ANALYSIS OF NOVEMBER 4, 2011 SUPREME COURT OPINIONS[Posted November 4, 2011] In case you haven’t finished eating all your leftover candy, and you still have a jack-o’-lantern on your porch, we get a reminder today that the Halloween season is over. Today is opinion day for the Supreme Court’s November session. We get thirteen published opinions, plus a couple of published orders. I’ll digest the opinions for you here, saving you time that you can use to go out and discard that pun’kin.
Freedom of Information
This one is going to make the open-government advocates mad.
In Christian v. SCC, the Supreme Court reaffirms the protected status of the State Corporation Commission, ruling that the Virginia Freedom of Information Act doesn’t apply to the commission. Christian submitted a request to the SCC for certain documents, only to be given a somewhat ambivalent answer. He was told that the SCC wasn’t conceding that FOIA applied to it, still, the clerk of the commission generally complied with requests for documents. [In a personal aside, I’ll echo this sentiment. My dealings with that clerk’s office over the years have been uniformly pleasant, and the staff there is wonderfully accommodating.] The final answer was that the information “is not readily available,” so no documents were furnished.
Christian then filed a petition – in the SCC! – asking the SCC to temporarily enjoin itself, to issue declaratory relief against itself, and to award him attorney’s fees and costs. Leaving aside for the moment the problems attendant to a pro se party asking for attorney’s fees, isn’t that a gutsy move? This procedural posture (which is entirely correct, by the way) of suing the adjudicative body itself emphasizes the unique nature of the SCC. It is one of the very few agencies that occupy all three branches of government.
Back to the petition: The commission eventually sent Christian one solitary page, claiming that was all it had in response to the request. In adjudicating the petition, the SCC blew it. It ruled that in view of the clerk’s “timely response,” there was no case or controversy. The response wasn’t remotely timely; as any FOIA jock can tell you, a public body has to act fast in order to comply, and its initial response, due within five days, must be one of a designated list of answers. The initial response wasn’t on the list, so the court today rules that there was, indeed, a case or controversy.
But that’s as far as Christian gets today. Affirming by the right-for-the-wrong-reason route, the justices hold that FOIA has no application to the SCC, for three primary reasons. It finds that the commission “is governed by a separate and parallel structure of laws” extrinsic to FOIA; holds that the SCC is not a “public body” as contemplated by FOIA; and notes that FOIA’s enforcement mechanism cannot, by its nature, apply to the commission.
In terms of its application to the day-to-day practice, this ruling won’t show up on most lawyers’ radars. But as noted above, for advocates of openness in government, it might be time to try again (the first effort, in 1995, failed) to persuade the legislature to bring the commission within the ambit of the Act.
Two decisions issued today deal with the same question: Under Virginia law, when may a party adduce evidence of a prior consistent statement of a witness?
The first of these that we’ll take up is a criminal appeal Anderson v. Commonwealth. It involves a sexual assault in which the perpetrator may or may not have had a gun; the victim reported that the had felt a cold, hard object placed against her head and heard a click, but she never actually saw a gun. In subsequent reports to a counselor and law-enforcement officers, she described the incident, but one officer made notes to the effect that the victim had indeed seen a weapon.
The defendant pointed to this inconsistency at trial, so the prosecution asked the witnesses to recount how, exactly, the victim had described the incident. The defendant objected to this evidence as hearsay, but the trial court allowed it, since it was being offered not for the truth of the matter asserted, but to support the victim’s trial testimony.
The Supreme Court today approves this approach and affirms the conviction. It notes that there are two exceptions to the general rule that prior consistent statements are not admissible. This case presents involves one of those exceptions, where “the opposing party has attempted to impeach the witness by offering a prior inconsistent statement made by the witness.” In that instance, offering the other side of the coin is fair game.
The other case decided today, Ruhlin v. Samaan, involves the other exception. This is a civil suit over an automobile collision in which the defendant admitted liability; the subsequent trial was on damages only. The primary issue in the case appears to have been whether the plaintiff’s shoulder was injured in the collision or not. He had sustained a previous injury to that shoulder years before.
The plaintiff gave an oral statement to the defendant’s insurance company on the day of the collision. (No word in today’s opinion whether the plaintiff’s lawyer gave him a Gibbs-slap for that decision. If you’re unfamiliar with this cultural phenomenon, my teenaged daughter could explain it to you, or you could check here or here.) In that interview, the plaintiff mentioned that his ribs and head hurt, but said nothing about his shoulder.
We’ll pause here to take note of Code §8.01-404, which prohibits the use of written statements taken from personal-injury plaintiffs on the dates of their injuries. The idea behind this is that such statements, taken while the party may still be experiencing shock or other symptoms associated with being injured, might not make a complete report. The legislature has accordingly barred the use of those written statements in evidence.
At the damages-only trial, the defense lawyer asked the plaintiff about the phone call with the adjuster. The plaintiff said he didn’t recall it, so the lawyer helpfully offered to refresh his memory with this document –
At which point the plaintiff’s lawyer objected, leading directly to today’s appellate proceedings. The trial court allowed the defense to show the document (a transcript of the telephone call) to the witness, solely to refresh his recollection. The document was never read to or published to the jury, and it was not admitted into evidence. After reading it, the plaintiff acknowledged talking about his injuries without mentioning his shoulder. He later called his wife to testify that he had told her, at least, of his shoulder pain immediately, but the trial court refused this prior consistent statement.
This case presents two evidentiary issues. The first, parallel to the Anderson case above, deals with the admission of prior consistent statements. The other exception to the rule of inadmissibility is to respond where “the witness has been subjected to specific forms of attack, and the offered prior consistent statement was made before any litigation motive of the declarant to make self-serving statements would have arisen.” The plaintiff offered the wife’s statement under this theory, but the trial court didn’t bite.
The court affirms the decision to reject this statement, because there was no suggestion of a “recent fabrication.” The defense had maintained that the plaintiff had never suffered a shoulder injury in this crash. Since hearsay statements aren’t more reliable simply because they’re repeated, this one won’t meet that test, and the exception doesn’t apply.
The second evidentiary issue is the use of the recorded statement. The court today affirms on a couple of grounds, but this one alone was sufficient in my book: The document was never introduced, and was never “used to contradict him as a witness.” Indeed, the jury probably never knew what the document was. There’s no prohibition in the statute against using such a document to refresh recollection, and as the old adage goes, you can use anything, even a plate of fettuccine, to refresh recollection.
I’m not sure whether the proposed Virginia Rules of Evidence deal with this topic (the exceptions; not the fettuccine), but trial-court practitioners should take the time to read both opinions to get a sense of how to proceed when a prior consistent statement is offered.
It’s no secret that the Supreme Court in recent years has been just short of openly hostile to covenants not to compete. And understandably so; the agreements are in restraint of trade and can effectively deny a person the ability to earn a living wage. In the 42 opinion days I’ve covered since launching this website nearly seven years ago, I can recall only one published opinion in which the court did not canopener a covenant. And even that exception is the functional equivalent of a trick question: In Ulloa v. QSP, Inc., 271 Va. 72 (2006), the enforceability of the covenant was not in issue on appeal. (Ulloa settled the question of whether one could be a prevailing party in this kind of litigation without proving damages.)
Viewed in that context, today’s ruling in Home Paramount Pest Control v. Shaffer will come as no surprise – up to a point. The covenant at issue is patently overbroad, given the court’s recent jurisprudence; it prohibited the employee from doing anything at all for a competitor (the oft-cited “janitor rule”), and it even prohibited him from owning stock in a competing company. This means that ownership of a single share of Orkin or Terminix would result in a breach of the agreement.
But just when this was starting to look like a glorified unpublished order, a complication arrives. Home Paramount, you see, is the successor company to Paramount Termite Control Company. And in a case titled Paramount Termite Control v. Rector, the Supreme Court of Virginia in 1989 upheld the exact language of this covenant. Home Paramount understandably urged the court to reverse the trial court’s ruling in favor of the employee, contending plausibly that this very language had already been blessed by the very same court.
Okay, now what? The irresistible force of a tidal wave of recent caselaw meets the immovable object of stare decisis, with a judicial approval of this very language. For six members of the court, the immovable object has to move; the court today affirms, noting that the law has evolved in the intervening 22 years, so the 1989 decision is overruled.
One justice remains unconvinced: Justice McClanahan insists that the company has the right, as a matter of business practice, to rely on specific decisions from the courts. She points out, quite plausibly, that people (including corporate “people”) make plans and carry out business in reliance on what the courts decide is lawful. This company had a right to continue to use this very language, she argues, and a mere change in the personnel of the court shouldn’t sweep away Home Paramount’s business expectations.
Who’s right? This question is older than I am, and I won’t pretend to be able to answer it definitively. But if the court had adopted the dissent’s view, it would have created an outlier – a single company’s non-compete clause that has been somehow grandfathered through the sea change of the past two decades of employment-law decisions. I’m not sure how that would be a better outcome than the majority’s approach.
Ultimately, stare decisis does yield to changes in society. If courts adhered to previous precedents slavishly, we’d still be citing Plessey v. Ferguson for the separate-but-equal fiction. This case is a modern example of that evolutionary dynamic, with far fewer implications for society than Brown v. Board of Education, of course.
It takes four justices to constitute a quorum in the Supreme Court; it says so in Code §17.1-300. In Landrum v. Chippenham and Johnston-Willis Hospitals, the court could only muster five decisionmakers out of its full complement of seven. But all five agree on the result, which is an ugly showing for a certain out-of-state attorney.
If you’re a foreign attorney handling a case here in Virginia, or if you’re a Virginia attorney serving as local counsel, you’ll want to read this case, if only to avoid the same train wreck. For the rest of us, this medical malpractice case is about two things: the imposition of sanctions by a trial court, and a specific statement of what constitutes abuse-of-discretion review in an appellate court. Throughout this discussion, I’ll try to drop subtle hints as to ways you can avoid the problems that arose here.
The plaintiff hired a Missouri attorney to represent her in a suit against a hospital and several doctors. The lawyer appeared in the case pro hac vice on a temporary basis, as provided in Rule 1A:4(3), but never followed this up with a formal motion by local counsel or an order granting full PHV status. (Don’t do this.)
The parties executed a standard pretrial-scheduling order, which required them to identify expert witnesses, if requested in discovery, on a fixed schedule. Two months before the plaintiff’s discovery cutoff, the defendants propounded discovery asking for the plaintiff’s expert-witness information. The plaintiff’s lawyer declined to answer within 21 days (don’t do this); instead, he answered on the last day for discovery (i.e., 60 days after the discovery was propounded). (Don’t do this.) The answers provided only the names and addresses of the experts; the lawyers decided to leave out things such as the substance of the anticipated fact and opinion testimony. (Don’t do this.) The defendants moved to exclude the witnesses, at which point the plaintiff’s lawyer sent in the experts’ reports. But he declined to supplement his disclosures. (Don’t do this.)
At a subsequent hearing, a remarkably patient trial judge declined to strike the experts; he instead gave the plaintiff’s lawyer seven days to remedy the problem. The leave came with some ominous words of warning, however, including an admonition to “do it in the proper manner.” The court added, “I will tell you, sir, if you fail to do that, I will dismiss the case after that.”
Okay; does the court have everyone’s attention yet? Just in case the answer is no, the judge entered an order setting forth the new deadline, and adding that if the lawyer didn’t timely comply, he would “risk further sanction by the court, including but not limited to, reconsideration of the defendants’ motions.”
Happily, the supplemented disclosure arrived with 24 hours to spare. (Good for him; you shouldn’t play with deadlines.) But alas; he had sent in the supplement without getting his local counsel to sign, too. (Don’t do this.) This brought another motion to strike and a motion for summary judgment, since without the experts the plaintiff couldn’t establish things like the standard of care. At the subsequent hearing, the foreign lawyer acknowledged that he had blown it by signing alone; he even admitted that he had done so previously in other filings in the case. But he pointed out that he had secured the local counsel’s signature several days before the hearing, and in any event, the defendants weren’t prejudiced by the omission.
The trial judge had had enough. He granted the motion to strike the witness designation as a sanction for failure to obey the previous order, so the plaintiff’s case was doomed. The judge then took up the MSJ. At this point in the narrative, the voice inside my head is hollering, “Nonsuit, fer cryin’ out loud, or you’re toast!” But the plaintiff’s lawyer declined to ask for one. (It’s tempting to add yet another “Don’t do this” here, but it’s possible that the plaintiff had already burned her nonsuit, so I’ll cut the lawyer a break here.) The hammer eventually fell and the case was dismissed.
On appeal, the plaintiff got a writ on five assignments of error, which is a major victory. (Once an appeal is awarded, the Supreme Court reverses 60% of the time, so the appellant is now in the driver’s seat.) But even that victory was charred beyond recognition when, in a development I learned about a few weeks ago, the plaintiff’s lawyer filed a brief of appellant in which he changed the wording on four of the five assignments of error, presumably in an effort to improve the appellant’s chances of getting a reversal. (Don’t do this.) The court entered an order dismissing the appeal on those four assignments, since you can’t change the wording once the court grants a writ.
Each of these sins of omission or commission comes back to haunt the appellant today, as the court affirms the trial court’s decision to dismiss the case. The court rules that the trial judge acted within his discretion in imposing the sanction of barring the witnesses from testifying, so the dismissal of the case is a foregone conclusion.
For appellate lawyers, this is one of the most important cases in a good, long while in at least one respect: The court takes pains to set out what’s involved in abuse-of-discretion analysis. A majority of the court (remember, we’re starting with a bench of five, so the “majority” is in reality just three justices) adopts the three-factor test espoused in a couple of federal appellate courts, including the Fourth:
An abuse of discretion . . . can occur in three principal ways: when a relevant factor that should have been given significant weight is not considered; when an irrelevant or improper factor is considered and given significant weight; and when all proper factors, and no improper ones, are considered, but the court, in weighing those factors, commits a clear error of judgment.
Justice Millette, joined by the chief justice, files a concurring opinion. The concurrence certainly agrees with the concept of affirming the result below; there’s no doubt in anyone’s mind about that. But the concurrence points out that a trial court abuses its discretion when it commits legal error, too, citing an impressive array of caselaw, including from this very court. In the concurrence’s view, the majority’s test doesn’t include legal error, and the three-part test would by necessary implication exclude legal-error analysis whenever the standard of review is abuse of discretion.
As appellate issues go, this is almost a hair-splitting exercise, hardly the sort of weighty legal dispute that goes down into the annals of jurisprudence as a seminal decision. And yet standard-of-review questions matter – a great deal, as it turns out. I would prefer that the full court clarify this by reaffirming that appellate courts can still, in the context of abuse-of-discretion analysis, reverse based on demonstrated legal error. I doubt that even today’s majority – Justice Lemons, joined by Justices Goodwyn and Mims – would want to rule that out.
One last point: The discussion above is, beyond question, critical of what the plaintiff’s lawyer did, or didn’t do, throughout the course of this litigation. But lest you be deceived into thinking that I blame the Missouri lawyer entirely, I’ll add here that the primary blame for these many procedural defaults (particularly the ones that relate to Virginia practice) lies with the local counsel. He’s supposed to know Virginia procedure, including the requirement for making a motion for full PHV status; he’s supposed to be in charge of complying with Virginia rules, including things like endorsements on pleadings. As one justice mentioned to me recently, our rules don’t really provide for local counsel; you’re counsel of record, and responsible for what goes on in the case.
Update – November 5: In musing over this opinion since I wrote about it yesterday, I now see it in a different perspective, and my sense now tilts in favor of the majority. It’s not that I think that legal-error analysis should be eschewed; it obviously belongs in appellate review. But the majority undertakes only to describe the standard for pure abuse-of-discretion analysis. If a trial judge commits legal error, the appellate court will always evaluate that under a de novo standard of review. I’m confident that all five justices who signed off on yesterday’s decision will agree with that. The question is whether an appellate court will afford a trial-court decision the degree of deference that’s called for in abuse-of-discretion situations, when the error is in fact a legal one.
In that context, the majority’s view makes sense. Trial judges have considerable discretion in many regards – the classic example of abuse-of-discretion review is admission of evidence. Appellate courts give trial judges lots of leeway to make judgment calls on questions like whether evidence is cumulative, or more prejudicial than probative. In that sense, applying an abuse-of-discretion standard is appropriate; if the trial judge was somewhere in the ballpark, she deserves to be upheld.
But when a judge commits pure legal error – for example, by admitting evidence that’s forbidden by statute – there’s no abuse of discretion there; it’s simply legal error, and the court’s decision is entitled to no deference at all. This distinction is probably complicated by frequent appellate statements like, “A trial court has no discretion to admit clearly inadmissible evidence because admissibility of evidence depends not upon the discretion of the court but upon sound legal principles.” Commonwealth v. Wynn, 277 Va. 92, 97 (2009). In these instances, courts don’t use an abuse-of-discretion standard at all; a judge doesn’t have the discretion to go outside the proper and clearly defined bounds of admissibility. Applying an abuse-of-discretion standard here would give the trial court’s decision more deference than is actually warranted.
I pondered deleting yesterday’s analysis and replacing it with this perspective, but it occurs to me that this will actually be clearer if I leave both sides of the discussion up on the site, and allow you to read them both.
Limited liability companies
The question of inheritability of interests in LLCs is at the heart of Ott v. Monroe. This was a two-member LLC, with Dad owning 80% and Mom owning 20%. Mom was listed as the managing member, with an outside person listed a successor manager. Dad died a year after the company was created, and his will left his ownership interest to his daughter.
Daughter got the will probated, and then, acting as the majority owner, called a meeting of the company at which she removed Mom and the outsider, and elected herself manager. She then filed a suit asking for a declaration that she was the manager.
She sued her Mom! In fairness, it might have been Stepmom; the opinion doesn’t identify the two women’s precise relationship. But still!
The issue in this case is whether an ownership interest in an LLC can be transferred by will. A statute seems to say no; only the right to receive the profits can pass without the consent of the other owners, with no managerial authority. This parallels the former provision of the Virginia Partnership Act, which furnishes much of the substance of the LLC Act. But in this case, the operating agreement contains this language:
Except as provided herein, no Member shall transfer his membership or ownership, or any portion or interest thereof, to any non-Member person, without the written consent of all other Members, except by death, intestacy, devise, or otherwise by operation of law.
Hmmm. That language seems to suggest that membership can be transferred without consent “by death.” Hmmm.
Except it doesn’t, the court rules today. There is no intention specifically expressed here to supersede the statute, and in the absence of such clear language, the statute prevails, and Daughter’s attempt at an ouster of Mom doesn’t succeed.
Smith v. Commonwealth involves a doctrine I learned long ago in law school, albeit in my UCC class – the strength of a “pure heart; empty head” defense. Smith got arrested for a marijuana charge, and hired a lawyer. The lawyer wrote to him to keep him apprised, including the fact that his case would be scheduled for trial on the court’s next term day, which was November 13. A week before that, Smith got another from the lawyer, this one letter telling him that his trial had been pre-scheduled in advance of term day, for a date in January.
Unknown to Smith, a grand jury indicted him on the original term day. Two days later, unknown to law-enforcement authorities, Smith went into a gun shop and applied to purchase a firearm. He signed the required paperwork, including the assurance that he had not been indicted for any criminal offense that was punishable by a year or more in custody.
A Virginia statute makes it a crime to knowingly and willfully make a false statement on that application. His pleas of ignorance fell on deaf ears in the trial court and in the CAV; the latter court affirmed the conviction in an en banc opinion issued last November.
Today, the justices reverse the CAV’s en banc ruling and dismiss the indictment. The court rules that the relevant statute, by including the phrase knowingly and willfully, imposed an obligation on the prosecution to prove that the defendant actually knew about his indictment at the time he made the false certification. The CAV had relied upon the “deliberate disregard for the truth” angle, but today the Supreme Court disagrees.
There’s a short, painful order today in McDowell v. Commonwealth in which the court reiterates the necessity of renewing a motion to strike at the close of all the evidence in a case. This is essential if the appellant intends to appeal the question of the sufficiency of the evidence. McDowell’s lawyer made such a motion at the conclusion of the prosecution’s case, but never addressed it after presenting evidence on behalf of the defense.
I used the word renewing in the previous paragraph with some trepidation, because the court’s recent caselaw makes it clear that it isn’t really a “renewed” motion. It’s a different motion, taking into consideration a different quantum of evidence. Once a trial court denies a motion to strike and the defendant – civil or criminal – adduces his own evidence, that first motion to strike is deemed abandoned. The “renewed” motion is in fact an independent motion, contending that the sum of all of the evidence – plaintiff/prosecution and defense – is insufficient to allow the factfinder to reach the merits.
Want more painful lessons? Well, if so, shame on you for your masochistic tendencies, but I’ll oblige you anyway. In another published order, the court dismisses the appeal in Davis v. Commonwealth, involving a firearms-possession charge. Davis’s appellate sin (which turns out to be mortal) was in his assignment of error: He asserted in the Court of Appeals that the trial court had erroneously accepted his guilty plea. On its face, that sounds like a long shot – entering a guilty plea waives non-jurisdictional defects in the proceedings – but when he repeated that assignment, probably verbatim, in the Supreme Court, the game was up.
Rule 5:17(c) clearly specifies that when you appeal from the Court of Appeals on to the Supreme Court, you have to assign error to what the CAV did; not to what the trial court did. A new provision in that rule states that if you assign error to a ruling of the wrong court, the Supreme Court will dismiss the appeal, and that’s what happens here.
Divorce practitioners get some important guidance today on equitable distribution, in Schuman v. Schuman. The wife was employed during the marriage as a corporate officer, and part of her compensation was in the form of stock options and awards. The couple separated just three years after being married (at least they lasted more than 72 days), and the issue arose whether the stock options and awards were separate or marital.
The trial court found the options to be separate, because the wife had exercised them using separate funds. The Court of Appeals affirmed, albeit on different grounds, holding that since the options didn’t vest during the marriage, they were separate.
The Supreme Court reverses today, agreeing with the husband that the vesting date isn’t the relevant factor. Stock options are a form of deferred compensation, and the ED statute treats deferred comp as marital property if it’s earned during the marriage.
We’ve visited Adcock v. DCSE before, back when it was decided last year in the Court of Appeals. I discussed the case in detail back then (with some fairly sparkling prose, if I say so myself), so I won’t repeat everything now; you can read last year’s description here.
Today, the justices reverse the CAV’s divided panel decision. The court holds that by statute an ongoing spousal-support decree is, in effect, a money judgment for all sums as they become due. Since the husband was obligated to pay weekly sums but did not make those payments, the sums due became money judgments against him on a weekly basis. The wife’s extraordinary delay in bringing matters to court means that she is indeed barred by the 20-year limitation on enforcement of judgments.
There’s an important difference between the Virginia and United States Constitutions. The federal Constitution creates a set of limitations upon the power of Congress. If the legislature is not specifically granted a power, then it doesn’t possess that power. The Virginia Constitution, in contrast, starts out with the presumption that the powers of the General Assembly are unlimited; the Constitution lists a set of specific limitations on that power, but except for those limits (and those imposed by federal law), that power remains.
Two of the enumerated limits are implicated in Montgomery County v. Department of Rail and Public Transportation. A few years ago, in order to encourage intermodal transportation and thereby reduce truck traffic on Virginia’s Interstate highways, the legislature entered into an agreement to promote something called the Heartland Corridor. That project provided for the movement of freight by rail and truck instead of exclusively by truck; the project included construction of an intermodal facility in Montgomery County. Today, the Supreme Court reviews a challenge to the constitutionality of that agreement, specifically the question whether it violates two limits on the legislative power of the General Assembly.
I’ll cut to the chase here: The court rules that the legislation is constitutional. It rejects an assertion that the project involves Virginia’s involvement in internal improvements, and a separate challenge based on the credit clause.
The first challenge fails because the entire project is geared toward lessening traffic on Virginia’s roads. Roads are one listed exemption from the internal-improvements clause (parks are the other), and while this project deals with rail travel, it’s clear from the legislative history that the thrust of this system is aimed at roadways.
As for the credit clause, the court concludes that the Commonwealth isn’t lending anything. (The clause forbids the Commonwealth to lend its credit to “any person, association, or corporation.”) This project involves a grant, creating something akin to a public-private partnership. While Norfolk Southern (an intervening defendant in this case) will own the facility, it still has obligations to the Commonwealth in the event, for example, the project is abandoned or sold.
The subtext of this entire constitutional discussion is the substantial nexus between this project and public transportation considerations, along with a healthy dollop of judicial deference to legislative findings on the need for the project. (Judges may decide whether a given act is constitutional, but only legislatures can decide whether it’s wise.) Justice McClanahan meticulously lays out the legislative history of this project, leaving the reader with little doubt that it really is geared to relief of transportation problems, not private enterprise. On two occasions, she notes that by entering into this agreement, the Commonwealth is in essence purchasing additional traffic capacity on roads such as Interstate 81, now overrun with trucks beyond its design capacity.