ANALYSIS OF FEBRUARY 21, 2019 SUPREME COURT OPINIONS

 

 

(Posted February 21, 2019) After a slow drip-drip-drip of recent opinions, today the Supreme Court turns the faucet on fully. We get five published opinions plus a published order today.

 

Personal jurisdiction

Virginia’s long-arm jurisdiction statute is at the heart of Mercer v. MacKinnon, a suit against a Canadian citizen. This is a family dispute in which one party (the American) accuses another (the Canadian) of self-dealing after obtaining a power of attorney from an elderly relative.

This is actually the second action involving these parties. The first was fully litigated and ended in an appeal that the Supreme Court refused in 2016. The American then filed this lawsuit. Unlike in the first case, where the Canadian appeared and participated without objecting to the Virginia court’s jurisdiction over her, the Canadian moved to dismiss this second suit on jurisdictional grounds.

The American asserted several grounds for jurisdiction, but the court ruled otherwise, finding that the only possible basis was subsection A(4) of the statute:

Causing tortious injury in this Commonwealth by an act or omission outside this Commonwealth if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this Commonwealth …

The trial judge ruled that the facts didn’t establish a persistent course of conduct here, so the Virginia court couldn’t adjudicate this claim against the Canadian.

Despite her having asserted several arguments below, the American chose to raise only the A(4) argument on appeal. Today the justices agree with the trial court and affirm. The key to this holding is the requirement that the defendant’s conduct here must be persistent.

In this case, the Canadian allegedly did several things. She (1) came to Virginia and took her ward back to Canada; (2) got a power of attorney and allegedly used it to change ownership or POD nominee of bank accounts; (3) filed a guardianship petition in the original litigation; (4) defended that litigation without objecting; and (5) appealed the original judgment. The Supreme Court rules today that this limited contact wasn’t persistent enough to satisfy the statute.

It is at least possible that one of the other asserted grounds for long-arm jurisdiction might have succeeded on appeal, but we’ll never know. The justices limit their analysis to the only ground in the assignments of error, without discussing any of the other grounds.

 

Arbitration

Here’s an elementary arbitration question: Is a disagreement over whether a given dispute is arbitrable, arbitrable? In Brush Arbor Home Construction, LLC v. Alexander, two homeowners sued a construction company over claimed defects in their home. The construction contract contained an arbitration clause that consigned to arbitration “any controversy or claim arising out of or relating to this contract,” but it didn’t specify whether a dispute over arbitrability was itself subject to arbitration.

There’s a twist here: The clause specified “arbitration administered by the Better Business Bureau under its Construction Industry Arbitration Rules.” The fact that the last four words are capitalized indicates to me, at least, that that’s the title of a document. But there is no such document; the BBB doesn’t have any rules relating to arbitration in the construction industry.

The trial judge seized on this in denying the motion to compel arbitration. He concluded that the absence of such rules made this clause impossible to perform.

The builder filed an interlocutory appeal – the Arbitration Act allows that when a court refuses to compel arbitration, though not when it actually compels it – and today the Supreme Court reverses in a short opinion. The justices conclude that the question whether this dispute can be arbitrated is a “controversy or claim arising out of or relating to” the contract, so it’s presumptively arbitrable even without a specific clause saying that.

As for those phantom BBB rules, today’s opinion states that that doesn’t require that the BBB have promulgated the rules; it’s perfectly okay for the BBB arbitrator to employ generic construction-industry arbitration rules.

This last point gives me at least minor heartburn for a reason I’ve mentioned here: The capitalized words in the contract do indicate to me that the parties contemplated a specific – though, as it turns out, nonexistent – document. When page 4 of this opinion refers to generic arbitration rules, the capital letters are notably absent. I’m not sure if I would have dissented on this basis if I had a vote; I still believe that the court correctly decided that this call belongs to an arbitrator.

 

Civil forfeiture

For the second consecutive day, we’ve received an appellate decision in this field. The first one, yesterday, arrived at One First Street across the Potomac, as the Supreme Court of the United States ruled in Timbs v. Indiana that the Eighth Amendment’s ban on excessive fines applies to the states, and thus can apply to a forfeiture. Today, by the banks of the beautiful James, we get Commonwealth v. Hall, where the Virginia justices rule that a valid forfeiture doesn’t require proof of more than one drug transaction.

Hall fell for a time-honored police trick: a controlled drug buy. He drove to an agreed location in his pickup truck to meet the police’s informant. Without getting out of his truck, he made the exchange – the informant handed over cash and Hall tendered oxycodone pills – after which Hall drove away.

Because the gendarmes had him cold, Hall pleaded guilty to the crime. The Commonwealth later sought forfeiture of the truck, reasoning that Hall had used it in substantial connection with the sale. After a hearing on stipulated evidence, the trial court denied the forfeiture, because Hall had only used the truck in a single drug sale.

The Commonwealth got a writ to review that ruling, and today the justices unanimously reverse. There’s nothing in the forfeiture statute that requires multiple drug transactions, so the Supreme Court remands the case for entry of a forfeiture order.

But wait; what about yesterday’s ruling from SCOTUS? Doesn’t that mean that the forfeiture of a truck – exactly the forfeiture in issue in Timbs – is an excessive fine? Not necessarily; the Robes in the District didn’t come out and say that all such forfeitures are excessive. The only question before the court in that appeal was the ruling below that the Excessive Fines Clause didn’t apply to the states. What’s more, it’s quite possible that Hall – the Virginia drug dealer – didn’t preserve an Eighth Amendment objection, so he might not be able to assert it now.

Hall will assuredly try to make that argument, given the gentle cattle prod of a SCOTUS opinion (and a unanimous one, at that). You should expect the Commonwealth to oppose that, since today’s Hall opinion remands specifically for the circuit court to enter forfeiture orders; not to conduct further hearings. We may have to stay tuned on this one to see what eventually happens.

 

Criminal law and procedure

The Code of Virginia carries out the mandate of Miranda v. Arizona, providing for appointment of counsel for indigent criminal defendants. One such statute provides that if a defendant’s financial circumstances change after the court appoints an attorney for him, he must hire his own lawyer and forthwith notify the court of the change. The statute continues, “The court shall grant reasonable continuance to allow counsel to be obtained and to prepare for trial.” That’s the playing field for today’s decision in Reyes v. Commonwealth.

Reyes responded, “guilty” when arraigned on a robbery charge. Between then and sentencing, he became able to hire a private lawyer. His family paid that lawyer just before the sentencing hearing, so the new lawyer filed an appearance and a motion to continue the day before, and appeared at the hearing to press his request for a continuance.

After an extensive colloquy, the trial judge refused the continuance request, despite that troublesome shall in the statute. This would have been a second continuance at the defendant’s request, both times inconveniencing a victim who had appeared to testify. The court allowed the appointed counsel to handle the sentencing hearing, which resulted in a lengthy prison term.

The Court of Appeals affirmed the judgment, noting that Reyes hadn’t shown “exceptional circumstances” to warrant the continuance. Today the justices agree. This ruling rests on what may be a surprising conclusion: The defendant isn’t the intended beneficiary of the statute I quoted above. The real beneficiary is the taxpaying public; the statute is designed to minimize the financial burden on the state when a defendant turns out not to be so indigent after all.

The only basis for relief here would be the Sixth Amendment, but Reyes didn’t press that argument at trial, so it was waived for appellate review. As for that pesky shall, Justice Mims’s opinion for a unanimous court cites the recent Rickman decision for the premise that, in this context, it’s directory and not mandatory, leaving it up to the trial court to fashion a remedy. Here, the ultimate issue may be the adjective in the phrase, “reasonable continuance.” The justices today agree that the trial court’s approach was reasonable.

 

A small percentage of appellate dockets comprise proceedings that aren’t truly appeals. These are original-jurisdiction proceedings, known to court insiders as “OJ cases,” where the appellate court is the original decision-maker, and isn’t reviewing a lower-court finding.

One key issue in many of these proceedings is the appellate court’s inability to take evidence. That issue is the determining factor in Dennis v. Commonwealth, which stems from a petition for a writ of actual innocence.

Because the grounds for this petition were non-scientific – testimony, not DNA findings – the court of original jurisdiction was the Court of Appeals. Dennis was convicted after a jury trial twenty years ago of malicious wounding and attempted murder in connection with a robbery. Years later, while in prison, he learned that another man had confessed to other inmates that he had committed the crime. Other witnesses testified that the two men were lookalikes – almost like brothers.

Dennis filed an actual-innocence petition, supported by numerous affidavits calling the conviction into question. The Commonwealth responded to the petition with affidavits of its own, including two from inmates who suggested that Dennis tried to bribe two of his own supporting affiants to implicate the other man. The Court of Appeals considered the competing submissions and dismissed the petition, finding that Dennis hadn’t shown that the evidentiary support for his petition was true and not merely contrary to the trial evidence.

Dennis appealed that dismissal to the Supreme Court. The standard of review in such appeals is lenient: abuse of discretion. Nevertheless, the justices reverse here, ruling that the CAV did abuse its discretion by not employing the statutory tool of remand to the trial court for an evidentiary hearing. Trial courts, unlike appellate courts, can listen to and observe witnesses as they testify. That’s the key to resolving conflicted testimony, and the justices today direct the CAV to go back and employ that approach. Dennis doesn’t have his writ yet, but he’s back in the game.

 


NOTE ON RECENT APPELLATE DEVELOPMENTS

 

 

(Posted February 15, 2019) Here’s a quick report on the new and notable in the Virginia appellate arena.

 

New SCV justice, CAV judge elected

Yesterday the General Assembly selected CAV Judge Teresa Chafin as the next Supreme Court justice. Judge Chafin will move up September 1, when current Justice Elizabeth McClanahan retires. The legislature chose Judge Clay Athey of Frederick County to take Judge Chafin’s position.

Judge Chafin’s elevation continues a trend: She’ll be the fifth consecutive General Assembly appointee to come from the Court of Appeals. The last time the legislature chose a new justice who wasn’t a CAV judge was nine years ago, when it elected Justice Bill Mims.

By statute, Justice McClanahan will be eligible to serve the court as a senior justice if she so chooses (and if the rest of the court consents, but that’s a formality). The statute authorizes up to five senior justices, and right now we have four. I have no insight into whether she’ll choose this route, or elect to spend her time otherwise.

One last note on these developments: Judge Chafin is from Russell County in southwestern Virginia. At least one legislative comment hailed her selection on geographic grounds, assuring that vast corner of the state continued representation on the court. (Justice McClanahan is from Abingdon.)

Once upon a time, that geographic diversity had greater significance. In the Nineteenth Century, a lawyer seeking to present an appellate petition of some sort might endure hardship in traveling to Richmond, so Virginia custom “dictat[ed] that there should be an appellate justice from each of the five grand divisions of the state: Tidewater, Piedmont, Valley, Southside, and Southwest.” Thomas R. Morris, The Virginia Supreme Court: An Institutional and Political Analysis (Univ. of Virginia Press 1975) at 46. This allowed lawyers living in regions beyond Richmond to “conveniently present petitions for writs of error to the justice from their region of the state.” Id. at 53.

The court’s current composition isn’t quite that balanced. There’s one justice from Nelson County, just south of Charlottesville; two are from Tidewater; two come from the greater Richmond area; and one hails from Fredericksburg. Noticeably absent from that list is northern Virginia, which hasn’t had representation on the court for several years now.

 

A larger merits docket looms

The February session argument docket is out, and it features 22 appeals, spread over four days. I’ve publicly lamented the decline in the number of writs – appellate lawyers gotta eat, too! – and the January session was remarkably thin, with just 13 appeals. A 22-argument docket is a welcome sign. April might be bountiful, too; the justices granted over 20 writs in the month of December alone, and those appeals are making their way through the pipeline. Here’s hoping that this is a trend.

 

Back to the Court of Appeals

In case you missed it, Judge Marla Decker is the new chief judge of the court, replacing previous Chief Judge Glen Huff. She becomes the second female CAV chief judge in its 34-year history. Fear not for Judge Huff, who’s still on the court and probably enjoying all the free time that comes with fewer administrative duties.

 

New notification system

We have tech news here at VANA. If you’ve signed up to receive a notice when I post new content, you’ll soon get a different-looking e-mail, as I’m switching to a new service. Starting next week, you’ll get an e-mail notifying you of new content as usual, but it’ll look a bit different. (I figure I’ll warn you before you start getting strange-looking e-mails inviting you to click on a link.) You don’t need to do anything to remain on the mailing list.

 


ANALYSIS OF FEBRUARY 14, 2019 SUPREME COURT OPINION

 

 

(Posted February 14, 2019) Looking for a last-minute gift for your Valentine? I probably can’t help you with that, unless your sweetheart is a Workers’ Comp defense lawyer. If that’s the case, run off a copy of Jeffreys v. Uninsured Employer’s Fund and present it to him or her. It’s your call whether to draw hearts and arrows on it.

This is an appeal about the statutory-employer doctrine. The claimant worked for an unlicensed contractor who had agreed to relocate and renovate an old school building in Pittsylvania County. The contractor was hired by a nonprofit historical society that was loosely affiliated with a local church.

The claimant sustained injuries while working on the church building. He filed a claim for Workers’ Compensation benefits, naming as respondents the society and one of its members, plus the church. None of those respondents had Comp insurance, so the Uninsured Employer’s Fund entered the fray.

A deputy commissioner entered an award finding that the claimant was the direct employee of the society and its member, and that the society was part of the church. The Commission set aside the award against the individual member, because she exerted no control over his work, but otherwise affirmed benefits. After a quick trip to the CAV and a remand for more factfinding, the Commission ruled in favor of the society and the church, finding insufficient evidence of control. On the statutory-construction issue, the Commission found “no evidence the Church and Historical Society were in the construction business,” so that doctrine got the claimant nowhere.

The case returned to the Court of Appeals, which affirmed the denial of benefits. The justices granted a writ, and today they affirm.

Before addressing the merits, today’s opinion explores the premise that the Comp Act is remedial and should be given a liberal construction. That’s true as far as it goes, Justice Kelsey writes for a unanimous court, but it doesn’t mean that the claimant automatically wins, or that the Commission or the courts can basically rewrite the Act by liberally interpreting it.

This seems to me to be parallel to other rules of construction in one sense. For example, in contractual-interpretation cases, there’s a rule that calls for construing language against the drafter. But that rule is a sort of last resort; if the language is clear, you can’t change it by construction or interpretation. It’s the same in the statutory context. You only resort to rules of construction or interpretation if applying the plain language doesn’t resolve the issue.

The court today rules that the Court of Appeals wasn’t plainly wrong in ruling that the facts here were consistent with a finding that the church and society weren’t in the building-renovation business. That, in turn, means that the claimant can’t get benefits from those organizations.

For whatever reason, the claimant didn’t name his direct employer, the unlicensed contractor, as a respondent to his Comp claim. An employer-employee relationship probably existed there, but since the claimant chose not to seek benefits from him, that issue never arises here.

I’ll confess to one small degree of surprise: I don’t see why the justices chose to take this appeal, and to decide it by published opinion. From my review, it appears to break no new ground. By statute, the Supreme Court has no jurisdiction over the CAV’s Workers’ Comp rulings unless one of two exceptions applies: either there’s “a substantial constitutional question” at the heart of the matter, or else the case carries significant precedential value.

There’s no real constitutional question here. The claimant makes an oblique stab at raising one, claiming that because the CAV got the facts wrong, that denied his right to due process. The justices swat this aside in a footnote. As for precedential value, my reading of this opinion convinces me that this holding fits squarely within the previous Comp caselaw. Of course, the simple answer to the question why the court took this case for merits decision is because at least two members of the writ panel voted to take it.

 


APPELLATE MEDIATION PROGRAM GETS ITS FIRST TEST

 

 

(Posted February 11, 2019) Tomorrow the Supreme Court of Virginia convenes writ panels for the first time since the calendar turned. Soon thereafter, the Clerk will start delivering good news, in the form of writs, to a select few appellants. And that will trigger the first uses of the new appellate mediation pilot program in that court; the clerk will also send notices to counsel in qualified appeals, letting them know that the program (and its automatic 30-day stay of deadlines) is available.

I reported on the program last year, and Virginia Business magazine ran a story on it this week. Those of us who put the program together will watch with a mix of hope and eagerness to see how many pairs of civil litigants will take advantage of the crop of newly certified appellate mediators. They, unlike those who see the appellate process all the way through to the mandate, will get to resolve their own appeals, on their own terms.

One last point: The Court of Appeals also is participating in this program, though with a very limited number of cases. That program is limited to domestic-relations appeals where the appellate issue is equitable distribution. In case you’re wondering, no one will mediate an appeal over a protective order or child custody.

 


ANALYSIS OF FEBRUARY 7, 2019 SUPREME COURT OPINION

 

 

(Posted February 7, 2019) Corporate income taxation is the milieu for today’s published opinion in Corporate Executive Board Co. v. Dep’t of Taxation. CEB is an Arlington business that provides what I’ll loosely call business-management services to major corporations around the world. Some of those services include the management of an online database of resources and analytical tools. It also provides company-specific education and analysis.

Here‘s an early paragraph from today’s opinion that sets the table for today’s dispute:

The vast majority of CEB’s sales of its Core Product and Solutions, over 95%, occur outside of Virginia. The Commonwealth accounts for less than 5% of CEB’s gross revenue. For the three years at issue, CEB earned $1.76 billion in total sales. Of that total, Virginia accounted for about $66 million.

Hence the problem: Can Virginia tax all of that $1.7B of income when the customers are elsewhere? It’s more complex than you might think; numerous states have adopted tax-allocation formulas that tax such income in their states, where a customer in one of those states buys services from a Virginia company like CEB.

Virginia has for 60 years used a formula that fully (indeed, doubly) weighs sales for taxation where the “income-producing activity is performed in the Commonwealth …” A trial court considered the matter and ruled that all of the sales, even those to remote locations, counted toward Virginia taxable income.

I’ve done the math on this three times, because the result is so staggering: The difference between a business-friendly interpretation and a tax-man-friendly interpretation is on the order of $300 million, for this one company alone. That many zeroes make for a judgment well worth appealing, so CEB went to Richmond and got a writ.

Today the justices unanimously affirm. The court analyzes constitutional challenges under the Commerce Clause and the Due Process Clause, concluding that SCOTUS precedent lines up with the trial court’s ruling. It may surprise you that double taxation – where the identical income from the identical transaction is taxed by two different states – isn’t unconstitutional. The Supreme Court today finds that Virginia’s tax scheme isn’t externally inconsistent. And citing language from the Notorious RBG, the Supreme Court agrees that the Constitution doesn’t require one state to “recede simply because both have lawful tax regimes reaching the same income.” The court finds that Virginia’s method of apportionment doesn’t extend beyond the value fairly attributed to activity here.

That doesn’t end the matter, because Virginia has a savings statute, and CEB sought relief there, too. That act allows relief where the allocation method is inequitable. That, in turn, requires proof of two elements, under a tax regulation. The first is double taxation, which definitely applies here. The second criterion is that “the inequity is attributable to Virginia, rather than to the fact that some other state has a unique method of allocation and apportionment.”

It’s this second one that trips up the taxpayer here. Justice McCullough’s opinion for the court analyzes several other states’ apportionment methods, finding it impossible to describe them as “unique.” More fundamentally, the inequity is attributable to the other states’ more recent taxation changes. Virginia uses an approach based on a 1957 uniform model act. Today’s opinion notes that that approach “has faced mounting criticism” as the American economy shifts from manufacturing to service and information. But the Commonwealth has resisted efforts to change.

The changes, instead, have come from other states’ efforts to modernize their tax codes. Using the common definition of attribute, the justices today hold that any inequity is attributable to those states’ amendments.

This opinion notes that the few legislative proposals to move Virginia’s allocation model toward a “market-based sourcing approach” have failed in the past eight years. This ruling will no doubt spur pro-business legislators to try again next year, lest the Commonwealth be viewed as an unfavorable state for business taxation. Of course, our 6% tax rate, one of the lowest in the nation, may offset that; but I do expect Corporate Virginia to try.

 


HOW TO SPEAK TO AN APPELLATE COURT

PART 1

 

 

(Posted January 22, 2019) It’s been quite a while since I’ve addressed the topic of oral advocacy. While there are numerous speaking styles, and no one of them is definitively correct, here are some notes on the way I do things.

Part 1 – How to Speak

This section is simultaneously breathtaking in its scope and dangerous in its connotation. The topic of how to speak is immense; the study of rhetoric and oratory goes back at least to Aristotle and Demosthenes. And tackling the task of telling people – educated people, at that – how to do something as basic as talking risks giving offense. After all, while we may realize that we’re not very good at painting portraits or singing or ballet, everybody perceives that he or she can talk well. You do, right?

As for the scope, I won’t try to be comprehensive here. I couldn’t possibly set out in an essay everything I’ve learned about public speaking since I was 13 years old and received my first training in it. It’s far too voluminous, and besides, there are some things that I don’t even realize that I know; they just come naturally after a lifetime of practice.

As for giving offense, please be assured that I’m not here to insult anyone. One of my primary goals in publishing this website is to help you to become a better appellate advocate. But even professionals who are highly skilled in their chosen craft may not know how to convey ideas clearly, forcefully, and persuasively. Here are a few basic suggestions.

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A QUICK REPORT ON 2018 STATISTICS

 

 

(Posted December 31, 2018) Virginia’s appellate courts are closed today, so we have time for a quick look at what happened in 2018.

 

Decisions on the merits

I was worried for a time that we wouldn’t reach 100 merits decisions in the SCV, but the justices put together an admirable late push, handing down 14 published opinions and one published order in December to get us over the mark. The court gave us 74 published opinions and four published orders this year. It also reissued two corrected opinions from last year. Add those to the 24 unpubs we saw n 2018 and you get 104 merits decisions.

For comparison’s sake, in 2017 there were 79 published opinions and 111 merits decisions. In 2016, we got 78 opinions and 125 merits decisions. For those of us who make our living at the appellate lectern, 2018 continues a disheartening downward trend in business.

 

David-Goliath Index

I promised you this as a recurring quarterly feature. Through the first half of 2018, David (the little guy in appeals, such as a defendant appealing a criminal conviction or an employee suing for wrongful termination) won about one out of three published rulings from the Supreme Court. But his third quarter was a disaster: one win and eight losses. A strong(-er) fourth quarter, where David won eight times and lost 13, brings our final David-Goliath Index to 31/69. That is, the little guy won 31% of the time and the big guy won 69% in 2018. Whether that’s a good sign or a bad one probably depends on which side of the litigation aisle you occupy.

 

CAV published opinions

By my preliminary count, the Court of Appeals of Virginia handed down 66 published opinions in 2018. That’s the same number as in 2016. I’ll have a fuller analysis of these figures when the court issues its full report in the spring.

 


 

EMERGENCY APPEALS: A HOW-TO GUIDE

(Posted October 15, 2018) I’ll confess that I’ve tended to take a lighthearted view of what I’ve described as “omigod appeals,” where a party just has to have immediate review of a trial court’s ruling. I’ve given the example of, “You’re litigating over an ice cream truck, and it’s 97 degrees outside.” I never really gave much thought to when a real need for such an appeal might arise, or how I would go about pursuing one.

All that changed recently when I was asked to speak at an upcoming conference. My topic is how to appeal in denial-of-care cases. Yet another confession: My immediate reaction to that request was, “What’s a denial-of-care case?” I really have lived a sheltered life.

I soon found out that these cases are nothing to take lightly. They refer to the circumstance where a hospital denies medical care needed to preserve someone’s life. There may be squabbling family members, and maybe even a do-not-resuscitate provision in an advance medical directive. In these cases, if a circuit court issues an order allowing or directing the hospital to deny care, and a family member wants to appeal, the normal appellate process is out of the question. These days, it takes well over a year to get from circuit-court judgment to Supreme Court opinion, and most patients in that circumstance don’t have anywhere near that much time. For these folks, there has to be a faster way.

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