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[No.108]
December 30, 2004 |
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International Legal News
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Cases
Source:
Westlawinternational.com
Addressing an issue
of apparent first impression at the circuit court level, the Second Circuit has
held that a corporation's chief executive officer did not misrepresent a
"material" fact, for purposes of a securities-fraud suit brought by
shareholders, by falsely stating that he held a bachelor's degree in economics
from a university when, in fact, he had attended that university for three years
and studied economics, but had left before getting his degree. Even if, in an
age of heightened sensitivity to corporate scandal, some investors temporarily
viewed the company as "damaged goods" because its credibility was
suspect, it was not substantially likely that reasonable investors would devalue
the stock knowing that the CEO had skipped out on his last year of college.
Instead, they would likely value the CEO's years of management in financial
institutions, other board members' and key managers' similar track record, the
years of the firm's earnings statements as a private company, the firm's
debt/equity ratio, the general costs of capital and macroeconomic trends, and
the strength of the firm's potential competitors.
Greenhouse v. MCG
Capital Corp.
A child born alive
was an "unmarried dependent" entitled to claim damages for loss of
parental consortium, notwithstanding that the child was only a fetus at the time
of the injury to his mother in a motor vehicle accident. The statute made a
tort-feasor liable to a victim's unmarried dependent for permanent loss of
services, comfort, companionship, and society as a result of significant
permanent injury to the natural or adoptive parent. The child's claimed damages,
which did not accrue until the loss of parental companionship upon the live
birth of the child, related back to the time of injury.
Larusso v. Garner
The date that a city
formally approved an enterprise zone agreement, rather than the calendar year
after the county auditor noted the real property exemption on the tax list, was
the date on which the exemption effectively commenced for the limited purpose of
establishing when construction workers were "new employees" within an
enterprise zone. That determination would control the city's obligation to share
income tax revenue from new employees with the school districts to compensate
the districts for taxes they were forgoing due to the real property exemption.
Moreover, employees from outside the city's taxing authority who were
transferred to work at a site in the enterprise zone were "new
employees" to the extent they were first employed at the site, even though
the employees were not newly hired.
Massillon City
School Dist. Bd. of Edn. v. Massillon
A Connecticut trial
court acted within its discretion in a former husband's partition action when it
enforced a former wife's properly domesticated foreign judgment, which was based
on an alimony arrearage, when awarding the proceeds of the sale of real property
that was jointly owned by the former husband and the former wife. The foreign
judgment was not entirely unrelated to the partition property since the judgment
was based on the former husband's failure to comply with postnuptial agreements,
which included provisions about the maintenance of the property. Also, it was
not feasible for the former wife to obtain a judgment lien on the partition
property.
Segal v. Segal
Upon the death of
the beneficiary of a special needs trust, the remaining trust assets were to be
treated as part of the beneficiary's estate pursuant to the Probate Code, and
trust assets distributed solely to the beneficiary's adult disabled child were
exempt from Medi-Cal reimbursement claims pursuant to the Welfare and
Institutions Code. The clear and unambiguous language of the special needs trust
and Medi-Cal reimbursement statutes, along with sound public policy, supported
such a construction of the statutes.
Bonta v. Arnold
Economic loss rule
did not bar a negligence action brought by the owner of an aircraft and its
insurer against the company that serviced the aircraft's landing gear before the
owner purchased the aircraft. The company was neither a manufacturer nor
distributor of a product, and the parties were not in privity of contract. The
economic loss rule would bar a negligence action to recover solely economic
damages only in circumstances where the parties were either in contractual
privity or the defendant was a manufacturer or distributor of a product. No per
se distinction was made between damages for direct economic injury, such as the
loss of the benefit of the bargain, and consequential economic damages, such as
lost profits.
Indemnity Ins. Co.
of North America v. American Aviation, Inc.
A Nevada state
district court judge's conduct in using his judicial letterhead for two letters
to principals at his child's school violated the judicial conduct rule
prohibiting a judge from lending the prestige of the judicial office to advance
the judge's private interests. The letters stated that the judge had been
awarded custody of his and his former girlfriend's child, and asked the school
to prohibit the former girlfriend from visiting the child at the school. An
objective reasonable person could conclude that the judge was attempting to gain
a personal advantage, even if the principals had already known the judge was a
district court judge, and even if the principals did not provide special
treatment to the judge. The adoption of the objective reasonable person standard
was a matter of first impression in Nevada.
In re Mosley
A letter written by
an African-American former residential tenant to her landlord in which she
apologized for her late rent payments and requesting that the landlord use her
security deposit as her last month's rent was insufficient to show that the
termination of her lease by the landlord was based on a valid business decision,
in an action brought by the former tenant for discrimination in housing based on
race. The tenant had already received her notice of the landlord's intent not to
renew her lease. Furthermore, there was overwhelming evidence indicating that
the tenant was vacating the apartment because of the apartment manager's
conduct, which included racial slurs, complaints to police that were unfounded,
and refusal to allow her guests to associate outside the apartment in the common
areas, while allowing white tenants and their guests to do so.
New Corey Creek
Apartments, Inc. v. Pennsylvania Human Relations Com'n
The rates for
nonbasic telecommunications services actually paid by consumers to a price cap
regulated incumbent local exchange telecommunications company could be either
less than or equal to maximum allowable prices. Under the plain terms of
governing Missouri statute, it was the maximum allowable prices that could not
be raised by more than 8% annually, not necessarily the actual rates which could
be requested by ILEC. Interpreting the statute in this allowed actual rates and
maximum allowable prices to be different from and largely independent of each
other, permitting telecommunications service providers to receive the benefits
of rate flexibility without ignoring the interests of consumers and the public.
This was a matter of first impression.
State ex rel. Sprint
Missouri, Inc. v. Public Service Com'n of State
The tort of wrongful
life was not cognizable in South Carolina. The Supreme Court noted the
distinction in a wrongful life action from a medical malpractice action, in that
the child's defects were not caused by any alleged negligence on the part of the
health care providers, but was based on the child's assertion that no life was
better than a life with impairment. The Court agreed with the reasoning of many
states that also rejected the cause of action, based on a determination that the
act of being born was not a legally cognizable injury, and that it was
impossible to weigh the fact of being born with a defect against the fact of not
being born.
Willis v. Wu
The evidence
supported wrongful death awards of $175,000 for each of patient's sons arising
from death of their mother at a hospital. Both sons testified that their father
deserted the family when they were young children and that their mother
functioned as both as their mother and as their father. Although both sons lived
out of state, they both had frequent contact with their mother, evidenced by the
many pictures admitted into evidence, some of which were taken only five days
prior to their mother's death. In a letter written by one son, he expressed his
longing for his mother to assist him in raising his children, particularly his
teenage daughter. And the other son's letter spoke of his newest child whom his
mother had never seen.
Beilenson v.
Jefferson Parish Hosp. Service Dist. No. 2
The capital
sentencing statute which required the imposition of the death penalty if the
jury found the existence of aggravating circumstances and that such
circumstances were not outweighed by the existence of any mitigating
circumstances, and which required the jury to impose the death penalty even if
the aggravating and mitigating circumstances were in equipoise, or weighed
equally, violated the prohibition against cruel and unusual punishment and was
unconstitutional on its face. The Supreme Court overruled its prior holding in
State v. Kleypas, in which it held that the statute, as written, violated the
Eighth and Fourteenth Amendments, but which upheld the statute by stating that a
"tie" would go to the defendant rather than the State. The Court in
Kleypas inappropriately applied the statutory interpretative maxims of avoidance
and the rule of constitutional doubt, which allow the court to uphold a
constitutionally infirm statute if it is consistent with legislative intent to
enact a constitutional death penalty statute. First, those interpretive
doctrines applied only if the statute subject to challenge was ambiguous, vague
or overbroad, which was not the case here. The Kleypas Court's
"rewriting" of the statute violated the separation of powers doctrine
by eviscerating the legislature's clear intent regarding equipoise and which
imposed on the legislature's exclusive authority to enact statutes. Rather, the
proper remedy would have been for the Kleypas Court to hold the law
unconstitutional, and then allow the legislature to respond accordingly.
State v. Marsh
The former chief of
security for the organizer of El Salvadoran death squads was liable for the
security chief's part in the 1980 assassination of Archbishop Oscar Romero. The
security chief's role, including paying fees to the assassin, was sufficient to
establish liability for extrajudicial killing and crimes against humanity under
the Alien Tort Claims Act (ATCA), and for extrajudicial killing under the
Torture Victim Protection Act (TVPA). The ten-year limitations period was
equitably tolled since the plaintiff could not have obtained justice from
Salvadoran courts. The District Court awarded $5 million in compensatory damages
plus $5 million in punitive damages to the anonymous plaintiff.
Doe v. Saravia
A former county
employee was not entitled to an award of damages for a county's delay in
complying with an order of an administrative law judge awarding the employee
reinstatement without back pay, in an action for a writ of mandamus. An award of
damages for delay in compliance with a legal duty was not authorized in a
mandamus action in North Carolina. This was a matter of first impression.
Holroyd v.
Montgomery County
An employer's
attorney violated the attorney disciplinary rules prohibiting a lawyer from
communicating with a represented party and prohibiting a lawyer from using
methods to obtain evidence that violate a person's legal rights, where the
attorney gave the employer an affidavit that the attorney wanted the employee to
sign in support of the employer's proposed motion to sever the employer's and
the employee's federal criminal trials. The attorney was aware the employer
would speak directly to the employee, who was represented by separate counsel.
Even if the employer was not acting as the attorney's agent, the attorney
ratified the employer's direct contact with the employee and actively
participated in the events leading to the employee signing the affidavit. The
attorney failed to take steps to intervene when the employer presented the
affidavit for the employee's signature in the attorney's presence, and failed to
take steps to contact the employee's counsel while the attorney was waiting for
the employee to sign the affidavit. The attorney took control of the affidavit
once it was signed, and filed it with the federal court.
In re Anonymous
News
The Computer Firm,
Apple is famously secretive about its future product launches while Apple users
are equally famous for speculating about new technology from the company. In
December 2002, Apple had sued a former contractor who allegedly posted online
drawings, images and engineering details of the company's PowerMac G4 computer.
Recently, Apple has filed a lawsuit with the Santa Clara California Superior Court,
against an unidentified individual who had recently misappropriated and
disseminated confidential information (trade secret) about its future products.
Further, Apple has said in the seven-page complaint, filed on 13 December, that it
did not know the "true names or capacities, whether individual, associate,
corporate or otherwise," of the defendants and were willing to amend the
complaint, once they had discovered the names of those who had allegedly leaked
the said information.
Under the leadership
of Mr. Schmid, Mobilcom had obtained the support of France Telecom in 2000 to
invest in third generation (3G) mobile phone networks, using UMTS technology.
Further, both the firms had reached a settlement in 2002, in which the French
company agreed to pay more than 7 billion euros of Mobilcom's debt. Now Mobilcom
has filed a suit in a
regional Court in Frankfurt, Germany alleging that France Telecom has failed to honour the deal and
has not fulfilled its legal and contractual obligations. The suit also alleges that
the original amount was insufficient to cover the damage done to Mobilcom, and
that the 2002 agreement was not binding.
Chinese firms
generally copy products ranging from computer software and spark plugs to baby
milk and compact discs. Despite the fact that product piracy is a major problem,
foreign companies have only occasionally won cases and even in such cases, the
compensation awarded has usually been very small. Earlier this week China had
said that in future it would punish violators of intellectual property rights
with up to seven years in jail. In a recent ruling, a Court has ruled that
Chongqing Lifan Industry Group must stop selling Honda brand motorbikes and must
pay 1.47m yuan ($177,600) as compensation. In a related case, the Paws Incorporated - the owner of
the rights to Garfield the cat, has also won a court battle against a publishing
house that violated its copyright. Other firms that have taken legal action in
China, with varying degrees of success, include Yamaha, General Motors and
Toyota.
Pfizer, the world's
largest drug maker, through its Alzheimer's Disease Prevention Study has
reported that there were no increased cardiovascular risk seen in elderly
patients, taking its blockbuster arthritis and pain relief drug Celebrex (400 mg
daily) for up to three years. However, the National Institute of Health had
earlier suspended, the use of, two drugs, Aleve (220 mg twice a day) and
Celebrex (200 mg twice a day). Celebrex is part of the same family
of drugs called COX-2 inhibitors as Bextra (also made by Pfizer) and Vioxx,
which was pulled from the market by Merck & Company on September 30, 2004,
after a study confirmed that it increases patient’s risk of heart attack and
stroke. In addition, Pfizer has agreed to suspend advertising on Celebrex and to
craft appropriate detailing to physicians that reflects the uncertainty of
scientific data currently available.
Being part of a new
government scheme being tested in certain parts of England, kids behaving badly
in public would now face on-the-spot fines up to £40. Subsequently, if these
fines were not paid, their parents could go to jail. In this regard, several
police forces have been given powers to fine 10 to 15-year-olds for a range of
offences, including vandalism, under age drinking and using fireworks. In this
first phase, the scheme is being tested in Essex, Lancashire, Merseyside,
London, Nottinghamshire and the West Midlands. This has been a result of a
similar scheme for adults, that was brought in earlier this year and the police
had said that it had been very successful.
Shrimp is the No. 1
seafood choice in the United States, and nearly 90 percent of it is imported.
Unfortunately, while many of the antibiotics used as part of the factory farming
of shrimp are banned in the United States, they are being used in other
shrimp-producing countries, and residues of U.S. banned antibiotics have been
detected in farmed shrimp and other seafood shipped from Asia to the United
States and Europe, which are highly injurious to human health. As a result, by
Spring 2005, a mandatory country-of-origin label will be required on all seafood
sold in grocery stores in US. This label will tell consumers where the shrimp
comes from and whether it is farm-raised or wild-caught.
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Ministry of Finance and Company Affairs
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Service Tax
Instructions from
File No. 341/18/2004-TRU(Pt.) Dated 17.12.2004: With the levy of service tax on
services provided by a goods transport agency in relation to transport of goods
by road, the Tax Research Unit, has come up with related clarifications. These
instructions focused on avoidance of double taxation, that is, if service tax
due on transportation of a consignment has been paid or is payable by a person
liable to pay service tax, service tax should not be charged for the same amount
from any other person.
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RBI
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Circular No.
RPCD.SP.BC.66/CLCC/09.01.01/2004-05 Dated 21.12.2004: The Central Level
Coordination Committee (CLCC) for the Swarnjayanti Gram Swarozgar Yojana (SGSY)
reviewed the performance under the SGSY scheme during the year 2003-04 and has
expressed concern over the unsatisfactory response from the banks. It was
observed that the credit mobilisation under SGSY during the year 2003-04 could
cover only 56% of the targets and the subsidy-credit ratio is far below the
desired level of 1:3. Therefore, the RBI has advised all the Scheduled
Commercial Banks with certain line of actions, so as to keep the programme
moving with required pace.
Circular No.
DGBA.GAD.No.H-2697to27930/42.01.001/2004-05 Dated 17.12.2004: Now that ‘Education
Cess’ has been levied on Income Tax and Corporation Tax, so as to facilitate
the accounting of Education Cess, a new Minor Head "504 – Education Cess"
has been accorded under the Major Heads of Corporation Tax and Taxes on Income
other than Corporation Tax.
Circular No.
UBD.PCB.Cir30/09.161.00/2004-05 Dated 15.12.2004: The RBI, vide this circular,
has advised the Urban Co-operative Banks to follow certain customer
identification procedure for opening of accounts and monitoring transactions of
a suspicious nature, in compliance with ‘Know Your Customer’ guidelines.
Emphasis was again put on these guidelines, as with the view of the
Recommendations made by the Financial Action Task Force (FATF) on Anti Money
Laundering (AML) standards and on Combating Financing of Terrorism (CFT).
Notification No.
GSR825(E) Dated 13.12.2004: Vide this notification, Foreign Exchange Department,
has made regulations in relation to borrowings in foreign exchange under
Automatic Route or with prior approval of Reserve Bank of India under the
Approval Route or as Trade Credit.
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DGFT
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Policy Circular No.
12/2004-2009 Dated 28.12.2004: Earlier, the last date for filing of application
for Duty Free Credit Entitlement Certificate for Status Holder for the period
2003-04 was 31st December 2004, but this has been extended till 31st March 2005.
The Joint Director General of Foreign Trade circulated this information.
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Ministry of Health and Family
Welfare
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Notification No.
GSR812(E) Dated 16.12.2004: The Ministry of Health and Family Welfare, vide this
notification, has further amended the Prevention of Food Adulteration Rules,
1955. The amendment also, listed the permissible food additives for use in
edible oils and fats.
Notification No.
GSR810(E) Dated 13.12.2004: Viewing the fact that safer alternative to the drug
formulations containing Rofecoxib are available and that they are likely to
involve certain risk to human beings, the Central Government has prohibited the
manufacture, sale and distribution of this drug and its formulations for human
use.
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Ministry of Petroleum and Natural
Gas
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Notification No.
GSR813(E) Dated 16.12.2004: Vide this notification, the Central Government has
brought forward further amendments to the Petroleum and Natural Gas Rules, 1959.
Now, the licensee or lessee after determination, cancellation or relinquishment
of his license or lease shall have to immediately remove and dispose of any
petroleum, all stores, equipment, tools, and machinery from such area.
Notification No.
GSR814(E) Dated 16.12.2004: The rates at which royalties shall be payable in
respect of mineral oils, namely, Crude Oil, Casing Head Condensate and Natural
Gas, have been modified with this notification. These amendments were reflected
in the schedule of the Oil fields (Regulation and Development) Act, 1948.
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Ministry of Consumer
Affairs, Food and Public Distribution
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Food Corporation of
India
Notification No.
EP-7(1)/2004 Dated 08.12.2004: The Food Corporation of India, vide this
notification, made further amendments to the Food Corporation of India (Staff)
Regulations, 1971. These amendments relate to the mode of recruitment to special
posts.
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Press Information Bureau
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Dated 23.12.2004:
The Justice S. N. Phukan Commission has submitted its report on Tehelka expose,
as the commission has been wound up with effect from Oct 04, 2004 and that the
CBI would be investigating into this matter from here on. Earlier, on Feb 04,
2004, the commission has submitted Part-I of the report to the Government.
Dated 23.12.2004:
The Ministry of Power has formulated a six-level intervention strategy for
distribution reforms, ensuring accountability, deliverability and performance at
all levels. The measures proposed are at the National, State, SEB, distribution,
feeder and consumer levels.
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Ministry of Personnel, Public Grievances and Pensions |
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Notification No.
GSR820(E) Dated 15.12.2004: Vide this notifications, the Central Government,
after consultation with the Governments of the States concerned, made further
amendments to the All India Services (Death-cum-Retirement Benefits) Rules,
1958.
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Supreme Court |
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The appellant had
applied for a plot in a residential colony, being developed by the respondents.
Later a letter was issued by the respondents calling upon the appellant to pay
escalated charges, failing which allotment in her favour was to be cancelled. The
appellant approached the MRTP Commission against the said demand. However, the
Commission declined to direct the respondent to hand over the possession, even
though additional amount had been deposited by the appellant. Aggrieved by this
the appellant approached the Apex Court.
The Supreme Court
observed that the course of enquiry being conducted was virtually stalled by the
persistent efforts of the appellant to get interim relief in one form or the
other. Besides the main relief could not be granted by way of interim relief,
and therefore, the Commission was directed to dispose of the complaint of the
appellant expeditiously.
The appellant was
running a hospital for providing medical facilities to its employees, their
dependants and the employees of its associated companies and their families. It
also catered to Government employees on payment of certain charges. Later, the
Labour Commissioner sent a letter to the appellant asking him to get it
registered as an Establishment under the Bihar Shops and Establishments Act,
1953. An objection was raised against this and the same was rejected. The High
Court also dismissed the writ petition filed by the appellants seeking to assail
the said order. The appellants then approached the Supreme Court substantially
on the grounds that they were running a charitable hospital and were as such
exempted from the provisions sought to be imposed on them.
The Supreme Court
while dismissing the appeal held that the hospital being run by the appellants
had been established to fulfill their statutory obligations and not for a charitable
purpose. In addition, the charges were also recovered from outsiders and
therefore, they were not exempted from the said provisions.
The widow of a
landlord sought to evict her tenant on the grounds that she required the
property for her own personal use, as she was in bonafide need of the same. Both
the Trial Court and High Court upheld the case of the landlord and refused to
grant leave to the tenant to defend the eviction petition. An appeal was
preferred to the Supreme Court on the ground that only a landlord who had let
out his premises to a tenant, could be allowed to evict the tenant. A subsequent
purchaser could only do so after the statutory period had passed, and therefore
the eviction petition was not maintainable.
The Supreme Court
while dismissing the application of the landlord held that immediate possession
could only be required by those widows “who had themselves let out the
premises or it had been let out by her husband”.
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High Courts &
Tribunals |
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Orissa
The petitioner had applied for appointment as a Special Judicial Magistrate and appeared in the
examination, against 18 posts. Later, 21 candidates had been called for
the interview. The petitioner challenged the process of admission. The question for consideration
was whether sub-division of marks by the commission on different facets and
awarding only two and a half marks for a higher qualification was arbitrary.
The Orissa High Court held that
there was no statutory rule or any guidelines issued by the Government,
for the purpose of evaluation of merit by the commission. Further, the
Court held that they should be
slow to interfere with the opinion expressed by experts, unless allegations of
malafide were made and established. It would be prudent and safe for the
Courts
to leave the decision on such matters to the experts who are more familiar with
the problems they face than the Courts, and resultantly the petition was dismissed.
Karnataka
The respondent’s
wife had filed an application claiming maintenance from him. This application
was allowed and the said maintenance was awarded from the date of the petition.
Aggrieved by the said order, the husband challenged this, which was later
dismissed. Immediately thereafter the wife initiated execution proceedings for
recovery of the amount due. Further, warrants were issued against the
respondent. He challenged the issuance of warrants, which was also dismissed.
Against this order, the respondents moved the High Court.
The Karnataka High
Court disposed of the petition with the observations that Section 125 Cr PC was
meant for the benefit of those persons who needed maintenance. However, the
limitation period of one year, providing for recovery of arrears was required to
be strictly followed. Further, the Court left it to the Legislature to introduce
suitable amendments to the statute.
Delhi
The petitioner had
been carrying on business for a considerable time and was brought under the
provisions of the Employees Provident Fund Act from 01st
March, 1975. A default notice was issued to the petitioners for default during
the period 1997-2004. The representation of the company was dismissed and a
demand of Rs 30,13,744/- was made. An appeal was preferred to the Appellate
Tribunal, but could not be listed for hearing since the Presiding Officer had
not been appointed and therefore, a recovery certificate was issued against the
petitioner. Later, the petitioner filed a writ petition for quashing the
proceedings initiated against him on the grounds that firstly, the demand
consisted mainly of interests and damages, secondly, the sums due had already
been made good and lastly, that the demand was not only bad in law, but it was
also based on wrongful computation.
The Delhi High Court
disposed of the petition with the observation that no fault could be attributed
to the petitioner for having approached the appropriate forum. Whilst refraining
from taking a serious view of the inaction of the authorities, hope was
expressed that matter with relation to appointment of Presiding officer would be
finalised expeditiously.
Income Tax Appellate
Tribunal, Chennai
The assessee was
engaged in computer education, which was an extension of an existing
undertaking. They filed an appeal against the order of the respondent in respect
of the assessment for the year 2001-2002.
The Income Tax
Appellate Tribunal held that the law does not permit expanding proceedings under
section 263 of the Income Tax Act, after its initiation beyond what is stated in
the notice itself. Whether the impugned assessment is erroneous or prejudicial
to the interest of the revenue could be judged only with reference to reasons
stated therein. The Tribunal further held that the surplus arising out of
exchange fluctuation was not a receipt and hence the question of considering it
for the purpose of section 80HHE would not arise at all. Further, they said that
the assessee under the contract could not take the leased equipment away from
the training center, since these structures were installed at the cost of the
assesee for the purpose of his business and were to remain the property of the
schools, the expenditure incurred is wholly and exclusively for the purpose of
the business allowable as deductions in the year that it was incurred. Further
they said that, the assessee having preferred a lesser claim, the grant of
deduction under section 35 D was not prejudicial to the interest of the revenue.
Thus, Section 263 could not be invoked merely for the purpose of ordering a
fishing enquiry. Further, it also has to be shown that the order passed by AO
suffered from error. The CIT directed enhancement on four issues and in respect
of one, set aside the assessment for fresh consideration.
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