Case Summaries
Tax Law
[06/23] In re McKinney
An appeal by a tax debt owner in Chapter 13 proceedings, arising from the bankruptcy court's denial of its objections to the debtor's proposed plan to pay off the tax debt with interest within five years, is dismissed for lack of jurisdiction as, although the issue that the tax debt owner cares about may have been resolved, its basic dispute with the bankruptcy estate has not been resolved and therefore the judgment of the bankruptcy court is not final.
[06/22] In re: Delta Airlines, Inc.
In creditors' appeal from a bankruptcy court's order upholding debtor's objections to their claims under tax indemnification agreements, the order is vacated where: 1) the bankruptcy court's construction of "pay" as that term was used in an agreement at issue nullified debtor's obligation to pay the "Owner Participant" under the agreement upon the occurrence most likely to call its provisions into play ? the debtor's insolvency; and 2) the bankruptcy court effectively nullified the agreements by stripping them of their ability to protect the Owner Participant in the event of debtor's default.
[06/21] US v. Batson
In a prosecution for conspiracy to commit tax fraud, defendant's restitution order is affirmed in part where the district court was authorized to order restitution for a violation of Title 26 as a condition of supervised release by 18 U.S.C. section 3563(b)(2), which granted courts broad discretion to order restitution as a condition of probation, and 18 U.S.C. section 3583(d), which made that grant applicable to supervised release. However, the order is vacated in part where restitution so ordered must be limited to the offense of conviction when, as here, that offense does not involve an element of a "scheme, conspiracy, or pattern of criminal activity."
[06/17] Estate of Schneider v. Finmann
In a legal malpractice action alleging that defendants negligently advised decedent to transfer, or failed to advise decedent not to transfer, an insurance policy which resulted in an increased estate tax liability, the appellate division's affirmance of dismissal of the action is reversed where an attorney may be held liable for damages resulting from negligent representation in estate tax planning that causes enhanced estate tax liability.
[06/17] Estate of Charania v. Shulman
In a tax deficiency case, the judgment of the tax court is affirmed in part and reversed in part where: 1) the tax court's judgment that all of the Citigroup shares were the separate property of the decedent for federal estate tax purposes and, thus, were includable in his gross taxable estate is affirmed, as the rule of De Nicols is that a change in marital domicile does not, in itself, effect a change in the marital property regime governing the spouses' rights in personal property acquired throughout the course of the marriage; but 2) the tax court's approbation of the late-filing penalty was in error and is therefore reversed.
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Corporation & Enterprise Law
[06/25] Deutscher Tennis Bund GMBH v. ATP Tour, Inc.
In plaintiffs' suit against the ATP Tour, an organizer of worldwide men's professional tennis circuit, claiming that the ATP Tour's reorganization to revitalize its popularity violated sections 1 and 2 of the Sherman Act and constituted a breach of the directors' fiduciary duties, judgment of the district court is affirmed where: 1) the jury verdict on the Sherman Act section 1 claim is affirmed as the plaintiffs failed to prove the relevant market; and 2) district court's judgment as a matter of law dismissing the breach of duty of loyalty claim against a director is affirmed as neither he individually, nor the ATP Board of Directors as a whole, were materially self-interested when they voted in favor of the reorganization plan.
[06/24] Olmstead v. Fed. Trade Comm'n
An order to partially satisfy a judgment against defendant in the FTC's suit for unfair or deceptive trade practices is affirmed as Florida law permits a court to order a judgment debtor to surrender all right, title, and interest in the debtor's single-member limited liability company to satisfy an outstanding judgment.
[06/24] DDJ Mgmt., LLC v. Rhone Group L.L.C.
In an action claiming that defendants presented plaintiffs with corporate financial statements that were false and misleading, the appellate division's modification of the trial court's order dismissing plaintiffs' fraud claim is reversed where: 1) when a plaintiff has taken reasonable steps to protect itself against deception, it should not be denied recovery merely because hindsight suggested that it might have been possible to detect the fraud when it occurred; and 2) plaintiffs in this action for fraud have alleged facts from which a jury could find that they were justified in relying on the representations defendants made to them.
[06/24] Black v. US
The Seventh Circuit's affirmance of defendants' honest-services mail fraud convictions is vacated where: 1) per the ruling today in Skilling v. US, the honest-services component of the federal mail-fraud statute, 18 U.S.C. section 1346, criminalizes only schemes to defraud that involved bribes or kickbacks, and that holding renders the honest-services instructions given in this case incorrect; and 2) by properly objecting to the honest-services jury instructions at trial, defendants secured their right to challenge those instructions on appeal, and they did not forfeit that right by declining to acquiesce in the government-proposed special-verdict forms.
[06/24] Skilling v. US
The Fifth Circuit's affirmance of former Enron CEO Jeffrey Skilling's honest-services fraud conviction is affirmed in part where pretrial publicity and community prejudice did not prevent Skilling from obtaining a fair trial, and he did not establish that a presumption of juror prejudice arose or that actual bias infected the jury that tried him. However, the judgment is vacated in part where 18 U.S.C. section 1346, which proscribes fraudulent deprivations of "the intangible right of honest services," was properly confined to cover only bribery and kickback schemes, and Skilling's alleged misconduct entailed no bribe or kickback.
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Tax-exempt Organizations
[06/16] US v. Graham
In defendant's motion for a certificate of innocence after his conviction for embezzlement of his employer was overturned, district court's denial of the motion is affirmed as defendant has not demonstrated that the court abused its discretion in concluding that he failed to meet his burden under the second clause of section 2513(a)(2), that he did not, by misconduct or neglect, cause or bring about his own prosecution.
[05/26] Haight Ashbury Free Clinics, Inc. v. Happening House Ventures
In a free medical clinic's suit for breach of fiduciary duty and other claims against its founder and a limited partnership, formed to assist the clinic by acquiring real estate, denial of defendant's special motion to strike is vacated as acts that are protected under the SLAPP statute are not "merely incidental" to a cause of action simply because they represent a relatively small number of many alleged wrongful acts.
[03/23] Fleszar v. U.S. Dep't of Labor
Petition for review a decision of the Administrative Review Board declining to investigate plaintiff's allegation that her termination from employment by the American Medical Association violated section 806 of the Sarbanes-Oxley Act (a whistleblower-protection provision), is denied as the AMA, a nonprofit membership association that does not issue stock, is not covered.
[03/17] Service Employees Int'l. Union v. US
In an appeal of the IRS's assessment of penalties for the late filing of a return, a district court's order reducing the assessed penalty is reversed where penalties on tax exempt organizations for late filing of informational returns may not be reduced by district courts as a matter of discretion.
[03/16] Alcazar v. Corp. of the Catholic Archbishop of Seattle
In an action seeking pay for the overtime hours plaintiff worked as a seminarian in a Catholic church in Washington, dismissal of the action is affirmed where the ministerial exception barred the claim because: 1) the First Amendment strongly circumscribed legislative and judicial intrusion into the internal affairs of a religious organization; 2) awarding damages would necessarily trench on the Church's protected ministerial decisions; and 3) plaintiff's complaint demonstrated that plaintiff was a minister for purposes of the ministerial exception.
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