2) the generalized investor reaction of concern causing a temporary share price decline was far too tenuously connected -- indeed, by a metaphoric thread -- to the transaction to support liability.

[03/03] Teachers' Ret. Sys. of La. v. PriceWaterhouseCoopers LLP
In a shareholder derivative action brought on behalf of AIG for breach of fiduciary duty against PricewaterhouseCoopers under New York law, the Delaware Supreme Court certifies the following question to the New York Court of Appeals: Would the doctrine of in pari delicto bar a derivative claim under New York law where a corporation sues its outside auditor for professional malpractice or negligence based on the auditor's failure to detect fraud committed by the corporation; and, the outside auditor did not knowingly participate in the corporation's fraud, but instead, failed to satisfy professional standards in its audits of the corporation's financial statements?

[02/26] D&J Tire Inc. v. Hercules Tire & Rubber Co.
In an action by a minority shareholder for breach of fiduciary duty arising out of defendant-executive's failure to disclose that defendant corporation was in talks to be acquired when the executive served as a mandatary on plaintiff's behalf to redeem his shares, summary judgment for defendant is vacated where: 1) because Louisiana's prescription statute did not bar plaintiff's rescission claim, the district court needs to determine whether plaintiff could prove that defendant's directors failed to disclose a material fact; 2) because defendant's directors were acting in their official capacity when redeeming plaintiff's stock, Connecticut courts would impose a fiduciary duty to disclose material facts in this situation; and 3) there was no reason, under Louisiana law, to apply another prescriptive period merely because defendant was also CFO of the corporation when the claim was based on his duties as mandatary.

[02/26] Ghadrdan v. Gorabi
In plaintiff's breach of contract suit against defendant that arose out of a longstanding business relationship, the trial court did not abuse its discretion when it excluded evidence of a plea agreement and conviction of a corporation, of which plaintiff was the CEO and sole shareholder, to impeach plaintiff and show his motive and knowledge.

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Sentencing

[03/10] US v. Wilder
Defendants' drug conspiracy convictions and sentences are affirmed where: 1) the district court did not err in excluding a document as hearsay because a witness was unable to verify that the proffered document was a public record created by the police department; 2) the government established that defendant knowingly and intentionally joined an agreement to distribute controlled substances; 3) the court was not convinced that the trial record presented an obvious case of a defendant with no predisposition to distribute crack cocaine, such that the district court plainly erred by failing to instruct the jury on entrapment; and 4) the district court explained that it had considered all of the 18 U.S.C. section 3553(a) factors, including the nature and circumstances of the offense and defendant's history and characteristics.

[03/10] US v. Almany
In a prosecution of defendant for drug and firearm related offenses, the case is remanded for resentencing where: 1) the district court committed plain error by failing to probe defendant's understanding of the appellate waiver provision of his plea agreement, and therefore, the waiver is unenforceable against the defendant; and 2) the district court erred by sentencing defendant to both a five-year mandatory minimum sentence under the firearm statute and a ten-year mandatory minimum sentence under the drug statute.

[03/09] US v. Wise
Defendant's firearm possession sentence is affirmed where: 1) defendant's prior conviction under Utah law for failure to stop at the command of a police officer was a "crime of violence" under the Sentencing Guidelines; and 2) the district court erred in not assigning criminal history points for one of defendant's prior convictions, but that error did not invalidate defendant's sentence.

[03/09] In re Victor L.
In a conviction of a minor for possession of specified illegal weapons, juvenile court's order placing the defendant on probation with various conditions is affirmed for the most part with the exception of: 1) the restrictions on defendant's right to associate with individuals disapproved of by his probation officer or his parents is unconstitutionally vague and will be modified to include a personal knowledge requirement; 2) restrictions on defendant's presence "where dangerous or deadly weapons or firearms or ammunitions exist" is unconstitutional as due process requires that the probationer be informed in advance whether his conduct comports with or violates a condition of probation; and 3) to the extent the second Internet condition prohibits any "use of" or "access to" an Internet-enabled computer, it conflicts with the other two conditions, thereby making the combination of conditions unconstitutionally vague.

[03/08] US v. Miller
Dismissal of defendant's petition for a writ of audita querela challenging a restitution order, arising from his conviction for conducting a monetary transaction with criminally-derived funds and evading income tax, is affirmed where: 1) if it still exists, the writ of audita querela can only be applied to rectify a judgment which, though correct when rendered, has since become infirm; and 2) since all parties to this case agree that the district court's restitution order was initially correct, and because the statute does not require the order to be modified every time a subsequent payment is made on a restitution obligation, there is no infirmity in defendant's judgment for a writ of audita querela to rectify.

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